March 2021 – No Jab, No Job; New IR35 Rules; Holiday Carry Forward & Ending Furlough
Employment Update for Small Businesses
A packed newsletter this month, as we consider whether employers can insist staff have a COVID vaccine, we remind you of forthcoming tax changes for “self-employed” contractors in light of the Supreme Court’s recent ruling on Uber drivers, there is a reminder of the new rules on carrying forward unused holiday and that the furlough scheme is soon coming to an end.
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.
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Can employers insist that their staff have the COVID vaccine?
We have had a number of enquiries from clients on this matter and you will have seen that this question has featured in the press over the last week. There are two considerations here:
Can employers insist their current staff have the jab and, if so, what can they do if anyone refuses?
Can employers make having the jab a condition of employment for new starters?
The employer’s starting point should be to consider what they want to achieve by introducing such a rule. In a care environment, the aim may be to take extra steps to protect vulnerable residents and the care staff, which on the face of it seems pretty reasonable. In other sectors, however, that may not be quite so obvious – for instance, a tech firm whose staff largely work from home may struggle to explain why such a rule would be reasonable.
Some employers face third-party pressure to have staff vaccinated. For instance, in construction some site owners are starting to make this a condition of letting staff on site. So a supplier to the client may need to insist staff have the vaccine in order to comply with the site requirements, over which they have no control.
If an employee or new recruit refuses to comply, what can an employer do about it? In the case of a new starter, you could withhold the offer of employment. For current staff you may consider it a refusal to comply with a reasonable management request and treat it as gross misconduct, or else consider that their refusal makes it impossible for them to fulfil their contract and terminate employment.
However, all of these steps carry some risk. So the starting point should be to investigate the reason for refusal and document it. Some people may not be able to have the vaccine for health reasons; if you take action against them for failure to comply, that could be considered indirect disability discrimination (assuming their health condition meets the definition of disability). If they are unable to comply because they are too young to have yet been able to have the vaccine, that could amount to indirect age discrimination. You may still be able to justify the steps you take, as an employer is able to successfully defend a claim of indirect discrimination if the action they take (e.g. dismissal or refusal to employ) is “a proportionate means of achieving a legitimate aim” (Section 19 of the Equality Act 2010). That is why it is important to establish your “legitimate aim” at the outset (e.g. to protect vulnerable people in your care). However, in the case of an age discrimination claim it may not be considered proportionate to insist on younger people being vaccinated where that is not possible, and where the alternative may be to have a rule that they become vaccinated as soon as they are offered the vaccine. That is something that could be made a condition of the employment contact for new starters.
If someone refuses to have a vaccine because they are an “anti-vaxxer” who buys into the various conspiracy theories that are circulating on social media, you may be tempted to think there is no risk in taking action against them. You may well be right, but there is the possibility that they may try to claim indirect discrimination on grounds of religion or belief. Once again, however, you could use the defence of trying to achieve a legitimate aim, as set out above. in addition, case law has established that to be protected a belief must satisfy certain criteria, including that it has a level of cogency, seriousness and importance akin to a religious belief and is worthy of respect in a democratic society. I suspect that an anti-vaxxer may struggle to meet those criteria.
Until we have some case law on this, however, all we can do is assess the risk based on the considerations set out above, and hope that an Employment Judge would validate our approach.
Please contact us if you would like to discuss this further, particularly if you are considering introducing rules on vaccination.
Supreme Court Confirms Uber Drivers are Workers and HMRC Rules Set to Change
On 19th February, the Supreme Court dismissed Uber’s appeal and confirmed that its drivers were not genuinely self-employed. Instead they are “workers” and are, therefore, entitled to paid holiday and the National Minimum Wage for all the hours they are on duty (not just when they have a customer in their taxi). The drivers will receive compensation to cover back pay for holidays over at least two years as well as shortfalls in their pay. They are not employees, however, so do not have unfair dismissal rights, the right to redundancy pay or other employment rights.
This case highlights that courts will look beyond any contractual documentation when considering employment status claims, and examine what is the reality of the relationship between the principal and the person providing their labour.
Whilst tax law and employment law do not fully overlap when it comes to employment status, there are a number of similarities. HMRC is introducing new rules from 6th April for self-employed contractors working on behalf of larger organisations in order to try to ensure more of them are paid through PAYE, so that HMRC receives tax and NI directly from the principal. These are known as the IR35 rules.
“The rules apply to all public sector clients and private sector companies that meet 2 or more of the following conditions:
you have an annual turnover of more than £10.2 million
you have a balance sheet total of more than £5.1 million
you have more than 50 employees”
If you meet these criteria you can use the HMRC tool to check the status of your contractors. However, this does not always make a clear determination, so you may wish to speak to us as well to see what can be done to either bring your contractors onto payroll or to try to protect your position in asserting that they are genuinely self-employed.
Carrying Forward Holiday
Current Rules in Light of COVID
This is just reminder that the Government has changed the rules regarding carry forward of holiday in reaction to the COVID pandemic. Under the Working Time Regulations, it was not permitted to allow workers to carry forward more than 1.6 weeks’ holiday from one holiday year to the next. The change that the Government has put in place makes it lawful now to allow carry forward of up to 4 weeks’ holiday and for that holiday to be taken over the next two holiday years.
As an employer, you do not have to allow this carry forward, but if your staff have not been able to take holiday or you have not taken reasonable steps to encourage them to take holiday, you may face claims for unpaid holiday pay if you apply the normal “use it or lose it” rule. Whilst that may seem unreasonable if your staff have been on furlough, you have been able to force staff to take holiday whilst furloughed (as covered in a number of our previous newsletters). So if you have not taken steps to make them use up their holiday, it would probably be seen as unreasonable not to allow them to carry it forward.
The End of Furlough?
The Scheme is Scheduled to End on 30th April
At the time of writing, the Government’s Furlough Scheme is set to finish at the end of April. It seems unlikely that it will be extended further unless there is a significant change in the Government’s recently announced road map for lifting lockdown, as the stay at home requirement should be lifted on 29th March.
If you are still using the Scheme you will need to plan for its demise. You need to consider whether you will be able to bring staff back to work or if you will need to make some redundancies. If you do need to make redundancies, please contact us as soon as possible if you would like some support, as it does take time to ensure the process is followed correctly and to minimise the scope for claims.
National Minimum and Living Wage
From 1st April 2021, the National Living Wage will apply to workers aged 23 and over. Currently it is for workers aged 25 and over. Also the rates for the National Living Wage and National Minimum Wage rates will increase as follows:
to £8.91 per hour (from £8.72) for workers aged 23 and over (+ 2.2%)
to £8.36 per hour (from £8.20) for workers aged 21 to 22 (+ 2%)
to £6.56 per hour (from £6.45) for workers aged 18 to 20 (+ 1.7%)
to £4.62 per hour (from £4.55) for workers aged 16 and 17 (+ 1.5%)
to £4.30 per hour (from £4.15) for apprentices under 19 and those over 19 in their first year* (+ 3.6%)
*N.B. Apprentices over 19 and who have completed at least one year are entitled to the appropriate rate for their age.