Her Majesty’s Revenue and Customs (HMRC) recently served three enforcement notices on three employers requiring them to pay arrears of wages to their employees. HMRC was attempting to clarify the National Minimum Wage Regulations 1999. One of these regulations state that all money paid by the employer to the employee counts towards the employee’s minimum wage, except for those payments distributed by the employer from customers’ tips (through a system known as ‘troncing’).
Troncing is where service tips are pooled into a collective fund for distribution among employees. The practice is a controversial one, with dissatisfaction being expressed both by customers and employees.
The three employers penalised by HMRC successfully appealed the enforcement notices to the Employment Tribunal, arguing that since the funds from the service charges had been entrusted to ‘troncmasters’ (those responsible for distributing the money) through a separate bank account, the employees were unable to personally reclaim that money. It was argued that the employees had been paid twice, receiving total wages above the national minimum wage.
HMRC then appealed to the Employment Appeals Tribunal on the point that the funds were not payments made by the employer and so failed to meet the requirements of the 1999 Regulation.
Following this decision, HMRC issued a press release stating that tips and service charges should not be taken into account when calculating the national minimum wage. The Employment Bill will also introduce penalty payments for employers who fail to comply with minimum wage requirements.
Time to Train
A Government consultation launched in June aims to give employees the right to take time off work in order to go on job-related training courses, provided they have been employed by their employer for at least 26 weeks. The consultation will close in September 2008, with new rights expected to be implemented in 2010.
‘Time to Train’ will equip employees with a more formal way of obtaining training. It is currently estimated that eight million employees receive no training for their jobs, with approximately one third of employers failing to provide any sort of training.
The Government sees this scheme as a way of investing in the talents and potential of the workforce. The objective is to improve the standard of work and to increase productivity, within and between businesses.
The Government plans to use the current procedure for flexible working requests to deal with Time to Train requests. The employee will be required to write to their employer justifying their request for training. The employer is entitled to refuse the request on legitimate grounds, for example considering the burden of cost to the business or the inability to meet customer demands.
It is anticipated that the employee will be able to appeal an employer’s refusal to grant them leave to the Employment Tribunal if the employer has been unreasonable or exaggerated the detriment that would be caused to the business’ interests.
Concern over Age Discrimination
The Employment Equality (Age) Regulations 2006 have come under attack from Age Concern. The Regulations allow employers to compulsorily retire employees over the age of 65. Age Concern argues there is little protection for these workers, and that the 2006 Regulations do not comply with the EU’s Equal Treatment in Employment Directive.
The European Court of Justice is currently considering the point, and will decide whether the UK Government has failed to comply with the Directive.
If Age Concern is successful in challenging the 2006 Regulations, the impact of the decision will be far-reaching. Not only would UK law have to be changed, but many employers could face the prospect of paying out compensation to those they wrongfully dismissed solely on the grounds of age.
Do you know enough about TUPE?
In essence, TUPE (Transfer of Undertakings (Protection of Employment) Regulations 2006) apply where there is a relevant transfer. For there to be a relevant transfer there must be a "transfer of an economic entity which retains its identity". For example, mergers, the sale of a business by way of assets sale, or the transfer of an outsourced contract, going concern, or a change in franchisee (among others).
Its effect is to move employees and any liabilities associated with them from the old employer to the new employer by operation of law. It is important to understand that when buying a business the purchaser will not only inherit employees, but also the responsibility to honour all existing employment contracts and conditions of employment. This extends to disputes, tribunal claims and collective employment agreements.
TUPE applies every day to an enormous number of different business transactions and it is essential that employers of all sizes understand what employment liabilities can arise. To protect your business from claims you need to understand when TUPE is likely to apply, what the implications are for your business, what you need to do to comply with the regulations and the penalties for failing to do so.