Changes to Employment Law

Other than essential changes to bring us in line with EU requirements, Northern Ireland’s employment laws have barely changed in the last two years. Changes to employment laws in GB, however, have resulted in a period of uncertainty for Northern Irish employers.

As we await the outcome of various consultations undertaken in 2013, I have answered some questions raised by employers as they navigate through this ambiguous time.

Has the unfair dismissal qualifying period increased in NI and will employees have to pay fees to lodge a tribunal claim?

Despite an increase to two years in GB, employees in Northern Ireland still only require one year’s continuous service to bring a claim for ordinary unfair dismissal to an Industrial Tribunal (N.B. there are exemptions where one year’s service is not required, including for example, dismissal for pregnancy/maternity leave, reporting health and safety risks or assertion of statutory rights).

Regarding fees, although these were introduced in GB in July 2013, they will not be implemented in Northern Ireland at the present time. Employers do, however, have the option to apply to the Tribunal for a Deposit Order, which, if granted, requires an employee pursuing a weak case to pay a specified amount before they can continue their claim.

Do I need to accommodate shared parental leave?

At present, no, but it is anticipated that shared parental leave will be introduced in Northern Ireland in April 2015 with the implementation of the Work and Families Bill.
Parents already have the right to share maternity leave through the use of Additional Paternity Leave, however that scheme has not proved popular.
Current proposals for shared parental leave include allowing qualifying parents to share up to 50 weeks of leave and 37 weeks of pay, whereby the mother can commit to ending her maternity leave on a particular date and share the untaken balance of maternity leave and pay with her partner; and allowing parents to take shared parental leave at the same time or separately, in small blocks of one week rather than all at once.

Although the concept of shared parental leave is advantageous for families, the practicalities of taking the leave and the administration could create difficulties, for example in coordinating leave between two employers or in providing temporary cover for staff taking leave. The success of the scheme will depend on the finer details of how the scheme will be rolled out, but the key for employers will be to ensure that employees discuss their plans as early as possible.

Should I include commission when calculating holiday pay?

Although not part of current legislative reform, a series of decisions given by the Court of Justice of the European Union (CJEU) earlier this year have turned the spotlight on UK-wide calculation of holiday pay.

Under the Working Time Regulations (WTR), holiday pay for workers with normal working hours and whose pay does not vary based on the amount of work they do, need only be calculated on basic pay. In the case of Williams and others v British Airways (regarding pilots’ holiday pay) however, the CJEU signalled the way for a significant re-think of how statutory holiday pay should be calculated, establishing that it should include all elements of remuneration which are “intrinsic” to the performance of the job.
In the subsequent case of Lock v British Gas Trading Ltd, the CJEU held that holiday pay under the Working Time Directive (WTD) cannot be calculated on basic salary alone where a worker’s remuneration includes commission determined by reference to sales achieved.

Lock’s holiday pay generally included commission earned on previous sales (paid in arrears), but he suffered a financial disadvantage after the holiday as a result of not having earned commission during his holiday. The CJEU ruled that his holiday pay must include an element to offset this disadvantage. If this was not the case, a worker might be deterred from exercising the right to annual leave, which would be contrary to the purposes of the WTD.

As is often the case, the CJEU did not give any guidance on how employers should calculate holiday pay to account for commission payments. Whilst it must be based on average commission earned “over a reference period which is considered to be representative”, the CJEU did not expand on what that reference period might be. The Lock case is expected to return to the Tribunal in late October 2014 and again in March 2015 to determine issues such as this, and whether the requirement to include commission will apply only to the four weeks’ holiday under the WTD or the 5.6 weeks granted under the WTR.

In the meantime, employers should use this time to digest the impact of Lock on their own holiday pay arrangements and consider the risk of historic claims for holiday pay shortfalls, which could potentially date back to the implementation of the WTR in 1998.

While great care has been taken in the preparation of the content of this article, it does not purport to be a comprehensive statement of the relevant law and full professional advice should be taken before any action is taken in reliance on any item covered.