Clarification on holiday pay calculation
An Employment Appeal Tribunal (EAT) has found that the overarching principle when paying holiday pay is that normal remuneration must be maintained in respect of annual leave. The principal established is that when taking leave, a worker must not suffer a financial disadvantage. Payments in respect of overtime (whether that is compulsory, non-guaranteed, or voluntary) constitute remuneration. For a payment to count as ‘normal’ it must have been paid over a sufficient period of time. The indication given was that voluntary overtime worked one in every four or five weeks would be sufficiently regular to count as ‘normal’ and should be included.
What is clear is that:
- Guaranteed overtime should always be included in holiday pay calculations;
- Non-guaranteed overtime, which is compulsory when offered, should also always be included;
- Purely voluntary overtime, where there is no obligation to offer it and no obligation to do it if offered, should be included if it is sufficiently regular or recurring so as to qualify as ‘normal’.
The key should always be the overarching principle that workers should not be out of pocket when they take holiday.
Losing the right to work doesn’t mean losing the right to correct dismissal procedure
Employers that don’t believe an employee has the right to work in the UK still need to adhere to good employment law practice. If an employer is found to employ an individual without the right to work in the UK, the employer can be issued with financial penalties (currently up to £20,000 per individual) and even have a business closed down for a period of time (ultimately up to 12 months). As a result, many employers adopt a very conservative and risk-adverse approach when dealing with employees who do not have an unqualified right to work in the UK.
A recent case heard by the Employment Appeal Tribunal (EAT) has shown that even against the above background, employers are still obliged to adhere to good employment law practice.
The employee is from Pakistan and started working for a pizza chain in October 2009. He was a well-respected and hardworking employee, working his way up from a delivery driver to an acting assistant manager and a manager-in-training. His right to work in the UK expired on 12 August 2016. However, it could have been extended if he submitted an application for permanent residence on or before this date. The employer wrote to the employee in June 2016 and July 2016 and reminded him to submit his permanent residence application by 12 August 2016, and to show evidence of that application to his employer.
Late on 12 August 2016, the employee sent his manager an email with attachments which purported to show the permanent residence application had been made. However, the manager could not open the attachments. The employer decided that, to ensure it was not employing an illegal worker, it should dismiss him and sent him a dismissal letter the same day. The reason relied upon by the employer was ‘some other substantial reason’ – namely that the employer genuinely believed that it was legally prohibited from continuing to employ him. He was not called to a meeting prior to his dismissal and he was not given a right to appeal the decision.
The employee brought a claim for unfair dismissal, which he lost at the employment tribunal. He appealed the decision and successfully persuaded the EAT that the judge at the employment tribunal had not applied the correct law.
The EAT did state the employer was justified in dismissing the employee but was very clear that, had the employer offered the employee a right of appeal, the employee would have been able to show that he did make the permanent residence application in time and therefore had the right to work in the UK.
The EAT stated that in circumstances involving right to work, it is good practice to offer an appeal. The judge was clear that this type of case is not unusual. The judge also referred to the Home Office’s Employee Checking Service, which he acknowledged was not always up-to-date or fully informed, but that HR managers should be familiar with. Ultimately, the case shows that an employer should always offer an appeal when dismissing an employee – even in right to work cases.
Consultation to improve governance in insolvency situations
The Government has launched a consultation to improve governance processes of companies that go bankrupt. The launch of the government’s consultation around improving corporate governance and stakeholder outcomes in insolvency situations, is expected to be welcomed by many UK businesses.
With several high-profile collapses bringing corporate governance to the fore recently, it is essential that businesses at risk of insolvency are aware of the proposals contained in the consultation and follow best practice when it comes to dealing with any resulting HR issues.
The Government’s primary objective for launching its new consultation is to crack down on irresponsible behaviour of some UK directors and offer greater protection to employees throughout the insolvency and liquidation process.
For example, while there have been instances of individuals setting up companies only to run them into the ground and set up another, leaving a trail of destruction behind them, any investigation against them would be dependent on the business entering liquidation.
The consultation proposes potential changes to ensure that directors responsible for the sale of an insolvent subsidiary of a corporate group protect the interests of the subsidiary’s shareholders, in particular by deterring reckless sales and ensuring fair outcomes when major companies get into difficulties.
It is important for businesses in insolvency situations to have a set of clear processes and procedures in place to protect the interests of the workforce and help to limit reputational damage. The most common HR issues are likely to arise around monies owed to employees made redundant, which may include outstanding salary, accrued holiday pay, unpaid pension contributions and redundancy pay.
When it comes to the rights of former employees, it is also vital to understand the distinction between those whose contracts are terminated during the first 14 days of the administration period (‘ordinary creditors’) and those made redundant after this period (‘preferential creditors’). Whereas ordinary creditors are in the last category to receive monies owed, preferential creditors stand a better chance of recouping any outstanding payments due to them. In addition, while ordinary creditors are only entitled to outstanding wages and redundancy payments, preferential creditors may also be entitled to up to six weeks of accrued holiday pay and some occupational pension payments.
Pensions Regulator cracks down on failing employers
The Pensions Regulator (TPR) announced last week it would be cracking down on employers it suspects of providing misleading information on their automatic enrolment duties through a series of spot checks. The pensions watchdog intends to conduct around 100 checks on employers a month. In particular, it will be on the lookout for incidences where two sources of data do not match or seem inconsistent – for example, an employer reporting that 20 staff members are enrolled but PAYE filings revealing it has 50 employees.
Although the vast majority of employers meet their pensions responsibilities, TPR will be using the full range of its powers “to ensure staff get the pensions they are due”.
It is an offence for employers to provide TPR with false information on their declaration of compliance, but there are tell-tale signs indicating an employer might not be telling the truth. The Regulator can also detect employers who are failing to meet their automatic enrolment duties despite being issued with a penalty, and the Regulator will take action if they suspect that irregularities exist.
In May, TPR reported that it received more than 80 calls every week from people who suspected their employers were not complying with workplace pension laws.
Female candidates being rejected for fear that they might have children
Nearly one in three bosses would reject a female candidate because they fear she might start a family, research has found. The survey of 501 UK managers also discovered one in four would turn away a woman because she was a single parent, 29% because she had young children and 28% because she was recently engaged or married.
Almost two in five admitted they would advertise roles as available to men only if the law allowed them, while a similar proportion said they thought men were more dedicated to their jobs.
This discrimination also affects women generally – those who don’t plan to have children or already have children – as it is about attitudes and stereotypes applied to women generally. The survey also revealed one in seven bosses did nothing to support mothers returning from maternity leave, while a third thought women were more of a future investment risk than men.
Grievance treated as “immature” cost a company over £15,000
A bathroom supplies company has been ordered to pay more than £15,000 by the Employment Tribunal after its director called an employee “immature” and fired her for alleging sexual harassment.
The Claimant was employed as a cost and initially worked full time before going part time on three-and-a-half days a week. She claimed that she had been subjected to sex discrimination by the owner of the business. She said the degree of his behaviour made her feel stressed about being alone with him at work.
The tribunal also heard that she had been subjected to abusive language and derogatory comments about her age and religion from other colleagues. She claimed one colleague in particular treated her as a secretary and not in the same manner as his male co-workers.
Eventually the Claimant raised a grievance and an informal investigation was held but the employee felt that she had not been sufficiently included in the decision and went home. She submitted a formal grievance the following day, in which she complained primarily about the abusive language she experienced from her colleague.
She received no response to her grievance and instead was dismissed. The owner of the business described her conduct as “immature” and said the workplace was “not a kindergarten”. She was unable to work anywhere following her dismissal as she suffered from extreme stress and anxiety for six weeks following the dismissal, recounting at tribunal that her stress levels had made her physically ill.
Podlecka lodged a tribunal claim against MYM Global in January 2018, on the basis she was dismissed because she raised a formal grievance over her co-worker’s conduct.
The Tribunal found that the conduct the Claimant was subjected to, was experienced over a period of three months. Second, it involved unwanted sexual advances, as well as abusive and derogatory treatment on a regular basis. Third, it caused physical and mental illness. Fourth, it resulted in her losing her job.
The company was ordered to pay the Claimant £10,000 for injury to feelings, with an additional 12.5% awarded for failing to comply with the Acas code and failing to respond to the claim, bringing this element of the award to £11,250. The company was asked to pay more than £15,000 in total, with other elements including notice pay, holiday pay and loss of earnings.
Being late because of the school run is not an acceptable reason to dismiss
A teacher who repeatedly turned up late for work after taking her daughter on the school run has won an appeal at the Employment Appeal Tribunal (EAT).
The employee brought indirect discrimination and victimisation claims against the London School of English, where she had worked as a freelance teacher since 2005. The claims arose from her inability to make an 8.45am start time because she had to take her child to school.
Although classes typically started at 9am, all employees were required to arrive 15 minutes before their first tutoring session, to prepare and meet with students. However, the employee argued that this put her and other women at a disadvantage. She asked for a later start time of 9.30am but was told that because tuition started at 9am, she might receive less work.
In July 2015, a client complained that the teacher had been between 20 and 30 minutes late twice in one week. The teacher acknowledged the complaint and accepted she had a problem with timekeeping and said that she found it “unprofessional and personally distressing.” Around this period, the amount of work available to her dropped off.
The original claim at the Employment Tribunal was dismissed by a judge who stated that 9am was not an “unusual or extravagant start time”. The Judge on the case stated that the requirement for teachers to start at that time was proportionate to the aims of the business, particularly as the school catered to an upmarket audience and clients expected a certain degree of professionalism.
However, the Employment Appeal Tribunal judge granted the appeal, finding that the original tribunal did not adequately balance the needs of the business against the negative impact on the mother and child.
The case has been sent back to tribunal to reconsider the facts.
While this decision may, on the face of it, be worrying for employers who may now think that their female employees with childcare responsibilities are able to ignore designated start times, it is important to realise it is not a definite legal precedent. Employers who can demonstrate that there is a real need for their designated start time will be in a strong position to defend this type of claim, but it is important to wait for the outcome of the renewed employment tribunal before changing policy.
Cutting pay resulted in a constructive unfair dismissal claim
The Employment Appeal Tribunal (EAT) has considered whether an employee was constructively unfairly dismissed when his employer planned a significant cut to his pay. The employee was a showroom manager whose sales figures fell substantially over four years. His employer asked him to accept a reduction in his basic pay, from £45,000 to £25,000. He objected and the employer said it would proceed with the cut.
The decision focused on the “implied term” of trust and confidence. This obliges an employer not to act in a way likely to destroy or seriously damage its relationship with the employee. If it does breach this and the employee resigns, this will be a ‘constructive’ unfair dismissal.
In this case, the employment tribunal found that cutting the employee’s pay did not breach the duty of trust and confidence because the employer had reasonable and proper cause given his poor performance. However, the EAT held that this was the wrong approach saying that the tribunal should have considered that employers are not permitted to impose changes to key contractual terms (such as pay) without employees’ consent.
Things to consider when making salary cuts:
- If the employer has reason to question an employee’s performance, follow a performance management procedure. If the employee fails to improve, they can be dismissed on capability grounds rather than trying to cut salary.
- Consider making the post redundant in favour of offering an alternative role which has reduced responsibilities and therefore a reduced salary. For it to be a genuine redundancy and to avoid the risk of an unfair dismissal claim, employers must show that they no longer need the existing role and the new position is different. In this case, it would involve suggesting that there was no longer the need for a manager in favour of the new role of a sales rep with fewer responsibilities.
- If thebusiness is in financial trouble, seek the employees’ consent to pay cuts as an alternative to redundancy or the closure of the business. This must only be done following genuine and meaningful consultation.
Equality and Human Rights Commission to investigate “dodgy” gender pay gap data
The Equality and Human Rights Commission (EHRC) has writen to roughly 20 employers over their gender pay gap figures, as scrutiny persists over “dodgy data”.
More than 10,000 organisations with 250 or more employees were required to submit gender pay data by the April 2018 deadline, but an independent statistician has estimated that up to 17% of the data is wrong.
Now some of the organisations that filed data are being asked to correct or justify their data, or risk being taken to court where they could face unlimited fines.
EHRC have stated that if they are not satisfied with the responses they will investigate and are prepared to go to court. Gender pay gap reporting is a legal requirement and EHRC is wholly committed to ensuring that all organisations adhere to the data reporting requirements.
Employers will file their 2018 gender pay reports on 4 April 2019.
Recruitment still based on “gut feel”
More than a quarter of employers say gut feeling is their main reason for hiring someone, a survey has found and only 23% out of more than 1,000 managers who have accountability for recruitment said that relevant experience was their main reason for taking somebody on board, while another 23% felt that strong interview performance was the deciding factor. Only 8% said that good qualifications was their main driver for hiring somebody.
Unconscious bias can lead to the wrong candidate being taken on and the loss of the “perfect” candidate.
Having a clear and consistent recruitment process in place is crucial when recruiting, and is something that ensures all candidates are treated equally, even when they are interviewed by different managers.
84% of job applicants have had a negative experience during interviewing, with the main reasons being that interviewers were unprepared and that there was a lack of structure to the interview. Apparently many employers develop their gut feeling about a candidate before they even got through the door of the interview room, with almost three-quarters using social media to research a candidate in advance.