Zero-Hours Contracts: Exclusivity restrictions on workers banned

To update my blog last week, Vince Cable this morning confirmed that employers are to be banned from placing restrictions on workers on zero hour workers from seeking additional work elsewhere.

It is estimated that employees on zero-hour contracts account for about 2% of the UK’s workforce. Cable stated that zero-hour contracts do have a place in the labour market, despite calls for contracts of this nature to be banned completely, but that they need restrictions which stop workers from being abused.

Despite the government plans to address the issue of zero-hour contracts, there are still concerns surrounding them as a whole. Even if workers can seek income elsewhere, they are still by no means guaranteed work and still face uncertainty regarding their income. For some employers and employees though this is the very benefit of the arrangement. Students and others with other flexible commitments view the arrangements as a chance to work when they are available. On that level it can be a valuable means of getting experience in the labour market whilst employers can access additional workers when they need them.

There are still calls for zero-hour contracts to guarantee a minimum number of hours for workers but I’m not sure that is of benefit to all potential workers never mind employers. However, these reforms do not address the issues surrounding employers favouring workers or more frequently not giving work to those perceived as ‘rocking the boat’ when they raise what might be a relatively minor issues.

However, the changes do start to address the difference in power balance between employers and employees, allowing workers and employers flexibility. Ultimately I suspect the other main factor that will address that power balance is an improvement in the economy. If only those workers who want the flexibility of a zero hours contract work on that basis the issue becomes irrelevant.

All employees now able to seek flexible working

The right to request flexible working will extend to all employees who have been employed for 26 weeks from 30 June.

The right was initially introduced for parents with children under 6 or those with disabled children in 2003. Over the years the qualifying conditions have widened. From 30 June the eligibility criteria is broadened to all employees with 26 weeks employment.

To make a request an employee must apply in writing, specifying the date of the application, stating that the application is made under the statutory procedure, the change that they seek when they want it to apply, the effect they think it may have on the employer and how that could be dealt with and whether they have applied before and if so, when.

The employer must deal with the request in a reasonable manner,
notify the employee of its decision within the decision period (usually three months) and only refuse a request if there are grounds to do so.

The grounds on which a request may be refused are the burden of additional costs, a detrimental effect on ability to meet customer demand, inability to reorganise work among existing staff, inability to recruit additional staff, detrimental impact on quality, detrimental impact on performance, insufficiency of work during the periods the employee proposes to work or planned structural changes.

There is a new ACAS Code of Practice on Handling Requests to work flexibly in a reasonable manner and a Guide for Employers.

Remedies for breach remain much the same. An employee may bring a claim on the basis that their employer did not deal with their application in a reasonable manner, did not notify them of the decision on their application within the decision period, rejected the application for a reason other than one of the statutory grounds, made the decision to reject the application based on incorrect facts or wrongly treated the application as withdrawn. In such cases the employment tribunal will review the procedure and decision making process followed by the employer. What they will not do is question the employer’s commercial decision making or substitute their own view of the situation for that of the employer. It is also possible that the decision may be discriminatory. Claims must be brought within 3 months and are subject to the ACAS early conciliation process.

Key points for employers: as an employer you should be able to demonstrate that you have followed the statutory requirements, avoid raising ‘technical’ points about employees’ requests, be able to show that you have seriously considered the request ideally from a perspective as wanting to accommodate employees rather than not wanting to and that you have considered alternatives perhaps not suggested by the employee. Consistency with other decisions can also be important. Finally as with many decisions a good explanation of the decision and the reasons for the decision should be given and, as always, keep records!

Abuse of zero hours contracts

In the Queen’s speech on 4 June the Government announced their intention to introduce measures to crack down on abuse of zero hours contracts. No detail is included as to what is meant by abuse. The subsequent commentary has referred to the exclusivity provisions often included in such contracts and indeed that does seem to be an abuse. However more frequently employees on zero hours contracts believe that if they raise an issue or concern or are unable to work some hours offered to them the consequence will be that there will then no longer be any hours for them.  Employers on the other hand often think it will be a panacea for some of the issues employing staff creates and it does suit some but it can lead to transitory less engaged staff.  Like everything, I suspect they have a place but the recent enthusiasm for such contracts may turn out to have been misplaced in a more buoyant economy.  In this blog I identify some of the legal issues such contracts raise.

What is the current legal position on zero-hours contracts?

There is no legal definition. It is usually thought to mean a contract of employment under which the employee has no set hours and is paid only for the hours worked. At its root is the agreement that there is no obligation on the employer to provide work. This in itself creates a number of legal issues.

Legal issues on zero hours contracts

  • The employment status of the individual is unclear – are they an employee, a worker or self-employed.  In employment the  status of the individual dictates their legal rights.  This lack of clarity creates confusion.
  • As with all contracts in assessing employment status a tribunal look not just at the contract but at what is happening in practice.  A relationship that starts as a zero hours contract may, over time, evolve into something different.
  • Such workers still have rights under the Equality Act indeed the profile of the zero hours workforce may be indirectly discriminatory and lead to claims by part-time workers, one gender or one age group

The reality of zero hours contracts is that the individual’s legal rights will depend on their status and the duration of the relationship and what is agreed in the contract.    They have created an uncertainty of employment for many who work under them.  However the question really is whether that is a consequence of zero hours contracts or a consequence of the raft of changes to employment rights that have been introduced in recent years.  I will blog separately about the rights of workers and employees with no qualifying period of employment, the rights available to employees regardless of their length of employment and the rights employees accrue as their employment continues.

 

World Cup Fever

I’m not a huge football fan (some may say unsurprisingly) so I find the flurry of articles on dealing with the employment issues raised by World Cup fever bemusing.  Nevertheless ACAS have produced some useful guidance on how coping with some of the issues that employers may face during the World Cup such as all staff wanting leave for the matches, what to do if you are suspicious about sickness absence on match days and unauthorised use of social media or websites to view or discuss matches and possibly dealing with issues around alcohol.  You can find the advice here  World Cup advice and guidance  Acas – http://bit.ly/1hOHZBa  via @acasorguk

I’m just pondering if this is dicriminatory… no such advice is produced or flexibility is advised for the World Netball Chamionships #netballrocks

Holiday Pay: are your payments right?

As the holiday season approaches many employers may be considering how to calculate their employees’ and workers’ holiday pay. Often employees and workers whose pay includes commission, bonuses or regular overtime are paid holiday pay based on basic salary. A series of court decisions and pending cases, most recently concerning commission, suggest that this is the wrong approach.

The Working Time Directive on which the entitlement to holiday pay is based provides that employees to should be paid their ‘normal remuneration’ when on holiday.

In a decision last month the ECJ confirmed that where an employee or worker is paid contractual commission, that commssion must be taken into account when calculating holiday pay. The question of how it should be calculated will be dealt with by the employment tribunals but broadly the expectation is that it will be assessed by reference to average commission earned probably over a 12 month reference period or possibly a 12 week period.

On overtime, employers have followed a 2010 decision which held that holiday pay should be calculated by reference to contracted hours only and overtime disregarded. This has meant that often employees have contracts that provide for working say 16 hours a week but they usually work 30 hours but get holiday pay based on the 16 contracted hours. Two recent casers challenge that as being contrary to the Working Time Directive. It is expected that the decision will be that where workers regularly work overtime holiday pay should be calculated to include those payments as they are part of ‘normal remuneration’.

When calculating holiday pay therefore employers may wish to consider looking at the employees normal pay over the preceding 12 months and making a payment calculated on that basis.

Financial penalties for employers losing tribunal cases

From April tribunals will have the power to order an employer who loses at tribunal to pay a financial penalty of up to £5,000. The payment is in addition to any compensation paid to the employee and can be ordered if the employer’s conduct has ‘aggravating features’ even in circumstances where an award is not made to the claimant.

What amounts to aggravating features has not been explained. I had a case recently where the tribunal came to the conclusion that the employer had made alterations to documents used in a grievance procedure after the documents had been signed and agreed by both parties. You would hope those were aggravating features. Even if they were though the claimant would not have benefitted the penalty is to be paid to the Exchequer.

The amount of the penalty can be from £100 to £5000 and is decided by the tribunal who are required to take into account any factors it considers relevant including the circumstances of the case and the employer’s circumstances. Furthermore an employer who pays quickly (within 21 Days) can reduce their liability by 50%.

This increase in an employer’s potential liabilities following a tribunal decision must be a further factor for employer’s to consider both at the new early conciliation stage or throughout any claim.

Abolition of government support for SSP

Another change effective from 6 April is the withdrawal of government funding for Statutory Sick Pay (SSP). The amount of SSP increased to £87.55 per week for employees above the Lower Earnings Limit with effect from April.

The Percentage Threshold Scheme which enabled employers to reclaim SSP, where the total SSP paid in a month exceeded 13% of the employer’s Class 1 National Insurance Contributions for that month is abolished from 6 April. The government maintains the subsidy acts as a deterrent to stop employers addressing long term sickness issues but all the research and commentators have drawn attention to the burden this will place on very small businesses.

For a small business with an employee off for 12 weeks the cost of the absence is just over £1000. Many suggest that the impact is likely to increase outsourcing and the use of agency workers. It may also lead to employers being forced to dismiss employees on ill-health grounds sooner than they may otherwise have done. If an employer is able to say that the effect of having to pay the SSP affects the finacial stability of the business, it seems to me that dismissal could be a reasonable decision.

Early conciliation for employment claims: a simple, quick and low cost process?

Monday 6 April saw the introduction of a new system of early conciliation in employment disputes. The new system becomes compulsory on 6 May. Most claimants making an employment tribunal claim on or after 6 May will have an obligation to participate in early conciliation with ACAS before they start a claim.

Early conciliation is a relatively straightforward process. The employee who wants to make a claim fills in a form either online or on the hard copy form which is posted to ACAS. An early conciliation officer contacts them to explain the process and ask if they want to proceed with conciliation. If they do the form is sent to an ACAS Conciliation Officer. The Conciliation Officer then contacts the employer to ask if they will take part in the process. If they agree the Conciliation officer will make efforts to promote a settlement to resolve the issue. The parties have a month to try to reach a resolution. If no solution is found a certificate is issued and the employee may, if they wish, go on to pursue the claim.

The procedure has a number of advantages for both parties most notably it’s simple, quick and low cost. Negotiated settlements also have the advantage of being able to provide solutions that tribunals cannot order.

There are also some features that may create issues. Employees looking at a simple, low cost option may be encouraged to ‘have a go’ which may discredit the system in an employers’ eyes. Similarly an entrenched employer with emotions still high following the incident that led to the dispute may be reluctant to properly engage in the process.

ACAS have a good record in achieving settlements so despite the reservations the prospects look good. No doubt the proof will be in the developments in the coming months…

Redundancy pools

I often get enquiries about redundancy pools and who should be included. The answer is there are no rules that specify who should be included or who should not. These are business decisions and employment law generally leaves business free to make those decisions.

The key is to make a reasoned decision about the pool for redundancy that you an demonstrate you applied your mind to. That usually means that when you make the decision you make a note of the factors you considered and the decision you came to. As long as that decision satisfies the range of reasonable responses test, i.e. was your decision one of a range a reasonable employer might come to, that will be enough. Quite a low threshold really.

Appealing dismissal

I always feel pleased with a result that shows the system works whether for employer or employee.  After a long lunchtime meeting I got back to my desk to an e-mail from a client I saw a couple of weeks ago.  I’d advised him on his appeal against dismissal.  He’d been dismissed for negligence following a robbery – it was said he could have prevented it.  At first sight the evidence did look quite damning but when we went through it it was quite clear that none of the things he could have done would have made any difference.  The thieves would still have got away with it.  We prepared a letter of appeal going through the detail and explaining why he could not have prevented the theft.

In the e-mail this afternoon he tells me that he has been given his job back with back pay.  All’s well that ends well.

My experience of employers is that most treat appeals very seriously but sometimes employees believe that their case may not be properly reviewed or reconsidered.  This just shows how wrong that assumption can be!

Follow

Get every new post delivered to your Inbox.

Join 225 other followers