Employment essentials: February 2016's top 5

9 minute read
29 February 2016

Gowling WLG's employment & equalities experts bring you the latest top five employment law developments that may affect your business - what they are, and what you can do about them.

  1. Gender pay gap reporting
  2. Taxation of termination payments
  3. Holiday pay calculations
  4. Language discrimination in the workplace
  5. Disability and the meaning of normal 'day to day' activities

At number 1: Mind the Gap: A guide to gender pay gap reporting for employers

Private employers with 250 or more employees will be required to publish gender pay gap information by the end of April 2018 and annually thereafter.

Employers may be feeling daunted by the prospect and potential cost of gathering the data required under the regulations, and by what they might unearth in the process. Although there are no civil or criminal penalties for non-compliance with the regulations, reporting will nevertheless be 'mandatory', and organisations may have concerns about the reputational damage of non-compliance as well as pressure from the workforce, trade unions or the media.

While publication is some way off, employers need to ensure they have their houses in order now with bonus payments paid from 1 May 2016 needing to be included in the 2018 reports. In Mind the Gap: A guide to gender pay gap reporting for employers we unpack the 'who, when, where and what' of the draft regulations and their potential impact on employers.

At number 2: Sticks and stones: the taxing question of injury to feelings

In Moorthy v The Commissioners for HM Revenue and Customs, the Upper Tribunal ruled that injury to feelings payments made in connection with the termination of employment are taxable. The income tax exemption under s.406 ITEPA does not apply because injury to feelings is not an "injury" for these purposes.

This is contrary to the established view of the Employment Appeal Tribunal (EAT). In Sticks and stones: the taxing question of injury to feelings we look at the current state of play in this evolving and often contradictory area of law.

At number 3: Holiday Pay - commission and overtime the battle on both fronts continues

We have been reporting for a number of years on the highly publicised case law under which the European and UK courts have held that workers are entitled to receive 'normal pay' when on the first four weeks of holiday leave. "Normal pay is that which is normally received". This includes overtime that is regularly worked and commission that is regularly earned.

The commission front

In Lock v British Gas Trading Ltd. the Court of Justice of the European Union (CJEU) ruled that commission which couldn't be earned due to a worker being on holiday must be taken into account in the subsequent pay period. But how you actually work out what the commission sum would have been where commission fluctuates from month to month was remitted back to the UK employment tribunal.

Last year the employment tribunal issued a partial judgment in which it held that the UK Working Time Regulations (WTR) can and must be interpreted so as to be consistent with European law. As such, there is no obstacle to interpreting the WTR so as to include commission payments in the calculation of holiday pay in respect of the four weeks' annual leave under regulation 13. The issues of the correct reference period for calculating average commission and whether Mr Lock suffered any loss where the commission rate included an element of 'rolled-up' holiday pay were deferred to a later date.

With the employer facing over 900 more claims waiting in the wings behind that of Mr Lock, it appealed the interpretation point. On 22 February, the appeal was rejected. The EAT upheld the tribunal's finding that it was possible to interpret the WTR so that results-based commission should be taken into account when calculating an employee's holiday pay. But the fight goes on, a further appeal to the Court of Appeal is now pending.

The overtime front

In 2014, the EAT in Fulton and Baxter v Bear Scotland combined with Wood v Hertel and Laws v Amec confirmed that in a deduction of wages claim for underpaid holiday pay where more than three months has elapsed between the alleged "deductions" they will not form part of a "series of deductions". This can significantly limit the potential value of such back claims (in any event, such claims are now limited to two years for claims brought on or after 1 July 2015). Just when you think the position as regards overtime payments has settled down…

Despite not appealing the 2014 EAT judgment, Mr Fulton and Mr Baxter are now attempting to challenge the three month gap principle following their case having been sent back to the tribunal last August. The tribunal rejected the attempt to challenge the three month gap principle at this stage. Mr Fulton claimed £10,060 of underpayments going back to December 2008. However, due to breaks of more than three months between regulation 13 leave he was only able to recover underpayments of £2,146 which occurred in 2013 and 2014. Likewise Mr Baxter who claimed underpayments of £15,170 going back to May 2007, was only able to recover underpayments of £1,796 for 2013 and 2014.

Mr Fulton and Mr Baxter have recently applied for an oral hearing (following rejection on written representations) of their application for permission to appeal.

At number 4: The language of respect at work - language discrimination in the workplace

We live in a multi-cultural society, and have welcomed people of all nationalities for centuries. There are sectors of the UK workforce which would crumble without workers from other countries - construction, the care industry, the NHS, hospitality and catering to name but a few. The government's new Immigration Bill will require all public sector workers in customer facing roles to speak fluent English, citing care workers in particular.

Taking this a step further, is it appropriate to stop workers speaking their native language at work, or to require them to only speak English during working hours? In The language of respect at work - language discrimination in the workplace we consider this question following issues arising from the recent case of Kelly v Covance Laboratories Limited.

At number 5: Disability and the meaning of normal 'day to day' activities

Under the Equality Act 2010 a person (P) has a disability if P has a physical or mental impairment, and the impairment has a substantial and long-term adverse effect on his ability to carry out normal day-to-day activities".

While there is no specific definition of disability in the European Framework Directive, under CJEU case law the definition of disability is based on the effects of the person's condition on their ability to participate in "professional life" on an equal basis with other people.

Although the concepts of disability in the UK and EU law are similar, a notable difference is that the CJEU definition focuses on the effects of the person's condition on their ability to participate in "professional life" on an equal basis with other people, whereas the UK definition focuses on the effect on "normal day-to-day activities", which may or may not include some specialist work-based activities.

The EAT in Banaszczyk v Booker Ltd, held that "warehouse operations", such as manually lifting and moving cases of up to 25kg, could constitute "normal day-to-day activities" for the purposes of disability under the Equality Act 2010. The EAT cautioned against regarding a work rate, such as a warehouse "pick rate", as an impaired activity, e.g. a target of moving 210 cases per hour, but rather to look at the impairment of the activity itself, e.g. the lifting and moving of cases.

The EAT went on to cast doubt on the accuracy of the 2011 'Guidance on matters to be taken into account in determining questions relating to the definition of disability' in relation to "highly specialised" activities. This case appears to mark a significant step in the widening of the UK "day-to-day activities" concept. Moving closer to the European concept of "normal day-to-day activities" being viewed within the context of the worker's professional world having its own norms.

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