Category Archives: Legislation

National Minimum Wage Increases

national-living-wage

SUMMARY: The government has announced that from 1 October 2016 changes to the National Minimum Wage will come into effect.

THE CHANGES

The following changes to the national minimum wage will take effect from 1 October 2016:

1 April 2016 From 1 October 2016
National Living Wage £7.20

£7.20

Standard Adult Rate £6.70

£6.95

Development Rate £5.30

£5.55

Young Workers Rate £3.87

£4.00

Apprenticeship Rate £3.30

£3.40

THE CATEGORIES

THE NATIONAL LIVING WAGE

This rate applies to workers aged 25 or over.

THE STANDARD ADULT RATE

This rate applies to workers aged 21 or over.

THE DEVELOPMENT RATE 

This rate applies to workers aged between 18 and 20 inclusive.

THE YOUNG WORKERS’ RATE

This rate applies to workers aged below 18 but above the compulsory school age but who are not apprentices.

APPRENTICESHIP RATE

This rate was introduced in October 2010 and applies to all apprentices under 19 years of age or those aged 19 and over but in the first year of their apprenticeship.

CONTACT DETAILS

For more details about the national minimum wage changes please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 1604 871143

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

Sports Direct: Use of Zero Hours Contracts – A Business Model With Exploitation at its Heart? (Part 2)

11578822 - 3d human charcter holding green zero, 3d render, isolated on whiteSUMMARY: 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, at the beginning of this month, it was announced that shareholders will be asked to vote on whether there should be an independent workplace review; and this week it was reported that Sports Direct is to pay £1million to its workers for breaches of the minimum wage legislation.

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.

In the first article of a two part series, we deal with the allegation concerning a breach of national minimum wage legislation; the first article can be accessed here.

In this second article, we explore the allegation that Sports Direct sought to increase its profit margins by engaging workers on zero hours contracts and short term hours agency agreements in order to avoid many of the legal obligations of employing staff. We also review the legal considerations that your business should take into account when using either zero hours contracts or being supplied with temporary workers via an agency.

THE ALLEGATIONS

Reports revealed that nearly 80% of Sports Direct’s workers are not employees but, instead, workers engaged via zero hours contracts or short term hours agency worker agreements. During the Select Committee’s evidence session on 7 June 2016, Steven Turner, the Assistant General Secretary of the Unite Union, remarked that this practice has created a “business model that has exploitation at its heart.”

In May 2015 the Government banned exclusivity clauses in zero hours contracts; clauses that prohibit a worker from taking up work under another contract, or which require the worker to get the company’s consent beforehand can no longer be included.

However, alternative work arrangements, specifically the arrangements adopted by Transline and the Best Connection Group, who supply Sports Direct with agency workers, could be placing workers in a worse position compared to if they had been engaged via a zero hours contract post the May 2015 change.

The reason behind this claim is that the Transline and the Best Connection Group do not have an obligation to offer these agency workers any work over and above a minimum of 336 hours over a 12 month period.

However, the agency workers must accept any suitable assignment offered to them unless there is “just cause,” and if assignments are not accepted, it is likely that the worker will not be offered another.

In addition, the workers are effectively forbidden for looking for additional hours elsewhere; workers who have done so have not been offered any further assignments – this is effectively an exclusivity clause in disguise.

WHAT IS A ZERO HOURS CONTRACT?

Zero hours contracts are contracts between a company and a worker and/or an employee, which specifies that the company is not obliged to provide the worker or employee with any minimum working hours, and that the company only pays for work undertaken. Similarly, the worker or employee is not obliged to accept any of the hours offered to them.

CAN ZERO HOURS CONTRACTS STILL BE USED?

Yes, zero hours contracts can still be used by companies.

The change in the law in May 2015 did not ban companies using zero hours contracts completely, instead it prohibits zero hours contracts containing exclusivity clauses.

WHY WOULD A COMPANY USE A ZERO HOURS CONTRACT & WHEN IS IT APPROPRIATE TO DO SO?

The key benefits of a zero hours contract are that a company using these contracts:

  • does not have to guarantee a minimum amount of work, and
  • only pays for work undertaken.

This is useful if your company is a start-up business and you are unsure of your people requirements. Alternatively, zero hours contracts may be useful if a company wishes to engage staff for seasonal work, or to cover absence and holidays.

The other benefit to companies is that the relationship between the company and the worker does not have to be one of employment. However, the worker will still benefit from the right to receive the National Minimum Wage, paid annual leave, rest breaks and will be protected from discrimination.

WHAT SHOULD THE BUSINESS CONSIDER WHEN ENGAGING AGENCY WORKERS?

If like Sports Direct, your company is supplied with workers via an external agency, you should be very clear as to the employment status of these workers because this will affect their rights.

Usually, the arrangement dictates that workers supplied by an agency are classed as workers of the end user client and not as their employees.

From day 1, agency workers are entitled to access to collective facilities (such as canteen facilities, child care facilities and transport facilities) and access to information about employment vacancies. Agency workers are also entitled to take rest breaks, receive the National Minimum Wage, receive Statutory Sick Pay (if they satisfy the relevant qualifying conditions set out in the legislation), take paid annual leave and benefit from protection against discrimination.

Following 12 weeks with the Company, agency workers are entitled to receive the same pay and other basic working conditions as equivalent permanent staff; this can include the auto enrolment pension obligations.

This is a relationship which often gives rise to uncertainty of employment status and, consequently, there are many reported cases on this very issue. Companies are therefore advised to ensure that, when engaging agency workers, they have in place the appropriate documentation with both the agency supplying the worker and the agency worker.

COMMENT:

Exclusivity clauses in zero hours contracts, which could exploit the most vulnerable of workers, are now unenforceable. However, this protection does not address the real issue for zero hours workers, which is the practice of ceasing to use workers who have turned down an assignment because they have accepted an alternative assignment and are unavailable.

In addition, as is evident from the Sports Direct review, Companies are now taking advantage of other working models such as the arrangements adopted by Transline and the Best Connection Group; although these arrangements are not prohibited by law, they raise questions of morality.

Only time will tell if the ongoing review by the BIS Select Committee will result in recommendations for change. In the meantime, we would recommend carrying out a review of the arrangement that your Company adopts for the supply of its staff to ensure that any legal obligations are being met.

CONTACT DETAILS:

If you would like more information on this topic 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.

Safe Harbor – Shipping Out?

160212 Data TransferSUMMARY: Employers who transfer employees’ personal data to a US office should be aware that they can no longer rely on the Safe Harbor decision to comply with data protection laws.

A recent European ruling means that the Safe Harbor decision is invalid.  Since then, employers have wanted to understand what this means in relation to transferring employees’ personal data; below are some frequently asked questions.

Q1: What is the Safe Harbor decision?

The Safe Harbor decision previously enabled certified organisations to transfer personal data from the EU to the US without breaching European data protection laws.

The Snowden revelations about the US National Security Agency’s surveillance of data held by Safe Harbor participants meant that Safe Harbor’s credibility was seriously undermined.  The revelation indicates that the US is not ensuring an adequate level of protection for personal data.

Subsequently, the European Court of Justice (ECJ) has held that the Safe Harbor arrangement is invalid.

Q2: Does the ECJ’s decision concern our organisation?

Personal data transfers between the EU and the US

If your organisation transfers personal data between the EU and the US it will be of concern; you can no longer rely on the Safe Harbor decision when transferring such data.

The European Commission is attempting to agree a new Safe Harbor package but has not given any time frame for finalising this.

Continuing to transfer data on this basis therefore carries a level of risk.  We suggest ways in which you can manage risk in relation to this at question 3.

Personal data transfers within the EU

If your organisation only transfers personal data within the EU, this decision will not affect you.

Q3: If we cannot rely on the Safe Harbor framework, what are the alternatives?

EU organisations should now consider alternatives to the Safe Harbor when transferring personal data to the US.  These include:

1. Having an employee’s informed express written consent.  Consent may, however, be withdrawn at any time.  Note that it may be considered unfair to make it a contractual requirement for an employee to consent to a transfer of his/her data to the US.

2. Implementing the following:

  • Model contracts – contracts adopted by the European Commission which provide standard wording for the transfer outside the EU; and
  • Binding Corporate Rules – a set of approved internal Codes of Conduct.  The EU’s Article 29 Data Protection Working Party have developed a number of documents to assist.

3. Anonymising or pseudonymising data exported from the EU to the US.

A paper trail should always be kept of any steps taken.

Q4: What are the possible sanctions if we transfer personal data to the US without appropriate alternatives in place?

Legal sanctions in the UK, if the organisation breaches data protection legislation, include:

  • a fine of up to £500,000;
  • the Information Commissioner taking enforcement action against the organisation; and
  • conviction for a criminal offence (which could result in an unlimited fine).

Organisations should also be aware that a breach of the Data Protection Act 1998 is likely to result in damaging adverse publicity and individuals could bring a civil claim against the organisation.

Contact Details

For more details about the issues in this article or if you would like a data protection policy, which we advise all organisations to have, 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.

Are Legal Highs a Workplace Issue?

DrugsSUMMARY: Use of legal highs has increased recently – how can employers manage this in the workplace?

The increase in the use of legal highs is now widely publicised.  Given this increase, the reality is that some employees may be at work under the influence.  This could present employers with two main problems: impaired employee performance; and serious health and safety implications for both the employer and the employee.

Whilst some employers may dismiss this issue on the basis it is unlikely to be a significant concern for them, the following points are worth noting when deciding whether to be proactive:

  1. Many so called “legal highs” are actually illegal.
  2. The drugs can have the same effects on users as some more traditional illegal substances.
  3. During 2014 in England, such drugs were implicated in 129 deaths.
  4. Legislation is currently going through Parliament to ban the supply of these drugs.

We would therefore recommend the following action points for employers:

  1. Update policies – consider how this issue can be covered in alcohol and drugs policies.  Employers should have clear rules about coming to work under the influence of drugs and alcohol and about taking drugs or drinking at work.  Legal highs can be treated in the same way as other drugs would be.  If policies are unclear, this is the time to update them.
  2. Remind – remind employees attending work under the influence of drugs that the use of legal highs at work is banned and ensure that they are aware of relevant policies and the potential sanctions for breaching these policies.
  3. Educate – educate staff and line managers on the signs of drug use, what to be aware of and the action they should take.

Contact Details

For more details about the issues in this employment law article or if you would like an alcohol and drugs policy 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.

Whistleblowing Update

17663630_sSUMMARY: The Enterprise and Regulatory Reform Bill is currently progressing through Parliament and proposes three significant changes to the current whistleblowing legislation. The recent case of Onyango –v– Adrian Berkeley t/a Berkeley Solicitors has also widened the concept of a protected disclosure to include a disclosure made after an employee’s employment has terminated.

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