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Employment Law 2016 - Checklist

Holiday Pay

Holiday pay has continued to cause problems for employers in 2015. In Fulton v Bear Scotland the EAT had to decide how payments such as overtime should be treated for the purposes of calculating holiday pay in light of Lock v British Gas Trading Ltd C-538/12 and Williams v British Airways plc C-155/10. It held that there should be an intrinsic link between remuneration and the work a worker is required to carry out. It also held that in order to bring an unlawful deductions claim based on historic deductions underpaid holiday pay cannot be claimed where more than three months has elapsed between deductions (s 23(2) and s 23(3) ERA 1996). Fulton returned to tribunal to be decided on the facts. The claimants challenged the deductions point on the basis that it had been insufficiently addressed in submissions and that it was obiter. The tribunal rejected this point. The claimants have sought permission to appeal to the EAT.

For the time being, the decision in Fulton is good law and so where there is a gap exceeding three months between deductions of holiday pay, a worker cannot bring an unlawful deductions claim based on historic deductions.

Gender Pay Gap Reporting

The provisional deadline for the introduction of gender pay gap reporting regulations is 26 March 2016. These will be introduced under section 78 of the Equality Act 2010 and will require employers with at least 250 employees to publish information about their gender pay gap. The government has stated that it intends that bonus information should be included in the disclosure obligations.

Gender pay equality is a hot issue and the government has stated that it wants to extend this disclosure obligation to public sector employees. In advance of the publication of the regulations, companies should be carrying out pay audits to ensure that there is parity of treatment between male and female staff.

Extension of parental leave and pay to working grandparents

The government has stated its intention to extend shared parental leave and pay to working grandparents by 2018. There will be a consultation on the proposals in 2016.

National Living Wage

National Living Wage (NLW) rates will be debated in Parliament with a view to coming into force on 1 April 2016. The government has also announced a package of measures to ensure compliance with the NLW (e.g. doubling the penalties for non-payment and potential disqualification for directors). The NLW will be implemented through the NMW Regulations.

From April 2016 the NLW will be £7.20 an hour for workers aged 25 and over, increasing to £9 an hour by 2020.

Trade Union Bill 2015/16

The Trade Union Bill proposes radical changes to the landscape of industrial relations. Consultation closed on 9 September 2015 over measures proposed by the Bill and the government published its response on 3 November 2015. There are proposed changes to balloting rules for industrial action, measures on picketing. There have also been consultations on the intimidation of non-striking workers and the use of agency workers during a strike. The second reading of the bill in the House of Lords took place on 11 January 2016.

Unions and unionised employers will want to keep a close eye on the passage of this controversial Bill and associated consultations since the proposals will mean an overhaul of the way in which industrial action is carried out.

Employment Tribunal Fees

UNISON’s legal challenge against fee-charging in employment and employment appeal tribunals may not have succeeded in the Court of Appeal but the issue of employment tribunal fees continues. The government is in the process of carrying out a review of employment tribunal fees; in particular focusing on whether the charging of fees has met its financial and behavioural objectives whilst maintaining access to justice. Separately, UNISON has appealed to the Supreme Court against the Court of Appeal’s dismissal of its case. The Justice Committee is also conducting an inquiry into the effects of court and tribunal fees.

Reform of regulation of employment agencies and employment businesses

The government consulted on proposed reform to prevent recruitment agencies from recruiting from overseas EEA countries without first advertising in the UK. The government’s response to consultation is expected by 15 February 2016.

Zero Hours Regulations

The Zero Hours Contracts (Redress) Regulations 2015 came into force on 11 January 2016 and outlaw exclusivity clauses in zero hours contracts. Workers who are dismissed or suffer a detriment in connection with such clauses will be able to seek a remedy in an employment tribunal.

Free childcare

The Childcare Bill 2015/16 proposes to increase free childcare for working parents to 30 hours a week in relation to children aged three and four. Separately, the present scheme of childcare vouchers will be replaced with a scheme under which 20% of qualifying childcare costs for children under the age of five can be re-claimed.

Human Rights

As Shami Chakrabati steps down after a high profile tenure as legal director of Liberty, the government has stepped up its moves to replace the Human Rights Act 1998 with a British Bill of Rights. There had been a planned consultation towards the end of 2015 but this has been delayed.

Simplification of tax on termination payments

The government has consulted on the simplification of the tax and NICs treatment of termination payments with a view to making some fundamental changes, including treating contractual and non-contractual payments in the same way (i.e. both will be subject to deductions for tax/NICs).

Apprenticeship Levy

In August 2015 the government consulted on the introduction of the Apprenticeship Levy that will let employers choose and pay for the apprenticeship training they want. The levy is expected to come into effect in April 2017.

‘Public interest’ test for whistleblowing

In Chesterton Global Ltd v Nurohamed the EAT held that for the purposes of satisfying the public interest test in the whistleblowing legislation it was not necessary to show that a disclosure was of interest to the public as a whole. The decision has been appealed to the Court of Appeal and is expected to be heard towards the end of 2016.

British Gas appeals Lock decision

In the holiday pay case of Lock v British Gas Trading Ltd (which dealt with the issue whether commission should be included as holiday pay) an employment tribunal held that it was necessary to add words to the Working Time Regulations 1998 to give effect to the Working Time Directive in order to calculate a ‘week’s pay’ consistently with EU law. The ET rejected British Gas’s argument that a conforming interpretation was not possible. British Gas has lodged an appeal on the basis that commission and non-guaranteed overtime are covered by different provisions and so the ET should not have considered the case of Fulton (above).

Working Time: travelling to and from work

The ECJ decided in Federacion de Servicios Privados del sindicato Comisiones Obreras v Tyco that workers without a fixed working base are entitled to count time spent getting to their first work appointment and getting home from the last appointment as working time under the Working Time Directive. This does not seem to fit squarely with the Working Time Regulations. In the UK, MiHomecare, a care agency, is facing a claim that it should have paid for travel time between home visits.

Changing Terms and Conditions

The Department of Transport is appealing the High Court’s decision in Sparks v DoT that it was not able to change terms in the absence management procedure in the staff handbook since it had been incorporated into staff contracts of employment. The Court of Appeal hearing is expected in February 2016.

Bonus pools and discretion

Investec is appealing the High Court’s decision in Brogden v Investec Bank that the bonus clause specified in employment contracts entitled the Bank to exercise its discretion ‘in the relevant sense’ when determining the bonus pool. This involved implied duties of good faith and rationality. The appeal is expected to be heard in the Court of Appeal on 5 or 6 October 2016.