UK: Employment And TUPE, Important Facts That General Counsel Need To Know - Thinkhouse Foundations

Last Updated: 24 February 2017
Article by Emma Hine

This session takes a look at employment which touches on everything you do, providing a general round up of key developments in the world of employment and TUPE with those all important facts that General Counsel need to know.

Mike Reed: My name is Mike Reed.  I am a senior associate in the commercial IT & outsourcing team at Gowling WLG and I am here with my colleague Emma Hine from our employment and equalities team to do a follow-up podcast to our ThinkHouse foundation session. Emma is going to provide an employment law update from 2016 and we have got a few questions and topics to work through with her.

Firstly Emma there has been a lot of talk recently about gender pay gap reporting. Can you tell us about the requirements and who it will apply to?

Emma Hine: Well there is a requirement in Section 78 of the Equality Act 2010 for regulations to be published requiring employers in the private and voluntary sectors with 250 or more relevant employees on the relevant date to publish gender pay gap information and, although this requirement in the legislation is specific to private and voluntary sector employers, the government has also published a consultation showing its intention to extend this reporting requirement to public sector employers too. The government says it intends the obligations to be the same regardless of whether the employer is in the public or private voluntary sectors and that, it says, is to encourage consistency of approach across the board and it also then means that comparable data will become available for all major employers.

Now at the moment there are no draft regulations for relevant public sector employers, but on 6 December the government published the revised version of the draft Equality Act 2010 Gender Pay Gap Information Regulations which, subject to parliamentary approval, are expected to come into force on 6 April 2017. The revised regulations will essentially require relevant employers to take a snapshot of their relevant employees' pay on the relevant date each year. Now there was some confusion in the draft regulations and the later consultation on closing the public sector pay gap on when that relevant date would be, but the revised regulations confirm the date will be 5 April 2017 and each anniversary of that date.

Now before we go on to look at what information will need to be published, it is worth noting a couple of points. The first is that there has been some confusion on the definition of who will be a relevant employee and, whilst the draft regulations state it will apply to anyone who ordinarily works in Great Britain and whose contract of employment is governed by UK legislation, this was criticised for being unclear and not in line with what was set out in the government's original consultation on closing the gender pay gap, or in the later consultation on closing the public sector pay gap. The revised version of the regs has confirmed that it is that wider definition contained in Section 83 of the Equality Act 2010 which will apply, so that is anyone engaged under a contract of employment, a contract of apprenticeship or a contract personally to do work. However, if someone is engaged under a contract to do work, these persons do not need to be included if the relevant employer does not and cannot reasonably practicably obtain data on them. Also partners in a firm and members of an LLP are expressly excluded, and one final point to note about relevant employees is only full pay relevant employees will be counted, so that is anyone who is not during the relevant pay period being paid a reduced rate or nil as a result of being on leave.

The second point is that it would appear, although we are waiting for further guidance on this, that there is no need to aggregate relevant employees across the group companies, so you just need to look at each individual legal entity when assessing whether or not that entity has enough employees to meet the relevant requirements to publish gender pay gap information.

In terms of what information needs to be published, this will include the overall median and mean gender pay gap figures, and that is just the percentages, there is no need to publish the actual figures. Also report on the number of relevant men and women in each of the four pay quartiles and these revised regulations have confirmed that this should be calculated by listing all employees in order of hourly pay and then splitting them into four groups of equal employee size. You should then also publish mean and median gaps between bonus payments made to male and female employees in the 12 months preceding 5 April and also publish details on the proportion of male and female employees who received a bonus in the 12 months preceding 5 April. These results will then need to be signed off by a director or equivalent and be published within one year of 5 April. So the first results will need to be published on 4 April 2018. They should be published on the employers' website and remain there in a searchable format for three years and also on a specified government website.

Mike: So Emma, what should employers be thinking about in terms of next steps to prepare for gender pay gap reporting?

Emma: Well although the first gender pay gap report does not need to be published until April 2018, there are still plenty of steps which relevant employers should be taking to prepare for the new regime. There are no civil or criminal penalties for failure to comply with the regulations themselves, but the explanatory notes to the amended draft regulations do indicate that a failure to comply with the regulations will constitute an unlawful act within the meaning of Section 34 of the Equality Act 2006, which empowers the Equality and Human Rights Commission to take enforcement action. Aside from this there are also obviously reputational risks for failure to comply and the government is required under the regulations themselves to review them within five years of them coming into force.

In practical terms we would recommend that relevant employers firstly take a look at whether or not they are indeed a relevant employer now or are likely to be on 5 April 2017, as that is the date when that snapshot is going to be taken. Also have a think about allocating roles and responsibilities internally, so who is going to be responsible for what. Start to have a think about how your organisation will go about collecting the data needed to conduct gender pay gap reporting too. You may also want to have a think about carrying out an audit or a dummy run, and this will confirm if your organisation is ready to meet the regulatory requirements and will help the organisation to anticipate any gaps so it can begin to address them. Do be aware though that any documentation produced in the course of this exercise could be disclosable in any claim such as equal pay, unless they are produced for the purposes of taking legal advice, and if there are gender pay gaps have a think about what the reasons for these gaps are. For example, was pay ring-fenced for a particular reason, I do not know, maybe a TUPE transfer or perhaps there was a skill shortage resulting in higher pay for particular roles. There is an option to include a narrative when publishing the results and this is likely to be a very useful tool for those employers who do have gender pay gaps.

Mike: I understand there have been a couple of interesting cases this year on the service provision change test in TUPE. Can you tell us a bit more about those cases and the impact they have had?

Emma: The service provision change test covers outsourcing retenders and insourcing and was introduced into the UK in 2006. It was introduced to try and provide more certainty in outsourcing situations, but in actual fact where we have ended up is it has generated a lot more case law as a result. The test to determine if there has been a relevant transfer in an outsourcing retender or insourcing arrangement, such as the outsourcing of cleaning services for example, is where there is an organised grouping of employees in Great Britain whose principal purpose is carrying out activities on behalf of a client and the client intends that fundamentally the same activities will continue after the transfer.

Now we have had two interesting cases this year, the first on the organised grouping of employees requirement and the second on the requirement for activities to be fundamentally the same. The case of Amaryllis v McLeod looked at the question of an organised grouping of employees. As we know from previous case law, in order to demonstrate the existence of an organised grouping more than happenstance or an accidental grouping is required and the employees will need to also be assigned to that organised grouping.

Briefly the facts of the Amaryllis case are that the claimant, who was a Mr McLeod, worked for Millbrook Furnishing Limited who had a contract with the Ministry of Defence amongst other clients to undertake specific work, namely the renovation of furniture. Now Millbrook lost that contract between 2003 to 2008 but won it back in 2008, then lost it again to Amaryllis in 2014. In the six months leading up to the transfer the Claimant spent nearly 70% of his time working on the Ministry of Defence furniture restoration contract and so he claims that he TUPE transferred to Amaryllis. Although the ET held that there was an organised grouping of employees the EAT reversed this decision, because whilst historically it might have been the case that Millbrook chose to organise its employees to provide furniture restoration services to the Ministry of Defence, at the time of the relevant transfer this historical grouping had changed, so now the furniture restoration department as a whole was working across a number of contracts rather than in any identifiable client teams. The key point to note about this case is the importance of focussing on the correct point in time, namely looking at the organised grouping immediately before the transfer.

A second noteworthy case was that of Arch Initiatives and Greater Manchester West Mental Health NHS Foundation Trust. Here Bolton Council contracted out drug and alcohol services to the Foundation Trust which is split along functional lines, and those were the case management and delivery of interventions functions. Now on the termination of the contract with the Foundation Trust it was decided that the contract would be split along those functional lines, with Arch Initiatives taking on the case management functions and Lifeline Project for delivery of intervention functions. The point to note from this case was that it concerned the division of existing activities along functional lines, where it was possible to see the link between each employee and the activities performed by the new service providers. It did not involve a redesign of the activities where the tendered activities pre and post transfer were different. To that end the EAT held that the activities were fundamentally the same. A note also in this case is that the EAT also confirmed that it is possible to have a transfer under the service provision change test for part of services.

Mike: There has been a lot of case law over recent years on what elements of pay should be included when calculating holiday pay.  Are we any closer to knowing what elements of pay should be included in those calculations?

Emma: In the UK all workers are entitled to receive 28 days annual leave and to be paid whilst on statutory leave. Now this requirement stems from both European and domestic law. We are required under European legislation to give workers 20 days annual leave and sometimes that is referred to as Regulation 13 leave, and in the UK we have gold plated this minimum requirement and increased it by 8 days and that sometimes is referred to as Regulation 13A leave. Whilst this basic entitlement is not in dispute, there has been much case law on how to calculate holiday pay in terms of what elements should be included. As Regulation 13A is a UK law concept, the UK can determine what elements should be included in holiday pay and it is determined that it should be the workers' normal working hours fixed under their contract.

What has been a hot topic and the subject of much case law is whether other payments, such as commission and overtime, should be included in respect of Regulation 13 leave and this is because European case law has concluded that employees should be entitled to receive their normal remuneration whilst on holiday. Recent case law has now established that in respect of Regulation 13 this means that non-guaranteed overtime which is paid regularly enough to amount to a normal payment should be included in the holiday pay calculation, as opposed to payments which are irregular or erratic. Secondly, voluntary overtime to the extent that it cannot be unreasonably refused should also be included in the calculation. Commission to the extent that it is regularly earned but not that which is irregular or erratic should be included, although the case which decided this is currently subject to appeal to the Supreme Court. Lastly standby and callout payments should be included.

Unfortunately, whilst what should be included is now getting clearer, the calculation is in practice still proving tricky and that is because we still don't know how regular is regular for the purposes of calculating holiday pay and also what's an appropriate reference period? Should it be 12 weeks for instance or would 12 months be more appropriate? Can employers use commission rates which take account of holiday periods, so in other words can an element of rolled up holiday pay be included within those commission rates?

And lastly, as the inclusion of commission and overtime only applies to the first four weeks of annual leave, that Regulation 13 aspect, how do you identify annual leave which is taken as Regulation 13 leave? Is it the date that that leave is reserved or the date the leave is taken?

Mike: If you have an questions in relation to the topics discussed in this employment law update then do feel free to contact either Emma or myself, and do please listen out for further podcasts from our ThinkHouse Foundation sessions and if you are interested in signing up to our mailing list then do please get in touch.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
3 Oct 2017, Seminar, London, UK

Join us over breakfast for our third retail-focused seminar.

10 Oct 2017, Other, London, UK

Join us for our Real Estate Sector Next Generation networking drinks evening.

12 Oct 2017, Webinar, Birmingham, UK

Join us for an interactive evening exploring the possibilities of implementing digital construction in real life projects.

 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.