Annual employment law update

Annual employment law update
Wednesday 24 and Thursday 25 November 2009

Have employers been strung up by
Stringer?
(Stringer & Others v HM Revenue & Customs)
Lisa Wallis
Solicitor

Working Time Regulations 1998
Regulation 13 (9)
– statutory minimum annual leave entitlement (four weeks) can
NOT be carried over into the next holiday year
– workers can NOT be paid in lieu of annual leave, except on
termination

Time Limit
Regulation 30
– claim must be brought within three months from the date at
which the refused right would have begun to have been
exercised

© Blake Lapthorn 2009

Employment Rights Act 1996
Regulation 13
– right not to suffer unauthorised deductions

Time Limit
Regulation 23
– claims can be brought within three months of the last in a
series of deductions


Questions

Ainsworth & Others v Commissioners of Inland Revenue

Does a worker’s entitlement to statutory annual leave accrue
whilst on long term sick leave?

Can a claim for unpaid holiday be brought as a series of
unlawful deductions from wages?


Chronology of case
Employment Tribunal
– held: holiday pay accrues while on sick leave
Claims can be brought as an unauthorised deduction under
ERA 1996

Employment Appeal Tribunal (February 2004)
– upheld decision of Employment Tribunal

Court of Appeal (April 2005)
Commissioners of Inland Revenue v Ainsworth & Others
– held: holiday pay does not accrue whilst on long term sick leave

House of Lords (December 2006)
Stringer & Others v HM Revenue & Customs
– referred case to European Court of Justice


Chronology of case
European Court of Justice (March 2009)
Stringer & Others v HM Revenue & Customs

Held:
– holiday pay does accrue during sickness absence,
regardless of how long the employee is off sick
– there is nothing to prevent a worker from taking paid holiday
while on sick leave (even if covered by a medical certificate)
– opportunity must be given to take the paid leave at some
point, even if that means carrying the paid leave over into
the next or subsequent holiday year
– it is for each EU state to determine when that leave should
be taken


House of Lords (June 2009)
HM Revenue & Customs v Stringer & Others
House of Lords Ruling

1. Annual leave does accrue and can be taken while a worker is
on long term sick leave

2. Claims for unpaid holiday can be brought as a series of
unlawful deduction from wages under the ERA 1996 as well as
under the WTR 1998


What if a worker is on annual leave and falls sick?

Pereda v Madrid Movilidad SA

ECJ ruled:

A worker who is on sick leave during a period of previously
scheduled annual leave must have the right, on his request, to
take that annual leave at another time

If business interests preclude the worker from taking the
rescheduled leave in the same leave year, the normal rules
against carry-over must be relaxed


Practical advice for employers
Following Stringer
Deal with requests for holiday from any worker, in the current
holiday year (whether on long term sick leave or not)
Amend policies to allow workers on long term sick leave to
designate part of that period as paid annual leave before expiry
of the relevant leave year
Review any current workers on long term sick leave and discuss
with them their holiday entitlement and how this will be handled

Following Pereda
Deal with situations involving carry-over on a case by case basis
Revisit notification of sickness procedures


Equality Bill
Emma Drew

Solicitor


Equality Bill
Aims
– to harmonise
– to strengthen

Contents
– employment
– goods and services
– public bodies

Focus
– employment law changes


Overview
Protected characteristics
– age
– disability
– gender reassignment
– marriage and civil partnership
– pregnancy and maternity
– race
– religion or belief
– sex and sexual orientation


Overview (2)
Direct discrimination
– ‘because of’ not ‘on the grounds of’
associative discrimination
perceptive discrimination
dual discrimination
NB: not marriage and civil partnership (or maternity and
pregnancy for dual discrimination)


Overview (3)
Indirect discrimination
– disability discrimination
– gender reassignment

Harassment
– third party harassment

Victimisation
– removes need for absolute comparator


Disability discrimination

‘Normal day to day activities’
– eight functions removed
Associated discrimination
‘Discrimination arising from disability’
Indirect discrimination


Equal pay and positive action

Equal pay
– ‘genuine material factor’ defence
– secrecy clauses
– publication of pay differences

Positive action
– recruitment and promotion


Progress of Equality Bill

House of Commons
House of Lords
Royal Assent - Spring 2010
Majority in force - Autumn 2010
Public duties - Spring 2011


Disability discrimination and
sickness absence
Tony Cooper
Partner

Definition of disability

Physical/mental impairment
Substantial adverse effect
Long term
Normal day to day activities


Direct discrimination

On grounds of disability
Less favourable treatment than non-disabled with same relevant
circumstances/abilities
No justification


Disability related discrimination

For a reason related to disability
Less favourable treatment than treats others to whom reason
does not apply
Employer cannot show treatment is justified


Duty to make reasonable adjustments

Provision criteria or practice or physical feature of premises
Places disabled person at substantial disadvantage
Duty to take reasonable steps to prevent
No justification


Harassment

For a reason related to disability
Engages in unwanted conduct
Violation of dignity
Creates an intimidating, hostile, degrading, humiliating or
offensive environment


Victimisation

Less favourable treatment because;
– brought proceedings
– given evidence/information in proceedings
– alleged contravention of DDA
– other reason relating to DDA rights


Scope

Wide definition of employment
Advertisements
Applicants/ex-employees
Associative discrimination


Employment Tribunals

No service requirement
Unlimited compensation
– loss
– injury to feelings
– personal injury


Long term sickness

Individual consultation
Medical opinion
Alternative employment
Reasonable adjustments?
Can we wait?


When can an employer dismiss?

Need for work to be done
Availability of other labour
Cost
Likelihood of return
Capability upon return
Conflicting medical opinions
Reasonable adjustments?


Intermittent absence

Unrelated
– individual consultation
– warnings of consequences and timescale
Related
– individual consultation
– medical consultation
– warnings of consequences and timescale


Intermittent absence (2)
Absence not misconduct
Procedural fairness
Investigation
Consultation
Warnings
Reasonable adjustments
Alternative employment
Avoid undue haste


Changing terms and conditions
Lynda Smedley

Senior solicitor

Identify nature of term

Contractual or non-contractual?

If non-contractual
– no further issue as non-binding
– can be varied by employer at any time without need for
employee consent

If contractual
– is it a fundamental or non fundamental term
would breach go to root of contract and be incompatible
with continuance of employment relationship?
answer will dictate remedies available to employee and
therefore approach by employer


Does contract authorise change

General flexibility clause
– not carte blanche
– only minor and non fundamental terms

Express flexibility clause
– contractual right to make change
– operation of clause subject to implied terms


Incorporated terms

Statutory
Collective

Other points to consider
Discrimination effect
Terms inherited under TUPE


Routes to variation

Where non contractual provisions or authorised by contract
– notify
– explain
– implement
– take careful note of objections


Routes to variation (2)

Where contractual provisions and not authorised by contract
– consent required
– so ask!
– if yes, celebrate and implement before anyone changes their
mind
– confirm in writing


If no agreement…

Review stage
– are managers aware of potential cost?
– has it been balanced against the potential benefit?
– are managers aware that implementing change without
employees’ agreement could require collective consultation?
– do managers accept that implementing change without
employees’ agreement could lead to dismissals?


If still want to proceed…

Two potential routes
Unilaterally impose changes
Termination of employment and offer of re-engagement on new
terms


Unilaterally imposing change
Always breach of contract
Always gives employee right to a remedy
No defence for employer to show had sound business reasons
or acted reasonably in circumstances

Employee who rejects change can:
work on new terms (whilst making rejection of them clear) and
bring claim for breach of contract
where practical continue to work on old terms and refuse to work
on new
where fundamental breach, resign and claim that been
constructively dismissed


Terminate employment and offer re-engagement on
new terms
Not wrongful dismissal
Potentially unfair dismissal

Need to show:
– potentially fair reason; and
– that acted reasonably in dismissing on those grounds
– some other substantial reason
– sound business reason


Factors when assessing reasonableness to dismiss

Employer’s motives for introducing change
Employees’ reasons for rejecting
Whether reasonable warning given
Whether change and full effect explained
Whether impact assessment undertaken and alternatives
considered
Had employer responded reasonably to objections and
made concessions where possible
Had there been a reasonable and genuine consultation
process


Procedure

Ascertain nature of consultation
– if 20 or more employees collective consultation under
TULRCA
– individual if less
Commence consultation
Consult with a view to reaching agreement
Listen to the feedback
Consider whether the changes can be varied

Need to show genuine and reasonable consultation process


Set a deadline for acceptance

If agreement not reached at end of process:
Follow individual dismissal process
– invitation to meeting
warn could result in notice of dismissal and offer to re-
engage on new terms at end of notice period
– hold meeting
– write to serve notice of termination of employment and offer
of re-engagement on new terms
– Right of appeal


Compromise Agreements:
avoiding the pitfalls
Linda Wilson
Solicitor

Introduction

What is a Compromise Agreement
Risks of constructive unfair dismissal
Without Prejudice discussions


Compromise Agreements

Difference between statutory rights and contractual rights
Employees can agree to give up their contractual rights
Normally employees cannot contract out of their statutory
rights
A Compromise Agreement is needed in order for an
employee to give up their statutory rights



Careful drafting is vital for a Compromise Agreement to be
valid and enforceable
It must relate to the particular complaint
Include certain statutory requirements
Other drafting pitfalls include:
– tax issues
– restrictive Covenants
– bonuses due after termination
– shares/share Options



Lunt v Merseyside Tec Ltd 1999 EAT
– sex discrimination claim not covered

Palihakkara v BT plc 2007 EAT
– only covered claims arising out of her termination of
employment not claims which arose during her
employment



Need to carefully manage the negotiation of a
Compromise Agreement
Set deadlines!
Do not forget about the ongoing procedures
Is the employee to remain in the workplace?
Protect company interests and other employees
Take legal advice to help assess the possible financial/tax
implications of offering a Compromise Agreement


Kirklees Metropolitan Council v Radecki 2009
CA
During Compromise Agreement negotiations R was
removed from payroll on 31 October 2006. R was
unaware at the time
CA held: Date of dismissal was 31 October
Stopping pay amounts to a fundamental breach of
contract
The employee does not need to be aware of such a
repudiatory breach


Avoiding a Constructive Unfair Dismissal
claim
The implied duty of trust and confidence is incorporated
into every employee’s contract of employment
Suggesting a Compromise Agreement to an employee
could be a breach of that implied duty of trust and
confidence
A fundamental breach of the implied duty of trust and
confidence entitles an employee to resign and claim
constructive unfair dismissal


claim

Advisable to only offer a Compromise Agreement once
disciplinary procedures have been commenced
Keep discussions/correspondence separate to any
ongoing procedure or ‘open’ discussions


claim
Billington v Michael Hunter and Sons 2003 EAT
– B given written warning with regard to her performance
– at further informal meeting to discuss performance
concerns B was invited to resign on favourable terms
– held: this was a ‘vote of no confidence’ and B did have
a potential claim for constructive unfair dismissal


Without Prejudice discussions

Legal advice privilege means employers can seek legal
advice without the content being admissible in a Court or
Tribunal – no need to state Without Prejudice
Without Prejudice is intended to give legal privilege to
communication between parties where there is a dispute
Based on public policy argument of allowing parties to
speak freely in order to settle disputes
BUT there must be genuine Without Prejudice discussions
which means they must:
– have the purpose of settling a dispute
– not fall under the umbrella of ‘unambiguous
impropriety’
Do not waive the protection of Without Prejudice
discussions

BNP Paribas v Mezzotero 2004 EAT

M raised a grievance on returning from maternity leave. At
the grievance meeting BNP said it was Without Prejudice
and it was best if her employment terminated. M claimed
direct sex discrimination and victimisation.

EAT held: without Prejudice protection did not apply
because:
– there was no existing dispute
– the discriminatory conduct of BNP amounted to
unambiguous impropriety


Blake Lapthorn is an English law firm regulated by the Solicitors Regulation
Authority under SRA number 448793 whose rules can be accessed via
www.sra.org.uk
This presentation is protected by copyright and is not a substitute for detailed
advice on specific transactions and problems and should not be taken as
providing legal advice on any of the topics discussed.
A full list of our partners is available on our website at
http://www.bllaw.co.uk/about_us/a_to_z_of_partners.aspx or at any one of our
offices http://www.bllaw.co.uk/offices.
If you have questions on this presentation or on other related topics, please
contact: marianne.pieterse@bllaw.co.uk


Annual employment law update

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