It's a trap!

Employment Law Newsletter - February 2016


In this issue ...

  All locked up for good?   Clearing the fog of early conciliation  
  Little new and little change   Putting the brakes on postponements  
  Hurt feelings aren't quite as lucrative   48 hours can be 84 hours?  
  You still can't lay-off TUPE easily   Day to day has a working context  
  And while we're talking lay-off...   And mind the gap!  

All locked up for good?

The January 2016 edition reminded you that we were due the judgment of the Employment Appeal Tribunal (EAT) in British Gas v Lock, about the interpretation of the Working Time Regulations (WTR) on the calculation of holiday pay (a thorny subject, covered several times in this newsletter over the last 15 months).

The ruling has just been given. Before giving it, the EAT had a post-hearing opportunity to consider the relevance of The Advocate General for Scotland v Barton (also covered in last month's issue). Centrally, it has rejected the employer's argument that the 'judicial rewriting' of the WTR necessary to comply with interpretations of European Union law and allow past commission payments to be included in holiday pay was excessive and ran contrary to the expressed will of Parliament. So, the approach of reading fresh words into the WTR, first adopted in Bear Scotland v Fulton (on the inclusion of historic overtime payments), remains valid – that is, subject to another appeal in Lock or another case emerging on the issue...


Little new and little change

Also in the January 2016 issue, we mentioned in passing the forthcoming National Living Wage (NLW). February would be a good time to talk in more detail about something starting in early April. However, as it turns out, there is little to talk about. The new NLW regulations have just been published, but, beyond formally specifying the NLW hourly rate of £7.20 for those 25 and over, they leave everything else to the existing legislative framework for the National Minimum Wage (NMW). For the avoidance of doubt, the NMW rates in place since last October for those aged 24 or younger will not change in April.

From 'little news' to 'no news' (here, probably good news). The Government has decided to leave unchanged the flat rates for all those statutory 'social security' payments – covering sickness, maternity, paternity, adoption and shared parenthood – made by employers directly to employees. At the relevant time for reviewing the level of these payments, September 2015, the Consumer Prices Index was showing no annual increase.

For much the same reason, the earnings trigger and the earnings band for pensions auto-enrolment will stay largely the same for 2016/2017, the only change being the slight rise in the upper end of the latter to £43,000 (from £42,380).


Hurt feelings aren't quite as lucrative

In Moorthy v Commissioners for Her Majesty's Revenue and Customs, the Upper Tax Tribunal ruled that where the termination of employment gives rise to compensation for injury to feelings (in Moorthy, for age discrimination), those damages are taxable. 'Injured feelings' are not to be equated to 'injury' proper, which is akin to death or disability.


You still can't lay-off TUPE easily

In our October 2015 issue, we featured the decision of the Employment Appeal Tribunal (EAT) in Inex v Hodgkins, establishing that there can still be a service provision change (SPC) under TUPE even though the employees dedicated to providing the service in question are not actually or 'physically' carrying out the relevant activities when the changeover occurs.

In Hodgkins, the employees had been laid off because work under the contract on which their employer was engaged was unlikely in the foreseeable future. In a more recent case, Mustafa v Trek Highways Services, the lay-off of a sub-contractor's employees occurred because of a commercial dispute between the sub-contractor and the main contractor. Almost two weeks later, the main contractor's service contract with its client (TfL) terminated. Following Hodgkins, the EAT ruled that, as the organised grouping of the sub-contractors' employees had not been dismantled and so appeared still to exist, there could still be a SPC under which those employees were entitled to transfer to the employment of TfL's new contractor.


And while we're talking lay-off...

Is there a point at which the exercise of a contractual right to lay-off employees for an unlimited period without pay becomes unreasonable? According to the EAT in Craig v Bob Lindfield, only very rarely and certainly not on the facts of the case itself.

After four weeks of unpaid lay-off, Craig resigned and claimed he had been constructively dismissed, arguing that this prolonged use of an express contractual right was excessive and unreasonable and, therefore, amounted to a breach of the implied term of trust and confidence. He failed.


Clearing the fog of early conciliation

Early conciliation (EC) has been around for a couple of years. Its process-driven nature creates potential for 'red tape'. But the EAT has recently shown an inclination to avoid pedantry.

In Mist v Derby Community NHS Trust, it decided that the incorrect naming of a respondent on the EC certificate issued by Acas should not prevent a tribunal's accepting the claim in question. Provided the claimant has provided to Acas the EC information prescribed by the Employment Tribunals Act, it does not matter that the full legal title of the respondent is not used.

In Drake International v Blue Arrow, the question was whether, in a TUPE case, the introduction of additional respondents to proceedings was possible when they had not been mentioned on the EC certificate. The EAT said it was – the addition of respondents by an employment tribunal is a case management decision, made after the EC certificate has been issued and which does not require revisiting the EC process afresh.


Putting the brakes on postponements

The Government has announced that, from April, new rules will be introduced to restrict significantly the ability of a party who has already been granted two postponements of a hearing to secure a further postponement.


48 hours can be 84 hours?

The European Union's Working Time Directive (WTD) and the UK's Working Time Regulations (WTR) adopt the general position that the maximum working week should be 48 hours. But that is just the headline. In Matja Kumba T M'bye v Stiftelsen Fossumkollektivet (a recitation to be reserved for linguistics and pronunciation enthusiasts), the European Free Trade Association Court came to the conclusion that a working week of 84 hours was, in certain circumstances, compatible with the WTD.

The first two parts of 'breaking the 48-hour barrier' are reasonably obvious – the individual opt-out, if it is taken up, and the averaging, normally over 17 weeks, both permitted under the legislation. But, to get from 48 all the way to 84 demands more. First, if the total hours in a week are 168 and the total obligatory weekly rest periods are 90 hours – that is (6 days x 11 hours)+(1 day x 24 hours) – there remain up to 78 hours available to be worked. And then, as in Matja Kumba itself, it was possible to legitimise an even longer working week, proposed under a '7 on, 7 off' rotation for therapists living on site with clients with drug or alcohol problems. This is because the WTD (and the WTR) allow more flexibility on rest periods for activities involving the need for continuity of service by the same individual, including those relating to treatment or care provided by hospitals, clinics and similar establishments. So, with the averaging inherent in a week on/week off regime and provided alternative, 'compensatory' rest breaks followed immediately after the period of intense work (as they would under the rotation), an 84-hour week was lawful.


Day to day has a working context

A person is disabled and subject to protection under the Equality Act if their condition has a substantial adverse effect on their ability to carry out 'normal day to day activities'. Banaszyck v Booker is a case about the meaning of that expression. The EAT found that, although it might not be a frequent or regular feature of many people's everyday existence, a warehouse operative's physical work action of lifting and moving of cases weighing up to 25kg each was a 'normal day to day activity' (although, by contrast, his need to comply with his employer's requirement for a certain number of such actions per shift was not). So, if his long-term back condition significantly impaired his ability to perform this function, he was disabled and able to pursue a claim of disability discrimination.


And mind the gap!

The Government has just published draft regulations about the obligation on all private and voluntary sector employers of 250 or more people to report on the gap between the genders on pay.

Data on pay will first be required for the pay period which includes 30th April 2017. Subsequent snapshots will be provided annually thereafter. Comparison between the sexes' remuneration will be on both a mean average and a median basis, the difference being expressed as a percentage of the mean and median female rates.

'Pay' includes basic pay, holiday pay, paid leave, maternity pay, sick pay, shift premia, area allowances, car allowances, on-call allowances, standby allowances, clothing allowances, first-aider allowances and fire warden allowances. It does not cover overtime, expenses, salary sacrifice payments, benefits in kind, redundancy pay, arrears of pay or tax credits.

Bonuses, profit share payments, Long Term Incentive Payments and the equivalent value of share allocations will also be subject to the new regime. However, because they are discretionary and can be paid on any date, they are treated somewhat differently. For all such awards made in the 12 months leading up to 30th April 2017 and each of its anniversaries, an annual report must include both the proportion of each gender group which has received them and the mean value for each gender group.

Finally on data, an employer will have to state the number of male and female employees respectively whose pay falls within each quartile of the organisation's overall pay range.

The information, signed by a director, must be published and held on the organisation's website for three years and uploaded to a central government website.

Where is the good news in all this new red tape? Well, a report relating to any given 30th April need only be produced within the subsequent 12 months. And, if this matters to you, the only sanction envisaged for those failing to comply is 'naming and shaming' (in the style now periodically used for national minimum wage offenders).


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.