You pay your workers close to the statutory minimum wage. However, you also offer an alternative to financial payment – perhaps you organise holidays and so offer them to your employees. They willingly accept. This means the money you're paying for their salary is below the minimum wage, but including the holidays they receive more than the minimum wage. Would this comply with minimum wage law?
As long as the holidays aren't connected with the workers' employment, it's probably fine.
This question was considered recently in relation to season tickets that a football club offered its staff. The club allowed staff to use some of their salary to purchase season tickets, and that took the received salary below the minimum wage.
Whether deductions count towards minimum wage depends on the type of deduction. If the deduction's made in connection with the employment or for the employer's benefit, it doesn't count towards minimum wage. For example, if attending football matches was part of the job, those deductions would take their salaries below minimum wage. In this case, HMRC argued that the football club had the 'benefit and use' of the season ticket payments, as they'd been made into the club's bank account.
The employment tribunal disagreed with HMRC. It decided that the payments didn't reduce the salaries because they were payments made by the workers to the club, the workers chose to make the payments (in order to spread the cost of the season tickets over a year) and they weren't required in connection with the work.
What this means for you
Even if requested by staff, deductions from wages affect their salary for minimum wage purposes if they're connected with the employment. However, this case reduces the scope for HMRC to make that argument.
In a similar case, HMRC has argued that payments by a business into its employees' savings schemes didn't count as salary as they were for the employer's benefit. The business is also appealing, and the football club's case should help them.
You're recruiting for a role and you're aware that women are under-represented in your workforce. So you grade the applicants and set a pass-mark beyond which you deem all the applicants to be excellent. You recruit a female applicant from that small pool of 'excellent' applicants, even though a male applicant had been even more amazing. Is that allowed?
No, it's unlawful. If you viewed the 2 applicants as absolutely equal, it would be lawful to choose the applicant from the under-represented group. But, as confirmed recently by an employment tribunal, if another applicant does even better it's unlawful discrimination to choose on the basis of sex.
Direct discrimination is when you treat one person less favourably than another because they have a 'protected characteristic'. These are listed in the Equality Act 2010: sex; gender reassignment; pregnancy or maternity; race or nationality; disability; religion or belief; sexual orientation; age.
In certain circumstances, however, 'positive action' is allowed so that employers can help under-represented groups without fearing discrimination claims by other disgruntled workers.
There are 2 types of positive action:
This employer had assessed candidates on various things and, after interview, had either passed or failed them. The candidates who passed were 'deemed equal'. Candidates with certain protected characteristics, which included sex, were all offered positions if they passed the assessment. The other vacancies were then filled by applying further criteria to the other applicants.
The tribunal said that it was a fallacy to consider everyone who passed at that stage of the recruitment process to be of equal merit. Accordingly, they couldn't be considered equally qualified for the job. The claimant was particularly suitable, so choosing someone else on the basis of their protected characteristics was unlawful direct discrimination.
What this means for you
Positive action is always voluntary. However, there are advantages to a diverse workforce so it could be worthwhile for you.
If you do use these tie-break provisions in recruitment or promotion, make sure you take into account formal qualifications as well as more subjective qualities, such as experience. Also, you must not have a general policy of treating people with a particular characteristic more favourably. (There is a limited exception for disabilities, as reasonable adjustments are often mandatory but are a type of positive action.)
How we can help
For a general policy relating to discrimination, see the Equal opportunities section of our Employee handbook.
An employee does something wrong. You start an investigation so that you know all of the circumstances and so that you can decide on the correct sanction. It may be gross misconduct so dismissal's possible. Should you suspend them?
Suspension must never be an automatic – 'knee-jerk' – reaction. But, as confirmed by the Court of Appeal recently, you may suspend if there is a good and acceptable reason to.
This case involved a primary school teacher who was accused of using excessive force when removing children from a classroom. The school started an investigation and suspended the teacher. In every employment contract there's an implied term of trust of confidence between the 2 parties. The teacher alleged that the suspension wasn't justified and breached this term. She therefore resigned in response.
It's accepted that unjustified suspension breaches the term of trust and confidence. The argument was about whether suspension was justified. The teacher argued that suspension is only justified if necessary; the school argued that that set the bar too high.
The County Court decided that the school was correct. The teacher appealed to the High Court, which disagreed with the County Court and decided in favour of the teacher. The Court of Appeal has now decided that the County Court and the school were correct: the High Court had set the bar too high in deciding that suspension had to be necessary: rather, the test is whether there's 'reasonable and proper' cause to suspend.
What this means for you
Suspension pending disciplinary investigation should never be automatic. You should always consider whether you have acceptable reasons to suspend and whether it's reasonable in the circumstances.
This case doesn't address the issue of what is a good reason, but the Acas (Advisory, Conciliation and Arbitration Service) code of conduct provides a few examples. Suspension may be sensible if the employee's presence could jeopardise the investigation or present a risk to other employees, property or customers.
This judgment simply lowers the bar slightly: suspension need not be absolutely necessary. Bear in mind that, whatever your policy says and however nice your suspension letter, suspension is always serious for the employee and casts a shadow over the future relationship.
How we can help
Our series of disciplinary letters includes an Employee suspension letter pending investigation of allegations, with further guidance on these issues. Our Employee handbook also addresses disciplinary procedures and suspension.
On 1 April, minimum hourly wage rates rose:
On 6 April, the following rates rose:
On 7 April:
In brief: The Government has launched a consultation on Off-payroll working rules from April 2020. In 2017 rules for off-payroll working in the public sector were reformed to give public bodies greater responsibilities in determining status and tax liabilities. This consultation is to consider how best to implement similar rules for the private sector. If you'd like to respond, the deadline is 28 May.