Employment Law Update – Sept 2013
Employer liability for third party harassment
On 1 October 2013, The Enterprise and Regulatory Reform Act 2013 repeals the section of the Equality Act 2010 which states that the employer will be liable where an individual is harassed by a third party if:
1. The third party harassed the employee on at least two previous occasions; and 2. The employer failed to take reasonably practicable steps to stop the harassment.
Therefore, as of 1 October 2013, the Government has decided to remove the third-party harassment provisions from the Equality Act 2010 and the employer can no longer be held vicariously liable for harassment by a third party in these circumstances. Simply-Docs has amended its Harassment and Bullying Policy accordingly and this updated document will be available to download from 1st October 2013. It is recommended that you replace your existing Harassment and Bullying Policy with the updated version.
National Minimum Wage Rates
National minimum wage rates also change as of 1 October 2013 as follows:
• The main (adult) rate of the national minimum wage rises from £6.19 to £6.31 per hour.
• The youth rate (for workers who are aged 18 but under 21) increases from £4.98 to £5.03 per hour.
• The rate for workers aged 16 to 17 increases from £3.68 to £3.72 per hour.
• The apprentice rate increases from £2.65 to £2.68 per hour.
The accommodation offset increases from £4.82 to £4.91 per day as of the same date. The accommodation offset applies if an employer provides an employee with accommodation.
Employee shareholder contracts
As of 1 September 2013, a new type of employment contract, called employee-owner or employee-shareholder contracts, was introduced. Full details are set down in the Growth and Infrastructure Act 2013 which can be found on the UK legislation website. Under this type of contract, employee-owners/employee-shareholders will be given between £2,000 and £50,000 of shares in the employer’s business, which will be exempt from capital gains tax, in exchange for giving up the following employment rights:
• They will not have the ‘ordinary’ unfair dismissal protection after two years' continuous service (except in health and safety cases, automatically unfair cases or cases where the dismissal is discriminatory under the Equality Act);
• They will be unable to make statutory requests to work flexibly or in relation to study or training, and will not be protected against dismissal for making either of these statutory requests, except in relation to a flexible working request on return from parental leave;
• Employee-owners/employee-shareholders will have no right to statutory redundancy pay; and
• They will have to give 16 weeks' notice to return early from maternity, adoption or additional paternity leave, as compared with eight weeks for employees.
Employers cannot compel employees to transfer to employee-shareholder contracts. Employees who are dismissed for refusing to agree to become an employee-shareholder will be automatically unfairly dismissed and will not need two years' service to bring a claim. Similarly, an employee cannot be subjected to a detriment, for example, by being disciplined or having their pay cut, if they refuse to become an employee-shareholder.
In order to ensure that employees do not feel unduly pressurised to become employee shareholders, the following provisions will also apply:
• An offer of employee shareholder status must include a statement explaining the employment rights that would be sacrificed and the rights attaching to the shares;
• The employee must receive advice from an independent legal advisor about the employment rights which are being given up and the rights attaching to the shares; and
• The employee will be given a seven-day ‘cooling off’ period after receiving legal advice to decide if they wish to take part in an employee shareholder scheme.
On 1 October 2013, The Enterprise and Regulatory Reform Act 2013 repeals the section of the Equality Act 2010 which states that the employer will be liable where an individual is harassed by a third party if:
1. The third party harassed the employee on at least two previous occasions; and 2. The employer failed to take reasonably practicable steps to stop the harassment.
Therefore, as of 1 October 2013, the Government has decided to remove the third-party harassment provisions from the Equality Act 2010 and the employer can no longer be held vicariously liable for harassment by a third party in these circumstances. Simply-Docs has amended its Harassment and Bullying Policy accordingly and this updated document will be available to download from 1st October 2013. It is recommended that you replace your existing Harassment and Bullying Policy with the updated version.
National Minimum Wage Rates
National minimum wage rates also change as of 1 October 2013 as follows:
• The main (adult) rate of the national minimum wage rises from £6.19 to £6.31 per hour.
• The youth rate (for workers who are aged 18 but under 21) increases from £4.98 to £5.03 per hour.
• The rate for workers aged 16 to 17 increases from £3.68 to £3.72 per hour.
• The apprentice rate increases from £2.65 to £2.68 per hour.
The accommodation offset increases from £4.82 to £4.91 per day as of the same date. The accommodation offset applies if an employer provides an employee with accommodation.
Employee shareholder contracts
As of 1 September 2013, a new type of employment contract, called employee-owner or employee-shareholder contracts, was introduced. Full details are set down in the Growth and Infrastructure Act 2013 which can be found on the UK legislation website. Under this type of contract, employee-owners/employee-shareholders will be given between £2,000 and £50,000 of shares in the employer’s business, which will be exempt from capital gains tax, in exchange for giving up the following employment rights:
• They will not have the ‘ordinary’ unfair dismissal protection after two years' continuous service (except in health and safety cases, automatically unfair cases or cases where the dismissal is discriminatory under the Equality Act);
• They will be unable to make statutory requests to work flexibly or in relation to study or training, and will not be protected against dismissal for making either of these statutory requests, except in relation to a flexible working request on return from parental leave;
• Employee-owners/employee-shareholders will have no right to statutory redundancy pay; and
• They will have to give 16 weeks' notice to return early from maternity, adoption or additional paternity leave, as compared with eight weeks for employees.
Employers cannot compel employees to transfer to employee-shareholder contracts. Employees who are dismissed for refusing to agree to become an employee-shareholder will be automatically unfairly dismissed and will not need two years' service to bring a claim. Similarly, an employee cannot be subjected to a detriment, for example, by being disciplined or having their pay cut, if they refuse to become an employee-shareholder.
In order to ensure that employees do not feel unduly pressurised to become employee shareholders, the following provisions will also apply:
• An offer of employee shareholder status must include a statement explaining the employment rights that would be sacrificed and the rights attaching to the shares;
• The employee must receive advice from an independent legal advisor about the employment rights which are being given up and the rights attaching to the shares; and
• The employee will be given a seven-day ‘cooling off’ period after receiving legal advice to decide if they wish to take part in an employee shareholder scheme.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.