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RMIF Employment Law Newsletter Autumn 2016Back

MILSLogo2Welcome to the Autumn Edition of the RMIF Employment law email bulletin. Please note : in this bulletin we aim to keep you up to date on some of the latest developments in employment law and although the bulletin is not intended to provide a comprehensive summary of all the changes to the law, we hope to highlight some key areas of change for motor industry employers.


Delay to the gender pay gap reporting regulations

The Government had intended that by October 2016, Regulations would have been brought into force creating a mandatory requirement for businesses with 250 or more employees to publish data about the gender pay gap within their organisation. However, the Government has indicated that the implementation of the Regulations will now be delayed until April 2017.

New National Minimum Wage as of 1st October 2016

The minimum wage is increased from 1st October as set out below.


Recent case law developments

Holiday pay must be calculated with reference to commission

The Court of Appeal in British Gas v Lock (2016) has handed down its decision on the calculation of holiday pay last month. Mr Lock was a salesman on a basic salary with variable commission paid in arrears. Mr Lock’s commission depended not on the time worked but the sales he achieved. As he was unable to earn commission whilst on leave, he therefore lost income by taking holiday. Mr Lock brought a claim for his “lost” holiday pay having taking leave from December 2011 to January 2012. The European Court of Justice held in 2014 that member states must ensure a worker taking leave is paid by reference to commission payments they would have earned if at work. However the UK Working Time Regulations 1998 do not suggest including holiday pay in respect of commission, when interpreted in line with the Employment Rights Act 1996. The question in this case therefore was one of statutory interpretation. In order to interpret the law in a manner compatible with EU legislation the Court of Appeal viewed the Working Time Regulations as including holiday pay with reference to commission. This decision is consistent with the earlier Tribunal and EAT decisions.

Essentially, the case only confirms what we already knew, namely that a representative element of results based commission should be included when calculating holiday pay for the four weeks’ of statutory holiday pay derived from the Working Time Directive. However, rather unhelpfully, the Judgment fails to address how this should actually be calculated and still leaves some questions unanswered, for example what the appropriate reference period is. It will be a case of “watch this space” as British Gas are expected to appeal the decision to the Supreme Court and it is hoped that further clarity will then be provided for employers.

Are Uber Drivers employees, workers or independent contractors?

You may have seen widely reported in the press the recent decision concerning Uber drivers. The Employment Tribunal has ruled that two drivers who provided services to Uber are “workers” within the meaning of the Employment Rights Act 1996. This means they will be entitled to a limited number of employment rights including 5.6 weeks paid annual leave each year, a maximum 48 hour average working week and rest breaks, the National Minimum Wage (and the National Living Wage) and protection of the Whistleblowing legislation.

As with the British Gas v Lock case it is widely expected that this case will also be appealed and, eventually, potentially to the Supreme Court.

The Uber case is of interest to any employer who uses “contractors” for example drivers or valeters as they may in fact have worker status. Note: In the Uber case the drivers were simply trying to claim worker (not employee) status which under UK law grants them basic workers rights, though not to the same level of protection as afforded to full employees.

Easyjet cabin crew win landmark breastfeeding dispute

The Employment Tribunal in McFarlane and another v Easyjet Airline Company Limited has upheld an indirect discrimination claim by two Easyjet flight attendants against the airline company for its failure to provide them with bespoke roster arrangements in order to breast feed their children. In this case the Tribunal found that such refusal was not objectively justified by the employer. The Tribunal also found that Easyjet had suspended the employees on maternity grounds and had failed to pay them the correct remuneration and failed to offer suitable alternative work.

This decision is not binding but it highlights the need for employers to think through and have hard evidence to back up any objective justification arguments when defending discrimination claims. In this case, Easyjet wasn’t able to present sufficient evidence to back up its assertion that allowing bespoke rosters would cause serious operational difficulty. The case also observes that it is not possible for a mother to state with certainty when she expects to stop breastfeeding and, in this particular case, the Tribunal did not consider it was reasonable to ask this question.

Protecting a disabled employee’s pay can be a reasonable adjustment

In the case of G4S Cash Solutions (UK) Limited v Powell the Employment Appeal Tribunal has held that an employer was obliged to continue paying a disabled employee his existing salary on an indefinite basis even though he had been redeployed into a more junior role due to no longer being able to carry out his normal duties as a result of his disability. The EAT ruled that it could not see any reason why pay protection should be excluded as a “reasonable adjustment” when an employer attempts to prevent disability discrimination.

Whilst this case is potentially problematic for employers, it is important to remember that each case will be decided on its own merits, taking into account various factors, and what is reasonable for one employer or employee will not always be reasonable for another. The EAT considered that pay protection would not be an “every day event” however, it should not be discounted. This will therefore need to be borne in mind by all employers when considering disabled employees’ pay and the question of reasonable adjustments.

In the News

Brexit employment law briefing paper published

On 12th October the House of Commons published a paper on Brexit and employment law. It largely reminds us that EU employment law is found in both primary and secondary legislation as well as in European Court of Justice case law and that, accordingly, different mechanisms will be required to preserve or amend the law originating from these various sources. The paper also mentions the Government’s proposed Great Repeal Bill which, if passed, will turn all EU law into UK law.

Better pregnancy and maternity protection called for

The Women and Equalities Committee has published a report showing the number of expectant and new mothers forced out of employment has almost doubled since 2005. Recommendations from the report include a substantial reduction in the £1,200 Employment Tribunal fee for women making pregnancy related discrimination claims, assurances that rights and protections will not be removed following Brexit and protections put in place to prevent redundancy until 6 months after the mother’s return to work. The Government will consider the recommendations and respond in due course.


Proposed consultation on workers’ rights

Tony Blair’s former Head of Policy, Matthew Taylor, has been appointed by Theresa May to lead a review into the current working practices and employment rights offered under UK law. The review comes after recent investigations into the working practices of large companies like Sports Direct. The consultation will focus on job security, pay and workers’ rights.

Simplifying tax on termination

The Government has responded to its consultation on simplifying the taxation of termination payments and produced draft legislation which will be consulted on further. In summary it confirms that, from April 2018:

The distinction between contractual and non-contractual payments in lieu of notice will be removed and all payments in lieu of notice will be taxable as earnings and subject to national insurance contributions.
The exemption from income tax and national insurance contributions will be retained up to £30,000.
Employer national insurance contributions will be payable on payments over £30,000.

Foreign service relief will be abolished and injury to feelings will be expressly excluded from the exemption that applies to injury payments (unless it relates to a psychiatric injury or medical condition).
Andrew Macmillan
Motor Industry Legal Services

Motor Industry Legal Services (MILS Solicitors) provides fully comprehensive legal advice and representation to UK motor retailers for one annual fee. It is the only law firm in the UK which specialises in motor law and motor trade law. MILS currently advises over 1,000 individual businesses within the sector as well as the Retail Motor Industry Federation (RMI) and its members.

Posted by Sue Robinson on 06/01/2017