HR briefing - July 2022

28 July 2022

Welcome to this month's briefing for HR teams and in-house employment counsel – bringing you this month’s employment and immigration law highlights in an easy-to-read package.

Holiday pay

The Supreme Court has looked at the correct method for calculating the holiday pay for a worker with irregular hours. The case involved a music teacher, who provided lessons as and when required. Her hours varied considerably week by week, over ten-week terms, and she took all of her statutory holiday in the school holidays. The school wanted to simplify its administration by counting the total number of hours worked in a term, multiplying that number by the relevant hourly rate, and then paying 12.07% of that figure by way of holiday pay. The 12.07% figure comes from the proportion that 5.6 weeks of annual leave bears to the total working year. As a reminder, all workers are entitled to 5.6 weeks’ paid holiday per year, so the working year is the whole year (52 weeks) minus the annual leave (5.6 weeks) and so 46.4 weeks. 5.6 weeks is 12.07% of 46.4 weeks. The school therefore treated the music teacher as entitled to 12.07% of her total pay for the term.

While superficially attractive (and formerly recommended by Acas) that methodology does not appear in the Working Time Regulations, which adopt a straightforward, and very different, approach: (i) take the last 12 weeks before each period of leave in which work was actually carried out, so discounting weeks in which no remuneration was received; (ii) count the total number of hours worked in that 12-week reference period; (iii) multiply that by the relevant hourly rate; (iv) divide that by 12 to give an average weekly earnings; (v) multiply that by the amount of holiday in each case.

The difference for this particular music teacher was substantial, and effectively meant that she was paid more for her holiday than a full-time employee would have been. The school sought to argue that this was an unfair result, not in accordance with the pro rata principle. The Court accepted that the result was anomalous, but did not agree that this fatally undermined the whole of the statutory methodology. The Regulations are clear, and should be followed – it really is as simple as that.

There are two important points to note. First, the ruling only affects workers with irregular hours and pay. Part-time or full-time salaried employees are not affected. Second, the reference period was changed in 2020 from 12 to 52 weeks. This should smooth out some of the discrepancies seen in this case, so the "unfairness" seen here may well not be so apparent in other cases.

Industrial action

In response to the ongoing round of industrial action in the rail sector, the Government has pushed through two important pieces of legislation. The first increases the maximum amount that can be awarded against a union that fails to follow the statutory procedures for calling industrial action. The maximum has been increased from £250,000 to £1m. The second repeals the ban on firms bringing in agency workers to cover strikes. Unison has indicated it intends to seek judicial review of the second measure.

Data privacy

The Government has published draft legislation that would amend various aspects of the Data Protection Act 2018 and the UK GDPR. Of significance to HR teams are the proposed changes to data subject access requests (DSARs). The steps are designed to make it easier for employers to charge a fee in some cases, and to allow "vexatious" requests to be ignored. This might potentially allow a DSAR to be refused where simultaneous legal proceedings are afoot, because the disclosure obligations in the litigation often substantially overlap with the DSAR response. We shall keep a close watch on the draft as it moves through Parliament, and on the reaction of the European Commission, which has repeatedly indicated that it regards any diminution in the protection afforded to data subjects as likely to jeopardise the "adequacy decision" that permits personal data to be transferred between the UK and EU.

Employment status

The complex question of whether someone is a worker, an employee or self-employed (for employment rights purposes) and an employee or self-employed (for tax purposes) continues to generate high volumes of litigation. The Government began a consultation in 2018 asking, amongst other things, whether legislation should define these categories more precisely, and whether the tax and employment rules should be harmonised. After four years of deliberation, the Government has now concluded that no changes are necessary. This will be unwelcome news for employers using different labour models, not solely in the gig economy, where accurate categorisation of individuals materially affects the tax, employment and risk profiles of each engagement. In an effort to give some assistance to businesses, the Government has issued some additional guidance, which may be of some help in this difficult area.

Dramatic increase to UK visa processing times

The Home Office continues to prioritise visa applications from Ukrainian refugees which has resulted in a dramatic increase in processing times for all other applications.

Priority services for applications filed from outside the UK have been suspended for the foreseeable future.

Employers seeking to recruitment migrant workers should bear in mind that work permit lead times have increased from 3-4 weeks to 8-12 weeks.

Applications filed from within the UK have better processing times, but are still slower than usual.