Mar 2015

All change…

This year promises changes in employment law which may have a big impact on employers.  And, with the forthcoming election campaign, all the major parties are making pledges which could have a major impact on employment law.  TFG’s expert employment team takes a look at the key areas of debate and their implications.   

Holiday Pay

Changes to the rules on holiday pay have made a significant impact last year and further developments are expected in 2015. 

Workers are entitled to be paid their “normal remuneration” during annual leave. Currently, only basic pay counts when calculating holiday pay. However, in a series of recent cases, the Employment Appeal Tribunal has decided that regular overtime carried out as part of a job should be included when calculating holiday pay. This could mean that many people may have been underpaid when taking holiday and could now seek to claim this pay back for a limited period. The situation regarding payment for non-guaranteed/voluntary overtime is not so clear. 

In addition, another holiday pay case saw the European Union Court of Justice decide that contractual commission should also form part of the calculation of normal remuneration for holiday day purposes, but it did not set-out exactly how this calculation should be carried out.  The case is due to return to the Employment Tribunal in 2015 which should see more details finalised.

What do you need to be aware of?

A review of holiday pay arrangements should be conducted. Employers might also want to consider reviewing any pension scheme rules to check if the definition of pension and pay used for the scheme may be argued to include payments for holiday and overtime.

Zero Hours Contracts

All major political parties have proposed rules around the use of zero hours contracts.

UKIP and Labour plan to give staff a zero-hours arrangements a right to a fixed hours contract once they have been employed for a year.  UKIP’s proposal is that the obligation would only apply to “large employers” (as yet undefined) and would be enforced through a “Code of Conduct” with “legislative action” if not observed. 

Labour proposes that employees can refuse to work outside their contracted hours and receive compensation if shifts are cancelled at short notice. 

The Liberal Democrats suggest that employees employed on zero hours contracts should have the right to request a fixed hours contract building on the current right to request flexible working.  The Conservatives plan to end the use of exclusive zero hours contracts, a move that has already been welcomed by the CBI.

What do you need to be aware of?

It is likely that the contentious issue of Zero Hours Contracts will be an area for reform whichever Government is in power. The most likely scenario is that the law will be amended to ensure a right to request fixed term contracts after a period.  If you have staff on zero hours contracts you might want to consider the impact of these suggested changes on your business and consider whether it is preferable for your business to move away from zero-hours arrangements.

National Minimum Wage

On 15 January 2015, the Government named employers who failed to pay their workers the national minimum wage (NMW).  The NMW is likely to be a focus for the election. Labour has set a target of increasing the NMW to £8 per hour by 2020.  The Liberal Democrats plan to increase the NMW for apprentices by over a pound and have instructed the Low Pay Commission to review increasing the NMW and also improving enforcement activity.

What do you need to be aware of?

Ensure all staff are and have been adequately paid the NMW and conduct regular wage reviews and planning meetings to ensure you are well placed to handle any changes to your salary bill and can meet any new obligations if need be.

Better rights for working parents

The new shared parental leave regime came into force on 1 December 2014, allowing parents (or carers) of babies born or adopted on or after 5 April 2015 to take their leave together in the first year of the child’s life. 

And it looks like there could be further changes to family friendly rights on the cards as the political parties compete to promise better rights for working parents.

The Liberal Democrats aim to increase paternity leave from two weeks to 6 weeks.  The Conservatives will be considering the rights of self-employed mothers to receive maternity pay.  Labour plans to support parents in the workplace and to encourage more parents to work by providing 25 hours of free childcare for all three and four year olds and increasing opportunities for flexible working across the public sector.

What do you need to be aware of?

If you have not done so already, why not consider adopting a Shared Parental Leave Policy to help inform staff about their rights? Ensure that managers are also trained in how to deal with requests. Senior Staff should be trained on diversity and how to deal with requests from parents to prevent liability for discrimination by mismanaging requests or displaying perceived negativity towards parents.

Tait Farrier Graham’s employment team has many years experience and expertise advising both employers and employees on employment law legislation. Contact Senior Partner Philip Shepherd on 0191 490 0108 for further information or a free telephone consultation.