In this issue, we look first at the landmark EAT case on holiday pay which attracted a lot of TV and press attention earlier this month. Our Autumn Employment Seminar will focus on this issue and will be held in London on Tuesday 25 November 2014 and in Milton Keynes on Thursday 27 November 2014. Please contact us on events@dentons.com to register. We also have two cases on the difficult issue of when employees working abroad may be entitled to bring claims in the UK Employment Tribunal.

Must employers consider overtime and other allowances when calculating holiday pay?

The issue

In these highly important cases, different employers were appealing separate decisions on similar facts, all to do with the calculation of holiday pay. The common issue was whether the employers had made unauthorised deductions from the wages by failing to include overtime and other allowances in calculating the employees' holiday pay.

The ruling

The EAT held that the "normal remuneration" that a worker is entitled to be paid as holiday pay is their typical average pay, which would include overtime and other allowances, rather than just their basic pay. However, the EAT stated there must not be a break of any longer than three months between each "deduction" (the periods of leave) and, if there is, the tribunal should lose jurisdiction to hear the claim subject to extending the usual limitation period.

Comment

The EAT has given leave to appeal to the Court of Appeal so it is doubtful that we are yet at the end of the clarity road on this one. Business Secretary, Vince Cable, has already announced that he is setting up a taskforce to assess the impact of the ruling. As things stand, though, there is a very real risk that if employers continue to pay basic pay only when its workers take holiday, they will be making an unlawful deduction from wages where that worker's normal remuneration includes elements other than basic pay. The concerns, however, that employers could be facing large claims for deductions dating back as far as 1998 have been mitigated significantly by the EAT's position on a break in "deductions". Nevertheless, claims could still reach back over a significant period. If they have not done so already, employers should promptly decide on their position going forwards on this issue and assess the scope of their historic liability.

Bear Scotland Ltd & Others v. Mr David Fulton And Others UKEATS/0047/13/BI; Hertel (UK) Ltd v. Mr K Woods And Others UKEAT/0160/14/SM; Amec Group Ltd v. Mr Law And Others  UKEAT/0161/14/SM

Does the individual's right to privacy apply to "personal" emails in the workplace?

The issue

The claimant, a Director of Resources, was suspended by his employer pending disciplinary proceedings. During the employer's investigations it was discovered that the claimant had breached the company email policy. He sent sexual emails to a female colleague and encouraged and assisted her with an application for a job with the employer. These emails were not marked private or personal. When the employee was to be questioned about the emails, he resigned and claimed constructive dismissal. He alleged that there had been an interference with his right to privacy under article 8 of the European Convention on Human Rights.

The ruling

The EAT held there had not been an unjustified interference with the claimant's private life. He could not have expected privacy as he had not marked the emails personal or private and so it would be reasonable to expect the employer to investigate them. When making its decision, the tribunal had rightly taken into account the wording of the email policy and the fact that the employee had written the policy.

Comment

This decision reinforces the need for employers to maintain and inform employees of the existence, extent and purpose of any workplace email and internet monitoring. It also serves as a reminder to employees that where there is a legitimate interest, correspondence and internet use can potentially be examined without breaching the right to privacy.

A link to the full report is here:

Atkinson v. Community Gateway Association UKEAT/0457/12

Will a tribunal claim be rejected for non-compliance with early conciliation rules?

The issue

The claimant presented a tribunal claim which incorrectly stated that she was exempt from the ACAS early conciliation (EC) process. The tribunal had accepted the claim but once the respondent's solicitors identified the defect, the issue was whether the claim should be allowed to proceed.

The ruling

The Judge held that the claim should, provisionally, be rejected but that the claimant should be allowed to correct her mistake by completing the EC process and applying for a reconsideration of the decision to reject the claim. However, the claim was then treated as presented on the later date the defect was rectified and was, potentially, out of time.

Comment

This case highlights two important points: 1) when receiving a claim form the tribunal will not undertake a detailed analysis of whether the claim has correctly complied with the EC process or, indeed, has been issued within time. Following the introduction of the EC process, the rules on timeframes are not straightforward and it will fall on the respondent to identify and communicate defects in the application; 2) a claimant, who realises they have not yet complied with the EC requirement, needs to complete the process and obtain an EC certificate to correct the defect as quickly as possible to maximise their chances of having the claim accepted.

A link to the full report is here:

Thomas v. Nationwide Building Society ET/1601342/14

When can "expatriate" workers be denied protection under UK employment law? (Part 1)

The issue

A US citizen based in the US was re-assigned to the UK in early 2012. He retained his existing role but shifted his focus to managing the business in the UK and Middle East. A letter confirming that he would be based in the US but required to spend approximately 49% of his time in the UK was issued. The company took a two-year lease on a London flat for his use, paid a relocation allowance and agreed to pay for his partner to visit him. In October 2012, he was told that his assignment was to be terminated and having failed to find another role in the company he was dismissed. He brought claims in the UK for unfair dismissal, as a "whistleblower" and for sexual orientation discrimination.

The ruling

The claims were rejected. The EAT held that the employment had an insufficient connection with the UK. The claimant had returned to the US at the time his employment terminated, there was no true break in his work connection with the US and he had maintained his base in the US.

A link to the full report is here:

Fuller v. United Healthcare Services Inc and another UKEAT/0464/13

When can "expatriate" workers be denied protection under UK employment law? (Part 2)

The issue

The employee was a salesperson initially based in London but then relocated to Dubai to focus on Asian, African and Middle Eastern business. When he moved to Dubai he handed over all of his existing accounts to a colleague and he had no job to return to in the UK. He was working for an international company headquartered in New York. He remained on the London payroll but was paid without deduction of tax or national insurance contributions and in US dollars. While he benefited from UK holidays, he was not entitled to be included in the UK pension plan and had separate health and dental policies in Dubai. He was subsequently summarily dismissed for alleged gross misconduct. The decision to dismiss him was made in New York. The employee brought claims for unfair dismissal and breach of the right to be accompanied at a disciplinary hearing.

The ruling

The Court of Appeal held that despite the fact the employee had a UK employer and remained on the UK payroll, he was not entitled to protection under UK law. He was not working in the UK when his employment terminated and his working arrangements did not bring him into the exceptional category of expatriate workers who maintain a sufficiently strong connection with the UK.

A link to the full report is here:

CreditSights Ltd v. Dhunna [2014] EWCA Civ 1238

Comment

These two recent decisions demonstrate how finely balanced territorial jurisdiction cases can be. Although the Courts held in the employers' favour in both instances, the cases reached the appeal courts and this area of the law remains both fact-sensitive and ripe for further litigation.

Must an employer pay both male and female employees the same "enhanced" maternity pay?

The issue

The employer operated a maternity policy that gave women on maternity leave full pay for up to 52 weeks. Its policy on additional paternity leave was to pay only the statutory rate. A male employee brought claims of direct and indirect sex discrimination, alleging that the differential treatment between him and an employee on maternity leave meant that he received around £18,000 less for an equivalent period of leave.

The ruling

The Employment Tribunal held there was no direct discrimination because the correct comparator for a man taking paternity leave is a woman taking paternity leave (a female spouse or civil partner), not a woman taking maternity leave. Further, whilst the policy did potentially discriminate against the employee indirectly, it was justifiable on the grounds that it was needed to recruit and retain women.

Comment

This is an interesting, albeit first instance, decision on the potentially thorny issue of treating male employees differently to females in respect of paid family leave. This is particularly topical in view of the impending and significant introduction of shared parental leave in 2015. It is of note that the company in this case had evidence dating back to 1999 which demonstrated the successful impact that its policy had had on recruiting and retaining female employees in the workforce. If an employer wishes to maintain a different approach to maternity and paternity leave, it should carefully consider its reasons for this and how this can be justified.

A link to the full report is here:

Shuter v. Ford Motor Company Ltd ET/3203504/13

TUPE - does the percentage of time that an employee spends on an activity immediately before a transfer determine whether they transfer? 

The issue

The claimant was a Project Engineer managing telecommunications projects under two contracts for the Welsh Assembly. Only one contract provided guaranteed work (the contract that transferred to the defendant). The defendant argued that the claimant did not transfer as he was not assigned to the contract that transferred. However, the tribunal found the claimant had transferred, focusing on the fact that "immediately before the transfer" he spent a particularly high percentage of his time on the transferring activity.

The ruling

The EAT was concerned that the tribunal had placed too much emphasis on the percentage of time spent by the claimant on each contract. It accepted that this was an area of focus for an employer when ascertaining who is in-scope to transfer but a wider analysis is required.

Comment

While employers can be tempted to look only at the percentage of time spent on a contract/part of a business when assessing whether an individual is in-scope to transfer under TUPE, this case re-affirms that a percentage analysis will not in itself determine the issue, which is more nuanced and depends on a number of factors.

A link to the full report is here:

Costain Ltd v. Armitage and another UKEAT/0048/14

Home Office tool on right to work checks

Detail

The Home Office has recently created an online tool in response to its Code which came into effect in May 2014. This Code created changes to the document checks that employers must carry out to ensure they have a statutory defence if it emerges they have unknowingly employed an illegal worker. The online tool created by the Home Office can be used by employers to check these documents.

The tool to check if someone can work in the UK can be found here.

The new law on mandatory equal pay audits

Detail

Employers that lose a claim for equal pay can be ordered by an employment tribunal to carry out an equal pay audit. This audit must, among other things, include relevant information about gender pay, identify any differences in pay between men and women and the reasons for those differences, and include the reasons for any potential equal pay breach identified by the audit. If an employer fails to conduct an acceptable equal pay audit after being ordered to do so, the tribunal can order it to pay a penalty of up to £5,000.

Key date

1 October 2014

Developments

On 5 April 2015, a new system of statutory parental rights will be introduced by the Children and Families Act 2014. This will effectively allow parents to share the statutory maternity leave and pay that is only currently available to mothers. The introduction of this system will retain the right for qualifying employees to take two weeks' ordinary paid paternity leave, but the rules on APL and pay will no longer be in force. On 18 September 2014 BIS published a guide aimed to help employers when they implement policies on shared parental leave. This can be found here.

Key date

5 April 2015