Employment Law Update – February 2014

Calculation of Holiday Pay should include Commission and Over-time: Recent cases of Neal v Freightliner Ltd ET/1315342/12 and Lock v British Gas Trading Limited and others ( C-539/12) have held that employers should take a worker’s over time and even sales related commission into account when calculating holiday pay. A failure to do so could amount in an unlawful deduction from wages claim and/or breach of contract claim against the employer.

National Minimum Wage Penalty to be Increased: If an employer fails to pay its workers at least the national minimum wage it could now receive a penalty of up to £20,000 (instead of the current penalty of £5,000). This has come about as a result of the Government’s draft National Minimum Wage (Variation of Financial Penalty) Regulations 2014. The regulations are expected to come into force this month (February 2014).

The government also wishes to introduce further legislation so that the maximum penalty of £20,000 can apply in respect of each underpaid worker. Employers should TAKE HEED!

Mandatory early ACAS Conciliation: On 6 April 2014 it will become mandatory to submit details of an employment dispute to ACAS before a claim can be issued at the Employment Tribunal. This was introduced as a response from the Government to the Resolving Workplace Disputes Consultation.

The conciliation will last for 1 month. The idea is that during the 1 month conciliation an ACAS Conciliation Officer will help assist the parties reach an agreement on the dispute. If it is refused by either party or is unsuccessful then it is only at that stage that the employee will be able to issue his or her claim at the Employment Tribunal. We will wait until April 2014 to find out just how successful the early Conciliation will be in settling claims before reaching the Tribunal system!

Financial Penalties on Employers who Lose at Employment Tribunals: Also as of 6 April 2014 the Employment Tribunals will have the power to impose financial penalties of 50% of the claimant’s financial award on employers who lose at Tribunal. The power to impose a financial penalty will be discretionary and based on a minimum threshold of £100 and a maximum cap of £5,000. If the financial penalty is paid within 21 days then it will be reduced by 50%. Only time will tell how willing Employment Judges will be to impose the penalties on losing employers and under what specific circumstances. It will also be interesting to see how the threat of a potential financial penalty will affect the number of employers willing to settle employment claims before reaching a hearing.

If you believe you are affected by any of the decisions and proposals above, or if you would like to obtain more information, please do not hesitate to contact our Employment team.

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