Employment Law

Despite an appeal, the Courts recently found against Bolt in relation to their attempts to evade the statutory entitlements of their drivers to a minimum wage and holiday pay.  The ruling confirms that 10,000 Bolt drivers employed on what was erroneously conceived to be an ‘agency arrangement’ as freelance contractors are indeed entitled to minimum pay, sick leave and paid vacations.

Under the Employment Rights Act 1996, National Minimum Wage Act 1998, National Minimum Wage Regulations 2015, and the Working Time Regulations 1998, Bolt’s drivers were considered by the Courts to be ‘exclusive’ employees unless they also drove for other ride-hailing apps or were part of the ‘Link’ scheme.  Bolt’s contention of self-employment was refuted based on its contractual control over their livelihoods and the absence of any valid notion of ‘free agency’. The Courts gave Bolt a scathing rebuke for the fictional nature of its contract that sought to deny any employer-worker relationship with the drivers.

Once again, the attempt to cut costs and responsibilities by creating sham contracts inferring that long-term employees are part-time freelancers has backfired. This ruling reaffirms that such sham contracts are no longer acceptable in the UK and that any employers operating under this attempted abrogation of responsibilities will find themselves on thin ice at tribunals. If you are currently employing any staff on zero-hours contracts or on an extended contractual freelance basis, you are advised to seek legal advice.

Legislation has been introduced in Parliament to upgrade UK workers’ rights.

The legislation is wide ranging with the intention of tackling poor working conditions and benefitting businesses. A summary of the main changes are:

• The existing two-year qualifying period for protections from unfair dismissal will be removed, delivering on the Labour manifesto commitment to ensure that all workers have a right to these protections from day one on the job.
• The government will also consult on a new statutory probation period for companies’ new hires. This will allow for a proper assessment of an employee’s suitability to a role as well as reassuring employees that they have rights from day one, enabling businesses to take chances on hires while giving more people confidence to re-enter the job market or change careers, improving their living standards.
• The bill will bring forward 28 individual employment reforms, from ending exploitative zero hours contracts and fire and rehire practices to establishing day one rights for paternity, parental and bereavement leave for millions of workers. Statutory sick pay will also be strengthened, removing the lower earnings limit for all workers and cutting out the waiting period before sick pay kicks in.
• Accompanying this will be measures to help make the workplace more compatible with people’s lives, with flexible working made the default where practical. Large employers will also be required to create action plans on addressing gender pay gaps and supporting employees through the menopause, and protections against dismissal will be strengthened for pregnant women and new mothers. This is all with the intention of keeping people in work for longer, reducing recruitment costs for employers by increasing staff retention and helping the economy grow.

A new Fair Work Agency bringing together existing enforcement bodies will also be established to enforce rights such as holiday pay and support employers looking for guidance on how to comply with the law.

Employers and employees who would like more information on the scope of the new legislation can view a Department for Business and Trade press release at https://www.gov.uk/government/news/government-unveils-most-significant-reforms-to-employment-rights.

New regulations that prohibit employers from withholding tips for employees in the hospitality, leisure, and services sectors took effect on 1 October 2024. This change follows the enactment of The Employment (Allocation of Tips) Act 2023, commonly referred to as the Tipping Act, along with the statutory Code of Practice on the fair and transparent distribution of tips, which also took effect on 1 October 2024.

This means that more than 2 million workers will have their tips protected. HMRC has estimated that this new law will mean an estimated £200 million a year will go back into the pockets of hard-working staff by retaining tips that would have otherwise been deducted. These new measures apply in England, Scotland and Wales. Employment policy is devolved to Northern Ireland.

Employers who violate these rules could face fines or be required to compensate their staff. Workers will have the ability to hold their employers fully accountable through employment tribunals.

The statutory Code of Practice provides businesses with advice on how tips should be distributed among staff. The Code of Practice is statutory and has legal effect, meaning it can be introduced as evidence in an employment tribunal.

British workers are set for better working conditions as the Government takes its first steps towards its Plan to Make Work Pay.

The Deputy Prime Minister and Business Secretary convened a meeting with trade unions and business leaders in a first-of-its-kind meeting 14th August 2024.

They agreed to wipe the slate clean and begin a new relationship of respect and collaboration to help deliver the Government’s first mission – to kickstart economic growth.

They discussed views on the Employment Rights Bill and wider Plan to Make Work Pay, with the Deputy Prime Minister and Business Secretary.

This comes soon after the Deputy Prime Minster and Business Secretary decided to overhaul the remit of the Low Pay Commission to deliver early progress on the Make Work Pay plan and put more money in working people’s pockets.

The Employment Rights Bill – which will play a key role in delivering the Plan to Make Work Pay – will be introduced within 100 days of entering Government.

As part of its Make Work Pay plan, the Government has committed to:

• Ban exploitative zero hours contracts
• End fire and rehire
• Introduce basic rights from day one to parental leave, sick pay, and protection from unfair dismissal
• Strengthen the collective voice of workers, including through their trade unions, and create a Single Enforcement Body to ensure employment rights are upheld
• Make sure the minimum wage is a genuine living wage by changing the remit of the independent Low Pay Commission so for the first time it accounts for the cost of living
• Remove the discriminatory age bands, so all adults are entitled to the same minimum wage, delivering a pay rise to hundreds of thousands of workers across the UK

When a new employee is added to the payroll it is the employer's responsibility to ensure they meet the employee's rights and deduct the correct amount of tax from their salary.

HMRC’s guidance lists the following requirements that an employer must meet for employees on full-time and part-time contracts:

• a written statement of employment or contract;
• the statutory minimum level of paid holiday;
• a payslip showing all deductions, such as National Insurance contributions (NICs);
• the statutory minimum length of rest breaks;
• Statutory Sick Pay (SSP); and
• maternity, paternity and adoption pay and leave.

Employers must also:

• make sure employees do not work longer than the maximum allowed;
• pay employees at least the minimum wage;
• have employer’s liability insurance;
• provide a safe and secure working environment;
• register with HM Revenue and Customs to deal with payroll, tax and NICs;
• consider flexible working requests;
• avoid discrimination in the workplace; and
• make reasonable adjustments to their business premises if an employee is disabled.

Three new pieces of legislation that received cross party support were granted Royal Assent on 24 May 2023. 

1. The Neonatal Care (Leave and Pay) Act 2023: This new Act will allow for up to 12 weeks of paid neonatal care leave. This will be made available to employed parents if their new-born is admitted to neonatal care so they can spend more time with their child. These parents will continue to be entitled to normal maternity, paternity, and/or shared parental leave.
2. Protection from Redundancy (Pregnancy and Family Leave) Act 2023: This Act will extend existing redundancy protections. This will allow for existing protections whilst on Maternity Leave, Adoption Leave or Shared Parental Leave to be extended to cover pregnancy and a period of time after a new parent has returned to work.
3. The Carer’s Leave Act 2023: This Act will introduce a new entitlement of one week of flexible unpaid leave per year for employees who are caring for a dependant with a long-term care need.

The implementation dates of these new employment rights have not yet been announced as the government will need to lay down secondary legislation in due course to implement these new entitlements. This is likely to occur at some time after April 2024.

Employers must ensure they are paying staff at least the National Minimum Wage (NMW) or National Living Wage (NLW). The NMW and the NLW are the minimum legal amounts that employers must pay their workers.

The new NMW and NLW rates came into effect on 1 April 2023. The hourly rate for the NMW (for 21-22-year-olds) is £10.18 and for the NLW is £10.42. The NLW is the minimum hourly rate that must be paid to those aged 23 or over.

It is important that employers ensure they pay the necessary minimum wage rates as there are significant penalties for employers who are found to have paid workers less that they are entitled to by law. If an employee has been underpaid, the employer must pay any arrears without delay. There are penalties for non-payment of up to 200% of the amount owed. The penalties are reduced by 50% if all of the unpaid wages and 50% of the penalty are paid in full within 14 days.

The maximum fine for non-payment can be up to £20,000 per employee. Employers who fail to pay, face a 15-year ban from being a company director as well as being publicly named and shamed.

There are fines for not registering as a childminder if you were required to do so.

GOV.UK guidance on the matter states that you must register as a childminder if all of the following apply:

• the children are under the age of 8;
• you look after them for more than 2 hours a day;
• you look after them in your own home; and
• you get paid to look after them – including payment in kind.

A registration can be made with Ofsted or through a childminder agency.

In order to register, the childminder will need:

• an enhanced check with barred lists for home-based workers from the Disclosure and Barring Service (DBS);
• first aid training for the age group they will look after;
• childcare training;
• a health declaration booklet;
• contact details for 2 references; and
• a certificate of good character from an embassy – if they lived abroad in the past 5 years.

A person does not need to register (although can choose to do so in certain situations) if they are working as a:

• a nanny
• a tutor
• a babysitter and if they look after the children between 6pm and 2am
• a family friend and they look after the children less than 3 hours a day.

There are different rules for someone who provides day-care outside someone’s home – for example, a nursery or creche.

The Check Employment Status for Tax (CEST) tool can be used to help ascertain if a worker should be classified as employed or self-employed for tax purposes in both the private and public sector.

The service provides HMRC’s view if IR35 legislation applies to a particular engagement and whether a worker should pay tax through PAYE. The service also helps determine if the off-payroll working in the public sector rules apply to a public sector engagement.

The software can be used to check the employment status of:

• a worker providing services,
• a person or organisation hiring a worker; or
• an agency placing a worker.

HMRC has said that it will stand by the result given unless a compliance check finds the information provided was not accurate. HMRC will not stand by the results of contrived arrangements and those designed to get a particular outcome from the service. HMRC are clear that this would be treated as evidence of deliberate non-compliance and could result in higher penalties.

The service is anonymous, and the results are not stored online. However, the results can be printed and held for your own records. If any changes take place to the workers role their status should be reassessed.

If you have staff that have been called up to serve on a jury, then you must allow them the necessary time off. You can ask them to request to delay their jury service if their absence would seriously harm your business. Your employee would need to agree to this request and would need to provide written evidence explaining why a delay has been requested. The request to delay jury service can only be made once in a 12-month period, and the employee must say on the jury summons when they will be available.

Whilst employers must provide time off to allow for jury service, there is no legal requirement to pay employees whilst they are serving.

However, the employee can continue to be paid as normal. If this is the case, the employer cannot reclaim money paid to the employee or that the business has lost during the jury service.

If an employer does not pay their employee, then they can claim a loss of earnings allowance from the court. The employer will need to prepare a certificate of loss of earnings for their employee. This form comes together with the jury service letter. 

Employers can also decide to top up the ‘loss of earnings allowance’ by subtracting the court allowance from their employee’s usual take-home pay.