EMPLOYMENT LAW TRAINING AND EMPLOYMENT LAW CONSULTANCY

Section Three

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Case Law Update – Significant decisions from the Courts

This section includes important cases on:

After these important cases we have also added – Court Shorts – one line comments on recent cases.

Case Summaries

 

Holiday Pay calculations (3)

An Employment Tribunal has found that payments for voluntary overtime, out of hours standby allowances, call out allowances and even the taxable elements of travel payments should be included in the first 20 days holiday pay provided they are linked to work and have been paid regularly enough to be considered part of a worker’s normal remuneration.

Background
In Brettle and others v Dudley Metropolitan Borough Council, ET, 56 employees brought claims for underpaid holiday, including voluntary overtime payments and other allowances they were paid to undertake out of hours work.

Decision
The Employment Tribunal accepted that there is no binding authority in relation to purely voluntary overtime and said that it was “sailing into unchartered waters”. [The Irish Court of Appeal’s decision in Patterson v Castlereagh Borough Council that found that there is no reason in principle why voluntary overtime should not be included in holiday pay is not binding in the UK – see below.]

The Judge in this case made it clear that the starting point for all holiday pay questions is to establish what constitutes “normal pay”. Applying this principle, the Judge found that out of hours standby payments and call out allowances had all been regularly paid (at a rate of one week in four or one week in five) and should be included.

The issue with regard to travel allowances was however more complicated. The allowance that was paid by the Company was at a higher rate than that recognised by HMRC to compensate the workers for the actual costs of their travel. The Judge ruled that the HMRC element should be excluded from the holiday pay calculation but that the taxable remainder should however be included as it was a benefit in kind.

It went on to find that only voluntary overtime that had been regularly worked should be included in holiday pay and this excluded one individual who worked voluntary overtime “rarely”. By contrast, an individual who regularly worked overtime on Saturday and counted this as part of their “normal” working pattern was entitled to have these payments included.

The Tribunal agreed with previous authorities which found that the right to include all regularly worked payments only applies to the first 20 days of leave taken each year and not to the additional statutory leave (eight days) or any contractual leave.

[Case; Brettle and others v Dudley Metropolitan Borough Council, ET ]

Holiday Pay calculations 1

Since the decision of the EAT in the case of Bear Scotland in late 2014, there has been uncertainty about the inclusion of purely voluntary overtime in holiday pay calculations. Most assumed that whilst compulsory overtime (guaranteed and non-guaranteed) would have to be reflected in holiday pay after this decision, voluntary overtime was exempt.

The Northern Ireland Court of Appeal (July 2015), has ruled that there is “nothing in principle” to prevent purely voluntary overtime counting towards holiday pay entitlement.
The Court overturned the Tribunal decision and sent it back to be reheard and to take account of the Employee’s evidence on his precise overtime arrangements.
So still a case of wait and see!

[Case; Patterson v Castlereagh Borough Council NICA 2015]

Holiday Pay calculations 2

If a part-time worker increases her hours, is her employer obliged to recalculate her entitlement to annual leave retrospectively, even taking into account annual leave already accrued and taken.
No, held the ECJ in a recent case.

The Claimant’s working hours and days varied from week to week. She took 7 days’ paid leave at a time when she was working one day a week (the equivalent of 7 weeks’ leave). Her employer said this exhausted her entitlement. She then increased her hours to 12 days on, 2 days off each fortnight. After her employment ended, she claimed a payment for accrued but untaken annual leave.

The employment tribunal upheld her claim, but following an appeal and application for reconsideration, referred the matter to the European Court of Justice (ECJ).

The ECJ held that annual leave must be calculated in accordance with a worker’s contractual working pattern, and the hours, days (and fractions thereof) actually worked. However, the taking of leave accumulated in one period has no connection to the working hours in the later period when leave is actually taken.

There was already authority from 2010 that a reduction from full-time to part-time working should lead to no reduction in the amount of leave a worker has already accumulated. An employer must therefore distinguish between different periods of different working patterns and calculate the leave that accumulates in each period separately, taking the same approach whether this is during employment, or after it has ended.

In this particular case, the excess leave taken whilst working part time can be offset against, or deducted from, the newly accumulated ( and higher in this case) holiday accumulation.

[Case; Greenfield v The Care Bureau Ltd. ECJ 2015]

Compensation for failure to provide rest breaks.

Can a worker claim compensation for injury to feelings if not allowed rest breaks under the Working time rules?

Under the Working Time rules, workers are entitled to a range of breaks and rest periods. These rules are health and safety based. A failure to provide breaks can lead to an employee making a tribunal application. The tribunal can award compensation which they see as “just and equitable” – in other words there are no set amounts specified.

A care worker successfully claimed that her employer was not providing her with a right to a 20 minute break after 6 hours working. The issue for this hearing was the compensation. The tribunal awarded her £1220 for her loss of rights. The woman claimed that the employers breach had affected her health and wellbeing and that she should be awarded added compensation for injury to feelings.

The EAT ruled that compensation for injury to feelings does not apply to Working Time claims. It is mainly confined to discrimination claims under the Equality Act, or Whistleblowing claims. The EAT rejected a series of arguments to the effect that either UK or EU law required compensation to be paid for injury to feelings, noting that compensation to a worker for a breach of the entitlement to rest breaks was akin to a claim for breach of contract, although an award takes into account any loss sustained by the worker and the default of the employer in not allowing rest breaks.

The EAT did however say that a claim for compensation for damage to health might be made, e.g. if a worker were made ill by a lack of rest breaks. This however would not be at Employment Tribunal as it is a personal injury claim.

[Case; Santos Gomes v Higher Level Care Ltd. EAT 2016]

HR influence means dismissal unfair

A recent Employment Appeal Tribunal case highlights the difficult line which HR and in-house legal professionals must tread when dealing with disciplinary matters. This was discussed recently in another case (the Ramphal case, see below))

Dronsfield was a professor at Reading University, and was bound by the university’s policies and procedures, one of which dealt with personal relationships between staff and students. The guidance provided that any member of staff in a personal relationship with a student should inform the university in order that it could make arrangements to ensure that the assessment of the student in question would be unbiased. Dronsfield failed to comply with this guidance and did not disclose a sexual relationship with a student. As a result, after being subjected to a disciplinary process, he was dismissed summarily (in other words, without notice). He claimed unfair dismissal.

Tribunal and EAT

An employment tribunal found that his dismissal was fair but this conclusion was overturned by the EAT. This was partly because the EAT found that an investigatory report produced as part of the disciplinary process had been heavily influenced and amended by the university’s HR and in-house legal departments. The EAT held that the final version of the investigatory report omitted various findings which were favourable to Dronsfield and that these alterations were made following the HR and in-house legal teams’ involvement.
The case was sent back to the employment tribunal to decide whether it was reasonable to dismiss Dronsfield.

[Case; Dronsfield v University of Reading, EAT 2016]

Acas Code does not apply to ill health dismissal

The ACAS Code on Discipline and Dismissal is a statutory code. This means that tribunals take it into consideration when deciding the outcome of unfair dismissal claims. It may also mean that compensation can be increased by up to 25% where the Employer has departed from the main provisions of the Code.
In one recent case a dismissal for ill health was found to be unfair and the claimant wanted the Tribunal to award a financial uplift for a failure to follow the ACAS Code. The Tribunal concluded, and the EAT agreed, that the ACAS Code does not apply to ill health dismissals. The Code focuses on misconduct and poor performance, and the Courts felt that it was not applicable in this case.

Hot on the heels of this case was another EAT decision on whether to apply the uplift for not complying with the Code. This second case involved a dismissal over relationship breakdown. Employers can decide whether to tackle this issue as misconduct (and the ACAS provisions will apply); or to go down the route of Some Other Substantial Reason (SOSR). Previous case law was unclear about whether the ACAS Code applies to SOSR dismissals. SOSR can cover a range of dismissals. The EAT recently stated that the full Code (and 25% uplift) did not apply in this case of relationship breakdown, However the Court did state that certain elements of the Code should still be applied to SOSR dismissals, so Employers still need to operate fairly and reasonably when carrying out a dismissal for SOSR.

[Cases; Holmes v Qinetiq ltd. EAT 2016; Phoenix House Ltd v Stockman EAT 2016]]

Whistleblowing – Defining ‘public interest’

Claims under the Whistleblowing rules have to demonstrate that the complaint is in the wider public interest – as against a personal grievance. This is proving to be surprisingly difficult to define!

In the case an employee made a protected disclosure that she and her colleagues were working in cramped conditions and that this could damage their health and safety. She was put on an improvement plan, and argued that she had suffered a detriment for making a protected disclosure. She was successful.

To be successful she had to show that the disclosure was in the public interest ,which the employer disputed. However, it was ruled that it was in the ‘public interest’ because it affected other employees as well as her, and it could be argued that members of the public might be interested in what she had to say.

[Case; Morgan v Royal Mencap Society EAT 2016]

Data Protection breach

A former waste disposal employee who left his job, taking information about previous clients with him, has been prosecuted and fined.

Mark Lloyd, who worked at Acorn Waste Management Ltd, emailed the details of 957 clients to his personal email address as he was leaving to start a new role at a rival company. The documents contained personal information including the contact details and purchase history of customers and commercially sensitive information.
Appearing at Telford Magistrates’ Court Mr Lloyd pleaded guilty to unlawfully obtaining data and was prosecuted under section 55 of the Data Protection Act. He was fined £300, ordered to pay a victim surcharge of £30 and £405.98 costs.
Steve Eckersley, head of enforcement at the ICO said:
“Taking client records that contain personal information to a new job, without permission, is a criminal offence.
“Employees need to be aware that documents containing personal data they have produced or worked on belong to their employer and are not theirs to take with them when they leave. Don’t risk a day in court by being ignorant of the law.”
Unlawfully obtaining or accessing personal data is a criminal offence under section 55 of the Data Protection Act 1998. The offence is punishable by way of ‘fine only’ in a Magistrates Court or a Crown Court. The ICO continues to call for more effective deterrent sentences, including the threat of prison, to be available to the courts to stop the unlawful use of personal information.

Discrimination over wearing a headscarf

Is it direct discrimination for a private employer to prohibit a Muslim employee from wearing a headscarf in the workplace? This recent decision is from the Advocate General, not the full European Court – their ruling will come later!

Not if the prohibition stems from a general neutrality policy, opines Advocate General Kokott ahead of the European Court of Justice’s first judgment on religious discrimination under the Equality Directive, Achbita v Centrum voor gelijkheid van kansen en voor racismebestrijding.

Three years into her employment at a Belgian security company, a Muslim employee began to wear a headscarf at work despite a company rule which prohibited the wearing of any visible signs of political, philosophical or religious beliefs. She was dismissed and appealed through the courts to the Belgian Constitutional Court which posed the question to the ECJ.

AG Kokott considers that as the neutrality policy is not limited to religious beliefs, it could at most amount to indirect discrimination. Even then, it may be objectively justified as an occupational requirement, subject to a proportionality assessment based on the size and conspicuousness of the symbol, the nature and context of the employee’s activity, and the national identity of the Member State concerned.

AG Kokott distinguishes this case from the finding of religious discrimination by the European Court of Human Rights in Eweida v United Kingdom, where a similar neutrality policy had not been applied consistently to individual employees.

Religious “grooming”

A born again Christian employee, Wasteney, allegedly tried to convert a junior Muslim colleague – prompting her to complain to management. The Christian lady offered to pray for her colleague; gave her books on Christianity and invited her to church meetings. The Muslim woman described this as being groomed. After disciplinary action was taken, Wasteney was issued with a final warning, which was reduced to a written warning on appeal.

She complained to tribunal that this was unfair religious discrimination and a breach of her human rights too. Her claims failed at tribunal and the EAT has recently endorsed that decision.

This is not a new approach from the courts. She was not disciplined for holding a religious belief. She was cautioned for “subjecting a subordinate colleague to unwelcome, unwanted conduct going substantially beyond a religious “discussion”.

[Case; Wasteney v East London NHS Trust EAT 2016]

Dismissed for “pulling a sickie”!

The EAT has held that ‘pulling a sickie’ is dishonest and a fundamental breach of contract.

Mr Ajaj was a bus driver. He wrongly claimed to be sicker than he was, and surveillance evidence proved him to be exaggerating. The employment tribunal held that fairness of dismissal should be assessed based on traditional ‘capability’ considerations, ie when could the employee reasonably be expected to return to work based on his real (rather than exaggerated) symptoms.

The EAT disagreed. It held that an employee who ‘pulls a sickie’ is dishonest and in fundamental breach of contract. The principal reason for dismissal of a malingering employee is conduct, not capability.

[Case; Metroline West v Ajaj EAT 2016]

Maternity pay and salary sacrifice

Is it discriminatory to discontinue childcare vouchers during maternity leave?

No, held the EAT in a recent case

Women on maternity leave are entitled to non-pay benefits under the Maternity and Parental Leave Regulations 1999. Following HMRC guidance that contractual non-cash benefits provided under a salary sacrifice scheme must continue to be provided during ordinary maternity leave, an employment tribunal held that it must be discriminatory for an employee to lose childcare vouchers during maternity. The Employer appealed.

The EAT allowed the appeal and substituted a decision that the claim should be dismissed. No legislative basis had been found to support the HMRC guidance. The key question was: did the vouchers constitute remuneration? If they did the Regulations did not require this to continue during maternity leave. The EAT held that the vouchers did represent part of salary since pay had been substituted with vouchers under a salary sacrifice scheme. On this basis they were to be regarded as remuneration and could be discontinued during maternity leave.

[Case; Peninsula Business Services v Donaldson. EAT 2016]

Disability and reasonable adjustments

An important decision at the Court of Appeal, which has resolved the confusion surrounding reasonable adjustments and absence management.

The court ruled that it IS a reasonable adjustment to adjust absence management trigger points when dealing with the absence of a person with a disability. However, It was not a reasonable adjustment (on the facts of this case) to “write off” 62 days of absence altogether and rescind the formal disciplinary warning issued for absence.

[Case; Griffiths v DWP CA 2015]

Spent convictions – Minor offences rules.

On 22 January 2016, the High Court decided that there should be a judicial review of the matter of spent convictions being disclosable where there was more than one offence.

The applicants in this case each had two very minor offences on their records, dating back decades from when they were youths. Neither applicant had offended after that. The application for judicial review was made because the applicants were now worried that, because two past offences must be disclosed (whereas only one past offence is not disclosable and can be filtered out), this would in P’s case, prevent her from working in a teaching capacity, and in A’s case, that the information might be used against him in some capacity, as he was an accountant and company director and needed to maintain his professional image.

Lord Justice McCombe said minor offences should not have to be disclosed indefinitely, from many years ago merely because there is more than one minor offence.

The Home Office said that it would appeal the decision of the High Court.

[Case; R (in the application of P and A) v Secretary of State for Justice and Chief Constable of Thames Valley Police HC 2015)

HR Influence affected disciplinary outcome

The EAT has ruled that the influence of HR over an investigating officers decisions made the subsequent dismissal unfair. The case was referred back to Tribunal to review the decision. The Court reminded HR professionals that their role in disciplinary procedures should not include recommending or changing the sanction to be applied. The HR professional role should only involve advice on matters of law, process and procedure and avoid apportioning any blame.

The Court did suggest that HR could look at the potential sanction being recommended by the disciplinary officer to ensure the decision was consistent within the organisation. The case was subsequently settled by the parties.

[Case; Ramphal v Department for Transport EAT 2015]

Redundancy – failure to consult and notify leads to prosecution

Under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRA), whenever an employer proposes to make 20 or more people redundant within a period of 90 days or less at one establishment, it must inform and consult with employee representatives and notify the Secretary of State for Business, Innovation and Skills (BIS) using form HR1.
An employer who fails to file a completed form HR1 commits a criminal offence. There is also personal criminal liability for any director, manager, secretary or other officer where the offence has been committed with their consent or connivance or is attributable to their neglect. Such an offence is punishable on conviction by an unlimited fine and disqualification from acting as a director for up to 15 years. In practice, proceedings are hardly ever commenced – but this week saw an exception.
The criminal investigation and subsequent charges against David Forsey, the Chief Executive of Sports Direct (who is since reported to have resigned), have been widely reported in the media. The charge against Mr Forsey apparently follows an employment tribunal ruling against West Coast Capital (USC), a wholly owned subsidiary of Sports Direct, for failing to consult with employee representatives. USC was criticised by the tribunal for its “disgraceful and unlawful employment practices” – according to press reports USC relied on its administrator to give warehouse workers just 15 minutes’ notice that they were losing their jobs. The employees were awarded a protective award of 90 days’ pay by the tribunal although, as the Company had entered administration, the Government’s Insolvency Service will need to foot the bill. Reports suggest the taxpayer has lost around £700,000 in the administration of USC because of unpaid tax bills and redundancy payments.
Another similar case has also been taken against Directors of City Link; a parcels delivery business in Coventry that closed without notice just before Christmas 2014.
The Insolvency Service’s decisions to press charges for a failure to file form HR1 may indicate an increased willingness on the part of the Government to press charges against individuals for breach of TULRA obligations if it considers the circumstances warrant it. Given the potentially serious consequences for both individuals and companies, it is a reminder of the importance of taking steps to make the notification within the required time frame – 30 days before the first dismissal takes effect where between 20-99 redundancies are proposed, and 45 days for 100 or more proposed redundancies.

Travel time under the Working Time rules

Back in June, the European Court Advocate General gave a preliminary opinion (not binding) that Employers should treat all journeys between clients and customers as working time; including the first and last trips of the day. Currently in the UK, employers may have a workplace agreement that the first and last journeys of each day are not included as working time for those who work from home.

In September the full Court agreed with this opinion and ruled on the facts of the case. This means that in the UK, for workers who do not have a fixed or habitual place of work, time spent travelling between their homes and the premises of the first and last customers designated by their employer constitutes ‘working time’ within the meaning of the EU Working Time Directive. This will have implications for working hours and entitlement to breaks, so Employers are encouraged to review their policies, and may need to arrange for more staff to “opt out” of the 48 hour weekly limit.

The National Minimum Wage rules are currently adopting a different approach, ruling out travel time – but this is likely to be open to challenge at some point in view of this EC decision that the travel is effectively “work”.

[Case;Tyco Integrated Security SL, ECJ 2015]

Disability and pension reduction

The EAT has overturned an employment tribunal’s finding that a disabled employee suffered discrimination when he received an ill-health retirement pension based on his final salary, rather than the salary he had received before his working hours were reduced in a series of reasonable adjustments.
When Williams retired through ill-health at the age of 38 because of his disabilities, the rules of the University’s pension scheme entitled him to immediately receive a pension, without actuarial reduction, based on his final salary.
In the year leading up to his retirement, he had requested, and been granted, a number of reasonable adjustments to his working hours, with the end result that he was working half of his previous hours by the time he retired. His salary had been adjusted to the new hours, so the pension which he received was half what it would have been had he taken ill-health retirement when still working full-time.

The tribunal accepted his argument that he had been treated unfavourably by the rules of the scheme, since his disability had ’caused him to have a lower pension than he would have done had his disability not caused him to work part-time’.
The University appealed.
Mr Justice Langstaff, President of the EAT, considered that the tribunal’s conclusion that Williams had suffered unfavourable treatment was ‘manifestly perverse’ – the tribunal’s conclusion could not stand – the matter would be remitted to a fresh tribunal for a complete rehearing.

[Case;Trustees of Swansea University Pension Scheme and anor v Williams, EAT 2015]

Court Shorts!
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(Very brief case summaries, most recent first.)

Disciplinary Appeals

An employee was dismissed for gross misconduct after a very brief disciplinary meeting (6 minutes!!) at which he was not allowed to make any representations himself. An Appeal was held by another manager who thoroughly investigated all the facts, interviewed witnesses etc. The decision to dismiss was confirmed. Both the ET and the EAT found the dismissal to be fair as the appeal process had overcome the flaws of the initial dismissal hearing.

This is good news for employers; there are no limitations on the extent that deficiencies at the first stage of discipline can be rectified and cured by an effective appeal process. Khan v Stripestar EAT 2016

Reason for leaving!

A Company informed its clients that a member of staff had been dismissed for gross misconduct. The High Court held that this was not defamation as the statement was true! Theedom v CSP Recruitment.

Reasonable adjustment?

A teaching assistant with a number of health issues requested a flexible start time instead of 8.45 every day. The school refused the request. Her claim under the disability section of the Equality Act was unsuccessful – the tribunal decided that the demands of the job required her to be present at particular times to supervise the children and that no reasonable adjustments could therefore be made. Appleby v Colburn Primary School EAT 2016.

Migrant discrimination

The Supreme Court has ruled that mistreatment of migrant workers, on the facts of this case, was not Race discrimination under the Equality Act as the treatment of the migrants was due to their vulnerable migrant status, not because of their nationality.

Hearing loss claims

According to recent reports there has been a sharp rise in hearing loss claims in recent years; up 200% between 2011 and 2014. A recently reported case was successfully defended by the Employer in court – who had evidence that hearing protection was issued and warnings had been issued about the dangers of noise in the workplace. You should keep records of hearing protection issued to employees – and retain any disciplinary sanctions issued over a failure to wear safety equipment.

Contact during absence

The EAT has held that writing to an employee who was off sick, to raise a number of performance concerns, was a fundamental breach of the contract (thus allowing a constructive dismissal claim). Private Medicine Intermediaries v Hodkinson. EAT 2016

Part timer needs full time comparator

A part time worker cannot make a claim using another part timer (who worked longer hours) as the comparator. The comparator has to work full time. Advocate General for Scotland v Barton

Verbal reference

Nothing new in this one, but a useful reminder about telephone references being dangerous!

After an offer of employment was made, and the “formal” references were taken up; the potential employer rang for more information. In a telephone conversation lasting around 15 minutes; information on absences and time off were discussed. The applicant had had a number of lengthy absences from work due to a disability. Following the telephone discussion, the offer of employment was withdrawn. The EAT said that this was disability discrimination. Pnaiser v NHS England EAT 2015.

Speak in English please.

The EAT has agreed with the tribunal that it was not race discrimination or harassment to instruct an employee to refrain from speaking in Russian during work related conversations. The Employer had a reasonable explanation for its actions (the employee had been acting suspiciously and was having long conversations on her mobile in Russian!) which were not related to the employee’s nationality. Kelly v Covance Laboratories EAT 2015.

Animal rights??

A London Zoo meerkat handler got into a fight at the Christmas Party with a monkey keeper – they were fighting over the affections of the llama keeper!! One of the fighters was dismissed, the other received a final warning. London Tribunal decided that without clear evidence as to who started the fight, no reasonable employer would have apportioned blame by awarding different outcomes – so the dismissal was unfair.