Workers’ Right to Inspect Pay Records.

Workers will be familiar with their right to be paid the National Minimum Wage (or the National Living Wage where they are 21 or over) but did you know that they have the right to inspect pay records held by their employer if they suspect that they are not being paid the national minimum wage?

Under S.10 of the National Minimum Wage Act 1998, workers (and ex-workers) have the right to require their employer to produce “relevant records” where they have reasonable grounds to believe that they are being paid, or have been paid, less than the national minimum wage.  Not only do they have the right to view the records, they also have the right to copy any part of those records provided to them.

The right can be exercised where the worker gives their employer what is known as a “production notice” which will request that their employer produces any relevant records relating to the specific pay period as outlined by the worker.  As well as this, the worker can be accompanied by someone who can inspect and examine the provided records alongside them. An employer, upon receiving a production notice, has 14 days in which to produce the records to the employee for viewing, and the records must be produced at a suitable place for the worker to view (such as their workplace or another agreed location).

Consequences of non-compliance?

Section 11 of the Act stipulates that compensation of 80 times the hourly rate in force at the time will be awarded.  At current rates, this could give a total award of £915.20.  There is no defence available to employers if they fail to provide the records within the 14-day time period provided there is proof of delivery of the request (as the employer could deny receipt).

This is an extraordinarily powerful right for workers and ex-workers, and emphasises to employers the importance of keeping up-to-date and detailed records of what their workers are paid, so they do not fall foul of this obligation.

New Duty on Employers to Prevent Sexual Harassment

Currently, employers are vicariously liable for all acts of sexual harassment committed by their staff in the course of employment.  However, they have a defence to an action if they meet the very high threshold of showing that they took “all reasonable steps” to prevent harassment.

On 26 October 2024, new provisions introduce an additional duty on employers to take reasonable steps to proactively prevent sexual harassment. This duty goes beyond the existing obligation, and the actions that employers should consider taking, to comply with this duty include:

  • Conducting a risk assessment to identify areas in which harassment is most likely to occur (e.g. where there is a power imbalance or where alcohol-related social activities take place);
  • Having a separate sexual harassment policy with clear examples of what constitutes sexual harassment relevant to the employer’s working environment;
  • Addressing the harassment of staff by third parties such as clients, customers and suppliers; and
  • Providing training to staff covering how to raise concerns, and to managers on how to handle complaints.

Where an employer cannot demonstrate that they complied with this duty, any successful claim for sexual harassment brought before an employment tribunal could see any compensation awarded given up to a 25% uplift (similar to the uplift applicable where there is a failure to follow the Acas Code of Practice on Disciplinary and Grievance Procedures).

Fire and Rehire: Tesco prohibited from using tactic

In a judgment last week, the Supreme Court reinstated an injunction (overturned by the Court of Appeal in July 2022) which prevented Tesco from using fire and rehire tactics to remove the contractual “permanent” right to Retained Pay.

Tesco carried out a mass reorganisation of its warehouses in 2007, and, as an alternative to potential redundancy for staff, Tesco negotiated with USDAW (the Union of Shop, Distributive and Allied Workers) that any staff who stayed on and agreed to be relocated would be given a “Retained Pay” payment, paid to them each month, on a permanent basis. In 2021, Tesco attempted to remove this term of employment from those staff by using “firing and re-hiring” tactics, with new terms and conditions on offer having the right to Retained Pay removed.

USDAW were successful in obtaining an injunction from the High Court to prevent the removal of this term (with the High Court ruling it was an implied term of the contract that Tesco could not terminate the contracts for the purposes of removing Retained Pay). Tesco appealed the injunction and it was overturned in July 2022 by the Court of Appeal, which held that no such implied term existed, Tesco were entitled to give notice to terminate in the ordinary way, and the entitlement to Retained Pay would only last as long as the contract did.

UDSAW then appealed this decision to the Supreme Court, which re-instated the injunction and overturned the Court of Appeal’s decision. They held that Tesco’s right to terminate the contract by giving the correct notice was qualified by a term implied by fact that Tesco’s right to terminate the contract could not be exercised for the purpose of removing the Retained Payment term.

The ongoing scrutiny of the use of fire and rehire tactics is not going to cease anytime soon:

  • In July, a new statutory Code of Practice on Dismissal and Re-engagement was introduced to set out the principles employers are expected to follow when dismissing and re-engaging employees.
  • Labour has pledged to reform the practice of fire and rehire further, through the introduction of more robust rules, which we anticipate will be reflected in the forthcoming Employment Rights Bill.

The proposed changes may be a good opportunity for businesses to consider familiarising themselves with the code and to seek advice when a business need to fire and rehire arises to ensure that genuine consultation with employees is carried out.

Supreme Court finds that Football Referees could be classed as Employees

In the case of Commissioners for His Majesty’s Revenue and Customs v Professional Game Match Officials Ltd, part-time football referees entered into a contract with their administrative body (PGMO Ltd) each time they were engaged to officiate at a particular match.  Both parties had a right to cancel the engagement without penalty. An appointment for a weekend game was usually offered on the preceding Monday and a referee could refuse an appointment (although PGMO would usually want to know the reason for refusal).

When a referee accepted a match appointment, a contract was formed where the referee agreed to officiate and PGMO Ltd agreed to pay the appropriate fee to the referee.

The question arose whether they were employees of PGMO Ltd for tax purposes, with HMRC arguing that they were.

The Supreme Court found that these contracts met the minimum requirements necessary to establish the existence of a common law contract of employment, because:

  • the parties’ obligations during the period of engagement – from the time the match was accepted to the time when the match report was submitted – satisfied the requirement for mutuality of obligation.
  • The parties’ conduct generally during the period of engagement (including PGMO’s right to discipline the referees for any misconduct) showed sufficient control by PGMO Ltd.

The Supreme Court emphasised that while control and mutuality of obligation are prerequisites for an employment contract, they are not necessarily sufficient. It therefore sent the case back to the First-tier Tribunal for it to decide whether, in the light of all relevant circumstances, the individual contracts were contracts of employment.

This decision is a significant one, and it highlights the importance of getting advice on working relationships to ensure that the label being attached to them is accurate in the eyes of the law.  The law on employment status is complex and there are a number of factors to consider before determination. 

The new Government plans to simplify this and implement a new system where people are designated as either workers or self-employed, thereby eliminating the current legal distinction between ’employees’ and ‘workers.’

A simpler system would be welcomed, although it is not currently clear how rights such as sick pay and family leave rights would work and how people will be taxed (workers are currently taxed as self-employed).  There is a significant amount of work to be done on this, so it’s unlikely to change anytime soon.  We’ll keep you updated!

For more information, or to discuss how we can help you, please email our team at employment@mcmsolicitors.co.uk

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The information contained in this article is for general use is not intended to be comprehensive or a replacement for obtaining specific legal advice about your situation. Using the information without consulting us or another professional adviser is at your own risk. McKee Campbell Morrison Ltd accept no responsibility and gives no representations or warranties, express or implied, that any of the information and materials on this site is complete, accurate or free from errors or omissions.