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