Communicating Bad News by Text or E-mail

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A survey undertaken by Intercity Telecom reported that 38% of British workers have used email or text to inform their boss that they were sick and unable to work. The survey of 2,000 business professionals in the UK found that one in five of those admitted they were ‘pulling a sickie’ and felt too guilty to call.

More than one in ten respondents stated that they would not have the courage to sack someone face-to-face, choosing the phone, email, or even text to deliver the news.

A very high-profile case in November 2022 was when Elon Musk confirmed that he had fired over 80% of the entire workforce at X (formerly known as Twitter) by email, which included UK employees.  This approach attracted global notoriety and condemnation.

Peter Stanway, our BackupHR legal expert comments:

There are two issues here:

1. Letting your employees get away with using texts, sending emails or asking someone else to call in their sickness absence is encouraging a lack of ownership towards their contractual responsibilities, as well as being bad practice. We advise all our clients to prohibit such actions as they not only fail to allow for appropriate two-way communication but as evidenced by the 20% who admitted to ‘pulling a sickie’ they make it easier for people to evade work. If you do not address employees who cannot be bothered to follow proper absence reporting procedures then expect to have plenty of short term sickness absence.

2. We advise our clients to be cautious about dismissing employees remotely. Allowing sufficient time to consider the outcome of disciplinary meetings can take time. If you are not in a position to give a decision face to face we would advise employers to, at the very least telephone with their decision and follow that up with a letter confirming the decision, which might go via post or email. We would rarely suggest using texting as an acceptable method of communicating a dismissal outcome other than in exceptional circumstances where other methods have failed. Managers are paid to take on responsibilities and sometimes that involves directly communicating out bad news. Copping out of that is not only ducking out of the job it is likely to land the employer with a tribunal.

The guidance provided in this article is just that – guidance. Before taking any action make sure that you know what you are doing, or call us for specific advice.

The Government has issued a press release setting out its ‘Good Work plan’ in response to last year’s Taylor Review on what impact modern working practices are having on the world of work. Four consultations are planned but there will be no immediate changes to the law.

Peter Stanway, our BackupHR™ legal expert comments:

The Government is however proposing to make some changes without giving further details or proposed timescales. A number of the measures envisage improved guidance rather than changing legislation.

  • Help enforce vulnerable workers’ holiday and sick pay (addressing the current uncertainty for gig economy workers);
  • Introduce day-one rights such as holiday and sick pay entitlements and a new right to a payslip for all workers, including casual and zero-hour workers;
  • Provide all agency workers with a clear breakdown of who pays them, and any costs or charges deducted from their wages;
  • Consider a higher minimum wage rates for workers on zero-hour contracts.
  • Consult on repealing laws allowing agencies to employ workers on lower rates than permanent employees (the so-called Swedish derogation).
  • A right for all workers, not just zero-hour and agency, to request a ‘more stable contract’;
  • Taking further action to ensure unpaid interns are not doing the job of a worker;
  • Define ‘working time’ for flexible workers who find jobs through apps or online so they know when they should be being paid;
  • Launch a task force with business to promote awareness and take-up of the right to request flexible working;
  • Ensure new and expectant mothers know their rights (as well as employers);
  • Launch a new campaign to encourage more working parents to share childcare through shared parental leave;
  • Introduce a new naming and shaming scheme for employers who fail to pay employment tribunal awards; and
  • Increase employment tribunal fines for employers showing malice, spite or gross oversight to £20,000 and consider increasing penalties for employers who have previously lost similar cases.

As for the consultations, the four topics to be covered are the rather trickier issues of enforcement of employment rights; agency workers recommendations; measures to increase transparency in the UK labour market; and employment status.

The Taylor Review ran to over 100 pages with recommendations on a wide range of topics. The press release states that all but one of Matthew Taylor’s 53 recommendations will be “acted on” but note the language, “acted upon” is not the same as “accepted”. The only one which is not being taken forward in some way is the proposal to equalise national insurance for employees and the self-employed. The Government states that it is committed to reforming employment law and practices to keep pace with modern ways of working. However, we are still not much further forward in knowing how and when this will happen in practice.

Much of the Good Work Plan is either a call for further consultation at this stage or agreeing to look at possible future reforms and guidance. Setting employment status to one side for the moment, changes, such as lengthening the reference period for holiday pay calculations and extending the period counted as a break in continuous service beyond one week, may have significant impact. Reviewing legislation relating to protection against redundancy for pregnant employees and those on maternity leave is another area of potentially significant impact.

So if all this is just proposals what if anything should you be doing now?

  • Review the employment status of contractors and casual/zero hour people
  • Make sure you advise pregnant women of their rights (in a Handbook)
  • Follow the proper procedure for flexible working requests
  • If you engage interns on an unpaid basis, start paying them if you are asking them to undertake useful work, core to what you do.

The guidance provided in this article is just that – guidance. Before taking any action make sure that you know what you are doing, or call us for a free initial chat on 01480 677980.

“I rely on BackupHR to help me ensure we are doing the right thing both for the business and our employees. They provide a first class service with very quick turnaround and help considerably when trying to make sense of ever increasing legislation. The ability to speak to my consultant, knowing I will get that return call even if she is out or busy with another client gives me that little bit of extra confidence when dealing with difficult or tricky situations.”
Moneyfacts (Financial)

“When the responsibility of the HR role was given to me to run alongside my existing finance role, the help I received from BackupHR was crucial to me in managing this role in an effective and efficient manner.”
Environmental Control Systems (Electrical/Manufacturing)

“We have used BackupHR services for many years now and are extremely pleased with their most efficient service they give to our company. The up to date current legislation that is provided is invaluable for our business. The personal touch really makes the difference. I would not hesitate to recommend Backup HR to other businesses that require this support.”
Stepney Ltd (Construction)

Here are some solutions we have delivered to our clients as part of their BackupHR™ Service.

Problem:
A client was instructed by their bank that to remain in business they had to rapidly reduce debt and, in particular, reduce their wage bill by 20% within 14 days. The challenge was that the 14 day timescale was not long enough for proper redundancy consultation, nor was a unilateral cut in pay legally enforceable.

Business Solution:
BackupHR™ helped persuade all of the Directors to take an immediate 25% cut in their pay, and then helped senior management negotiate with the entire workforce to accept an immediate 10% cut in their pay. BackupHR™helped draft the announcements, prepared for the group consultation meetings, dealt with numerous enquiries from Citizens Advice and other advisors, explaining that without this action there would be no company and no jobs.

The target was met within the timescale. The company survived, won many new orders as their competitors disappeared, the 10% pay cut was lifted within a year, and they are now flourishing, even though they still operate in difficult trading conditions.

We helped saved a company from going under with the subsequent loss of jobs in the local community, and all of our advice was given as part of our comparatively modest annual subscriber service.

Problem:
As a small start up business providing educational materials to schools, the founder originally and urgently needed a simple Handbook of all key employment policies relevant for her business, and, one employment contact that she could template for her first few appointments.

Business Solution:
BackupHR™ provided all that was needed within one week of the request, at the cost of £500 + VAT.

As the organisation rapidly grows in size, the next business milestone will be at around 6 month’s time when the founder aims to employ at least 10 employees. At that point, she plans to sign up with our subscriber service at the cost of approximately £200 + VAT per month, so she can get regular HR advice, support and guidance as she continues to grow in staff size and complexity. As her business grows, she will have further options to tap into more HR support, dependent on her staffing needs.

Problem:
A new client had a problem. Shortly before they engaged us, they had ‘laid off’ or made redundant someone who had been off sick due to an alleged accident at work. They had received a solicitor’s letter threatening an unfair dismissal claim.

Business Solution:
It was clear that they needed us. First of all procedural ‘oversights’ meant that they would lose an Employment Tribunal. We reckoned damages could easily be £10 – £20k.

We needed to limit the damage. We sent a letter to the solicitor, offering to re-engage the individual in a different job, provided he was now fit to work.

Over the next 5 weeks, we negotiated through both ACAS and the solicitor an amicable commercial settlement. This meant that the employee did not return to work, and he withdrew his claim. Within two months of using BackupHR™ our client avoided a costly claim, which covered our fee several times over.

If you would like to find out more, call Jackie Bolton 01480 677981

The Equality Act 2010 describes a disabled person as someone who has a physical or mental impairment that has a substantial and long-term adverse impact on their ability to carry out normal day-to-day activities. This wide definition captures a number of individuals with disabilities, which are not immediately obvious.

The Equality Act requires an employer:

  • Not to treat applicants or employees with disabilities less favourably because of the disability;
  • Not to unjustifiably treat those with disabilities unfavourably for reasons arising from the disability;
  • Not to subject those employees to indirect discrimination, harassment or victimisation.
  • To make reasonable adjustments to accommodate the condition so as to minimise any disadvantage.

The Equality Act provides that an employer is not liable for disability discrimination if (1) it did not know or (2) could not reasonably have been expected to know about a person’s disability. The law is complicated and evolving but it is best to stick to this perspective.

Many of the conditions that would cause an employee to be considered disabled within the meaning of the Equality Act can be described as hidden or invisible. Typical examples would be dyslexia, depression and diabetes.

Peter Stanway, our BackupHR™ legal expert comments:

While it is tempting for employers to think that avoiding any knowledge of any condition(s) is the best way to avoid liability, case law has shown that the ostrich approach does not work. The key problem is that of constructive knowledge i.e. could/should the employer have known that the employee suffers from a particular condition from the information that they have, normally due to absences and behaviour.

The Equalities and Human Right Commission provide a Code of Practice, on what should be regarded as reasonable knowledge of a condition. The Code states that ‘an employer must do all they can reasonably be expected to do to find out if a worker has a disability’ specifically targeting the “ostrich approach”. The EHRC suggests that employers should explore the reasons for a performance reduction of a previously good employee, including asking reasonable questions regarding their health/wellbeing. Tell tale signs may appear which suggest that an employee’s health is impacting their work. Each case is fact specific, but this can include a dip in performance, absences and concerns raised by colleagues about their behaviour. Many employers rush to take action to improve the performance without first trying to understand the underlying cause. By starting a performance improvement process they could unwittingly subject the employee to an act of discrimination.

Good/wise employers will therefore maintain an open dialogue with their employees and will regularly monitor and review employee performance. The workplace culture should encourage an open dialogue about wellbeing and employers should take steps to reduce stereotyping, particularly surrounding mental health conditions.

Employers should not be afraid to start a conversation about health and wellbeing, although conducting such conversations sensitively will be crucial to a positive outcome. Employers would be well advised to explain the concerns about the employee’s behaviour before asking the employee if there are any circumstances that might be causing the problems at work.

Action

  • Write to new employees to ask if reasonable adjustments are required to enable them to perform the role. They are not obliged to disclose conditions.
  • It will often be wise to obtain an Occupational Health report.
  • The onus is on the employer is to take reasonable steps to try and ascertain if the individual has a disability where this is not clear.
  • You need not have taken every step possible to discover an employee’s disability. It is your actions as a whole that matter.

The guidance provided in this article is just that – guidance. Before taking any action make sure that you know what you are doing, or call us for a free initial chat on 01480 677980.

You are only as good as the people you manage – if you do not manage them effectively, this will not reflect well on you.

Many Managers are promoted to a role that involves being in charge of people – the promotion is based on technical/operational expertise. Yet, to successfully manage individuals or a team requires a different set of skills and techniques.  Even Senior Managers may never have had formal training on the best ways to lead and manage people.  All Managers need to keep up to date with the evolving principles of motivating and engaging the different generations of people they are responsible for in the modern workplace. It is about continuous professional development if you are a Manager.

This course focuses on the key aspects of successful people management, including effective communication skills; practical motivation and engagement; the ability to develop individuals and also teams; and finally, knowing your own default management style and when you may need to change/modify it.

We have designed this course to suit those who are new to Management, as well as being a useful refresher for the more experienced Manager looking to develop existing skills and/or want to be more successful by learning new/different approaches, as part of personal/career development.

This course will be highly participative, practical in content, and is intended to challenge our delegates into recognising there are always alternative ways of dealing with people and/or situations.

The course objectives will include: –

  • Effective Communication Skills
  • Practical Motivation and Engagement
  • Ability to Develop Individuals and/or Teams
  • Default Management Style & When to Change it

We are running this course at the following venues:

Park Farm Country Hotel, Norwich – 7th March 2018
Rowley Mile Conference Centre, Newmarket – 26th April 2018

The course will commence at 8.30 am, with registration and refreshments from 8.00 am. The course will finish around 1.30 pm, with breaks for refreshments and lunch.

The cost for this training event will be £75.00 plus VAT per delegate, including lunch.

To reserve your place on this course, please contact Jackie Bolton either by e-mail: jackie@www.backuphr.com or call 01480 677981.

On 8 December 2017, an ‘agreement in principle’ was reached between the UK and the EU on the future rights of EU citizens currently living lawfully in the UK. This means that these individuals will be able to stay in the UK and enjoy broadly the same rights and benefits as they do now. This agreement applies equally to UK citizens currently living in the EU. However, a word of caution – this agreement is subject to the important caveat that ‘nothing is agreed until everything is agreed’. The Government maintains that EU citizens do not need to take any steps at this stage to establish immigration status.

Employers and their representative bodies have repeatedly expressed concerns that they were losing valuable workers, or struggling to recruit the skilled workers they need from other EU member states, because of the uncertainty these people feel after the EU referendum. The Home Secretary, Amber Rudd, has now written an open letter to EU citizens in the UK reassuring them that the rights they and their families currently have will remain broadly the same.

The Home Secretary acknowledged that EU citizens have had “an anxious wait while the fine details were ironed out” but has now emphasised that they will continue to have access to healthcare and benefits and their pensions will be protected. Their existing close family members living outside the UK will retain the right to join them in the future. She also promised that the newly designed digital system through which EU citizens will be able to get their new status will minimise bureaucratic hurdles, and applications will cost no more than the fee a British person pays for a passport. Anyone who already has valid permanent residence documentation will not be charged.

“You do not need to do anything just yet,” the Home Secretary concluded. “You will see more detail about the settled status scheme from us … and we expect applications will open during the second half of 2018.”

Key aspects of the agreement:

The key date for establishing rights will be 29 March 2019. EU citizens who legally reside in the UK before 29 March 2019 will be able to stay in the UK, and close family members will be able to join them after the UK has left the EU (where that relationship existed before, and continues after that date). These family members include spouses, unmarried partners, children, grandchildren, dependent parents and grandparents.

Individuals already holding a permanent residence document on 29 March 2019 will have that document converted into a new document free of charge, subject only to verification of identity, no criminality and security checks and confirmation of ongoing residence. Individuals who have acquired permanent residence rights can leave the UK for up to 5 consecutive years without losing their residence rights.

Peter Stanway, our BackupHR™ legal expert comments:

The implementation and application of citizens’ rights will be monitored in the UK by an independent national authority. Administrative procedures for applications for status will be transparent, smooth and streamlined. In particular, the UK will not be able to require anything more than is strictly necessary and proportionate to determine status. Application forms will be short, simple and user friendly, and a proportionate approach will be taken to those who miss a deadline for application where there is a good reason. A period of at least 2 years will be allowed to submit status applications.

Individuals can be kept up to date via the website Status of EU citizens in the UK: What you need to know, which includes case studies to help individuals determine their status rights.

Actions

  • Speak to your EU citizen workers to reassure them
  • Point them in the direction of the website
  • Monitor dates to remind them when action is needed and help if necessary

The guidance provided in this article is just that – guidance. Before taking any action make sure that you know what you are doing, or call us for a free initial chat on 01480 677980.

After the Brexit vote and the fall in the value of sterling, it may become harder to entice EU migrants to work within the UK, so there may be even more focus on recruiting people from outside of the EU.

There is often great value to organisations in employing workers from overseas. This approach opens up a useful source of information and knowledge which can be beneficial to the creativity, innovation and productivity of an organisation.

Organisations may choose to employ overseas workers for various other reasons:

  • To perform jobs requiring specialist skills (for example, technical or language skills) that are not available in the UK.
  • To fill vacancies for hard to attract jobs which the government agrees are in designated ‘shortage occupations’.
  • To facilitate secondments or transfers from an overseas division, e.g. for developmental assignments.
  • To fill temporary vacancies requiring a pre-existing skill set.
  • To fill unskilled or low-skilled vacancies due to labour shortages.

The Law

It is, however, a criminal offence to knowingly employ a person who requires but lacks immigration permission, to be in that role. There is a maximum prison sentence of two years, and an unlimited fine for employers caught in breach. Immigration fines for employing illegal workers by way of the Civil Penalty regime have seen employer fines increase, both in number and value, since their introduction in 2008. Criminal sanctions are aimed at employers who deliberately flout the law in order to exploit vulnerable employees, and undercut legal competitors.  The merely careless or negligent will generally be dealt with through a civil penalty.  Immigration enforcement teams are carrying out more raids and unannounced visits. The Government’s message is a clear. They will not hesitate to take action against an employer who fails to carry out appropriate right to work checks. The complexity of the rules however, means that many employers are still uncertain of what is required of them.

Since 2016, it has not just been about “knowingly employing” an illegal worker: Employers who have “reasonable cause to believe that the employee is disqualified from employment by reason of the employee’s immigration status” are also in the authorities’ sights.

Employers have to pro-actively check and copy specific original documentation for any new employees. The Government issues guidance which sets out when checks must be made, what employers need to do, including tips on how to check authenticity, and what to photocopy and retain. Checks must be completed before employment begins, but re-checking is also required for employees with time-limited immigration status. These document checks should be carried out for all prospective employees regardless of nationality – UK or otherwise.

Checklist

Here are 10 useful tips to prevent your business from having a civil penalty imposed, or to assist you in challenging a decision made against you.

  1. Ensure that your right to work processes are updated.
  2. Complete your right to work check before employment. If a prospective employee fails to present their documents prior to, or on, their first day of employment, you should delay their start date until such evidence is provided.
  3. Check the original documents in the presence of the holder. Do not accept copy documents, and be cautious of delaying tactics by a prospective employee. If documents are not presented, employment should not commence.
  4. All documents produced, e.g. passports and visa copies, must be on the acceptable documents checklist, known as List A and List B, published on the Government website. Do not accept any other documentation. When you are completing a check, be certain that the prospective employee does have a right to work by checking their visa status. If you have any doubt, consult an immigration expert.
  5. Copy all visa pages in passports, plus the photographic page and/or both sides of the Biometric Residence Card that is presented to you. All Biometric Residence Cards should specify whether or not work is permitted. Be mindful of restrictions related to students.
  6. Sign and date the document to confirm when your right to work check is complete. If you do not specify a date on the document copy, you should record the date of your check in a form that can be clearly identifiable by the Home Office, if requested.
  7. Keep records of all documentation for the duration of the individual’s employment. This is what will give you a statutory excuse, and a defence to challenge if faced with a penalty.
  8. Track and monitor visa expiry dates, and request an employee’s updated document where there is a time limit. It is good practice to request an updated document at least three months before expiry to give you a head start on the process. If an employee cannot provide an updated document, you must not continue to employ them.
  9. Take advantage of the Home Office Employer Checking Service if your employee has a pending application or appeal against an immigration application decision. Be aware that you can only complete this process if you have a case identification number provided by the employee.
  10. If you suspect an employee is working illegally, or has provided you with a false document, or a genuine document that does not belong to them, you should contact the Sponsorship, Employer and Education Helpline to report the incident. If you do not employ the person and you report this incident, you will not be liable for a civil penalty.

Any checks that are made should be done in a non-discriminatory manner in accordance with Government guidance, which recommends that all job applicants should be treated in the same way. (See below).

Sponsorship

While it was not too difficult in the past for a highly skilled individual to immigrate to the UK without a job offer or sponsorship from an employer, the UK Border Agency (UKBA) has recently closed this route to overseas applicants.

The UK Government still allows employers to sponsor overseas workers via the Tier 2 (general) visa. The sponsorship process involves an employer being approved by the UK Border Agency to hire overseas workers by being granted a Sponsorship License. This grants the employer the ability to issues Certificates of Sponsorship to overseas workers that the employer wishes to hire.

An organisation must meet certain requirements to sponsor migrant workers, including but not limited to the following:

  • It must be a genuine corporate entity operating legally in the United Kingdom.
  • It must not be a threat to immigration control.
  • It must designate a contact person who is an authorising officer for the sponsorship management system.
  • It must have an HR infrastructure in place to deal with immigration control.
  • It must provide all relevant supporting documents when applying.

Prior to making any overseas appointment, first of all you need to prove that the vacancy cannot be filled by UK employees by advertising the job you’re offering. This is known as carrying out the ‘resident labour market test’. You must place at least 2 adverts, which must run in the UK for 28 days in most cases, either continuously or in 2 stages.

If you advertise in 2 stages, each advert still needs to run for a total of 28 days and neither stage can be less than 7 days. You have to show that you didn’t find a suitable worker.

All of the above requirements can be of particular concern for smaller organisations on a budget that may not have the resources to deal with all the requirements for sponsorship licensing. Alternatively, you can use specialist immigration solicitors, such as Birketts or Gross & Co., or there are specialist companies that will do all of this for you, albeit either outsourcing option comes with a financial cost, but with major savings in management time and stress!

Discrimination Law

The processes which employers are required to follow to protect themselves against an unfair dismissal or race discrimination claim, do not sit comfortably alongside an immigration regime which penalises employers who know, or should have known, that an employee did not have the right to work in the UK. To avoid claims of unlawful discrimination (and to ensure good recruitment selection), you should have:

  • A clear job description and person specification setting out the skills and experience you are looking for.
  • A standard set of interview questions, which are asked of all candidates, and you should document the answers given. This makes it easier to provide objective reasons why a candidate has been unsuccessful.
  • Training in recruitment and good interview techniques.
  • A very good reason to make a recruitment decision on the basis of an applicant’s race. Typically, this would occur where it is an occupational requirement of the specific role that the applicant is of a particular race, or speaks a certain language. Situations where such a decision can be lawful are very limited.

Expired Visas

Under the Immigration, Asylum and Nationality Act 2006, employers have a duty to conduct follow-up checks on employees whose employment began after February 2008 where, at the time of recruitment, the employees in question have been granted only limited leave to remain and work in the UK. A follow-up check is normally required when an employee’s permission to live and work in the UK expires.

In two recent cases, it was found that the employer was right to conclude that the requirement for employees to show that they have the right to work lawfully in the UK takes precedence over ‘normal’ employment laws. As this could not be shown the employer was entitled to terminate employment. In both cases, the careful process followed by the employer was scrutinised and held to be a key factor.

Practical Points

Offering roles to foreign nationals can be problematic so:

  • Offers of employment should be conditional on the employee being granted and maintaining the necessary permission to carry out the role for which they will be employed in the UK if they are not an EU citizen.
  • Employment should be conditional on the employee maintaining immigration permission and terminated summarily if the employee cannot do so (see below for more detail). Employees should also be required to report changes in their personal details, including immigration status.
  • Ensure that attention is paid to the induction and orientation of the overseas worker to allow that individual to become an effective part of the organisation.

Knowing how and when it is appropriate to treat foreign national employees differently from your UK national or EU employees is not always easy. Ideally, you should treat them in the same way. But remember that recruitment, TUPE transfers and termination of employment are three key areas where the visas that foreign national employees hold may give rise to particular issues that can affect business practice.

EEA Nationals

There has been a surge of EEA nationals applying for permanent residence cards. This means completing a long form and supplying supporting documentation. An online service for permanent residence applications became available from October 2016. Online applicants can make an appointment to submit their paperwork via certain local authorities (including Cambridgeshire). They cannot advise on draft applications, but after an application is submitted they will be able to copy and return the passport immediately.

See: https://www.gov.uk/government/collections/european-passport-return-service.

It is important to keep abreast of the regular changes to immigration policies that continue to make the channel for employing non-EEA workers more restrictive. The potential criminal liability, and negative publicity that come with negligent employment, is likely to be of a greater concern to employers than the risk of an unfair dismissal or discrimination claim but it ought to be possible to avoid both.

The Future

Recent figures suggest that the number of EU migrants coming to work in the UK is falling, which may be bad for UK productivity if employers cannot fill vacancies. In a tight labour market, it will remain important to find capable and motivated staff. The desire to fill vacancies must not lead employers to take short-cuts or risks. Finding the right people is important, but so is ensuring that they can legally work here. Beyond that it is essential to retain staff of all nationalities by providing a good working environment with good pay and conditions of employment.

Current immigration rules have received great criticism from employers for being too inflexible to meet real-world business needs. The Government has pledged to seek independent consultation to improve the current visa system, and its alignment with UK business. In time, this may result in changes to existing entry routes, or the emergence of new types of visa route that support specific needs. The Conservative manifesto pledged to double the recently-introduced Immigration Skills Charge on employers of skilled, non-EU workers who earn more than £30,000. It may choose to do so, but their most recent commitment to listen to business concerns about Brexit and the need for appropriate immigration may change that commitment. Whatever the future, employers should expect additional costs and administration around hiring EU nationals following the impending removal of freedom of movement.

We hope that these decisions come sooner rather than later to enable businesses to move ahead confidently. However, at the time of writing this article it would not appear that Brexit negotiations have got anywhere close to dealing with the free movement of EU nationals, or not, so the future is still far from clear.

 

Clients are welcome to raise concerns with their Consultant who will be pleased to advise you on any element of the issues arising from this newsletter.

There have been recent cases on the subject of holidays and the need to comply with EU law, specifically the Working Time Directive.

Overtime

In Dudley Metropolitan Borough Council v Willetts, the Employment Appeal Tribunal (EAT) held that voluntary overtime that is normally worked should be included when calculating an employee’s holiday pay.

In recent years, there have been several high-profile cases that have considered how employers should calculate statutory holiday pay for their workers, and to what extent employers should take account of variable payments, such as commission and overtime. The extent to which overtime should be included has been particularly problematic, with Tribunals drawing distinctions between different types of overtime.

According to EU law, workers should take their full holiday entitlement; getting ‘normal remuneration’ while on paid leave to ensure that workers are not put off taking holidays by receiving less than their normal pay during this time.

Mr Willetts, on behalf of 56 employees who worked for the Council as tradespeople, brought claims for unlawful deduction of wages. The employees were contracted to work 37 hours per week, with many having an additional right to work overtime. The employees also performed additional voluntary duties, such as working out-of-hours, standby shifts, attending call-outs and working voluntary overtime, for which they received additional payments. Their earnings for this additional voluntary work could amount to around £6,000 a year on top of their basic salary.

The Employment Tribunal held that the payments were intrinsically linked to the performance of the employees’ duties, and that they performed the duties with sufficient regularity for the payments to be considered ‘normal remuneration’.

The EAT dismissed the Council’s appeal. It noted that the ECJ, in a previous case, had set down the overarching principle that holiday pay should correspond to ‘normal remuneration’, so as not to dissuade workers from taking leave; and that the division of pay into different elements cannot affect a worker’s right in this regard. For a payment to count as ‘normal’, it must have been paid over a sufficient period of time.

The question in every case, irrespective of the label put on the payment, is whether the payment forms part of the worker’s ‘normal remuneration’. Voluntary overtime that satisfies this test must be included in holiday pay.

Implications

The EAT’s reasoning provides helpful guidance on when voluntary overtime should be included in the calculation of holiday pay:

  • EU law requires that ‘normal’ (and not contractual) remuneration must be maintained in respect of the four week period of annual leave.
  • For a payment to count as ‘normal’ it must have been paid on a regular and/or recurring basis, which is a question of fact and degree in each case.
  • Items that are not usually paid, or are exceptional are not ‘normal pay’.

This is the first binding decision on the issue, providing clear guidance that regular voluntary overtime should be included within the payment for the first four weeks of statutory holiday. It does not have to be included in the holiday pay for the additional 1.6 weeks of holiday provided for under the Working Time Regulations, or any additional contractual holiday that an employer provides, unless this is stated in the contract.

The outcome is not surprising given the case law on other variable payments, such as commission.

In another recent judgment, an Employment Tribunal in Flowers & Others v East of England Ambulance Trust held that ambulance workers’ compulsory overtime in respect of “shift overruns” should be included in the calculation of their holiday pay, but that on the facts of this case purely, voluntary overtime did not have to be included. It is likely that their voluntary overtime was not that regular, so not comparable with the overtime worked by the tradespeople in the Willets case.

Employers, who pay voluntary overtime, as well as stand-by payments, call-out payments, or payments for other forms of voluntary work, should now consider how they will adjust their payroll systems to calculate holiday pay correctly. It remains to be seen, however, how frequently overtime has to be worked before it becomes “normally worked” and that is not likely to become clear until we have further case law.

Actions to now consider

  • Ask: What would the worker have earned if they had not taken leave?
  • Review the regularity with which workers receive these payments to see if there is a discernible pattern, as well as considering the total value of the additional payments over the course of the holiday year.
  • Where there is a discernible, regular pattern of payments, or where the total value of the payments is sufficient to materially impact the worker’s holiday pay over the course of the year, re-calculate average holiday pay.
  • Decide on which relevant timeframe will you use for such calculations, the last 12 weeks/3 months, or based on last year’s P60 earnings.
  • Consider if enhanced average holiday pay calculations will be applicable just on the first four weeks, or for all holidays (including Public Holidays), or all holidays. If the former, clearly express this in your contracts.

Commission

Much the same approach should be taken with commission, as the Supreme Court have refused permission to British Gas to challenge the Court of Appeal’s decision, that results-based commission payments must be included in the calculation of holiday pay for the basic four weeks’ annual leave provided by the Working Time Regulations (WTR). The Court was, however, unwilling to extend the principle to situations other than those involving contractual, results-based commission.

The Court decision in this case, therefore, clarifies the position only with regard to a specific type of commission – that is, contractual, results-based commission. Employees who earn other kinds of commission will, therefore, have to persuade their employers that their situation is really no different from that of the sales people at British Gas, or will have to bring proceedings of their own. This means continued uncertainty for employers over this long running problem. While most businesses won’t be affected, those that engage workers on a commission-only basis, or on other non-standard contracts, and do not provide for paid holiday, may be hit hard, but need to take action sooner rather than later. The limit on back pay claims to two years does at least mean that employers can assess their potential exposure, and make appropriate provision.

Finally, it is worth remembering that if an employee earns commission and/or bonuses regularly, i.e. every pay interval, regardless of whether payment is down to individual or team performance, it is likely to form part of the definition of ‘normal remuneration’, so will also need to be included in the average holiday pay calculations.

Holiday not taken

A British case is making its way through the European courts system as to whether workers are entitled to carry forward, from one year to the next, holiday that they have been unable to take for reasons beyond their control. The matter was referred to the CJEU, and the opinion given by Advocate General Tanchev said:

  1. Employers must provide adequate facilities for their workers to exercise their right to take holiday, and workers should not be compelled to take legal action in order to establish this right.
  2. If a worker does not take holiday because they will not be paid for it, then this is being ‘prevented’ from taking it and the right carries over until they are given a facility to take the paid holiday or leave, whichever is earliest.
  3. A worker prevented from taking leave can, on termination, claim backdated holiday pay for the whole of their employment.
  4. The worker does not have to take the leave first, before being able to establish whether they are entitled to be paid for it.

Opinion from the Advocate General is not binding, but is usually followed by the ECJ’s judges, who are now deliberating their decision, and will give their ruling later this year. After this, the case will return to the UK’s Court of Appeal, which will decide what should be done in this case, in light of what the ECJ has said.

It will impact those on long term sickness, and people who have been categorised as self-employed, but are later found to be workers or employees, who will be entitled to holiday pay for the duration of their engagement/employment (assuming the ECJ follows the Advocate General’s opinion). However, because it is a decision on EU law, it will only apply to the four weeks’ paid leave provided under the EU Working Time Directive, and not the additional eight days provided by the UK Working Time Regulations.

Whilst UK law limits such claims to two years, and assumes this will not be unbroken by more than three months – if the ECJ follows the Attorney General’s opinion, this restriction may not be incompatible with this decision. UK law states that a gap of over three months between deductions will break the chain of causation, and claims issued on or after 8 January 2015 are prevented from going back more than two years from the date of issue. If this opinion is followed by the ECJ, UK law may need to be changed.

In practical terms, clients should adopt a cautious but pragmatic approach to holiday carry over, after taking advice from their Consultant, on the particular case.

Employers can choose to continue to adopt a ‘wait and see’ approach to average holiday pay, but we would strongly advocate taking a more proactive approach to making changes, calculated in a way that suits their organisation.

 

Clients are welcome to raise concerns with their Consultant who will be pleased to advise you on any element of the issues arising from this newsletter.

HM Revenue and Customs have come up with something to help employers and workers to establish if someone is genuinely self-employed. It is an online tool to determine for tax purposes, whether an individual is an employee or self-employed. That is different, of course, to whether they have ‘worker’ status – something which the taxman does not recognise but employment tribunals do! The Tool is available at https://www.tax.service.gov.uk/check-employment-status-for-tax/setup.

Only a week later, HMRC had to vigorously deny claims that the tool was unreliable, inaccurate and leaves contractors unsure of their status.

Contractors, or those who engage them, can use the tool to answer a pre-programmed series of questions, which change depending on the user’s responses. HMRC was heavily criticised last year that both their Business Entity Tests and their Employment Status Indicator online tools were deemed to be not fit for purpose. HMRC had previously published a checklist as guidance for whether a person was self-employed for tax purposes. This was criticised, as it gave an indication of employment status, but no ‘definitive’ answer. Both of these HMRC tools were heavily biased towards indicating an employed status for the individual whose employment status was being determined.

One contractor portal, “ContractorCalculator”, claimed it had trialled the tool by inputting 21 historical court cases around employment status. More than a quarter of cases received an “unknown” result, while one-tenth “passed” the online test (meaning they would be categorised as self employed), despite a judge having decided otherwise. It also found that contractors who are “significantly controlled” and moved about frequently, tended to pass the online test, despite case law indicating this would not be the case.

It appears that the test is largely reliant on the issue of substitution. If the contractor does have the right to send a replacement, there is little prospect of the tool deeming the person to be a genuinely independent contractor, even if everything else points to self employment. There are big concerns that an “unknown” status could create uncertainty for all. Many of the questions failed to offer much direction on “mutuality of obligation”, which is one of the key factors in determining employment status.

The difficulty with the new online tool is that whilst it does give a definitive answer (albeit in some cases the answer is, definitively, ‘unknown’), it is wholly dependent on the prescribed boxes being ticked by the person using the tool. Given that a worker’s view of the working arrangement could be substantially different from that of the ‘employer’, this could feasibly lead to the same arrangement being classed by the tool as both self-employed and employed, depending on who is filling in the questions and how.

The difficulty with this test, and other online status tools, is that the law on employment status is nuanced and dependent on the facts in each case: it cannot simply be reduced to a box-ticking exercise. It is possible for HMRC and an Employment Tribunal to come to different conclusions in the same case. This is due to some differences in the tests applied, and the fact that under employment law, there are employees, workers and the self-employed, whereas the HMRC only recognises employees and the self-employed. Employment Tribunals will take into account HMRC’s view when deciding whether an individual is an employee, but there are reported cases in which the tribunal has found an individual to be an employee or worker, whereupon HMRC had concluded the same individual was self-employed.

There are many factors which may also be highly persuasive in deciding whether an individual is in business in their own right. The importance of each factor can only really be weighed up by taking a holistic view to business. Clearly, if the self employed person is a sole trader, and they have other clients they are supporting at the same time as you, then you are probably in a safer position to justify they are genuinely self employed than if they are exclusively working for your organisation.

In our experience, many organisations try to justify that people are self employed when it is clearly evident that they are not, and the reality is that one or both parties are really just trying to avoid making statutory payments. Therefore, if your self employed contractor looks likes they are integral to the organisation, they are playing an active role in core aspects of what you do, and they personally have been doing it for a long time, then as one employment judge made the memorable observation: “if it looks like a duck and quacks like a duck, then it is a duck.”

Clients are welcome to raise concerns with their Consultant who will be pleased to advise you on any element of the issues arising from this newsletter.

Morrisons staff are to be awarded a pay-out over a data breach that occurred, when a disgruntled former member of its staff stole the data of thousands of employees and posted it online. Morrisons has been found liable for the actions of the employee by the High Court with the ruling opening the possibility for 94,000 people affected to bring a compensation claim.

Workers brought a claim against the company after employee Andrew Skelton, a senior internal auditor at the retailer’s Bradford headquarters, stole the data, which included salary and bank details, of nearly 100,000 staff. He then posted the payroll information online and sent it to newspapers in 2014. He was jailed for eight years in July 2015 after being found guilty of fraud, securing unauthorised access to computer material and disclosing personal data.

The Judge noted that it would be impracticable for Morrisons to routinely monitor all internet searches and that, even if it were feasible, it would have been disproportionately expensive. In any event, such monitoring would have been difficult to justify, since it would most probably amount to an unlawful interference with employees’ rights to privacy and family life, with little by way of balancing factor to suggest otherwise.

The test to establish vicarious liability was whether his actions were carried out in the course of his employment role in respect of payroll data, which was to receive and store it, and to disclose it to a third party (i.e. the external auditor). The fact that he chose to disclose it to others who were not authorised was nonetheless closely related to what he was tasked with doing. Although the disclosure took place outside working hours, and from his personal computer, there was a sufficient connection between the employee’s employment and the wrongful conduct, for it to be right to hold the employer liable.

Their lawyers said the data theft meant the group of 5,518 former and current employees were exposed to the risk of identity theft and potential financial loss and that the company was responsible for breaches of privacy, confidence and data protection laws. They also said: “Every day, we entrust information about ourselves to businesses and organisations. We expect them to take responsibility when our information is not kept safe and secure. The consequences of this data leak were serious. It created significant worry, stress and inconvenience for my clients. Data breaches are not a trivial or inconsequential matter”.

A second trial will be held to determine the amount Morrisons must pay in damages. This is despite the fact that the disgruntled employee’s intent was designed solely to damage his employer’s business and has therefore succeeded.

It is a difficult decision albeit the direction of the law is clear in making employers responsible as a matter of public policy.

Peter Stanway, our BackupHR™ legal expert comments:

The case demonstrates that employers can be held vicariously responsible for the acts, lawful and unlawful, of its employees. If nothing else the case may help some employers to come to terms with the seriousness of data protection as a new tougher law comes into effect in May.

Actions:

  • Review your data protection policies and procedures against not only the current but forthcoming legal requirements.
  • Strengthen your internal (and outsourced) controls on access to data.
  • Train employees on data protection requirements.
  • Deal effectively with disgruntled employees. Risk assess what access they have to personal data. Consider locking down or minimising their access to data whilst their issues are being resolved.
  • Create a culture that values data privacy and allegiance to the organisation.

The guidance provided in this article is just that – guidance. Before taking any action make sure that you know what you are doing, or call us for a free initial chat on 01480 677980.