Category Archives: Benefits

Should Employers Take The Gender Pay Gap Seriously?

wage-gap-concept-blue-symbolizing-men-red-womenSUMMARY: A failure to address gender pay gaps can create both financial, legal and reputational risk for employers. We answer some frequently asked questions about equal pay.

Do we have to pay men and women the same?

The law provides that men and women should be treated equally when doing “equal work”.  This means men and women must be treated equally in relation to their terms and conditions of employment if they are employed to do:

  • like work. This means work that is the same or broadly similar;
  • work rated as equivalent under a job evaluation study; and
  • work found to be of equal value in terms of effort, skill or decision making.

In order to establish if there is equal treatment or otherwise, there will need to be a comparison of the terms and conditions enjoyed by a member of the opposite sex working for the same employer, doing like work of equal value.

Employers should not forget that the equal pay law protects men too.  Women who are pregnant or on maternity leave have special rights when it comes pay, benefits and bonuses.

Is there any way of defending an equal pay claim?

It is open to an employer to defend a claim if it can show the reason for the difference is due to a genuine factor and is not based on the sex of the employee. Common factors would include a difference in geographical location, experience or qualifications.

Is it just pay that we have to ensure is equal?

The equal pay law covers all aspects of pay and benefits including:

  • basic pay;
  • contractual benefits, i.e., company cars;
  • holiday pay;
  • hours of work;
  • non-discretionary bonus payments;
  • non-monetary benefits;
  • pension benefits and access to pension schemes;
  • performance related pay and benefits, overtime rates and allowances; and
  • sick pay.

The following areas would not be covered by the equal pay law but could be challenged under the sex discrimination law:

  • discretionary bonus payments;
  • discretionary pay increases;
  • promotion; and
  • the terms of a job offer.

To avoid the risk of equal pay claims we are considering banning staff from talking about how much they get paid?

Whilst employers are able to impose some restrictions on their staff about discussions concerning pay, any ban on this type of discussion would be unenforceable, if the purpose of the discussion is to identify if there is unlawful pay discrimination. This means a gagging clause in a contract of employment will not be effective if its aim is to prevent this type of discussion.

Any disadvantage including dismissal suffered by the employee as a consequence of their disclosure about pay for the purpose referred to above will be unlawful victimisation.

Do we have to respond to a request from a member of staff asking for information about pay differences?

A person who thinks they may have an equal pay claim may submit questions to the employer to help them determine whether they have such a claim.    An employer is not legally obliged to respond.  Before making the decision not to respond, an employer needs to be aware that an employment tribunal can take into account any response, or lack of response as a contributing factor when considering the issue of discrimination.

An employer faced with a request for information will need to consider carefully the nature of any response it chooses to provide and any decision not to respond. In any event, if legal proceedings are commenced the employment tribunal may order the information to be provided.

Acas has provided guidance on the question and answer process – Asking and responding to questions of discrimination in the workplace.

Should we be aware of any additional legal requirements?

It is expected from October 2016 private and voluntary sector organisations with more the 250 employees will be required to publish information about the pay differences between men and women. The first reports will have to be published by April 2018.

These requirements do not apply to the public sector.

If we lost an equal pay claim, what are the sanctions?

Any claim by an employee can be brought during their employment or no later than six months after their employment has ended.  Any individual wishing to issue a claim would have to contact Acas to consider conciliation.

A successful employee would be entitled to:

  • a declaration that their rights have been breached;
  • payment of any arrears (in the case of pay); or
  • damages (in the case of a non-pay contractual term).

In most cases arrears of pay can go back up to six years before the date the claim was brought.

Any employer who loses any case in the employment tribunal can now be ordered to pay a financial penalty of between £100 and £5,000, which is payable to the government.

In some cases, a losing employer will be required to carry out an equal pay audit and publish its findings supported by a plan to avoid breaches occurring or continuing. The penalty for failing to carry out the audit is up to £5,000.

Contact Details

If you would like more information on good equal pay practices with a view to engaging with your workforce and to minimise the risk of claims, please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.

Apprentices – Four Reasons and a Risk

160607 Apprenticeship Training CareerSUMMARY: Four reasons to engage an apprentice and how to overcome the main risk

The government has been encouraging employers to engage apprentices and many employers are now seeing the benefits of them.

Four key benefits

1. National Insurance Contributions (“NICs”)

Since 6 April 2016, employers do not have to pay class 1 NICs for apprentices who are earning less than £827 a week (£43,000 a year) and are:

  1. under age 25; and
  2. following an approved UK government statutory apprenticeship framework.

Specific evidence is needed to show that these two requirements are satisfied. For example, an appropriate agreement.

 2. Apprentice rate minimum wage

If the apprentice is in the first year of their apprenticeship or is under the age of 19, employers can pay the apprenticeship rate, which is currently £3.30 per hour.

3. Gain skills in areas your organisation needs to grow

Organisations will be constantly considering and implementing new ways to grow.  Apprentices can be a cost effective way of supporting the larger strategic aim.

4. Funding

There could be funding available from the Skills Funding Agency to your business to support apprenticeship programmes.  Further information can be found at www.gov.uk/government/organisations/skills-funding-agency

Risks

The intention is for the apprenticeship relationship to be a positive and beneficial one for the organisation and the individual. However, not all working relationships will be harmonious.  If things do not work out, employers need to be able to address problems and ultimately dismiss individuals both fairly and lawfully if problems subsist; this is often where the risk lies.  Why?  Apprentices can have enhanced rights on dismissal, which limits the ability to terminate the agreement without potentially a significant financial liability.

Having the right agreement in place lowers the risk by ensuring an apprentice can be dismissed in the same way as an employee.

More Information

For more information on apprenticeships and how you can make them work for you, please visit: http://www.fgsolicitors.co.uk/news/apprenticeships-make-them-work-for-you/

Alternatively, if you would like more information on other contract essentials, please visit: http://www.fgsolicitors.co.uk/news/contract-essentials/

Contact Details

If you are considering recruiting an apprentice and want to benefit from the above advantages, without worrying about the risk, please contact us:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.

Settlement Agreements – A Perfect Ending!

160519 Settlement AgreementSUMMARY: Learn more about settlement agreements with the answers to some of the most frequently asked questions.  

Q: When can we use a settlement agreement?

A:   Settlement agreements are often used to resolve workplace disputes, and to give the employer the certainty that once the agreement is signed there will be no subsequent employment tribunal claim from a disgruntled employee.  More often than not, the employment relationship will have broken down. The focus then is usually on avoiding unfair dismissal and discrimination claims. A whole raft of statutory employment rights and breach of contract claims can also be compromised.

There does not necessarily need to be a dispute as settlement agreements can be used in a variety of other circumstances where the employment will end.  For example, where there are performance or ill health issues, a voluntary exit or a restructure.

Settlement agreements are not however always about the employment relationship ending, as they can be used at any time during the employment relationship to resolve workplace disputes. For example, if there has been a complaint about how holiday pay has been calculated.

We would recommend that where a settlement agreement is being contemplated, legal advice is taken before any discussions take place with the employee so that any legal risks are identified and then can be properly managed.

Q: What are the benefits of using a settlement agreement?

A:  A settlement agreement allows an employer to manage legal, commercial and reputational risks all in one go in the knowledge that there will be no tribunal claim.  Significant management time, stress and expense can be saved.

Terms can also be agreed on issues that a tribunal would be unable to address. For example, the offer of a positive reference; or the introduction of post termination restrictions, where the existing contract is silent on the employee’s activities once they have left.

Settlement can also keep a dispute out of the public eye and be subject to strict confidentiality provisions.

These benefits need to be balanced with the fact the employee will want something in return, no matter how at fault they may be. Money is usually the main consideration but the circumstances may dictate an entirely different exit package.  There are also restrictions on an employer’s ability to compromise personal injury and accrued pension rights claims.

Q: Are there any essential requirements which need to be complied with to make the deal binding?

A: The following are essential to ensure that the employee is not able to bring an employment tribunal claim:

  • The settlement agreement must:
    – be in writing;
    – identify the complaints to be compromised; and
    – state that it satisfies certain legal requirements.
  • The employee must also have received independent legal advice.

A poorly drafted agreement or one which has been incorrectly signed may leave the door open for an employee to bring a tribunal claim, even if they have already been paid a sum of money.

Q: How long should we give an employee to consider a settlement agreement?

A: An employee should generally have at least 10 days to consider the settlement agreement and obtain legal advice. A shorter period could lead to allegations of undue pressure, permitting reference to the settlement offer in a subsequent tribunal claim, if settlement is not reached.

If there is a commercial imperative requiring a shorter period, legal advice should be taken.

Q: Do we have to pay for the employee’s legal advice?

A: An employer is not obliged to pay the employee’s legal costs.  To get the job done, an employer will often choose to make a contribution.  A good starting point is £250 plus VAT. The following factors may demand a higher contribution: locality, seniority of the employee and the complexity of the case.

Q: Can we recycle a settlement agreement used in the past for a different employee?

A: We would caution against recycling for two reasons:

  • Each employee’s circumstances are different; and these circumstances need to be taken into account in the agreement. A one size fits all approach will not provide the employer with the best possible protection; and may give no protection at all.
  • Any changes to the law may require amendments being made to the agreement.

Contact Details

If you would like to explore whether a settlement agreement may be the best option for your business where you have a workplace problem – please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.