Unemployment down but more than 200 employers caught paying less than NMW?!
18 August, 2017

Do you know your National Minimum Wage (NMW) obligations andpound coins what constitutes working time? If not, you could join the list of 230 employers that HMRC has ‘named and shamed’ for failing to comply with their NMW obligations.

Unemployment Down

Official figures suggest that unemployment is at its lowest since 1975 and that weekly earnings have increased by 2.1% compared to this time last year. However, this only tells part of the story and as said in our ‘Brexit: Employment Update’ (Brexit: employment update), statistics suggesting unemployment is down does not automatically mean that people are in gainful employment and/or receiving NMW!


High-level, an individual is entitled to receive the applicable NMW for his/her working time (a more detailed explanation is here Employer caught out by National Minimum Wage requirements ). 

The government has revealed that a large number of employers have failed to comply with their NMW obligations – and the main culprits come from the high risk sectors HMRC is focussing on, namely social care, hair dressing and retail. Therefore, being employed doesn’t seem to guarantee a fair wage.

Our previous blog set out the risks and claims an employer in breach may face (Take note, new National Minimum Wage rates confirmed )

Self-Employed Contractors and Zero Hours Contracts

The prevalence of self-employed contractor/employment status claims along with the number of individuals working under zero hours contracts are further indicators that ‘lower unemployment’ doesn’t necessarily equate to a healthy level of employment.

The thorny issue of self-employed contractor vs employee/worker status has received plenty of media coverage and court time, such as the matters of Uber and Pimlico Plumbers (Worker status – the plot thickens ).

The attraction for a company to engage an individual as a self-employed contractor is the avoidance of certain obligations, such as NMW and holiday pay.

The distinction between whether an individual is self-employed, an employee, or a worker, is not always easy to make (for example, there are subtle differences between ‘employment’ in the eyes of HMRC and that of the employment tribunals).  Getting it wrong can result in sanctions from HMRC, claims being brought in the employment tribunal, and negative publicity.

Are you confident your self-employed contractors are correctly classified and that your commercial agreements provide you with sufficient protection?

Zero hours contracts are regarded negatively by many, but when used correctly they provided flexibility for both the individual and the employer. Unfortunately, zero hours contracts can also mean that although an individual is not classed as unemployed they could well be working far less hours than a full time employee.  

If you have any questions regarding NMW compliance, employment status, or the use of zero hours contracts please contact Chris Hovenden.

How can employers address pay imbalance?
15 August, 2017

Important recommendations for employers towards reducing pay gaps were made by the Equal and Human Rights Commission (EHRC) in its strategy report published this week, “Fair opportunities for all”.  The gender pay gap currently stands at 18.1% and new evidence supporting the report shows an ethnicity pay gap of 5.7% and a disability pay gap of 13.6%.

Flexible working

Increased opportunities for flexible working are seen as important ways to improve participation in employment and to reduce pay imbalances.  The report recommends that employers offer all jobs, including the most senior roles, on a flexible and part-time basis unless a genuine business reason means this is not possible.  Flexible working should not be an obstacle to career development and promotion, and employers should be more willing to see flexible working as a reasonable adjustment for disabled people.  The report also proposes that the Government should legislate to extend the statutory right to request flexible working to apply from day one of employment.

Recruitment and promotion

Employers are recommended to take active steps to tackle prejudice and bias in recruitment, promotion and reward decisions.  They should use transparent competencies for job roles, and advertise senior roles widely rather than relying on personal networks.  All persons involved in making appointments should be trained in equality law and fair decision-making.  Employers should set targets for senior appointments to increase diversity in their talent pipelines, and facilitate more flexible career paths.

Sharing the caring

The report identifies the uneven distribution of parenting and caring responsibilities, the low take-up of paternity leave and parental leave, and access to affordable childcare as significant factors contributing to the gender pay gap.  The key recommendations here are for legislative change to tackle the “motherhood penalty”, such as the introduction of a “use it or lose it” parental leave for fathers, at a pay rate which properly incentivises them to take up this entitlement.

Employers are advised to introduce policies which encourage men to share childcare more equally and so reduce workplace bias towards mothers as the primary carer.  The adoption of enhanced shared parental pay (avoiding discrimination risks) can be a way for employers to support male employees to increase their caring responsibilities and to change their organisational culture.

Pay gap reporting

The report advises that the Government should extend mandatory pay gap reporting (see our previous blog – https://www.cripps.co.uk/employment/mind-gender-pay-gap/ ) to ethnicity and disability pay gaps.  It recommends that employers report on their gender pay gaps even where not legally required, and voluntarily report on their ethnicity and disability pay gaps and their action plans to close these gaps.  Transparency in these areas is viewed as beneficial to the employer’s organisation and its employee relations.  It may also benefit organisations when bidding for the award of public sector contracts.

Please contact the Employment Law team at Cripps for assistance with reviewing your contracts, policies and recruitment processes in the light of these recommendations, or for the provision of equality and diversity training to your organisation.  The ECHR report is at https://www.equalityhumanrights.com/sites/default/files/pay-gaps-strategy-fair-opportunities-for-all.pdf

Tens of thousands of slavery and human trafficking victims – Are you doing enough to ensure you are compliant with the Modern Slavery Act 2015?
11 August, 2017

Do you know what your company’s obligations under the Modern Slavery Act 2015 (MSA) arered sign?

The MSA was introduced to tackle slavery and human trafficking.  However, its impact appears to have been limited with the National Crime Agency (NCA) revealing that cases of slavery and human trafficking are occurring in ‘every large town and city in the country’ and it is ‘far more prevalent than previously thought.’

Law enforcement steps up response to modern slavery

In response to statistics released by the NCA on 10 August 2017, which showed there are more than 300 current live policing operations targeting modern slavery, the NCA is commencing a new campaign focused on sexual and labour exploitation.

As an employer, what does this mean for you? Businesses that are part of a supply chain need to be aware of the scope of the MSA and their obligations under it.

Part of a supply chain? The Modern Slavery Act 2015 could impact you

Although the obligations under section 54 of the MSA only apply to certain employers (see link above for further detail), namely those at the top of a supply chain, we have had several businesses seek advice following an important client of theirs insisting on evidence of anti-slavery good practice, including anti-slavery policies, and inserting anti-slavery compliance obligations into commercial terms.

In light of the recent substantial media coverage, if you are part of a supply chain it might be a good idea to ensure you have good anti-slavery practices in place and that these can be readily evidenced if a big client so requests.

Is anything private at work?
10 August, 2017

The High Court decision of Simpkin v The Berkeley Group Holdingsemail in a letter plc highlights both the benefits to an employer of having a clear and comprehensive IT policy and the risks for employees using work IT systems for personal correspondence.

Many employers permit their employees to use the company’s IT system for occasional personal use. However, problems can arise when an employer claims that it owns the information or documents created on its IT system; whilst the employee argues it has a reasonable expectation of privacy and confidentiality.

Mr Simpkin was in an employment dispute with his former employer, Berkeley, and sought for the High Court to determine that an email he sent from his work email address to his personal email account (and then on to his lawyer for advice in relation to divorce proceedings) was private, confidential and privileged – meaning that the email and its contents should not be included in Berkeley’s witness statements and should not be relied upon further in proceedings.

However, the content of the email and the attachment were of particular interest to Berkeley since they set out an account of Mr Simpkin’s expectations under the company’s Long Term Incentive Plans that was somewhat different to the position set out in his witness statement relating to the dispute.

It is a pre-condition to a claim of privilege that the documents in question are confidential. In short, Berkeley argued that the email (and attachment) simply was not confidential and it had a right to access it.

The High Court agreed with Berkeley and the following factors lead to its decision:

  • Mr Simpkin had signed a copy of Berkeley’s IT policy which made it clear that emails sent and received on its IT systems were the property of Berkeley;
  • Mr Simpkin’s employment contract made it clear that his emails were subject to monitoring by Berkeley without his consent; and
  • The content of the emails were created on Berkeley’s IT system, at its office and were then sent out on its email system.

This case is a good example of the importance and benefit of having a clear IT policy, and employment contract, that is acknowledged by the employee. Setting out expectations from the outset of employment should help reduce any misuse of your IT systems. Further, if needed, being able to monitor and access an employee’s use of your IT systems can be a useful tool in monitoring performance and disciplinary issues.

Voluntary overtime payments must be included in holiday pay
2 August, 2017

The EAT has handed down a judgment concerning the calculation of paid annual leave due under the Working Time Regulations 1998 (“WTR”). In Dudley Metropolitan Borough Council v Mr G Willetts and Others, the EAT has held that payments for entirely voluntary duties, such as voluntary overtime, standby, call out work and travel time linked to that work, fall within the scope of Article 7 of the Working Time Directive (“WTD”), and therefore within the concept of “normal remuneration” for the purposes of calculating the four weeks holiday pay due under regulation 13 of the WTR.

This case is important because it is the first binding authority to consider after full argument whether truly voluntary overtime should be included in “normal remuneration” for the purposes of the calculation of paid annual leave. Bear Scotland ltd v Fulton [2015] (EAT) left that question open, since the overtime considered in that appeal was “non-guaranteed”, being overtime which the employer was not obliged to offer, but which the employee was obliged to undertake if offered. This EAT decision now sets a legally binding precedent which employment tribunals in the UK are obliged to follow.


The 56 Claimants were employed by Dudley Metropolitan Borough Council (“the Respondent”) as tradesman involved in the repair and maintenance of the Respondent’s housing stock. The Claimants had set contractual hours and also volunteered to perform additional duties which their contracts of employment did not require them to carry out. The Claimants argued that their out-of-hours standby pay, call out allowance, voluntary overtime and mileage or travel allowance should be taken into account in the calculation of holiday pay. The Respondent had not taken those payments into account when calculating holiday pay, which it had paid based on contractual hours only.

Despite finding that on-call and additional overtime work was entirely voluntary on the part of the employee, the Employment Tribunal had nevertheless held that those payments should be included in the calculation of holiday pay as the additional payments had been paid with sufficient regularity to be considered part of the Claimants normal pay. It was also noted by the employment tribunal in this case that once an employee had volunteered for a rota, they were committed to it.  

The Employer’s Argument

On appeal to the EAT, the Respondent argued that the decisions of the Court of Justice of the European Union (“CJEU”) in British Airways plc v Williams [2012] and Lock v British Gas Trading Ltd [2014] made it clear that payments for such work should not count as “normal remuneration” because they lacked the necessary intrinsic link to the performance of tasks required under the contract of employment.

The EAT’s Decision

The EAT dismissed the appeal. It was noted by the EAT that the right to paid annual leave had been regarded by the CJEU as a particularly important principle of EU social law. EU law required that normal (not contractual) remuneration must be maintained in respect of the four week period of annual leave. That overarching principle meant that payments should “correspond to the normal remuneration received by the worker” while working. The purpose of that requirement was to ensure that the worker suffered no financial disadvantage by taking leave, which was liable to deter him from exercising this right.

In order for a payment to count as “normal” it must have been paid over a sufficient period of time. That would be a question of fact and degree. Questions of frequency and regularity are likely to play a part in determining whether a payment is normal. Items which are not usually paid or which are exceptional do not count, but items which are usually paid and regular across time may do so.

It was felt by the ECJ that the exclusion as a matter of principle of payments for voluntary work which is normally undertaken would amount to an excessively narrow interpretation of normal remuneration. It would give rise to the risk that employers would fragment pay into different components to minimise levels of holiday pay.


This EAT decision highlights that cases regarding what should be included in holiday pay will turn on their own specific facts. Therefore it is important for employers at this stage to take stock of their voluntary overtime and standby patterns and the regularity of those in order to determine whether or not payments for such are sufficiently regular and settled to require inclusion in holiday pay. Unfortunately the EAT offered little guidance as to what level or regularity or frequency is required for a payment to be deemed “normal remuneration”. Therefore until more cases start trickling through the tribunal system, there will remain some uncertainty for employers going forward.   

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