Last week an employee damaged a piece of equipment causing £200 worth of damage. We don't have the right under the contract to recover this money from him but there is no dispute that the employee is at fault and he has offered to repay the £200. Can we simply make the deduction from his wages?
Without a contractual right to recover the money you are unlikely to be able to accept the employee’s payment or make a deduction from his wages.
The Employment Rights Act 1996 (ERA 1996) provides strict guidelines on when an employer may lawfully make deductions or accept payments from employees. Without contractual entitlement there must be a legal requirement or authorisation to make the deduction (e.g. income tax and national insurance deductions); or the employee must have provided written consent.
Written consent will only be valid however if it was gained prior to the need for deduction/repayment arising (s13(6) and s15(4) ERA 1996). In this instance therefore it must have been gained before the damage to the equipment was caused.
As this does not appear to have happened you will not be able to recoup the money from the employee. If you were to make the deduction or accept a repayment the employee may complain to an Employment Tribunal within three months. The employment tribunal will then likely make a declaration that the employer must repay the money to the employee.
Had the contract of employment included a right to make deductions you should still exercise caution before exercising this ‘right’. You should ensure that the clause is clearly worded to expressly provide for deductions in this type of circumstance and not just for deductions in general. For example in these circumstances the contractual right may state that deductions can be made for repair to or replacement of equipment damaged by the employee’s negligence. Further, even where contractual wording is clear, you must be able to establish that the employee was indeed negligent. If you are in any doubt over your ability to make deductions or accept repayments you should contact your HR Rely Adviser.
Even if you can establish that such a deduction is lawful, you should carefully consider the impact such an act may have on your continuing employment relationship with that employee and your workforce as a whole. That is not to say that you shouldn’t make the deduction, but that you should consider first whether it is appropriate to do so, having regard to the implied term of trust and confidence in relation to how you manage the situation. It is worth noting that there are no circumstances in which you will be able to deduct an amount which exceeds the damage caused, i.e. as a penalty payment or fine.
Can I pay temporary workers a monthly sum in lieu of holiday?
As far as any statutory holiday entitlement is concerned the short answer is no. All workers, regardless of their length of service, are entitled to annual leave under the Working Time Regulations 1998. The system of making monthly payments in lieu of holiday is known as 'rolled-up holiday pay' and, in the past, was often used for temporary or casual workers to limit the amount of time taken off by them. However this system was ruled unlawful by the European Court of Justice in the case of Robinson-Steele. Here it was held that rolled up holiday pay would deter workers from taking holiday, as they would not receive pay whilst absent. There is some debate about how this ruling is applied in the UK. However the government advises that such a system is unlawful and should not be used.
Therefore employers should look at other methods of paying holiday pay to temporary and causal workers whose end date is unknown. A common method is to allow these workers to accrue holiday at a notional monthly rate. Their final pay should then be adjusted according to the length of the period actually worked.
A payment in lieu of holiday is lawful on termination of employment and should be made to compensate workers for holiday accrued but not taken. However you should consider whether the worker is employed under an 'umbrella contract' or works on a series of discrete contracts. Umbrella contracts can be implied by conduct and would mean that the worker’s employment continues in between assignments. As such their holiday would continue to accrue during rest periods. Therefore the end of an individual assignment will not terminate the contract under which they are employed and a payment in lieu of holiday cannot be made. To help avoid this implication the contract under which the temporary or casual worker is engaged should state that they are only employed during periods in which they are actually working.
The employment status of temporary and casual workers is not always clear. Therefore if you employee a casual worker on a series of assignments you should contact the HR Rely team for advice.
The son of one of our employees wants some experience of working in our type of industry and we have agreed to give him a two week work experience placement during his holidays. It has since been suggested to us that we may have to pay him during his work experience, is this correct? The employee is 18 years old
There has been a lot of publicity recently about whether or not organisations are required to pay work experience students. The situation is this: if you are providing the individual with work or have an obligation to provide him with work and the individual is receiving benefits in kind or remuneration then the individual is likely to be classed as a worker for the purposes of the National Minimum Wage legislation. Ultimately each case will depend on its own facts but, if the placement may lead to the individual being offered paid work, this too may indicate a contractual relationship pointing towards him being classed as a worker.
There are certain exemptions from the NMW for work experience placements. The most common is where the individual is carrying out a work experience placement as part of a UK further or higher education course, provided that the period of work experience is no more than one year in duration. If you believe that an exemption may apply, contact your HR Rely adviser.
If do not wish to pay the individual, the clearest solution is to make sure that he does not carry out any work but instead spends the two weeks 'work shadowing'. It would be sensible to put something in writing confirming that the two weeks will be spent shadowing other employees and making clear that he will not be provided with any work. There is nothing to stop you setting out a timetable or list of the activities that he will shadow, but you should make clear to all involved in the programme that the individual must not be given any work, even if he volunteers to do some. As an alternative to work shadowing, if the individual is likely to carry out some activities, you need to make sure that there is no obligation on him or her to turn up for work and that there is no entitlement to any financial reward or benefit for carrying out the work. In either scenario there is nothing to stop you providing the individual with reasonable out of pocket expenses.
One of my employees is currently unable to attend work as she has been remanded in custody. Do I have to pay her whilst she is in custody?
Your employee is unable to attend work and although the employee may be ready and willing to perform the contract, she will only be entitled to pay if the impediment which prevents her from attending work is unavoidable. Although in practice many employers have not paid employees in these circumstances there has been no authority on the point until the case of Burns –v- Santander UK Plc [2011] IRLR 639. In this case it was held that an employee was not entitled to be paid whilst in custody and therefore their unlawful deduction from wages claim failed. The reasoning was that it was the employee’s conduct that caused the employee to be deprived of his freedom and ability to attend work. The EAT held that on that basis, the remand in custody was an avoidable, rather than an unavoidable, impediment and therefore he was not entitled to be paid in these circumstances.
On this basis, even without knowing why the employee has been remanded in custody, there is no obligation on you to continue paying your employee whilst she is unable to attend work in these circumstances.
We provide all our employees with private health insurance, irrespective of their age, but understand that we may be able to remove this benefit for employees aged 65 or over and that this won’t be discriminatory. Is this correct?
When the Default Retirement Age was removed, the Regulations implementing this change gave employers an exemption from an age discrimination claim if they withdrew or ceased to offer private health insurance to employees when they reached the age of 65.
Due to the way the Regulations are drafted, more generous employers i.e. those who allow employees to continue to receive such a benefit beyond the age of 65, cannot later rely on the exemption as the withdrawal/cessation can only be triggered by the employee attaining the age of 65 and not some later age. * On this basis, employers wishing to remove the benefit for employees aged over 65 would need to be able to objectively justify this to avoid an age discrimination claim.
In either scenario, whether an exemption applies, or the employer is able to objectively justify the removal of the private health benefit, there may still be contractual issues that need to be addressed. Assuming that the benefit is a contractual one, then there are two options. It may be that the terms of the contract allow you to remove the benefit, but you should still consult with the employee about the proposal prior to removing the benefit. If there is no provision in the contract, then you would need to go through the appropriate channels for achieving such a variation. Further details on changing terms can be found in our section on Managing Contracts.
Similar exemptions apply to Life Assurance Benefits as well.
*NB. This is subject to any increases in State Pension Age in which case the exemption age will apply in line with the State Pension Age.
We have someone who works for us as a volunteer 8 hours a week. We don’t pay her but we do reimburse her car park charges and, as we have our own canteen, we provide her with a meal on the two days that she attends to help out. Are we in danger of the volunteer being deemed an employee by reimbursing her for her car park expenses and providing her with lunch?
The volunteer may be deemed an employee if there is a mutuality of obligation between her and you as the employer. If an organisation pays a volunteer for time worked, particularly if the time worked appears to be done on a regular basis, it does create a risk of it being argued that there is mutuality of obligation with the volunteer being deemed an employee.
Payment of genuine expenses incurred by the volunteer will not in itself give rise to an employment relationship. However the expenses must be actually incurred and ideally should be reimbursed against receipts to avoid any argument that you are in fact paying the volunteer for the work provided. Providing the employee with a meal whilst she volunteers is unlikely to create an employment contract.
In order to protect yourself however it is sensible to make clear to the volunteer, in writing, that she is not obliged to do any work on behalf of your organisation and that she may choose not to attend if she wishes. It would be useful for the letter also to set out what documentation you would expect to receive before reimbursing any expenses.
We want to appoint a new Sales director and have found the ideal candidate; the only problem is that in her current contract of employment she has an 18 month 'non-dealing' restrictive covenant preventing her from dealing with clients that are anywhere in Europe and with whom she had dealings within the two years prior to termination. Could this cause us problems?
Potentially. Although this restriction is between the candidate and her employer, your organisation could be liable if you recruit her and induce her to breach the restrictive covenant by requiring/allowing her to deal with organisations covered by the restriction.
The question therefore is whether the restriction is enforceable. Given that such restrictions limit an individual’s ability to work, in considering whether or not the restriction is enforceable the court would look at whether there is a legitimate business interest to protect and if so, whether the restriction 'goes no further than is necessary' to provide that protection. The Court would have regard to the public interest in relation to open competition; the requirement of the former employer to protect her own interests; and the entitlement for the individual to change her job.
Matters that the court would also take into account when deciding whether the restriction 'goes no further than is necessary' include how long it would be before the Sales Director’s influence with the customers would be lost, the period of the restriction and its geographical extent. As a rule of thumb the wider the restriction the less likely it is to be enforceable.
If you are liable for inducing a breach of contract, then the Sales Director’s former employer could seek damages from you as well as their own legal costs. Unless you are able to recruit the Sales Director and ensure that she does not deal with any of her former employer’s customers, then we would advise that you take specific advice as to whether or not the restrictive covenant in question is likely to be enforceable and recommended next steps.