National Minimum Wage and New Living Wage

The New Living Wage of £7.20 per hour for those aged 25 or over came into effect on 1 April 2016. The National Living Wage will increase to £9 per hour in 2020.

The Government has announced the National Minimum Wage rates increases from October 2016. This includes an increase of 3.7% to the adult rate for workers aged 21 to 24 to £6.95 per hour. The new national living wage for those aged 25 and over (see above) will not change. From next year, the annual changes will occur in April rather than October and the Low Pay Commission will make its recommendations in the autumn on the level of the various National Minimum Wage rates to apply from next April.

National Minimum Wage penalties also changed on 1 April 2016. A notice of underpayment must require an employer to pay a financial penalty to the Secretary of State. This financial penalty is calculated as a percentage of the amount by which a worker has been paid below the National Minimum Wage in each pay reference period specified in the relevant notice of underpayment. For underpayments from 1 April 2016, this percentage figure will increase from 100% to 200%.

New system of financial penalties

A new system of financial penalties for employers who fail to pay tribunal awards or Acas-supervised settlements comes into force on 6 April 2016. Under this system, a warning notice will be issued stating that unless the tribunal award is paid within 28 days a financial penalty will be imposed. If the sum due is not paid within that 28-day period then a penalty notice will be issued which will require the employer to pay a financial penalty equivalent to 50% of the original award to the Secretary of State subject to a minimum of £100 and a maximum of £5,000 and reduced by 50% if the employer pays both the original tribunal award and the penalty within 14 days.

Pulling a sickie

Mr Ajaj was a bus driver. He wrongly claimed to be sicker than he actually was, and surveillance evidence proved him to be exaggerating. The Employment Tribunal held that fairness of dismissal should be assessed based on traditional ‘capability’ considerations, i.e, when could the employee reasonably be expected to return to work based on his real (rather than exaggerated) symptoms.

The Employment Appeal Tribunal disagreed. It held that an employee who ‘pulls a sickie’ is dishonest and in fundamental breach of contract. The principal reason for dismissal of a malingering employee is conduct, not capability.

Can knowledge by Occupational Health of a disability be imputed to the employer?

In Gallop v Newport City Council, the Employment Appeal Tribunal found, following the Court of Appeal’s guidance in CLFIS (UK) Limited v Reynolds, that knowledge cannot be implied, even where the fact of disability is already known within the organisation. The Employment Appeal Tribunal stated that the focus of an employment tribunal’s enquiry ought properly to be on the thought-processes and motivation of the decision-maker. The test is: did the decision-maker know of the disability and were they influenced by it?

This decision conflicts with the EHRC Statutory Code of Practice on Employment at paras.5.17 to 5.19 which provide that employers will usually not be able to use the knowledge defence to a disability discrimination claim if an employer’s agent or employee (such as Occupational Health) has knowledge. The Guidance is clear that knowledge is not imputed if it is gained by a person providing independent services to a worker, such as counselling. We wait to see if this case goes to appeal to resolve the conflict.

For more information, please contact Jayne Harrison or Emma Tegerdine