Employment Bulletin – May 2019

Reading Time: 5 minutes

Directors liable for company’s failures over employment rights

Two company directors have been held personally liable for their company’s failures over minimum wage rates, holiday pay and overtime.

The case involved Lithuanian nationals who had come to the UK to work as chicken catchers on farms.

Their employment was subject to the regulatory regime of the Gangmasters (Licensing) Act 2004. They alleged that they were employed by a company in an exploitative manner, commonly working extremely long hours and being paid less than the statutory minimum prescribed by the Agricultural Wages Act 1948 and the Agricultural Wages (England and Wales) Order 2012.

They contended that they were frequently not paid the sums recorded as being due to them on their pay slips, which had in any event been calculated on a fictional basis; payments were often withheld as a form of punishment; they were not paid holiday pay or overtime; deductions were unlawfully made for employment fees and rent; and one of the workers had not been permitted to take bereavement leave.

The court found in their favour. It held that the workers were all telling the truth. A gruelling and exploitative work regime had been imposed on them. It considered that two directors of the company were both thoroughly unsatisfactory witnesses.

The evidence was overwhelming that they were operating the company in a deliberate and systemic manner, whereby chicken catchers were working massively more than the hours recorded on the payslips.

They operated a system of withholding wages for entirely invalid reasons and trapped workers had little option but to remain.

The general principle in law was that directors would be liable for the wrongdoings of a company committed at their direction.

In this case, both directors “actually realised” that what they were doing involved causing the company to breach its contractual obligations to the workers. They were therefore jointly liable with the company for the breaches of contract with the workers.

Compensation will be assessed at a separate hearing.


Female administrator paid 15% less than her male replacement

The Employment Tribunal has ruled that a female finance administrator was discriminated against when her male replacement was paid £3,500 more than her.

The case involved a female employee, who had been employed in various roles by her employer for nearly two years.

At the time she resigned from the company, she was a finance administrator with a salary of £18,000.

The role was filled by a male employee, whose partner was the daughter of the company director.

His official employment documentation stated that his role was finance administrator and his salary was £21,500.

The female employee trained the male employee to replace her and was also put in charge of payroll during the transition period. She noticed that the male employee was being paid £3,500 more than she had been, which she described as a “kick in the teeth”.

She took the case to the Employment Tribunal and produced an itemised list of her duties, which the male employee said broadly corresponded to the duties that he now performed.

The employer argued that the male employee was on a higher salary as he was in a more senior role and the company’s intention was for him to eventually take over from director, thereby keeping the business in the family.

The pay increase was necessary as tale employee would not have joined for the existing salary.

The tribunal ruled that this was not an acceptable reason to pay him more than female employee for performing the same task during the training period.

The documentation from when he was appointed stated his job title would be ‘finance administrator’ – indicating that he was to be a direct replacement.

Company documents only started to refer to the male employee as a ‘finance manager’ or ‘trainee financial director’ after the female employee had filed a formal grievance.

The female employee was awarded compensation for the notice period she worked alongside the male employee.

Headmaster told disabled teaching assistant: ‘I can do what I like’

A teaching assistant was discriminated against by her employer, who did not take the necessary steps to allow her to work in comfort with her disability.

That was the decision of the Employment Tribunal in a case involving an assistant who worked at a primary school from February 2006.

The employee suffered with fibromyalgia and chronic fatigue syndrome. In 2015, her health began to decline. She would leave work “exhausted and required a couple of hours sleep to recuperate”.

She asked the headmaster if she could be moved from the reception class, where the “cacophony of noise and constant grabbing” was causing her to struggle.

An occupational health report recommended she be given duties that could be performed both sitting or standing, that her shifts should be concentrated to mornings and at the early stages of the week to allow her good time to recover physically.

After a period off work with stress, the employee was told by the headmaster that she would have to return to the reception class. When she challenged the decision, the headmaster allegedly told her: “I can do whatever I like.”

Another dispute over the employee’s duties led to the headmaster telling her: “We are all under pressure and working hard” and that if she did not like it: “There’s the door.”

The employee took more time off work sick, and when she phoned to arrange her return date, she was told not to come back until her condition had subsided. She explained that she was disabled, and her condition would not subside. She said the headmaster then told her he “did not ever want her back”.

The employee raised a formal grievance and was dismissed in the following months.

She took legal action and the judge ruled in her favour. The tribunal was satisfied that the headmaster’s conduct towards the employee meant she was subjected to various acts of unlawful discriminatory conduct that breached the Equality Act 2010.

A remedy hearing will be scheduled to decide the level of compensation that should be awarded.

The case highlights the importance of having effective harassment reporting procedures in place, particularly when the head of the organisation is the person being accused of wrongdoing.

Latest figures show slight reduction in gender pay gap

The latest figures on the gender pay gap in large businesses show a slight reduction on last year.

Legislation introduced in 2017 means that every employer with 250 or more employees has to publish the differences between what they pay their male and female staff in average salaries and bonuses.

This is the second year that employers have been required to report their data. The new figures show:

• 8,424 private sector employers reported their data
• 3,736 employers saw their pay gap improve
• 3,387 employers saw their pay gap worsen
• 645 employers reported no change in their pay gap.

Latest statistics from the ONS show that, across all employers, the median gender pay gap is at a record low of 17.9%, down from 18.4% the previous year.

The Government Equalities Office (GEO) estimates that around 50% of relevant employers have put in place an action plan to tackle their pay gap. Ministers want to see that number increase and the GEO have published guidance to encourage employers to identify why they have a gender pay gap and how they can work to resolve it.

The Minister for Women and Equalities, Penny Mordaunt, said: “Actions to tackle the gender pay gap are good for business. That’s why we have produced support to help employers close their gaps.

“We recognise that in order to close the gap entirely we still need a much wider cultural change, that is why we have introduced a range of initiatives to tackle the drivers of the gap, including shared parental leave and spending around £6billion on childcare support.”

Over the past year, the Government Equalities Office (GEO) has been working with employers in several sectors to encourage them to put in place detailed and effective action plans to reduce their pay gap.

One of these is the retail sector which has a large number of female employees working in customer facing roles. The British Retail Council are working with their members, supported by GEO, to increase the opportunities for women to progress to more senior roles while retaining the flexibility that attracted them to the sector in the first place.

Companies that are taking positive action against their pay gaps, may still see their gap widen this year. This is because companies that are taking effective action to close their gender pay gap may be taking steps to hire more women, if these are in junior positions then it could see the average wage for women drop within that organisation. Likewise, a senior female leader could move on to another opportunity and that may cause a short term widening of the gap within that organisation.