As part of The Sherrards Training Academy, we have asked our Legal Assistants and Trainee Solicitors to write articles to support their learning, and also to ensure they start to build on their own personal brand. This article has been fact-checked and proofread by Head of the Employment department, Mark Fellows.

On Monday the government issued a consultation paper which proposes re-introducing fees in Employment Tribunals and the Employment Appeals Tribunal, with the main aim ‘to contribute to the continuous improvement of His Majesty’s Courts and Tribunals Service and reduce the cost to the taxpayer to fund these services’. The new proposal comes nearly 7 years after the Supreme Court ruled the previous charging regime as unlawful when trade union Unison successfully argued that it prevented thousands of employees from securing justice.

The proposed fee is £55 to bring a claim in the Employment Tribunal, which is considerably modest in comparison to the previous fee regime This is a one-off fee which is £55 irrespective of the type of claim (but some limited claims will be exempted) or whether the claim is brought by a single claimant or multiple claimants. Unlike the 2013-2017 Tribunal fee regime, no hearing fee will be applied under the government’s most recent proposals.

To start an appeal in the Employment Appeals Tribunal, the same fee of £55 would also apply.

A system for remission from fees would be available for those who genuinely cannot afford to pay the fee (as defined by the government).

It is thought that the proposal may act as an incentive for parties to apply their mind to settlement and engage in negotiations early in the process through ACAS, without the need to proceed to issuing actual claims in the Tribunals, thereby helping to alleviate the huge pressures currently faced by the Tribunal service. It is questionable whether such a modest fee will actually have this impact, but at the same time, it was recognised that if the fee was too high, it might be open to further challenge from the Unions.

The consultation runs for 8 weeks and closes on 25 March 2024 – please stay tuned for further updates from the Employment Team.

Legal Entitlement and Calculation

All full-year workers, with the exception of the genuinely self-employed, are entitled to 5.6 weeks of paid statutory holiday per year. Four weeks of this entitlement must be paid at the worker’s ‘normal’ rate of pay, including regular payments like overtime, bonuses, and commissions, as specified by Regulation 13 of the Working Time Regulations. The remaining 1.6 weeks can be paid at the ‘basic’ rate of pay, that is, the worker’s basic remuneration (as specified by Regulation 13A).

Holiday pay is designed to ensure that workers do not suffer financially when taking time off. For those with regular hours and fixed pay, the holiday pay should mirror what they would have earned if they were at work. From 1^st January 2024, the regulations now specify that certain payments, such as commission payments and those related to professional or personal status, must be included in the calculation of the 4 weeks of normal holiday pay.

Irregular Hours and Part-Year Workers

For leave years starting on or after 1^st April 2024, part-year and irregular hours workers must have their statutory holiday entitlement calculated based on actual hours worked, using the 12.07% accrual method. Alternatively, employers can opt for rolled-up holiday pay, a method applicable exclusively to irregular hour and part-year workers.

Rolled-up Holiday Pay

Rolled-up holiday pay allows employers to include an additional amount with every payslip to cover a worker’s holiday pay, instead of paying it when the worker takes annual leave. The calculation involves 12.07% of the worker’s total pay, representing the proportion of statutory annual leave in relation to the working weeks of each year. If employers choose this method, the entire amount of leave for irregular hours and part-year workers is paid at the ‘normal’ rate of pay.

Considerations for Employers

Employers intending to implement rolled-up holiday pay should review workers’ contracts to ensure compliance and avoid unintentional variations. For those opting not to use rolled-up holiday pay, the existing 52-week reference period method can be employed to calculate holiday pay, considering the worker’s previous 52 paid weeks.

Payment in Lieu

If irregular hour or part-year workers do not utilise their accrued holiday entitlement upon leaving employment, they are entitled to a ‘payment in lieu.’ Employers should calculate this by determining the remaining holiday entitlement and computing the holiday pay for the period. Deductions should be made for any holiday taken during the employment period.

Conclusion

As the new Holiday Pay Calculation rules come into effect, employers must stay informed and adapt their practices accordingly. Compliance with these regulations not only safeguards against legal issues but also fosters a fair and transparent work environment. By understanding the nuances of holiday pay entitlement and calculation, employers can ensure that their workforce is compensated appropriately for their time away from work.

If you have any questions or wish to discuss holiday pay for your business, please contact the Employment Department.

 

Pregnant employees and those returning from family leave to be given priority status in redundancy situations from April 2024

What does this mean?

From 6 April 2024, employees who are pregnant or returning from maternity, adoption or shared parental leave will all have the right to be offered a suitable alternative vacancy, if one is available, before being made redundant. This gives these employees priority access to redeployment opportunities over other redundant employees.

When does this priority status apply to pregnant women?           

Protection under the new legislation begins when the employer has been notified of pregnancy and 18 months from the child’s date of birth if notified to employer before the end of maternity leave (or 18 months from the Expected Week of Childbirth if not notified).

For women who suffer a miscarriage, the protection ends two weeks after the end of the pregnancy, for pregnancies ending before 24 weeks (as pregnancies ending after 24 weeks are classed as stillbirths and the employee would be entitled to statutory maternity leave).  

What about employees who adopt?

The protection begins at the beginning of adoption leave and ends 18 months from date of placement or date of entry into Great Britain (if overseas adoption).

Is it the same for shared parental leave (SPL)?

A parent needs to take only a minimum of 6 weeks’ consecutive shared parental leave before becoming eligible for 18 months of protection.

How does this affect your business?

You’ll need to bear the above in mind for any restructures taking place after April 2024. There will now be more employees who are potentially going to be given priority status, which may mean you’ll need to carry out a selection process amongst priority status employees at risk of redundancy where there aren’t enough vacancies. Careful consideration will need to be applied here to prevent claims of discrimination.

You may also see a take up of SPL because of the additional protections the employee will benefit from.

It’s important to comply with the law as an employee that isn’t offered a suitable alternative vacancy when they have priority status would have a claim for an automatic unfair dismissal, which would mean a compensatory award that is not capped. There’s also no requirement to have two years’ service to qualify for this type of claim. The employee may also have a claim for discrimination. Given the significant penalties, employers will need to exercise extreme caution and it’s strongly recommended to take legal advice before making redundancies.

 

What are the key take away points from the new Carer’s Leave Regulations?

 An employee will be entitled to take one week of unpaid carer’s leave in any 12 month period, where they have a dependant with a long-term care need and want to be absent from work to provide or arrange care for the dependant.

• Importantly, the right will be a Day one employment right. 
• Employees will have the option to take the carer’s leave on consecutive days, non-consecutive days, half days or full days.
• Employees must give written notice of their intention to take carer’s leave, confirming their entitlement to take it. The notice requirement will be at least twice as many days as the period of leave requested.
• Employers will have a right to postpone a request if they reasonably consider that the operation of the business would be unduly disrupted. The employer must give notice of the postponement before the leave was due to begin and must explain why the postponement is necessary. The employer must then permit the employee to take carer’s leave (of the same duration) on a date determined by the employer after consulting with the employee, which must be within one month of the start date of the leave originally requested by the employee.
• Employees will be protected from detriment and dismissal because they choose to take, or seek to take, carer’s leave (or the employer believes they are likely to do so).

To find out more, contact the Employment team or Head of the Department, Mark Fellows.

 

Partner in Employment law at Sherrards Mark Fellows, answers some common questions ahead of another heatwave:

Do I have to pay employees who are unable to get into work due to travel difficulties?

Take a look at your employment contracts and Employee Handbook. These might specify whether an employee is entitled to be paid if they are unable to get in due to travel problems. If they are silent, however, then the default position is that the obligation is on the employee to get into work, regardless of any difficulties caused by the weather or otherwise. If they do not attend, they are on unauthorised absence and they are arguably not entitled to be paid.

Be careful, however, if you are going to take this approach. Firstly, there is a potential that the employee can argue that failure to make payment in these circumstances is an unauthorised deduction from wages (assuming this is not covered in the employment contract). The defence to this would be that there was no entitlement to pay as no work was done, but it may be an argument you would prefer to avoid. Secondly, you should assess whether the financial benefit of withholding pay is outweighed by the impact on staff morale and productivity. This is particularly so if the weather and travel conditions are extreme and, even with the best of intentions and efforts, employees are unable to get in.

Above all, you should ensure that your approach is consistent. Ideally, tell staff in advance (in written format, e.g. memo or email) what your approach is going to be or, even better, have an “Extreme Weather Policy”.

Consider whether employees are able to work from home, whether alternative travel arrangements can be made or whether there are other ways around the issues – e.g. travelling outside of peak times to avoid the worst of the heat. Otherwise, clearly explain to employees that either: (a) any time off will be unpaid; (b) time off will be paid but that they are expected to make up the time later; or (c) they can request the time off as paid annual leave or unpaid time off for dependant’s leave (see below). Prior notification is particularly important if you have made payments in the past in such circumstances.

As an aside, be careful if you are trying to insist on employees taking annual holiday retrospectively. Employees will need to agree to this unless the contract specifically allows for you to do this.

 

I have an employee who says they cannot come in because their child’s school has closed due to the heat. What shall I do?

Employees with responsibility for a dependant are entitled to emergency time off in circumstances in which there is an unexpected disruption to childcare. Unless the school closure was announced a reasonable time in advance, such that the employee had sufficient time to arrange alternative childcare, this would probably be an emergency situation and employees are entitled to take time off and not suffer any detriment for doing so.

Strictly speaking, the time off is unpaid (unless the contract of employment says otherwise) but employers may again want to consider the impact on morale that this approach would have. Again, it is important to be consistent in your approach. You should be especially careful where other employees who are unable to make it into the office due to travel are being paid.

 

One of my employees failed to come into work today, blaming the heatwave and travel issues. I think he is using it as an excuse and could have easily come in. Where do I stand?

If you believe that an employee is falsely using the weather conditions as an excuse for absence or lateness, this can be treated as a disciplinary matter. If you consider the matter to be serious enough (e.g. if it is a persistent or blatant case), you should investigate in line with your disciplinary policy and take action as appropriate.

However, in less serious or one-off cases, you may be better placed simply having a quiet word with the employee and letting them know that any further time off will have to be taken as holiday or will be unpaid. Bear in mind that it can often be difficult to prove or disprove an employee’s ability to come into work in these circumstances.

 

Our air conditioning isn’t great. Is there a maximum temperature above which I am obliged to shut the workplace?

In short, no, there is technically no maximum temperature above which people aren’t allowed to work. In offices or similar environments, the temperature should be “reasonable”. You should have thermometers around the workplace so that you can check the temperature – although temperature itself is not the sole issue, since humidity, radiant heat sources and clothing are also factors.

The TUC has lobbied for an upper limit on workplace temperature to be introduced – suggesting that employers be forced to take steps when the temperature inside hits 24˚C. Under the TUC’s proposals, staff could be sent home and employers prosecuted if temperatures reach 30˚C (or 27˚C for those whose work is physically demanding).  However, these proposals are currently not reflective of the law.

If your working environment is getting too hot to be considered “reasonable” then you could be putting your staff’s health and safety at risk. If, having taken steps to try to control those risks, the temperature is becoming dangerous enough to endanger health (e.g. through heatstroke etc) then you would be best advised to shut the workplace.

 

The above provides a general guide to issues that might arise. However, each situation is unique and different considerations may apply in your case. We would therefore recommend that you consult a solicitor, or another suitably qualified person, about your specific circumstances.

To find out more about employers responsibilities during a heatwave, click here to speak Employment Partner Mark Fellows. 

Since 16 August 2021, people who are double-jabbed and are without symptoms or a positive test do not need to self-isolate if they come into contact with someone who has tested positive for coronavirus. This was a major step to help ease the serious supply chain shortages that followed the “pingdemic” during the summer of 2021 which saw up to 700,000 per week self-isolating in England and Wales as contacts of positive cases.

Whilst many people are unable to get the vaccination for medical issues, all adults in the UK have now been offered the vaccine. This means that the people who are unvaccinated are either due to medical reasons, or have chosen not to be.

Ikea has argued that employees who refuse to get the vaccine are causing disproportionate financial losses to businesses. Whilst Ikea’s 10,000 plus workers receive an average of £400 a week salary, the furniture retailer said unvaccinated workers will only receive statutory sick pay of £96.35 a week where they are absent for a Covid-related reason (but full-pay if they test positive, as with vaccinated staff).

Given that Ikea is such a high-profile company, it is almost inevitable that other employers will follow suit and many will be monitoring the fall-out of this new policy. In fact, Next is the latest employer to announce it intends to adopt the same approach.

Some have argued that this policy is potentially discriminatory against employees refusing to be vaccinated on the grounds of religion or belief under the Equality Act 2010. Whilst this argument is generally considered unlikely to be successful, to avoid claims employers will need to consider each circumstance on “a case-by-case basis”, which Ikea has also confirmed it will do. This is necessary as applying similar policies without exemptions could be discriminatory against employees are unable to be vaccinated (e.g. those with disability-related medical reasons or pregnant employees).

As well as considering the implications on staff who are unable to be vaccinated, employers considering varying their sick pay entitlements also need to be careful to ensure that they won’t fall foul of any contractual responsibilities, where sick pay forms part of an employee’s contract of employment. It will be important to check the terms before any such measures are introduced.

Perhaps most significantly, employers will need to consider the public response to any policy change in such a highly divisive area before taking any steps.

Finally, if an employer is considering introducing a similar measure in respect of sick pay, a key issue will be the communication to the staff, setting out the reasons for the change and the exceptions that might apply. It may well be that the approach may give rise to some complaints from those employees who are directly affected.

Any employers considering introducing policies which target unvaccinated staff should act with caution and take legal advice in advance to ensure that savings in sickness payments now don’t turn into much larger costs defending claims from unvaccinated staff down the line.  

Please contact Emma or the team for more information. 

“IR35” – it could almost be mistaken for a character from the latest Star Wars film, and whilst IR35 is not a new concept, it will be hitting the private sector in 2021*. If your business currently engages consultants or contractors operating as part of a personal service company, this is a premiere that you ought not to miss.

What is “IR35”

“IR35” refers to existing legislation that was designed to close a tax loophole whereby an individual could in theory, work as if an employee of an end user client but seek to avoid being subject to PAYE deductions by supplying their services through an intermediary, usually a personal services company. Like the Hokey Cokey, you were either ‘in’ or ‘out’. If inside IR35, you were caught and the individual should be paid via PAYE. If outside of IR35, then the arrangement was regarded as genuine self-employment for tax purposes.

So, what has changed?

Firstly, the old regime required the consultant / contractor to determine their own status for tax purposes, and they generally bore the risk of getting this wrong. With effect from April 2021, and in respect of the private sector, the onus passes to the entity engaging the individual, which in many cases will be the end user who receives the services. The engaging entity will therefore have to satisfy themselves as to whether the consultant / contractor is inside or outside of IR35.

In addition, if the consultant / contractor is inside IR35, and the new rules applies to the entity engaging the individual (see below), then in principle that entity becomes responsible for accounting to HMRC for tax and national insurance in respect of the payments made to that individual. The situation becomes more complicated if a recruitment business is involved, where it supplies the individual to the end user entity and pays the individual directly.

This change of approach already applies to the public sector and insofar as the private sector is concerned, it only applies to engaging entities that are not “small”.

A “small” company is one which satisfies two or more of the following requirements:

• Its annual turnover is not more than £10.2 million.
• Its balance sheet total is not more than £5.1 million.
• It has not more than 50 employees.

How do you know whether a consultant / contractor is ‘in’ or ‘outside’ of IR35?

HMRC have an online questionnaire, known as CEST, which is designed to give you a definitive answer to this conundrum. If the questions are answered honestly, then it can be relied upon in the event of a later dispute. However, some of the questions are difficult to answer, and a possible outcome of CEST is that it is unable to make a determination on the matter!

As it happens, the test under IR35 is similar to (but not the same as) that which applies in employment law, in determining an individual’s employment status. This means that particular focus will be placed on the extent to which the end user controls the consultant / contractor, the extent to which the services need to be performed personally by the consultant / contractor (as opposed to having a right to substitute) and the extent to which mutuality of obligation exists between the parties. It also means that the label that the parties attach to the arrangement is far from determinative.

What should you do?

If you engage consultants / contractors, we would recommend you take the following steps:

• Review those arrangements and consider utilising CEST;
• Ensure that you have a written contract that formalises the arrangement, and is drafted to best protect your business;
• Take specialist advice – your accountant on the tax side, and an employment lawyer on the legal side.

It follows that if you decide that somebody is ‘inside’ IR35 and will be treated as an employee for tax purposes, that equally will make it more likely they will be regarded as an employee for legal purposes, and that carries its own separate implications.

*As of 17th March 2020, the Government announced the delayed introduction of IR35 to the private sector to April 2021.

For further information, please contact Mark Fellows.