Employment Bulletin – November 2014

STOP PRESS - HOLIDAY PAY AND OVERTIME

The recent Employment Appeal Tribunal case of Bear Scotland which decided that overtime pay needs to be included when calculating holiday pay, has attracted a lot of media attention.

In the case, the workers claimed that they had received too little holiday pay because overtime which they were obliged to work (but which the employers did not contractually guarantee) had not been included when holiday pay had been calculated.

The Judge decided that overtime pay which the workers routinely received as part of the settled pattern of their employment was "normal pay" which was "normally received". As a result, this overtime pay had to be taken into account when calculating holiday pay under the Working Time Regulations 1998 (limited to four weeks holiday per year).

With regard to retrospective claims for underpaid holiday, if such a claim is made to an Employment Tribunal more than three months after the date of the underpayment, then this claim will be out of time in the Employment Tribunal.

However, the claim can still be heard if the underpayment forms part of a series of underpayments. The Judge decided that if there is a gap of more than three months in any series of such underpayments, an Employment Tribunal would not be able to consider the claims relating to the earlier underpayments.

This seems to have significantly limited the scope for retrospective holiday pay claims.

However, the Employment Appeal Tribunal has given leave to appeal the judgement to the Court of Appeal. The Judge has indicated that the most significant point to be decided by the Court of Appeal relates to the time limit for a series of underpayments. Due to the importance of the case, it is very likely to be appealed.
The Government has also set up a taskforce to assess the impact of the ruling and to limit its impact on businesses.
If you are concerned about how your business may be affected by this ruling, please contact either of our Employment Partners, Julia Woodhouse or Mark Ridley to discuss.

NOTICE PERIOD INJUNCTIONS

In the case of Sunrise Brokers LLP - V - Rodgers the Court of Appeal had to decide what remedy might be available to an employer, where a departing employee has refused to work his notice, and the employer has, as a consequence, stopped paying the employee.

In this case, the employee was a derivatives broker. He was subject to a 12 month notice period.

The court had to decide whether the employer's refusal to pay the employee meant that the employee could treat the contract as at an end, such that he was no longer bound by his contractual obligations, and in particular the duty of loyalty.

The Court of Appeal decided that the employer was entitled to decide whether to accept that the employee's refusal to work brought the contract to an end, or to keep the contract alive. In this case, the employer had chosen to keep it alive, and therefore Mr Rodgers remained an employee during the balance of his notice period. The court went on to say that as an employee's right to pay is dependent upon him being willing to work, the employee was not entitled to treat the contract as at an end, because the employer had refused to pay.

An employee's obligations before termination of employment and after usually differ hugely. Care should be taken by both employer and employee to ensure that they are clear as to whether a contract of employment continues to subsist.

NATIONAL MINIMUM WAGE

The government is proposing that there should be a single National Minimum Wage for apprentices and 16 - 17 year olds. This would result in an increase to the apprenticeship rate in the first year of the apprentices' programme, in order for it to match the rate for 16 - 17 year olds. As of 1st October 2014 the apprentice National Minimum Wage rate is £2.73 per hour and the 16 - 17 year old rate is £3.79 per hour. The proposal would create a single rate for apprentices and 16 - 17 years olds.

The rationale is to make apprenticeships a more financially attractive route for young people, whilst making it easier for employers to understand and comply with the law, streamlining the number of minimum wage rates down from 4 to 3.
EMPLOYMENT REVIEW - TO IMPROVE CLARITY AND STATUS OF THE BRITISH WORKFORCE

On 6th October 2014 the business secretary Vince Cable launched a wide ranging employment review. The government will start the process of determining how clear the current employment framework is, what the options are to extend some employment rights to more people and whether there is scope to streamline the complex law in relation to employment status, in the hope of clarifying rights for both employers and employees.

DEDUCTIONS FROM SALARY

In Ridge - v - HM Land Registry the Employment Appeal Tribunal confirmed that the recovery of an overpayment of wages or salary is a "deduction". Accordingly, it has to be explained in a itemised pay statement.