Articles | Employment bulletin October 2016

This month we report on a key holiday pay decision, major changes to the UK’s data protection regime and the effect of an early conciliation certificate.

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STOP PRESS - Holiday pay and commission

Latest decision in ongoing saga

STOP PRESS

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The Court of Appeal has recently handed down its judgment in Lock v British Gas, a key case relating to the calculation of holiday pay. The main facts and previous decisions in this case are set out in our previous reports (read more). By way of reminder, Mr Lock worked for British Gas earning around 60 per cent of his pay through commission, yet his holiday pay was calculated by reference to his basic salary only.

 

Following a decision of the European Court of Justice that the EU Working Time Directive requires holiday pay for workers to reflect normal pay (including commission), both the Employment Tribunal and the Employment Appeal Tribunal (EAT) had held it was possible to interpret the Working Time Regulations as requiring the inclusion of commission payments in the calculation of holiday pay for the 4 weeks’ holiday derived from the Working Time Directive.

 

British Gas appealed, arguing that the EAT’s interpretation was not compatible with the clear, unequivocal wording of the Regulations.

 

The Court of Appeal rejected the appeal and upheld the EAT’s decision. It emphasised that the Regulations had been enacted solely and deliberately for the purpose of implementing the Directive and held that, on this occasion, it was appropriate to depart from the literal reading of the Regulations and interpret them in a way which gave effect to the meaning of the Directive. The Court was satisfied that this approach did not go against the grain or underlying thrust of the Regulations.

 

However, the Court also narrowed the scope of previous findings by limiting the effect of its judgment to contractual results-based commission only (rather than all types of commission), specifically stating that its judgment was confined to its facts, and refusing to say anything about how employers should go about calculating any commission element of holiday pay.

 

The Court’s reluctance to set down any guiding principles means employers are still largely in the dark about how to calculate holiday pay lawfully for workers who receive commission. However, with this case almost certain to be appealed again to the Supreme Court, employers will hope that more practical guidance will be forthcoming in due course. If you have concerns about whether you are correctly calculating holiday pay to reflect overtime and commission payments please don’t hesitate to get in touch.

National Minimum Wage - Update

Government announces changes to rates

National Minimum Wage

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October has traditionally been the time of year that increases to the National Minimum Wage come into effect. Here are the new rates that apply to pay reference periods beginning on or after 1 October 2016:

 

Workers aged 21 to 24: £6.95 per hour
Workers aged 18 to 20: £5.55 per hour
Young workers (non-apprentices aged under 18 but above compulsory school age): £4.00 per hour
Apprenticeship rate: £3.40 per hour

 

The new National Living Wage for workers aged 25 or over, introduced in April 2016, is unchanged at £7.20 per hour. In a move away from the normal pattern, the government has confirmed that it will now uprate all National Minimum Wage rates, including the National Living Wage, in April each year.

Data protection in the UK

Major changes are coming

Data protection

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The UK's current data protection regime has been in place for almost 20 years but a major overhaul is on the horizon. The Data Protection Act 1998 (DPA) is set to be repealed when the General Data Protection Regulation (GDPR) comes into force in May 2018.

 

What are the key changes?

 

The GDPR builds on the DPA but there are significant changes, including:

1. New obligations on data processors:

 

  • Must maintain records of the personal data they hold and their processing activities. 
  • More legal liability for data protection breaches.

 

2. The rules relating to consent to process personal data are being tightened up.

 

3. New rules about the processing of personal data relating to children.

 

4. Citizens’ rights are being expanded: as well as changes being made to the right of individuals to have access to their personal data, new rights are being introduced:

 

  • To have incorrect personal data rectified. 
  • To have personal data deleted. 
  • To restrict the processing of personal data. 
  • Data portability: to be able to have personal data safely transferred, e.g. between different organisations. 
  • To object to processing of personal data, e.g. for direct marketing purposes and profiling. 
  • To object to certain types of automated decisions (the decline of “the computer says no”).

 

5. New accountability rules mean organisations will need to be able to demonstrate their compliance with the law. This will include maintaining records of their data processing activities, staff training, data protection audits and implementing measures to meet the new “data protection by design” requirements.

 

6. Some organisations will have to appoint a data protection officer.

 

7. New rules about reporting data protection breaches.

 

8. Significant increase in the maximum penalties for breaches (up to €20 million or 4% of global turnover).

 

Why is it important for UK businesses?

 

Apart from avoiding fines for breaches, compliance with the rules will be essential if businesses want to retain customer confidence and remain competitive both in the UK and overseas.

 

Won't the changes be affected by the Brexit vote?

 

The timing of when the GDPR comes into force and the Brexit negotiations give lawyers plenty to debate - our advice is to proceed on the basis that the GDPR (or similar new domestic legislation) will come into force in 2018. The UK Information Commissioner’s Office recommends changes are made irrespective of the outcome of the Brexit negotiations.

 

What should businesses be doing now?

 

This will depend on the nature of your organisation, what sort of personal data you collect, where it is stored, what you do with it and who you share it with. We would recommend that you make an early start and plan for the changes in good time to minimise business disruption and to avoid having to take hasty action at the last minute. We are happy to discuss the processes and policies that you should be implementing to ensure compliance without adversely impacting your business.

 

 

Early Conciliation certificates

Can they cover a future claim?

 

Early Conciliation certificates

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Before bringing most types of employment claim, the employee must first contact ACAS to confirm the names and addresses of the parties and begin a process of ‘early conciliation’ (EC). The process is intended to help parties reach a settlement and avoid tribunal proceedings, but there is no obligation to participate. If EC is unsuccessful then ACAS will end the process by issuing an ‘EC certificate’.

 

A recent case in the Employment Appeal Tribunal (EAT) has focused on what happens when a new claim arises after an EC certificate has been issued; does the employee have to re-start the EC process or is the claim already covered by the existing EC certificate?

 

The case in question concerned Mrs Morgan and Compass Group. In October 2014 Mrs Morgan filed a grievance after Compass asked her to work at another location and in a less senior position. She contacted ACAS to begin the EC process and received an EC certificate in January 2015. Two months later Mrs Morgan resigned and claimed constructive dismissal. Compass argued that Mrs Morgan had failed to complete the EC process in respect of the constructive dismissal claim.

 

Noting the broad language adopted in the relevant legislation, the EAT held that employees must contact ACAS before instituting proceedings “relating to any matter”, not in respect of every specific cause of action or claim. Moreover, it held there was nothing in the legislation to limit the scope of an EC certificate to events which pre-date it.

 

As there was a sufficient connection between the matters set out in Mrs Morgan’s claim form and the matters in dispute during the EC process, the EAT held she was entitled to proceed with her constructive dismissal claim without the need for any further EC process.

 

The case demonstrates to employers that there is nothing in principle to prevent an employee bringing a claim that had not yet crystallized at the time of the EC process. While the EAT stressed that its decision should not mean an EC certificate acts as a “free pass” to bring proceedings about any unrelated matter, and that each case will come down to its own facts, its decision indicates that the EC process will continue to be a very low barrier for employees to hurdle before issuing proceedings.