employment law update
TRANSCRIPT
Employment Law UpdateStephen Jenkins, Partner
Agenda• Shared Parental Leave• Holiday Pay• Pensions Auto-Enrolment
Introduction to Shared Parental LeaveThe entitlement and eligibility requirements
What is Shared Parental Leave?• Employees who are parents (birth or adoption)• Opt to share parental leave during the first 52
weeks of their child’s life or after placement for adoption
• Not obligatory• Default will continue to be maternity or adoption
leave
When did it come into force?• Shared Parental Leave Regulations came into
force 1 December 2014• Apply where:
− EWC begins on or after 5 April 2015− A child is placed for adoption on or after 5 April
2015
What has changed?• Maternity and adoption will remain default• Additional paternity leave no longer available
− If parents don’t qualify for Shared Parental Leave only Ordinary Paternity Leave will be available
− Remain in operation until April 2016
How does Shared Parental Leave work?• Mother or primary adopter:
− Opt to end maternity or adoption leave− Commit to ending it at a future date
• Makes up to 50 weeks Shared Parental Leave and 37 weeks of Share Parental Pay available to either parent (subject to eligibility)
• Must be taken between the date of the baby’s birth and 1st birthday (within 1 year of adoption)
How does Shared Parental Leave work?• Eligibility requirements• Return to work or Leave Curtailment Notice• Notice of entitlement and intention to take
Shared Parental Leave• Period of Leave Notice• Regime for revoking and varying notices
Eligibility – who are the parents?• Birth
− Mother - child’s mother− Partner - child’s father, the mother’s spouse on
the child’s date of birth, civil partner or partner• Adoption
− Main adopter – person with whom the child is placed
− Adoptive partner – spouse, civil partner or partner
Eligibility – who are the parents?• Partner
− Person (whether the same sex or different sex) who lives with the mother/main adopter and child in an enduring family relationship
− Not a child, parent, grandchild, grandparent, sibling, aunt, uncle, niece or nephew
Eligibility requirements - Mother• Satisfy the “continuity of employment” test• At the date of the child’s birth have the main
responsibility for the care of the child (apart from any responsibility of her partner)
• Be entitled to statutory maternity leave in respect of the child
• Curtail her maternity leave
Eligibility requirements - Mother• The mother’s partner must also
− Satisfy the “employment and earnings test”− At the date of the child’s birth have the main
responsibility for the care of the child (apart from any responsibility of the mother)
• Comply with the notification requirements
Eligibility requirements - Partner• Satisfy the “continuity of employment” test• At the date of the child’s birth have the main
responsibility for the care of the child (apart from any responsibility of the mother)
Eligibility requirements - Partner• The mother must also:
− Satisfy the employment and earnings test− At the date of the Child’s birth, have the main
responsibility for the care of the child (apart from any responsibility of the partner)
− Be entitled to statutory maternity leave, statutory maternity pay or maternity allowance in respect of the child;
− Have curtailed the statutory maternity leave, statutory maternity pay period or maternity allowance period
What is the continuity of employment test?• Employee must have:
− Been continuously employed with an employer for a period of not less then 26 weeks
− Ending with the 15th week before the expected week of childbirth
− Remain in continuous employment with that employer until the week before any period of shared parental leave
Do both parents need to be employees?• No• Partner must satisfy the employment earnings
test• Must have worked in an employed or self-
employed capacity in at least 26 weeks of the 66 weeks immediately before the Expected Week of Childbirth earning on average at least £30 a week based on any 13 of those weeks
How much Shared Parental Leave is available per parent?• Start with 52 weeks• Deduct the amount of maternity leave (inc.
compulsory 2 weeks)• Reduce the remaining weeks by any amount of
Shared Parental Leave notified or taken by the other parent
• A part of a week’s leave taken is treated as a whole
How much Shared Parental Leave is available?• Ordinary Paternity Leave has no effect• Once a period of Shared Parental Leave is taken
any untaken paternity leave entitlement is lost
Concurrent periods of leave• Both parents can be on Shared Parental Leave at
the same time• Shared Parental Leave and Parental Leave• Shared Parental Leave and Maternity Leave
Periods of Leave• At least 8 weeks before the start date of a period
of Shared Parental Leave• Written notice• Sets out start and end dates of each period of
Shared Parental Leave• Three blocks or more if agreed • Can be at the same time as notice of entitlement
and intention and Leave Curtailment Notice• Binding
Periods of Leave• Cannot request leave with a start or end date
outside the Shared Parental Leave period i.e. over 52 weeks after the baby is born
Periods of Leave• Continuous Leave
− Employee will automatically be entitled to that period
• Discontinuous Leave− Split a block of leave into short periods e.g.
working every other week during a 12 week period
Discontinuous Leave• Employer has 14 days from date notice given
− Consent to the periods requested− Propose alternative dates − Refuse the periods requested
• If parties agree to the periods requested or alternative dates then the agreement is binding and Shared Parental Leave can be taken
Discontinuous Leave• If refused employee can:
− Take the total amount of leave requested in a continuous block
• Employee must chose a new start date within 5 days of the end of the two week consideration period
• 8 weeks after the date the Period of Leave Notice was given
• If no new start date given then Shared Parental Leave will start on the first period of leave requested
− Withdraw Notice (15th day after notice given)
Employment Considerations
Terms & Conditions• Employee is:
− Entitled to all benefits of terms and conditions (except remuneration)
− Bound by any obligations (except where inconsistent with right to absence)
• SPLIT days− Reasonable contact− 20 days− In addition to maternity leave KIT days
Redundancy• Priority for an offer of suitable alternative
employment• Failure to comply = automatic unfair dismissal• Suitable alternative
− Work which is both suitable and appropriate in all the circumstances AND
− Terms and conditions not substantially less favourable
Simpson v Endsleigh Insurance Limited and other (UKEAT/0544/09)
Rights on returning to work• Depend on how much Shared Parental leave
taken (alone or with other statutory leave)• Return to work after 26 weeks or less
− Return to work in the job employed before their absence
Rights on returning to work• Return to work after more than 26 weeks
− Return to work in the job employed before absence unless not reasonable practicable
− Another job which is both suitable and appropriate for them in the circumstances
− Not less favourable terms
Protection from detriment and dismissal• Employee entitled not to be subject to any
detriment or dismissal because:− Took, sought or made use of Shared Parental
Leave− Employer believed employee was likely to take
Shared Parental Leave− Took, considered or refused to undertake SPLIT
days
Shared Parental Pay• Ordinarily anyone who is eligible for Shared
Parental Leave is eligible for Shared Parental Pay• Not payable
− If person also entitled to Statutory Sick Pay− Shared Parental Leave and Shared Parental Pay
may be suspended where the employee too ill to care for child
Shared Parental Pay• Statutory Rate is Lower of prescribed rate
(£139.58) or 90% of normal weekly earnings• No 6 weeks at 90% as with Statutory Maternity
Pay
Enhanced Shared Parental Pay• To enhance or not to enhance that is the
question!• Direct Discrimination• Indirect discrimination
− Shuter v Ford Motor Company ET/3203504/13
Holiday Pay
Legal framework – annual leave and pay• Working Time Directive - Article 7
− 4 weeks’ paid annual leave
• Working Time Regulations 1998− 5.6 weeks’ paid annual leave (Regulation 13)
• 4 weeks WTD• Additional 1.6 weeks
− Holiday Pay (Regulation 16)• A week’s pay in respect of each week of leave
Legal framework – annual leave and pay• Week’s pay – Employment Rights Act 1996
− No normal working hours• Average of remuneration earned in previous 12
weeks – including overtime and commission
− Normal working hours• Basic salary disregarding additional pay elements
(except compulsory overtime)
Case law – annual leave and pay• Bamsey v Albion Engineering and Manufacturing plc
(2004) COA− ERA 1996 meant that overtime included only where it is
guaranteed and compulsory− Overtime regularly worked but not guaranteed not included
• British Airways plc v Williams (2012) ECJ− Pay which is “intrinsically linked” to the performance of the
contract of employment
• Lock v British Gas Trading Ltd (2014) ECJ− Correspond to “normal remuneration”− Commission “directly linked” to his work
Case law – annual leave and pay• Themes
− The “intrinsically linked” test− Reduction in remuneration that will deter from
taking holiday is contrary to the WTD objective− Ancillary costs or expenses not included e.g.
subsistence allowance
Bear Scotland Ltd & Others – The facts• Construction companies• Claimants working under the terms of the
National Agreement for Engineering and Construction Industry − Basic working week of 38 normal working hours− Obligation to work overtime− No obligation on employer to provide overtime
Bear Scotland Ltd & Others – The facts• Agreement terms
− overtime would be required- not guaranteed− did not form part of the normal working hours− would not form part of any of the calculations on
holiday pay entitlement
• Unauthorised deductions from wages claims• Specific claims for breach of contract (Hertel &
Amec)
Bear Scotland Ltd & Other – The issuesIssue 1•What does Article 7 WTD require by way of paid annual leave?•Does it follow from Williams and Lock that non-guaranteed overtime should be included in the calculation of holiday pay?
Bear Scotland Ltd & Other – The issues• Pay received during holiday should be natural
continuation of pay before holiday• Payment needs to be for sufficient period of time
to be “normal remuneration”• Required by employer• Perverse to hold overtime was not intrinsically
linked to performance of tasks• “normal remuneration” not easily identifiable –
average over appropriate reference period
Bear Scotland Ltd & Other – The issuesIssue 2•Could WTR 1998 and ERA 1996 be interpreted to give effect to Article 7?•Yes – reading words into Regulation 16 to allow overtime to be included in the definition of “a week’s pay”
Bear Scotland Ltd & Other – The issuesIssue 3•Does the underpayment of holiday constitute a “series of deductions”?•Must be brought within 3 months of the deduction or last in series of deductions•Gap of 3 months between two deductions will break the “series of deductions”•Restrict scope of back pay claims
Where does Bear Scotland Ltd leave us?The following must be included in calculation of holiday pay•Compulsory or contractual overtime•Commission•Non-guaranteed overtime•Travel time payments•Acting up supplements
Where does Bear Scotland Ltd leave us?• Voluntary overtime? • Productivity, attendance or performance bonuses• Allowances (e.g. shift allowance)• Standby and emergency call out payments• Sleeping in payments• Acting up supplements• Profit related or annual discretionary bonus?
Holiday Pay – Other considerations4 weeks or 5.6 weeks?•Less generous provisions can apply to the additional 1.6 weeks under WTR
− Neidel v Stadt Frankfurt am Main (2012)• It is for member states to decide whether to
provide workers with holiday rights above the minimum
Holiday Pay – Other considerations4 weeks or 5.6 weeks?•Practical to distinguish?•Could break the series of deductions•Employer has power to direct within the leave year when holiday should be taken•“additional leave” last to be agreed upon in the leave year
Holiday Pay – Other considerationsWhat is an appropriate reference period?•“reference period considered to be representative under national law” Lock•Not dealt with by EAT in Bear Scotland Ltd & Others•ERA 1996 – 12 weeks•Is this representative?
Holiday Pay – Other considerationsBack pay claims•Unlawful deduction of wages claim•“series of deductions” limited•Does the 1.6 weeks additional leave break the series?
Strategy options• Do nothing• No longer a feasible option
Strategy options• Include non-guaranteed overtime in holiday pay
calculations going forward− Provide a break in “series of deductions” and start
the clock running on back pay claims
Strategy options• Costing• Which elements of pay• Approach to “additional 1.6 weeks”• Appropriate reference period
Other thorny pay issues• On call, standby and sleeping in allowances
− NMW issues
• Care worker arrangements
Pensions Auto-Enrolment
The Background• Address long standing concerns about pension
saving in the UK• Came into force in July 2012• Requires employers to automatically enrol
eligible employees into a pension scheme• Staging date – varies depending upon number of
employees. From 1 June 2015 will extend to <50 employees
The Duty• Automatically enrol an eligible job-holder as an
active member• Qualifying automatic enrolment scheme• With effect from the date the job-holder
becomes eligible• Unless they are already an active member of a
qualifying scheme
Who is a job-holder?• Defined as a “worker”• Is working (or ordinarily working) in Great Britain
under contact:− Is aged between 16 and 75− Is paid qualifying earnings by an employer in a
relevant pay reference period
• Very broad definition substantially the same as the definition of worker in the ERA 1996
• Encompasses permanent, temporary, agency workers and apprentices
Qualifying earnings• Qualifying earnings means annual earnings
between £5,824 and £42,385;• Gross salary, wages, commission, bonuses and
overtime• Qualifying earnings band reviewed annually
Who must be auto-enrolled?• Not all job-holders will be eligible• To be eligible a job-holder must:
− Be at least 22 years old and not have reached state pensionable age
− Have earnings that exceed the earnings trigger (currently set at £10,000)
− Not already be an active member of the employer’s qualifying scheme
• Must be enrolled from the date the job-holder meets the qualifying requirements
• 1 month to make arrangements
Opting in and opting out• Job-holder has a statutory right to opt out of any
scheme to which he has been automatically enrolled
• Once in any 12 month period• Non-eligible job-holders• Entitled workers
Postponement period• Three months before a job-holder becomes
entitled to be auto-enrolled;− From staging date− From the first day of a worker’s employment− From the first day a worker becomes eligible
• Assessment of eligibility at the end of the postponement period, with effect from the deferral date
Postponement period• Practical option
− Align auto-enrolment with existing payroll processes;
− Obviate the need to auto-enrol short term workers
• Must provide worker with notice of deferral date within one month
What is a qualifying scheme• Complex statutory requirements• Occupational pension scheme or personal
pension scheme as defined (section 18 and 19 Pensions Act 2008)
• Is a registered pension scheme• Satisfies quality requirements (sections 20 -27
Pensions Act 2008)• Does not levy excess charges on its members
What is a qualifying scheme• Does not contain provisions that are specific
barriers to entry which:− Prevent an employer using the scheme to meet
auto-enrolment, opting in and re-enrolment duties;
− Require a job-holder to make a choice or provide information to become an active member
Information and consultation• Must provide prescribed information to workers• Rights to opt in or join• Consultation required for any changes• Duty to automatically re-enrol
Transitional arrangements• Defined contribution Schemes
− Minimum contributions phased in two transitional periods spanning six years
− Staging date to 30 September 2017: Employer contributions 1% with a total employer and job-holder contribution of 2%*
− 1 October 2017 to 30 September 2018: Employer contributions of 2% with a total employer and job-holder contribution of 5%*
− 1 October 2018 onward: Employer contributions of 3% with total employer and job-holder contributions of 8%* *including tax relief
Transitional arrangements• Defined Benefit and Hybrid Schemes
− Optional transitional period ending on 30 September 2017
− Delay auto-enrolment requirements for eligible job-holders who have opted out of scheme
− Prescribed notice − Eligible job-holder can opt in
• There may be changes to the legislative provisions regarding hybrid schemes
The contract of employment• ERA 1996 requires basic information regarding
pensions to be included• Can refer to pension scheme document• Avoid setting out auto-enrolment duties and
terms in the contract• Provide details to the pension scheme
administrators• Transmission of personal data
Employment Protection Measures• Designed to protect the rights of job-holders and
prospective job-holders• Apply even before the staging date• Cannot contract out• Should not ask job applicants if they intend to opt
out• Should not offer financial inducements• Right not to suffer detriment
National Employment Savings Trust• NEST is a government established pension
scheme• Contributions must match the minimum
contribution requirements that apply to a defined contributions scheme
• Currently an annual limit and a ban on transfers in and out
• Restrictions removed from April 2017
Enforcement• The Pensions Regulator• Powers to investigate, issue warning letters and
enforcement notices• No right of action for breach of statutory duty in
the employment tribunal
Preparing for the staging date• Assess the workforce• Does the transitional period apply?• Is your scheme a qualifying scheme?• Will the scheme need amending?• Opting out• Employment contracts• Re-enrolment
Thank You
