1. Zero hours contracts and Employment Status

The Employment Appeal Tribunal has held in Pulse Healthcare Ltd v Carewatch Care Services Ltd that it was open to a tribunal to find that carers who had signed what purported to be zero hours contracts were ‘employed’ under global or umbrella contracts of employment.

What does this mean?

When assessing the employment status of a person, tribunals will look at the true agreement between the parties and the facts of the working relationship. This includes whether there are ongoing obligations for the worker to do, and the employer to provide, work and, if so, whether the employment continues over time or is just a succession of separate arrangements. Putting in the contract a phrase such as ‘zero hours’ or provisions purporting to absolve the employer from any duty to provide work or permitting the employee to work for others will not be decisive if they don’t reflect what is really happening.

What should employers do?

Zero hours contracts are so called because they do not obligate the employer to provide the worker with any working hours whatsoever. Usually, of course, the employer will provide some working hours but they may be erratic and dependent upon the requirements of the business.  Sometimes this will preclude the development of an ongoing employment relationship (see item 8 below), but there is no magic in the phrase “zero hours”. The tribunal will look at what is really happening even if it is different from what the contract says.  Employers who want to set up contracts allowing for erratic working patterns should take specific legal advice about how to word the contract so as to make sure that any zero hours provisions are appropriate and will have the desired effect.

  1. Fixed Term Contracts & Redundancy

The Employment Appeal Tribunal has held in Greater Glasgow Health Board v Lamont that when a redundancy payment is claimed by an employee dismissed at the end of their fixed term contract, the question is whether or not the dismissal was for reason of redundancy.

What does this mean?

Where a fixed term employee has been filling in for an absent colleague who then returns at the end of the period, the requirement for the post has not ceased or diminished and redundancy will not be the reason for the dismissal.

What should employers do?

Employers should set up and terminate fixed term contracts with care, seeking legal advice where in any doubt.

  1. Employee Financial Awareness

The Chartered Institute of Personnel Directors has published guidance to help employers improve financial awareness and help prevent workforces from being pre-occupied with financial worries. The guidance is aimed at combating the danger of stress and anxiety-related underperformance associated with employee debt and to ensure that the resources organisations invest in their reward packages are not wasted due to employees not appreciating the value of what is on offer to them.  It is intended to help employers to decide whether there is a business case for introducing financial education in their workplace and to provide them with ideas for developing a programme.

A copy of the guide can be found here.

  1. Redundancy Pools

The Employment Appeal Tribunal has held in Wrexham Golf Co Ltd v Ingham that in some cases it will be reasonable to focus upon a single employee without developing a redundancy pool or even considering the development of a pool.

What does this mean?

There will be cases where it is reasonable to focus upon a single employee without developing a pool or even considering the development of a pool. However, the employer who decides to do this will have to justify the reasonableness of the decision.

What should employers do?

Employers should take specific legal advice before making redundancies but in any case it will be necessary to demonstrate the reasonableness of the decision to focus on only one employee. Keeping a paper trail of how that decision was reached would be a good start if it demonstrated that the employer had taken all relevant factors into consideration before making the decision.

  1. PAYE

From April 2013 employers will be required to report PAYE in real time under a new system known as Real Time Information (RTI). Most employers will be required to begin reporting PAYE in real time from April 2013, with all being required to do so by October 2013.

Employers will also be required to use payroll software to send the details electronically to HMRC and send the details as part of their normal payroll process unless they have nine or less employees when they will have the option to use HMRC’s basic PAYE Tools package to send their information instead.

What does this mean?

From April 2013 employers will be required to report PAYE electronically every time a payment is made.

What should employers do?

Employers should start preparing  by talking to their payroll software provider or payroll service provider.  They should also check that information about their employees is accurate, up to date, and in the right format.

  1. National Minimum Wage

An employer has been ‘named and shamed’ for flouting National Minimum Wage (“NMW”) law.

What does this mean?

Employers who don’t comply with NMW legislation run the risk of being named and shamed under a scheme introduced by Government in 2011 under which it has the power, if certain criteria are met, to name employers who flout NMW law. Employers who meet the criteria are notified and have 28 days to make representations against being named.

In addition employers who pay workers less than the minimum wage may be required to pay back arrears of wages at current minimum wage rates and may face financial penalties of up to £5,000. In the most serious cases employers can be prosecuted.

What should employers do?

Employers should ensure that all workers are paid at least the NMW. If in doubt legal advice should be obtained.

  1. The ACAS Code of Practice

The Employment Appeal Tribunal has held in Local Government Yorkshire & Humber v Shah that only employees can be awarded an uplift in compensation of up to 25% when the employer has unreasonably failed to follow the ACAS Code of Practice.

What does this mean?

Some protections (such as for detriment following whistleblowing) are available to the wider group of “workers”. Unfair dismissal in contrast is a claim only an employee can make. The power to uplift compensation for unreasonable failure to follow the Code of Practice only applies to employees.

  1. Employment Status

The Employment Appeal Tribunal has held in Knight v Fairway & Kenwood Car Service Limited  that a minicab driver whose contract allowed him to work as and when he pleased, as long as he made weekly rental payments and sent notifications to the company when he was not going to be working, was not an employee.

What does this mean?

Where a contract places obligations on both parties, but does not contain an obligation to do any amount of work at all there is no contract of employment and the fact that the individual may in practice work 7 days a week is insufficient in itself to infer an obligation to carry out a minimum or reasonable amount of work.

What should employers do?

Employers who want to set up contracts for frequent work that are not employment contracts should take specific legal advice.

  1. Constructive Dismissal

The Employment Appeal Tribunal has held in Logan v Celyn House Limited that in a claim for constructive dismissal the fundamental breach must be a reason for the resignation, but it doesn’t need to be the ‘principal reason’ for the resignation.

What does this mean?

An employee who resigns at least partly because of her employer’s fundamental breach of contract can claim to have been constructively dismissed even if that wasn’t the only reason she resigned.

What should employers do?

Employers should be aware of the risks of fundamentally breaching an employment contract.

  1. National Minimum Wage

From 1 October 2012 the following rates will apply:

  • The rate for workers aged 21 and over will rise to £6.19
  • The rate for workers aged between 18 and 20 will remain unchanged at £4.98
  • The rate for workers aged under 18 but above the school leaving age who are not apprentices will remain unchanged at £3.68
  • The rate for apprentices will rise to £2.65.

The accommodation offset maximum will rise to £4.82 for each day.

The minimum rates of pay for agricultural workers will also increase on 1 October.

  1. Personal Data

Organisations who hold personal data, including data relating to their staff are not allowed to hold it ‘for longer than is necessary’ for the purpose or purposes for which it is processed. In some cases an organisation may be required by law to delete an individual’s personal data.

The Information Commissioner’s Office (“ICO”) has indicated in recently published guidance that it will be satisfied that information has been ‘put beyond use’, even if it has not actually been deleted, as long as the organisation holding it:

  • is not able, or will not attempt, to use the personal data to inform any decision in respect of any individual or in a manner that affects the individual in any way;
  • does not give any other organisation access to the personal data;
  • surrounds the personal data with appropriate technical and organisational security; and
  • commits to permanent deletion of the information if, or when, this becomes possible.

The ICO has said that it will not require data controllers to grant individuals subject access to their personal data provided that all four of the above safeguards are in place.