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Zero-Hours Contracts 
Following on from our earlier report; it seems the announcement that the Government will be conducting a ‘fact-finding’ exercise into the use of ‘zero-hours’ contracts has sparked a media frenzy into the subject, with many appearing to ‘demonise’ these contracts and those who use them. We now also have the first claim being brought to a Tribunal from an employee of Sports Direct, who is challenging the use of these contracts by the Company. 
In this case, the employee, who is a part-time employee and is classed by the Company as being a ‘casual’ employee, is claiming that they have a right to be treated no less favourably than full-time employees and that the reality of their working arrangements does not match the ‘employment label’ that has been applied to them and 20,000 other part-time employees working for the Company. Specifically, the issue at hand appears to be that part-time employees are being denied access to ‘share award’ schemes, sick pay and annual leave, all of which are being granted to full-time employees. Obviously, we will report back on this case as it progresses, but in the meantime a couple of pointers when using zero-hours contracts. 
Zero-hours contracts are particularly useful for businesses whose workload fluctuates, meaning that in periods of high-demand they need to bring in additional workers to meet that demand, but in periods when that demand falls away they need a smaller core workforce. They are also favoured by individuals who wish to have a flexible working pattern to enable them to manage child-care arrangements, studying or for other personal/professional reasons. The key principle to ‘zero-hours’ contracts is that there should be no ‘mutuality of obligation’ on either the employer to provide work or on the employee to accept work that is offered to them. 
Where these contracts appear to be coming under fire is that they are perceived by many to favour employers; who appear to be using these as a means to avoid their obligations to employees and in some cases are expecting workers to work ‘exclusively’ for them i.e. they seem oblivious to the individuals’ right to decline to accept work if it is not convenient or suitable for them at a particular point in time and are expecting the individual to be available at all times that the employer needs them. 
This issue will undoubtedly rumble on for some time; but it is important to remember that a Tribunal will, when determining an individual’s employment status, always consider what the reality of that employment relationship is and not just what is written down on paper. In other words, employers who are using zero-hours contracts in the manner in which these are intended should have nothing to be worried about at this stage. 
Employment Law Updates which came into force ~ July 29th 2013 
Over recent months, we have been reporting on a number of developments in the arena of employment that have been in the pipeline. Well, on the 29th July the following changes were finally introduced: 
Compromise agreements have been renamed settlement agreements (see below) 
Pre-termination negotiations are now inadmissible in unfair dismissal proceedings 
Claimants have to pay a fee to submit a claim to an employment tribunal (see June 2013 update for details) 
New employment tribunal rules (see below) 
Reduced cap on the compensatory award for unfair dismissal claims (to a maximum of 52 weeks pay or £74,200, whichever is the lowest amount) 
However, although an earlier bid was unsuccessful, Unison has been given leave to bring a judicial review, which will be heard in October 2013, to challenge the introduction of Tribunal Fees. The grounds on which Unison have challenged the introduction of fees are: - 
In accordance with EU law, national courts must not make it virtually impossible, or excessively difficult, to exercise individual rights conferred by European Community law. Unison suggested that fees were set at a level which was prohibitive even to those entitled to partial remissions. 
Fees are not payable at all in most claims brought to the First-Tier Tribunal, a similar tribunal at the equivalent level in the judicial hierarchy to the Employment Tribunal. It is a breach of the principle of equivalence to require significant fees to be paid to vindicate EU rights where no fees are required to vindicate similar rights derived from domestic law. 
There has been no proper assessment of the Public Sector Equality Duty. An assessment should then have been made of the potential adverse effect of introducing fees in terms of the numbers and proportions of claims brought by individuals with protected characteristics which would previously have been brought and will now not be pursued. 
Indirect discrimination. For example, charging prohibitively high fees to pursue such claims will therefore have a disproportionate adverse impact on women. Given that women will not (if they earn an average income) be entitled to any remission of fees in the Employment Tribunal, it is difficult to see how that impact could be said to be a proportionate means of achieving a legitimate aim. 
Unison were unsuccessful in obtaining an injunction to prevent the fees from being introduced as planned at the end of July and therefore, if their challenge is successful, any fees paid between now and the decision will have to be refunded. We will continue to monitor this and bring an update after the hearing in October. 
Employment Tribunal Rules 
Following our earlier report into the introduction of the Fees Structure, applicable on all claims lodged on or after 29th July 2013, the following is a brief outline of some of the changes to the rules governing Employment Tribunals (in England, Scotland and Wales, but not Northern Ireland), which also came into force on 29th July 2013: 
Claims will not be accepted if they are not submitted with the relevant fee (as previously outlined). Where a claim progresses to a hearing, if the appropriate hearing fee is not submitted by the given deadline (either in the Hearing Notice or in a second notice issued subsequently), then the claim will automatically be dismissed. This applies equally to other application fees and the fee for judicial mediation. 
Elements of the rules around time-limits will be relaxed; allowing employers to request an extension to the 28-day limit for responding to claims, even after that time-limit has expired (except in ‘counter-claims’ – see below). 
An initial review of all claims and responses will be undertaken by an Employment Judge; the purpose of this will be to ensure that there is an arguable complaint and defence which falls within the jurisdiction of the Employment Tribunal. Where it is felt that one or other party has little prospect of success, the Employment Judge will write to the party with the weaker case asking them to explain why their claim/response should not be dismissed. If the party responds, this may result in a preliminary case being held so that it can be considered in greater detail and where no such response is received by the deadline, the claim/response will automatically be struck out. 
‘Deposit orders’ may now relate to a particular allegation or argument as opposed to applying to the whole claim. 
Tribunals will be able to limit verbal evidence, cross-examination and submissions within the hearing. 
Case Management discussions, which can currently take place in person or on the telephone as directed by the Employment Judge, will now be able to be conducted via e-mail. 
The current cap of £20,000 which applies to costs that can be awarded by a Tribunal will be removed. 
In claims brought by employees of a ‘breach of contract’ by their employer, the time-limit for an employer to issue a counter-claim will be reduced from 6-weeks to 28-days; they will have to set out this counter-claim in response to the claim and will be subject to a fee of £160. 
Where a claim is withdrawn, it will automatically be dismissed without any further action being necessary unless it is specifically stated by the claimant that they wish to ‘reserve the right to bring a new claim in the future’ and the Employment Tribunal is satisfied that there would be a legitimate reason for bringing a new claim or if the Employment Tribunal believes that a dismissal of the claim would not be in the ‘interest of justice’. 
Both sides will be encouraged, where it is practicable and appropriate to do so, to facilitate the use of ACAS, Judicial or other mediation in an attempt to resolve their dispute by agreement without recourse to a Tribunal. 
Settlement Agreements 
Changes to the Employment Rights Act 1996 and contained within Section 111A is expected to be implemented very shortly; these changes will allow employers and employees to engage in confidential discussions about ‘pre-termination’ settlement offers, without worrying that these may later be referred to in an Employment Tribunal in relation to unfair dismissal claims. In anticipation of these changes, ACAS will be producing a Code of Practice on Settlement Agreements and has published a revised draft of what this will look like. Some of the changes which have been made to the initial draft include: 
A recommendation that employees should be allowed to be accompanied to any settlement meetings by their Trade Union Representative or work colleague, as currently applies in the case of other formal procedures. 
That the minimum time period which must be given to employees to enable them to consider any offers is increased from 7 to 10 calendar days. 
The ability for initial offers to be made verbally rather than in writing; though the final agreement will have to be made in writing. 
Examples of ‘improper behaviour’ are also illustrated and include, but may not be restricted to: 
Putting pressure on an employee to accept an offer i.e. not giving them reasonable time to consider the offer. 
Telling an employee before any disciplinary proceedings have commenced, that if they reject an offer, this will result in their dismissal. 
However, it will be acceptable to put forward in a ‘neutral manner’ the reasons why the proposed settlement agreement has been offered to the employee or may state factually, the alternatives that may be considered if agreement is not reached and this may include the possibility of disciplinary action where relevant. 
There is no change to the current principle of ‘without prejudice’ applied within negotiations aimed at resolving a dispute, nor will the current conditions to satisfy a valid ‘settlement’ [compromise] agreement be changed i.e. that the written agreement must follow independent legal advice obtained by the employee. 
Failures to follow the Code will not in itself be grounds for an employee to bring a ‘standalone’ claim and unlike breaches of the ACAS Code of Practice on Disciplinary and Grievance Procedures, there will not be any powers to increase/decrease any compensation paid as a result of a breach of this code of practice. 
Employee Shareholder Status 
It has been announced that amendments have been made to the Finance Bill 2013 which will mean that individuals seeking advice in relation to accepting ‘Employee-Shareholder’ status, will not be liable to pay income tax on any payment or reimbursement given to them by their [potential] employer which has been incurred in obtaining that advice. However, this will be limited to ‘tax advice’; i.e. explaining the tax implications of entering into such an agreement and will not apply to general advice sought on the wider terms of such an agreement. 
The new status of Employee-Shareholder will be introduced from 1st September 2013 and as previously reported, we will continue to monitor the take up of such contractual arrangements – which is widely anticipated to be very low. 
And finally... 
The BBC has reported this week that the pay gap between men and women is exacerbated by bonus payments given to male managers which are on average double those given to female managers, according to the Chartered Management Institute (CMI). 
The average bonus payments given to male managers were £6,442 last year compared with £3,029 given to females. Additionally, the CMI has reported that the salaries of male managers were already almost 25% higher than female managers. In this study of 43,000 managers; the findings showed that men would earn £141,000 more in bonuses over a lifetime. 
At more senior levels, the pay gap for both basic and bonuses, increased. 
Mark Crail, from XpertHR, who assisted the CMI with their study has stated "There is no good reason for men to still be earning more in bonuses than women when they are in very similar jobs... But it's often the case that men and women have different career paths, with 'male' roles more likely to attract bonuses... While women are generally getting lower bonuses than men, especially at senior levels, they may be entering occupations where there is less of a culture of bonus payments. The question for employers is why that's the case." 
This study seems to suggest that there is still a very long way to go before pay equality between genders can fully exist!! 
Cases of Interest 1 ~ Collective Consultation in Redundancy Situations 
In June we reported on the case of USDAW v WW Realisation 1 Ltd (in liquidation), an Employment Appeal Tribunal (EAT) case concerning the former employees of Woolworths and whether the Company had failed in its obligations to consult with employees when they proposed to ‘dismiss as redundant 20 or more employees at one ‘establishment’ within a period of 90 days or less’. The issue in this case was whether ‘Woolworths’ in its entirety should be considered to be the ‘establishment’ or if each individual store was the ‘establishment’. At the time, the Company considered each individual store to be ‘one establishment’, meaning that there was no obligation on them to consult with employees of smaller stores with fewer than 20 employees. 
The EAT in this case found for the claimant and ruled that the Company in its entirety should have been considered to be the ‘establishment’, meaning that they were obliged to consult with every employee. As previously stated, this ruling was open to appeal and therefore the decision in this case could not yet be considered to be binding on others and the Government, specifically the Department for Business, Innovation and Skills have now lodged an appeal. They are permitted to do so, because under legislation, the Secretary of State will guarantee the payment of ‘protective awards’ up to a defined limit, to employees whose employer is insolvent. It has been reported that it is quite unusual for the Government to intervene in these matters, but has opted to do on this occasion because of the wider implications that the decision in this case will have. 
It has also been reported in Personnel Today that a second case will also have a bearing on the definition of ‘establishment’ for the purposes of collective consultation. This is the case from Northern Ireland of Lyttle and others v. Bluebird UK Bidco 2 Ltd; in which the Chairman of the Tribunal has referred to the European Court of Justice, the matter of what constitutes an ‘establishment’ in such cases, believing that ‘ is better to refer the matter now, rather than it being referred some considerable time later by the Court of Appeal...’. 
The net result is that we continue to be in ‘limbo’ until a definitive legal position is delivered and we will continue to monitor progress of this case through the various courts. In the meantime lawyers advise; that employers who are based across multiple locations and who are considering making redundancies at a number of those sites which when amalgamated, will exceed 20 proposed redundancies within a 90-day period, should go through the requisite collective consultation in order to avoid future issues. 
Cases of Interest 2 ~ Working Time Regulations (Sickness and Holiday Pay) 
For some time, we have been pondering the issue of the impact of long-term sickness absence on an individuals’ entitlement to holiday and holiday pay and the case of Sood Enterprises v Healy appears to have now resolved this. 
The issue has emerged because the UK’s enactment of the Working Time Directive, contained within the Working Time Regulations, gives employees an additional 1.6 weeks of holiday over the 4-weeks ‘ordinary annual leave’ which they are entitled to receive in the European Directive. Where employees were prevented from taking their full entitlement to holiday due to extended periods of sickness absence, it was unclear as to how much annual leave they were entitled to carry over to the following year or how much holiday pay they would be entitled to receive in the event that they did not return to work as a result of their sickness absence. 
In this case, Mr Healy was absent from work for approximately 1.5 years, having suffered from a stroke and he resigned from his position as a consequence. He was initially successful in his claim to carry over the full 5.6 weeks of holiday entitlement and to be paid for this; however the Employment Appeal Tribunal has overturned this decision. 
In doing so, they have stated that “...unlike 'ordinary' annual leave (4 weeks), provided for by Regulation 13 of the Working Time Regulations 1998, 'additional' annual leave (the extra 1.6 weeks), provided for by Regulation 13A of the same regulations, cannot be carried over unless there is an agreement in place between the parties, which in this particular case there was not’. 
What this means is that unless the carry-over of ‘additional annual leave’ is expressly stated within the terms and conditions of employment; then employers will only be obliged to honour the 4-weeks of ordinary leave if an employee is prevented from taking their entitlement due to sickness absence.  
In view of this ruling, it would be sensible to review contracts of employment to ensure that they do not inadvertently allow the carry-over of this additional 1.6 weeks
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