Frontline: UK Employment Law Update July 2018

Welcome to the July 2018 edition of Frontline UK.

This month, in light of the recent "naming and shaming" of many employers who had failed to pay national minimum wage ("NMW") to their workers, Furat Ashraf considers some common pitfalls under the NMW regime and the serious consequences of getting it wrong.

Alison Dixon and Sam Rayner also discuss the UK Government's current consultation on reforming the IR35 regime as it applies to the private sector; a move which would have significant tax implications for organisations which engage individuals through intermediaries, such as personal service companies.

Finally, our case update highlights the importance of a right of appeal in illegal working cases, the difficulties associated with issuing warnings to those on long-term sickness and another judgment which confirms that calculations of holiday pay should include regular voluntary overtime.

National Minimum Wage – A reminder of the common pitfalls

In early July, the names of 239 employers who underpaid the National Living and Minimum Wage were published by the government. A record 22,400 UK workers are to receive a total of £1.44m in backpay, with the employers being fined £1.97m in total, more than in any previous single naming list.

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Case Summary

Termination date not extendable in cases of genuine gross misconduct

Lancaster & Duke Limited v Wileman (Employment Appeal Tribunal)

The EAT has confirmed that where an employer is entitled to dismiss an individual summarily for gross misconduct, that employee is unable to rely on their statutory minimum notice period to extend their deemed effective date of termination.

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Right of appeal critical to fair dismissal of suspected illegal worker

Afzal v East London Pizza Ltd t/a Dominos Pizza (Employment Appeal Tribunal)

The EAT has held that a dismissal will generally be unfair where an employee (who qualifies for protection against unfair dismissal) is dismissed without a right of appeal, in circumstances where the employer has a genuine but erroneous belief that an individual's right to work for UK immigration purposes is invalid or has expired.

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Warning issued following long-term absence was disability discrimination

DL Insurance Services Limited v O’Connor (Employment Appeal Tribunal)

The EAT has held that a decision to issue a disabled employee with a written warning in response to an extended period of sickness absence , which followed an otherwise irregular history of attendance, was not objectively justified and therefore represented an act of unlawful discrimination arising from her disability.

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Holiday pay should include regular voluntary overtime

Flowers v East of England Ambulance Trust (Employment Appeal Tribunal)

The EAT has re-emphasised the fact that entirely voluntary overtime payments should be factored into the calculation of holiday pay where they are made over a sufficient period of time on a regular or recurring basis, so as to justify the label ‘normal remuneration’.

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Legal Updates

Reforms to IR35 regime incoming?

The UK government is considering reform of the "IR35" regime; a move which could have significant tax implications for private sector organisations that engage individuals through intermediaries, such as personal service companies.

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Government proposes no regression in EU labour standards

On 12 July 2018, the UK Government published formal proposals for its post-Brexit relationship with the EU in a White Paper entitled 'The future relationship between the United Kingdom and the European Union’.

From an employment perspective, it confirms that the UK envisages it will, post-Brexit, retain the suite of current labour protections which originated in EU legislation, including those relating to the Transfer of Undertakings, Working Time, collective consultation and discrimination.

However, the White Paper is at best a further position statement to help support ongoing negotiations. It does not represent a final agreement and much could still change. Indeed, the UK has still not clarified the details of its future immigration system upon which many employers will depend.

For a full copy of the report, please click here.

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