News & Insights

Employment bulletin February 2014

This month we discuss holiday pay, protecting your clients from ex employees, off the record settlement offers, whistle-blowing, caste discrimination and increases in rates and penalties.

Do you include commission when you calculate holiday pay?

David Clay discusses the latest European opinion on whether workers who normally receive commission on top of their basic salary should have this reflected in their holiday pay.  Read more

Rate and penalty increases

The government has confirmed that the penalties on employers who fail to pay their workers the national minimum wage will increase.  Such employers will face a penalty of up to 100% of the unpaid wages capped at £20,000.  (Currently the penalty is up to 50% of the unpaid wages subject to a maximum of £5,000.)  This is expected to come into force this month.  It follows last year’s changes which made it easier to ‘name and shame’ defaulting employers.

The following will increase from 6 April 2014:

  • Statutory sick pay from £86.70 to £87.55 per week;
  • Statutory maternity pay, ordinary and additional statutory paternity pay and statutory adoption pay from £136.78 to £138.18 per week.

If you were expecting to see the limit on weekly pay (used for calculating statutory redundancy payments and unfair dismissal basic awards) increase this month as usual, you may be pleased to know that this has been put back.  We are expecting the increase to apply in April but the rate has not yet been published.

Caste discrimination

Caste is not currently one of the individually named “protected characteristics” in the Equality Act 2010.

As we mentioned last month, the Government intends to prohibit expressly caste discrimination, although this has been delayed until 2015.

An employment tribunal has decided that this change in the law may be unnecessary.  It concluded that caste discrimination is a form of race discrimination under the “ethnic origin” sub category.  This is only a tribunal decision and, in fact, it conflicts with another tribunal decision that came to exactly the opposite conclusion.  However, it is clearly prudent for employers to proceed on the basis that caste discrimination is already likely to be considered unlawful.

Does social media affect employers’ abilities to prevent former employees soliciting their clients?

In current times, the use of social media is widespread and information about many individuals is readily accessible on the Internet.  Employers seeking to rely on restrictive covenants in the recruitment sector may find themselves particularly affected by the rise in the use of social media by both ex-employees and clients.

In a recent case, an employee worked for a recruitment agency which matched teachers to schools in Essex.  Her contract of employment contained a covenant preventing her from soliciting or dealing, for a period of 6 months after the end of her employment, with the candidate teachers or client schools with whom she had dealt in the last 12 months of her employment.

After her employment ended, her former employer sought to enforce this covenant.  She argued that widespread use of the Internet by teachers and schools meant that all relevant information is now in the public domain and so could not be confidential to any particular agency.

However, the High Court reminded us that the purpose of non-solicitation clauses is not to protect information but rather to protect the close relationship that an employee builds with clients.  Therefore, the restrictions were enforceable in this case.

The key, as ever, with restrictive covenants is first to ensure that you have identified the business interest that you are trying to protect and secondly to impose a restriction which is only as wide and as long as is necessary to protect that interest.


For an employee to be able to bring a whistle-blowing claim, they have to show that they have blown the whistle or more specifically that they have made a “protected disclosure”.  This means reporting information that the employee reasonably believes shows that malpractice (including endangering health and safety) has or will occur.

Employees will often raise issues in emails.  A recent case considered whether 3 emails sent to different people could, when taken together, qualify as a disclosure although individually they would not.  The employee had sent emails about his team members being required to drive in heavy snow which he felt was dangerous.  The EAT reconfirmed that communications can be read together.  It went further to explain that the various communications do not need to be sent to the same person where the earlier communications are obvious from the later one(s).

Off the record?

The “without prejudice” rule allows parties to attempt to settle disputes safe in the knowledge that if a settlement is not reached the settlement negotiations are not admissible in a future claim subject only to a very limited exception of “unambiguous impropriety”.

Its use in the employment context was severely limited a decade ago when the Employment Appeal Tribunal (EAT) found that a grievance will not be enough to constitute a “dispute”.  This had the effect of limiting the safe use of without prejudice discussions to after the employment had ended or at least notice had been served.  As we reported last July the Government sought to make it possible for employers to have off the record or protected conversations proposing the end of an employment relationship which would not be admissible in ordinary unfair dismissal proceedings but there are many limitations to that protection.

Therefore, a recent case concerning the “without prejudice” rule is good news for employers.  The case related to the reason for dismissal – during the unsuccessful settlement negotiations the employer had indicated that it proposed to dismiss for misconduct but had agreed to categorise it as a redundancy.  When the negotiations fell apart the employee sought to argue that he had in fact been dismissed for whistle-blowing and sought to exclude the settlement negotiations on the basis that they were without prejudice.

The EAT found that there will often be a “dispute” or a “potential dispute” where an employer has offered a settlement agreement which is being considered by the employee.  In this case, the EAT found there was clearly a dispute as the employer had announced an intention to dismiss and then there were discussions about agreeing an alternative reason and financial terms.  The EAT confirmed that an allegation of unfair dismissal for example is not required for a dispute to arise.  Employers should therefore consider categorising discussions about ending an employment relationship as both protected conversations and without prejudice.

Less positively from an employer’s perspective, although the exclusion of the settlement negotiations from a further hearing would allow the employee in this case to put forward a different reason for his dismissal than ones which were discussed during the negotiations, this disadvantage to the employer was not enough to be “unambiguous impropriety”.