EMPLOYMENT UPDATE APRIL 2015

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1 Welcome to the RBA Spring 2015 Newsletter. You will see from this edition that future legislation is rather light as we all await the results of the election on 7 May. Various flavours of coalition seem to be what s on offer politically, so it would be unwise for us to speculate on what the future holds. There is much talk within the manifestos about tribunal fees, living wages and increases to the minimum wage, increased family rights such as higher paternity pay and shared parental leave for grandparents. As we know the headline manifesto is often different to reality! Let s enjoy the seasonally adjusted weather and crack on. NEWS AND VIEWS 1.Second Unison appeal against tribunal fees fails Unison s legal challenge to overturn the introduction of tribunal fees has been rejected by the High Court for the second time. Figures from the Ministry of Justice suggest that the number of single claims made to employment tribunals has fallen by 72 per cent following the introduction of fees in Unison challenged the legality of the payments regime, on the basis that it would deny access to justice for workers treated unfairly by employers, and that it has a disproportionate impact on women. This is unlikely to be the end of the matter. 2. Criminal record requests by employers In theory, if employers want to know whether job applicants have a criminal record, they should use the Disclosure and Barring Service (formerly known as the Criminal Records Bureau), which does not disclose any spent convictions. Some employers have been known to circumvent this protection by insisting that applicants make a Data Protection Subject Access Record to get hold of their full criminal record including spent convictions. From last month, such a practice became unlawful. The newly in force section 56 of the Data Protection Act 1998 makes it a criminal offence to require job applicants (or existing employees) to produce a copy of their criminal record through a subject access request. This follows changes last year significantly shortening rehabilitation periods under the Rehabilitation of Offenders Act Guidance published on new Fit for Work service The Department for Work and Pensions has published three sets of guidance notes for GPs, employers and employees on the new Fit for Work service (FFW). The service will be introduced on a phased basis later this year. FFW will provide free occupational health assessments and return to work plans to assist employees who have been on sickness absence for four weeks or more.

2 GPs and employers are encouraged to make referrals to FFW and while it is not mandatory, the guidance suggests that referral is the default position. Once an employee is referred, FFW will contact them to undertake an assessment with a view to creating a return to work plan and a timetable to achieve a return to work Easter s changing date could force breaches of the working time rule The Working Time Regulations 1998 state that workers are entitled to a minimum of 5.6 weeks' paid holiday a year, which equates to 28 days' paid holiday for a full time worker. It is common for contracts of employment to provide an entitlement to 20 days' paid leave per year (or the pro rata equivalent for part-timers) plus bank and public holidays in other words the public holidays count towards workers' 28 days' statutory paid annual leave entitlement. There is no right to take paid leave on the actual days on which public holidays fall under the working time regulations. When the leave can be taken is a matter of agreement between the employer and the worker (this is normally specified in employment contracts). Holiday years A holiday year which runs from 1 January to 31 December will provide at least eight public holidays but this is not true for holiday years running from April to March, since five of those public holidays fall on different days each year. So an employer whose holiday year runs from April to March could fall foul of its statutory obligation to provide 28 days' paid leave if Easter falls early one year and late the next. This can create a wide variation. If the holiday year runs from 1 April 2015 to 31 March 2016, the employer can rely on a generous 10 days of public holidays in England and Wales. By contrast, a holiday year running from 1 April 2016 to 31 March 2017 will only provide six days of public holidays towards the statutory allowance. Contract wording Where the contract states a worker is entitled to 28 days' holiday (or a pro rata equivalent) inclusive of bank and public holidays there should be no problem. Similarly, where an individual is entitled to significantly more than the minimum, for example, 25 days' holiday plus bank and public holidays, the regulations would not be breached. However, if a full-time worker's contract states they are entitled to "20 days plus bank and public holidays", they will only be entitled to 26 days for which would be a breach of the regulations. In these circumstances, the employer would need to allow the individual an extra two days holiday to comply with the law. Payments in lieu Employers affected by this anomaly for may be tempted to make a payment in lieu of two extra days' holiday, but this would be contrary to the regulations. European law has established that the purpose of paid holidays is to allow workers to relax away from work, for their health and well-being. It is unlawful to 'buy-out' an individual's minimum right to leave except where employment has ended (although this might be possible where a contract is more generous than the statutory minimum). Solutions Since this problem will keep occurring over the years, and because productivity may be seriously affected in years where there are 10 public holidays such as , employers

3 should consider a longer term solution. Rather than unilaterally reducing holiday entitlement in years where there are more than eight public holidays (which would be a breach of contract), they could seek workers' agreement to either: change the holiday year change the wording of contracts carry leave over into the following holiday year (which is not unlawful for the additional 1.6 weeks' leave provided by EU law). Clients should check what their contracts say and consider their strategy now. With some lead-in time, they may be able to make use of the extra public holidays in , perhaps through carry over or some other agreement with workers ahead of time. Consultation with the workers involved will be necessary. 5. Holiday Pay - the Lock Decision The employment tribunal in Leicester has handed down its long awaited decision in the case of Lock v British Gas. Mr Lock was a salesman on a basic salary with variable commission paid in arrears. Mr Lock's commission depended not on the time worked, but the outcome of that work, i.e. sales achieved. Mr Lock could not earn commission whilst on leave, and therefore would lose income by taking it. He brought a claim for his 'lost' holiday pay after taking leave in December 2011 to January Following the ECJ's decision last year, the employment tribunal has held that Mr Lock's holiday pay should include an element for his commission. It has done so by inserting new words into regulation 16(3) of the Working Time Regulations This will impact on future holiday pay entitlement. The impact on back-claims is reduced by the two year cap on backdated claims which takes effect on 1 July LEGISLATION UPDATE New rules regarding the right for employees to take Shared Parental Leave (SPL) and to receive Shared Parental Pay (ShPP) came into force for parents whose baby is born on or after 5 th April The same entitlements are available to anyone who is adopting a baby. Very briefly, to be eligible to take SPL the mother has to end her maternity leave early and then the remainder of the 52 weeks she was entitled to can be shared between the mother and her partner as SPL. It is a particularly complex piece of legislation and further details are available via the following link: We have developed an application form for anyone who is considering taking SPL which should help to simplify the administrative process, bearing in mind that mother and father will usually work for different employers. The application form is available on request from your consultant. CURRENT RATES Statutory Sick Pay p.w. (from 6 th April 2015) Statutory Maternity and Adoption Pay 6 weeks at 90% of average earnings

4 then 33 weeks at p.w. (from 6 th April 2015) Statutory Paternity Pay 2 weeks at p.w. (from 6 th April 2015) Shared Parental Pay 139,58 p.w. (from 6 th April 2015) Week s pay for statutory redundancy 475 p.w. (from 6 th April 2015) NI Contributions Lower Earnings Limit 112 p.w. (from 6 th April 2015) Minimum annual paid holiday Guarantee Pay 5.6 weeks (28 days for 5 day week) per day 130 for 5 workless days (from 6 th April 2015) Minimum Wage (Until ) Adult 6.50 per hour Age per hour Age per hour Apprentices 2.73 per hour Minimum Wage (from ) Adult 6.70 per hour Age per hour Age per hour Apprentices 3.30 per hour RECENT CASES OF INTEREST Case 1. Self-employed plumber was entitled to worker rights Individuals who are workers benefit from a number of employment rights, including protection for making a protected disclosure (whistleblowing) and from unlawful deductions from wages (for example, for wrongly calculated holiday pay), and the right to paid annual leave, the national minimum wage, and pension auto-enrolment. In the case Pimlico Plumbers v Smith the Employment Appeal Tribunal had to decide whether a plumber who was self-employed on paper was actually a worker for legal purposes. Facts Smith was engaged as a plumber by Pimlico Plumbers from August 2005 to April The written agreements between him and the company gave the impression that he was in business on his own account, the most recent agreement referring to him as a "selfemployed operative". The contract terms dictated that he had to wear Pimlico s uniform, drive a van leased from Pimlico (which was fixed with a GPS tracker and labelled with the company s logo) and could only be contacted by customers through the company. On the other hand, Smith was required to provide his own tools, equipment and materials. He handled his own tax and was VAT registered. He also maintained his own insurance and had to correct any errors in his plumbing work free of charge.

5 Smith was required to work a minimum number of hours every week but could choose when he worked and which jobs he took. Any contracts or estimates issued for plumbing work were in the name of the company and payments were made to the company, which was under no obligation to provide work for Smith if none was available. The company didn t have to pay him in certain circumstances either, for example, where the client took longer than six months to pay or Smith had to correct any mistakes. Following the termination of this arrangement, Smith brought numerous tribunal claims, including for unfair dismissal (an employee right). Tribunal The tribunal had to determine whether he was an employee, worker or self-employed in order to decide whether it had jurisdiction to hear his claims. The tribunal decided he was not an employee because there was no legal obligation on the company to provide him with work, and the intentions and actions of the parties to the contract made it clear they considered he was self-employed. He also bore a substantial financial risk, including not being entitled to payment in some situations and the risk involved in quoting too low for a job. However, the tribunal decided that he was a worker because there was an obligation to provide his services personally. Although there was a system whereby plumbers could share jobs or be substituted by another Pimlico plumber, this was not sufficient to show Smith had the freedom to provide a substitute (having to perform work personally is an indication of worker status). The tribunal concluded he was not an employee but he was a worker rather than being self-employed. EAT The EAT held the tribunal was right to consider the financial risks undertaken by Smith and the practical effect of the agreement between him and the company. Even though there was no obligation on the company to provide work, Smith was required to work a 40-hour week. The EAT found that both parties clearly envisaged that he would provide his services personally. The Employment Appeal Tribunal agreed with the tribunal that he was a worker. RBA Viewpoint Establishing whether someone is an employee, a worker or a self-employed contractor can be quite difficult. There are many factors that both HMRC and the Employment Tribunal consider in determining a person s status. In this particular case, in deciding that Smith was a worker, a lot of emphasis was put on the fact that he was required to provide his services personally, and was not required to arrange a substitute in his absence. Case 2. Duty to make reasonable adjustments not triggered when no indication of return to work Ms Doran was employed by the Department for Work and Pensions (DWP) as an administrative officer. Her employment began in May 2009 and her initial fixed-term contract was extended until 4 November In January 2010, Ms Doran was signed off work with stress. Initially, Ms Doran provided a sick note and asked whether part-time hours could be considered in the future. This was followed by a further sick note in February 2010 that made no mention of a possible return to work. In accordance with the DWP s attendance policy, Ms Doran attended a meeting with her line manager to discuss her absence. They told her that she could be offered administrative assistance duties and part-time hours for four weeks to support her return. Ms Doran agreed that she would discuss this with her doctor. However, she did not discuss the issue with the DWP again.

6 Under the DWP s attendance policy, absences would not be supported if there was no indication that the employee would be able to return to work within six months. On this basis, DWP dismissed Ms Doran on the grounds of capability on 26 May Ms Doran brought various claims against DWP in the employment tribunal, including a claim that it had failed to make reasonable adjustments under s.4a of the Disability Discrimination Act Although this case was determined under the Disability Discrimination Act 1995, as the relevant legislation at the time, it is important to note that the reasonable adjustment provisions in the Equality Act 2010 are the same. Employment tribunal decision At first instance, the employment tribunal indicated that a phased return to work could not be implemented until Ms Doran had indicated that she was going to return to work. The employment tribunal pointed out that the DWP had discussed a phased return or returning to work at a lower grade at first, but the ball was in Ms Doran s court in terms of discussing these suggestions with her GP and reverting to the DWP, which she did not do. EAT decision On appeal, the EAT held that the employment tribunal had been entitled to find that the duty to make reasonable adjustments had not been triggered because Ms Doran did not become fit to work even if reasonable adjustments could be made to her employment. The EAT went further and also agreed that it was for Ms Doran to tell her employer when she became fit to do any work. Ms Doran s appeal was therefore unsuccessful. RBA Viewpoint The Equality and Human Rights Commission s Employment code of practice advises that it is good practice for an employer to ask a disabled employee about any possible adjustments that could be made or considered. As a result, clients should always maintain regular contact with absentees and manage sickness absence proactively, checking on progress, discussing when employees may be fit to return to work and whether any reasonable adjustments to working arrangements should be considered. It is important to consult directly with the employee to see if they have any suggestions regarding adjustments that may facilitate a return to work and to ensure that any such adjustments are agreed before of implementation. Finally, it is worth noting that this case demonstrates that for an employer s duty to make reasonable adjustments to be triggered, there needs to be an indication that the employee may be fit to return to work at some time in the foreseeable future. We hope you have found this and previous Newsletters useful. Of course, if you have any queries on any of the items included above, or on any other matter, please do not hesitate to contact us. This newsletter and the most recent issues can be found on our web-site via the link below. Rob Bryan Chris Manby Mob: Mob: robbryan@mac.com chris@robertbryan.co.uk Rob Bryan Associates Limited: