Category Archive: Employment

Disparate pay for maternity and shared parental leave may be indirect discrimination

Following the EAT’s recent ruling, in Capita Customer Management Limited v Ali, that a father who wished to take shared parental leave was not directly discriminated against in not being entitled to the higher maternity pay rate which the employer paid to employees taking maternity leave, the EAT has handed down judgment in Hextall v Chief Constable of Leicestershire Police.  The appeal in this case related to indirect discrimination, and provides a useful contrast to the previous judgment on direct discrimination.

In Hextall, the Respondent Police Force’s maternity, paternity and shared parental leave policies were such that the only option for men taking leave after the birth of their child was shared parental leave at the statutory rate, while women had the additional option of taking maternity leave on full pay.  The Claimant brought both direct and indirect discrimination claims, which the Employment Tribunal dismissed, concluding that women on maternity leave were not valid comparators for men on shared parental leave in respect of either the direct or indirect discrimination claims.  The Claimant appealed the decision in relation to the indirect discrimination claim only.  In appealing this decision, the Claimant also clarified the nature of the indirect discrimination claim, namely that the rate of pay for shared parental leave being at the statutory rate while maternity pay was offered at an enhanced rate disadvantaged men because they, unlike women who could opt for maternity leave on enhanced pay, had no other choice than to accept statutory pay if they wished to take leave to care for their child.

On appeal, the EAT found that the ET had erred in the application of the appropriate test for indirect discrimination. While the ET had correctly identified the PCP relied on by the Claimant, the EAT found the ET had erred in identifying a logically relevant pool in order to undertake a comparative exercise to decide whether the PCP put men at a particular disadvantage compared with women in circumstances which were not materially different.  In particular, the ET had failed to identify the disadvantage relied on  by the Claimant.  This was that the difference in pay rate disadvantaged fathers because they, unlike mothers, would be deterred from taking leave.  On this basis, the EAT held that the relevant pool should have been comprised of men and women with a present or future interest in taking leave to care for their new-born child.  The ET had therefore been incorrect to exclude women on maternity leave from the relevant pool, which it had done on the same basis for its correct rejection of the same comparator in relation to the direct discrimination claim.

While the EAT allowed the appeal, they concluded that they did not have sufficient facts before them to accurately identify the relevant pool, and as such returned the case to a differently constituted ET for re-consideration. Hextall does not therefore provide a definitive answer to the question of whether disparate pay under maternity and shared parental leave policies will give rise to indirect discrimination.  The position should, however, become clearer after the ET issues its decision, which will necessarily incorporate the consideration of any objective justifications for the alleged indirect discrimination.  In light of the recent ruling in Ali, it will be informative to observe the extent to which the ET gives weight to the contrasting purposes of maternity leave and shared parental leave in the context of justifying any indirect discrimination.

Permanent link to this article: https://www.dlapiperbeaware.co.uk/disparate-pay-for-maternity-and-shared-parental-leave-may-be-indirect-discrimination/

Less than one month to go until GDPR: Are you ready?

The countdown is on to the implementation of the GDPR on 25 May 2018. With less than one month to go, many employers will be finalising their preparation for the changes the new law will bring to data protection in the workplace.

For those employers finalising their preparations, it may be time to check in to ensure that you remain on track and on target.  But for those organisations who are only just turning their minds to GDPR, what are the next steps?

Compliance might appear a daunting task for organisations, but it is not too late to begin to get ready.  There is still time to put in place an action plan and timeline for developing and implementing a GDPR compliance programme; including the changes needed to practices, key documents, processes and procedures.  Although continued inaction runs the risk of fines and legal action, taking steps towards compliance now will be steps in the right direction.

If your organisation has not already carried out a comprehensive data audit, that is a good place to start. Knowing what data you collect, what you do with it and (most importantly) why is the first step in developing a GDPR-compliant Privacy Notice and to prioritising compliance activity and remedial measures based on areas with the highest risk.

DLA Piper’s employment team have a wide range of experience in the field of employer data privacy, and are actively involved in assisting clients to prepare for GDPR. Whatever stage of readiness you are at, we can help you to implement your GDPR compliance programme.

 

Permanent link to this article: https://www.dlapiperbeaware.co.uk/less-than-one-month-to-go-until-gdpr-are-you-ready/

Holiday and casual workers: the 12.07% formula challenged

A recent decision of the Employment Appeal Tribunal (EAT) casts doubt on the practice of employers fulfilling their obligations to allow paid annual leave to casual workers by providing for holiday accrual at the rate of 12.07% of hours worked.

Facts

Brazel was a part-time music teacher, retained on a zero hours contract.    She worked mostly during term-time and her hours fluctuated weekly.  She had a contractual right to 5.6 weeks’ paid holiday, mirroring her statutory right,  and she was required to take holiday during school holidays.

By way of holiday pay, Brazel was paid 12.07% of the actual hours worked each term at the end of the term, so she received holiday pay three times a year in her March, August and December pay packets. The employer took this approach based on the ACAS guidance on holidays and holiday pay for casual workers, rather than calculating holiday pay based on the normal rate of pay averaged over the 12 weeks prior to holiday being taken, which is the methodology required by the Working Time Regulations.

The Employment Tribunal upheld the employer’s approach. It decided that a principle of pro-rating should apply, so that either (i) in the case of a part-time worker, like Brazel, working fewer than 46.4 weeks per year, the statutory scheme by which a week’s pay is calculated should be “read down” so that holiday payment should be capped at 12.07% of annualised hours; or (ii) the entitlement to 5.6 weeks’ leave should be pro-rated,  with leave entitlement based on the amount of weeks worked in a year.

EAT decision

The employee’s appeal against the Employment Tribunal judgment was upheld. The EAT’s conclusion was that Brazel’s holiday pay should have been calculated using the 12 week averaging method.   The EAT did not consider there to be a requirement to pro-rate the leave entitlement of part-time employees (which is what the 12.07% formula achieves), whether to avoid a “windfall” for term-time only workers or to avoid full-time employees being treated less favourably than part-timers.

The EAT also commented that the overriding principle of the Part-time Workers Regulations is that part-time workers are not to be treated less favourably than full-time workers. There is no principle to the opposite effect, and as such there was no basis for the tribunal’s amendment of the statutory 12 week averaging scheme, the provisions of which are unambiguous.

Comment

The facts of this case involve a term-time only teacher. However,   the principle of the EAT’s decision will apply equally to any business which uses the 12.07% accrual formula for staff on zero hours contracts or other casual working arrangements.  There are different versions of this approach – in some cases, like Brazel’s,  the accrued amount is paid at intervals throughout the year; in others, employees accrue 12.07% of hourly pay throughout their working weeks/months and receive the accrued amount when they take holiday or leave the business; finally, some employers “roll-up” an extra 12.07% into the hourly pay rate.  (Remember that, although rolled-up holiday pay technically breaches the Working Time Directive,  payments clearly identified as holiday pay on worker’s pay slip will be offset against any holiday pay claim).

The 12.07% method undoubtedly provides employers with a practical rule of thumb when calculating holiday accrual for casual staff.  Although it is not approved by legislation, as mentioned in the Brazel case,  the ACAS guidance refers to holiday entitlement for a casual worker as being 12.07% of hours worked over a year.  In addition, the Gov.UK online holiday entitlement calculator uses this formula.   Unfortunately, the value of this formula is now diminished and the Brazel decision leaves businesses with uncertainty and the risk of their established methods of providing holiday/holiday pay for casual staff being open to challenge.

 

 

Permanent link to this article: https://www.dlapiperbeaware.co.uk/holiday-and-casual-workers-the-12-07-formula-challenged/

Government publishes response to Taylor Review and four consultation papers

The Government has today published ‘Good Work’, its response to the Taylor Review which investigated what impact modern working practices are having on the world of work. The Taylor Review published its report in July 2017 and made wide-ranging recommendations regarding reforms of the law on agency work, paid holiday, sick pay, flexible working and employee representation. The review found that the strength of the UK’s labour market is built on flexibility but that a clearer focus is needed on quality of work as well as the quantity of jobs.

The Government says that it will take forward all but one of the Taylor Review’s  53 recommendations. It has specifically rejected proposals to reduce the difference between the National Insurance contributions of employees and the self-employed and has no plans to revisit this issue. However, in many cases the Government is only proposing to consider or seek views on the Taylor recommendations and it has rejected parts of some recommendations. The result is considerably less radical than the headlines might suggest.

Employment status

The Government is launching a detailed consultation on employment status examining options, including new legislation, to make it easier for both the workforce and businesses to understand whether someone is an employee, worker or self-employed. The consultation closes on 1 June.

Other proposals

The Government is also proposing to:

  • Increase the holiday pay reference period from 12 weeks to 52 weeks;
  • Introduce a right for all workers to request a more predictable contract;
  • Extend the right to a statement of written particulars to all workers from day one and consult on what information to include;
  • Extend the right to an itemised payslip to all workers;
  • Ask the Low Pay Commission to explore the impact of introducing a new national minimum wage rate for hours that are not guaranteed;
  • Consult on extending the relevant break in service for the calculation of the qualifying period of continuous service beyond the current week (but not necessarily to a month as recommended by Taylor);
  • Consult on how definitions of working time (for the purposes of the national minimum wage) can and should apply to platform working;
  • Consult on whether to repeal the ‘Swedish derogation’ in respect of agency workers;
  • Introduce a naming and shaming scheme for unpaid employment tribunal awards;
  • Raise the maximum penalty for aggravated breach of employment rights from £5,000 to at least £20,000 (although since the penalty was introduced in 2014 only 20 have been imposed);
  • Launch a new campaign to encourage more working parents to share childcare through shared parental leave. Yesterday BEIS published a set of guidance and tools for parents thinking of taking shared parental leave; and
  • Carry out research on potential reform of statutory sick pay.

The Government is launching 3 additional consultations:

The Government is not taking forward the proposal to give ‘dependent contractors’ the opportunity to receive rolled-up holiday pay, or the proposal to reverse the burden of proof in employment status claims.

It should also be noted that the Government has specifically stated that it has not ruled out re-introducing fees in the employment tribunal system at some point in the future.

Although today’s response and consultation papers will move the debate on the issues raised by the Taylor Review forward, specific legislative change may still be some way off, particularly in the more complex areas such as employment/worker status.

Permanent link to this article: https://www.dlapiperbeaware.co.uk/17339-2/

April 2018 tax reforms will impact on employers making termination payments

Employers who are planning to make termination payments to departing employees on or after 6 April 2018 need to be aware of important reforms which will take effect on 6 April 2018.

The key point for employers to note is that the value of all notice periods not worked will become taxable and subject to both employer and employee National Insurance Contributions (NICs), regardless of whether there is a contractual payment in lieu of notice (PILON) clause, or not.  This is a critical change to the existing position, where currently the value of a notice period can generally be paid tax and NICs-free where there is no contractual PILON clause in the employee’s contract of employment.  The impact of this is to potentially increase costs to employers who may have to increase the value of a termination package to make it sufficiently attractive to an employee.  It also makes the tax advantages of not having a PILON clause redundant, and increases the benefits of including one, not least so that any restrictive covenants will remain enforceable post-termination.

Payments made pursuant to a contractual PILON clause have always been – and will remain –  subject to tax and NICs in full as general earnings.

So, in practice, what impact does the legislation have?  In effect, it does not matter how much of the severance package the employer allocates to notice.  What the new provisions require is that employers carry out a specific calculation to determine how much of the termination payment is deemed to be subject to tax and NICs as ‘post-employment notice pay’ (PENP).  For these purposes, only basic pay, plus the value of any salary sacrifice arrangements, is taken into account. Once the value of the PENP has been established, any remainder of the payment will be subject to the £30,000 tax free exemption (so any remaining payment up to £30,000 will be free of tax and NICs, and anything in excess of £30,000 will be subject to tax only[1]).

In many cases, the impact of the new legislation in practice (other than making non-contractual PILONs taxable) will be fairly limited, and the calculations relatively straightforward. This is particularly the case where an employee’s notice period is a whole number of months.  However, the position is less straight forward where an employee’s notice period is expressed in weeks, where the calculation may become skewed by the date of the employee’s departure. It is also more complicated where salary sacrifice arrangements apply.  This is key as it is common for contractual PILONs to confer entitlement to basic pay only, whereas the new calculations require the value of any salary sacrifice to be added on.  Where salary sacrifice arrangements are in place, therefore, there will be an impact on the value of the PENP (and therefore the amount subject to tax and NICs), which will be higher than would apply if calculations were done by reference to the provisions of the contractual clause only. This may mean that, even where there is a contractual PILON and the employer has deducted tax and NICs on the notice pay actually paid, the PENP calculation results in an additional tax and NIC liability.

If you have any queries about the new tax regime for termination payments, please speak to your usual DLA Piper Employment contact or David Smith or Lynda Finan in our Tax team.

[1] NB From April 2019, further tax reforms will mean that any excess over £30,000 will be subject to employer’s NICs.

Permanent link to this article: https://www.dlapiperbeaware.co.uk/april-2018-tax-reforms-will-impact-on-employers-making-termination-payments/

Gender Pay Reporting Regulations: Are you ready?

In 10 weeks’ time, the deadline for gender pay gap reporting for every employer with  250 or more employees will be here.  The Government estimates that around 9,000 employers will be required to report and, to date, less than 700 have done so – in the region of 7.5%.

So if you haven’t completed and published your report, where do you sit on the readiness curve?

If you haven’t completed and published your report, are you ready and waiting; do you still have lots to do; or have you actually yet to make a start?  Wherever you sit on the readiness curve, the Employment team at DLA Piper can help you to get your report across the line.

We are providing all levels of support to our clients including: advising them on how to go about producing the numbers for their report; checking their methodology; helping them to create and/or reviewing their narratives; explaining to the board what the regulations require; and advising on the manner of publication.  We are providing ad hoc advice in response to specific queries from some clients and are also part of other clients’ project teams set up to produce the report.

If you need any support in complying with your obligations in relation to gender pay, please get in touch with Clare Gregory, Kate Hodgkiss or your usual DLA Piper contact.

Permanent link to this article: https://www.dlapiperbeaware.co.uk/gender-pay-reporting-regulations-are-you-ready/

CAC rejects novel collective bargaining application in respect of outsourced workers

The Central Arbitration Committee has rejected a novel claim that outsourced workers employed to provide ancillary services at a university should be entitled to bargain collectively with the university as their “de facto” employer.

The Independent Workers Union of Great Britain (IWGB) sought statutory recognition against both Cordant Security and the University of London under Schedule A1 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) in respect of workers employed by Cordant to provide services to the University.

The IWGB’s application in respect of Cordant failed as there was an existing recognition agreement between Cordant and Unison which covered the workers in the proposed bargaining unit. The CAC also rejected the application against the university. The CAC considered that even if the union was correct that the university “substantially determined” the workers’ terms, the absence of any contract between the workers and the university was fatal to the union’s application, because the definition of “worker” in section 296 of TULRCA requires a contract.

To allow the application proceed would “transform the statutory machinery for collective bargaining” by giving two unions the right to bargain with two employers over the terms of the same group of workers. This would, the CAC considered, be “a recipe for chaotic workplace relationships” and go against the CAC’s statutory duty to promote “fair and efficient practices and arrangements in the workplace”.

The CAC did not rule on the union’s argument that Article 11 of the European Convention on Human Rights gives unions a right to bargain collectively with a de facto employer. In the CAC’s view, any decision to expand the scope of statutory recognition in this way would be a matter for Parliament, and the question of whether section 296 is incompatible with Article 11 would be a matter for the High Court.

Permanent link to this article: https://www.dlapiperbeaware.co.uk/cac-rejects-novel-collective-bargaining-application-in-respect-of-outsourced-workers/

Be Aware: EHRC consults on its approach to enforcement of gender pay reporting regulations

The Equality and Human Rights Commission (EHRC) has published a draft policy paper setting out the approach it intends to take in using its enforcement powers in respect of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (GPGR). The EHRC is consulting on the draft policy and wants to hear from businesses, representative bodies and anyone with an interest in pay gaps on its planned approach to enforcement. The consultation closes on 2 February 2018.

A recap – What do the GPGR require?

All private and voluntary sector employers with 250 or more employees in England, Wales and Scotland must now publish information on their gender pay gap under the GPGR. All listed public sector employers with 250 or more employees in England must publish the same information under the Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017.

Private and voluntary sector employers must report the required pay gap information by 4 April 2018. Public sector employers in England must publish the required information by 30 March 2018.

Key elements of the draft policy

The draft policy states that informal action and cooperation are the EHRC’s preferred option, but that it will take formal enforcement action where employers do not comply.  In 2018/19, the EHRC intends to focus its enforcement work on employers who do not publish the information required by the GPGR. If it has capacity to do so, it may also take action against employers for publication of inaccurate data, if the EHRC considers that it is necessary, proportionate and feasible to do so. This is notable as there have recently been reports in the Financial Times of organisations reporting gender pay gap information which is statistically improbable and consequently almost certainly inaccurate.

In respect of the private sector, following the reporting dates, the EHRC will assess the scale of non-compliance and decide whether it is necessary to take a staged approach to enforcement. If a staged approach is necessary, the EHRC will divide non-compliant employers by industry and contact a tranche of randomly selected non-compliant employers within each industry, based on the number of non-compliant employers overall and the scale of non-compliance in each industry.

Where an employer does not comply with the GPGR by the relevant reporting date, the EHRC will write to them after that reporting date:

  • Drawing their attention to their obligations under the GPGR
  • Requiring them to acknowledge the letter within 14 days
  • Requiring them to confirm within their acknowledgment letter that:
    • they will comply with the GPGR retrospectively for the past reporting year within 42 days; and
    • they will comply with the GPGR on or before the relevant reporting date in the current reporting year.

Where the EHRC receives the necessary assurances it will monitor for compliance within the agreed timescales for both reporting years. Where the employer complies with those timescales, no further enforcement action will be taken in respect of those reporting years. If, however, a private or voluntary sector employer does not comply at the informal resolution stage, the EHRC will carry out an investigation into whether they have committed the suspected unlawful act (ie breach of the GPGR). As part of the investigation process an employer may be required to provide information and documents in their possession or to provide oral evidence.

During the course of an investigation the employer will be offered the opportunity to enter into a written agreement requiring compliance. If an agreement is entered into but not complied with the EHRC can apply for a county court order. If the employer does not accept the offer of an agreement and the conclusion is that the employer has breached the GPGR, the EHRC will issue an unlawful act notice requiring the employer to prepare a draft action plan within a specified time, setting out how they will remedy their continuing breach of the GPGR and prevent future breaches.

Ultimately non-compliance can result in unlimited fines but there are a number of procedural hoops to jump through first and the employer will always have the option to comply retrospectively.

Employers can respond to the draft policy consultation online here:  https://www.smartsurvey.co.uk/s/GPGRconsultation/.

For more information on how to calculate your organisation’s gender pay gap, visit Be Aware or contact your usual DLA Piper contact.

Permanent link to this article: https://www.dlapiperbeaware.co.uk/be-aware-ehrc-consults-on-its-approach-to-enforcement-of-gender-pay-reporting-regulations/

Brexit: Deal on EU citizens agreed in principle

On 8 December 2017, an agreement in principle was reached between the UK and the EU on the future rights of EU citizens currently living lawfully in the UK.  In short, the Government has announced that these individuals will be able to stay in the UK and enjoy broadly the same rights and benefits as they do now.  This agreement applies equally to UK citizens currently living in the EU. However, a word of caution – this agreement is subject to the important caveat that ‘nothing is agreed until everything is agreed’.  For now, the Government maintains that EU citizens do not need to take any steps at this stage to establish immigration status.

The key aspects of agreement on EU citizens include:

  • The key date for establishing rights will be 29 March 2019.
  • EU citizens who legally reside in the UK before 29 March 2019 will be able to stay in the UK, and close family members will be able to join them after the UK has left the EU (where that relationship existed before, and continues after, 29 March 2019).  These family members include spouses, unmarried partners, children, grandchildren, dependent parents and grandparents.
  • Individuals already holding a permanent residence document on 29 March 2019 will have that document converted into a new document free of charge, subject only to verification of identity, a criminality and security check and confirmation of ongoing residence.
  • Individuals who have acquired permanent residence rights can leave the UK for up to 5 consecutive years without losing their residence rights.
  • EU citizens with settled status and temporary permission to stay will continue to have the same access as they currently do to healthcare, pensions and other benefits.
  • The implementation and application of citizens’ rights will be monitored in the UK by an independent national authority; its scope and functions to be discussed in the next phase of negotiations.
  • Administrative procedures for applications for status will be transparent, smooth and streamlined. In particular, the UK will not be able to require anything more than is strictly necessary and proportionate to determine status.  Application forms will be short, simple and user friendly, and a proportionate approach will  be taken to those who miss a deadline for application where there is a good reason. A period of at least 2 years will be allowed to submit status applications.
  • The Government will announce further details on the administrative processes in the first half of 2018.  Individuals can be kept up-to-date via the website Status of EU citizens in the UK: What you need to know
  • Details of the immigration rules for EU citizens who arrive after 29 March 2019 and during the implementation period are yet to be agreed.
  • The Government has published case studies to help individuals determine their status rights.

For further information, or to discuss how we can help manage the impact of Brexit on EU nationals in your workforce, please contact Kate Hodgkiss, or your usual DLA Piper contact.

Permanent link to this article: https://www.dlapiperbeaware.co.uk/brexit-deal-on-eu-citizens-agreed-in-principle/

ECJ: A worker must be able to carry over paid annual leave when an employer does not allow him to exercise that right

The ECJ held today in King v The Sash Window Workshop that a worker must be able to carry over and accumulate rights to paid annual leave when an employer does not put that worker in a position in which he is able to exercise his right to paid annual leave. EU law precludes the requirement that a worker must actually take leave before establishing whether he has the right to be paid in respect of it. The decision could have a significant impact on the worker status claims currently making their way through the courts.

Mr King worked for The Sash Window Workshop on the basis of a “self-employed commission-only contract” from 1999 until he retired in 2012. When he took annual leave, it was unpaid. Following termination of his contract, Mr King sought to recover payment for his annual leave, both taken and not paid and accrued but not taken, for the entire period of his engagement. The Employment Tribunal found that Mr King was a worker and that he was entitled to payment in lieu of leave. On appeal, the Court of Appeal made a reference to the ECJ asking whether, in the case of a dispute between a worker and employer as to whether the worker is entitled to annual leave with pay, it is compatible with EU law if the worker has to take leave first before being able to establish whether he is entitled to be paid.

In today’s judgment, the Court notes that the right for every worker to have paid annual leave must be regarded as a particularly important principle of EU law. The purpose of that right is to enable the worker to rest and to enjoy a period of relaxation and leisure. However, a worker faced with circumstances liable to give rise to uncertainty regarding remuneration during the leave period is not able to fully benefit from that leave and such circumstances are liable to dissuade the worker from taking his annual leave. The Court notes that any practice or omission of an employer that might have such a deterrent effect is incompatible with the purpose of the right to paid annual leave.

The right to an effective remedy would not be guaranteed if, in a situation in which the employer grants only unpaid leave to the worker, the worker would be forced to take leave without pay and then bring an action to claim payment for it.

The Working Time Directive therefore precludes a situation in which the worker has to take his leave before establishing whether he has the right to be paid in respect of that leave.

The Court also concluded that EU law precludes national provisions or practices that prevent a worker from carrying over and, where appropriate, accumulating, until termination of his employment relationship, paid annual leave rights not exercised in respect of several consecutive reference periods because his employer refused to remunerate that leave.

The Court referred to its previous case law in the context of  workers who had been prevented from exercising their right to paid annual as a result of their absence from work due to sickness, according to which a worker who has not been able, for reasons beyond his control, to exercise his right to paid annual leave before termination of the employment relationship is entitled to an allowance in lieu. In that context, in order to protect the employer from the risk that a worker will accumulate long periods of absence, and from the difficulties those periods might entail with regard to the organisation of work, the Court found that EU law does not preclude national provisions or practices limiting the accumulation of entitlements to paid annual leave by a carry-over period of 15 months, at the end of which the right is lost.

By contrast, in circumstances such as those in the present case, the Court considered that protection of the employer’s interests is not necessary  The Court therefore found that unlike in a situation of accumulation of entitlement to paid annual leave by a worker who was unfit for work due to sickness, an employer that does not allow a worker to exercise his right to paid annual leave must bear the consequences. The fact that an employer might consider, wrongly, that the worker was not entitled to paid annual leave is irrelevant.

As a result, in the absence of any national statutory provision establishing a limit to the carry-over of leave in accordance with the requirements of EU law, to accept that the worker’s acquired entitlement to paid annual leave could be extinguished would amount to validating conduct by which an employer was unjustly enriched to the detriment of the purpose of that Directive.

The judgment of the ECJ raises the stakes for employers who engage their workforce on a self-employed basis where there is a risk that they will be found to be workers. Where an employer has not made a facility available for workers to be able to take their paid annual leave (for example, where the employer denies the worker is entitled to paid leave), then any leave not taken would carry over to the next leave year, indefinitely, until the employee is permitted to take their accrued paid leave, or until termination. The two-year back pay limit under the Deduction from Wages (Limitation) Regulations 2014 does not apply in that situation as the claim is not for back pay but for payment due on termination.

However, the ECJ’s decision case does not explicitly deal with the situation where the worker has taken leave and not been paid. In such cases the existing rules in UK legislation and case law apply: the non-payment is a deduction, a series of deductions is broken by a three-month gap, and back pay is limited to two years.  There must be a risk, following today’s decision that these UK rules are incompatible with EU law, but it is unlikely that there could be a definitive ruling to that effect before the UK leaves the EU.

 

Permanent link to this article: https://www.dlapiperbeaware.co.uk/ecj-a-worker-must-be-able-to-carry-over-paid-annual-leave-when-an-employer-does-not-allow-him-to-exercise-that-right/

Older posts «