Category Archives: Law

Get GDPR ready with us

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Couldn’t make it to our seminar on the 22nd February? Well, you haven’t lost out just yet! Keep an eye out for updates on our next seminar and get GDPR ready with us!

It is an acute focus on the mind to realise that there are under three months left before the General Data Protection Regulation (“GDPR”) becomes law in the UK on 25th May 2018.

What stage has your business reached in the process of operational readiness for GDPR? 

Zero Tolerance on Sexual Harassment?

size0Last year was a year of surprising developments in the field of employment law and it has also certainly been an encouraging year for women in the arena of work and working relationships with equal pay and sexual harassment setting the momentum for legal decisions and media frenzy.

From Prime Ministers to activists to law enforcement within the civil and criminal court system, a seismic change appears to be developing in the war against sex discrimination. Laws to protect, for the most part, women, from unlawful discrimination in the workplace are not new, the Equal Pay Act 1970 and the Sex Discrimination Act 1975 have been in place for over four decades.

This, therefore, begs the question, to what should we attribute this clear increase in the number of claims being brought against individuals, employers and even members of Parliament? Certainly the number of global high profile allegations against even the current United States President and Harvey Weinstein the movie mogul has arguably given women in the workplace the courage to come forward casting off the shackle of fear that such a stance could be career-defining for all the wrong reasons, or that the practice of sexual harassment within their particular workplace is so ingrained as to be institutional.

Closer to home, the abolition of Employment Tribunal fees has led to a 66% increase in the number of claims made in Employment Tribunals in the period of October 2017 to December 2017. No doubt some of these will be complaints linked to some form of sex discrimination.

Employers can either be directly liable for proven cases of sex discrimination or have liability imposed as a result of the actions of their employees where the employer is unable to demonstrate that they took all reasonable steps to prevent the conduct of the errant employee and there was nothing more they could have done. Given the current climate and appetite for seeking redress for unsolicited and unwanted conduct of a sexual nature, employers of any size are well advised to review their policies and procedures to ensure not only that there is an effective infrastructure in place to deal with allegations of this nature, but also that the issue of educating the workforce to have an appreciation as to the types of conduct that may be perceived by female and also male employees as undermining their dignity at work.

There should be regular periodic reviews of all relevant policies and procedures to ensure that there is sufficient knowledge of them in the workplace and that they remain effective. New employees should have dignity at work and awareness policies enshrined within onboarding and induction training to ensure that a full appreciation of the types of prohibited behaviour is gained. Employers must balance the right of an aggrieved employee to make allegations and to have the confidence that they will be effectively dealt with, against the right of the accused to also be confident that the process that follows will have the required level of investigative thoroughness to withstand objective scrutiny. In so doing a culture that promoted dignity at work will be woven into the fabric of working practices.

Gather, Distribute, Process, Retain No Info!

3MonkeysIn terms of legal opinion on which others may place reliance it is often advisable to do away with the needle of innuendo and pick up the club of statement. In line with that adopted position, you are invited to consider the implications of the impending arrival of the General Data Protection Regulations (“GDPR”).

As the regulations have their origins in EU law, an immediate question is will they survive Brexit? The short answer is that even if the regulations do not survive intact post Brexit, the Government has confirmed that the UK will implement the GDPR when it comes into effect on 25 May 2018 because the UK will still be a member of the EU at that time.

The GDPR heralds the biggest shake up in privacy laws in 20 years and will have a seismic impact on the human resource data processing undertaken by employers and employment related entities.

There will be some fundamental changes to the current law and it is suggested that organisations need to be aware of those changes and should be actively developing a strategy for compliance ahead of the changes coming into effect in May 2018. This is especially because the cost for GDPR non-compliance has risen dramatically when compared to non-compliance with current data protection legislation, as the new fines will be based on a percentage of total annual turnover of a business in the previous financial year. It will become easier for individuals to claim compensation and group actions will be more likely.

THE KEY CHANGES…

As a minimum, the key changes for staff engagement purposes include:

Consent: No longer will it be sufficient to include in Contracts of Employment a blanket clause stating an employee is deemed to give consent to the lawful processing of their data. Instead, organisations will be obliged to demonstrate that consent has been explicitly given for each processing purpose of the data in question. Furthermore, the organisation will need to demonstrate the consent was freely given (potentially difficult in the master/servant relationship which is employment) and that the consent is “informed.” Also, the organisation will need to implement a mechanism for the withdrawal of such consent at any time.

Subject Access Requests: The information to which data subjects will be entitled under the GDPR is more extensive. The time for providing that information is reduced from 40 days to one month and there will be no longer be a right for organisations to charge a fee to provide this data.

Right to Erasure: Also known as “the right to be forgotten,” this is a new right where individuals can request that their personal data is permanently deleted in certain circumstances. This will cause organisations particular difficulties where personal files are held both centrally and locally (for example, by a line manager).

Right to Restriction: There are instances when organisations are obliged to restrict processing; this includes employee challenges to the accuracy of personal data. This could result in certain management processes being stalled.

Breach Notifications: Unless the breach is unlikely to result in a risk to the individuals concerned, organisations’ data processers will be obliged to notify the ICO of all data breaches without undue delay and, where feasible, within 72 hours of the breach.

DO WE NEED TO DO ANYTHING YET??

YES! 

Organisations could be forgiven for thinking that, as the GDPR implementation date (25 May 2018) is still the best part of 12 months away, and with Brexit looming, the matter can be left for now. But compliance with this legislation will require a good deal of planning and remapping of existing processes. The immediate steps for any organisation include:

  1. A comprehensive audit of existing systems and processes;
  2. Deciding whether additional personnel should be recruited to take on specific roles and responsibilities;
  3. Designing systems that will assist with GDPR compliance (including breach notification compliance);
  4. Identifying appropriate training for staff – for example, general awareness training for staff with more specific training for those with greater compliance responsibilities (including the IT Department and HR managers); and
  5. Reviewing and upgrading current Contracts of Employment and policies to manage risk.

We can undertake your audit and assist you with preparation for GDPR implementation. For a non-obligation consultation, please call a member of our team on 01604 871143 or email us on info@fgsolicitors.co.uk

5 minutes with Floyd Graham

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1)   How has employment law changed over the last 5 years?

Employment law has changed in emphasis. There appears to be a focus on clarifying and simplifying legislation, whilst at the same time striving to make it easier for contentious matters to be resolved without the need for following a full legal process through to resolution by the Courts. With the right support, employers can now create the right blend of performance optimisation and risk management to suit their organisations.

2) How many employees do businesses need to have before they have an employment law strategy?

Even employers with only one employee have employment law obligations and mistakes can be costly! The strategy should focus on legal compliance first, followed closely by achieving enough lawful flexibility to manage the business profitably and efficiently.

3) What advice would you give our readers who need to reduce their headcount over the next 6 – 12 months?

Plan properly to ensure that you do not end up keeping the employees you should be losing and losing the employees that you need to keep! A bit of effort in the planning stage, and the right guidance will ensure that your selection decisions work for your business and that your process will withstand any objective scrutiny. It is important that exiting employees, and those being retained, accept that fair processes have been adopted as this is a crucial part of managing risk.

4) What advice would you give our readers that are planning to increase head count over the next 12 – 18 months? 

Firstly, evaluate and streamline your operational infrastructure to ensure that the increase in headcount adds value and does not just fill a vacancy that has arisen. Next ensure that your recruitment and selection process is capable of selecting the right candidates for the role not just in terms of competence, but also in terms of team fit. Miss-hires are costly! Lastly, spend some time getting the “on boarding” process right, after all your new recruit is not the only one who needs to make a good impression!

5) Finally, one of our readers has 35 employees. They have a member of staff who has been with them for 10 years, who has made significant career progression and is now Sales Director. However, the Managing Director has noticed a “different” person in the last 12 months and believes it would be in the best interest of the company for the Sales Director to leave. How does the Managing Director achieve this as quickly, cost effectively and amicably as possible?

As an advisor, I would be focused on establishing the reason for the change, after all for 9 of those 10 years he has been a good employee and has an invaluable historic working knowledge of the business. The reason could be linked to domestic circumstances, ill-health or becoming disillusioned with the work environment. An accurate assessment of the reason will greatly assist the decision on which “legal tools” are chosen to remove him. Commerciality and risk are the twin stools on which most removal strategies are based.

The law now permits the option of having a protected discussion with the employee to explain the Company’s position and to allow the employee to state his. If the differences are irreconcilable, a protected discussion is generally quicker than a formal process, but can be a more costly option. It is likely that a dismissal on performance grounds is likely to be contentious unless supported by significant evidence. If this option is chosen, great emphasis needs to be placed not only on the reason but also the process, which should be vetted beforehand to ensure that it is legally compliant. This is generally a longer route. Lastly, it may be less contentious and faster to restructure that part of the operation for which this employee is responsible and remove him on this ground. Again, if speed is of the essence, this option may be the most suitable. I note that the employee is a Sales Director and therefore prior to dismissing him, consideration should be given to safeguarding the business against post dismissal competition from him and protecting confidential information.

What’s Next For Employment Law – You Decide?

1622450 - thinker isolated over blueAll three major political parties have now published their manifestos ahead of the snap General Election to be held on Thursday, 8 June 2017, but what do the parties have in store for employment law?

The Labour Party was the first to divulge its plans in the document “For the Many, Not the Few,” which contains numerous pledges in relation to employment rights.

The Liberal Democrats followed closely with the release of its manifesto “Change Britain’s Future,” which includes an acknowledgement that they believe the Conservative Party will win the general election, but that the Liberal Democrats are the only effective opposition, particularly on issues such as Brexit.

Finally, the Conservative Party released “Forward Together,” which Theresa May claims “contains the “greatest expansion in workers’ rights by any Conservative Government in history.” 

We have covered some of the key points from each manifesto in relation to employment law below, but this is not a substitute for reading each manifesto in full, we also provide this update for information only and not with the aim of supporting any particular political party.

Brexit

Conservatives Labour Liberal Democrats
The Conservatives pledge to maintain all rights given to workers by European Legislation post Brexit, for example working time, annual leave, TUPE legislation and anti-discrimination legislation to name a few. Labour has also included a statement that it will ensure that all rights given to workers by European Legislation post Brexit will be protected. Similarly, the Lib Dems have made a pledge to unilaterally guarantee the rights of existing EU nationals in the UK. They have also stated an intention to remain part of the single market and to retain the right to freedom of movement as far as possible due to the vital role that EU workers have to play in the UK economy.


Human Rights

Conservatives Labour Liberal Democrats
The Conservatives have vowed to retain the Human Rights Act during the Brexit process, but would consider amendments to this in due course. Labour intends to preserve the Human Rights Act. The Lib Dems will oppose any attempt to withdraw from the Human Rights Act.


Workers’ Pay & Executive Pay Packages

Conservatives Labour Liberal Democrats
The Conservatives aim to increase the National Living Wage (which applies to workers aged 25 and over and is currently set at £7.50 per hour), in line with the current target for this rate to reach 60% of the median earnings by 2020.They have also pledged to curb executive pay by making executive packages subject to annual votes by shareholders and to commission an investigation into share buyback to ensure that this is not being used to artificially hit companies’ performance targets with the aim of inflating executive pay. Labour pledges to increase the National Minimum Wage for all workers over the age of 18 to the same level as the National Living Wage (currently £7.50 per hour). The National Minimum Wage is expected to be £10 by 2020 for all workers over 18. Labour also proposes to increase prosecutions against employers who fail to pay the minimum wage, and to reinstate the Agricultural Wages Board to monitor wages (and employment standards) in the food manufacturing, farming and fishing industries. Labour intends to reform the pay ratios for public sector employers, and those that bid for public sector contracts, to ensure that the maximum ratio between the highest paid and lowest paid would be 20:1. Labour pledges to abolish the 1% public sector cap on pay increases. Finally, Labour intends to work to close the ethnicity pay gap by introducing equal pay audits requirements on larger employers. The Lib Dems intend to establish an independent review of how to set up a genuine living wage and roll this out across central Government and where possible, across other public sector bodies. They would also call for larger employers to publish data on the number of workers earning less than the living wage and the ratio between top and median pay. They intend to end the pay freeze in the NHS and the 1% pay cap on other areas of public sector pay and to update wages in line with inflation. Finally, the Lib Dems would require binding public votes by Board members on executive pay polices.


Employment Status

Conservatives Labour Liberal Democrats
The Conservatives pledge to continue the current review of employment status and the “gig economy” with the aim to ultimately ensure that the interests of employees working in the traditional master/servant employment relationship are properly protected. Details on how this will be achieved have not been specifically defined. Labour vows to widen employment protection to provide workers with the same protection currently given to employees. In addition, Labour intends to modernise the law on employment status to include creating a statutory definition for “self-employed,” “worker” and “employee” and to crack down on the potential misuse of the self-employed status. Labour intends to ban the use of Zero Hours Contracts so that every worker will receive a minimum number of guaranteed working hours. Finally, Labour intends to support young people at work by creating a target that will see the number of completed NVQ Level 3 apprenticeships double by 2022. It intends to make apprenticeships more accessible to all, and would require the provision of annual reports on completed apprenticeships to monitor access into the workforce. Labour has pledged to maintain the current apprenticeship levy, but will aim to make this more flexible. The Lib Dems pledge to modernise employment rights to make them “fit for the age of the gig economy.” In addition they intend to stamp out the abuse of Zero Hours Contracts and create a right for workers to request a fixed-term contract. The Lib Dems intend to consult on introducing a right to make regular hours of work contractual after a period of time.


Family Friendly Rights

Conservatives Labour Liberal Democrats
The Conservatives have suggested they would introduce a new right for workers to take between 13 and 52 weeks off work to care for a family member who requires full-time care, and to return to the same job afterwards. This is an extension of the current right to take Dependant Leave, which only allows employees to take very brief unpaid periods off from work to deal with unexpected incidents or emergencies. There is also an indication that the Party will introduce a new right to Child Bereavement Leave. No details have been provided about the length of this leave and whether it will be paid or unpaid. Labour intends to increase the scope of the current 30 hours of free child care to cover all 2 year olds and will consult on the possibility of extending this to 1 year olds. Labour also intends to increase the Statutory Paternity Leave period from a maximum of 2 weeks to 4 weeks, and to increase the rate of Statutory Paternity Pay (which is currently set at £140.98 per week). Labour also intends to extend the period of Statutory Maternity Pay to 12 months from the current 39 weeks. Finally, Labour intends to consult on introducing legislation on Statutory Bereavement, however the full details of the scope of this have not yet been disclosed. The Lib Dems intend to provide 15 hours a week of free childcare to all 2 year olds and to children of all working families from the end of paid Statutory Maternity/Paternity Leave or Shared Parental Leave, with an ultimate aim to increase this to 30 hours. They intend to make the right to make a flexible working request and to take Statutory Paternity Leave a “day one” right as opposed to the current legislation that requires an employee to have 26 weeks’ continuous employment with an employer before gaining these rights. In addition, the Lib Dems intend to make the right to take Statutory Shared Parental Leave a “day one” right and also introduce a one month “use it or lose it” period for fathers to encourage them to take this type of leave.


Worker Representation & Trade Unions

Conservatives Labour Liberal Democrats
The Conservatives aim to improve worker representation at Board level for listed Companies by either nominating a Board Director from the workforce, creating a formal Employee Advisory Council to the Board or assigning specific responsibility for employee representation to a designated Non-Executive Director. Labour intends to repeal the Trade Union Act 2016, which covers specified turnout requirements and balloting requirements before industrial action and to replace this with a “sectoral collective bargaining regime.” Labour will also give all employees the right to receive union representation, guarantee all unions’ access to the workplace, only award public contracts to employers that recognise a union and look at introducing electronic balloting. Finally, Labour intends to launch a public enquiry on Trade Union blacklisting. The Lib Dems aim to encourage employee ownership by giving staff in listed companies with more than 250 employees the right to request shares to be held in trust for the benefit of the workforce. They would also continue the drive for Boardroom diversity by pushing for at least 40% of female boards in FTSE 350 companies and improving ethnic minority Boardroom representation.


Discrimination & Diversity

Conservatives Labour Liberal Democrats
The Conservatives intend to extend the scope of the Equality Act 2010 to cover discrimination against those suffering from mental health conditions that are “episodic and fluctuating” to cover people suffering from depression, anxiety and bi-polar disorder. Currently, the legislation provides that certain conditions are “deemed disabilities” such as blindness and cancer and protection is automatically granted. In other cases, an individual would have to demonstrate that they have a physical or mental impairment that has an adverse effect on their ability to carry out day-to-day tasks and that effect is long term. The suggestion is that a Conservative Government would potentially classify depression, anxiety and bi-polar disorder as “deemed disabilities” so that people suffering from these conditions are automatically protected under the Equality Act 2010.There is also a reference to incentives being offered to employers to employ vulnerable workers such as 1 year’s relief from Employers National Insurance Contributions. Finally, the Conservatives propose an extension to the current gender pay gap reporting regime, which came into force on 6 April 2017, by requiring employers to publish more data than is currently required. This scope of this has not been clarified. There is also a suggestion that race gap reporting could be adopted. Labour intends to enhance the Equality Act 2010 to make it easier to challenge disability discrimination at work. It would also consult on reform to the Gender Recognition Act and the Equality Act 2010 to better protect transgender people by changing the protected characteristic of “gender assignment” to “gender identity.” Labour intends to increase pay equality by introducing an independent body to ensure that the gender pay gap reporting obligations are complied with. The manifesto also provides a proposal to audit all proposed legislation to assess its potential impact on women before it is introduced and to strengthen protection for women against unfair redundancy. The Lib Dems aim to extend the current protection against discrimination to cover gender identity and expression and not just gender reassignment. They would also outlaw caste discrimination. The Lib Dems intend to extend the gender pay gap reporting scheme in the private sector to include a requirement to publish information on gender, ethnicity, and LGBT statistics. They would also require name blind recruitment in the public sector and encourage this in the private sector, and will aim to improve diversity in public appointments by including a presumption that every shortlist should include at least one black/ethnic minority candidate. Finally, the Lib Dems would guarantee the freedom to wear religious or cultural dress in the workplace.


Immigration & Modern Slavery

Conservatives Labour Liberal Democrats
The Conservatives aim to increase the Immigration Skills Charge from £1,000 per annum to £2000 per annum, which is levied on employers employing migrant workers. They will also review the application of the Modern Slavery Act to strengthen measures against exploitation of vulnerable workers. The Labour manifesto includes a statement that Labour is committed to working with Trade Unions to ensure there are fair rules to prevent exploitation of migrant workers. The Lib Dems aim to strengthen companies’ responsibility for supply chains to assist in tackling modern slavery.


Tribunal Fees

Conservatives Labour Liberal Democrats
The Conservative manifesto makes no reference to Employment Tribunal fees. Labour aims to abolish Employment Tribunal Fees (which were introduced in the summer of 2013) and extend the time period for bringing a maternity related claim from 3 months to 6 months. The Lib Dems also aim to abolish Employment Tribunal Fees (which were introduced in the summer of 2013).


Other Provisions

Conservatives Labour Liberal Democrats
The Conservative manifesto contains a suggestion that a Conservative Government will introduce a right to request unpaid time off work for training. It also covers protection for Occupational Pension Schemes whereby the Pensions Regulator will be given greater power to review acquisitions that could potentially have an impact on an existing Occupational Pension Scheme, and to issue fines and Director disqualifications to those wilfully leaving a pension scheme under resourced. Criminal sanctions are also being considered. Labour intends to introduce 4 new Bank Holidays to increase a worker’s statutory minimum holiday entitlement to 32 days per annum. The Lib Dems aim to provide more protection to NHS whistleblowers – specific details are lacking.

Employer Found Not Liable For Work Related Assault

Naughty or niceThe Christmas festivities are now hopefully a distant memory for most of us. That is of course if your Christmas party was not a fertile source of inappropriate, and in some cases, violent behaviour of members of your workforce.

It is settled law that employers can be held liable for the acts of employees carried out in the course of employment, save where an employer is able to show they took all reasonable steps to avoid the act occurring. The principle of holding employers liable for the acts of their employees is known as vicarious liability. By way of example, in the case of Hawley v Luminar Leisure Limited, the Court of Appeal upheld the decision of the High Court that a nightclub exercised sufficient control over the actions of a doorman supplied to it by a security company, to deem the nightclub his “temporary” employer for the purposes of vicarious liability. The Court of Appeal found that the nightclub had sole vicarious liability and assessed the security company’s liability at nil.

This brings us to the more recent decision of Bellman v Northern Recruitment Limited, here the High Court ruled that an employer was not vicariously liable for a violent assault by its Managing Director on an employee at an impromptu drinking session after its Christmas party. This was because it was an ‘impromptu drink,’ which was not itself a part of the work Christmas party (despite the expectation that some or all of the bill would be met by the company), and because the mere fact that the assault had followed a discussion of work matters did not mean that it was necessarily ‘in the course of employment.’ The Court said that the incident had arisen in the context of ‘entirely voluntary and personal choices’ by those present to engage in a heavy drinking session.

What does this mean?

Employers may be able to escape liability in such circumstances, but it will depend on the facts of a particular case.

What should employers do?

Employers should exercise caution as this decision does not change the law, nor does it establish that post-Christmas party drinks are outside the scope of employment for vicarious liability purposes.

The possibility of inappropriate behaviour at work related social functions is entirely foreseeable and employers should be vigilant and proactive in ensuring that acceptable standards of behaviour are defined and communicated to all employees and workers.

For more information on how to manage the risk of vicarious liability, contact a member of the Employment Team at FG Solicitors on 01604 871143.

Can wilful disobedience of an employers’ instruction ever be justified?

6fnZXAevDtAWTRWV9Js6picIAnd so it was that the final race of the F1 Calendar 2016 brought into sharp focus the controversy between Lewis Hamilton, three times world champion, and his employers Mercedes Benz as a result of the driver refusing to obey instructions to increase his speed during the race.

At first blush, it seems perverse that a racing driver needs to be told to drive faster during a race as adopting a purposive approach, the job is to drive as fast as you can with the aim of winning races.

In this particular case however, Hamilton was already winning the race and there appeared little risk that the result was in jeopardy. The issue was around the coveted world championship title as F1 aficionados will be only too well aware. Hamilton, being some nine points behind his team mate and only rival for the championship Nico Rosberg, could only win the world championship if his rival did not finish in at least third place.

Disciplining Hamilton for driving as he did in Abu Dhabi is akin to disciplining him for trying to win the world championship which seems perverse.

Employees who wilfully disobey the lawful and reasonable instructions of their employers leave themselves open to the risk of disciplinary action, which can include dismissal. Even without the benefit of actually seeing Hamilton’s contract of employment it is a safe bet that it will include provisions about the driver agreeing that he will obey team principal instructions and will possibly define the sanctions for failing to do so. Even in the absence of those written provisions, the law will imply a term into the contract that an employee will carry out all lawful and reasonable instructions of an employer. The interpretation of those three words is key to the extent to which Mercedes can discipline Hamilton for what was a clear defiance of express instructions.

Firstly, the instructions must be lawful, this can be interpreted to mean contractually sound as it goes without saying that illegal instructions do not have to be obeyed. In addition, the instruction must also be reasonable. This is where Hamilton may have some wriggle room. If he simply drove as fast as he could without any tactical or strategic application, he would no doubt win the race as he in fact did, but would certainly have lost any chance of achieving a fourth world championship title; a fact that would have been known to his team bosses.

Taking everything in the round, a view that tactical and strategic application is a team effort would not be unsound, but in reaching that view it must also be the case that the team outside of the car provides advisory information to the driver who then interprets and acts upon it. This margin of discretion afforded to the driver would logically cast doubt on whether an instruction to speed up would in the specific circumstances of this case be reasonable. This was certainly echoed by Hamilton’s pained utterance on receiving the instruction “Why can’t you just let us race?”

CONTACT DETAILS:

If your business has a “Lewis Hamilton” and you need some help or advice, contact FG Solicitors.

Call: 01604 871143 or E-mail: fgmedia@fgsolicitors.co.uk

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

2017: Looking Ahead to Changes in Employment Law

FG_ImageBy the time you read this the turkey will have been eaten, Christmas trees returned to storage or recycled, Christmas jumpers packed away and New Year’s resolutions very likely broken. However, with confidence amongst businesses reportedly riding sky high, employers have plenty to look forward to in 2017!

Undoubtedly the big news of the year will be the unveiling of whether “Brexit means Brexit,” and employers could be forgiven for thinking there is little else on the horizon in the people management department for the year ahead. Not so – there is plenty to keep employment law and HR Practitioners busy.

2017 heralds a number of changes. One such change is the introduction of a tax free childcare scheme to replace the current system whereby employers can provide employees with childcare vouchers. The new system will allow working families to claim 20% of qualifying childcare costs for children under 5 (and for disabled children under 17) up to a maximum of £2,000 per child per year. To be able to benefit from the scheme, the general rule is that both parents in the household must earn at least £50 per week. However, if one parent is an additional rate taxpayer, the family will not be eligible.

The gender pay gap reporting regulations are scheduled to come into force in April 2017 with the aim of closing the pay gap between male and female employees. The regulations apply to large private and voluntary sector employers with more than 250 employees, and will require employers to annually publish figures showing the average hourly pay of male and female employees, pay gaps at different levels of seniority within the business and information about bonus payments over a 12 month period.

The gender pay gap report must be published on the employer’s own website and a Government sponsored website. The first reports do not have to be published until April 2018. However, employers should begin their preparations now by initially identifying if they are likely to be caught by the regime, and if so by conducting a provisional audit to establish any areas of concern. The Government will produce guidance to assist employers with compliance in due course.

In addition, the Government plans to introduce an apprenticeship levy in April 2017, which will change the way apprenticeships in England are funded. This will require all employers with an annual wage bill of more than £3 million, to invest in apprenticeships by paying 0.5% of their annual wage bill (minus an annual levy allowance of £15,000) towards the cost of apprenticeship training. The employer will then be able to access funding for apprenticeships through a new digital apprenticeship service account. The Government is also considering introducing an “Institute for Apprenticeships” tasked to ensure apprenticeships are of high quality.

Additionally, the National Living Wage rate will be reviewed in April 2017. It is anticipated this will increase from the current rate of £7.20 per hour to £7.50 per hour in line with the recommendations of the Low Pay Commission.

Overall, we predict that 2017 will be a busy year in employment law and HR matters. Employers should ensure they are fully briefed and are fully prepared to save being caught by surprise!

CONTACT DETAILS:

If you would like more information about planned changes for 2017 or would like to discuss a specific concern in relation to your business, please contact us:

Call: (01604) 871143 Email: fgmedia@fgsolicitors.co.uk

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

TUPE Seminar – Thank You!

thank-you-messageIt was great to meet everyone who attended our TUPE Seminar on Friday 23 September, held in association with Bedford CIPD.  Sorry we missed those of you who were unable to attend.

The event was a success as always and we will continue to host seminars in the months ahead!

With this in mind, we will be planning our next seminar and have so far received feedback which indicates the following three topics are of the highest interest:

  • Employment strategies in a changing climate.
  • Policies & procedures – are you up to date?
  • Staff motivation.

If any of these tick the box for you or if you have any others in mind, please click here to let us know what gets your vote!

Below are a couple of testimonials we received from the CIPD Seminar for which we are most grateful:

“Floyd was a great presenter, provided lots of useful information in a format that made it easy to understand. Thank you!” – Alison Moss – Ramsay Healthcare

“Fabulous session and pitched at the right level for us all to learn – thank you.” – Rachael King – Central Bedfordshire Council

“Presenter kept my interest going and made the session very interactive which I always welcome.”- Veronica Charles – Luton Council

We are always keen to obtain your input so we can tailor our events to your needs, therefore please feel free to let us know any suggestions or ideas that you may have – fgmedia@fgsolicitors.co.uk

Contact Details

If you would like more information on our upcoming events, or if you require any advice on an employment law issue, please contact:

info@fgsolicitors.co.uk

+44 (0) 808 172 93 22

Sports Direct: Failure to Pay National Minimum Wage – A Business Model With Exploitation at its Heart? (Part 1)

14184143 - green grass  uk pound symbol against blue skySUMMARY:  The Sports Direct founder, Mike Ashley, faced the Business Innovation and Skills (“BIS”) Select Committee on 7 June 2016 for an evidence session into the working practices adopted by Sports Direct.  A month later, it was widely reported that Sports Direct’s profits had been hit.  Mr Ashley’s fortunes have not improved as this month it has been announced that shareholders will be asked to vote on whether there should be an independent workplace review – we will have to wait until September to see how this latest chapter unfolds.

But how did it come to this?

To recap, Mr Ashley received intense criticism stemming from the Guardian Newspaper’s investigation at the end of 2015, which uncovered allegations that his Company:

  1. Failed to pay its workers the minimum wage;
  2. Engaged a significant proportion of staff via zero hours contracts and short term hours agency worker agreements;
  3. Created a culture of fear throughout its workforce due to arbitrary and outdated disciplinary practices; and
  4. Conducted daily physical security searches of employees.

On the back of the ever increasing publicity of how some high profile companies treat their employees, we have produced a two part series to enable you to assess whether your company is inadvertently making the same mistakes as those reportedly made by Sports Direct.  The first in this series explores the allegation that Sports Direct failed to pay its workers the minimum wage and sets out the law behind this complex issue.

___________________________________________________________________________

THE ALLEGATIONS:

HM Revenue and Customs (“HMRC”) are currently investigating allegations that Sports Direct paid its workers less than the National Minimum Wage (“NMW”) effectively saving the Company millions of pounds per year.

The underpayment allegedly arose as a result of workers being forced to undergo compulsory rigorous security checks at the end of their shifts as a theft prevention measure, adding as much as 15 minutes onto their working day (or up to one hour and fifteen minutes to their working week), which is unpaid.

In addition, it is also alleged that workers faced a 15 minute deduction from their pay for “clocking on” 1 minute after their designated start time, even if they actually arrived on site on time.

WERE THE SPORTS DIRECT STAFF WHO WEREN’T EMPLOYEES ENTITLED TO NMW?

All employers are obliged to pay the NMW regardless of their size, and the NMW applies to all “workers” ordinarily working in the UK who are over compulsory school leaving age, not just employees.  This includes agency workers and apprentices.

WHAT ARE THE CURRENT NMW RATES?

From 1 April 2016, there are now 5 rates of NMW:

CATEGORY   RATE (£)
National Living Wage Workers aged 25+

7.20

Standard Adult Rate Workers aged 21-24 (inclusive)

6.70

Development Rate Workers aged 18-20 (inclusive)

5.30

Young Workers Rate Workers aged under 18 but above the compulsory school age

3.87

Apprentice Rate Apprentices either:

  1. Under the age of 19; or
  2. Aged 19 or over, but in the first year of their apprenticeship

3.30

HOW DO I DETERMINE IF MY COMPANY IS PAYING THE NMW?

In order to determine whether the NMW is being paid to your workers, you will need to determine their average hourly rate of pay.

On the face of it this calculation seems quite a simple one – sadly, this is not so. The average rate of pay is calculated by dividing the total amount of “money payments” that a worker earns across the relevant reference period, by the number of hours the worker has worked during that same reference period. However, what amounts to a “money payment” frequently trips up the uninitiated – see below.

The number of hours worked (known as “working time”) can also prove a tricky area for companies and one which has given rise to a raft of case law on its own. This is dealt with below.

Turning then to the relevant reference period, this is usually one month and cannot be greater than one month. However, if the worker is paid weekly or daily, then this is their reference period.

What Money Payments Should Be Considered?

Companies must exercise caution as some payments cannot be included as “money payments” for NMW purposes:

EXAMPLES OF INCLUDED PAYMENTS Basic salary
Bonus**An annual bonus paid for example in December, will usually only count for the December reference period
Commission/Incentive Payments Based on Performance
Accommodation Allowances
Allowances Paid by HMRC Dispensation Agreements
 

EXAMPLES OF EXCLUDED PAYMENTS

Benefits in Kind
Loans Given by the Company
Advances of Wages
Pension Payments
Lump Sum Payments on Retirement
Redundancy Payments
Tribunal/Settlement Awards
Premiums Paid for Overtime/Shift Work
Expenses
Tips and Gratuities

What About Deductions From Pay?

Certain deductions from a worker’s pay can reduce their pay for NMW purposes, including deductions made by a company in respect of expenditure in connection with carrying out their duties (e.g. the cleaning or purchase of uniforms). After these deductions have been taken into account the worker must still be left with at least the NMW.

Another famous retailer, Monsoon, was ordered to pay more that £100,000 to its employees in 2015 as a result of its practice of requiring staff to wear Monsoon clothes at work and deducting the discounted cost of the clothes from their wages. After the deduction, staff were left with less than the NMW.

Conversely, certain deductions do not reduce a worker’s pay for NMW purposes such as a deduction permitted by the contract between the Company and the worker due to misconduct.

In the case of Sports Direct, it has been reported that deductions were made from workers’ pay for lateness. If the deductions were not permitted by contract, the deduction would reduce the workers’ pay for NMW purposes.

A deduction of this nature could also amount to an unlawful deduction of wages, allowing the worker to bring a claim in the Employment Tribunal.

What Is Classed As Working Time?

Finally, a key issue for the Sports Direct case is what is actually classed as working time?

Working time is defined as any time during which a worker is working, at their employer’s disposal and carrying out their duties. There has also been recent case law demonstrating that, for those workers without a fixed placed of work, travelling time to their first assignment of the day and travelling time from the last assignment of the day may count as working time.

Against this legal backdrop, should the time spent by Sports Direct workers undergoing compulsory security checks be considered working time that is counted for NMW purposes? It is highly likely that the answer to this question is “yes”.  This is because workers are not free to leave the company’s premises until the compulsory security checks are completed.

How Can Your Company Avoid A Similar Fate?

Those companies operating in sectors where payment of the minimum wage is prevalent often adopt a proactive stance and schedule annual reviews to ensure legal compliance in this respect. These reviews can be linked to annual pay reviews or can form part of wider audits which align HR strategies to deliver the businesses’ objectives.

In any event, and at the very least, all companies need to:

  • have an awareness of the current NMW rates which are updated twice a year;
  • understand what payments can be included for NMW purposes; and
  • understand what counts as working time for NMW purposes.

This then enables a company to identify any risks which may arise on the back of the publicity surrounding high profile NMW cases such as Sports Direct; at the very least this will enable that company to tackle those risks head on.

CONTACT DETAILS:

If you would like more information on this topic, audits or would like to discuss a specific concern in relation to your business, please contact us:

Call: +44 (0) 808 172 93 22     Email: fgmedia@fgsolicitors.co.uk

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