Employment Update - July 2015

02 July 2015


Our employment & equalities 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:

and links to our recently published alerts and podcasts:

School holidays for parents & grandparents?

As school children across the country begin to look forward to the long stretch of the summer holidays, working parents face the organisational scramble for childcare. The vast majority of statutory leave related to childcare focuses on the first year of a child's life: maternity leave, paternity leave and the new shared parental leave. While the recent introduction of shared parental leave has monopolised the headlines over the past year, important changes have also been made to the similarly termed but very different unpaid 'parental leave'.

While the right to take unpaid parental leave has been in place for just over 15 years, two recent changes may increase its popularity. Firstly, in 2013 the amount of leave that can be taken by each parent was increased from 13 to 18 weeks per child. Perhaps even more significantly, since April 2015, the leave can be taken anytime, subject to certain restrictions, up to the child's 18th birthday rather than the child's 5th birthday.

Unlike other forms of statutory "parenting leave", parental leave is a form of leave not exclusively for use during the very early years of a child's life. Traditionally, uptake has been low as the leave is and remains unpaid. Will the vastly extended period for taking the leave make this a more attractive proposition? Will parents now take the opportunity to combine parental leave and annual leave entitlements to cover school summer holiday childcare? Are employers beginning to see signs of a hitherto absent increase in requests? What about the grumblings over the introduction of so-called "granny" leave?

What is 'parental leave'?

Parents who have one year's qualifying service are entitled to each take 18 weeks' unpaid leave to care for a child for whom they have "parental responsibility". The entitlement is per parent per child. For example, parents of twins will each have an entitlement to take up to 36 weeks' parental leave.

Since 5 April, parental leave can be taken any time up the child's 18th birthday, subject to certain limitations. Unless otherwise agreed:

  • The leave is unpaid.
  • No more than four weeks' leave can be taken in a given year.
  • The leave must be taken in week blocks, unless the child is disabled.
  • The employee must give at least 21 days' notice setting out the period to be taken.
  • Employers can postpone leave for up to six months where the business would be particularly disrupted, except where taken immediately following birth/placement for adoption, by giving notice no later than seven days after receipt of the employee's notice.

Impact of the 5 April changes

As the leave is unpaid, unless otherwise contractually agreed, historically take up has been very low. When it is used, it is often tacked onto maternity leave. Even before the change, some parents who had a child under 5 and other older children recognised the potential to use parental leave in combination with paid annual leave to cover the difficulty of school holiday childcare.

The very substantial increase to the period in which parental leave can be taken, combined with the 2013 increase in the leave period itself, may see this form of leave become a more attractive option. While the statutory entitlement remains unpaid, parents will no doubt weigh this up against the cost and inconvenience of finding good childcare to cover school holidays. Statistical evidence is not available, but some employers have indicated that they have seen a recent increase in requests.

Employers should also be aware that the change does not only affect parents who had children under the age of 5 as at 5 April 2015. Employees who did not previously take their full entitlement before their child turned five, have their untaken leave revived. For example, a parent of a child now aged 13 has up to that child's 18th birthday to take any unused parental leave.

Points to consider

1. Keeping track of how much parental leave an employee has taken

Should an employee request leave, employers should seek confirmation from the employee of any parental leave taken with a previous employer. There is no duty on employers to keep records or supply this information if requested by a subsequent employer, so employers will simply need to trust their employees.

2. Differing eligibility requirements than for shared parental leave or paternity leave

The eligibility criteria for parental leave in respect of employees who are not the child's natural parent are different than for paternity leave and shared parental leave. For instance, a step-father who, with the mother, has the main responsibility for the care of the child could potentially qualify for paid paternity leave or paid share parental leave without necessarily acquiring formal "parental responsibility" under the Children Act 1989 which is needed to qualify for unpaid parental leave (for a step-parent to have "parental responsibility", he/she must be married to or the civil partner of a parent of the child and have the formal agreement of both natural parents or a court order).

3. Pay implications

Provisions relating to an employee's pay are suspended unless contractually agreed otherwise - the entitlement is to unpaid leave. Possible pro-rating of annual bonus schemes needs to be carefully considered. The impact upon pension contributions will depend upon whether the pension scheme is a defined contribution or defined benefits scheme and whether the leave is unpaid (the default position) or paid under a contractual scheme.

4. Parental leave policy

Employers should have in place a clear parental leave policy covering issues such as, eligibility, notification, required evidence, terms and conditions during the leave, return to work and sanction for misuse of policy.

Future developments - 'Grand' parental leave?

David Cameron has recently said he would look at proposals for grandparents to share up to 18 weeks of unpaid parental leave. How this could be achieved in practice is likely to be difficult, for instance, will there be limits placed on those with a large number of grandchildren? How do you incorporate the concept of 'parental responsibility' within the eligibility criteria? What relationship does the grandparent need to have with the parent and child? Will it extend to a step grand-parent? The complexities of the modern 'blended' family make the possible permutations numerous.

It remains to be seen whether or not a new right to 'grand' parental leave will be introduced. No doubt the debate will continue.

Holiday pay where are we now?

Legal arguments over what constitutes 'normal remuneration' for calculating holiday pay appear endless.

Last year the Employment Appeal Tribunal (EAT) in Fulton v Bear Scotland combined with Wood v Hertel and Laws v Amec confirmed that holiday pay must correspond to normal remuneration, which is what is normally received, including "non-guaranteed" overtime (in relation to the first four weeks of statutory leave).

The EAT judgment looking at the facts of the three cases before it preferred to refer to the overtime in question as 'non-guaranteed' rather than 'voluntary'. This appears to have led some commentators and a Northern Irish Industrial Tribunal in Patterson v Castreagh BC to leap to the erroneous conclusion that 'voluntary' overtime did not need to be included.

On appeal to the Court of Appeal in Northern Ireland, this erroneous conclusion has now been quashed. As both parties had conceded in that case, the court expressly states that "in principle there is no reason why voluntary overtime should not be included as part of a determination of entitlement to paid annual leave".

As the EAT stated in Fulton, the answer is simple: "normal pay is that which is normally received". Focusing on whether overtime is or isn't 'voluntary' is irrelevant. The key is regular receipt.

So what is and isn't included according to the cases so far?

  • Commission that is regularly earned, but not that which is irregular and erratic (Lock v British Gas Trading ltd - subject to an outstanding appeal).
  • Standby/call-out payments and radius/travel time allowances, but not expenses (e.g. train fares/petrol) (Fulton v Bear Scotland).
  • Contractually-guaranteed overtime, overtime which is non-guaranteed but compulsory for workers and overtime which is non-guaranteed and voluntary to the extent that it cannot be unreasonably refused by workers (Fulton v Bear Scotland).
  • Overtime which is non-guaranteed and voluntary but regularly/consistently worked by the worker as opposed to irregular and erratic (Patterson v Castlereagh BC and Neal v Freightliner - tribunal-level decision which settled before reaching the EAT).

What remains unanswered?

What should be included in principle is now fairly clear, but making a calculation in practice is still proving tricky. The Fulton, Lock and Patterson cases are returning for further hearings at tribunal level (in Lock there is also a further pending appeal). Outstanding questions in these cases include:

  • How regular must regularly worked overtime/commission earned be?
  • What is an appropriate reference period for calculating average overtime/commission - 12 weeks? 12 months?
  • Can employers use commission rates which take account of holiday periods - in other words include an element of 'rolled-up' holiday pay?
  • As the inclusion of overtime/commission only applies to the first four weeks of annual leave (regulation 13 leave), how do you identify annual leave taken as regulation 13 leave? Is it the date the leave is reserved or the date the leave is taken? This has an important implication for back-claims.

Further case law will no doubt ensue.

A mobile worker's "working" day

Employers with large cohorts of itinerant workers, such as salespeople, mobile engineers or home carers need to take note of a Spanish reference to the Court of Justice of the European Union (CJEU), Federaci├│n de Servicios Privados del sindicato Comisiones Obreras.

Under the Working Time Regulations and underlying Directive, travel time to and from work is not counted as working hours, but travel which is part of the employee's duties is counted as working time.

It has long been understood that travelling to and from home to an assigned depot or booking-on point, did not count as 'working time' for itinerant workers. How does the rise of mobile employer apps for giving the day's appointment list change things?

The Advocate General in the Spanish reference, advises that the time taken by itinerant workers travelling from home to the first client designated by the employer and from the last client to home should have that time considered as 'working time'.

What happened in this case?

The Spanish case concerns security system technicians. Following the closure of all of the employer's regional offices/depots, all technicians were provided with mobile phones to receive their instructions and submit their reports. A technician's first and last appointments could be anywhere between a few kilometres to over a hundred kilometres from their home.

Upon moving to the remote instructions system, the employer calculated the working day on the basis of the time elapsing between the worker's arrival at the premises of the first customer of the day and the time that worker leaves the premises of the last customer, the only journeys taken into account being the journeys between customers. The workers claimed this breached their right to 11 consecutive hours' rest in each 24-hour period under the Directive.

The Advocate General concluded that failure to take into account as 'working time' the time which the technicians spent travelling to and from home is contrary to the Directive as:

  • the workers must travel to clients in order to carry out their work, therefore the travel itself forms part of the work;
  • when travelling to and from home, they are not outside the scope of their employer's management power; and
  • being at a workplace cannot be reduced to a physical presence at a location, hence when travelling, workers are 'at work'.

What does this mean for employers?

While the an Advocate General Opinion is not binding, if the CJEU choose to follow it - highly likely - it means that where travel is an integral part of the job, all journeys to clients count as working time.

If followed by the CJEU, this could have a significant impact on the number of visits each worker can make in a day and on margins, as their travel time at the beginning and end of the day may result in a reduced number of visits being made.

One to watch.

China v UK

China has seen stratospheric economic growth in the six years since it implemented the ground-breaking Employment Contract Law (ECL). Significant numbers of international investors have established bases in China during this period, recruiting Chinese workers. The ECL has aligned the People's Republic of China (PRC) labour law more closely with international standards, and Chinese employees are becoming more aware of their rights.

Evidence of China's evolving economy can also be seen closer to home. Increasingly, Chinese companies are expanding into foreign markets, and the United Kingdom is often the destination of choice. The UK presents exciting opportunities for Chinese investors and companies looking to employ workers locally need to understand and comply with the country's complex employment law framework.

See our alert China v UK - a comparison of key employment law principles for a comparison of key areas of Chinese and UK employment law and the issues most likely to affect managers and HR professionals operating internationally.

A transatlantic 'irreconcilable clash' of jurisdictions

Listed US corporations often grant senior executives in UK subsidiary companies valuable awards of stock options in exchange for non-compete obligations. Stock option agreements will usually contain an exclusive jurisdiction/governing law clause naming the law of the parent company's home state. If the senior executive is based in England, does an 'exclusive' jurisdiction clause do what it says on the tin? No.

Despite what the contract says, international employers can in certain circumstances be subject to the jurisdiction of the courts in the country where they - in a wide sense - 'employ' staff. As the case of Petter v EMC Europe Ltd and EMC Corporation illustrates, this can lead to a very unsatisfactory 'irreconcilable clash' of jurisdictions resulting in a legal stand-off.

For further detail of this legal stand-off see our alert, A transatlantic 'irreconcilable clash' of jurisdictions.

Views on shoes or gendered ageism?

Officials at the Cannes Film Festival reportedly turned away a number of women in their 50s from a red carpet film screening because they were wearing - oh shock, horror - flat shoes! A glib act of an image-obsessed industry or an insidious high-heeled example of gendered ageism? Do older women face a daily bias of the 'wrong shoes'?

In Views on shoes or gendered ageism? we consider the issue of 'gendered ageism'' leading to loss of talent, expertise and potentially distinctive thought leadership.

Whistleblowing podcast

Whistleblowing: Where the law meets psychology: Barely a day goes by without a story in the press centred on employees either not raising serious issues when they ought to or not being listened to when they do. Why don't people speak up? And, if they do, why aren't they listened to? How can organisations best deal with whistleblowers effectively and also protect themselves?


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