Welcome to BusinessHR's September update!
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- Employment law update
- Company cars - advisory fuel rates revised from 1 September 2011
- National Minimum Wage - reminder re increase
- Agency workers
- The demise of the default retirement age
- Pensions - new online interactive tools for automatic enrolment
- Tax on airmiles, VAT and salary sacrifice schemes
- Some interesting cases
- Working Time Regulations (WTR) and the minimum wage (NMW) - Wray v JW Lees & Co
- Discrimination - victimisation (post employment references)> - Deer v Walford and the University of Oxford
- Discrimination (age and victimisation) - Stirrup v Ufuoma Obahor t/a Summers Dry Cleaners
- Discrimination (caste) - Begraj v Heer Manak Solicitors
- Discrimination (race) - Ruda v Tei
- Dismissal (redundancy and parental leave) - Vance v Charles Hurst Ltd
- Dismissal (redundancy and insolvency) - BIS v (1) Coward (2) Local Taverns Ltd (dissolved company)
- Dismissal (failure to follow procedures) - Siddons v The Tontine Hotel
- Dismissal (when notice has already been given)- M-Choice
UK Ltd v Aalders
- New on the website
- And finally....
- Some more statistics....
- BusinessHR services
- This month's hot topic
1.1 Company cars - advisory fuel rates revised from 1 September 2011
HMRC has issued revised advisory fuel rates for mileage in company cars, as follows:
Petrol or LPG: engine size:
- 1400cc or less: petrol 15p; LPG 11p
- 1401cc to 2000cc: petrol 18p; LPG 12p
- Over 2000cc: petrol 26p; LPG 18p
Diesel: engine size:
- 1600cc or less: 12p
- 1601cc to 2000cc: 15p
- over 2000cc: 18p
Petrol hybrid cars are treated as petrol cars for this purpose.
These rates apply to all journeys on or after 1 September 2011 until further notice. For one month from the date of the change, employers may choose to use either the previous or new rates.
For further details see: www.hmrc.gov.uk/cars/advisory_fuel_current.htm
1.2 National Minimum Wage - reminder re increase
Just a reminder that next month the NMW will increase as follows:
- adult rate (for those aged 21 and over): £6.08 per hour
- youth rate (18-20): £4.98 per hour
- rate for those aged 16 and 17-year-olds: £3.68 per hour
- apprentices not otherwise covered by the NMW: £2.60 per hour
- the maximum amount that can be offset where accommodation is provided will be £4.73 per day.
For more information on the NMW, see: {HTTP:// www.businesshr.net/docs/legal/minimumwage.html}
And a further reminder that the Agency Workers Regulations 2010 come into force on 1 October 2011 in Great Britain, and their Northern Ireland equivalent on 5 December 2011. These will give agency workers the right to the same pay and conditions after 12 weeks' employment in the same role and with the same hirer, so in fact the impact will not be felt until the end of December in Great Britain, and early March in Northern Ireland. Implementation in Northern Ireland is via separate legislation but this will be almost identical to that in Great Britain.
Our hot topic in June covered this issue - for further details see: /docs/legal/agency.html However, since then there have been some minor amendments to the regulations.The changes (set out in the Agency Workers (Amendment) Regulations 2011) were laid before Parliament on 3 August and will take effect from 1 September, as follows:
- the definition of an agency worker has been amended to make it clear that the work done personally by the worker does not have to be done for the agency (because, of course, it is usually done for the hirer!)
- the 'Swedish derogation' section has been amended to make it clear that an agency that employs a worker on a permanent contract is obliged to pay the employee between assignments only once the worker has completed his/her first assignment
- agencies may defend themselves against liability for breaching an agency worker's right to equal treatment if they can show they asked for information on pay from the hirer and tried to pay the agency worker accordingly. The section on the defence available to agencies confirms that information only need be sought on the basic working and employment conditions of the employee the temporary worker is being compared to, not the hirer's workforce more generally. If the agency can establish this defence, the hirer will be liable for the breach.
For further details see:
- the amendment regulations: www.legislation.gov.uk/uksi/2011/1941/contents/made
- the BIS guidance: www.bis.gov.uk/assets/biscore/employment-matters/docs/a/11-949-agency-workers-regulations-guidance.pdf
- for Northern Ireland, the final regulations will be put before the Northern Ireland Assembly in September.
- for a general overview on agency workers, see: /docs/legal/agency.html
1.4 The demise of the default retirement age
The statutory retirement procedure, which enabled employers to retire employees on reaching the age of 65, was abolished in April. The date by which the employees had to reach the age of 65 was 1 October 2011. So, as from next month, we no longer have a default retirement age.
Employees covered by the transitional arrangements (who reach the age of 65 on or after 1 October AND who have been given notice of dismissal on grounds of retirement under the statutory procedure prior to 6 April 2011) may continue to work until 5 October 2012. For the rest of us, hopefully most employers will by now have notified their staff as to whether they intend to retain an employer-justified fixed retirement age or not.
For further advice on this, see our legal overview on retirement: /docs/legal/retirement.html
1.5 Pensions - new online interactive tools for automatic enrolment
It looks as though pensions is becoming a recurring topic these days!
The Chartered Institute of Personnel and Development's quarterly employee survey reports that workers aged 18 - 24 are the group that is the least likely to be aware of the forthcoming introduction of auto-enrolment into pensions schemes. Fewer than one-third of private and voluntary sector workers in this age group were familiar with this, whereas 45% of 45-54-year-olds and 57% of workers aged 55 or above were aware of the changes.
The Pensions Regulator has provided four interactive tools on its website to help employers to prepare for automatic enrolment. These are
- find out your staging date
- your employer duties
- how to automatically enrol your staff
- your minimum employer contribution.
The website also includes checklists and detailed guidance for larger employers, advisers, intermediaries and software developers.
To try these out, see: www.thepensionsregulator.gov.uk/press/pn11-20.aspx For a general overview of NEST, see: /docs/legal/personalaccounts.html
1.6 Tax on airmiles, VAT and salary sacrifice schemes
Income tax: when employees pay for business travel and subsistence themselves and then reclaim this through the expenses procedure, should any resulting benefits such as airmiles and other credit card points be reported for tax purposes? HMRC has provided guidance and says that, as long as the air miles, petrol tokens, credit card points etc are acquired by buying goods or services in the same way as any other member of the general public, there is no tax liability, even though they are acquired because the employee has paid for business travel and subsistence or has used a business credit card.
However, if the rewards are obtained by the employer and then made available to employees (eg if an employer buys a block of air miles and awards them as incentives), that would be a reportable benefit.
For further details, see: www.hmrc.gov.uk/manuals/eimanual/EIM21618.htm
And VAT: the Court of Justice of the European Union (CJEU) has now ruled on the case of Astra Zeneca (UK) Taxation and decided that, where an employee gives up some pay in return for a retail voucher, the amount of pay given up is regarded as payment for the purchase of the voucher. So if the employer paid VAT on top of the voucher price (input tax), the amount paid by the employee must also include VAT, requiring the employer to account for 'output tax' on the sale of the voucher to the employee.
HMRC has taken the view that there is no longer a distinction for VAT purposes between deductions from salary to obtain benefits and reductions in salary to obtain benefits via a salary sacrifice. So if the benefit is subject to VAT (ie not exempt or zero-rated), output tax is due. This applies not just to vouchers but to any other benefits that are provided under salary sacrifice schemes. The VAT implications for the provision of certain benefits, specifically cycles and cycling equipment, retail vouchers, childcare vouchers, subsidised meals, benefits provided without any salary deduction or reduction, and cars are set out by the HMRC in a separate brief, see:www.hmrc.gov.uk/briefs/vat/brief2811.htm.
Some breathing space has been allowed - HMRC has said that, to give employers time to make any necessary adjustments to their accounting procedures, output tax on taxable benefits provided under salary sacrifice schemes does not have to be accounted for until 1 January 2012.
Working Time Regulations (WTR) and the minimum wage (NMW) - Wray v JW Lees & Co
This has always been a complicated issue as many employers assume that the definition of working time is the same for the purposes of the WTR and the NMW - however they are not!
In Wray v JW Lees & Co, Ms Wray, a temporary pub manager was required to sleep on the premises overnight. The employment tribunal, incorrectly, used the definition of working time in the Working Time Regulations 1998, for the purposes of checking her entitlement to the NMW.
The hours spent by an employee who is obliged to sleep on the employer's premises, nominally available to deal with emergencies, may count as 'working time' under the Working Time Regulations. However, unless the employee is actually awake and working, the time spent sleeping will not count as 'work' for the purpose of calculating their hourly rate under the National Minimum Wage Regulations. The EAT found that, using the exceptions in regs 15 (1A) (time work) or 16 (1A) (salaried hours work) of the NMW Regulations, the employee was not working whilst sleeping on the premises and this time did not count for the purposes of a national minimum wage claim. Since the employee was not required to do any work during this time, her position was therefore different from that of night watchman or night sleeper in a residential home, who had responsibilities throughout the night.
For further information about the WTR, see: {HTTP:www.businesshr.net/docs/legal/workingtime.html} For further information on the NMW, see: {HTTP:www.businesshr.net/docs/legal/minimumwage.html}
Discrimination - victimisation (post employment references) - Deer v Walford and the University of Oxford
Victimisation is a word that is often misunderstood when talking about tribunal claims. A victimisation claim has a specific meaning and is restricted to treating someone less favourably because he or she has committed a 'protected act', such as bringing legal proceedings against the employer or the perpetrator, or giving evidence at a disciplinary or grievance hearing, or at tribunal, or making complaints about the perpetrator or the employer or their alleged discriminatory practices.
A person who brings a victimisation claim has to show that the reason for the less favourable treatment is because of the protected act.
In this case, Ms Deer applied for a junior research fellowship and asked her former D.Phil supervisor, Professor Walford, for a reference. Professor Walford read the criteria for the application, and refused to give a reference as he said there was no point as she didn't have a chance.
Ms Deer decided that the real reason for his refusal was because of a previous sex discrimination claim she had made against the university and brought a further claim.
In response to her sex discrimination questionnaire, the professor stated that he had very little knowledge of her complaint (although it had had widespread media coverage), except that it had some link to the university. He also said that he supplied very few references every year, he had refused references in the past if he felt he could not support them and he did not keep copies of them.
Ms Deer argued that the 'hostile tone' of his statements meant that he knew more about her previous claim than he admitted. She also claimed that his refusal to provide evidence of previous refusals was evasive.
The tribunal did not agree. It found Professor Walford's reasons for refusing to be 'transparently genuine' and unrelated to Ms Deer's previous claim. It felt that any similar applicant, who had not brought a claim against the university, would have been treated the same. The EAT agreed. Professor Walford's answers were 'clear, straightforward and indeed unsurprising'. Even if they had been 'less full than they should have been', this did not mean that they were 'evasive or equivocal.'
Ms Deer lost her case.
Discrimination (age and victimisation) - Stirrup v Ufuoma Obahor t/a Summers Dry Cleaners
A Northern Ireland case on age discrimination, in which Anna Stirrup was awarded damages of £24,147.56 after bringing a successful age discrimination case against her employer.
What was particularly interesting to us about this case, is that Mrs Stirrup had already brought a successful claim against her employer after he had made comments about her age and told her that at the age of 50 she was too old to work five days a week. She had been awarded £5,867. You would have thought that that award would have been a lesson to him, but apparently not!
The hearing for her original complaint was on 19 -21 April 2010. Mrs Stirrup was dismissed on 4 June 2010, just six weeks later, having been accused of gross misconduct. She brought a second case, this time of unfair dismissal. This was also successful, and she was awarded £24,147 in compensation for unlawful victimisation and unfair dismissal. The second tribunal said that the reasons given for dismissing her were 'flimsy, to say the least'; that she had done 'nothing which would justify the ultimate sanction of dismissal'; and that 'Taking account of the timing of the allegations of misconduct against the claimant, the fact that we believe those allegations were ill-founded ..., the actual conduct of the disciplinary proceedings and their outcome...the core reason for the claimant's dismissal was the fact that she had brought an age discrimination claim against the respondent.'
The breakdown of the award is as follows:
- unfair dismissal - £13,153.80
- injury to feelings for victimisation - £10,000.00
- interest on victimisation award - £928.76
- unlawful deduction of wages - £65.00
Discrimination (caste) - Begraj v Heer Manak Solicitors
The Equality Act contains a power to include 'caste' (or social standing within the Hindu and Sikh communities) within the definition of 'race' at a future date, but currently this is not specifically recognised in British discrimination law. The definition of 'race' does not mention caste, but includes colour, nationality, ethnic origin and national origin.
In this case, an Indian couple who both met and worked at a Coventry-based law firm have brought the first caste discrimination case. They are both claiming unfair constructive dismissal, unauthorised deduction of wages, unpaid holiday pay, race discrimination, breach of contract, discrimination on the grounds of religion or belief and failure to provide a statement of the terms and conditions of employment.
Amardeep Begraj (a solicitor) and Vijay Begraj (the former practice manager at the Firm) allege that their ex-employer, Heer Manak Solicitors, treated them differently following their marriage, because they are from different castes. Mrs Begraj is from the higher caste of Jat, while Mr Begraj belongs to the Dalit (lowest) caste, formerly called the 'untouchables' because of their work in roles such as cleaning, pest control or scavenging.
Mrs Begraj alleges that a senior colleague had told her to reconsider marrying Mr Begraj because people of his caste were 'different creatures'. Following her marriage, Mrs Begraj claims she was given more work, less secretarial support and less pay than her colleagues. Mr Begraj was dismissed after seven years at the firm and his wife subsequently resigned.
This case may help to clarify whether or not caste discrimination is already covered by existing discrimination law.
Discrimination (race) - Ruda v Tei
Would you consider that using the nickname 'Borat' in reference to someone from Eastern Europe is direct race discrimination? The tribunal thought so.
Mr Ruda, a Polish engineer, brought claims including race and sexual orientation discrimination. He claimed that he had been given a number of nicknames, including 'Borat'. The tribunal rejected most of his allegations, describing Mr Ruda's evidence as 'less than persuasive and less than honest', but did however think that Mr Ruda had been harassed on the grounds of race by a colleague calling him 'Borat' and that the use of the nickname created a degrading and humiliating working environment for him, and was direct race discrimination. The judgement explained that someone who had all the characteristics of Mr Ruda but was neither from Poland nor perceived to be of Eastern European origin would not have had the nickname applied to him.
The tribunal found that the majority (if not all) of the company's other employees had nicknames, but the examples provided were not connected with the racial or national origins of the employees, but were associated only with personal characteristics that were not the subject of discrimination law.
A warning to be very very careful about nicknames!!
Dismissal (redundancy and parental leave) - Vance v Charles Hurst Ltd
Another Northern Ireland case, this time relating to the dismissal on grounds of redundancy.
In this case, Mr Vance, a manager at a car dealership, applied and took two weeks parental leave over the Christmas period. His manager (Mr Haining) subsequently allegedly commented in an accounts review meeting at which Mr Vance was present that he would 'put an end to' parental and paternity leave.
Mr Vance was subsequently told that he was at risk of redundancy, as the business had been sustaining losses for some time. At the consultation meeting, having been told that his redundancy was 99.9% certain, when Mr Vance said how shocked he was, Mr Haining responded 'welcome to the new world'. Mr Vance was then dismissed. He appealed unsuccessfully - the letter confirming the outcome stated that there was no evidence of a connection between Mr Vance's parental leave and his redundancy.
The tribunal hearing Mr Vance's claim thought otherwise! It found that the redundancy situation was triggered by Mr Vance's parental leave and that Mr Vance was selected without considering whether anyone else should be at risk of redundancy. The tribunal noted that no serious attempt was made in the appeal hearing to investigate Mr Vance's concerns regarding his parental leave.
The dismissal of an employee because he or she has requested or taken a period of parental leave is automatically unfair. The tribunal therefore found automatic unfair dismissal, and awarded Mr Vance the maximum compensatory award for unfair dismissal - £65,300. This was made up of loss of earnings to the date of the hearing £30,908.90 and 12 months' future loss of earnings of £38,420.90.
Dismissal (redundancy and insolvency) - BIS v (1) Coward (2) Local Taverns Ltd (dissolved company)
Where an employer is unable to meet the costs of the following, these can be claimed from the Redundancy Payments Office:
- any statutory redundancy pay to which the employee is entitled
- arrears of pay for up to eight weeks (subject to the "cap" on weekly pay)
- outstanding holiday pay of up to six weeks
- notice pay
- a basic award of compensation for unfair dismissal made by an employment tribunal.
This is another case that confirms that the Secretary of State will only cover notice pay where an employer is insolvent: the claimant has to prove that one of the specified conditions of 'insolvency' set out in Employment Rights Act 1996 sec 183 have been met.
For more details see: {HTTP:www.businesshr.net/docs/legal/redundancy.html}
Dismissal (failure to follow procedures) - Siddons v The Tontine Hotel
The EAT has confirmed that an internal appeal, if conducted fairly, may rectify what would have otherwise been a procedurally unfair dismissal.
In this case, a head chef and a kitchen porter were dismissed for gross misconduct. They had helped themselves to drinks from the hotel bar without paying for them - a clear breach of the rules. The tribunal found that, even though the employer had investigated and found that the misconduct did take place, the dismissals were procedurally unfair because:
- the person carrying out the investigation was also involved in the disciplinary hearing
- the person who took the decision to dismiss was not present at that hearing but relied on 'second-hand information' when doing so.
However, on appeal, there was a virtual re-hearing of the case which the tribunal felt mitigated or 'cured' most of the previous problems.
Tribunals may award what they consider 'just and equitable' so can make a reduced award or no award where the employee would have been dismissed anyway. The tribunal considered that had the correct procedure been followed, the employees would have been dismissed in any event. It reduced the compensatory award by 100% and the basic award by 75%; on appeal, the EAT reduced the basic award by 100%!
So the employees received no 'unjust enrichment' for their procedurally unfair dismissals.
Dismissal (when notice has already been given) - M-Choice UK Ltd v Aalders
Miss Aalders had a contractual notice period of 6 months. She was dismissed after 6 months' service, so would have had a year's service at the date her notice would expire.
She lodged an unfair dismissal claim in the final month of her notice period. Her employer then summarily dismissed her before her notice period expired. This meant that she had not accrued one year's service (including the statutory notice period of one week), so the question was whether she could bring an unfair dismissal claim for the earlier decision to dismiss?
The EAT confirmed the second dismissal replaced the first. The effective date of termination was the date of the summary dismissal, rather than the date her notice period would otherwise have expired. Miss Aalders therefore had no right to claim 'ordinary' unfair dismissal as she had insufficient continuity of employment.
However, if she can satisfy the tribunal that her summary dismissal resulted from her original claim of unfair dismissal, she may still have the right to claim automatically unfair dismissal (which does not require a year's service) on the grounds that her dismissal was because she had brought proceedings to enforce a statutory right.
So - employers may dismiss an employee during the notice period if there are grounds for doing so (eg gross misconduct), and this may deprive the employee of the right to bring an ordinary unfair dismissal claim. However, under the Employment Rights Act 1996, an employee who is dismissed without the applicable period of statutory notice (in circumstances where he or she is entitled to notice), can count that period towards his/her length of service.
We've added last month's hot topic (managing remote workers) to the "managing your employees" section of the website, see: /docs/TPduringmanaging.html
We've also reviewed most of our letters and forms over the last month - see: /docs/TPdocuments.html
3.1 Some more statistics ...
- The Bank of England has downgraded our economic growth forecast and now expects the UK economy to grow by only 1.5% by the end of this year. The forecast for 2012 was also downgraded from around 2.5% to closer to 2%, while Bank of England governor Sir Mervyn King warned there was 'a good chance' that the rate of inflation could hit 5% by December, before easing next year.
- Incomes Data Services (IDS) reports that the average pay award in UK organisations remained steady at 2.5% last month. There were no pay freezes recorded in the private sector in the three months to July - down from 6% in the three months to June.
Finding it difficult to keep abreast of all of the above changes?
Why not let us help you? We can review your contracts, handbook and HR policies, advise on any suggested additions and update them for you - and then keep them updated. Take a look at our broader range of services:
This month's hot topic will be a review and update on the Equality Act - now almost a year since it started to come into force.
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