Tag Archive: tribunal

Holiday pay decision in Lock v British Gas commission case

Kate Hodgkiss, a Partner in our Edinburgh office comments: The employment tribunal has handed down its decision in Lock v British Gas, one of the on-going holiday pay cases, this one concerning commission. Unfortunately the decision does not answer many of the remaining questions following the EAT’s decision in Bear Scotland (see Be Aware 4 November 2014) although it does confirm that commission must be included in the calculation of holiday pay.

The brief facts in Lock are that Mr Lock was employed by British Gas as a salesman, earning a basic salary of under £15,000 but with substantial potential for commission (up to 60% of his overall remuneration). During periods when he took annual leave, he was paid basic salary plus commission earned in previous weeks; on return from holiday, however, his remuneration would be lower as he had not had the opportunity to earn commission whilst absent on leave. He brought a claim for unlawful deductions from wages.

On a reference from the tribunal, the ECJ held that a worker should have commission included in holiday pay. The live issues in Lock were therefore:

  1. To determine the effect of the ECJ ruling and in particular whether the Working Time Regulations (WTR) are capable of being read to give effect to it;
  2. If so, whether the relevant commission scheme operate sin such a way that it effectively compensates for periods of annual leave so that even if the scheme is unlawful no money is due to the claimants;
  3. What is the correct reference period for calculation of holiday pay due;
  4. Whether the principles in the ECJ ruling apply only to the four weeks’ Working Time Directive (WTD) leave or also to the additional 1.6 weeks’ leave granted under the WTR; and
  5. How much the claim is worth.

However, the tribunal went on to deal with only issue one in any detail. In respect of issue four, it was agreed that the decision is relevant only to the four weeks’ WTD leave.

In respect of issue one, the tribunal regarded itself as bound by the reasoning of the EAT in Bear Scotland, but held in the alternative that that it agreed with the reasoning of the EAT in any event. The EAT said that Regulations 16(2) and 16(3) of the WTR should be applied with the inclusion of the words in italics below:

16(2)    Sections 221 to 224 of [the Employment Rights Act 1996] shall apply for the purposes of determining the amount of a week’s pay…subject to the modifications set out in paragraph (3).

16(3)    The provisions referred to in paragraph (2) shall apply-

            (e) as if, in the case of the entitlement under Regulation 13, a worker with normal working hours whose remuneration includes commission or similar payment shall be deemed to have remuneration which varies with the amount of work done for the purpose of section 221.

Section 221 ERA provides that where remuneration varies with the amount of work done, the amount of a week’s pay is the amount of remuneration for the number of normal working hours in a week calculated at the average hourly rate of remuneration payable in respect of the period of the previous 12 weeks. Presumably the average hourly rate for these purposes includes both basic salary and commission. The effect of the wording read into the WTR is to implement a 12 week reference period; however, it is not entirely clear whether this is settled as the tribunal had said that this issue was to be determined at a later date. It is also not clear precisely how the reference period will work, as commission paid in the 12 weeks before the calculation date will not be paid entirely in respect of hours worked during those 12 weeks; it may be necessary to average the pay over a different period. None of the holiday pay decisions so far have satisfactorily determined precisely how holiday pay should be calculated. There will need to be a further tribunal hearing in Lock to determine how much the claim is worth, which may provide some practical guidance.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/holiday-pay-decision-in-lock-v-british-gas-commission-case/

Government action on holiday pay claims

BIS has announced this afternoon that a statutory instrument is being laid before Parliament to limit back pay in holiday pay claims to a maximum of two years. The limit will apply to claims brought on or after 1 July 2015. Click here for a copy of the press release.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/government-action-on-holiday-pay-claims/

Failure to enhance paternity pay not discriminatory

In Shuter v Ford Motor Company, an employment tribunal has held that a male employee was not discriminated against when he received only statutory pay during a period of additional paternity leave (APL) whereas a female employee on maternity leave would have received full pay for up to 52 weeks.   Although only a first instance decision which will not bind other tribunals, this case nonetheless serves as a useful reminder to employers that they need to decide an approach to the incoming system of shared parental leave (SPL) and, in particular, to address the thorny issue of whether the benefits of an enhanced maternity scheme should be mirrored for those on SPL.

Facts

Under Ford’s family leave policies,  employees on maternity leave are entitled to occupational maternity pay at the rate of 100% for the whole leave period and employees on the two weeks of ordinary paternity leave are also entitled to 100%.   APL was a new type of family leave which took effect in relation to children born after 3 April 2011;   where the mother returns to work and ends her maternity leave,  the child’s father or the mother’s spouse/civil partner can then take between two and 26 weeks’ APL.   At the time APL was introduced,  Ford reconsidered how it might structure its pay arrangements for family leave.   Its decision was the retain 100% maternity pay and two weeks’ full pay for ordinary paternity leave but to pay only statutory pay for APL.   Among the reasons for this decision were –

  • The APL regime was likely to be temporary as the Government was already consulting on the introduction of SPL;
  • It was usual practice to initially adopt statutory minimum entitlements and then refine entitlements based on experience;
  • Paying APL at 100% would be costly and disruptive to the business given the make-up of Ford’s workforce;
  • 100% maternity pay had been introduced to enhance Ford’s ability to recruit and retain more female employees and assist its diversity targets.  A downwards equalisation of pay for maternity and APL would demotivate female staff; negatively impact the reasons for implementing 100% maternity pay; and  risk litigation and negative publicity;
  • A recognition that APL and maternity leave are different as maternity leave is connected with the biological condition of pregnancy and childbirth and facilitates the special relationship between mother and child;
  • The Government’s advice was that pay for APL did not need to be enhanced to mirror maternity pay and similar employers were not doing so;
  • Ford did not want to subsidise the less generous maternity benefits of other employers;
  • The current 2% take up of ordinary paternity leave was low; and
  • Other European companies in the Ford group did not offer such generous rights.

Ford was also able to provide statistical evidence to the tribunal which demonstrated the need to increase the number of women in its workforce; that an increase had been achieved; and also statistics on the take up of maternity and paternity leave within its workforce.

ET Claim

Following his wife’s return to work after maternity leave,  between July and December 2013,  Mr Shuter took a period of about five months’ APL from his employment with Ford.   He was paid at the statutory rate.  In October 2013,  Mr Shuter issued employment tribunal proceedings alleging both direct and indirect discrimination based on the difference in treatment by Ford of women on maternity leave and men on APL.   Had Ford’s maternity and APL pay policies been the same,  he would have received around £18,000 during his period of leave.

The employment tribunal decided that Mr Shuter had not been subject to either direct or indirect sex discrimination.   

In terms of direct discrimination,  Mr Shuter had sought to compare himself to a woman on maternity leave but the tribunal held that this was not the correct comparator.  Instead, Mr Shuter should be compared to a woman on APL who would, similarly, have received only statutory pay and, as such, there was no less favourable treatment.

In terms of indirect discrimination,  it was accepted that Ford had applied a practice of “paying women basic pay when on leave beyond 20 weeks after the birth of the child when looking after the child”.  It was also accepted that men were likely to suffer a group disadvantage from this practice given that the largest group eligible for APL are fathers.   However, the tribunal decided that Ford’s practice of paying full pay during maternity leave was justified;  its legitimate aim was to retain and increase the number of women in its workforce and its policy on maternity pay was a proportionate means of achieving that aim.

Implications

This is one of the first cases where a difference in pay for women on maternity leave and men on APL has been considered.   It is helpful for employers that, in a well-reasoned judgment, the tribunal found that there was no discrimination.   However,  businesses should not take this as an opportunity to breath a collective sigh of relief.    The decision is only at employment tribunal level so is not a binding authority and it may yet be subject to appeal.   In addition,  the case related to APL which will soon become a thing of the past when SPL comes into effect (for babies expected on or after 5 April 2015).    There are significant differences between APL and SPL including that, for example,  SPL can be taken from two weeks after the birth, rather than 20 weeks as is the case with APL,  and also that a mother and father can take SPL concurrently,  rather than consecutively as is the case with APL.    As such,  it is possible that the courts may reach a different decision when asked to consider a discrimination claim based on differences between maternity pay and pay for SPL.   

What this case is very helpful in demonstrating is the sort of detailed evidence an employer will have to provide in order to justify a decision to enhance maternity pay but not pay for SPL.  Cost alone is not an adequate reason and some additional justification will be required.   Here, Ford had carefully considered the issue when APL was introduced,  had reviewed various options and had identified sound business reasons for the decision to continue to enhance maternity pay only.     This is an exercise which employers who currently enhance maternity benefits will need to carry out before the SPL regime comes into effect and, in this regard, there is no time like the present!

 

Permanent link to this article: http://www.dlapiperbeaware.co.uk/failure-to-enhance-paternity-pay-not-discriminatory/

Tribunal fees challenge

Guy Lamb, a Partner in our Leeds office, comments: 

This month will see one of the biggest shake-ups of the employment law landscape for decades, as fees will be charged to bring claims in the employment tribunal for the first time. Fees are due to be introduced in respect of all claims commenced on or after 29 July 2013. The tribunal fee will be paid in two stages – an issue fee and a subsequent hearing fee – and will depend on the type and complexity of the claim and the number of claimants. We will be publishing a Be Alert later this month with full details of the fee system and what this will mean for employers and employees. However, in the meantime the future of fees has been called into question as the trade union Unison is challenging the decision by the Ministry of Justice to bring in fees by calling for a judicial review.

Unison is arguing that, contrary to EU law, by bringing in fees the government will make it virtually impossible for a worker to exercise their rights under employment law. The new fee regime will impose fees which may be greater than the expected compensation, even if the claims were successful. Many of the claims with which the tribunals deal are for small amounts of unpaid wages or holiday pay.

The union is also arguing that there has been no proper assessment of the Public Sector Equality Duty. An assessment should have been made of the potential adverse effect of introducing fees in terms of the numbers and proportions of claims brought by individuals with protected characteristics which would previously have been brought and will now not be pursued. The union is also highlighting that, had the government conducted a proper assessment, it would have discovered charging high fees was disproportionate to the numbers of claims brought by individuals with protected characteristics and the low compensation that is often awarded.

It seems unlikely that Unison’s challenge will succeed, as the threshold for judicial review is set very high; in order for a judicial review to be successful, Unison would have to show that the government had acted in a way that no reasonable government could act by implementing the scheme in the way it has. In the current economic climate, the government’s stated aim to save taxpayer’s money by transferring some of the burden of the costs of the tribunal system to its users may prove difficult to attack.

guy.lamb@dlapiper.com
+44 113 369 2504

Permanent link to this article: http://www.dlapiperbeaware.co.uk/tribunal-fees-challenge/