Employment Law Briefing – October 2023

Workers (Predictable Terms and Conditions) Bill receives Royal Assent

At the moment there is no statutory right to request a more predictable working pattern.  However, the Workers (Predictable Terms and Conditions) Act 2023, which has just received Royal Assent, introduces a right for workers to request a more predictable working pattern, and is expected to come into force in September 2024.  This new right is intended to address the issue of “one-sided flexibility” experienced by workers in the gig economy, and will apply to workers whose existing work patterns lack certainty in terms of the hours or times they work, and to workers who are engaged on fixed-term contracts of 12 months or less.

Workers will need to have worked for their employer for an as yet undetermined qualifying period before they can make a request.  Workers will be able to make a maximum of two applications in any 12 month period, and the application will need to specify the change being applied for, and the date the worker would like the change to come into effect.  Employers will be required to deal with requests in a reasonable manner, and notify the worker of their decision within one month.   Employers will be able to refuse requests on a number of specified grounds.

Workers will have the right to bring a claim for compensation in the Employment Tribunal if they submit a predictable working request and their employer does not deal it in accordance with the requirements of the Act.  Employers may also face unlawful detriment and/or automatic unfair dismissal claims if their staff are dismissed or subjected to a detriment because they have made a request.

Right to participate in a non-contractual share incentive plan transferred under TUPE

The Inner House of the Court of Session has held in Ponticelli UK Ltd v Gallagher that an employee’s right to participate in a share incentive plan (“SIP”) arose “in connection with” their contract of employment for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”).

Mr Gallagher’s employment transferred from Total Exploration and Production UK Ltd to Ponticelli UK Ltd in 2020.  Prior to the transfer, Mr Gallagher participated in a SIP operated by Total Exploration.  Mr Gallagher’s employment contract did not mention the SIP.  When Mr Gallagher’s employment transfer to Ponticelli, his participation in Total Exploration’s SIP ended, and the shares held on his behalf within the SIP were transferred to him.  The Inner House of the Court of Session held that Mr Gallagher’s right to participate in the SIP formed an integral part of his overall financial “package” and was caught by TUPE.  AS a result, following the transfer of his contract of employment to Ponticelli, he became entitled to participate in a SIP of equivalent value to the SIP operated by Total Exploration.

Employers generally try to ensure that share schemes are kept separate from employees’ contracts of employment.  Scheme rules typically state that they are not contractual, and any reference to rights to participate in a share scheme are usually specifically excluded from the employment contract.  However, the court in this case found that the right to participate in a SIP was a right “in connection with” a transferring employee’s employment contract, bringing the scheme within the scope of a TUPE transfer.  In addition to presenting a significant cost burden, the obligation to provide a share scheme of substantial equivalence may cause considerable practical difficulties for a transferee employer, particularly if it does not operate similar share schemes for its existing employees.

Employees can claim for historic underpayments of holiday pay even if there are gaps of more than three months between payments

Workers in the UK have a statutory right to 5.3 weeks’ holiday a year.  Case law has established that to the extent that the statutory right to paid holidays is derived from the Working Time Directive (4 weeks each year), holiday pay must be calculated based on normal pay, including commission, overtime, and some allowances and bonuses.  A worker can bring a claim for “unauthorised deduction from wages” if they have been underpaid holiday pay, and can bring a claim for a series of deductions (underpayments) as long as the claim is made within three months of the last underpayment.  However, there is a statutory “backstop” on unauthorised deduction from wages claims, which means claims can’t go back further than two years.

In 2015 the Employment Appeal Tribunal in Bear Scotland Ltd v Fulton held that there would be a break in the chain of any “series of deductions” if a period of more than three months had elapsed between deductions.  This meant that if there was a gap of more than three months between underpayments of holiday pay, the earlier underpayments could not be included in the unauthorised deduction from wages claim.  However, the Supreme Court in Chief Constable of the Police Service of Northern Ireland v Agnew has now held that a gap of three months between underpayments of holiday pay does not break a series of unlawful deductions.

The Supreme Court’s decision in this case represents a significant shift in holiday pay case law in the United Kingdom,  and could have significant repercussions for employers who are still not calculating holiday pay correctly.  As it will now be much easier for workers to demonstrate a series of deductions, this case immediately opens up the prospect of those employers receiving claims for underpayments of holiday pay going back two full years.

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