Latest News : Employment Bulletin - October 2011

Latest News

Employment Bulletin - October 2011

 10th Oct 2011

Welcome

October is a month for change and there are some significant ones coming up. George Osborne has announced that the qualifying period for unfair dismissal will be increased from one year to two years with effect from 1 April 2012. In addition, the BBC has reported that fees will be introduced for tribunal claims from 2013, including fees payable by the claimant on issue and, when the hearing is listed. Rumour has it that the fees will be as high as £250 to start a case, and a further £1,000 when the case is listed for a hearing but a forthcoming consultation paper will give more details.

The Agency Workers Regulations came into force at the beginning of the month, entitling temporary staff to the same basic employment and working conditions, including pay, overtime and holiday pay after a 12 week qualifying period. For more information on the ramifications for your business, please contact us.

Also this month, the National Minimum Wage increases to £6.08 for workers over 21. Those between 18 and 21 will be entitled to £4.98 and under 18 to £3.68. For apprentices, the hourly rate will be raised from £2.50 to £2.60.

Finally, it looks like we will be working for longer even earlier than expected. Pensions Minister, Steve Webb, has said the government is proposing to raise the state pension age to 67 a decade earlier than previously planned. He said that the current timescale (for women increasing to 65 by 2018, and then both men and women retiring at 66 from 2020, increasing to 67 in 2036 and 68 in 2046) was "too slow".

Neil Andrews

Partner, Coles Miller LLP

Pay Cuts

We start this month with three cases in which employers have made various attempts to cut pay. In Driver v Air India an employment contract provided for shift work and overtime, but didn't specify payment amounts. When the employer stopped paying overtime at time and a half, and asserted it should be unpaid because the contract did not provide for payment, the Court of Appeal decided that although the original claimant did not have a contractually agreed payment, this did not mean that he had to work unpaid. Instead, it meant that he was entitled to a 'reasonable' sum.

An employer's decision not to pay a bonus was upheld in Hellewell v AXA Services, where the bonus was stated to be discretionary and provided for conditions to be met before a bonus would be paid. The EAT was clear that there was no contractual obligation to make the payment, which in turn meant that there was no deduction of wages. This is a good example of an employer having a clearly worded bonus provision. If you pay bonuses, you should always make sure there is something in writing which makes it clear whether they are discretionary, whether conditions must first be met and whether there are any special factors relating to payment of bonus on termination of employment or during a notice period.

Of interest to many will be a case where an employer dismissed an employee for refusing to accept a pay cut, and it was found to be a reasonable dismissal ­ Garside and Laycock Ltd v Booth. Before you rush to follow suit, it is worth noting the details of this case. Mr Booth was the only one of all the employees who refused to accept a 5% pay cut at the request of the management, who took a cut themselves. The company was in financial difficulties and the employees were allowed a vote on the cut before it was put into effect. Several meetings were held with Mr Booth to try and persuade him to agree and he was offered a review in six months. He held out and was eventually dismissed. The fact that the management had also taken the cut and had not tried to simply impose the measure on the work force without consultation ­ were strong factors which led to this being a fair dismissal.

Racial Harassment

The issue of what constitutes harassment has been before the courts recently. In the first case, a child resident in a children's council run home regularly directed racially abusive language towards an Iranian employee, mocking his accent. In response to his claim for harassment on the basis that the council had done nothing to protect him from the child's behaviour, the council argued that the child was not motivated by the employee's race; his motive was just to upset the employee. Although this might be a contender for the 'cheekiest argument of the year' award, the argument was rejected by the Employment Appeal Tribunal, which found that to mock a racial characteristic such as an accent was analogous to racial abuse.

On similar lines, a tribunal has recently ruled that using the name 'Borat' to refer to someone from Eastern Europe (in this case, Poland), amounted to discrimination. Mr Ruda worked for Tei, an engineering company in Wakefield. His nickname, 'Borat', was given to him because of his national origin, and a tribunal held he had been subjected to racial harassment.

Other past examples that have been found by tribunals to be discrimination include calling an Irishman a 'thick Paddy', and references to Hitler and making Nazi salutes to a German worker.

Rest Breaks

The Working Time Regulations entitle a worker to twenty minutes uninterrupted rest when they work over six hours, and that where the worker falls into an excluded category, they must be allowed an equivalent period of compensatory rest.

The issue in Hughes v The Corps of Commissionaires Management Ltd was whether requiring a security guard (an excluded category) to remain on call during his rest breaks contravenes the requirements. If he had been called out during the rest breaks, he would not have enjoyed an "uninterrupted" break. However, in this case, he was allowed to start his break again and the Court of Appeal held that because of that, the breaks provided to him were "equivalent periods of compensatory rest" noting that he might well end up with a break longer than the 20 minutes required by the Regulations.

What is a Reasonable Adjustment?

In Foster v Leeds NHS Trust Mr Foster went off sick with stress after his relationship with his manager had broken down and brought an unsuccessful grievance; following which he looked to return. The hospital gave him two choices ­ either a return to his old job or a different post but still within that manager's department. It saw no reason to redeploy him (despite Occupational Health advice that Mr Foster was only fit to return to a different department) since his grievance had been dismissed. Subsequently he was placed on a redeployment list for three months. No post came up and eventually Mr Foster was dismissed.

The Employment Appeal Tribunal upheld the tribunal's ruling that he had been placed at a disadvantage by being required to work in a department that ­ rightly or wrongly ­ was causing him stress. Given the size of the NHS Trust as an employer, there was a real prospect that over six months a suitable alternative job would have become available, which would have fitted with the Occupational Health advice. That was sufficient for the step of placing Mr Foster on the redeployment list earlier to be deemed a reasonable adjustment.

When is a Self Employed Contractor Really an Employee?

The Supreme Court has made it clear that when deciding whether someone is a self-employed contractor or an employee, the focus of the question must be to discover the actual legal obligations of the parties, and that this is done by examining not only the written terms but also how the parties acted in practice and what their expectations of each other were.

In the case, Autoclenz Ltd v Belcher, car valets were paid on a piecework basis, submitted weekly invoices, paid their own tax and NIC, and had written agreements stating that they were self employed contractors. Nonetheless, in practice, some aspects of the actual relationship negated what the contract documents said, for example a term that the valets did not have to carry out work personally. The Supreme Court held that actual practice overrode what the parties had written down, and that the individuals were accordingly employees.

What about the situation where an individual who has always been categorised as self employed then claims to be an employee so that they can claim unfair dismissal? If there has been some kind of deliberate misrepresentation (normally for tax avoidance purposes) then the contract may be ruled illegal and the individual will lose their claim by default. In Connolly v Whitestone Solicitors, while the claimant solicitor originally saw himself as self-employed, over the three years he worked for the firm, he realised that he was actually an employee but in the absence of any review, he had no choice but to keep submitting invoices. The Employment Appeal Tribunal decided that in the absence of misrepresentation to HMRC, that is, deliberately representing himself as self employed in the knowledge that it was unsustainable to do so, the employment contract (for such it was) could not be ruled illegal.

References

Employers can incur liability if they fail to give an accurate reference about an ex-employee, but what should they do when new allegations come to light after employment? In Jackson v Liverpool City Council, one of Mr Jackson's three references from his former employer suggested that there were record keeping issues. Because these had come to light after Mr Jackson had left, they had not been investigated and could not therefore be substantiated, and this was made clear in the reference. He failed to get the job and was unemployed for a year.

The issue was: although the reference was true and accurate, was it unfair or negligent because Mr Jackson had not been given a chance to answer them? No, according to the Court of Appeal. The reference was not negligent because it was made clear to the prospective employer that the issues raised about Mr Jackson were allegations only which had not been investigated.

The moral of the tale for departing employees is to try to agree your reference before you leave. For employers it must be that where there are questions over their performance or conduct or these arise after they have left, those issues should be disclosed accurately to any prospective employer, but making it absolutely clear that the allegations have not been investigated and so no assumptions can be made.

And Finally...

Virgin have just been found to have unfairly dismissed four former employees after they were sacked for gross misconduct on the grounds that they allegedly distributed links to a video clip claiming to show a Taliban fighter having sex with a donkey. One of the sacked employees said: "It's a night vision clip so all you can make out is green with black blobs, it's really very tame... When we were dismissed I showed the video to my mother and she wasn't offended by it."

Offensive or not, the four pointed out that more senior Virgin staff ­ allegedly regularly sent pornography to the airline's staff (and were able to produce a substantial amount of evidence to suggest that this was accepted practice). They also claimed that they had not been made aware of Virgin's email and IT usage policy. The tribunal found in their favour although they decided that the employees had contributed to their dismissal. But the judge also reportedly rebuked the airline for relying on the company's internet policy in the case of one of the employees who was dismissed for sending an email from home, on a day off, using a personal email account.

Disclaimer

The information and any commentary contained in these bulletins is for general information purposes only and does not constitute legal or any other type of professional advice. Coles Miller Solicitors LLP do not accept and, to the extent permitted by law, exclude liability to any person for any loss which may arise from relying upon or otherwise using the information contained in these bulletins.

If you have a particular query or issue you are strongly advised to obtain specific, personal advice about your case or matter and not to rely on the information or comments in this bulletin.

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