2014 Employment Review and 2015 Predictions

Sarah Henchoz

I’m a celebrity 2014/15

The 2014 party promised to be an interesting one with all the intrigue of a masked ball. Even though celebrities like Shared Parental Leave and Equal Pay Audits were announced in advance, nobody really knew what to expect. These established personalities promised the arrival of something new on the cat walk. This year didn’t have the glitz and glamour of past years like 2010, where everyone was star-struck by the Equality Act, or 2013, where whistleblowing was the word on everyone’s lips. Instead, 2014 distinguished itself by its understatedness. It was an opportunity for B-listers like holiday pay cases, to punch above their weight, while the unknown quantity of gate-crashers like obesity and zero hour contracts, despite not being invited, stole the show and made sure they will be VIPs in 2015.

Shared Parental Leave

Without any doubt, shared parental leave is the big ticket number for 2014. Radical initiatives like this usually originate in Europe but this time it is a home-grown idea from the Coalition Government. Coming into force at the start of the party season on 1 December 2014, but applying to babies born after 5 April 2015, it re-thinks and shakes-up the traditional workplace view that it is the woman who is left holding the baby. For the moment though, it is still the woman who physically has the baby, and the two weeks following birth are exclusively reserved for the mother. Other than that, the remaining 50 weeks of maternity leave can be shared by the parents as they wish. They can decide to take it together, separately, or on rotation. For discontinuous periods of leave (eg leave that is not taken in a single block) the employer must agree to the leave pattern.

Although take-up is predicted to be low, businesses are still worried about the new arrangements. At least with maternity leave, the chances would be that the female employee would be absent for one year and therefore suitable cover could be obtained. The same predictability cannot be applied to shared parental leave, however, making planning difficult.

Equal Pay Audits

The potential impact of equal pay audits does not appear to have registered with either employers or employees. The new regime requires employment tribunals to order an equal pay audit if an employer loses an equal pay case. The audit results must then be published on the employer’s website and remain there for three years. An exception to this is where an employer has already carried out an audit within the preceding 12 months. We would have expected employers to take the pre-emptive step of conducting one of these audits but this does not seem to be the case. Nor are employees threatening the risk of an equal pay audit in order to force settlement on enhanced terms.

Holiday pay cases

It was the humble right to paid holiday that shone bright in 2014. The cases of Lock v British Gas and Bear Scotland v Fulton (and other conjoined cases) had businesses quaking in their metaphorical boots at their potential exposure for incorrectly paid holiday, potentially going back to 1998. The Working Time Regulations were drafted to make it clear that holiday pay should be paid on the basis of basic remuneration. Europe threw a spanner in the works this summer by ruling that where commission was intrinsically linked to a role, it must be taken into account when calculating holiday pay. More recently, the EAT said that non-guaranteed overtime must also be factored in. This only applies to 20 days’ holiday under the Working Time Regulations, while the remaining eight days, or any additional contractual holiday pay, can be paid at the basic rate.

Much to the relief of employers, the EAT limited the potential liability for back-dated pay by stating that if there is a break of more than three months in the series of deductions between the underpayment and the correct payment, the link in the series is broken and claims would be out of time.

The Government has also intervened to limit the impact of this decision by capping retrospective unlawful deduction claims at two years. This rule will not come into force until 1 July 2015, so the first half of the year is likely to be busy with an unbroken series of deductions claims from employees rushing to beat the deadline.

Expect more and less in 2015 with obesity and zero hour contracts

Almost out of the blue came two new celebrities: obesity dressed as a protected characteristic and zero hour contracts. Both hit the 2014 scene with significant impact.

The Small Business, Enterprise and Employment Bill 2014-15 includes a proposal to ban exclusivity clauses in zero hour contracts, which prevent an employee from working for another employer. The Bill is currently passing through its legislative stages and is expected to become law in 2015.

With UK obesity rates reaching epidemic proportions, it is hardly surprising that the issue would spill over into the workplace. In 2013, the EAT ruled that, while obesity itself is not a disability, physical and mental impairments associated with obesity may well be covered. In the last few days of 2014, this approach was given the European blessing by an ECJ decision in which the view was taken that morbid obesity may amount to a disability in its own right if it significantly impacts on the person’s working life.

We predict that obesity, alongside zero hour contracts will continue to make waves in 2015 as more employees assert their rights in these areas.

Blog post by Sarah Henchoz and Sheila Fahy


Comments published on Employment Talk do not necessarily reflect the views of Allen & Overy.

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