Summary and implications

A number of judgments, published in the last few weeks, are likely to affect the day-to-day working practices of many of our readers. They cover a wide range of issues: summary terminations, employees’ equality rights and the balance between conflicting rights and the thorny issue of annual leave rights.

We summarise below the impact these will have and the steps you should consider taking:

  • Ensure you have appropriate powers to terminate employment contracts summarily and do so lawfully. This sounds like trite law. But, the Supreme Court has recently held that an unlawful summary termination of the employment contract will not bring it to an end unless and until the employee “accepts” the termination or the employer otherwise terminates the contract validly. Further, if you terminate the contact under a PILON clause, make this expressly clear to the employee. You may need to review your PILON clause, or decide to introduce them into employment contracts, following our analysis of the Supreme Court’s decision below.
  • Review your organisation’s dress code and other policies and practices which may have an impact on employees’ manifestation of faith. A recent decision by the European Court of Human Rights (ECHR) confirms that protection against religion discrimination covers a broader spectrum of practices than originally thought. However, broadly speaking, where conflicting rights are at play, employers are likely to have a wider margin of appreciation.
  • Take reasonable steps to ensure your workers take their statutory holiday entitlement during the holiday year. Generally speaking, healthy staff are responsible for making their own holiday arrangements, and if they fail to do so may lose their holiday allowance. However, a recent tribunal decision suggests employers ought to take steps to ensure staff take their full holiday entitlement. Periodical reminders during the holiday year are fairly easy to administer and could protect the employer in case of a future dispute.

Unlawful summary terminations: employees hold all the cards ?

You may recall the case of Geys v Societe Generale, London (discussed in our briefing of June 2011). In brief, Societe Generale (the Bank) sought to summarily dismiss Mr Geys in November 2007. Approximately 20 days after the purported termination, the Bank made a PILON payment and sent Mr Geys his P45. The Bank did not tell Mr Geys the date on which his termination would take effect, nor that it was made under the contractual PILON clause until early 2008. Mr Geys reserved his rights throughout, expressly did not accept his termination and, subsequently, argued that because his termination only took effect in early 2008 he was due an additional €4.5m.

Last month, the Supreme Court accepted Mr Geys’ claims. Its judgment confirms that employers who seek, but do not have the power, to terminate the employment summarily are in a precarious position: termination will only take effect if and when it is unequivocally and unambiguously “accepted” by the employee. Acceptance may be express or implied (e.g. employee does not show up to work or employee accepts employment with a competitor where he/she would be subject to restrictive covenants but for the breach). However, the employee is not obliged to accept the breach and may, instead, “affirm” the contract until the employer lawfully brings it to an end (e.g. by giving the requisite notice).

The decision raises a number of issues for employers’ consideration, including whether:

  • Existing contractual arrangements provide adequate powers for lawful summary terminations. In particular:
    • are the summary dismissal provisions for gross misconduct clear, so as to minimise as much as possible any argument that the employer’s purported termination is unlawful? (see box)
    • is it possible to terminate the employment summarily, for no cause, shortly before the employee reaches the necessary qualifying period for bringing unfair dismissal claims? This links to the next point.
  • It is advisable to reconsider the relative advantages and disadvantages of having a contractual PILON clause. In the absence of a good cause for termination, a summary termination may only be lawful if made expressly under, and in strict compliance with, a PILON.
  • PILON terminations are, in fact, contract-compliant. When terminating under a PILON, an employer must always make clear that this is what it is doing, expressly stipulate the date on which termination takes effect and make the PILON payment in strict adherence to the terms of the contract.

Religious symbols, practices and beliefs about marriage – the ECHR provides helpful guidance, whilst departing from earlier judgments

The case of Eweida and her fellow three claimants received much press coverage. In brief, four individuals brought claims against the UK government, alleging that their rights under the European Convention of  

Misconduct summary terminations

Consider the following scenario in light of the Geys decision:

You have just dismissed an employee summarily for gross misconduct. After a thorough investigation, you believe the employee had breached your IT security system, a matter which The decision raises a number of issues for employers’ consideration, including whether: could considerably affect client relationship as well as your status within the industry.

You dismiss the employee’s appeal against your decision to dismiss.

Following Geys, the employee has two options:

  • bring an unfair dismissal claim;
  • bring a claim for unpaid wages but argue that the contract remains in existence as you have not lawfully terminated it since you had no good cause, i.e. the employee is not really guilty of gross misconduct.

Until the tribunal decide whether or not the employee has been guilty of misconduct, there is a risk he remains employed by you, unless you are willing to operate a contractual PILON clause.

Religious symbols, practices and beliefs about marriage – the ECHR provides helpful guidance, whilst departing from earlier judgments

The case of Eweida and her fellow three claimants received much press coverage. In brief, four individuals brought claims against the UK government, alleging that their rights under the European Convention of Human Rights (the Convention) were either breached or not properly protected under UK legislation. The ECHR upheld only one of the claims (see the box below).

Click here to view table.

Below is a brief summary of the ECHR’s findings and their implications for employers:

  • The human right to manifest a religion includes an individual expression of faith (e.g. wearing of the cross) and adherence to a religion, even where this is not a mandatory requirement of the particular religion. However, not every act inspired, motivated or influenced by such a belief amounts to manifestation: there has to be an “intimate link” between the act and the religion or belief. - In light of this decision employers are advised to review all working practices, policies and procedures which may affect employees’ religious practices. A dress code is one such example, but others include Sunday working requirements, time off for prayer, catering provisions etc.
    • In assessing the validity of a policy or any other work practices, an employer ought to balance all the conflicting interests of both parties. The fact that an employee may resign from a job if its requirements conflict with his/her religion is no longer a trump card at the employer’s hands, but only one of a number of relevant factors.
    • When assessing indirect discrimination complaints, employers may have to give more focus to the impact of their policies on the individual claimant, rather than on a group that shares his/her characteristic.
  • However, the right to manifest a religion is qualified under the Convention. The right to manifest religious beliefs may be limited by national law, to the extent necessary in a democratic society in the interests of public safety, for the protection of public order, health or morals, or for the protection of the rights and freedoms of others. The employer in Chaplin won its case on the basis of the health and safety exception and the court made it clear it will not willingly interfere with policies which are justified by reference to the Article 9 qualifications.
  • Any difference in treatment based on sexual orientation requires particularly serious reasons by way of justification.
  • In the context of competing rights (such as protection from discrimination on grounds of sexual orientation as against the ground of religion or belief), the court provides a wide margin of appreciation. Where employers aim to provide a service (and, arguably, run a business) which meets their commitment to the promotion of equal opportunities, the court will be reluctant to interfere with a decision which, effectively, favours one competing right over others. In order to be able to protect their position, employers will have to carry out a balancing exercise in advance, assessing the impact of their actions on individuals with competing rights.

Statutory annual leave rights – but this time of healthy staff

If you are a regular reader of our briefings, you will have followed the many developments in relation to the rights of workers on sick leave to accrue and take statutory annual leave. Earlier this month, however, we successfully argued a client’s case concerning the holiday rights of a healthy member of staff.  

The judgment, at an employment tribunal level only, provides three important lessons:

  1. Workers who are well will lose their statutory holiday entitlement if they do not take it during the relevant holiday year. Late requests which genuinely cannot be accommodated may lead to such loss.
  2. Employers ought to take reasonable steps to ensure workers take their statutory annual leave. Periodical reminders during the holiday year, of the right to take leave and the risk of losing it, are advisable.
  3. Employers ought to have clear holiday policies, e.g. in relation to the notice workers must give, and grounds for refusing leave. The larger the employer, the more it may be expected to show flexibility and apply alternative arrangements, where possible.

It is worth noting that the tribunal also dealt with the length of notice an employee ought to give when requesting to take annual leave. In the tribunal’s opinion, the statutory requirement to give “twice as many days” as the leave requested covers only twice as many working days as the employee will be absent: it does not cover twice the total period of the employee’s absence. For example, a full time employee seeking to take two weeks’ leave must give 20 days’, as opposed to 28 days’ notice. A part-time employee working a three-day week will need to give 12 days’ notice in similar circumstances.

As you may recall, the statutory minimum notice provisions may be varied by a “relevant agreement”.

Stop press: Temporary agency workers and the Swedish derogation

An employment tribunal has just handed down a judgment on the operation of the so-called Swedish derogation in the Temporary Agency Workers Regulations. In brief, the tribunal found that:

  • the derogation can be used where there are ongoing arrangements between an agency and its workers (i.e. it is not limited to new hirers); and
  • arrangements under the derogation need to be in place before the starting of the specific client assignment to which they relate. It is immaterial the workers have carried out earlier assignments for the same client.

There is no need for a reference to the ECJ.