Hospitality update – Christmas 2018
Whilst you would be forgiven for thinking that Government has fallen into paralysis on everything apart from Brexit, the last few days have seen a raft of announcements regarding the National Minimum Wage (NMW) and the “Good Work Plan” which incorporates Ministers’ responses to the Taylor Report on modern working practices. Here’s the updates you need.
New guidance has been published regarding what counts as work during a trial shift and when the Minimum Wage needs to be paid and is available by clicking here (at page 20). There are a number of “example scenarios” but the key points are:
• Is the purpose of the trial genuinely for recruitment purposes?
• Did the length of the trial exceed a period of time which an employer would reasonably need to assess a candidate’s suitability?
• Is the candidate monitored and observed whilst carrying out tasks?
• Are the tasks being performed directly related to the job being offered?
• Are the tasks being undertaken in a real or simulated environment?
There is no one question that determines if the trial shift must be paid. A key section in the guidance is that “in some cases an unpaid trial work period lasting a few hours may be reasonable and not create an entitlement to National Minimum Wage/National Living Wage (NLW) . This is because the main purpose would likely be to test the individual, and what is done would probably have little or no other value to the employer: the substance of the arrangement would therefore concern recruitment rather than providing work. The individual would therefore probably not be entitled to the NMW/NLW. A key consideration is that the longer a trial period continues, the more likely it is that it results in a contract to provide work and that the NMW/NLW becomes due”.
Whilst the updated guidance appears not quite as prescriptive as before, as always the key will be to record exactly what the potential employee has done and have this agreed and signed if you do not intend to pay for the trial shift.
National Minimum Wage – Consultation on Salaried Workers & Salary Sacrifice
Government appears to be listening to concerns that many have expressed regarding who can be treated as a salaried worker for NMW purposes, and as such entitled to have their hours averaged over a 12 month period. At present if an employee is paid fortnightly or four-weekly the Regulations prohibit them from being treated as salaried and instead means that staff must be paid for all hours worked in that pay period. It’s unclear what problem or abuse these Regulations are trying to halt, and it seems the Government has concluded the same as they have launched a consultation into whether additional pay frequencies can also be classed as salaried.
Additionally at present employees paid at NMW rates are precluded from entering into salary sacrifice arrangements for Government-approved ideas such as workplace pensions, childcare vouchers and cycle-to-work schemes as, even via consent, pay cannot be reduced to sub-NMW levels. The consultation is also looking at whether this restriction should be relaxed in a small number of defined areas, which will allow these employees to benefit in the same way as higher-paid colleagues.
The consultation is available here. Both suggestions appear sensible, reasonable and beneficial.
Right to request “a more stable contract”
The Government’s “Good Work Plan” (here – page 13) includes a new right for employees who are on a zero or variable hours contract to request, after 26 weeks’ service, a more “stable” contract. This may include a minimum number of hours per week or fixed days of the week on which they will have to work. Note that this is a right to request, and not a requirement on an employer to agree. There is no detail in the Plan about what grounds an employer may need to be able to demonstrate if they refuse an employee’s request.
At present when calculating holiday pay entitlement (particularly for hourly-paid workers) the amount of time due an employee is calculated by reference to the hours worked over the preceding 12 weeks. This timeframe is to be extended to 52 weeks, which the Government believes will result in more fairness for seasonal employees.
Lower pay loophole for agency staff blocked
Government has announced it will close an exemption in the current regulations (known as the “Swedish Derogation”) which allows, in certain circumstances, agency staff to be paid at lower rates than equivalent full-time staff. This will clarify the law and ensure that all staff are paid at the same rate regardless of whether they are directly-employed or supplied via an agency.
Naming & Shaming for Employment Tribunal awards
In a similar vein to NMW, Government has announced proposals to publicly name and shame employers who do not make prompt payment of any awards made by Tribunals. Any award made from 18th December is covered. The naming is not automatic – if an employee has not been paid an amount within 42 days of the Tribunal award then they are able to register this with BEIS who will write to the business warning of naming & shaming. As with NMW, there are only very limited grounds for a business to appeal, the main one being that the award has in fact been paid. Naming & shaming will take place quarterly.
Showing hours on payslips
From next April employers will be obliged to show on all employee or worker payslips the number of hours worked where the employee is a time-based worker (i.e. hourly pay).
The Government has re-stated its aim to legislate to ensure that workers receive all tips in full. The statement does not go further than that made by the Prime Minister on 1 October, and does not mention the representations that industry and trade bodies have made (including directly to the Minister) since that date. There is no timeline or date within the announcement, but I am aware that BEIS are engaging in informal consultations in the New Year (which I have been invited to attend) so it would appear this is not imminent.
Good Practice Guide for Tips, Service Charge & Tronc
In case you missed it, we have recently published a Guide setting out what a future Code of Conduct on good practice might look like. Given the ongoing media attention, Government announcements, union campaigns and consumer concerns I think it important that the vast majority of businesses who act in perfectly fair and reasonable ways are not tarnished by the any publicised poor working practices of other businesses. Most businesses have only positive and good news stories to tell about the way they handle tronc and service charge (including, we think, all of our clients). It’s available to read here and I’d be really interested in your feedback and comments – even if it is negative!
If you would like to discuss any of the above in more detail please contact Peter Davies.
Finally we would like to thank you all for your business during 2018 and to wish you, and all of your teams, a very Happy Christmas and a successful 2019.