Category: Employment Law

111A of the Employment

Since 29 July 2013, employers and employees have be able to engage in confidential, “off the record” discussions about terminating employment thanks to s. 111A Employment Rights Act 1996 (“ERA”).  This has become known as “protected conversations”. However, my experience is that very few employers – or employees – know exactly when these protected conversation can take place – and indeed in what situations they can’t.  

Without prejudice

Nearly everyone has heard of the common law principle of without prejudice.  This still exists and essentially prevents any discussions that are made in a genuine attempt to settle a dispute from being raised in front of a court or being used as evidence.

However, this principle has required updating as without prejudice rules state that a dispute must be on-going before the “without prejudice” rules kick in.  In employment law terms, there are many times when an employer may wish to raise the issue of parting ways with an employee before any dispute has actually arisen.  Indeed, case law tells us that even where an employee has raised a grievance, this is not necessarily enough to be considered as an on-going dispute. 

Protected conversations

s.111A ERA introduced a statutory form of the without prejudice rule but with one main difference; the parties did not need to be in a dispute for it to kick in.  There are however some restrictions on when s.111A can be used.

1. 111A protection can only be used:
2. In claims of “ordinary” unfair dismissal – this means that if the claim is one of automatic unfair dismissal (such as a dismissal related to whistleblowing), one of discrimination claims or a breach of contract claim, s.111A protection cannot be relied upon.
3. Where there is no improper behaviour – this can be for example threatening the employee to accept the terms offered (including pressuring them or not giving them sufficient time to consider), harassment, bullying or discrimination.

Ideal uses

Protected conversations are ideal when an employer may not be happy with an employee’s performance, but wants to give that employee the option of entering into a settlement agreement instead of going through a formal performance review. Indeed, any party can broach the subject of a settlement agreement and an employee may likewise wish to raise the option of a settlement agreement to end their employment.

For any further information or advice on protected conversations or terminating employment, please contact Ilinca Mardarescu.

The Supreme Court dismissed Pimlico Plumber’s appeal recently paving the way for a deluge of claims from “workers” in the gig economy.  The judgment upheld the Employment Tribunal’s and Court of Appeal’s finding that Mr Smith, a plumber, could be classified as a “worker” in employment under the Equality Act.  Workers have less protection than employees but are still given certain rights such as holiday pay and sick pay.

The Supreme Court held that Mr Smith was a “limb worker” because Pimlico Plumbers were clearly not his client and there was an element of control by Pimlico over him in that (amongst other things) they told him to wear a uniform and controlled when and how much he was paid.  This was despite the fact that he had been paying tax as self-employed and was entitled to refuse work offered to him.

It is thought that many gig-economy workers will now bring claims on the back of this.   In reality the case concentrated very much on its facts and simply upheld the view that the Employment Tribunal and Court of Appeal were entitled to make the decision made based on the facts.  It does little to change current case law with regard to worker/employee status. However, workers in the gig economy are likely to be bolstered by this victory.

Holiday pay case a game-changer

A recent decision in The Court of Justice of the European Union  (CJEU) in the case of King v Sash Windows Workshop is a potential game-changer – and should worry all business – big and small.

The case involved Mr King who was a commission-only self-employed salesman.  Interestingly, he had even been offered an employment contract a while ago but had declined it.  Despite this, when the relationship turned sour Mr King challenged his position and made a number of claims against Sash Window including one for unlawful deduction of wages in respect of holiday pay.  He stated that he had never taken his full holiday entitlement as he could not afford too due to the fact it was unpaid.  The position had always been that he was not paid holiday pay on the presumption that he was self-employed.  As it turned out, the Employment Tribunal disagreed and found he was a “worker” for the purposes of Working Time legislation.

The case ended up at the CJEU who have made it clear that it is the employer’s job to ensure it is meeting all of its obligations in relation to any relevant legislation – ignorance is no defence.  It also clarified that workers who are denied their entitlement to holiday pay do not have to actually take a period of (unpaid) leave before making a claim as that would potentially penalise employees and cause them to suffer financial hardship.  Instead, workers can make a claim for untaken leave on termination.  This in effect circumnavigates any limitation period and enables workers to backdate their claims for a number of years.  Indeed, Mr King’s claim was for 13 years of unpaid holiday pay.

For companies that rely on the “self-employed” this case could have an enormous financial impact due to the number of years a worker can go back.  It may also be that the Employment Appeal Tribunals’ decision earlier this year in Bear Scotland (which stated that claims for arrears of holiday pay will be out of time if there has been a break of more than three months between successive underpayments) may well need revising.

Precisely how the unpaid leave will be calculated is not yet clear (where a worker does not take the holiday due to it being unpaid but instead works and therefore earns whilst working; how would the resulting loss be calculated?).  The case has now been remitted to the Court of Appeal where it is hoped we will find out more. But the case will have a significant impact not only on Uber and others in the “gig economy” but for smaller businesses too.

Ilinca Mardarescu

Head of Employment

Vento bands increase for discrimination cases

Earlier this month, the President of the Employment Tribunals in England & Wales and Scotland announced a rise in the potential compensation employees will receive if they are successful when bringing a case of discrimination.

This followed a consultation on how to re-value what is known as the Vento bands. These are known as such due to the case of Vento v Chief Constable of West Yorkshire Police. Here, the Court of Appeal identified three bands of compensation for injury to feelings awards to be used in discrimination cases. At the time, the lower band was set at £500 to £5,000 for less serious cases; the middle band was set at £5,000 to £15,000 for cases that did not merit an award in the upper band; and finally the upper band which was set at £15,000 to £25,000 for the most serious cases (with the most exceptional cases capable of exceeding £25,000). The Court of Appeal made this decision on 20 December 2002 and the Tribunals have been following the Vento guidelines ever-since.

A more recent case of Simmons v Castle considered the issue of inflation and made the decision that the way to factor in any inflation issues should be to always start with the original Vento bands and apply to those figures the appropriate inflation index value and then add the 10% uplift and then round up or down to the nearest £100.

The consultation which took place recently concentrated only on the issue of how to re-value the Vento bands for inflation whilst also incorporating the Simmons v Castle uplift.

The announcement confirmed that the increases will be as set out below, and that this will be reviewed in March 2018 and every year thereafter.

• Lower band (less serious cases): £800 to £8,400
• Middle band: £8,400 to £25,200
• Upper band (the most serious cases): £25,200 to £42,000
• Exceptional cases: over £42,000

Certainly a regular review will mean a greater degree of certainty which should be welcomed by most and no doubt this will see the awards steadily being increased year on year.

Ilinca Mardarescu

Head of Employment

Inequality at the BBC? The gender pay gap & what it tells you

 

With the BBC having recently published its list of top earners, issues such as the gender pay gap is hot topic right now.  And rightly so.  No-one wants a world of inequality and we all expect, in this day and age, to be treated fairly at all times, and especially in our working environment.  However, is the press misleading us as to the relevance of the gender pay gap reports that have already been published?  And what does the recent BBC list mean in practice?

 

Since the introduction of the Equal Pay Act in 1970 (now  consolidated into the Equality Act 2010), employees have had the right to compare their working contract and pay with another employee in the same or similar role who is of the opposite sex to them.  There have been numerous cases being brought in the Employment Tribunals and companies who have tried to eschew the equal pay ethos have paid heavily; not simply in financial terms but with their reputation also.

 

The Gender Pay Gap legislation however was introduced with a slightly different purpose in mind.  It was all very well and good comparing like for like but often employers would argue that two jobs were not substantially comparable and get away with paying vastly different (and unequal) sums.    Now, under the new Gender Pay Gap legislation, companies are required to report and publish information which is available for all to see.   The information provided will not compare anyone’s specific wages but is intended to show:

1. The difference in average earnings between men and women
2. The difference in average bonus payments between men and women
3. The proportion of men and women in each pay quartile
4. Whether a company complies with the regulation and how it compares to other companies

 

A lot of companies have already published their reports and the information is there for all to see on the Government’s dedicated site, https://www.gov.uk/government/news/view-gender-pay-gap-information.  It makes for interesting reading (if you are into that sort of thing) and it may be worth a look if you are planning on joining any of these companies in the near future.  But what does it really tell you about the companies concerned?

 

Women are still more likely than men to work part-time; at least for a short period of time. It is still relatively common (although some would also now say an enviable luxury) for the mother to choose to stay at home and be the care-giver when raising a young family.   There are rafts of legislation which have been introduced to specifically target and encourage men to share the child rearing responsibilities, but, in my experience at least, the lack of take-up or interest “on the ground” with the Shared Parental Leave legislation is not at all surprising.

And as long as this is due to a genuine choice made within the family for their own reasons rather than any lack of support in women returning to work, then that is perfectly acceptable.  Furthermore, traditionally women’s roles have been in the more administrative and clerical areas.  It is right that young girls now should be encouraged to reach for the stars, but that does not take away from the fact that many women are still in these roles – and indeed may be perfectly happy to be.

 

All of these factors need to be taken into account when looking at the gender pay gap figures.  If the average pay for women at a company is lower than a man’s but the roles within that same company for women encompass part-time working roles largely taken up by women, the company need to be congratulated on allowing flexible working.  Not publicly shamed.  If more men receive bonus but men are the ones in the more targeted sales roles for instance, then it is right they should be rewarded accordingly.

 

The one and only thing that should be looked at within any of these companies is whether there is any barrier to women going into these roles, should they chose too. As long as companies encourage women to apply for and take on any role within its organisation, then that company has done its job.

 

As to the BBC list, they have refused to comment on individual’s wages – perhaps rightly so.  But it strikes me that each individual’s pay will be based on the various contracts they do for the BBC, the shows they are on, how many hours they work each day/week/month, whether they do any research themselves, and even how good their agent is perhaps!

 

So whilst I encourage wholeheartedly the legislation contained in the Equality Act amongst others and the drive to ensure our young girls fulfil all their potential, what I want to see is equal treatment in the workplace and the ability to choose where and how you work.  The ability for women to choose either to take on more senior, management roles or work part-time, whichever works best for them.  And that may not always mean the same pay.  Perhaps flexibility is more important to some.  And that is fine too.  It is not for companies, or indeed governments, to pressure women either way simply to make their figures look better.   We need to veer away from the hysteria caused by such figures or the recently published BBC “rich list” and look to what is causing the disparity. Because back in the real world, what I am sure all women want is equal pay for equal work alongside the opportunity to work as they wish in whatever role they wish; not preferential treatment.

Ilinca Mardarescu

Head of Employment

Modern Slavery

The Modern Slavery Act 2015 came into force on 29 October 2015.  It consolidates offences relating to slavery and trafficking.  S.54 provides that all organisations with a turnover of over £36 million will need to publish a statement each year relating to the action they have taken to ensure that their business and supply chains are slavery free.

However, it’s not just companies with a turnover of over £36 million that need a modern slavery policy.  The big companies have to check their suppliers have them, who in turn ask their suppliers and so on, all the way down the line. For this reason, smaller business are now finding they are being asked to provide a copy of their relevant policies when bidding for work or supplying a client within the normal course of their business.

What is it?

Slavery and human trafficking comprises any of the following:

• The offences of slavery, servitude and forced or compulsory labour and human trafficking
• The traffic in prostitution
• The trafficking for exploitation
• Conduct that would constitute an offence as above if the conduct took place in the UK.

The statement

The Home Office has issued guidance on what it would expect to see as part of the requisite statements.  They have confirmed statements should be:

• Written in simple language to ensure that it is easily accessible to everyone.
• Succinct but cover all the relevant points and link to relevant publications, documents or policies (as may be relevant in the different types of businesses).
• In English (but may be provided in other languages that are relevant to the supply chain).

The slavery and human trafficking statement must include either a statement:

• Of the steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place in any of its supply chains, and in any part of its own business; or
• That the organisation has taken no such steps.

There is no prescribed form or length requirements for the statement.  The slavery and human trafficking statement may include information about:

• The organisation’s structure, business and its supply chains;
• The policies and procedures it has put into place to avoid slavery and human trafficking;
• Its due diligence in relation to its supply chains to ensure they are acting to avoid slavery and human trafficking;
• The parts of its own business and/or supply chains where there is a risk of slavery and human trafficking taking place, and the steps it is taking to assess and manage that risk;
• Its effectiveness in ensuring that slavery and human trafficking is not taking place (measured against such performance indicators as it considers appropriate for its industry);
• The training about slavery and human trafficking available to its staff.

What needs to happen?

Although these provisions have been in force since 2017, commercial organisations with a financial year that ends before 31 March 2016 did not have to make a slavery and human trafficking statement in respect of that financial year.  This has meant that the effect of this legislation is only now beginning to be felt by smaller business.  As part of these obligations therefore, the larger companies will need to check that their suppliers have a modern slavery policy in place too.

Larger businesses will by now be starting to send out questionnaires to their suppliers (and they to their suppliers and so on). The questionnaire will require copies of a Modern Slavery policy, possibly a Whistleblowing policy and details of training, management and information regarding how the business is run and what each businesses does to ensure they themselves do not fall foul of the laws relating to this. If businesses are not fully prepared, they may find that the larger companies do not want to risk doing business with them until they are.  Certainly, any businesses which tender for work will find they need to provide this information as part of the tendering process.

For any assistance with drafting or implementing an Anti-Slavery Policy and associated procedures, please get in touch with :

Ilinca Mardarescu

Head of Employment

Fixed Retirement Age

Compulsory retirement ages in contracts of employment used to be the norm.  Now however, inserting such a clause would need careful consideration. Indeed, unless it can be shown that a fixed retirement age can be objectively justified (which can be extremely difficult to do), an employer risks falling foul of the Equality Act.

Since the abolition of the default retirement age (DRA) on 6 April 2011, employers must now make a conscious decision as to whether or not to have a fixed retirement age. The answer seems to have been that some employers may decide to have a fixed retirement age for only some (more specialist) roles within their organisation.  But all will need to consider carefully the requirements before enforcing any such policies.

When can an employer justify having a fixed retirement age?

Compulsory retirement is prima facie direct age discrimination. However, unlike other forms of direct discrimination under the Equality Act 2010 (EqA 2010), direct age discrimination can be objectively justified if it is “a proportionate means of achieving a legitimate aim”.

If an employer wishes to have a fixed retirement age, it must be able to show that:

• It is intended to meet a legitimate aim;
• Having the particular retirement age meets that aim; and
• It is proportionate to use that retirement age as a means of meeting that aim.

If an employer cannot meet the above criteria, the only other way to defend an age discrimination claim based on compulsory retirement would be to show that the age limit on the job in question falls within the “occupational requirement” (OR) defence (i.e. police, firemen, pilot etc).

Legitimate aims

A legitimate aim must correspond to a “real business need”. While in indirect discrimination cases, there is no requirement for the employer to show that the legitimate aim has any wider public interest or social policy aims, it appears that when attempting to justify direct age discrimination, the employer needs to be able to show that its legitimate aim has some social policy or public interest benefit.

This can be seen in the case of Seldon v Clarkson Wright & Jakes & Anor in which a law firm argued that retiring partners at a certain age was objectively justified on the grounds that the business needs to be able to recruit and retain “new blood” coming through.   The Supreme Court found that where such default retirement age policy is introduced and where it is “founded on legitimate social policy aims”, imposing a certain retirement age could be lawful.

It is clear that however that a blanket compulsory retirement age is highly unlikely to work in most business. If the decision to enforce a compulsory retirement age is made, there should be clear and detailed thinking to see if it would stand up to the requirements for it to be a proportionate means of achieving a legitimate aim.

For more information or for any employment law advice, please do not hesitate to contact

Ilinca Mardarescu.

Employment Law in 2017 – Important Changes

2017 is expected to bring about a few important changes to employment law.

The most anticipated will be the Supreme Court’s decision on Brexit which is due soon. Whilst no immediate employment law changes will happen on the back of this, there will undoubtedly be much speculation as to how Brexit will affect employment law generally in the future.

Similarly, the 2016 Budget and thereafter the Autumn statement both confirmed that changes would be introduced to the tax treatment of termination payments.  The government are consulting on the draft bill now with the changes expected to be implemented at a later date, namely in April 2018.

More immediate changes for employment law in 2017 expected are:

• The current weekly rate of statutory maternity/paternity/adoption/shared parental leave pay (which is currently £139.58, or 90% of the employee’s average weekly earnings if this figure is less than the statutory rate) is being increased to £140.98. This will take affect from 2^nd April 2017.
• The minimum wage for workers over 25 will increase to £7.50 in April, an increase of 30p on the rate introduced last year. There will be smaller increases for 18-20 and 21-24 year olds, to £5.60 and £7.05 respectively.

• From 6^th April, statutory sick pay (SSP) is also increasing from £88.45 to £89.35. This is, as usual, subject to minimum eligibility requirements.

• Gender pay gap reporting. Employers with 250 or more employees will be required to produce gender pay gap reports by April 2018 for the financial period 2016/2017.

• Large employers (with an annual payroll of more than £3 million) will be required to pay a 0.5% levy on their total pay bill, by 6^th April 2017. Larger employers will then be able to access the fund (plus a 10% top-up from the government) to fund accredited apprenticeships within their business. Different rules will apply to smaller employers who are not required to pay the levy – in which case the government will fund the cost of apprenticeships if they contribute 10%.

• Salary-sacrifice schemes will start to be phased out with no new schemes to be introduced from April 2017 and the ones set up prior to this date will be protected until anywhere between 2018-2021 depending on the type of scheme in place.

– Ilinca Mardarescu

For any advice on implementing the changes or any other employment-law related enquiry, contact us here or call us on 01753 486 777.

How will the Autumn Statement affect Employment?

Salary Sacrifice schemes

There were a number of employment related implications in this year’s Autumn Statement. The most controversial of these was perhaps the removal of tax-free incentives on “salary sacrifice” schemes. The schemes allowed employees to “buy” a certain number of employment perks by agreeing to a cut in their wages in return for certain benefits. The schemes would often be used to provide tax-free benefits such as medical insurance, free gym membership, health checks and mobile phone contracts.

The advantage to employees was that any tax and NI would be calculated on their lower, agreed wage discounting the “sacrifice” they have made in lieu of these perks. This could mean substantial savings and even meant some employees who would have been classed as higher earners could sacrifice enough of their wages for these perks thereby taking them into the lower tax bracket. For employers too, the salary sacrifice schemes meant they would benefit by being able to discount the portion of the salary which had been sacrificed when calculating national insurance payments. The more employees a company had, the more beneficial the scheme was and substantial NI savings could be made by larger companies offering a salary sacrifice scheme.

These schemes were never formally part of any Government policy however. The method grew organically some years ago and HMRC allowed the practice to continue unhindered. Recently, the Treasury has looked at the practice and has concluded that it is losing out on tax revenue as a result. The changes to the salary sacrifice scheme have been expected.  However, keeping in line with policy, enhanced employer pension contributions (to registered pension schemes), childcare benefits, cycles and the cycle to work scheme and ultra-low emission cars will be exempt from these new changes.

National and Living wage

Increases were announced, effective from April 2017, as follows:

The National Living Wage for those aged 25 and over will increase from £7.20 per hour to £7.50 per hour.

The National Minimum Wage will also increase:

• for 21 to 24 year olds – from £6.95 per hour to £7.05
• for 18 to 20 year olds – from £5.55 per hour to £5.60
• for 16 to 17 year olds – from £4.00 per hour to £4.05
• for apprentices – from £3.40 per hour to £3.50

And the Chancellor confirmed that he will spend £4.3 million on helping small businesses to understand the rules and on cracking down on employers who are breaking the law by not paying the minimum wage.

Raising the tax-free personal allowance

The Chancellor confirmed that the tax-free personal allowance will be raised to £11,500 in April 2017.  He further confirmed that ‘despite challenging fiscal forecasts” they will continue to raise the personal tax-free allowance to £12,500 by the end of the parliament.

The Chancellor also confirmed that the point at which the higher rate of income tax will kick in will increase from £43,000 this year, to £45,000 in 2017-18

Employee Shareholder Status

‘Employee shareholder’ status (ESS) was introduced in September 2013 as a new category of worker status. Employee shareholders could forgo a number of employment protections, such as the right to a redundancy payment and protection from unfair dismissal, in return for a minimum of £2,000 of shares in the employer’s business. There were various tax benefits to these schemes and employers used them to reward those in management or other employees who have contributed to the growth of a business. These schemes will now be abolished in situations where parties enter into the agreements on or after 1 December 2016. For ESS arrangements entered into before 1 December 2016, the tax advantages will continue to apply. The removal of this benefit is largely in response to evidence that ESS was being used for tax planning.

Termination Payments

The Autumn Statement has confirmed that the first £30,000 of a termination payment will remain exempt from income tax and National Insurance. However, from April 2018 termination payments over £30,000, which are subject to income tax, will also be subject to employer NIC. Following a technical consultation, tax will only be applied to the equivalent of an employee’s basic pay if their notice is not worked, making it simpler to apply the new rules. This means that certain post-employment and/or bonus payments will not be classed as earnings. However, the government has said it will monitor this change and address any further manipulation.

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