Back in July 2015 the Chancellor announced a new ‘National Living Wage’ of £7.20 per hour for workers aged 25 or over. Regulations have now been implemented introducing this change with effect from 1st April 2016. The National Living Wage will actually be a new rate of the National Minimum Wage inserted on top of the old structure.
This means that from 1st April 2016 there will be 5 rates of the National Minimum Wage. Those aged 25 or over will entitled to £7.20 per hour. Those aged from 21-24 will be entitled to £6.70. The rate will be £5.30 for those aged 18-20 and £3.87 for those under 18. There is also an apprenticeship rate of £3.30 for those who are under 19 or in the first 12 months of their apprenticeship.
This represents a significant increase in the minimum rates payable to workers – and this year is only the beginning. In the past, the Low Pay Commission (“LPC”) has been asked to make recommendations on the level of the minimum wage based on the need to avoid creating unemployment. Government has not usually taken its own position on how high the minimum wage should be. The remit of the LPC has now been changed, however, to give them the specific target of taking the higher rate of the National Minimum Wage to 60% of median earnings by 2020. It is expected this will mean an increase in the higher rate to more than £9 per hour over the next four years.
This sharp increase will mean that many employers who have previously not had to worry too much about the National Minimum Wage will have to pay close attention to exactly how it is calculated. There are complicated rules about what pay and benefits can be included in the calculation and how an employee’s hours of work in any particular pay reference period should be counted. This means that even where an employee’s stated hourly rate is above the minimum, there is a risk that when the calculation is done, the figure arrived at falls somewhat short.
The need to check compliance with the new rates is all the greater since the penalties for failing to pay the minimum wage are also going up in April. An underpaying employer will face a penalty of 200% of the amount owing to each employee – to a maximum of £20,000 each! Expect also to see increased emphasis on the ‘naming and shaming’ of employers who fail to pay their workers the minimum wage. Employers who have not yet checked that they can match the new minimum rates should do so now and be prepared to adjust terms and conditions of employment where necessary. For obvious reasons, this is one area of employment law where workers are particularly keen to enforce their rights, so if you have workers on (or around) the minimum wage level, take note. As ever, we can help if you have any issues.
A snooper’s charter?
An early contender for 2016’s most-hysterical-overreaction-to-a-legal-judgment-of-the-year award must surely go to those papers who put the decision of the European Court of Human Rights in Bărbulescu v Romania on their front pages. Reading those reports you would think that the Court had given all employers permission to snoop on employees by reading their emails and other private messages sent while at work. Our favourite was “Your boss now has the right to snoop on your private online messages”.
The reality is very different – and altogether more reasonable. Mr Bărbulescu had been asked to set up a Yahoo Messenger account for the specific purpose of handling technical queries from customers. His employer had a strict rule that there should be no personal use whatsoever of company computer equipment. However, over the course of a week, they monitored the Yahoo Messenger account and accused Mr Bărbulescu of sending and receiving personal messages. Despite seemingly being caught red-handed, he denied the allegation – in writing. His employer responded by producing a 45-page (!) transcript of the messages he had sent.
When he was dismissed he argued that his employer had breached his human rights by monitoring his online activities and reading the personal messages that he had denied sending. The case eventually reached the European Court of Human Rights, which held that there had been no breach of his right to respect for his private life under Article 8 of the Convention. The Court was keen to stress that an employee did have a legitimate expectation of privacy in his private correspondence – even when conducted in working time and on the employer’s equipment. However in this case, the level of intrusion was proportionate given the fact that the employer had specified that the account was only to be used for work purposes. The employer was entitled to ensure that its rules were observed and the monitoring they had conducted was the only practical way in which they could refute the employee’s denial that he had sent any personal messages.
This case goes nowhere near giving employers a general right to monitor an employee’s private messages. In any event, the case is only concerned with Romanian employment law and has no impact on the UK where the monitoring of such messages would be covered by the Data Protection Act 1998. Any employer looking at personal messages sent or received by an employee should make sure that they have a valid business reason for doing so and that their monitoring is no more intrusive than it needs to be, given that reason.
Age discrimination and early retirement
In employment law we are accustomed to employees complaining because they have been dismissed. In Donkor v Royal Bank of Scotland plc, however, the employee brought a claim because his employer had refused to make him redundant and instead found alternative work for him. The problem was that because he was over 50 he would have been entitled, if made redundant, to take early retirement under the terms of his pension scheme at an additional cost to the employer of some £420,000.
While a number of employees – all of whom were under 50 – were given a voluntary redundancy option when a reorganisation took place, Mr Donkor was not, and was instead given an alternative role. The rules of the pension scheme then changed so that the enhanced early retirement option was only available to employees who were at least 55 years old. At that point Mr Donkor was offered – and accepted – a more modest voluntary redundancy package.
There is no doubt that the reason that Mr Donkor was not initially allowed to take voluntary redundancy was the astronomical expense of funding his early retirement. Other employees were allowed to take voluntary redundancy because in their case this expense did not arise. The difference in treatment was due to the difference in expense, not the difference in age. On that basis, (and others), the employment tribunal rejected Mr Donkor’s age discrimination claim. However on appeal it was held that the cost of allowing Mr Donkor to take redundancy was inherently bound up with his age. The employer’s motivation was to avoid unnecessary expense, but that did not alter the fact that it had treated Mr Donkor less favourably than his younger colleagues simply because he was over 50 and therefore qualified for early retirement. That was direct discrimination.
Age discrimination differs from other forms of discrimination in that even where direct discrimination has occurred- as in this case- the employer can still argue that its action was justified if it can show that it was a ‘proportionate means of achieving a legitimate aim’. The case will now return to the tribunal to decide whether the Bank’s discrimination was justified.
Proving race discrimination – shifting the burden of proof
One of the things that make discrimination claims difficult is that claims often depend on what is going on in the mind of the alleged discriminator. There is rarely direct evidence of discrimination and so tribunals have to rely on drawing inferences from the surrounding facts as to why an employer acted in a particular way. The Equality Act provides that where those surrounding facts could support an inference that discrimination has indeed occurred, then the burden is placed on the employer to prove its innocence.
This does not mean that the employer is always guilty until proved innocent. There must be substantial evidence of discrimination before the burden of proof is reversed in this way. In Essex County Council v Jarrett a solicitor employed by the council complained about discrimination in relation to her selection for redundancy. She made 29 allegations of unfair treatment and alleged that these were based on race.
The tribunal upheld her claim after finding that the burden of proof fell on the employer to show that the instances of unfair treatment were not racially motivated. However, on appeal, it was held that the tribunal had taken the wrong approach. Unreasonable treatment was not the same as discriminatory treatment. The tribunal could not infer discrimination without first considering how other employees in the same relevant circumstances would have been treated. For example, the tribunal had found that there was unfavourable treatment when the employer refused to offer Ms Jarrett the role of Head of the Employment Law Team in the Council’s legal department. However, the tribunal had not taken into account the fact that the person actually offered the role had much more experience of employment law practice than Ms Jarrett had. The tribunal should not have reversed the burden of proof without first considering whether Ms Jarrett and the successful candidate were in a sufficiently similar situation that their treatment could form the basis of a valid comparison.
The case was sent back to the tribunal for it to consider whether Ms Jarrett had been treated less favourably than other comparable employees of a different ethnic origin.
Dismissal without warning
Where an employee is found to have committed gross misconduct, that will usually result in dismissal. Run-of-the-mill misconduct, on the other hand, should normally only lead to dismissal if the employee is already on a ‘final written warning’. That, at least, will be the case in the vast majority of situations. In some rare circumstances it is possible for an employer to dismiss an employee for misconduct without issuing a warning first.
In Ham v The Governing Body of Beardwood Humanities College a senior teacher was dismissed for a number of separate instances of misconduct none of which – the tribunal found – were capable of amounting to gross misconduct. A large part of the employer’s complaint was to do with the employee’s attitude in refusing to attend meetings, communicating in an inappropriate way and undermining working relationships by acting in an unreasonable and uncooperative manner. The tribunal initially found that the dismissal was unfair because these individual acts of misconduct should not have been treated as gross misconduct by the employer. However on appeal the EAT held that the key question was not whether there had been gross misconduct but whether the employers had behaved reasonably.
When the case came back to the tribunal they held that the dismissal was fair – but only just. This time the EAT upheld the tribunal’s finding. In the particular circumstances of this case the employer had been entitled to take the view that any warning given to the employee would have served no purpose (given her attitude) and would not have prevented further misconduct. This is a case that could easily have gone the other way, however, and in most cases employers should continue to give appropriate warnings before deciding that an employee’s persistent misconduct merits dismissal.
TUPE transfers and subcontractors
The complexity of the rules governing the transfer of undertakings under a TUPE transfer is well known. One of the problems faced by both employers and employees is that when there is a dispute about whether TUPE applies or not, there is no objective way of deciding the issue without litigation.
In Mustafa v Trek Highways Services Ltd (and others) employees were engaged by Trek Highways Services Ltd, a subcontractor for a company called Amey Services Ltd, which was itself in a contract with Transport for London (TFL). In March 2013 the contract between TFL and Amey was put out to tender and the work was won by a new contractor – Ringway Jacobs Ltd. They accepted that there was a TUPE transfer of the relevant staff from Amey, but refused to take on those working for Trek, the subcontractor. At the time of the alleged transfer, Trek had been in dispute with Amey and suspended its work for them. The eventual resolution of that dispute led to the contract between Trek and Amey coming to an end. Trek then went into administration and has since been dissolved.
This left the employees of Trek out in the wilderness. Both Amey and Ringway Jacobs denied any responsibility for them and so they brought unfair dismissal claims against all three companies. The tribunal’s task was to determine which of the three was to be held responsible for their dismissal.
The tribunal decided that the responsibility lay with Trek. There was no transfer of an undertaking because the activities in which they had been engaged had already ceased by the time there was a transfer as a result of the dispute with Amey. The Employment Appeal Tribunal held that this was wrong. Trek’s employees had been sent home when the dispute with Amey arose, but they had not been dismissed. They remained employed in the undertaking up until the end of the contract with Amey. The fact that, while the dispute continued, Amey had found alternative means for fulfilling the work that had previously been done by Trek did not necessarily prevent a TUPE transfer from having taken place. The case was sent back to the employment tribunal to reconsider whether there was a transfer from Trek to Amey – and then from Amey to Ringwood Jacobs – and decide where liability for the dismissals ultimately lay.
We are seeing more and more cases coming through about the operation of the Acas Early Conciliation procedure. Anyone who wants to bring an employment tribunal claim must first contact Acas to allow them to attempt to conciliate a settlement. If no deal is reached, Acas issues the potential Claimant with a certificate – giving them a reference number that must be quoted on any subsequent tribunal claim. One of the odd features of the procedure is that the individual does not have to spell out the details of the claim when contacting Acas – all that is required is that he or she gives the name and address of the employer.
Even this requirement, it seems, will be treated with some leniency by the tribunals. In Drake International Systems Ltd v Blue Arrow Ltd it was not immediately clear to an employee who the employer was, as his work was covered by a complicated arrangement involving a parent company and four subsidiaries. The tribunal claim was initially brought only against the parent company but the tribunal subsequently ordered that the four subsidiary companies be added to the claim.
Those companies argued, however, that claims could not be brought against them because they had not been involved in any Early Conciliation procedures. The employee had contacted Acas as required, but only named the parent company as his employer with no mention of the subsidiaries. Nevertheless, the EAT held that the claim could go ahead. While there was a clear obligation on a potential Claimant to name the employer against whom a claim was being contemplated, the tribunal nevertheless had a wide discretion – as part of its case management powers – to add new Respondents to the claim. The rules on Early Conciliation only related to the initial bringing of a claim and required a ‘prospective Claimant’ to contact Acas. There was no requirement to do so again once a tribunal claim had been brought and accepted. If the tribunal felt that a Claimant was abusing the system by seeking to add Respondents then it could use its discretion to refuse to do so.
We are likely to see more cases on the operation of the Early Conciliation regime, but it is increasingly clear that the tribunals and the EAT are unwilling to throw cases out on the basis of a technicality if that can possibly be avoided. Sadly for employers – since such technical arguments can sometimes dispose of a Claim entirely – where the legislation gives any latitude at all, it seems likely that they will err on the side of allowing a claim to proceed.
…And Finally – how does it feel?
The first Monday in February was, apparently, ‘National Sickie Day’ when more employees phone in sick than on any other day of the year. One might imagine that any employee who does in fact call in sick on National Sickie day is either seriously ill or is displaying considerable nerve. However the coincidence is not likely to be sufficient to persuade a tribunal that the absence is unwarranted and employers should not rush into disciplinary procedures.
National Sickie day follows hard on the heels of Blue Monday (16 January) when employee productivity is supposed to be at its lowest as the euphoria of the holidays wears off and the prospect of a long hard winter starts to hit home. These days are not real of course and the data that underlies them is suspect at best. However, in what might otherwise be a quiet time of year, they give the press something to write about and also give lawyers and consultants an opportunity to remind their clients of the importance of effective absence and performance management procedures.
So that’s what we’ve done.