UK Employment Hub 

Pensions and Employment speak different languages and as an employer it’s important to have a team working for you that understands both.

A recent example arose in the Pensions Ombudsman case of Mr. O (PO-7782).

Mr O worked for a local authority. Following an outsourcing and TUPE he was transferred to Capita Secure Information Solutions Limited. Unsurprisingly, Capita had some cost-cutting targets to meet and notified the Service Desk staff to say that there might need to be staffing reductions.

The staff in question were members of the Local Government Pension Scheme. This provides expensive-to-fund unreduced pension benefits where a member who is 55 or over:

• is made redundant;
• is dismissed on grounds of business efficiency; or
• leaves by mutual consent on grounds of business efficiency.

As Mr O was on sick leave at the time he agreed to a compromise agreement with a £25k payment in exchange for leaving his employment. In his case a pensions top-up would have cost Capita an extra £50k.

Capita had to fill in a form saying what the reason for Mr O’s departure was. This caused issues. Capita tried to say it was by “mutual agreement” but the relevant LGPS form didn’t have that as an option.

It then tried “redundancy” but realised this was an error (and would have triggered the pension benefits). It then ran with “resignation”. The Ombudsman looked at the facts, ran them against the only options available on the form and ordered Capita to resubmit it with “mutual consent on grounds of business efficiency” as the reason. Mr O got his unreduced pension costing Capita £50k and his £25k as well.

There’s always more to these things, but the key thing for this blog entry is to make sure you’re clear on what your pension scheme provides on leaving service. If you have any early retirement/redundancy provisions, they could leave you with an unexpected and very unwelcome bill even if you’ve got all your employment ducks in a row.

In the latest in a number of cases dealing with the calculation of holiday pay, the Employment Appeal Tribunal (“EAT“) has held, in the case of Dudley Metropolitan Borough Council –v- Willetts, that pay for voluntary overtime normally worked constitutes “normal remuneration” for the purposes of calculating holiday pay provided for in the Working Time Directive (20 days).

The EAT rejected Dudley Council’s restrictive interpretation of the recent seminal cases of Williams and Lock. Dudley Council sought to argue that these cases demonstrated that the overtime payments were not “normal remuneration” because they were not intrinsically linked to the performance of the tasks the Claimants in this case were required to carry out under their employment contracts. The EAT found that this link did exist since the Claimants were performing the same tasks when they worked overtime as they did when performing their usual duties.

In reaching its decision, the EAT considered what it called “the overriding principal of EU case-law”, this being that normal remuneration must be maintained so that pay in respect of annual leave corresponds to remuneration while working. To not include this voluntary, but frequent, overtime in the calculation of holiday pay would be to potentially deter a worker from taking annual leave – which is exactly what the legislation (and the case law flowing from it) is intended to prevent. It seems therefore that the reverse is the case. Not only must taking holiday not be detrimental to an employee but it may, in fact, result in a windfall since, had the employees not been on annual leave, they may have chosen not to work the overtime in any event. It remains to be seen, however, how frequently overtime has to be worked before it becomes “normally worked”.

The full case report can be found here:  http://www.bailii.org/uk/cases/UKEAT/2017/0334_16_3107.html

Following in the tracks of CitySprint, Deliveroo and Excel, Addison Lee is the latest company to wrongly classify its workforce.

In a claim again supported by the Independent Workers Union of Great Britain (IWGB), an employment tribunal has held that Addison Lee wrongly classified Christopher Gascoigne as an independent courier. The judge hearing the case, Ms Joanna Wade, was the same judge who made the damming finding against CitySprint in January (see http://www.ukemploymenthub.com/citysprint-courier-delivered-employee-status-by-employment-tribunal). As in the CitySprint case, Judge Wade was critical of the construction of the contract that Addison Lee had put in place in an attempt to avoid a finding of worker status. Further, Judge Wade criticised an indemnity included in the contract against any liability Addison Lee may face based on any employment-related claim. Not only was it thought to be an attempt to frighten the worker off litigating, it also suggested that Addison Lee knew the risk it faced in portraying Mr Gascoigne as self-employed.

The IWGB has been supremely active in fighting for rights for those working in the gig economy. In another claim that it has supported against The Doctors Laboratory (see http://www.ukemploymenthub.com/gig-economy-couriers-delivering-emergency-blood-are-workers), it is asking the Central Employment Tribunal to make a finding that five couriers are in fact employees. Such status gives more rights, including the right not to be unfairly dismissed. The IWGB also awaits a decision by the Central Arbitration Committee over the employment status and union recognition case it brought against Deliveroo.

We also await the Government’s considerations of the Taylor Review (see http://www.ukemploymenthub.com/good-work-taylor-review-on-modern-working-practices). The evidence appears to be overwhelming that a contracting company should categorise any worker under its control and supervision with a new status which entitles them to holiday pay, sick pay and the minimum wage.

Mr Gascoigne’s status of worker entitles him to holiday pay and the national minimum wage. The employment tribunal will list a separate hearing to decide the amount of holiday pay owed to Mr Gascoigne.

The UK government has tasked the Migration Advisory Committee (MAC) to examine the role EU nationals play in the UK economy and society. MAC is the government’s independent advisers on migration.

Amber Rudd, the Home Secretary, has engaged the MAC. It will look into the British labour market, the overall role of migration in the wider economy and how a modern industrial strategy should align with the UK’s immigration system. The MAC will consult widely with businesses, employer organisations and EU citizens working in the UK.

The importance of this should not be underestimated, since free movement will end when we exit the EU. The government is working on plans to develop the flow of migration from Europe – see our blog post from 13 July (http://www.ukemploymenthub.com/the-rights-of-eu-citizens-in-the-uk). The UK and the European Commission had key discussions at the end of July. The next round of negotiations is scheduled for late August.

It’s rare for employment law to make “breaking news” headlines (unless you count President Trump’s attacks on his own staff). But that’s what happened, if briefly, with yesterday’s decision by the Supreme Court that the Employment Tribunal fees regime introduced controversially in 2013 was unlawful.

The decision was surprising partly because UNISON, which brought the claim, had lost the three previous hearings in the lower courts.  However, it was also surprising because it was based first and foremost on profoundly English common law principles relating to the constitutional right of public access to justice, and only secondarily on EU law and European human rights principles.  The lead judgment even cites Magna Carta as a guarantee of access to courts which administer justice promptly and fairly: “Nulli vendemus, nulli negabimus aut differemus rectum aut justiciam”, as is probably not often said on the Clapham omnibus (“We will sell to no man, we will not deny or defer to any man either Justice or Right.”)

So the result can perhaps be thought of as Brexit-neutral – Brexiteers cannot claim that this was EU-inspired interference with British sovereignty but neither can Remainers assert that the result would necessarily have been different had the UK not been an EU member.

In reaching its decision, the Court reviewed the evidence regarding the effect of fees on Tribunal claims, noting: “… a dramatic and persistent fall in the number of claims …” since fees were introduced three years ago.  The Court also observed that many claims are for modest amounts and that if: “… fees of £390 have to be paid in order to pursue a claim worth £500 (such as the median award in claims for unlawful deductions from wages), no sensible person will pursue the claim unless he can be virtually certain that he will succeed in his claim, that the award will include the reimbursement of the fees, and that the award will be satisfied in full.”

Readers should note the immediate practical effect: the 2013 Fees Order has been held unlawful and quashed, so that as from yesterday, fees have ceased to be payable for Employment Tribunal claims and appeals to the Employment Appeal Tribunal. Moreover, the Lord Chancellor has given an undertaking to reimburse all fees previously paid.

It remains to be seen whether there will be a return to the pre-2013 level of Tribunal claims or whether the Government will attempt to re-introduce fees in a different form – the Supreme Court said that fees would be lawful so long as they were not indirectly discriminatory (or justified if they were) and: “… if set at a level that everyone can afford, taking into account the availability of full or partial remission.” Hold the front page?

On Wednesday, the BBC published its annual report on pay for stars earning more than £150,000, and the statistics have been revealing to say the least. As an illustration, the top five highest earning men earn three times more than the top five highest earning women. Whilst the fact of a pay gap may be unsurprising, the scale is still shocking.

Lord Hall remarked that on gender and diversity the BBC is more diverse than the broadcasting industry and the civil service. However, what’s clear is that even the BBC has a long way to go.

It’s worth noting that the BBC has not as yet actually published its gender pay gap. Indeed it’s been reported that only around 30 or so of the 8,000 odd employers caught by the Gender Pay Gap Regulations have reported to date. However, the BBC has pledged to close the gender pay gap between men and women on air by 2020.

Speculation has now commenced as to how that will be achieved. The corporation has indicated that pay cuts will be part of the solution.

As employers prepare to publish their gender pay gap figures, a light needs to be shone not only on the solutions for closing the gender pay gap but also on the underlying reasons for the pay gap and the business case for closing the gap. Whilst there is no legal obligation to publish an accompanying narrative, messaging and communication, both internally and externally, are going to be key in delivering a ‘successful’ gender pay gap report.

The Labour Party has made it clear that it will not support the ‘Great Repeal Bill’ in its current form. It was reported last week that at least 15 Conservative MPs are in talks with a group of Labour MPs about a deal which could keep the UK signed up to the principle of free movement after it leaves the EU.

The deal has been described as a ‘Norway-style deal’. But what does that actually mean?

Under the proposed plan, the UK would remain part of the single market post-Brexit, as a member of the European Economic Area (the EEA). It would continue to benefit from free movement of goods, without applicable customs fees. However, unlike EU member states which are bound by a common trade policy, under the proposed plan, the UK would have the freedom to negotiate its own free trade agreements with non-EU countries. In exchange, the UK would be required to apply largely the same free movement of people principles as EU member states.

Whilst per capita UK contribution to the EU would fall, there would still be a ‘fee’ involved in being a member of the EEA.

From the roughly 23,000 EU laws currently in force, the EEA has incorporated around 5,000 (roughly 21 per cent). If the UK joins the EEA, a number of EU policy areas would continue to apply to it, including financial services, social and employment laws, and energy and climate change policies. While the EEA Agreement includes provisions for non-EU members to be consulted on new legislation, the UK would lose its right of veto in the European Council.

Even though details of the Great Repeal Bill have now been published, it’s all still speculation as to what happens in the Brexit negotiations and what our relationship with Europe will look like going forward. Whilst there is a general consensus that our employment legislation will remain largely unaffected by Brexit, what happens to our immigration model is still anybody’s guess.

Stay tuned to our Blog for all employment and immigration Brexit updates.