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Employment Law - What Schools Can Expect in 2018

on Wednesday, 07 March 2018.

2017 was a significant year for employment law and this looks like it will continue into 2018. We have set out the key employment law issues which might affect schools in 2018.

Shared Parental Leave

The Employment Appeals Tribunal (EAT) is due to imminently decide the appeals of two conflicting shared parental leave cases, Capita Customer Management Limited v Ali and Hextall v Chief Constable of Leicestershire Police.

In issue is the question of whether it is discriminatory on the grounds of sex, for employers to enhance maternity leave benefits, whilst limiting partners taking shared parental leave to statutory shared parental pay only? A challenging social and legal issue. Needless to say, two employment tribunals, two different decisions.

It is arguable that enhancing pay for maternity leave, but not for shared parental leave, reinforces the need for working mothers to be the primary carers for children. Enhanced maternity pay forces mothers to take an extended period of leave due to the financial consequences of fathers taking leave resulting in less family income.

A few schools have already taken a policy decision and amended their Shared Parental Leave Policy to provide enhanced shared parental pay now, mirroring their enhanced maternity pay policy. (Please note that there is no requirement to enhance maternity pay at all).

Our advice remains that legally, you may continue to have enhanced maternity pay without a legal obligation to extend the same benefit to the Shared Parental Leave Policy. But watch this space… There is a risk that this may change when the EAT gives judgment. For the time being, we advise no amendments to the Shared Parental Leave Policy are required but we will update you if that position changes.

Grandparental Leave

In 2016 the government announced plans to extend shared parental leave and pay to working grandparents by 2018.

Consultation on implementing these plans had been proposed for May 2016. However it was delayed until after the EU referendum. The Department for Business, Energy and Industrial Strategy (BEIS) will shortly publish consultation regarding the extension of shared parental leave (SPL) rights to grandparents and to consider the simplification of the current shared parental leave system in general.

Under the current SPL scheme, a child's mother who is eligible for SPL, may only share SPL and pay with the child's father or the person who, at the date of the child's birth, is the mother's spouse, civil partner or partner.

'Partner' is defined as a person (whether of the same sex or a different sex) who lives with the mother/adoptive mother and the child in an enduring family relationship, but who is not the mother's/adoptive mother's child, parent, grandchild, grandparent, sibling, aunt, uncle, niece or nephew.

It is expected that following BEIS' consultation, the government will legislate to extend SPL to working grandparents and simplify the current SPL regime before the end of 2018.

We will be participating in the consultation process, as part of the Employment Lawyers Association and will keep you updated on progress.

Sleep in Staff

Are workers who are required to sleep in a particular location entitled to be paid the national minimum wage while they are asleep? This is an important question for boarding schools, those with nursing staff and residential caretakers. The answer is far from straightforward.

In 2017, a number of cases were considered by the Employment Appeal Tribunal (EAT) to determine whether workers were entitled to be paid the minimum wage for the whole period of time spent carrying out sleep-in shifts. One of these cases, Focus Care Agency Ltd v Roberts and others has been appealed and is due to be heard in March 2018 in the Court of Appeal.

National Minimum Wage

The national minimum wage regulations provide that:

"Where the worker is not actually working, they are treated as doing… work if they are available (and are required to be available) at or near a place of work for the purpose of doing such work, subject to the following:

  • where the worker's home is at or near the place of work, time the worker is entitled to spend at home is not treated as working time
  • where the worker sleeps by arrangement at or near a place of work and is provided with suitable facilities for sleeping, time during the hours they are permitted to use those facilities for the purpose of sleeping shall only be treated as working time when the worker is awake for the purpose of working."

Many schools rely on these provisions so that only the time that individuals are awake and actively working are treated as working time for the purpose of the national minimum wage. However, case law goes further. The dividing line between 'working' and being 'available to work' was considered in the 2017 cases:

The EAT Decision in 2017 said that this is a particularly fact-sensitive area and there must be a 'multi-factorial' approach to determine whether (for minimum wage purposes), someone is working simply by being at their employer's premises, even when sleeping.

The factors which should be considered include:

  • the employer's particular purpose in engaging the worker (so for example, where a regulatory requirement is being met by the worker's presence, this may be a factor pointing towards them working merely by being present)
  • the extent to which the worker's activities are restricted by the requirement to be present and at the disposal of the employer
  • the degree of responsibility undertaken by the worker and the types of activities that they may be called upon to perform
  • the immediacy of the requirement to provide services if something untoward occurs or an emergency arises

The National Minimum Standards for Boarding require schools to be 'adequately staffed' and to have at least one staff member sleeping in each boarding house so as to be responsible for the boarders in the house.

Where an employee meets this regulatory requirement, by being present on site for regulatory purposes, unable to leave site, and would be subject to disciplinary action if they were to do so, then there is a strong likelihood all the time, even when sleeping, will be deemed to be working time for the purpose of assessing entitlement to the national minimum wage.

Conversely, do make sure that if these provisions do not apply and workers are residential as a contingency or for mutual convenience, that the national minimum wage may be avoided. This is particularly the case where two employees may be sleeping over with only one, actually 'on-call'. Be clear in correspondence and contracts in respect of rotas and who is 'on duty'.

Court of Appeal guidance to bring further clarity to this area will be welcomed.

Holiday Pay

The 2017 ECJ's decision in Sash Window Workshop Ltd and another v King confirmed that workers who are wrongly informed they are not entitled to holiday pay may carry their holiday rights over indefinitely and be paid in lieu for any untaken holiday for their entire period of employment on termination. The Court of Appeal will consider the implications of the ECJ's decision at a further hearing this year.

This case currently conflicts with UK legislation. Since 1 July 2015, UK law imposed a two year limit on back-pay for unlawful deductions of holiday pay. This rule is unlikely to survive now, opening up the risk of claims for compensation dating back to the introduction of the Working Time Regulations in 1998. 

The risk for schools particularly concerns those staff who have historically been treated as self-employed. They may in fact be legally redefined as employees or workers and could claim holiday pay for the entirety of their relationship with the school, dating back to 1998, (not just for the last two years).

The Sash Windows decision is also likely to extend beyond those who have never been paid holiday pay, but also to those who have been underpaid. Whether holiday pay has been miscalculated or too little holiday entitlement provided, any incomplete payment of holiday pay, is likely now to be at risk of challenge far beyond the two year limit. This creates the risk of a significant latent liability for unpaid holiday pay.

Schools should audit the contracts that are in place with staff and the self-employed. Where any one could argue they are in fact a worker or an employee, steps should be taken to formalise the relationship and to properly record 'status'. Workers and employees should receive all the legal benefits to which they are entitled. It is only the truly self-employed who are not entitled to holiday pay.

General Data Protection Regulation

The EU General Data Protection Regulation (GDPR) dominated the news in 2017 and the same can be expected in the coming year. The GDPR will come into force on 25 May 2018.

The GDPR will introduce a raft of changes regarding the processing of personal data, including but not limited to:

  • greater penalties for non-compliance
  • increased requirements around record keeping and reporting
  • the requirement to include additional information in privacy notices and contracts with data processors
  • increased information security
  • a far narrower definition of consent
  • changes to the rules around the handling of subject access requests
  • new rights for individuals in relation to their data

All schools should be preparing for the GDPR and reviewing their approach to data protection. The GDPR requires schools to demonstrate compliance and this will involve ensuring robust policies and procedures are in place. We consider that the following are essential:

  • an overarching data protection policy for staff
  • an information security policy
  • an information and records retention policy
  • privacy notices for pupils, parents and staff - Privacy notices (sometimes known as transparency notices) are an explicit requirement under the GDPR

In certain circumstances, your school will also need additional data protection documents. For example, data protection impact assessments, sometimes known as privacy impact assessments (PIAs), should be undertaken before carrying out certain activities. Examples include activities such as introducing CCTV or a new type of browser for monitoring staff internet and e-mail usage and content, or introducing a new IT system. In some cases, carrying out a PIA simply reflects good practice, in other cases a PIA will be mandatory under the GDPR.

Finally it is important for schools to ensure that all staff understand their responsibilities under GDPR. Training on the new data protection legislation is vital.

Termination Payments

From 6 April 2018, there will be changes to the way that termination payments are taxed.

The Finance Act 2017 changes are as follows:

  • all payments in lieu of notice will be fully taxable and subject to National Insurance, regardless of whether the employee's employment contract contains a right to pay in lieu of notice
  • the £30,000 exemption from income tax and NICs for termination payments will be retained (however the Treasury may amend the £30,000 threshold by regulations)
  • employer NICs will be payable on termination payments over £30,000

Currently, if there is no payment in lieu of notice (PILON) clause in a contract, a payment in lieu is not a contractual emolument. This means that payment for the notice period may be gross, without deductions for tax and national insurance. Payment in lieu in this case is technically a breach of contract. Of course paying the sums which would have been earned if the notice period was worked, would extinguish a wrongful dismissal or breach of contract claim.

Over the years, the ability to pay notice gross has been used successfully as the 'sweetener' to conclude settlement agreements. We always advise that where staff live in school accommodation, PILON clauses are used. This is to permit immediate, lawful termination with the ability to gain immediate, vacant possession of the property. Payment in lieu of part or the whole of the notice period in these circumstances would then be subject to deductions.

The Finance Act 2017 changes this position so that in every situation where a member of staff does not work their notice period, but receives a payment in lieu, pay representing the whole, or any outstanding period of notice, will be subject to deductions. This will be a change to the practice and the culture within some schools and will assist HMRC to raise more tax revenue. The change takes effect for all termination payments made after 6 April 2018. Schools need to consider the practical implications of this change now.

From 6 April 2018, all schools should include a PILON clause in a contract of employment. To include an express contractual right to pay in lieu of notice will be advantageous. It will reflect the law, but also the discussion will now move on to the drafting of that PILON clause. The clause may, for example, limit the payment of notice only to basic salary and may exclude pension payments and other benefits. This may be introduced for all new staff and consideration will be needed for how this may be communicated to existing staff.

Gender Pay Gap Reporting

All government departments and private and voluntary sector companies with 250 or more employees are due to publish their gender pay gap data by 5 April 2018. This is required under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (the Regulations). The Regulations apply to independent schools and we know that many schools are already in the process of finalising their gender pay data and reports.

Leading by example, the Department for Education (DfE) became the first government department to comply with its obligation to publish data on the gender and bonus pay gap. The DfE reported a mean pay gap of 5.3% and a median pay gap of 5.9%. This is far lower than the UK's reported national gender pay gap of 18.1%. At the other end of the spectrum, it was recently reported that Easyjet had a 45.5% median pay gap between male and female staff.

The Regulations require the gender pay information to be accompanied by a written statement confirming that the information is accurate. It must be signed by a Governor (or equivalent) prior to uploading this to the Government portal and publishing it on a school's website. Preparing and seeking Governor approval of a school's gender pay gap report is essential and should be properly timetabled into the routine governor meetings to ensure the reporting deadline can be met.

The Regulations themselves do not make proper provision to consider term time only working. This means that on a technical application of the Regulations, term time only employees could appear to be paid at an artificially low gross hourly rate. This in turn could lead to a distorted gender pay gap. ACAS and the Government Equalities Office have now issued updated joint guidance (the Guidance) which includes specific advice on calculating weekly working hours for term time only staff. This is to be welcomed.

The updated Guidance now helpfully suggests that schools may report their data in a way that more meaningfully reflects atypical working arrangements such as term time only working. The Guidance contains worked examples setting out suggested methodology to adopt for different categories of term time only and/or annualised hours workers.

The information on the Government portal only contains basic calculations. As we all know, the narrative is so important to explain the calculations. If the calculations identify a gender pay gap, we strongly recommend a supporting narrative to explain the calculations and to identify or explain any positives to be included within the report for Governors and on the school's own website. Schools may also wish to consider developing an Equality Action plan to establish initiatives that could be put in place to close the gap over time. The DfE's initiatives could be a good starting point.

We are working with a number of schools to support them with queries on the calculations and with narratives. The requirements do throw up some particular challenges for schools given the variety of working arrangements and for further information on the approach for schools, please do contact us.

Tribunal Fees

2017 saw the abolition of employment tribunal fees in the landmark Supreme Court ruling in Unison. As predicted, the number of claims has now increased significantly. In the first quarterly statistics since the removal of fees, the number of claims brought increased by 64%. This trend is expected to continue in 2018.

Employment tribunal fees were introduced in July 2013. We went from an era of no fees, to prospective Claimants paying issue and hearing fees totalling £390 or £1,200 (depending on their claim). The fees were always controversial, accused of impeding access to justice, evidenced by claims falling by 70%.

In July 2017, the Supreme Court unanimously agreed that the fee system was unlawful under both domestic and EU law.

Since this ruling the Government has announced a refund scheme to allow employees and employers to recover the fees they paid. You are eligible for a refund under the scheme if you paid a fee directly to the employment tribunal, you were ordered to reimburse your opponent their fee, or you paid a fee on behalf of another person.

In addition to schools considering whether they are entitled to any refunds, please also be aware of the increased risk of tribunal claims when managing staff. Without a financial deterrent, employees will be more likely to bring employment tribunal claims. Having a fair reason for action and following a fair procedure have never been more important.

For more information please contact Simon Bevan on 0117 314 5238 or Alice Reeve on 0117 314 5383.

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