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Employment Law Update
May 2010Welcome to the latest issue of the Steptoe & Johnson Employment Law Update.
The Employment Law Updates are aimed at providing information on recent developments in UK employment law. It is our desire to provide you with not only an update of the law, but also a practical insight in managing workplace issues on a proactive basis.
To achieve our objectives and to continuously improve the Updates, it is important that we receive feedback from you. With a view to this, please e-mail any comments or suggestions which you may have relating to the Updates to employmentgroup@steptoe.com. We look forward to hearing from you.
To read the latest, click the link below:
- Maternity Leave
- Anti-Slavery laws
- Equality Act 2010
- Immigration Rules
- Climate Change
- Whistleblowing
- Holiday Pay
- Minimum Wage Increases
- Team Poaching
- Bonuses
- Collective Redundancy Consultation – Protective Award
- Age Discrimination
- Holiday Pay arising from Sick Leave Absence
- Religious Discrimination
- Sex Discrimination and Victimisation
- Summary termination under a PILON clause
- EU
- Bribery Act 2010
- Disability Discrimination
- Interns
- Unfair Dismissal Compensation
- Payment of Quantum meruit
- Constructive Dismissal
- TUPE
- Unfair Dismissal for viewing pornography
The European Parliament has voted to increase the minimum period of paid maternity leave to 20 weeks’ full pay. Lobbying by employers groups has led the Parliament to postpone its final vote on the new rights until 18 May 2010. This will allow an impact review to take place.
Under new rules from April 2010 provided the mother returns to work during or at the end of Ordinary Maternity Leave she can transfer the remainder of her SMP and maternity leave to her partner but this will only apply to babies due on or after 3 April 2011.
Correction: Statutory maternity, paternity and adoption pay effective as of 4 April 2010 is £124.88.
New legislation has been brought into effect on 6 April 2010 to protect vulnerable people such as migrant workers who may be unaware of their employment rights. An offence of holding another person in slavery or servitude or requiring another person to perform forced or compulsory labour now carries a maximum penalty of 14 years in prison under s. 71 of the Coroners and Justice Act 2009.
This offence will be construed in accordance with Article 4 of the European Convention on Human Rights which prohibits slavery and forced labour. The offence will apply to anyone who, for example, withholds a worker’s passport or forces workers to live in poor accommodation, not just their employers.
The Equality Bill became the Equality Act 2010 on 8 April 2010. The main provisions will come into force in October this year and the balance in March 2011. The Equality and Human Rights Commission are drafting statutory codes of practice and non statutory Guidance which are to be published in September. A complimentary copy of explanatory notes to accompany the Equality Act is available on request.
The Act consolidates, harmonises and strengthens all previous anti discrimination legislation and the main provisions will be brought into force irrespective of which Government is returned this month. Employers will need to consider how significant the Act will be. No immediate action is required but employers should review their policies by October 2010 to reflect the new transparency provisions relating to pay secrecy clauses, pre-employment health questionnaires and positive discrimination. Further complimentary Guidance will be available in due course.
On 6 April 2010 the Government made significant changes to Tier 1 and Tier 2 of the Points Based System. The key changes relate to Tier 1 applicants with only Bachelor degrees. High achievers with £150,000 or more of earnings will now be able to qualify for a Tier 1 Visa without any qualifications, providing increased flexibility. Multi-national companies can now transfer staff within certain occupations to the UK but there is a tightening of the qualifying criteria for inter-company transferees under the Established Staff Category, who now have to have 12 months’ company experience before transferring to the UK.
Applicants under Tier 1 will be granted leave for 2 years rather than 3 years’ leave but after 2 years Tier 1 general migrants will be able to apply to extend their leave for a further 3 years.
Nicholson v Grainger Plc
Mr Nicholson’s case against his employers that he had been discriminated against under the religion and belief regulations has been settled out of court. Mr Nicholson successfully claimed that a belief in climate change was capable of being a philosophical belief. He challenged his redundancy and has apparently settled for £100,000 compensation.
BP plc v Elstone and another UKEAT/0141/09
In this case the EAT held that a worker could pursue a whistleblowing claim against his current employer based on a protected disclosure he made while working for a previous employer.
Mr Elstone was dismissed for gross misconduct in June 2008 by his then employer, P Ltd. when they discovered Mr Elstone had told two senior BP employees who were clients of his employer about his safety concerns. P Ltd. took the view that this was a disclosure of confidential information and breach of his contract.
Mr Elstone then started working as a consultant for BP but he was let go when P Ltd. informed BP that he had been dismissed for disclosing confidential information. Mr Elstone brought a claim against BP arguing that the company had subjected him to a detriment on the grounds that he had made a protected disclosure. BP argued that protection was lost on the change of employer.
The purpose of the legislation is to provide protection in employment for those who had blown the whistle in the public interest. The Court held that an employee did not have to be working for the employer against whom the whistleblowing claim was eventually made, at the time of the disclosure. Mr Elstone’s claim has been allowed to proceed against BP.
Goode v Marks and Spencer Plc UKEAT/0442/09
In July 2008 M&S submitted proposals to its staff representative body of the new method for calculating enhanced redundancy payments from 1 September. When Mr Goode received a copy of these proposals from his line manager, he told his line manager that he thought they were “disgusting”. His line manager told him to raise his concerns with the staff representative body.
Two weeks later Mr Goode sent an email to The Times attaching a copy of the July 2008 proposal. Mr Goode was identified as the source of the email and after disciplinary proceedings was summarily dismissed in September. He brought a claim for automatic unfair dismissal under s. 103 of the Employment Rights Act 1996. The EAT held that his opinion that the proposals were “disgusting” did not amount to a qualifying disclosure. As he had not disclosed to the press the same information that he had disclosed to his employer a protected disclosure had not been made for the purpose of an automatic unfair dismissal claim.
Key point: The protection offered to employees for whistleblowing is narrow but as these cases show, where employers contest whistleblowing claims, the outcome can be unpredictable.
British Airways Plc v Williams and others 2010 UKSC16
This case concerns whether British Airways had breached the Civil Aviation Regulations by paying airline pilots basic pay only during periods of annual leave. Ms Williams acted as a lead claimant for some 2,750 others employed by BA whose collective agreements did not specify how holiday pay was to be calculated. Ms Williams appealed the Court of Appeal’s decision arguing that the Aviation Directive required payment of normal remuneration during annual leave in order to ensure that the worker on leave was in a position which was comparable to the one whilst working.
Without upholding the appeal the Supreme Court referred a number of questions to the ECJ. One of the questions for the ECJ is whether pay has to correspond precisely with or be broadly comparable to the worker’s normal pay.
Key point: The Court of Appeal’s decision remains binding but once the ECJ has answered their questions, these answers may well affect many workers outside the aviation industry.
The Government has announced increase in the National Minimum Wage to take effect from 1 October 2010. The new hourly rates will be as follows:
- Standard adult rate for workers aged over 21 - £5.93.
- Workers aged between 18 and 20 - £4.92.
- Young workers rate for those aged under 18 but not apprentices - £3.64.
- Apprentices aged under 19 or who are in the first year of their apprenticeship - £2.50.
Tullett Prebon Plc and others v BGC Brokers LP 2010 AER 186
Tullett and BGC were rival inter-dealer broking companies. Mr Verrier, Tullett’s COO left by agreement to join BGC on 2 January 2009. He had given notice in April 2008 that he would be leaving his employment when his contract expired on 31 March 2009. After Mr Verrier left Tullett tried to stem the potential loss of further brokers to BGC. The 45 day case concerned the employees who left and who stayed and claims against BGC for inducing breach of contract and conspiracy amongst others.
The Court held Tulletts were entitled to injunctive relief and able to recover from the brokers who left the retention payments and the loyalty bonuses they had been paid as the clauses requiring them to do so were neither in restraint nor penalty clauses. Interestingly, 3 employees who had agreed to join BGC were also able to tear up their contracts and remain with Tullett without penalty on the basis that they could have no trust or confidence in BGC in being recruited in the way they were and so they were released from having to serve BGC.
Key point: Employers should be wary of contrived constructive dismissal claims where employees purport to be justified in walking out in order to join a competitor without the burden of their hitherto restrictive covenants.
Rutherford v Seymour Pierce Ltd [2010] EWHC 375
Mr Rutherford was dismissed by Seymour Pierce for poor performance. His employer agreed that the dismissal was unfair. All his claims were settled with the exception of his entitlement to a bonus. As Mr Rutherford was entitled to participate in a discretionary bonus scheme, Seymour Pierce argued that it was an implied term of Mr Rutherford’s contract that in order to be considered for a bonus payment he had to be in employment and not under notice on the date any bonus was paid.
The court held that it was not necessary to imply such a term into the contract. Any implied term had to be considered on the basis of evidence at the time the contract was made. Later evidence that more recent leavers had not been paid a bonus in similar circumstances was irrelevant.
Key point: Employers should include an express term in the bonus clause that payment is conditional on the employee still being employed and not under notice at the time the bonus falls due rather than having to rely on any term implied by custom or practice.
11. Collective Redundancy Consultation – Protective Award
Shanahan Engineering Ltd v Unite the Union UKEAT/0411/09
Shanahan, a construction contractor, had to stop work on one of two construction projects with very short notice from its client. This led to redundancies having to be made. Shanahan claimed that it was not reasonably practicable for it to comply with its obligations to consult with employees in good time under s. 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 and that these were “special circumstances”.
The EAT held that the obligation to inform and consult still remained in whatever little time was available. The “special circumstances” did not however absolve Shanahan absolutely from the obligation to consult. Shanahan were therefore liable to pay a protective award to the redundant employees as it was in breach of the consultation process. The Tribunal had been wrong however, to order the maximum 90 day protective award. The case was remitted for further consideration of the amount of the protective award to be paid to each redundant employee.
Key point: This case suggests that it will be difficult for an employer to establish the “special circumstances” defence except in very narrow circumstances.
Chief Constable of West Yorkshire Policy v Homer EWCA/Civ 2010/419
The Court of Appeal held in this case that requiring certain employees to hold a degree in order to attain a higher paid grade was not indirect age discrimination in respect of an employee who did not have time to get the degree before his retirement. The particular disadvantage he suffered was not as a result of age discrimination, but because of his impending retirement. The Court held that the same result would apply to anyone else who similarly stopped work before qualifying.
Key point: Employers should be wary of relying too heavily on this case as imposing such a universal barrier could give rise to claims that it still disadvantages a large number of older candidates who had or have less opportunity to attend higher or further education. The need for a degree as a recruitment or promotion criterion could well be found to be discriminatory on the grounds of age in other cases.
13. Holiday Pay arising from Sick Leave Absence
Rawlings v The Direct Garage Door Company Ltd ET/2800547/2006
Mr Rawlings was absent from his employment due to illness throughout both 2004 and 2005 and remained so until April 2006 when his employment terminated. He was paid 4 weeks’ holiday pay for 2004 at his request. He then claimed holiday pay for 2005 but this was stayed pending the outcome of the Stringer litigation.
When that stay was lifted he applied to amend his claim to include a further complaint for pro rated holiday pay for 2006 and to bring the whole claim under the deduction from wages provisions. The Judge found he was unable to take leave due to illness throughout 2005 and 2006 and in those circumstances he was entitled to 4 weeks’ holiday pay for 2005 and a pro rated sum for 2006 on the termination of his employment.
Workers on long term sick leave can notify their employers that they wish to take statutory holiday on certain dates and if they so do their employer will be obliged to make holiday payments at that time as Mr Rawlings received in 2004. Untaken holiday must then be compensated for on termination only.
Key point: This is one of the first sickness holiday pay cases to be decided post Stringer. Employees should be encouraged to take their statutory holiday at least during sick leave if they are well enough to do so. Otherwise employers should accrue holiday pay on a rolling basis.
McFarlane v Relate Avon Ltd 2010/EWCA/Civ B1
Mr McFarlane is a Christian who believes that same sex sexual activity was sinful. He was dismissed by his employer Relate because he was unwilling to provide counselling to same sex couples. He brought a claim against Relate for direct discrimination on the grounds of religion or belief. His claim was dismissed and he appealed, which appeal was unsuccessful. He appealed for permission to appeal to the Court of Appeal which was also refused even though the former Archbishop of Canterbury Lord Carey had submitted a witness statement in support of the appeal. The Court held that his appeal would be unsuccessful by virtue of its earlier decision in Ladele [see Employment Law Update 44]. In that case, the Christian registrar was fairly dismissed for refusing for religious reasons to perform civil partnership ceremonies. Her religious views did not exempt her from her civil partnership duties.
Key point: The case is again one in which the Court had to balance the right of an individual to hold personal views and the right of equal respect to all in the community.
15. Sex Discrimination and Victimisation
Pothecary Witham Weld (a firm) v Bullimore UKEAT/0158/09
In this case the Tribunal had to consider the reference given by Ms Bullimore’s former employer 4 years after she had left which referred to her allegedly poor relations with the partners the fact she had previously brought Tribunal proceedings against the firm and could on occasion be “inflexible as to her opinions”. Her new job offer was withdrawn on receipt of that reference and Ms Bullimore commenced proceedings against PWW (and Mr Hawthorne the author of the reference) claiming that the reference had victimised her. She was successful. PWW and Mr Hawthorne appealed but were unsuccessful. The Tribunal did not accept Mr Hawthorn’s explanation of the way he drafted the reference. PWW was simply unable to prove that it was not significantly influenced by the fact that the former employee had previously brought discrimination proceedings against it when it gave her an unfavourable reference some 4 years later.
Key point: The case is a reminder that liability for victimisation can extend long after the employment has ended. Mr Hawthorne clearly still felt some animosity towards Ms Bullimore. It is rare however for an employer to write such a detailed reference. Employers generally opt to provide a more general one.
16. Summary termination under a PILON clause
Geys v Société Générale London Branch 2010 EWHC 648
Mr Geys was employed by Société Générale from February 2005 as Managing Director, European Fixed Income Sales. On 29 November 2007 he was called into the Bank and given a letter which said that the Bank had decided to terminate his employment with immediate effect. On 10 December the Bank sent him a draft termination agreement advising that HR would contact Mr Geys separately regarding other matters including his notice. On 18 December the Bank made a payment of approximately £32,000 into his bank account. Mr Geys concluded that it was intended to be a payment in lieu of notice.
His solicitors wrote to the Bank advising that Mr Geys had decided to affirm his contract and that he reserved his position concerning the monies until he understood what they constituted. On 4 January the Bank wrote to Mr Geys stating that it had given him notice to terminate his employment with immediate effect and that his pay in lieu had been credited to his account on 18 December. The Bank subsequently calculated the termination payment due to him of €8 million. However Mr Geys argued that he was in fact entitled to be paid more than €12.5 million. The disparity was part due to the difference of opinion when his employment ended.
The court held that his employment could not have terminated on 29 November but only on 6 January when he was deemed to have received the Bank’s letter confirming that he had been paid in lieu of notice, as the Bank did not in their original letter rely on any contractual provision to terminate him with immediate effect.
This was an expensive mistake. As they had failed to specify in the termination letter that it was exercising its right to pay in lieu of notice, Mr Geys’ employment was extended from 29 November until 6 January and as they had not offered him the correct amount of payment Mr Geys was not obliged as a condition of receiving the money to perform his concurrent obligation of entering into a termination agreement or to desist from proceedings against the Bank.
Key point: In summary dismissal cases, an employer should state clearly when and how they are terminating the contract by making a payment in lieu of notice.
Belgium
Allowances paid for Belgian-based employees and company directors taking short foreign business trips are now subject to revised daily tax-free limits. The new limits range from €52 to €100. The allowance may be paid for trips of up to 30 days and is designed to cover minor expenses incurred during the stay exclusive of accommodation and travel costs (FedEE).
Germany
A judgment by the Mainz Labour Court in Germany has established that truck drivers are responsible for their own compliance with legal restrictions on driving time. An employer is not liable for any fine for exceeding permitted working hours even if the driver was acting under the employers’ instructions. This is because, in the court’s view, a worker enjoys a high level of legal protection from dismissal and he should therefore not hesitate to reject requests from the employer to break road traffic regulations (Fed EE).
On 8 April 2010 the Bribery Act received Royal Assent. The Act repeals the common law offence of bribery and creates several new offences carrying a maximum penalty of 10 years’ imprisonment or an unlimited fine for which employees, directors and commercial organisations can be liable.
Click here to view Steptoe's briefing on the Bribery Act 2010.
Coleman v Attridge Law
Mrs Coleman settled her claim against Attridge Law just before the compensation hearing. She is to receive an undisclosed sum of money for her injury to feelings. Mrs Coleman sued her former employers for disability discrimination. The disability however was suffered by her son and she was claiming disability by association. The ECJ decided in a landmark decision that discrimination by association was prohibited under the DDA. The Court of Appeal refused Attridge Law permission to appeal that decision, so finally some 5 years’ after her departure from Attridge Law the matter reached its conclusion. Discrimination by association is now dealt with in the new Equality Act 2010.
The TUC has launched a website aimed at helping young people find out more about their rights at work. The TUC is concerned that as many as 1 in 3 interns is not being paid for their work despite qualifying for the minimum wage. Many are being exploited due to the economic downturn by employers who see interns as a useful source of free labour. See http://www.rightsforinterns.org.uk/.
21. Unfair Dismissal Compensation
Wood v Mitchell SA Ltd UKEAT/0018/10
Following his unfair dismissal Mr Wood suffered psychiatric ill health which was accepted to be unrelated to his employment. The Tribunal concluded that any loss after the start of his illness was not attributable to action taken by his employer and therefore Mr Wood did not need to be compensated. The EAT considered this to be too narrow a view. Although his illness was not connected to his employment, when assessing compensation the Tribunal ought to have taken account of the financial value of his rights during the period of ill health. His illness was not such an unusual or supervising circumstance which it would be just and equitable to treat as a cut off point for calculating his loss.
Except in unusual circumstances, Tribunals should estimate how long the employee would have been employed, the pay and benefits that would have accrued to him during that period even if he were ill, and whether he would have returned to work when fixing compensation.
Amin and another v Amin and others 2010 AER 167
The Chancery Division in this case held that a sum of £105,000 should be awarded on a quantum meruit basis where a daughter had worked for several years without remuneration in the family business and where her father had given her assurances that she would be rewarded for her work. The judge held that it was appropriate that the remuneration should be £20,000 per annum multiplied by the number of years for which restitution was claimed rather than the commercial rate of £70,000 per annum she was claiming.
Buckland v Bournemouth University 2010 EWCA 121
Professor Buckland was employed by Bournemouth University and had resigned after the head of the department confirmed the outcome of a re-marking exercise of his students’ papers undertaken without consulting him. The Tribunal upheld Professor Buckland’s constructive dismissal claim. The conduct of procuring and re-marking exam papers without consulting Professor Buckland was a fundamental breach of the implied contractual terms of mutual trust and confidence and the report by Professor Vinney, which subsequently vindicated him before his notice expired, did not cure the breach.
The EAT disagreed holding that Professor Vinney’s report had cured the breach. The Court of Appeal agreed with the Tribunal’s decision. It held that in determining whether an employer was in fundamental breach of the implied term of trust and confidence the employee had to show that the employer had without reasonable and proper cause conducted itself in a manner calculated or likely to destroy the relationship of trust and confidence between them.
That conduct had to go beyond unreasonable conduct on the employers’ behalf so as to amount to breach of contract. It remained open for the employer to show that the dismissal was for a potentially fair reason and if it did so a Tribunal would have to decide whether the dismissal for that reason was both substantively and procedurally fair. In this case the slur on his integrity remained despite his vindication in Professor Vinney’s report.
Key point: There is no doctrine to the effect that a party in default can unilaterally cure their repudiatory breach. Conduct alleged to amount to a fundamental breach of contract is not assessed by reference to the range of reasonable responses test but must be objectively assessed.
Ward Hadaway v Capsticks
This case is a timely reminder that professional law firms are also subject to TUPE Regulations. In this case the EAT found that TUPE did not apply when Ward Hadaway lost the Nursing and Midwifery Council contract to another firm as the transfer of the contract was not a service provision change between the two firms. Therefore the employees who worked on the Council’s contract did not automatically become Capsticks’ responsibility.
The reason for this was that there had been a 6 month run up period during which Ward Hadaway had been able to complete the work in progress with no active files transferring to Capsticks. The work Capsticks were to do for the Council was also different from that carried on by Ward Hadaway with most advocacy moving in-house.
Key point: The case is fact specific but employers should not assume that every service provision change gives rise to an automatic transfer of all the employees’ contracts to the new service provider.
25. Unfair Dismissal for viewing pornography
City of Edinburgh Council v Dixon EAT 0038/09
D was employed as a learning and development worker at a community wing of a school. He had type 1 diabetes. A disciplinary investigation revealed that he had been watching pornographic images and that he had visited an inappropriate website. D said he had no recollection of either incident and that his behaviour must have been a result of his diabetes. The council’s occupational health doctor who had examined D indicated that his behaviour could have been caused by a hypoglycaemic episode but that there was no evidence to indicate whether or not it had been.
The council concluded that his actions were conscious and they summarily dismissed him. The Tribunal upheld his claim for unfair dismissal holding that the council had come to a decision that no reasonable employer could have reached. The council appealed to the EAT who upheld the Tribunal’s decision. The council had failed to take his explanation seriously. This was sufficient to find it was an unfair dismissal.
The EAT concluded that if the council had conducted a proper investigation on the balance of probabilities it would have accepted his explanation and dismissed the charges. However, the EAT found that the dismissal did not amount to disability discrimination.
Key point: Employers should remember that where an employee has been dismissed for misconduct a Tribunal hearing an unfair dismissal claim must ask whether the employer genuinely believed that the employee was guilty of the misconduct in question, had reasonable grounds for that belief, and carried out a reasonable investigation. In a similar type of case independent medical advice should be obtained so an objective examination of the facts can be made.
