Employment law highlights – February 2017

by Morecrofts HR & Business

We round up the key employment law developments taking place last month along with emerging HR trends that employers need to be aware of:

1. Legislative developments

Statutory redundancy pay to increase from 6 April 2017 

The maximum amount of statutory redundancy pay and the limit on the amount employment tribunals can award for unfair dismissal is set to increase from 6 April 2017. Employers that dismiss employees for redundancy must pay those with at least two years’ service an amount based on the employee’s weekly pay, length of service and age. The weekly pay is subject to a maximum amount. From 6 April 2017, this is £489, increasing from £479. This means that the top award of statutory redundancy pay also increases to £14,670 from £14,370. The maximum statutory redundancy payment increases every year in line with the retail prices index. 

Compensation limit Current
Current figure
From 6 April 2017
Maximum compensatory award for unfair dismissal
Maximum limit on a week's pay

The maximum compensatory award for unfair dismissal is also increasing to £80,541 from the current £78,962. These increases are among a number of adjustments to awards that employment tribunals can make and payments that employers must make. The new rates are set out in the Employment Rights (Increase of Limits) Order 2017, which comes into force on 6 April 2017.

Draft National Minimum Wage (Amendment) Regulations 2017 published 

The draft National Minimum Wage (Amendment) Regulations 2017 were published on 1 February 2017 and propose to increase rates including the standard adult rate, apprenticeship rate and accommodation offset limit of the national minimum wage on 1 April 2017. According to the draft regulations, the following hourly rates of national minimum wage will apply from 1 April 2017:

•The national living wage (workers aged 25 and over) is £7.50.

•The standard adult rate (workers aged between 21 and 24) is £7.05.

•The development rate (workers aged between 18 and 20) is £5.60.

•The young workers rate (workers aged under 18 but above the compulsory school age who are not apprentices) is £4.05.

•The rate for apprentices is £3.50.

2. Employment law and HR trends

Hundreds of underpaying employers named and shamed

The Department of Business, Energy and Industrial Strategy (BEIS) has published a list of employers failing to pay the national minimum wage (NMW). The list names 359 employers who between them underpaid 15,513 workers to the tune of £994,685. The associated penalties amounted to approximately £800,000. Companies such as Debenhams and Subway feature in the list. The list is compiled by HMRC, on behalf of BEIS, and follows backlash from MPs and workers that it is not tough enough on non-compliant employers who are often given the benefit of the doubt. HMRC’s investigations can be prompted by an individual complaining to Acas that they have not been paid the NMW; Acas refers those complaints to HMRC. Officials have also released ten of the most bizarre responses provided by employers when questioned on their reasons for failing to pay NMW. Read some of the worst excuses for underpayment here.

Work-life pressures impose penalty on fathers

Working Families has published the results of a survey that suggests nearly half of working fathers would take on a less stressful role to achieve a better work-life balance. According to the Modern Families Index report, out of the 2,750 parents surveyed, a third of fathers said they regularly felt burnt out by their work, while one in five admitted to working extra hours. Sarah Jackson, Chief Executive of Working Families, said that the lack of support offered to fathers in the workplace was at risk of creating a "fatherhood penalty" where fathers follow a career that is below their skill set to avoid the work-life conflict. To improve the work-life balance of fathers, Ms Jackson suggested that employers introduce measures that enable both men and women to have flexible working opportunities. In light of the report, The Women and Equalities Committee has launched an inquiry into the treatment of fathers in the workplace.

Statistics show employees did £33.6bn worth of free work in 2016

Employers benefited from £33.6bn worth of unpaid overtime last year, according to statistics published by the TUC. More than 5.3 million people put in an average of 7.7 hours per week in unpaid overtime, which equates to an average of £6,301 they have each missed out in their pay packets. The data, which is published on the TUC’s annual ‘work your proper hours day’, suggests the average person doing unpaid overtime will have worked for free so far in 2017. ‘Functional managers’, such as finance managers and marketing and sales directors, came in second highest (behind teachers and educational professionals) with 393,198 working free overtime. On an individual basis, chief executives did the most unpaid hours on average, at 13.2 hours per week. The findings also highlighted the fact that more than 1.6 million workers in the UK are working for longer than the 48-hour limit of the EU Working Time Directive.

New initiative to boost disadvantaged groups in the workplace launched

The Department for Work and Pensions has launched an employer "See Potential" toolkit to help employers retain and recruit workers from disadvantaged groups, including single parents, recovering addicts and care providers. The toolkit provides guidance on how employers can more effectively recruit and support those from disadvantaged groups in the workplace, and provides employers with a directory of organisations that are able to assist in making their workplace more inclusive. The toolkit was created following a Government study that suggested over two-thirds of employers were struggling to fill vacancies due to skill shortages, with nine out of ten companies admitting that hiring from disadvantaged groups provided additional benefits, including improved brand reputation and production growth. Access the guide here. 

Employment Status: Government review published 

The Department for Business, Innovation and Skills (BEIS) has published its Employment Status Review (published this month, despite the review being dated December 2015). It sets out the current system of employment status, considers the position of some atypical workers, and then examines the future and possible reforms (without making any recommendations). BEIS states that the report was updated in December 2015 and is being published now in the interests of transparency and to help inform the Taylor review of modern employment practices. The review states: "It has become increasingly clear that determining whether you are an ‘employee’, a ‘worker’ or genuinely self-employed is not a simple calculation for some, requiring familiarity with complex legislation and decades of case law."

Employment tribunal decisions now online

A new webpage listing employment tribunal decisions has been launched on the gov.uk website. The webpage allows the public to search for first-instance judgments from England, Wales and Scotland using drop-down menus and a free-text search. Previously, anyone wanting to search or browse employment tribunal decisions had to attend in person at offices in Bury St Edmunds for English and Welsh decisions, and in Glasgow for Scottish decisions. Currently, a selection of decisions from 2015, 2016 and 2017 are listed on the page. It is understood that the webpage will initially cover new or recent judgments. It is not currently known whether existing judgments will be added to the database as well.

3. From the Employment Tribunal

Plumber was a worker, not a self-employed contractor 

In Pimlico Plumbers Ltd and Mullins v Smith the Court of Appeal has upheld an employment tribunal's decision that a plumber was a worker and not truly self-employed. This finding was despite the plumber's contract labelling him as an independent contractor. In a largely fact-sensitive decision, the court determined that the plumber was required to provide personal service and that he was not in business on his own account; he was an integral part of Pimlico Plumbers' operations and was subordinate to it. 

Comment: The decision comes at a time of significant interest in worker status issues, following the recent employment tribunal decisions in the Uber case (where the tribunal held that drivers are workers not self-employed contractors) and in light of the ongoing Taylor review into modern working practices. It is important that companies are proactive in clarifying the employment status of individuals who work for them.

Refusal of five-week holiday to attend religious festivals was not indirect discrimination 

In Gareddu v London Underground Ltd the Employment Appeal Tribunal (EAT) considered an employer's refusal to grant an employee's request for five consecutive weeks' annual leave in order to return to Sardinia and participate in religious festivals with his family members who still lived there. The EAT upheld the decision of the first-tier Tribunal to reject a claim of indirect religious discrimination, brought by a Catholic employee, whose request for five consecutive weeks' holiday was declined. The tribunal had rightly focused on whether or not the asserted requirement to attend the series of festivals over a five-week period was genuine. It found that the real reason for wanting to take the lengthy period of holiday was the desire to be with his family. 

Comment: Previous case law has shown that the category of religious and philosophical beliefs which qualify for protection is extremely broad, and it is recognised that manifestation of such beliefs can differ widely. In this case, however, it was not in doubt that attendance at festivals in Sardinia was a manifestation of a religious belief for Mr Gareddu and others; it was just that the attendance at the festivals was shown not to be the genuine reason for his extended holiday request. Had it been genuine, the employer may well have been able to justify their refusal of the request by showing that their policy of limiting holiday to no more than three weeks at a time, was a proportionate means of achieving a legitimate aim.

Q&A: Is it gross misconduct when an employee's illness is proven to be false by social media?

Our employee is currently on sick leave due to back problems. However, it now appears on Facebook that this person has been partying and dancing which has caused us to question the validity of their sickness claim. If the employee has not been telling the truth, could this be grounds for dismissal for gross misconduct?

Ideally, if you have a sickness absence policy or contractual right requiring the employee to submit to medical examinations when requested, you should take steps to verify the employee's sickness in this way in the first instance.  If there is no such policy or requirement, then you may nonetheless wish to contact the employee and request further medical evidence in light of your doubts.  However, sole reliance on social media, in this case Facebook, without any further evidence to question the validity of an employee's sickness may be risky.  Arguably, the employee's personal social activities as recorded on Facebook are private and it would be questionable whether you could rely on this information without anything further in order to dismiss fairly for misconduct.  The case is different where the use of social media negatively impacts on the business in some way.  It would be relevant to refer to any social media policy that you have in place in this regard.

If the employee refuses to submit to a medical examination requested by an employer, particularly in circumstances where there is a contractual right or policy in place requiring such examination, you may be in a position to treat this as misconduct for failure to obey a reasonable instruction.  If further evidence shows that the employee is not genuinely sick, then you could treat this as misconduct on grounds of dishonesty.  However, dismissal for gross misconduct is only fair where the misconduct is so serious that it brings the contract to an end.  An employer must tread carefully and ensure all reasonable steps are taken to investigate and a fair procedure followed before any such dismissal.