When making certain future changes to their pension scheme, employers should keep in mind the requirement to consult with their employees before making the change. In this blog post, we run through the key aspects of member consultations to provide a reminder of what exactly employers need to do, and why they need to do it.

Who?

Employers who have 50 or more employees based in Great Britain are subject to consultation requirements set out in the relevant consultation regulations. This threshold is based on the number of employees the employer has, even if some of those employees are not pension scheme members.

Continue Reading Talking pension changes

Continuing our spotlight posts featuring contributions from our global Employment & Benefits group, here are some recent articles from our teams in France and Germany:

  • Protecting IP with employment agreements in France – Employment & Benefits partner Julien Haure and associate Marine Hamon provide guidance on how employers in France can establish ownership of the intellectual property rights in works created by employees during the course of employment.
  • Increasing demand for flexibility leads to considerable need – Employment & Benefits partner Hagen Köckeritz considers the increasing need in Germany for “external personnel” (e.g. temporary workers or freelancers) and how to manage the associated risks.
  • Hidden no longer – Employment & Benefits senior associate Pauline Moritz examines the often-overlooked area of calculation of leave pay for commission-based employees in Germany.

For further information on the topics covered in these articles, please contact Julien Haure and Marine Hamon (France) or Hagen Köckeritz and Pauline Moritz (Germany).

As you may be aware, since February 2017, all Employment Tribunal and Employment Appeal Tribunal judgments have been published on an online register on the gov.uk website. A recent case in the Court of Appeal has confirmed that, other than in cases of national security, the online register will always maintain a copy of any judgment.

In this case, the Claimant made an appeal to the Court of Appeal to argue that his judgment should not be published on the online register, and if the judgment was to be published at all, it should be heavily censored to delete reference to his disabilities, and matters connected to his disabilities, as well as anonymising the parties. The Court of Appeal refused to allow his appeal. It confirmed that neither the Employment Tribunal nor the Employment Appeal Tribunal had any power to prevent the publication of a judgment on the register. Similarly, it was correct to refuse to redact the judgments that had been previously been given at the Employment Tribunal and the Employment Appeal Tribunal stage to delete details of the Claimant’s disabilities and consequential matters.

This case is a clear indication from the courts of the importance of the principle of open justice. Whilst, traditionally, employers often take the view that it is a disadvantage to the employer for it to be identified as being on the receiving end of a tribunal case, and for details of the case to appear in the judgment given online, the same often holds true for claimants. Parties who are in negotiations about resolving employment disputes, before the commencement of formal tribunal proceedings, may both wish to bear this in mind. From the point at which proceedings are launched, the case will appear in the public register at a later date. Although it is possible, in limited circumstances, to ensure that parties are anonymised, this is very much the exception to the rule of the principle of open justice

With the introduction of automatic enrolment, increasing longevity, and employees focusing on the full benefit package offered by an employer, rather than just salary, an employer’s pension offering is under the spotlight. However, despite the increased relevance, the difference between types of pension scheme is not always clear. So, what are the key differences between a workplace trust-based pension scheme (“Trust Scheme“) and a workplace contract-based pension scheme (“Contract Scheme“)? Continue Reading To trust or not to trust, that is the question

A traffic policeman on motorway patrol passed a car that appeared to be driving at 11mph. The policeman pulled the car over, and asked the driver why he was going so slowly.

“I saw a sign saying that the speed limit was 11mph” said the driver. “A big blue sign, with white numbering.”

“That’s not the speed limit, that’s the road name – the M11” said the policeman. The policeman then looked at the passenger, who was sitting rigid in her seat, a rictus grin on her face. “What’s the matter with her?” asked the policeman. “Well” said the driver, “we’ve just joined the motorway from the A120.”

Interpreting laws and regulations can be difficult – particularly in highly technical areas such as pensions, where legislation can be opaque at the best of times. The Pensions Act 2004 tried to ameliorate this problem by giving the Pensions Regulator the power to flesh out legislation by issuing Codes of Practice. Codes of Practice have a special status: they have to be laid before Parliament before they come into force; they are admissible in legal proceedings; and if they appear to be relevant to the question the court has to decide, the court has to take them into account. (Albeit, on occasion, judges have “taken into account” Codes of Practice by brusquely dismissing them.)

Continue Reading Sign of the times …

As mentioned in our earlier posts, we will be featuring contributions from our global Employment & Benefits team on this blog, highlighting particular topics and issues of interest to UK employers with operations overseas.

Here is some recent commentary and guidance from our Employment & Benefits team in Hong Kong:

  • Our Employment & Benefits team in Hong Kong produce the “Asia Employment Law: Quarterly Review”, a publication covering 15 jurisdictions in Asia. The twenty-fourth edition flags the anticipated employment law developments during the second quarter of 2019, highlighting some of the major changes to look out for in 2019.
  • Following case law in 2018, in June 2019, the Hong Kong Court of Final Appeal took a further step towards internationally accepted norms by making it unlawful for the Hong Kong government to provide lower benefits to a spouse in a same-sex marriage than to a spouse in a heterosexual marriage. This recent update from Employment & Benefits partners Duncan Abate and Hong Tran provides more information about this key development.
  • On 4 April 2019, the Hong Kong government published the long-awaited Occupational Retirement Schemes (Amendment) Bill 2019. This update from Duncan Abate and Hong Tran provides a flavour of the more important consequences of the legislation and some of the concerns arising from the changes.
  • In addition to the above, this follow-up update from Duncan Abate and Hong Tran dives deeper into the Bill to identify three of the ugliest or weirdest “devils” in the detail of the Bill.

If you would like further guidance on employment and benefits issues in Hong Kong, and/or would like to register for our Asia legal updates, please contact Duncan Abate or Hong Tran.

The possibility of a Pensions Bill in the next parliamentary session should provide clarity on the funding framework for defined benefit (DB) schemes.

The Government’s white paper in March 2018 proposed that the Pensions Regulator should issue a revised code of practice focusing on how prudence is demonstrated when assessing scheme liabilities, appropriate factors for recovery plans, and ensuring that a long-term view is considered when setting the funding objective. Some or all of the funding standards contained in this revised code would be given statutory force.

Continue Reading DB scheme funding: all about the long-term

Our latest blog post reviews two important developments in the calculation of holiday pay. First, the Government announced late last year that it will extend the reference period for calculating holiday pay. Second, the recent decision in Flowers v East of England Ambulance Trust clarifies the uncertainty surrounding whether voluntary overtime should be included in the calculation of holiday pay.

New reference period

From 6 April 2020, holiday pay will be calculated on the basis of average weekly pay over 52 weeks, replacing the current reference period of 12 weeks. The amendment will give effect to one of the key recommendations of the Taylor review of modern working practices, published in July 2017, which was to resolve the concern that a 12-week reference period did not take into account the seasonal nature of casual and zero-hours work arrangements. In December 2018, the Government published the Good Work Plan, where it committed to enacting the legislation that will now come into effect next April, extending the reference period.

Overtime

The calculation of statutory holiday pay is governed by the UK Working Time Regulations (the “WTR”), which provides that, during statutory annual leave, workers are entitled to be paid at a rate of a week’s pay for each week of leave. A week’s pay has been interpreted as being ‘normal remuneration’. Various cases have considered the extent to which overtime should be included in this calculation. It was established fairly early on that compulsory non-guaranteed overtime should be included in the calculation, however, uncertainty remained over voluntary overtime.

The position has now been resolved by the Court of Appeal in Flowers v East of England Ambulance Trust, which decided that voluntary overtime payments should be included as long as they are sufficiently regular and paid over a sufficient period. The Court rejected comments made by the ECJ, in an earlier case, where it was suggested that overtime pay could only be included to the extent that it was provided for in the worker’s contract. Although Flowers was a case under the Working Time Directive (the “WTD”) rather than the WTR, UK courts and tribunals will interpret the WTR to conform with the WTD, and so the case is likely to apply equally to private employers. The question then becomes: when will overtime be “sufficiently regular”, and that will remain something that will turn on the facts of each situation.

Recent determinations of the Pensions Ombudsman¹ have considered the extent to which employers should provide information on pension rights to employees who have notified them of a terminal illness.

The law

There is no general duty on employers to advise employees about their pension rights, or to safeguard employees’ economic well-being. Indeed, the law prohibits anyone other than a person authorised by the Financial Conduct Authority from advising on pension rights.

However, a distinction should be drawn between “advising” and “providing information”. In some situations the law imposes specific duties on employers to provide information about pension rights to employees. When the law is silent, however, getting things right can be tricky.

Continue Reading Providing information about pensions to terminally ill employees – how far should employers go?

Mayer Brown’s UK Pensions Group has launched a monthly video series providing a snapshot of recent developments and issues of current importance in the UK pensions industry. In the first episode, available on our YouTube channel, partner Richard Goldstein looks at the issue of DB superfunds and, in particular, the UK government’s recent consultation on an authorisation and supervision framework for DB superfunds. This series will also be available as podcasts, available for streaming and download from iTunes, Google and Yahoo!. Viewers/listeners can also subscribe to our YouTube, iTunes, Google and Yahoo! channels.