Category Archives: Pay

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 Created a culture of fear throughout its workforce due to arbitrary and outdated disciplinary practices; and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.

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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.

Resolving Employment Disputes

10032845_mSUMMARY: What do you do when a tribunal claim is brewing…. Fight or Flight?

Whilst the number of tribunal claims are down, claims are still happening; unfair dismissal claims still prevail but often more complex issues such as discrimination and whistleblowing are involved.

Being on the receiving end of a tribunal claim can feel acutely painful from both a time and costs perspective. The following are a few simple do’s and don’ts to help manage a dispute which is brewing.

DO consider all the options for dealing with a dispute or a tribunal claim.

For example:

  • Acas Early Conciliation

Before a claim can be started an employee must contact Acas; Acas will then establish if the employee and employer can resolve the dispute without the tribunal’s intervention. Neither party has to participate in the process and if settlement cannot be reached, the employee is then free to claim.

Even if there is no interest in settlement, this process may serve as a reconnaissance exercise to understand more about the employee’s complaint in preparation for defending any subsequent claim.

  • Defend the case

Some employers may prefer not to shy away from the gaze of the tribunal because the complaint requires a robust response.  For example:

  • there is no case to answer;
  • the employee’s settlement expectations are unrealistic; or
  • there may be important financial and commercial considerations. Disabusing staff of a settlement culture may be one reason. Broader issues may also be at stake, which relate to pay, hours and holidays.
  • Judicial Mediation

Mediation has the advantage of taking place in a less formal setting in comparison with a full tribunal hearing. The mediator, an employment judge, will work with the parties on a confidential and without prejudice basis to explore if there is a way of resolving the dispute.  The parties are free to discuss their differences and consider the options for resolving the dispute, without the fear of their discussions being repeated if the mediation fails.

Agreement can be reached on matters which a tribunal would not be able to address. For example, the employee leaving, an apology or a reference being issued, or the employee being provided with assistance to find another job.

From an employer’s perspective a satisfactory commercial outcome, without having to concede its position can often be achieved.

  • Settle the case before the hearing

Once a tribunal claim has been issued, the Acas conciliation service will still be available to consider with the parties whether there is a solution. Settlement agreements can also be used.

DON’T ignore a tribunal claim once received.

Employers only have 28 days from the date when the claim is sent to respond to the tribunal setting out why the claim is disputed.  A response will usually be rejected if received after the expiry of the 28-day time limit.  Possible consequences are that a judgment could be issued without the employer being able to defend its position. This could be costly as compensation for discrimination claims is uncapped, and the maximum compensatory award for unfair dismissal from 6 April 2016 is the lower of £78,962, or one year’s pay.

Until and unless settlement is properly concluded, a response must always be filed.

DO consider ways to limit an employee’s opportunity to bring a claim in the first place.

Effective ways to reduce the risk include:

  • having legally compliant contracts of employment and policies and procedures;
  • introducing a robust appraisal system and ensuring current job descriptions exist;
  • communicating to staff the expected workplace standard of behaviour to reduce the risk of harassment and discrimination claims; and
  • dealing promptly and fairly with grievances and whistleblowing complaints.

DON’T forget …..

…. if a dispute arises, a sound strategy, which acknowledges the needs of your organisation and the merits of the complaint, will go a long way towards finding the right solution, whether that be a hard fight in the tribunal or a quick exit via the settlement route.

Contact Details

If you would like to identify the right strategy for your employment disputes, 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.

Does “Discretionary” Commission Mean Employers Can Pay Whatever They Want?

CommissionSUMMARY: Many employers give their employees discretionary bonuses or commission. However, “discretionary” does not mean that employers can pay whatever amount they choose.

In a recent case, the Court of Appeal agreed with the High Court that the amount of “discretionary” commission paid to an employee should be increased.

This case is a useful reminder that an employer should be able to show that the way in which it has exercised its discretion is not irrational or perverse.

Here are our top tips for employers who want to avoid challenges by employees about how they have exercised their discretion:

  1. Have in place an appropriately worded clause in the contract of employment setting out that a bonus/commission is discretionary.
  1. Consider the reason(s) for the amount of bonus/commission you are giving to an employee.
  1. Record your reason(s) in writing at the date the bonus/commission decision is made so that you have evidence ready in the event of a challenge.  Your record should show why and how you have reached a decision.  Flipping a coin is not a rational decision-making process!
  1. If you want a bonus/commission scheme in place, ensure that this is suitably worded to give you flexibility.  For example, the flexibility to vary or withdraw a scheme can be a useful tool.
  1. If you tell employees there are factors that will be taken into account in decision making (for example, in a commission scheme), ensure these factors are taken into account.  If the factors change, tell employees in advance of them carrying out the work.
  1. Treat staff consistently.  If an employee feels that they have been awarded a lower commission/bonus than others, they may claim this is on the basis of a protected characteristic (such as age, sex or disability).  This could leave an employer facing a discrimination, as well as a breach of contract, claim.

If you follow these tips, you should be able to motivate your workforce with the possibility of a bonus/commission payment, but avoid claims from employees when you want or need to pay less.

Case

Hills v Niksum Inc [2016] EWCA Civ 115

Contact Details

For more details about how to set up and implement bonus or commission schemes 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.

Carrying over holiday entitlement when on sick leave – how much and when?

HolidaysSUMMARY: In the recent case of Plumb v Duncan Print Group Ltd UKEAT/2015/0071, the EAT dealt with the issue of a sick worker’s right to carry over holiday entitlement.

Holiday is a hot topic for employers – recent decisions on holiday pay have led many employers to re-think how overtime could be taken into account in such payments.

However, an equally vexing problem which employers need to solve is how to deal with the holiday entitlement of those workers who are on sick leave. The EAT considered this in the recent case of Plumb v Duncan Print Group Limited.

Background

As a reminder, there are the following important principles to take into account when considering a sick worker’s entitlement to annual leave:

  1. Workers are generally only entitled to take annual leave in the leave year in respect of which it is due. For example, if the leave year is between January and December, an employee must take all of their annual leave entitlement by the end of December.
  1. An exception to the principle in point 1 is that annual leave may be carried over where the worker was unable or unwilling to take annual leave because he was on sick leave and as a consequence did not exercise his right to annual leave. The worker does not have to have made a request for annual leave in order to carry it over.
  1. On termination of employment, if the worker is entitled to annual leave in respect of any previous leave year which was carried over because of sick leave, the employer should pay the worker in lieu of that annual leave.

When considering carrying over annual leave, we are only referring to carrying over the 4 weeks of annual leave that a worker is entitled to under the (European) Working Time Directive, not the additional 1.6 weeks that a worker is entitled to under the (British) Working Time Regulations or any additional contractual annual leave.

Where clarity was required

There were 2 areas which needed clarity:

  1. How far back should a payment in lieu of holiday go on the employment ending?

In relation to point 3 above, it is clear that a worker should be paid in lieu for holiday they were unable to take because of sick leave.  What was not clear before this case, was how far back a worker could claim holiday for.  To take an extreme example, if they had been off sick for 5 years and had not taken any holiday, if their employment was terminated in the sixth year, could they claim a payment in lieu of all the 5 years of holiday they had been unable to take?

  1. Should a worker unwilling but able to take annual leave be entitled to carry over holiday?

Another point which required clarity was whether a worker who was unwilling to take annual leave during sick leave should be permitted to carry it over, even if he would have been physically able to take the annual leave during the sick leave period, had he chosen to do so.

Facts of the case

Mr P (the employee) was on sick leave between 26 April 2010 and 10 February 2014, when his employment terminated.  Mr P did not take or request any holiday until summer 2013 when he requested permission to take all of his accrued holiday from 2010 onwards.  The employer agreed to pay for accrued holiday for the current leave year (2013/2014) but refused to pay for untaken holiday for the previous 3 leave years.  The leave year ran from 1 February to 31 January.

Mr P brought a claim for payment in lieu of untaken leave for the 2010/2011, 2011/2012 and 2012/2013 leave years. The employment tribunal dismissed his claim and he appealed to the EAT (Employment Appeal Tribunal).

Decision

The EAT allowed Mr P’s appeal in respect of accrued leave for the 2012/2013 holiday year (i.e. he would be entitled to a payment in respect of these years), but dismissed his appeal in respect of accrued leave for the previous two holiday years.

The EAT made it clear that:

  • Sick workers can carry over untaken holiday leave for 18 months after the end of the leave year.
  • Sick workers are not required to demonstrate that they are unable to take their holiday.  They can choose not to take holiday during sick leave.

What does this mean for employers?

  • Employers now have more clarity on how much annual leave an employee can carry over from previous years.  Taking the example given earlier, an employee on the termination of their employment would not be entitled to payment in lieu of annual leave for the entire 5 years they had been off sick.  They could only carry over untaken holiday leave for 18 months after the end of the leave year and on termination would be entitled to a payment in lieu of this holiday.  A practical example of this would be:
    • The leave year runs between 1 January and 31 December.
    • Mr A has a full time contract and is off sick from 1 January 2010 until his dismissal on 1 January 2015.
    • Mr A has not taken any annual leave in this 5 year time period and his contract of employment does not state anything about carrying over annual leave.
    • Mr A would be entitled to a payment in lieu of 8 weeks annual leave on the termination of his employment.  This relates to the annual leave for the leave year ending 31 December 2013 and for the leave year ending 31 December 2014.
  • Employers should check their contracts of employment in relation to the carry-over of holiday entitlement.  If employers allow more carry-over of annual leave than is necessary, employers may want to amend these contracts.  Contracts should also not set out that carry-over of annual leave is never permitted.
  • Employers should permit workers to carry over untaken annual leave while they are on sick leave even if they consider that workers would have been able to take this annual leave had they chosen to do so. Whether to take annual leave during sick leave is a decision for the worker and they are entitled to choose not to take the annual leave even if they would have had the ability to take it.  They are also not required to request the annual leave if they wish to carry it over.

Cases

Plumb v Duncan Print Group Ltd UKEAT/2015/0071

Contact Details

For more details about holiday leave entitlement and its interaction with sick leave please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 1604 871143

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

Making Redundancies – Key Principles

Redundancy Policies

SUMMARY: HSBC has announced it is cutting 8,000 UK jobs in a global reorganisation.  There is no doubt that planning has been undertaken for such large scale redundancies, but what are the key steps that any business should take when making redundancies?

HSBC recently announced that as part of a global reorganisation, it will axe 8,000 jobs in the UK.  Many businesses will have to make redundancies at some point, whether it is part of a reorganisation or a site or workplace closure.  What are the key steps an employer should take when making redundancies?

  1. Ascertain the current situation – conduct an audit

Before taking any decision about embarking upon redundancy consultation, an employer needs to understand its current structure and terms and conditions of employment by conducting an audit.  In particular, it should consider the following:

a)    Does it have an up to date organisation chart?

b)    Does it have up to date contracts of employment for all employees?

c)    Are all employees’ job descriptions up to date?

d)    What are the terms of the contracts of employment?  In particular, what notice period are employees entitled to receive from the employer?

e)    What length of service do employees have?  Employees with less than 2 years’ service are not entitled to a statutory redundancy payment and generally do not have a right to bring a claim for unfair dismissal.

f)    What age are employees?  This is relevant for calculating any statutory redundancy payments.

g)    Is there a collective agreement with a trade union and does it include provisions relating to redundancy?

h)    Check policies and procedures are up to date and particularly consider whether there is any policy on the process for redundancy consultation and how much employees may be paid when they are made redundant.  There may be an enhanced redundancy pay scheme, which entitles employees to be paid more than statutory redundancy pay.

  1. Consider the reasons for making redundancies

The employer must have a strong rationale for making redundancies and it is sensible to set this out in writing in the form of a proposal.  The reasons must relate to:

a)    business closure (closure of the business altogether);

b)    workplace closure (closure of one of several sites, or relocation to a new site); or

c)    diminished requirements of the business for employees to do work of a particular kind (this is generally the reason for a restructure).

It is usually easy for an employer to demonstrate the first two reasons, but the third reason may require some further exploration and gathering of information to support it.

  1. Identify the pool for selection

A pool is the group of employees from which an employer will select those who are to be made redundant.

Before selecting an employee or employees for dismissal on grounds of redundancy, an employer must consider what the appropriate pool should be. Where the employer recognises a union, it will usually be expected to discuss the choice of pool with the union. A pool can be made up of one person in some cases.

Carefully identifying the pool for selection is likely to be most important in cases where there are diminished requirements for employees to do work of a particular kind.

If an employer is unsure what an appropriate pool for selection would be, we can assist in identifying this.

  1. Consultation

There are two types of consultation; collective and individual.  Individual consultation must always be carried out, even if collective consultation is carried out. Collective consultation obligations (in particular the length of the consultation period) depend on the number of individuals to be made redundant.

In the case of HSBC, it is likely that it will need to carry out collective consultation which must be carried out if an employer proposes to make redundancies of 20 or more employees within a period of 90 days or less.  This is one of the reasons it is key for an employer to establish how many redundancies it is proposing to make before starting consultation.

Although there are various steps an employer will need to follow when carrying out consultation, one essential criterion, whatever the type of consultation, is that an employer can show that the consultation is meaningful.

Minimum areas consultation should cover

In all redundancy situations, consultation should cover as a minimum the following areas:

a)    the reason for the proposed redundancies;

b)    the proposed pool for selection;

c)    the method of selection (eg. objective selection criteria); and

d)    ways of avoiding redundancies.

If consultation obligations are not satisfied, employers risk potentially expensive unfair dismissal claims being brought against them and/or a requirement to pay significant financial awards (known as protective awards) of up to 90 days’ gross pay per employee for failing to collectively consult.

Pre-consultation enquiries

Before starting consultation, we suggest an employer considers the following:

a)    The number of employees to be made redundant.

b)    Where those employees are based (i.e. are they at one site or different sites?)

c)    Whether there is a recognised trade union.

d)    Whether there is a collective agreement with a trade union containing obligations relating to collective consultation.

e)    Whether there is a need to elect employee representatives (which may be necessary to satisfy collective consultation obligations).

f)    What the timeframe is likely to be for the consultation period prior to making redundancies.

We suggest that employers seek legal advice if they intend to dismiss by reason of redundancy, so that an appropriate process can be followed to avoid a claim of unfair dismissal and/or a claim for a protective award.  Our advice will be most effective if an employer has already carried out the suggested steps in “ascertain the current position” above; we can assist an employer in carrying out these steps and conduct an audit of existing documents.

Contact Details

For more details about how to carry out redundancies please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 1604 871143

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

Time to share… Are you ready?


'Time to share...Are you ready'
SUMMARY: Our briefing note tells you how to get to grips with the basics on Shared Parental Leave.

What is the new Shared Parental Leave (“SPL”) regime?

SPL is a new legal entitlement for eligible parents of children due to be born on or after 5 April 2015, or who are placed for adoption on or after 5 April.  It gives both parents the opportunity to consider the best leave arrangements to care for their child during the child’s first year with their family.

Does SPL replace normal family friendly leave?

The entitlement to statutory maternity, paternity and adoption leave will remain. SPL is an optional entitlement which parents can choose to take.

In order to trigger SPL, the mother will however need to have curtailed or given notice to reduce their maternity/adoption leave (or pay/allowance if not eligible for maternity/adoption leave).

Do we have to offer SPL to all our staff?

The right to SPL is not automatic; a parent must satisfy stringent eligibility requirements and opt to take it.

Who is eligible to take SPL?

There are four elements to identifying who is eligible for SPL:

First element

The mother must:

  • have a partner;
  • be entitled to maternity/adoption leave; or to statutory maternity/adoption pay or maternity allowance; and
  • have curtailed, or have given notice to reduce, their maternity/adoption leave (or pay/allowance if not eligible for maternity/adoption leave).

Second element

A parent who intends to take SPL must:

  • be an employee.  A self-employed parent will not be entitled to SPL but if they pass the employment and earnings test (see below), their partner, if an employee, may still qualify for SPL;
  • share the primary responsibility for caring for the child; and
  • have properly notified their employer of their entitlement and have provided the necessary declarations and evidence.

Third element – the “continuity of employment test”

A parent wanting to take SPL must satisfy the continuity of employment test. This means that they must have been your employee for 26 weeks:

a)   at the end of the 15th week before the expected week of birth; or

b)   at the week of being matched with a child for adoption,

and remain in continuous employment until the week before he or she starts any period of SPL.

Fourth element – the “employment and earnings test”

The other parent/partner also needs to satisfy the employment and earnings test by:

a)   having worked for at least 26 weeks as an employee or a self-employed earner during the 66 week period leading up to the baby’s expected due date or child’s matching date; and

b)   earning an average of £30 per week (as at 2015) in any 13 week period during those 66 weeks.

When will we know if an employee wants to take SPL?

Parents do not have to choose to take SPL immediately on the birth/matching.  They have the option to request it at any time whilst they remain eligible to do so, and there is some untaken leave left to share. You would however be entitled to receive at least eight weeks’ notice – see below.

When and how must SPL be taken?

The legislation provides that:

  • SPL must be taken within one year of the birth/adoption; and
  • it can be taken as an unbroken period of leave (“continuous block”); or
  • it can be taken as separate periods of leave (“discontinuous block”). For example, the employee takes five weeks SPL, returns to work for four weeks and then takes a further five weeks SPL.

The distinction between continuous and discontinuous blocks of leave is important as this determines the nature of the employer’s response.

How much leave can be taken?

The total amount of SPL available depends upon the amount of statutory maternity/adoption leave that the mother or the primary adopter has taken and/or proposes to take – this is because the mother/primary adopter must cut short their 52-week entitlement which can either be done by:

  • returning to work early; or
  • giving a curtailment notice to their employer to end the statutory maternity/ adoption leave on a specific date.

The maximum number of weeks of SPL that can be made available is 50.

SPL can only be taken in blocks of complete weeks, i.e. not in blocks of less than seven days.

It is envisaged that SPL can be taken concurrently by the partner, while the mother is still on maternity leave as long as the relevant notice requirements have been satisfied.

Do we have to pay Statutory Shared Parental Pay (“SSPP”)?

The answer is yes.  SSPP is broadly the same as statutory maternity pay and can be paid for up to a maximum of 39 weeks (less any statutory maternity pay, maternity allowance or statutory adoption pay).

An employee who qualifies for statutory maternity pay, statutory adoption pay or statutory paternity pay and whose partner meets the employment and earnings test will be eligible for SSPP.

If both parents qualify for SSPP they must decide who will receive it, or how it will be divided, and they must each inform their employer of their entitlement.

How will we know if an employee wants to take SPL?

SPL can only be taken where the mother has:

  • already returned to work; or
  • given notice to reduce the statutory maternity/adoption leave and the date it will come to an end.

Before SPL can start you would be entitled to receive the following communications:

1.   Notice of entitlement

If an eligible employee intends to take SPL they must send you a notice of entitlement confirming that they want to opt to take SPL. This notice must include certain prescribed information such as how many weeks maternity/adoption leave will or has been taken, details of as how much SPL will be taken and when; a declaration from the employee and the other partner/adopter confirming that the statutory conditions are met must also be provided. At this stage the employee is only required to give you an idea of what they are considering and the leave dates do not have to be definitive.

The notice must be submitted at least eight weeks before the intended period of SPL.

The mother/primary adopter must provide their employer with the notice. Likewise, the father/partner must provide their employer with the notice.

2.   Curtailment notice

If the employee has not returned to work they must serve a curtailment notice in relation to statutory maternity/adoption leave to bring it to an end.

3.   Notice to claim SSPP

If an employee wishes to claim SSPP, they must also give notice at least eight weeks before they wish to start claiming it.  This notice can be included within the notice of entitlement.

4.   Notice to book leave

A notice to book SPL must be submitted in writing at least eight weeks before any period of SPL would begin.  This notice to book leave must set out the leave the employee intends to take specifying the start and end dates. Three periods of leave notice can be given, which can permit up to three separate blocks of SPL being taken.

This notice can be given at the same time as the notice of entitlement is provided.

This notice must be submitted at least eight weeks before the intended period of SPL.

Can we refuse requests for periods of SPL?

In short, the answer to this question will depend on whether the request relates to a continuous or discontinuous block of leave:

  • A request for a continuous block of leave must be accepted unconditionally, unless the employee agrees to a modification; there must in this case be evidence that such agreement has been freely given by the employee.
  • A request for a discontinuous block of leave could lead to three possible outcomes:

a)   the request is accepted unconditionally.

b)   a modified period for leave is agreed; and

c)   the request is refused without proposing alternative dates.

Employers should be mindful that there is a process for responding to requests particularly those relating to discontinuous blocks of leave and in some cases the default provisions may be triggered. For example, where the request is ignored, agreement is not reached or the request is rejected. The default provisions allow the employee to withdraw their request, which will then not be treated as one of the statutory three notices to book leave, or the leave will default to a period of continuous leave.

Does SPL have to mirror the organisation’s enhanced maternity scheme?

There is no statutory requirement for employers to create an occupational shared parental leave scheme, even if it offers an enhanced maternity scheme. If, however, you offer an enhanced maternity scheme we would recommend that you take legal advice as potentially not offering an enhanced SPL scheme may  give rise to a discrimination claim.

Do we need to allow the employee to return to work following SPL?

An employee’s right to return to work will be determined by the period of SPL taken:

  • If an employee returns to work following a period of SPL they are entitled to return to the same job if their combined leave period (comprising of maternity/paternity/adoption and SPL) totalled 26 weeks or less.
  • If an employee returns to work following a period of SPL where the number of weeks of maternity/paternity/adoption and SPL exceeds 26 weeks in total, or the total number of unpaid parental leave weeks exceeds four weeks, an employer must allow an employee to return to the same job unless it is not reasonably practicable to do so, in which case a suitable and appropriate job on terms and conditions no less favourable must be offered.

Are there any other considerations we need to be aware of?

The legislation does create additional rights and protection for those seeking to take or taking SPL. For example:

  • Terms and Conditions – During SPL an employee is entitled to benefit from all of their usual terms and conditions except for remuneration, i.e., wages.
  • Redundancy situations – If whilst on SPL an employee’s role becomes redundant, they must be offered any suitable alternative role, if available. This is the same right a mother on maternity leave has.
  • Detrimental treatment and dismissal – Employees are entitled not to suffer from a detriment or be dismissed for seeking to taking SPL.
  • “Shared Parental Leave In Touch Days” (“SPLIT days”) – An employee and employer can agree that the employee will attend  work for up to 20 SPLIT days.
  • Annual leave – Annual leave will accrue during SPL.

The Equality Act 2010 prohibits unlawful discrimination in the workplace on the grounds of a protected characteristic, which includes gender, sexual orientation, pregnancy and maternity. SPL therefore creates the potential for a discrimination claim. To minimise the risk, all requests for SPL must be handled fairly, consistently and in a non-discriminatory way to avoid such claims.

Should we introduce a SPL Policy?

Whilst there is no legal requirement for you to have SPL policy, we consider that it would be a matter of good practice for most employers to have one.  This will ensure that all SPL requests are dealt with consistently, all legal requirements are satisfied and the correct procedures, particularly where discontinuous periods of leave are sought, are followed.  It will also tell your employees how to apply for SPL and the minimum legal requirements they need to satisfy.

What do we do next?

If, having read our note, you have further questions or if you receive an application for SPL from a member of staff and you require some advice specific to that application, please contact us. We would also be happy to advise you.

We will however keep you updated with future updates on this knotty subject.

Please contact us on: fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

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

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.