Pay day?

Photo by Jordan Rowland on Unsplash

One of the most important common law duties that an employer has under the contract of employment is to pay wages to the employee.

This duty, of course, is contingent upon the employee carrying out his or her side of the bargain i.e. performing their contractual duties.

The right to be paid fully and on time is a basic right of any employee. Failure by employers to pay wages (wholly or partially) or to delay payment is a serious contractual breach.

Historically, employers could exploit employees by paying them in vouchers or other commodities. Often, these vouchers could be exchanged only in the factory shop. This led Parliament to pass the Truck Acts to prevent such abuses.

Sections 13-27 of the Employment Rights Act 1996 (which replaced the Wages Act 1986) give employees some very important rights as regards the payment of wages.

The National Minimum Wage Act 1998 (and the associated statutory instruments) and the Equality Act 2010 also contain important provisions about wages and other contractual benefits.

There are a number of key issues regarding the payment of wages:

  • All employees are entitled to an individual written pay statement (whether a hard or electronic copy)
  • The written pay statement must contain certain information
  • Pay slips/statements must be given on or before the pay date
  • Fixed pay deductions must be shown with detailed amounts and reasons for the deductions e.g. Tax, pensions and national insurance
  • Part time workers must get same rate as full time workers (on a pro rata basis)
  • Most workers entitled to be paid the National Minimum Wage or the National Minimum Living Wage (if over age 25) (NMW)
  • Some workers under age 19 may be entitled to the apprentice rate

Most workers (please note not just employees) are entitled to receive the NMW i.e. over school leaving age. NMW rates are reviewed each year by the Low Pay Commission and changes are usually announced from 1 April each year.

It is a criminal offence not to pay workers the NMW and they can also take (civil) legal action before an Employment Tribunal (or Industrial Tribunal in Northern Ireland) in order to assert this important statutory right.

There are certain individuals who are not entitled to receive the NMW:

  • Members of the Armed Forces
  • Genuinely self-employed persons
  • Prisoners
  • Volunteers
  • Students doing work placements as part of their studies
  • Workers on certain training schemes
  • Members of religious communities
  • Share fishermen

Pay deductions?

Can be lawful when made by employers …

… but in certain, limited circumstances only.

When exactly are deductions from pay lawful?:

  • Required or authorised by legislation (e.g. income tax or national insurance deductions);
  • It is authorised by the worker’s contract – provided the worker has been given a written copy of the relevant terms or a written explanation of them before it is made;
  • The consent of the worker has been obtained in writing before deduction is made.

Extra protection exists for individuals working in the retail sector making it illegal for employers to deduct more than 10% from the gross amount of any payment of wages (except the final payment on termination of employment).

Employees can take a claim to an Employment Tribunal for unpaid wages or unauthorised deductions from wages. They must do so within 3 months (minus 1 day) from the date that wages should have been paid or, if the deduction is an ongoing one, the time limit runs from the date of the last relevant deduction.

An example of a claim for unpaid wages can be seen below:

Riyad Mahrez and wife ordered to pay former nanny

Equal Pay

Regular readers of the Blog will be aware of the provisions of the Equality Act 2010 in relation to pay and contractual benefits. It will amount to unlawful sex discrimination if an employer pays a female worker less than her male comparator if they are doing:

  • Like work
  • Work of equal value
  • Work rated equivalent

Sick Pay

Some employees may be entitled to receive pay from the employer while absent from work due to ill health e.g. 6 months’ full pay & then 6 months’ half pay. An example of this can be seen below:

Statutory Sick Pay (SSP)

This is relevant in situations where employees are not entitled to receive contractual sick pay. Pre (and probably post Coronavirus crisis) it was payable from the 4th day of sickness absence only. Since the outbreak of the virus, statutory sick pay can paid from the first day of absence for those who either are infected with the virus or are self-isolating.

Contractual sick pay is often much more generous than SSP

2020: £95.85 per week from 6 April (compared to £94.25 SSP in 2019) which is payable for up to 28 weeks.

To be eligible for SSP, the claimant must be an employee earning at least £120 (before tax) per week.

Employees wishing to claim SSP submit a claim in writing (if requested) to their employer who may set a deadline for claims. If the employee doesn’t qualify for SSP, s/he may be eligible for Employment and Support Allowance.

Holiday Pay

As per the Working Time Regulations 1998 (as amended), workers entitled to 5.6 weeks paid holiday entitlement (usually translates into 28 days) per year (Bank and public holidays can be included in this figure).

Some workers do far better in terms of holiday entitlement e.g. teachers and lecturers.

Part-time workers get holiday leave on a pro rata basis: a worker works 3 days a week will have their entitlement calculated by multiplying 3 by 5.6 which comes to 16.8 days of annual paid leave.

Employers usually nominate a date in the year when accrual of holiday pay/entitlement begins e.g. 1 September to 31st August each year. If employees leave during the holiday year, their accrued holiday pay will be part of any final payment they receive.

Holiday entitlement means that workers have the right to:

  • get paid for leave that they build up (‘accrue’) in respect of holiday entitlement during maternity, paternity and adoption leave
  • build up holiday entitlement while off work sick
  • choose to take holiday(s) instead of sick leave.

Guarantee payments

Lay-offs & short-time working

Employers can ask you to stay at home or take unpaid leave (lay-offs/short time working) if there’s not enough work for you as an alternative to making redundancies. There should be a clause in the contract of employment addressing such a contingency.

Employees are entitled to guarantee pay during lay-off or short-time working. The maximum which can be paid is £30 a day for 5 days in any 3-month period – so a maximum of £150 can be paid to the employee in question.

If the employee usually earn less than £30 a day, s/he will get their normal daily rate. Part-time employees will be paid on a pro rata basis.

How long can employees be laid-off/placed on short-time working?

There’s no limit for how long employees can be laid-off or put on short-time. They could apply for redundancy and claim redundancy pay if the lay-off/short-term working period has been:

  • 4 weeks in a row
  • 6 weeks in a 13-week period

Eligibility for statutory lay-off pay

To be eligible, employees must:

  • have been employed continuously for 1 month (includes part-time workers)
  • reasonably make sure you’re available for work
  • not refuse any reasonable alternative work (including work not in the contract)
  • Not have been laid-off because of industrial action
  • Employer may have their own guarantee pay scheme
  • It can’t be less than the statutory arrangements.
  • If you get employer’s payments, you don’t get statutory pay in addition to this
  • Failure to receive guarantee payments can give rise to Employment Tribunal claims.

This is an extremely relevant issue with Coronavirus, but many employers are choosing to take advantage of the UK Government’s Furlough Scheme whereby the State meets 80% of the cost of an employee’s wages because the business is prevented from trading.

Redundancy payments

If an employee is being made redundant, s/he may be entitled to receive a statutory redundancy payment. To be eligible for such a payment, employees must have been employed continuously for more than 2 years.

The current weekly pay used to calculate redundancy payments is £525.

Employees will receive:

  • half a week’s pay for each full year that they were employed under 22 years old
  • one week’s pay for each full year they were employed between 22 and 40 years old
  • one and half week’s pay for each full year they were employed from age 41 or older

Redundancy payments are capped at £525 a week (£508 if you were made redundant before 6 April 2019).

Please find below a link which helps employees facing redundancy to calculate their redundancy payment:

https://www.gov.uk/calculate-your-redundancy-pay

Family friendly payments

Employers also have to be mindful of the following issues:

  • Paternity pay
  • Maternity Pay
  • Shared Parental Pay
  • Maternity Allowance
  • Adoption Pay
  • Bereavement Pay

Employers can easily keep up to date with the statutory rates for family friendly payments by using the link below on the UK Government’s website:

https://www.gov.uk/maternity-paternity-calculator

What happens if the employer becomes insolvent and goes into liquidation?

Ultimately, the State will pay employees their wages, redundancy pay, holiday pay and unpaid commission that they would have been owed. This why the UK Government maintains a social security fund supported by national insurance contributions.

An example of a UK business forced into liquidation can be seen below:

Patisserie Valerie: Redundant staff ‘not receiving final pay’

Up to 900 workers lost their jobs when administrators closed 70 of the cafe chain’s outlets. Disclaimer:

Conclusion

Payment of wages is one of the most important duties that an employer must fulfil. It is also an area which is highly regulated by law, for example:

  • The common law
  • The Employment Rights Act 1996
  • The Working Time Regulations 1998
  • The National Minimum Wage Act 1998
  • The Equality Act 2010
  • Family friendly legislation e.g. adoption, bereavement, maternity, paternity

Failure by an employer to pay an employee (and workers) their wages and other entitlements can lead to the possibility of claims being submitted to an Employment Tribunal. The basic advice to employers is make sure you stay on top of this important area of employment law because it changes on a regular basis and ignorance of the law is no excuse.

Related Blog Articles:

https://seancrossansscotslaw.com/2020/01/30/2020-same-old-sexism-yes-equal-pay-again/

https://seancrossansscotslaw.com/2020/01/10/new-year-same-old-story/

https://seancrossansscotslaw.com/2019/05/13/inequality-in-the-uk/

https://seancrossansscotslaw.com/2019/03/31/the-gender-pay-gap/

https://seancrossansscotslaw.com/2019/04/05/the-gender-pay-gap-part-2/

https://seancrossansscotslaw.com/2019/06/26/ouch/

https://seancrossansscotslaw.com/2019/06/20/sexism-in-the-uk/

Thttps://seancrossansscotslaw.com/2019/04/30/paternity-leave/

Copyright Seán J Crossan, 5 April 2020

2020: same old sexism (yes, equal pay again)

Photo by Artur Tumasjan on Unsplash

We’re still in the month January and the issue of serious disparities in pay between the sexes raises its ugly head once again. I’ve said it before; but I’ll say it again: we’ve had over 40 years of legislation in the UK (first the Equal Pay Act 1970 and now the Equality Act 2010, not to mention EU primary and secondary legislation) which should have put the issue to rest.

The Equality Act 2010 incorporates an equality clause into contracts of employment which means that employers have a duty to ensure that men and women are paid on equal terms for carrying out like work; work rated equivalent; and work of equal value.

It’s hard to believe that the groundbreaking decision of the Court of Justice of the EU in Case 43/75 Defrenne v Sabena (No 2) [1976] ECR 455 was in the 1970s and here we are, entering the second decade of the 21st Century, still talking about the issue of equal pay – or the lack of it.

There is a depressing familiarity to stories in the UK media about the lack of progress regarding this issue. This is surprising because successful equal pay claims can be be very costly in financial terms for employers. In 2019, after Glasgow City Council female employees won their battle for equal pay, there was much speculation about how the employer was going to pay the bill. One of the (seemingly) more dramatic predictions was that the City Council would have to sell Salvador Dali’s world famous painting Christ of St John of the Cross in order to meet its legal obligations to its underpaid female employees. Susan Aitken, the City Council leader, was forced to issue a denial that this was a possibility. When you realise that the estimated value of Dali’s painting starts at £60 million you begin to get an idea of the scale of the problem.

https://www.glasgowtimes.co.uk/news/16594318.glasgow-city-council-wont-be-flogging-off-famous-dali-painting-to-cover-equal-pay-claims/

That said, some years ago, Birmingham City Council was forced to sell its share in the National Exhibition Centre in order to meet the (awesome) financial burden of thousands of equal pay claims . The price achieved was £307million – although 3 years later, the asset was sold once more for an eye watering figure of £800 million (allegedly).

https://www.ft.com/content/da429608-9d8e-11e4-8946-00144feabdc0

Recent research carried out by the English law firm, Slater+Gordon, suggests that women fail to gain pay increases because they are not negotiating with their employers about this issue. Campaigning groups, such as Close the Gap, are firmly of the opinion that the onus should not be placed on women to push for equal pay; rather it should be the responsibility of the State and/or employers to achieve this goal. There has to be real cultural change in society and women need to be valued more if the gender gap is to become a thing of the past.

Links to articles in The Independent about the equal pay research that Slater+Gordon Solicitors carried out can be found below:

https://edition.independent.co.uk/editions/uk.co.independent.issue.280120/data/9304961/index.html

https://edition.independent.co.uk/editions/uk.co.independent.issue.280120/data/9304901/index.html

https://edition.independent.co.uk/editions/uk.co.independent.issue.280120/data/9304016/index.html

Postscript

And if you remain unconvinced about ingrained gender bias in the corporate world generally, you will find a link below to research carried out by The Independent which demonstrates how many leading tech companies suffer from the lack of women in leadership roles:

https://edition.independent.co.uk/editions/uk.co.independent.issue.200220/data/9344746/index.html

Copyright Seán J Crossan, 30 January & 20 February 2020

New Year, same old story …

Photo by Markus Spiske on Unsplash

It’s becoming depressingly predictable: the persistence of the gender pay gay in the United Kingdom.

This time last year, I was discussing with my students the struggle that City of Glasgow Council female employees were undertaking to win their claims for equal pay. After a period of industrial action, the women finally won their struggle:

https://www.theguardian.com/society/2019/jan/17/glasgow-council-women-workers-win-12-year-equal-pay-battle

We’ve just entered 2020 and it seems as if nothing much has changed in the wider world (more on this later).

Theoretically, the gender pay gap should be a thing of the past. We have had legislation in place for nearly 45 years in this country: the Equal Pay Act 1970 (which came into force in December 1975) and the current Equality Act 2010.

An info graphic which shows the number of Employment Tribunal cases in the UK involving equal pay claims (2008-2019) can be seen below:

Source: UK Ministry of Justice obtained from BBC News

True, the above figures show the number of equal pay claims in overall decline – effectively being halved (from a high of over 60,000 in 2008 to just over 30,000 in 2019); but my riposte to that would to say still too many.

In today’s edition of The Independent, new research, carried out by the Institute of Public Policy Research, indicates that female General Practitioners (physicians for our overseas readers) are paid up to £40,000 less than their male colleagues every year.

For each £1 that a male colleague earns, a woman earns 35 pence less. To reinforce this point, the article states that female GPs are effectively providing their services free of charge between September and December every year.

In language of the Equality Act 2010, the female GPs are carrying out ‘like work’ when comparing themselves to their male colleagues. There seems to be absolutely no lawful justification for this disparity in pay between the sexes.

A link to the article in The Independent can be found below:

https://edition.independent.co.uk/editions/uk.co.independent.issue.100120/data/9277336/index.html

The equal pay laws imply a sex or gender equality clause into every person’s contract of employment. Employers therefore have a legal duty to ensure gender equality in relation to terms and conditions of service.

It seems pretty simple, so why isn’t it happening in 2020?

An explanation for this situation in the medical profession has centred around the development of a ‘two tier’ system whereby more men are partners in GP surgeries whereas a large number of women take on the role of a salaried GP. Women tend to become salaried GPs because they feel that this allows them to work flexibly around their family commitments. So, again, what we appear to be seeing is women being penalised because they are trying to balance work and family (the so called ‘motherhood’ penalty).

Also on this day …

And purely by coincidence another equal pay story …

… Samira Ahmed, BBC journalist, wins her Employment Tribunal claim for equal pay (see below):

http://news.sky.com/story/samira-ahmed-tv-presenter-wins-sex-discrimination-equal-pay-claim-against-the-bbc-11905304

And if you’re still not convinced …

read the following article in The Independent about discrimination in pay between male and female apprentices (guess what?; it’s not the men who are the victims):

https://edition.independent.co.uk/editions/uk.co.independent.issue.150120/data/9283611/index.html

Copyright – Seán J Crossan, 10 and 15 January 2020

Ouch!

Photo by Seán J Crossan

A salutary tale from Northern Ireland about the dangers of unequal pay for employers.

Margaret Mercer, a Belfast solicitor, has been awarded £273,000 in compensation by the Industrial Tribunal (yes, they still exist in Northern Ireland) after she won her equal pay claim against her employer, C&H Jefferson (a law firm).

The Tribunal concluded that Ms Mercer had been doing “like work” when a comparison was made with 4 other colleagues who held the rank of salaried partner in the firm. Three of these individuals were men.

It should be recalled that, under equal pay legislation in the UK, individuals can bring claims on a number of grounds:

  • They are engaged in like work with their comparator(s);
  • They are engaged in work of equal value with their comparator(s); or
  • They are engaged in work rated equivalent with their comparator(s).

C&H Jefferson has stated that it intends to appeal the Tribunal ruling.

More details about Ms Mercer’s claim can be found below in the BBC article:

Belfast solicitor wins £273k in equal pay case

Margaret Mercer found out she was not being paid the same as some colleagues at the law firm C&H Jefferson.

Copyright Seán J Crossan, 26 June 2019