Spring/Summer 2015 - A season full of change for fashion businesses

February 5, 2015

2015 promises changes in employment law which may have a big impact on the fashion sector.  With the New Year heralding the start of the election campaign, we are now getting a better view as to how important HR issues affecting the fashion industry may be impacted by the outcome of May’s general election.

Holiday Pay

Changes to the rules on holiday pay made a number of headlines in 2014 and we expect further developments in 2015.  In the last few weeks, the John Lewis Partnership announced that it would be paying around £22 million to staff in response to these changes.

Workers are entitled to be paid their “normal remuneration” during annual leave.  In a series of related cases, the Employment Appeal Tribunal decided that this includes payment for non-guaranteed overtime.  This means potentially millions of workers in the fashion industry may have been underpaid when taking holiday and could now seek to claim this pay back.

However, the story did not end there.  In another holiday pay case, the EU Court of Justice decided that contractual commission should also form part of the calculation of normal remuneration for holiday day purposes, but it did not set-out exactly how this calculation should be carried out.  The case is due to return to the Employment Tribunal in 2015 to work out the details. 

What does this mean for your business? 

A review of holiday pay arrangements should be firmly on every employer’s agenda.  Employers might also consider reviewing any pension scheme rules to check if the definition of pension and pay used for the scheme may be argued to include payments for holiday and overtime.

Zero Hours Contracts

Sports Direct received much negative Press coverage last year for its use of zero hours contracts.  Ed Miliband branded the company a “terrible place to work” and all major political parties have proposed rules around the use of zero hours contracts.

UKIP and Labour plan to give staff a zero-hours arrangements a right to a fixed hours contract once they have been employed for a year.  UKIP’s proposal is that the obligation would only apply to “large employers” (as yet undefined) and would be enforced through a “Code of Conduct” with “legislative action” if not observed.  Labour proposes that employees can refuse to work outside their contracted hours and receive compensation if shifts are cancelled at short notice.  Meanwhile, the Liberal Democrats suggest that employees employed on zero hours contracts should have the right to request a fixed hours contract building on the current right to request flexible working.  The Conservatives plan to end the use of exclusive zero hours contracts, a move welcomed by the CBI.

What does this mean for your business?

It is safe to say that something will happen a zero-hours contracts, whoever forms a government after the May election most likely a right to request fixed term contracts after a period.  If you have staff on zero hours contracts you might want to consider the impact of these suggested changes on your business and consider whether it is preferable for your business to move away from zero-hours arrangements.

National Minimum Wage

On 15 January 2015, the Government named and shamed 37 employers who failed to pay their workers the national minimum wage (NMW).  H&M was amongst those on the list.  The fashion retailer failed to pay £2,604.87 to 540 workers, which works out on average as an underpayment of £4.82 per worker.  Not a big sum and H&M described this as an error, but the unwelcome publicity of being “named and shamed” shows the importance of getting it right.

The NMW is likely to be a focus for the election.  Labour has set a target of increasing the NMW to £8 per hour by 2020.  The Liberal Democrats plan to increase the NMW for apprentices by over a pound and have instructed the Low Pay Commission to review increasing the NMW and also improving enforcement activity.

What does this mean for your business? 

Audit your payroll to make sure that you are in fact paying NMW for all workers and that no one is slipping through the net.

Better rights for working parents

The new shared parental leave regime came into force on 1 December 2014, allowing parents or carers of babies born or adopted on or after 5 April 2015 to take leave together in the first year of the child’s life.  Employers have been getting to grips with the new regime updating their policies.  However, it looks like there could be further changes to family friendly rights still to come as the political parties compete to promise better rights for working parents.

The Liberal Democrats plan to increase paternity leave from 2 weeks to 6 weeks consistent with its focus on promoting the rights of the father.  The Conservatives are considering including the right for self-employed mothers to receive maternity pay.  If enacted, this would apply to female freelancers an increasing number of females working in start-up businesses, including of course in the fashion sector.  The question is how would this be funded. 

The Labour Party plan to support parents in the workplace and to encourage more parents to work by providing 25 hours of free childcare for all 3 and 4 year olds, requiring breakfast clubs and after school clubs to be provided an increasing opportunities for flexible working across the public sector.

What does this mean for your business? 

If you have not done so already, think about adopting a Shared Parental Leave Policy as a means of informing staff about their rights and ensuring that managers are also informed as how to deal with requests.  This might be a time to consider training for staff on diversity and how to deal with requests to avoid causing liability for discrimination by mismanaging requests or displaying negativity towards parents, but potentially as its new, to want to use this new right.

We will be examining each of the technical and tricky areas in more detail in a series of articles over the forthcoming editions of Fashion Focus.


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