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News in Brief – July 2019

Court of Appeal confirms voluntary overtime must be included in holiday pay

Last year, we reported the case of Flowers v East of England Ambulance Trust, where the EAT ruled that NHS staff employed under the 'Agenda for Change' terms and conditions of employment should have all voluntary overtime payments included in their holiday pay even if they are not regularly worked. Because this was a contractual right, they could recover underpayments going back up to six years.

To read the background to the case and our analysis of the EAT decision please click here.

The Court of Appeal has recently agreed that the staff had a contractual right to have voluntary overtime taken into account to determine their holiday pay and could have dismissed the employer's appeal without considering the wider implications under the Working Time Directive. However, it recognised this was an important issue for thousands of employers and made decisive findings that are relevant to all employers - large or small.

The basic principle is that workers are entitled to receive 'normal' remuneration when they go on holiday.

Specifically:

1. Voluntary overtime payments should be included if they extend for a sufficient period on a regular or recurring basis.

2. Allowances relating to the professional and personal status of workers should also be included if they are regularly included in their pay. This might include payments linked to seniority, length of service or professional qualifications.

3. Payments to cover ancillary costs incurred by the worker, such as mileage expenses don't have to be included.

NMW naming and shaming list suspended

The Low Pay Commission recently published its second NMW non-compliance and enforcement report, which revealed that the number of people paid less than the statutory minimum wage increased in 2018.

It called on the government to:

• Improve the way in which underpayments are measured to make it easier to assess the scale of noncompliance

• Publicise information about the NMW to help workers understand what they should be paid

• Find out why workers aren’t complaining and work with trade unions, Acas and other bodies to encourage them to do so

• Improve guidance available to employers to help them understand the rules

• Restart naming and shaming employers who don’t comply with the NMW.

The last list was published, almost a year ago, in July 2018. At that time, the government trumpeted the fact that 239 employers were found to have underpaid 22,400 UK workers by a total of £1.44m resulting in fines of almost £2 million.

In February, opposition parties accused the government of letting down low-paid workers and suggested naming and shaming had “fallen off the government’s to-do list”.

According to recent newspaper reports, Business Minister Kelly Tolhurst said that the government was continuing to review the practice and that lists wouldn’t be published until that process is complete. There is no set completion date for the review, which started six months ago. However, she denied that the government had decided to shelve the naming and shaming scheme.

Many businesses have complained about being including in the lists where they have made genuine mistakes and have not deliberately underpaid staff. Therefore, it is possible therefore that the government will elect to only name those who deliberately underpay staff. The Minister was keen to emphasise that "not all employers are wilfully paying under the national minimum wage, and we have a duty to educate businesses so that they are easily able to comply with the law." That suggests that the government may adopt an enforcement approach that is more carrot than stick going forward.

Government confirms it won’t meet its target of starting three million in apprenticeship schemes by 2020

The Education Secretary, Damian Hinds, has confirmed that the government won’t meet its pledge to get three million people into apprenticeships by 2020.

In March 2019, the National Audit Office said the rate of apprenticeship starts would have to double for the government to meet its target by 2020, and the government had some way to go to make sure resources are being used to best effect. The National Audit Office (NAO) also raised concerns about the long-term financial sustainability of the apprenticeship programme.

Government must substantially increase compensation to deter employers from covering up discrimination

The House of Commons’ Women and Equalities Committee has recently published its report into the use of non-disclosure agreements in some discrimination cases - specifically, sexual harassment and pregnancy and maternity discrimination.

The Committee, which is appointed by the House of Commons to examine the expenditure, administration and policy of the Government Equalities Office, launched its inquiry last year.

It makes a number of important recommendations, which if implemented, should lead to change. These include substantially increasing compensation, a presumption that, if the employee succeeds with their claim, the tribunal will order their employer to meet their legal costs and compelling an employer to pay the employee's costs of obtaining legal advice about the reasonableness and enforceability of the settlement terms on offer.

Modern slavery: Government signals it will increase sanctions for non-complaint businesses

The Government has just published its final report following on from the Independent Review into the Modern Slavery Act 2015.

Its conclusions are that:

• There is a lack of compliance (with 40% of companies still not having a compliant modern slavery statement or one at all)

• There has been no enforcement action for lack of compliance and that enforcement powers need to be strengthened

• A body to be set up specifically to enforce non-compliance

• A recommendation for the six reporting areas in the guidance to be mandatory

• A recommendation that the Companies Act 2006 should be amended to include a requirement for companies to refer to their modern slavery statement in their annual reports

• A recommendation that a failure to fulfil modern slavery statement reporting requirements or to act when instances of slavery are found should be an offence under the Company Directors Disqualification Act 1986.

The Government will be publishing the scope and time frames for a public consultation on proposed legislative changes to achieve these recommendations in the coming months.

Businesses must act now because the Government is going to step up its efforts to take action against those who don't fully comply with their reporting obligations. We also think it may introduce criminal penalties.

Businesses urged to sign up to living hours accreditation scheme to provide job security to casual staff

The Living Wage Foundation has recently launched a new scheme - Living Hours to help zero hours and casual workers obtain some job security.

Organisations that sign up to the scheme agree to pay the real Living Wage (not the government's version, confusingly called the National Living Wage) and commit to provide workers with at least four weeks’ notice of shifts, a contract that accurately reflects hours worked, and a contract with a guaranteed minimum of 16 hours a week. Organisations that agree to these measures will be accredited as Living Hours employers alongside their Living Wage accreditation.

Research commissioned by the Living Wage Foundation has revealed that one in six, or around five million workers, are in low paid, insecure forms of work, including short-term contracts, and contracts with unpredictable pay and hours. The research found:

• 2 million workers in low paid, insecure work are parents

• Over a fifth (22%) of workers aged 16-24 are in low paid, insecure work, and in most types of insecure work measured, young people are worst affected

• However, insecurity is not just a problem for young people – 1 in 2 employed people (46%) experiencing insecurity and low pay at work are over the age of 35

• Over a fifth (21%) of the working population in Wales experiences low paid, insecure work, and 18% in the North East, compared to 15% in London and 13% in Scotland

• Those from black and minority ethnic backgrounds are disproportionately affected: 15% of white people in work are experiencing low pay and insecurity in comparison to 17% of workers from mixed/multiple ethnic groups, 17% of Asian/Asian British workers and 17% of Black/African/Caribbean/Black British workers.

The real Living Wage is £9.00 per hour and £10.55 per hour in London and reflects actual living costs. It is voluntary.

Key Contact

Jo Moseley