Legislation Changes and Guidance Updates
1. Revised ACAS Code of Practice
On 11 March 2015, the Code of Practice (Disciplinary and Grievance Procedures) Order 2015 came into force, revising the Acas Code of Practice on Disciplinary and Grievance Procedures(the “Code of Practice”). The minor change made to the Code of Practice reflects the fact that an employee has an absolute right to request their choice of trade union representative or workplace colleague as their companion to disciplinary and grievance hearings provided the request to be accompanied is itself reasonable. What is reasonable will depend on the circumstances of each case. A reasonable request would provide sufficient information and time to enable the employer to deal with the practicalities of the companion’s attendance at the hearing. The revision reflects the Employment Appeal Tribunal’s (EAT)’s decision in Toal v GB Oils.
A link to the new code of practice is here.
2. Shared Parental Leave
The new shared parental leave regime has now come into force and applies to employees in England, Scotland and Wales whose babies are born, or who will adopt a child, on or after 5 April 2015. Additional paternity leave will cease to exist, but compulsory maternity leave of two weeks (or four weeks for certain workers) will be retained. Eligible parents/adopters will be able to share all or part of the remaining maternity or adoption leave and pay as shared parental leave and pay. Ordinary parental leave (as detailed below) remains.
Key Point: Employers should be finalising new shared parental leave policies and making consequential amendments to their current maternity, paternity and adoption policies, if they have not done so already.
3. Family Friendly Regulations
As we have previously reported, various Regulations relating to family-friendly rights have been made. These include:
- The Maternity and Parental Leave etc. (Amendment) Regulations 2014 (SI 2014/3221), which extend the existing parental leave regime to parents of children aged between five and 18. This right became available on 5 April 2015.
- The Paternity and Adoption Leave (Amendment) (No. 2) Regulations 2014 (SI 2014/3206), which extend the current rights to adoption leave contained in the Paternity and Adoption Leave Regulations 2002 to individuals fostering a child under the "Fostering for Adoption" scheme. This right became available on 5 April 2015.
- Three sets of Regulations, which purport to include couples who are adopting a child from outside the UK in the right to shared parental leave and pay: Employment Rights Act 1996 (Application of Sections 75G and 75H to Adoptions from Overseas) Regulations 2014 (SI 2014/3091); Shared Parental Leave and Paternity and Adoption Leave (Adoptions from Overseas) Regulations 2014 (2014/3092) and the Statutory Shared Parental Pay (Adoption from Overseas) Regulations 2014 (2014/3093). This right became available on 5 April 2015.
Key Point: Employers should be updating their adoption and parental leave polices to take account of these changes, if they have not done so already.
4. Increases in statutory maternity, paternity, adoption and sick pay
The Welfare Benefits Up-rating Order 2015 has up-rated certain social security benefits and payments:
- From 5 April 2015 – statutory maternity, adoption, paternity and shared parental pay increased to £139.58 p/w.
- From 6 April 2015 – statutory sick pay increased to £88.45 p/w.
5. Increases in unfair dismissal and redundancy pay limits
The following new rates will apply where a dismissal/redundancy takes effect on or after 6 April 2015 (the old rates apply in relation to dismissals that have taken effect prior to 6 April 2015, but which are litigated at a later date):
- Maximum amount of a week’s pay - £475.00 (old rate £464.00).
- Maximum statutory redundancy/basic award - £14,250.00 (old rate £13,920.00).
- Maximum unfair dismissal compensation award cap - £78,335.00 (old rate £76,574.00).
- Maximum combined compensation for unfair dismissal - £92,585.00 (old rate £90,494.00).
6. BIS guidance for employers and prescribed persons on whistleblowing
On 20 March 2015, the Department for Business, Innovation and Skills (BIS) publishedWhistleblowing: Guidance for Employers and Code of Practice and Whistleblowing: Prescribed Persons Guidance.
The prescribed persons guidance sets out information on the role of a prescribed person and how they should handle protected disclosures.
The employer guidance is intended to help employers understand the law relating to whistleblowing and understand how to put whistleblowing policies in place, and bring them to the attention of their staff.
A link to the guidance is here.
7. Abolishment of “wider recommendations” in discrimination cases
It was intended that Section 2 of the Deregulation Act 2015, abolishing the power of tribunals to make “wider recommendations” (e.g that an employer introduces a diversity policy or undertakes entire staff retraining), was to come into force on 6 April 2015. This will now come into force in October 2015.
Key Point: When section 2 of the Deregulation Act 2015 comes into force, Tribunals will retain the power to make recommendations to employers that benefit an individual Claimant, but will not be able to make “wider recommendations” which affect the employer’s entire workforce.
1. Unfair Dismissal – Drug Testing
Bailes v First Bristol Limited UK EAT/0526/13
Mr Bailes was employed as a bus driver with the Respondent from 20 September 1990, until his dismissal on 27 June 2012 for failing a routine driver drugs test for traces of cocaine. Mr Bailes had an unblemished disciplinary record and during his appeal queried:
- Whether the fact that he was taking antibiotics could have led to a false positive test result.
- Whether the fact that he had handled a significant number of banknotes (a 2010 Forensic Science Service study found that 1 in 20 bank notes was likely to have very high readings of cocaine traces) and eaten his sandwiches shortly after doing so meant that he might have unknowingly taken in cocaine.
- That he had undertaken a £440.00 hair strand test, at his own expense, the results of which produced a negative result for cocaine for the previous three months.
Mr Bailes’ appeal was unsuccessful and he claimed unfair dismissal.
An employment judge accepted that the Respondent had taken reasonable steps to investigate the impact of the antibiotics and potential relevance of the hair strand test. However, the judge held that Mr Bailes’ dismissal was unfair by reason of the Respondent’s failure to investigate the possible accidental contamination of the test from the banknotes. The Respondent appealed.
The EAT remitted the case to the original judge who appeared to have overlooked comments by an expert which were relevant to the question of whether and, if so, to what extent handling banknotes could have resulted in a false positive test result for cocaine.
The Employment Tribunal judge held that it was incumbent on the Respondent, as part of a reasonable investigatory process, to investigate the possibility that that bank note contamination may have had some significance to the Claimant’s positive cocaine drug test. As such, it held that Mr Bailes had been unfairly dismissed and awarded Mr Bailes £84,000.00 in compensation.
Key Point: It is imperative that employers undertake a fair and reasonable investigation into drugs and alcohol allegations, considering all available evidence, before disciplining or dismissing staff.
2. Discrimination – Philosophical Belief
Henderson v GMB UKEAT/0073/14/DM
Can an accusation as part of a heated exchange that a letter was “too left-wing” amount to harassment related to belief? Not necessarily.
Mr Henderson, who was employed as a Regional Organiser by the General and Municipal Boilermakers Union (GMB), was dismissed on 7 December 2012 for gross misconduct. Prior to his dismissal, Mr Henderson had publicised a picket line at the House of Commons and wrote a day of action letter; this lead to Ed Milliband being asked difficult questions by David Cameron. Mr Milliband’s office then contacted the General Secretary of the GMB (Paul Kenny) who called Mr Henderson, shouting at him that the ‘day of action letter’ was “too left wing” and “over the top”.
Having found that Mr Henderson was fairly dismissed for gross misconduct (being unmanageable and making unsupported allegations of collusion between the GMB and the Labour Party), the Employment Tribunal also found that he had suffered unlawful direct discrimination and harassment on the basis of the protected characteristic of his “left-wing democratic socialist beliefs” (referred to as ‘protected beliefs’). The Tribunal held that the protected beliefs formed a substantial part of the reasoning for his dismissal and were an effective cause of it. As for the harassment relating to the Claimant’s protected beliefs, three incidents of unwanted conduct by the GMB (including the above incident with Mr Kenny) were found proved, all of which had the purpose of creating an intimidating, hostile or humiliating environment for him. Both parties appealed.
The EAT dismissed the appeal of Mr Henderson holding that:
- the individual incidents (including the “too left wing comment”) were insufficient to amount to unlawful harassment based on philosophical belief, emphasising that context and seriousness must be taken into account when assessing whether an act is sufficiently serious to amount to unlawful harassment. It was held that “To conclude that the telephone conversation was an unlawful act of harassment is to trivialise the language of the statute”.
- account must be taken of the alleged discriminator’s awareness that a Claimant was manifesting a protected belief so as not to conflate the “Respondent’s reasons for treating the Claimant as it did with [the Claimant’s] reasons for acting as he did”. In this case, there was an absence of evidence that Mr Henderson’s beliefs had operated on the minds of the decision makers. It was his conduct that was an issue.
- all qualifying beliefs are equally protected, and philosophical beliefs may be just as fundamental as religious beliefs to a person’s individuality and daily life.
Key Point: Whilst isolated and one-off instances may be regarded as harassment, they must reach a degree of seriousness before being regarded as so. An individual’s philosophical belief is equally protected under the law as any other category of belief.
3. Type 2 Diabetes controlled by diet is not a disability within the meaning of the Equality Act 2010
Metroline Travel v Stoute UKEAT/0302/14/JOJ
Mr Stoute was employed by the Respondent as a bus driver from 24 February 1992 to 11 March 2013 when he was dismissed for gross misconduct. Mr Stoute had a somewhat chequered employment history, including diverting his bus so he could go and buy chicken kebabs. Mr Stoute also suffered from Type 2 diabetes which he controlled largely by avoiding drinking sugary drinks.
The Employment Tribunal rejected Mr Stoute’s substantial claims for unfair dismissal, discrimination arising from disability and failure to make reasonable adjustments, but accepted that Mr Stoute’s Type 2 diabetes automatically made him a disabled person within the meaning of the Equality Act 2010. It held that a diabetic diet was equivalent to medical treatment, and that without that treatment, Mr Stoute’s condition would meet the definition of disability.
Despite the Claimant losing on his substantive grounds, the EAT allowed the Respondent’s appeal. The Respondent had other employees with Type 2 diabetes who may have relied on the Employment Tribunal judgment to argue that they too were disabled for the purposes of the Equality Act 2010.
The EAT was unable to accept that abstention from sugary drinks constitutes a substantial adverse effect on day-to-day activities caused by the Type 2 diabetes. As such, the EAT held that Type 2 diabetes per se does not amount to a disability and the Employment Tribunal had made an error of law. The Claimant was ordered to repay the Respondent’s fees in full.
Key Point: Type 2 diabetes does not, automatically, amount to a disability under the Equality Act 2010. Claimants with Type 2 diabetes will have to demonstrate that they meet the definition of disability.
4. Disability Discrimination – Reasonable Adjustments
Is an employer required to make reasonable adjustments, where an employee gives no sign they will be returning to work? No
Doran v Department for Work and pensions UKEATS/0017/14/SM
Miss Doran (D) began working for the Department for Work and Pensions (DWP) as an administrative officer in May 2009. In January 2010, she went on sickness leave due to stress. D produced a medical certificate and asked the DWP if part-time hours could be considered in the future.
In February 2010, D attended a meeting where her manager offered her an administrative assistant role and part-time hours for four weeks to support her return to work. D stated that she would consult her doctor but did not accept the offer. DWP's attendance policy stated that absences would not generally be supported if there was no indication of the employee returning to work within six months. By May 2010, with D not having returned to work, D was given notice of dismissal.
D brought a disability discrimination claim on the basis that DWP had failed to make reasonable adjustments. The Employment Tribunal accepted that D did have a disability and was placed at a substantial disadvantage by the DWP's attendance policy. The Employment Tribunal, however, dismissed D's claim and held that DWP's duty to make reasonable adjustments had not been triggered because D had not informed DWP of a return date, or given any sign that she would be returning to work at a particular time if adjustments were made. D appealed.
The EAT dismissed the appeal and held that the Employment Tribunal had been entitled to find that DWP's duty to make reasonable adjustments had not been triggered because D had not become fit to work even if adjustments were made. The EAT further established that the onus was on D to contact the DWP when she became fit again to work.
Key Point: There must be an indication from the employee that they might be fit to return to work at some point before the employer’s duty to make reasonable adjustments is triggered. Despite this, it is good practice for an employer to maintain an appropriate level of contact with an employee on sick leave in order to keep updated on their medical condition and ask, at an early stage, about what reasonable adjustments could be made should they be fit to return to work.
If a Claimant successfully appeals against dismissal under a contractual appeal procedure, are any further steps required to revive the employment contract? No
Salmon v Castlebeck Care (Teesdale) Limited and OthersUKEAT/0304/14/DM
Mrs Salmon (S) was employed by Castlebeck Care Ltd (CC Ltd) until she was dismissed for gross misconduct on 10 July 2013. S exercised her contractual right to appeal. On 4 September 2013, CC Ltd's business transferred to Danshell Healthcare Ltd (DH) under the TUPE Regulations 2006 (as amended).
On 17 September 2013, S's appeal was heard by the HR Director. At the appeal, the HR director deemed S's dismissal to be “unsafe” but no express decision was taken to reinstate S, or to indicate that her original employment contract had been revived as a result. S was not told of the outcome of her appeal.
DH then instructed its advisers to arrange a settlement agreement with S. However, a scheduled meeting with S was subsequently cancelled and no offer was made.
S brought claims for unfair dismissal against both CC Ltd and DH arguing that her employment had transferred to DH and its subsequent behaviour towards her had the effect of dismissing her. The Employment Tribunal dismissed S's claim against DH on the basis that she had never been employed by them. S appealed, arguing that her employment had automatically transferred to DH under Regulation 4(3) of TUPE and that DH’s behaviour towards her amounted dismissal.
The EAT allowed the appeal. Citing the decision in Roberts v West Coast Trains Ltd, the EAT ruled that S's contractual appeal had been successful which therefore had the effect of reviving her employment contract. There had been no need for the outcome of the appeal to have been communicated to her in order for it to be effective. As a result, the EAT found that given that S was still an employee immediately prior to the transfer, she was entitled to bring her claim against the transferee, DH.
Key Point: Whilst serving as a useful reminder that transferees need to be mindful of the fact that they could be liable for claims from employees who, at the time of the transfer, had been dismissed; this case also demonstrates that it is not necessary to communicate the outcome of a successful appeal to the employee in order for the automatic revival of the employee’s contract of employment to take effect. One way to mitigate against this might be to include within any appeal process a term that provides employment will not be reinstated unless and until a finding of reinstatement has been made and communicated to the employee.
6. Collective Consultation – Advocate General Wahl considers that the EAT’s decision in the “Woolworths’ Case” was wrong
USDAW and another v WW Realisation 1 Lid (in liquidation) and others Case C 392/13
The EU Collective Redundancies Directive (the “Directive”) provides two options for Member States regarding how the collective consultation duty is triggered. The second option, adopted by the UK, triggers the duty to consult representatives when 20 or more redundancies are proposed within a period of 90 days or less, whatever the number of employees employed in the establishments in question.
The EAT ruled last year in the “Woolworth’s case” that the UK legislation on collective redundancy consultation was not compatible with EU law. The EAT decided that the UK rules had to be read as requiring employers to collectively consult whenever an employer proposes 20 or more redundancy dismissals in 90 days or less across its business, regardless of how many redundancies are proposed at any single establishment.
On appeal, however, the Court of Appeal asked the ECJ whether the EAT’s approach was correct, or whether the trigger is in fact 20 or more redundancies in a particular establishment (i.e. not across a business as a whole).
Advocate General Wahr (the “AG”) has now released an Opinion and has said that the EAT’s approach in Woolworths was wrong and that the Directive does not require aggregating the number of dismissals in all the employer’s establishments for the purpose of triggering the duty to consult.
Key Point: The decision of the AG is not binding. We await the decision of the ECJ (which often, but not always, follows the Opinion of the AG) and then the case will return to the Court of Appeal for the final decision. However, it raises the hope that we may return to the pre-Woolworths position of collective consultation obligations being triggered on an establishment by establishment basis. In practice, this will mean that the duty to collectively consult is triggered less frequently.
7. Termination for Gross Misconduct
Can an employee be fairly dismissed for gross misconduct if an employer finds evidence of him sending pornography as part of a "fishing exercise" to find a reason to summarily dismiss? Yes
Williams v Leeds United Football TLQ/14/1059
Mr Williams (W) was employed as a technical director by Leeds United Football Club (LUFC). The terms of W's employment were orally agreed with the chairman at the outset of his employment and were not confirmed in writing. The orally agreed terms included an entitlement to 12 months' notice.
Following a restructuring of its operations on 23 July 2013, LUFC gave notice of redundancy to W. It stated that he was entitled to three months' notice, in accordance with its standard senior management contract.
On 24 July 2013, W was invited to attend a disciplinary hearing on 29 July 2013 to consider allegations of gross misconduct. More specifically, the allegations concerned an email sent by W from his work account to a male friend five years earlier which contained pornographic images. LUFC alleged that W had stored pornographic material using computer equipment belonging to LUFC and had forwarded that material to a person outside of LUFC. W did not attend and the disciplinary hearing subsequently went ahead in W's absence.
On 30 July 2013, W was summarily dismissed without notice or pay in lieu of notice, having been found guilty of the allegations and in breach of the LUFC’s internet and email code of practice. W appealed his dismissal and his appeal was not upheld.
Following his dismissal, W issued a claim for damages in the High Court in respect of his 12 months' notice pay, loss of pension, other contractual benefits and a statutory redundancy payment. He claimed that his actions did not amount to a repudiatory breach of contract enabling LUFC to summarily terminate his employment.
After proceedings had been issued, LUFC discovered that W had also sent the same email with images to a junior female employee and another male friend around the same time as his original email. Accordingly, LUFC amended its defence.
The High Court found that W forwarding the email to a junior employee and to two friends outside of LUFC was a breach of the implied term of mutual trust and confidence. Moreover, W’s conduct was likely to seriously damage the relationship of trust and confidence between him and LUFC and was sufficiently serious to amount to a repudiatory breach of contract.
The fact that W had forwarded the email over five years before it was discovered, or that LUFC had been actively looking for a reason to avoid paying the employee's 12 months' notice pay, was irrelevant.
Key Point: The fact that W held a senior management position and the employer was a football club (subject to public and media attention) were significant factors in High Court’s decision that W had breached the implied term of mutual trust and confidence. The court may have reached a different decision in different circumstances. Generally, employers should think carefully before embarking on a “fishing exercise”.
8. Discrimination – Bonus
Land Registry v Houghton and Others UKEAT/0149/14
Is it discriminatory for an employer to deny an employee an employee bonus where the bonus criteria excluded payment if sickness absence warnings were in place (and no exercise of discretion was possible)? Yes.
In 2012 the Land Registry operated a discretionary bonus scheme of £900 (pro-rated for part-time employees). Under the terms of the scheme, an employee who received a formal warning in respect of sickness absence during the relevant financial year was ineligible to receive the bonus. Managers had discretion in conduct cases to determine that the warning would not affect entitlement to any bonus. However, there was no such discretion permitted for sickness absence warnings.
A number of claimants brought claims against the Land Registry when they were not paid the bonus after being absent due to disability. They claimed disability-related discrimination, asserting that the decision not to pay the bonus followed on from something arising in consequence of their disabilities (i.e. their absences).
The Employment Tribunal found in favour of the claimants as the unfavourable treatment shown by the Land Registry arose as a consequences of their disabilities. The Land Registry appealed.
The EAT agreed with the ET, confirming that, while the issue of a sickness absence warning in itself was not discriminatory, refusing to award bonuses as a result was.
Key Point: Discrimination arising from a disability is capable of justification if the treatment is "aproportionate means of achieving a legitimate aim". It was not disputed that the Land Registry had a legitimate aim of "acknowledging employees’ contributions towards corporate achievements and encouraging good performance and attendance". However, the Land Registry failed to establish proportionate means as managers had no discretion to decide that the employee would not be excluded from receiving the bonus, unlike the position with a warning for conduct. Employers should review their bonus policies accordingly to ensure there is fairness in this respect. The concept of discrimination arising from disability is a broad one and no comparator is required. Accordingly, it can be an attractive claim for employees to bring.
9. Early Conciliation –Time Limits
Booth v Pasta King UK Ltd - 1401231/2014
Mr Booth (B) was dismissed on 2 April 2014 for gross misconduct. B would normally have to submit his unfair dismissal claim to the Employment Tribunal within three months of the termination date - 1 July 2014. B contacted ACAS under the Early Conciliation (EC) Scheme on21 May 2014. A settlement was not reached and B received his EC Certificate on 21 June 2014. B filed his claim for unfair dismissal to the Employment Tribunal on 24 July 2014.
The employer, Pasta King (P), applied to have the claim struck out on the grounds that B was outside of the extended time limit to bring a claim. P argued that the time limit was one month from B’s receipt of the EC certificate, which would make the deadline for submission of his claim21 July 2014.
The Employment Tribunal ruled that the claim had been brought in time, on the basis that EC Scheme provides two ways in which time to submit an ET1 could be extended:
- the Scheme allows for the time taken during conciliation to be added to the original time limit, or
- simply adds a further month from when the EC certificate was received by the Claimant (but only where the time limit had or would expire within a month of the certificate being received).
The Employment Tribunal found that neither of the above take precedence over one another, but apply cumulatively. Moreover, it was held that the Claimant could choose whichever was most beneficial in the circumstances.
Key Point: Employers must look at whether a claim has been brought within 3 months of the date of termination, but also now whether the claim is extended by either of the extension provisions in the legislation. However, this is only an Employment Tribunal decision and is not binding authority on other tribunals.
10. Stress at Work – Foreseeability of Psychiatric Illness
Was an employer liable for an employee’s psychiatric illness caused by occupational stress? No, not on the facts of this case.
Easton v B&Q plc  EWHC 880 (QB)
Mr Easton (E) joined the hardware store B&Q in 2004 as a store manager, having previously worked as a store manager for the supermarket Sainsbury’s. E advanced well within B&Q and in 2008 was appointed manager of the Romford store, with the remit of managing the store’s refurbishment.
In May 2010 E was diagnosed as suffering from depression, and was signed off from work, receiving medication and therapy. In September 2010 he returned to work on phased basis at a less busy store, but this ultimately failed to work out. E was recertified as unfit to work due to depression and brought proceedings against B&Q, alleging his initial illness was caused by occupational stress and that this occupational stress was due to the negligence and/or breach of statutory duty on the part of B&Q. Further, E claimed that B&Q were in breach of duty in their management of his return to work, causing a relapse of his illness. B&Q accepted that Mr Easton has suffered a psychiatric illness, but that his illness was not foreseeable at any stage.
The High Court agreed with B&Q and dismissed E’s claim for lack of foreseeability. Mr Justice Davis relied on Hatton v Sutherland  ICR 613, the leading authority on claims by employees for damages in respect of psychiatric injury caused by stress in the workplace. He held that E had spent his 10 year managerial career in charge of large retail outlets, had no history of any psychiatric or psychological problems and nothing about E gave anyone any clue that he might succumb to a psychiatric illness. On E’s return to work, the fact that he was still taking medication was not an indication of how his work should be managed. B&Q were under no general obligation to make searching enquiries of E, or seek permission for medical input. E raised no express concerns regarding any stress he might be suffering to senior managers and B&Q were entitled to assume that E could withstand the normal pressures of his role.
Key Point: Whilst cases such as this will be very fact specific, the threshold for breach of duty is high and requires foreseeability of the harm in fact suffered. An employer’s obligation to act arises when it is reasonable for it to do so. Employees should be encouraged to raise any concerns they may have about themselves, or a colleague, in confidence. Employers should also recognise the potential need to provide additional support to an individual if they have previous instances of depression, prolonged periods of absence, or concerns are raised by them or their colleagues.
11. Holiday Pay – Holiday Pay includes Commission
Lock v British Gas - 1900503/12
We have finally received the long awaited Employment Tribunal decision in Lock v British Gas Trading Limited, following the decision of the Court of Justice of the European Union (CJEU).
Mr Lock was a salesman with British Gas on a basic salary with variable commission, which depended on the sales he achieved. Mr Lock could not earn commission whilst on annual leave, and therefore would lose the chance to earn commission by taking it. He brought a claim for his 'lost' holiday pay after taking leave between December 2011 and January 2012.
The CJEU confirmed that commission must be factored in when calculating holiday pay, but only for the 20 days’ European Directive annual leave, and not the 8 days’ UK domestic bank holidays.
The question for the Employment Tribunal Judge to decide was whether domestic legislation, in the form of the Working Time Regulations 1998 (the “Regulations”), can be read consistently with the European Working Time Directive (the “Directive”) and, if not, whether words can and should be added in interpreting the Regulations, so that the calculation of a week’s pay conforms to the Directive.
The Employment Tribunal Judge held that appropriate words should be added to the Regulations to bring the calculation of a week’s pay in line with the Directive. As such, regulation 16(3) of the Regulations is to be interpreted and applied as if the following paragraph were added to it:
“…a worker with normal working hours whose remuneration includes commission or similar payment shall be deemed to have remuneration which varies with the amount of work done for the purposes of section 221.”
As such, where applicable, holiday pay should comprise an employee’s basic salary and an amount that reflects the commission (or other regular variable pay component).
Key Point: The decision merely reinforces the CJEU decision that commission must be factored in when calculating holiday pay. However, many issues remain unresolved. For example, what is the correct reference period that should be used for the calculation of commission (is it 12 weeks? one whole year? or something else?). For some employees, commission may fluctuate significantly during the course of a year, justifying a longer reference period. Further case law is required to clarify this point. However, in the meantime, employers should review not only their overtime policies but also the operation of commission schemes in the context of holiday pay.
12. Whistleblowing – Public Interest
Can a disclosure be made in the 'reasonable belief it is in the public interest' if it relates to a contractual dispute affecting a group of staff, and not the wider general public? Yes.
Chestertons v Nurmohamed UKEAT/0335/14/DM
Mr Nurmohamed (N) was director of the Mayfair office of Chestertons, a well-known firm of estate agents. In January 2013, a new contractual commission structure was brought in making commission dependent on certain profit/loss realisations. In August 2013 N met with his manager, having been told that no staff would receive a bonus based on Chestertons’ latest profit and loss accounts. N reviewed the accounts and claimed that he made a protected disclosure by complaining on a number of occasions to his manager and HR director that the costs for the London office had been manipulated, thus driving down the commission for him and 100 senior managers. N was subsequently dismissed. N claimed unfair dismissal and automatically unfair dismissal on the grounds that he had made a protected disclosure.
The question for the Employment Tribunal surrounded the meaning of the words “in the public interest” inserted into section 43B(1) of the ERA 1996 by the Enterprise and Regulatory Reform Act 2013, with effect from 25 June 2013. As there had been no previous authority on the meaning of “in the public interest”, the Employment Tribunal had to consider it themselves.
The Employment Tribunal found N had been automatically unfairly dismissed and that N’s disclosure was made in the interest of himself and 100 other managers, which was a sufficient group to amount to a matter of public interest to afford whistle-blower protection. Chestertons appealed the finding that the disclosure was “in the public interest”.
The EAT dismissed the appeal. The EAT found that Parliament’s intention for the insertion of the words “in the public interest” was to reverse the effect of Parkins v Sodhexo  IRLR 109which had enabled an employee to blow the whistle on his employer if the employer had breached an obligation owed under his own contract of employment.
The EAT held that whilst N’s disclosure did relate to his own employment situation, the disclosure also related to 100 other managers; this, the EAT held, was in the public interest.
Key Point: This is the first reported case which has considered the meaning of “in the public interest” and is fact specific. Whilst it is clear that breaches of an employee’s own contract of employment by an employer would not be in the public interest, it appears that the public interest test may be relatively easy for a whistle-blower to satisfy provided that their disclosure is in the interests of other workers. It is unclear whether or not the courts will specify a minimum number in this regard.
13. Agency Workers – Blacklisting
Is it possible for a court to use the broad interpretative principles of the Human Rights Act 1998 in order to imply a contract of employment between a black-listed agency worker and an end-user client, so as to enable that agency worker to bring detriment claims against the end client on grounds of trade union and health and safety activities? No.
Smith v Carillion (JM) Ltd and another  EWCA Civ 209
Between 1997 and 2000, Mr Smith (S) worked in the construction industry as a site agent, engaged through employment businesses as an agency worker. He worked for a number of construction companies, including John Mowlem Construction Plc (Mowlem), which in 2006 was acquired by the Carillion Group. S was an active member of the Union of Construction Allied Traders and Technicians and held positions as a shop steward and health and safety representative.
After 2001, S was unable to obtain work. In 2009, S discovered that he was on a secret blacklist of thousands of construction workers, including active union members and health and safety representatives, which had been compiled and kept by the Consulting Association (CA). A large number of construction companies accessed this information and were also generally the source of the information. Mowlem had used CA's services between 1994 and 2006.
S believed that he had been blacklisted. He brought claims against Carillon under section 146 of TULRCA and section 44 of the ERA 1996 on the basis that, by providing information about him to the CA, Carillion had subjected him to detrimental treatment by virtue of his trade union and health and safety activities, respectively.
Prior to 1 October 2004, the right not to suffer a detriment on union grounds was only available to employees (detriment on health and safety grounds has only ever been available to employees). Both the ET and the EAT dismissed S’s claims as S conceded that he was never an employee of Mowlem but a worker. If S was not an employee, he was not afforded the protection of the above legislation. S appealed to the Court of Appeal.
S argued that:
- he had a contractual relationship with Mowlem, and
- under the Human Rights Act 1998, UK courts and tribunals are obliged to interpret domestic legislation, so far as possible, in a manner compatible with the European Convention on Human Rights (which, amongst other things, protects an individual’s right to freedom of assembly and association, including the right to form and to join trade unions). As such, S argued that the Human Rights Act required the Court of Appeal to extend the protections under section 146 of TULRCA and section 44 of the ERA 1996 to him as a worker, and therefore imply a contract employment between him and Mowlem.
The Court of Appeal rejected S’s appeal, holding that the onus is on the claimant to establish that a contract should be implied, but only if it is necessary to do so. The question a tribunal needs to ask is whether it is necessary, having regard to the way in which the parties have conducted themselves, to imply a contract between worker and end user.
S asserted that:
- he was invited to an interview, which indicated that it was important that he personally continued to do the work;
- it was intended to be a long term arrangement;
- he was fully integrated into Mowlem's management;
- Mowlem determined when he would be dismissed; and
- there were no written terms setting out his relationship with his agency.
The Court of Appeal had held that none of the above, either separately or cumulatively, necessitated the inference of a contract between S and Mowlem.
The Court of Appeal also rejecting S’s argument regarding the Human Rights Act 1998 being used to interpret the above legislation in favour of him.
Key Point: The Employment Relations Act 1999 (Blacklists) Regulations 2010 (SI 2010/493)make it unlawful for employers, employment agencies and others to compile, supply or use a blacklist of trade union members or activists for discriminatory purposes such as employment vetting. They also make it unlawful to refuse to employ someone for a reason which relates to a prohibited list or for an employment agency to refuse to offer its services to someone for such a reason. Despite S’s failure to succeed with his claims, this case is a useful reminder of how the court will decide whether a contract should be implied in accordance with the principle of necessity.
14. Tribunal Fees – UNISON granted permission to appeal against refusal to undertake judicial review of tribunal fee regime
UNISON has been granted permission by the Court of Appeal to proceed with appeals against the decision of the High Court refusing two Judicial Review applications challenging the lawfulness of the employment tribunal fees regime. These appeals will be heard in June 2015.
Recently released figures revealed that tribunal claims between October and December 2014 fell by a further 12 per cent compared with the same quarter in 2013. Since the fees regime was introduced in June 2013, tribunal claims have fallen by 80 per cent, with sex discrimination claims down by 91 per cent. The onus is now on Unison to provide specific examples of potential claimants who have been disadvantaged by the new fees regime.
15. A single employee was an 'organised grouping' for the purposes of a TUPE Service Provision Change
Rynda v Rhijnsburger  EWCA Civ 75
Ms Rhijnsburger (R)'s role involved looking after a portfolio of Dutch properties. R's employment with her previous employer ended on 31 December 2010 and her employment with Rynda began on 1 January 2011. Her responsibility remained to manage the portfolio of properties, for which she was solely responsible. Eight months later, R was dismissed.
In order to establish that she had the requisite service to bring an unfair dismissal claim against Rynda, R had to establish that her employment had transferred under TUPE from her previous employer.
In order to establish whether there have been a Service Provision Change (SPC) for the purposes of the TUPE, the Employment Tribunal considered whether, immediately before the transfer, there was an organised grouping of employees that had as its principal purpose the management of the properties. Further, it needed to be established that R was assigned to that organised grouping.
The Employment Tribunal held that, prior to 1 January 2011, the previous employer had organised its employees so that R's principal purpose was to carry out the property management of the properties. It was the only work she did and she was the only person who did it. It had been deliberately planned that R would work solely on the property portfolio. R had therefore been assigned to the organised grouping for the purposes of TUPE. R was the organised grouping carrying out, as its "principal purpose", the transferring activities. Rynda appealed.
The EAT dismissed Rynda's appeal. The EAT cited Seawell Ltd v Ceva Freight UK Ltd andEddie Stobart Ltd v Moreman in which it was held that for there to be an "organised grouping of employees" there needs to be a deliberate putting together of employees for the purpose of the relevant client work. The EAT agreed that R's assignment to the management of the property portfolio had been a conscious decision of her previous employer. There had therefore been a SPC and R's employment had transferred to Rynda under TUPE. This meant that R had sufficient continuity of employment to bring an unfair dismissal claim against Rynda.
Rynda appealed to the Court of Appeal that there was not a sufficient element of deliberate planning or intent by Rynda regarding R's dedication to the properties.
The Court of Appeal dismissed the appeal and ruled that there had been a SPC under TUPE and that R's employment had transferred to Rynda. The Court of Appeal identified a four-stage process for tribunals to follow in SPC cases:
- Identify the service which the transferor (the outgoing employer) was providing to the client.
- List the activities which the staff of the transferor performed in order to provide that service.
- Identify the employee or employees of the transferor who ordinarily carried out those activities.
- Consider whether the transferor organised that employees leaving into a "grouping" for the principal purpose of carrying out the listed activities.
The Court of Appeal found, applying this process, that it was not happenstance that R was managing the properties and that there had been a deliberate decision by Rynda to allocate the client’s properties to R. Rynda did not assign anyone to assist R and assigned no other work to her. As such, R was an organised group to which TUPE applied.
Key Point: Whilst each SPC case will depend on the facts in question, this case provides useful guidance of the factors that the court will take into account when determining whether an SPC has taken place. The case reaffirms the position that a single employee can be an "organised grouping" for the purposes of TUPE.
16. Variation to terms and conditions of employment
Norman and another v National Audit Office UKEAT/0276/14/BA
Can an employer rely on a clause in an employment contract to unilaterally vary an employee’s terms and conditions? Not in this case - no.
The National Audit Office (NAO) sought to reduce NAO staff’s (the “Appellants”) privilege leave (an entitlement beyond normal annual leave) and their enhanced sickness leave. The NAO wanted to reduce those benefits and commenced consultation with the trade union. However, discussions failed and, consequently, the NAO sought to impose the changes on its employees unilaterally, relying on a provision of it’s the employment offer letter and HR Manual. The Appellants applied to the Employment Tribunal for a declaration regarding the particulars of their employment and that their terms and conditions had not been validly varied.
The Employment Tribunal found in favour of the NAO. The Employment Tribunal held that the wording of the Appellants’ offer letters:
“detailed particulars of conditions of service are to be found in the relevant section of the HR Manual of the NAO. They are subject to amendment…changes affecting your particular terms and conditions will be notified separately to you”. (Emphasis added)
Was to be understood as indicating that the NAO had a power of unilateral variation and that, by signing the offer letter, the Appellants had agreed to such a power. The Appellants appealed on the basis that clear and unambiguous language had to be used in order to create the right to vary a contract unilaterally.
The EAT considered that it was a matter of construction whether the above wording provided NAO with a right to vary the contracts unilaterally. The EAT held that the use of the verb “notify” did no more than stipulate that NAO would inform employees of changes – it did not establish a right to make changes unilaterally. The EAT also held that “subject to amendment” meant nothing more than the possibility of amendment. The EAT allowed the appeal and reinstated the employees' original terms of employment. The EAT found that the wording in question was not clearly nor unambiguously drafted and therefore did not provide the right to make unilateral variations to the Appellants' contracts.
Key Point: Whilst employers may try to rely on provisions within an employee’s employment contract, or set out in other documentation, which enable them to make changes unilaterally, courts and tribunals are reluctant to accept that such a power is effective unless the provision is well drafted and very clear in its meaning. An employer must also act reasonably in relying on any provision, otherwise they risk breaching the implied term of trust and confidence. A general flexibility clause to amend terms and conditions on its own is unlikely to justify the imposition of a unilateral change, and a consultation process should be followed where appropriate.
With the General Election on May 7 fast approaching, we set out below the approach proposed towards Employment Law by each of the main political parties in England and Wales, if elected.
In its publication “A better plan for Britain’s workplaces” and in the “Labour Party Manifesto 2015” the Labour Party proposes to:
- Increase the national minimum wage to more than £8.00 by October 2019.
- Extend HMRC’s remit to cover holiday pay and consider whether it should cover related non-payment of statutory sick pay and statutory maternity, paternity and adoption pay.
- Use Government procurement to promote the “Living Wage”, require PLCs to report on whether they pay the “Living Wage” and give tax rebates to businesses that sign up to become “Living Wage” employers.
- Introduce a new, lower 10 pence starting rate of tax, paid for by scrapping the marriage tax allowance.
- Introduce new legislation which would require companies with more than 250 employees to publish average pay of men and women at each pay grade.
- Reform zero hours contracts: Proposals include restricting on-call practices, banning exclusivity, paying compensation for shifts cancelled at short notice and enabling zero hours workers to go on to a “regular contract” after 12 weeks, if they work regular hours.
- Reform the Government “shares for rights initiative” that offers shares in return for forfeiting certain employment rights.
- Abolish the current tribunal fee system, asking Acas to oversee a process of agreed reforms between the CBI and TUC (unclear whether tribunal fees removed or reduced).
- Prevent employment agencies being able to recruit exclusively from abroad and make it a criminal offence to undercut wages by exploiting migrant workers.
- End the Swedish derogation from the Agency Workers Regulations which exempts such agency workers from some of the equal treatment provisions.
- Review the TUPE rules.
- Tackle bogus self-employment in the construction industry and hold an inquiry into theblacklisting of construction workers.
- Increase paternity leave from two to four weeks and increase the level of pay so that fathers receive the equivalent of a full week’s work paid at the National Minimum Wage.
- Require companies to publish the pay packages of the 10 highest paid employees outside the boardroom and the ratio of the total pay of their top earners compared to average employees.
- Put employee representatives on remuneration committees.
- Review the current implementation and operation of the Information and Consultation Regulations to examine how information and consultation in the workplace can be made widespread and more meaningful.
- Give employers, working collectively through reformed sector bodies, more control overapprenticeship funding and standards, in exchange for increasing the number of high quality apprenticeships in their sectors and supply chains.
- Tackle unpaid internships.
- Introduce a Compulsory Jobs Guarantee - a paid starter job for every young person unemployed for over a year, a job which they will have to take or lose benefits.
- Stay in the European Union.
The Liberal Democrats propose to:
- Review the level of fees in the Tribunal Fee system to ensure that the fees do not prohibit individuals from making bona fide claims.
- Consult on how best to tackle rogue employers who seek to avoid restrictions on zero hours contracts, as well as backing draft legislation to ban exclusivity clauses in such contracts. A ‘right to request’ a permanent contract for all workers without having to accrue service would also be introduced.
- Increase paternity leave from two to six weeks, with a ‘use it or lose it’ policy meaning it cannot be transferred to the mother. Parental rights, including for same sex couples, will include six weeks reserved for each partner, with the remaining 46 weeks to be shared. An ambition is to see Paternity and Shared Parental Leave become a ‘day one’ right.
- Introducing “name blank” job applications for all public sector jobs, and on a voluntary basis for the private sector, in order to reduce the risk of discrimination.
- Set up a new one-stop shop for workers’ rights enforcement. The Workers’ Rights Agency would streamline the work of four existing bodies and refocus efforts to enforce employment law.
- Increase the number of apprenticeships and improve their quality, extending the Apprenticeship Grant for Employers for the remainder of the next Parliament, delivering 200,000 grants to employers and expanding the number of degree-equivalent Higher Apprenticeships
- Improve pay fairness. Proposals, similar to Labour, include requiring companies with over 250 employees to: publish information on gender pay differences, declare the number of people they employ on less than the living wage, provide information comparing the top and median pay levels and consult employees on executive pay.
- Request to the Low Pay Commission an increase in the minimum wage for apprentices(from £2.73 to £3.79 on current rates).
- Stay in the European Union.
The Conservatives propose to:
- Introduce a British Bill of Rights and repeal the Human Rights Act.
- Fund 3 million apprenticeships.
- Retain the Employment Tribunal Fee System.
- Support the Living Wage and will continue to encourage businesses and other organisations to pay it whenever they can afford it.
- Introduce employee volunteering entitlement in which an employer (unless it opts out) pays for an employee to undertake up to 3 days’ volunteer work for charities and community organisations during the year.
- Improve pay fairness. Proposals, similar to Labour, requiring companies with more than 250 employees to publish the difference between the average pay of their male and female employees.
- Take further steps to eradicate abuses of workers, such as non-payment of the Minimum Wage, exclusivity in zero hours contracts and exploitation of migrant workers.
- Change strike laws: Proposals include introducing a minimum 50% strike ballot threshold (of the number of eligible voting union members in contrast to the current simple majority of those who actually vote), a three-month time limit after the ballot for the action to take place, illegal picketing being made a criminal offence, a requirement for unions to provide longer notice, and greater details of the proposed strike action.
- End exclusive zero hour contracts. Additional measures have also been announced to tackle avoidance of the forthcoming ban on exclusivity clauses with the introduction of a new protection from detriment for workers who take jobs under other contracts.
- Review how best to support those suffering from long-term yet treatable conditions, such as drug or alcohol addiction, or obesity, get back into work.
- Seek to renegotiate Britain's European Union membership then hold an in-out referendum.
UKIP proposes to:
- Require ‘large employers’ to be subject to a Code of Conduct requiring qualifying zero hours workers to be offered contractual fixed hours. Such workers to be given 12 hours advance notice of work, and once notice has been given, the worker must be paid, regardless of whether they are needed at the time.
- Require businesses hiring 50 people or more to give workers on zero-hours contracts either a full or part-time secure contract after one year, if the workers involved request it.
- Repeal the Agency Workers Regulations, and working time rules in the health sector reviewed, as part of a wider review into all law of EU origin.
- Allow British businesses to choose to employ British citizens first.
- Adopt for all EU citizens the existing points-based system for time-limited work permits. Those coming to work to the UK must have a job to go to, must speak English, must have accommodation agreed prior to their arrival, and must have NHS-approved health insurance. In addition, an Australian-style points policy would be used to select migrants with the skills and attributes for work that are considered to be lacking in the UK.
- To leave the European Union and remove the UK from the jurisdiction of the European Court of Human Rights.
The Green Party
The Green Party propose to:
- Progressively introduce “anonymised CVs” to reduce the chances of discrimination against job applicants at the initial stage.
- End the “exploitation of interns” – no unpaid internship to last more than four weeks.
- Reduce Employment Tribunal fees so that tribunals are accessible to workers.
- Introduce a maximum pay ratio of 10:1 between the best paid and the worst paid in every organisation.
- End zero-hours contracts.
- Phase in a 35-hour working week, to combat unemployment by sharing available work out more equitably.
- Revive the role of democratic trade unions – including right to belong to a union and have the employer recognise it, and the right to take industrial action, including strikes and peaceful picketing.
- Introduce a minimum wage target of £10.00 per hour by 2020, so that it is a Living Wage.
- End “blacklisting”, with a full review of the practice in the construction industry and the consideration of introducing a criminal offence against it.
- Introduce employee-elected directors in medium and larger companies.