The government equalities office has just launched a consultation on gender pay gap reporting which will close on 6 September 2015. The reason for this is that the government is committed to introducing regulations that will require companies to publish their gender pay gaps clearly identifying the differences between average pay for males and females.
Research has shown that the UK falls way behind in the league table of worldwide equal pay. Iceland, Finland, Norway and Sweden are the top ranking countries for equality. Four decades on from the Equal Pay Act working women in the UK continue to lose out.
The regulations will only apply to companies in the UK with at least 250 employees so small and medium sized businesses will not be affected. Furthermore public authorities will not be included as they already have broad equality obligations compared to the private sector.
The regulations will be in place by March 2016 but will not take place immediately so that employers have time to prepare for implementation.
The Government appears to be considering the following options in terms of what will be reported:
1. Reporting one overall gender pay gap figure that captures the difference between the average earnings of men and women across the organisation as a percentage of men’s earnings.
2. Reporting separate gender pay gap figures for full-time and part-time employees.
3. Showing the difference in average earnings of men and women by grade or job type.
Highlighting pay differences could expose companies to equal pay claims. There will therefore be the need to put pay decisions in context as there may be fair reasons for these.
A failure to comply with the rules could, ultimately, be treated as an offence, attracting a fine.
In anticipation of the regulations being implement employers should consider the following actions:
• Be proactive – doing nothing is not an option. Understanding your pay arrangements will help you manage and present information meaningfully and in context.
• Review all current pay practices across your organisation in order to understand the differentials which may exist.
• Consider gender pay gaps which exist on a departmental/geographical/functional level and compare these with the composition of your workforce.
• Analyse the rationale behind your current arrangements to identify potential risk areas.
• Consider implementing a job evaluation scheme which will help provide defence for pay gaps
The Employment Appeal Tribunal (EAT) has recently clarified that where an employee has untaken leave that they have been unable to use because of long term sickness there is to be an 18 month time limit to do so. The 18 months starts from the end of the leave year in which it should have been taken. Workers have been able to carry over four weeks leave if they have been on long term sick as decreed by HMRC v Stringer in 2009 and was linked to the Working Time Regulations 1998. An employee’s contract may, however, provide for additional holiday carry over.
The decision to add the 18 month time frame was linked to Plumb v Duncan Print Group Ltd. The EAT stated the worker doesn’t need to show that they were physically “unable” by reason of sickness to take the holiday during the leave year in which they were off sick. Although employees can take their holiday during a period of sickness some may choose not to.
Background to the Case
Mr Plumb had been on sick leave since April 2010 due to an accident at work. He did not take his annual leave for 2010, 2011 and 2012 leave years. In July 2013 he was asked to take all the annual leave that he had accrued. The employer only paid him his leave for the year in which he requested it ie 2013-14 and refused to pay the leave untaken from 2010, 2011 and 2012 which amounted to 60 days. He remained on sick leave until his termination of employment in February 2014 and put in an employment tribunal claim.
The EAT decided that a worker should not be entitled to have their holiday carried forward indefinitely as defined by the Working Time Directive and EU case law. Therefore workers who have been absent for a number of years will not be entitled to back pay for holiday that they have accrued and not taken.
In any case wherever possible I always advocate employers should deal with long term absence issues to prevent employees being off for months and certainly not years on end.
In 2006 the European Court of Justice ruled that rolled up holiday pay was illegal, however, almost ten years later some businesses in the UK still use this to pay casual staff on zero hours contracts. The law in the UK remains confusing on this issue so here are some tips on rolled up holiday pay.
The decision by the ECJ decided three things:
1) it is contrary to the working time directive for holiday pay for statutory holidays to be rolled up into normal pay instead of actually being paid during the holiday.
2) Countries who are members of the EC must take ‘appropriate measures’ to ensure that the practice of rolling up ceases.
3) However sums already paid would still count towards pay for holidays.
When the decision came from the ECJ it took a year for the UK government to state that rolled up holiday pay was unlawful. However, the focus was on the worker to approach their employer to re negotiate the contract and if the employer was unwilling to then the worker could go to an employment tribunal. Many casual workers on zero hours contracts have precarious security with their employment as the terms are mutual no obligation. The employer has no obligation to offer the worker work and under these circumstances an employer if challenged could arguably decide not to provide any further work to that person. For the worker to take a case to an employment tribunal they would need to pay a hefty fee which is arguably prohibitive for someone who has received a relatively low wage then ultimately may have no income. These two things create a barrier for a worker trying to sort out rolled up holiday with their employer.
Nevertheless, the ideal thing is for an employer to review and amend a zero hours contract that operates rolled up holiday pay and this is what I would advocate given that the government decreed, in accordance with the Working Time Directive, that holiday pay should be paid at the time of holiday. To renegotiate the contract there should be consultation and written agreement in the form of a signed new contract. To comply with the government’s proposal an employer should keep accurate records of hours worked and provide holiday pay when the worker actually requests holiday.
However, this can be quite onerous if a business operates with a large pool of casual workers on zero hours contracts and in many cases casual workers like to have rolled up holiday pay. If a business wishes to continue to operate rolled up holiday pay because they find that easier there are ways to reduce the risks and costs of an employment tribunal claim.
The main principle is to operate rolled up holiday pay comprehensively and transparently. Workers should clearly know and understand how the process will operate. As with all things HR, written records are essential for the paper trail. Rolled up holiday pay should be clearly stated in the contract showing the 12.07% allowance in the hourly rate. Wage slips should also clearly show the percentage payment of rolled up holiday pay. In addition the employer should operate a holiday booking system where workers have to book their 5.6 weeks pro rata holiday and be encouraged to take their entitlement in a twelve month period. If that is proving difficult because a worker is doing many hours on a weekly basis that is a definite impetus for the employer to review and amend the contract to accurately reflect the working practices with an employment contract.
The summer time often means that many employers take on extra staff to meet increased work demands eg fruit farms, holiday parks. Employers will have to consider the impact of seasonal workers and auto enrolment.
The first task is to assess the workers and see which category they fall into – eligible worker, non eligible worker or entitled worker.
Following on from that the employer must consider whether postponement is more beneficial rather than auto enrolling those staff particularly if the employer knows that the temporary staff will not be needed after three months.
An employer can only postpone automatic enrolment from:
the staging date
a staff member’s first day of employment
the date a staff member first becomes eligible for automatic enrolment.
To postpone auto enrolling a member of staff the employer must write to them within six weeks from the date postponement starts. An employer can postpone for a maximum of three months, but it can be for much less than that. An employer can postpone as many or as few staff as is required and the postponement period does not have to be the same length for everyone.
Staff who have been postponed can choose to opt in during the postponement period.
On the last day of the postponement period, an employer needs to know whether any member of staff whose automatic enrolment who has been postponed is still eligible to be automatically enrolled. If they are, an employer must put them into a pension scheme straight away. An employer can not apply a further period of postponement even if postponement has been for less than three months.
Auto enrolment is set to ramp up as the country heads for complete auto enrolment of all employers by 2018. So far only 3% of employers have needed to comply but in the next few years the outstanding 97% will be implicated. There are obviously challenges ahead as resources become stretched both outside and within smaller businesses.
In 2015 45,000 employers are set to enrol and in 2016 it will be 45,000 employers per month. So far it seems that medium sized businesses have coped well however some have struggled to find a pension provider that will enrol all of the workforce and some businesses turned down completely by a private pension provider. As with all businesses return on investment is essential and it seems that some pension providers do not think that providing a pension scheme to a small to medium sized business is worthwhile. Others will disagree but may add hefty ongoing annual charges in order to ensure they make a profit. This leaves the smaller business in a difficult situation with the choice of pension schemes available dramatically reduced.
Research has shown that medium sized businesses have so far taken less time to prepare for auto enrolment and have had reduced implementation costs than the larger businesses who have had to comply since October 2012.
Many small and micro businesses have no experience of implementing a pension and do not have an active scheme in place. Many did not bother offering a stakeholder pension despite the fact that having 5+ employees this was required. Auto enrolment, however, can not be ignored. It seems, that awareness of the process is quite high, but action is required and early planning essential to comply with the staging date and avoid the hefty fines.
Demand for help with auto enrolment remains quite high. A high percentage of businesses will turn to their accountant. However, many are not able to offer any support. The IFA industry on the other hand has geared up to provide advice and guidance, but often will charge high fees to implement the process.
In 2014 the opt out rate for employees was running at 8% which is relatively low. Research shows that only 5% of younger workers are opting out whilst 28% of older workers are doing so. Affordability seems to be the key with these older workers as well as having an alternative means of saving for their pension.
It is thought that overall opt out rates is because of good communication processes offered by the larger employers that have had to comply so far. However the medium and smaller businesses that are now being affected do not have the huge resources available to provide communication processes such as seminars and workshops. Communication about the process is essential so that employees fully understand the implications of auto enrolment and saving for future retirement. The possible lack of communication resources may impact negatively on opt out rates in future, time will tell. There are a range of communication methods that smaller businesses could use including team meetings and newsletters. Ideally one to one meetings is best, but is obviously time consuming and may be difficult timewise.
The Pension Regulator has recently published it latest quarterly bulletin which shows that employers are failing to understand their automatic enrolment duties.
It seems that the Pension Regulator has found that many employers assume their duties only relate to staff who are eligible to automatically enrol according to age and salary criteria. This is incorrect as staff who have the right to join or opt in must be included in the automatic enrolment process.
The Pension Regulator found one employer who was using a master trust and had misunderstood the role of the scheme and had assumed that the scheme would be responsible for calculating contributions and making the correct staff deductions. This is a fundamental error and one that leads to a hefty fine for failing to comply correctly to automatic enrolment regulations and attracts the highest number of fines.
The Pension Regulator lists the various offences that employers can be fined for:
Information Notice – The power to demand information and documents under section 72 of the Pensions Act 2004.
Inspection – The power to inspect premises under section 74 of the Pensions Act 2004
Warrant – The power to search premises and take possession of content under section 78 of the Pensions Act 2004
Compliance Notice – A Compliance Notice under section 35 of the Pensions Act 2008 The power to remedy a contravention of one or more automatic enrolment employer duty provisions
Unpaid Contributions Notice – An Unpaid Contributions Notice under section 37 of the Pensions Act 2008 to remedy a late or non-payment due to a qualifying pension scheme
Fixed Penalty Notice – A Fixed Penalty Notice under section 40 of the Pensions Act 2008 of £400 for failure to comply with a statutory notice or some specific employer duties
Escalating Penalty Notice -An escalating penalty under section 41 of the Pensions Act 2008 of between £50 and £10,000 per day (depending on size) for failure to comply with a statutory notice
Employers who don’t understand what their compliance duties fully entail should take advice from an advisor who fully understand what needs to be done. Pension Regulator research has shown that accountants and book keepers have the lowest level of understanding out of all the available intermediaries.
When seeking advice and support, an employer should understand exactly what they are getting for their money whether it is just advice or a full automatic enrolment service. Both parties should be clear on the responsibilities for each task in the automatic enrolment process.
The recent case of Lock v British Gas lodged in the employment tribunal has tested the claim that commission is due on holiday pay. The employment tribunal has now ruled on 25 March 2015 following the Court of Justice of the European Union’s judgement on this subject to give a final decision.
The Lock v British Gas claim came about being lodged by a sales consultant who was paid a basic salary plus a sales commission which made up about 60% of his earnings. He took holiday in December 2011 and was paid his salary and commission earned on sales prior to taking leave. While on leave he made no sales and earned no commission. This would potentially affect his holiday pay if he had taken annual leave later in the year. He claimed this was unlawful.
The Court of Justice of the European Union said holiday pay was meant to reflect workers’ “normal remuneration” and should put workers in a position “comparable to periods of work” with regard to salary. In the UK commission payments had not been accounted for in holiday pay.
It has now been ruled ruled that employers must take commission payments into consideration when they calculate holiday pay.
Employers could potentially have to pay more when they offer commission schemes to enhance employees’ pay. The employees should receive normal pay during periods of holiday that are consistent with how they are paid during working hours. There is no reference in the ruling, however, to the correct reference period for calculating holiday pay where an employee receives commission – perhaps that will be determined by the employment contract which should clearly specify how commission payment should operate.
This will have a future cost impact to various industries that offer commission payments; this will, of course, include those employees with sales roles. It will may provide a possible additional headache with retrospective claims. At least 40% of the UK workplaces receive incentive payments to boost their employees salary so the ruling has far reaching consequences.
This is a key employment tribunal ruing and an interpretation of the Working Time Regulations, however, it sets a precedent and paves the way for other employment tribunal claims to be lodged.
The clock is ticking for all employers in the UK with pension auto enrolment. The process began in October 2012 with very large companies and from now until 2018 the process affects small businesses. The role of HR with pension auto enrolment can be quite key due to the high administrative requirements. Planning ahead is essential to ensure statutory deadlines are met.
The CIPD code of conduct states that HR professionals can not provide on pension schemes, but as HR often has an administrative role to play in most employer businesses the support with pension auto enrolment can be invaluable. An in house HR Manager or external HR consultant with auto enrolment proficiency can help streamline what may seem to be an administrative nightmare.
The key HR responsibilities in auto enrolment will include:
Identifying workers eligibility based on age and salary criteria. Workers aged 22 to retirement age and who, 2015-16 earn £10,600 are deemed to be eligible workers. Non-eligible workers are 16-22 and from state pension age to 75. Entitled workers are those who earn £5824.
Provide workers with information about auto enrolment. This will take the form of an appropriately worded letter. Additional ways to provide information can be with presentations, lunch and learn sessions, posters, email communication and face to face consultations.
Arrange deductions in pay with effect from the auto enrolment date, unless the process has been brought forward. Contributions are based on qualifying earnings. This is defined as gross earnings and can include bonus, commission, overtime, etc within a band 2015-16 will be set at £5284 and £42,385. Employers must make contributions of at least 1% for eligible and non-eligible workers, but do not have to make contributions to entitled workers.
Manage opt outs. It is illegal for an employer to encourage opt out of a pension, and currently 9/10 employees remain auto enrolled, nevertheless some employees may feel they do not want to be in a pension scheme. Workers can not opt out before they are auto enrolled, but need to be able to access an opt out form and understand the process that needs to be followed. If a worker opts out within the one month period HR must inform the scheme, stop payroll deductions and arrange for contributions to be refunded.
Inform the Pension Regulator about compliance. Within five months of the staging date HR will have to provide a compliance declaration to the Pension Regulator, this is a legal requirement. This will include contact details, business details, pension scheme information
Keep records which will include opt outs and opt in notices, enrolment and contribution information. Records have to be kept for six years except opt out notices that are kept for four years.
The process is continual. HR needs to remain vigilant to ensure that workers that become eligible due to age and salary changes are auto enrolled. Should salary changes tip the balance of a worker becoming eligible for auto enrolment, once auto enrolled they remain in the pension scheme unless they opt out.
The recently published Small Business Enterprise and Employment Bill includes a number of employment law initiatives amongst its extensive provisions. It is designed to make the UK the most attractive place to start, finance and grow a business.
The Employment The Bill will introduce measures to;
• Reform Whistleblowing procedures to achieve a consistent standard of best practice for handling disclosures and provide greater reassurance to the whistle-blower that action is being taken by the prescribed person and as a result increase the confidence in the actions of the prescribed person.
• Deter business non-payment of employment tribunal awards by creating strong financial consequences of non-payment.
• Reduce the delays in Employment Tribunals caused by frequent and short notice postponements, and addressing the costs arising from short notice postponements.
• increase the penalties imposed on employers that underpay their workers in breach of the national minimum wage legislation on a per worker basis.
• Make exclusivity clauses in zero hours contracts invalid and unenforceable so that no one is tied into a contract without any guarantee of paid work. This will enable employers and employees to benefit from the flexibility of zero hours contracts whilst addressing abuse of these contracts.
• recover exit payments from public sector employees that leave and re-join the same part of the public sector organisation within a year
It has always been an offence to drive whilst taking drink and drugs that impair driving and this is laid out in Section 4 of the Road Traffic Act 1988, however, on 2 March 2015 new laws relating to drug driving come into force. There will be a new offence of driving with certain controlled drugs including some prescription drugs. Drivers will need to make sure they are fit and legal to drive. Employers need to be prepared for the drug driving laws and and implement HR policies and procedures to protect the workforce covering all employees who drive on company business either in company or their own vehicles.
The ability of the police to prosecute for drug driving offences has always been difficult meaning that there have been few prosecutions due to inability to prove impairment.
Drivers who are impaired by drugs can already be arrested. However, being over the limit with prescription drugs will be an offence. Unlike the existing ‘impairment’ offence, the new law provides a medical defence for patients who are taking their medicine in accordance with instructions – either from a healthcare professional or printed in the accompanying leaflet – provided they are not impaired. If they are impaired it will be an offence and prosecution may result. This new offence will be section 5A of the Road Traffic Act 1988
The government has produced guidance that advises patients who take legitimately supplied medicines to keep evidence with them in case they are stopped by police; this could include a GP letter or copy of the prescription. This will help speed up any investigation into the medical defence and reduce the inconvenience to the patient.
The new regulations will come in to force at the same time as new equipment to test drivers for cannabis and cocaine at the roadside is expected to become available to the police. If a driver tests positive they will be taken to a police station where a further evidential test will be taken. If this is positive it will allow police to arrest and charge a driver for being over the limit. Detection levels for illegal drugs will be low.
The limits for each of the following drugs were set out by the government in 2014. A medical panel of experts have advised on the most commonly used drugs and levels have been set where a road safety risk arises.
Cannabis (tetrahydrocannabinol, THC)
Although only a few benzodiazepines and opioids are included in the list above, all benzodiazepines and opioids can impair driving ability. The risk of driving impairment is increased if the medicine is taken with alcohol. Warnings on the risks of driving impairment are already in the patient information leaflet.
Employers need to ensure that there is a robust drugs use policy in the employee handbook that covers issues such as driver safety and link to the disciplinary procedure for any misdemeanours.