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Employment Update for Small Businesses
February 2023

Dear Subscriber

There are two important developments in the world of employment law to advise you about this month. The first relates to holiday entitlement for workers who only work during term-time, and the second relates to the procedure when trying to change terms and conditions of employment for a group of staff. Both are quite detailed, if they affect you at all you may benefit from some more detailed guidance.
Please contact me if you would like to find out a bit more about any of the subjects raised in this update or if you need any help or advice.

Please forward this email to any of your contacts who might find it of benefit.

Peter Etherington
Tel: 01664 668164


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Peter Etherington
Term-Time Only Workers
Holiday Pay Calculation
You may recall that we reported in August on the case of Harpur Trust v Brazel. This long-running case reached the final legal stage at the Supreme Court, which ruled that workers who do not work and are not paid for every week of the year, should receive holiday pay using a formula that granted them a proportionally greater entitlement than people who work all year round. Whilst this was correct in legal terms, it makes no sense practically and has introduced a horribly complex approach to holiday management which most payroll systems cannot cope with.

The Government appears to share these concerns because it has now launched a consultation with a view to overturn the Supreme Court’s decision through a change in the law. This would see us returning to a simpler approach that would allow employers to calculate holiday pay for these types of workers on the basis of 12.07% of pay received.

The Consultation closes on 9th March. If you would like to take part, please just click on this link.

Changing Terms and Conditions of Employment
Dismissal and Re-engagement
Sometimes an employer may wish to change the terms and conditions of employment for a group of staff as the business develops and that may not be a very easy process. Where any change is purely positive – for example, a pay increase or an uplift in the holiday entitlement – then that is not a problem and the change can just be imposed, as no-one is going to object. However, if the change is not purely positive, then that can prove challenging.

For instance, it could be that a warehouse and distribution business may want to expand its working hours and move staff onto a shift system. Or it could be that an employer wants to bring in longer notice periods for more senior staff members. Whatever the nature of the change, the starting point is that it can only be achieved by mutual agreement. So employer and employee would both need to agree to the change, which would normally be confirmed in writing.

Where the same change needs to be achieved with a group of staff, the normal procedure is to explain to the staff what you are trying to achieve and set out the details of the proposed change. You would then consult with staff with a view to reaching agreement. Clearly that is more likely to be achieved if there is something in it for them – so making the change a condition of a receiving a pay rise, for example, is more likely to succeed.

Hopefully, most staff will accept the change and there will be only a few employees who refuse. In that case the employer may choose to dismiss them with notice and offer them the new terms to take effect from the end of the notice period, with no break in service. The risk, of course, is that those who are dismissed in this way will claim the dismissal is unfair and the employer will need to argue that the dismissal was fair on the grounds of “some other substantial reason”.

As you can gather, this process can be quite confrontational and some employers in recent years have been rather quick to use it, citing business requirements that may seem a little opportunistic.

ACAS has now released a draft Code of Practice which sets out a good practice approach to this matter. The Code, once launched, will have legal status, and if an employer fails to comply with it, it will be taken into account in any related unfair dismissal claims and could result in an uplift to any compensation awarded of up to 25%. Currently the Government is consulting about the Code before it is finalised and will bring it into force “when Parliamentary time allows”. So watch this space!

The closing date for the consultation is 18th April 2023.

National Minimum and Living Wage
From 1st April 2023, the minimum wage bands are increasing:

  • to £10.42 per hour (from £9.50) for workers aged 23 and over
  • to £10.18 per hour (from £9.18) for workers aged 21 to 22
  • to £7.49 per hour (from £6.83) for workers aged 18 to 20
  • to £5.28 per hour (from £4.81) for workers aged 16 and 17
  • to £5.28 per hour (from £4.81) for apprentices under 19 and those over 19 in their first year*

*N.B. Apprentices over 19 and who have completed at least one year are entitled to the appropriate rate for their age.