Employment Law Update March 2016

Employment Law Update

Welcome to the March 2016 issue of

Employment Law Update In this issue
When is an employer liable for
A selection of interesting cases is reported in this months the actions of its employee?
newsletter, including the important Supreme Court decision
on when employers are vicariously liable for the acts of their Quick fire: Trade Union Bill
employees. amendments

April sees a number of employment law changes taking effect, including Quick fire: National Minimum
the introduction of the National Living Wage from 1 April 2016. We provide Wage rates announced
a summary of the changes you need to be aware of. In addition, our Quick
fire news items include an update on the latest developments in the Commission payments and
progress of the Governments controversial Trade Union Bill. holiday pay
Childcare vouchers during
We also include an update on the latest immigration developments. maternity leave
Look out for details of our forthcoming series of Early Bird seminars, on Quick fire: New Acas guidance
the topic of atypical workers, taking place in June. Dates and booking on disability
details will be available soon.
Changes in force: April 2016
Quick fire: New guidance to
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 Employment Law Update March 2016

When is an employer liable for the actions of

its employee?
In the recent conjoined cases of Cox v Ministry of Justice and
Mohamud v WM Morrison Supermarkets plc, the Supreme Court has In the courts opinion,
reconsidered the appropriate test for establishing vicarious liability the existing close
in the context of the employment (or in the case of Cox, a quasi-
employment) relationship. connection test
for the purposes of
Mohamud v WM Morrison Supermarkets plc, Supreme Court
establishing vicarious
Facts liability remains good
Mr Mohamud was a customer at a Morrisons petrol station. He entered the kiosk law and was the correct
and asked a member of staff, Mr Khan, if he could print off some documents from a test to apply.
USB stick. Mr Khan responded in a rude and racially abusive manner and ordered Mr
Mohamud to leave the premises. He then followed Mr Mohamud out to his car where
he subjected him to a serious and unprovoked physical attack and told him never to
return. While he was carrying out the attack, Mr Khans supervisor came on the scene
and tried unsuccessfully to stop him.

Mr Mohamud brought proceedings against Morrisons, claiming that it was vicariously

liable for the actions of its employee, Mr Khan. The court considered whether there
was a sufficiently close connection between what Mr Khan was employed to do
and his conduct in attacking Mr Mohamud, and concluded that the connection was
not sufficient to establish his claim. The Court of Appeal agreed and dismissed the
claimants appeal.
Supreme Court decision
The Supreme Court has now upheld the claimants appeal, finding Morrisons liable for
the actions of its employee.
the individuals
In the courts opinion, the existing close connection test for the purposes of
establishing vicarious liability remains good law and was the correct test to apply. On motive in the attack was
the facts of the case, it was satisfied that a sufficiently close connection between what irrelevant; it did not
Mr Khan had been employed to do and his conduct towards Mr Mohamud had been
established. matter whether he was
motivated by personal
The court identified two factors relevant to determining vicarious liability in the context
of the employment relationship. racism rather than a
desire to benefit his
1. What function or field of activities has been entrusted by the employer to
the employee? In other words, what was the nature of his job? This should be employers business.
construed widely.

In this case, Mr Khans job was to attend to customers and respond to their enquiries.
Interacting with customers was therefore within the field of activities assigned to him
by his employer.

2. Whether there was sufficient connection between the employees position and
his or her wrongful conduct to make it right, according to social justice, to hold
the employer liable.

The court was satisfied that what happened after the altercation in the kiosk was an
unbroken sequence of events. When Mr Khan came out from behind the counter
and followed Mr Mohamud out to his car on the forecourt, the court did not accept
the defendants argument that he had metaphorically taken off his uniform. He had
ordered Mr Mohamud to leave his employers premises and reinforced this instruction
though the use of violence. He was therefore purporting to act in the interests of his
employers business.

The court held that the individuals motive in the attack was irrelevant; it did not matter
whether he was motivated by personal racism rather than a desire to benefit his
employers business.

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 Employment Law Update March 2016
Consequences
In this decision the Supreme Court has endorsed the existing close connection test for it is likely to be
vicarious liability. However, the judgment appears to have broadened the remit of that
test, meaning that it is likely to be easier in the future for claimants to establish that an easier in the future for
employer is vicariously liable for the acts of its employees. claimants to establish
In circumstances where, by virtue of his or her job, an employee has the time and that an employer is
opportunity to commit wrongful conduct towards a third party, there will be a significant vicariously liable for the
risk that the employer will be held liable for his or her actions. This will be a particular
risk in customer-facing roles, such as retail and hospitality, where interaction with acts of its employees.
customers is an integral part of the role. Robust recruitment practices and employee
training will go some way to alleviate the risks for employers of being faced with such
claims.

Quick fire: Trade Union Bill amendments

The Government has put forward a number of minor concessionary
amendments to the Trade Union Bill as it progresses through the House
of Lords. These include:
A requirement for ballot papers to set out a summary of the dispute, rather than
a reasonably detailed indication as previously required under the Bill.

Excluding workers from the 40% ballot threshold requirement applicable to

important public services, if they are not normally engaged in the provision of
those services at the time of the ballot.
Allowing a seven-day notice period (rather than the new 14 days notice
requirement under the Bill) for industrial action if the employer agrees.

Increasing the period for a ballot in favour of industrial action to remain valid
from the proposed four months to six months, with the option to extend it to nine
months with the employers agreement.

Requiring picket supervisors to wear something to identify themselves, rather

than specifying a badge, armband or other item.

It remains to be seen whether these concessions are sufficient to secure the progress
of the Bill as it reaches its third (and final) reading in the House of Lords. We will report
on any further amendments to the Bill.

Quick fire: National Minimum Wage rates

announced
The Government has accepted the recommendations of the Low Pay
Commission in its Spring 2016 report, confirming the rates of the
national minimum wage taking effect from 1 October 2016:
The main (adult) rate, for workers aged 21 to 24 increases from 6.70 to 6.95 per
hour.

The development rate, for workers aged 18 to 20 increases from 5.30 to 5.55
per hour.

The young workers rate, for ages 16 to 17 increases from 3.87 to 4.00 per hour.

The apprentice rate increases from 3.30 to 3.40.

The new national living wage rate for workers aged 25 and over, taking effect
from 1 April 2016 at 7.20 per hour, will not change in October 2016. However, the
Government has confirmed that all rates of the national minimum wage (including
the national living wage) will increase in parallel from April 2017.

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 Employment Law Update March 2016

Commission payments and holiday pay

The Employment Appeal Tribunal (EAT) has handed down its
decision in the case of Lock v British Gas Trading Ltd, the latest word in The EAT was satisfied
the long-running saga of what should be included in the calculation of
statutory holiday pay. that the reasoning
in Bear Scotland on
Lock v British Gas Trading Ltd, EAT
the interpretation of
Facts the WTR to include
As a reminder, this case concerned the payment of commission following a period overtime payments
of holiday, during which time the employee (an energy trader) was unable to earn applied equally to
commission generated by sales. The case was previously referred to the European
Court of Justice (ECJ) by the Leicester employment tribunal. The ECJ ruled that commission payments.
commission payments must be taken into account when calculating holiday pay under
the EU Working Time Directive (2003/88/EC). There was found to be an intrinsic
link between the payment of the commission and the performance of tasks under
Mr Locks contract of employment, meaning that commission payments should be
included in the calculation of statutory holiday pay.

The case then returned to the employment tribunal to determine whether our
domestic Working Time Regulations 1998 could be interpreted so as to give effect to
the ECJs decision. The tribunal held that the WTR were capable of this interpretation,
in effect upholding Mr Locks claim in principle. British Gas appealed the tribunals
decision, which was heard by the EAT on 8 and 9 December 2015.

EAT decision
Subject to any appeal,
The EAT has dismissed the employers appeal, deciding that the case could not be
distinguished from the EATs previous decision in Bear Scotland and others v Fulton this decision means
and others, concerning the inclusion of non-guaranteed overtime in the calculation that both commission
of holiday pay. The EAT was satisfied that the reasoning in Bear Scotland on the
interpretation of the WTR to include overtime payments applied equally to commission payments and non-
payments. guaranteed overtime
Since the decision in the Bear Scotland case was not manifestly wrong or inconsistent, should be included
Mr Justice Singh could see no reason to depart from the reasoning in that case. He in the calculation of
made an express finding that if the EATs reasoning in Bear Scotland is wrong, it is a
matter for the Court of Appeal to decide. statutory holiday pay.
Implications
The EATs decision in this case comes as no surprise; very few experts had anticipated
that it would uphold the employers appeal. However, the door has been left open by
the EAT for an appeal, and British Gas has reportedly already applied to the Court of
Appeal for permission to appeal the decision. Any appeal is unlikely to be heard before
2017.

Subject to any appeal, this decision means that both commission payments and non-
guaranteed overtime should be included in the calculation of statutory holiday pay.
Unfortunately, the EATs decision in this case takes us no further forward in clarifying
the actual mechanics for calculating holiday pay.

The case of Bear Scotland is also expected to return to the EAT later this year, with the
employees challenging the ruling that a gap of three months or more will defeat a claim
for underpayments of holiday pay.

We will unfortunately have some considerable time to wait until we have any more
certainty on the calculation of statutory holiday pay.

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 Employment Law Update March 2016

Childcare vouchers during maternity leave

The Employment Appeal Tribunal (EAT) has upheld an employers
appeal against a tribunal decision that it was discriminatory to The key question
suspend childcare vouchers, provided under a salary sacrifice
arrangement, during a period of maternity leave. to be determined
was whether the
Peninsula Business Services Ltd v Donaldson, EAT
vouchers constituted
Facts remuneration
The employer operated a childcare voucher scheme for its employees, by means of a
salary sacrifice arrangement. Under the terms of the scheme employees were required
to agree that the provision of vouchers would be suspended during any period of
maternity leave, when they would be paid only statutory maternity pay.

The employee in this case considered this requirement to be discriminatory and

brought a number of claims against her employer, including for pregnancy and
maternity discrimination. Her claim was upheld by an employment tribunal, on the
grounds that women on maternity leave are entitled to continue to receive contractual
non-pay benefits. In reaching this decision the tribunal referred to HMRC guidance,
which stated that contractual non-cash benefits provided under a salary sacrifice
scheme must continue to be provided during maternity leave.

EAT decision

The EAT upheld the employers appeal and dismissed the employees claim. The key
question to be determined was whether the vouchers constituted remuneration, The EAT determined
which could be lawfully discontinued during maternity leave under the provisions of the that under a salary-
Maternity and Parental Leave Regulations 1999.
sacrifice arrangement,
The EAT determined that under a salary-sacrifice arrangement, childcare vouchers childcare vouchers
represent part of salary that has been diverted from the employees pay packet and
is therefore remuneration. The scheme operates as a tax benefit for the individual represent part of salary
employee and acts as an incentive to remain in work. To impose an additional cost to that has been diverted
employers during maternity leave would act as a deterrent to offering such a scheme,
which could not have been Parliaments intention. from the employees pay
Implications
packet and is therefore
remuneration
This decision provides welcome clarity for employers on the position in relation to a
salary-sacrifice arrangement during maternity leave. Subject to any appeal, employers
will not be required to continue providing the benefit of childcare vouchers under a
salary-sacrifice arrangement during an absence for maternity leave.

Childcare vouchers that are provided as a contractual benefit by employers not under a
salary sacrifice arrangement should still be continued during maternity leave.

Quick fire: New Acas guidance on disability

Acas has published new guidance: Disability discrimination: key points
for the workplace.
The guidance is aimed at employers (including managers and HR personnel) as
well as employees, to raise awareness of how disability discrimination can occur
in the workplace, how it should be dealt with and reducing the chance of future
discrimination.

The guidance provides a good overview of the law in this area, particularly for those
with little or no prior knowledge about disability discrimination. It outlines how
employees should raise a complaint if they have either experienced discrimination
themselves, or observed discrimination towards another. The guidance also provides
advice on how employers should deal with either informal or formal complaints.

A copy of the guidance is available on the Acas website.

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 Employment Law Update March 2016

Changes in force: April 2016

The National Living Wage takes effect for workers aged 25 and over from 1 April The National Living
2016, at the rate of 7.20 per hour. For further information see our update article.
Wage takes effect for
The penalty for underpayment of the National Minimum Wage and National Living workers aged 25 and
Wage is due to double from 100% to 200% of arrears, with a reduction by half if
the payment is made within 14 days. It is anticipated (but not yet confirmed) that over from 1 April 2016
this enforcement measure will take effect in April 2016.

Changes to the Employment Tribunals Rules of Procedure will apply to claims

issued on or after 6 April 2016.

The changes will affect the treatment of applications for the postponement of a
hearing: the number of postponements will be limited to two for each party in a
case; a new deadline of seven days prior to the hearing will apply for postponement
requests; a costs or preparation order must be considered where a successful
application for a postponement is made less than seven days before the hearing.

An increase to tribunal compensation limits will apply where the effective date
of termination is on or after 6 April 2016. The maximum compensatory award for
unfair dismissal will rise from 78,335 to 78,962. The maximum statutory weeks
pay (for the purpose of calculating statutory redundancy payments as well as the
basic and additional awards for unfair dismissal) will increase from 475 to 479.

Provisions under the Small Business, Enterprise and Employment Act 2015 will also
come into force on 6 April 2016, introducing new financial penalties to be imposed
on employers who do not pay employment tribunal awards or sums due under a
COT3.

Regulations requiring higher-earning public sector employees to repay

termination payments, if they are re-employed in the public sector within a period
of 12 months, are also expected to come into force in April. See our recent Stop
Press article for further details.

Quick fire: New guidance to avoid discriminatory

adverts
The Equality and Human Rights Commission (EHRC) has published
a new range of guidance on avoiding discrimination under the
Equality Act 2010 in advertising jobs, goods, services, facilities and
accommodation.
The EHRC press release states that in a period of just over 12 months, it received over
100 complaints about discriminatory adverts. In response the EHRC has published this
guidance, to assist those who place and publish adverts and to dispel confusion and
misunderstanding about the law.

The guidance comprises four separate publications, available on the EHRC website:

1. What equality law means for advertisers and publishers: outlines key aspects
of equality law in relation to advertising of job opportunities, goods, services,
facilities and accommodation. Identifying when an advert is discriminatory and
who is potentially liable.

2. FAQs on lawful advertising: for anyone involved in the creation, placement or

publication of adverts, including clarification of what is lawful and examples of
best practice.

3. Good practice checklist: a series of questions for advertisers and publishers, to

ensure that adverts do not discriminate.

4. Making an enquiry about a discriminatory advert: a guide for individuals who

are concerned that an advert might be discriminatory, including how to make a
complaint.

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 Employment Law Update March 2016

Immigration Update - March 2016

Spring tends to bring a number of changes into the Immigration
arena and this year is no exception. The Statement of Changes in Spring tends to bring
Immigration Rules which will come into effect on 6th April 2016 can a number of changes
be found at the following link: https://www.gov.uk/government/
uploads/system/uploads/attachment_data/file/507235/54729_ into the Immigration
HC_877_Web_Accessible.pdf arena and this year is no
We have provided below a brief summary of these changes most likely to affect
exception.
migrants in Tiers 1 and 2.

Tier 2 Visas

Restricted Certificates of Sponsorship

The Government has decided not to increase the 20,700 annual allocation of
available restricted Certificates of Sponsorship (CoS) for the year ending April 2017,
but they have decided to stagger the availability of Tier 2 CoS throughout the year,
instead of split equally in twelve monthly allocations. Starting April 6, 2016, 2,200
CoS will be available in the first month, gradually falling to 1,000 by March 2017. The
Home Office believe that this will assist in the seasonal demand for places which is
historically higher in the summer months.

Tier 2 Salaries
Unlike in other years, the Government will not be increasing the salary
requirements for this visa category in April. These will instead be reviewed later
this year as part of the governments response to recommendations made by the
Migration Advisory Committees (MAC) report this January.

Salary Threshold for Tier 2 Indefinite Leave to Remain

... any one applying
As we have indicated in previous updates, anyone applying for Indefinite Leave to for Indefinite Leave to
Remain (ILR) in the UK as a Tier 2 migrant after 6 April 2016 will need to earn a Remain (ILR) in the UK
minimum salary of 35,000 per year (unless in a shortage occupation or a PhD
role). Anyone not earning that figure at the end of the five year qualifying period as a Tier 2 migrant after
can apply to extend their visa for a further 12 months (to a maximum of six years 6th April 2016 will need
in this category). If they are still not earning the required sum, and they have no
other immigration category to switch into, they will need to leave the UK for a to earn a minimum
minimum period of 12 months before they will be eligible to apply to return as a salary of 35,000 per
Tier 2 migrant.
year ...
The 35,000 salary is only required at permanent residence stage and does not
affect applications to extend Tier 2 visas. It is however an ever moving target,
depending on the point at which ILR is applied for; 35,000 from 6 April 2016,
35,500 from 6 April 2018, 35,800 from 6 April 2019 and 36,200 from 6 April
2020.

Points Based Calculator

Many Tier 2 and Tier 1 applicants have traditionally used the points based calculator
to ensure that the Home Office recognise that a degree awarded to the candidate
meets UKVIs requirements for a degree taught in English. From 6 April 2016, the
calculator tool will be taken down. Instead, applicants will now need to obtain an
official statement from UK NARIC: www.naric.org.uk/visasandnationality.

Tier 1 Visas

The new immigration rules have sought to simplify and clarify some of the
documentation required for Tier 1 visas with the amount of documentation required
for entrepreneur applicants to be reduced for those applying using funds which are
provided by a trusted source, e.g. UK Seed Funding Competitions or UK government
departments.

However other applicants can expect to be required to provide more documentation

when applying for, or extending, this type of visa. This will also be the case for any
application for Indefinite Leave to Remain (ILR) made under the Tier 1 category.
The endorsements necessary to becoming eligible to apply for a Tier 1 (Exceptional
Talent) visa are being slightly altered by Tech City UK.

It is worth noting that these rule changes do not include any reforms resulting from
the Migration Advisory Committees (MAC) recent reviews of Tier 1 or Tier 2. The
Government has not yet announced its response to those reports, and we will bring you
further news as we have it.

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 Employment Law Update March 2016
Other changes

Increase in Application fees

Increases in UKVI fees will take effect from 18 March 2016. The new, higher fees will
particularly hit personal, family immigration categories with the costs for Sponsor
Licence Applications and Certificate of Sponsorship fees remaining static and only
modest increase for Tier 2 application fees.

Health Surcharge
Australian and New Zealand nationals who were previously exempt from having
to pay the Immigration Health Surcharge will, from 6 April, have to pay the charge
when applying to enter the UK for a period of more than six months or for any
application made in the UK.

Concessions for Syrian Nationals Increases in UKVI fees

On 29 February 2016, UKVI published certain concessions to the Immigration Rules will take effect from
for Syrian nationals who are present within the UK, whose country of habitual
residence is Syria and have limited leave to enter or remain (or has expired within 18th March 2016.
28 days). These allow applicants in certain categories of the rules to apply to
remain in the UK beyond the maximum time stated under the Immigration Rules.
The categories include Tier 4 General, Family Members of Relevant Points-Based
System migrants, Visitors, Overseas Domestic Workers and Short term students.

The concessions also allows certain Syrian nationals to switch in-country to another
category of visa (from the one that they currently hold), provided they meet the
rules of the other category. Switching into a settlement category however, is not
permitted. Under the concessions the switching restrictions do not apply to the
following categories: Tier 1 Exceptional Talent, Tier 1 Entrepreneur, Tier 1 Investor,
Tier 2 General, Tier 2 Minister of Religion, Tier 2 Sportsperson, Tier 4 General
(Student) and Tier 5 Temporary Worker.

The concession also provides for document flexibility in recognition of the civil
unrest in Syria where applicants may not be able to provide the full range of
documents required for an in-country application.

Brexit

With the EU referendum in sight, this month we focus on EU migrants currently living in
the UK and the effect it may have on them, and their employers, in the event of Brexit.

There are currently around 2.34m EU migrants living in the UK. There has been no
public announcement about what would happen to these individuals in the event of
Brexit, but there are a few options for those who wish to consider protecting their
position here before the swamp of applications which would surely arise in the event of
a break.

1. Apply for permanent residence. If an EU national has been living in the UK for at
least five years, they may be eligible to apply for a permanent right to reside as
an EEA (European Economic Area) National. They must be able to show that they
have been exercising Treaty rights throughout the five year period by working,
looking for work, being self employed, studying etc.

2. Apply for British Citizenship. Once an EU national has held permanent residence
for a period of 12 months, they can apply for British Citizenship. Most European
countries allow dual citizenship, although the following countries do not; Estonia,
Lithuania, Netherlands, Norway, and Slovakia.

3. Apply for Registration Cards as recognition of your right of residence. This would
apply to EU nationals who have not lived in the UK for five years and would not
therefore qualify for permanent residence to nonetheless demonstrate that they For more information
are resident in the UK.
on any of the matters
In the past where immigration rules have rapidly changed there have been transitional covered in this
provisions for those most immediately affected. We will continue to monitor the
situation and will provide further news in the next updates. update, please contact
Clare Hedges or
Janice Leggett in our
immigration team.

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