Employment law is always a fast-moving area, and missing something important can result in costly and time-consuming issues for management to deal with, so it’s best to be prepared. This is our monthly legal update from Flora Mewies of Ward Hadaway.
2016 might have only just started, but it already shaping up to be a busy year and with that in mind, here’s a heads up of what to expect in the next twelve months which is likely to impact on your business.
Holiday pay
This has been on everybody’s radar for a while now as there has been confusion around how to calculate employees’ holiday pay and whether it includes additional payments over and above base salary. In the case of Fulton, it was decided back in 2014 that ‘non-guaranteed’ overtime must be taken into account when calculating statutory holiday pay.
In response to concern about claims for unlimited amounts of unpaid holiday pay, a cap to limit claims to a maximum of 2 years back pay was introduced. This year we will find out whether a gap of more than three months between underpayments means the right to claim back pay is lost entirely. In the case of Lock, we were told that sales-related commission should be included in the holiday pay calculation but British Gas is now challenging this and we are awaiting judgment.
As it stands currently, commission should be taken into account during periods of holiday and while this is standard practice for some, others are awaiting the outcome of this appeal before making any changes. Soon this is likely to be something that requires real consideration for business owners and managers.
Working time
Unless your staff opt-out, the Working Time Regulations prevent a worker from legally working more than 48 hours a week. As a rule of thumb, time spent travelling to work does not fall within this limit. However, the recent European Court of Justice (ECJ) case of Tyco may change the position slightly.
The case was relevant to workers with no fixed place of work and held that time spent travelling in this way can count as time spent working and so falls within the Working Time Regulations. Further as it is working time, it should be paid for.
Future challenges from workers may arise if they are temps with no fixed place of work or staff who seek to argue that travel time to/from client and candidate meetings at the start and end of their working days takes them outside of the 48 hour week.
Ban on recruitment from overseas European Economic Area countries without prior advertisement in UK
In 2015, the Government introduced a ban on recruitment agencies advertising British job vacancies exclusively in overseas EEA countries. In addition to this, a consultation has recently concluded on further plans to ban recruiters from hiring individuals from overseas EEA countries without having first advertised the roles in the UK. No decision has yet been communicated about next steps.
The effect of this change would be to compel recruiters to advertise in the UK each time they are engaging in recruitment activity overseas. They would also not be able to fill UK vacancies with overseas employees already on their books without having advertised the role domestically first
Publication of the response to the consultation is due by mid-February, and it is likely new regulations will be introduced shortly afterwards.
Zero hours contracts
So-called ‘exclusivity clauses’ in zero-hour contracts, which prohibit individuals on such contracts from working for any other employer, were made unenforceable by legislation passed last year. However, the ban on exclusivity clauses could be easily sidestepped by employers by offering for example, one hour of work per week to a temp, or choosing not to offer any work at all if they chose to work for a different client or sign up with another recruitment agency.
To prevent employers avoiding the ban, those on zero-hours contracts from 11 January 2016 have the right not to be unfairly dismissed or suffer any detriment for failing to comply with an exclusivity clause. This effectively renders such clauses useless even if they are in existing or new contracts.
National Living Wage
The new National Living Wage will come into force on 1 April. This will effectively work as a premium on top of the National Minimum Wage for all employees aged 25 or over. It is expected that the rate payable in April will be £7.20 per hour (an increase of 50p per hour on the current National Minimum Wage), likely to rise to £9 per hour by 2020.
The Government has stated that the increase will have to be paid for by businesses themselves, although some tax relief is planned over the next few years to soften the blow slightly. A straightforward cost cutting exercise which includes the dismissal of employees because the business cannot afford the higher wages is not a legitimate reason for redundancy and is likely to result in claims of unfair dismissal from those dismissed.
Employment status
The thorny issue of employment status is back on the agenda for 2016. Whether an individual is classed as an ’employee’, a ‘worker’ or ‘genuinely self-employed’ has major knock-on effects on the degree of legal protection they have and how you treat and pay them.
Two Court of Appeal cases this year will hopefully shed further light on the extent to which an individual can be classed as an employee. In the case of Windle, the Court will be asked to decide whether two individuals who personally undertook work for a company on several short term freelance contracts were ‘in employment’. If so, this will allow them to pursue race discrimination claims against the company. In Pimlico Plumbers, the Court will decide whether plumbers who undertook work personally for clients were, in fact, employees and not self-employed contractors as the contractual documentation said.
Agency workers
Under the Agency Workers Regulations 2010, agency workers assigned to do ‘temporary’ work must be allowed access to communal workplace facilities and be given information about job vacancies from the first day of their assignment.
In the case of Moran, the Employment Appeal Tribunal held that ‘temporary’ meant ‘not permanent’ and so even though the workers had been assigned to the hirer for periods ranging from six to 25 years, they were not protected by the Regs. An appeal of this point is due to be heard in March, so stay tuned for further clarification.
Ward Hadaway is one of the UK’s Top 100 law firms with offices in Leeds, Manchester and Newcastle. We are a Northern law firm for national business. Led by experienced experts, our specialist recruitment services team offers commercially-focused legal advice on the whole range of issues encountered by businesses operating in the sector across the UK and overseas, from HR and employment to regulatory and corporate matters.
