Client Question – I have a zero hours worker. They have been signed off sick. Do I have to pay them sick pay?
Watch this video to find out your obligations.
Holiday Pay Decision Part-Year and Irregular Hour Workers
We have had a big decision recently after the conclusion of the Supreme Court case, Harpur Trust v Brazel.
The case centred around the holiday pay of term time only workers who had their holiday pay restricted to 12.07% of the hours they worked through the year.
The Working Time Regulations 1998 (WTR) state workers are entitled to 5.6 weeks holiday.
The Employment Rights Act 1996 (ERA) tells us how we calculate what a week’s pay amounts to for the purposes of holiday pay.
Where a worker does irregular hours the previous 52 weeks should be used to create an average (previously this was a 12-week reference period). Where no remuneration was paid in a certain week, that week would be excluded and earlier weeks where the worker had been paid would be used.
This can cause issues for workers with irregular hours and what we find is that employers will calculate using 12.07% of each hour worked. 12.07% is used because that is the equivalent of 5.6 weeks of a full-time worker.
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In this case, Brazel was a music teacher, she didn’t have set hours and would work term time only. She was paid monthly based on an hourly rate. She was still employed during school holidays but would not have duties and would not be paid.
She was entitled to 5.6 weeks holiday under her contract and she received payments calculated based on 12.07% for each term. She brought a claim stating that there had been a deduction from wages and that she should have been paid her holiday by reference to the preceding 12 weeks (which has now changed by law to 52 weeks). This would have resulted in more holiday pay for her.
The employment tribunal disagreed with her, but the Employment Appeal Tribunal and Court of Appeal disagreed.
The Court of Appeal found that a cap of 12.07% was incorrect and that even though the different method would mean the period working part of the year would be better off in terms of holiday pay than a full-time worker, they did not consider it to be unfair.
The case then went to the Supreme Court.
The Trust argued the holiday should be pro-rata to take into account that the person is not working every week of the year and to reflect the work done.
The Supreme Court disagreed. It stated that there was no room to interpret Government drafted legislation in any way other than as set out in the ERA and WTR which is by reference to calendar weeks.
The correct approach now for calculating part-year workers and workers with irregular working hours is to calculate using a 52-week average prior to the annual leave period and by ignoring the weeks when no work has been completed. The maximum number of weeks that can be taken into consideration is 104.
Where someone has not worked sufficient weeks, the weeks that have been worked should be used to calculate the average.
Elissa Thursfield appeared this morning on BBC Radio Wales with Claire Summers. Listen back to their conversations about today’s increase in Nation Insurance contributions.
BBC Radio Wales
National Insurance contributions are going up today for millions of people across the UK.
Anyone earning more than £9,880 will pay 1.25p more per £1.
Employers will also be paying extra contributions for their staff.
If you are self employed, you will be paying more on your profits.
From July the threshold of when you start paying tax will increase to £12,570, therefore in July anyone earning less than around £34,000 will be paying less NI than they were a year ago.
This money will be going to health and social care in England, experts are predicting the increase will be around £11bn.
Opponents are saying it will just put more pressure on the cost of living.
Claire – We are all feeling the squeeze right now with all costs going up.
Elissa – What it means is the cost of employing somebody is going to rise. Businesses are up against it at the minute anyway with a battle to attract the right kind of talent. Wages have gone up with the national minimum wage and on top of that now we have this increase.
Claire – What might the impact be on smaller businesses?
Elissa – For smaller businesses particularly those whose cash flow has had a bit of a squeeze or those who are reliant on raw materials or whether cost of sales has gone up due to cost of living or the cost of sourcing has gone up. This is going to be an additional squeeze on their business and it could mean they can’t afford to employ as many staff as they have been or they will have to stop recruiting.
Claire – So it could lead to redundancy in some cases? Could it mean some businesses may have to close?
Elissa – Potentially yes! This could be the tipping point for many businesses where they have skated through the pandemic, they have managed to stay open. The government support has now stopped and now everything is now rising. Utility costs have rocketed. The day to day costs of running a business have risen, the money they have to bring in before the business owners can even take home £1 have gone up significantly so I do think we will see some smaller businesses closing.
Claire – Could it stifle jobs?
Elissa – Yes! With this candidates market at the moment and the battle for talent at the moment where candidates pick and choose where they work. We may see that situation change if there are less businesses around or less people willing to recruit due to the cost of employing people.
Claire – And if you are a business listening to us today, what support is there? What is the advice? What do you think small businesses will need to have to cope with this increase?
Elissa – It’s very easy for smaller businesses to feel isolated so my suggestion would be to
- look out for local free networking groups
- become a member of the federation of small businesses
- chat to your peers
- there is lots of free advice out there, look at what other people are doing and this will help you feel less alone.
- if you don’t have an internal HR or legal department then you can outsource those options and it tends to end up cheaper and more efficient, particularly if you are going to need to make redundancies, you don’t want to do a P&O and get it wrong, make sure you take advice so it doesn’t end up costing you more in the long run
Oliver Hides “People in Wales who test positive for Covid 19 are no longer legally required to self isolate. The change came into force yesterday (28/03/22). Mark Drakeford said on Friday, it was a finely balanced decision to scrap most /covid of the Covid rules in place.”
Ollie welcomes, Elissa Thursfield “our go to woman for these kinds of issues” Ollie – This may well be something that companies are thinking about, having someone on your staff, should they be expected to work?
Elissa – As an employer, we have a duty of care for our staff, we have to do risk assessments to ensure we are protecting against Covid and keeping the risk low. The sensible thing to do would be to stay home if someone tests positive, there is SSP for that purpose. Unfortunately, with there no longer being a legal requirement for these people to stay home, those who are on a lower income or struggling financially and feel they can’t survive on SSP, we are expecting to see them presenting for work and going into the workplace.
There are many roles which cannot be worked from home. We do still have the “self-isolation support scheme payments” available until June. After that we are expecting to see a spike in people presenting to workplaces who are Covid positive.
People who test positive who have the capability of working from home. If someone has the capability to work from home and refuse to do so, that would be seen to be unreasonable from the employers perspective. If someone has tested positive and are very poorly with it, if they are too sick to work, they shouldn’t be working from home. On the flip side, most employees are asking to work from home, they want their full pay whilst they are off. The reluctance is often on the employers side, where they are unsure whether it will work, if they haven’t done it before.
What the pandemic has shown us is that people can be very productive and it can work.
You can’t open a newspaper today (and rightly so) without seeing the absolute mess that P&O have made of their so-called redundancy process in the UK.
You know your team has got it wrong when comments are coming out of Number 10 Downing Street about your day at work and Nicola Sturgeon has rung to give you a telling off. #worstdayever
Frankly, and I mean this with as much professionalism as possible where I rarely criticise other professionals, an A-Level law student could have done better. No, really, a quick ‘Google’ of ‘how to make 800 people redundant immediately’ would have provided an inkling to the P&O team of what was to come.
Now whilst the tone of this may seem light-hearted, it’s not, there are some serious messages in here. The disgraceful treatment of the P&O staff is abhorrent, and it was totally avoidable. Given the public reaction it’s a surprise in this day and age that we haven’t had an announcement from P&O: ‘sorry guys we were hacked, no idea where that message from’. Not that anyone ever believes those messages, just FYI.
So, here is what we know so far:
- 800 out of 2,200 staff members have been dismissed- we do not know the status of those contracts, whether they have been employed for more than 2 years and have protection from unfair dismissal or whether they are zero hours contracts
- Only the UK has been targeted, not the French staff (who have the right to issue injunctions by the way via their unions/work councils in such circumstances, and the minimum length of service for severance is 8 months, not 2 years like the UK)
- The Secretary of State for Business has announced no notification had been made in line with collective consultation rules- an immediate breach of the requirements when dismissing more than 20 people in a 90 day period
- Notice of redundancy was given on a video message, not in writing
- Trade Unions are stating they were not consulted with, and therefore there has been a breach of the requirement to consult and elect employee representatives. This would likely implicate that there has been no consultation or information given at all.
- Dismissal was immediate and P&O are therefore relying on paying in lieu of notice
Clearly they are not paying their legal team or PR team enough. This has disaster written all over it. The breaches are numerous and severe. Even if all 800 staff have under 2 years employment and/or are zero hours workers, there are significant risks to P&O in relation to status arguments and a significant miscalculation regarding the need to undertake a process even where staff have less than 2 years employment.
It is serious stuff, a Company can be prosecuted for failing to notify, it is a criminal offence and the fine is unlimited.
There must have been a work experience student in the room when the planning was done though, as on the worst pre recorded video call of 2022 the staff were offered settlement agreements. ‘Of course! Hurrah! Our get out of jail free card’ exclaimed the P&O bosses when the script was authorised….
The settlement agreements were offered at the same time as the staff were told that they were made redundant. They already knew their employment was ending that very day, and P&O were banking on all the staff taking up the offer of the settlement agreement without any notification of the figures or time to consult a solicitor in advance of the termination being implemented.
This was a terrible decision, not only was the settlement offered on an ‘on the record’ call and not without prejudice, but it was done at the same time as the hammer blow, that their employment was ending and they were being replaced by external agency staff. In the absence of any figures or other motivating factors being visible, employees were enraged. Rightly so.
It resulted in staff refusing to leave their ships and a worldwide ‘big brother’ show of the police attempting entry, captains lifting up their gangplanks and if course the telling off from Nicola Sturgeon.
How on earth did they really think this would play out? It shows a total lack of employee engagement and management that has no idea how their workforce reacts, thinks or what motivates them. They have not been treated like human beings with independent thoughts and feelings.
On Twitter #irishferries is trending, as people remind the world that Irish Ferries did the same thing to 543 of their workers in 2005. In the Irish Ferries mass redundancy security guards were smuggled on board the shifts to ensure a ‘smooth transition’. The Brexit blamers are also out in full force, declaring with full confidence that since we left the EU we have lost all our employment laws (we haven’t). You can probably hear the collective eye rolling by employment lawyers up and down the country.
I am sitting here trying to think how on earth they were advised:
‘It’s ok, no-one talks about Irish Ferries any more, it will be yesterday’s new in no time’– Wrong we are 17 years further on into the ‘social media’ revolution, this story will be around a while!
‘There is a war, no one will care’– Wrong, with a humanitarian crisis and concern over oil supplies and our Prime Minister meeting in the middle east this week, a mass redundancy by a Company owned by a Dubai based business will definitely get noticed.
‘They will all take settlement agreements and there won’t be a PR disaster’– see social media point above….
P&O now have a huge mess to clean up, and its going to cost them a fortune in fines, management time, stops on services and delays with ships being out of place. Cutting corners to ‘save costs’ has really done well for them hasn’t it? Its likely to cost them significantly more and their reputation is in tatters. The Trade Unions likely smell blood already, its going to be a bumpy road out of this for them.
P&O when you are up the creek without a paddle, drop an anchor. #HRANCHOR
The case concerned a lady called Joan Hutchinson who brought a claim against Asda.
The tribunal found Mrs Hutchinson was discriminated against due to her age and disability.
At the time of the incident Mrs Hutchinson was 73 years old and was suffering from dementia. The tribunal were very clear to point out that Asda acted with the best of intentions.
There was an example where a colleague rummaged through her bag to find her keys and bus pass.
That was deemed to have violated her dignity.
Whilst they were trying to help, they did so without her permission.
She was also asked on multiple occasions whether she would like to retire.
The tribunal came to this decision
Had this been a younger member of staff suffering with a disability the chances are they would not have been asked if they wanted to retire.
They would have taken them through a sickness absence procedure.
For some reason Asda did not follow that well trodden procedure that businesses and employers are typically used to when it comes to managing employees who aren’t well or who are no longer capable of doing their job.
A well meaning employer who simply didn’t follow procedures ended up with a national tribunal and all over the national press.
In summary
Always ensure you are following your company procedures or handbook. If you are in doubt of which procedures you should be following, always take advice.
See more like this here
Elissa suggests what to do when you are taken to an employment tribunal.
It can happen to any business that employs someone.
It doesn’t necessarily mean you’re a bad employer or you’ve done anything wrong.
Employment tribunals can be issued by anyone at any time even whilst they are in employment.
It’s very rare for a claim to be rejected on the grounds that it has no prospects of success, without there being some sort of tribunal procedure first
- Don’t point fingers – this is not productive and won’t help the case
- Always take advice – There is a big difference between professionally drafted defences and those done internally, even by very experienced HR. Taking an objective view by an outsider can often mean points of defence are looked at that would not have ordinarily have been considered and they can also ensure everything is being dealt with in line with the most up to date employment law.
- Preparation is key – ensure documents are read and absorbed so you are fully aware of everything that is going on. You will be able to engage better. Your solicitor will be able to advise you in a more informed capacity. You will also engage better with the decisions which need to be made.
Employment tribunal cases can be defended! You don’t always have to settle. It doesn’t always mean you have to go down in tribunal for thousands of pounds. They can be defended successfully but its important to follow the 3 points above.
See more articles like this…
Elissa discusses pay rises
Businesses may be coming up to the financial year end or perhaps pay review time.
Contracts often state pay will be reviewed every year but there is no guarantee that pay will be increased.
What about if the contract relates to inflation-based pay rises?
Check your contract of employment to see whether it says there is a contractual obligation to increase the pay or whether it is discretionary.
If you’re not sure, if the contract is vague or if it could be contained in policies ensure you take advice.
Watch more Q&A videos here
Elissa reports on the Sue Gray report from an employment law perspective
Listen to Elissa’s recent appearances