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Changes to annual leave

Annual leave has been a hot topic over the past couple of years with numerous cases being tested through the courts. The following are recent key cases that have helped to change the landscape surrounding annual leave:

Williams & Others v British Airways plc – This case concerns the Aviation Directive rather than the Working Time Directive but the principles are to apply to both. The latest decision in this case further to the Supreme Court referring a number of questions to the ECJ was that there was an entitlement to normal remuneration during statutory annual leave which is remuneration intrinsically linked to the performance of tasks which a worker is contractually required to perform....

Lock v British Gas Trading Ltd & Others – The Advocate General gave opinion on how the holiday pay of workers earning a basic salary and commission should be calculated. Further to the decision in the British Airways case, it was stated that remuneration during leave periods should be commensurate with pay during comparable periods of work earned over a representative period.

The latest development in this case is only given as opinion that commission should be included. As this is opinion, it is vague as to how it should be viewed or calculated, therefore we will have to wait until the end of the year for clarity on the subject but employers should bear this change in mind.

Neal v Freightliner Ltd – A Judge ruled that overtime pay must be included when calculating holiday pay under the Working Time Regulations. The Judge decided that wording should be included to exclude sections of the Employment Rights Act 1996 which state that the week’s pay provisions do not include periods of overtime. This case is not binding because it is a first instance case, however employers should consider taking paid overtime into account when calculating holiday pay.

Sood Enterprises Ltd v Healy – The EAT confirmed that the Working Time Directive does not require the carrying over of the 1.6 weeks’ additional leave where a worker is prevented from taking holiday due to long term sickness absence. A relevant agreement needs to be in place to provide for the remaining 1.6 weeks’ leave to be carried over.

Further information on this legal area should be available towards the end of this year, however Opsium believe that further case law could turn the whole subject of annual leave and pay on its head and that employers should be ready for it.

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Changes to Sickness Absence

Health related issues have a massive impact on the economy with nearly 1 million workers absent from work for a month per year. The government has responded with an initiative to encourage workers back to work by introducing a new state funded health assessment and case management. It is hoped that the initiative will reduce ill-health costs by as much as £70million per year. To find out more please read our article here.

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Changes to Sickness Absence

Nearly 1 million workers are absent from work for a month per year and around 300,000 people a year fall out of work and into the welfare system for longer because of health related issues. This has a massive financial impact on the economy and those individually affected.

It is generally thought that the longer a person is absent from work through sickness, the harder it is to get back to work, therefore the Government has responded with an initiative to get sick employees back to work faster.

The Health and Work Assessment and Advisory Service is due to be launched this Spring. It will introduce a new state funded health assessment of employees who have been off sick for more than one month and case manage employees with complex health issues to facilitate their return to work.

Under the new initiative, workers on long term sickness absence (which is classed as four weeks or more) could be referred for specialist support. Specialists will be on hand to support employees with non-compulsory medical assessments and suggestions for courses of treatment to speed their recovery.

It is hoped that the initiative will reduce ill-health costs for employers by as much as £70m a year, however it has received some criticism. The TUC’s head of health and safety notes that the service should be about providing support to workers to enable them to get better, rather than back to work. There was a cautionary note stating that the scheme could force employees back to work before they were well enough, which moves into the realms of presenteeism, which is in itself an economic problem. 

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Employment Law Changes

2014 brings many changes to the employment law landscape. With the usual changes to statutory rates taking place, there are other changes that employers need to be aware of such as changes to TUPE; changes to ACAS conciliation; right to flexible working to be extended, amongst other things. Employers need to ensure that they are up to date with the legal changes in order to avoid any potential ramifications. Read more about these changes in our blog.

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Employment Law Changes 2014

 31 January 2014

Changes to TUPE implemented

 February 2014

Fines for NMW breaches increased to a maximum penalty of £20,000

 10 March 2014

Reduction in the rehabilitation periods for less serious criminal offences

 6 April 2014

Tribunals to have the power to impose financial penalties on losing employers if workers rights have been breached


Discrimination questionnaires abolished


Changes to ACAS conciliation introduced


Increase in compensatory limits and the week’s pay figure


Statutory pay limits increase

 Spring 2014

Changes to sickness absence introduced

 30 June 2014

Right to request flexible working for all introduced

 October 2014

Tribunals to give the power to order an employer to carry out an equal pay audit


Response from government to the annual leave aspects of the Modern Workplaces consultation expected


Fathers and partners able to take time off to attend up to two antenatal appointments

Changes to Rehabilitation Periods

Fewer convictions will need to be disclosed when applying for jobs due to the government reducing the length of rehabilitation periods. The roles which require offenders to declare all their convictions when working in sensitive workplaces will remain unchanged....

Employers are generally not allowed to enquire about a job applicant’s criminal convictions which have become “spent” however there are exceptions for certain occupations or professions. A conviction becomes spent once the rehabilitation period has expired.


Financial Penalties for Breaches of Employment Rights

As of April 2014 a tribunal will have the power to impose financial penalties on employers who have lost their case and where the tribunal decides that an employer has breached any of the worker’s rights to which the claim relates and the breach has one or more aggravated features. This will apply to cases that have been lodged after this date.

If a penalty is appropriate then normally 50% of the compensation will be awarded, subject to a cap of £5000. The penalty will be reduced by half if the employer pays the amount within 21 days.

The potential financial exposure for employers will therefore increase, however time will tell how this penalty regime will be applied in practice.


Changes to ACAS Conciliation Introduced

Changes to the ACAS conciliation process will be introduced as of 6 April 2014. From 6 May onwards it will not be possible to start an employment tribunal claim without first involving ACAS. This will mean that the limitation clock will pause during these proceedings so that the three month time limit will not expire.

The scheme will require potential claimants to approach ACAS before issuing proceedings by contacting them directly or completing a form. There will then be a month long period during which an ACAS conciliation officer must try to promote a settlement between the parties.

If it is concluded that a settlement cannot be reached then an early conciliation certificate will be produced and this will have to be evidenced on the tribunal claim form (ET1) otherwise the claim will be rejected.


Equal Pay Audits Powers Introduced

A tribunal will be able to order a company to carry out an equal pay audit from October 2014 in order to quantify and report disparities between wages across gender and other characteristics in an organisation.

The Office for National Statistics has reported that the gender pay gap is increasing with women earning an average £5,000 less than their male counterparts.

Employers should be worried about this because under equal pay legislation staff can claim up to six years of back pay. This is illustrated by Birmingham City Council where 11,000 employees brought a case for equal pay which could cost £1.1billion to settle.


Increase in Statutory Pay Limits

As of 6 April 2014 the statutory pay limits will increase. The breakdown is as follows:

Statutory Sick Pay will rise from £86.70 to £87.55 per week.

Statutory Maternity Pay, Statutory Adoption Pay and Statutory Paternity Pay will rise from £136.78 to £138.18 per week.

A week’s pay for the purposes of calculating redundancy pay will rise from £450 to £464 per week.

The lower earnings limit will remain at £109 per week but is expected to change in October 2014.

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