The Latest Legal Changes to Employment

Every year around April and October, changes are made to Employment Law that will affect some, if not all of your employees. In April we ran one of our popular Employment Law update workshops, to tell our clients and contacts what they need to know. If you missed it, here’s a summary of what we covered.

More changes will be happening later this year, so we’re running our autumn event on 18 October 2016 and we’ll send you a reminder nearer the time. In the meantime, if you have any questions about the latest changes and what you need to do about them, do get in touch.

Here are some of the issues we discussed at the recent workshop:

Statutory Rates – these usually change, but this year, statutory family-related pay and sick pay rates were frozen.

Postponing a Tribunal – under rule 30A of the Employment Tribunals Regulations 2013 for proceedings presented on or after 6 April 2016, changes have been made, in order to limit the number of postponements and adjournments that can be granted in a single case in the employment tribunal and introduce a deadline after which applications for a postponement will not be allowed. Employment tribunals must also consider making an award for costs where postponements are granted at late notice.

National Living Wage – this applies to all employees over 25 years of age. The new rate from 1 April 2016 is £7.20 per hour, and is expected to increase to £9 per hour from April 2020. Also from 1 April 2016, the penalty was set at 200% for the total underpayment, for each employee who has been underpaid. 300,000 employees will benefit from this increase, with employers needing to find an estimated £3 billion by 2020. The Government intends to align when the national minimum wage and national living wage rates are amended, to be April for both with effect from April 2017. It has asked the Low Pay Commission to recommend the rate of the national living wage and the national minimum wage for April 2017 and to provide an indicative rate of the national living wage for April 2018. The Commission is due to report back on its findings in October 2016.

Zero Hours Contracts – legislation came into force on 11 January 2016, which states that individuals on a zero hours’ contract must not be unfairly dismissed or subjected to a detriment for breaching an exclusivity clause.

National Insurance for under 25s – employer NICs have been abolished for apprentices under the age of 25. As part of the Government’s drive to encourage employers to create more apprenticeships for young people, from 6 April 2016, employers will not pay employer national insurance contributions for apprentices aged under 25.

New State Pension – a single-tier state pension was introduced on 6 April 2016, replacing the previous basic state pension and additional state pension. Employer-provided pension schemes will no longer be able to contract out of the state pension and receive a national insurance rebate. This means that, where an employer provides a previously contracted-out scheme, its employer and employee national insurance contribution liability will increase. Employers should ensure that employees are aware that there may be an impact on their pay.

The Gender Pay Gap – these new regulations will apply from 1 October 2016, for all private-sector and voluntary-sector employers with 250+ employees. Companies will be required to publish the gender pay gap as it is in the pay period in which 30 April 2017 falls.

If you think that your company and your employees will be affected by any of these changes, please do get in touch for a confidential chat. Call 0118 940 3032 or email sueferguson@optionshr.co.uk.

Staff Accuse B&Q of Using the National Living Wage as an ‘Excuse’ to Cut Pay and Benefits

Employers are being warned to avoid kneejerk moves when introducing measures to offset increased wage costs.

A petition drafted by a B&Q manager, accusing the DIY retailer of slashing employee benefits in an effort to offset the costs of the national living wage (NLW), has so far attracted more than 120,000 signatures. As an employer you could face a similar negative reaction if you attempt to alter terms and conditions as a result of the law to increase salaries for your lowest paid staff. The £7.20 an hour wage came into force on Friday 1 April.

As part of the change, the B&Q employees say that the retailer has suggested time-and-a-half pay for working Sundays and double time for working bank holidays; a restructuring of allowances for employees working in parts of the UK where the cost of living is higher; and the removal of a summer and winter bonus, which equates to 6% of annual salary.

The petition says that B&Q staff are required to accept the new terms and conditions of employment, or face losing their job.

“Big businesses like B&Q are using the NLW as an excuse to cut overall pay and rewards for the people who need it the most,” the petition reads.

B&Q denies that the changes to terms and conditions are as a result of the NLW, stating that a review of its pay and reward framework was launched “long before” the new wage was announced.

A B&Q spokesman said: “Our aim is to reward all of our people fairly so that employees who are doing the same job receive the same pay. That isn’t the case at the moment, as some have been benefitting from allowances for a long time when others have not, and that can’t continue.”

A survey from the Federation of Small Business found that 54% of SMEs believe they have been negatively impacted by the 50p an hour increase in pay, and will put off hiring new staff as a result. 41% will cut staff hours, while 26% plan to erode pay differentials by freezing or cutting the wages of higher paid staff.

According to analysis by the FT, employers are actively are actively considering increasing the number of self-employed individuals or apprentices – all of whom are exempt from the NLW – in their staffing mix.

But Esther Smith, employment partner at UK law firm TLT, warned that this could leave employers open to discrimination claims.

“Employers may, consciously or unconsciously, look to employ younger people to avoid the higher wage costs.  Also, if they operate zero hours’ contracts, they may elect to offer less work to those people over 25,” she said. “Both of these actions would expose the employer to age discrimination claims.”

Before you make any major decisions which could affect your business and your employees, get in touch by contacting us on 0118 940 3032 or emailing sueferguson@optionshr.co.uk.

Zero Hours Update – the Latest Developments

A zero-hour contract is the name given to a type of contract, where an employer has the discretion to vary employee’s working hours, usually anywhere from full-time to “zero hours”. The employer typically asserts that they have no obligation to provide work for the employee.

There have been a number of changes made to the rules governing these contracts in recent months and the Department of Business, Innovation and Skills (BIS) has published some guidelines for employers, suggesting the following:

  • Zero hour contracts are only appropriate in situations where an employee is engaged in seasonal work or a one-off event
  • When recruiting, you should clearly advertise the job as a zero hour contract and inform any applicant that hours are not guaranteed
  • You should include within the contract whether you deem the individual an ‘employee’ or a ‘worker’, what rights they are entitled to, how work will be offered to them, and how the contract can be terminated
  • As an employer you should give as much notice as possible when you can’t offer work
  • This is addition to the fact that exclusivity clauses have been prohibited since May 2015. There is more about this in a previous blog here.

In addition to this guidance, the BIS’s Exclusivity Terms in Zero Hour Contracts (Redress) Regulations 2015 give more protection for employees on zero hours contracts. They will have a right not to be unfairly dismissed if the reason is that they have failed to comply with an exclusivity clause. There is no qualifying period of employment needed to bring such a claim. Zero hour workers have the right not to be subjected to detriment because of non-compliance with an exclusivity clause and if you breach these rights, a worker may issue a claim and seek a declaration or compensation.

What does this mean for you as an employer?

If you use zero hours contracts, then you should do the following:

  • Review your employment contracts
  • Audit your workforce to see if zero hours contracts are the appropriate contracts to use, in line with the BIS guidance.
  • Contact us if you need any help with sorting this out! Call us on 0118 940 3032 or click here to email me.

The Latest News on Zero Hours Contracts

The Government has banned the right to include an exclusivity clause in Zero Hours contracts. This means that you can’t employ someone on a Zero Hours contract and then try to prevent that person from doing other work, or stop them from working without your consent.

The clause is now illegal, so if any of your employees have this clause in their contract, as their employer, you can no longer enforce it. The ban became legal on 26 May 2015.

Zero Hours contracts, when used correctly, are very effective, e.g. for students during holiday periods or seasonal work. These casual contracts allow employers to hire staff with no guarantee of work. They mean employees work only when they are needed by employers, often at short notice. Their pay depends on how many hours they work. A Zero Hours contract is generally understood to be a contract between an employer and a worker where the employer is not obliged to provide any minimum working hours, and the worker is not obliged to accept any work offered. Zero hours workers have the same employment rights as regular workers, although they may have breaks in their contracts, which affect rights that accrue over time. They are also entitled to annual leave, the National Minimum Wage and pay for work-related travel in the same way as regular workers.

Zero hours contracts can be used to provide a flexible workforce to meet a temporary or changeable need for staff.

Examples may include a need for workers to cover:

  • unexpected or last-minute events (e.g. a restaurant needs extra staff to cater for a wedding party whose original venue cancelled)
  • temporary staff shortages (e.g. an office loses an essential specialist worker for a few weeks due to bereavement)
  • on-call/bank work (e.g. one of the clients of a care-worker company requires extra care for a short period of time).

If you have staff with Zero Hours contracts and you’re not sure if you have the exclusivity clause in those contracts, contact us on 0118 940 3032 or click here to email us and we’ll talk you through it.