Emplaw Monthly - End of Summer 2018
AWARD FOR EMPLAW ONLINE
Award for the 'employment law experts' at Emplaw Online
We are proud to have been awarded Online Company of the Month by Business & Industry Today for our 'passion and service to employment law' - that says it all! This report explains a little more and includes a copy of the original article.
EMPLOYMENT LAW NEWS
Report on gender pay gap reporting with recommendation to extend publishing obligations to companies with over 50 employees
The government has published a report on gender pay gap reporting.
The report recommends a widening of the net of companies required to report and for companies to be required to publish action plans and narrative reports on what they are doing to close the gap.
The report notes that while the median pay across the economy is 18% in favour of men, at an organisational level, the new figures reveal some alarming truths: with gender pay gaps of over 40% not uncommon in some sectors and 78% of organisations reporting gender pay gaps in favour in men. New analysis by the Business Committee finds that 1,377 employers (13% of the total) have gender pay gaps in favour of men of over 30%.
The Committee notes that only around half the members of the UK workforce are expected to be covered by the present reporting requirements. Recognising evidence that the pay gap is higher in smaller businesses, the report calls on the Government to widen the net of organisations required to publish gender pay gap data to those with over 50 employees (from the current 250).
The report recommends that organisations should be required to publish, alongside the figures, an explanation of any gender pay gap and an action plan for closing the gap, against which they must report progress each year, as part of normal reporting requirements.
Women and Equalities Committee inquiry into enforcement of the Equality Act 2010
The Women and Equalities Committee has launched an inquiry into the enforcement of the Equality Act 2010.
Identifying widespread problems with enforcement, the committee wants to know what more needs to be done to achieve widespread compliance with the Equality Act 2010 and calls for written evidence on such matters as how easy it is for people to understand and enforce their rights, how accessible tribunals are, the effectiveness of the Equality and Human Rights Commission as an enforcement body and whether there are other models of enforcement.
Employer/ee guidance/need to know
References - New Acas Guide
Acas has published a short guide to references answering questions such as: Does an employment reference have to be provided?;
What can an employment reference include?
For detailed information at Emplaw Online, including data protection aspects, please see our law card References
HMRC changes approach to NMW penalties in context of TUPE transfer
HMRC has changed its approach to charging penalties when enforcing the National Minimum Wage where there has been a transfer of staff from one employer to another under the TUPE Regulations 2006 provisions.
Since 2 July 2018, where TUPE applies, all NMW liabilities, including the full penalty amount are applied to the new employer.
HMRC previously charged the former employers all, or part of, the penalties where they were triggered by arrears that accrued before workers were transferred under TUPE provisions.
Surveillance at work: ‘I’ll be watching you’- new report
The TUC has published a report on employers carrying out surveillance at work.
Key findings include:
- Over half of workers (56%) think it is likely that they are being monitored at work
- Workplace monitoring is more likely to be happening to younger workers and employees in larger companies
- 70% think that surveillance is likely to become more common in the future
- trade unions should have a legal right to be consulted on and to agree in advance the use of electronic monitoring and surveillance at work
- the government should ensure employers can only monitor their staff for legitimate reasons that protect the interests of workers
Childcare vouchers close to new applicants on 4th October
From 4 October 2018, childcare voucher schemes will close to new applicants. Employees be able to get Tax-Free Childcare instead.
Employees can keep getting vouchers if they’ve joined a scheme and their wages have been adjusted before the scheme closes in October 2018, as long as:
• they stay with the same employer and they continue to run the scheme
• they do not take an unpaid career break of longer than a year
NMW- Sleep-in judgment to be appealed
In a much heralded judgement in July 2018 in Royal Mencap Society v Tomlinson-Blake / Shannon v Rampersad  EWCA Civ 1641 the Court of Appeal held that “sleep-in” residential care workers were only entitled to the National Minimum Wage when they are awake and “actually working”, not when they are asleep and therefore, simply “available for work”
In August UNISON asked the Supreme Court for leave to appeal against the Court of Appeal decision. https://www.unison.org.uk/news/2018/08/sleep-in-appeal/
In August 2018, HMRC confirmed that The Social Care Compliance Scheme (based on earlier case law and whereby employers who are accepted into the scheme and declare any underpayment won’t have to pay the financial penalty or be publicly named) will continue to operate, although it is yet to update government guidance on sleeping between duties.
Company Update - Government designs on corporate governance, executive pay 2018 and pay for workers
BEIS response to consultation on corporate governance and insolvency
In the latest in the government’s drive for corporate governance reform, BEIS has published the government’s response to consultation on proposals to improve the corporate governance of firms that are in or are approaching insolvency. Some of the highlights relevant to employment practitioners are set out below although the response contains other proposals in relation to failing businesses. As a more general point, it is clear that the government has corporate governance in its sights. In July 2018 the Companies (Miscellaneous Reporting) Regulations 2018 were published requiring large private and public companies to state how the directors have had regard to matters in section 172(1)(a) to (f) of the Companies Act 2006 (which include the interests of the company's employees) when performing their duty to promote the company’s success. The government is also implementing measures to improve transparency and accountability on executive pay, strengthen the employee and stakeholder voice in the boardroom and ensure more consistent corporate governance standards in large private companies.
In this response to consultation, the government states its intention to take forward the following actions (subject to consultation where appropriate).
Directors’ duties and professional advisers.
The consultation sought views on whether, when commissioning and using professional advice, company directors did so with an adequate awareness of their legal duties, specifically those in sections 172-177 Companies Act 2006 which include the requirement to exercise independent judgement. The government recognised the strength of arguments for more guidance and training for directors, particularly newly appointed directors of large complex firms. In light of the responses, the government will bring forward further proposals to strengthen access to training and guidance for directors, tailored to different sizes of company, and will consider whether some level of training should be mandatory for directors of large companies.
Enforcement of directors’ duties
Over 1,200 individuals were disqualified from being a director last year. The government will assess the impact of tthe Companies (Miscellaneous Reporting) Regulations 2018 (discussed above) requiring large companies to explain in their annual report how directors have had regard to the matters set out in section 172(1) Companies Act 2006, effective January 2019. The government will assess the impact of that reform before considering further action.
Improving boardroom effectiveness and directors’ training and guidance. The government will bring forward proposals to improve boardroom effectiveness and strengthen directors’ training and guidance. It will ask ICSA: the Governance Institute to convene an appropriate group which will identify ways of improving the quality of the independent boardroom evaluations required including the development of a code of practice for external board evaluations It will also bring forward proposals to strengthen access to training and guidance for directors, including for raising their awareness of their legal duties when making key decisions.
Insolvency and corporate governance.
Among other measures, the government will legislate to give the Insolvency Service the power to investigate directors of dissolved companies where they are suspected of being in breach of their legal obligations. This is largely to mitigate the effect of ‘phoenixing’ where a company is dissolved and another created shortly afterwards with a slightly different name in order to avoid liabilities.
Complex group structures.
The government is keen to ensure that adequate and effective controls are in place to ensure that directors are fully aware of risks posed by subsidiaries to the overall group. The introduction to the 2018 corporate governance code emphasises that the board to a parent company should ensure that there is adequate co-operation within the group to discharge its governance responsibilities.
Executive and worker pay 2018
The CIPD has published a review of FTSE 100 executive pay packages.
The total income received by chief executives working for current FTSE 100 firms was £560.1 million in the financial year ending 2017. If this sum were divided among all the CEOs covered by the report, they would each receive a mean annual package worth £5.7 million, 23% higher than the 2016 mean figure of £4.6 million.
However, CEO pay is not distributed evenly. If CEO pay in the FTSE 100 is ranked from the lowest to the highest, then the mid-point in this range is worth £3.9 million, which is 11% higher than the median figure of £3.5 million paid in 2016.
By contrast, data from the Office for National Statistics indicates that mean pay for full-time workers has increased marginally by 3% over this period from £34,414 to £35,423, while median pay for full-time workers had risen by just 2% from £28,213 to £28,758.
Unpaid tribunal awards due to insolvency
Over £390,000 of employment tribunal awards were unpaid last year due to insolvency. In many cases these businesses ‘phoenixed’ which means that the companies went insolvent to avoid paying their debts and set up a new, almost identical business afterwards.
HM Courts & Tribunals Service court reform programme updates
The reforms aim to bring new technology and modern ways of working to the justice system. Information incluiding a sign up form for monthly updates is found at
ET erred in reading across finding of bad faith for protected disclosure claim to determination of bad faith for victimisation claim
The issue in this case is whether an individual must act dishonestly in order for an allegation not to be a protected act under the victimisation provisions in section 27(3) Equality Act 2010.
‘The statutory human or moral right to own the copyright and moral rights of her own creative works and output" is not a philosophical belief under the Equality Act 2010
ECJ rules that there was a transfer under the Acquired Rights Directive after a five month break
Article 1(1) of the Acquired Rights Directive 2001/23 provides:
‘(a) This directive shall apply to any transfer of an undertaking, business, or part of an undertaking or business to another employer as a result of a legal transfer or merger.
Rush to report IT breaches to the regulator without giving individuals right to comment was breach of trust and confidence
A non-compulsory general meeting is not sufficient to effect changes to terms and conditions
Clause making pay rise conditional on accepting new restrictions is ineffective if additional conditions are introduced
When determining whether individual is agency worker, regard must be had to the work carried out
To be an agency worker, an individual must (a) be supplied by a temporary work agency to work temporarily for, and under the supervision and direction of, a hirer, and (b) have a contract with the temporary work agency that was a contract of employment with the agency or any other contract to perform work or services personally; see of the Agency Worker Regulations.
Time limits for presentation of ET claim – no extension to next working day
Rule 4(2) ET Rules 2013 provides:
“(2) If the time specified by these Rules, a practice direction or an order for doing any act ends on a day other than a working day, the act is done in time if it is done on the next working day. “Working day” means any day except a Saturday or Sunday, Christmas Day, Good Friday or a bank holiday …”.
ECJ considers ‘controlling undertaking’ for the purposes of the Collective Redundancies Directive
Recital 2 of the Collective Redundancies Directive 98/59 states:
‘Whereas it is important that greater protection should be afforded to workers in the event of collective redundancies while taking into account the need for balanced economic and social development within the Community’.
ET’s order to select only certain events for consideration at full hearing was perverse
Ms Tarn is a GP, who formerly worked in partnership with Hughes and others, a GP practice (the Surgery). She pursued various claims of sex and pregnancy discrimination, harassment and victimisation before the ET and the parties agreed a list of issues, identifying 30 separate acts about which Ms Tarn was complaining. It was clear that there would be some overlap in terms of the evidence the ET would need to hear relevant to the different issues.