Category Archives: National minimum wage

National Minimum Wage increases

1-1241448648KyD1SUMMARY:

As of 1 April 2018, the new rates prescribed by the National Minimum Wage legislation come into effect.

THE CHANGES:

The following changes to the national minimum hourly wage will take effect from 1 April 2018:

Screen Shot 2018-03-06 at 17.17.49

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 between 21 and 24 inclusive.

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.

Are You Ready For The Changing Face Of Employment?

FG DSC_0545Just a few months into 2017, emerging alternatives to traditional working patterns and arrangements are raising a number of interesting questions about the future direction of employment law.

Employers now operate in an employment arena where short-term contracts are commonplace and temporary positions and
freelance work is the norm!

While this operates to provide greater freedom and flexibility in relation to work for individuals concerns are starting to emerge that for some employers it creates opportunities for exploitation. The legislature and employment law courts now have a critical role to play in ensuring clarity and certainty for employers and individuals alike in avoiding unintended consequences.

Informal ways of engaging workers has existed for decades but arguably, technological advances make it easier for the informal workforce to tap into the mainstream working environment. This has led to concerns about employees within formal work patterns being disenfranchised and experiencing a gradual erosion of rights associated with traditional working arrangements.

Lost in the debate about the evils of non-traditional forms of working is the host of benefits that it can bring. Flexibility is the key argument of supporters. The ability of individuals to work whenever they want has a direct impact on earning income without undermining childcare, family obligations and medical priorities. Employers also benefit by being able to optimise resources while at the same time managing costs.

The legislature and the courts now need to provide confidence to business that where they engage individuals with the intention on both sides that they are genuinely self- employed, they are not subsequently declared workers or employees.

The genuinely self-employed do not have employment rights. Workers, a creation of European law enjoy fewer rights than Employees but are entitled to receive among other things the National Minimum wage and have a right to paid holiday. Workers can also claim for arrears of holiday pay, which can create very onerous financial burdens on businesses in the event that there is a large group of claimants.

There have been the much publicised decisions in the continuing saga of “employee v worker v self-employed” – this saga is set to continue in the light of the Uber decision that a group of 19 Uber drivers were entitled to receive the National Minimum Wage and holiday pay, being appealed. Whether the recently published Employment Status Review will help organisations determine the question is yet to be seen, but commentators have already pointed out that the review is dated December 2015!

Traditionally, organisations have relied on contracts and policies as a means of plotting a safe passage through the thorny landscapes mentioned above. And, whilst any employment lawyer worth their salt will advise that organisations should ensure they have in place up to date and relevant employment documentation (such as contracts and handbooks), is this enough? Very definitely “no”.  Long gone (if ever it was) is the time that organisations could brandish these documents in a “get out of jail free” way.

The Department for Business, Energy and Industrial Strategy has recently issued a statement which included the following “an individual’s employment status is determined by the reality of the working relationship and not the type of contract they have signed. Individuals cannot opt out of the rights they are owed, nor can an employer decide not to afford individuals those rights. Employers cannot simply opt out of the NLW by defining their staff as self-employed.” A sign of things to come?

For assistance with minimising the risk and guidance on proposed engagement agreements you can contact a member of the team at FG Solicitors on 01604 871143.

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.

Employed or Self-employed? Correctly Label the Employment Status in Your Business

to-be-or-not-to-beSUMMARY: How can your business avoid the employee/self-employed quandary that Hermes Couriers now faces?

Are workers receiving the thin end of the wedge where their rights are concerned? You would be forgiven for thinking the answer is quite possibly “yes” in the light of numerous news reports of recent weeks and months. To date, reports of poor treatment of staff have been made, in respect of Sports Direct and Amazon to name but two prominent businesses, it would seem that Hermes Couriers is the latest company to come under the media spotlight following the compilation of a dossier of complaints that its drivers are treated unfairly. The claims primarily allege that the company has failed to pay its drivers the National Minimum Wage (“NMW”).

Hermes Couriers’s initial response is that the drivers are self-employed workers and not employees and thus not entitled to the NMW. As an individual’s employment law rights differ depending on their employment status, it is imperative that a business correctly labels that status at the outset. With case law littered with examples of those individuals who are genuinely employed versus those who are genuinely self-employed, it is reasonable for businesses to think it is relatively easy to get the label right.

So why is there still room for dispute? Quite simply because case law has given rise to a number of tests/theories which are to be applied when deciding the question. As part of our quick guide series we have identified the six key questions to be asked by businesses in these times of doubt.

The 6 Key Questions:

1. Is it the expectation that the service is undertaken by the individual or does the individual have the right to substitute him/herself with another individual?

If there is no right of substitution (or there is a right but it is a very limited right) this is more consistent with the relationship being one of employment.

2. Is the business obliged to offer work and, when offered, is the individual obliged to undertake that work?

If the business can choose, without limitation, when it offers work and the individual is likewise at complete liberty to decide whether he/she will do the work which is offered, the relationship is more consistent with one of self-employment.

3. Is the individual expected to comply with the business’s policies and procedures (such as its disciplinary and grievance procedures), internal working practices (such as hours of work) and directions/instructions for undertaking the work?

Although it is fair to expect compliance with health and safety policies by both employees and the self-employed alike, the more integrated into a business’s working practices the individual is, and the greater the degree of overall control exercised by the business together point towards an employment relationship. Likewise, if the individual is a member of the business’s various schemes offered to employees (e.g. share option, bonus or medical insurance schemes), the relationship is more consistent with one of employment.

4. Does the individual bear any risk/have the ability to benefit from any profit?

Bonus arrangements aside, if the individual runs the risk of being out of pocket financially when undertaking work for a business, this will point toward the individual being in business on his/her own account and therefore self-employed.

5. Does the individual work solely for the business or for a variety of businesses?

In circumstances where an individual performs services for more than one business at any one time there is a greater likelihood of the relationship being one of self-employment than is the position where an individual works for a number of different businesses during any given period of time. However, a degree of caution should be applied when asking this question as the issue of part-time working can arise.

6. How do the parties term the relationship and who is responsible for accounting for tax?

This last question is one where businesses often fall into difficulties. The description applied to the relationship – even when it is agreed by both parties at the outset of the relationship – is not decisive. Just because an individual has described themselves as “self-employed” does not mean they are for employment law purposes. Similarly, where parties elect to adopt the tax practices of the genuinely self-employed (such as issuing invoices for services rendered) does not automatically mean the courts will find that no employment relationship exists.

When coming to a decision about a worker’s employment status, it is necessary to consider each of the six questions opposed to taking one in isolation to the others; this explains why businesses find themselves in some difficulty when determining the employment status of its workforce. Therefore, despite HMRC’s statement to the BBC in respect of Hermes Couriers which indicates key question 6 is going to be one that receives close scrutiny in determining the exact status of the drivers, it will be the complete picture that is scrutinised.

Only time will tell whether Hermes Couriers is correct in its assertion that its drivers are self-employed. In the meantime your business can avoid similar difficulties by conducting a review of any current arrangements and practices (utilising the 6 key questions above) for those engaged on a self-employed basis.

Contact Details

If you would like more information or advice on employment status issues 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.

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.

National Living Wage FAQs

When does it come into force?National Living Wage - FG Solicitors

1 April 2016.

How much is it?

£7.20 per hour.

Is there a small employer exemption?

No. All employers will be obliged to pay the National Living Wage.

Who does it apply to?

Workers aged 25 or over.

Where has this come from?

It falls under the National Minimum Wage legislation.

Is it the same as the Living Wage? 

No, organisations must pay workers the National Living Wage, but the Living Wage is voluntary, set by the Living Wage Foundation and calculated according to the basic cost of living in the UK.  The current UK Living Wage is £8.25 per hour and the current London Living Wage is £9.40 per hour.

What payments can be taken into account when deciding if the correct rate is being paid?

There are a number of elements of pay that can be taken into account. These include basic pay, bonus, commission, piecework and accommodation allowances.

Are pension payments made by the employer taken into account when deciding if the correct rate is being paid?

No.

What about tips?

Tips cannot be taken into account when calculating whether the correct rate has been paid to the worker. This is even if the tip is paid through the payroll system.

Is there an easy way of checking if I am paying the correct amount?

The Government has published an online calculator which can be used by employers and employees to determine whether the correct amount is being paid. This can be accessed at:

https://www.gov.uk/am-i-getting-minimum-wage

What happens if I fail to pay the correct amount from 1 April 2016?

The rates are enforced by the HMRC and those employers who fail to pay the correct rates will face financial penalties.

Contact Details

For more details about the National Living Wage please contact a member of our Employment Law team:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

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

FGazette April 2015

FGazette April 2015

Welcome the latest edition of the FGazette – we wish you a Happy Easter!

This latest edition of the FGazette is packed with key employment law updates and includes issues such as eliminating tribunal claims worry, considering whether individuals are employed or self-employed as well as performance management in the workplace.

Click on the image to read and please forward the FGazette to any of your colleagues and contacts to whom you feel it may be of benefit.

If you have any problems viewing this link, please contact us on 01604 871143 or fgmedia@fgsolicitors.co.uk

Biggest National Minimum Wage Increases Planned for October 2015

 

National Minimum WageSUMMARY: From 1 October 2015 changes to the national minimum wage will come into effect. The biggest real-term rise in 7 years to the adult rate.

The Changes

The Government has announced the following changes to the national minimum wage which will take effect from 1 October 2015:

From 1 October 2014 to 30 September 2015 From 1 October 2015
Standard Adult Rate £6.50 £6.70
Development Rate £5.13 £5.30
Young Workers Rate £3.79 £3.87
Apprenticeship Rate £2.73 £3.30

The increase in the adult national minimum wage rate is reported to be the biggest real-terms rise in 7 years.

The Categories

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@floydgraham.co.uk

+44 (0) 1604 871143

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

New Legislation in Force 1 October 2014

SUMMARY:  Several key employment law changes will be implemented on 1 October 2014:

  1. National minimum wage.  The national minimum wage rates for all workers will increase.  In summary:

1 October 2013 to 30 September 2014

From 1 October 2014

Standard Adult Rate

£6.31

£6.50

Development Rate

£5.03

£5.13

Young Workers Rate

£3.72

£3.79

Apprenticeship Rate

£2.68

£2.73

  1. Power to order equal pay audits.  Tribunals will have the power to order employers found to have been in breach of equal pay law to carry out equal pay audits in certain circumstances.
  1. Reserve Forces reform. The statutory qualifying period for unfair dismissal will be removed where the dismissal is connected with the employee’s membership of the Reserve Forces.   There will also be provision for payments to small and medium-sized employers of reservists who are called up.  See our article posted on Military Reservists and Unfair Dismissal posted on 22 September 2014 for further details.
  1. Time off to accompany partner to antenatal appointments.   Employees and agency workers will have a right to take unpaid time off to accompany a pregnant woman with whom they have a “qualifying relationship” to up to two antenatal appointments, up to a maximum of six and a half hours for each appointment. For more information on this, see our newsletter which is published on 1 October 2014.

Contact Details

For more details about upcoming changes in employment law please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 1604 871143

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