Main menu

Liverpool:

+44 (0)151 600 3000

Manchester:

+44 (0)161 836 8800

Preston:

+44 (0)1772 823 921

Search form

Search form

A B C D E F G H I J K L M N O P R S T V W Y

Employment Bulletin

A regular bulletin that provides updates affecting employment issues and the related legislation and best practice.

To stay up to date with this bulletin and see others - sign up to any of our free newsletters.

Are departing employees obliged to disclose their plans to compete?

Wednesday 12th July 2017

Share this article:

Employment Law Update 

In the case of MPT Group Ltd v Peel, the High Court held that employees were not under duty to disclose their intention to compete. 

Background facts

The defendants, Mr Peel and Mr Birtwistle were employed by MPT Group Ltd, a leading producer and supplier of mattress machinery, where they held senior positions as a technical manager and technical sales manager respectively until they resigned on 4 August 2016 bringing to an end their employment on 1 September 2016. 

After they had resigned, they were both questioned by the firm about their reasons for leaving the company. Both answered untruthfully, Mr Peel said he wanted to spend more time with his child by working as a freelance CAD designer and Mr Birtwistle said he had been offered a panel wiring position. However, both intended to go into competition with their employer by setting up a company after their termination and restrictive covenants had expired.

The restrictive covenant was to prevent them from soliciting or dealing with customers with whom they had dealt with whilst employed at MPT for a period of 6 months.

Immediately after the 6 months had elapsed, the defendant’s went into business together along with a third defendant, MattressTek Ltd who were in direct competition with MPT. 

MPT alleged that both employees misused the company’s confidential information, solicited each other, failed to answer questions truthfully as to their future plans, contracted with MPT clients during 6 month restrictive covenant and interfered with MPT’s supply chain.

MPT sought various orders from the High Court to prevent Mr Peel and Mr Birtwistle from using the information to gain a competitive advantage.

Duty of fidelity does not extend to disclosing intention to compete

The Judge found that Mr Peel and Mr Birtwistle were not under a duty to disclose their intention to compete with MPT. He said he was ‘reluctant to hold that an incident of the duty of fidelity is that, when asked a straight question a departing employee is under a contractual obligation to explain his own confidential and nascent plans to set up in lawful competition.’

Whilst an employee owes a duty of fidelity to their employer by answering questions honestly that duty did not extend to disclosing information about plans to set up a business in competition with their employer.

Points to note

The employees in this case were moderately senior, had the employees held more onerous fiduciary duties towards MPT, a different conclusion might have been reached. 

This case illustrates that there is a limit to the obligations which the Courts are willing to find will act to restrict employees planning to complete. That said, it continues to underline the important of ensuring that employers who are sensitive about employees departing and setting up in competition have clear contractual restrictions to protect their business - as far as this is possible. 



Kirsty Weyman

Paralegal
Tel: 0151 600 3147
Email Kirsty

 

 


Employer's belief that a whistleblowing disclosure was not protected is irrelevant

Friday 9th June 2017

Share this article:

Employment Law Update 

An employee claiming unfair dismissal on the basis of alleged whistle-blowing can benefit from the following:

  • The usual qualifying period of 2 years will not apply;
  • The dismissal will be treated as automatically unfair; and
  • There is no limit on the amount of compensation that can be awarded.

To benefit from the above protection, the employee must establish that the reason, or the principal reason for their dismissal is that they have made a protected disclosure. A disclosure will be protected if it meets the statutory conditions in Part IVA of the Employment Rights Act 1996 (ERA).

However, is it an adequate defence for an employer to argue that they did not believe that the employee’s disclosure was a protected disclosure at the time of dismissal?

The recent case of Beatt v Croydon Health Services NHS Trust has examined this issue.

Background facts

An NHS Trust employed Dr Beatt as a consultant cardiologist for seven years. In June 2011, a patient tragically died. Dr Beatt subsequently made a number of criticisms of the Trust relating to staffing levels staff experience, as well as patient safety. The Trust considered the claims though were vexatious and accordingly instigated disciplinary proceedings. The Trust then dismissed Dr Beatt on the grounds of gross misconduct. Dr Beatt challenged his dismissal in the Courts with the case eventually making its way all the way up to the Court of Appeal.

Decision

The Court of Appeal was asked to consider whether the Employment Tribunal at first instance had correctly decided that the reason that the NHS Trust had dismissed Dr Beatt was that he had made protected disclosures in relation to the criticisms of the Trust. The Trust argued, amongst other things, that an employer who did not believe that the employee had made a protected disclosure could not be held to have dismissed the employee for such a disclosure. The Court of Appeal in rejecting this argument identified two key questions:

  1. whether the making of the disclosure was the reason for the dismissal; and
     
  2. whether the disclosure in question was a protected disclosure within the statutory definitions of the ERA?

The first question requires a fact finding exercise into what caused the employer to decide to dismiss the employee. In contrast, the beliefs of the employer are irrelevant to the second question, as it is an objective test to be determined by reference to the statutory definitions in the ERA.

The court based its decision on policy grounds, commenting that the Trust's argument would enormously reduce the scope of the protection afforded by the whistle-blowing provisions if liability under section 103A could only arise where the employer itself believed that the disclosures were protected.

Conclusion

This case has created increased risk for employers who dismiss an employee in respect of raising allegations that are later argued to be protected disclosures. Whilst it is still open to the Employer to argue that the disclosures are not protected because they don’t comply with the statutory conditions, it is no defence for the employer to argue that they did not believe that disclosures were protected at the time. Therefore, an employer must think very carefully in disciplinary cases founded on allegations that could be protected disclosures.



Joshua Oxley

Trainee Solicitor
Tel: 0161 836 8843
Email Joshua


Fulton v Bear Scotland Ltd

Tuesday 30th May 2017

Share this article:

In an unsurprising decision, the Employment Appeals Tribunal (EAT) has handed down its judgment in the case of Fulton and another v Bear Scotland Ltd (No.2).

Whilst the decision confirms its previous position, it is a useful reminder that a gap of three months or more in a series of deductions (in this case, underpaid holiday pay) will mean that the Tribunal does not have requisite jurisdiction to hear the claimant’s claim.   

Facts of the Case

The Claimants in this matter had initially brought claims against their employer for unlawful deductions from wages in 2012 and 2013 respectively which related to their employer’s failure to take into account additional payments when calculating their holiday pay. The matter was initially referred to the EAT in 2014, which in a landmark decision held that:

  • The Working Time Regulations 1998 require an employer to count additional payments (such as overtime, commission, emergency call-out allowances, etc.) in its holiday pay calculations.  In omitting these additional payments from its calculations, the Respondent had indeed made unauthorised deductions from the wages of the Claimants; and
  • For the purposes of deciding whether there has been a series of deductions (under S.23 (2) ERA 1996), the correct interpretation is that a series of deductions will be considered “broken” where a period of more than three months has elapsed between two separate deductions.

As such, when the matter was referred back to the Employment Tribunal (ET), it was held that the majority of the claims were time-barred.  This was because the deductions identified in the Claimant’s submissions did not generally amount to an “unbroken” series of deductions – many of the underpayments complained of had been interspersed with periods of three months and above, during which no deductions by the Respondent had occurred.

The Claimants appealed the ET’s decision, but the EAT has dismissed their appeal and stated that the interpretation of S.23 (2) ERA 1996 that was handed down on the first appeal was correct, and therefore in the circumstances the majority of the Claimant’s claims were out of time.

Comments

Although the EAT’s interpretation of the statute was considered, by some, to be controversial in 2014 (given that it essentially combined the three-month limitation period provided for by S.23 (2), ERA 1996 with the question of how the concept of a series should be interpreted), it is hardly surprising that the appeal failed in this instance, given that the Claimants were asking the EAT to reconsider its earlier decision in the same matter.

Points to Note

The decision flags up some important considerations for both employers and employees.

In particular, employers faced with potential unlawful deduction from wages claims should consider the following points:

  • Whether there is a series of deductions from wages (which could allow employees to claim for underpayments that occurred more than three months ago);
  • Whether any such series has been broken by any three-month gaps between deductions ; and
  • Whether the last deduction in this series occurred within the last three months.

Although for many employers, the issue of holiday pay has not been the battlefield which was once feared, it remains a live issue and one in which the litigation continues. 

If you would like more information on any of the issues raised in this article, please do not hesitate to contact: 



Alexander Thow

Trainee Solicitor
T: 0151 600 3159
Email Alexander


General Election 2017: The Manifestos - Workers’ rights front and centre

Monday 22nd May 2017

Share this article:

Employment Law Update - Issue 316 - May 2017

Since Theresa May’s decision to call a general election to be held on 8 June 2017, there has been a flurry of campaigning activity among the UK’s political parties, which culminated last week in the release a number of official manifestos (the manifestos of the Conservatives, Labour, Liberal Democrats and Green Party are freshly launched – we await to hear from the other main parties).

Given the numerous opportunities that have been presented to UK voters to exercise their democratic rights since the last election in 2015, one could hardly be blamed for feeling a sense of ‘electoral fatigue’ at the prospect of reviewing these documents so we have done it for you. Within the manifestos there are contained interesting and diverging ideas as to the direction in which each party would take the UK should they be voted into Government next month.  Also, it is clear from the manifestos that all parties believe that workers’ rights will be a crucial issue in this election, each offering a variety of commitments to improve the rights and protections of those working in the UK. 

We set out the key employment commitments from each of the respective manifestos below.

Conservative Party

  • Increase the National Living Wage to 60 per cent of median earnings by 2020 (and by the rate of median earnings thereafter).
  • Ensure that the interests of employees, workers and the self-employed are all properly protected within the UK’s “gig economy” (having regard to the recommendations of the ‘Taylor Report’, due to be returned later this year).
  • Give all employees the right to request unpaid time off for training, to care for sick relatives, and for ‘child bereavement leave’.
  • Subject executive pay packages to annual votes by shareholders, and require listed companies to publish the ratio of executive pay to that of the broader UK workforce.
  • Require public companies to have employee representation at board level – this includes a proposal to require such companies to nominate a director from the workforce.
  • Offer breaks of up to a year on employer’s NIC contributions in respect of new employees with disabilities, mental health problems and/or long-term unemployment records.
  • Increase gender pay gap reporting obligations on large employers and introduce pay gap reporting obligations in respect of employees from different ethnic backgrounds.
  • Extend Equalities Act 2010 protections against workplace discrimination to cover mental health conditions that are “episodic and fluctuating”.
  • Double the Immigration Skills Charge levied on companies employing migrant workers, to £2,000 a year, by the end of the parliament

In summary, some interesting initiatives particularly in relation to mental health but the point has to be forcefully put to the Conservatives that their promises of additional workers’ rights sound hollow whilst they continue to resist anything but very minor changes to the Employment Tribunal fee regime (meaning that fewer workers feel willing and able to actively enforce those rights).

Labour Party

Workers’ Rights

  • Establish a “Ministry of Labour” to oversee the enforcement of workers’ rights
  • Increase the minimum wage to £10 per hour by 2020 (for workers over the age of 18).
  • Ban zero-hours contracts and unpaid internships.
  • Double paid paternity leave to four weeks and increase paternity pay.
  • Strengthen protection for women against unfair redundancy relating to maternity and parental commitments.
  • Amend the Equality Act 2010 in order to establish ‘terminal illness’ as a protected characteristic for the purpose of establishing discrimination in the workplace.
  • In the context of the UK “gig economy, legislate to shift the burden of proof onto the employer to prove that the worker is not an employee in cases where employment status is questioned (and increasing the fines to be levied on employers deemed to be taking advantage of purportedly ‘self-employed’ workers).
  • Abolish fees in the employment tribunal.
  • Make public sector employers, and private sector employers which perform public sector contracts subject to ‘maximum pay gap’ rules (imposing a maximum pay differential ratio of 20:1 between highest and lowest paid earners in such organisations). 
  • Remove the ‘Public Sector Pay Cap’.

Industrial Relations

  • Repeal the Trade Union Act 2016, which introduced controversial new requirements for ballots preceding industrial action aimed at restricting trade union activity (and also introduce ‘online’ and ‘workplace’ balloting for industrial action).
  • “Roll-out” of sectoral collective bargaining.
  • Guarantee trade unions a right to access workplaces, and to enforce all workers’ rights to trade union representation at work.
  • Ensure that public contracts will only be awarded to companies which formally recognise trade unions.

Business Immigration

  • Guarantee the rights of all persons currently working in Britain.
  • ‘Crack-down’ on ‘overseas-only’ recruitment practices (and those employers who fail to pay migrant workers the national minimum wage).
  • Reinstate the Migrant Impact Fund in areas where high levels of migration has placed a strain on public services.

Labour’s proposals are, as expected, the most wide ranging and would result in a dramatic shift in the dynamics of workplace relations. Free access to the Employment tribunal could be expected to see claims return to their former levels at least and the trade unions would expect to have a more visible role in UK businesses.

Liberal Democrats

  • Ban ‘zero-hours’ contracts and create a formal right for a worker to request a ‘fixed contract’.
  • Make paternity and shared parental leave ‘day one’ rights for employees, and extend the maximum paternity available to fathers by an additional month.
  • Extend the current ‘pay-gap’ reporting obligations to include reporting on figures showing compliance with National Living Wage requirements, and the gaps between top and median rates of pay within an organisation.
  • Legislate to ensure that the interests of employees, workers and the self-employed are all properly protected in the context of the UK’s “gig economy (reference is also made by the Liberal Democrats to the significance of the forthcoming ‘Taylor Report’).
  • Reverse the introduction of employment tribunal fees.
  • Strengthen worker participation in company decision-making by making staff representation on remuneration committees and at board level compulsory.
  • Amend the Equality Act 2010 to impose a requirement that large companies publish data on gender, BAME and LGBT+ employment levels and pay gaps within the organisation.
  • Introduce ‘name-blind’ recruitment in the public sector.

Again, some significant changes echoing the Conservatives themes on the gig economy but also Labour’s commitment to repealing Employment Tribunal fees.

Green Party

  • Take steps towards the introduction of a universal basic income, including a government sponsored pilot scheme.
  • Phase in a 4 day working week (a maximum of 35 hours)
  • Abolish zero hours contracts.
  • Increase the minimum wage to reach a genuine living wage of £10 an hour by 2020.
  • Take steps to end the gender pay gap, and require a minimum 40% of all members of public company and public sector boards to be women
  • A phased in abolition of the cap on employees’ national insurance

In addition to their eye-catching commitment to establish a four-day working week (aimed at reducing the stress of the UK’s workforce), the Greens unsurprisingly offer a progressive set of commitments, with pledges to raise the national minimum wage to £10 an hour and abolish ‘zero-hours’ contracts bringing the party into close alignment with Labour on issues of worker’s rights. 
 

If you would like more information on any of the issues raised in this article, please do not hesitate to contact: 



Alexander Thow

Trainee Solicitor
T: 0151 600 3159
Email Alexander


£2 Compensation awarded for employer’s breach of right to be accompanied

Friday 12th May 2017

Share this article:

Most of us are familiar with an employee’s right to be accompanied at a disciplinary hearing. This right is granted by statute. It is not an unlimited right and extends to a trade union representative or a work colleague only.

However, there are occasions where the employee’s right to be accompanied causes some headaches and difficulties, for example:

  • what happens when the employee’s choice of companion has displayed disruptive behaviour ?
  • does the employee have the right to be accompanied at an appeal hearing (after the disciplinary hearing) or does an employer have more freedom to reject a companion at that stage?
  • what if the companion has been found to intimidate staff members at the employer and the employer has banned the companion from its premises as a result?
  • can an employer say no to the worker’s choice of companion in any of the above circumstances?

The recent case of Gnahoua v Abellio London Ltd provides some further guidance and clarification of those very issues.  In this bulletin, we consider the employee’s legal right to be accompanied as well as the employer’s obligations in accommodating this (as further clarified by the case of Gnahoua).

Gnahoua v Abellio London Ltd

Section 10 of the Employment Relations Act 1999 (ERA) confirms that an employee is entitled to be accompanied to a disciplinary hearing or grievance hearing where he “reasonably requests to be accompanied at the hearing”.  Section 10 goes on to confirm that the employer must allow the employee to be accompanied by either an employed trade union official, a certified trade union official or a work colleague.  The ERA also confirms that a worker has the right not to be subjected to detriment as a result of exercising the right to be accompanied.

The key facts of the Gnahoua case can be summarised as follows:

  • The claimant (Mr Gnahoua) was a bus driver who had been employed by Abellio. Following an investigation and disciplinary process, Mr Gnahoua was dismissed for moving a bus whilst using his ipad at the same time, which was deemed gross misconduct;
     
  • Mr Gnahoua appealed and confirmed to Abellio that he wanted to be accompanied at the appeal hearing by one of two brothers, both of whom were union officials for PTSC Union;
     
  • Abellio wrote to Mr Gnahoua and confirmed that Abellio was happy for him to be accompanied by a member of the PTSC Union, but that the two brothers had been banned from taking part in such hearings.  Abellio refused to permit Mr Gnahoua to be accompanied by either of the brothers; The reasons given for the refusal were that they were guilty of threatening behaviour towards members of staff and of dishonesty.  It is worth mentioning that, in separate proceedings by one of the brothers against Abellio, an employment tribunal had previously awarded £10,000 in costs against both brothers for vexatious conduct.  This conduct had involved falsifying the date on which a witness statement was prepared.
     
  • Mr Gnahoua attended the appeal hearing unaccompanied.  It was noted by the tribunal that he took little part in the hearing, but that the appeal officer still went through the appeal process in a considerate fashion; and
     
  • Mr Gnahoua subsequently brought a number of claims against Abellio, including a claim in which he asserted that there had been a breach of his right to be accompanied under section 10 of the ERA. 

After considering the issue, the employment tribunal confirmed that an individual’s choice of companion at a disciplinary hearing is absolute, provided that the companion falls within the permitted categories of the ERA.  With this in mind, the tribunal upheld that there had been a breach of the claimant’s right to be accompanied. This was so even though the employer’s reasons for refusing the employee’s choice were considered to be perfectly understandable and reasonable.

Parliament intended the right to be absolute and the tribunal was not permitted to consider whether it is reasonable for the employee to request a particular companion   The tribunal also referred to appeal hearings being an integral part of the disciplinary process and did not accept that the right only applied to a disciplinary or grievance meeting, because “appeal hearings are an integral part of the disciplinary process…”. 

When giving judgment, the judge confirmed that: “in the present case it is hard to criticise the actions of the respondent and we make no criticism” and referred to policy reasons behind having the strict rule in place.  The judge also referred to the wording of the ERA and confirmed that an award had to be made where breach of the right to be accompanied had been upheld.  A nominal award of £2 was made as a result. 

The £2 award is consistent with the earlier case decision of Toal v GB Oils Ltd 2013, where the Employment Appeal Tribunal confirmed that only a nominal award should be made where no loss or detriment has been suffered.

Summary

The tribunal’s decision reaffirms that there is an unfettered right for the employee to choose the companion.  Whilst the case decision does provide certainty - albeit not in a way that a lot of employers will like - the price of this certainty can seem unjust.

On the one hand, it is understandable that judges do not wish to allow an element of discretion in this area by handing a power of “veto” to employers.  On the other hand, it seems unjust to adopt this position in all circumstances, including those where the representative has been found to intimidate staff or act dishonestly.  It appears that the tribunal had some sympathy for the employer in the Gnahoua case, but felt obligated to apply the strict rule.

Employers should therefore appreciate the effect of the above ruling when considering declining an employee’s request to be accompanied by a particular person.

If you have any issues relating to an employee’s choice of companion or you would like to receive advice on any other employment law matters, please contact Emma Clarke on the details provided below.



Emma Clarke

Associate 
T: 0161 836 8951
Email Emma


Reconciling the flexibility quandary

Wednesday 5th April 2017

Share this article:

Employment Law Update - Special Issue - April 2017

Take a moment to consider these two questions:

  • How would you define a good work-life balance?
  • Do you consider yourself as having achieved a good work-life balance?

If the answer to the last question was no, you’re not alone, The Modern Families Index 2017 (published by an organisation called Working Families which campaigns to improve work-life balance in the UK) was published in January and made a number of findings.

Working Families asked nearly 3,000 families across the UK what their experiences of juggling work and family life were. They found that: 

  • Only 1 in 5 families felt they had the right combination between work and life. 
  • More than a third of families said they lacked not just money but time, referred to as “time poverty”.
  • Family life is under enormous pressure from work – 72% of parents catch up on work at home during weekends or evenings.
  • Of couples families, 48% now both work full time.
  • Only a third of parents manage to leave work on time every day.
  • One in five parents (working full time) put in the equivalent of an extra 5 weeks of unpaid work (the same as their annual leave entitlement) per year just to keep up with the demands of their job.
  • A third of parents regularly felt burnt out.
  • Almost half of parents said they were not comfortable talking about work boundaries with their employer.

When asked what changes they would make to their own working lives to tackle, in particular, time poverty, the most frequently chosen option was being able to work from home some of the time (27%) followed by having flexible hours (25%).

The index found that there was evidence of a ‘flexibility gap’ – with employees wanting more flexibility than is available to them. There was also limited confidence in the strength of purported family friendly policies and culture statements from their employers.

Genuine flexibility was only seen as attainable to those in more senior positions and was often a limited exception rather than a rule.

Is flexibility the answer?

In this country, there is it seems a rather odd approach to flexibility – a rigid and arbitrary statutory procedure for making flexible working requests with a list of pre-determined reasons for rejections and time limits as to when requests can be resubmitted. The truth is, that approach is not consistent with reality. The regime doesn’t meet with the complex arrangements parents often have to meet family commitments. 

Despite this, in the last 15 years, we have seen flexibility becoming embedded within the workplace and for many employers, it’s had to accommodate requests for flexibility as a means of retaining its staff and reacting to the changing and increased pressures that working people face. 

Research shows that millennials increasingly expect work-life balance when they are considering employment, and it is clear from the Index results that parents need to achieve, somehow, a better fit between work and life. 

In recognition of this, there is an emerging culture amongst some top CEO’s who recognise that to attract and retain their workforce, they need to run their businesses in ways that accommodates life, not the other way around. 

On the one hand, flexible working is hailed as the solution to a work-life balance and technology has caught up to make flexible, agile, remote working more possible than ever. 

If you have a job that relies on electronic communication the chances are you can, with the right technology, do your job from wherever in the world you are at whatever time. That is amazing, but it is also being increasing recognised as a real problem.

Do you feel lost without your smartphone?

I do, and it’s because our phones have become a central part of the way we live our lives. They wake us up in the morning, tell us whether the train is running on time, measure the number of steps we take to the station, allow us to keep in touch, to tell the time the time, to shop, to share information, to socialise, to take pictures, to record videos, to listen to music, to diarise and for many of us – to work.

As humans, we’re designed to be both curious and responsive and it can be almost impossible to resist checking to see if anything urgent has come in, even when we’re not at work.  

This is isn’t an attack on technology. In terms of engagement, and in particular, keeping in touch, many organisations use technology and digital media as a core and highly effective tool.  Organisations that have, for example, Facebook pages and Twitter feeds where employees are encouraged, expected even, to participate, view this technology as highly effective in terms of engagement.    

But there is an inherent tension. The sense that technology is ruling us not the other way around. It’s ability to tie us to the workplace in a way that isn’t always healthy. 

The reality can be that that flexible working can lead to always working with insufficient boundaries about when its time to switch off.  

In this country, particularly amongst the professions, it’s a much deeper cultural problem. We equate working long hours with dedication, with ambition and with professionalism. In some organisations, sending emails in the middle of the night is worn as a badge of honour and that sets the tone for a workplace. 

Lots of organisations talk about work-life balance but if senior individuals are working until midnight, how are members of staff genuinely meant to believe that their organisation wants them to have a break from work? 

How should you address this?

Here are some examples of what businesses that have tried to improve flexibility.

1. Switching Off

In the first example, the CEO of a major US company asked her team to make one simple change: stop emailing after 6pm and at the weekends.

In doing so, she trusted that her team were clearly intelligent and capable people and so, work was efficiently prioritised, meetings were scaled to the right length and crucially, from the top down, she modelled her own behaviour.

And what happened?

The work still got done, it was just done more efficiently.

2. Working when you work best

In another example, flexibility was given its ultimate meaning: each team member being given the ability to determine when, how and where they work best.

This applied top down and so the CEO, who by her own admission did not work best first thing, didn’t start work before 10am.

All that was asked was that team members were transparent about their schedules and that calendars are kept updated.

Again, the employer showed that they trusted their employees to get the job done and they did. 

What happened was the core hours naturally emerged (roughly between 10am – 4pm) and people managed their home lives around that.

3. “Work can wait” software

Founders of a tech-company used their own experiences to serve as the model for the business.

One worked in Germany, the other in the US with only three hours of overlap per day due to the time difference. 

They rolled this out as a business model so that most of their employees worked from home, wherever they happened to live, and on their own schedule. 

All that was asked from them was that there was a reasonable amount of overlap between employees that need to work with each other.

The CEO from that company said:

“The best workers are the ones who take vacation, are rested, and have fulfilling lives outside of work”

Being a tech company, they have built into their software a “work can wait” function that allows the user to set boundaries about work notifications.  For example, if an employee’s hours are 8 – 4pm, then any messages received after 4pm won’t be seen by the employee until 8am the next morning.

4. VW

Likewise, at VW in Germany, the email server stops sending employee’s their emails half an hour after they’re meant to have stopped work.

5. Switching off emails during holidays

In some organisations, employees have their emails switched off during holidays.

6. Banning internal email 

In other organisations, internal email is banned.

The reason?  It’s a massive distraction. 

It takes around 64 seconds to get back to work after checking an email and organisations that have banned internal email report an increase in productivity because people have more time.  They communicate better with each other.  Rather than sending an email to a person that they work in the same room as, they get up and they go and they speak to them and they make a decision rather than sending 10 emails.

7. France

Labour laws introduced a 35 hour limit on the working week in 1999. When it was enforced, Apple was fined for making staff work night shifts because the law forbids shifts between 9pm and 6am unless the work plays an important role in the economy or is socially useful. 

The perception is that the 35 hour working week has come under threat from smartphones and the sense that if you don’t unplug, you are permanently at work.

As such, a labour agreement has been implemented which requires employers of more than 50 people to ensure that their staff “disconnect” outside of working hours. In practice, this means employers drawing up a charter of good conduct, setting out the hours, normally in the evenings and weekends when staff are not supposed to send or answer emails.

The agreement is estimated to affect around 250,000 employees in the technology and consultancy sectors and means that employers must ensure that their employees receive a break from work and do not put employees under any pressure to look at work related material outside of working hours.

This was mocked by some elements of the UK press when the idea was first mooted but the French government insists that the problem of permanent connection is universal and it is growing and that intervention is needed.

They also say that apart from wanting to spare employee’s suffering, companies need employees to be creative and that this is much less likely without regular downtime.

8. Sweden

Trials are being carried out in various organisations and businesses to limit the working day to 6 hours. 

The thinking being that if you give someone a 6 hour window, their productivity will be higher and they will be less tired than if you give them an indefinite window of time. 

9. Sleep Monitors

In the final example, a US insurance company issued its employees with sleep monitors and it pays them a bonus if they get 20 consecutive nights of good sleep!

Conclusion

These changes are bold, brave and they require trust and they also require organisations to reassess their values system. 

But get it right and the rewards are clear, a more productive and more loyal, more engaged and more fulfilled workforce.

The reality is, we are all likely to live and work longer than the previous generation.  Whether we like it or not, we are now part of a global workforce that spans time-zones.  We carry with us – at all times – devices that allow us to be “on” anytime and anywhere in the world.  When is it time to switch off?

If you would like to further information on how to improve flexibility in your workplace, please do not hesitate to contact Kate Venables on the details provided below.



Kate Venables

Senior Associate
Tel: 0151 600 3151
Email Kate

 

 


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.

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.

Gig Economy

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:



Joseph Shelston

Partner
Tel: 0151 600 3162
Email Joseph

 


"Can I take my break now, please?"

Thursday 8th December 2016

Share this article:

Employment Bulletin - Issue 312

We would assume that this 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 (the “WTR”) 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 briefly recap the law in this area, broadly speaking, workers are entitled to a rest break of 20 minutes, if their daily working time is more than 6 hours. If an employer refuses this right, the worker can bring an employment tribunal claim. 
 
Mr Grange was initially allocated an eight hour shift, with a half hour break. Due to the demands of the job, he often found it difficult to take a break and he frequently worked an entire shift without rest. In July 2012, Mr Grange’s employer changed his shift to eight hours and Mr Grange was told that he was no longer entitled to a break, but was permitted to finish 30 minutes earlier instead. Mr Grange raised a grievance to complain about the fact that he wasn’t able to take a rest break, and hadn’t been able to even prior to the July 2012 shift change. He argued that this constituted a “refusal” to exercise his rights under the WTR.  
 
When this case was first heard in the Employment Tribunal it was found that as Mr Grange hadn’t actively asked for a break during each shift, there could not have been a refusal on the part of the employer. Prior to July 2012, working practices had allowed for a rest break, regardless of whether not one was actually taken. Whilst post July 2012, the employer had instructed or set an expectation that no breaks be taken, Mr Grange had nevertheless not challenged this and had not requested to take his 20 minutes, until the grievance was submitted.  
 
The Employment Appeal Tribunal, however, disagreed. In the Appeal Tribunal’s view the purpose of the legislation is clear; rest breaks are needed to protect workers’ welfare. If an employer adopts working practices that don’t allow workers to take breaks, then this will constitute a “refusal”. Whilst the Appeals Tribunal didn’t ultimately rule on whether or not the particular facts of this case amounted to a refusal, the principle to come out of the judgment is clear - an express request is not a prerequisite. 
 
Although the position remains that workers can’t be forced to take rest breaks, the “if you don’t ask, you don’t get” attitude, will no longer get employers very far. Employers would, therefore, be well advised to proactively encourage the taking of rest breaks and to ensure that working practices do allow/make provision for breaks. Employers who, in reality, allow breaks to go by the wayside will find themselves in considerable difficulty if they face a claim.  
 
For the full judgment, please click here.
 
If you would like to discuss any matters around rest breaks please do not hesitate to contact:
 

Amy Anderson

Solicitor
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:

Elspeth Beatty
Associate, Employment & Pensions
Tel: 0151 600 3114 or email: elspeth.beatty@brabners.com

 

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:

Paul Chamberlain
Head of Employment & Pensions - Manchester
Tel: 0161 836 8864 or email: paul.chamberlain@brabners.com

Emma Clarke
Associate, Employment & Pensions 
Tel: 0161 836 8951 or email: emma.clarke@brabners.com


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.

Decision

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

Solicitor, Employment & Pensions team
Tel: 0151 600 3157

Pages