Category Archive: Employment

Gender pay gap reporting: what counts as ‘pay’?

Two weeks from today, 5 April 2017, marks the ‘snapshot’ date for which employers who are in scope need to collect the raw data on which to calculate their mean and median gender pay and bonus gaps. Employers will be required to publish information on their gender pay gap by 4 April 2018.

The requirement to assess pay data is the gross hourly rate of pay in the pay period which covers 5 April. Pay is calculated using gross figures, before any deductions for PAYE, National Insurance contributions, pension contributions, student loan repayments and voluntary deductions and takes into account both ordinary pay and bonus pay.

Ordinary pay means basic pay,  allowances, pay for piecework, pay for leave; and shift premium pay. It does not include overtime pay, redundancy pay, pay in lieu of leave, or non-monetary remuneration. 

Bonus pay means as any remuneration that is in the form of money, vouchers, securities, securities options or interests in securities and that relates to profit sharing, productivity, performance, incentive or commission.

These definitions give rise to some grey areas. The draft guidance published by Acas and the Government Equalities Office makes clear that the value of benefits provided under a salary-sacrifice arrangement do not count as ordinary pay; the employer should use the employee’s gross pay after any reduction for a salary-sacrifice scheme.  

The position in relation to pension contributions is still not entirely clear. The guidance says “The amount of an employee’s ordinary pay and bonus pay must be calculated before deductions are made at ‘source’. Employee pension contributions are a deduction, so whether or not an employee makes pension contributions will not affect the gender pay gap calculations” but it is arguable that employer contributions are not a deduction. A salary supplement that an employee receives because they have opted out of a pension scheme would be included in pay.

Benefits in kind are excluded from the definition of ordinary pay. This means that an employer should disregard the value of, for example, a company car provided to an employee. However, car allowances should be included in the calculation, as allowances are included in the definition of ordinary pay. Where an employer provides an interest-free loan to employees, such as a season ticket loan, the value of the loan should not be included as pay.

Should retrospective pay rises be included in the calculation? The regulations allow employers to ignore “any amount that would normally fall to be paid in a different pay period” but this does not cover pay which should have been paid in the relevant pay period but was not. 

Overtime is another grey area. Remuneration referable to overtime is excluded from the definitions of both ordinary pay and bonus pay. This suggests that employers should exclude not only actual overtime pay but also other elements of pay (such as allowances and shift premiums) earned in respect of overtime hours. If so, employers would need to distinguish between what is earned during normal working hours and what is earned during overtime hours. However, such a distinction could be difficult to draw in respect of some elements of pay. For example, how should an employer determine which part of a performance bonus or sales commission relates to work done during overtime hours?

These grey areas are bound to lead to inconsistencies in how employers in the same sector approach their data. Ultimately this risks making comparisons between employers of limited value. The most important consideration for employers may be to ensure that they take a consistent approach internally so they can track their own progress on the gender pay gap year-on-year.

 

 

Permanent link to this article: http://www.dlapiperbeaware.co.uk/gender-pay-gap-reporting-what-counts-as-pay/

Scope for ban on Islamic headscarves in the workplace remains limited

The European Court of Justice has decided that an internal rule which prohibits the visible wearing of any religious sign does not constitute direct discrimination based on religion or belief. Although such a rule might constitute indirect discrimination, it may be objectively justified.

Facts

Ms Achbita (A) was employed, in Belgium, as a receptionist by G4S and was involved in providing reception services for customers.  At the time of A’s recruitment there was an unwritten rule within G4S prohibiting employees from wearing visible signs of political, philosophical or religious belief in the workplace.   When A informed her employer that she intended to wear an Islamic headscarf at work,  she was told not to as this was contrary to the position of neutrality adopted by G4S in its contact with customers.    Shortly after, the G4S works council approved a change to the workplace regulations which provided that ‘employees are prohibited, in the workplace, from wearing any visible signs of their political, philosophical or religious beliefs and/or from engaging in any observance of such beliefs’. A was dismissed because she insisted on wearing the Islamic headscarf at work. She challenged her dismissal in the Belgian courts, which referred the matter to the ECJ.

Ms Bougnaoui (B) worked at Micropole, in France, initially as an intern and then as an employee. Before the start of her internship,  she was told by a representative of the employer that wearing an Islamic headscarf at work might pose a problem when she was in contact with customers.   B did wear an Islamic headscarf at work. Following a complaint from a customer to whom B had been assigned, Micropole reaffirmed the principle of the need for neutrality as regards its customers and asked B not to wear the veil in future. B objected and was dismissed. She challenged her dismissal in the French courts, which referred the matter to the ECJ.

The ECJ considered both cases together.

G4S decision

The Court decided that, as G4S’s internal rule refers to the wearing of visible signs of political, philosophical or religious beliefs, it covers any manifestation of such beliefs without distinction. All employees are treated in the same way and are required, generally and without differentiation, to dress neutrally.   There was no evidence that the internal rule was applied differently to A as compared to other G4S employees.

The Court concluded, therefore, that the rule is not directly discriminatory as it does not introduce a difference of treatment that is directly based on religion or belief.

The Court also considered the issue of indirect discrimination. It found that the employer’s internal rule could be indirectly discriminatory if the obligation it imposes, although apparently neutral,  in fact results in persons of particular religion being put at a particular disadvantage. Such indirect discrimination may, however, be objectively justified by a legitimate aim, provided that the means of achieving that aim are appropriate and necessary.

In terms of G4S’s rule, the ECJ gave guidance on the matters that the Belgian court should consider when assessing objective justification. According to the ECJ –

  • the pursuit by the employer, in its relations with its customers, of a policy of political, philosophical and religious neutrality is a legitimate aim, notably where the only workers involved are those who come into contact with customers;
  • the ban on the visible wearing of signs of political, philosophical or religious beliefs is appropriate for the purpose of ensuring that a policy of neutrality is properly applied, provided that that policy is pursued in a consistent and systematic manner;
  • the Belgian court will have to ascertain whether the prohibition covers only G4S workers who interact with customers. If that is the case, the prohibition must be considered strictly necessary for the purpose of achieving the aim pursued; and
  • the Belgian court should also ascertain whether it would have been possible for G4S to offer A a post not involving any visual contact with customers, instead of dismissing her.

Micropole decision

The ECJ decided that the willingness of an employer to take account of the wishes of a customer no longer to have services provided by a worker wearing an Islamic headscarf cannot be considered to be a ‘genuine and determining occupational requirement’ for discrimination purposes.   The Court pointed out that there are very limited circumstances in which a characteristic related to religion can constitute a genuine and determining occupational requirement. This concept refers to a requirement that is objectively dictated by the nature of the occupational activities concerned or of the context in which they are carried out and does not cover subjective considerations, such as the employer’s willingness to take account of the particular wishes of the customer.

Comment

Although the decision of the ECJ does allow some scope for an employer to operate a dress code which requires religious neutrality,   in reality that scope is extremely limited.   Such a code is only possible where its use is in pursuance of a legitimate business aim and, further, it must be a proportionate means of achieving that aim.   Employers should also be aware that dress codes can give rise to risks of other types of discrimination, for example sex or disability discrimination. Practical points to consider in reviewing or implementing a dress code are –

  • Addressing why the dress code is necessary by identifying a legitimate aim;
  • Considering the scope of the code and what the justification is for its different elements;
  • Deciding whether employees or employee representatives should be consulted about the code;
  • Ensuring that the code is applied consistently and systematically across the business; and
  • Considering what flexibility might be allowed within the code, where exceptions might be possible and how any flexibility can be managed consistently across the business.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/scope-for-ban-on-islamic-headscarves-in-the-workplace-remains-limited/

New apprenticeship levy applies from April 2017

This week (6 to 10 March 2017) marks the 10th National Apprenticeship Week. This is quite timely, as it precedes the introduction of the apprenticeship levy next month.

The apprenticeship levy applies from 6 April 2017, and effectively shifts the cost of funding apprenticeships from the government to large employers.  The levy will be collected through the PAYE system alongside tax and National Insurance Contributions.

The rate of the levy will be 0.5% of each employer’s wage bill; effectively operating as an additional tax on employers. However, each employer will be able to offset an allowance of up to £15,000 against the levy, which in effect means that the levy only becomes payable on wage bills of over £3m (as 0.5% of £3m equals £15,000), unless the employer is “connected”.  A company is deemed to be “connected” to another if it has control of that other company, or if both companies are under the control of the same person or persons.  Therefore, generally speaking, companies in a corporate group will be connected.  Importantly, connected companies will only be entitled to one £15,000 allowance between them for each tax year.

Employers will have access to a new Digital Apprenticeship Service (DAS) account, which they can use to access funding for apprenticeships. The amount of funds available in an employer’s DAS account will be determined by the value of their apprenticeship levy and the number of their employees living in England.  The government will also apply a 10% ‘top up’ to the funds.  Funds will expire 24 months after they enter an employer’s DAS account.

More details on the levy and how it will operate are set out in the guidance manual recently published by HMRC. For advice on the apprenticeship levy, or on apprenticeships generally, contact your usual DLA contact.

 

 

Permanent link to this article: http://www.dlapiperbeaware.co.uk/new-apprenticeship-levy-applies-from-april-2017/

Collective Bargaining Stalemate? – Tribunal finds employer’s direct approach to employees unlawful

Employers who recognise a trade union for the purposes of collective bargaining should be aware of a recent tribunal decision which may significantly  impact on their ability to implement contract variations where union negotiations reach a stalemate.

The s.145B conundrum

This is due to a little-known section of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). Section 145B of TULRCA is complex but essentially prohibits employers making offers directly to union members to change their terms and conditions in order to avoid collective bargaining (i.e. if the employer’s “sole or main purpose” in making the offer is to achieve a “prohibited result”) .

TULCRA defines a “prohibited result”  as being that one or more of the workers’ terms “will not” or “will no longer” be determined by collective agreement. There is no binding case law on what this means in practice. In particular there is uncertainty about whether employers who, despite bargaining in good faith with the union, fail to reach agreement on a new contractual term are able to then approach employees directly to agree the change, without breaking the law.

This is an issue which arises frequently. For example, if an annual pay bargaining negotiation reaches stalemate, or an employer tries and fails to agree new working patterns with its recognised trade union then if the employer invites workers to accept its proposals directly and they accept, that particular contract term will not have then been determined collectively. The key questions are does the employers offer amount to a prohibited result and was this its sole or main purpose?

Following 3 employment tribunal cases in 2013  it was generally considered that for the legislation to be breached the employer had to be seeking either the total or partial elimination of collective bargaining.

Dunkley and others v Kostal UK Limited

This position has been called into question by the recent employment tribunal decision in Dunkley and others v Kostal UK Limited.

Facts

The employer had a recognition agreement with Unite providing for collective bargaining. In pay negotiations in November 2015 the company made a pay offer of a 2% increase in basic pay plus a 2% Christmas bonus, in return for changes to terms relating to sick pay for new starters, reduction in overtime rates and consolidation of breaks.

The union balloted members on the offer, which was rejected. The employer then sent a notice to all employees summarising the deal and giving until 18 December to accept. The notice stated that failure to sign and return would result in the Christmas bonus not being paid. In January the employer sent a further letter to employees who had not accepted the offer stating that if no agreement could be reached this may lead to notice being given to terminate employment. In the meantime the dispute between the company and the union was referred to ACAS but a collective agreement in respect of pay for 2015 was not concluded until November 2016.

The claimants – all members of Unite – brought claims under s.145B.

Decision

The tribunal held that the employer had breached s.145B.  It found that the employer took the conscious decision to bypass further meaningful union negotiations in favour of a direct and conditional offer to individual employees. It was, the tribunal found, improbable that the employer did not intend to circumvent the collective bargaining process when it made the offers. If there is a recognition agreement which includes collective bargaining the employer cannot drop in and out of the collective process as and when that suits its purpose. The tribunal discounted the fact that the employer intended to determine terms and conditions collectively in the future.

Interestingly, the tribunal failed to accept the employer’s arguments that the impact of this would prevent the employer ever implementing a change to terms with union members if the Union refused to agree.  The tribunal disagreed and considered the option was still open to employers of terminating the contract and offering re-engagement on the new terms. In our view, however, this misses the point that the offer of re-engagement would in itself be in breach of s.145B if the tribunal’s interpretation of s.145B is correct.

Implications of this decision

While there is much the employer could have done differently in this case to strengthen their argument as to their true purpose in implementing the changes, the tribunal decision casts new uncertainty on the impact of s.145B and the level of restriction it places on employers with trade unions who are recognised or seeking recognition.

Although this is only a tribunal decision and therefore not strictly  binding, we are aware that Unite is already seeking to rely on it to prevent employers engaging  directly with employees in relation to terms and conditions. There is now a much higher risk that trade unions will encourage employees to bring claims if offers to change terms are made direct to union members even where collective bargaining has been followed in good faith and reached a stalemate and where the employer intends to collectively bargain on all future matters.

Why is this important?

The consequences of a breach of s.145B can be significant. An Employment Tribunal will award  £3,830 to each employee who has been made an offer in breach of the statutory provisions (whether or not they have accepted the offer) and the contract variation may not be effective. In addition, dismissal for failing to accept such an offer will be automatically unfair with no minimum service requirement. While this legislation only restricts offers to union members, making offers only to non-member employees presents other risks.

What should employers now do?

What can employers do to mitigate the potential for a breach of s.145B?

  • Be clear in communications with the union and the employees what the business reason or need is for any proposed change to terms and conditions and the reason for any urgency. Employers must prove their purpose is lawful. The stronger the business need the more likely a tribunal is to accept the business reason for the new terms is the main purpose;
  • Ensure if offers are made to employees the terms are the same as those offered via the trade union and, in most cases, that the scope of collective bargaining going forward remains unchanged;
  • Exhaust collective bargaining procedures first. Avoid expressing hostility towards  collective bargaining arrangements. In determining the employer’s purpose, the employment tribunal must take into account any evidence that  the employer had recently changed or sought to change, or did not wish to use, collective bargaining; and
  • Review collective bargaining agreements.   

Our employment team have extensive experience of advising on changes to terms and conditions where a union is recognised for collective bargaining and succeeded in defending British Airways against a s.145B claim in 2013 following a restructure. If you would like to discuss your current collective bargaining  arrangements or ongoing or anticipated change programmes, please contact your usual DLA Piper contact.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/collective-bargaining-stalemate-tribunal-finds-employers-direct-approach-to-employees-unlawful/

Trade Union Act 2016 major provisions coming into force 1 March

The major provisions of the Trade Union Act 2016 will come into force on 1 March 2017. The Trade Union Act 2016 (Commencement No. 3 and Transitional) Regulations 2017 will bring into force the following provisions:

  • The 50% turnout requirement for all industrial action ballots (section 2 of the 2016 Act which amends section 226 of the Trade Union and Labour Relations (Consolidation Act 1992 – TULRCA));
  • The requirement that 40% of those entitled to vote support industrial action in important public service ballots (section 3 which amends s.226 TULRCA);
  • New rules governing the information that must be included on the ballot paper, requiring the union to provide a summary of the matters in issue in the dispute, details of the types of industrial action short of a strike and when industrial action is expected to take place (section 5 which amends s.229 TULRCA);
  • Changes to the information which must be notified to union members following a ballot (section 6, which amends section 231 TULRCA);
  • The requirement on unions to include information about industrial action and political expenditure in their annual return to the Certification Officer (sections 7 and 12, which bring into force new s.32ZA-C TULRCA);
  • The extension of the notice of industrial action to be given to employers from one week to two weeks (section 8, which amends s.234A TULRCA);
  • The expiry of the mandate for industrial action six months after the ballot (section 9 which amends s.234 TULRCA);
  • The requirement on unions to appoint a picket supervisor (section 10 which amends s.219 and brings into force new s.220A TULRCA);
  • The requirement that union members opt in to contributing to political funds, subject to a transition period of 12 months and only in respect of new joiners (section 11 which amends s.82 and brings into force new s.84A TULRCA); and
  • Restrictions on ‘check-off’ arrangements, requiring unions in the public sector to make a reasonable contribution to the cost of administration (section 15 which amends s.296 and brings into force new s.116B TULRCA).

The new rules will only apply to industrial action ballots which open on or after 1 March 2017.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/trade-union-act-2016-major-provisions-coming-into-force-1-march/

Employment tribunal developments

In the last week, we have seen a couple of developments relating to employment tribunals which will be of interest to employers. The first relates to a new online register of employment tribunal judgments; the second is the publication of the Government’s response to its consultation on transforming the justice system.

Online employment tribunal judgments

HM Courts and Tribunals has now launched its online register of employment tribunal judgments, (some time after its initial announcement about the planned availability of this service back in June 2016). The register is available here.  This is the first time that there has been a central register of judgments at employment tribunal level.  At present, the number of cases available on the new online service is limited, mainly covering cases in 2016 and 2017 (with a small number of 2015 cases). It is anticipated, however, that all new cases will be available on this register going forward. EAT judgments are still available through the Courts and Tribunals Judiciary website.

Government publishes response to its consultation on “Transforming our justice system”

Reform of the courts and tribunals system has been on the agenda for some time. Back in July 2016, Lord Justice Briggs published his final report on the Civil Courts Structure Review which contained a number of comments on the employment tribunal system and referred to the potential for a new Employment and Equalities Court (see sections 11.11-11.21).

Then, on 15 September 2016, the Lord Chancellor, Lord Chief Justice, and the Senior President of Tribunals issued a joint statement on their shared vision for the future of Her Majesty’s Courts & Tribunal Service. The statement highlighted that the case for reform of the tribunals system is “compelling” and that there is a plan to create “one system, one judiciary” with better quality outcomes.  By 2020, therefore, it is proposed that tribunals will be part of a single justice system with a single judiciary. The statement said that “tribunals will be digital by default” but with help in place for anyone who needs it – and that the needs of people who use the tribunals will be “put at the centre”, allowing all parties better quality, faster and less stressful resolution of claims.

At the same time as the publication of the joint statement, the Ministry of Justice published a consultation paper, Transforming our justice system. The consultation sought views on making the justice system faster and easier to use.  In relation to employment tribunals specifically, the proposals were limited with the consultation paper indicating that reforms being adopted elsewhere in the justice system (eg streamlining procedures, more decisions ‘on the papers’, more virtual hearings, simplifying panel composition etc) could be applied to the employment jurisdiction. The consultation generally asked for views on 3 specific elements:

  • Assisted digital facilities;
  • Online conviction and statutory fixed fine; and
  • Panel composition in tribunals.

The consultation received 790 replies and the Government’s response was published last week. Unfortunately there is no specific reference to the employment tribunal system but the response indicates that support (in the form of a national network of accessible, quality assured assistance alongside telephone and webchat services) will be put in place for any digital solutions eg services which are moved online. We shall have to wait to see how developments progress.  For now, despite the current lack of information, it seems certain that change is firmly on the agenda.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/employment-tribunal-developments/

Court of Appeal decides “self-employed” plumber has worker status

Employment status is shaping up to be one of the hot employment law topics for 2017.   Early February and we already have a Court of Appeal judgment on the subject.  Today, the Court of Appeal decided,  in the case of Pimlico Plumbers Ltd v Smith,  that a plumber, who was engaged as a “self-employed operative”,  should in fact have been treated as a “worker” for employment rights purposes.  Workers have rights to, for example, paid annual leave and the national minimum wage.

Facts

Smith worked as a plumber for Pimlico Plumbers Limited for around 6 years.  He was labelled as a “self-employed operative” and described in documentation as an independent contractor, in business on his own account.    Under the arrangements between the company and the claimant –

  • He was required to wear a Pimlico Plumbers uniform;
  • He was required to drive a van with the Pimlico logo;
  • He had his movements monitored by Pimlico via GPS installed in the van;
  • He could only be contacted by customers through Pimlico;
  • Customer contracts and estimates were issued in the name of Pimlico;
  • His contract did not permit him to provide a substitute to do his work and largely pointed to personal performance. Pimlico did permit work to be transferred between operatives and where necessary allowed external specialists to be used;
  • His contract contained post-termination restrictive covenants;
  • He was paid by Pimlico against receipt of an invoice;
  • He was required to provide his own tools, equipment and materials;
  • He took personal liability for work performed by him and provided his own professional indemnity insurance;
  • He was taxed as self-employed and was VAT registered;
  • According to the contract, there was no obligation on the company to offer and no obligation on Smith to accept work, but he was required to notify the days on which he was unavailable;
  • He could ostensibly reject particular jobs and could decide his own working hours, but the tribunal accepted that he was required to do a minimum number of hours work each week.

Employment Tribunal, Appeal Tribunal and Court of Appeal agree “worker” status

Smith brought a claim to the employment tribunal alleging that, following a heart attack, he was unfairly or wrongfully dismissed by Pimlico.  His claim also alleged direct disability discrimination, discrimination by reason of failure to make reasonable adjustments, and contained allegations in respect of holiday pay and unauthorised deductions from wages.

The Employment Tribunal considered, as a preliminary issue, the question of Smith’s employment status and concluded that he was a “worker” rather than genuinely self-employed or an employee. This decision was upheld by the Employment Appeal Tribunal and has now also been approved by the Court of Appeal.

Key factors in the arrangements between Smith and Pimlico which led to the worker status finding were

  • The obligation on Smith to perform work personally and the absence of a contractual right of substitution;
  • That Smith was required to work a minimum number of hours per week, despite the documentation purporting to allow him to reject work and decide his own working hours; and
  • The degree of control exercised over Smith by Pimlico which showed that they were not a customer of a business run by him. Rather, Smith was an integral part of Pimlico’s business and was subordinate to it. The contractual restrictive covenants were important to this finding.

Key factors in the arrangements which led to Smith being held not to be an employee were –

  • The fact that there was no obligation on Pimlico to provide Smith with work;
  • The intentions and actions of the parties demonstrated they considered him to be self-employed; and
  • The financial risk which Smith bore.

The finding of worker status means that Smith will be able to pursue his disability discrimination claims and those for unlawful deductions and holiday pay. He will be unable to continue with his unfair dismissal claim.

Comment

Whether an individual is classified as self-employed, a worker or an employee will depend on the facts of each particular workplace arrangement.   However, there are some useful pointers to be taken from the outcome of this case.   First, it is crucial for businesses to be aware that a classification of self-employed for tax purposes does not automatically mean that the same classification will apply for employment rights purposes.   Further, for self-employed status to hold true, removing a requirement for personal service and allowing a right of substitution is important. In addition, the use of standard contractual documentation should be approached with caution as there is a risk that it will not reflect the reality of the arrangements between the parties and suggest a different type of “employment” arrangement to what is intended.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/court-of-appeal-decides-self-employed-plumber-has-worker-status/

Gender pay reporting: Who is in scope?

ACAS and the Government Equalities Office have published guidance on the gender pay reporting requirements due in force from April.  Employers will be required to publish information on their gender pay gap by 4 April 2018.

The guidance leaves a number of questions unanswered, including: Which workers are in scope?

We know that the report must include employees, zero hours employees and casual workers, plus other workers who provide personal services. But there are some grey areas:

  • What about contractors who supply their services via their own service company, or an intermediary? The guidance suggests that the contractor would count towards the headcount of the service company, not the end user but it is not clear that this is the right approach.
  • What about agency workers who are employed by an agency but provide personal service to the client.  Do both the agency and client have to report on those workers?
  • What if the employer does not have sufficient information to calculate hourly pay of its contractors?  There is an exception to the requirement to publish pay data for workers/contractors if the employer does not have the data and it is not reasonably practicable to obtain it. What does “reasonably practicable” mean?  The guidance suggests that employers should ‘consider’ whether it is reasonably practicable to obtain the information by asking for it and new contracts should seek, where possible, to ensure that contractors are required to provide the information needed for compliance. However, as the guidance is non-binding, employers may take a different view.

The most important consideration for many businesses may be to ensure that how workers are categorised for the purposes of gender pay reporting is consistent with and does not undermine the employer’s employment status strategy in other areas.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/gender-pay-reporting-who-is-in-scope/

Immigration Act 2016: New provisions now in force

The Immigration Act 2016 represents a significant milestone in immigration regulation creating additional duties and responsibilities on individuals and businesses. Immigration is increasingly under the spotlight and likely to remain so for the foreseeable future so it is therefore vital for employers to be fully aware of their responsibilities to effectively manage their risk.  Key features of the 2016 Act include the introduction of a new criminal offence of illegal working, criminal liability for employers who employ workers with reasonable cause to believe they do not have the necessary right to work in the UK and increased penalties for those who are found to have broken the law.

The substantive provisions of the 2016 Act are being brought into force in various stages, most recently on 1 December 2016.

By way of summary these are:

  • Closure Notices and Compliance Orders

New penalties now apply to offenders who have been found to be repeatedly employing illegal workers, or failing to pay a civil penalty notice. The new enforcement regime gives the Home Office the power to close an employer’s premises for up to 48 hours. All paid or voluntary work on premises subject to a closure notice will be prohibited.

Following the issue of a closure notice the matter will be urgently referred to a County or Sheriff Court for consideration. In those circumstances the court may apply a Compliance Order which may impose additional specific requirements on employers to follow to make sure that they do not commit further offences. The Court will have a wide discretion as to the measures that it can impose. At the same time it is important to note that an employer will have a defence against a closure notice if it can show that the appropriate right to work checks were carried out.

The potential closure of premises for up to 48 hours without notice or process will be of particular concern to businesses for whom such premises are key, and it is therefore vital for employers to be aware of their obligations in relation to illegal working and in particular to carry out right‑to‑work checks at the appropriate time. Also worth bearing in mind is the provision in the legislation for an application for compensation to be made for businesses which have suffered losses caused by closure orders.

  • Right to Rent Provisions

As of 1 December 2016 it is a criminal offence to rent a property to someone who is not lawfully residing in the United Kingdom. This provision follows on from the recent introduction of “right to rent” checks obliging landlords in England and Wales to conduct checks on tenants. The new landlord/tenant provisions come with strict penalties with potential custodial sentences of up to five years for offenders. This is relevant to employers who provide housing as part of the terms of employment and may present a particular risk to such employers with a cross-border workforce.

Although the legislation is now effective it remains to be seen how it will be enforced by the authorities and interpreted by the Courts. What we do know, however, is that the Home Office are taking steps to “strengthen our immigration system” against a backdrop of getting tough on illegal working. Employers should therefore review their processes to make sure that they are well placed to deal with an inspection and any resulting action.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/immigration-act-2016-new-provisions-now-in-force/

Gender pay reporting regulations published, to come into force 6 April 2017

The Government has today published the revised draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, which are intended to come into force on 6 April 2017. Under the regulations, employers employing 250 or more employees will be required to publish information about the gender pay gap in their organisation.

The original draft regulations contained a number of problem areas (Se our Be Aware of 15 February 2016). Whilst some of those problems have been addressed in the new draft, some remain and there are some new problem areas to grapple with.

Employees

‘Employees’ are not defined in the draft regulations; however, the explanatory notes state that the definition of employment is the section 83 of the Equality Act 2010 definition which includes employment under a contract of employment, a contract of apprenticeship and a contract personally to do work. This would include many independent contractors. However, the impact of using the wide definition of employee is softened slightly by a new provision which says that the employer is not required to include data relating to an employee who is employed under a contract personally to do work if the employer does not have the data and it is not reasonably practicable to obtain it.

Partners, including partners in an LLP, are excluded from the definition of employee. It is not clear why this exclusion has been made.

The data snapshot

The requirement is to publish data captured at a snapshot date. This has changed from 30 April 2017 to 5 April 2017. The obligation to report is within a year of the snapshot date.

Pay

Pay is gross pay calculated before deductions at source. The definition of pay has been tweaked in the new regulations but has not changed substantially. Pay will include basic pay, paid leave, allowances, shift premium pay, and pay for piecework. Pay will not include overtime pay, expenses, benefits in kind, redundancy or other termination pay, payment in lieu of leave. Bonus pay is included but has a separate definition in the new regulations. Commission is treated as bonus pay.

The duty to publish annual information relating to pay

The basic obligations on employers who are caught by the regulations remain the same. They will need to publish:

  • The difference in the mean and median pay of male and female employees;
  • The difference in mean and median bonus pay of male and female employees;
  • The proportions of male and female employees who were paid a bonus in the previous year; and
  • The numbers of male and female employees employed in quartile pay bands.

However, the detail of what must be published has changed.

In calculating the mean and median pay gap, employees who are not on full pay due to being on leave are excluded. If an employee is being paid at a reduced rate or nil as a result of being on leave during the pay period which includes 5 April they are not included. Leave includes maternity, paternity, adoption, parental and shared parental leave, sick leave, annual leave and special leave. This could mean that many employees who are on annual leave on 5 April should be excluded; even without the impact of the holiday pay litigation, many employers perfectly lawfully pay employees less during annual leave than they would receive if they were not on leave; arguably, this is pay at a reduced rate. This could have a significant impact on some employers, particularly as the snapshot date will often fall in the Easter holiday period.

Employees on leave are also excluded from the quartiles information but are not excluded from the calculation of mean and median bonus or proportions of employees paid a bonus.

Bonus

The definition of bonus has been clarified and now makes it clear that pay in the form of securities, securities options and interests in securities is treated as paid at the time when and in the amounts in respect of which it gives rise to taxable earnings.

Calculation of the hourly rate of pay

The new regulations set out in detail the steps involved in calculation of the hourly rate of pay of relevant employees, presumably intended to mitigate the impact of unusual work patterns and achieve a more accurate comparison. The steps are as follows:

  • Identify the pay period – generally speaking, the period in respect of which the employer pays basic pay (weekly, fortnightly, monthly etc);
  • Identify all amounts of pay and bonus pay paid during the pay period which includes 5 April;
  • Exclude any ordinary pay which would normally be paid in another pay period;
  • If bonus (which includes commission) is calculated over a different period, pro-rata it in respect of the pay period;
  • Add together the ordinary and bonus pay as adjusted;
  • Multiply by (7 divided by the number of days in the pay period); and
  • Divide by the number of working hours in a week.

There is  a new provision which determines how to calculate working hours; either normal working hours or an average over a 12 week period if the employee has no normal working hours.

Quartiles

The new regulations set out in detail how the quartile pay bands should be calculated. This was unclear under the old regulations. Once the hourly rate of pay for all full-pay relevant employees (ie not those receiving reduced or nil rate due to being on leave) has been calculated, those employees should be ranked from lowest hourly rate to highest hourly rate. The list should then be divided into 4 sections each containing (so far as possible) an equal number of employees. The employer must publish the proportion of male and female employees in each quartile as a percentage.

In recognition of the fact that this method is potentially open to manipulation, as employers can decide which quartile employees on the same hourly rate of pay are assigned to,  the regulations require employers to assign relative proportions of male and female employees to each quartile – so if there are 20 employees who could legitimately be put in either of 2 adjacent quartiles and 10 are male and 10 female, 5 of each should be assigned to each of the 2 quartiles.

Form and manner of publication

Here there has been no change. The information must be published on the employer’s website in a manner which is accessible to its employees and the public, for a period of at least 3 years, and it must be accompanied by a statement signed by a director (or similar for non-companies) which confirms that the information is accurate.

Enforcement

Whilst the new regulations, like the old regulations, do not expressly contain any sanctions for failure to comply, the explanatory notes state that a failure to comply with an obligation imposed by the regulations will constitute an ‘unlawful act’ within the meaning of section 34 Equality Act 2006 which empowers the Equality and Human Rights Commission to take enforcement action. Such enforcement action is, in practice, unlikely due to the EHRC’s limited resources but does mean that the regulations are theoretically not completely toothless.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/gender-pay-reporting-regulations-published-to-come-into-force-6-april-2017/

Older posts «