It's a trap!

Employment Law Newsletter - March 2016


In this issue ...

  Completing the picture   Budget news  
  Swings and roundabouts? – Not that simple   Logical but counter-intuitive?  
  Vicarious liability – a wider net   Logical and intuitive  

Completing the picture

In the February 2016 issue, we mentioned that, inflation having been so low, nothing much was happening to the level of certain benefit rates and pension auto-enrolment thresholds in April. At the time of publication, we were still awaiting news of what would happen to the limits and rates under employment legislation. Now we know, and the answer is not a lot again. The limit on a 'week's pay' will rise from £475 to £479, lifting the maximum possible statutory redundancy payment and basic award for unfair dismissal to £14,370. The maximum compensatory award for unfair dismissal (where the primary limit of 12 months' pay does not produce a lesser figure) goes up £627 to £78,962. The increases reflect a rate of between 0.08% and 0.085%, so small that it even serves to leave the daily amount of the statutory guarantee payment untouched at £26.

And the new national minimum wage (NMW) rates to take effect in October have just been announced. They are £6.95 (ages 21 to 24), £5.55 (ages 18 to 20), £4.00 for non-apprentices under 18 and £3.40 for apprentices. The increases are of between 3% and 4.7%.

The national living wage (NLW), applicable to workers who are 25 or older, will not rise in October. While unsurprising in that the NLW has not yet commenced, this disjointed approach is administratively inconvenient. But this is only a short-term issue - it has been announced that, from April 2017, the NLW rate and the NMW rates will be reviewed together.


Swings and roundabouts? – Not that simple

Easter moves about a bit. In 2015, it was in April. This year, it's in March. Then it's back to April in 2017. Now, we haven't checked with the calendar since 1998 and it may not be the first time the problem has cropped up, but, if you operate a holiday year of 1st April to 31st March and only work to the minimum paid leave entitlement under the Working Time Regulations (WTR) of 5.6 weeks/28 days, this gets a bit messy.

The minimum WTR entitlement is often satisfied in the form of 20 'normal' days plus the 8 bank holidays. There will only be six bank holidays falling in the 1st April 2016/31st March 2017 holiday year (because the two for Easter 2016 occur before it starts and the two for Easter 2017 occur after it ends). So, there will be a breach of the WTR rules unless two extra days' leave is given. Moreover it is no defence to say that, in the previous (2015/2016) holiday year, there were two days' leave awarded in excess of entitlement because Easter fell within it twice.


Vicarious liability – a wider net

The Supreme Court (SC) has recently considered conjoined appeals – Cox v Ministry of Justice; Mohamud v Morrisons Supermarkets – about the range of situations to which the principle of vicarious liability (where a party can be liable for the negligent or otherwise unlawful act of another) can apply.

In Cox, a prisoner working in the kitchen negligently dropped a bag of rice on Cox, a manager in the prison service, causing her injury. The SC held that, although the prisoner was not an employee, he was carrying on activities as an integral part of the operation conducted by the defendant for its benefit. So, if the risk of the wrongdoing has been caused by the defendant organisation having assigned activities to that person, there can be sufficient connection to make the defendant liable. This principle can, of course, be applied readily to more orthodox working environments and the acts of contractors or others not engaged under a contract of employment.

In Mohamud, a Mr Khan was employed by Morrisons, although it will have wished he wasn't. He worked at one of the supermarket's petrol stations. Mohamud, a passing customer, asked if it was possible to print some material off a USB stick. For reasons best known to himself, Khan ordered Mohamud off the premises, became abusive and racist and, having followed him back to his car, caused him injury through a serious and sustained assault. The SC held that Khan's ordering Mohamud to leave the premises was sufficiently connected to the job assigned to him by his employer and the violence was a reinforcement of that order. So Khan could not be said to be acting outside the course of employment and, in the vernacular of vicarious liability (which is quite an antiquated doctrine) 'on a frolic of his own'. Morrison's was liable to Mohamud for the injuries he suffered. The lesson here, if there be one capable of application arising from such a bizarre incident, is 'know your employee', watch for warning signs in attitude and behaviour (we doubt that Khan had ever been subjected to psychometric testing) and ensure that employees understand that emotional self-indulgence at work will not be tolerated.


Budget news

Like its predecessors from other Chancellors, George Osborne's budget for the long-term (you know, the one which 'puts the next generation first' – you can't have forgotten already!) did not contain any announcements about 'full on' employment law. But it did feature the plan to charge National Insurance Contributions (NICs) on that part of any termination payment that is in excess of £30,000. Remember to amend your model settlement agreements to refer to NICs alongside income tax on any balance above this amount.


Logical but counter-intuitive?

Now, what's the best time for the law to step in to hinder an employee's sensible planning for properly-funded childcare? Not an obvious question or an easy one to answer, but, if there's not a good time for such an intervention, it's probably when the employee is on maternity leave – that sounds sensible, doesn't it? Yet, that is precisely the position the Employment Appeal Tribunal (EAT) has reached in Peninsula Business Services v Donaldson.

Here, childcare vouchers received by an employee under a salary sacrifice arrangement were withdrawn by the employer during ordinary maternity leave (OML). The EAT concluded that, salary otherwise receivable having effectively been traded for the vouchers, they constituted 'remuneration' under Regulation 9 of the Maternity and Parental Leave Regulations and, so, could and should be withdrawn during OML. It was irrelevant that HMRC had previously issued guidance asserting that non-cash benefits under salary sacrifice arrangements should continue during maternity absence, as that lacked any legislative foundation.

It is difficult to find a serious hole in the EAT's reasoning. It's just that the result is, almost in policy terms, a bit peculiar. Time for some amendment of the legislation?


Logical and intuitive

But for every decision that makes you think 'that cannot be right', there is one that leads you to ask 'that's so obvious, why did it need deciding with litigation?' The EAT's ruling in Metroline West v Ajaj is this edition's example. Ajaj was found, through surveillance by his employer, to have been deliberately exaggerating the medical situation which was the stated cause of his absence from work and receipt of sick pay. He was dismissed. So far, so good – the guy got what he deserved, didn't he?

Well, initially, not according to an employment tribunal, which imaginatively concluded that the dismissal was unfair because such circumstances should not have been dealt with as a disciplinary/misconduct matter but, rather, as a capability/health issue. So, opined the tribunal, Metroline should instead just have disregarded Ajaj's dishonesty, taken his true medical condition and asked itself how long it could reasonably be expected to wait for him to return to work... It was left to the EAT to correct things on appeal – demonstrably 'throwing a sickie' (briefly or for a longer period) is a disciplinary matter, generally warranting dismissal.


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.