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This month email@example.com reports on Mr Justice Underhill's proposals for wide-ranging changes to the Employment Tribunal rules, and on the introduction of fees in Employment Tribunals. In addition, hrlaw@trowers reports on a holiday pay decision affecting payment for untaken holiday on termination of contract, on the existence of mutuality of obligation over a succession of individual contracts and on another age discrimination decision.
1.1 Costs in employment tribunals
The Employment Appeal Tribunal (EAT) has upheld a Tribunal's decision to award costs against the Claimant because her claim was misconceived in the case of Topic v Hollyland Pitta Bakery.
Despite the fact that her beliefs had no basis in reality the Claimant had genuinely believed that she had suffered discrimination. Although the genuineness of her beliefs was not relevant to whether her claim was misconceived, it was relevant to the exercise of the discretion to award costs. The EAT noted that whether a party is dishonest will be relevant to the determination of whether costs are appropriate, but will not be determinative. An honest case may still be misconceived or conducted unreasonably. Finally, the EAT held that the Tribunal had been right to take account of the Claimant's failure to lodge a grievance. A failure to lodge a grievance formed part of the evidence in support of the Claimant's claim.
1.2 Gross misconduct and setting up in competition
The EAT has held in the case of Khan & Another v Ladsker Childcare Limited that it is not necessarily gross misconduct for an employee to take preliminary steps towards setting up in competition with his employer. In order for summary dismissal for gross misconduct to be fair, the misconduct in question must be capable of amounting in law to a fundamental breach of the contract of employment. Although employers are free to decide what they want to define as gross misconduct that freedom will be subject to common law limits on restraint of trade.
In this case, the employees had put together a detailed plan for a business competing with their employer which made use of the expertise acquired in the course of their employment. The EAT remitted the case to the Tribunal to determine whether the conduct identified as the reason for dismissal (preparing to compete) was gross misconduct in the form of a breach of the implied terms of trust and confidence.
1.3 Age discrimination and the Swedish default retirement age of 67
The Court of Justice of the European Union (CJEU) has held in the case of Hörnfeldt v Posten Meddelande AB that the Swedish law providing for retirement of employees at the age of 67 without taking into account the level of the retirement pension available to the person concerned was legitimate.
Under Swedish law every employee enjoys an unconditional right to work until the last day of the month of his or her 67th birthday on which date the employment contract can be terminated. Pensions in Sweden are based on career average earnings. The Claimant worked for the postal services agency for various periods on fractional contracts and, when he retired, found he had an inadequate pension. He argued that if he had been allowed to work for two or three years longer his retirement pension would be significantly increased. He argued that an exception to the "67 year rule" ought to be allowed in respect of workers who, like him, wished to continue working. The court held that the 67 year rule was not a mandatory scheme of automatic retirement and merely laid down the conditions under which an employer could derogate from the principal of age discrimination by giving notice to workers aged 67. There was nothing to prevent a worker and an employer entering into a new fixed term contract. In addition, people who found that their pension was too low, could receive other support benefits, such as retirement pension in the form of basic coverage from 65, housing benefit and/or old-age benefit.
1.4 Amending Tribunal claims
The EAT has considered what factors a tribunal should not take into account when deciding whether to permit a party to amend his or her statement of case in Woodhouse v Hampshire Hospitals NHS Trust. It held that the Tribunal cannot take into account the strength of the evidence relating to the claims sought to be introduced in circumstances in which disclosure relating to those claims has not occurred.
The Claimant sought to amend his case the day before the 3 day hearing of his unfair dismissal claim was due to commence. He sought to introduce claims of disability discrimination and whistleblowing. The EAT held that the Tribunal erred in law when considering the application to amend, because the Employment Tribunal had taken into account its views, and the views expressed by the Respondent's counsel, about the underlying merits of the proposed new claims. These were essentially that, if there were a good case, why had the Claimant's team not realised it earlier. The views were based on the limited material before the Employment Tribunal, but as the proposed claims were wholly new claims there had been no disclosure of documents relevant to them.
The EAT clarified that an Employment Tribunal is permitted to consider the merits of proposed claims when assessing the balance of hardship and the balance of prejudice, but that unless the case is "utterly hopeless" it should assume that the proposed claims are arguable.
1.5 Vicarious liability of Catholic Church
The Court of Appeal held that the Catholic Church could be vicariously liable for a priest's actions in JGE v The Trustees of the Portsmouth Roman Catholic Diocesan Trust.
JGE was in a children's home run by the Church and brought a personal injury claim alleging that she had been sexually abused. Whilst the Court of Appeal confirmed that a Catholic Priest is not an employee, they extended the scope of vicarious liability to non employees in relationships so close in character to employment that it was just and equitable to hold the "employer" liable. The Court held that when identifying such relationships courts should consider the control the organisation had over the individual; whether the individual performed a core function of the organisation; whether the individual was integrated into the organisation; and whether the individual was in business for themselves.
1.6 Independent contractor had worker status
The Court of Appeal has held in the case of Hospital Medical Group Limited v Westwood that a doctor, although not employed under a contract of employment, was a "worker" for the purposes of the Employment Rights Act 1996.
Mr Westwood, a doctor, carried out hair restoration work for HMG Ltd (a private clinic) on a self employed independent contractor basis. When this agreement was terminated he lodged claims for, among other things, unlawful deductions from wages and unpaid holiday pay. A Tribunal found that he was a "worker" as he had a contract to perform work personally for HMG Ltd. The Tribunal found that HMG Ltd was not "a client or customer of any profession or business" carried out by Mr Westwood, which would have taken Mr Westwood outside the definition of "worker". The Court of Appeal held that it was difficult to see HMG Ltd as just another purchaser of Mr Westwood's medical skills. Although he was not working for HMG Ltd under a contract of employment, he was clearly an integral part of its undertaking. HMG Ltd had specifically recruited Mr Westwood to carry out surgical procedures on its behalf and had referred to him in its marketing materials as "one of our surgeons".
1.7 No need to request annual leave while off on sick leave
The Court of Appeal has held in the case of NHS Leeds v Larner, that a worker who was unable to take 4 weeks annual leave due to sickness did not have to make a request to carry the untaken leave over into the next leave year in order to receive a payment in lieu of it on termination of employment.
There have been two recent conflicting EAT decisions in this area. In Larner the EAT held that a worker on long term sick leave for a whole year who was not well enough to exercise her "right to enjoy a period of relaxation and leisure" (ie make a request to take holiday) should be allowed to carry over her holiday entitlement to the next leave year. However, in Fraser v South West London St George's Mental Health Trust the EAT said that a failure to request leave meant that the right expired at the end of the leave year. The Court of Appeal found that the facts in Fraser could set it apart from Larner. In Fraser the employee had returned to work after a period of sickness and had worked for almost a year before being dismissed, and therefore had had the "opportunity" to take her holiday in the year before her dismissal, whereas Mrs Larner did not have such as opportunity as she had been dismissed whilst still on sick leave.
It seems, following the Court of Appeal's decision, that from now on those off on long term sick will be automatically entitled, on termination, to payment in lieu of holidays which they did not make a request for.
1.8 Calculation of pay increase uncertain but not unenforceable
The EAT has held in the case of Anderson & Others v London Fire and Emergency Planning Authority that an agreement to award a pay increase calculated in one of two alternative ways was not unenforceable even though it was uncertain.
The Claimant's union and the Respondent had negotiated a 3 year pay settlement as part of a collective agreement which was incorporated into the Claimant's contracts of employment. Under the agreement the Respondent was committed to award a pay increase of either 2.5% or the National Joint Council (NJC) settlement plus 1%. The Tribunal concluded that this was no more than an "agreement to agree". It held that the NJC settlement was yet to be determined at the date of the collective agreement and, furthermore, the agreement was silent as to how the choice was to be made between the two options. However, the EAT held that the NJC settlement would be certain at the relevant time. It also held that many contracts gave parties a choice and that, so long as they make one of the permitted choices, they will not be in breach.
1.9 Appeals and extension of time
The Court of Appeal upheld the EAT's decision to reject a late appeal in the case of Greg O'Cathail v Transport for London.
Mr O'Cathail's deadline to appeal was 27 January 2010. Although he lodged his notice of appeal on the 26th, he had not included the Tribunal's Judgment or reasons. These documents were not provided until 28th January. Mr O'Cathail sought to claim that the lateness was caused by his depression, anxiety and panic attacks. The EAT found that the lateness was because he left presenting the appeal until the last moment, and was not due to his disability. The Court of Appeal found that the EAT had correctly considered Mr O'Cathail's disability, but found it was not why the appeal was late. It emphasised that it would only overturn the EAT's exercise of discretion if it was legally floored or plainly wrong.
1.10 Mutuality of obligation
The EAT has held in the case of Drake v Ipsos Mori UK Ltd that a person working under a succession of individual contracts can be an employee. It held that there was a contract in respect of each assignment (the Claimant worked as a market researcher under a succession of different assignments), and that there was "mutuality of obligation" sufficient to create a contract of employment even if the contract could be terminated at any time.
The EAT reasoned that there were two questions to ask in order to ascertain whether "mutuality of obligation" existed. The first was whether a contract existed, and the second was whether it was a contract of employment. The EAT held that while an assignment was continuing there was an agreement to undertake work in return for payment. Ipsos Mori described the acceptance of an assignment as a "contract" in its Handbook and even though either side could terminate the contract at will that did not mean that there was no contract. The EAT then remitted the issue of whether the contract was a contract of employment back to the Tribunal. Factors for the Tribunal to consider include the obligation to work personally and the extent to which the Claimant was under the Respondent's control.
1.11 Can loss of death in service benefit be claimed by a deceased employee's estate?
The EAT has held in the case of Fox v British Airways that the estate of an employee who was unlawfully dismissed, and died shortly afterwards, could bring a claim for loss of a death in service benefit.
Mr Fox's estate argued that his dismissal was unfair and discriminatory and brought a claim for both. The compensation in question was the value of the death in service benefit enjoyed by Mr Fox whilst he was in employment. The EAT held that the death in service benefit was a contractual right which Mr Fox lost at the point of his dismissal. The opportunity to use such a benefit for his dependents, or causes he wished to support, was of value to Mr Fox and, as he had died shortly after dismissal, the cost of providing for payment of a lump sum known to be due within a short period of time was no less than the entire sum itself.
1.12 Constructive dismissal and upheld grievances
The EAT has held in the case of Assamoi v Spirit Pub Company that if an employer upholds an employee's grievance about treatment by his immediate manager, this can prevent the employee relying on the treatment to show a breach of the implied term of trust and confidence.
Here, although the employee's immediate manager had behaved badly towards him this did not amount to a breach of the implied term of trust and confidence. The actions of more senior managers had prevented the situation worsening in a way which would have justified the employee claiming constructive dismissal.
2.1 Maternity leave and mothers of children born by surrogates
Norman Lamb, the Parliamentary Undersecretary of State for Employment Relations, Consumer and Postal Affairs, has confirmed that the Department for Business, Innovation and Skills (BIS) is looking into the possibility of granting leave and pay for mothers of children born by surrogates. This issue is currently the subject of a Private Members bill Surrogate Parents (Leave, Pay and Allowance Arrangements) Bill 2010-12. Meanwhile in C-D v S-T, the Employment Tribunal decided to refer questions to the CJEU about whether EU maternity and discrimination law protects a woman who becomes a mother under a surrogacy arrangement.
2.2 Consultation on a UK Bill of Rights
The Commission on a Bill of Rights has issued a consultation asking for views on whether a United Kingdom Bill of Rights is needed, and if so, what form it should take.
The Commission has already asked for comments on a discussion paper published last August ('Do we need a UK Bill of Rights?') which has received conflicting responses and wants to seek further views. Some have felt that a UK Bill of Rights is unnecessary given the Human Rights Act's (HRA) existence and that a removal of the HRA would pose risks to rights protections in the UK. Others have felt that the HRA is perceived negatively and often results in unpopular decisions, and that a Bill of Rights would allow UK fundamental rights to be distanced from Europe.
The Commission seeks views on (amongst other things):
The Consultation closes on 30 September and a report will be made to the government by the end of the year.
2.3 Wide ranging changes to employment tribunals recommended
Mr Justice Underhill, the former president of the EAT, has completed his fundamental review of Employment Tribunal Rules. He proposes a set of new rules, to replace the existing Tribunal Rules and Regulations. In an effort to make the new rules more understandable by unrepresented parties, they will use simpler language and are less than half the length of the old rules. A formal consultation on the proposals made by Mr Justice Underhill's review will follow later this year.
The new rules would make wide ranging changes if they are approved, including:
2.4 Fees in employment tribunals
The Ministry of Justice has published the results of its consultation on the introduction of fees in employment tribunals. The changes are intended to be implemented next summer. For level one claims (the very straight forward ones such as unlawful deductions, payment in lieu of notice and redundancy payments) there will be a £160 issue fee and a £230 hearing fee. For level two claims (these include claims relating to unfair dismissal, discrimination complaints, equal pay claims and claims arising under the Public Information Disclosure Act) there will be a £250 issue fee and a £950 hearing fee. For EAT claims there will be a £400 appeal fee and a £1200 hearing fee.
2.5 Government issues statement on Fair Deal guidance
The Government issued a written ministerial statement on 4 July 2011 which confirmed it will bring forward legislation to introduce fundamental changes to the Fair Deal guidance which applies to staff whose employment is compulsorily transferred from the public sector under TUPE.
In the statement, Chief Secretary to the Treasury Danny Alexander confirmed that "the Government has reviewed the Fair Deal policy and agreed to maintain the overall approach, but deliver this by offering access to public service pension schemes for transferring staff". This will also include staff whose employment is subject to a subsequent TUPE transfer. The statement confirmed that the new arrangements will "replace the current broad comparability and bulk transfer approach under Fair Deal, which will then no longer apply." Currently, only employees in the Local Government Pension Scheme can routinely remain members of that scheme following an outsourcing to the private sector, though certain limited exceptions apply to the NHS Pension Scheme and Teacher's Pension Scheme to enable some private employers to participate.
Some contracting service providers will be concerned that the announcement on Fair Deal policy and the recent joint Local Government Association and trade union statement proposes an intention to make it compulsory for members to be able to remain in their public sector schemes as this removes an element of flexibility where broadly comparable pensions would be on offer as an alternative. Equally some providers will welcome the move towards greater pricing certainty that will come from admission to public sector arrangements whilst dispensing with the need for protracted negotiations regarding bulk transfer shortfall risk. The written ministerial statement does not provide any detail on how re-tendered contract awards will be treated. This could give rise to careful examination of exit provisions in current outsourced contracts.
2.6 Proposal to make older workers pay to get young into jobs
Currently, older workers are not required to pay national insurance (NI) because it has always been linked to entitlement to benefits such as the state pension. However, the abolition of the default retirement age is expected to result in many more people continuing to work into later life. The Telegraph reports that a report from the Free Enterprise Group of 39 Tory MPs, said that the Chancellor had already indicated that he intends to merge NI and income tax. Charging NI on earnings for over 65's could raise up to an extra £2 billion for the Treasury the study suggested. This revenue could be used to give companies a break from paying employer NI contributions, with the aim of encouraging more to take on young workers and help address high levels of youth unemployment.
2.7 Low cost measures to create 215,000 jobs
The Telegraph reports that business leaders have called on the government to introduce a raft of low cost measures that would help create hundreds of thousands of new jobs and alleviate the UK's unemployment problem. Among the proposals are measures to make more councils enforce apprenticeship and job creation as part of awarding industry contracts, a plan to bring forward construction work that has already been approved and proposals for big companies to train up UK workers so that they are ready to take up available jobs in the supply chain.
A CBI report entitled Bridging the Gap, published last month, said that the construction sector had the potential to create some 215,000 jobs within months if local authorities brought forward repair, maintenance and improvement work which had already been budgeted for. The report stated "[This] work can deliver jobs quickly on the ground across all regions, including creating openings for unemployed young people as its nature offers 'hands on' jobs suitable for school leavers".
Leadings companies in the manufacturing and construction sector, including building group Midas and engineering firm Seamans, are among those urging policy makers to do more to help spur jobs growth amid a dismal trading environment. Steve Hindley, Executive Chairman at Midas, said the government was missing a trick by not implementing simple, low cost measures that had huge potential to employ thousands of people. Mr Hindley said "bureaucracy" was the biggest barrier to councils getting on with commissioning repair work, but urged industry and government to help each other create more jobs.
2.8 Only a quarter of employees in work pension
The Telegraph reports on figures from the Department for Work and Pensions which show that only a quarter of private sector workers are active members of their employer's pension scheme, down from a third in 2007. Meanwhile, only three in ten private sector companies offer any pension provision at all for their staff, a fall from four in ten five years ago.
However, auto-enrolment, the scheme to give people workplace pensions, will mean that, as of October when it comes in, the number of people saving for retirement will increase sharply. Under auto-enrolment, an estimated 10 million people will be placed into workplace pensions for the first time, although they will be able to opt out if they wish. Meanwhile, the DWP's Employers' Pension Provision survey shows that half of the companies surveyed have "not thought about the reforms at all", and just three per cent have a plan in place.
2.9 Graduates forced to work for free
The Independent reports on a report released by the Higher Education Statistics Authority which claims that last year 6,295 graduates worked for free. The figures show the number of graduates going into internships, or low or unpaid positions, in the professional services rose by 21% in the past year.
Although in the UK it is illegal for employers to pay less than the national minimum wage of £6.08 an hour to workers aged 21 and over, a recent survey by the Chartered Institute for Personnel and Development has found that more than a third of employers do not pay that amount. Brendan Barber, the TUC General Secretary, has called for an "end to the unfair expectation that young people will work for nothing or next to nothing", arguing that it "helps keep less affluent graduates out of the most desirable jobs and bolsters recruitment through the old school tie network".
2.10 Consultation launched on the accommodation offset under the NMW
The Low Pay Commission has launched a consultation on the accommodation offset under the national minimum wage. The deadline for responding to the consultation is 10 September 2012.
The accommodation offset is the only benefit that can count towards the NMW. The Low Pay Commission has asked employers and workers who have provided or received accommodation to complete a short survey. The aim is to understand how far the offset has protected low-paid workers since it was introduced and also to see if there is any evidence that the level of the offset has deprived workers of accommodation that would otherwise be offered.
2.11 Pension Regulator issues updated guidance on employer departures from multi-employer schemes
The Pensions Regulator has updated its guidance for trustees and employers about managing employer debts that arise when an employer stops participating in a multi-employer scheme. New material in the guidance covers the introduction of flexible apportionment arrangements on 27 January 2012, along with the provisions allowing an employer to extend the "period of grace" before an employer debt is triggered. The guidance sets out the key considerations for trustees to take into account in these situations.
3.1 The Enterprise and Regulatory Reform Bill completes its Committee Stage
The Enterprise and Regulatory Reform Bill completed its Committee Stage in the House of Commons on 17 July 2012. It has now been republished showing the amendments made. No date has yet been set for Report Stage, but it will be after the summer recess. There are no changes to the original employment law clauses, but new clauses have been added dealing with protected conversations, directors, remuneration and termination payments.
3.2 Auto-enrolment update
As auto-enrolment draws ever closer some regulations and guidance have been issued.
"This is an indispensable aid to the busy company secretary. The text is clear, the precedents...