Breaking news on backdating holiday pay claims

On 18 December 2014 the Government published a press release stating the action it intends to take to reduce potential costs to employers and give certainty to workers on their rights on holiday pay.

Last month we reported on the controversial and widely publicised judgment of the Employment Appeal Tribunal in the case of Bear Scotland v Fulton. Following this decision the Government set up a taskforce of representatives from government and business to assess the financial exposure employers face and how to limit the impact on businesses. We have recently hosted two successful workshops for local businesses on the matter discussing, amongst other things, what action the Government’s taskforce might take to protect UK businesses from the impact of this decision.

The Government’s announcement was that it is introducing the Deduction from Wages (Limitation) Regulations 2014, which will do two things:

1. Cap back pay claims at two years. This means that claims to an Employment Tribunal for unlawful deduction of wages (including underpayment of holiday pay but not including certain specific deductions such as SMP, SSP and guarantee payments) cannot stretch back further than two years from the date the ET1 is lodged; and
2. Explicitly state that the right to paid holiday is a separate statutory right and is not incorporated as a term in employment contracts. This is designed to prevent employees bringing breach of contract claims in the civil courts, where the limitation period is 6 years.

The overall effect of these regulations is to remove any chance employees have of bringing long-term claims for underpayment of holiday pay, either in the Employment Tribunals or civil courts.

The changes will apply to any claims made on or after 1 July 2015, so workers will still be able to bring claims under the existing arrangements for the next 6 months. This is intended to act as a transition period before the new rules come into force. It will be interesting to see if there will be a flood of claims in the next 6 months from employees with potential long term back pay claims who are willing to gamble before the regulations come into force.

The release also states that the taskforce is continuing to work through the issues and implications of the ruling. This suggests that this may not be the only action taken by the Government in relation to holiday pay. Indeed, there still remain a number of unanswered questions, as we have highlighted in our previous articles.

We will of course, continue to keep an eye on these issues and keep you informed and up to date.

If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.

Shared parental leave – regulations issued

As we hope you are already aware from our previous articles, the new right to take shared parental leave applies for employees who are expecting a baby or adopting on or after 5 April 2015. The regulations to deal with how the new right will work in practice were published at the end of November and came into force from 1 December 2014.

While some people are sceptical about how much take up there will be, it is important that all employers ensure they are aware of the new rules and ensure their policies are up to date.

In particular, the fact that the new rules potentially allow employees to take shared parental leave in chunks rather than one continuous period has caused concern for some employers due to the potential difficulty in arranging cover.

Shared parental leave can be made up of up to 50 weeks of leave, up to 37 of which can be paid, and the leave can be shared between eligible parents. One of the biggest differences from the current maternity and adoption leave system is that shared parental leave can be taken either as a continuous period or in periods of a week or multiples of complete weeks.

As long as the notification and eligibility requirements are met (which are dealt with in our previous article here), and there is still some leave left to take, parents can choose to opt into the shared parental leave regime at any time – in a maternity situation the mother would need to serve notice on her employer that she is ending her maternity leave. The employee is required to give their employer notice of intention to take shared parental leave at least 8 weeks before the leave is due to start. Up to three requests can be made and each notice can be for a single period of leave or for multiple shorter periods (such as 4 weeks’ leave followed by 4 weeks back at work, followed by another 6 weeks’ leave).

If multiple periods are requested, the employer has the right to decline the request or propose an alternative. If the request is declined the employee has to be allowed to take leave for a continuous period instead.

The problem with this is that the regulations allow up to 3 separate requests, each for a single period of leave, which the employer is not able to refuse. So although a request for multiple periods may be refused, an employee might achieve the same result by putting in 3 requests for single periods. This could mean that employers are left with as little as 8 weeks’ notice to arrange cover, which will cause concern for employers and which was one of the reasons why employers had been given the right to decline multiple shorter periods of leave.

The new regulations also deal with points such as terms and conditions during shared parental leave, the right to return, etc. There is provision for up to 20 keeping in touch (KIT) days per employee, which will work in the same way as those for maternity leave – these are completely optional for both parties, but have been found to be popular with employees and employers.

As we covered in our article in October, one of the questions many people are asking is whether shared parental leave has to be paid at the same rate as maternity leave. You can read our article on this topic here.

There is a lot for employers to get to grips with in terms of the new shared parental leave rules. We are planning to run workshops on the topic early in the New Year so please do watch this space for further information. If in the meantime you have any queries then please do not hesitate to get in touch.

If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.

Do new restrictive covenants require fresh consideration?

Many employers find that they have employees on old contracts of employment with unenforceable, inappropriate or even no restrictive covenants.  Can an employer simply get an employee to sign a new contract with fresh restrictive covenants and expect them to be enforceable?  This was the question raised in the High Court in the recent case of Re-Use Collections Limited v Sendall.

In this case, the High Court considered whether Mr Sendall, who was a senior employee with many years’ service, was bound by restrictive covenants in a new contract he signed just over a year prior to his resignation.  The Court held that he was not bound by the restrictive covenants in the contract of employment which he had signed, because he had not been given any ‘consideration’ for those covenants. Consideration is one of the essential requirements of a legally binding contract – it must be something of value passing from one party to the other.

As there had been no consideration given to Mr Sendall, the result was that he had no post-termination restrictive covenants at all.  The Court emphasised that, when an employer seeks to impose substantial new obligations on an existing employee “the consideration must compromise some real monetary or other benefit (promotion for example) conferred on the employee for the purpose of causing the employee to agree the restrictive covenant and that it must be substantial and not nominal”.

In this case, Re-Use Collections Limited argued that the covenants contained in the signed contract of employment were supported by consideration, because they were introduced as part of a package under which benefits were conferred upon Mr Sendall, including a pay rise, or alternatively that Mr Sendall continuing in employment after he had signed the contract, and that amounted to good consideration.  Those arguments failed for the following reasons:

Whilst Mr Sendall received a pay rise around the time that he signed the contract, there was no evidence that acceptance of that pay rise was expressly or impliedly made conditional on signing the new contract;

1. Whilst Mr Sendall was told about a new (enhanced) bonus structure during a meeting when he was asked if he was going to sign the new contract he had been sent, there was no evidence that Mr Sendall had been told that the bonus would be payable only if he signed the new contract. In the circumstances, the Court held that there was no link between the new bonus and the contract of employment.
2. Many of the other alleged new benefits relied upon by Re-Use Collections Limited were already enjoyed by Mr Sendall prior to him signing the new contract.
3. The argument that consideration was found in Mr Sendall’s continuing employment after the contract was signed failed because the contract was not put forward on the basis that a refusal to sign it would, or might, lead to dismissal, or any other lesser sanction. Things might have been different if Re-Use Collections Limited had given Mr Sendall a deadline, after which specified consequences might flow.

So what are the lessons for employers?  Employers must not assume that simply issuing a new contract, even if it is signed by the employee, will mean that the employee is bound by its restrictive covenants.  The best approach is to expressly tie acceptance of the new contract of employment containing enforceable covenants to a new benefit for the employee. Promotions offer a good opportunity to get new contracts signed up. Where an employer wishes to introduce new post-termination restrictions more widely, pay rises can also be a good opportunity provided that the pay rise is expressly stated to be conditional upon acceptance of the new contract.

This case acts as a cautionary reminder to employers that simply issuing new contracts to employees may not be the complete answer to ensuring that they have the protection they need from the potential actions of former employees.  If you are looking to introduce new contracts, and particularly if you are seeking to introduce new restrictive covenants, it is sensible to take specialist legal advice.

If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.

What is the new Fit for Work service?

A recent review of sickness absence in Great Britain identified that a lack of access to occupational health services, particularly for small and medium-sized businesses, was a significant issue in preventing employees from returning to work. As we mentioned in our article earlier this year, the Government has responded by introducing the relatively unknown ‘Fit for Work’ service (http://fitforwork.org/) which is due to launch this month with a phased roll-out due to complete by May 2015.

This service, provided by Health Management Limited on behalf of the Department for Work and Pensions, aims to help employees and employers manage sickness absence and reduce the length of time employees take off sick which, in turn, should cut sick pay costs.

There are two aspects to ‘Fit for Work’:

–          An advice service which is live now where  employers, employees and GPs can access a telephone helpline and website

–          An assessment service which will be rolled out on a regional basis, to be completed by May 2015.

In order to access the assessment part of the service, employees will normally be referred by their GP when they reach, or are expected to reach, more than 4 weeks’ sickness absence. They will then undergo an occupational health assessment and a resulting return to work plan will then be shared with both their employer and their GP. Our current understanding of the service is that most assessments will be over the telephone and only in certain circumstances will a face to face meeting be recommended. The telephone assessment should take place within two working days of the referral and last between 45 minutes and an hour.

In order to entice employers to use the scheme or other occupational health services, the Government are introducing a tax exemption of up to £500 a year per employee for medical treatments recommended by this new service or an employer-arranged occupational health service. Normally, a payment of this nature would be treated as a taxable benefit in kind, liable to income tax and employer National Insurance contributions.

The value of this service remains to be seen; however there are already a number of issues we are aware of which could limit its effectiveness:

–          Fit for Work is a voluntary service and requires consent from all parties concerned. An employee could refuse to consent to the referral, which would put an end to the process. Employees cannot be forced to attend the assessment, but without the information the employer can only make a decision based on the information available. In order to try to deal with this issue, employers may wish to include provisions within their employment contracts or policy documents that require employees to consent to such assessments.

–          Employees also need to consent to the disclosure of the return to work plan to their employer. If disclosed, it is then entirely down to the employer as to whether it follows any of the recommendations made in it. Of course, tribunals may not look favourably on employers who choose not to follow such recommendations when dealing with sickness absence, but this will depend on the circumstances, including the size and resources of the employer.

–          There may be issues with the telephone service; for example, employees may not wish to discuss personal problems with a stranger over the telephone and the assessor may only have limited information about the problem. The assessor may not necessarily have access to the employee’s medical history, for example.

–          It is not known yet how much involvement employers will have in the production of the return to work plan. It is important for employers to be involved when dealing with sickness absence as they may be in the best position to know what adjustments could be made to facilitate a return to work.

Our understanding is that this service is not designed to replace existing occupational health services. We envisage this scheme being more useful as a supplement to existing services (perhaps for more basic absence issues) or for small to medium sized businesses who perhaps haven’t used an occupational health service before or who do not have easy access to a provider. We have some concerns about the effectiveness of this new service and will be keeping an eye on it in future.

If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.

Don’t be a twit – watch what you tweet!

As many of you will be aware, social media in the workplace is one of my particular areas of interest, and although it is something we are increasingly being asked to advise on, there is relatively little binding case law guidance (as most cases have not progressed to appeal).

The case of Game Retail v Laws has just been decided by the Employment Appeal Tribunal (EAT) and the judgment made interesting reading.

Mr Laws was dismissed for gross misconduct by Game Retail after he made offensive comments on his personal Twitter account, most of which were not work related. He argued that his dismissal was unfair.

At the Employment Tribunal his unfair dismissal claim succeeded – in particular, the Tribunal relied upon the fact that his Twitter account was a personal one with no reference to his employer, that the tweets were made in his own time, and that Game Retail did not have a policy stating that inappropriate social media use may result in dismissal.

Game Retail appealed to the EAT. They argued that it was immaterial that the Twitter account was a personal one. Mr Laws had, as part of his role as a risk and loss prevention investigator, ensured that his personal Twitter account followed the Twitter accounts of 65 of the company’s stores, and those stores also followed him back. His tweets had not been set to private and he was therefore well aware that the stores (and potentially also customers of the company) could see what he had tweeted. In these circumstances, Mr Laws cannot have had a reasonable expectation that his tweets were private.

The EAT agreed and upheld the appeal. They concluded that the Tribunal had not properly considered whether Game Retail had acted reasonably, and that Mr Laws’s tweets could not properly be considered private. There was no need for Game Retail to have to prove that offence had been caused. The EAT declined to give any particular guidance on social media use in the workplace, saying that it would not be helpful, and that it was really a question of applying the normal ‘band of reasonable responses’ test.

In some ways the outcome in this case contrasts with the Tribunal level case we covered in October (Blue v Food Standards Agency) where Facebook activity outside work was not found to be grounds for dismissal. However, the circumstances of the cases are very different, not least the nature of the comments made. In both cases however the employers did not have policies governing social media use outside work. Although Game Retail ultimately succeeded in defending this case, they would have been in a better position had they ensured they had a properly drafted social media policy in place which specified their expectations for social media use (both within and outside work) and what the consequences would be if the expectations are not met.

If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.

Agency Workers Regulations – a cautionary tale for employers

Under the Agency Worker Regulations which came into force in 2011, agency workers have the right to equal pay and other basic working conditions as comparable permanent employees after a 12 week qualifying period.  If they are not offered this, liability will normally fall on the recruitment agency, but if the agency which supplied the worker to the hirer can show that it acted reasonably to ensure equal treatment, including by seeking relevant information from the hirer, it will be the hirer and not the recruitment agency which will be liable if the agency worker’s claim is successful.

The Agency Worker Regulations have resulted in surprisingly few Tribunal claims, as we reported back in 2012, but in the recent case of Miss G Stevens v Northolt High School and Teach 24 Limited, Georgia Stevens was supplied as a music teacher to Northolt High School through Teach 24 Limited.  She brought a claim in the Employment Tribunal alleging that she was not being given the same basic working and employment conditions as a comparable direct recruit after her twelve week qualifying period and this claim was upheld.  She was awarded compensation of more than £10,000.

The Employment Tribunal had to decide how payment of the compensation should be apportioned between Northolt High School and Teach 24 Limited.  It considered that the repeated requests from Teach 24 Limited to the school for comparator information amounted to reasonable steps to obtain relevant information for the purposes of a defence to Georgia Stevens’ claim. Consequently, Northolt High School was held to be liable for the full amount of the compensation.

This case is a useful reminder to those who use agency workers that they should not ignore or avoid requests from the recruitment agency for information regarding comparators who are directly employed.  As Northolt High School discovered, doing so can prove costly.

If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.

Early conciliation – is it working?

As we have previously reported, people who want to bring a claim in the Employment Tribunal have, since May this year, had to go through ACAS early conciliation.  The idea behind the scheme is that cases which would otherwise go to Tribunal can be settled between the parties at an early stage.  It is only once the employee has taken part in early conciliation that they will be allowed to issue proceedings in the Tribunal.  Once they have taken part in early conciliation then, assuming that there is no settlement, ACAS will issue a reference number to the potential claimant.  They then need to insert that number on their Tribunal claim form, and if there is no number the Tribunal will simply reject the claim.

There has never been any obligation on the employer to participate in the process, and anecdotal feedback from ACAS officers suggests that quite a few refuse.  However, what was not clear was whether there was any obligation on the claimant to at least go through the motions of trying to reach a settlement.  The Employment Tribunal in Cardiff has now held in the case of Thomas v Nationwide Building Society [2014] that even if the claimant has absolutely no intention of trying to reach a settlement, by contacting ACAS and completing the early conciliation form they are deemed to have taken part in the early conciliation and as such are entitled to be issued with a reference number to allow them to submit a claim to the Employment Tribunal.  This approach does seem to rather undermine the whole concept of early conciliation, but it may also simply recognise the employee’s pragmatism that in this particular case the employer would not have wanted to settle anyway!  It would of course be open for the employer to seek costs against the employee if she subsequently lost her claim, and her lack of good faith in the early conciliation process would no doubt be a factor which the Tribunal would take into account in determining whether to award costs, and if so how much to award.

What is also interesting about this case is that initially Mrs. Thomas’ claim had been rejected because she had failed to go through the early conciliation process and did not have a reference number, but the Tribunal allowed her to comply with the procedure retroactively.  This seems to be completely at odds with the intention of the early conciliation process, and it will be interesting to see whether that approach would be upheld on any appeal.

It is still very early to assess the impact of early conciliation, and of course there have been several other changes to the Tribunal process in the last couple of years which make statistical comparisons of the number of claims filed between different periods difficult.  However, initial indications from the Southampton Tribunal region suggest that 17% of cases brought to early conciliation settled, and that of the cases where a reference number was given so as to allow the potential claimant to proceed to Tribunal, 19% of potential claimants indicated they would not do so.  It is not clear why – some will probably be because the claims have little merit, but it is also likely that the high fees which need to be incurred in order to lodge a claim in the Tribunal will deter many claims which may have merit.

If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.

Getting Christmas cover all wrapped up

Every year it seems the Christmas decorations and the adverts on television appear earlier. As soon as we have packed away our Halloween costumes and the last of the fireworks disperse in our skies, the Coca-Cola advert announces that “holidays are coming” and from that moment on the build up to Christmas begins. Christmas shoppers are now out full force and festive parties are being booked up. Many employers, especially those in retail and services, will be putting plans in place to cope with this seasonal rush, including the drafting in of temporary workers. We thought it would be useful to summarise some of the options available to employers and some of the main pitfalls to bear in mind.

Agency Workers

Research has shown a reduction in the use of agency workers, perhaps due to the introduction of the Agency Worker Regulations 2010 (AWR), covered in our ebulletin prior to their introduction in 2011 (see our previous article here). Despite this, agency workers remain a popular and flexible option for covering staff shortages during busy times of the year. For those who need a reminder, we have provided a brief summary of the main provisions of the AWR below:

From day one of the assignment

– Agency workers are entitled to access the employer’s facilities, such as staff canteens, childcare and transport.

– Agency workers have the right to know about permanent positions on offer with the employer.

After completion of 12-week qualifying period

– Agency workers are entitled to the same basic working and employment conditions as its permanent workforce including terms and conditions relating to:

– pay (and overtime rates)

– annual leave

– night work

– rest breaks and rest periods

– duration of working time

For those employers bringing in agency workers for a short assignment over Christmas, these rights should not pose too much of a burden. However, businesses bringing staff in for longer assignments over 12 weeks may face additional costs as a result of the AWR. To address this issue, employers may wish to use fixed term contracts (discussed below) or consider engaging staff from agencies who use the ‘Swedish Derogation Model.’ This is an exception within the AWR and provides that the right to equal treatment with regards to pay will not apply to an agency worker who has a permanent contract of employment with the temporary work agency and is paid a minimum amount between assignments when they are not working for the employer. This may allow employers to retain a pay differential between temporary workers and its permanent staff.

Fixed term contracts

For employers who wish to avoid the use of temporary work agencies, recruiting staff on a fixed term contract is another solution. These may be most suitable where an employer wants staff working regular hours for a fixed period over Christmas. Employers should ensure fixed-term staff are provided with clearly drafted terms and conditions of employment setting out their working hours and how the contract is brought to an end.

Fixed term employees are protected by the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 which are designed to prevent less favourable treatment of fixed-term employees as compared to permanent employees (unless the less favourable treatment can be objectively justified).

For more information regarding fixed-term employees, see our ‘facts and fictions’ article here.

Casual Workers

Casual workers offer a highly flexible option to employers and are always popular for seasonal cover. In particular, we have seen an increased use of zero-hours contracts as a way of engaging casual workers without creating an ‘employment’ relationship.

Recent media coverage  has focused on the minority of employers who abuse zero-hours contracts by removing the ‘flexibility’ element by including exclusivity clauses and requiring workers to work when asked. Employers should keep in mind that in a genuine zero-hours contract, flexibility must be a two way street. Workers should be allowed to refuse work and should be allowed to work for other companies.

Our update about Government plans to deal with abuse of zero hours arrangements can be found here.

If you expect Christmas staff to work regular hours over Christmas, then you should consider the alternative arrangements discussed above. If you are offering regular work which is regularly accepted, you run the risk of creating an employment relationship between the employer and worker which has a number of legal implications. This is something we can advise on – please contact us if we can help.

If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.

 

 

Evening Workshop – Help with Holiday Headaches

As detailed in our recent article, the latest development in the linked cases of Bear Scotland v Fulton (and others) has potentially very significant implications for employers and employees. In order to help you understand what this could mean for your organisation, we are running two workshops to help with your holiday headaches! The other session is a breakfast workshop on 27 November, details of which are here. Read more

Breakfast Workshop – Help with Holiday Headaches

** Please note that this event is now fully booked –  however we are still taking bookings for the evening workshop on 4 December **

As detailed in our recent article, the latest development in the linked cases of Bear Scotland v Fulton (and others) has potentially very significant implications for employers and employees. In order to help you understand what this could mean for your organisation, we are running two workshops to help with your holiday headaches! The other workshop is an evening session on 4 December, details of which are here. Read more

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