Our monthly employment law update brings you the latest top picks of employment law developments that may affect your business.

Remember though, we’re always here when you need us to help you navigate the wonderous world of employment law in managing your people!

This month we cover:

1. Neonatal Care (Leave & Pay) Bill

2. Unlawful to Withhold Tips from Staff

3. Exclusivity Clause ban is widened

4. Recent case law with takeaways for your business: Part-Year Workers – all workers get 5.6 weeks' leave, regardless of the number of weeks in the year they actually work meaning big impacts for some employers!

The Neonatal Care (Leave and Pay) Bill has received government support. It will allow the parents of babies who need hospital neonatal care to take 12 weeks’ paid leave in addition to their statutory maternity or paternity leave. This right will apply:

* from day one of employment

* apply to parents whose babies are admitted to hospital up to the age of 28 days

* apply to babies who need to stay in hospital for 7 days continuously or more.

The Government has backed a private members bill to make it unlawful for employers to withhold tips from staff.

It will ensure that 100% of tips go to staff. A new statutory Code of Practice will be developed on how tips should be distributed, and workers will have the right to ask for information on their employer’s tipping record which will help them to bring a tribunal claim under the new rules.

The government has announced plans to widen the ban on the use of exclusivity clauses beyond zero-hour contracts.

Exclusivity clauses are contractual clauses designed to stop employees and workers from working for other employers at the same time and are common in most contracts.

The new proposals will mean that these clauses can no longer be included in contracts where the minimum guaranteed weekly income for the employee or worker employed on that contract, is on or below the Lower Earnings Limit (currently £123 per week).

The change is designed to make sure lower-paid workers can increase their income and to widen the pool of talent for employers to choose from.

Legislation introducing the ban is expected later this year.

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After seven years of waiting, the case of Harpur Trust v Brazel has finally concluded in the Supreme Court! The decision has implications for all atypical workers on variable hours and those who work part year, in the matter of holiday pay and leave entitlement calculations.

Background

In summary, the case involved a music teacher ‘Ms Brazel,’ who worked during term-time (only), on variable hours in accordance with pupil needs. She had to take her holiday outside of term time, and the method the school used to calculate her holiday pay was 12.07% of her hours worked each term. The 12.07% ‘percentage method’ is the most common way in which businesses calculate holiday entitlement for variable hours workers currently as a way of pro-rating holiday for part year workers and other atypical workers.

Brazel argued that this was wrong and that she should instead be paid based on her average hours over 12 weeks in which she has worked (as was required at the time of the case. Now a 52-week average should be applied).

The case went through the Employment Tribunal, to the Employment Appeals Tribunal, who concluded that it was necessary to reduce Ms Brazel’s holiday entitlement to avoid unjust results, as the approach she suggested would result in other workers on zero-hour contracts who worked for lesser proportions of the year, such as a school cricket coach, being entitled to holiday pay exceeding that of a full-time staff member and that wouldn’t be fair.

The case then went to the Court of Appeal and finally to the Supreme Court who disagreed! Instead they concluded:

• That the Working Time Directive (WTD) only requires workers to accrue annual leave in proportion to the time they work but this doesn’t apply to the pay for that leave.
• The WTD therefore placed no requirement to pro-rata leave entitlements of ‘part-year workers’ to that of ‘full-year workers.
• They did accept that this ruling could lead to odd results in ‘extreme cases,’ such as the school cricket coach example mentioned earlier but decided that it would be unusual for an individual who only worked a few hours a year to be on a permanent contract, and that this was not ‘unprincipled or obviously unfair.’

In my experience though there are a substantial number of zero hours workers, working very irregular hours but who are on permanent contracts which makes this decision baffling!

The Supreme Court said specifically:

“In short, the amount of leave to which a part-year worker under a permanent contract is entitled is not required by EU law to be, and under domestic law is not, prorated to that of a full-time worker."

Takeaways – What does this mean for employers?

The key takeaway from this judgement is that all workers should get 5.6 weeks' leave, regardless of the number of weeks in the year they actually work, if their contract is ongoing, and their holiday pay should be based on an average over 52 weeks in which they have performed work. The same principles apply to those on a zero-hours, variable-hours or casual contract.

This means employers will need to ensure they keep accurate records, to be able to calculate this average.

It’s especially important to note that only weeks in which work is performed should be included in the pay calculation, and therefore weeks where no work is provided, but the contract continues, should not be included. This may mean going further back than one year (to a maximum of 104 weeks).

Moving forwards, you may need to reconsider your use of permanent zero-hour contracts, and if another type of contract or working arrangement is more suitable, such as fixed-term working.

Takeaways – What does this NOT mean for employers?

To clarify, this doesn’t change the position for part-time workers, just part-year workers which will include some zero hours and atypical workers where they don’t work 52 weeks of the year. Part-time workers who work a full 52 weeks of the year but for less hours or days than their full-time colleagues, can continue to have their holiday calculated pro-rata. It also doesn’t change the position for fixed term employees, whose holiday can continue to be calculated pro-rata for the duration of the contract.