Trial periods for job applicants – the proof of the pudding or taking the biscuit?
16 March, 2018

When does a prospective employee’s unpaid trial shift become exploitation and breach minimum wage legislation?  A private member’s bill currently before Parliament seeks to prohibit unpaid trial work periods and to bring them squarely within the ambit of the national minimum wage.  It would also require employers to give information upfront about the duration and scope of a trial work period, with obligations to provide feedback and to notify the applicant of its outcome.  This issue is also drawing the focus of a number of trade unions and significant attention in the media.

Trial shifts are often a very useful element of an employer’s recruitment process particularly in the hospitality sector.  For example, if a restaurant is recruiting for a chef, the application form and interview will be of limited value in assessing a candidate’s capabilities for the role.  It will want to carry out a real-time evaluation of the candidate’s skills in the kitchen – a literal instance of the proof of the pudding being in the eating.

The grey area is where the assessment crosses the boundary into the candidate undertaking work duties and providing their labour for the benefit of the would-be employer.  If a potential employee impresses management within the first hour of their trial shift and continues to work effectively as a member of the team, should the remainder of the trial shift be unpaid?

There have been recent reports of businesses taking on staff supposedly for a trial shift but in reality with no expectation of hiring them subsequently, and just using these individuals as a source of unpaid labour, for example to meet the demands of a particular catering function or to cover the absence of an employee.  Elsewhere the length and scope of the trial shift, such as a six-hour trial shift for a waiting job in a restaurant, have gone well beyond what was reasonably necessary to assess the suitability of an applicant for the job role in question.

There are similar issues and uncertainties with pre-employment training.  The hours which an employee or worker spends training are clearly payable as working time, but the law is less clear when it comes to training which an individual attends before they start working.  If the individual is required to undergo training before they start, for example under regulatory requirements, then the time spent in training should be paid as working time.  This is not however always followed in practice.

An example of this (highlighted in a recent Dispatches documentary) involved agencies which supplied housekeeping staff to hotels, and these staff had to attend several days’ unpaid training on the hotel premises.  There were reports of agencies cynically telling the housekeepers that they would have to wait for three months before they could be paid, in the expectation that many staff will leave before the end of this period and so never receive their due payments.

As we await any changes in the law surrounding unpaid trial shifts and pre-employment training, regular audits and reviews should be conducted by businesses to ensure their staff, whether hired directly or through sub-contractors, are paid correctly.

Finally on the topic of minimum wage legislation, recent enforcement action against Wagamama and TGI Fridays has highlighted that employers must meet the costs of staff meeting their uniform requirements, where the employer does not provide the uniform itself.  In the Wagamama case, the restaurant chain had required front-of-house staff to wear black jeans or black skirt with their Wagamama-branded top, without paying them any uniform supplement. This resulted in a failure to pay these staff in accordance with the national minimum wage.

If you have any queries about compliance with national minimum wage legislation, please contact patrick.glencross@cripps.co.uk or any of our Employment team.

Mental health management in the workplace
12 March, 2018

One in six employees is likely to be suffering from a mental healthMental Health illness at any one point in a given year. The impact can be severe on the individual personally,  but also on the employer, with the cost to UK employers as a result of mental health issues estimated at up to £42 billion per year.

Whilst there is growing public and political awareness of the need to address mental health issues in society, employers are increasingly struggling to effectively manage employee mental health. This blog addresses the impact on a business from poor mental health management and outlines practical steps an employer can take to create a culture that combats mental health issues in the workplace.


Employers not only have a moral duty to promote employee mental wellbeing, but there are legal and economic factors which make it a commercial incentive.

A recent study into workplace mental health found that low levels of employee wellbeing affects employees’ general health with long working hours, for example, causing a 20% increase in mortalities. Personal lives are also negatively impacted, with one in four adults suffering from mental health problems falling into debt as well as the negative impact on ones family.

From a legal perspective, employees are increasingly holding their employer to account for either breaching their duty of care in relation to mental health in the workplace under the Health and Safety Act 1974 or disability discrimination under the Equality Act 2010. The latter tends to pose more issues for employers since there is no qualifying service required to bring a claim and there is no cap on compensation for a successful claim.

A further business incentive for promoting wellbeing is increased levels of employee productivity. Staff turnover and absenteeism through sickness are major costs to businesses, but so is the issue of presenteeism (where employees are in work for longer than is required but are performing at less than full capacity because of ill health). Presenteeism poses additional complications because employees tend to be suffering in silence, rather than seeking medical help and recovering at home.

Lastly, businesses ought to consider the reputational benefits of promoting mental well being and tackling ill health – both internally and in society.

Practical measures

Employers should be pro-active in implementing measures to recognise, prevent, and manage, mental health issues within an organisation.


Common causes of mental ill health include harassment, bullying, and stress (often caused by heavy workloads). Managers should be trained to recognise symptoms of ill health such as poor timekeeping, increased sickness absence, unproductivity, and certain physical changes including appearance, weight and irritability. HR teams should carefully review sickness absence patterns and appreciate that other reasons for sickness may be given in order to avoid disclosing mental ill health. Performance reviews and appraisals are a good opportunity for businesses to engage with employees about any issues they are having.


Employers can prevent mental ill health through promoting healthy work-life balances, such as flexible or agile working initiatives, and implementing mindfulness and wellbeing programmes for staff. Confidential helplines or support networks should be advertised as well as providing regular training sessions to staff at all levels in order to raise awareness and tackle the stigma attached to mental health. Managers ought to consider how projects are allocated to staff so that employees are not being over-worked. Lastly, employers should put in place company policies relating to equality, anti-bullying and harassment, and health and safety.


It is important to open dialogue with affected employees as early as possible. Regular meetings should be arranged to monitor their health and address any concerns the employee may have. Employers must consider what reasonable adjustments can be made to assist affected employees, for example, flexible working arrangements and flexible deadlines may help the individual concerned. Medical professionals should be consulted to better understand the illness in question and their practical advice can then be implemented. It is also important to document all discussions and processes to avoid legal risk.

If you have any questions about mental health in the workplace please get in touch with Emma.saunders@cripps.co.uk.

This year Cripps is proud to support “Rethink Mental Illness” who provide a range of services to individuals affected by mental ill health. For more information about their programme please visit their website here.

Stand-by time – No play, more pay
6 March, 2018

Legal update: “on-call” time at home is “working time” where a worker is significantly restricted from engaging in other non-work interests, such as family time and hobbies.

The European Court of Justice (ECJ) last week considered whether time spent on-call away from the workplace was capable of amounting to working time. The decision further develops the ever changing law governing what constitutes “working time” under the Working Time Regulations 1998.

The case concerned a retained firefighter, Mr Matzak, who is required to be available on-call for work at certain periods during the week. While on stand-by, Mr Matzak must remain contactable and, if required, report to the fire station as soon as possible and in any event within no more than 8 minutes. Mr Matzak must therefore live in close proximity to the fire station and is restricted from carrying out his hobbies and interests. Mr Matzak is not paid for time spent on-call.

The ECJ’s decision confirms that where a worker’s freedom to engage in non-work activities during on-call time spent at home is severely impacted, then that time must be working time under the Working Time Regulations. Interestingly, the Advocate General’s opinion and the ECJ’s decision differed on the importance of necessary proximity to the workplace. The ECJ found that the necessary proximity to the workplace was of critical importance.

Domestic courts who must apply this decision domestically may find it challenging determining what amounts to “significantly reducing” opportunities to engage in non-work related activities.

Previous decisions in the context of ‘on-call’ workers made it clear that the “decisive factor” in determining whether the definition of working time is satisfied, is the requirement to be present at the place determined by the employer and to provide the appropriate services immediately in case of need. This case demonstrates how the law is developing with power slowly shifting to the employee.

Notice Pay, Pay in Lieu and Tax
26 February, 2018

A new tax regime takes effect from 6 April 2018 in relation to payments in lieu of notice (PILONs), alongside other significant changes to the taxation of termination payments.  These changes reflect the Government’s stated intention to “tighten and clarify” the income tax treatment of termination payments.

Until now, determining the appropriate tax treatment for payments reflecting notice entitlements has been difficult for employers and fraught with risk.  In introducing the new legislation (by the Finance Act (No. 2 2017), the Government has accepted the current tax rules to be complex, and described the current tax exemptions as incentivising employers to manipulate the rules by structuring exit arrangements to include payments which are ordinarily taxable in order to minimise the tax and National Insurance contributions due.

All PILONs to be taxable

Under the new tax regime, all payments in lieu of notice will be treated as earnings for the purposes of income tax and National Insurance liabilities.  HMRC has confirmed that these changes will apply where termination payments are made after 6 April and where the employment is ended on or after this date.

The new legislation requires the employer to split a ‘termination award’ between amounts treated as earnings (and so subject to PAYE deductions) and amounts which benefit from the £30,000 exemption as compensation for loss of employment.

The ‘termination award’ broadly means the payment, or other benefit, which the employee receives in return for the termination of their employment.  Payments of statutory redundancy are excluded from the scope of the termination award, as are certain other payments and benefits.  HMRC guidance has indicated that this will extend to non-statutory redundancy payments (for example under enhanced redundancy schemes).

In order to work out how much of the termination award has to be treated as earnings, the employer then has to calculate the “post-employment notice pay” (PENP).  The essential formula for this involves multiplying the employee’s basic pay for the last pay period by the duration of their unworked notice period, and then deducting amounts paid on termination taxable as earnings (other than holiday pay and termination bonuses).

This sounds simple in outline, however there are a number of grey areas in the legislation and complicating factors which can be involved, for example the impact of salary sacrifice arrangements and how to treat termination packages which include exempt contributions into registered pension schemes.

The entire termination award will need to be treated as earnings for tax purposes if it is less than or equal to the PENP figure; otherwise the PENP figure will be the amount taxable as earnings.

The £30,000 threshold for tax-free compensation

From April 2018 HM Treasury will have the power to make regulations which would vary the level of this tax exemption, which has remained at £30,000 since 1988.  Watch this space for news of any increase to the threshold.

Injury to feelings payments

From April 2018, payments for injury to feelings (typically made in connection with discrimination claims) will fall outside the tax exemption for injury payments, except where the injury amounts to a psychiatric injury or other recognised medical condition.

Foreign service relief

Foreign service relief for UK resident employees will be abolished from April 2018, on the grounds that the current scheme is outdated and unnecessary.  Only employees or former employees not resident in the UK for the tax year in which the employment terminates will be eligible for foreign service relief.

National Insurance liability on termination payments above £30,000

From April 2019 all termination payments above £30,000 will be subject to employer National Insurance contributions (but not employee contributions).  This proposal was originally planned for implementation in 2018.


While the new tax legislation will introduce some simplification in this area, there will still be some points of complexity and uncertainty for employers.  The overall intention to tighten the tax rules will also in some cases translate into increasing the overall costs of termination packages for exiting employees.

Changes to compensation limits and the national minimum wage:
22 February, 2018

The new compensation limits have now been published and will come into force from 6 April 2018. The figures apply to dismissals where the effective date of termination is on or after 6 April 2018.

There will be an increase to the limit on:

Unfair Dismissal

The maximum basic award for unfair dismissal has increased from £14,670 to £15,240; and the maximum compensatory award for unfair dismissal from £80,541 to £83,682.

A week’s pay calculation

A week’s pay for the purposes of calculating statutory redundancy payments and the basic award for unfair dismissal has increased from £489 to £508.


Whilst there remains no cap on awards for discrimination, the ‘Vento bands’ are used for awarding injury to feelings.  These bands were increased as follows, for claims presented on or after 11 September 2017:

  • A lower band (for the least serious cases such as one off incidents) of £800 to £8,400.
  • A middle band (serious cases) of £8,400 to £25,200.
  • An upper band (the most serious cases with a lengthy campaign of discriminatory harassment) of £25,200 to £42,000, with the most exceptional cases capable of exceeding £42,000.

Statutory payments

Statutory sick pay will rise from £89.35 to £92.05 per week.

Statutory maternity, adoption, paternity and shared parental pay will go up from £140.98 to £145.18 per week.

National minimum wage rates

As mentioned in our previous blog detailing what to expect in 2018, the national minimum wage rates have increased:

  • £7.83 per hour (from £7.50) aged 25 and over
  • £7.38 per hour (from £7.05) aged 21 – 24
  • £5.90 per hour (from £5.60) aged 18 – 20
  • £4.20 per hour (from £4.05) aged 16 -17

The apprentice rate increases from £3.50 to £3.70 per hour.

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