Can an employer impose a pay cut on financial grounds?

A recent case in the Liverpool Employment Tribunals has highlighted the risk for employers in unilaterally imposing pay cuts on employees in response to a downturn in business.

Mr Decker was a branch manager for a recruitment agency, Extra Personnel Logistics, specialising in driver recruitment for the logistics industry in Merseyside. He commenced employment in December 2008. On commencing his employment he worked 40 hours a week flexibly between 7.00 a.m. and 7.00 p.m. Monday to Friday. In July 2015 it was agreed that his working hours would be reduced to 32 per week. It was also agreed that he would be released from on call duties, other than covering holidays and emergencies.

On 20 February 2017 he was asked by the managing director, Brad Richardson, to reduce his working days from four to two (32 to 16 hours), equating to a loss of £205.95 per week. The following day Mr Richardson wrote to him, confirming the reduction to Mondays and Tuesdays only. He gave the reasons as the loss of two contracts and the industry market being quiet. The letter also informed him that the consultation period for the contract would run until 6 March, following which a meeting would take place the following day. Mr Richardson also referred to an offer of six additional hours doing sales which, although it had been declined by Mr Decker, would remain open for discussion.

On 3 March Mr Decker wrote to Mr Richardson to inform him that, due to his financial circumstances, he could not afford any reduction in his existing working hours and that he was willing to discuss matters further at the meeting on 7 March.

At the meeting Mr Richardson said that, as a result of the resignation of Mr Decker’s daughter in law (who had also been offered a reduction in working hours), he could offer a further eight hours per week. However, that was subject to him resuming on call work. Mr Decker said that he would accept the reduction from 32 to 24 hours if his day rate was increased from £102.97 to £110.00, on the basis that this would assist the employer in achieving its cost-cutting objective.

No agreement was reached at the meeting.

Ensuring employers don’t pay for failing to comply with incoming payroll legislation

New requirements for employers to provide payslips are on the way – the Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) (No.2) Order 2018  comes in to effect on the 6 April 2019. Once implemented, all workers will have the right to obtain a written, itemised payslip at any time before or after their wage or salary has been paid to them. Previously, this obligation extended to employees only. The new law comes after a recommendation by the Low Pay Commission in 2016 and forms part of the Government’s raft of initial responses to the Taylor Review on Modern Employment Practices. The Taylor Review, published in July 2017 set out key recommendations to increase the rights of workers and this new legislation is aimed at ensuring that low paid workers can work out whether they have been paid correctly.

The widening of the obligation will increase transparency in relation to wages and will assist workers in challenging discrepancies. It will also highlight if an employer is falling short of their minimum pay obligations (National Minimum Wage and National Living Wage).

Aside from being necessary evidence for pay disputes, payslips are required by workers for many other purposes – securing credit for a property, securing rental accommodation, proof of loss of earnings and proof of employment generally.

The extension of the right to include all workers will now mean workers in the gig economy and those on casual or zero hours contracts will be entitled to an itemised pay slip where previously they were not.

Would reforming the Working Time regulations be a good idea?

Brexit. Brexit. Brexit. Whilst Christmas and New Year provided a welcome rest from Brexit-dominated headlines, there is no doubt that the media train will start in earnest sooner rather than later.

Just before Christmas, various newspapers reported that the Working Time Regulations could be a target for the Government following the UK’s departure from the EU. Certain newspapers went further and stated that repealing or substantially amending the Working Time Regulations would be a positive example of removing so-called ‘red tape’ and freeing businesses from the burden of overbearing regulations; some newspapers even trotted out the over-used line of ‘taking back control’.

So, to use that awful phrase, should the UK ‘take back control’ and amend the Working Time Regulations?

Equality Act 2010 (Gender Pay Gap Information) Regulations 2017

On 6th December 2016, the Government published the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, which will require large private sector businesses to publish gender-based pay statistics each year. These Regulations are likely to come into force (subject to parliamentary approval) on 6th April 2017, and will essentially require employers with 250 or…

What are the likely implications of Brexit on UK Employment Law/HR practices?

Employers may not be aware that much of the current legislation in place to protect employee rights actually derives from the European Union – for example, working time regulations, rights of the employees on a business transfer (TUPE) and family leave rights to name but a few. Indeed some Politicians for the ‘Leave Campaign’ will no…