Constant changes and increasing complexity have helped make employment law a frontline challenge for business and this year looks set to continue the trend.
After several companies hit the headlines for poor practices in recent months, such as the reports of workers at Sports Direct receiving less than the national minimum wage and being subjected to humiliating working practices, the Government is moving to crack down on unscrupulous employers in order to stamp out exploitation in the workplace. The new Labour Market Enforcement body will take the lead in this, headed by Prof Sir David Metcalf, a founder of the Low Pay Commission.
Together with other employment legislation already announced for introduction this year, bringing further significant changes and new requirements, businesses need to make sure they are up to date with their practices and terms of employment. Up and coming legislation includes:
Gender pay gap reporting: The Equality Act 2010 (Gender Pay Gap Information) Regulations are set to come into force on 6 April 2017 meaning all private sector organisations with at least 250 employees must publish details of their gender pay gap, for both basic pay and any bonus payments. The first reporting will be due no later than 4 April 2018, and annually after that. This could be a raw topic for supermarket employer Asda who recently lost an equal pay claim brought by women workers, who claimed their work was equal to male warehouse workers. In the preliminary judgement, the women won their case but Asda are expected to appeal.
Apprentice levy: Also due on 6 April is the annual apprenticeship levy, under the Finance Act 2016 (part 6). In a Robin Hood style approach, the levy must be paid by all private and public sector employers in the UK with a pay bill of £3m and above. It will be charged at the rate of 0.5% on their total pay bill, with an annual allowance of £15,000 to offset against the levy payment. The income will be used to fund a new system of post-16 apprenticeships, which will be available also to those employers falling below the £3m threshold.
Salary sacrifice schemes: As announced in the Autumn Statement, the Finance Bill 2017 will set out changes to the tax status of salary sacrifice benefits with effect from April 2017. The changes will see an end to the tax saving benefits of most salary sacrifice schemes, which will become subject to the same taxation as cash income. Any arrangements in place before 6 April 2017 will be protected for one year, or four years in the case of cars, accommodation or school fees. The extension will apply until the arrangement ends, is renewed or otherwise modified. Remaining exempt from tax will be pensions and related advice, cycle-to-work and ultra-low emission cars.
Tax-free childcare: Also retaining its taxation benefits will be existing employer-supported childcare voucher schemes. These can remain open to new entrants until April 2018 with childcare vouchers and all associated tax savings available for the life of the scheme. However, the Government is expected to launch a new, alternative tax-free childcare scheme, which will allow working families satisfying a minimum/maximum income requirement to claim 20% of childcare costs for children under 12, or under 17 where children have a disability, capped at £2,000 per year. The two schemes can run in tandem, but once a new scheme has been established no new employees will be allowed to join an old-style childcare voucher scheme and still receive the tax benefits.
Holiday pay: An appeal by British Gas to the Supreme Court will challenge last year’s ruling by the Court of Appeal that holiday pay should be ‘normal pay’ and include contractual results-based commission. The appeal is expected to be heard in March 2017 but in the meantime the ruling stands and employers need to look at irregular payments made to employees and establish which are to be included within ‘normal’ pay and so be included in any calculation for holiday pay.
“The complexity around holiday pay calculations alone means employers are likely to need advice to get it right and is just one example of how employment law continues to pose challenges for business and the year ahead is certainly no exception,’ says employment specialist Sue Ball from Portsmouth legal firm, Verisona Law. ‘It’s important to get ahead of the deadlines and make sure you’re addressing the changes across all aspects of the business.
“And while European law is behind some of the upcoming legislation or court rulings, it cannot be ignored on the basis that we are starting the process of withdrawing from the European Union, whatever style of Brexit is adopted by the Government. For now, everything stands.”
Here are the types of cases we handle:
- Contracts of Employment
- Employer Staff Handbooks
- Redundancy Process
- Breach of Contract
- Breach of Restrictive Covenants
- Tribunal Claims
- Settlement Agreements
- Consultancy Agreements
Sports and Football Law
- Contracts of Employment
- Service Agreements
- Contractual Issues
- Executive Departures
Dealing with creditors’ demands for personal guarantee payments
The company had substantial liabilities to the bank and its landlord. These liabilities were personally guaranteed, jointly and severally, by both directors.
The bank and landlord both called in the personal guarantees by pursuing our client, rather than the co-director who had little cash or assets.
As a result our client was required to pay the guarantees totalling tens of thousands of pounds.
Claiming a share of the guarantee payments from the co-director
We were instructed to pursue a claim against the co-director for a contribution of half the amount our client had paid.
The co-director instructed solicitors to resist the claim, alleging they had little or no involvement or control in the business and so should not have to contribute.
We built a case based on the detailed consideration of historic company records which demonstrated the extent of each directors’ involvement in the company. We supplied extensive witness statements and secured the disclosure of financial and other company records relevant to the case.
A number of witnesses also gave evidence at trial.
Winning and enforcing the claim
We secured a judgment at trial against their former co-director for half of the sum our client paid under the personal guarantees, together with interest and their legal costs.
Subsequently we took enforcement action to recover payment and, despite the co-director’s limited means, successfully recovered the full sum for our client.
Former Director and Shareholder of Limited Company
The background to the situation was complicated, yet Verisona Law quickly grasped the essentials and prepared clear arguments with a minimum of wasted time and cost.
Throughout a worrying period, their calm approach allowed me to fulfil my group function with a restored confidence, having been distracted prior to Verisona Law’s appointment by the aggressive and unjustified stance of the Secretary of State.
I have no hesitation in recommending Verisona Law to anyone in a similar position.
Individual - Chairman of a group of companies in the construction industry
"Over the years, I have developed a great trust in my working relationship with Mike Dyer, Head of Commercial Law at Verisona. One of the things I value most is that he is always at the end of a phone. On the rare occasions he is unavailable, his secretary is always well informed and very helpful. Through Mike, I have met many other members of Verisona and, just like in the recruitment industry, they understand the importance of being treated like an individual. They make me feel valued and important to both them and their business. At Verisona, you always deal with real people who you know and are in a position to help. Most importantly, Verisona delivers. We recently had an urgent situation regarding the restrictive covenants of new members of staff. Employment specialist Susan Ball came in on a day off to listen to us, dissect and analyse the situation, and translate what we wanted to achieve into the best possible legal language and solution. This is just one example of the calm, efficient professionalism I have come to value from Verisona over the years. Verisona has a refreshing approach to the law. They are there when we need them, always easy to talk to, go out of their way to make sure that we understand what they are doing for us and why, and always get the best results".
Legally enforcing the tribunal award
To enforce the Tribunal award we applied to the Defendant’s local County Court for it to be registered and for permission to enforce the award.
The Court granted the application and on the Register of Judgments, Orders and Fines. As a result the Tribunal award would appear as a County Court Judgment which would likely affect the Defendant’s credit rating.
Time limits for enforcing Tribunal awards
It is worth noting that there is no time restriction for registering or enforcing a Tribunal award. You can enforce one even if it is several years old. In addition, it is usually possible to claim interest on the amount until you receive payment.
A commercial business