Sun sets on low cost holidays by Howard Kennedy LLP

Sun sets on low cost holidays? How to count commission for holiday pay The Issue We now have the Employment Tribunal decision on how businesses should factor in contractual commission when they calculate holiday pay. This aligns UK and EU law and alters UK law immediately with some retrospective impact.

The new calculation For holiday pay businesses must now calculate the average remuneration inclusive of commission received by the worker during their normal working hours in the 12-week period immediately preceding each holiday. The holiday pay is based on this average pay rate. This new rule only applies to the four weeks’ holiday required under EU law but not to the additional 1.6 weeks holiday given under UK law, for which pay is unaffected.

Our Guidance Businesses should review their commission schemes for this holiday pay impact, particularly for:

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the additional cost of commission based holiday pay; whether they have a contractual right to alter the commission scheme for current staff to manage this cost (and the employee relations consequences of doing that); and

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what commission terms they will offer to new joiners.

Anomalies The new rule does not separate out different types of commission; for example, commission based on personal sales and commission based on team sales. A worker was previously financially disadvantaged on personal sales commission by going on holiday but may not have been for team sales commission. Interpreting the new wording literally may now result in some anomalies for these commission types.

Claims for historic holiday pay New Regulations will limit the unlawful deductions basis for holiday pay claims made on or after 1 July 2015 to a two-year backstop period.

Employment E-alert March 2015

Practical ways to limit backdated holiday pay claims

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A gap of more than 3 months between holiday pay underpayments breaks the ‘series’ of deductions. This restricts backdating to claims less than 3 months old and stops claims for underpaid holiday pay from previous holiday years. UK cases say, unless the contract states otherwise, a worker takes their 4 weeks of “EU holiday” first in a holiday year and their additional 1.6 (UK only) weeks afterwards. So, breaking a series of deductions can be achieved:

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Carolyn Brown Partner, Head of Employment T: +44 (0)20 3755 5390 E: carolyn.brown@howardkennedy.com

if the additional leave is paid at the correct (non commission-inclusive) rate applicable to the 1.6 UK only holiday weeks; or

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generally by paying statutory holiday pay at the correct (commission inclusive) rate and extinguishing historic holiday pay claims over three months old.

Lydia Christie Senior Associate, Employment T: +44 (0)20 3755 5402 E: lydia.christie@howardkennedy.com

Susie Al-Qassab Associate, Employment T: +44 (0)20 3755 5357 E: Susie.al-qassab@howardkennedy.com

Alexandra Mizzi Associate, Employment T: +44 (0)20 3755 5614 E: alexandra.mizzi@howardkennedy.com

If you would like more information on our services, please visit www.howardkennedy.com here you will find all our latest news, publications and events. This material is for general information only and is not intended to provide legal advice. © HowardKennedy, 2015

Spring Changes: Extension of Adoption and Parental Leave rights

Employment E-alert April 2015

This Spring a number of rights for working families come into bloom. The one most heralded is the right for parents of babies due on or after 5 April 2015 to take shared parental leave. The extension of rights to adoption leave, adoption pay and parental leave also change from 6 April.

The Changes Parental Leave: From 5 April 2015 all parents will have the right to take up to 18 weeks' parental leave per child until their child's 18th birthday. Before 5 April, parents could only take parental leave up until their child’s 5 th birthday (or 18th birthday in the case of a child entitled to disability living allowance). Parental leave is unpaid and can be taken at a maximum of four weeks per year (but not per child per year). Adoption Rights: For parents who have a child placed with them for adoption on or after 5 April 2015 adoption rights are being aligned with maternity rights:

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Contact the authors:

There will no longer be a period of qualifying service before an employee can take adoption leave; and

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Statutory adoption pay will be at 90% of the employee's average earnings in the first six weeks of adoption leave as for statutory maternity pay.

Adoption rights (which pre 5 April only apply to those adopting through a UK adoption agency)

Carolyn Brown

will be extended to:

Partner, Head of Employment T: +44 (0)20 3755 5390 E: carolyn.brown@howardkennedy.com

  

overseas adoptions; foster to adopt situations; and intended parents in surrogacy arrangements where the child is due on or after 5 April 2015.

Practical Guidance Businesses should:

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Update parental leave and adoption policies Train managers on these changes

Louise Gibson Associate, Employment T: +44 (0)20 3755 5467 E: louise.gibson@howardkennedy.com

Fewer Claims, But More Expensive Tribunal Awards From 6th April 2015

Employment E-alert April 2015

The Issue Since July 2013 employees have had to pay a fee to issue claims in the Employment Tribunal. UNISON has failed in one application for judicial review of the decision to introduce fees and no fresh challenge is imminent. The introduction of fees has reduced the number of tribunal claims dramatically but those successfully brought may now result in more expensive awards. (Discrimination compensation and some specific unfair dismissal awards, e.g. an employee dismissed unfairly or selected for redundancy for reasons connected with health and safety or public interest disclosure (whistleblowing) are not subject to a statutory cap and unaffected.

The Consequences For unfair dismissals effective on or after 6 April 2015: 

the cap on the unfair dismissal compensatory award rises to the lower of £78,335 or 52 weeks' pay;

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the cap on the maximum amount of "a week's pay" increases to £475; and

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the minimum basic award for some automatically unfair dismissals (e.g. those based on health and safety, working time or trade union membership) increases to £5,807.

For redundancies with effective dates of termination on or after 6 April 2015: 

The cap on the maximum amount of "a week's pay" also increases to £475; and

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The cap on the maximum statutory redundancy increases to £14,250.

Contact the authors:

Unfair dismissal awards are still subject to either an uplift or a reduction of up to 25% where either an employer or employee fails unreasonably to follow the ACAS Code on Disciplinary and Grievance Procedures. The overall statutory cap still applies even if an uplift is made. Carolyn Brown

The Solution To avoid employment tribunal claims, businesses should: 

ensure adherence to the guidelines in the ACAS Code of Practice on Disciplinary and Grievance Procedures as recently updated

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adopt an equal opportunities policy to reduce the risk of liability for discrimination claims

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communicate such policies to all staff, provide training in and monitor their fair operation

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train managers to conduct disciplinary and grievance procedures fairly

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obtain specialist legal advice before dismissing or taking action to enforce employment rights.

Partner, Head of Employment T: +44 (0)20 3755 5390 E: carolyn.brown@howardkennedy.com

Edward Belam Solicitor, Employment T: +44 (0)20 3755 5378 E: edward.belam@howardkennedy.com

Whistling at work: what is in the public interest? The Issue Workers reporting wrongdoing at work under the whistleblowing legislation must reasonably believe that their disclosure of information is in the public interest. This “public interest” requirement was added in June 2013. It was intended to reverse the effect of case law that gave whistleblower protection to workers who disclosed information covering a breach of their own contracts of employment, which had been heavily criticised. The Employment Appeal Tribunal has recently delivered the first appeal level decision on the meaning of “in the public interest”.

What is in the public interest? Mr Nurmohamed was a senior manager at the estate agency, Chestertons. Following changes to the company's commission structure, he complained on three occasions about alleged manipulation of the company's accounts, which he believed had an adverse effect on his, and 100 other senior managers', commission income. Mr Nurmohamed was dismissed and successfully claimed that he had been unfairly dismissed because he had reported this wrongdoing. In addressing the question of whether the information reported by Mr Nurmohamed was made in the public interest, it was found that: 

the relevant question is not whether the information in itself is in the public interest but whether the individual reporting it reasonably believes that it is in the public interest.

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when he reported his concerns Mr Nurmohamed believed that it was in the interests of the 100 senior managers and, based on the facts, that belief was reasonable.

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where a section of the public would be affected, rather than simply the individual concerned, this is sufficient for a matter to be in the public interest.

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a relatively small group may be sufficient to satisfy the public interest test. In this case, the affected group was the 100 senior managers. Although Mr Nurmohamed was most concerned about himself, he did have other office managers in mind.

Employment E-alert April 2015

Consequences and practical guidance This decision sets a relatively low bar for the public interest test. Disclosures concerning personal disputes may amount to whistleblowing if the worker reasonably believes it affects a wider group. If so, workers will be protected under the whistleblowing legislation if they are subjected to any detriments or dismissed because they have reported those concerns. Businesses should: 

assess the risk of potential whistleblowing claims by workers who raise concerns about apparent personal disputes which they reasonably believe have a wider impact.

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review/update existing whistleblowing policies to include the public interest test.

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ensure that managers are trained in recognising potential whistleblowers, operating their whistleblowing policies and responding appropriately to reports of wrongdoing to minimise potential claims risk.

Contact the authors:

Carolyn Brown Partner, Head of Employment T: +44 (0)20 3755 5390 E: carolyn.brown@howardkennedy.com

Lydia Christie Senior Associate, Employment T: +44 (0)20 3755 5402 E: lydia.christie@howardkennedy.com

Commuting on the job: For mobile workers, travelling to and from work is now “working time.” The Issue

Employment E-alert September 2015

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The European Court of Justice (ECJ) has decided that time spent by mobile workers (those who have no fixed workplace) travelling from their home to their first customer and from their last customer back home counts as working time under the EU Working Time Directive. The Court decided:  

Commuting time was a necessary means of providing their services to customers Mobile workers are at the business’ disposal during commuting time since the employer allocates the customer visit appointment times.

The Consequences Working hours for mobile workers: The decision does affect how maximum weekly working hours and rest break entitlements are calculated for mobile workers (for example sales people, carers on client home visits, engineers/maintenance workers, delivery drivers etc.) particularly those who live outside their territory or in a remote location. This worked travelling time will reduce the on the job maximum working hours available under the Working Time Regulations. Resourcing may be impacted. Pay for mobile workers: The decision may affect pay. The ECJ said this decision does not give businesses a statutory obligation to pay staff for the worked commuting time. However, for hourly paid mobile workers who work, or are paid overtime, it may count as additional paid working time under their contract. Working hours and pay for fixed workplace workers: The decision does not affect how commuting hours are treated for their working time or their pay.

Carolyn Brown Partner, Head of Employment T: +44 (0)20 3755 5390 E: carolyn.brown@howardkennedy.com

Guidance for businesses to manage mobile workers with no fixed workplace Businesses employing mobile workers: 

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Can consider reassigning mobile workers to a fixed base they travel to before commencing work and leave last before going home and so remove their classification as mobile workers Can arrange mobile workers’ first and last assignments close to home to limit travelling working time Should institute monitoring of travelling working time to ensure working time regulation compliance and so manage commuting “working time"

Working time guidance: 

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If the additional travelling working time might take mobile workers over the maximum weekly working time (48 hours prescribed by the Working Time Regulations), ensure the worker has given a written opt-out of this Regulation. If they refuse, reduce their active working hours to avoid any working time breach by the business Check all mobile workers can take at least 11 hours' rest between getting home at night and setting off again next morning.

Pay guidance: 

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Check contracts of hourly paid mobile workers and/or those with overtime arrangements and obtain advice on whether they are entitled to pay for the additional travelling working time Consider whether the business will pay for the additional travelling working time of mobile workers If businesses have no current obligation to pay for the additional working time, expect pressure from staff to negotiate or claim pay for this travelling worked time (such as breach of contract claims from those paid hourly or with paid overtime) National Minimum Wage Regulations in the UK say that time travelling to/from work is not included when calculating the national minimum wage. Take advice on the impact for mobile workers now.

Slaving Away – New Reporting rules on supply chain labour practices The Issue

Employment E-alert October 2015

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The Modern Slavery Act 2015 requires large businesses operating in the UK (with a £36 million + turnover worldwide) to publish annually on their website a Board-approved statement of steps taken to ensure slavery and human trafficking do not exist in their business or supply chains (inside or outside the UK). For these purposes:

Carolyn Brown

“Slavery” is holding people in slavery or servitude or requiring them to perform forced or compulsory labour.

Partner, Head of Employment T: +44 (0)20 3755 5390 E: carolyn.brown@howardkennedy.com

“Human trafficking” means facilitating workers’ travel with a view to exploiting them. “Exploitation” covers sexual offences, removal of organs as well as working under threats, force or deception. There will be interim rules for large businesses whose financial year ends soon. Promised Government Guidance is still to come when an update will follow.

The Consequences It is likely these Board statements will need to specify: business and supply chain relationships relevant policies, including supplier due diligence and auditing processes training provided to those in supply chain management key risks related to slavery and human trafficking and how those are evaluated and managed key performance indicators enabling assessment of the effectiveness of the business’ anti-slavery activities.

Guidance Large businesses and those who supply to them should now:  

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Assess their suppliers and supply chains for risk Introduce an Anti-slavery policy, which should:  identify high risk business and supply chain areas (e.g. types of supplier heavily reliant on migrant labour)  guide procurement and supplier liaison staff on identifying ‘red flags’  provide mechanisms for reporting concerns which ensure prompt remedial action. Train staff on the operation of the Anti-slavery policy Review procurement arrangements and supplier contracts for inclusion of appropriate business safeguards such as:  supplier information provision and monitoring  use of anti-slavery compliant policies and practices  contract termination rights when anti-slavery compliance issues arise.

Not whistling in the wind. Workers' own contract disputes can attract whistleblower protection

Employment E-alert November 2015 Contact the author:

The Issue Workers reporting wrongdoing at work must reasonably believe the information is "in the public interest" to get employment law whistleblowing protection against resulting detriment or dismissal. This public interest requirement was intended to remove whistleblower protection from workers who disclosed information covering a breach of their own contract. With no definition of “in the public interest”, there has now been another appeal level decision confirming this public interest test is not as broad as it might appear.

What does “in the public interest” mean in whistleblowing?

Carolyn Brown Partner, Head of Employment T: +44 (0)20 3755 5390 E: carolyn.brown@howardkennedy.com

The latest decision concerned Mr Underwood who was an HGV driver with Wincanton plc and who, with three colleagues, made a written complaint about their terms and conditions of employment, including about the way overtime was allocated. When Mr Underwood was dismissed seven months later, he claimed he had been automatically unfairly dismissed because of his overtime complaint which he termed a whistleblowing report. In that case, the EAT directed that for whistleblowing claims: 

A contractual dispute between a group of employees or workers and their employer can be in the public interest

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An employee or worker could reasonably believe that a disclosure about this to the employer was in the public interest.

Consequences and Practical Guidance This second EAT decision appears to take whistleblowing protection back close to its pre-public interest test days when workers who disclosed information about alleged breaches of their own contracts of employment had whistleblowing protection. The EAT’s first public interest test decision is being appealed but that appeal is not due to be heard until October 2016. Until then, the low bar for establishing that whistleblowing is in the public interest remains firmly set and so even cases involving disclosure of individual contractual disputes will potentially enjoy whistleblowing protection. Businesses should, to minimise claims risk, continue to: 

Assess the risk of potential whistleblowing claims by workers who raise with their employer concerns about apparent individual contractual disputes which the employee or worker may reasonably believe have a wider impact

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Review or update existing whistleblowing policies to cover the public interest test

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Ensure that managers are trained: 

In recognising potential whistleblowing reports

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In operating their whistleblowing policies

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To respond appropriately to reports of wrongdoing made by workers in their business.