Wragge Lawrence Graham & Co's employment experts bring you the latest developments that may affect your business - what they are, and what you can do about them.
This month's update covers:
Contract variations - what happens if the employee doesn't object?
In the recent case of Wess v Science Museum Group, the Employment Appeal Tribunal (EAT) held that a tribunal was entitled to find that an employee had impliedly accepted a variation of her contract of employment by continuing to work for nine years, without expressly objecting to that variation.
Ms Wess, employed since 1979, had been entitled to six months' notice of termination from her employer. In 2003 she was issued with a new contract of employment which purported to make some variations to her terms and conditions of employment. One of those variations was to reduce her notice entitlement to 12 weeks. Ms Wess never signed the new contract of employment as requested, but neither did she object to the new terms. She was eventually dismissed by reason of redundancy.
The Employment Tribunal found that Ms Wess had impliedly assented to a variation of her contract, and the EAT held that it was entitled to come to that conclusion. There is settled case law in this area concluding that if the change does not have an immediate impact on the employee (as here) then employers should not assume that silence is sufficient to indicate implied agreement. However, the key point in this case is that the employer had made it very clear at the time that future employment was offered on the basis of an entirely new contract. The nine years that had passed in the interim did not help Ms Wess's case.
Quite a straightforward decision then - but useful all the same. Ideally employers would never rely on implied agreement to changes to terms and conditions of employment, but this is helpful guidance on how to handle that situation if it arises.
Employers should remember that an employee can also work under the new terms but make clear that they are not accepting the change ("working under protest") and that this is a very different situation and a route which Ms Wess did not pursue.
Holiday Pay: Unite will not appeal
In an unexpected about turn, Unite has announced that it will not pursue an appeal against the decision of the Employment Appeal Tribunal in Bear Scotland v Fulton.
See our alert "Important holiday pay judgment handed down" for the background to this important decision.
What does this mean for the calculation of holiday pay?
For the time being, non-guaranteed overtime should be included in the calculation of holiday pay. This includes not only overtime which is compulsory for the employee, but also that which cannot be unreasonably refused.
To avoid the risk of further challenge, it would be prudent for employers to explore the inclusion of "voluntary" overtime. This is on the basis that any overtime worked regularly is highly likely to amount to 'normal pay' and should therefore be included in the calculation of holiday pay.
Is the risk of claims backdated to October 1998 dead?
In many cases the risk of claims being brought as a series of deductions will have been severely limited by the decision in Fulton. This is because more than three months is likely to have passed since the employee last took Regulation 13 leave (the first four weeks of annual leave), although that won’t always be the case.
There may be employees and workers who will be able to show that there has not been a three-month break between leave periods and who may have back-pay claims going back several years.
However, the risk of such claims being pursued is low, given the need for detailed holiday leave record-keeping, as well as the cost involved in pursuing such a claim without union backing and where a fee has to be paid.
What next?
Given that the decision in Fulton is inconsistent with earlier cases at appellate level, we might expect a challenge to the series of deductions decision in future cases. This is particularly the case given that the EAT said that an appeal on this point was arguable.
Voluntary overtime and the extent to which it is regularly worked is also likely to feature in future claims.
So as far as these issues are concerned, perhaps this is not the end to the holiday pay saga. The issue of the inclusion of commission in the calculation of holiday pay will return to the Leicester Employment Tribunal in February 2015.
So what should employers be doing?
- Include overtime which is regularly worked in the calculation of holiday pay going forward.
- Analyse the risk of potential back-pay claims which may still be possible despite the lack of an appeal.
Shared Parental Leave
If recent surveys are an accurate reflection, there may be more interest in shared parental leave than originally anticipated. In a recent survey by ADP, results reveal that a third of workers under the age of 34, those most likely to be planning to have children, were intending to take advantage of the new right to share parental leave. If that is right now is clearly the time to ensure plans for implementing shared parental leave are in place. Businesses need to ensure that rules and policies are drafted, guidance notes in place, communications to the workforce agreed and managers trained on the new right.
Last week saw the publication of the final version of the regulations governing shared parental leave. Those regulations come into force today, 1 December 2014.
To re-cap, the new regulations encourage the sharing of "family" leave between working parents (and adopters). Employees can opt into the new system of shared parental leave for children due to be born/placed for adoption on or after 5 April 2015. Given that the new system relates to an expected due date and taking into account the age old dilemma of pinpointing precisely when a baby will make its entrance into the world, there is a real possibility of parents being able to opt into this system ahead of April.
In very broad terms, mothers and adopters can choose to curtail maternity and adoption leave to opt in to shared parental leave. The little used right to additional paternity leave will be abolished on 5 April 2015. Shared parental leave doesn’t replace existing maternity and adoption leave rights. Instead it enables mothers/adopters to elect to convert a portion of that leave so that up to 50 weeks' leave and 37 weeks' pay can be shared between both parents.
The timing for taking of the leave will also be more flexible. Parents can apply for continuous periods of leave which they can take at the same time or separately up to the child's first birthday/anniversary of placement. When a period of continuous leave is requested it cannot be refused.
Discontinuous periods of leave are possible but only where agreement is reached with the employer. The notification requirements are prescriptive and it's clear employees are likely to need guidance on the system and how to make a request. The initial requirement is for the employee to submit a non-binding notice that he or she intends to take shared parental leave. This is then followed by a 'period of leave' or booking notice confirming full details of the request including the amount of and pattern of the leave to be taken.
The default position in relation to pay is that a flat rate will be available with employers free to offer more generous enhanced arrangements if they wish.
Whether the results of this latest survey are borne out will remain to be seen. In the meantime what do employers need to be doing?
- Preparing policies and guidance
- Reviewing existing family leave policies to incorporate changes due in 2015 and references to shared parental leave
- Training line managers on the new leave, how it will operate and how to respond to requests.
Employment law reform update
Employment law reform featured heavily in the Coalition Government's legislative programme. We have already seen changes in relation to unfair dismissal claims and compensation, collective redundancy consultation, whistleblowing protection, TUPE, flexible working requests and tribunal reform, including the introduction of tribunal fees. And the new shared parental leave regulations came into force at the beginning of this month for babies expected to be born/children placed for adoption on or after 5 April 2015.
Further changes anticipated are set out below.
1 December
- Shared parental leave in force for babies due on or after 5 April 2015
- Ban on employment agencies advertising vacancies exclusively in other EEA countries
- Sickness absence: new independent assessment service
Spring 2015
5 April
- Shared parental leave fully in force and abolition of Additional Paternity Leave
- Right for those proposing to adopt to attend 'adoption appointments'
- Removal of a six-month qualifying period for adoption leave
- Revision of Statutory Adoption Pay to mirror Statutory Maternity Pay
- Extension of adoption leave and pay to surrogacy and 'foster to adopt' arrangements
Autumn 2015
- 'Caste' to be a specific aspect of race discrimination (may be delayed to 2016)
- Employer-supported childcare voucher schemes closed to new participants
Sometime in 2015
- Regulation of zero-hour contracts including exclusivity clauses become unenforceabe
- Whistleblowing: annual reporting by 'prescribed persons'
- Limited tribunal reform and penalties for non-payment of tribunal awards
- Increased penalty for underpayment of national minimum wage
- Repayment of public sector exit payments by those quickly re-employed
- Repeal power to make recommendations for the wider workforce in discrimination cases
- Apprenticeship simplification