Employment update


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Edward Wheen and Sam Murray-Hinde from Moorhead James LLP present an employment update – from the Sport and the Law Conference 2014.

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Employment update

  1. 1. Employment Update Presented by Edward Wheen, Partner & Sam Murray-Hinde, Associate
  2. 2. VOLUNTEERS AND THE LAW Presented by Edward Wheen
  3. 3. Volunteers – Who are they? A volunteer is:  “a person engaged in an activity which involves spending time, unpaid (except for travel and other out of pocket expenses), doing something which aims to benefit some third party other than or in addition to a close relative.” The Police Act 1997 (Criminal Records) Regulations 2002
  4. 4. Volunteers – Who are they?  Volunteering is: “an activity that involves spending time, unpaid, doing something that aims to benefit the environment or individuals or groups other than (or in addition to) close relatives.” The Manifesto for Change / The Compact Code of Good Practice on Volunteering
  5. 5. Volunteers – What are they not?  Employment law gives protection to: (1) employees; (2) workers; and (3) a wider class of individuals who are protected from discrimination under the Equality Act 2010
  6. 6. Volunteers – What are they not?  An employee is: “an individual who has entered into or works under (or where the employment has ceased, worked under) a contract of employment.” S.230(1) Employment Rights Act 1996
  7. 7. Volunteers – What are they not?  A contract of employment is: “a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing.” S.230(2) Employment Rights Act 1996
  8. 8. Volunteers – What are they not?  A worker is: “an individual who works under a contract of employment or any other contract, whether express or implied, who undertakes to do or provide personally any work or services for another party to the contract, where that other party is not a client or customer of any profession or business undertaking carried on by the individual.” s.230(3) Employment Rights Act 1996
  9. 9. Volunteers – What are they not?  Internships  Work experience placements
  10. 10. The National Minimum Wage  If found to be an employee or worker, an individual is entitled to be paid the National Minimum Wage.  Avoid giving any monetary payment or benefit in kind other than reimbursement of genuine expenses.
  11. 11. How to avoid giving volunteers rights  Avoid giving individuals a contract of employment.  A contract can be oral or in writing.  Constituents leading to a contract of employment: (1) offer; (2) acceptance; (3) consideration; (4) intention to create legal relations; and (5) certainty of terms
  12. 12. How to avoid giving volunteers rights  Avoid paying anything but genuine expenses.  Avoid rewards and gifts, unless it is a genuine honorarium with no obligation and of small value.  Provide only training which is necessary for the individual to perform their duties.  Provision of uniform and equipment should only be that which is required for the role.  Avoid providing free entrance to events save where necessary to carry out the role
  13. 13. Fixed-Term Contracts Presented by Sam Murray-Hinde
  14. 14. Fixed-term contracts  Popular with employers.  Danger that employers think fixed-term employees have no rights.  Are they as employer-friendly as first thought?
  15. 15. Fixed-term contracts A fixed-term contract is a contract which will terminate:  On the expiry of a fixed-term  On the completion of a particular task, or  On the occurrence or non-occurrence of any other specific event
  16. 16. Fixed-term contracts A fixed-term contract is typically used for:  A specific task or project  When funding comes from an external source  Where demand for a post is not clear and/or a trial period is required, or  To provide maternity cover.
  17. 17. Fixed-term contracts Rights of a fixed-term employee:  Normal employment rights  PLUS: Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002
  18. 18. Fixed-term contracts Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002:  Cannot be treated less favourably than comparable permanent employee, or be subject to any other detriment by any act or failure to act, unless such treatment can be objectively justified
  19. 19. Fixed-term contracts Who is a comparable permanent employee? Someone who:  Is not on a fixed-term contract  Works for the same employer in the same establishment  Does the same or broadly similar work.
  20. 20. Fixed-term contracts What is less favourable treatment?  Less favourable terms and conditions of employment (pay, bonuses, access to benefits)  Not being given access to promotion  Bullying or harassment  Dismissal (to include being selected for redundancy ahead of permanent employees). N.B Only prohibited if treatment on the ground that the employee is a fixed-term employee.
  21. 21. Fixed-term contracts Can only be treated less favourably where objectively justified. Treatment must be:  a proportionate means of achieving a legitimate aim.
  22. 22. Fixed-term contracts  Fixed-term employees must be informed of any permanent vacancies.
  23. 23. Fixed-term contracts Beware of using successive fixed-term contracts:  After four years‟ continuous employment on a series of successive fixed-term contracts, employees are automatically deemed to be permanent employees UNLESS the continued use of such contracts can be objectively justified
  24. 24. What happens on expiry?  Potential wrongful dismissal claim if contract terminated ahead of expiry and no break clause.  Non-renewal of fixed-term contract amounts to a dismissal by law. Fixed-term contracts
  25. 25. Fixed-term contracts Need to show potentially fair reason for dismissal:  Capability;  Conduct;  Redundancy;  Contravention of a statutory obligation;  Some other substantial reason.
  26. 26. Fixed-term contracts Considerations:  Objectively justifiable grounds for using or renewing a fixed-term contract?  Non-renewal of a fixed-term contract amounts to a dismissal by law.  Keep a record of the expiry dates of contracts.  Think carefully how to handle the expiry of a fixed- term contract. Plan ahead.  Nb. Acas Code of Practice does not apply.
  27. 27. Fixed-term contracts  Consider including a notice period to allow for termination before expiry date.  Keep a record of employees‟ continuous service – where someone attains 4 years‟ service, send a written statement of variation.  Audit contract terms and benefits to look for differences to those offered to permanent staff.  Where a contract is extended, agree the terms and the length of the extension.
  28. 28. Pensions auto-enrolment Presented by Sam Murray-Hinde
  29. 29.  Pensions Act 2008 came into force on 30 June 2012.  Imposes obligation on UK employers to automatically enrol „eligible jobholders‟ into a pension scheme and to pay minimum contributions into the scheme. Pensions auto-enrolment
  30. 30. Pensions auto-enrolment When do the new employer duties apply?  From the relevant staging date.  If fewer than 250 employees, the staging dates will run from 1 April 2014 to 1 April 2017.  Staging timetable available from the Pensions Regulator website.  Employers must register with the Pensions Regulator within five months of staging date.
  31. 31. Who must be auto-enrolled?  All eligible jobholders, unless they are already active members of a qualifying scheme. Pensions auto-enrolment
  32. 32. Pensions auto-enrolment An eligible jobholder is someone who:  Is aged at least 22, but is below state pension age;  Earns more than the earnings trigger in a relevant pay reference period (currently £9,440).
  33. 33. Pensions auto-enrolment When must an eligible jobholder be auto-enrolled:  Within six weeks of their auto-enrolment date (“the AED”).  The AED will be the date a new jobholder commences employment, or the employer‟s staging date if they are already employed.  Can be later in some circumstances.
  34. 34. An AED can be postponed for up to three months in relation to:  Eligible jobholders already working for employer at staging date;  New workers who are eligible jobholders when they start; and  Existing and future workers who are initially ineligible but who become eligible in the future. Pensions auto-enrolment
  35. 35. What type of scheme must eligible jobholders be enrolled into?  An automatic enrolment scheme which meets certain quality tests and additional criteria.  An existing scheme which amounts to a qualifying scheme.  NEST. Pensions auto-enrolment
  36. 36. Pensions auto-enrolment On-going employer duties:  Must not take any action that could result in jobholder ceasing to be active member of qualifying scheme or the scheme ceasing to be a qualifying scheme.
  37. 37. Pensions auto-enrolment Must provide the following information to an eligible jobholder within one month of AED:  Their AED;  Information about the scheme, including contact details;  Value of contributions due from member and employer;  Details of how tax relief will be given; and  Confirmation of right to opt-out and how to do so.
  38. 38. Pensions auto-enrolment Must provide the following information to the scheme administrator within one month of AED:  Personal information about the eligible jobholder;  The AED; and  Jobholder‟s gross earnings and value of contributions payable by employer and member.
  39. 39. Pensions auto-enrolment Opting-out:  Once auto-enrolled, jobholder can opt-out of scheme within one month of the later of the date he became an active member and the date given the statutory enrolment information.  Must send valid opt-out notice to employer.  Entitled to refund of contributions he paid, less any tax due.
  40. 40. Pensions auto-enrolment Re-joining:  Where opted-out, jobholder can change mind and apply for membership of an automatic enrolment scheme.  Needs to give notice to employer.  Can only do this once in a 12 month period.
  41. 41. Pensions auto-enrolment Workers not eligible for auto-enrolment have statutory right to opt-in or join a scheme:  Non-eligible jobholder: 16-74 years old with earnings exceeding qualifying earnings threshold but below earnings trigger; OR aged between state pension age and 74 with qualifying earnings about the earnings trigger.  Entitled worker: Aged 16-74, works in UK under contract, but earns less than start of qualifying earnings band
  42. 42. Pensions auto-enrolment Within one month of the staging date or of them starting work, the employer must send to a non-eligible jobholder:  Statement that has right to give notice and opt-in to auto-enrolment scheme and entitled to receive employer contributions;  Statement that written notice must be signed; and  Details of how to obtain further information about pension saving.
  43. 43. Pensions auto-enrolment Within one month of the staging date or of them starting work, the employer must send to an entitled worker:  Statement that worker may require employer to arrange for him to become active member of registered pension scheme on written notice;  Statement that written notice must be signed; and  How to obtain further information about pension saving.
  44. 44. Pensions auto-enrolment Re-enrolment:  Every three years, employer must auto-enrol all eligible jobholders who were initially auto-enrolled but opted out. The requirement to provide the statutory information applies.
  45. 45. Pensions auto-enrolment Prohibited conduct:  Cannot contract out of, limit or exclude any of the new duties.  Unlawful to ask job applicants if intend to opt-out.  Unlawful to offer financial incentives for opting-out.
  46. 46. Pensions auto-enrolment Obliged to retain records for six years of:  Details of auto-enrolment scheme used,  Name, NI number, DOB and AED of all jobholders auto-enrolled, together with corresponding details for non-eligible jobholders and entitled workers who have opted-in;  All opt-out, opt-in and joining notices received.  Evidence of jobholders‟ earnings and contributions;  Dates on which employer contributions paid; and  Where postponements used, records of these.
  47. 47. Pensions auto-enrolment Penalties for non-compliance:  No action for breach of employer‟s statutory duty.  Regulator can intervene and has power to issue formal compliance notice.  Where breach not remedied, can impose fixed penalties starting at £400.  For serious or persistent breaches, can impose escalating penalties.
  49. 49. EMPLOYMENT TRIBUNAL FEES INTRODUCED ON 29 JULY 2013  Type A Claims (e.g. unlawful deduction of wages etc.) issue fee £160; hearing fee £230  Type B Claims (e.g. unfair dismissal, discrimination etc.) issue fee £250; hearing fee £950
  50. 50. Level of fees  Type A Claims (e.g. unlawful deduction of wages etc.) issue fee £160; hearing fee £230  Type B Claims (e.g. unfair dismissal, discrimination etc.) issue fee £250; hearing fee £950
  51. 51. Remission  Fees waived for those who have less than £3,000 in disposable assets (including partner‟s assets) and a gross income of less than £1,245 per month (for a couple without children).  Other criteria for individuals, and those with children.  Possibility of part-remission for those who are just above these criteria  There will many who do not qualify for remission, or part- remission, but will nonetheless be unable to afford the fees.
  52. 52. Claims down  Ministry of Justice published statistics for October- December 2013 show Employment Tribunal claims down by 79% on the same period in 2012.... and  75% lower than June-September 2013 quarter (during which the fees were introduced)
  53. 53. Change?  Application by Unison for Judicial Review failed, in essence, because of the absence of reliable evidence of the impact of the fees on access to justice......  The High Court expressed the hope that the Lord Chancellor would amend the scheme if reliable figures were to show such an impact, to save the parties returning to Court.  Now that there are reliable figures, will he do so?
  54. 54. ACAS early conciliation  From 6 April 2014 prospective Claimants will be required to notify ACAS of the problem before issuing an Employment Tribunal claim.  If a Claimant fails to do so, the claim will be rejected.
  55. 55. ACAS early conciliation  The conciliation period is 4 weeks, but can be extended to 6 weeks.  The clock stops for the purposes of time limits (e.g. 3 months for most ET claims) whilst conciliation takes place.
  56. 56. Will it work?  24,000 disputes were dealt with under pre-claim conciliation procedures in 2012 and 75% did not go on to become ET claims.  Evidence of success? How many ET claims would there have been without ACAS involvement?!
  57. 57. Will it work? Cont’d…  It is clear, however, that ACAS has a better chance of success with simple disputes (e.g. breach of contract or monetary disputes) than with the more complex claims (e.g. unfair dismissal or discrimination claims).  Although Employment Tribunal fees are payable by the Claimant, a losing Respondent will normally be ordered to reimburse these to the Claimant. As a result, it is in the interests of both parties to give pre-claim conciliation a chance.
  58. 58. Will it work? Cont’d…  However, it will not usually be commercially sensible for employers to invest too much time and money in this process since (a) the claim may not be brought (particularly in view of the fees payable and (b) it may be used by some as an attempt to test the strength of the other party‟s case.  There is no penalty for declining to engage in early conciliation. However, it is a factor which may be taken into account by an Employment Tribunal when considering an application for costs after Judgment has been given.
  59. 59. Conclusion  There will be fewer Employment Tribunal claims. Even if the rules change, fees are unlikely to be entirely removed and this will inevitably deter some Claimants.  There will, however, be more contact from ACAS before claims are issued, and employers will need to consider whether to try to negotiate a settlement at that stage, or take the risk that an Employment Tribunal claim will follow. Legal advice on the prospects, at that stage, will assist in assessing the level of risk, and the likely award if the claim were to be brought.