Gordons Legal Employment Update – 25th August 2016

First of all, a SAVE THE DATE for you: we will be holding an Employment Update seminar on Tuesday 18 October 2016 which will be an afternoon event between 2pm and 4.30pm full details to follow in the next 10 days.

Comment: to ensure you are notified of the event please check your spam filters in a week or so to ensure you your invitation isn’t blocked!

Moving swiftly on, please find below details of recent Employment Law updates and news from the past week or so. There have actually been very few noteworthy case reports as such and bar one, the following is rather more a round-up of employment related issues we have seen in the general press.

Holiday pay calculations and regular overtime inclusion – further guidance or more confusion?

As we now know, from earlier high profile decisions, payments in respect of voluntary overtime which are regular and part of ‘normal pay’ should be included when calculating holiday pay in respect of the basic four weeks’ leave under regulation 13 of the Working Time Regulations 1998. Precise guidance on what ‘normal pay’ might include remains a matter of factual interpretation from case to case, in other words, something for individual tribunal judges to decide. A recent Birmingham case is an interesting example, demonstrating how Employment Judges may think when confronted with tribunal claims relating to such claims: Brettle and ors v Dudley Metropolitan Borough Council.

Although only a first instance decision at ET level and not therefore a binding precedent, the judge was happy to include regular voluntary overtime payments within ‘normal pay’. However, the payments in this case had been made regularly for many years (e.g. for between 10 and 21 years) and the judgment does not offer guidance on what may, or may not, be considered ‘regular’. Yawn! Why are cases always like that? Answer: to enable lawyers to make a living of course – nothing wrong with that!

This judgment is also significant for the judge’s support for the order in which the different types of leave under regulation 13 (the basic four weeks’ leave) and regulation 13A (the additional 1.6 weeks’ leave) are deemed to have been taken. In short, leave under regulation 13A should be held to have been taken last. Depending on the circumstances, this may potentially open up a gap of more than three months between one series of deductions and the next and a tribunal will not have jurisdiction to hear an unlawful deductions from wages claim under the ERA 1996 if there is a gap of more than three months between one series of deductions and the next.

Comment: If you haven’t yet amended your holiday pay calculations to include such things as regular overtime payments and commissions and if you are unsure whether you need to do so, please contact us for precise guidance as we have significant experience of advising on the strategic implications and valuation of the impact of such decisions and the risks inherent in doing nothing.

Women who have children tend to be worse off than men in the pay department

A report published this week by the Institute for Fiscal Studies (IFS) shows that women who have children will fall behind when it comes to pay. The IFS report shows that the gap between hourly earnings between men and women becomes steadily wider after a women has had children. The current 18% gap in hourly wages is down from 23% in 2003 and 28% in 1993, the IFS notes.

The IFS report shows that whilst women who return to work after having children are not generally penalised in what they earn on an hourly basis, the issue is that a significant proportion of women come back to work on reduced hours or part time and ultimately in the long run then miss out on wage progression and promotion. Although the pay gap between men and women’s hourly pay has been closing in recent decades, after new mums return to work the wage difference per hour does widen.

Separate research by the Chartered Management Institute and XpertHR shows that men are 40% more likely than women to be promoted into management roles.

The government is trying to tackle the inequality and regulations are due to come into force later this year requiring employers to calculate gender pay gaps using data from the specific pay period of 5 April, commencing from 2017 (note this has just been brought forward from 30 April 2017). Employers will have up to 12 months to choose when they publish this information. The regulations will mean some 8,000 employers with more than 250 staff will have to reveal the number of men and women in each pay range and show where the pay gaps are at their widest.

Comment: As an employer it is important to ensure that when women come back from maternity leave their progression options remain unaffected within the company despite the changed hours they may work. We can assist with equality and diversity issues and for more detail on the GPR regulations and how to prepare for them please contact us for further information on how we can help.

Strategies needed to tackle race inequality

A report by the Equality and Human Rights Commission has revealed that for certain groups of people in the UK life has not become fairer: the report, updated every 5 years, looks into whether our society lives up to the promise of creating a fair place to live for all its citizens.

With respect to employment, the report has found the following: black, asian and ethnic minority workers with degrees are two and a half times more likely to be unemployed than white workers with degrees. Black workers with degrees are paid 23.1% less on average than white workers with degrees. The report also shows that black and asian workers are moving more into insecure forms of employment at higher rates than white workers and that young people from ethnic minority communities have suffered from the worst long-term employment outcomes.

In light of their findings the commission has ordered the government put in place a comprehensive and co-ordinated strategy to achieve race equality. The report aims to show the government where society might be failing in creating race equality.

Comment: This will probably strike a note of considerable surprise with many reasonable employers. We would have expected that in 2016 we would not need to be lecturing employers about issues of equality, diversity and race discrimination. However, by way of example, the appalling nature of certain news reports following the Brexit vote seemed to indicate that we have regressed, at least in some parts of society. If you feel your business needs some assistance in this area please do not hesitate to contact a member of the Employment Team.

Whistleblowers

A report by the Whistleblowing charity, Public Concern at Work demonstrates the challenges whistleblowers still face. The charity argues that the law in this area (Public Interest Disclosure Act 1998 PIDA) needs an overhaul. The PIDA was passed to protect whistleblowers: the Act makes it unlawful for an employer to dismiss or victimise a worker for having made a ‘protected disclosure’.

This is the second time the charity has raised concerns about the act and how much protection it actually offers whistleblowers. In 2013 the charity set up a commission and as a result more protection was called for in respect of blacklisting whistleblowers and protecting workers who have been wrongly identified as a whistleblower, amongst other things. Due to the 2013 report the government issued the Prescribed Persons Whistleblowing Guidance and the Small Business, Enterprise and Employment Act 2015 introduced a duty on prescribed persons to report annually on whistleblowing concerns.

The government has since put further guidance in place and a non-statutory code, however the charity want to see a statutory code put in place by the government with the advantage being that it could be taken into account by courts and tribunals when dealing with whistleblowing issues. The charity argues that a statutory code of practice will ensure that employers have effective policies and procedures in place which support whistleblowers.

Comment: Employees should not feel like they are unable to speak up when it comes to a ‘protected disclosure’ and measures should be in place to guide and protect those who do. Whilst there has been a good deal of case law relating to apparent “misuses” of whistleblowing protection, this should not detract from a prevailing need to have a solid process in place. For help with policy design, implementation, and interpretation, let us know.

New rules on Apprenticeship levy

As a reminder rather than “new news”, from May 2017 the way the government funds apprenticeships will change. All employers who operate in the UK will need to pay the apprenticeship levy, this applies to employers in any sector with a pay bill of more than £3million each year. You are classed as an ‘employer’ if you are a secondary contributor, with liability to pay Class 1 secondary National Insurance Contributions (NICSs) for their employees.

The levy will be charged at a rate of 0.5% of the company’s annual pay bill. Employers will have a levy allowance of £15,000 a year to offset against the levy you must pay. So you will only have to pay the levy if your pay bill exceeds £3million in a given year. For example if you have an annual pay bill of £5,000,000 you would pay 0.5% x £5,000,000 = £25,000 – £15,000 levy allowance = £10,000 annual levy payment.

The levy will be paid direct to HM Revenue and Customs through the Pay as you Earn (PAYE) process. Once you have declared the levy you will be able to access funding for apprenticeships through a new digital apprenticeship service account. The digital apprenticeship service will help employers select an apprenticeship framework, choose training providers and post apprenticeship vacancies.

Comment: For further information on this please contact us.

If you require further information on any of the above developments please do not hesitate to get in contact with a member of the employment team, on the following number 0113 227 0100.