Be Aware – November 2023

Supreme Court issues landmark decision on holiday pay calculations

Over 3,300 police officers and 364 civilian employees brought claims under the Employment Rights (Northern Ireland) Order 1996 (ERO) and the Working Time Regulations (Northern Ireland) 2016 relating to underpaid holiday pay against the Police Service of Northern Ireland and the Northern Ireland Policing Board. The claims sought arrears of holiday pay going back to November 1998.

The employer argued that the police officers could not recover underpayments dating back to 1998 because the 2016 Regulations restricted recovery to sums underpaid in the three months before the claims were brought.

On 4 October 2023 the Supreme Court delivered a much-anticipated judgment in the case of Chief Constable of the Police Service of Northern Ireland v Agnew and others [2023] UKSC 23 in relation to the issue of holiday pay calculations.

One of the issues for the Court to determine was whether a series of deductions of wages (i.e. a shortfall in holiday pay) could be broken by either a gap of three months or by making one lawful payment.

Summary of decision

The Court unanimously decided that the decision issued by the Court of Appeal should be upheld on the basis that a ‘series’ of underpayments cannot be broken if there is a ‘factual link’ between the underpayments.  In this instance, the common link in each payment of holiday pay was the method of calculation i.e. basic pay only.

Impact of the decision for employers

The Supreme Court decision is binding across the UK which will largely align the position on holiday pay calculation and payment.  However, outside Northern Ireland this decision it is unlikely that it will have huge financial consequences for employers because the rest of the UK still has the statutory two-year ‘backstop’ for claims brought for unlawful deductions from wages.

Employers across the UK could see an increase in holiday pay claim being lodged including for underpayments that employers might previously have assumed were out of time although these still cannot extend back more than two years (unlike Northern Ireland where claims could potentially go back as far as the employee’s start date of employment or 1998 when the Working Time Regulations were introduced).

Holiday pay calculation is a complex issue that has not been helped by the web of case law that has emerged in recent years.  Whilst the Agnew decision bring clarification there is still a substantial amount of information for employers to digest.

The Workers (Predictable Terms and Conditions) Act 2023: What Changes Can Employers Expect?

The Workers (Predictable Terms and Conditions) Act 2023 has recently received Royal Assent and is expected to come into force next year, most likely later in 2024. Despite the somewhat late date the Act will come into force, which was by design to give employers a year to react, this article will outline the changes employers can expect when it does come into force.

What does the act do?

The fundamental addition to the law which the Act conceives is a new right for workers to request more predictable work patterns. The request has to be related to work patterns. This can be in the form of a more predictable number of hours, more predictable days of work in the week and the times of work on those days, or even a more predictable period of engagement by the employer (s.80IA (2)). Another notable requirement before a worker can request is for them to have worked for at least 26 weeks with the employer and importantly that does not have to be ‘continuous service’.

The Act does not mean that automatically employers must change a worker’s work pattern to be more predictable when the Act comes into force, it is only upon a request by the employee or worker*.

Who can request more predictable hours?*

Anyone whose hours are varied leaving them ‘lacking predictability’ can request their employer to make them more predictable. The Government has made it clear that the Act is aimed at those on ‘zero hours’ contracts and alike, but there is certainly scope for other contract types to be affected. A fairly typical employment contract with set hours, but which has a clause whereby the employer can vary the hours at will would be affected for example.

The Act also provisions for agency workers too, who will be able to request more predictable hours to their agency or the employer who hires them from the agency.

What will employers be required to do

Employers can allow workers up to two requests in any 12-month period for the purpose of improving predictability, and a new application cannot be made whilst an existing application is being considered by the employer.

The employer has a legal duty to handle the request in ‘a reasonable manner’ and to do so within 1 calendar month (s.80IC). It is not specified in the Act exactly what a ‘reasonable manner’ entails. But the Government has enlisted ACAS to provide a Code of Practice offering guidance on the Act’s practical implications for when it comes into force, which should hopefully address this requirement amongst other requirements.

If an employer accepts the worker’s request, they have two weeks to offer the new contractual terms.

Can employers reject a worker’s request?

Yes. Employers are entitled to reject a request on 6 possible grounds:

• the request would burden the employer with additional costs;
• it would detrimentally affect the employer’s ability to meet customer demand;
• it would have a detrimental effect on the recruitment of staff;
• it would have a detrimental impact on other aspects of the employer’s business;
• there is a lack of work during the worker’s requested times;
• there are planned structural changes within the employer’s business.

New regulations will be attached to the Act which will add more detail alongside the future ACAS guidance, which will help inform employers of how to plan their requests procedure for when the Act comes into force.

Navigating the obstacles of workplace relationships

A newspaper article recently declared that the politics and practicalities of workplace romantic relationships were a ‘minefield’, a statement that the majority of HR departments would likely agree with. Their article focussed on recent high-profile resignations of CEOs and Directors at large corporations like BP for not disclosing past workplace romances, both in the US and the UK. This article will focus on employees below the Director level and explain the current legal position in England and Wales as well as some practical guidance on how to approach this tricky area in practice.

What classifies as a ‘workplace relationship’ or ‘personal relationship’?

There is no well-defined legal definition for what constitutes a workplace relationship, but there are some well-established employment law views which define the boundaries, albeit they are not exhaustive.

The word ‘relationship’ has multiple meanings within a business setting, but the type of relationship we are referring to in this article is an ‘emotional’ or ‘romantic’ relationship which goes beyond the typical boundaries of a professional relationship between colleagues. The obvious example is two colleagues who are married, the more formal end of the relationship spectrum.

However, the question most commonly asked in this area relates to the less formal end of the spectrum, romantic relationships where colleagues are ‘seeing each other’, ‘dating’, or ‘going out together’. It is safe to assume that these less formal romantic relationships constitute personal relationships in the workplace context. It will be for HR departments, or those who assume HR responsibilities, to decide where the line is drawn in borderline cases.

What are the issues to be aware of?

It is important to note that the majority of workplace relationships do not have any noticeable interference with work. However, it is still important to highlight the most typical issues that arise with workplace relationships.

Typical issues include disruption to both the employees involved and their colleagues, they can affect the retention of employees when the relationships end or become turbulent, and there is a risk of conflicts of interest which can undermine the hierarchy within teams when the relationship is between managers and subordinates.

Some specific issues to look out for include fear of favouritism by colleagues, lack of transparency in workplace matters, legal risks of harassment, reduction of team morale, and potential embarrassment for employees.

Practical guidance on approaching workplace relationships

It is important to note for those in management that just because you become aware of a workplace relationship, this does not mean a call to ‘battle stations’ immediately, only where an issue arises. Sensitivity and confidentiality (due to data protection laws) are crucial when an issue does arise, as is treating both colleagues even-handedly.

It equally key to recognise that on occasions an employee may be subject to unwanted conduct from a colleague, which in serious cases could constitute harassment. In such cases, having a suitable grievance procedure and making sure employees are aware of how to make a grievance is obviously paramount.

Employees should know the conduct expected of them when they engage in workplace relationships. This can be as small as making sure employees know that equipment and resources are only to be used for work purposes to more significant or sensitive topics like not engaging in public displays of affection.

For some workplaces, it may be appropriate to put in place a duty to inform HR where a workplace relationship involves employees in manager/subordinate roles for conflict-of-interest reasons. Employers and their HR departments/ representatives should be emphasising that any communication in this regard is confidential.

Policies

First of all, in England and Wales it is well established that the US-style ‘love contracts’ are likely to be found as unlawful i.e contracts which companies require two colleagues to sign, confirming they have freely chosen to enter a romantic relationship. Instead, it is sensible to ensure that company policies e.g. equal opportunities, bullying and harassment and data protection are fit for purpose and cover most of the risks around workplace relationships.

Such policies tend to cover the topics outlined in the last section. Such as: guidelines for management/ managers and how to handle workplace relationship issues when they arise, dealing with grievances related to relationships, the conduct expected of employees in workplace relationships, and a reminder of the interaction between the relationships policy and other related employee policies/ guidelines on discrimination and harassment.

Abandoned Vehicles

“ I have had a vehicle on site for some time. I have done some diagnostic work and quoted for a repair. The owner was going to get back to me but they haven’t and now I cannot contact them, what should I do?”

There are many reasons a vehicle may be abandoned on your premises. When this occurs that are generally speaking, 3 options :-

• Taking the owner to court
• Selling the vehicle to settle the debt
• Reporting the vehicle to the local council as abandoned

Taking the owner to court

If you are owed money for a repair or diagnosis but the owner doesn’t agree then you will have to take the matter to a Judge in order to get a definitive answer. The first step is to write to the owner of the vehicle setting out your case asking for payment or asking him to set out his position in writing as to why he is refusing to pay or collect his vehicle. If there is no agreement after this, and there is a significant amount due, a court is capable of deciding who is right and how much is owed. Once this is decided then the court will be able to seize the vehicle and sell it to settle any debts. However, you have to be warned that a court Order only states that money is due, not that the owner has the money to pay. As you will incur court fees on top of any Judgment, this should be considered.

Selling the vehicle to settle the debt

First off, you cannot just sell someone’s property because it is on your premises or because you are owed money. DO NOT apply to the DVLA to become the registered keeper. You are not the legal owner and will become liable for any TAX.

If you have carried out work that increases the value of the vehicle and the owner is in agreement that the money is owed but cannot, or will not come to pay for it, then you have the ability to require the owner to collect the vehicle and pay within 14 days, and if this doesn’t happen you can then sell the vehicle to settle the debt provided you give him 3 months’ notice. There are a number of requirements to get this right so we would strongly advise you discuss this with us so that we can take you through the steps required.

Reporting the vehicle to the local council as abandoned

All Councils have the power to seize and destroy abandoned vehicles. Different Councils have different approaches, and we are starting to see more reluctance from councils. Some will only remove from the public highway, and some will only remove from private land for a fee. As such, if this is an option you want to pursue you should contact your local Council and discuss their requirements before going any further. When reported, the Council will be able to remove and, where there is no response from the owner, destroy the vehicle. This option is therefore generally best if the vehicle has been on your premises for some time or if you are not owed any money or you are willing to forego any debt.

Next steps

Either way you will need to write to the owner in order to try and resolve the matter amicably. Any letter should clearly establish what it is you want them to do and why it is you believe they are liable. You should include a copy of any invoice as well as a deadline by which to respond. This should be at least 14 days but can be more.

Where you do not have the customer’s address, then you should contact the DVLA. You can establish a reasonable cause for requesting this information, but if you have a contract that requires enforcement, or a vehicle abandoned on your premises, this should be sufficient. You can contact the DVLA for further information. However, at the time of writing, you will need to use the DVLA’s form V888/2A or B.

General Note

Don’t forget, this advice is general in nature and will need to be tailored to any one particular situation. As an RMI member you have access to the RMI Legal advice line, as well as a number of industry experts for your assistance. Should you find yourself in the situation above, contact us at any stage for advice and assistance as appropriate.

Motor Industry Legal Services

Motor Industry Legal Services (MILS) provides fully comprehensive legal advice and representation to UK motor retailers for one annual fee. It is the only law firm in the UK which specialises in motor law and motor trade law. MILS currently advises over 1,000 individual businesses within the sector as well as the Retail Motor Industry Federation (RMI) and its members.