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Looking back over 2016

Having drawn an end to what some will have seen as a long and turbulent 2016, it is time to recap on the developments of the previous 12 months – at least in relation to employment law. Whilst a number of matters which cropped up in the last year will undoubtedly be revisited in the coming months, we thought it best to look back over some of 2016’s best bits.

The Introduction of the Modern Slavery Act

  • Requires any commercial organisation, which supplies goods or services and has an annual global turnover of £36 million or above, to publish an annual slavery and human trafficking statement.
  • The slavery and human trafficking statement must include either a statement outlining the steps the organisation has taken to ensure that slavery and human trafficking is not taking place in any of its supply chains (or in any part of its own business) or, if no steps have been taken, that fact.
  • The first statements were to be produced as soon as possible after the end of the financial year which falls on or after 31 March 2016.
  • Read our article 'What the modern slavery act means for your business.'

The National Living Wage was introduced…

  • Entitling workers aged 25 or over to the National Living Wage rate of £7.20 per hour, from the first pay reference period beginning on or after 1 April 2016.
  • This is a new top rate of the National Minimum Wage and not to be mistaken with the real Living Wage initiative, which is a voluntary rate calculated independently with reference to the basic cost of living across the UK.
  • Points to note: employers should check, in particular, that employees’ average hourly rate of pay is not brought below the new prescribed minimum by, for example, salary-sacrifice arrangements.
  • Click here to read Chris Cook's answers to frequently asked questions about the National Living Wage.

…and penalties for non-payment of the National Minimum Wage were increased

  • On 1 April 2016 the penalty percentage for non-payment of the prescribed minimum rates was increased from 100% to 200%, with a minimum penalty of £100 and a maximum penalty of £20,000 per worker.
  • The revised penalty is calculated as 200% of the total underpayment for all of the workers specified in a Notice of Underpayment relating to pay reference periods that commence on or after 1 April 2016.
  • The penalty is reduced by 50% if the unpaid wages and the penalty are paid within 14 days.
  • Points to note: employers are reminded to ensure that on average, their employees are receiving the national minimum wage for the hours they work. This is particularly important for those who work “sleep-in” shifts.
  • Here is a link to my article on 'How to adhere to the requirements of the National Minimum Wage.'

Public-sector employees are now required to repay exit payments in some circumstances

  • Regulations requiring high earning public-sector employees to repay exit payments if they re-join any part of the public sector within a year of their departure came into force on 1 April 2016.
  • The duty to repay will include redundancy payments, voluntary exit payments and payments made to reduce an actuarial reduction to a pension on early retirement.
  • The minimum earnings threshold for individuals subject to the recovery provisions reduced from £100,000 to £80,000 and a cap of £95,000 on all public-sector exit payments has also been implemented.

Enforcement of tribunal award payments has been focused upon

  • On 6 April 2016, section 150 of the Small Business, Enterprise and Employment Act 2015 came into force imposing financial penalties on employers who do not pay employment tribunal awards or sums due under the provisions of COT3 agreement.
  • The penalty can amount to 50% of the unpaid award (subject to a minimum payment of £100 and a maximum of £5,000) but is reduced for prompt payment.
  • The sums are paid to the government (not the claimant who failed to receive the award) and recent statistics provided by the Department for Business, Energy and Industrial Strategy suggest over £83,000 worth of fines have been paid since its inception.

The Court of Appeal confirms position in relation to the calculation of holiday pay

  • The ongoing case of Lock v British Gas Trading was heard before the Court of Appeal which delivered its judgment in October 2016, confirming that results-based commission ought to be included within the calculation of holiday pay. (Read Keely Rushmore's article on this case here.)
  • It was found that the Working Time Regulations 1998 can be interpreted so as to include a reference to the worker’s normal remuneration as this remains in line with the duty to provide conforming interpretation of UK legislation introduced for the purpose of implementing the European Directive.
  • British Gas has lodged an appeal to the Supreme Court which is set to be heard later this year.

An interesting point in respect of shared parental leave was raised

  • The case of Snell v Network Rail is the first to consider whether a failure to offer men enhanced benefits during shared parental leave in circumstances where they offer enhanced maternity leave can amount to discrimination.
  • Whilst the Respondent conceded that their policy amounted to indirect sex discrimination ahead of the hearing it is an interesting point, as it directly opposes the government advice that providing enhanced shared parental pay should be “entirely at the discretion of employers”.
  • Here, Chris Cook comments on Shared Parental Leave in HR Magazine.

And finally…. we saw the growth of the “gig economy”


If you would like more information or advice relating to this article or an Employment law matter, please do not hesitate to contact Domonique McRae on 01727 798023 or 020 7183 5683.

© SA LAW 2018

Every care is taken in the preparation of our articles. However, no responsibility can be accepted to any person who acts on the basis of information contained in them alone. You are recommended to obtain specific advice in respect of individual cases.

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