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Pay cap lift for police and prison officers

The 1% cap on public sector pay rises in England and Wales (which came into force in 2010) is to be lifted. The first professions to benefit will be police officers and prison officers. The government has announced that for the 2017/2018 FY police officers will receive a 1% pay rise plus a 1% bonus and prison officers will get a 1.7% rise, both of which will be funded from existing departmental budgets.
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Pay cap lift for police and prison officers

Fulton and anor v Bear Scotland Ltd

The EAT has confirmed that a gap of more than three months between non-payments or underpayments of wages breaks the ‘series’ of deductions for the purpose of bringing an unlawful deductions from wages claim. In the context of holiday pay, what this means is that where there has been a gap of more than three months between underpayments of holiday pay, the earlier payments in the series will be time barred, although the Tribunal may exercise its discretion to extend time.

Fulton and anor v Bear Scotland Ltd

Its all change in employment law in April…

April is a key month for employment law changes and this April is no different. 6 April is “D-Day” for a number of significant changes. By way of reminder:

1 April

  • National minimum wage – the National Living Wage (for workers aged 25 and over) increased from £7.20 to £7.50 and there were also changes in the other bands.

Weeks commencing after 2 April

  • Cap on a week’s pay  – the cap on a week’s pay (which is used in statutory redundancy pay calculations for example) increased from £479 to £489.

5 April and onwards

  • Gender pay gap reporting – employers with 250 employees should have collated their relevant data on the first annual “snapshot date” yesterday. Today the work on calculations can begin! Private employers have a 12 month window (4 April 2018) before calculations must be published on the employer’s website and the relevant government website. Remember that public sector employers have a earlier snapshot date (31 March), their calculations need to be published by 30 March 2018 and every four years thereafter.

From 6 April

  • Unfair dismissal compensatory award – the statutory cap increases from £78,962 to £80,541.  Don’t forget that the cap will be one year of the employee’s gross salary if lower.
  • Apprenticeship levy – UK employers in the public and private sectors with annual wage bills of £3 million or more have to pay their monthly levy payments;
  • Immigration skills charge – employers who sponsor workers under tier 2 will have to pay £1,000 per year, or £364 if they are a small employer or a charity;
  • IR35 – new rules apply to public authorities paying personal service companies or other intermediaries. The public authority will need to make tax and National Insurance deductions as appropriate;
  • Salary sacrifice – relief on benefits in kind provided via salary sacrifice arrangements is being scaled back for benefits entered into from today.
Its all change in employment law in April…

Dealing with personal relationships in the workplace

It has recently been reported in the press that John Neal, the CEO of the Australian headquartered insurance and reinsurance company QBE, had his annual bonus cut by twenty per cent (which equated to AU$550,000 or £340,000) for failing to disclose a personal relationship with his executive assistant. The decision to cut his bonus was taken despite what QBE described as a “commendable year [during which he] delivered a strong full year result”.  It has been reported that Mr Neal’s executive assistant was also executive assistant to the board.  QBE requires executives to disclose workplace relationships under its executive code of conduct.

Workplace relationships are common. Employees necessarily spend significant time together, and in many cases will have common interests.  Some employers view these relationships as a positive.  For example, one of the UK’s largest independent travel agencies is known to have produced well in excess of 100 marriages.  However, workplace relationships can be a distraction, can fuel gossip and can sometimes complicate decision making.  To be clear as to their expectations, employers should consider the circumstances in which workplace relationships may be inappropriate, and may wish to put in place a policy on them.  Any policy should strike a balance between an employee’s right to a private life, and the employer’s right to protect its business interests.  In most cases, this is likely to include a requirement that an employee discloses any workplace relationship that may give rise to a conflict of interest or a breach of confidentiality.  It should also be made clear to employees that they must not allow personal relationships to influence their conduct in the workplace.

Mr Neal’s case is an extreme example.  As CEO, he was clearly obliged under the executive code of conduct to disclose any personal relationship with a colleague.  Mr Neal has himself admitted that he did not do this, and that he could see that it might cause damage to the company’s reputation.  It is important to remember that the issue here was not the relationship itself so much as Mr Neal’s failure to abide by the code of conduct, and disclose it.  Whilst it has been reported that Mr Neal’s executive assistant has decided to leave QBE, it is understood that no action was taken against her, presumably because she was not subject to the code of conduct.  It is unlikely to be appropriate for employers to take steps to reduce bonuses, or take disciplinary action against an employee, simply for having a personal relationship with a colleague.  Such steps may be appropriate though, where an employer has a policy on workplace relationships which an employee deliberately disregards.  As always, when making a decision to reduce a bonus payment in any circumstances, an employer should consider whether the terms of the bonus scheme allow it to do this.  Failure to do so might lead to a claim for unlawful deduction from wages, or breach of contract.  The specific terms of the bonus scheme which applied to Mr Neal are not known.

Dealing with personal relationships in the workplace

Holiday pay includes commission (still)

Given the high numbers of potential holiday pay claims that British Gas has waiting in the wings it is unsurprising that following its loss at the Court of Appeal British Gas tried to appeal the decision to the Supreme Court. By way of brief reminder, the Court of Appeal found in Mr Lock’s favour and ruled that his holiday pay should include commission.

However the Supreme Court has refused to grant British Gas leave to appeal and has remitted the case back to the employment tribunal to determine the amount that should be paid to Mr Lock. It is hoped that the employment tribunal will make it clear how exactly the commission element of holiday pay should be calculated, as currently there is no clear guidance as to what the correct reference period should be.

There is speculation as to whether, following Brexit, this EU-derived right will continue. However at this stage this is a moot point as until the UK leaves the UK (which is likely to be at least two years away) companies and courts will have to uphold this right. So for the foreseeable future companies need to make sure that holiday pay includes commission.

(To see our previous blog post about the Court of Appeal hearing please click here)

Holiday pay includes commission (still)

National Minimum Wage and National Living Wage set to increase in April

Following our post on 1 December 2016, “National Living Wage to increase by 4 per cent in April“, the draft National Minimum Wage (Amendment) Regulations 2017 have now been published.

The draft Regulations are intended to come into force on 1 April 2017 and will increase the National Living Wage from £7.20 to £7.50 per hour. The new National Living Wage for workers aged 25 and over came into force on 1 April 2016, and is a premium added on to the National Minimum Wage.

The National Minimum Wage rates will also increase in April as follows:

  • Workers aged 21 to 24: £6.95 to £7.05 per hour
  • Workers aged 18 to 20: £5.55 to £5.60 per hour
  • Young workers aged under 18 but above compulsory school age who are not apprentices: £4.00 to £4.05 per hour
  • Apprenticeship rate: £3.40 to £3.50 per hour
National Minimum Wage and National Living Wage set to increase in April

Extending gender pay gap reporting to public sector employers

Following the women’s march over the weekend, in which hundreds of thousands of women globally took to the streets to march for women’s rights, it seems apt that only last week the Government published the draft Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017.

The draft regulations extend the duty to publish annual gender pay gap reports to public sector employers with over 250 employees. The draft regulations broadly reflect the draft gender pay gap regulations published in December last year, which apply to private sector employers with over 250 employees.

However, there are a couple of key differences. Specifically, the public sector duty will take effect as part of the existing public-sector equality duty, rather than as a standalone requirement. Whilst the stipulated ‘snapshot’ date for relevant private sector employers is 5 April, the ‘snapshot’ date for public sector employers will be 31 March.

As we’ve previously noted, the Government’s response paper issued in December did deal with a number of the outstanding issues relating to gender pay gap reporting. However, there are still unanswered questions and it is hoped that the Government will issue further guidance before the gender pay gap regulations come into force. It is currently anticipated that they will come into force by April 2017.

Employers should be carefully considering whether or not they are likely to be caught by the new regulations and be carrying out some initial analysis to determine what their gender pay gap is likely to look like. Employers may wish to consider whether there could be a benefit to changing bonus structures or bonus payment dates under any plans they operate, if their current arrangements are likely to inflate their pay gap.

Ultimately the aim of gender pay gap reporting is for employers to show that they are making progress in closing their gender pay gap, year on year. Employers will be assessed against their industry peers, and websites have already been set up to enable stakeholders to undertake a comparison exercise. Whilst voluntary under the current draft regulations, narratives could be a useful tool for employers to explain any pay gaps and to set out what steps they are taking to improve their statistics.

Extending gender pay gap reporting to public sector employers

CitySprint courier delivered employee status by employment tribunal

In another case focusing on the gig economy, the London Central Employment Tribunal has ruled that a CitySprint bike courier was a worker under the Employment Rights Act 1996.

In Dewhurst v CitySprint UK Ltd, the tribunal decided that Maggie Dewhurst was not self-employed and was instead a worker, despite her contract saying the opposite. Now Ms Dewhurst will receive employee rights given to other workers, such as holiday pay and sick pay. CitySprint will also need to pay Ms Dewhurst the National Minimum Wage and National Living Wage. While this decision only affects one employee directly, many employees are likely to make similar claims following the decision.

In the decision, the tribunal focused on what was happening in reality and not the wording of the contract (actually entitled a “Confirmation of Tender to Supply Courier Services to CitySprint Ltd”). The tribunal was critical of CitySprint’s use of confusing wording and a tick box recruitment form for the terms of the employment.

The tribunal also considered a number of factors regarding Ms Dewhurst’s normal day, demonstrating that she was integral to the business and had no control of her own working day.

For example:

  • starting her day by logging into the company tracking system to receive instructions and only logging out when she got home;
  • wearing a uniform and following instructions to smile;
  • the manner in which she was permitted to send a substitute to complete work, which was effectively no different from swapping roles with a colleague; and
  • CitySprint calculating the payments due to her and paying her in arrears, rather than self-billing via invoices.

CitySprint has called on the government to provide better support and help for businesses across the UK. The government is due to report in the spring on modern working practices. Uber, which received a similar ruling in October 2016, intends to appeal the decision. With many courier companies likely to be in a similar position, it remains to be seen what will happen next with the gig economy.

CitySprint courier delivered employee status by employment tribunal

National Living Wage to increase by 4 per cent in April

The Chancellor has confirmed that the National Living Wage (NLW) will increase in April 2017 from £7.20 to £7.50 per hour. This represents an increase of 4 percent.

The new NLW for workers aged 25 and over came into force on 1 April of this year, and is a premium added on to the National Minimum Wage (NMW). The current NMW rates are as follows:

  • Workers aged 21 to 24: £6.95
  • Workers aged 18 to 20: £5.55
  • Young workers aged under 19 but above compulsory school age who are not apprentices: £4.00
  • Apprenticeship rate: £3.40

It is not clear at this time whether the NMW will also increase in April. However, the government states that its aim is to increase the NLW to £9 per hour by 2020. Given the uncertainty that Brexit has created for the economy and the labour market, only time will tell whether this aim is successfully implemented.

National Living Wage to increase by 4 per cent in April

Government announces proposed statutory maternity pay and sick pay rates for 2017 to 2018

The government has published the proposed benefit and pension rates for 2017 to 2018. It reviews the rates every year to reflect the changes to the consumer price index (CPI). The CPI increased by 1% in the year 2015 to 2016, leading to an increase in statutory rates for 2017 to 2018, as set out below.

  • Maternity, paternity, shared parental and adoption pay: increase from £139.58 to £140.98 per week.
  • Sick pay: increase from £88.45 to £89.35 per week.
  • Lower earnings limit: increase from £112 to £113 per week.

Employees’ average earnings must be in line with, or higher than, the lower earnings limit to trigger their eligibility for these benefits. The above figures are key rates referred to by employers and HR professionals on a daily basis. The new rates will not come into force until April 2017 and might still be subject to change. However, the government’s early publication of its proposed revised figures will give employers and HR professionals an indication of the likely level at which they will be set. This will allow employers and HR professionals to prepare budgets accordingly and to anticipate any necessary amendments to policies in advance.

Government announces proposed statutory maternity pay and sick pay rates for 2017 to 2018