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Budget

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There were a number of measures of importance to employers in the budget, including a small change to the taxation of termination payments, following a government consultation last year. From April 2018, termination payments (for redundancy, for example) in excess of £30,000 which are already subject to income tax will also be liable for employer National Insurance Contributions.
“It has always seemed bizarre that although income tax became payable on amounts over £30,000, national insurance contributions did not,” commented employment partner Chris Holme, from law firm Clyde & Co. “The announcement that employers NICs will now be payable on these amounts seems quite logical. Unfortunately it will lead to an increased cost for employers, but we can’t see this having a huge impact on the number of settlements because the very important tax break for the employee (the first £30,000) it seems will remain – and that is to be welcomed.”
Other measures announced in the budget included a consultation in May 2016 on extending shared parental leave and pay to working grandparents, which will also consider options for streamlining and simplifying the existing shared parental leave procedures.
More details on the apprenticeship levy were also announced. Employers with an annual wage bill of more than £3 million will pay a 0.5 per cent apprenticeship levy from April 2017, but will also receive a 10 per cent top-up to their monthly levy contributions from the government, in addition to a £15,000 allowance they can offset against the levy payment.
The government’s Tax-Free Childcare scheme will begin rolling out in early 2017, and the existing Childcare Vouchers scheme will close to new entrants from April 2018.

National living wage

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From 1 April the new National Living Wage (NLW) is payable to workers aged 25 and over. The introductory rate is set at £7.20 an hour and is expected to rise to over £9 by 2020. BIS guidance on ‘Calculating the minimum wage’ has been updated to reflect the new wage. The Low Pay Commission will continue to advise the government on appropriate increases annually.
The government announced in February that over 90 employers had been ‘named and shamed’ for not paying the NMW. From 1 April the penalty for underpaying the minimum wage will double to 200 per cent of the arrears owed to each worker if the debt is not cleared within 14 days.
Just before the Budget in March, Chancellor George Osborne announced the following increases to the National Minimum Wage (NMW) from 1 October 2016:
•    Workers aged 21-24 rate rises from £6.70 to £6.95 an hour
•    Workers aged 18-20 rate rises from £5.30 to £5.55 an hour
•    Workers aged 16-17 rate rises from £3.87 to £4.00 an hour
•    Apprentices under 19 (or in first year of apprenticeship) rate rises from £3.30 to £3.40 an hour.
From 2017 both the NLW and the NMW will change on 1 April.
Phil Allen, employment partner at law firm Weightmans, commented that the size of the NMW increases was “something of a surprise”, and pointed out that from October they “will narrow significantly this age-related minimum pay gap”.
Chris Rowley, professor of human resources at Cass Business School predicted that the NLW would have a greater effect on small businesses, the accommodation, food services, retail and agriculture sectors, and on employers providing administrative and support services. “Worryingly, some firms have already looked at ways around the NLW, such as cutting benefits and perks, taking on younger workers, using apprenticeships and self-employment as convenient fig-leaves,” he said.
Kristie Willis, an employment solicitor at law firm BTMK, warned that employers attempting to minimise the NLW’s effects by recruiting younger employees “may amount to age discrimination.” She also thought that any businesses trying to engage contractors rather than employees in order to avoid paying it “should seek careful advice before doing this to ensure that any contractors are not actually considered workers under the NMW rules. If employers fail to comply, the overall maximum penalty is £20,000 per worker.”
Angela Wright, senior lecturer in human resources management at Westminster Business School, said there was a concern that a rise in the lowest pay rate could “trigger pay claims from others in the organisation, particularly those paid just above the new rate. Companies may find it beneficial to move to pay structures which use pay ranges, rather than the single point or spot pay rates used by some large retailers, so they can manage the introduction and development of the NLW more effectively.”

Prominent cases in 2015

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Discrimination law has been growing in scope, while travel to work time, holiday pay, employee misdemeanours on social media, and collective consultation obligations have all featured in claims before courts and tribunals this year – and some of these are still running.
Working time
The Court of Justice of the European Union decided in the case Federación de Servicios Privados del sindicato Comisiones obreras v Tyco that workers without a fixed place of work were on ‘working time’ when travelling to and from their homes to the first and last appointments of the day. The technicians were working on security installations in homes and commercial premises and had previously operated out of regional offices – but when these were closed the workers could be travelling up to three hours to get to that day’s calls. The employer had not previously counted the travelling time to and from the regional offices as working time.
The case has implications for employers of mobile workers with no fixed or usual place of work and employers will need to check these workers’ hours against the requirements of the Working Time Regulations 1988. The European court made it clear that whether this time should be paid or not is a matter for member states. In the UK, travel to and from the first and last appointments of the day does not count as working time for national minimum wage purposes, but case law has established that travel between appointments does.
Holiday pay
The case Lock v British Gas Trading is being heard by the Employment Appeal Tribunal this month and a decision is expected early in 2016. The appeal is challenging this year’s employment tribunal judgment that the UK’s working time regulations can be read to give effect to the European court’s judgment that holiday pay should include commission where this is part of normal pay. If successful, the government may be under pressure to amend the regulations. The appeal will not challenge the three-month gap rule established in the Bear Scotland v Fulton case which limits employers’ liability for underpaid holiday when there is a gap in a series of underpayments of more than three months. Since July claims for back pay for incorrectly calculated holiday pay are limited to two years under the Deduction from Wages (Limitation) Regulations 2014.
Social media
Two cases this year highlighted disciplinary measures arising from employee’s social media use. Biggin Hill Airport v Derwich involved the bullying of a temporary supervisor, first by being ‘unfriended’ by colleagues on Facebook, and then by having witch images placed on her computer as screensavers. The ringleader was nearly successful in her subsequent unfair dismissal claim because the employer had not followed its disciplinary procedure closely enough. Scottish Canals v Smithconcerned a waterways worker who made offensive remarks online about his managers and bragged about drinking while on standby (he claimed he believed his Facebook settings prevented the posts becoming public). The EAT found his subsequent dismissal fair and said such cases would need to be judged on their facts and by the ‘band of reasonable responses’ test.
Discrimination
Case law has been pushing the boundaries of discrimination law. The issue in the case Griffiths v DWPwas whether trigger points in an absence management procedure should be adjusted to take account of a 62-day disability-related absence. Both the employment tribunal and the EAT decided that the trigger point could not be continually extended as this would not help a disabled employee return to and remain in work. The case was heard again by the Court of Appeal in September, and judgment on it is expected early in 2016.
In EAD Solicitors v Abrams, the Employment Appeal Tribunal decided that a company set up by a retiring partner of the law firm to receive his profit share and supply a fee-earner (usually himself) to the firm when required, could bring an age discrimination claim. The Equality Act 2010 prohibits discrimination by one person against another, and in law ‘person’ can include companies.
In Tirkey v Chandock, the EAT decided the provisions on race in the Equality Act 2010 were broad enough to encompass characteristics determined by descent, which could include caste. The case went back to the employment tribunal where the claimant was awarded £183,773 for unpaid wages. The award for discrimination has yet to be determined.
In Chez Razpredelenie Bulgaria v Komisia, the Court of Justice of the European Union decided it was possible for someone to bring a claim for less favourable treatment because of a discriminatory measure arising from race, even though the claimant was not of the race concerned. The case involved a Bulgarian shopkeeper who complained that electricity meters were placed at an inconvenient height in an area that was prone to tampering. Her shop was in a predominantly Roma district of a city. She was not of Roma origin herself, but was able to claim indirect discrimination ‘by association’ with a protected characteristic.
Collective consultation
In May the European court revived the status quo on the meaning of ‘establishment’ in a collective consultation context. The case, USDAW v WW Realisation 1, was brought by ex-Woolworth employees who missed out on a protective award for the lack of consultation when the retailer closed because they were working in shops with fewer than 20 workers. The Employment Appeal Tribunal decided the words ‘at one establishment’ in the regulations should be disregarded and that the number of redundancies across the whole business should be considered. The liquidators appealed and won – but the Court of Justice of the European Union has warned that what is and is not ‘an establishment’ will depend on the facts of each case.

April enforcement dates…

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April enforcement dates, new legislation, and the latest case law from courts and tribunals
This month the shared parental leave rules reached the ‘expected week of childbirth’ trigger, the Small Business, Enterprise and Employment Act 2015 became law just before Parliament shut down for the general election, an employment tribunal released the first part of its judgment on the Lockholiday pay case, and new statutory pay and tribunal compensation limits increased.
April changes
The Easter weekend ushered in a whole raft of employment law changes. On 5 April:
•Shared parental leave rights applied to babies due, or children matched for adoption
•Parental leave, which is unpaid, was extended to parents of children under 18 years (previously the leave had to be taken before the child’s fifth birthday, unless the child was adopted or disabled)
•Additional paternity leave ceased to be available, although the rights continue until April 2016 to cater for parents of babies due, or children matched for adoption, before this date (usually the leave can only start 20 weeks after the child’s birth or matching, and must be taken within a year of that date)
•Statutory maternity, paternity, shared parental and adoption pay increased from £138.18 to £139.58.
On 6 April:
•Statutory sick pay increased from £87.55 to £88.45
•Limits on a week’s pay (used for calculating redundancy and unfair dismissal basic awards) increased from £464 to £475
•Maximum basic award for unfair dismissal and statutory redundancy payment rose from £13,920 to £14,250
•Cap on the compensatory award for unfair dismissal went up from £76,574 to £78,335.
Also from this date, new consolidating regulations governing the National Minimum Wage are in force. New NMW rates apply from 1 October 2015. The government is planning to launch a new online tool, called the National Minimum Wage Accelerator, which will compare rates of pay across regions, sectors and occupations, drawing on data collected annually by the Office for National Statistics.
New legislation
The Small Business, Enterprise and Employment Act 2015 became law on 26 March. It includes provisions on mandatory equal pay reporting for companies employing 250 or more, a ban on exclusivity clauses in zero hours contracts without a guaranteed weekly income, measures for clawing back exit payments from public sector executives who are then re-employed in the same area of work, a fine capped at £5,000 for employers that fail to pay compensation awarded by tribunals and an increase in penalties for employers not paying the national minimum wage.
Most of the changes need further regulations to bring them about, which will require the backing of the new post-election government. The equal pay reporting provisions stipulate the new regulations should be introduced by the end of March 2016.
Case law
The holiday pay case Lock v British Gas has returned to an employment tribunal following its referral to the European court. The tribunal followed a previous EAT decision which said that the UK’s Working Time Regulations 1998 can be amended to include commission when calculating pay for four (in other words, the basic holiday entitlement under EU law) out of the 5.6 weeks statutory leave UK workers have a right to. The tribunal also thought the employee in this case should be treated like a piece worker under the regulations, which would mean using a 12-week reference period when calculating holiday pay. However, exactly how the calculation will be done in this case is to be decided at a later date.
Employment partner at Irwin Mitchell Glenn Hayes pointed out that the circumstances in the Lock case were relatively straightforward and that ascertaining what an employee is owed will not be so easy where, for example, commission is paid annually, or is based in part on team performance. “We are likely to need further cases before we have answers to the more difficult questions,” he said.
Research conducted by Irwin Mitchell and polling company YouGov found that a quarter of employers surveyed expected staff costs to increase as a result of the holiday pay case law, and that half of the senior managers surveyed did not have a plan for dealing with the issue. From 1 July 2015, claims for backdated underpayment of holiday will be limited to two years under the Deduction from Wages (Limitation) Regulations 2014 (pdf).
The European court is due to deliver its judgment on 30 April 20015 on defining an “establishment” for collective consultation purposes in the ‘Woolworths’ case. In February the EU Advocate General gave a legal opinion on the case, which is called USDAW v WW Realisation 1, that ‘establishment’ was the local employment unit to which the redundant workers are assigned – in this case, the shop – and did not require employers to aggregate dismissals across the whole organisation to see if this triggered consultation requirements. The Court of Justice of the European Union does not have to follow the AG opinion.
The issue of tribunal fees is due to return to the courts in June as Unison has been given permission to appeal the decision of the High Court failing to grant the trade union a judicial review of their introduction

Spring employment law changes

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Regulations, statutory amendments, and case law continue to push forward developments in employment law
Compensation rates rise, first shared parental leave babies are born, and ‘vaping’ reaches the tribunal system
Tribunal awards

New tribunal compensation limits have been announced. The capped award for unfair dismissal increases from £76,574 to £78,335; the maximum basic award for unfair dismissal and statutory redundancy pay rises from £13,920 to £14, 250; and the limit on a week’s pay (used for calculating basic awards for redundancy and unfair dismissal) rises from £464 to £475. The new rates apply from 6 April 2015. Rate increases for statutory maternity, paternity, adoption and shared parental pay apply from 5 April 2015.

The Low Pay Commission, the body that advises the government on setting the National Minimum Wage, has released its suggested increases for this year. If the recommendations are accepted by the government the rate for workers aged 21 and over will rise by 3 per cent to £6.70 an hour; the rate for workers aged 18-20 will increase by 3.3 per cent to £5.30; workers aged 16-17 will see a rise of 2.2 per cent to £3.87; and apprentices’ minimums go up by 2.6 per cent to £2.80. Confirmation of the new rates may be in this month’s Budget and, if approved, the increases will take effect from 1 October 2015.

New regulations for the National Minimum Wage are in force from 6 April. The regulations consolidate 20 amendments that have been made since the minimum wage was first introduced and don’t represent any changes in policy.
Family leave

The pivotal ‘due date’ for the shared parental leave rules is 5 April 2015, which means the parents of babies born in the next weeks will be the first to benefit from the new arrangements, provided both parents qualify. The government says around 285,000 couples are expected to be eligible, but the government predicts a take-up of only 5,700 couples in the scheme’s first year.

Law firm Irwin Mitchell believes these estimates are too low. In a survey which it carried out of 2,000 working couples, it found that 66 per cent of male respondents said they would like to be their baby’s main carer in its first year, and sixty-one per cent said this would be the case even if it had a detrimental effect on their career. More than a third of men said sharing the leave and pay was the best option for them as their partners were on higher salaries.

Employment partner Glenn Hayes commented, “These figures may take businesses by surprise. The shared parental leave rules are designed to encourage more dads to play an active role in the upbringing of their children, but the financial situation in the home will be the greatest influence on who takes it up. Many businesses have been slow to prepare themselves for this important change and in doing so have left themselves open to the risk of mishandling requests and inviting claims for discrimination.”

Statutory paternity leave is unchanged by the new shared parental leave rules. The Labour party has recently pledged to double its current length from two weeks to four, and raise the statutory paternity pay rate by £100 to £260 a week, if it forms the next government. Law firm Norton Rose Fulbright’s head of employment practice Paul Griffin said that as this new rate would only reflect the national minimum wage, “it may not be that attractive”. He said that in a survey his firm conducted last year on shared parental leave, the key stumbling blocks were low pay levels during leave and “entrenched cultural resistance to men taking an active role in childcare. Eighty-nine per cent of respondents among employers predicted a low level of take-up. These new proposals in the same vein may, therefore, have limited impact.”

The advent of the shared parental leave rules has put the increase in parental leave next month in the shade. From 5 April 2015parents can take parental leave (which is unpaid) up to their child’s 18th birthday – previously it was only available until the child was five years old. Parents can take a maximum of four weeks in any one year.
Criminal records
On 10 March Section 56 of the Data Protection Act 1998 is in force (delayed from its predicted implementation date of December 2014). The provision makes it a criminal offence to require someone, perhaps a job applicant, to access and provide information on their criminal record. Employers have been known to make it a condition of employment. The practice is referred to as ‘enforced subject access’, and the Information Commissioner’s Office has now produced guidance on how the prohibition operates.
Case law

Two recent cases have broken new ground in employment terms. In the case Rubins v Latvia, the European Court of Human Rights decided that dismissing an employee for sending emails criticising management was an unjustified interference with the employee’s right to freedom of expression. The Equality and Human Rights Commission has published new legal guidance, prompted by the Charlie Hebdo murders in Paris, on freedom of expression to help address “muddle and misunderstanding” over rights in this area.

In the UK, an employment tribunal has heard the first case involving ‘vaping’, the term describing the use of e-cigarettes. It decided a catering company’s decision to discipline a catering assistant for vaping on school premises, in full view of pupils, was reasonable, but the tribunal raised a ‘point of concern’ over the school’s no-smoking policy neglecting to include e-cigarettes.

Holiday pay back in the spotlight, collective redundancy consultation rules assessed, and statutory pay rates rise

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Holiday pay back in the spotlight, collective redundancy consultation rules assessed, and statutory pay rates rise
The Lock case returns to a UK tribunal and the European advocate general decides on the meaning of ‘establishment’ in the Woolworth’s case
Holiday pay
The case which looked at whether commission should be included in holiday pay, Lock v British Gas, has
returned to a UK employment tribunal following a decision by the European court. The tribunal now has to
decide whether UK law can be interpreted in line with the court’s ruling, although its decision is not
binding on other courts and may be appealed.
The case involved a salesman whose pay was made up of 60 per cent commission. When he was on leave he earned no commission. He claimed this would decrease his future holiday payments.
The European court has confirmed that holiday pay needs to reflect “normal remuneration” and should put
workers in a position which is “comparable to periods of work” as regards salary. So where commission is a
significant part of workers’ wages, it needs to be included in holiday pay.
Colin Smith, an employment partner at law firm Brachers, commented “What is clear is that EU law requires
commission and bonus earnings that are intrinsically linked to the work done by a worker to be factored into
EU law holiday pay (the basic four weeks out of the UK’s 5.6 weeks’ entitlement). Whether this EU principle
can be shoehorned into the current wording of the Working Time Regulations is unclear. This whole area,
including overtime, is crying out for proper legislative intervention to bring clarity for employers as to
what holiday pay should be and how it should be calculated.”
Redundancy consultation
A legal opinion from the European Advocate General has been given on the collective consultation for
redundancy case, USDAW v WW Realisation 1. The case, which has been linked with two others for the opinion, stems from the closure of Woolworth’s stores and was heard in the Employment Appeal Tribunal in 2013. It has been referred to the European court by the Court of Appeal over whether UK consultation requirements, triggered when 20 or more redundancies are being made “at one establishment”, refers to individual work locations (shops, in this case) or the whole business.
The opinion, which may not necessarily be followed by the CJEU, suggests that ‘establishment’ does mean
individual workplaces within a business. Emma Zarb, employment lawyer at Taylor Wessing, said: “This is good news for employers. Should the ECJ follow the Advocate General’s opinion, businesses will be able to revert back to the standard approach taken since the seventies, and look at any planned redundancy in isolation.”
But Sarah Rushton, a partner at solicitors Moon Beever, urged employers to remain cautious about the opinion.She said that although it suggested that the pre-Woolworth’s position may prevail “matters are not entirely clear cut as the Advocate General also observed that it is conceivable that several shops operated by one employer within one shopping centre may be regarded as one employment unit, and that it is not necessary for an employment unit to have financial or administrative autonomy in order for it to be regarded as such.”
Nick Dent, employment partner at law firm Clyde & Co, said that the purpose behind the European collective
redundancies directive is “arguably to protect local communities from the impacts of mass redundancies in
that area. Employers have actually for the last year and a half been living with case law that says they have
to look at redundancy plans across all their sites when calculating whether they hit the 20-person threshold
for consultation. For large employers this means they would have constant consultation obligations, and many have been quietly ignoring the Woolworths case and only consulting locally where there are 20 or more
redundancies at one site – without much objection.”
Matthew Smith, a partner in Blake Morgan’s employment law team, said the opinion would come as a “great
relief to many employers. The opinion stresses that it’s the local impact of proposed redundancies which is
important, which is why it’s the number of affected staff at the local store or office which counts.
Employers going through redundancy exercises will still have to consult their staff on an individual basis
but the opinion suggests that, in many cases, they will be spared the formal requirements of collective
consultation, such as the need to elect and consult with employee representatives. Importantly, they’ll also
not need to worry about the significant financial impact of large ‘protective awards’ for failing to consult
collectively”.
Other cases to watch
Law firms are recommending that employers keep their eye on a number of cases this year which have
implications for the way they manage their businesses. These cases, which are all to be heard in the Court of Appeal, include:
•USA v Nolan, on the trigger point in an employer’s decision-making process when the obligation arises
to consult collectively
•Griffiths v DWP, on whether absence management policies should be adjusted for disabled employees
•Moran v Ideal Cleaning Services, on the meaning of ‘temporary’ where agency workers are concerned
•Unison v Vice Chancellor, on the lawfulness of the introduction of tribunal fees.
Statutory pay rates
The government has announced increases to the statutory pay rates (see the Welfare Benefits Uprating Order 2015). Statutory sick pay rises from £87.55 to £88.45 on 6 April 2015, and statutory shared parental, maternity, paternity and adoption pay rises from £138.18 to £139.58 on 5 April 2015. Shared parental leave and pay becomes available to the parents of babies due, or of children matched for adoption, on 5 April. All statutory shared parental pay will be paid at the lower rate of statutory maternity pay – there will be no initial six week enhancement as available under the statutory maternity pay provisions.
Tribunal compensation limits, on a week’s pay for calculating statutory redundancy pay and the basic award
for unfair dismissal, should come into force in the first week in April, although the new rates have yet to
be announced.
Dates for your diary
MarchForced subject access requests  become unlawful
AprilShared parental leave applies, statutory pay rates and tribunal compensation limits rise
May‘Fit for work’ service becomes fully operational
OctoberNational Minimum Wage rates change

Politicians shouldn’t focus on regulation to make our labour market work better, says CIPD

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Politicians shouldn’t focus on regulation to make our labour market work better, says CIPD

New report suggests that either more or less employment regulation is likely to have little impact on UK labour market outcomes

With less than 100 days to go until the General Election, the CIPD, the professional body for HR and people development, is warning that regulatory changes shouldn’t form the cornerstone of labour market election promises. According to new research, the UK’s flexible labour market is generally working well in comparison with our international peers, suggesting there isn’t a strong case for the next Government to either de-regulate further or to strengthen employment rights.The report, Employment Regulation and the Labour Market, indicates that the UK is highly unlikely to get much benefit from more employment regulation or from significant deregulation of the labour market, as it already performs well in comparison to many of its OECD counterparts on a number of measures. The link between the stringency of regulation and labour market outcomes such as productivity or job quality is in many areas either weak or complex and thus difficult to predict. Instead, the CIPD is urging policymakers to focus efforts on improving productivity through a much stronger focus on improving workplace practices while increasing awareness of existing rights and enforcing them more effectively.The report, commissioned by the CIPD, and compiled by The Work Foundation, considered the impact of employment regulation on broad labour market measures. The Nordic countries (Denmark, Sweden, Finland and Norway) and the Netherlands score consistently well and the UK sits comfortably mid-table or above on most indicators. However, there are some economies in Southern and Eastern Europe, such as Spain, Italy and Greece, where the data does suggest that labour market outcomes could be improved by greater liberalisation.The report indicates that despite the UK rating below average among OECD countries on measures of employment protection, the quality of employment in the UK compares more favourably with other countries than is often thought to be the case:

•In comparison to other OECD countries, the UK has a high share of permanent employment – 79% of UK workers in 2013 were on a permanent contract, compared to 77% in Germany and 65% in Italy
•Compared with the European average, the UK has a larger proportion of ‘good’ jobs and a smaller proportion of ‘low quality’ jobs. Overall 65% of jobs in the UK are rated as good jobs*, compared to just 54% in Italy, 50%  in France and 49% in Germany
•The average weekly hours worked by employees in the UK in 2013 was 36, which was in line with the OECD average. However the UK does have a comparatively high proportion of long hours jobs (those involving 50 hours or more a week) with 12% falling into this category
•In all, 84% of UK workers say they are satisfied with their working hours (EU 28 average 80%) and 77% report they are satisfied with their work-life balance (EU 28 average 74%). UK workers don’t seem much more fearful of losing their jobs than workers in countries with stricter employment protections (12-14% across UK, Germany, France and Italy) and over 40% said they were either optimistic or very optimistic they could find another job at a similar wage.

Ben Willmott, head of public policy at the CIPD said: “The public debate can often seem polarised between calls for greater regulation and employee protections from trade unions and, at the other end of the scale, employer organisations that want to reduce regulatory burdens on business. Our report shows that more or less regulation is not the issue. Overall, UK workers are more satisfied with their jobs, working hours and ability to progress than their counterparts in France, Germany and Italy. The solution to some of the challenges we face in the UK such as poor productivity and the high proportion of low paid jobs in the economy doesn’t lie in quick legislative fixes. We don’t need yet another employment bill or another zig-zag between more and less regulation. Instead, what we need is a fundamental review of the UK’s skills policy to understand how we can generate more high-skilled jobs and better progression routes for those in low-skilled and low-paid jobs. We also need a much greater focus on improving workplace practices in the areas of leadership, management and HR capability to increase demand among employers to invest in workforce development.”While the UK performs well overall, it performs comparatively poorly in three important areas – productivity, low pay and the integration of young people into the labour market.

  • The UK performs poorly on productivity compared to many of its international peers, however, there seems little association between labour market regulation and productivity. Between 1985 and 2013, relative productivity compared with the US fell in relatively lightly regulated UK, New Zealand and Canada. Among the more highly regulated economies, relative productivity fell in Italy and increased slightly in France and Germany
  • While the UK doesn’t have the highest share of low-paid jobs in the OECD, it does sit uncomfortably in the top quarter. The UK, US and Canada all have 20-25% of employment in low-paid work compared with 18% in Germany and 10% in Italy
  • The UK sits in the lower half among OECD countries in terms of its youth unemployment rate and in the bottom quartile among EU 28 countries on the youth unemployment ratio.

Willmott concludes: “It’s clear that the UK struggles on productivity, low-pay and unemployment among young people, but the wider picture is much more positive. The stage seems set for a good performance but something is missing in the delivery. We have good investment in ICT, above-average shares of knowledge-intensive industries and better quality employment than many European economies, including some with much higher productivity levels. Rather than meddling with regulation, a renewed focus on enforcing and improving awareness of existing rights among employers and workers is needed to help curb any abuses of employment rights where they do occur, as well as a much more explicit policy focus on the workplace to improve practice and productivity.”The CIPD has suggested the creation of a Workplace Commission to help support a more strategic approach across government to developing policy on the workplace with the objective of improving productivity and enhancing job quality where poor practice exists.

See http://www.cipd.co.uk/pressoffice/press-releases/labour-market-280115.aspx for original PR

‘Fit for work’ website and helpline goes ‘live’

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‘Fit for work’ website and helpline goes ‘live’, prohibition on forced subject access requests is delayed, and no appeal yet on holiday pay overtime case

Fit for work     

Assessment and advice service aimed at speeding ‘return to work’ for employees on long-term sick leave begins this month

The government is beginning to implement its new health assessment service, ‘Fit for work’. Previously known as the Health and Work Assessment and Advisory Service, the scheme stems from recommendations in the government commissioned report in to long-term sickness absence by Dame Carol Black and David Frost in 2011. This called for an independent assessment mechanism triggered when employees on sick leave had been absent from work for around 4-6 weeks, after which time statistics indicate the likelihood of them returning to work decreases.

There will be two main elements to the service:

•         health and work advice, provided through a helpline and website
•         an occupational health assessment, designed to identify all the obstacles preventing the employee returning to work, culminating in a ‘return to work plan’.

The telephone and website advice service are expected to be live by mid-December. The second part of the service, consisting of telephone based ‘biopsychosocial assessments’ conducted by health professionals, looking at issues which may be preventing a return to work from sick leave, will follow later. The service is not directly linked to benefits, but individuals referred to it receive the equivalent of a Fit Note at the end of their ‘return to work plan’ which may need to be provided as evidence in an application for benefits.

The service will be delivered in England and Wales through a private provider, Health Management Ltd, and in Scotland by the Scottish government.

Adam Bailey, head of the sickness absence review team at the Department for Work and Pensions, said the scheme was a “consent-based service, designed to provide help to the individual, the employer and the GP about what things might be appropriate to help that individual get back to work.” He said the service was intended to complement and not compete with employer’s own occupational health services, and was expected to be particularly useful for small and medium sized organisations with no occupational health service. He also said his department was committed to evaluating the service appropriately in order to arrive at a “significantly in-depth understanding of the drivers of sickness absence”.

The roll-out schedule for the service is still to be finalised but is expected to be completed by May 2015. Speaking at a Westminster Employment Forum conference recently Bailey said he appreciated that employers needed to know exactly how the service would operate and that his department was aiming at putting out full information for employers at least six weeks before they would be affected. He stressed that there would not be a ‘big bang’ start and “there will be time once the information’s out there before the service really ramps up”.

The new service’s operations director, Susannah Hoskins, emphasised that Fit for work was “not an occupational health service” but a “line of support, providing impartial expert health and work advice to employees, employers and GPs”. It was aimed at giving doctors short on appointment time and experience of occupational health issues the opportunity of early intervention in to what they expected could become long-term health issues for patients. “The service is very much work focused, but it’s covering ground that might not be covered with a GP because of time or knowledge constraints,” said Hoskins.

GPs will be encouraged to make early referrals to the service; employers can only make referrals after an employee has been absent on sick leave for four weeks. There are no self-referrals. The ‘return to work plan’ will be agreed with the employee, and the service will also need users’ agreement as to who sees which parts of the plan.

The service’s implementation coincides with recently released annual figures from the Health and Safety Executive, showing that almost 46 per cent of the half a million employees who developed a new illness over the past year had an illness related to stress, depression or anxiety and that 23.5 million working days were lost to all illnesses in the year from 2013-14.

Data protection

The government’s implementation of Section 56 of the Data Protection Act 1998, expected this month, has been delayed due to an unspecified “technical issue” according to the Ministry of Justice. The department says it is working urgently to resolve the problem and “remains committed to making the practice of enforced subject access illegal”.

Section 56 makes it an offence for employers to require individuals to make data subject access requests in order to provide the employer with evidence of whether or not they have a criminal record. Employers can only ask the Disclosure and Barring service for a criminal record check where the person concerned would be working with children or vulnerable adults, or where the job requires a high level of public responsibility (for example, doctors and lawyers). Ellen Temperton, a partner at Lewis Silkin, says the implementation of the provision “could have a wide-reaching effect on the recruitment practices of many employers.”

Case round-up

The trade union Unite has said it will not appeal the Employment Appeal Tribunal’s decision in the overtime holiday pay case, Bear Scotland v Fulton. The EAT’s judgment imposed limitations on a worker’s right to bring historic claims for underpayments as a series of unlawful deductions. Glenn Hayes, employment partner at Irwin Mitchell, said the announcement was “surprising as it was widely anticipated that the union would appeal … particularly as the EAT itself conceded that this aspect of its decision was ‘arguable’.

“We now have a bit more clarity in relation to the issue of holiday pay and overtime,” he continued, “but there are still plenty of uncertainties, and other claims are likely to be raised over the coming months and years. Businesses that do not start to adjust their holiday pay calculations could face claims for underpayment of holiday pay in the employment tribunal and should consider taking action now.” The law firm notes that employers can still legitimately refuse to adjust holiday pay where overtime is purely voluntary, ad hoc or where an employee can ‘reasonably’ refuse it.

Appeal tribunal – Overtime & Holiday Pay Rules

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Appeal tribunal rules that non-guaranteed overtime should be included when calculating holiday pay
Employers given favourable interpretation on how far back claims can stretch but may see this overturned by higher courts
Compulsory overtime

In a long-awaited judgment, the Employment Appeal Tribunal (EAT) has decided that ‘non-guaranteed’ overtime pay should be included in the calculation of holiday pay. This is overtime that an employee has to do if the employer offers it, but which the employer does not guarantee to provide. The EAT indicated that it was a significant factor in its judgment that the employees in the cases before it were required to work the overtime on a regular basis.
The EAT decision relates to a number of cases being heard together on this issue, now known collectively as the Bear Scotland case but previously known as Neil v Freightliner which has now been settled out of court.
The ruling is in line with earlier cases on the calculation of holiday pay, such as British Airways v Williams and Lock v British Gas, which gave rise to many reports suggesting that employers faced claims going back to 1998 when the Working Time Regulations came into force.
Employer liability
A positive note for employers is that the latest decision has put limitations on how far back employees can claim. The EAT said that if employees were claiming for a series of deductions from wages (one of the ways to claim for underpayment of holiday pay), the series would be broken if there is a gap of more than three months between those deductions. The EAT has also confirmed that the inclusion of non-guaranteed overtime pay in the calculation of holiday pay only applies to the four weeks’ paid leave employees are entitled to under EU rules, not to the additional 1.6 weeks’ paid leave they are due under the UK’s working time regulations. This increases the likelihood of there being a gap bigger than three months between underpayments, and law firm Pennington Manches says that claims for underpayments before the three month gap “will normally be out of time”.
Practical steps

The firm suggests that from now on employers should “consider including any variable payments which meet the test of ‘normal pay’ (a payment sufficiently permanent and intrinsically linked to the tasks the worker is required to carry out) in holiday pay.” This could include shift pay, commission, some bonuses and other variable payments “unless they are genuinely ad hoc, and will include overtime that is guaranteed by the employer or compulsory for the employee. The position regarding truly voluntary overtime is less clear and would definitely not be covered if not worked regularly.” Pennington Manches advises employers to use the 12 week reference period under the Working Time Regulations to calculate this type of holiday pay and also suggests companies should audit their ‘variable pay’ systems to assess the risk of claims and perhaps consider adjusting them for the future.

Law firm Trowers and Hamlins suggests that one possible option for employers trying to minimise their liability for increased holiday pay is to “offer voluntary overtime instead of non-guaranteed overtime, giving employees the option to refuse to work the extra hours. Bank staff or agency staff could then be used to cover periods of increased demand.”
Possible appeal

The EAT was asked to refer the way it has interpreted the time limits for bringing a claim for underpaid holiday pay to the European court. It refused that request, but did give permission for the issue to go to the Court of Appeal. Gearalt Fahy, partner at law firm Watson Burton, said the EAT judgment “may offer some welcome relief to employers” but said the possibility of an appeal may mean the “final outcome could be years, rather than months away.” Noele McClelland, head of Thorntons employment law team, thought an appeal could take as long as five years if it went all the way to the Supreme Court, and suggested employers may wish to act now.

“There are currently thousands of claims either going through early conciliation with Acas, or ready to be raised, which were waiting for the outcome of this decision,” she said. “Businesses may want to take advantage of this judgment and seek to settle any historic claims, which will most likely only have a small value, before an appeal court takes a different view.”

Glenn Hayes, a partner at Irwin Mitchell, pointed out that the judgment doesn’t deal with whether an individual can bring a claim for breach of contract for underpaid holiday in this context, and thought it was “likely that this point will be litigated as potentially employees have six years to pursue a civil claim.”

Christopher Fisher, employment partner at Mayer Brown, suggested that the “proactive approach the court has taken to interpreting domestic law in light of EU law will again raise some eyebrows. The need for legal certainty held little weight with the EAT and it was content to insert language into the current domestic legislation. This type of approach, which is now becoming more commonplace, means employers can be caught out even when they are abiding by the exact wording of domestic legalisation.”

Adam Lambert, employment partner at Clyde & Co commented that the EAT “has changed the wording of the UK legislation, interpreting it in a way that could not have been anticipated when the legislation came into force in the 1990s. Businesses that have diligently complied with UK law for years now have to be told they have got it wrong.”
Government taskforce

The government is to set up a taskforce, including employers’ groups such as the EEF manufacturers organisation, the Federation of Small Businesses and British Chambers of Commerce, to work out how to limit the effects of the judgment on businesses. Business secretary Vince Cable said the government “will review the judgment in detail as a matter of urgency”.

Acas has said it will update its advice leafleton holiday pay to reflect the judgment and in the meantime has urged employers, workers and trade unions to discuss any concerns arising from it “with a view to seeking agreement on any temporary measures or policy changes they feel may be necessary”.

Blurred lines – autonomy or control in social media?

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Managing electronic communications: a new challenge for human resource managers, Bernadine Van Gramberg , Julian Teicher and Anne O’Rourke, International Journal of Human Resource Management, Vol 25 No 16, September 2014.

Our increasing use of and access to information and communication technology – in particular social media – has thrown up new challenges for people management. This article reviews a series of Australian legal cases on disciplinary measures taken against employees for misuse of ICT and draws out implications for the HR profession.

For example, the authors cite a case in which an airline was found to have unlawfully dismissed an employee for distributing a union bulletin about a joint working group through the company’s email. While company policy did prohibit using notice boards for such communications, ICT policies made no such mention.

It also cites a case where dismissal was judged too harsh for an employee who made derogatory comments about a manager on Facebook. The judge viewed the content as ‘letting off steam and trying to outdo one another in being outrageous’, having ‘the flavour of a conversation in a pub or café’. It was also judged that it would be unclear to people not familiar with the company who was being discussed.

On the other hand, in another case, an employee was found to have been fairly sacked for posting offensive comments about his employer on Facebook, even though this was done out of work hours, on a personally-owned computer at home. A critical factor in this case was that, as well as the criticism being clearly about the employer, the person had at least 11 colleagues who were Facebook ‘friends’ and could see the comments. It was thus considered as if the comments had been made at the workplace.

Through comparison of these and other cases, the authors argue that the HR function has a central role to play in setting and clarifying policies and responding to infringements when it comes to employee uses of ICT.

They also argue that in doing this, HR needs to balance the two aspects of its fundamental role, namely ‘employee champion’ and ‘strategic partner’. In other words, on the one hand, HR needs to support and protect the business from employee misuse of ICT; but on the other hand, it needs to do so in a way that is seen to be fair and does not jeopardise employee performance.

They conclude by writing: ‘blurring of the boundaries between home and work and public and private has created unprecedented scope for organisations to regulate the lives of their employees’. The challenge this brings is not only legal in nature, but also a question of how employers ‘strike an appropriate balance between autonomy and control’.