It's a trap!

Employment Law Newsletter - January 2015


In this issue ...

  Working overtime on the holiday pay question   Appearances can be deceptive  
  Carrying on with carrying over   Twitter ye not?  
  Fit for work is not yet fully fit to work   Just what is a disability?  
  The die is cast?   Make sure you pay up  
  Woman (or Men) at work – can a claim come from down under?  

Working overtime on the holiday pay question

In a fast-moving scenario, two things have become apparent since our December 2014 issue. First, time limits having now expired, none of the parties in Bear Scotland v Fulton seems to have presented an appeal against any aspect of the ruling of the Employment Appeal Tribunal (EAT) about the calculation of holiday pay (first covered in the November 2014 Special Edition). So, for the time being, that ruling is the precedent. And, second, the Government has quickly produced Regulations to address the principal concern of employers about increased holiday payments – liability for back pay. They provide that, for any claim presented on or after 1st July 2015, a tribunal will only be able to consider the lawfulness of deductions that occurred on dates falling within the two years preceding the presentation of that claim.

However, with the current state of the law as interpreted in Bear, that still would not translate into an employer's automatic liability for all underpayments in the previous two years. The most contentious aspect of the Bear decision – on limiting increased holiday pay to the basic 20 days under the Working Time Directive (WTD) and Regulations (WTR) and the effect of that on breaking a series or chain of deductions or underpayments – survives for now. So, the attainment of two years' back holiday pay would not be feasible for many 'post-1st July' claimants. Their 'personal chain' will be broken by a gap in excess of three months occurring within the last year or so.

But what the Regulations will ensure for claims presented in the second half of 2015 or later is that, if this key aspect of Bear is successfully challenged in a future case (and a challenge is likely), there is a two year backstop in place.

What then of tribunal claims already in existence or ones submitted before 1st July 2015? It's back to Bear and its possible fragility on that back pay issue. Unless and until that issue is reshaped in another case, many claimants will be constrained by the 'series/chain' approach – and, as indicated above, waiting until July will not improve their position. But, if the previously mentioned successful challenge does happen, it might well permit consideration of underpayments to go farther back – indeed, all the way to the later of 1998 or the date of start.

Meanwhile, the employment tribunals have issued directions about the amendment of existing holiday pay claims to accommodate fresh underpayments (thereby avoiding the fees that would be payable if a fresh claim were necessary).


Carrying on with carrying over

We've also done excessive overtime on the subject of sickness absence and carrying over holidays (culminating in NHS Leeds v Larner), in this publication - if you still have the energy and a good filing system, refer back to various editions from 2010 to 2012 - and, more recently, in our book, Employment law for line managers, and at our annual update sessions. But, in Sash Window Workshops v King, consideration was given to an extension of that subject.

Here, a self-employed salesman (under the WTR, a 'worker') said that he had been discouraged from taking annual leave because he was paid on a commission-only basis (and so would not get holiday pay). He claimed that he should be entitled to carry forward the unused days and receive payment in lieu of them on termination.

Although it found there was insufficient evidence to support the claim, the EAT nevertheless acknowledged the principle that a worker who is prevented by circumstances other than sickness from taking annual leave in the relevant holiday year should be allowed to carry it forward. Of course, unlike the relatively incontrovertible fact of sickness absence, the more nebulous concept of 'prevention by circumstances' should provide the scope for much debate and deliberation about its nature.


Fit for work is not yet fully fit to work

The Government's 'Fit to work' service is grinding into action, albeit quite slowly. There is now a website and phone line for 'free expert and impartial work-related health advice'. But there is uncertainty about precisely when employers can seek support from the core feature of the service – referral of employees who have been absent for four weeks or longer for assessment to assist a return to work. We are told only that it will be rolled out in the coming months.


The die is cast?

In our February 2014 edition, we mentioned Chandok v Tirkey, in which an employment tribunal held that it had jurisdiction to consider a claim of discrimination based on 'caste'. The EAT has now rejected an appeal against that decision, ruling that caste will often be protected under the Equality Act 2010 as a consequence or offshoot of a sub-set of 'race' (usually 'ethnic origin').

So, while the Government is still formally committed to amending the Act explicitly to include 'caste' as a protected characteristic, it appears that the urgency to do so is diminished.


Appearances can be deceptive

For a 'service provision change' (SPC) to occur under TUPE, there must be an 'organised grouping of employees' attached to the service in question.

As Eddie Stobart v Morman (see our April 2012 edition) illustrated, there is more to this requirement than meets the eye. There, it was found that the outgoing service-provider had not consciously structured work activity so as to give rise to such a grouping. In a similar vein, in London Borough of Hillingdon v Gormanley, the EAT has found that there was no organised grouping simply because, at the time of changeover, the employer had no other clients or contracts to service and, therefore, the employees were only working on the particular service in question. The evidence showed that, at other times, the group of staff had, to differing degrees and in varying numbers, worked across more than one contract. So, no SPC and no TUPE!


Twitter ye not?

We can only speculate on how Frankie Howerd might have fared in the social media age. However, the cannibalisation of one of his catchphrases for the headline of this piece seems apt after the ruling in Game Retail v Laws.

Mr Laws was a Risk and Loss Prevention Manager with Game Retail. He had a personal Twitter account which, although it did not identify him directly as an employee of the company, he also used to monitor the Twitter accounts of the 100 or so stores for which he was responsible. He also allowed about two-thirds of these units to follow him on Twitter without restriction.

Game Retail was alerted, by another employee who was a follower, to some offensive tweets by Mr Laws. It conducted an investigation and, ultimately, dismissed him – even though the tweets concerned were not about the company or its staff, customers or suppliers.

The EAT concluded that Mr Laws had not been unfairly dismissed. There was no need for there to be an overt link to Game Retail that a customer or supplier would readily pick up or for the content to be work-related. And, although the account was personal, it was not truly 'private' because he had knowingly allowed unrestricted access to other employees.

Although cases will inevitably turn on their own facts and some will produce the opposite conclusion (for example, in a not dissimilar scenario involving Facebook, see the High Court's decision in Smith v Trafford Housing Trust in 2012), Laws shows the extent to which an employer's interest in personal social media activity can extend.


Just what is a disability?

In order to constitute the protected characteristic of disability, a condition must be a physical or mental impairment with a substantial and long-term (has lasted 12 months or more or is likely to last at least 12 months or, if less, the rest of the person's life) adverse effect on a person's ability to carry out normal day-to-day activities.

Two recent decisions have thrown light on different aspects of this requirement.

In FOA (Kaltoft) v Billund, the European Court of Justice (ECJ) looked at obesity and concluded that, although the condition in itself did not come within the definition, one or more of its physical or psychological consequences could amount to an impairment which, if the effects were sufficiently significant and lasted long enough, would be a disability. In reaching this view, the ECJ stated that the cause of or contribution to obesity was irrelevant.

In Saad v University Hospital Southampton NHS Trust, the EAT gave a cautionary reminder about generalised assumptions on 'depression'. Even where that term is properly applied to describe a clinically recognised condition (a pre-requisite for protection under the Equality Act), it is still possible that, as in Mr Saad's case, the resultant effects will be of insufficient duration or severity to be a 'disability'.


Make sure you pay up

A basic principle of contract law is that, in order to enforce a promise or commitment by another, a party must have furnished some consideration in return. With restraints on post-termination activity by an employee, there is generally no problem on this count for the employer. The provisions are part of a contract which also, and simultaneously, features the employer's commitment to pay salary – a generally indeterminate proportion of which can be said to be consideration for the restrictions on the employee.

However, in Re-use Collections v Sendall & May, things were not so neat. The employee concerned only received a written contract of employment for the first time when the family-run business for which he worked was sold. He signed the contract, which contained various written restraints. When Re-use tried to enforce them, it failed. The High Court rejected Re-use's argument that the benefits provided under the new contract (these included life assurance at four times salary, private medical cover, provision of a car, three months' notice and 25 non-bank holidays) were effective as its consideration for his undertakings. None was outwardly or obviously related to the restraints, some (the car and the medical insurance) were no improvement on existing benefits and the employee was not even aware of one (the increased life assurance cover). Further, the simple fact of his being allowed to continue in employment was insufficient – there was no evidence that he would otherwise have lost his job.

For employers, the message is fairly clear. If you slip restrictive covenants into anything but an original contract of employment (and then preferably reaffirm them in any subsequent replacements – see Patsystems v Neilly in our October 2012 edition) but forego specifically-allocated consideration, you run the risk of getting egg on your face when you want to enforce them.


Woman (or Men) at work – can a claim come from down under?

In Lodge v Dignity & Choice in Dying, an Australian citizen who was the Head of Finance for a charity relocated for personal reasons from London to Australia, from where she continued to work remotely for the employer for about 15 years before she was dismissed. The EAT said she could bring unfair dismissal and whistleblowing claims in the UK, even though she had not been posted abroad by the charity. The key issue was that the work she did was solely for the benefit of her employer's operation based in London.


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.