Employment Law Update

Issue No. 27

1. What's new with effect from 1 October 2007

Statutory Holiday Leave:

The annual entitlement will increase from 20 to 24 days. ACAS has issued a new advice leaflet on holidays and holiday pay. Complimentary copies are available upon request.

National minimum wage increases: 

The new rates are £5.52 for workers aged over 22, £4.60 for workers aged between 18-21 (and those in accredited training aged over 22) and £3.40 for workers aged between 16-17.

CEHR:

The Commission for Equality and Human Rights is now in existence but it has rebranded itself as the Equality and Human Rights Commission.

Flexible working:

The Flexible Working Regulations 2007 extend the definition of adopter to those who are adopting a child (whether domestically or intercountry) where the child has not been placed with the adopter by a UK adoption agency. It also adds definitions of adoption agency, private foster carers and residence order.

The BERR has published a new guide on flexible working eligibility and applications. Complimentary copies are available upon request.

Racial and Religious Hatred Act 2006:

This Act creates new criminal offences of stirring up hatred against persons on religious grounds, augmenting the existing offences under the Public Order Act 1986. Religious discrimination in the workplace could also amount to an offence for which both individuals and corporate bodies may be found liable.

2. Smoking in the workplace

Smith v. Michelin Tyre PLC ETS/100726/07

The Tribunal in this case upheld a dismissal for gross misconduct where the employee's misconduct was a one-off breach of a no-smoking policy. He worked at a factory using highly flammable materials. The Tribunal held that the personal circumstances of the employee, who had been employed for twelve years, had to be weighed against the importance of the employer's no-smoking policy in preserving its business, property and the lives of other staff. In this case, the existence of a legislative ban on smoking in the workplace (in Scotland ) did not significantly add to the employee's breach, as the employer had a long-standing policy of banning smoking in the workplace. He had therefore been fairly dismissed by Michelin. Although the sanction is harsh, the Tribunal felt that the dismissal was not outside the band of reasonable responses.

With the introduction of the smoking ban in the UK , employers should ensure that its policies are clearly communicated to staff and enforced so that there is no inconsistency between employees.

3. Employment status of directors and shareholders

Nesbitt and Nesbitt v. Secretary of State for Trade and Industry UKEAT/0091/07/DA

In this case, the Employment Appeal Tribunal reviewed the recent authorities on the employment status of directors and shareholders. It held that the fact that a Claimant is a majority shareholder and director of the employer should not lead a Tribunal to conclude that the Claimant is not an employee unless the Tribunal finds that the company arrangements were a mere sham.

APAC Computer Training Limited, provided IT training to businesses. The share capital was held by three board members, Mr. and Mrs. Nesbitt and Mrs. Nesbitt's mother who had one share. Mr. and Mrs. Nesbitt had written contracts of employment and were paid salaries but did not receive director's fees or dividends.  In 2006 the company became insolvent and on 3 July 2006 the liquidator made the remaining employees and the Nesbitts redundant. The Nesbitts applied to the Insolvency Service for redundancy payments and other arrears which are payable only to employees. The Insolvency Service rejected the claims on the grounds that they were not employees. The Nesbitt's appeal was successful and the case has been remitted to determine the amount due to them.

4. Disability discrimination

Department of Constitutional Affairs v Jones (2007) EWCA Civ 894

The Court of Appeal upheld a Tribunal's decision that it was just and equitable to permit a disability discrimination claim, submitted after the expiry of the three-month time limit, to proceed.

In this case, Mr. Jones, who was a chief executive of the North Wales Magistrates' Court Committee had been genuinely reluctant to acknowledge that he was disabled by reason of a mental impairment. He had been diagnosed with anxiety and depression whilst suspended in September 2004.  On 28 July 2004 he had been suspended following allegations of financial irregularity. He was finally dismissed on 1 March 2005. He submitted several tribunal claims including one for disability discrimination out of time.

Although this case turned on its facts, any employee who is uncertain as to whether or not they are disabled under the Act should issue proceedings within the three-month time limit to protect their position.

5. EU

Germany:

A smoking ban came into force across Germany on 1 September 2007. It applies to bars, public transport, taxis and federal buildings. The penalty for infringing the new law is a fine ranging from 5 euros to 1,000 euros per offence.

United Kingdom:

Views still differ about which date should be chosen for the proposed "British National Day". Gordon Brown favours 24 July but the Institute for Public Policy Research has argued in favour of the Monday after Remembrance Day in November. The Trade Union Congress is pressing for a bank holiday in October to celebrate and promote British "community activity and involvement".

Belgium 

The Belgian government has modified its procedures for monitoring business visitors from other EU member states. It has now been agreed to exempt from declarations all visits to attend "scientific congresses". Employers with staff attending business meetings in Belgium will no longer need to complete Limosa forms, provided the visits by each staff member do not exceed 60 days per year or last for longer than 20 days per meeting. However, once these changes have been introduced this autumn, there will still be a requirement for employers and end users to have in place internal systems to track staff movements into and out of Belgium .

France 

The French President has proposed a number of reforms as part of his nouveau contrat social. The principal changes are:

• tax penalties for retirement before the age of 65 and incentives for workers who wish to continue to work beyond the normal retirement age;
• the removal of a facility enjoyed by unemployed workers aged over 57 to draw unemployment benefits without actively seeking further employment;
• further easing of working time restrictions and greater scope to exceed the 35 hour standard working week;
• relaxation of rules relating to employment contracts and the simplification of dismissal procedures.

6. Redundancy

Optical Express Limited v Williams UKEAT/0036/07/CEA

Employees under a notice of redundancy may be offered a statutory four-week trial period or alternative employment. During this period, they may decide whether the new employment is suitable. If it is, their redundancy does not take effect but otherwise they will be treated as having been dismissed by reason of redundancy from the date in which the original contract terminated. Parties may agree on a longer trial period in strictly limited circumstances.

In this case, Ms Williams had been employed by Boots as manager of a dental clinic. Optical Express bought all Boots dental practices and decided to close the dental clinic at which Ms Williams was working. She was offered the position of becoming manager of an optical store, losing her dental responsibilities. She was not happy with it but she accepted the offer of a four-week trial period. She resigned two weeks after the trial period ended and brought claims for constructive dismissal and a redundancy payment. In this case, as she did not give notice within the statutory trial period, she was no longer eligible for the statutory redundancy payment.

7. New Evidence on Appeal

Hygia Professional Training v Cutter UKEAT/0063/07/ZT

The Employment Appeal Tribunal will take a strict approach when allowing an appeal on grounds of fresh evidence. In this case, the employer dismissed an employee for trying to poach customers. At the first tribunal hearing, the employer had no real evidence of poaching which it explained on the grounds that it did not know it was expected to obtain such evidence. Following the decision, the employer obtained four witness statements which, if accepted, would be fairly overwhelming evidence that the ex-employee had been approaching clients to solicit work (whilst still employed).

The EAT held that this did not enable the employer to have a second bite at the cherry. Whilst clearly credible and relevant, there was no proper explanation for not having obtained the evidence first time round. Neither ignorance, nor possibly incompetent advice from the employer's advisors, came close to being sufficient. Mr. Cutter had therefore been found to have been unfairly dismissed but his basic claim was reduced by 25% and after the necessary mark-up on the compensatory award by virtue of failures of procedure, the compensatory award was also reduced by 25%.

8. Parental Leave

Kiiski v Tampereen kaupunki C-116/06

This is a case from the European Court of Justice. The Court held that an employee who had been granted about 10 months' parental leave (under Finnish law), and then discovered that she was pregnant and due to give birth part way through her parental leave, should have been allowed to end her parental leave early and return to work in order to benefit from paid maternity leave. The relevant collective agreement, which provided that a new pregnancy was not a good reason to change the dates of parental leave once they had been agreed, was contrary to the Equal Treatment Directive and the Pregnant Workers Directive.

Although the exact circumstances of this case would not arise under UK law, which only allows parental leave of up to 13 weeks per child, it is possible to envisage a situation in which an employee has arranged parental leave several months in advance, and subsequently discovers she is pregnant and likely to be on maternity leave during part of the period in question. Employers should be aware that they may be required to change (or possibly cancel) the parental leave if the employee so requests.

9. Data Protection

The Information Commissioner's office has published a new guidance on "Determining what is personal data". The guidance provides many examples to illustrate circumstances when data relates to an identifiable, living individual. Complimentary copies of this guidance are available upon request.

10. Statutory dismissal procedures

Aptuit Limited v Kennedy UKEATS/0057/06/MT

Mrs. Kennedy had been notified that she was to be made redundant.  After a meeting when a number of matters were discussed, she received a letter saying that her redundancy would take effect in four months' time. The letter did not refer to her having a right of appeal although there was evidence that she was aware that she could appeal the decision. The Employment Tribunal concluded that her dismissal was automatically unfair because the claimant had not had notice of her right of appeal and that was part of the statutory dismissal procedure. She was awarded compensation with a 40% uplift.

The EAT held that the Tribunal were wrong. There was no requirement that the employee should be advised in writing of her right of appeal. It will always be best practice for an employer to confirm to an employee in writing that he or she has a right of appeal but it is then for the employee to inform the employer of his or her intention to appeal. The Appeal Tribunal also overturned an uplift of 40% which the Tribunal had assessed because of the general lack of consultation and because the Claimant had been treated in a shoddy manner. These, according to the Appeal Tribunal, were irrelevant factors, the uplift applying only to the failing to follow the statutory procedure.  However, there was nothing in the wording of the statute prohibiting Tribunals from having regard to the surrounding circumstances

11. Compensation: Polkey Deductions

CEX Limited v Lewis UKEAT/0013/07

In this case, the Tribunal held that Mr. Lewis had been automatically unfairly dismissed and ordinarily unfairly dismissed and that the employer had not established on the balance of probabilities that, had the relevant procedures been followed, the employee would still have been dismissed. The employer did not challenge these findings but challenged the Tribunal's decision that, had the relevant procedures been followed, there was a "100% chance" the employee would have remained in employment. The EAT allowed the appeal.  The employee cross-appealed for an uplift higher than 10% but he failed. 

The EAT declined to give general guidance for tribunals on the assessment of the percentage by which uplift to compensation may be made. In this case, however, the Tribunal was entitled to take into account the fact that the employer's failure to comply with the statutory dismissal and disciplinary procedures was the result of ignorance rather than deliberate disregard.

12. Equal Pay

Redcar and Cleveland Borough Council v Bainbridge & others (2007) EWCA Civ 910

The Court of Appeal has now held that the equal pay legislation does apply where the woman is doing higher rated work than a man. The Court has re-written s.1(5) of the Equal Pay Act 1970 to make that clear as follows:-

"A woman is to be regarded as employed on work rated as equivalent with that of any men if, but only if, her job and their job have been given an equal value or her job has been given a higher value, in terms of the demand made on a worker under various heading (for instance effort, skill, decision), on a study undertaken with a view to evaluating in those terms the jobs to be done by all or any of the employees in an undertaking or group of undertakings, or would have been given an equal value, or her job would have been given a higher value, but for the evaluation being made on a system setting different values for men and women on the same demand under any heading."