SIBA BUSINESS - BACK OFFICE
LEGAL
EMPLOYMENT LAW UPDATE In this article Napthens’ employment & HR partner Oliver McCann, examines two major issues for employers.
National Minimum Wage Regulations
The draft National Minimum Wage (Amendment) Regulations 2017 have been published and come into force on 1 April 2017. They raise the National Minimum Wage (which includes the National Living Wage for those aged 25 or over) as follows: • for those aged 25 or over an increase from £7.20 per hour to £7.50 per hour
Oli McCann, Napthens
• for those aged 21 or over (but not yet 25) an increase from £6.95 to £7.05
• for those under the age of 18 an increase from £4.00 to £4.05 per hour
Pimlico required the operatives to wear its uniform and provided them with GPS tracked vehicles with company logos on the side. The agreement between the parties did not allow the plumbers to send any substitute to carry out work on their behalf.
It is important to consider for example, where a salaried employee is not paid overtime their hourly rate may fall below the relevant National Minimum Wage bracket if they work additional hours:
The Court of Appeal considered the level of control the company had over the operatives and held that the plumbers were ‘an integral part’ of Pimlico’s operations and were therefore workers as opposed to self-employed contractors.
• If an employee is paid a salary of £18,720 this would equate to an hourly rate of £9/hour over a 40 hour week. However, if that employee works 50 hours, the hourly rate falls to £7.20/hour - below National Living Wage and illegal for anyone aged 25 or over. If they worked 55 hours the hourly rate falls to £6.55/hour - illegal for anyone aged 21 or over. Where employees are paid an annual salary around this level, employers must keep an eye on the hours (and retain records) that salaried staff have been working and ensure hourly rates meet the National Minimum Wage.
The decision highlights that a court or tribunal will look beyond the label given to a relationship to examine how it operates in practice when considering employment status.
Deductions from wages can also give rise to breaches of National Minimum Wage Regulations, even where deductions agreed by employees. While there are permitted exclusions, employers should contact us for advice before making deductions.
ACAS have recently published new guidance on their website: www.acas.org to help employers understand the different employment arrangements.
• for those aged 18 or over (but not yet 21) an increase from £5.55 to £5.60
Employment Status
Employment status of individuals is another popular topic and we have seen an increase in enquiries as to whether a particular arrangement between a brewery and an individual amounts to that individual being an employee. This issue was highlighted by the judgment in the Uber case in December 2016, followed up in the Department for Business, Innovation and Skills’ Employment Status Review outlining possible future reforms. Recently we saw the Court of Appeal hand down its judgment in the case of Pimlico Plumbers & Charlie Mullins v Gary Smith which saw the Court of Appeal uphold the Tribunal’s earlier decision that a plumber who purportedly carried out work for Pimlico Plumbers as a self-employed contractor was in fact a worker. The Court of Appeal gave a clear summary of the principles for the ‘personal service’ aspect of the employment status tests In this case, the written agreement between Pimlico and its plumbers specifically referred to the operatives as being ‘self employed operatives’. Despite this description of the relationship in the document, the Court considered the reality of the arrangements operating in practice.
Where self employed status is defeated and individuals held to be workers or employees, they gain employment rights such as the right to be paid National Minimum Wage, the right to paid leave, the right to be automatically enrolled into a pension scheme (where they meet qualifying criteria) and the right not to be unfairly dismissed.
We expect to see more cases of workers challenging their employment status and employers should take the opportunity to review the employment status of their workers, employees and any self employed contractors to establish and properly document the true employment relationship. Failure to do so could result in a costly claim further down the line. For advice on this topic or on legal issues affecting your business please contact SIBA Legal Helpline: 0845 6710277 North West law firm Napthens LLP is a SIBA supplier associate and gold standard sponsor. The firm has a team of specialists looking after the legal requirements of clients in the leisure and licensed trade sector, with clients including Daniel Thwaites plc and Sceptre Leisure Ltd. Napthens manages the SIBA Legal Helpline which offers legal advice and guidance on a wide range of legal issues affecting your business including: general commercial, intellectual property, corporate finance, dispute resolution and litigation, commercial property, licensing, debt recovery and employment law. Any enquiry through the helpline will receive up to 1 hour of free legal expertise (if further work is require, you’ll be advised of the appropriate charging structure) Full details of the helpline can be found on the SIBA Members Toolbox.
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