It's a trap!

Employment Law Newsletter - February 2015


In this issue ...

  But there's more!...   Silence is not always golden  
  As you were?   The usual old stuff  
  Three strikes and you're out   Some sport for zero hours workers  
  Two's company by Acas   Parked up  
  Dallying not allowed!   Early pledges  
  30 ('ish) into 1 does go  

But there's more!...

We can't yet let you away from the topic of recalculating holiday pay to include overtime and many other 'non-basic' earnings (see our November 2014 Special Edition and our December 2014 and January 2015 issues).

On its return from the European Court of Justice (ECJ), the case of Lock v British Gas is due to be heard by the Leicester employment tribunal during February and March. The headline subject for determination on the particular facts is the way commission earned by Mr Lock should be factored into the calculation of holiday pay. But, underlying this, there are issues of broader application to the whole holiday pay question recently brought into fuller focus by the ruling of the Employment Appeal Tribunal (EAT) in Bear Scotland v Fulton. These include the applicable reference/averaging period (if there be just one) and the scope for the claimant to recover past underpayments of holiday pay. The tribunal's conclusions on these matters could be the subject of an appeal to the EAT and quite possibly beyond, to the higher courts. For that reason, the tribunals in Scotland have already decided to stay all related claims until Lock is resolved in the tribunal and in any subsequent appeal – and we have no reason to doubt that those elsewhere in the UK will follow.

Meanwhile, from this month, the John Lewis Group has commenced calculating holiday pay on the basis of the decision in Bear. It has worked out the additional cost of compliance to be just shy of 1% of total annual payroll cost. Given that this is based exclusively on including overtime pay (and not any other 'non-basic' payments to employees that, in other environments, might fall within the definition of 'normal pay'), it is not radically out of line with the assessments we have done for some clients. However, the percentage will, of course, ultimately depend on the volume of overtime done in a particular business.


As you were?

There's many a slip twixt cup and lip (as they say – or used to), but employers can derive some early new year cheer from the recent opinion of the Advocate General in USDAW v Woolworths and related cases, referred to the ECJ on the validity or meaning of the concept of 'establishment' in the UK's legislation on collective redundancy consultation (for our last coverage, see the February 2014 edition).

He has stated that the 'physical entity' approach is the favoured one under EU law - so that UK law is not in breach by requiring employers only to count proposed redundancies in a particular unit in order to decide whether the threshold of 20 is reached. So, if the ECJ adopts its usual approach of following the Advocate General's view (but there are occasions when it does not – for example, see Parkwood Leisure v Alemo-Herron in our July 2013 newsflash), there will be no increased incidence of consultation with employees' representatives caused by a need to do 'entire business' counts of proposed redundancies occurring within a period of 90 days or less.


Three strikes and you're out

The government has embarked upon consultation about new legislation amending the ET rules of procedure to limit any party's requests for a postponement or adjournment to a normal maximum of two. Even then, a request made within seven days of hearing or at the hearing itself will only be granted in exceptional circumstances and with the tribunal's being required to consider whether a costs or preparation time order should be made. The only exceptions to the 'three strikes and out' rule itself would be where the tribunal considers postponement desirable to facilitate settlement or where postponement is considered necessary because of an act or omission by the tribunal or another party.


Two's company by Acas

Acas has issued a draft revised Code of Practice on Disciplinary and Grievance Procedures. The principal change from the current version is to the section on the right to accompaniment at hearings. On this subject, the new text makes clear that the requirement for a worker's request to be 'reasonable' does not give an employer the right to object to the precise identity of the chosen companion (see Toal v GB Oils in our July 2013 issue) and that there is nothing to prevent a worker changing the choice of companion more than once. Formally, the new document requires Parliamentary approval before coming into effect.


Dallying not allowed!

The right to found a 'constructive dismissal' on a resignation can be lost if it is found that, before resigning, the employee had 'affirmed' the contract. That is what happened in Colomar Mari v Reuters.

Here, the EAT held that, in failing to resign sooner than she did and so claiming sick pay for a relatively prolonged period (some 18 months), the employee had waived her right to assert constructive dismissal through her employer's repudiatory treatment of her that, she said, had caused her absence for stress and depression. Of course, that does not mean that the simple fact of the employee's receiving sick pay after the time at which the contract has been repudiated by the employer will defeat a constructive dismissal claim. But, in adding to recent jurisprudence on affirmation or waiver (see Chindove v Morrisons and Cockram v Air Products in June 2014), it does signify that such behaviour can only go on for so long.


Silence is not always golden

You would be forgiven for thinking that, once an appeal by an employee against disciplinary dismissal is considered and found to have merit, the remainder of the process would take care of itself – even if only because of the natural concern of the employee to get back to work and regular income, reinstatement and reparation would follow quickly. But sometimes, where there is a change of employer under TUPE, a related passage of time and dislocation of processes can encourage a departure from normal behaviours and reactions, so that things do not go so smoothly.

In Salmon v Castlebeck Care & Danshell Healthcare, an employee was dismissed for gross misconduct and submitted an appeal before Danshell took over Castlebeck's operations under TUPE. Some time after the transfer of business, Danshell's HR Director considered the case and concluded that the dismissal was unsound. However, instead of offering the employee reinstatement or even communicating the conclusion to her, Danshell instructed its employment law consultants to negotiate a settlement. That was never achieved.

The EAT held that, even though she had never received from Danshell notification of the outcome of her appeal, the employee was entitled, retrospectively, to treat her contract of employment as having been revived or resurrected from the date of her dismissal. Consequently, she had been in Castlebeck's employment immediately before the TUPE transfer and, so, had passed into Danshell's employment in law. In turn, that meant that she could pursue an unfair dismissal claim against Danshell based on its failure to have her back.

It seems as if a transferee employer in a TUPE scenario is, unless it is willing to accept an individual back into its workforce, best advised to leave well alone an unresolved appeal against a pre-transfer disciplinary dismissal. Trying to be tidy could be costly.


The usual old stuff

It's the time of year when uplifts of payments and limits will soon be upon us. First up are the various statutory 'benefit' payments made through employers. From 6th April, the new weekly rate for statutory maternity, paternity, adoption and shared parental pay will be £139.58. The same 1% inflator will see statutory sick pay rise to £88.45 per week.


Some sport for zero hours workers

The government is still completing its review of employment status and, separately, the new legislative constraints on zero hours contracts (see our June 2014 and July 2014 issues) are still making their way through Parliament. However, some workers operating under such arrangements are making use of existing laws, specifically those protecting part-time workers against detrimental treatment, to seek redress for what they consider to be consequential unfair treatment. Claims have been, or soon will be, filed for almost 300 people who, because of their 'zero hours' status and despite fulfilling a length of service criterion, were denied a bonus paid by Sports Direct to other, 'permanent' employees. The total estimated value of the claims is around £10 million.


Parked up

In Exol Lubricants v Birch, the employer felt compelled to terminate the employments of delivery drivers when it closed the secure overnight parking facility that it had provided close to their homes in Manchester. It then elected to assert that the reason for dismissal was 'redundancy', notwithstanding that the depot in the West Midlands which was the drivers' contractual place of work and the collection point to which they drove each day, remained open. The argument failed before the EAT. The place of work was the depot near Birmingham - not just by dint of what the contract said, but also because the reality was that their loads were situated there and their routes started there – and there was neither a closure of nor a decline in the need for employees to do delivery work at the depot. So, the drivers' complaints of unfair dismissal succeeded, as the employer had failed to 'prove' the reason for terminating their contracts.

This decision should not be taken to suggest that any dismissal in these or similar circumstances will be inevitably unfair. The employer's big mistake here was to omit to plead an 'in the alternative' defence of 'some other substantial reason' (explicitly recognised by the unfair dismissal provisions), based on a dismissal's being caused by a change in contractual working arrangements. If it had done so, it is far more likely that it would have defeated the claims (there was a good business reason for closing the parking facility and it had done some consultation with each driver before dismissal). And it would have avoided the cost of redundancy payments.


Early pledges

In some quarters, it is being called the 'long campaign' at this stage, so perhaps we shouldn't be expecting too much from the traditional principal political parties yet about employment or industrial relations law reform. But there's a bit of meat to chew on.

The Conservatives are displaying their preoccupation with the public sector, trade unions and industrial action. There is a pledge to limit enhanced redundancy payments to a maximum of £95,000 (yes, that's right...) under new rules that would apply to public sector workers earning £27,000 or more per annum. And certain groups in the public sector – health, transport, fire and education – would not be able to be called out on strike unless there had been a ballot in which at least 40% of eligible union members had voted. Also on strikes, the Conservatives envisage removing the current ban on supplying agency workers to cover for striking employees.

Meanwhile, alongside wanting to increase paternity leave to four weeks and paternity pay by more than £100 per week, Labour is looking at:

improving flexible working for family carers (an initiative that would likely include provision for 'adjustment leave', when a dependant first becomes disabled);
increasing to £50,000 the fine for deliberate failure to pay the national minimum wage;
reinstating an employer's liability for third party harassment under the Equality Act 2010 (its repeal was mentioned in our October 2013 issue);
subjecting TUPE to review, 'to avoid a race to the bottom' (we're not quite sure what this means yet); and
to generate transparency on pay, requiring companies to divulge the ratio of their top earners' pay to that of their average employees.

Nothing too visible or noisy from the LibDems yet, but watch this space.


30 ('ish) into 1 does go

One for the purists, this. The government has just brought forward the draft National Minimum Wage (Consolidation) Regulations 2015, which will take effect on 6th April. As the name on the tin suggests, their helpful, even important, aim is to consolidate the almost 30 separate sets of regulations that currently apply to the minimum wage. Now, if someone could just read through all those to check they have all been included in the consolidation....... Any volunteers?


If you would like to discuss this or any other issue facing your organisation please speak to your usual contact at Collinson Grant or Jo Hale on 0161 703 5600

Although care has been taken in the preparation of this Newsletter, Collinson Grant cannot accept responsibility for errors, omissions or advice given. Readers should note that only Acts of Parliament and Statutory Instruments have the force of law and only the courts can authoritatively interpret the law.