Employment Update Kathy Halliday, Partner

Employment Update Kathy Halliday, Partner www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham Lawyers & Parliamentary Agents Introduction Overview Review legislative changes that came into force in April 2016 Impact Ensuring you are fully compliant Consider most significant cases recently decided Identify trends and best practice Look ahead at changes that are, or may be, on the horizon Are you prepared?

www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Legislative changes that came into force in 2016 www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents National Living Wage (NLW) The National Minimum Wage (Amendment) Regulations 2016 came into force on 1 April 2016 Introduced a premium added on to the national minimum wage (NMW) for all workers aged 25 and over NLW = 7.20 an hour

Failure to pay NLW HMRC can issue notice of underpayment, setting out arrears and the fine for non-compliance HMRC can take the employer to court if it still refuses to pay www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Calculating NLW Calculation of NLW: Basic pay Bonuses, commission, other incentive payments - INCLUDED Premium for overtime or shift work - EXCLUDED Allowances or payment not attributable to the employees performance EXCLUDED On call/standby payments - EXCLUDED

www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents NLW - implementation Review wage calculations Identify affected workers and update payroll systems How will you finance the cost of paying NLW? Recent news articles about employers removing employees benefits to offset the cost of NLW not the spirit of the law (George Osborne) Compression of salary scales

www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Abolition of contracting out of S2P Until 6 April 2016, the state pension consisted of two elements - the basic pension and the state second pension (S2P) Occupational pension schemes (Schemes) were allowed to contract-out of S2P on a salary-related basis Since 6 April 2016, basic state pension and S2P were replaced with a single-tier state pension

Contracting-out no longer possible www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Abolition of contracting out of S2P Impact and best practice: Schemes that were contracted-out of S2P on a salary-related basis automatically ceased to be contracted-out on 6 April 2016 Review contracts of employment and ensure pensions clauses are up to date www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents

Penalties for unpaid tribunal awards The Small Business, Enterprise and Employment Act 2015 (Commencement No 4) Regulations 2016 came into force on 6 April 2016 Introduces a new scheme for penalising employers who fail to pay tribunal awards or settlement sums under a COT3 Once time limit for payment of an award of compensation or costs has passed, an employee can apply to enforce their judgment through the civil courts www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents

Penalties for unpaid tribunal awards Key features of the new scheme are as follows: 1. Warning Notice - states a financial penalty will be imposed unless the "relevant sum" is paid by a specified date (no less than 28 days from the date of the notice) 2. Penalty Notice - issued if relevant sum remains unpaid by the date specified in the warning notice. Employer to pay financial penalty to Secretary of State by specified date (no less than 28 days from the date of the notice). Penalty = 50% of the unpaid relevant sum (minimum 100 and maximum 5,000)

3. Penalty reduced by 50% - if employer pays relevant sum and penalty within 14 days of penalty notice 4. Appeal - Employer has 28 days from date of penalty notice to appeal against the imposition of the penalty notice or the amount of the penalty www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Tribunal compensation limits

The Employment Rights (Increase of Limits) Order 2016 came into force on 6 April 2016 The maximum compensatory award for unfair dismissal rose from 78,335 to 78,962 The maximum amount of a week's pay rose from 475 to 479 A weeks pay is used to calculate statutory redundancy payments and various awards (including the basic and additional awards for unfair dismissal) www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Trade Union Act 2016 Royal Assent 4 May 2016 but not yet in force amends industrial action ballot requirements - 50% turnout required plus majority vote in favour Important public services - 40% support required

Information on ballot paper Two weeks notice of action (one week by agreement) Expiry of ballot after six months (nine months by agreement) www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Immigration Act 2016 In force from 12 July 2016

New offence of illegal working Extension from knowingly employing to reasonable cause Increased penalties for employing illegal workers NB Modern Slavery Act Ensure pre-employment checks are robust www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Significant cases recently decided www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Holiday Pay British Gas v Lock and another

EAT held results-based commission to be taken into account when calculating statutory holiday pay Followed decision in Fulton v Bear Scotland which included e.g. nonguaranteed overtime in holiday pay UKs Working Time Regulations 1998 (the WTR) can be interpreted in a way which conforms with the Working Time Directive The appeal heard in the Court of Appeal in July 2016 www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents

Holiday Pay Where are we now: Overtime Commission payments Review current pay methods for compliance, establish the potential costs and implications of change to the payroll system, take an informed decision as to what action to take going forward Wait for further clarification on voluntary overtime www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents TUPE BT Managed Services Ltd v Edwards and another The EAT found that an employee who had been off sick for over five years

did not transfer to a new employer, along with the rest of his team, under the TUPE regulations An employee "will generally require some level of participation or, in the case of temporary absence, an expectation of future participation inthe relevant activities to be assigned to a group transferring under TUPE To be heard by Court of Appeal on 14 June 2016 www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents TUPE Trends and best practice:

Difference made between employees on long-term, but temporary sick leave, or maternity leave and those on permanent absence Employers should keep a good record of those employees on long term sickness absence Employers tendering for work should undertake detailed due diligence in respect of those employees to ascertain the prospect of them returning to work and participating in the team's activities www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Monitoring employees personal emails Brbulescu v Romania

Employee was dismissed for personal internet use at work, contrary to the employer's internal policy Employer accessed messages sent by the employee from his work-related Yahoo messenger account and from his own personal Yahoo messenger account on the employer's computer The Romanian courts upheld the employee's dismissal The ECtHR held - interference with Mr Barbulescu's right to private and family life (Article 8(1) ECHR) was proportionate. The existence of the emails proved there had been personal use of the employer's systems contrary to its policy

www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Brbulescu v Romania continued The ECtHRs rejection of the employee's Article 8 complaint is not a green light for employers to snoop on employees' emails This case was limited in scope Nevertheless this case can probably be seen as the low water mark of ECtHR case law on privacy at work The Employment Practices Code contains core principles re. monitoring An email and internet policy is important

www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Vicarious Liability Mohamud v WM Morrison Supermarkets plc Supreme Court Held supermarket vicarious liable for employees unprovoked assault on customer. Close connection test broadly applied Cox v Ministry of Justice

Supreme Court held the MoJ vicariously liable for negligence of a prisoner working in a prison kitchen. Extension of liability beyond traditional employment relationship www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Whistleblowing Public Interest Qualifying disclosure - in reasonable belief of worker is made in public

interest Chesterton Global Ltd v Nurmohamed Underwood v Wincanton plc Morgan v Royal Mencap Society Relatively low hurdle Court of Appeal - 11/12 October 2016 www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Whistleblowing Best Practice

Take care with worker who has made possible protected disclosure Does worker have reasonable grounds for believing that disclosure is in interest of certain section of public? Implement a clear whistleblowing policy and promote it internally Implement training, mentoring, advice and other support systems Ensure employees know who to speak to and take appropriate action before any concern is reported to an external body www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Religious Discrimination Pendleton v Derbyshire CC & GB of Glebe Junior School

EAT held that a teacher dismissed for refusing to leave her headteacher husband after he was convicted of sex offences had suffered indirect religion or belief discrimination The Schools decision reflected a practice The Claimants religious beliefs put her at a particular disadvantage There was no justification www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Manifestation of Religious Belief

Wasteney v East London NHS Foundation EAT upheld ET decision that disciplinary action taken against Christian senior Manager for imposing her religious views on Muslim junior employee was not discriminatory Complaint and investigated and final written warning given; downgraded to first written warning on internal appeal W claimed direct discrimination and harassment ET & EAT agreed that whilst context of disciplinary action was religious acts, reason for treatment was for blurring professional boundaries and

placing improper pressure on colleague www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Disability Discrimination Risby v London Borough of Waltham Forest EAT held only loose causal link is needed between employees conduct and disability in claim of discrimination arising from disability. R , paraplegic, was dismissed after losing his temper when he found out that venue of course was being changed to one with no wheelchair access

ET held that since Rs short temper was not caused by his disability, his claim should be dismissed EAT held that, if R was not paraplegic, he would not have been angered by change of venue and remitted to ET www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Childcare Vouchers Peninsula Business Services Ltd v Donaldson EAT held: not discriminatory to suspend provision of childcare vouchers

under salary sacrifice scheme during maternity leave Regulation 9 of Maternity and Parental Leave Regulations 1999 - employee on maternity leave entitled to benefit of all terms and conditions of employment other than those relating to remuneration Childcare vouchers form part of remuneration www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Childcare vouchers Best practice: Employers may wish to review salary sacrifice schemes to

check existing arrangements during maternity leave The law now appears to permit suspension of benefits under a salary sacrifice scheme during maternity leave BUT, employers should consider the employee relations impact of such action www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Changes that are, or may be, on the horizon www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Mandatory Gender Pay Reporting Equal Pay Act 1970 - but pay gap still significant

Robin Wright I want to be paid the same as Kevin. It was a perfect paradigm and example to use, because there are very few filmswhere the male the patriarch and the matriarch are equal. And they are in House of Cards. Serena Williams I have been playing [tennis] since the age of two and it would be shocking to say my son would deserve more than my daughter. It is irrelevant. www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Mandatory Gender Pay Gap Reporting Will initially apply to private and voluntary sector employers with over 250

employees Regulations expected to come into force on 1 April 2017 Need to capture pay data April 2017 Required to publish annual report from April 2018 www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents How to calculate the pay gap? Mean pay difference as a % Median pay difference as a % Mean bonus difference as a %

Proportion of male and female employees receiving a bonus Pay quartiles www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Identifying and managing risks Penalties for failing to comply with the Regulations Equal Pay

Discrimination Reputation www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Preparing for Gender Pay Reporting Select Committee - reasons for inequality Occupational segregation Part-time penalty Disproportionate caring responsibilities of women

Concentration in low paid sectors e.g. caring www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Preparing for Gender Pay Reporting Know your staff - audit who falls within scope and elements of remuneration package

Establish the data you will need to report and system for capturing this Undertake a practice run using legal privilege Identify and address any issues Consider appropriate narrative Pay Policy Equality & Diversity training www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Grandparental leave

Take up of shared parental leave (SPL) only at 1% Government plans to extend SPL and pay to working grandparents by 2018 60% of working grandparents involved in caring for grandchildren Government due to launch consultation this month on how to implement this Consultation to also cover options for streamlining the SPL and Pay system, including simplifying eligibility requirements and notification system www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Apprenticeship levy

Government encouraging employers to use apprenticeships HMRC has published draft legislation to be included in the Finance Bill 2016 Levy charged at 0.5% of an employers pay bill Employers will receive an annual allowance of 15,000, so only those whose pay bills exceed 3m per year will pay the levy Employers choose how to spend their allowance - can pick preferred apprenticeship training Levy to come into effect in April 2017 www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents

Termination Payments Enterprise Act 2015 - in force 1 October 2016? will impose 95k cap on public sector payments Likely to be in force from 1 October 2016 HMRC - Simplification of tax and national insurance treatment of termination payments - in force April 2018? 30k exemption remains No distinction between contractual/non-contractual PILON Alignment tax/NI treatment of payments over 30k

www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Brexit Significant proportion of the UK's employment law comes from the EU Probable that EU law will continue to have significant influence even after Brexit because: Some EU employment laws included protections that were already provided by UK law Much employment law is regarded by both employers and employees as a good thing There is a need to stay in a relationship with the EU

www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Brexit UK required to give two years' notice of intention to leave the EU Status of negotiations unclear but focus must be on new trade arrangements and likely to link to employment/immigration rights Controversial for government to repeal some employment law (e.g. the Equality Act 2010 or the Data Protection Act 1998) Other law, e.g. TUPE, may be modified to make it more business friendly Freedom of movement would no longer exist Agreement that existing EU migrants staying, in return for UK citizens

abroad being permitted to remain where they are? Future EU immigration? www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Conclusion Discussed the legislative changes of April 2016 - are you fully compliant? Discussed the most significant cases recently decided and best practice Discussed legislative changes on the horizon - are you

prepared? www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Questions? www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents Kathy Halliday Partner [email protected] 0121 227 3711 www.vwv.co.uk | Offices in London, Watford, Bristol & Birmingham Lawyers & Parliamentary Agents

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