Can annual leave which is untaken due to sickness absence be carried forward indefinitely?

In Plumb v Duncan Print Group Limited, the EAT confirmed that workers on sick leave cannot carry untaken holiday forward indefinitely. However, untaken leave can be carried forward where the worker was capable of taking his annual leave in the relevant leave year but was unwilling to do so. The claimant in this case was off sick for nearly four years leading up to his dismissal in 2014. The employer had refused his request to take holiday that had accrued from 2010 to 2012 and after his termination he brought a claim for a payment in lieu of untaken leave.

The claim was dismissed by the tribunal because the claimant was unable to show that his medical condition meant that he was unable (as opposed to unwilling) to take his leave. Overturning the finding, the EAT held that European law does not require a sick worker to show he was unable by reason of sickness to take leave during the relevant leave year. He can still carry it over if he was either unable or unwilling to take it. However, European law does not permit such leave to be carried forward indefinitely and carry-over is limited to a period of 18 months following the end of the relevant leave year.

Given existing case law, it is not surprising that the EAT found that annual leave can be carried forward even where the worker was technically capable of taking it during the relevant leave year. The ruling that holiday can only be carried forward for 18 months gives welcome clarity to employers. Note, however, that this case only concerned the four weeks’ leave required by the Working Time Directive, not the additional 8 days’ statutory leave under the UK Working Time Regulations.

Mass compulsory retirement of police officers was objectively justified age discrimination

Chief Constable of West Midlands Police and others v Harrod & others concerned a decision by a number of police forces to compulsorily retire large numbers of older police offers to achieve substantial costs savings. To do so, they used Regulation A19 of the Police Pensions Regulations 1987. This regulation is one of the few prescribed grounds on which police officers can legally be dismissed but its use clearly disadvantaged officers over the age of 48. When considering claims brought by a group of affected officers for indirect age discrimination, the central question for the tribunal was whether the officers’ treatment was objectively justified, in order to achieve the forces’ aim of achieving efficiency savings with certainty.

The tribunal upheld the claims because the forces had failed to show it was necessary to use Rule A19, as they had not given proper consideration to other measures, such as voluntary retirement, part-time working or career breaks. The EAT held that the tribunal should not have applied a strict test of necessity, but should have considered whether the measures were reasonably necessary. In any event, the EAT held that it was clear that the only way the forces could be certain of a reduction in staff costs was by use of A19 and so the test of necessity was satisfied.

Although the decision revolved around a unique set of facts, it is helpful that the EAT has reiterated that employers are not required to satisfy a test of absolutely necessity when it comes to showing objective justification, at least in an age discrimination context, as this will often be difficult to prove.

Decision on the territorial scope of the Equality Act 2010

Can Afghan nationals who worked as interpreters for the British armed forces in Afghanistan bring claims of discrimination under the Equality Act 2010 (EqA)? No, said the High Court in R (Hottak and another) v The Secretary of State for Foreign and Commonwealth Affairs.

The court rejected the submission that Parliament had intended the territorial scope of the EqA to be wider than that of the Employment Rights Act 1996 (ERA), merely because it dealt with discrimination. Rather, the Court confirmed that the existing case law on the territorial scope of the ERA applies equally to the EqA. As such, the claimants had to show that their employment had a ‘sufficiently close connection’ with Britain and with British employment law.

The claimants’ employment was performed and managed in Afghanistan, their contracts were not governed by English law and many of the terms would not be compatible with English law, and their only real connection with Great Britain was the identity of their employer. On that basis, the High Court held the claimants’ employment did not have a stronger connection with Great Britain and with British employment law than with Afghanistan and Afghan law, so they could not claim under the EqA.

At what point does the obligation to consult on collective redundancies arise?

Where an employer proposes to make large scale redundancies within a certain period, it must collectively consult on its proposals. The exact point at which this obligation arises is critical. If it starts the consultation too late, the employer may incur substantial liabilities for failure to comply with its consultation obligations. However, working out when the duty arises in practice is difficult and unfortunately the case law does not provide clarity.

In E Ivor Hughes Educational Foundation v Morris, the EAT held that the obligation arose where the employer made a provisional decision to close a workplace, and not at a later point when that provisional decision was confirmed. The employer decided in 27 February 2013 that it would close one of the schools it operated unless pupil numbers increased. The final decision to close was taken in April 2013, once the number of pupils for the forthcoming academic year was known. No redundancy consultation was carried out as the employer was unaware of its legal obligations. The tribunal held that the obligation to collectively consult arose following the provisional decision in 27 February, even though it may not have been necessary to make redundancies had pupil numbers improved. The tribunal also held that the employer’s ignorance of its legal obligation to consult did not constitute ‘special circumstances’, such as to provide a defence to its failure. The tribunal’s full ‘protective’ award of 90 days’ pay for each claimant was therefore upheld.

This decision supports the view that the trigger point for consultation arises at an early stage in the employer’s decision-making  process. However, there is still conflicting case law on this issue, so it remains a difficult area for employers.

Disciplinary proceedings – procedural flaws corrected on appeal

Adeshina v. St George’s University Hospitals NHS Foundation Trust and others is a helpful illustration for employers that even serious procedural flaws are capable of being remedied by a robust appeal process.

In this case, disciplinary proceedings were commenced due to the claimant’s alleged behavioural issues. There were a number of procedural failings in the disciplinary process, including that the decision to dismiss the claimant was based partially on matters which had not been put to her. The claimant’s appeal was heard by a panel which included an individual who had previously been involved in issues that were subject of the proceedings. Further, another member of the panel (Mr J) was more junior than the disciplining officer. The panel rejected the appeal and the claimant brought various tribunal claims including unfair dismissal.

The tribunal held that the dismissal was fair, on the basis that the procedural flaws were corrected by the appeal process. Rejecting the claimant’s appeal, the EAT held that the tribunal was entitled to consider the flaws in the context of the appeal process and to conclude that those flaws, although serious, had been remedied. The EAT also recognised that small employers may struggle to identify sufficient senior managers with no previous involvement in the case to sit on a disciplinary panel. Further, although the EAT endorsed the recommendation in the Acas Code that an appeal hearer should be senior to the original decision-maker, it concluded that the tribunal was permitted to take account of the fact that Mr J was only one member of a panel of three, which also had the benefit of an independent advisor. For these reasons, the tribunal has been entitled to conclude that there was no bias in the appeal process.

Indirect discrimination – is it necessary to show the reason why a PCP caused disadvantage?

In Home Office (UK Border Agency) v Essop and others the Court of Appeal held that in an indirect discrimination claim it is necessary to show why the provision, criterion or practice disadvantaged both the group who all share the relevant protected characteristic and the individual claimant. The claimants in this case brought claims of indirect discrimination relating to the Home Office’s requirement that candidates for certain Civil Service posts had to pass a core skills assessment (CSA). The claimants relied on statistical evidence which showed that black and minority ethnic (BME)/older candidates were less likely to pass the CSA than non-BME/younger candidates.

The Court held that it is not sufficient to show that the claimants were part of a group of people disadvantaged by the requirement to pass the CSA. It is also necessary to show the reason why the PCP placed the group at a disadvantage. Further, each claimant must also prove that he suffered a disadvantage for the same reason. Although the statistics showed a higher proportion of BME/older candidates failed the CSA, no reason had been identified to explain the differential impact and so the claims failed. The Court noted, however, that in the absence of some other explanation for the disadvantage complained of, a tribunal may still be able to infer the required reason from statistical evidence.

For indirect discrimination in relation to other protected characteristics, it is already established that claimants must show that the reason for their individual disadvantage corresponds to the reason for the group disadvantage. For example, an employee arguing that full-time work disadvantages women must show that the reason (e.g. disproportionate burden of childcare responsibilities) disadvantages all women and her personally. Nonetheless, this decision will be welcomed by employers who would otherwise need to objectively justify indirect discrimination without any understanding of the cause of the claimant’s disadvantage.

Discrimination arising from disability – what is ‘unfavourable’ treatment?

In The Trustees of Swansea University Pension & Assurance Scheme and another v Williams, the EAT examined the meaning of ‘unfavourable’ treatment for a claim of discrimination arising from disability, an issue on which there was no existing case law. The claimant was part of an ill-health retirement scheme which entitled him to an enhanced pension payable immediately on retirement. The claimant requested to work part-time, as a reasonable adjustment due to his disability. When he took ill-health retirement, he argued that his employer’s failure to base his enhanced pension on a full-time salary amounted to unfavourable treatment because of something arising in consequence of his disability. A Tribunal upheld his claim.

On appeal, the EAT clarified that ‘unfavourable’ treatment is not the same as the ‘less favourable’ test used in a direct discrimination claim. The latter involves assessing the claimant’s treatment against that of a comparator, whilst the former does not.  What is ‘unfavourable’ should instead be measured against an objective sense of that which is adverse as compared with that which is beneficial. This test allows a Tribunal to take a broad view of the particular facts of the case in determining whether the claimant’s treatment was unfavourable.

In this case, as only disabled employees were eligible for the scheme, the claimant had not been treated unfavourably. In fact, he had been treated favourably in comparison to non-disabled colleagues. Further, the employer had adjusted the claimant’s hours at his request, to satisfy its competing obligation to make reasonable adjustments. In the circumstances, the Tribunal was wrong to find that the claimant has been treated unfavourably. The EAT remitted the case to a fresh Tribunal.

Associative indirect discrimination may be possible

The ECJ has held that a person may claim indirect discrimination under the Race Directive even though they do not possess the protected characteristic which is said to give rise to the discriminatory practice. The decision in CHEZ Razpredelenie Bulgaria C-83/14 appears to accept the possibility that such a person could bring an ‘associative discrimination’ claim in relation to indirect discrimination. This is a potentially significant development for UK employment law and our blog, Indirect associative discrimination claims become a reality, considers the decision in more detail.

July 2015 Budget: employment implications

On 8 July, the Chancellor of the Exchequer delivered his Budget. The key issues of interest to employment and HR practitioners are:

  • The introduction of a new National Living Wage (NLW), which will apply a premium to the existing National Minimum Wage for workers aged 25 and over. Starting in April 2016, the premium will be 50p, meaning the NLW will be £7.20 per hour.
  • A consultation on simplifying the tax and NICs treatment of termination payments, including a proposal to replace the current £30,000 exemption with a new income tax relief that is available in the case of statutory redundancy. This consultation was published on the 24 July and closes on 16 October 2015. Our update on the Government’s consultation on simplifying the taxation of termination payments can be read here.
  • A consultation on reforms to the IR35 legislation, and the tax treatment of personal service companies, as personal service companies are still seen as tax-avoidance vehicles.

Acas Early Conciliation: First Year Statistics

Since 6 May 2014, it has been mandatory for most prospective claimants to notify Acas with a view to conciliating their claim before it has been issued. Acas has recently published statistics which show that in the first year of the regime:

  • It dealt with over 83,000 notifications.
  • Overall, around 90% of employees and employers agreed to participate in early conciliation.
  • Nearly half of all claimants who used early conciliation either settled via Acas or decided against submitting a tribunal claim due to Acas’ involvement.
  • Only 15% of notifications resulted in a formal settlement via a COT3.
  • Approximately a quarter of those who ultimately decided not to bring a claim said this was because tribunal fees were off-putting. In nearly three quarters of those cases, this was because the prospective claimant could not afford the fees.

Commons Select Committee Inquiry into Tribunal Fees

The Commons Justice Select Committee has launched an inquiry into the effects of changes to court and tribunal fees and charges that were made over the course of the last Parliament, including the introduction of employment tribunal fees. The Committee has stated that one of its main points of interest is the effect of employment tribunal fees on access to justice and the volume and quality of cases brought.

This inquiry is separate to the Ministry of Justice’s review of employment tribunal fees, which was launched in June and is expected to announce its conclusions towards the end of the year. This is a link to our July update, which discusses the MoJ review.

Consultation on mandatory gender pay reporting

The Government has commenced consultation on implementing mandatory gender pay reporting. The consultation paper asks extensive questions about how the new regime should work and on wider gender pay issues, so it gives an opportunity for employers to help shape the mandatory gender pay reporting regime. The consultation closes on 6 September 2015 and we will be submitting a response on behalf of clients.

Further details on the gender pay reporting consultation are set out in our recent blog post.

Trade Union Bill and Consultations on changes to the law on industrial action

The government has published the draft Trade Union Bill, which sets out proposals for a comprehensive overhaul of the law relating to industrial action and trade unions’ conduct. The key proposals include increasing ballot thresholds, extending the notice of industrial action required to be given to employers, lifting the ban on using agency staff to cover striking workers, a new expiry date for action to be taken following a ballot and the introduction of stringent requirements relating to the supervision of picketing.

In addition to the Bill, consultations have been launched on:

  • The proposed introduction of a 40% ballot threshold for certain important public services.
  • Reforming the rules and code of practice on picketing to deal with perceived intimidation and leverage tactics by unions.
  • Repeal of the ban on the use of agency workers to cover striking workers.

The consultations close on 9 September 2015.