Changes to Zero Hour Contracts

“Government crackdown on zero hours contract abusers”

Vince Cable announced on 25 June 2014 that the government was cracking down on the abuse of zero hours contracts. The key measure they plan to take is to ban exclusivity clauses. These clauses mean that an employee on a zero hours contract is prevented from working for another employer even if their current employer is not providing them with any work.

As BIS put it: “The use of exclusivity clauses in zero hours contracts undermines choice and flexibility for the individuals concerned.” They claim this will help about 125,000 employees.

However, as a zero hours contract gives the employer the right not to provide the employee with any work employers will be free to refuse to provide work to employees who do find other work elsewhere. It will be difficult for an employee to prove they stopped being given work for this reason, so this ban may well have zero impact.

This action follows a government consultation into zero hours contracts which received over 36,000 responses. 83% were in favour of banning exclusivity clauses in zero hours contacts.

The Business Secretary also announced that the government will:

  • consult further on how to prevent rogue employers evading the exclusivity ban, for example through offering 1 hour fixed contracts
  • work with business representatives and unions to develop a code of practice on the fair use of zero hours contracts by the end of the year (2014)
  • work with stakeholders to review existing guidance and improve information available to employees and employers on using these contracts

Tim Thomas, Head of Employment Policy at EEF, the manufacturers’ organisation, said:

Zero hours contracts occupy an important space in the labour market where, properly used, they provide flexible employment in job roles where open-ended contracts are unsuitable.

For manufacturers where skills are in scarce supply, zero hours contracts can help employers to tap into specialist skills when they are needed, such as drawing on the experience of older workers.

The way forward set out in the Small Business, Enterprise and Employment Bill treads a fine line between supporting the majority of workers who want to continue to work on their zero hours contracts and limiting their use where they are neither necessary nor appropriate.

The ban will be part of the Small Business, Enterprise and Employment Bill, which is being introduced to Parliament today (25 June 2014)

Paul Whitfield can be contacted on 0161 2831276 or

Employment Law Solicitors – Head Office based in Manchester with offices located throughout the United Kingdom.


Employers Named by Government for failing to Pay Minimum Wage

Government Names and Shames Employers that failed to pay Minimum Wage

On 8 June 2014 the government named 25 employers who had failed to pay their employees the National Minimum Wage.

Under new rules from October 2013 the government can now publish the names of employers who have been found not to have paid their employees the National Minimum Wage.

Business Minister Jenny Willott said:

Paying less than the minimum wage is not only wrong, it’s illegal. If employers break the law they need to know that they will face tough consequences.

“Any worker who is entitled to the minimum wage should receive it. If anyone suspects they are not being paid the wage they are legally entitled to they should call the Pay and Work Rights helpline on 0800 917 2368.”

The government plans to bring in new rules in the next parliamentary session so that employers can also be given penalties of up to £20,000 for each individual worker they have underpaid, rather than the maximum penalty applying to each employer. This will mean if an employer underpays 10 workers, they could face penalties of up to £200,000.

Employers must be aware of the current rates for the National Minimum Wage and keep up to date as they change. The government has announced the following rates will come into effect on 1 October 2014:

  • a 19p (3%) increase in the adult rate (from £6.31 to £6.50 per hour)
  • a 10p (2%) increase in the rate for 18-20 year olds (from £5.03 to £5.13 per hour)
  • a 7p (2%) increase in the rate for 16-17 year olds (from £3.72 to £3.79 per hour)
  • a 5p (2%) increase in the rate for apprentices (from £2.68 to £2.73 per hour)

There has been criticism about the government’s actions as the 25 businesses that they have named are said to amount to less than 1% of the problem. Apparently HMRC say that over £4.6 million is owed in arrears to people paid less than the minimum wage. This includes an unnamed Premier League Football club that owed more than £27,500 to 3000 of its employees.

The Low Pay Commission has said that it believes that there has been a “sharp decline” in compliance with the National Minimum Wage in the past two years and that the social care sector is one of the worst offenders.

A list of the named business can be found at:

Paul Whitfield can be contacted on 0161 2831276 or

Employment Law Solicitors – Head Office based in Manchester with offices located throughout the United Kingdom.


Giving Too Much Notice?

Giving Too Much Notice Meant Employee lost their Constructive Dismissal Claim

A constructive dismissal occurs where the employer does not dismiss the employee, but the employee resigns and can show that they were entitled to do so by virtue of the employer’s conduct.

Employees can resign either with or without notice, what matters is that they have the right to resign without notice because of the employer’s conduct towards them.

Employees need to be able to show three things to win a constructive dismissal claim:

  1. A breach of contract by the employer that is sufficiently serious to justify the employee resigning.
  2. The employee must resign in response to that breach of contract.
  3. The employee must not delay too long in accepting the breach.

Constructive dismissal claims have always been difficult cases for employees to win. The employee has to prove that the employer was in fundamental breach of contract. It is not enough just to show that they were not treated fairly. Even if they can do that the employee could still lose their claim because they delayed leaving employment. Even though an employee is permitted to give notice on resignation, the fact that they feel able to work their notice period may lead a tribunal to find that the claimant had in fact delayed too long.

In the recent case of Cockram v Air Products plc a senior employee with a three month notice period resigned after a grievance he raised was not upheld. He claimed that this amounted to a breach of his contract entitling him to claim constructive dismissal. Because he did not have any other work lined up he gave 7 months notice to his employer. He lost his case because of that. The Employment Tribunal and EAT found that to give 7 months notice was to delay too long in accepting the breach and the case was thrown out.

Paul Whitfield can be contacted on 0161 2831276 or

Employment Law Solicitors – Head Office based in Manchester with offices located throughout the United Kingdom.


New TUPE Guidance from ACAS

TUPE (Transfer of Undertakings (Protection of Employment) Regulations 2006) is a set of rules that work to protect employees when the business they work for is sold or transferred to a new employer.

New TUPE regulations came into force on 31 January 2014 and ACAS have now published some very helpful guidance to help employers and employees better understand what the changes mean and how they may affect their business. The PDF of the ACAS TUPE guide can be found at:

The key points to note about TUPE are:

  • When a business is sold or transferred the employees assigned to, or employed by that business will automatically transfer with the business and become employed by the new owner of the business.
  • Employees will transfer to their new employer on their existing contracts of employment and with all their years of continuous employment protected. Changing the contracts of transferred employees can be very difficult and legal advice must be taken at the earliest opportunity.
  • The outgoing employer must provide information about the transferring employees to the new employer not less than 28 days before the transfer.
  • Employer must inform/consult with the transferring employees before the transfer and if there is no trade union this may require the election of employee representatives.  From 31 July 2014, micro businesses (those with fewer than 10 employees overall) are not required to elect representatives to inform and consult where there are no existing recognised trade unions or elected employee representatives. However, they must still inform and consult directly with each individual employee regarding the transfer.
  • If an employee is dismissed either before or after a transfer and the sole or principal reason for the dismissal is the transfer, it will be automatically unfair.

TUPE is a complex area of law and anyone thinking about purchasing or taking over a business with employees really needs to take legal advice about the employees they may inherit at the earliest possible stage.

Employees being transferred can find this a very unsettling and worrying time and may also be best taking legal advice about their position if they feel they are not being treated correctly.

Paul Whitfield can be contacted on 0161 2831276 or

Employment Law Solicitors – Head Office based in Manchester with offices located throughout the United Kingdom.


Holiday Pay Should Include Commission

Update 14/05/2015:

This case has now been referred back to the Employment Tribunal and British Gas has now appealed that again. It is unlikely to be before the end of 2015 when that appeal is heard. The Employment Tribunal it did not consider reference periods and how to quantify a claim for the commission element of holiday pay. The principle that commission must be included in holiday pay is established law now, the still open questions is how to quantify it.

Our best advise at the moment is that in cases where a worker has no normal working hours, or has normal working hours but their pay varies according to amount of work done or the time of work employers should use an average of the last 12 working weeks to calculate how much holiday pay should be paid. If your ways of working mean that 12 weeks would not be representative, such an a system where all commission is paid annually, then 12 weeks may not be the appropriate reference period. In any case we advise all employers to take legal advice on this as soon as possible. Fox Whitfield are already dealing with multiple claims where employers have not changed their policies and are facing claims.

Paul can be contacted on 0161 2831276 or

Employment Law Solicitors – Head Office based in Manchester with offices located throughout the United Kingdom.

In a new twist on the law relating to holiday rights the European Court of Justice (ECJ) has held that holiday pay should take into account commission payments.

Currently the UK law, the Working Time Regulations, make it clear that employees are entitled to holiday pay based on their basic salary alone. This case suggests that is now incorrect as it is not compatible with European Law.

In this example an employee’s remuneration was made up of basic salary and commission. The commission was about 60% of the total remuneration. The ECJ said that the commission payments were directly linked to the performance of his work under his contract of employment. Therefore, the commission should be taken into account in the calculation of his statutory holiday pay.

This case is now being referred back to the Employment Tribunal which will need to consider how to interpret the Working Time Regulations following this decision. It is likely that they will do so in a way that will have far reaching implications for many businesses and their employees.

One possibility is that the Tribunal will say that statutory holiday pay should be based upon 12 month average normal pay. That would ensure that any commission payments paid over a year would be included. Another possibility is that they will use a shorter reference period of 12 weeks. This could mean sales forces trying to take their holidays immediately after busy periods to maximise their holiday pay. We shall have to wait and see how the details of this develop.

There are two other cases being heard in the EAT during the summer of 2014 looking at the extent to which overtime payments should also be included in the calculation of statutory holiday pay.

So what should employers do now?

1) Do nothing. Wait and see how these cases develop the law as they take their time going though the Tribunal and appeal systems. It may be that the UK courts limit the effect of the ECJ  decision.

2) Assume the UK law is going to have to change to comply with the European decisions.  Take the business decision to look at changing your holiday pay and commission rules and policies now. The risk of this is that we have yet to see how the UK courts will apply the law and you could end up having to change your rules twice.

So far, most employers seem to be waiting to see what happens next before making any changes.

We will update you as things become clearer, or more muddy.


Paul can be contacted on 0161 2831276 or

Employment Law Solicitors – Head Office based in Manchester with offices located throughout the United Kingdom.