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Two of my favourite things: Mexican food and employment law...

Two of my favourite things: Mexican food and employment law...

Until yesterday, Wahaca was best-known (to me at least) for its delicious tacos - and even more delicious mojitos. But after a customer (a former Labour leader of Camden Council) posted a tweet saying she had witnessed an “eat and run”, for which the waiter would need to pay out of his wages, the story went viral and Wahaca was criticised for financially penalising staff in this way. Wahaca swiftly advised that they were no longer applying a policy of this kind, and that in fact the waiter had only been asked to cover £3 of the £40 bill (but had now been assured he wouldn’t have to pay anything).

There are three key ‘take-aways’ (sorry!) for employers from this incident.

First, yet again we have a stark reminder of the power of social media. One tweet, and within hours there’s a business critical reputational issue swirling around the media that has the potential to impact adversely an otherwise untainted brand. Wahaca were clearly well advised to respond promptly and with a decisive and reassuring message, but by that point the issue was out there and people were asking “Can they really do that?”. Which leads on nicely to the second lesson…

The question of whether an employer can “dock workers’ pay” can be deceptively complex. The remedy for workers who believe their employer has acted unfairly is to bring an unlawful deduction from wages claim in the Employment Tribunal. To make a decision on such a case, the Tribunal will need to apply specific provisions under the Employment Rights Act 1996, together with general contract law principles. Put simply, an employer can, if it has the right to do so under the contract (and/or it has advance written consent from the worker), make deductions from workers’ wages. That said, Tribunals will always look at the precise wording in question and, where the employer has discretion to make the deduction or not, consider whether the employer has acted reasonably in the specific circumstances. There are special rules for deductions from retail workers (to give them added protection), and employers should also be live to their ongoing duty to pay workers the national minimum wage.

It’s common for employers to seek to include provisions in contracts allowing them to recoup sums where they have been lost due to workers’ negligence, but could that be said to apply to “eat and run” situations? Wahaca’s statement indicates that they will no longer be making these types of deductions, but will investigate where they believe the waiter may have been complicit in the bill not having been paid – a policy which is fairly uncontroversial given this would clearly be a potential disciplinary matter.

The key point for employers is to make sure that they consider carefully the circumstances in which they may need to make deductions from wages, and then ensure that precise wording is in place for all workers (in advance of these issues occurring). That may involve a review of template contracts and those already in place, which would be a useful exercise anyway given the legislative changes coming in in 2020 as a result of the Good Work Plan.

The third and final point, which chimes with a number of discussions we’ve been having with our clients as part of our Future Workforce Forum, is what type of employer do you want to be known as?

Each and every policy you apply as an employer has an impact on your internal and external brand. Attracting and engaging employees is now, more than ever, a business critical issue. As we’ve seen with a number of different stories picked up by the media over the last few years (zero hours contracts; #MeToo; and Gender Pay Gap), workers – and the public – are challenging employers whose policies are indicative of a culture where their people are not valued and respected in their workplace. And this is particularly so with younger generations, who are demanding higher levels of respect, fairness and ethical action from their employers.

As one of the contributors to our Future Workforce Forum put it: “kindness is cool again” – wouldn’t it be nice if everyone went by that mantra! But the point stands that candidates for jobs, existing staff and, indeed, Tribunals will always be drawn towards employers who have acted reasonably and with a human touch. So just because you can, doesn’t always mean you should.

If you’d like to join the Future Chemistry conversation, or have any questions about your contracts, please do drop me an email or give me a call.

By Jennifer Skeoch,
Partner

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