June Blog - 03/06/2019

Shared parental pay and maternity pay need not be the same

If you pay more than the statutory minimum to mothers on maternity leave, must you do the same for fathers on shared parental leave (SPL)?

The Court of Appeal, partially overturning the Employment Appeal Tribunal's decision, has decided that you can pay mothers on maternity leave more than fathers on SPL.

First, here's a summary of the types of leave available when a new person enters the family:

Mothers and adopters

  1. Compulsory maternity leave: all mothers must take 2 weeks off after the birth (4 for factory workers).
  2. Ordinary and additional maternity leave is the right for mothers to take 52 weeks' leave after giving birth and to return to work. It's available to all employees who give birth, regardless of their length of service.
  3. If the employee has sufficient continuous employment and earnings, she's entitled to statutory maternity pay (SMP).
  4. For the first 6 weeks, SMP is 90% of earnings.
  5. For the next 33 weeks, SMP is at a "prescribed rate" (unless 90% of earnings is lower): currently £148.68 (revised each April). However, many employers decide to pay more.
  6. Except for the compulsory 2 weeks, adopters have the same rights.

Fathers

  1. Fathers, husbands or partners may take 1 or 2 weeks' ordinary paternity leave within the first 56 days following the birth. Unlike maternity leave, it's only available if the employee has the required continuous service. It can't be taken after any period of shared parental leave.
  2. If they fulfil the earnings requirement, they're also entitled to statutory paternity pay, which is the same as SMP after the first 6 weeks.

Shared parental leave

  1. Mothers and adopters can also share their leave entitlement with their partners. The mother/adopter may end their leave early, and the rest can then be shared with the partner. So, the mother might take 10 weeks' maternity leave, leaving 42 weeks' leave to share. Both could then take 21 weeks' shared parental leave.
  2. Statutory shared parental pay is the same as the prescribed rate for maternity pay (£148.68). That happens even if the mother ends maternity leave in the first 6 weeks, during which time she'd probably have been paid more. Again, employers could decide to pay more.

The recent case concerned 2 fathers who were paid less when on shared parental leave than mothers on maternity leave would have been paid.

The Court of Appeal decided that the employers were acting lawfully, for these reasons:

  1. Direct discrimination would have involved treating male employees worse than female employees in the same situation. But they weren't in the same situation: the shared parental pay policy applied equally to all, and the maternity pay policy didn't apply to fathers at all. Also, whereas shared parental leave is about childcare, maternity leave is about far more: e.g. recuperating from giving birth, breastfeeding.
  2. Indirect discrimination was the wrong claim to bring: it should have been brought as an equal pay claim. The fathers would have argued that there was an implied equal pay clause in the contract, meaning that contractually they were entitled to the same pay as women on maternity leave. But that claim wouldn't have succeeded because the law allows exceptions for women who are pregnant, have recently given birth or are breastfeeding.
  3. In any event, the indirect discrimination claim wouldn't have succeeded either as (unlike direct discrimination), it's possible to justify indirect discrimination. Because of the different aims of the legislation, higher maternity pay could be justified.

What this means for you

It's OK if you pay more than the statutory minimum for maternity pay but not shared parental pay, which will come as a relief to those employers who don't think they can afford to equalise their policies. However, there are employers who are making this change and it's worth considering. The take up of shared parental leave is very low as it's often not financially viable – equalising your policies could be a big factor in attracting and keeping good staff, and help your business stand out as a forward-thinking employer.

How we can help

Our Employee handbook has policies on Maternity leave, Paternity leave, Adoption leave and Shared parental leave.

 

June Blog - 10/06/2019

Even one-off acts of discrimination can lead to serious financial penalties

An employee's dismissed and is successful with a discrimination claim at an employment tribunal. As a 'one-off' act, will injury to feelings compensation be limited to the 'lower Vento band', which is up to £8,800?

No. The guidelines are just guidelines and in some circumstances, even one-off acts are serious enough for the middle band, which is up to £26,300.

Compensation for discrimination is generally split into 2 parts:

 

  1. Financial loss – e.g. if the employee's salary was £30,000/year and the tribunal thinks they're likely to be out of work for 18 months, this part of compensation will be £45,000 plus pension losses.
  2. Injury to feelings – these correspond to the severity of the discrimination and is split into 3 categories known as 'Vento bands' (named after a case).
    1. The lower band is for less serious or one-off acts and is up to £8,800;
    2. The middle band is up to £26,300;
    3. The highest band is for the most serious cases, e.g. a campaign of harassment, and is up to £44,000.

There are sometimes extra elements to the award, such as aggravated damages or personal injury. There may also be an uplift or reduction to the award due to failure to comply with the Acas Code of Practice on Disciplinary and Grievance Procedures.

In a recent case, the employee alleged a series of discriminatory acts. However, the employment tribunal decided that they were too late in raising all but one – the dismissal.

The employer argued that as a one-off act, injury to feelings had to fall into the lower band. The tribunal disagreed. The Vento bands only provide guidance. The one act was dismissal, which is generally the most serious act possible in the employment context.

The dismissal came out of the blue and the employer gave a false reason for it: redundancy. The claimant didn't believe that and suggested it was because of her race. The decision maker, who was already supported by one manager, called in the claimant's line manager to support him, which was intimidatory. At this, the claimant began to cry, but the decision maker challenged her to say she was accusing them of discrimination and told her to pack up her things and leave immediately. The employer didn't respond to her grievance or her appeal against her dismissal.

This was too serious to fall into the lower Vento band. The tribunal also noted that the employee had invested time and money studying for this profession (photographer), had been good at her job and expected to remain in that employment for the foreseeable future. Losing the job therefore had a particularly serious impact on her.

Damages were:

  • £16,000 injury to feelings
  • £3,000 personal injury because the claimant had been medically depressed for about 3 months
  • £4,000 aggravated damages
  • a 25% uplift
  • £300 for costs due to the employer's initial false defence.

What this means for you

Don't discriminate – if you do, this case is a reminder that the financial penalties can be serious.

How we can help

For a general policy relating to discrimination, see the Equal opportunities section of our Employee handbook.

June Blog - 24/06/2019

Commission: it's due, even if your agent concealed the facts accidentally

You sell something. An agent assisted. It turns out that agent hadn't told you about a previous higher offer for that item. On that basis, could you lawfully withhold the agreed commission?

The commission is due unless the agent acted dishonestly.

That's what the Court of Appeal decided in May in relation to a claim relating to the sale of a painting by Paul Gauguin by a Swiss family trust to the Emir of Qatar for $210 million. While this might not seem all that relatable, it's quite an important case in the regular business world of sales via agents.

The first issue was whether an agreement had been reached about the payment of commission. Nothing was written down about it. The judge had to go through all the evidence including numerous telephone conversations and meetings in locations ranging from restaurants to Zurich airport, and none of the principal witnesses were wholly reliable. The judge found that $10 million commission had been agreed.

Another issue was whether that commission had been forfeited as a result of trying to conceal a previous offer of $230 million. The judge found that the art dealers hadn't tried to conceal the offer and hadn't been dishonest. Had they been dishonest or acted in bad faith, they would have forfeited their right to commission. Accidentally withholding information, on the other hand, wouldn't be dishonest and so the commission would still be due.

What this means for you

Get your contracts in writing.

If you work as an agent, if you conceal information from the seller dishonestly you probably won't be due your commission.

How we can help

We have an Agency agreement and a Simple introduction commission agreement. We also have several agreements relating to the sale itself, such as an Agreement for the supply of goods (non-retail).