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CIPDAnnual Employment

Update

26 January 2015

1

National Minimum Wage

Holiday Pay

Employee Status

Flexible Working

Shared Parental Leave

Agenda

Pay Types of Contract Work Patterns

National Minimum Wage

• Consolidation and Simplification

• NMW Regulations amended more than 20 times!

• Consolidated Regulations due to come into force on 6 April 2015

National Minimum Wage

Penalties

• Change: Maximum penalty for each underpaid worker to increase to £20,000

• Currently penalty is set at 100% of total underpayment up to a maximum of £20,000 for the employer

• Naming and shaming via BIS press notice

National Minimum Wage

• Review of employment status of interns for purposes of NMW

• Recap of current NMW capability:

Workers (over compulsory school age) Agency workers Agricultural workers Apprentices

National Minimum Wage

Should a deduction from pay to repay training costs be ignored for NMW purposes?

Commissioners for HMRC v Lorne Stewart PLC

National Minimum Wage

Were livery stables trainees apprentices for NMW purposes?

Commissioners for HMRC v Jones & others

Holiday Pay

Overview

•A week’s pay – the law

•Recent case law

•What should be included in holiday pay?

•The future

•What should employers do?

Holiday Pay

Background

“A week’s pay for a week’s leave”

•No normal working hours

•Normal working hours

Pay ≠ work done (S221(2), ERA 1996)

Piecework (S221(3) and (4) and 222 ERA 1996)

The time of work (S221 (3) and (4) and 222 ERA

1996)

Holiday Pay

Holiday Pay

Tribunal Decisions after ECJ in Williams:

•Neal v Freightliner ET/1315342/12

• Fulton and another v Bear Scotland ETS/4112472/12

• Elms v Balfour Beatty Utilities Solutions Ltd ET/2404322/12

• Woods and others v Hertel (UK) Ltd and another ET2603803/12

Holiday Pay

Holiday Pay

Key points:

•Workers are entitled to be paid a sum of money to reflect normal non-guaranteed overtime as part of their annual leave payments

•That applies only to the basic 4 weeks’ leave granted under the Working Time Directive, not the additional 1.6 weeks under regulation 13A of the Working Time Regulations

•Claims for arrears of holiday pay will be out of time if there has been a break of more than three months between successive underpayments (subject to the reasonable practicability test)

•Travel time payments, which exceed expenses incurred and so amount to additional taxable remuneration, should also be reflected when calculating holiday pay

Holiday Pay

What should be included in holiday pay?

•Overtime pay?

•Commission?

• Standby / call out payments?

Holiday Pay

• The Deduction from Wages (Limitation) Regulations 2014

• Two-year backstop

• Reg 16 of WTR ≠ contractual right

Holiday Pay

What should employers do?

Employee Status

1. Employee

“individual who has entered into or works under a contract of employment”

• Person service• Control• Mutuality of obligation

Protections include:

• Unfair dismissal• Redundancy Pay• Statement of terms and conditions

Employee Status

2. Worker

Includes all employees and any other contract:

• For personal service

• Where status of other party is not a client or customer of a profession or business undertaking

Protections include:

• Paid holiday

• National Minimum Wage

Employee status is in the eye of the beholder

1. Tax status is not determinative

Autoclenz v Belcher [2011] – HMRC found individuals to be self-employed, Supreme Court found them to be

employees for employment law purposes

2. Vicarious liability

Hawley v Luminar Leisure [2006] – Doorman provided by security company to nightclub sustained injury. Doorman was employee of security company for employment law purposes, but the nightclub was his “temporary deemed employer” for purposes of vicarious liability for personal

injury

Employee status is in the eye of the beholder

3. Apprenticeship

• Genuine contract of apprenticeship is not a contract of employment and is difficult to teminate (e.g. no redundancy termination)

• An apprenticeship agreement under the Apprenticeship, Skills, Children and Learning Act 2009 is an employment contract

• New proposed approved English apprenticeships

Employee status is in the eye of the beholder

4. Agency Workers

• Brook Street Bureau v Dacas [2004] – Court of Appeal indicated that they would have implied a contract of employment between Mrs Dacas and the end-user had that been the issue before it

• James v Greenwich Council [2008] – Court of Appeal concentrated on issue of necessity – is it necessary to imply contract between worker and end-user? Mere passage of time is not sufficient to imply contract of employment

Employee status is in the eye of the beholder

5. Secondments

Be clear on issues of:

• Control (discipline, absence)

• Insurance

• Termination provisions

Employee status is in the eye of the beholder

6. Personal service companies and IR35

IR35 legislation (April 2000) to crack down on services provided by service companies owned by contractor (contractor received remuneration through dividends of service company rather than through PAYE)

IR35: Worker will be subject to income tax and NICs if he/she would, in absence of intermediary arrange:

•Be regarded as an employee of the client for tax purposes and/or•Be regarded as employed in “employed earner’s employment” by client

Finance Act 2014: tightening up

•A Personal Service Company now falls within agency legislation and must apply agency provisions in priority to IR35 rules•Right to provide substitute has little effect in preventing agency legislation from applying

Employee status is in the eye of the beholder

7. Joint Employers

• Does it work?

• Need for certainty?

• What happens if there is a redundancy situation?

Zero hours contracts

• December 2013 – Consultation on use of zero hours contracts

• June 2014 – Government response to consultation: ban exclusivity clauses to the benefit of 125,000 zero hours workers (out of 1.4 million)

• Small Business, Enterprise and Employment Bill 2014 – 2015

• Proposed definition: “there is no certainty that work will be made available to the worker”

• Consultation on “anti-avoidance provisions” – eg. An employer guaranteeing one hours work

Came into force – 30 June 2014 (S80F – S801)

‘Reasonable manner’

3 month period

Acas code of practice

Flexible Working

Eligibility

Any employee with at least 26 weeks continuous employment

One request in 12 month period

Who is excluded?

Agency workers

Employee shareholders

Armed forces

Flexible Working

Types of changes

Changes to hours

Changes to times

Place of work

Flexible Working

Flexible Working

Flexible Working

Flexible Working

Flexible Working

Flexible Working

Flexible Working

Flexible Working

Flexible Working

Practical Guidance

Flexible Working

Practical Guidance

Flexible Working

Shared Parental Leave (SPL)

Shared Parental Leave (SPL)

Key Points:

•52 weeks leave available (50 can be shared)•Mother and partner can take leave concurrently•SPL can be taken in one block or discontinuous blocks

Who can take SPL?

•Parents•Adopter and their partner

Eligibility requirements for mother to take SPL:

Eligibility requirements for mother to take SPL:

Eligibility requirements for partner to take SPL:

Eligibility requirements for partner to take SPL:

Shared Parental Leave (SPL)

When one parent is self-employed or unemployed, can the other parent still

take SPL?

Shared Parental Leave (SPL)

Evidence an employer can request

•Birth certificate of child or documentation confirming adoption placement

•Name and address of the other parent’s employer

Shared Parental Leave (SPL)

Notice requirements

•Notice of entitlement and intention to take SPL

•Curtailment of maternity leave notice (if mother)

•Period of leave notice

Shared Parental Leave (SPL)

Shared Parental Pay (ShPP)

•Eligibility

•SPLIT days

•Occupational or enhanced shared parental pay