Employment law roundup 2015

The major employment law changes that took effect in 2015 are:

Changes in parental rights

April 2015 saw the introduction of Shared Parental Leave (‘SPL’).  The fundamental premise behind SPL is choice and flexibility, allowing parents to decide how they would like to spend the first year of a birth or adoption. SPL applies where the expected week of childbirth is on or after 5 April 2015, or a child is placed for adoption on or after 5 April 2015.  For those parents with children born or to be placed for adoption before 5 April 2015 the old statutory maternity/paternity rights continue to apply.

Under the SPL provisions, the maximum amount of leave that can be taken remains as 52 weeks and the maximum period of pay remains as 39 weeks.  Additionally, the first two weeks of leave continue to be compulsory leave for the mother.  However, the flexible scheme now permitted will enable a mother or primary adopter to share their maternity leave and maternity pay with their partner, thereby providing an opportunity for them to return to work before the end of their leave without forfeiting the remainder of maternity leave to which they would be entitled.  SPL can be taken in 3 separate blocks, with each block lasting a minimum of 1 week.

It is important to note that SPL can only be utilised if both parents are or have been remunerated and so SPL will not apply to volunteer workers.  However, where one parent has ceased working, they are still entitled to SPL if they have been an employee or self-employed in at least 26 of the 66 weeks immediately preceding the expected week of childbirth or the week that they are notified of the adoption.  Additionally, they must have earned on average of at least £30 a week in any 13 of those weeks. 

In addition to SPL, prospective fathers and partners can now take unpaid leave to attend two ante-natal appointments with the mother.

There has been a further change to family friendly rights in April 2015 as the period within which ‘ordinary’ unpaid parental leave can be taken has been extended.  Parental leave is available to birth and adoptive parents and also to anyone who has, or expects to have, parental responsibility for a child.  The right entitles employees to up to 18 weeks’ unpaid leave for each child in order to care for them.  From 5 April 2015 this right has been extended to the child’s 18th birthday.  It was previously only permitted to the child’s 5th birthday.

Rates of pay

Rates of pay were increased from 6 April 2015.  The limit on a week’s gross pay for the purpose of a number of statutory rights increased from £450 to £475 per week whilst the compensatory cap for an unfair dismissal award increased from £76,574 to £78,335.  Maternity pay, paternity pay and adoption pay increased to £139.58 per week whilst statutory sick pay increased to £88.45 per week.

Fit for Work Service

The Fit for Work Service, which aims to prevent long periods of sickness absence, became operational in May 2015.  This service independently assesses employees’ ability to work and provides advice and support to those employers with staff members with over 4 weeks’ sickness absence, to help them return to work by recommending steps they can take to stay in or return to work.  Following an assessment, employees will be given a return to work plan, which will provide evidence of their fitness to work.

Additionally, employers receive a tax exemption of up to £500 per year per employee in circumstances where they fund the medical treatment recommended by Fit to Work to facilitate their employees return to work.

Small Business, Enterprise and Employment Bill (‘the Bill’)

This Bill introduced a number of changes to employment law such as tougher penalties for non-payment of the National Minimum Wage, as well as changes to tribunals, zero hours contracts and whistleblowing legislation.

A zero hours contract is an employment contract in which the employer doesn’t guarantee any hours of work, and the individual on the contract is not obliged to accept any work offered.  Zero hours contracts give an organisation greater flexibility, allowing the workforce to be responsive to demand, without the risks attached to expansion.  They also allow the retention of skills and knowledge within the workforce by enabling those looking to reduce their hours to continue to work for the organisation.

Following a government consultation, concerns were raised in relation to exclusivity as, in some circumstances, zero hours contracts included an ‘exclusivity clause’ preventing the individual from working for another employer, even when the current employer was not offering work. The inclusion of exclusivity clauses in zero hours contracts was banned by the Bill with effect from 26 May 2015.

The Bill has also given authority to the government to introduce further regulations on such matters as a requirement that those bodies authorised to receive ‘protected disclosures’ report annually on whether those disclosures have been investigated, as well as the number of adjournments available to employers and employees during the litigation process.  A new system of financial penalties for employers who fail to pay an award ordered by the Tribunal is also likely to be introduced.

National Minimum Wage rate

All employers are required to pay their workers in accordance with the National Minimum Wage (NMW).  On 1 October 2015 the NMW increased to £6.70 per hour.

The consequences for an organisation that fails to pay the NMW to workers are potentially serious.  Not only could the organisation be required to pay up to six years of backdated NMW to the workers, but it may also be liable for a criminal penalty of up to £20,000 per worker (as increased by the Bill) if it has wilfully neglected to pay the NMW. 

Case law

Holiday pay

The decision of the Employment Appeal Tribunal (EAT) in the combined cases of Bear Scotland Limited v Fulton & Others and Hertel (UK) Limited v Woods & Others and Amec Group Limited v Law & Others dominated the news towards the end of 2014.  This decision applies to both employees and workers. 

Employers are now required to include non-guaranteed overtime payments and allowances in the calculation of holiday pay for the first four weeks’ annual leave.  There remains some uncertainty about the impact and scope of these decisions particularly as an appeal has been lodged.  This appeal will be heard in the EAT on 8 and 9 December 2015.  Nonetheless, organisations should consider some form of risk assessment, such as a full review of working arrangements to assess whether they have workers who regularly work non-guaranteed overtime or are paid allowances which are more than simply expenses.  Organisations should also consider whether to start making these payments now, to negotiate some form of settlement with the affected staff and/or their representatives or simply wait for the outcome of the inevitable appeal and make backdated payments where appropriate.

In any event on 8 January 2015, shortly after the EAT’s decision, the Deduction from Wages (Limitation) Regulations 2014 were introduced.  There is now a two-year “backstop” period for most unlawful deductions from wages claims, including claims for holiday pay and wages.  Note that this cap applies only to claims pursued on or after 1 July 2015.  

There was another key case relating to holiday pay in 2015.  In Plumb v Duncan Print Group Limited the EAT considered whether an employee on sick leave needed to show that they were unable to take holiday because of their illness, and if not, whether and for how long their accrued but untaken holidays rolled over from one year to the next.  The EAT found that an employee on sick leave did not need to demonstrate that they were unable, by reason of a medical condition, to take their holiday.  It was sufficient that they were absent on sick leave and chose not to take holiday.

The EAT did however state that an employee does not have an unlimited right to carry over untaken holidays from one year to the next. The EAT decided that holidays can only be carried over for 18 months from the end of a holiday year, and that any accrued holiday untaken after this period will lapse. In the event of the termination of an employee’s employment, payment of accrued but untaken holiday is therefore calculated in accordance with this limit.

Obesity as a disability

In 2014 the European Court of Justice (ECJ) was asked to consider whether obesity amounted to a disability.  The ECJ ruled that if the obesity of the worker “hinders the full and effective participation of that person in professional life on an equal basis with other workers” then obesity can fall within the scope of disability discrimination.

It is important to remember that, like stress, obesity is not a disability in itself.  However, many of its symptoms may result in the employee meeting the statutory definition of disability.  It is the effect of the employee’s various mental and physical impairments that matter, rather than the cause and if they have a substantial adverse long-term impact on the employee’s ability to carry out normal day-to-day activities, then the physical and mental consequences of obesity could well meet the definition of disability.

The ECJ’s ruling has already been relied on by an Industrial Tribunal in Northern Ireland who found that an employee had been harassed for a reason relating to disability after the employee was subjected to conduct relating to his weight.

What to expect in 2016

There will also be significant employment law changes in 2016, which employers need to be aware of.  April 2016 will see the introduction of the National Living Wage whereby workers aged 25 and over will be entitled to a 50p premium on top of the existing NMW rate giving workers a minimum hourly rate of £7.20.
The government has also announced that they are planning to extend SPL to include grandparents.  Whilst the government aims to bring this in by 2018, further details are expected next year.

Finally, pension auto-enrolment (introduced in 2012) continues to be rolled out.  Organisations with fewer than 50 employees are obliged to complete their enrolment duties between 1 June 2015 and 1 April 2017.

If you would like assistance with the review of your existing policies in light of the above or would like further advice on the matters or any other aspect of employment law, please contact Elena Vasiliou (Solicitor) on 020 7148 7847 or by email evasiliou@levenesemployment.co.uk.

Disclaimer

This article is written to highlight, in general summary form, some of the legal issues facing employers and employees in the UK. This is not intended to be, and does not constitute either legal advice or an authoritative statement on the law. Advice should always be sought for specific circumstances.

27 November 2015

© Levenes 2015

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