Be Aware - April 2017
Before reading this month’s legal update, please note that we have become aware of features within the Energy Act 2011 that will have implications for a number of members. Look out for further information on this important legislation next month.
Inspection Pit Safety
The RMI Legal team assist an RMI member in a recent HSE prosecution which has shed light on the duties of businesses with regards the assessment of the risks surrounding inspection pits.
A Family owned multi-site franchised dealer had an inspection pit at one of their sites that ran the length of one of their garages. The pit was used for commercial vehicles and was capable of being used for HGV inspections as well as the inspection of other vehicles where a lift was not practical. The pit was approximately 5 foot in depth.
It was regularly necessary to manoeuvre vehicles across the pit for inspection as well as access to the rear of the property. This was a common occurrence but despite adherence to the HSE guidance and a well-maintained risk assessment this had not been identified or assessed as part of the general assessments. On one occasion a vehicle was manoeuvred over the pit whilst another member of staff was in the pit cleaning. Whilst the vehicle was being driven over the pit the member of staff within it tried to exit the pit and became caught under the vehicle.
One of the issues was whether the business had complied with its obligations under the Health and Safety at Work Act 1974 by assessing the risks commonly identified by the HSE themselves, or whether the risk of the activity undertaken was so obvious that it should have been identified.
The court accepted that manoeuvring a vehicle over a pit was such that the risk of injury to other employees within the pit was a risk that should have been considered as part of a businesses regular H&S assessments even though this was not a risk identified by the HSE themselves within their guidance.
Whilst HSE Guidance is provided to assist businesses in managing the risks to employees these are not exhaustive lists. Any business with inspection pits, particularly where there is a requirement for vehicles to be manoeuvred over them either for access or during inspection/MOT need to assess the risks of injury to staff within the pits and put in place working practices to remove and reduce these risks as much as possible.
It is likely that there will always be a limited requirement to manoeuvre vehicles over inspection pits. However, this should be minimised at all costs. Where it remains necessary, the business should put in place clear working practices to minimise the risks presented and ensure that these are followed.
The following increases in compensation payments will apply to dismissals (or detriments, etc.) occurring on or after 6th April 2017:
- An increase to the limit on compensation for unfair dismissal from £78,962 to £80,541.
- The limit on a week’s pay for the purposes of calculating, among other things, statutory redundancy payments and the basic award for unfair dismissal, will increase from £479 to £489.
- Guarantee pay will increase from £26 to £27 per day.
- The minimum basic award in cases where a dismissal is unfair by virtue of health and safety, employee representative, trade union or occupational pension trustee reasons will increase from £5,853 to £5,970.
The draft National Minimum Wage (Amendment) Regulations 2017 were published on 1st February 2017 and have proposed to change the rates of the National Minimum Wage in accordance with recommendations from the Low Pay Commission. According to the draft regulations, the following hourly rates of National Minimum Wage will apply from 1st April 2017:
- The National Living Wage (workers aged 25 and over) is £7.50.
- The standard adult rate (workers aged between 21 and 24) is £7.05.
- The development rate (workers aged between 18 and 20) is £5.60.
- The young workers rate (workers aged under 18 but above the compulsory school age who are not apprentices) is £4.05.
- The rate for apprentices is £3.50.
Calculating the National Living Wage
“We pay our employees monthly, dividing their annual salary by 12. Having consulted various relevant employment websites our understanding is that by quoting a set number of annual contracted hours we are allowed to divide annual salary by 12 and pay that each month. Then regardless of whether the actual working hours in a particular month multiplied by hourly rate fall below minimum wage for that month, the fact that their annual contracted hours multiplied by NMW/NLW is at least equal to their annual salary means we comply with the law. Is this correct for calculating the NMW/NLW?
Furthermore our sales executives receive a low basic salary that can be anything from £5,000 to say, £12,000. Most sales executives will earn over £30,000 per annum with commission. If a salesman does not earn commission in a particular month, we would divide his annual salary by their annual hours to compute the hourly rate and make up to NLW as necessary by applying the NLW hourly rate to annual hours/12. Are there any flaws in the above?”
The short answer to the first part of the query is no. When calculating the minimum wage you calculate it over the pay reference period, which is the period the employee is paid over. If employees are paid monthly the pay reference period is monthly, if you paid weekly the pay reference period would be weekly (it cannot be greater than monthly).
Then whether a worker has received the national minimum wage, it depends on their average hourly rate. This is calculated by looking at the total remuneration earned over the relevant pay reference period divided by the total number of hours worked over the pay reference period.
The official calculation for national minimum wage/national living wage is:
- Gross pay before deductions for income tax and National Insurance Contributions
- Payments and deductions that do not count towards the national minimum wage.
You can factor in commission earned in that month even though it is not paid until the next month. For example, if you have a Sales Executive who earns commission in September but is not paid until October, when reviewing their September salary, you can take into account the commission they will be paid in October because it was earned in the September pay reference period.
Effectively therefore with any staff who are on bonus/commission etc. you will be calculating on the basis of one month but effectively looking at the month before to see what was earned in that period albeit not paid until the next period.
In order to ensure compliance with the NLW/NMW you should consider conducting a review each month (as the pay reference period) and if in any month, the employee fell below the national minimum, you would need to top up their salary so as not to be in breach of the legislation.
When is a Worker not a Worker?
Continuing the focus on employment status, the Court of Appeal has upheld a tribunal decision that a plumber who was held out as being self-employed was nevertheless a “worker” and able to claim for unpaid holiday and also an “employee” for the purpose of discrimination protection. The case is called Pimlico Plumbers and Charlie Mullins v Gary Smith.
This case is likely to become a leading case on employment status in future years and puts the spotlight on a business model under which operatives are intended to appear to clients of the business as working for the business but at the same time the business itself seeks to maintain that there is a legal relationship of independent contractor rather than employer and employee or worker.
Members will have seen this case widely reported in the press but an official Notice of Appeal has now been lodged detailing the reasons why Uber believe the Tribunal have erred in their decision to class their drivers as “workers”. It will be a case of “watch this space” in relation to how this case turns out. Uber also disputes how the claimants’ working time should be calculated for the purpose of the National Minimum Wage Regulations.
Customer Supplied Parts
“A customer has asked me to fit parts that he has supplied. I told him at the time that I was not responsible if they failed but there is now a problem and he is saying it is my fault.”
Whilst it can be common for customers to supply parts when things go wrong it can be difficult to untangle who is liable for what.
Where your client is a consumer you cannot avoid the statutory liability for either the service you provide or the parts supplied. Any parts must be of a satisfactory quality taking into consideration common issues such as your description and the price paid. Any diagnostic work, advice and fitting of parts must be carried out with a reasonable level of care and skill. A failure on any of these issues will result in you being liable for any losses reasonably sustained.
As you have not supplied the part then if the part has failed the starting point should be that there is no liability. If it has failed due to the fitting, then you are liable and establishing which can be difficult.
To make matters easy you need to ensure that the customer is clearly advised that you are not warranting the part before the work commences and that you clearly explain what will happen if the part fails. Ideally this should be clearly marked on any invoice.
Any failure should be investigated. You can require the customer to prove what has happened. However, you should consider whether you will be happy to accept anyone else’s opinion. Where appropriate consider whether an independent engineer should be used.
If you cannot agree who is liable consider referring the matter to the National Conciliation Service. This is a free and independent dispute resolution service provided to RMI members and their customers. They can be contacted on 01788 538317 and more details can be found on their website .
This advice is general in nature and it will need to be tailored to any one particular situation. As an RMI member you have access to the RMI legal advice line, as well as a number of industry experts for your assistance. Should you find yourself in the situation above, contact us at any stage for advice and assistance as appropriate.