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Calculating Holiday Pay: Factoring in Voluntary Overtime
Wednesday 2nd August 2017

Should payments and allowances received in respect of regular “voluntary” overtime be treated as forming part of a worker’s “normal remuneration” for the purpose of calculating the first four weeks of that worker’s holiday pay?

Yes, held the EAT in a recent judgment handed down in Dudley Metropolitan Borough Council -v- Willetts & Others [2017].


This claim was brought before the employment tribunal by a group of fifty-six individuals who were employed by the Council to provide housing maintenance and repair services (‘the Claimants’).  Generally, each of the Claimants was contracted to work thirty-seven hours per week, in addition to an agreed two-to-four hours of overtime.  In addition, it was accepted that the Claimants also performed, to varying degrees, additional duties on an entirely voluntary basis, and that “this additional work was performed almost entirely at the whim of the employee, with no right to enforce work on the part of the Council”.

The Claimants argued that the failure by the Council to include payments and allowances made in respect of this “voluntary overtime” in its holiday payment calculations constituted unlawful deductions from wages contrary to S.13 Employment Rights Act 1996.

The tribunal held that:

  • Where employees only work voluntary overtime “occasionally”, payments and allowances made in respect of such overtime need not be factored in to an employer’s holiday pay calculations; but
  • Where employees work voluntary overtime on a “regular” basis, payments and allowances made in respect of such overtime do need to be factored in to an employer’s holiday pay calculations in respect of the first four weeks’ holiday.

The Council appealed the decision to the EAT.


The EAT dismissed the Council’s appeal and instead upheld the tribunal’s original decision.  In doing so, the EAT created a binding principle that, where voluntary overtime is performed by an employee with sufficient regularity, payments relating to that overtime must be included in an employer’s calculations in respect of the first four weeks’ of holiday pay.

Providing guidance on how ‘regular’ the voluntary overtime must be in order for it to form part of holiday pay calculations, the EAT emphasised that tribunals will need to consider whether a pattern of work is “sufficiently regular and settled” such that it may justifiably be described as “normal” for the employee.  The EAT did not, however, set out any ‘hard and fast’ rule to assist tribunals in determining this issue of “regularity” – instead, it was confirmed that this will be a question of “fact and degree” for tribunals to consider on a case-by-case basis.


The EAT appears to have been guided by the overarching principle of EU law that that “pay” in respect of annual leave should “correspond to “normal remuneration while working”.  The EAT also agreed with the Claimants’ submission that, when working a shift of voluntary overtime, they were in effect performing work which was required of them under their contracts of employment. Accordingly, it followed that the overtime payments were directly linked to tasks the Claimants were required to perform under their contracts of employment, and so should rightly be considered to form part of their “normal remuneration” for the purposes of calculating holiday pay.

Given last week’s landmark Supreme Court ruling that employment tribunal fees are in fact unlawful, employers should be alert to the fact that employees may well now be more willing to pursue lower value claims (such as those for unlawful deductions from wages) in the tribunal.

Therefore, employers would be well advised to review past disputes over alleged deductions from wages - there is an argument that employees who previously wished to bring such a claim against their employer (but were prohibited from doing so by the level of the tribunal fees) should now be allowed an extension of time in which to bring their (now time-barred) claim on the basis that they were prevented from doing so originally by the ‘unlawful’ fee regime.  This is certainly an issue to be monitored closely.

The risk of such liabilities to employers is, however, reduced by the fact that an employee bringing a claim in respect of a series of unlawful deductions must do so within three months of the last deduction complained of, as confirmed in the recent decision in Fulton –v- Bear Scotland.

Irrespective, this ruling sets a binding precedent that regular voluntary overtime performed by workers must be included in holiday pay calculations in the same way as compulsory overtime.  Employers would therefore be well advised to closely assess the overtime arrangements that exist within the business, and also to review whether their current holiday pay system(s) adequately take into account employees’ remuneration in respect of any such arrangements.


Gender Pay Gap – Raising issues for employers
Monday 31st July 2017

The BBC’s recently revealed gender pay gap has attracted a lot of attention and criticism, which highlights the significant pressure employers may face due to the gender pay gap reporting legislation.  

An open letter signed by over 40 women at the BBC addressed to the BBC’s Director-General and published in The Telegraph demands action into what the signatories say is women at the BBC “being paid less than men for the same work” and calls on the Director General “to act now” after the Corporation’s annual report revealed that ‘only a third of its 96 top earners women and the top seven all men’. The Independent has also reported that “at least 10 female presenters are reportedly preparing to sue the BBC” in light of the gender pay gap.

The gender pay reporting legislation which came into force in April 2017 requires both public and private sector employers with 250 or more employees to produce a gender pay gap report containing certain gender pay gap information and for that report to be published on their website and a designated government website by April 2018 and annually thereafter. With this increased transparency, any gender pay gaps that are identified are likely to result in employers facing negative publicity and significant pressure to justify why this is so as well as potentially facing claims for sex discrimination and equal pay depending upon the reason(s) for any gaps.    

It is hoped that where a gap exists employers will question the causes of the gender pay gap in their organisations and consider the action they could take to decrease it. Employers may reduce the potentially negative impacts of publishing gender pay gap information by analysing the information to help understand why gaps exist and take action to decrease it.

We would strongly recommend that employers produce a supporting narrative to accompany their gender pay gap report to explain any gender pay gaps, detail the strategy for reducing the gender pay gap and explain what action has been taken to address the situation. By producing an effective narrative over time employers can show they have reduced any gender pay gaps, and hopefully achieve and retain a workforce which works harder as it feels valued by its employer and avoiding PR issues such as those experienced by the BBC.  In some circumstances, seeking legal advice may also bring the benefit of legal professional privilege against information and draft reports/ data that would otherwise be disclosable in legal action, such as Equal Pay claims.

As well as assisting you with drafting a narrative we can help by advising on compliance with the new gender pay gap reporting regime, reviewing your draft reports and advising on tricky areas such as casual workers, overseas employees and bonus payments.

For more information please contact a member of our employment team or Susan directly on 0151 600 3157 or via email


Employment Tribunal Fees - Supreme Court Ruling Explained
Thursday 27th July 2017

Since the coming into force of the Employment Tribunals and Employment Appeal Tribunal Fees Order 2013 (‘the Fees Order’) on 29 July 2013, any employee hoping to bring a claim against their employer / former employer in the employment tribunal has been liable to pay fees of up to £1,200 in order to do so.  The stats suggest that, following the introduction of the Fees Order, the number of tribunal claims being brought against employers (especially lower value claims) has fallen by approximately 70%.

Yesterday, the Supreme Court handed down a highly significant judgment in the case of R (on the application of UNISON) –v- Lord Chancellor, in which it ruled unanimously that the employment tribunal fees imposed by the Fees Order are in fact unlawful under domestic and EU law, and therefore shall be quashed with immediate effect.  Following the decision, the justice minister Dominic Raab stated that the government would cease taking fees for employment tribunals "immediately".

Delivering the leading judgment, Lord Reed stated that the “dramatic and persistent” fall in the number of employees pursuing claims in the employment tribunal since 2013 suggested that the Fees Order was indeed hindering employees’ right of access to justice, and was therefore unlawful.  In reaching this conclusion, the following factors appear to have been material:

  • The level of the fees imposed on claimants is such that they are clearly not affordable for everyone. Coupled with the under-utilisation of the fee remission regime, it was concluded that many prospective claimants since 2013 have opted not to pursue claims simply because they were unaffordable;
  • The court was convinced by several hypothetical examples, put forth by UNISON, of situations in which the level of the fees, when weighed against the potential tribunal award (and the likelihood of an award being paid in full by a respondent), would actually render it ‘irrational’ for an employee to pursue a claim against their employer; and
  • The fees cannot not be justified as a “necessary restriction” on employees’ rights of access to justice.  In practice, the fees have generated far less revenue to support the tribunal system than anticipated, whilst also apparently failing to encourage parties to settle disputes during the ACAS early conciliation period.

In a separate judgment, Lady Hale stated that the Fees Order was also indirectly discriminatory, contrary to the Equality Act 2010.  The reasoning behind this was that the Fees Order requires higher fees to be paid by Claimants for “Type B” claims than for “Type A” claims.  As women are more likely to bring “Type B” claims, the Fees Order essentially puts women at a particular disadvantage.

Impact of the Ruling

The judgment is likely to have a material impact upon both employers and employees alike, and the Government’s response to the Supreme Court ruling in the coming days and weeks will need to be monitored closely.

With the fees today having been declared unlawful, there are now a number of pressing issues for employers to consider:

  • Employers should prepare themselves for a rise in the number of employment tribunal claims that they may face.  In particular, although Claimants will still be required to engage with ACAS’ pre-claim conciliation service, the removal of the fees would appear to increase the likelihood of more speculative claims being brought by employees.
  • The Ministry of Justice has already issued a statement confirming that tribunal fees incurred by claimants since the introduction of the Fees Order will be refunded.  How the Government proposes to deal with this will be watched closely by employers who have been ordered to reimburse a claimant’s fees as part of a judgment or settlement since 2013 - there could well be scope for an employer to recover such costs from the Government.
  • There is potential that employees dismissed after July 2013 could now have grounds seek extensions of time for bringing their claims, on the basis that the unlawful Fees Order effectively prevented them from doing so.  In the event that this is permitted, employers may well undertake a review of any employee grievances / dismissals since 2013 to assess the scale of any potential liability they may have.

From the Government’s perspective, aside from the estimated £32m in fees to be reimbursed to claimants, there is also the wider question of whether the Tribunal Service is set up now to deal with a larger volume of claims, given that substantial cuts were introduced on the assumption that the reduction in claims would be a permanent trend.


Breach Court Orders at your Peril!
Monday 24th July 2017

Can a breach of the terms of a Court injunction land a party in prison? The answer to this question is yes, as recently discovered by an ex-employee who had taken an employer’s confidential information and then attempted to cover his tracks following receipt of the injunction.

The High Court in the recent case of OCS Group UK v Dadi has imposed a prison sentence of 6 weeks on an employee for breaching a Court order in a dispute over confidential information.

Background Facts

Mr Dadi was an employee of OCS Group UK, an aviation cleaning contractor at Heathrow Airport. OCS believed that Mr Dadi had sent some of its confidential information to his private email account in order to disclose it to a rival company. It consequently applied for an interim injunction in relation to the confidential information which was granted by the Court.

The terms of the interim injunction specifically prohibited Mr Dadi from deleting or disclosing any confidential information. The injunction also contained the usual penal notice warning that any disobedience of the terms rendered Mr Dadi liable to be imprisoned. Mr Dadi subsequently committed several breaches of the terms.

Following his misdemeanours, and after obtaining legal advice, Mr Dadi decided to come clean by admitting to the Court that he had committed the various breaches of the terms through a mass deletion of around 8000 emails.  Mr Dadi had also passed confidential information to a number of people. OCS took a dim view of these breaches and applied to the Court for Mr Dadi to be committed to prison for contempt. In his defence, Mr Dadi asserted that he should be spared prison as he had admitted his wrongs, and then subsequently co-operated with OCS in trying (unsuccessfully) to recover the deleted emails to rectify the various breaches.

After balancing the magnitude and brazen nature of the breaches with Mr Dadi’s acceptance of his wrongdoing and his subsequent co-operation, the Court deemed the appropriate sentence for the contempt to be six weeks' imprisonment.


This case provides a stark reminder of the potential consequences of breaching a Court order.

The case also underlines the effectiveness of obtaining an injunction – it can be a very powerful remedy!


Headscarves, high heels and discrimination
Thursday 16th March 2017

The Court of Justice for the European Union (CJEU) has handed down its widely anticipated judgment in the case of Achbita v G4S Secure Solutions.

G4S had been operating a blanket dress code policy of 'neutrality' within Belgium, which effectively banned the wearing of all philosophical, political and religious symbols. A Muslim employee had then begun wearing a headscarf despite a knowledge of the policy, and a number of warnings that the headscarf was in contravention of the said policy. The employee’s refusal to stop wearing the headscarf eventually resulted in her dismissal. The dismissal was subsequently appealed by the employee all the way up to the CJEU.

The CJEU held that G4S’s blanket policy of neutrality was not tantamount to direct discrimination on grounds of religion because the blanket policy prohibited all religious symbols. This effectively meant that no one particular religion was being treated any less favourably than any another religion.

The CJEU did agree with the employee that G4S's policy introduced a difference in treatment which was indirectly based on religion, whereby Muslims were placed at a particular disadvantage. The CJEU concluded though that this disadvantage did not result in indirect discrimination because G4S’s desire to project an image of neutrality was achieving a legitimate aim, provided it applied only to customer facing employees. This was because the business of G4S involved constant personal contact with a diverse range of people where it was thereby proportionate to insist in displaying a neutral image.

The question still remains though whether an employer could demonstrate the required ‘legitimate aim’ in a non-customer facing role. Here is a link to the press summary of the case.

Within the UK context there has been our own controversial dress code debate, which has been triggered by the public backlash to a temporary receptionist being sent home for wearing flat shoes in breach of a workplace dress code requiring female workers to wear 2 to 4 inch heels.

The employee subsequently petitioned the government to actively prohibit such gender specific dress code requirements which gained more than 150,000 signatures. This led to the House of Commons Petitions Committee and the Women and Equalities Committee publishing a joint report calling for a ban on employers requiring female staff to wear high heels at work.

We await the government’s official response to the report within the next two months.

As demonstrated by the CJEU decision it is right for businesses to place an intrinsic value on the enforcement of some form of work place dress code. However, as both these cases demonstrate, the parameters for when a dress code achieves a legitimate aim and when a dress code is discriminatory remains palpably unclear.

If you are worried about your business dress code or rules, please do not hesitate to contact Lee Jefcott by calling 0161 836 8898 or emailing


Must an expired warning always be disregarded when considering the dismissal of an employee for misconduct?
Friday 3rd March 2017

In Stratford v Auto Trail VR Ltd, the EAT considered whether an employer taking account of a history of expired warnings meant that the employee’s dismissal was unfair.


Mr Stratford started work for Auto Trail VR Ltd (“Auto Trail”) in November 2001. Mr Stratford had a poor disciplinary record with 17 occasions on which Auto Trail had taken formal action against him, although there were no live warnings on his file at the time of the events that ultimately led to his dismissal.

In October 2014, Mr Stratford was seen with his mobile phone in his hand on the shop floor. This was strictly prohibited under Auto Trail’s employee handbook. Auto Trail contended that the offence in question was not one of gross misconduct and that Mr Stratford would receive a final written warning, however, as a result of his extensive disciplinary record, Mr Stratford was dismissed with 12 weeks’ pay in lieu of notice.

Mr Stratford claimed unfair dismissal. The Employment Tribunal rejected the claim and held that Mr Stratford had been dismissed for conduct consisting of his disciplinary history. The normal employment practice of ‘wiping the slate clean’ following the expiry of a warning was balanced against Mr Stratford’s attitude to discipline and it was concluded that, in the circumstances, the dismissal was fair. Mr Stratford appealed to the Employment Appeal Tribunal.

EAT Decision

Mr Stratford argued that it was not reasonable for Auto Trail to rely upon earlier misconduct as the principal reason for dismissal where any warnings given in respect of that misconduct have expired.

The EAT dismissed the appeal and relied on the fact that section 98(4) of the Employment Rights Act 1996 does not single out any particular circumstances as necessarily determinative of the questions of reasonableness, equity, merits or fairness.

The fact that the employee had a substantial history of misconduct, that a final warning had been given in respect of that misconduct and that the final warning had expired would all be objective circumstances relevant to whether the employer had acted reasonably or unreasonably in its decision to dismiss. In this instance, Auto Trail were considered to have acted reasonably by taking into account such factors in its decision to dismiss Mr Stratford.

Points to Note

The decision in Stratford noted a distinction between:

a) An employer who has regard to the previous conduct of an employee when deciding on a sanction for a dismissible offence; and

b) An employer who uses expired warnings to elevate conduct into a dismissible offence.

It would not be advisable for an employer to seek to rely on this seemingly artificial distinction however:

  • It is clear that expired warnings do not need to be disregarded in every case when deciding to dismiss an employee. However, employers will need to proceed with caution when considering the circumstances in which an expired warning may lawfully be taken into account. The outcome may have been different had the employer relied on one previous expired disciplinary warning.
  • The way in which repeat offenders and warnings, in particular expired warnings, are dealt with by the employer’s disciplinary policy will likely be relevant to any tribunal claim on this matter. Employers should review their disciplinary procedures to consider whether they allow for any flexibility which would permit reliance upon an expired warning in any decision to dismiss.
  • The decision in Stratford should not be treated as one which opens the floodgates and permits employers to rely upon historical instances of misconduct (which have already been investigated and dealt with) as a potentially fair reason for dismissal. Each matter must be assessed on a case by case basis, so it is difficult to predict with any certainty how Stratford will be applied by Employment Tribunals.
  • Employers should always tread carefully in relation to expired disciplinary warnings. We would recommend that you seek independent legal advice if you are contemplating dismissing an employee with previous expired warning(s).


The CitySprint decision is concluded, the gig-economy continues to unravel
Wednesday 11th January 2017

On the 23 November 2016, Amy Anderson provided an update on the latest litigation being debated in the ‘gig-economy’ in her blog ‘First Uber, now CitySprint – The Latest Gig Economy Employment Litigation’. 

Since then, the London Central Employment Tribunal has ruled (in the decision of Dewhurst v CitySprint UK, referred to hereafter as “CitySprint”) against CitySprint and concluded that Ms Dewhurst was a ‘worker’ of CitySprint for the purposes of the Employment Rights Act 1996, even though Ms Dewhurst was issued with contractual documentation describing her as a self-employed contractor.

When starting at CitySprint each courier is issued with a document ‘Confirmation of Tender to Supply Courier Services to CitySprint Ltd’.  Within the document, CitySprint highlight a number of specific key terms, with a tick list system on a computer to ensure the courier acknowledges the information has been read and understood.  Some of key terms covered are:

  1. CitySprint are under no obligation to provide work to the courier;
  2. If the courier does not work they will not get paid;
  3. The courier may send a substitute to work in his or her place (subject to certain criteria); and
  4. The courier will not be paid sickness pay, holiday pay or maternity pay.

In this case, Ms Dewhurst, would start her day by speaking to a controller and logging onto CitySprint’s electronic tracking system, “Citytrakker” and would remain on the system until she had finished her working day to go home. Typically, Ms Dewhurst worked from 9.30 am to 6.30pm four days a week and would move from job to job. 

In-between each job there would be gaps ranging from 10 minutes to an hour. The Citytrakker system effectively monitors the courier’s whereabouts and with this information this would assist the controllers at CitySprint to assign jobs to each courier working that day. 

In conclusion, Ms Dewhurst successfully won her claim for two days outstanding holiday pay, as it was determined she was a ‘worker’ within S.230 (30 (b) of the Employment Rights Act 1996 during the time that she was logged into Citytrakker.

This case again reinforces the position that Tribunals will look at the reality of the situation rather than the contractual documentation alone. Here the Tribunal were quite damming in their verdict (something else that seems to also be a running theme in the gig-economy cases) and described the contractual documentation produced by CitySprint as merely ‘window dressing’ and the work of an ‘army of lawyers’ rather than the reality of the position.

It is clear this type of litigation will not go away with three similar cases against other courier companies Excel, E-Courier and Addison Lee all due to be heard in March and April 2017. Additionally HMRC have also recently announced that it was setting up a new unit to investigate firms that use large numbers of self-employed contractors and agency workers to deliver their services.


Employment law—looking ahead to 2017
Monday 9th January 2017

Elspeth Beatty, associate at Brabners, recently joined a panel of employment law experts to consider what 2017 might have in store for employment lawyers.

To read her comments, please click here.

This article was first published on Lexis®PSL Employment  analysis on 3 January 2017. Click for a free trial of Lexis®PSL.


Naming and shaming: Some thoughts for 2017
Monday 9th January 2017

In October 2016, we ran a HR Forum on the highly topical subject 'Named and shamed for low pay: A headline you don't need' about a certain sports retailer that had been in the press, and not for the right reasons.

National Minimum Wage compliance and pay generally were big news items in 2016 and are likely to remain so in 2017. The biggest risks to businesses are no longer Employment Tribunal claims but in fact public “naming and shaming” on social media and in the news. In our HR Forum we explored the use of zero hour contracts and breaches of the National Minimum Wage, looked at what went wrong and identified the learning points for businesses.

Headlines you don't need 

Last year undercover reporters for a national newspaper reported on a world where staff were searched daily, harangued via tannoy to hit targets and could be sacked in a ‘six strikes and you’re out’ regime
It was said that workers were kept onsite at the end of each shift in order to undergo a compulsory search by security staff. This typically added another hour and 15 minutes to the working week – which was unpaid.

Given that the workers were not free to leave their place of work until and unless the security check has been completed, this time should be considered ‘working time’ and therefore paid in accordance with the National Minimum Wage provisions.

In addition, deductions from wage packets for clocking in for a shift just one minute late were imposed raising further issues of breaches of the National Minimum Wage requirements.

There was also criticism that:

  • more than 80% of staff in parts of business were on zero hours contracts;
  • a large proportion of workers were supplied by recruitment agencies;
  • workers were warned they would be sacked if they received six black marks over a six-month period for offences including a period of reported sickness, errors, excessive/long toilet breaks, time wasting, excessive chatting, horseplay and using a mobile phone in the warehouse;
  • workers were banned from wearing certain clothing brands at work;
  • the strict culture in the workplace resulted in workers being afraid to speak out over low pay and conditions as they feared immediately losing their jobs.

Following the newspaper investigation the department of Business, Innovation and Skills select committee published a damning report where one MP stated working practices were similar to those of a Victorian workhouse.

The report requested a review of the health and safety provisions and a review into corporate governance arrangements to improve the running and reputation of the company.

An internal review recommended that the company should put a workers’ representative on its board and stated that the board would give zero hours staff the option to choose a permanent employment contract with guaranteed hours of at least 12 hours work a week.

It also stated that the board was considering the business case for the continued use of agency workers and would consider transferring ten staff a month from the agencies to direct employment. Other pledges in the report included fewer searches of staff and a change to the deduction of wages regime for clocking in late.


It is impossible to put a price on the cost and disruption this unwelcome attention may have had on the business concerned. There was a continuing spate of negative publicity during 2016.  The business fought back with its own publicity campaign. The share price of the business also fell. The internal costs to the business in taking remedial action must have been considerable.

Learning points

Perceived worker exploitation is now big news. The Government has pledged to review modern working practices which includes the “gig economy” in view of the increasing use of engaging “self-employed” workers, frequently on digital Apps.  You can be sure that worker pay and the use of zero hours contracts will remain in the news.  Some thoughts:

  • Are you confident that your business could defend its employment practices if it was thrust into the news?
  • What is your approach to worker pay and reward? 
  • Carry out a pay audit – consider pay deductions and clocking in, do you count all working time in the pay calculation? Could unpaid overtime, “calls outs” or on call time be an issue?
  • Do you use agency workers or zero hours contracts and why do you do so?
  • Are your recruitment processes and staff contracts clear?
  • What is your process regarding staff tips and service charges?
  • How can we encourage staff to raise any concerns internally before going external?

We are offering a complimentary audit of employment practices in January 2017 or if you have any concerns about the above issues and would like a chat please click here.




Gender Pay: No Respite for Millennials
Wednesday 4th January 2017

The Resolution Foundation has identified that the gender pay gap for Millennials (those born between 1981 and 2000) stands at 5%, which is lower than for previous generations. Whilst this is a positive step, the same study has also found that when women reach their 30s and early 40s, a time when many start to have children, the pay gap widens considerably and continues for decades afterwards.

According to the Resolution Foundation, this trend is likely to continue for Millennials with the effect that female Millennials are likely to suffer “a significant lifetime earnings penalty compared to their male counterparts”.

The Government is seeking to address the gender pay gap by requiring employers with 250 or more employees to publish their gender pay gap information. The final version of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (“the Regulations”) has been published and is expected, subject to parliamentary approval, to come into force on 6 April 2017.

The Regulations contain a number of changes from the draft Regulations, including the fact that the “snapshot date” has been moved forward to 5 April, meaning that the first gender pay gap reports must be published by 4 April 2018. We will be updating you more fully on the changes in the coming weeks.

If you would like advice on gender pay gap reporting and the impact it might have on your business please contact Susan McKenzie or Kate Venables.