WORKS Chairman’s view With another year coming to an end, it's time to review what has happened in 2016. Although Brexit dominated column inches, there have been other changes keeping HR practitioners busy. 2016 saw a ban on the use of exclusivity clauses within zero hours contracts. Fast on the heels of this came the introduction of the National Living Wage. There has also been a drive to increase the number of apprenticeships across all business sectors. According to the Department for Business Innovation and Skills this has contributed to a dramatic increase in apprenticeships. Our experience supports this as a number of clients have sought guidance this year on apprenticeship documentation. The courts have been busy settling case law in a variety of areas, one such being the calculation of holiday pay. In this edition of FG Works we explain the ruling on holiday pay and commission, and provide guidance on festive holiday issues. Looking ahead to 2017, a number of changes are already on the horizon including the introduction of a tax free childcare scheme, implementation of gender pay gap reporting and various immigration law changes. The Supreme Court will also hear Unison’s Tribunal Fees challenge. We predict that 2017 is likely to be a busy year for all, in the meantime, have a restful Christmas and we look forward to working with you next year.
Floyd Graham
DECEMBER 2016 0808 172 93 22 info@fgsolicitors.co.uk www.fgsolicitors.co.uk
round up: Gay Cakes: The Northern Ireland Court of Appeal has recently upheld a decision that a Christian cake business had directly discriminated against a gay man under the Equality Act by refusing to bake him a cake with the slogan “Support Gay Marriage.” Although decided in Northern Ireland, the principles of this case are a persuasive reminder that the sincere religious beliefs of a service provider (which are protected by Article 9 of the European Convention of Human Rights), do not override the provisions against direct discrimination on grounds of sexual orientation.
UBER TAXI DRIVERS GAIN WORKER'S RIGHTS: An Employment Tribunal has held that Uber taxi drivers are workers as opposed to self-employed contractors who provide services to Uber. The Uber workers can therefore benefit from the National Minimum Wage, protection from unlawful deductions from wages, paid annual leave and limits on working hours – however they will not benefit from the full breadth of rights afforded to employees. This case is a first instance decision and is not binding on future cases related to the so called “gig economy.”
CONTRACTUAL RESULTS BASED COMMISSION SHOULD BE INCLUDED IN HOLIDAY PAY: The Court of Appeal upheld the decision of the Employment Appeal Tribunal that contractual results based commission should be included in the calculation of a worker's four weeks statutory holiday pay to allow them to receive their “normal remuneration” during periods of annual leave. The court failed to define the correct reference period to calculate the commission element of holiday pay – a reference period of the previous twelve weeks was suggested, however this did not form part of the final Judgment.
at a glance... CHRISTMAS HOLIDAY ENTITLEMENT take a note: working time regulations PAGE 2–4
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Christmas holiday entitlement: the facts It will not have escaped anyone that Christmas 2016 is fast approaching. Once the Christmas parties have been enjoyed, employers and employees alike will be turning their attentions to the Christmas break. Whether yours is a business that operates a shutdown over Christmas, or simply allows employees to take some time off during the festive period, there are a few key issues for you as an employer to be aware of.
1. Holiday pay and results based commission: Background: The long running “do we or don’t we include commission and overtime when calculating holiday pay” saga has kept both the national and EU courts busy for the past few years. To briefly recap, whilst UK legislation clearly obliges employers to allow full-time workers 28 days’ paid holiday (and a pro-rata entitlement for anyone who works less than full time), the legislation fails to stipulate how holiday pay is calculated. Several cases have been
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brought to attempt to address this question. The most recent decision is that of the Court of Appeal in British Gas Trading Limited v Lock and another. In the Lock case, the Court was asked whether Mr Lock’s holiday pay should have included a commission element so as to reflect his normal remuneration. The court’s decision was that, where an employee has ‘normal working hours’ and their remuneration does not vary with the amount of work done during such hours, the amount of results based contractual commission (for example where commission is paid based on the number of sales they make) normally earned should be taken into account when calculating their holiday pay. What does this mean? Employers should take into account results based commission when calculating holiday pay for the first 20 days holiday in any holiday year where a worker has normal hours of work. If the worker’s hours of work varies, the employer should take the previous 12 weeks they worked as the appropriate
reference period unless there are significant seasonal fluctuations in a worker’s commission, in which case the previous 12 months may be a more appropriate reference period. Employers should also note that the requirement to include results based commission in holiday pay calculations applies to the first 20 days holiday entitlement and not the full 28 days (or the pro-rata entitlement for those working less than full-time).
2. Do I have to allow my employees time off on the allocated Christmas bank holidays? Background: This year the allocated bank holidays for Christmas Day and Boxing day are Monday, 26 December 2016 and Tuesday, 27 December 2016. Unless the individual’s contract entitles them to have either day away from work as paid or unpaid time off, employers do not have to allow employees time off on these bank holidays. In the event the time off is allowed, employers should note that paid public holidays can be counted as part of the 28 days holiday entitlement (or pro-rata entitlement for those not working full-time). Also as Christmas Day falls on a Sunday this year, employers should be aware that the Equality Act 2010 protects workers against direct and indirect discrimination because of any religion, religious belief or philosophical belief. Therefore, if your employees ordinarily work on Sundays and one or more requests time off on Christmas Day to observe their Christian beliefs, a refusal to grant their request could amount to indirect religious discrimination. What does this mean? In the first instance, employers should be sympathetic to requests for annual leave on Christmas Day and the associated bank holidays if there is sufficient cover and the individual has sufficient holiday entitlement. In the event that you intend to refuse the request, you should ensure there is a compelling business reason for your refusal.
Employers don't have to allow employees time off on Christmas Day and the associated bank holidays, but should be mindful of potential religious discrimination if requests are refused.
3. Can I refuse competing time-off requests? Background: It is often the case that a number of employees will want to take annual leave during the Christmas period. This can result in employees requesting overlapping periods of leave which, if all granted, will result in the business being under staffed. Procedures for requesting annual leave are generally contained in the company's staff Handbook. In the absence of a Handbook, the statutory default position specifies minimum periods of notice which employees can be obliged to give when making a leave request. The employer then has a specified period of time to either agree or refuse the request. In the event the request is refused, the employer must allow the employee to take the leave at another time. What does this mean? Employers do have the right to refuse holiday leave applications. However, refusals should be issued with care. Employers are advised to take a proactive approach about holidays, to include notifying employees about how holiday requests should be made. Notifications should be issued in plenty of time and, in the event there is a Handbook setting out the procedure, the employees should be directed to it. If there is no defined procedure, employers may wish to encourage employees to speak with their line managers about forthcoming holiday requests and/or treat requests on a first come, first served basis. Employers should ensure that the procedure they ultimately apply, is applied consistently and not in contravention of any contractual or statutory rights.
4. Can employees carry over unused holiday into the next holiday year? Background: A company’s holiday year often aligns with the calendar year. Unless the Handbook or an employee's Contract of Employment entitles employees to carry over unused holiday into the following holiday year, the old adage of “use it or lose it” generally applies. There are a few key exceptions to this, one of which gives rise to another string of prominent cases which deal with whether a worker who, due to sickness, is prevented from taking holiday in one leave year, can carry it over into the next leave year. CONTINUED ON PAGE 4 ...
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In one such case, the ECJ made it clear that a worker who becomes ill before a period of pre-arranged statutory
Employees can choose to rebook holiday if they become ill either before or during it. holiday, has the right to reschedule the holiday to a later date – this could be a date in the next holiday year if the worker remains sick until the end of the relevant leave year. In another case, it was decided that if an employee falls ill during a period of booked leave, they can reschedule the holiday days when they were ill to a later date – this too can be in a subsequent holiday year. The cases apply to the statutory holiday entitlement derived from the European Working Time Directive (20 days for a full-time employee). For this reason, the right to carry over holiday into subsequent holiday years relates to the 20 days entitlement as opposed the full 28 days permitted by UK law or days in excess of this minimum entitlement which may be provided by an employer. What does this mean? Employers will need to first identify whether the Handbook, Contract of Employment or custom and practice gives rise for holiday to be carried over and, if so, their internal rules of holiday carry over will need to be considered. Ordinarily there will be limitations on how carry over is operated in practice – these limitations require consistent application by an employer. In the event there is no right to carry over holiday, the employer will need to consider how to approach sickness and untaken holiday. This includes considering the current case law, and any requirements included in the Handbook/Absence Management Policy to protect the business from employees abusing the carry over right in this instance – such protection can be derived from reporting and evidence requirements.
WORKING TIME REGULATIONS 1. W orkers are entitled to at least 5.6 weeks’ (28 days) paid ho liday each year; 2. W orkers are usually en titled to: • 11 hours uninterrupted rest per day; • 24 hours uninterrupt ed rest per week (or 48 hours uninterru pted rest per for tnight); and • An unpaid rest break of at least 20 minutes when working for more than 6 hours. 3. A worker’s average working time (over a 17 week reference pe riod) should not exceed 48 hours – unles s the worker has signed an “Opt Out Ag reement;” 4. Y oung workers (those over compulsor y school leaving age bu t under 18 years old) are entitled to an unpaid rest break of 30 minutes if they have worked for more than 4 and a half hours; 5. Y oung workers must no t work for more than 8 hours per day, or more than 40 hours per week and mu st not generally undertake night work; 6. Night workers’ norm al hours of work should not exceed an average of 8 hours per day. If the worker is doing work involving special hazards or heav y physical/mental strain, then the average rule does not apply an d they should not work for more than 8 ho urs in any day.
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