December Legal Update

New national minimum wage rates announced

In his Autumn Budget, the Chancellor confirmed the national minimum wage increases which will take effect from April 2018. Also, a new scheme has been announced affecting care sector employers who may have underpaid their workers.

In case law, we have seen conflicting gig economy employment status judgments involving Uber and Deliveroo and a timely Bill has been published to offer further protection to these atypical workers.

New national minimum wage rates

As part of the Autumn Budget, Chancellor Philip Hammond confirmed the new minimum rates of pay which will apply from April 2018.

In line with the intention for the national living wage to increase to £9 per hour from 2020, it will increase from £7.50 to £7.83, representing a 4.4 per cent uplift. In practical terms, this will mean a pay rise of around £600 per year for a full time worker.

The other rates will increase as follows:

  • Workers aged 21-24: from £7.05 to £7.38 an hour
  • Workers aged 18-20: from £5.60 to £5.90 an hour
  • Workers aged 16-17: from £4.05 to £4.20 an hour
  • Apprentice rate: from £3.50 to £3.70 per hour

The Budget was also used to announce a review of the flexibility of the way organisations may use their apprenticeship levy (large organisations have been required to pay this levy since April 2017 which they can then use to fund apprenticeships) and a National Retraining Scheme to support worker’s career development.

Care employers urged to correct minimum wage under payments

A new scheme to encourage organisations in the care sector to make good any minimum wage underpayments was launched on 1st November 2017.

Recent employment tribunal judgments have shifted a focus onto an organisation's minimum wage obligations in the specific area of sleep-in shifts. Her Majesty’s Revenue & Customs’ (HMRC) interpretation of the legislation, in common circumstances, requires that all hours of a sleep-in shift attract the minimum wage, regardless of whether the worker is asleep.

In order to soften the impact of these decisions on social care organisations, the Social Care Compliance Scheme (SCCS) will see any underpayments corrected but remove the normal enforcement measures applied to organisations that are found to have underpaid their workers. Employers have until the end of 2018 to join up to the scheme.

Committees publish draft bill on gig economy workers

A joint draft bill containing enhanced protections for gig economy workers has been published by two government committees.

The proposal focuses on giving individuals more certainty about their status by providing an automatic assumption of “worker” status, meaning that it would be for the organisation to prove otherwise at employment tribunal. This would also mean that these workers would be entitled to certain employment rights from day one.

Some recommendations from the Taylor Report are also included in the Bill, such as consideration of a higher national minimum wage rate for those on zero hour contracts. The government is yet to provide its full response to the review and this Bill will add more pressure on the government to take action.

Case law

In Uber v Farrar & Aslam, the Employment Appeal Tribunal (EAT) refused to overturn the employment tribunal’s decision that Uber taxi drivers are workers. In another case determining employment status in the ‘gig economy’, IWGB v Deliveroo, the Central Arbitration Committee found that Deliveroo’s food delivery riders were self-employed because of their active right to substitute.

On a different note, the EAT confirmed in Baker v Abellio that an employer’s reasonable, albeit mistaken, belief in an employee’s ineligibility to work in the UK could form the basis of a fair dismissal. However, this employer’s belief was not found to be reasonable.

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