Gordons Legal Employment Update – 4 August 2017

Employment tribunal fees are unlawful

The big news this week was the case of R (on the application of Unison) v Lord Chancellor.  The Supreme Court has held that fees for those bringing employment tribunal claims are unlawful.  It found that the fees:

• Could not be justified as a necessary intrusion on the right of access to justice;
• Had the effect of rendering other statutory employment rights “nugatory”;
• Imposed limitations on the exercise of EU rights which were disproportionate and therefore in breach of articles 47 and 52 of the Charter of Fundamental Rights of the European Union; and
• Were indirectly discriminatory against women in respect of higher fees for Type B claims.

The Government is set to repay £32 million to claimants and respondents from 2013, although it is not yet clear whether the fees will be repaid on an automatic basis, or whether those parties will need to make an application to have their fees refunded.

Comment: It is likely that this will not be the last we see of Employment Tribunal Fees.  The government may at some point look at reintroducing fees but at a lower level but we imagine that there are far bigger issues to occupy the government at the moment surrounding Brexit.  For now, the process will revert back to pre-August 2013 and as a result there will no doubt be a significant increase in Employment Tribunal claims.  In light of this, if you haven’t already, now is the time to consider what protection your business has in place.  If you would like any further information, please do not hesitate to contact a member of the Employment Team.

Voluntary overtime and holiday pay

The Employment Appeal Tribunal has this week confirmed that regular voluntary overtime payments must be taken into account when calculating holiday pay.

In Dudley Metropolitan Borough Council v Willetts and Ors, the Claimants carried out housing repairs for the Council.  They were employed to work set contractual hours, but could volunteer to work additional hours, with there being no right on the part of the Council to require these employees to work these additional hours.  The Claimants sought to argue that their holiday pay should include voluntary overtime, call-out payments, as well as mileage and standby allowances.

The Employment Tribunal decided in favour of the Claimants and the Council appealed to the EAT.

The EAT held:

• That in accordance with the ECJ’s decision in British Airways Plc v. Williams and Others, the overarching principle is that holiday pay should correspond with “normal remuneration” so that workers are not discouraged from taking annual leave;
• For a payment to form part of “normal remuneration” it must have been paid over a sufficient period of time;
• If there is an intrinsic link between the payment and performance of the task, that is a decisive criterion, but not the only decisive criterion.  The absence of such an intrinsic link would not automatically exclude such a payment from counting;
• In this case the Employment Tribunal did not make an error of law in finding that remuneration that was linked to voluntary overtime could be included in normal remuneration for calculating holiday pay.

Comment:  The outcome of this case is not surprising, but is the first appellate decision to confirm that voluntary overtime which is regularly worked should be counted towards holiday pay.  This decision sets an important precedent and Employment Tribunals will be bound to follow it.  Therefore, for those employers who have not yet started to include regular voluntary overtime payments into their holiday pay calculations, we would advise that they look to introduce this as soon as possible in light of this decision.  But how regular does overtime need to be to be included in holiday pay? Once a week, once a month? This is still a grey area and no doubt there will be further case law on this in due course.

Consultation on Vento Bands

A joint consultation statement has been issued by the Presidents of the Employment Tribunals which seeks the views on increasing the Vento bands in line with the RPI. The Vento bands are used by Tribunals to determine injury to feelings compensation in discrimination claims. The lower band covers one off/minor acts of discrimination with the upper band covering the most serious or prolonged discrimination.

The proposed new bands for injury to feelings and psychiatric injury are:

• Lower band: £1,000 to £8,000;
• Middle band: £8,000 to £25,000; and
• Upper band: £25,000 to £42,000.

The consultation responses are required by Friday 25 August 2017.  You can access the full consultation document here.

Comment: The increase in the bands is overdue given that it is several years since they were last formally updated, unlike the compensation limits for unfair dismissal claims which are increased each year.

HMRC announce waiver of financial penalties for arrears of national minimum wage (‘NMW’) from ‘sleep-in shifts’

The Government recognises that versions of its guidance on ‘Calculating the National Minimum Wage’, published before February 2015, were potentially misleading over the treatment in this area.  Therefore, the Government has decided to waive the financial penalties for arrears of NMW resulting from ‘sleep-in’ shifts which took placed before 26 July 2017.

From 26 July 2017, underpayments for such shifts will be liable to the usual penalties of 200% of the amount of arrears.  For the social care sector the government is going to suspend enforcement activity over payments for ‘sleep-in’ shifts, until 2 October 2017.

The guidance has now been updated and you can access a copy of it here.

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