Employment Review – May 2018
Welcome to the May edition of Freeths’ employment law update
In this month’s update we take a look at cases covering payment of ShPP to a male employee, the long term consequences of not paying the national minimum wage and a warning over casual work experience arrangements.
- Failure to pay enhanced ShPP was not discriminatory
- NMW – conseqences of non-compliance
- Benefits packages update
- Understand the rules if you offer work experience placements
- Acas guidance on agency worker rights
- Data protection self-assessment toolkits have been published
The Employment Appeal Tribunal has held that failure to pay a male employee enhanced Shared Parental Pay was not sex discrimination.
The employee, in Capita Customer Management Limited v Ali and another, came to work for his employer following a TUPE transfer. Transferring female employees were entitled to maternity pay of 14 weeks’ basic pay followed by 25 weeks’ SMP. Transferring male employees were entitled to two weeks’ paid ordinary paternity leave and up to 26 weeks’ additional paternity leave – which ‘may or may not be paid’.
Following the birth of his daughter, the employee took two weeks’ paid leave. He wanted to take further leave to look after his daughter but was told by his employer that he was eligible for Shared Parental Leave, but only statutory ShPP (and not the enhanced maternity pay provided to female employees in the 2-14 week post-birth period). He brought a grievance asserting that he should receive the same entitlements as a transferring female employee taking maternity leave. He then brought a tribunal claim alleging direct and indirect sex discrimination.
The Tribunal decided that the employer had directly discriminated against its employee, on grounds of sex, by not paying him his full salary when he was on shared parental leave. This was because a mother taking maternity leave during the same period would have received her full salary.
The employer’s appeal against this decision has recently been upheld by the Employment Appeal Tribunal.
The Employment Appeal Tribunal held that the employee was not discriminated against on grounds of sex. It considered that the employee could not compare himself with a woman on maternity leave because maternity leave had a different purpose from shared parental leave. Whilst maternity leave is for the health and wellbeing of the mother, shared parental leave is to care for the child.
It said that there is a clear distinction between the rights given to pregnant workers and those who have given birth or are breastfeeding, and the rights given to the parents of either sex to take leave to care for their child. The purposes of the two sets of rights are different, as are the circumstances of those to whom they are given.
As an aside, the Court noted that it may be that after 26 weeks the purpose of maternity leave may change from the biological recovery from childbirth and special bonding period between mother and child, and it may at that point be possible to draw a valid comparison between a father on SPL and a mother on maternity leave. It did not make a ruling on this point but said that a claim based on such facts may well involve such a comparison.
Failing to pay staff the National Minimum Wage stores up serious financial trouble for the future and employers who do not understand the law could be stung in the long run following a tribunal’s guideline decision.
The case concerned a head porter, employed by a property management company, who had for over a decade been paid less than the National Minimum Wage. His claim in respect of unlawful deductions from wages under the Employment Rights Act 1996 (ERA) was upheld by an Employment Tribunal and he was awarded £44,603 in damages.
In making the award, however, the Tribunal found that it only had power to compensate him in respect of unlawful deductions made during the period of six years prior to his claim being lodged. That was on the basis that the six-year time limit contained within the Limitation Act 1980, which applied to the case, and acted as a back-stop to his claim.
In upholding his challenge to that ruling, however, the EAT found that his claim was effective from the date on which the NMW Act came into force. In accordance with the ERA, the man had brought his claim within three months of the last of the unlawful deductions in the series. His compliance with that three-month deadline had the effect of disapplying the six-year limitation period. The parties were left to calculate the amount by which the employee’s compensation would be increased, leaving the business with a significant bill to pay overall.
If your business uses tax efficient schemes for employees such as EMO or salary sacrifice, it is important to be aware of changes which may affect you.
EMO Schemes – warning
The Enterprise Management Option scheme has been with us for several years now. It allows companies to incentivise key staff by issuing share options under terms which carry significant tax advantages. However, the scheme required EU approval and this expired on 6 April 2018.
It remains to be seen whether approval will be granted again and, if it is, whether it will be retrospective. Until the future tax status of EMO schemes is known, the setting up of new schemes should be approached with care.
Closure date for employer-supported childcare schemes is set
Regulations have been passed specifying 4 October 2018 as the date by which new entrants to existing employer-supported childcare schemes must have sacrificed salary and received childcare vouchers to be treated as an eligible employee.
Eligible employees can continue to sacrifice salary, on which no income tax or National Insurance Contributions are payable, and receive tax exempt vouchers, as long as they remain with the same employer, the employer continues to run the scheme, and the employee does not take a break from receiving vouchers for a year or more.
Existing childcare schemes were due to close to new entrants from April. However, the Government announced shortly before then that closure would be deferred for six months.
Employees who are not eligible employees are entitled to participate on the replacement tax free childcare voucher scheme that does not involve any form of salary sacrifice.
Whilst many businesses take on people for work experience on a casual basis, this informal approach can have its dangers, a point made in a case where a woman’s work placement amounted to employment for the purposes of statutory maternity play.
The woman, who was the niece of the firm’s office manager, had been placed by a government agency that promotes apprenticeships. The agency paid her an allowance of £35 per week, but the firm took the view that that was not enough to cover her expenses and paid her a further £15 per week.
The arrangement was markedly informal and no contract was signed. The firm described her role as superfluous from a business point of view. She performed menial tasks, such as making tea, answering phones, filing and running errands. The firm expressed concern that, if work experience placements gave rise to a right to SMP, many businesses would think twice before entering into such arrangements, despite their great social benefits, particularly to young people.
After the end of the 12-month placement, the woman was employed by the firm on a somewhat more formal basis for about another four months and she was paid the National Minimum Wage. She informed the firm that she was pregnant soon afterwards and had a baby three months or so after her departure.
After the woman claimed £2,633.78 in SMP, an issue arose as to whether she had been employed by the firm for long enough to qualify for such a payment. In ruling in the woman’s favour on that point, the First-tier Tribunal found that the initial period of work placement did constitute employment for SMP purposes. It was more likely than not that she had notified the firm at the appropriate time of her intention to claim SMP and the criteria for payment of SMP, had therefore been met.
ACAS has published new guidance setting out the rights of agency workers in response to an increase in the number of calls received by ACAS from agency workers unaware of their legal rights. The guidance outlines several employment rights available to agency workers, including their right to be paid even if their agency doesn’t receive payment from the hirer. It also sets out the right of agency workers to the same pay and other basic working conditions as permanent staff after a 12 week qualifying period.
The Information Commissioner’s Office has published a series of data protection self-assessment toolkits. The toolkits are designed to help employers comply with their legal obligations when they collect, process and store personal information.
The toolkits include a self-assessment checklist for data controllers and data processors. They also contain information on how to create a cyber security and risk policy as well as record management procedures.
Once completed, the user will receive a report which sets out the practical steps they should take to improve their data protection procedures.
The content of this page is a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
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