Again, further mixed messages from the housing market, with the latest RICS survey showing that July was the strongest month for home sales since 2007 and the first time this year that the sales in any month have surpassed their 2014 total.  The RICS has highlighted that the shortage of property supply is driving prices higher and holding back both transactions and instructions.  This certainly ties in with my feeling about the Scottish market.

Lindsay Darroch
Partner – Head of Property

Don’t mix Appletinis and Facebook

Earlier this year, we saw the first social media case to be heard by the Employment Appeal Tribunal when Game Retail Limited v Laws was determined by the EAT in London.  On that occasion, the EAT declined to establish general guidelines to be applied in cases of dismissal for social media related misconduct.

More than 6 months on from the Game decision, the Scottish EAT has now heard its first case concerning a social media misconduct dismissal.

British Waterways Board t/a Scottish Canals v Smith was an appeal against a finding of unfair dismissal.  Mr Smith was dismissed when his employer, Scottish Canals, discovered various Facebook posts which he had made.  Among the offending posts were offensive views about his colleagues and comments that he had been drinking whilst on standby some two years prior.  The comments included: “w@nker supervisor”…“why are gaffers such pr1cks, is there some kind of book teaching them to be total w@nkers”… “on standby tonight so only going to get half pissed.”  Mr Smith did not specifically identify the employer in the posts other than a reference to the initials “bw”.  He admitted making the comments but explained them as banter.  He also made reference to his Facebook having been hacked whereby the settings were changed from private to public.

The employment tribunal found that the respondents had carried out a reasonable investigation and had a reasonable belief as to the claimant’s guilt of misconduct.  However, they found the decision to dismiss was outside the band of reasonable responses because the employer had failed to consider the claimant’s mitigation.

The EAT overturned this decision and substituted a finding of fair dismissal – the tribunal had substituted their own view for that of the employer (which they are not supposed to do).  Again, the EAT declined to issue any social media specific guidance.  Instead, they agreed with the approach in Game whereby the tribunal must apply the ordinary principles of law in all unfair dismissal cases.  They saw no reason for special rules in social media cases.

In the absence of social media specific guidelines, employers should ensure that they fully investigate any issues of social media misconduct in accordance with their policies and procedures.  A robust social media policy should assist in this task and will also act as a useful tool to ensure that employees are well aware of the standards expected regarding the use of social media.  The case also serves as a timely reminder for employees that arguments about privacy settings and banter will not save them from getting their books.

Jack Boyle
Senior Solicitor – Employment Law

Tips for Tipping: An Employment Lawyer’s Guide to Eating Out

I always tip.  Even if the service is rubbish and the food is horrible, I still feel strangely compelled to leave a tip.  In fact, even when I have specifically said “no” to mushrooms and then find mushrooms on my plate, I will still always calculate my 15%.  I suspect that this is a throwback to the many years I spent waiting tables as a student.

However the world of tipping also has some interesting employment law aspects.

Can an employer use tips to satisfy their national minimum wage obligations?

No.  The National Minimum Wage Regulations create obligations on employers to pay workers a basic hourly rate.  Prior to 2015, an employer could include tips and service charges which were “paid by the employer” through its payroll to count towards a worker’s wage.  However since the regulations were amended, such tips cannot count towards the employer’s national minimum wage obligations.

Should tips be taxed and, if so, who is liable for this?

Yes.  Tips should fall subject to tax and national insurance contributions.  Ordinarily the employer would fall liable for these.  Generally most restaurants are following the HMRC guidelines – tips are collected by the employer and then put through payroll.  However, if customers give cash tips directly to waiting staff who keep them without any involvement from the employer, the responsibility for tax on these payments will fall to these employees (although in such specific circumstances employees may be able to avoid having to pay national insurance contributions on these sums).

Can I choose to ignore a compulsory service charge?

No.  If the charge is clearly labelled as compulsory, it will be very difficult to avoid.  In such situations, the compulsory service charge is not a tip and therefore if the employer chooses to share this charge with its employees, this payment should be treated by the employer in the same way as wages (i.e. subject to tax and national insurance deductions).

Can I ensure that any tip which I leave is given to the person who served me?

No.  The only way to ensure that the person who served you gets the tip is to give it to them directly.  And even if you do this, that person may still be subject to internal procedures regarding the pooling of tips and may still have to declare your tip to the employer.

What is the impact of failing to deal with these issues correctly?

Workers who do not comply with these issues risk not only being prosecuted for tax avoidance but also potentially finding that they cannot rely on the terms of their contract in an employment tribunal.  If a contract is illegal or tainted with illegality, it cannot be relied upon.  Tribunals are frequently refusing to hear claims where parties have not complied with employment legislation.

So whilst all restauranteurs seek to have limitless reservations, they should ensure that they have no reservations about their treatment and taxation of tips.  Take professional advice about these issues now.  Otherwise you may find yourself in a pickle in future, having to mustard the strength to ketchup with your competitors and existing legislation.

Simon Allison
Partner – Head of Employment Law