Employment Update April 2010

A reminder of reforms coming into force this month

A number of reforms come into force this month including:

1. Right to request time-off for training
   From 6 April 2010, employees who work for organisations with at least 250 staff will have the right to request time off work for training purposes; provided the employees have at least 26 weeks’ continuous service.
2. New ‘fit notes’
   We first mentioned this reform back in June 2009.  New fit notes came into effect on 6 April 2010.  The Social Security (Medical Evidence) and Statutory Sick Pay (Medical Evidence) Amendment Regulations establishes the framework for their use.  Please click here for a copy of the DWP Guidance on this.
3. Additional paternity leave and pay
   The Additional Paternity Leave Regulations 2010 came into force on 6 April 2010.  Please see our February Update for a detailed summary.

Holiday entitlement and sick leave

Following from our October 2009 Update, the employment tribunal’s decision in Shah v First West Yorkshire Limited endorses the European Court of Justice’s (ECJ) decision in Stringer v HMRC and Pereda v Madrid Movilidad, allowing employees to make up their holiday where they are otherwise prevented from taking it due to illness.

The minimum paid holiday entitlement is four weeks in terms of the Working Time Directive (which equates to 28 days for someone who works a 5 day week).  The Regulations state that the basic 4 week entitlement cannot be carried over to the next holiday year.

In Stringer, the ECJ ruled that a period of sickness absence cannot result in workers losing any part of their entitlement to minimum paid holiday.  Workers on long-term sick leave accrue statutory holidays and must be paid for it at their normal rate of pay, even if their sickness lasts for the whole of the holiday year.  By extension, where a worker has been denied the right to take holiday because of sickness, they must be allowed to carry over the entitlement on returning to work.

In Pereda, the ECJ ruled that a worker who is on sick leave during a period of scheduled holiday must not be prevented from taking the holiday at a later time even if this means taking it outside the leave year in which the leave was accrued.

In the case of Shah, the claimant was unable to enjoy his holidays due to a broken ankle.  When he asked his employer to carry his missed holidays into the following leave year, the employer refused and explained that these holidays had in effect been lost.  The employment tribunal disagreed, ruling that the employer's refusal to allow the employee to retake in a new leave year a period of holiday affected by a broken ankle was a breach of the Regulations.  The Tribunal went so far as to read into the Regulations that the basic four-week statutory leave entitlement can be taken only in the leave year that it falls due, "save where a worker has been prevented by illness from taking a period of holiday leave and returns from sick leave, covering that period of holiday leave, with insufficient time to take that holiday leave within the relevant leave year, in which case, [he or she] must be given the opportunity of taking that holiday in the following leave year".

Although the decision of the employment tribunal in Shah is not binding on other tribunals, it is nevertheless an indication of tribunals’ endorsement of the ECJ’s approach to employees’ holiday entitlement under the Working Time Regulations.

The BIS website has recently updated its information for employers on sickness and holiday leave.  It also confirms that there will be a Government consultation later in the year on possible amendments to the Working Time Regulations.

More information can be obtained from the following link: www.businesslink.gov.uk

Ordinarily, a contract of employment, like any contract, can only be altered by one of the parties if either the other party to the contract consents, or the contract itself so allows.  The EAT has issued a significant decision on the subject of employee contracts and general terms and conditions.

In Bateman v Asda Stores, Asda wanted to amend its company-wide pay and work structure as set out in its staff handbook.  The handbook specifically provided that it was part of the employee’s contract of employment.  Some employees agreed to the new conditions voluntarily, however others, like Ms Bateman, refused.  Some 700 employees brought a claim against Asda for unlawful deduction of wages, which were eventually whittled down to Ms Bateman who claimed that she did not consent to the changes and as a result of these changes she had suffered loss.

The employment tribunal refused Ms Bateman’s claim.  The EAT upheld this decision, stressing that the law permitted exceptions to the general rule that consent is needed to effect a change to a contract of employment.  At any rate, Asda had consulted and warned employees about the changes, so it was not true to say that Asda had breached its implied duties of trust and confidence by effecting the changes unilaterally.

The case shows that employers can unilaterally change employee terms and conditions provided that:

• This is permitted by the employees’ contracts of employment (whether in the contracts themselves or by reference to handbooks);
• There is some form of consultation or warning; and
• That the terms being changed are not of such a nature that to change them unilaterally would breach the duty of mutual trust and confidence with the employees.

New national minimum wage rates announced

The Government has announced new national minimum wage rates, which will come into force on 1 October 2010. They are as follows:

• £5.93 per hour for low paid workers aged 21 and over (currently £5.80);
• £4.92 per hour for 18-20 year olds (currently £4.83); and
• £3.64 per hour for 16-17 year olds (currently £3.57).

Collective consultation

Where an employer plans on dismissing 20 or more employees within a period of 90 days or less, the Trade Union and Labour Relations (Consolidation) Act 1992 requires that employer to undertake collective consultation over a prescribed period of time.  Where 20-99 employees are affected, the consultation period is at least 30 days. For 100 employees or more, the consultation period is at least 90 days unless there are special circumstances which make it not reasonably practicable to comply.  In that case the employer is still under an obligation to take all steps towards compliance as are reasonably practicable in those circumstances.  Where an employer has failed to comply with a requirement, this can result in the employer being liable for ‘protective awards’ to the affected employees (i.e. up to 90 days’ pay).

In Shanahan Engineering v UNITE, Shanahan, an engineering construction company, was instructed by the project managers on the site to alter its work practices by the end of the day on 1st May 2008.  The project managers invoked a clause common to the engineering industry which meant that the main contractor could order the sub-contractor to stop work.  The consequence for Shanahan was an immediate reduction in its workforce and the triggering of the collective consultation requirements of Section 188 of the 1992 Act.  Shanahan thereafter applied redundancy criteria previously agreed with UNITE and terminated the employment of 50 employees on the 2nd May with a week's pay in lieu of notice. 

It was found by the Employment Tribunal that there was no consultation which could have taken place over 2-3 days, and Shanahan was ordered to make 90 day protective awards to the employees.  Shanahan appealed.

The EAT upheld the Tribunal judgment that special circumstances existed in relation to the 30 day time period. However, it concluded that it was reasonably practicable for Shanahan to carry out consultation in accordance with their legal obligations even if this was only over a period of a few days.  The EAT concluded the Tribunal had been wrong to award a 90 day protective award as there were mitigating factors to reduce this, and the case was therefore remitted back to the Tribunal to decide this particular issue.

Shanahan serves as a reminder to all employers that where 'special circumstances' exist which mean that it's not reasonably practicable to hold statutory collective consultation, then the employer must take such steps as are reasonably practicable towards compliance.  If they fail to do so, a protective award of up to 90 days pay can be awarded.

Constructive dismissal is a complex area of employment law.  As a general rule of thumb, employees can resign and bring a claim if they are exposed to either one act or a series of actions by their employer which fundamentally breaches the contract of employment by completely undermining the employer’s implied duty of trust and confidence to the employee.  Where there has been a series of actions, there has to be an act which constitutes the ‘final straw’ although this need not be the most serious of the series of actions.

However the question which arose for consideration in Buckland v Bournemouth University was whether the respondent employer, Bournemouth University, could cure a fundamental breach of the claimant professor’s contract of employment.

Professor Buckland had marked exam papers, but was shocked to learn that the University decided to remark them.  After the Professor made his hurt feelings known to the University, but before he resigned, the University held an inquiry which vindicated the Professor.  The University argued that the vindicating inquiry ‘cured’ its fundamental breach.  The Employment Tribunal rejected this argument, whereas an Employment Appeal Tribunal accepted it.

The Court of Appeal allowed the appeal against the Employment Appeal Tribunals’ decision insofar as it concerned the ‘curing’ of fundamental breaches.  The Court reasoned that if employment law permitted a right to cure (as is the case for general contract law), there would be endless litigation as to whether the cure in any given circumstances was sufficient.  Once the damage has been done, it cannot be undone.  However the Court reaffirmed the existing rule that employees may find it difficult to claim constructive dismissal where they have delayed resigning after the employer caused the fundamental breach.  Whether a delay constitutes affirmation of a breach depends on the facts and circumstances of the case.

The Court of Appeal’s decision is significant for employers who, accidentally or not, breach their employees’ contracts to the point of no return.  It shows that Tribunals may not be sympathetic to attempted offers of olive branches.  Perhaps unhelpfully, the case seems to suggest that employers should not bother to even try to make amends – which ironically could have the effect of spurring employees into bringing a constructive dismissal claim in cases where suitable amends may restore their trust and confidence, or at least make the decision to resign more difficult.  However the Court acknowledged that tribunals are entitled to hold that there may be circumstances where employees would not be justified in rejecting an employer’s olive branch, for example if they took too long in deciding whether or not to quit their job after the breach had been cured.

 

The British Chamber of Commerce has published its report, “Employment Regulation: up to the job?”, which discusses many problems with current employment law regulation and reform.

Some of the particular complaints of the BCC include the complexity of employment law generally; complaints about the employment tribunal, for example the length of time it takes for a claim to call; and the excessive burden of health and safety legislation.

The BCC then makes a series of what it calls “constructive recommendations to help reduce and rebalance the burden of employment red tape”.

To see the report, click on the link below:
http://www.britishchambers.org.uk/zones/policy/press-releases_1/relentless-flow-of-employment-law-is-stifling-uk-competitiveness-says-bcc.html

 

• Proscribing employers from sacking or refusing to recruit employees who appear on blacklists;
• Proscribing employment agencies from refusing to provide services to individuals who appear on blacklists; and
• Allowing individuals or unions to bring legal action against those who compile, distribute or use blacklists, and seek compensation from them. 

The matters covered in this ebulletin are intended as a general overview and discussion of the subjects dealt with.  They are not intended, and should not be used, as a substitute for taking legal advice in any specific situation.  Semple Fraser LLP will accept no responsibility for any actions taken or not taken on the basis of this publication.

For further information please contact: Alison Gow

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