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Anna Denton Jones HR Insights June 2017
- 1. Employment Law Update Anna Denton-Jones June 6th 2017
- 2. Rates changed 6 April • Week’s pay £489.00 • Basic award £14,670 • Compensatory award £80,541 • Statutory maternity/paternity/ £140.98* adoption pay • Statutory sick pay £89.35p.w. * From 2nd April navigating employment law
- 3. Abellio case – right to be accompanied • Toal principle – employee can choose who they like meant ACAS had to amend Code • Value of breach maximum 2 weeks’ pay • Amount awarded £2 navigating employment law
- 4. The election manifestos • Gig economy • Worker’s rights • Tribunal fees navigating employment law
- 5. Government consultations • Provision of living accommodation • Benefits in Kind • Expenses • Proposed tax changes on hold due to purdah navigating employment law
- 6. Finance Act 2017 • Changes to salary sacrifice schemes from 6th April 2017 – New members – Changes to a contract • For existing schemes period of grace to 2018 or 2021 for cars, accommodation and school fees navigating employment law
- 7. Excluded from the restrictions • Employer contributions to registered pension schemes. • Pension advice. • Employer-supported childcare. • Cycle-to-work schemes. • Ultra-low emission cars. navigating employment law
- 8. Restricted • Health checks • Gym membership • Car parking • Technology • School fees • Cars • Accommodation navigating employment law
- 9. BENEFITS RELATED CASES navigating employment law
- 10. Statutory maternity pay • If you make the employee redundant and they have triggered SMP you are still required to pay it • Cannot contract out of this in a settlement agreement • Make sure you separate payments out in documents and pay the NI navigating employment law
- 11. Statutory maternity pay • Bonus payment October for year to June £44k • EWC 28th Jan 2015 • Bonus was within the reference period for calculating 90% normal weekly earnings • £3K penalty for getting it wrong navigating employment law
- 12. Mr E v BT • Pensions Ombudsman jurisdiction over your contractual benefits navigating employment law
- 13. • Make sure you give staff the right information on pensions • Risk cost of putting the employee in the position they thought they were in navigating employment law
- 14. Pay rises • Jo hasn’t had a pay rise in 7 years • Can she bring any claims? navigating employment law
- 15. Duty not to act capriciously in relation to pay • Implied term that an employer will not treat employees "arbitrarily, capriciously or inequitably in matters of remuneration" FC Gardner Ltd v Beresford • Now forms part of the general duty of trust and confidence navigating employment law
- 16. • To what extent does the employer become responsible for advising the employee? navigating employment law
- 17. Contact us: adenton@refreshinglawltd.co.uk Phone 029 2059 9993 or 07977 545480 www.refreshinglawltd.co.uk
Editor's Notes
- DP for driving bus whilst using Ipad to read a book!! 2 brothers TU reps – history – refused ET happy employer had conducted otherwise fair process, taking into account LOS and given consideration to all the arguments – understood why employer had refused partic people - £2 award
- The government has also promised to consult on employer-provided living accommodation and to issue a call for evidence on valuing benefits in kind. A call for evidence on taxation of employee expenses was issued on 20 March 2017 and closes on 12 June 2017 Focus – are we taxing people correctly in respect of these things? Likely to be some change in future? Tax changes due in 2018 - all PILON taxable irrespective of contract and NIC on payments over £30k redundancy – pushed back but could come back again
- Gordon Brown encouraged employers to offer variety of benefits to employees: forego cash in return for benefits and in return employer save NICs. Who in the room introduced some element of this? Now being curbed. Not everything. If any changes this year – staff will need to understand the tax implications of staying in scheme: any variation kicks change in earlier Or get people signed up as last chance before changes occur Employers moving to loans system instead? Can still be advantageous to use corporate purchasing power eg:- buy laptops more cheaply. New benefits more attractive now like extra annual leave
- These are still encouraged. As is subsidised meals, medial treatment up to £500 Not intended to capture intangible benefits like extra holiday but most recent guidance issued in March by HMRC unclear on this
- Salutory lesson recently for Campus Living Villages – their HOF made redundant. As you might expect she claimed UD and pregnancy discrimination – COT3 agreement via ACAS. She had calculated losses at £98k, including £41k maternity pay as they had an enhanced scheme. Compromised at £60k. Full and final settlement. S164(6) Social Security Contributions and Benefits Act 1992 – cannot contract out of it – Nr still had outstanding obligation to pay the SMP and the NIC due on it! Can reclai Trigger 11 weeks before EWC
- Nr argued bonus was payment for the previous year so shouldn’t be included in calculation – not part of ‘normal weekly earnings’ Tax tribunal found was normal weekly earnings so that 6 week period should been paid at the higher rate What does this have echoes of? Alabaster Holiday pay cases What can the employer do to reduce liablity? Pay monthly or quarterly?
- E had MH issues – dismissed on capability – settled claims for UD and DDA under SA. Excluded pensions. BT’s ill-health benefits scheme – lump sum for time served payable into GPP when ill health requirements met – assessed by OH. The OH service rejected claim on basis E hadn’t tried all available MH treatments – felt his condition might not be permanent which was a condition of payment. E claimed unreasonable decision – appealed and then claim to PO. E argued pension so outside SA. BT argued discretionary benefit not part of pension scheme so caught by SA Ombudsman ruled in favour of E – OHS hadn’t said which treatments E should have tried – broadens scope of what Ombudsman deals with – free to go to him so no cost barrier. Take care when drafting SA. – carve out only in relation to accrued benefits under X scheme not generally in relation to pensions.
- Mr E (PO-8518): scheme administration: member's contributions wrongly refunded following misrepresentation by employer An employer who misrepresented a prospective employee's pension rights in relation to a planned TUPE transfer must ensure he was returned to the position he would have enjoyed but for the incorrect statement. The complainant began working for the employer and joined its pension scheme on 6 January 2014. When he was TUPE transferred to a new employer on 1 April 2014 he had less than three months service and was therefore only entitled to a refund of his employee contributions under the scheme rules (unlike members with three to 24 months service, who were entitled to transfer their benefits). The member complained that his service would have exceeded three months if he had not delayed his start date in reliance on an update issued by the employer in November 2013, which stated that members' benefits in its scheme would be preserved following the planned TUPE transfer. Upholding the complaint, the Deputy Ombudsman said that the employer should have corrected the statement once it knew it was wrong. She held that the incorrect update induced the complainant to agree to delaying his contract start date to 6 January 2014, albeit there was no indication the employer acted in bad faith. As well as making directions to compensate the complainant within his current scheme for his financial loss, the Deputy Ombudsman directed the employer to pay him £500 for the significant distress and inconvenience caused by its failings. (Determination in a complaint by Mr E, 3 February 2017 (PO-8518).)
- I assume that there is no express contractual term entitling the employee to a pay rise. If there were such a term then obviously consideration would need to be given to a breach of contract claim based on breach of an express term. It is possible for a failure to award a pay rise to amount to a breach of trust and confidence in certain circumstances. Although most of the cases we have referred to relate to situations in which there has been a failure to award a discretionary bonus, similar principles will likely apply where there has been a refusal to award a discretionary pay rise. Transco plc v O'Brien [2002] The implied term obliges employers to treat employees "even-handedly". This does not necessarily mean treating them identically but, if the employer treats one employee differently from the rest, its reasons must not be capricious. T was offering enhanced terms to all permanent employees as a loyalty incentive during a restructuring; its refusal to offer the new contract to Mr O'Brien was a breach of trust and confidence. In the court's view, there were few things more likely to damage trust and confidence between an employer and employee than to single him out and refuse to offer him the same terms as the rest of the workforce. Its honest mistake in thinking that he was not a permanent employee was not an excuse. This would be similar in effect to the implied term that prevents an employer from dismissing an employee on long-term sick leave where this would cause them to lose permanent health insurance or bonus. However, the decision in Takacs was not a final determination, merely a finding that the claim was arguable and could proceed to trial. The case was eventually settled and so the position remains uncertain. If a female employee could demonstrate that pay rises are being awarded based upon attractiveness then this may well amount to a breach of trust and confidence. Sex discrimination In order to claim direct sex discrimination it is necessary to identify a member of the opposite sex whose circumstances are not materially different to the claimant (either real or hypothetical). It would therefore be difficult for a female employee to demonstrate that she had been discriminated against because of her sex unless she can point to a real or hypothetical male comparator. Having said that, if female employees are being awarded pay rises based upon their perceived attractiveness, and male employees being awarded pay rises based upon merit, then there may be scope to argue that there is discriminatory practice in the way pay increases are awarded.
- 1978 EAT
- An employer has no general common-law duty to inform employees of their rights: s1 ERA. The House of Lords has given approval to an implied duty on an employer to inform an employee about a contractual right in a very limited category of cases. In Scally employees were able to purchase enhanced pension rights under the provisions of a collective agreement, but were not informed of the provisions until it was too late. The House of Lords held that the employers were under a duty to take reasonable steps to inform the employees of a contractual term so as to be in a position to enjoy its benefit, where: The terms of the contract have not been negotiated with the individual employee but result from negotiation with a representative body or are otherwise incorporated by reference; A particular term of the contract makes available to the employee a valuable right contingent upon action being taken by him to avail himself of its benefit; and The employee cannot, in all the circumstances, reasonably be expected to be aware of the term unless it is drawn to his attention. In a number of subsequent cases the courts have refused to expand the scope of the Scally doctrine. In University of Nottingham v Eyett the employers failed to advise the employee that his chosen retirement date was financially disadvantageous to him, and that, if he chose to retire the following month, his pension would be calculated at a higher rate. The facts were very different from those in Scally, since the employee knew of his early retirement rights and could have worked out the financial implications from the handbook which had been supplied to him. The employers had no duty to advise the employee that he was making a mistake. Neither was the employer in breach of the implied trust and confidence term. Similarly in Outram CA held that there is no general implied duty on employers to give advice to employees about pensions . The duty in Scally is only a duty to take reasonable steps to inform the employee. In Andrews v Kings College NHS trust, put up notices and stapled letters to pay slips informing part-time employees about rights under the NHS pension scheme. Ms Andrews and 15 others (out of over 500 staff) complained they had not received the letter. Ms Andrews worked mainly off site and so she didn't see the posters either. The EAT upheld the employment tribunal's finding that the trust had taken reasonable steps. It was not under a duty to "do everything possible or take all steps which were not unreasonable". If an employer does give advice or information to employees (whether or not it is under a duty to do so), it must take reasonable care in giving it (Hagen & ors v ICI Chemicals In Hagen the employer owed a duty when giving information to its employees on the likely effects of a proposed transfer on their pension benefits. The advice was relied on by the employees and affected the negotiating position taken by their TU. The employer was not, however, liable for a statement that the transfer was likely to be in the employees' best interests, since the employer had no special knowledge or skill making it reasonable for the employees to rely on that opinion rather than their own. The term is also limited in that it only applies to contractual benefits, not other benefits or options to which the employee has no contractual right. In Ibekwe v London General Transport the employee worked as a London bus driver at the time the service was being privatised. The transferee and transferor negotiated enhancements to pensions if an employee opted to transfer from the transferor's scheme into the transferee's (the other option being to remain in the transferor's scheme and take a deferred benefit at retirement). The county court judge held that the Scally duty did not apply here. The option for an enhanced pension on transfer was not part of Mr Ibekwe's contract of employment and neither had it been negotiated by a representative body on his behalf. CA did not disturb that finding, but considered what the position would have been if there had been such a duty. Letters had been given to employees with their pay slips informing them of their options, but Mr Ibekwe, who was on sick leave, did not get the letter as it was not posted to him. Although he often went to the workplace to collect his payslips, even while off sick, he did not collect this one. The court considered the chosen method of informing employees was reasonable and so the employer would not have been in breach of the term. No general duty to care for employee's economic wellbeing In Crossley v Faithful the CA held that there is no general implied duty on an employer to take reasonable care of an employee's economic well-being. Such a duty would impose an unfair and unreasonable burden on employers. It is one thing to say that, if an employer assumes the responsibility for giving financial advice to his employee, he is under a duty to take reasonable care for the giving of that advice. It is quite a different matter to impose on an employer the duty to give his employee financial advice in relation to benefits accruing from his or her employment, or generally to safeguard the employee's economic well-being. The employer in that case was not in breach of contract for failing to advise an employee that his resignation would have a detrimental effect on his entitlement under a PHI scheme