Employment Law and HR Updates October 2022

The updates covered in this blog are:

  1. Right to Work in the UK check procedures from 1st October 2022
  2. Calculating holidays for  irregular shift or zero hours workers with an ongoing contract
  3. CV fraud can be prosecuted
  4. Long covid and menopause can be classed as a disability
  5. Potential future removal of EU laws, GDPR and reversal of IR35 reforms 
  1. Right to Work in the UK check procedures from 1st October 2022

With effect from 1st October 2022 you can no longer accept a photo or scanned copy of someone’s Right to Work in the UK documentation – you have to see the original documents in person. Remember, you can risk a fine of up to £20,000 for not following the required procedures and inadvertently employing someone who does not have the right to work in the UK.

This means that for UK Nationals you must now complete Right to Work checks in the presence of the holder of the documentation. For example, the new worker must bring their UK passport to you in person so that you can check that it is a genuine document / it hasn’t been tampered with, the photograph matches the person who has brought the document in and the date of birth is reasonable based on the person’s appearance.

If the new worker does not have a passport, they can bring to you (in person), a birth or adoption certificate issued in the UK, together with an official document showing their permanent National Insurance number and their name, issued by a government agency or a previous employer.

Please refer to pages 11 and 12 of this Employer’s guide to right to work checks – GOV.UK document for full, step by step guidance.

Alternatively, you can now pay a Company approved by the government to complete checks on your behalf. Details here: Digital identity check services

Non UK Nationals: There is a separate online checking service which MUST be used to check the Right to Work status of non UK nationals / workers from outside of the UK. This applies to workers from the EU. Details here: View a job applicant’s right to work details – GOV.UK

Further information: Full and detailed guidance covering all of the above can be found here: Employer’s guide to right to work checks – GOV.UK

  1. Calculating holidays for irregular shift or zero hours workers with an ongoing contract

When an employee or worker takes holiday, they should get the same level of pay when they’re on holiday as when they’re at work – whatever their working pattern.

Important Note Regarding Holiday Entitlement: In a recent  Supreme Court ruling (Harpur Trust v Brazel) those who are employed on an ongoing irregular or zero hours contract are still entitled to the full, minimum statutory holiday entitlement of 20 days plus 8 bank holidays / 5.6 weeks per year, regardless of the fact that they only work for a proportion of the year.  (This does not apply to part time workers who work fixed hours and days – they should still receive their holiday entitlement pro-rata).

This means that for holiday pay calculations, if you are currently spreading holiday pay over the year by adding an amount eg 12.07% on top of the worker’s weekly / monthly pay (often referred to as “rolled up holiday pay”) then you need to stop doing this ASAP, as holiday pay calculations made this way are incorrect and could put you at risk of a backdated claim for holiday pay owed. Workers must be paid for their holiday when they take it and their holiday pay must be calculated in line with the guidelines below. An example of how to complete a calculation is provided in Appendix A. You will see that there is an extra calculation step to complete if you pay your workers monthly.

For casual workers with no normal hours, including workers on a zero-hours contract, the holiday pay they receive will be their average pay over the previous 52 weeks during which they have completed paid work for the Company (weeks when they have not worked / have not earned anything do not count). This may mean that the actual reference period takes into account pay data from further back than 52 weeks from the date of their leave. However, you should not go back any more than 104 weeks. If going back 104 weeks gives fewer than 52 weeks pay data to take into account, then the reference period is shortened to that lower number of weeks.

If a worker has not been in employment for long enough to build up 52 weeks’ worth of pay data, then you should use however many complete weeks of data they do have. For example, if a worker has been with you for 26 complete weeks, that is what you should use.

Alternatively to remove the requirement to complete these calculations, you could offer your workers a contract with fixed days and hours of work, meaning that they become a part time employee and their holiday entitlement is applied in the same way, but at a pro rata rate, of a full time employee. 

Further information:

General guidance on holiday pay calculations can be found at: calculating-holiday-pay

Full details can be found here: calculating-holiday-pay-for-workers-with-irregular-hours

  1. CV fraud can be prosecuted

The Supreme Court has ruled that CV fraud can be prosecuted, with CV fraudsters being required to pay back at least part of their wages if they are caught falsifying qualifications and experience to an employer.
 The decision concludes the high-profile appeal case of Jon Andrewes, a former NHS chief executive, who was jailed after lying about his PhD and previous career to get a leading hospice role as well as other directorships.
Originally, a Court of Appeal ruled that Andrewes should not have to pay back his earnings; however, a recent Supreme Court hearing, which cited the Proceeds of Crime Act 2002, ordered that part of the disgraced executive’s salary must be repaid.

This means that while employers will most likely dismiss an employee who has provided false information on a CV and leave it at that, this ruling paves the way for also taking the employee to court to claim back “the difference between the higher earnings made as a result of the fraud and the lower earnings the defendant would have made if fraud hadn’t taken place”. 

To avoid these issues in the first place, it is always advisable to issue a “Conditional Offer” letter* and obtain all references before signing a contract. Make sure that you obtain the potential employee’s written consent to obtain references from the employer(s) named on their CV (a GDPR data requirement and a potential cause for complaint / claim) and then obtain those references directly from the employer’s HR department, rather than any named referees provided by the prospective employee. Independently source the HR department’s contact details.

* The job offer is conditional upon the receipt of references and other pre-employment checks that meet the Company’s required standards.

  1. Long covid and menopause can be classed as a disability

UK tribunals are reporting a rise in disability discrimination claims against employers due to long covid and the menopause. Women can also bring menopause-related claims against their employer under the Equality Act 2010.

A person is classified as disabled under the Equality Act 2010 if they have a physical or mental impairment that has a ‘substantial’ and ‘long-term’ negative effect on their ability to do normal daily activities.

What does ‘substantial’ and ‘long-term’ mean? :
  • ‘substantial’ is more than minor or trivial eg it takes much longer than it usually would to complete a daily task like getting dressed.
  • ‘long-term’ means 12 months or more eg a breathing condition that develops as a result of a lung infection.

This means that if you have a worker who fits the criteria above and is being adversely impacted by long covid or the menopause, you will need to consult with them and consider what reasonable adjustments can be put in place in order to enable them to undertake their role.

  1. Potential future removal of EU laws, GDPR and reversal of IR35 reforms 

EU Laws and GDPR The recent introduction of a retained EU law bill will enable government departments to review and then retain or replace all EU-derived law. Any current laws that are not formally retained will automatically expire on 31 December 2023. The key components dependent on the Retained EU Law include the Working Time Regulations, Transfer of Undertakings (Protection of Employment) (TUPE), part-time and fixed-term worker regulations, agency worker regulations and GDPR.

IR35 The 2017 and 2021 changes to IR35 legislation for those who use independent contractors are to be reviewed and the onus for paying the correct tax may be put back on contractors, instead of employing organisations. It is expected that the IR35 rules will still exist in some form, but responsibility for compliance and tax is expected to be passed back to the contractors. 

This means that there is likely to be a need to amend some Company policies and contracts in the next 18 months. Watch this space!

APPENDIX A

Calculating holidays for workers with irregular hours eg Zero hours

  • Monthly Paid Workers – Start from Step 1 below as they require an additional calculation. 
  • Weekly Paid Workers – Start from Step 2 below. Note: if a worker’s pay is calculated by a week ending with a Wednesday, then you should treat a week as starting on a Thursday and finishing on a Wednesday.

How to calculate

Step 1 (monthly paid workers only) – Work out what their weekly pay has been for each of the previous 52 weeks when they have completed paid work for the Company. 

NOTE: Definition of a ‘week’ for the purpose of the holiday pay reference period – a week should start from the last whole week worked from Sunday to Saturday ending on or before the first day of the holiday / leave. In the case of a worker paid monthly, if that worker takes a day’s leave mid-week then the first week used to calculate their holiday pay will be the preceding week’s pay earned between Sunday and Saturday.

The maximum time frame to work backwards in order to identify 52 worked / paid weeks is 104 complete weeks prior to the first day of the worker’s holiday. If, when working back by 104 weeks, you identify that there were less than 52 worked  / paid weeks, then use all of the worked / paid weeks that you have identified during that 104 week period for the calculation instead.

Example:

In a month a worker earns £1,250 and works 130 hours:

  • 25 hours in week 1
  • 20 hours in week 2
  • 35 hours in week 3
  • 35 hours in week 4
  • 15 hours in week 5 (only part of the week falls in the month)

Average hourly pay = £1,250 ÷ 130 = £9.62

  • pay for week 1 = £9.62 x 25 hours = £240.38
  • pay for week 2 = £9.62 x 20 hours = £192.31
  • pay for week 3 = £9.62 x 35 hours = £336.54
  • pay for week 4 = £9.62 x 35 hours = £336.54

To calculate the pay for the week which falls across 2 months, data from both months would have to be used.

Step 2 – Calculate their average weekly pay over the 52 working week period (If the worker hasn’t been there for 52 weeks, use data from all previous weeks where they have completed paid work for the Company)

Example:

Week(s) Gross pay per week Paid / Unpaid week

1 £300 Paid

2 – 5 £350 Paid

6 £0 Unpaid

7 £10 Paid

8 – 22 £100 Paid

23 – 25 £0 Unpaid

26 – 40 £400 Paid

41 – 45 £200 Paid

46 – 48 £0 Unpaid

40 – 54 £180 Paid

55 – 59 £150 Paid

You should discount weeks 6, 23-25 and 46-48 in the above table, which is 7 weeks in total, as there was no pay in these weeks, reflecting that the worker performed no work. As 7 weeks have to be discounted, you must go back a further 7 weeks to take the total to 52 weeks of pay data when calculating holiday pay for this period. These extra weeks are weeks 53-59 in the table.

The total pay over the 52 weeks is calculated by summing the pay for each week. The calculation is:

(1 × £300) + (4 × £350) + (1 × £10) + (15 × £100) + (15 × £400) + (5 × £200) + (6 × £180) + (5 × £150) = £12,040.

This is then divided by the 52 weeks-worth of data used to calculate the average (if you don’t have 52 weeks of data, divide by the number of weeks that you do have): £12,040 ÷ 52 = £231.34.

A week’s holiday taken in the week following would therefore be paid at a rate of £231.34

Step 3 – Calculate average day rate if the worker is taking less than one complete week’s holiday

Once you have worked out the weekly average pay, divide it by 5 to identify the amount to be paid for each day of holiday taken in that particular period. 

*NOTE: The work week is defined as 5 working days from Monday to Friday and the weekend is Saturday and Sunday.

Example

Average weekly rate of pay over previous 52 worked / paid weeks = £231.34

£231.34 divided by 5 working = each 1 day of holiday being taken at this time is paid at £46.27