National Living Wage

The National Living Wage – will it live up to expectations?

The National Living Wage – will it live up to expectations?

Issue

On 1 April 2016, the national minimum wage will be increased significantly for all workers aged over 25. The aim is that this new “National Living Wage” will be increased to a £9 compulsory hourly rate by 2020.

What you need to know

  • The first increase will take place on 1 April 2016 when workers will receive the first increased rate of £7.20 per hour.
  • It will only apply to those workers aged 25 or over. This means that the national minimum wage will continue for those aged under 25.
  • The National Living Wage will change every year on 1 April whilst the National Minimum Wage will change on 1 October every year.
  • There are fears that jobs will actually be lost. The retail sector is anticipating the loss of up to 900,000 jobs as a result of the National Living Wage and the Apprenticeship Levy.
  • Potentially 74,000 shops could close, with Wales and the North of England being particularly hard hit.
  • Over six million workers should benefit from this increase.

Penalties

The penalty for non payment of the National Living Wage will be 200% of the amount owed, unless the arrears are paid within 14 days. The maximum fine for non-payment will be £20,000 per worker. Employers who fail to pay will be banned from being a company director for up to 15 years.

What we can do for you

The introduction of the national living wage could cause some difficulties for employers. We can guide you through any restructures, redundancies or changes to terms and conditions that businesses may need to consider.

Individuals will need to make sure that they are being paid the correct rate.

Zero Hour Contracts

Zero Hours Contracts and exclusivity clauses

Zero Hours Contracts – the exclusivity clause is now unenforceable

Issue

Zero hours contracts are also known as casual contracts. They are often used by businesses to deal with fluctuating demand and allow employers to hire workers without guaranteeing them any work.

What is changing?

Zero Hours contracts have had their fair amount of negative press with larger companies being accused of taking advantage of their workers. The requirement for individuals under these contracts to only work for that particular employer are now unfair and unenforceable.

What do I need to be aware of?

Earlier this month the Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015 came into force and provide as follows:

  • Any dismissal of an employee who is on a zero hours contract is automatically unfair if the principal reason is because they breached a clause stopping them from working for another employer (an exclusivity clause);
  • No qualifying period of service is required to bring such a claim;
  • Employers are not allowed to subject anyone working under a zero hours contract to a detriment because they failed to comply with an exclusivity clause.

How does this affect employers?

Employers who use these types of contracts will no longer be able to enforce any exclusivity clause in the contract.

What we can do for you?

Zero hours contracts will have their place and indeed some updated guidance from the Department of Business, Innovation and Skills suggests that they are suitable for starts ups, seasonal work, special events and to cover sickness absence.

You may find the guidance useful and a copy of the link is here.  Zero hours contracts are still a tricky area and we can guide you through the pitfalls and traps to make sure you use them as effectively as possible.

 

 

 

National Living Wage

The National Living Wage – what you need to know

The National Living Wage – what you need to know

Issue

Earlier on this year, George Osborne announced a new National Living Wage which will see a £9 compulsory hourly rate to be introduced by 2020.

Background

Workers are currently entitled to the national minimum wage which for workers who are aged 21 or over is £6.70 per hour.

What you need to know

• The first increase will take place in April 2016 when workers will receive an increased rate of £7.20 per hour.

• It will only apply to those workers aged 25 or over. This means that the national minimum wage will continue for those aged under 25.

• There are fears that jobs will actually be lost. Tesco has recently announced its concern that when companies also factor in the apprentice levy and increasing business rates, this could, in their words, amount to a “lethal cocktail”.

• It is anticipated that up to 60,000 will lose their jobs as a result of this change which will increase costs. This could particularly hit small businesses very hard.

• There will be help for businesses. Corporation tax will be cut by 2% and there will also be some help for small firms as the employment allowance will be increased by 50% to £3,000.

• Over six million workers will benefit from this increase.

What we can do for you

The introduction of the national living wage could cause some difficulties for employers. We can guide you through any restructures or redundancies businesses may need to consider.

Individuals will need to make sure that they are being paid the correct rate from April 2016 onwards.

Cutting a long story short

Holiday and Sickness Absence – the story continues

Holiday pay and sickness absence – the story continues

Issue

The issue of holiday pay and sickness absence continues to be taken before the courts and tribunals and as each case is heard, we begin to see greater clarity on the situation.

Background

In the case of Plumb v Duncan Print Group Ltd, the EAT has clarified two issues affecting the rights of workers on long term sick leave to carry forward untaken annual leave under the Working Time Regulations 1998.

Facts

This case came about when the Claimant sought to claim a payment in lieu of untaken holiday when his employment ended after a long period of sickness absence. The employer’s leave period ran from 1 February to 31 January each year. The Claimant in this case was absent on sick leave from 26 April 2010 until his employment ended on 10 February 2014. During the whole of that time he did not take any annual leave.

Decision

The EAT ruled that the Claimant was entitled to a payment in lieu of his untaken holiday for all years except the 2010/11 and 2011/12 leave years.

How does this affect employers?

There are two interesting points from this case:

• Following on from this case, a worker on sick leave can carry forward untaken holiday entitlement even if he is capable of taking that leave but simply unwilling to take it.

• Untaken leave cannot be carried forward indefinitely and the Working Time Regulations are to be read as allowing a worker to take annual leave within 18 months of the end of the leave year in which it accrued.

What we can do for you

The imposition of an 18 month limit is useful guidance for employers. However, holiday entitlement and its interaction with commission, sickness absence, maternity leave and overtime continues to cause employers and employees headaches. We can help you with these difficult problems.

Redundancy and Maternity Leave Explained

Redundancy and Maternity Leave – a useful reminder

Redundancy and Maternity Leave – a useful reminder

Issue

When facing a redundancy situation, is an employer obliged to offer a vacancy to an at risk employee who is on maternity leave during a restructuring exercise?

Background

Where a woman is on maternity leave and a redundancy situation arises, the law states that a woman has a right to be offered a suitable alternative vacancy under the Maternity and Parental Leave Regulations 1999. Failure to do so will make any dismissal automatically unfair.

The EAT recently handed down judgment in a case (Sefton Borough Council v Wainwright) which considered what an employer should do with regard to offering suitable available vacancies to women on maternity leave at the time of a restructuring exercise. This serves as a particularly useful reminder of the current position as this will be similar for those who take up the new right to Shared Parental Leave.

Facts

Mrs Wainwright worked for Sefton Borough Council and during her maternity leave, her employer implemented a restructuring exercise. One of the proposals was to merge her role and one other role into a new senior role of Democratic Services Manager. Mrs Wainwright and the other role holder were advised that they were at risk of redundancy and both invited to apply for the new role.

The other employee was successful at interview. Mrs Wainwright was placed on the redeployment register – her employer did not offer her any of the other vacancies, nor did she express an interest. She was eventually dismissed in early 2013 and brought claims for breach of the Maternity and Parental Leave Regulations 1999, direct discrimination and automatically unfair dismissal.

What was the decision?

The EAT upheld the tribunal’s decision that Mrs Wainwright should have been offered the vacancy for the new senior role. It is an absolute right under Regulation 10 of the Maternity and Parental Leave Regulations 1999 to be offered a suitable vacancy. This right arose as soon as the decision had been made to delete Mrs Wainwright’s role, not when the restructuring exercise was complete. She should not have been required to take part in any selection process. The claim for automatic unfair dismissal therefore succeeded.

Interestingly, the EAT did comment that if there had been more than one vacancy, an employer would not have to offer all of the vacancies or even one particular vacancy – it just has to offer one vacancy as long as it is suitable.

The direct discrimination claim was sent back to the tribunal for consideration as to whether there was any evidence to support this. The EAT commented that a failure to comply with the regulations does not necessarily mean that this amounts to unfavourable treatment due to maternity.

What we can do for you?

This case is a useful reminder on the requirement to offer a vacancy to an employee on maternity leave when the employer becomes aware that the employee’s role is or may be redundant. This brings in interesting points as to when this duty is triggered and at what point does a possibility of redundancy become a firm proposal that a role will be put at risk of redundancy?

Employers also need to be aware of the risk of a discrimination claim when considering what vacancies to offer to an employee on maternity leave.

We can help guide you through these tricky situations and the pitfalls to try and avoid. Please call Karin Henson for further information.

Aeris Employment Law Ltd, Employment Solicitors, Solihull, West Midlands

 

Cutting a long story short

Holiday and Overtime – what now?

Holiday pay and overtime – what now?

Issue

When calculating holiday pay, should an employer have to calculate it based on a worker’s overtime earnings?

 Background

Holiday pay is a complicated and changing area of law. The courts have already held that employers need to take commission into account when calculating holiday pay. A number of cases then came before the EAT in July on the issue of overtime and the decision is a significant one.

 What was the decision?

The EAT held that when calculating holiday pay, an employer must now base their calculations to include non guaranteed overtime or similar payments. This calculation must cover the four weeks’ leave provided by the European Directive which was distinguished by the EAT from the additional 8 days that workers in the UK get under the Working Time Regulations.

 Some positive news

There was some good news in the judgment however for employers. There was great concern as to how far back potential claims for back payments could be made. The EAT held that any such claims will not be possible if there has been a gap of more than three months between payments. This will be a real source of relief to employers concerned about how far back workers may have tried to claim

 What we can do for you

We already know that commission has to be taken into account when calculating holiday pay. This issue will be back before the courts next year. Now overtime has be taken into account. This is a difficult and complex area of law and we can help you deal with any holiday pay issues that might arise.

Cutting a long story short

Shared Parental Leave – what is it all about?

Shared Parental Leave

Issue

From 5 April 2015, parents of babies due or children adopted from 5 April 2015 will be entitled to take shared parental leave.

What is changing?

This will be a new right and it will work alongside maternity leave – eligible parents will be able to opt into this new regime which will mean the mother bringing her maternity leave to an end.

What do I need to be aware of?

The main points to be aware of are:

• Parents will be able to take a total of 52 weeks leave after a baby is born or a child is adopted. The effect of shared parental leave is that parents will be able to    share leave between them after the initial compulsory leave period of 2 weeks which must be taken by the mother.
• This will therefore leave up to 50 weeks leave that can be shared between parents, in blocks of one week or more.
• This leave must be taken before the child’s first birthday.
• Leave does not have to be taken in one continuous block. Requests may be made for shorter but more numerous blocks of shared parental leave.
• Pay will be available for 39 weeks of the 52 weeks shared parental leave and the rates will match the rates available for Statutory Maternity Pay.
• Parents will have to satisfy eligibility tests.
• 20 days of work will be allowed which will not bring the shared parental leave to an end. In maternity leave, they are known as KIT days. In shared parental leave, they will be known as SPLIT days.

How does this affect employers?

It is unclear whether this new right will result in an increase in the number of men who apply for leave to spend time with their new child. The aim of this change is to try and change society’s view that it is the mother who will always be the prime carer. Time will tell whether it will become culturally more acceptable for fathers to have time off. Affordability will no doubt play an important part in this.

Employers should be aware of this new right and review their policies accordingly. There are complicated notification requirements that the parents will have to comply with.

It may be that very little changes. The uptake of additional paternity leave by men currently is very low and this new right may not make much of a change. This should however be on an employer’s radar.

What we can do for you

We can help you review your current policy to make sure it is correct and/or help you draft a new policy. We can advise you on the more difficult issues of whether enhanced maternity benefits should be extended to those taking shared parental leave and how to deal with challenges of requests for blocks of discontinuous leave.

 

 

Cutting a long story short

Changes to Flexible Working

Changes to flexible working
Issue

From 30 June 2014, there will be a change to the right to request flexible working.

What is changing?

The right to request flexible working will be extended to all employees with 26 weeks’ service. Beforehand, it was available to employees with caring responsibilities for children under 17 (or 18 if disabled) and for certain dependents.

What do I need to be aware of?

The basic right to request flexible working remains unchanged. Employees can still make one request per year and the statutory procedure that employers used to follow is being replaced by a more general duty to deal with requests in a reasonable manner and within a reasonable period of time – this will be three months unless an extension is agreed.

ACAS have prepared a new draft statutory Code of Practice to give guidance as to what is meant by ‘reasonable’. The code will be taken into account by tribunals when considering cases on this point.

How does this affect employers?

The eight business grounds on which an employer can turn down a request for flexible working remain. These are very wide and are as follows:

• The burden of additional costs
• Detrimental affect on ability to meet customer demand
• Inability to re-organise work among existing staff
• Inability to recruit additional staff
• Detrimental impact on quality
• Detrimental impact on performance
• Insufficiency of work during the periods the employee proposes to work; and/or
• Planned structural changes

Employers may now get an increase in the number of requests for flexible working and will have to be careful that the three month time limit is not exceeded unless agreed.

In any tribunal claim brought on this issue, the sanction remains at eight weeks’ pay, subject to the applicable cap on a week’s pay. Remember however that these types of claims are often linked to a discrimination claim which has potentially unlimited compensation. It will therefore be important to monitor the uptake of this amended right and ensure that all requests are treated consistently and fairly. Temporary changes to terms and conditions should also be considered.

What we can do for you

We can help you review your current policy to make sure it is correct and reflects these current changes. We can also help you review how you should handle such requests in the future.

 

Cutting a long story short

Holiday Pay and Commission – what next?

Holiday pay and commission – what now?

Issue

When calculating holiday pay, the historical approach taken by tribunals has been a restrictive one in that they have held that commission does not need to be taken into account when working out what holiday pay a worker is entitled to.

Background

In the case of Lock v British Gas, the Court of Justice of the European Union had to consider whether commission payments should be taken into account when calculating holiday pay.

Facts

British Gas have a sales force which are paid a basic salary only along with commission on sales they achieve. In Mr Lock’s case, his average commission made up about 60% of his salary. When he took his holiday however he was paid only his basic pay. Mr Lock brought a tribunal claim for his outstanding holiday pay and the tribunal asked the Court of Justice to consider if commission should be taken into account when calculating holiday pay.

The Court of Justice decided that they would have to consider whether the commission was intrinsically linked to the work the employee had to carry out under this contract of employment. In this case the Court of Justice decided that the answer was yes. Therefore commission should be taken into account when calculating holiday pay.

How does this affect employers?

Employers can no longer pay staff who earn commission their basic salary only when they are on holiday. This is likely to create practical difficulties and extra costs for employers trying to administer annual leave.

In addition, employees may now make claims against their employers if they have failed in the past to take commission into account when calculating holiday pay.

What we can do for you

This is likely to cause employers significant difficulties if they have staff who earn commission. Employees may seek to take their holiday after a lucrative period when they have earned a lot of commission. It is also not clear what the reference period will be that an employer has to use to calculate holiday pay. We can help you with these difficult problems.

 

Trouble from a Badly Drafted Letter

Can you get into trouble from a badly drafted letter?

Can a badly worded letter get you into trouble?

Issue

All employers will be familiar with the concept that it is unlawful to treat a disabled employee unfavourably because of something arising from their disability unless the employer can show the treatment was justified (a proportionate means of achieving a legitimate aim). This is set out in the Equality Act.

Background

In a recent case, an employee brought a claim for unfair dismissal and disability discrimination due to a poorly written letter written to her by her employer.

What happened?

Ms Lawrence worked for CRI as a team leader and went on sick leave with depression. She was assessed by an occupational health specialist as suffering from post natal depression and she was therefore unable to return to work or even undertake any interim duties.

Her employer started a capability procedure but the letter inviting her to the capability hearing was badly drafted and read as if it were an invitation to a disciplinary hearing. Ms Lawrence chose not to attend the hearing as she was of the view that her employer had all the relevant information and after the meeting she was dismissed on grounds of ill health.

Ms Lawrence brought claims for unfair dismissal and disability discrimination.

The employment tribunal held that her dismissal was unfair and found specifically that the letter had intimidated her and put her off from attending. The majority of the tribunal also found that she had been discriminated against in breach of the Equality Act. The tribunal acknowledged that the decision to dismiss was a legitimate aim but they found that the decision was not justified as way the letter had been drafted prevented the employee from being consulted. She was awarded £750 for injury to feelings.

The Employer appealed the discrimination finding

CRI appealed against the discrimination finding and this was allowed by the EAT. It held that the tribunal had mistakenly taken into account the letter when deciding if dismissal was a proportionate means of achieving a legitimate aim. The letter was only part of a procedure and was not relevant to the reason why Ms Lawrence was actually dismissed.

Is there a lesson here for employers?

Whilst ultimately no discrimination was found, this is a useful reminder of the need to exercise care when drafting letters and to make sure they are suitably phrased to deal with the situation in hand. Using terminology relevant for a disciplinary process in a capability situation will always put an employer on the back foot and could protract a case, or, as happened here, lead to costly litigation.

What we can do for you

We can help you draft any letters or policies you need for any employment issue. We can also provide you with a disciplinary pack/capability pack of relevant policies and documents at a fixed price so that you have carefully written documents to use going forwards.