August 2013 Employment Law Newsletter


If you would like to discuss any employment issues please contact Julie Taylor on 01635 508181.

1.    EMPLOYMENT LAW CHANGES: Employee Shareholders

After an interesting and hotly debated journey through parliament “Employee Shareholders” became a legal reality on 1 September 2013.

This means that employers have the choice of offering their employees a stake in their business in return for the employee agreeing to waive some key employment rights. The employee must receive at least £2,000 worth of shares, subject to a written agreement setting out the rights attached to the shares and the employment rights they are waiving, which includes the right to claim unfair dismissal and the right to a redundancy payment. The employees must also receive legal advice on the arrangements at the employer’s expense.

The rules are rather detailed and we would recommend that any businesses looking to use these provisions take legal advice.

2.    GUIDANCE: Employee Shareholders

The Department for Business, Innovations and Skills has published some model documents for employee owned companies (including articles of association) and guidance notes for the documents.

In addition there is a guide for employees here.

A guide from HMRC on the tax issues here.

And the Employee Ownership Association’s website has lots of useful information here.

3.    HOLIDAY TIME: What can be carried over?

According to the Employment Appeal Tribunal an employer does not need to allow workers, who are unable to take holiday due to sickness, to carry over any holiday in excess of the four week European minimum. This means that the 1.6 weeks (or 8 days) of holiday that employees in the UK are entitled to (which usually takes account of the bank holidays) in addition to the four weeks European minimum cannot be carried over to the next leave year.

This is a departure from the understanding from recent cases the suggested all of the 5.6week entitlement should be carried over.  It has been well established under European law that workers have to be able to carry over paid annual leave if they were unable to take it because of sickness absence. However, this decision confirms that these rules do not apply to the 8 days’ additional entitlement and therefore an employee who has been absent due to long term sickness has no right to carry over the additional 8 days unless there is a contractual agreement to the contrary.

It will remain important to clarify holiday entitlement in contracts of employment, but in the absence of any contractual entitlement, employers do not need to let staff, who have been prevented from taking holiday due to long term sickness, carry forward more than 4 weeks of their holiday entitlement. It follows that if an individual’s contract of employment is terminated, any payment due in lieu of holiday can be limited to 4 weeks where the contract does not confirm a different entitlement.

4.    HOLIDAY TAKE 2: The calculation

Should voluntary overtime be taken into account when calculating statutory holiday pay? Yes according to an employment tribunal to ensure the UK is consistent with European legislation relating to the calculation of statutory holiday pay, although, as with the case above, this may only apply to the first four weeks of leave.

As this was an employment tribunal decision, a determination by the Employment Appeal Tribunal or a higher court is needed to confirm this is legally binding, but employers who pay staff who volunteer for overtime should consider taking into account their overtime pay when calculating holiday pay. In addition, employers who have a significant number of employees who work voluntary overtime that could benefit from more holiday pay may want to consider restricting overtime or giving staff time off in lieu instead of overtime pay.

The employer in this case has now filed an appeal with the Employment Appeal Tribunal….

5.    GUIDANCE: Work experience students

HSE (the Health and Safety Executive) has published new guidance specifically for employers who take on work experience students.

In summary employers should generally treat the management of risk for work experience students no differently from risk management for other young people and employers’ should ensure that their existing liability insurance policies cover work placements, which generally should be the case where the insurer is a member of the Association of British Insurers.

See the guidance here.

6.    EMPLOYMENT LAW CHANGES: Interest on tribunal awards

In addition to the changes detailed in last month’s update to tribunal fees and settlement agreements, there have also been changes introduced to the rules for charging interest on tribunal awards effective from 29 July 2013.

In summary, interest on tribunal awards will now accrue from the day after the day the case is decided, unless the full amount awarded is paid within fourteen days. The rate of interest on an unpaid tribunal award remains at 8%. In discrimination cases, tribunals have the power to award interest on a claimant’s losses as part of the compensation for discrimination up to the date of judgment. This is now at the rate of 8% for discrimination claims presented on or after 29 July 2013.

Please note that these comments are intended to summarise some of the employment issues of the moment, not to provide detailed legal advice, so if you need assistance with any employment issues you may have please contact Julie Taylor on: 01635 508181 or  [email protected]

Follow Julie on Twitter: @JulieT_GL

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