Scotsman Legal Review: Employment Law

The judgment in Lock v British Gas, which was announced in October, has generated a great deal of discussion around the issue of holiday pay and, more specifically, what is included in the calculation of a week’s pay.

The Court of Appeal upheld the previous decision of the Employment Tribunal and Employment Appeal Tribunal that Working Time Regulations 1998 can be interpreted such as to require results-based commission to be included when calculating holiday pay.

“Holiday pay is probably one of the most commonly asked about topics,” says Andrew Brown, partner in the employment team at Anderson Strathern.

“Often holiday pay is calculated on the basis of an employee’s basic salary, disregarding any commission or overtime.

“Over the past few years, however, there has been a lot of debate about what should and shouldn’t be included in the calculation.

“The European courts have now made clear that employees should be paid their normal remuneration during annual leave and where an employee’s normal remuneration would include commission payments, those payments must be included in the holiday pay calculation.”

Zero-hours contracts have been another hot topic and in many cases it was not the lack of guaranteed work that was the problem, rather a clause which appeared in a number of such contracts stating that the employee could not work for another employer.

“There are a lot of good things with zero-hours contracts and there are places where they make sense. The exclusivity clause is where the problem arises,” says Brown.

He also points to the Trade Union Act 2016 as a major change in employment law. The new legislation changes the rules on taking industrial action.

Currently, a strike or other industrial action will be unlawful unless at least 50 per cent of those who responded to the ballot voted in favour of the action, meaning a situation can arise where only a small minority of those entitled to vote actually voted for strike action.

Striking workers can form a picket line outside the employer’s premises and although they may not be intimidating or unruly, some workers may be reluctant to cross the picket line.

Those who did not vote in favour of strike action and did not feel they could cross the picket line may face a deduction of a day’s pay.

“The Trade Union Act 2016 changes that, so that in addition to requiring the majority to be in favour of the action, at least 50 per cent of those entitled to vote must vote,” explains Brown.

“This appears to be designed to address situations where the majority of those eligible to vote are not inclined to vote one way or the other.”

April brought with it the usual rush of employment legislation coming into force, including the national living wage, according to which workers aged 25 and over must be paid £7.20 an hour, 50p more than adult rate minimum wage at the time.

Similarly, last month saw a number of changes as well as new legislation enacted.

On 1 October, the national minimum wage rates changed with the intention going forward that both the national minimum wage and the national living wage will be increased in tandem in April each year.

Confirmation was received of the delay to the publication of the Equality Act 2010 (Gender Pay Gap Information). Brown says the number of employment tribunal claims has dropped off significantly over the last couple of years following the introduction of tribunal fees in 2013.

Where it was previously free to bring a claim against your employer, an individual is now required to pay fees at various stages of the process.

In relation to unfair dismissal cases, for example, an individual must pay £250 towards the claim and a further £950 when it gets nearer to the hearing.

“This seems to have acted as a disincentive to bringing claims,” says Brown.

“Depending what statistics you look at, the reduction in claims has been something like 70 per cent.

“It has had a huge impact and has been challenged by trades unions as being unlawful.

“So far the challenges have been unsuccessful but there is an appeal outstanding.”

The Scottish Government has pledged to abolish the current tribunal fees, although a lot of speculation remains as to what the changes will entail.

“The pledge was given before the Brexit vote so it remains to be seen how high on the agenda that’s going to be,” says Brown.

And it’s the same feeling across the board in terms of lawyers predicting uncertain times ahead as the UK moves towards an exit from the EU.

In theory, the changes for employment law could be vast, with much of what we understand as UK employment law shaped by Europe.

Discrimination rights, family rights and the protection of agency workers are just some of the areas which could be affected.

One certainty is that none of these changes will occur overnight, with the UK required to give two years’ notice of its intention to leave the EU.

“Nobody knows exactly what’s going to happen and that makes it difficult for lawyers to give genuine and meaningful advice to employers,” says Brown.

“Things like discrimination legislation, which largely follows EU legislation, are unlikely to change significantly.

“There might be a cap on compensation introduced – at the moment a discrimination claim is uncapped.

“A law firm wants to be able to advise their clients on what’s going to happen but at the moment with employment law all we can do is offer an educated guess.”

The Scotsman’s annual legal review looks at some of the most active areas of legal practice in Scotland. Informed by comprehensive data published by Chambers and Partners and Legal 500, the articles give exclusive insight into the work of more than 11,000 practising solicitors and over 460 practising advocates.