A regular bulletin that provides updates affecting employment issues and the related legislation and best practice.
In the latest issue of our employment bulletin we look at the issues of taking a 'break' as it is one of the most common questions asked by workers during a shift. But is an employer in breach of the Working Time Regulations 1998 if a worker doesn't take a break, even when they haven't asked for one? This was the interesting point raised in the recent case of Grange v Abellio London Limited.
To stay up to date with this bulletin and see others - sign up to any of our free newsletters.
Deregulation as an industrial strategy: Could it happen and can employers be trusted?
Tuesday 28th March 2017
Share this article:
Employment Law Update - Special Issue - March 2017
Deregulation: Promise or threat?
These are unique political times. Brexit is likely to mean hard Brexit. A firmly Eurosceptic government is determined to deliver the verdict of the 52%. Britain will not stay in the single market and it will withdraw from the jurisdiction of the European Court of Justice. The official opposition is suffering an existential crisis but warns darkly of the UK becoming a bargain basement tax haven.
Britain will almost certainly emerge from Brexit with the government having greater control (even full control) over employment law and the rights individuals enjoy in the workplace. The message so far has been that these rights are unlikely to come under threat. The Conservatives are positioning themselves as being at the service of the working people. There is a sense of obligation towards the workers who voted in numbers for Brexit. David Davies has been at pains to emphasise that there are no circumstances in which the government will rip up workers’ rights.
However, the two years set aside for Brexit talks is a long time. The talks will also play out against the fundamental shift in policy likely to play out in America led by a US President elected on a promise to reduce the burden of regulation on US firms by 75%.
As President Trump implements his promise to let business do business and if aligning more closely to the US becomes a central part of the Country’s future planning then will deregulation increasingly be seen as an opportunity – particularly if we cannot get the deal we want in our negotiations with the EU over the next two years?
The tempting promise behind deregulation is that when business does well, everyone gains: there are more jobs for workers, more profits for investors, more orders for suppliers……
In the context of employment law, the list of laws which are seen as being bad for business seems well established. The Working Time Regulations which seek to restrict the ability of the business and worker to decide between themselves how many hours are worked each week and when. TUPE which is felt to hinder fair competition by requiring a successful bidder for a contract to take on the employees of the outgoing contractor (even though dissatisfaction with those employees may be the very reason why the contract is up for grabs). Discrimination law which brings a threat of uncapped compensation against employers regardless of their size and resources. Also agency worker regulations which require equal terms for workers once they clear what can be argued as an artificial 12 week term of engagement.
So does employment law step aside allowing greater freedom in the workspace so that new ways of working can operate to the benefit of both employer and worker? Or would deregulation inevitably result in exploitation. Once the government starts picking at employment rights, is the likely outcome that workers will find themselves losing fundamental protections long term for little in return? Is this a prospect that many employers would actually welcome?
An absence of trust – campaigns which explain why
If there is uncertainty about whether employers can trusted in a deregulated world then this can be attributed in a large part to recent high profile campaigns targeting companies who are perceived to have played the existing system to the disadvantage in particular of unskilled, lower paid workers. Aspects of this debate have played out very publicly and not just because employment lawyers need a case of the month for their blogs and bulletins.
An early example of this related to zero hours contracts which came under the public spotlight in 2013 resulting in a government review in June that year in response to criticisms of their use from politicians, trade unions and the media.
Employers associated with the contracts at the time, Sports Direct, Cineworld even Buckingham Palace suffered reputational damage. The sense was that in the absence of regulation (contrasting to other EU countries such as Belgium, France and Spain) employers had taken advantage of this form of contract, using the label of zero hours to try and avoid making a commitment to provide paid work to their staff whilst still requiring their employees to take unsociable hours offered at short notice. The sense was that zero hours contracts allowed an abuse of the balance of power in the employment relationship – particularly where low paid / low skilled employees were required to commit to exclusivity of employment without any promise of regular work in return.
Ultimately zero hours contracts became an important campaigning issue in the 2015 general election with all parties making commitments to control their use. Following the election of David Cameron’s government, guidance aimed at employers was published and regulations implemented giving employees the right not to be unfairly dismissed or subjected to a detriment for failing to comply with an exclusivity clause. The concerns around zero hours contracts have not gone away though and there is still a sense that they can be exploited to the employee’s disadvantage. Employers may no longer have exclusivity clauses, but where a zero hours worker consistently turns down an offer of work by the employer they will inevitably find themselves behind those who are more readily available when it comes to the allocation of work. The threat of being penalised for not showing sufficient flexibility remains.
We then saw the very effective campaign brought in respect of national minimum wage abuses, targeting Sports Direct in particular over the course of last year. Strict working practices including keep employees on site unpaid at the end of every shift contributed to staff receiving an effective rate of £6.50 per hour against the then statutory rate of £6.70. The reputational damage could not have been much greater with the publication in July of a highly critical report from the cross party Business Innovation and Skill Committee describing working practices at the site of one of the country’s largest employers in Dickensian terms. The Committee sign-posted its concerns for the future – again pointing to the risk of larger employers exploiting vulnerable lower paid workers;
The way the business model at Sports Direct is operated, in both the warehouse at Shirebrook and in the shops across the country, involves treating workers as commodities rather than as human beings with rights, responsibilities and aspirations. The low-cost products for customers, and the profits generated for the shareholders, come at the cost of maintaining contractual terms and working conditions which fall way below acceptable standards in a modern, civilised economy. There is a risk that this model - which has proved successful for Mr Ashley - will become the norm.
Some steps have been since been taken by Sports Direct in response, offering 12 guaranteed hours in contracts to directly employed casual workers, making good back pay in respect of the NMW breach and placing a worker on the Company’s Board for greater transparency. However, considerable damage has been done and the new contracts have not been made available to over 4,000 agency workers who work at the much criticised Shirebrook warehouse.
Most recently and ongoing are the current cases on self-employed status and the gig economy playing out in the courts and involving businesses such as Uber and Citysprint and most recently developed in February’s well publicised Court of Appeal decision of Pimlico Plumbers and Mullins v Smith.
The legal issue at play relates to the different categories of employment status; employees who are entitled to the full range of employment protections, the truly self-employed operating as businesses in their own right who are not protected with the nebulous category of worker with access to certain rights (in particular relating to working time and discrimination) landing somewhere in the middle.
It is the sense that the number of individuals working on a self-employed basis is growing that has led to greater attention being paid to the gig economy and what it means to undertake casual work in the UK today. 15% of people working in the UK’s are self-employed. Again the extent to which employers can be trusted to not take advantage of inequality in the bargaining position is at issue. Campaigners point out that for many and despite the descriptor of “gig”, this is not free spirited work. Being engaged around piecework, deliveries etc in particular means variable wages, little protection and “flexibility” as a trap rather than stepping stone to a career that “works” for the individual.
Certainly, when looking at cases of taxi drivers and cycle couriers being tracked and directed by their employers across demanding working days, the criticism is that large businesses are seeking to enjoy the benefit of an on call worker doing 70 hour weeks without the burden of downtime and unexpected hitches.
But the Pimlico Plumbers case illustrates some of the greater subtleties around this particular issue. The individual involved, Mr Smith, was not a low paid or unskilled worker. As Pimlico pointed out, he was a highly paid and skilled tradesman with a relatively strong bargaining position in the market. He reportedly earned £80,000 per annum and enjoyed the relevant tax advantages of being self employed. The case illustrated the extent to which any status issue is a fact specific analysis and the truth was that many of the Company’s practices seemed to point to this being an arrangement which was indicative of self employed status; the contractual documentation confirmed Mr Smith as being an independent contractor, he was under no express contractual obligation to accept work and the Company was not obliged to offer him work, he had to provide his own materials and tools and he bore a significant proportion of the financial risk (if a customer failed to make payment then he would not be paid for the job and liability arising from his services lay with him). However, critically, the Court pointed to there being no express right for Mr Smith to pass jobs on (pointing to a requirement for personal service on his part). Also, the Court was willing to look beyond the immediate contract to the reality of the working relationship and noted in particular that the Company’s working practices manual stated that normal working hours were 40 hours per week pointing to an expectation on the part of the parties as to the basis on which Mr Smith was engaged.
This decision points to a direction of travel in this and the other gig economy cases with the Courts being unwilling to leave individuals “exposed” as contractors without enforceable rights. The basic question to ask is whether a Company such as Pimlico can genuinely be considered a client or customer of the contractor’s business or whether Pimlico should in fact be seen as the business itself with the contractor an integral part of its operations. It is clear that the Courts / Tribunals will intervene to make sure that individuals with long term working arrangements should not be unable to access NMW, paid holidays and, above all from a public policy perspective, discrimination protection.
Modern Employment Practices – the future debate
In a debate on whether employers can be trusted if deregulation is adopted as an industrial strategy, the gig economy cases are certainly more nuanced than often presented. The online gig economy is growing fast and there must be scope for genuinely freelance, platform driven and innovative ways of bidding for and winning work. There is a much more tech savvy workforce out there which expects to place digital tools firmly at the centre of their working environment.
Indeed the Taylor Review of Modern Employment Practices (due to report back in summer 2017) has been set up specifically to consider these issues; the implications of new models of working on the rights / responsibilities of workers as well as on employer freedoms and obligations. The terms of the review recognise the perception that the gig economy model can lead to workers losing out on all dimensions, providing flexible labour without much in the way of benefits in return. However, new forms of working are identified as an opportunity with a diverse ecology of business models to be supported. The review talks of achieving a balance of rights and responsibilities. Expect attempts to drag definitions of employment status into the online age. At least in this context, it appears that employment law is not going to be abandoned completely. The terms of the report indicate that there will be some attempt to ensure that rights which are driven by status track modern ways of working.
And so where will we be in 2020 and beyond?
At the beginning of this article we raised the question of whether the world of employment could be deregulated and, if so, could employers be trusted to ensure that their employees and workers get a fair deal.
Despite high profile campaigns such as in relation to zero hours contracts and minimum wage abuses, the starting point for the vast majority of employers remains that its workforce is an asset. Most of our clients believe that they treat their employees and workers very fairly – they take pride in the fact that they do so. Our clients rarely ask how they can implement the minimum. They want to know how they can retain and add to the skill-base they have got.
Also employers have generally responded positively to initiatives such as gender pay reporting and the extension of flexible working. Engagement is undoubtedly at the forefront of most HR / People strategies. Asking whether employers can be trusted perhaps misses the fact that whilst the inter-relationship between businesses / organisations and the people they engage to work for them is seldom straight forward, no organisation with a forward thinking HR strategy is looking to win a race to the bottom.
And cases like Pimlico Plumbers perhaps illustrate that employers do not necessarily want less regulation – in fact, what we often experience as advisors is that whilst our clients can be frustrated by certain aspects of employment law, what they really want is certainty so that they can make business decisions knowing exactly where they stand. Most employment law is well established. The fundamental rights on unfair dismissal and the main forms of anti-discrimination legislation have been in place for 40 years. Employment law may be far from perfect but is there is little appetite for a total vacuum.
Whilst these unique political times allow fundamental questions to be asked about how the state implements its industrial strategy there is also perhaps a sense coming out of the decisions of the past 12 months of the need to be careful what you wish for. Having voted for Brexit, employers and employees may want change to be implemented more gradually than total deregulation with a focus on bringing employment law up to date with new ways of working rather than discarding it entirely.
If you would like to discuss any issues you may have about the impact of brexit on employment law please do not hesitate to contact:
"Can I take my break now, please?"
Thursday 8th December 2016
Share this article:
Employment Bulletin - Issue 312
Tel: 0161 836 8952
Autumn Statement 2016: A look at the key points for employment law, pensions and the recruitment sector
Thursday 24th November 2016
Share this article:
Employment Bulletin - Issue 311
Chancellor of the Exchequer Philip Hammond delivered his first (and last) Autumn Statement since taking over from George Osborne following June’s Brexit referendum. From next year, the Autumn Statement will become the main Budget, announcing tax changes well in advance of the start of the tax year. From 2018 onwards, the Spring Statement will respond to the forecast from the Office for Budget Responsibility (OBR).
The Chancellor confirmed earlier government announcements, that George Osborne’s pledge to eliminate the budget deficit by 2019/20 would be abandoned. Borrowing is back. The dominating feature in this year’s Autumn Statement focused on raising productivity and setting out the support needed to grow the economy, as Britain prepares to leave the European Union.
Key announcements for employment law include:
- The unemployment rate was 4.8% in the three months to September 2016 – an 11 year low. The OBR forecasts that the number of people in employment will continue to increase, reaching 32.3 million in 2021.
- Following the recommendations of the independent Low Pay Commission, the government will increase the National Living Wage (NLW) by 4.3% from £7.20 per hour to £7.50 per hour in April 2017.
- From April 2017 employee and employer NI thresholds to be equalised at £157 per week.
- From April 2017 the tax and employer NI advantages of salary sacrifice schemes will be removed. Following consultation, arrangements relating to pension savings, childcare, the cycle to work scheme, and ultra-low emission cars, will be excluded from this change.
- At the Budget, the government committed to removing the tax benefits of disguised earnings for employees. The government will now extend the scope of the changes to employers and the self-employed.
Key announcements for pension law include:
- The Money Purchase Annual Allowance will be reduced to £4,000 from April 2017, to prevent inappropriate double tax relief.
- A new market leading savings bond to be launched with an interest rate of 2.2% gross and a term of three years.
- The ‘triple lock’ on the state pension will remain until the next Parliament, but will be reviewed to tackle the challenges of rising longevity and fiscal sustainability.
If you would like to discuss any issues on these announcements or to discuss any employment and pensions law matter please contact:
Recruitment sector update:
The government re-affirmed that it will be tackling the use of disguised remuneration schemes by employees and employers and removing tax benefits related to disguised earnings. This is consistent with previous Budget communications, but the government has gone on to confirm that it will:
1. “strengthen sanctions and deterrents and take further action on disguised remuneration tax avoidance schemes”;
2. “…reform the off-payroll working rules in the public sector from April 2017 by moving responsibility for operating them and paying the correct tax to the body paying the worker’s company. The government believes public sector bodies have a duty to ensure that those who work for them pay the right amount of tax…”;
3. ”in response to feedback during consultation, the 5% tax free allowance will be removed for those working in the public sector, reflecting the fact that workers no longer bear the administrative burden of deciding whether the rules apply”; and
4. “The government is investing further in HMRC to increase its activity on countering avoidance and taking cases forward for litigation...”
These points are confirmed in the Treasury’s Blue Book (published to accompany the Autumn Statement yesterday).
What does this mean for those running businesses in the recruitment sector or for persons working in the sector?
Firstly, the proposed IR35 tax legislation changes are going ahead. This means that businesses that pay personal service companies (e.g employment businesses) and operate in the public sector will need to scrutinise the supply chain and check compliance arrangements, given the tax responsibilities that will be imposed on them.
Secondly, the 5% tax-free allowance that personal service companies currently benefit from will be removed for contractors working in the public sector when the new rules are introduced.
Thirdly, it appears that HMRC will receive more funding to help them counter tax avoidance and this is likely to result in additional scrutiny being applied to recruitment businesses and contractors working in this sector.
Please also check out our Employment section update (above), which also comments on the confirmed increase to the National Living Wage from April 2017 and changes to salary sacrifice arrangements.
If any assistance is needed in considering these recruitment sector matters or re-visiting contractual arrangements in light of the announcements, then please do not hesitate to contact Emma Clarke or Paul Chamberlain:
The latest on holiday pay – clarity on what amounts to a 'week’s pay'
Wednesday 9th November 2016
Share this article:
Employment Bulletin - Issue 310
Two recent cases have both clarified and expanded upon what amounts to a ‘week’s pay’ for the purposes of calculating statutory holiday pay.
Susan McKenzie looks at the decisions with some useful points to note for employers.
The case of British Gas Trading Ltd v Lock looked at whether results-based commission payments should be included when calculating statutory holiday pay and the decision in Brettle v Dudley Metropolitan Borough Council considered the same for voluntary overtime.
British Gas Trading Ltd v Lock
The Court of Appeal has upheld the Employment Tribunal and EAT’s decisions that there is no obstacle to interpreting the Working Time Regulations (“WTR”) so as to include results-based commission payments in the calculation of holiday pay, thus giving effect to the decision of the Court of Justice of the European Union that contractual commission payments must be taken into account when calculating holiday pay.
The Court of Appeal considered the ‘underlying thrust’ of the WTR, namely that the WTR were enacted solely and deliberately to implement the Working Time Directive (“the Directive”). The Court decided that it must therefore be presumed that the UK government intended to fulfil all of its obligations arising under the Directive. This could be achieved by reading a new subsection into the WTR.
Far from bringing total clarity to the calculation of holiday pay in cases involving commission and/ or bonuses the Court of Appeal made it clear that its judgment was only focussed on the specific case of Mr Lock. The Court declined to provide answers as to whether commission and/ or bonuses should be included in holiday pay in all cases and what should be the appropriate reference period for calculating the commission/ bonus aspect of holiday pay.
Points to Note
Employers are advised to keep a watching brief on developments in this area. The Court of Appeal decided that the wording the Employment Tribunal had suggested should be read into the WTR was too wide. In addition, we understand that British Gas will seek leave to appeal the decision to the Supreme Court.
- As well as further clarifying what should be included in the calculation of “holiday pay” this case also shows that although the UK has voted for Brexit until we actually leave the EU the Courts are required to apply the European interpretation.
Brettle v Dudley Metropolitan Borough Council
Five lead claimants brought a case in the Employment Tribunal for unlawful deductions from wages in respect of 56 employees employed by a directorate which carried out housing repairs.
The five employees worked different shift patterns, with different degrees of regularity to the overtime worked. They argued that their holiday pay should have included an amount in respect of voluntary overtime, voluntary standby allowances and voluntary call-out payments.
The Employment Tribunal considered the existing case law in relation to holiday pay and working time, in particular Williams, Lock and Bear. Particular regard was given to the fact that an employee should not be deterred from taking annual leave, and that which is normally received constitutes ‘normal pay’. The Tribunal decided that the payments received were intrinsically linked to the work required to be done under the contract by the worker. Notwithstanding the fact that the additional overtime was voluntary, where overtime was regularly worked, this was to be included in normal pay and should therefore form part of the employee’s holiday pay.
Points to Note
As a non-binding tribunal decision the Brettle case is of limited value; however it does give a further indication as to the direction in which holiday pay cases are going.
Provided the voluntary overtime is worked with ‘sufficient regularity’ an employee’s holiday pay ought to reflect that the additional work has become part of their normal work. It will be for employers to decide whether to include those payments in their calculations going forward, or wait for the issue to be decided at the EAT.
- This only applies to the first four weeks of annual leave (which are derived from the Directive), not in respect of the additional 1.6 weeks provided for under the WTR.
Need advice or wish to talk to us?
If you need advice on holiday pay calculations please do not hesitate to contact us.
Working Time seminar - 23 November
The impact of these cases, and the issue of working time more generally, will be discussed in depth in our Working Time Seminar held in Brabners’ Liverpool office on 23 November 2016. For more information on the seminar and to book your place please click here.
Settlement agreement unenforceable due to lack of mental capacity
Wednesday 9th November 2016
Share this article:
Employment Bulletin - Issue 310
In the case of Glasgow City Council v Dahhan, the Employment Appeal Tribunal (EAT) held that an employment tribunal had jurisdiction to decide whether a settlement agreement which satisfied the requirements of section 203(3) of the Employment Rights Act 1996 was nevertheless unenforceable because the Claimant lacked the mental capacity to enter into it.
This decision follows from the case of Industrious Ltd v Horizon Recruitment Ltd (in liquidation) and Vincent which held that an employment tribunal had jurisdiction to determine whether a compromise agreement was unenforceable because of misrepresentation.
Facts of the case
Mr Dahhan was employed as a teacher by Glasgow City Council (“the Council”) and brought tribunal claims for direct discrimination, harassment and victimisation on the grounds of race.
The parties entered into a settlement agreement under which Mr Dahhan gave up all claims arising from his employment at the Council. The tribunal was subsequently advised by Mr Dahhan to withdraw his claims.
Mr Dahhan later wrote to the tribunal requesting reconsideration of the withdrawal of his claims arguing that he had lacked capacity to instruct a solicitor and to make decisions at the time the settlement agreement was entered into.
An employment judge held that the tribunal had jurisdiction to set aside the settlement agreement on the grounds that it was invalid because Mr Dahhan lacked the capacity to contract at the time he entered into it. The matter then went to the Employment Appeal Tribunal where the Council’s appeal was dismissed.
Section 203 Employment Rights Act 1996 (ERA 1996)
Section 203(1) of ERA 1996 provides that any provision in an agreement is void in so far as it purports to preclude a person from bringing any proceedings under the ERA 1996 before an employment tribunal.
Section 203(2) of ERA 1996 provides that subsection (1) does not apply to certain types of claim if the conditions set out in subsection (3) are satisfied in relation to the agreement. Section 203(3) provides for the following conditions:
- The agreement must be in writing
- The agreement relates to particular proceedings
- The employee has received advice from a relevant independent advisor
- The agreement must state that the conditions regarding compromise agreements are satisfied.
This case underlines the difficulties which can arise in trying to ensure a binding agreement in circumstances where there are question marks over the capacity of one of the parties to fully understand the Agreement he / she is entering into and its implications.
Unless there is a qualifying settlement agreement which is valid in both substance and form, a tribunal cannot dismiss a claim on the basis that it has been settled. Dahann shows that if there is sufficient evidence to establish a lack of capacity then a tribunal will not find the agreement to be enforceable, notwithstanding the fact that the settlement agreement in question may be compliant with section 203 of ERA 1996.
Where a contract is found to be a nullity, its component parts stand or fall together, meaning that the tribunal’s decision that the settlement agreement was not valid might extend beyond the specific issues being litigated before the tribunal. The EAT took the view that any attempts by the parties to bring other claims would have to be considered in light of ‘res judicata’, the doctrine preventing a party from re-litigating any claim or defence already litigated.
Points to Note
Where a party has a doubt as to the capacity of an individual entering into a settlement agreement, or even conducting proceedings more generally, the possibility of that person seeking medical assistance should be explored, as should the possibility of an employment judge exercising their case management powers in order to assist matters.
- Parties to a settlement agreement should always do so with the benefit of separate independent legal advice in order to ensure that the settlement agreement is valid in both substance and form.
If you would like more information or to discuss the potential impact of this case, please contact:
Uber: Does the latest decision give any more clarity on employment status?
Tuesday 1st November 2016
Employment Bulletin - Issue 309
EAT ruling: Permanent pay protection can be a reasonable adjustment for a disabled employee
Tuesday 18th October 2016
Share this article:
Employment Bulletin - Issue 308
In the case of G4S Cash Solutions (UK) Ltd v Powell, the Employment Appeal Tribunal (EAT) held that an employer was required, as a reasonable adjustment, to continue employing a disabled employee in a more junior role involving a less physical activity, preserving his existing rate of pay on an indefinite basis.
Brief facts of the case
Mr Powell worked as an engineer maintaining G4S ATM machines until he was no longer able to carry out his duties due to a severe back problem. Mr Powell was, in light of his disability, given the new role of ‘key runner’ which consisted of delivering parts to the other G4S engineers. Mr Powell was able to do this job despite his disability and believed that he would remain on his engineer’s salary indefinitely.
A year later, G4S informed Mr Powell that they were considering dispensing with the position of key runner for organisational reasons and offered a number of alternative vacancies to him. It was made clear to Mr Powell that if none of the offers were considered suitable he would be able to remain in his role as key runner but take a 10% reduction in salary or face being dismissed on medical grounds.
None of the alternative vacancies were considered suitable and Mr Powell refused to have his salary reduced. G4S dismissed Mr Powell and the matter went to the Employment Tribunal where Mr Powell’s complaints of disability discrimination and unfair dismissal were upheld. The matter then went to the EAT where the original decision was confirmed and it was decided that, in the circumstances of this case, G4S had failed to make a reasonable adjustment by failing to allow Mr Powell to continue in his role as key runner at his existing rate of pay.
What does the Equality Act 2010 say?
Where an employer knows or ought to have reasonably known that an individual is disabled and is likely to be placed at a substantial disadvantage because of their disability, an employer is under a duty to make reasonable adjustments in the workplace to ensure that a disabled person is not put at a substantial disadvantage when compared with those who are not disabled.
What constitutes reasonable adjustments?
What exactly constitutes a ‘reasonable adjustment’ will need to be considered in light of the facts of each case; however the EHRC Employment Statutory Code of Practice contains a non-exhaustive list of potential adjustments that employers might be required to make. Examples include:
- Making adjustments to premises
- Providing information in accessible formats
- Allocating some of a disabled person's duties to another person
- Transferring a disabled person to fill an existing vacancy
- Altering a disabled person's hours of working or training
- Acquiring or modifying equipment
- Modifying disciplinary or grievance procedures
- Adjusting redundancy selection criteria
Points to note:
Whilst the decision in Powell does appear to further expand on what would be considered a ‘reasonable adjustment’ it will certainly not be an “everyday event” that an employer is required to protect an employee’s salary as part of that adjustment.
One of the objectives of the EqA 2010 is to keep employees in work and in some circumstances there may be an additional cost to an employer in achieving that objective. The Powell case further stresses that the reasonableness of potential adjustments must be assessed on a case-by-case basis although employers will always be expected to give considerable thought to the financial resources of the company in making their decision.
An adjustment which also amounts to a contractual change (as in this case) will not be effective without securing the employee’s consent.
Careful and thorough consideration should be given of all aspects of the adjustments proposed.
- Ensure offers of adjustments are clearly and precisely documented and communicated.
Need advice or wish to talk to us?
To further discuss the potential impact of this case, or any other employment law issue, please contact:
Asda Face Equal Pay Battle
Friday 14th October 2016
Employment Bulletin - Stop Press - Issue 307
An Employment Tribunal held today that staff bringing equal pay claims against Asda are able to compare their jobs in Asda retail stores with the jobs of their colleagues who work in distribution centres. Asda had sought to argue that the jobs could not be compared for the purposes of equal pay because the shops and distribution centres were in different locations, with different pay arrangements.
The decision means that the Asda staff class action can proceed and leaves Asda facing the prospect of a large liability if found to have failed to ensure equal pay. This serves as a reminder of the importance of employer’s addressing any gender pay gap and avoiding potentially large back pay claims down the line.
The decision is particularly pertinent as with effect from April 2017 employers with more than 250 employees will need to calculate their gender pay gap by looking at mean and median figures for pay among men and women and publish their first gender pay gap information by the end of April 2018.
If you have any queries regarding equal pay or gender pay gap reporting please do not hesitate to contact Brendan McAleese or a member of our employment team.
Watching brief: Brexit and Employment Law
Tuesday 4th October 2016
Share this article:
Employment Bulletin - Issue 306
At the Tory Party Conference Theresa May said the UK will begin the formal Brexit negotiation process by the end of March 2017. The timing on triggering Article 50 of the Lisbon Treaty means the UK looks set to leave the EU by summer 2019. But, in the 13 weeks that have passed since the Brexit vote are we any more enlightened as to the potential impact of Brexit from an employment law perspective? And what are employers saying about the practical implications of Brexit in the workplace?
Steady As She Goes?
The status quo is broadly expected to continue during the negotiation period with the next 12-24 months appearing to be relatively quiet in terms of planned employment legislation. We are unlikely to see Brexit having an early impact on employment law.
Both the Leave and Remain campaigns focused heavily on workers’ rights. It is highly unlikely that the government will target workers’ rights whilst negotiations are ongoing, as any such attempts could potentially jeopardise those negotiations. The UK will be expected to demonstrate that it has minimum employment protections in place to remain a viable trading partner for the EU.
Perhaps with that in mind, Theresa May has made a point in saying that existing workers’ legal rights will continue to be guaranteed in law.
Most employers have maintained a message as steady as she goes. Confidence has returned after the immediate post leave shock. There is yet to be a Brexit effect on the jobs market with the latest figures showing a slight fall in unemployment levels.
- That said, Immigration rules will be different and the government will have to directly address a number of questions around the immigration status of EU nationals currently working in the UK and the requirements which will be placed on those who enter the UK to work in the future. Theresa May has promised some control over the number of people coming to the UK. The basis of that control has yet to be determined. Campaigners to leave championed a points based system but indications are that the government will look at other options; theoretically a work permit or visa system, restrictions on entry to those with job offers, a quota system or emergency brake.
Challenges Faced by Employers Post Vote
Challenges faced by employers have tended to be specific to businesses who place a particular reliance on recruiting from the EU. Businesses are reporting concerns from potential EU national recruits who are unwilling to commit to roles in the UK given the uncertainty as to their status and ability to remain long term.
Also, we have received reports of employee unrest from businesses who rely heavily on EU colleagues, particular unskilled workers, arising from misinformation relating to their current immigration status. Employers faced with this would be advised to issue its own information on immigration status and put measures in place to support EU colleagues who, based on an informed decision, want to proceed with a citizenship application rather than leave this to be dealt with by an outside agency.
Reported cases of post Brexit discrimination taking place within the workplace have been rare though some employers have faced the fall out arising from employees facing abuse outside of work or (in some cases) travelling to and from work.
- Some businesses have been affected by projects being put on hold (for example in the commercial property market) whilst the impact of Brexit is assessed meaning that short term steps are being taken to keep control of costs (a moratorium on pay rises for example).
Is your business protected? Top tips for employers regarding the use of restrictive covenants and gardening leave.
Friday 10th June 2016
Share this article:
Employment Bulletin - Issue 305
The Business Secretary, Sajid Javid, recently announced a ‘call for evidence’ requesting opinions on non-compete clauses. His aim is to investigate whether these clauses prohibit entrepreneurship and innovation. The Business Secretary appears to be seizing upon unenforceable clauses which seek to deter employees from working for a competitor or setting up on their own.
Non-compete clauses are one of a number of ways employers can seek to restrict the activities of their employees post-employment. These are collectively known as restrictive covenants and are commonly found in contracts of employment, particularly for senior employees.
When drafted correctly, restrictive covenants and garden leave clauses are a powerful source of protection for employers against the potential damage to the business that could be caused by an employee leaving to work for a competitor or setting up on their own and trying to poach your key staff, customers and clients.
The legal position
Restrictive covenants in employment contracts are subject to stringent scrutiny by the courts given the inequality of bargaining position between the employer and the employee.
In deciding whether restrictive covenants are enforceable the court will evaluate whether the restriction goes any further than is reasonably required to protect the legitimate interests of the employer. This will be assessed at the time the employment contract is entered into and does not take into account promotions or new positions generally.
The court will also consider the nature of the business when the clause was entered into. Therefore, in a business which has evolved to carry out different work the restrictive covenants may no longer be relevant and therefore are more likely to be unenforceable.
Another common pitfall is that employers have a ‘one size fits all’ approach where the restrictive covenants in use are the same for all roles across the business. The courts do not favour this approach as it fails to take into account an employee’s changing roles and responsibilities as they progress and are promoted within the business.
A significant legal question mark has always existed in respect of broadly drafted non- compete clauses. Mr Javid’s investigations will further call into question whether a blanket ban on competing can realistically be said to serve legitimate business interests.
How can garden leave help?
Placing an employee on garden leave is a valuable tactic to employ when an employee tells you they are leaving.
A well drafted clause would allow you to remove the employee from the workplace immediately and compel them to see out their notice period at home without contact with any of your clients or suppliers.
Putting an employee on garden leave comes at a cost. The employee would be entitled to their usual remuneration and benefits for the duration of their notice period but you may decide that commercially this is a cost worth bearing to protect your business.
The duration of a garden leave clause is often off- set against the period for which an employee would be restricted under restrictive covenants. Without such off- set a court may find both clauses to be unenforceable if the court believes the combined duration of employee restriction is too penal.
Business protection is very much a case of prevention being cheaper than cure- you need to make sure that your restrictive covenants are enforceable.
We recommend that you should:
Review employment contracts of key employees annually, particularly restrictive covenants.
We suggest that this could form part of a salary review process.
- Avoid a ‘one size fits all approach’ to restrictive covenants.
- Issue new contracts with relevant restrictive covenants with promotions or role changes.
- Review your use of garden leave- make sure your contracts include this right.
Need advice or wish to talk to us?
If you would like to discuss any issues regarding restrictive covenants and gardening leave, or for any other employment law matter please contact either: