Legal Article - Employment Law

Exemptions

If any of the following events happen prior to the 18 week entitlement ending, the employer must not pay SMP:

• The employee is taken into legal custody
• the employee goes abroad outside the EU
• the employee dies
• The employee works for her employer in any week, or part of a week during the Maternity Pay Period. If she falls ill for a whole week for a pregnancy related reason within the 18 week period, she can receive SMP.

Guaranteed Payments

Where the employer is unable to provide work on a day when the employee would normally be expected to work in accordance with their contract of employment (due to, for example, reduced demand, or lack of components) the employee is entitled to receive a guaranteed payment (£18.40 per day from 01/02/2005 but subject to annual review) for up to five days in any period of three months.

Such a payment will not be payable if:

• The employee has not completed one month’s continuous employment with the employer

• The employee unreasonably refuses suitable alternative work

• The employee fails to comply with the employer’s reasonable requirement to be available to work

• The lay-off or short-time is due to industrial action involving any employee of the employer or associated employer.
Any contractual payment in respect of the workless day can be offset against the employer’s liability to make a payment for that day.

Despite these provisions on guarantee pay, the employer has no automatic right to lay employees off without pay. The right to do so must be expressly laid down in the contract of employment, or be implied by past action and practice, or the lay-off must be by mutual agreement.

Otherwise the employer may be liable for claims for damages for breach of contract or the employees may resign and claim constructive dismissal.
Equal Pay for Equal Work

The Equal Pay Act 1970, as amended by the Equal Pay (Amendment) Regulations 1983, provides for equal pay between men and women in the same employment.

Equal pay is not just “wages”, but is any contractual terms and condition, whether or not it relates to money, but excludes those relating to death or retirement (e.g. it covers sick pay, holidays, cars, BUPA but not pensions, death benefit etc although these are covered under other legislation and may be equal).

Employees are in the same employment where they do work that is:

i. the same, or broadly similar, where differences between the things done by a man and a woman, having regard to their frequency as well as to their nature and extent, are not of practical importance in relation to the terms and conditions of employment;
ii. where work has been rated as equivalent under an analytical job evaluation system, provided the system does not give different values to the demands made on men, or on women, under any heading (Note: you are not required to use job evaluation);

iii. Work is of equal value in terms of the demands made on the people performing the jobs.

A male or female member of staff can compare pay with other employees of both sexes, currently employed or where there are no male or female employees currently employed, comparisons with either a former employee or successor is acceptable where their employment overlaps.

Where a company has more than one establishment, or has other associated companies, employees can compare themselves with male or female employees in another establishment (or associated company) where common terms and conditions are generally applied.

The legislation applies to all employees, whether on full time, part time, casual or temporary contracts regardless of length of service, as well as the self-employed. It applies to each individual contractual term, and you cannot argue that the woman’s (or man’s) “total remuneration package” taken as a whole is no less favourable than the man’s (or woman’s).

An employee who considers themselves likely to be disadvantaged by a discriminatory term in a collective agreement or employer’s salary scheme can challenge that term under section 6 of the Sex Discrimination Act 1986 as amended by Section 32 of the Trade Union Reform and Employment Rights Act 1993.

The employer can refute an equal pay claim if they can prove that the difference between the woman and man’s pay is genuinely due to a material factor, which is not the difference of sex.

This defence is the reason put forward by the employer to explain why the comparator, although doing equal work, is paid more than the applicant. To be successful this factor must be significant and relevant; that it must be an important cause of the difference and apply to the jobs in question.

The difference in pay must be genuinely due to the material factor, which must not be tainted by sex discrimination.

The employer must be able to justify objectively, in terms unrelated to gender, the reason given. This means in practice that he or she must explain why the factor, which causes the difference in pay, is necessary to a business objective of the organisation; how it is achieving that objective and that there is no other practical way of achieving that objective.

For example, if the reason given for paying the comparator more is that they have certain skills which the applicant does not have, then the employer would have to demonstrate that these skills are necessary for the job, are genuinely applied during the performance and are not simply rewarded because past pay agreements recognised and rewarded skills which are no longer applicable.

To succeed in a defence the employer needs to show that the material factor accounts for the whole of the difference in pay.

Where it accounts for only part of the difference equal pay can be awarded for the rest. For example, if the material factor defence relates to pay determined by skill shortages, but on examination it is found that these shortages can only justify part of the higher pay of the comparator, then the Tribunal will award the applicant the difference.

It is not sufficient to explain how the difference in pay came about, such as traditional values or separate bargaining arrangements or have been placed in separate grades with different job titles, but that the difference is due to the above material factors.

Further, the European Court of Justice has held that where the organisation concerned applies a system of pay, which is wholly lacking in transparency and appears to operate to the substantial disadvantage of one sex, then the onus is on the employer to show that the pay differential is not in fact discriminatory.

 In terms of UK law this means that the objective justification of the material factor defence could involve an examination of all the elements of the pay system, which contribute to the pay differences between applicant and comparator.

Employment Rights Act 1996 (ERA)

An employer can only lawfully make deductions from wages or receive payments from a worker in the following circumstances:

• It is required or authorised by legislation (e.g. income tax, national insurance, or an order for an attachment of earnings by a court);

• it is authorised by the worker’s contract of employment, so long as a copy of the terms of the contract which authorise the deduction (or a written explanation of these terms) been given to the worker before the deduction is made;

• It was agreed to by the worker in writing before the deduction was made;

• It is to recover an earlier overpayment of wages or expenses by the employer to the worker (i.e. administrative errors);

• Because the worker takes part in a strike or other industrial action (i.e. does not have to pay for work that is not done).

Wages mean any sums payable to the worker by his employer in connection with his job and include

• Any fee, bonus, commission, holiday pay or other payments in connection with the worker’s employment (not expenses incurred in employment)

• Statutory payments such as SSP and SMP

• Luncheon vouchers, gift tokens or other vouchers of a fixed monetary value that can be exchanged for money, goods or services.

The Courts have also concluded that unilateral withdrawal of regular overtime payments is also a deduction of wages. However, failure to pay wages in lieu of notice would not be a deduction of wages under the Employment Rights Act, but would be a claim for damages for breach of contract, to be resolved normally in the ordinary Courts not the employment tribunals.

An employer may ask a worker to agree to a change in the terms of their contract, or to give their consent to make a deduction on account of certain conduct that took place before the contract was varied or the consent obtained, this is unlawful.
For example, if a worker is late, the employer is not entitled to alter the terms of the contract or obtain consent to enable them to make deductions for lateness and then promptly reduce the worker’s wages for the incident of lateness that has already taken place.

Where the employer makes an unauthorised deduction from wages an employment tribunal will order the employer to reimburse the amount to the worker. The employer will not be able to recover the amount by any other means even if it is contractually due from the worker.
The employer is penalised for taking the easy route of docking pay, rather than pursuing a contractual remedy in the ordinary courts.

For example, if an employee owes money to the employer when they leave the company (because of a loan made to them to buy a car) but no agreement was made authorising the employer to deduct payments from the employee’s wages and the employer decides to deduct the amount owed from the fixed wages, this will breach the ERA and the employer will not then be able to sue in the ordinary courts for this amount.

Normally a worker who thinks their employer has broken the contract between them can only complain to the civil court.
 However, if they think that in making a deduction from wages the employer has failed to follow the provisions outlined above as well as breaking the contract, the worker can choose either to complain to a tribunal about an unlawful deduction of wages in breach of the Employment Rights Act, or to a civil court about the breach of contract.

 

Published: 26 May 2011

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