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Employment law - what you need to know

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01 May 2017, at 1:00am

CHLOE THEMISTOCLEOUS provides a round-up of changes coming this year and what employers and employees should pay attention to, including a landmark ruling on religious clothing and symbols at work

OVER THE PAST FEW MONTHS, several important decisions have been made in the Employment Tribunal and courts that affect employers. The government has now implemented further notable changes.

Holiday pay

In numerous cases, attempts have been made to clarify what should be included in holiday pay calculations since the European Court ruled in a British case that calculations should reflect “normal pay”. As a result, individual results based commission and overtime which employees are obligated to perform must now be included in the calculation of pay for the first four weeks of holiday each year under the Working Time Regulations. The position regarding voluntary overtime (i.e. overtime that workers are not obligated to accept when offered) is less clear. While there have been a small number of decisions in the Employment Tribunal to suggest that voluntary overtime should be included if it is regular and frequent, a binding decision from the higher courts has not yet been made on this matter.

Religious clothing and symbols

Employees’ rights to wear religious clothes and display religious symbols in the workplace have also appeared in numerous cases over the past few years. In March, the European Court of Justice (ECJ) considered whether it would be discriminatory for an employer to ban employees from wearing headscarves at work. In this case, the ECJ was told the company (based in Belgium) had an
unwritten rule that banned all religious clothes and symbols being worn to work, which it subsequently formalised in a written policy.
The claimant was dismissed after she started to wear a headscarf three years into her employment in breach of the company’s policy. The ECJ held that it was not less favourable treatment
of the employee in question for the employer to have an internal policy that all employees should “dress neutrally” – essentially banning religious dress because the policy was applied equally to all religious dress and symbols. This is the ECJ’s first ruling regarding headscarves at work and comes soon after several European countries banned wearing full-face veils in public places.
Employers considering implementing similar policies should seek advice before doing so. It is important to be aware that decisions on cases of this nature are made on an individual basis and the outcome is unlikely to provide employers with approval to put
blanket bans on all cases of religious clothing and symbols in the workplace thereafter.

Employment status

Numerous other cases have considered employment status – namely whether an individual is truly self-employed, or whether they are a worker or employee. Status determines what rights an individual has; self-employed individuals have the least rights and employed people the most. Workers sit in the middle as they are not entitled to claim unfair dismissal, but do have protection from discrimination and rights to the National Minimum Wage and paid holiday. One of the most recent cases to reach the media involved Pimlico Plumbers. While this case did not change the law, it provided useful guidance for employers and acted as a warning that the title an individual is given will not be definitive of their status – the facts and circumstances will be. In this case, the Court of Appeal has upheld the Employment Tribunal’s decision that the plumber involved was entitled to holiday pay and protection from discrimination, irrespective of the fact he appeared self-employed for tax purposes. The claimant, Gary Smith, had carried out plumbing work for Pimlico Plumbers for nearly six years. After his dismissal, Smith brought a tribunal claim for unfair dismissal,
discrimination and holiday pay. The Employment Tribunal decided
that Mr Smith was not an employee, so could not make a claim for unfair dismissal, but could claim holiday pay and discrimination because they found him to be a worker and not selfemployed. The Employment Appeal Tribunal upheld those decisions two years ago on appeal and in February this year, the Court of Appeal rejected
a further appeal against the decision. It is a common misconception that workers treated as self-employed persons for tax purposes have no employment rights, such as paid holiday and the right to be paid the National Minimum Wage. This is not the case and can be a costly mistake for employers to rectify both in litigation fees and damages. Given the number of Employment Tribunal claims in this area and the associated costs and negative
publicity, employers should review the employment status of their workers with the guidance of good advice, to ensure the right protections are in place and so that they know the correct legal
status of their workforce. Gender pay reporting The gender pay gap and the new reporting requirements have attracted a lot of media coverage. The Equality Act was devised on the principle that
men and women should receive equal pay for equal work. The gender pay gap shows the difference in the average pay between all men and women in a workforce. Regulations have been implemented to make larger employers (employing 250 people or more) report on their gender pay gap. The Regulations will require employers to publish: the difference between the median and mean average hourly rate of pay given to male and female employees; the difference between the median and mean average bonus paid to male and female employees; the proportions of male and of female employees who receive bonuses; and the relative proportions of male and female employees in each quartile pay band of the workforce. In the private sector, the employer’s first gender pay reports must be published by 4th April 2018, based on hourly pay rates on 5th April 2017 and bonuses paid between 6th April 2016 and 5th April 2017. The public sector regulations require the first pay reports to be published by 30th March 2018, based on hourly pay rates on 31st March 2017 and bonuses paid between 1st April 2016 and 31st March 2017. The reporting should put pressure on organisations to consider taking action to reduce or eliminate gender pay gaps. While this is of direct interest to larger firms, it is expected that its effect will trickle down through the markets.

Apprenticeship levy

With Brexit looming, the government is keen to offer new ways for businesses to train UK talent, rather than seeking skilled workers from beyond British borders. A desire to give young people an alternative to increasingly expensive university education can also be noted. To achieve this, the government has introduced an apprenticeship levy of 0.5% of the pay bill of larger employers
(those with a pay bill in excess of £3,000,000) that will be collected through PAYE alongside income tax and National Insurance. The pay bill of firms affected will be calculated with reference to total employee earnings (not additional payments such as benefits in kind) and will be payable by the employer monthly. This money can then be used to pay for the training of apprentices. It cannot be used to pay for any associated costs
of having an apprentice such as recruitment or salary. If the money paid into the levy is not used by the employers within 12 months, it will no longer be available to them and other businesses can apply
to use the funds, irrespective of whether they must pay the levy themselves. The levy is payable whether or not employers engage apprentices, and is estimated to apply to approximately 2% of UK employers. Employers will need to declare any levy liability to HMRC by April 2017 and to adjust their PAYE systems appropriately in readiness. Irrespective of whether the levy affects your business, it is worth considering where apprentices can fit into your organisation. If you do not currently have any apprentices and do not have to pay the levy, you could benefit from the unused funds from other firms.