Welcome to the latest issue of the Steptoe & Johnson UK Employment Law Update.

These Employment Law Updates are aimed at providing information on recent developments and what the regulatory changes mean for you in practice, in managing workplace issues on a proactive basis.

To achieve our objectives and to continuously improve the Updates, we would be pleased to receive feedback from you. 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.

1. New legislation

  • Equal Pay Audits

Employers are reminded that effective from 1 October 2014 Tribunals will have the power to order employers who are found in breach of equal pay law under the Equality Act 2010 (namely those who have lost an equal pay claim brought on or after 1 October 2014) to carry out equal pay audits. The employer will also have to publish the audit information on its website for at least 3 years.

  • National Minimum Wage

The National Minimum Wage for workers has increased from 1 October 2014. Those aged 21 and over are entitled to a minimum wage of £6.50 an hour.

  • Ante-Natal Appointments

From 1 October 2014 employees (and agency workers with a minimum of 12 weeks’ service) will be entitled to take unpaid time off work to accompany an expectant mother to an ante-natal appointment on up to 2 occasions where the appointment is made on the advice of a health professional. The right to time off is capped at 6.5 hours for each appointment.

The employer is not entitled to ask for evidence of the appointment but is entitled to ask for details of the appointment, the status of the employee with the mother and child, and for confirmation that time off is for the purpose of attending an ante-natal clinic. An employee (or agency worker) who is unreasonably refused time off may bring a claim for compensation within 3 months beginning with the day of the appointment in question. If the employee is successful the compensation payable is twice the hourly rate of pay for the period when the employee (or agency worker) would have been entitled to be absent.

  • Investor Visa Route

There are key changes to the UK Tier 1 (Investor) Visa Route applicable to applicants granted leave to enter or remain in the UK under that route on or after 6 November 2014. For new applicants the current £1m minimum investor threshold is being raised to £2m. The changes made include the requirement that the full investment sum is to be invested in prescribed forms of investments rather than as a percentage of the sum, at present. The requirement that the investment must be topped up if its market value falls is removed.

In addition a new British Irish visa scheme is to be implemented to allow Chinese and Indian visitors to travel to the UK and Ireland on a single visit visa.

  • Maternity and Adoption Leave

From 1 December 2014 an expectant mother on maternity leave, an adopter or a prospective adopter can give notice to end her maternity leave or his/her adoption leave on a specific future date. Where maternity or adoption leave has been curtailed the balance of the untaken leave may be taken as shared parental leave if the parents satisfy the entitlement and notification criteria. ACAS has published a new guide on shared parental leave, you can find it here.  The Department of Business Innovation & Skills has also published an employers’ technical guide to shared parental leave and pay, you can find it here. These entitlements are only available for those whose baby is due on or after 5 April 2015 or who have a child placed with them for adoption on or after that date.

It is estimated around 285,000 working couples will be eligible to take advantage of the scheme which could enable them to be at home at the same time for up to half a year after the birth of their child and share up to 37 weeks of statutory parental pay.

  • Dress Codes

ACAS has issued new guidance on dress codes and appearance in the workplace. Employers are reminded that if it is decided to adopt a dress code or appearance code it should be in a formal written policy and communicated to all staff so they understand what standards are expected of them.

  • Code of Practice for CCTV and Surveillance Cameras

The Information Commissioner’s Office published in October 2014 an updated code of practice for CCTV and other types of surveillance cameras. It provides best practice advice for those operating such cameras that review or record individuals’ information and how to comply with the Data Protection Act 1998. Employers should check their existing policies comply with the new code (although it remains the same as its 2008 predecessor in many respects). However in the new code the Information Commissioner’s Office has recognised that surveillance cameras are no longer a passive technology but a proactive one that can be used to identify people and keep detailed records of their activities. A complimentary copy of the code is available here.

  • Bereavement

ACAS has published a new guidance for employers on managing bereavement in the workplace. The guide details existing statutory entitlements for bereaved employees and offers best practice guidance. In many cases employers would want to suggest a return to work on a phased basis whilst reminding employers that everyone reacts differently to bereavement and this should be understood and respected by both employers and colleagues. A complimentary copy of the guide is available here.

2. Holiday pay entitlement

Bear Scotland Limited v Fulton & anor UKEATS/0047/13

Earlier this month the EAT handed down its judgment on the calculation of a week’s’ holiday pay under the Working Time Directive and whether it should include an amount in respect of “non-guaranteed overtime” to reflect the typical average pay rather than basic pay. “Non-guaranteed overtime” is overtime which an employer is not contractually obliged to offer but a worker is contractually obliged to perform, if requested. The key points in the decision, which had a huge amount of publicity, are that workers are entitled to be paid a sum of money to reflect normal non-guaranteed overtime as part of their annual leave arrangements, but this applies only to the basic 4 weeks’ leave granted under the Working Time Directive and not the additional 1.6 weeks’ under Regulation 13A of the Working Time Regulations.

Fears by employers of claims for arrears of holiday pay extending back to 1998 when the Working Time Regulations came into force have been dissipated as such claims for arrears of holiday pay will be out of time if there has been a break of more than 3 months between successive underpayments in respect of holiday pay (subject to the Tribunal agreeing an extension of time to bring a claim). However, leave has been granted to appeal this decision and Business Secretary Vince Cable has announced a task force to assess the possible impact on the ruling on employers and how the impact on businesses can be limited.

A fuller analysis of what the judgments might mean for a business is available on request although questions over the holiday pay and risks of backdated claims are unlikely to be conclusively resolved any time soon.

Key point: There is a fine line between risk and uncertainty by waiting for the final outcome of any appeal and putting a containment strategy in place so that from hereon the full holiday pay is paid to all relevant employees. As a minimum employers should audit their employees to assess their potential historic and future liabilities.

3. Time off for dependants

Ellis v Ratcliff Palfinger Limited UKEAT/0438/13

Employees are entitled to take a reasonable amount of unpaid time off work to take necessary action to deal with particular situations affecting their dependants. However the right to time off only applies if the employee tells their employer both the reasons for the absence as soon as is reasonably practicable to do so and how long they expect to be away from work.

Mr Ellis in this case was not automatically unfairly dismissed for exercising this right when he took his heavily pregnant partner to hospital at first due to illness on 6 February and then because she had been admitted to give birth on 7 February. The Tribunal found that he had failed to tell his employer the reason for his absence as soon as it was reasonably practical to do so. He claimed his mobile was not charged and he could not recall his employer’s number.

Mr Ellis had failed to telephone his employer at all on 7 February or attend work and it was not until the evening of 8 February that he left a message that he would not be in work on 9 February after receiving a text to contact the office. He had already received a final written warning because of attendance issues, which was still current.

Key point: The case is a reminder that if employees are in difficulty they must find a means as soon as they can of putting their employer in the picture about their lack of attendance. It would be sensible for expectant fathers to have had their employer’s telephone number stored in a fully charged mobile knowing that their spouse was going to be going into labour soon. This preparation should then be sufficient to give them statutory protection against unfair dismissal, if they have to take time off suddenly.

4. Social mobility

The Social Mobility and Child Poverty Commission has published its second annual State of the Nation report. One of its key recommendation includes ending unpaid internships by 2020 and ensuring that all British employers pay a living wage by 2025. Reasonable proposals to increase the national minimum wage to £8 by 2020 represents too slow an increase according to the Commission.

5. Whistleblowing

Public Concern at Work has published its annual whistleblowing report. Key findings of the report include an increase in whistleblowing cases from the health sector by 61% in 2013. Whistleblowing cases in the education sector have increased by 57% in the same period. Employers denied or ignored 63% of the concerns raised by whistleblowers.

Keppel Seghers UK Limited v Hinds EAT0019/14

Mr Hinds was a health and safety adviser working within the construction and civil engineering sector. He provided his services through his own company CSM. He was the sole director, shareholder and employee. He was placed with a company involved in the construction of energy recovery facilities KS, via a recruitment agency FR. He was not hired directly by KS but by FR which in turn had a contract with CSM.

Mr Hinds subsequently brought employment tribunal proceedings alleging that KS had subjected him to a detriment on the ground that he had made a protected disclosure. KS opposed the claim on the basis that he was not a worker. The Tribunal did not agree. Although Mr Hinds has no direct contractual relationship with KS, he had been introduced to KS through an agency and the fact that his engagement was through his own company did not alter the reality of the situation. The whistleblowing legislation was not intended to extend to the genuinely self-employed but in this case Mr Hinds was controlled by KS in the performance of his work. KS wanted his services and it was supplied with those services. KS appealed.

The purpose of the whistleblowing legislation was to protect individuals who had made protected disclosures. It was therefore appropriate to adopt an interpretation of the legislation in order to provide the protection rather than deny it. What mattered was whether the worker had been introduced or supplied to the employer and who in turn decided the terms of engagement. The EAT held that the Tribunal were entitled to conclude that the recruitment agency FR had introduced Mr Hinds to KS as an individual contractor, notwithstanding that his services were supplied through his own limited company.

Key point: For the purposes of the protected disclosure provisions s.43K of the Employment Right Act 1996 extends the meaning of “worker” to include any individual who is not covered by the section 230(3) definition but who works for a person in circumstances in which he was introduced or supplied to do work for the third person and the terms on which he is engaged to do the work as substantially determined not by him but by the person for whom he works. So the person who determines the terms of engagement is the employer.

Therefore, where a worker provides services through a limited company, of which he is the sole director and shareholder, he may well have whistleblowing protection.

6. Territorial jurisdiction

Fuller v United Healthcare Services and others UKEAT/0464/13

Does an employment tribunal have jurisdiction to determine the claims of a US citizen employed by a US company and paid in dollars but who lived and worked in London for half of his employed time? No.

Mr Fuller was an American citizen and COO of his employer. UHS was incorporated in the US and paid him in US dollars. Half of his many assignments involved working in London and he rented accommodation there paid for by UHS. His employment relationship was at will. He would spend roughly 180 days in any given calendar year in the UK from January 2012 onwards. Mr. Fuller reorganised and integrated the company’s business in the UK, Europe, Middle East and Africa. In October 2012 however he was told that due to budget issues and the change in status in the UAE his assignment was being terminated as of 30 November and if an alternative role was not secured for him his position would terminate on the same date. At that time he was in the USA. He was not found another position and his employment relationship ended on 3 January 2013. Mr Fuller then presented his complaints to the Tribunal in February 2013 for automatic unfair dismissal in respect of protected disclosures and sexual orientation discrimination.

The Tribunal held at the preliminary hearing that it had no jurisdiction to hear those claims. Mr Fuller appealed. He was unsuccessful. The EAT held that the Tribunal had no jurisdiction to consider his complaints under the Employment Rights Act 1996 or the Equality Act 2010.

What was relevant in this case was whether Mr Fuller had moved to the UK and had given up his base in the USA. He had not. His contract stated that he was based in the USA and that his contract provided for the cost of 2 trips to the UK each year for his partner. These were not irrelevant matters. The Tribunal held that Mr Fuller had entered into an employment contract which had an overwhelmingly close connection with the USA. It therefore did not have the required connection with British employment law as Mr Fuller was a person who worked in the US and who was dismissed there.

Key point: This case illustrates the importance of careful fact finding in matters relation to territorial reach. All the circumstances of the individual must be considered including but not limited to the terms of the contract, the applicable law, the place of performance of the work and the living arrangements of the employee. Once these facts have been ascertained the Tribunal can stand back and consider what connection, if any, there is to Great Britain and importantly with British employment law. Only then can the Tribunal decide if Parliament can reasonably be said to have intended the territorial scope of the employment legislation to include the situation of the employee.

Creditsights Limited v Dhunna [2014] EWCA Civ 1238

The Court of Appeal in this case agreed with the employment judge’s decision that the Tribunal did not have jurisdiction to hear Mr Dhunna’s claims for unfair dismissal and the right to be accompanied at a disciplinary hearing when he was working in Dubai.

Mr Dhunna, an employee of a British company who had moved to work in Dubai, brought his claims against his employer. The Tribunal judge had to decide whether Mr Dhunna had established a sufficiently strong connection with Great Britain and British employment law to fall within the exemption from the general rule that his place of employment was decisive on the question of jurisdiction. Mr Dhunna had tried to argue that the comparative exercise identified in the post Lawson v Serco cases required a comparison of employment law in Great Britain with that in the jurisdiction where the employee was working at the time of the dismissal to determine which was the better system of law.

The Court of Appeal, fortunately, held that there was no support in the authorities for any such comparison. The employment judge had correctly concluded that Mr Dhunna did not fall within the first class of expatriate employees identified in Lawson v Serco and did not have strong enough connections with the UK and British employment law. The reality of the situation was that he had moved from the UK and had severed links with it. However on his appeal to EAT, the EAT found that the relative strength of connection of an expatriate employee with Great Britain and with the country with which he was working was a question of degree for the fact finding Tribunal.

The EAT then remitted the case to be considered by a freshly constituted Tribunal. At this stage CSC appealed to the Count of Appeal which set aside the EAT’s order and restored the employment judge’s decision. There was no justification for any rehearing. The same territorial jurisdiction applied to the right to be accompanied as applied to the unfair dismissal claims. The only connection with Great Britain was Mr Dhunna’s English contract and being paid through an English payroll but that would rarely if ever amount to a sufficiently close connection where his place of work at the time of his dismissal was Dubai.

Key point: The right to claim unfair dismissal only exceptionally applies to employees working or based abroad and then only if the employee can show strong connections with Great Britain and British employment law, as in the Fuller case above.

7. Deposit orders

Wright v Nipponkoa Insurance (Europe) Limited UKEAT/0113/14

Mr Wright brought claims for race discrimination and whistleblowing against his employer. At a preliminary hearing the judge held that 7 out of his 11 identified allegations had little prospect of success and that the continuation of each of them should be subject to the condition that he pay a deposit. Having considered his means, the judge noted that each of the deposit orders was subject to a maximum of £1,000 but making an order for £7,000 would be inappropriate. Therefore he ordered a deposit of £2,100 being £300 for each claim. Unsurprisingly Mr Wright appealed but he was unsuccessful. Tribunals have broad discretion in deciding deposit orders and in fixing the amounts of a deposit. Following the new rules in place from July 2013 £1,000 is not the overall maximum deposit order that a party can be required to pay but up to £1,000 for any specific allegation or argument in a claim or a response. The EAT held that the judge had made an appropriate order with regard to Mr Wright’s means.

Key point: The purpose behind these deposit orders is for a party to consider whether they wished to pursue that particular aspect of the case or risk losing a deposit. It is for the judge to exercise his discretion in deciding what is appropriate. However, there is little guidance on what “little reasonable prospect of success” means in this context.

8. ACAS – Early Conciliation and Remission Statistics

ACAS has published its statistics on the early conciliation scheme under which anyone making an employment claim has first to contact ACAS to undertake early conciliation as a pre-claim step. During the 6 months April – September 2014 37,404 requests for early conciliation were made. Of those 3% of the first contact came from the employer rather than the employee. Of those total requests approximately 3,000 cases resulted in successful settlement.

3,913 employment tribunal fee remission applications have been granted between July 2013 and June 2014.

9. Failure to undertake early conciliation

Thomas v Nationwide Building Society 1601342/2014

Ms. Thomas, who is employed by the Nationwide Building Society, in August 2014 presented an ET1 prepared by her solicitors claiming that Nationwide had subjected her to a detriment for whistleblowing. These are relevant proceedings to which early conciliation applies. However her solicitors completed the ET1 claim form claiming she was exempt.

The Tribunal accepted the ET1 but in its ET3 in response, Nationwide claimed that the Tribunal should have rejected her claim because she had failed to undertake early conciliation. When the point was referred to her solicitors they sought a stay of proceedings so she could retrospectively undertake the early conciliation process. Nationwide objected to this proposal and the case was listed for a hearing before the judge.

The judge had to consider two issues: (1) whether her claim should be rejected as a result of her failure to undertake early conciliation and (2) if she contacted ACAS retrospectively, could the Tribunal revoke the decision to reject her claim under its powers of reconciliation?

The employment judge held that the claims should have been rejected. However under the reconciliation provisions as a defect had been remedied, the claim would be treated as having been presented at the end of the early conciliation procedure. Nationwide had argued that if a Claimant was permitted to rectify the defect by embarking on post-claim conciliation it would cease to be early conciliation and cease to be an “effective” procedure. The judge’s view that even belated compliance with the conciliation procedure would still be pre-claim. The claim will now go forward for a further hearing to consider the extent to which the claim may be out of time having regard to the later date of presentation.

Key point: Any defect in failing to complete the early conciliation procedure will have to be done as quickly as possible as time limits may arise as a result of the claim being treated as presented on the date on which the defect was remedied rather than any earlier.

10. Recovery of costs

Mardner v Gardner & others UKEAT/2014/0483

Mr Mardner was employed as a director of a charity but was dismissed in December 2009 when the charity ran out of money. He brought a claim for unpaid wages against 3 members of the charity’s management committee who were personally liable for its debts. These Respondents attempted to defend the claim but were unsuccessful and the employment judge considered that they had been unreasonable to maintain their defence for as long as they did as it was misconceived. Mr Mardner asked for costs but this was refused by the employment judge, as she held the view that the Management Committee were volunteers and trustees of the charity and were already personally liable for Mr Mardner’s substantive claims. It was not therefore reasonable to award costs in addition. She also considered that Mr Mardner had been funded by an insurer and was therefore not personally out of pocket. Not surprisingly Mr Mardner appealed and the EAT allowed his appeal.

It was held that the judge’s reasoning was unsustainable that simply because the claimant had an insurance policy he or she was not entitled to an award of costs. The Respondents should not be allowed to appropriate the benefit of that insurance for themselves by avoiding the cost consequences of their unreasonable conduct. The EAT felt the decision was therefore unsafe. It remitted the question to the same employment judge to consider afresh the appropriateness of making an award of costs.

Key point: Where costs applications are becoming more and more common the receiving party’s means will in most cases not be a factor taken into account in assessing whether a costs award should be made.

Ladak v DRC Locums Limited UKEAT0488/13

In this case the EAT considered whether a costs award in the employment tribunal could be made when a party was represented by its in-house legal team. The answer was yes.

Mr Ladak was employed by DRC for several years but his employment was terminated in May 2011. In August 2011 he brought claims for unfair dismissal and discrimination on the grounds of religion or belief. The discrimination claim was struck out at a hearing in January 2012 but his unfair dismissal claim was allowed to proceed. However, when he did not comply with directions DRC applied for the claim to be struck out. The Tribunal wrote to Mr Ladak warning him that his claim would be struck out unless he objected to the application in writing within 7 days. Mr Ladak did not do so and his claim was struck out on 2 July.

The hearing had been listed for 7 days and was due to start on 9 July. DRC then applied for costs on the basis of the work it had undertaken in preparation for the hearing and Counsel’s fees. DRC relied in its application on Mr Ladak’s failure to comply with directions and his failure to pursue his claim. The Tribunal found that a costs award was appropriate given Mr Ladak’s behaviour and, as the amount claimed substantially exceeded £20,000, it referred the matter for a detailed assessment in the County Court. Mr Ladak then argued that DRC should not be able to recover its costs in respect of its in-house legal team as those individuals were being paid a salary in any event. The Tribunal rejected this and Mr Ladak’s appeal failed.

Key point: An in-house legal team will now be able to seek recovery of costs but there is no helpful guidance in this case on what costs might be recoverable and how this might be assessed. The original judgment in this case suggested that the final costs award may be based on the time spent by the in-house team and then applying a charging rate.

11. Injunction during notice period

Sunrise Brokers LLP v Rodgers [2014] EWCA Civ 1373

Mr Rodgers was an inter-dealer broker for Sunrise. He had a 12 month notice period and post-termination restrictions of 6 months. He was contracted not to give notice before September 2014. However he decided to accept an offer of employment with a competitor and purported to give notice to terminate his employment with immediate effect on 27 March 2014. Unusually Sunrise refused to accept his termination and indicated that it would hold Mr Rodgers to his notice period and post-termination covenants. If Mr Rodgers was willing to work his notice period Sunrise would be willing to pay him. Mr Rodgers refused to do so.

Sunrise then brought an action for a declaration that the contract still subsisted and for an injunction requiring Mr Rodgers to observe the terms of his contract until October 2014 (Sunrise having agreed to a shorter notice period than 12 months). It sought also to invoke the protection of the restrictive covenants but throughout this period he would be without pay as he was not willing to work.

The High Court granted Sunrise the injunction and rejected Mr Rodgers’ argument that he was released from his obligations under his contract because Sunrise had failed to pay him. His subsequent appeal was dismissed. Mr Rodgers had not been put on garden leave, he had already agreed a start date with his new employer for January 2015 and he was already bound by a 6 month post-termination restriction. He could therefore be restrained from not working for a competitor during his employment contract for 10 months in all calculated from the last day he attended work and there was no obligation for him to be paid because he had refused to return to work as asked. Mr Rodgers’ argument that the injunction should not be granted where the effect would be to compel him to continue to work for Sunrise failed

Key point: As the employer had elected to keep the contract alive, the employee remained an employee for the remaining period of his employment. As his right to remuneration depended on his willingness to work he was not entitled to terminate his contract because of a failure to pay. The effect on an employee of not receiving payment for a period of injunctive relief will not always compel him to return to work (or face “starvation”) but whether it does so will depend on the facts of each case and the evidence produced, if the compulsion point is to be argued.

12. Pay for additional paternity leave

Shuter v Ford Motor Co Ltd ET Case 3203504/13

Mr Shuter was employed by Ford and his wife was employed by Essex County Council. Following the birth of their son in December 2012 Mrs Shuter returned to work from maternity leave on 15 July 2013. Mr Shuter then took additional paternity leave from Ford from then on until December 2013. Ford pays its employees on maternity leave up to 52 weeks’ full basic pay but only additional paternity leave at the statutory rate. Mr Shuter brought Tribunal proceedings arguing that Ford’s failure to pay additional paternity pay equivalent to enhanced maternity pay was direct and indirect sex discrimination and he had lost approximately £18,000 as a result. The Tribunal rejected his claims. The reason for Mr Shuter’s treatment was not because of his sex but because he had applied for additional paternity leave. The appropriate comparator was a woman applicant for additional paternity leave and as such they would have been treated exactly the same as him. The comparator was not a female employee who was on maternity leave.

The Tribunal also rejected Mr Shuter’s argument that Ford’s policy as between maternity and paternity pay exceeded what was reasonably necessary. The Tribunal was satisfied that the difference was proportionate in order to encourage women into a male dominated workforce, as it promoted recruitment and retention, which was legitimate. In finding that this PCP was proportionate the Tribunal took into account the fact that more favourable treatment of women during maternity leave arose simply due to the fact of pregnancy and childbirth, which is allowable.

Key point: This is a Tribunal decision and is not binding on other Tribunals but it does address the question of the relationship of maternity and paternity policies, enhanced pay and discrimination. Employers will also want to wait to see how the impact of the introduction of shared parental leave and pay from April 2015 onwards plays out. Employers may have to decide whether to offer enhanced shared parental pay to match their enhanced maternity pay. There may not be a substantial additional cost in this as, the Government estimates that the initial take up of shared parental leave will only be by 2%-6% of all eligible employees.

13. Disability discrimination – ignoring a final written warning for sickness absence

General Dynamics Information Technology Ltd v Carranza UKEAT/0107/14

C was employed by the London Borough of Lambeth as an adviser with effect from 2 May 2008. His employment transferred to General Dynamics under TUPE on 1 December 2011. He suffered from a disability and had had very substantial periods off work. Lambeth held a sickness panel hearing with him in September 2011. By this time he had been off for a total of 206 days in 3 years. Following the hearing he was given a final written warning effective for 24 months. C sustained a shoulder injury and he was off for 3 months from July 2012 to November 2012. When he returned to work, General Dynamics held a formal sickness hearing and in December 2012 he was dismissed. C appealed but his appeal was rejected.

He brought a claim in the Tribunal that General Dynamics’ failure to disregard his sickness absence for his disability amounted to a breach of its duty to make reasonable adjustments. The Tribunal agreed and went on to find that the dismissal was procedurally unfair but also to make a Polkeydeduction. General Dynamics appealed.

The EAT overturned the findings of disability discrimination based on the failure to make reasonable adjustments and unfair dismissal. The EAT held that the Tribunal had no sustainable basis for concluding that it was reasonable for General Dynamics to disregard the warning. The EAT also rejected the argument that the dismissal was unfair because General Dynamics had failed to reconsider at the time of the dismissal whether the earlier final warning had been justified. The dismissal of C was a proportionate means of achieving the legitimate aim of constant attendance at work.

Key point: The EAT doubted whether the mental process of disregarding a final written warning was a “step” for the purposes of s. 20(3) of the Equality Act 2010, although formally revoking a warning might be such a “step”. There are very limited possibilities for reopening the circumstances of the final written warning. If there has been a final written warning and substantial periods of absence since that time, then where there is medical evidence that absence patterns were unlikely to improve, it should be reasonable to dismiss an employee.

14. Discrimination protection not available to consultant

Halawi v WDFG UK Limited trading as World Duty Free [2014] EWCA Civ 1387

Ms Halawi was a beauty consultant selling Shisheido cosmetics at a World Duty Free outlet at Heathrow airport. She provided her services through Nohad Limited, a limited company which she had formed specifically for this purpose, to CSA, a company which provided management services to Shisheido. Nohad invoiced CSA every month for the work done. Mrs Halawi did not have a written contract with WDF or CSA, in fact none of the key relationships had been reduced to writing. There was a requirement however for Ms Halawi to send a substitute if she was unable to work personally. She did this on occasion. She was not paid if she did not work and she had no entitlement to holiday or sick pay. No one was under an obligation to provide work to Ms Halawi and she was free to refuse work if offered. When WDF withdrew her airside pass which meant she could no longer work at the airport she claimed she had been unfairly dismissed and discriminated against. In order to bring her claims she had to show that she was an employee of either WDF or CSA.

The Tribunal found that she was an employee of neither. There was no contract of any kind between her and WDF. The relationship with CSA had been through Nohad rather than Ms Halawi herself. She appealed this decision.

The EAT agreed that she did not have any employment relationship with CSA or WDF. There was an absence of control, a lack of subordination, no contract of employment and there was no contract personally to do the work.

Ms Halawi appealed to the Court of Appeal but was again unsuccessful. This was not a sham arrangement. She had not been forced to enter into a contract to disguise a true employment relationship. She had set up her own limited company and freely entered into an arrangement with CSA which showed she had unrestricted rights of substitution and she was not subject to WDF’s control in any way. There was a complete absence of the typical employment elements.

Key point: Although a “worker” does not have a universal meaning for the purposes of EU law it does have a settled meaning as established in EU and domestic case law. There must be a contractpersonally to do work and when considering an employment relationship the words “contract” and “personally” must be taken into account. A person who is classified as self-employed may in fact be a disguised employee or worker. Therefore it is necessary to have regard to the reality of the situation. The question of whether a person is an employee or worker is one of fact and if complex arrangements are entered into for commercial reasons these can have the consequence of providing no recourse for potential employment related claims.

Windle and Arada v Secretary of State for Justice UKEAT/0339/13

Dr Windle and Mr Arada, who were Czech and Algerian respectively, were on the register of interpreters. HM Court Services drew interpreters from the register to assist litigants and witnesses who did not speak English as their first language.

Between January 2003 and August 2012 Dr Windle performed 1,000 assignments for HM Court Services, around 1,600 for the police and some for the NHS. Mr Adada spent around 80% of his working time performing assignments for HM Court Services. Their written terms of service provided no guarantee of work and no obligation for them to accept work when offered it. They were treated as self-employed for tax purposes. The handbook made it clear that it would be a criminal offence for an interpreter to send a substitute once they had accepted an assignment.

Dr Windle and Mr Arada brought race discrimination claims against the Secretary of State for Justice. They argued that HM Court Services treated them less favourably than British Sign Language interpreters in respect of their terms of service. The Tribunal dismissed their claims on the basis that they were not in employment and there was a lack of mutuality of obligation between the assignments. Further, with reference to the Court decision in Hashwani above the Tribunal concluded they were not in a position of subordination when providing personal services to HM Court Services. In the circumstances they were self-employed and not employed under any type of contract falling within s. 82(3) of the Equality Act 2010 under which “discrimination law protected those who are in or apply for employment under a contract of employment, contract of apprenticeship or contract personally to do work”.

The interpreters appealed to the EAT. The EAT upheld their appeal. The Tribunal had misdirected itself in taking into account the absence of mutuality of obligation between assignments. The case was remitted to the same Tribunal for fresh consideration. It is for the Tribunal to decide whether the interpreters were subordinate enough or whether they were truly independent providers of services to the world at large and HM Court Services was merely one of their clients. What they did when they were not working for HM Court Services would be relevant.

Key point: Where independent providers of services seek protection against discrimination the Court must examine their subordination and integration into the business they are working in and their own business undertaking.

15. Change of base not substantial for dismissal purposes

Cetinsoy and ors v London United Busways Limited EAT0042/14

C worked as a bus driver on the number 10 route for CW. He was based at the Westbourne Park depot. On 30 January 2010 the route was taken over from CW by London United. This change amounted to a relevant transfer to which TUPE 2006 applied. One consequence of the TUPE transfer was that the Westbourne Park depot was not available as a base and London United required C and other number 10 drivers to work instead from Stamford Brook, about 3.5 miles away from Westbourne Park. The drivers did not like this change, two resigned and two worked for a while before resigning. All brought Tribunal claims arguing that they were entitled to be regarded as having been dismissed and that their dismissals were unfair due to this change of base.

It was a term of their contracts that they may be allocated to any of the company’s work locations, but Stamford Brook was not a required work location. It was common ground that requiring C and others to move there entailed a breach of contract. However the Tribunal Judge concluded that such a breach of contract was not fundamental. The move to Stamford Brook added at most 30 minutes travel time each day which was not a substantial increase. The Tribunal rejected C’s and others’ claims holding that the extended journey time was neither a substantial change nor a material detriment.

They appealed arguing that the place of work was a fundamental term of the contract and so the judge had erred in finding the breach of it was not repudiatory. The question for the Appeal Tribunal was whether the judge had come to the right conclusion. The alleged repudiatory conduct relied on by the employees was the requirement to move their base to Stamford Brook which was a substantial change. The EAT held the judge was entitled to come to his conclusion that there was no substantial change in working conditions such as to give rise to a dismissal under TUPE. It was also not a fundamental breach capable of amounting to a constructive dismissal.

Key point: A transferring employee will be treated as having been dismissed if the transfer involves a substantial change in working conditions to his detriment.

16. Service provision change and organised grouping

Costain Limited v Armitage and another UKEAT/0048/14

Mr Armitage was initially employed as a project engineer for ERH. In October 2012 he was promoted to project manager. This role involved the management of projects of varying complexity and value including the All Wales Regional Maintenance Contract (ARMC) and any works arising out of the Framework Agreement and ancillary contract. When, the ARMC came up for tender ERH lost the contract to Costain and a service provision took place on 1 February 2013. The ancillary works contract which was outside the ARMC did not transfer. During the consultation process Mr Armitage was told that he would transfer to Costain under TUPE as ERH estimated that he spent 80% of his time on the ARMC. Mr Armitage felt that ERH’s assessment did not take account of his revised responsibility which he had applied to his role since his promotion. Costain also decided that TUPE did not apply to Mr Armitage as he had not been assigned to the ARMC and as such would not transfer to its employment. Mr Armitage brought various claims against ERH and Costain.

At a preliminary hearing the Employment Tribunal ruled that Mr Armitage’s employment had automatically transferred to Costain under TUPE. It was clear to the employment judge that he was part of an organised grouping of employees in respect of the ARMC. Costain appealed to the EAT arguing that the Tribunal had placed too much emphasis on the percentage of time spent by Mr Armitage on the ARMC. The EAT agreed and remitted the case to a differently constituted Employment Tribunal.

The EAT found that the Tribunal had failed to take into account the distinction between the ARMC and other works carried out under the ancillary Framework Agreement. This was crucial given that Mr Armitage’s role under the ARMC was the subject of the service provision change whereas the ancillary works contract was not. The EAT felt that it was a crucial part of Costain’s case that Mr Armitage was a project manager who became engaged on various projects on a troubleshooting basis. The fact that he might have been more heavily involved in the ARMC just before the transfer did not mean that he had been assigned to it for the purpose of Regulation 4(1) of TUPE. The Tribunal had not analysed this question in sufficient depth and it had placed too much emphasis on the percentages put forward by the parties. ERH was also ordered to pay the fees of Costain’s successful appeal.

Key point: When considering the issue of which employees are eligible to transfer on a service provision change, employers should consider a two stage exercise of defining the organised grouping by applying the relevant case law on the meaning of organised grouping and then determining whether the employee is assigned to it.

17. Employee liability information under TUPE

Eville & Jones (UK) Limited v Grants Veterinary Services Limited (In Liquidation) ET/1803898/12

The parties both supplied veterinary and meat inspectors to slaughterhouses under the Food Standards Agency. Eville and Grants were notified that their contracts would expire on 1 April 2012 and they were invited to tender for the clusters in England under contracts to commence on 2 April. Eville was successful. It was accepted that the Grants’ employees would transfer under TUPE to Eville on 2 April and Grants began providing employee liability information to Eville. The information was needed by 19 March 2012. At that time Grants had already been in financial difficulty and was taking accountancy and insolvency advice. Grants’ employees did not receive their pay for March 2012. Eville issued tribunal proceedings against Grants for breach of Regulation 11(2)(d)(ii) of TUPE arguing that Grants had reasonable grounds to believe that its employees might bring claims against Eville arising out of the employment and it had failed to provide information about this to Eville.

The Tribunal upheld the claim and made an award of £65,500, that is £500 for each of the 131 transferring employees. Even though Grants had knowledge of the likely events, there was no explanation of its failure to comply with its duty of providing the appropriate employee liability information and no special circumstances. The Tribunal rejected Grants’ argument that it was only reasonable for it to believe that employees might bring claims once its bank account was frozen on 2 April.

In this case the failure by Grants was significant and not inadvertent. In awarding the minimum of £500 per employee which produced an award of compensation that exceeded the losses attributable to the breach of the notification duty. The Tribunal noted that it was not constrained by the maximum level of loss that Eville had suffered of approximately £42,000.

Key point: The time limit for providing employee liability information is now 28 days but that would not have helped Eville. The employees would still have transferred to it along with its liability for their unpaid salaries under TUPE. The case is nevertheless a reminder that a transferor has to provide all necessary information where a transferor has reasonable grounds to believe that an employee may bring a claim against the transferee arising out of the employee’s employment with the transferor.

18. Age discrimination payment taxable as termination payment

Moorthy v HMRC [2014] UKFTT 834

In March 2009, M, a senior employee at the local government team of an engineering contractor, was informed by his employer that he was to be dismissed by reason of redundancy. In March 2010 following a period of 12 months garden leave his employment was terminated and he received his statutory redundancy pay of £10,640. M then commenced proceedings at the Employment Tribunal alleging unfair dismissal and age discrimination. He entered into mediation with his employer and the parties agreed a Compromise Agreement under which before the end of the 2010/11 tax year M would receive an ex gratia sum of £200,000 by way of compensation for loss of office and employment.

In February 2012 M, through his advisers, informed HMRC that he believed the payment was not taxable. HMRC disagreed. The payment was taxable save for the £30,000 which fell under the statutory threshold and a further £30,000 which HMRC offered by way of concession to acknowledge M’s claim of alleged age discrimination. HMRC’s assessment was upheld by a formal review and M appealed to the First-tier Tribunal but his appeal was dismissed.

The payment of £200,000 was fully taxable under s.401 of the Income Tax (Earnings & Pensions) Act 2003, subject to the first £30,000 exemption (reduced by the statutory redundancy payment made). The Tribunal had no jurisdiction to allow the deduction of £30,000 that HMRC had proposed to make by way of concession. M’s liability to tax was increased accordingly after this concession was withdrawn when he appealed. A consequence M no doubt regretted.

Key point: The fact is that the most payments made in connection with the termination of employment are taxable in full subject to the £30,000 exemption. It is HMRC’s longstanding view that payments for discrimination are only exempt from tax if they are unconnected with the termination.

19. Data protection

The Information Commissioner’s Office has issued a warning about employees walking off with personal information from their employer. Such activity is a criminal offence. Mr. Pickles a former paralegal at Jordans solicitors in Dewsbury was prosecuted under s.55 of the Data Protection Act 1998 for illegally taking the sensitive information of over 100 people before leaving his employer for a rival firm in April 2013. Mr. Pickles had hoped to use the information in his new role. Although it consisted of file notes, template documents and workload lists it also contained sensitive personal data. He was fined £300 and ordered to pay a £30 victim surcharge and £438.63 prosecution costs.

Key point: Many employees think work related documents that they have produced or worked on belong to them and so they are entitled to take them when they leave. If they include other people’s details, then taking them without permission is an offence. The maximum fine can be up to £5,000 in a Magistrates Court or an unlimited fine in the Crown Court. Employees should be reminded of their obligations well before their departure.

20. Subject access request

From next month, s.56 of the Data Protection Act 1996 which outlaws enforced subjects access requests will come into force. It will then be a criminal offence for employers to require employees or job applicants to provide details of their criminal records by making an enforced data subject access request to the police. Any employer convicted of the offence will be liable to a fine of up to £5,000 in the Magistrates Court or an unlimited fine in the Crown Court.

The ICO has indicated that it intends to prosecute those who continue to enforce subject access requests.

21. Fixed term employees – less favourable treatment

Hall v Xerox UK Limited UKEAT/0061/14

The EAT in this case upheld a Tribunal decision that Mr Hall did not suffer detriment under the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 as a result of not qualifying for income protection under a permanent health insurance policy because his fixed term contract expired before the end of the 26 week qualifying period.

Mr Hall worked for Xerox under a succession of mixed term contracts. Xerox had agreed terms with the insurer Unum that if their employees had been off work for 26 weeks as a result of qualifying injuries Xerox could continue to pay them their income and be paid by Unum in turn. Under the terms of the insurance policy however, fixed term employees were not entitled to benefit from income protection where their fixed term contracts expired before the end of the 26 weeks’ qualifying period. That was the case with Mr Hall.

Although he was treated less favourably, the EAT held that this less favourable treatment was not caused by Xerox. The insurers’ decision not to make the payment was held to have caused the unreasonable treatment. In doing so, the insurer was not acting as the agent of Xerox under common law agency principles. The insurance contract between Unum and Xerox had nothing to do with agency. The Tribunal also found that on the evidence if Xerox had caused the detriment it would have been justified. Xerox had produced evidence that no other policy would have been suitable to cover a fixed term employee in these circumstances.

Key point: The case confirms that, as in discrimination legislation, common law principles of agency apply to determine whether an individual is acting as an agent for the purpose of the Fixed Term Employee Regulations. However, comfort can be drawn from this case by employers that they would not necessarily be held responsible for discriminatory terms in any underlying insurance policy.

22. Effective date of termination

Rabess v London Fire and Emergency Planning Authority [2014] UKEAT0029/14

Is the effective date of termination changed where as a result of an internal appeal an employee’s summary dismissal is substituted for dismissal with pay in lieu of notice? No, held the EAT in this case.

Mr Rabess was summarily dismissed for gross misconduct following disciplinary proceedings on 24 August 2012. He was a fire fighter and was entitled to one week’s notice for each year of continuous employment. No provision was made for payment in lieu of notice in his contract terms. He was informed in writing that his last day of service was 24 August and he was later advised of his right of appeal. Mr Rabess exercised his right of appeal which appeal was finally held on 9 January 2013. The outcome of his appeal was that his conduct was regarded as misconduct rather than gross misconduct but as he was already on a final written warning the penalty remained dismissal. Nevertheless he was entitled to notice pay which was paid and it was confirmed in writing that his last day of service remained 24 August 2012.

He did not commence proceedings against London Fire until 3 January 2013. His evidence was that his union had twice told him that he could not start proceedings until the appeal was dealt with. The employment judge found that the effective date of termination was 24 August 2012 and therefore his claim was out of time. The EAT agreed. The effective date of termination did not change as a result of the appeal. His dismissal was expressly confirmed and the outcome of the appeal did nothing to alter the date of dismissal. His only entitlement was to some notice pay. The fact that payment was made in lieu notice did not change the effective date of termination.

Key point: Only where the decision at an internal appeal results in a change of the date on which the employment is terminated, has that decision to be taken into account in determining the effective date of termination.

23. Union recognition

R (Boots Management Services Limited) v Central Arbitration Committee and others [2014] EWHC 2930

In this long running case the High Court refused to make a declaration of incompatibility under the Human Rights Act 1998 in relation to the statutory union recognition scheme in the Trade Union Labour Relation (Consolidation) Act 1992. This case concerned the PADUnion’s application to the CAC seeking recognition by Boots in respect of a group of workers. Boots resisted the application because it already had an established consultative relationship with another union BPA in relation to members of the proposed bargaining unit. However Boots did not negotiate with BPA over pay, working hours, holidays or other terms of employment and had no intention of doing so. The CAC allowed PADUnion’s application to proceed but the High Court held that that should not have happened, following a judicial review by Boots. In the meantime Boots had formalised their agreement with BPA as a ploy to prevent PADUnion getting access. For a recognition application to be admissible the CAC must be satisfied that there is not already in force a collective agreement under which a trade union is recognised as entitled to conduct collective bargaining on behalf of the workers in the proposed bargaining unit.

The Court held that this barrier to recognition could be overcome by applying for statutory de-recognition of BPA under Schedule A1 although that application would have to be made by a Boots’ worker and not by another union. If no worker was willing to make an application this would suggest there was insufficient support for recognition of the new union in any event. If the de-recognition application was successful, a future recognition application by the PADUnion would be admissible and its Article 11 rights would be protected.

Key point: The decision demonstrates that if a trade union is blocked from making a statutory union recognition claim by existing sweetheart arrangements it should persuade one of its members to apply for the de-recognition. The outcome of that process would give an indication of whether a new recognition claim would succeed. Nevertheless, for an employer there is a lot to be gained by negotiation, seeking to agree recognition informally and reaching a voluntary agreement with a Union on behalf of its workers.

24. Prohibition on advertising jobs exclusively in other European Economic Area countries

The Department for Business, Innovation and Skills has confirmed that there will be new regulations to prevent recruitment agencies from advertising jobs solely in other EEA countries. The Government intends the amendment of the Conduct of Employment Agencies and Employment Businesses Regulations should come into force by 31 December 2014. Consultation on this has already been completed with 31 responses. The ban will only apply to employment agencies and employment businesses operating in Great Britain. It will not prevent hirers based in Great Britain from using agencies based in other countries to advertise jobs in Great Britain or from advertising those roles directly themselves exclusively in other EEA countries.

25. Pensions

From 6 April 2016 when the new state pension is introduced contracting out of the additional state pension will end. The Department for Work and Pensions and HM Revenue & Customs have produced guidance which explains the impact of this change for employers and employees. There are about 2,500 private sector employers who offer an open contracted out salary related pension scheme. The state pension is changing for people who reach pension age on or after 6 April 2016.

26. Time spent carrying out trade union activities was not working time

Edwards and another v Encirc Limited ET/2412489/13

In this case a health and safety representative and a shop steward brought claims against their employer after it refused to take into account time spent on their union activities when calculating the 11 hour rest period that the employees were entitled to within a 24 hour period under the Working Time Regulations 1998. Their claims were unsuccessful as it was not time spent at their employer’s disposal, they were not carrying out their duties and their time was not classified as working time under any relevant agreement.

The Tribunal held that they had not been subjected to a detriment on union grounds. Although both employees relied on the recognition agreement entered into by their union and Encirc as the relevant agreement, the agreement itself was silent on the performance of union duties outside of normal working hours, pay for those duties or the issue of rest periods. Although Encirc had agreed to provide reasonable facilities to assist the union representatives in carrying out legitimate union duties this could not be construed as bringing time spent outside of normal working hours at union meetings within the definition of “working time”.

Key point: Where a recognition agreement expressly provides that time spent by a trade union representative is working time then such time will fall within the scope of the Working Time Regulations 1998 and employers will need to take this into account when organising for example shift patterns to ensure compliance with the Regulations and the maximum 48 hour week/rest entitlements.

27. Time limit for harassment claim did not start from date of transfer

Vernon v Azure Support Services and others UKEAT/0192/13

The EAT in this case held that the time limit for bringing a claim in respect of sexual harassment that continued over a period which spanned a TUPE transfer did not start to run from the date of the transfer but from the end of the period of the conduct complained of. This was so even though the transferee could not be liable for any acts of harassment post transfer because the employee carrying out the harassment had remained in the employment of the transferor.

Ms Vernon was employed by Port Vale Football Club as their sales manager but her employment then transferred to Azure under TUPE in July 2011 who employed her until her dismissal in October 2011. B was Port Vale’s Football Sales Manager and did not transfer to Azure. He remained employed by Port Vale until his employment ended on 1 October 2011. Before and after the transfer B subjected Ms Vernon to acts of sexual harassment. Although she raised complaints about this to both Port Vale and Azure, nothing was done. She brought claims after her dismissal of direct sex discrimination, sexual harassment, failure to act by Azure and Port Vale, victimisation and unlawful deduction of a bonus.

By the time of her hearing Port Vale had gone into administration and had no funds. Neither Port Vale nor B were represented at the hearing, both having been de-barred. The Tribunal held inter alia that B was liable to Ms Vernon in respect of harassment. His employer Port Vale was jointly and severally liable for that harassment. However from the date of the transfer of Ms Vernon’s employment to Azure, Ms Vernon and B were employed by different employers and therefore Port Vale could not be liable for any acts of harassment that occurred after that date. B’s harassment was a continuing act which ended on 1 October 2011 with his dismissal.

Although the employment of Ms Vernon by Port Vale ended on 4 July 2011 that did not determine when the time limit started to run. In this case the harassment conduct was found to have extended over a period until 1 October 2011 and so applying s.123 of the Equality Act 2010 the time limit for her claims began to run at the end of that period meaning her claims were in time since Ms Vernon’s ET1 was lodged on 29 December 2011. Azure was therefore vicariously liable for the acts of harassment carried out by B before the transfer.

Key point: Acts of harassment committed after the date of the transfer were not actionable as they were not committed by an employee of the transferee but they can extend the period of a continuing act for the purpose of liability for the pre-transfer acts. The risk of such claims should be ascertained during the due diligence exercise pre-acquisition.

28. Analysis of women in the workplace and on boards

HM Treasury has published an analysis of the number of women currently in employment and the occupations they hold. Since 2010 the number of women in employment has increased by 771,000 to a record high of 14.4m. The increase has been spread across four main sectors of the economy, agriculture and mining, manufacturing, construction and services. Nearly 80% of the increase in women’s employment since 2010 has been in highly skilled occupations, managers and senior officials and professional or associate professional occupations compared with 55% of men.

New statistics published by the Department of Business Innovation & Skills on 2 October 2014show that women’s representation on FTSE 100 boards has increased from 20.7% in March 2014 to 22.8% but it means that women still account for only 249 of the 1,094 FTSE 100 board positions. Vince Cable is urging businesses to keep up the momentum to reach the 25% women on boards target by 2015. Not long to go though.

And finally…

Wishing you compliments of the season and a prosperous and successful 2015.