A somewhat belated
'Happy New Year'!
No doubt this year will seem a little bit quieter on the legislation front following
last year’s bombardment of new regulations. However, it’s likely that
we will see some developments in case law regarding the statutory dismissal,
disciplinary and grievance procedures which came into force on 1 October
2004. It will also be interesting to see how the fixed periods of conciliation
through ACAS actually work in practice. Certainly, many have concerns
that the reforms may make it harder to settle cases – the opposite of
what is intended.
That said, new legislation is coming into force in April 2005 on Information
and Consultation. We will be giving you more information on that in the
near future. Looking further ahead, Regulations will come into force
in October 2006 on age discrimination which are likely to have a significant
impact on businesses.
Retirement Proposals
In December 2004 the Department of Trade and Industry published
its proposals in relation to retirement. This follows a lengthy period
of consultation on the issue of mandatory retirement ages.
Whilst there has been much debate on what the Government would
decide, with even the suggestion that mandatory retirement ages might
be abolished, the proposals are far from radical. There will be a default
retirement age of 65. Employers will be able to set earlier retirement
ages only if they can show that it is appropriate and necessary – no
doubt the latter requirement will be quite difficult to establish. Moreover,
an employee will have a right to request to work over the age of 65 with
the employer being under an obligation to seriously consider the request.
However, it seems that this requirement will lack teeth and provided
the employer shows that the request has been considered there will be
little redress for the employee. This right to request to work over 65
will follow the statutory framework of the Flexible Working Regulations
which consists of a meeting and an appeal meeting and allows the employee’s
request to be refused on business grounds.
The Government also plans to formally review the impact of
the legislation after it has been in force for 5 years and will monitor
the appropriateness of the default retirement age during this time.
So we don’t yet have to keep working until we’re 80 just yet…
Constructive Dismissal
The Court of Appeal has clarified what may constitute a ‘final
straw’ in constructive dismissal cases where an employee is relying on
a series of acts in order to bring a claim.
As many of you will be aware, in order to bring a claim for
constructive dismissal, an employee must show that an employer has committed
a repudiatory (or fundamental) breach of the contract of employment,
such as failing to pay the employee. Whilst there is no express dismissal
by the employer, in such circumstances, the employer’s actions are taken
to constitute a ‘dismissal’, thus entitling the employee to claim unfair
dismissal if they have the requisite length of service. Often employees
rely on a breach of the implied term of mutual trust and confidence in
order to bring a claim, especially where bullying, harassment and/or
discrimination is being alleged. One possible defence to such a claim
is that the employee has ‘affirmed’ the breach. This can occur if the
employee waits too long before resigning after the breach has been committed.
However, where there have been a series of acts, rather than a one off
occurrence, the employee can rely on the series of acts as being a breach
of the implied term provided that there is a ‘last straw’ which finally makes the employee resign.
In the case of Omilaju v Waltham Forest London Borough Council the Court of Appeal held that the final straw need not necessarily be
blameworthy or unreasonable, but must contribute to a cumulative breach
of the implied term of trust and confidence. Therefore, it must be related
to the type of conduct in the series of events. Further, whilst the Court
of Appeal said that the final straw must not be trivial, it could still
be fairly insignificant.
This ruling is obviously favourable to employees or former
employees. However, the Court of Appeal did recognise that it would be
unusual for a reasonable act to amount to a ‘last straw’. Further, under
the new statutory grievance procedures, the employee will have to raise
a grievance before presenting a claim to the Employment Tribunal.
Rolled Up Holiday Pay
There is still a degree of uncertainty as to whether paying
‘rolled up’ holiday pay satisfies the requirements of the Working Time
Regulations 1998.
Essentially, ‘rolled up’ holiday pay is when an employer includes
an element in the worker’s pay to represent their entitlement to holiday
pay. Therefore, when the employee takes holiday, he or she does not receive
pay for that particular period as it has already been paid, in effect,
in instalments throughout the year.
There are conflicting decisions between the Scottish and English
courts as to the legality of rolled up holiday pay. According to the
Court of Appeal in the case of Caufields v Marshalls Clay Products rolled
up holiday pay is permitted if there is an express term in the employee’s
contract of employment stating that the worker’s pay will include an
element of holiday pay and specifying the sum or percentage which relates
to holiday pay.
The Employment Appeal Tribunal has now added further clarity
as to when rolled up holiday pay can be (lawfully) paid by confirming
that there need not be an express written term in the contract of employment
and that it is possible to imply a term relating to holiday pay by reference
to collective agreements or custom and practice.
That said, whilst the ability to argue a term as to rolled
up holiday pay has been implied through custom and practice will no doubt
greatly assist employers who use this method of payment, the issue of
rolled up holiday pay is to be considered by the European Court of Justice
who may take the view that it does not comply with the Working Time Directive.
Discrimination
When alleging that an act of discrimination has occurred the
burden of proof is, initially, on the Claimant (the employee). However,
the difficulty this may cause a Claimant has been recognised and provisions
have been put in place so that once the Claimant has established facts
from which an inference of discrimination could be made, the burden of
proof will then shift to the employer to prove that the less favourable
treatment was not on the grounds of sex (or race).
The relevant wording in the Race Relations Act 1976, s.54A
has recently been considered by the Employment Appeal Tribunal in the
case of Webster v Brunel University in deciding at what stage the burden
of proof actually shifts from the Claimant to the employer.
The relevant section reads as follows:
“Where…the complainant proves facts from which the tribunal
could…conclude in the absence of an adequate explanation that the respondent
has committed…an act of discrimination…the tribunal shall uphold the
complaint unless the respondent proves that he did not commit…that act”.
In the case in question, the Claimant was employed on an IT
help desk and provided support to administrative staff of the University.
During the course of a telephone conversation with a member of staff
in the Accommodation Office, the Claimant heard someone say ‘Paki’ in
the background. The Tribunal made a finding of fact that the word ‘Paki’
had been used by someone in the Accommodation Office at the time of the
telephone conversation. However, as the word used could have been by
a visitor to the Accommodation Office, rather than another employee of
the University, the Tribunal held that the Claimant had not established
a prima facie case and, as such, the burden of proof did not transfer
to the employer.
However, the EAT considered the wording of the statute and
concluded that it will be for a tribunal to consider, having made findings
of fact, whether the treatment could have been by the employer. If the
Tribunal concludes the treatment could have been by the employer, the
burden of proof will shift to the employer to show that the treatment
was either not by the employer (i.e. an employee of the employer) or
was not on the grounds of sex or race.
Clearly, this may create some uncertainty in situations where
there are a number of different people in a room, not all of whom are
employees of the employer, and someone makes a racist or sexist remark.
A Claimant will not need to prove that a particular person made the remark,
or that it was made by an employee of the employer. All that the Claimant
will need to show is a prima facie case that it could have been by a
fellow employee. The EAT recognised this and gave as an example a situation
where there are 100 people in a room, 30 of whom were employees and 70
non-employees. In this situation, the EAT said, a tribunal may decide
that a prima facie case has not been established. No doubt, each case
will turn on its facts but it is logical to conclude that in the example
above, if 51 people were employees, a prima facie case will be established
and an employer is likely to have difficulty in showing that a member
of staff has not made a remark or that it was not on the grounds of sex
or race. Obviously, depending on the nature of the remark in question, the latter may be hard to prove.
The facts of this particular case – a conversation heard in
the background during a telephone conversation – are unusual. But the
case indicates that, as intended by the legislation, a Claimant will
not have great difficulty in establishing a case of discrimination. This
emphasises the importance of having a sound Equal Opportunities and Harassment
Policy in place and enforced. Staff should be made fully aware of what
is and is not acceptable and appropriate sanctions put in place for those
who fall foul of the policy. Then, if the employer is in the unfortunate
position of facing a claim as a result of a member of staff acting inappropriately,
it may be able to show that it took such steps as were reasonably practicable
to prevent the employee from acting as he or she did, and thus avoid
liability.
Fixed Term Employees
Under the Fixed-term Employees (Prevention of Less Favourable
Treatment) Regulations 2002, a fixed-term employee has a right not to
be treated less favourably than the employer treats a comparable permanent
employee in respect of his or her terms and conditions of employment,
or by subjecting the fixed-term employee to “any other detriment”.
In the recent case of Department of Work and Pensions v Webley a fixed-term employee sort to argue that the non-renewal of a fixed term
contract in itself amounted to a detriment and, as such, was in breach
of the Regulations. The EAT found that in certain circumstances this
could be the case. However, the Court of Appeal has stated this not to
be so. The Court of Appeal’s reasoning is logical and clear – fixed term
contracts are lawful and “it is the essence of a fixed-term contract
that it comes to an end at the expiry of the fixed-term” (Lord Justice
Wall). As such, there could be no less favourable treatment simply because
a contract is not renewed.
However, it is always important to bear in mind that, for
the purposes of unfair dismissal protection, the non-renewal of a fixed-term
contract does constitute a ‘dismissal’ and therefore, the employer must
have a fair reason to dismiss (for instance, a particular project coming
to an end for which the fixed-term employee was engaged) and act reasonably
in treating the reason as a sufficient reason for dismissal. This may
involve looking at alternative employment and consulting with the employee.
Moreover, the new statutory dismissal procedures apply to the non-renewal
of a fixed term contract. Therefore, it is essential that the employer
is aware of those employees on a fixed-term and of the expiry date so
that the proper statutory procedure is followed (as a minimum) before
the employment is terminated. Otherwise, the employer is likely to face
a claim for automatically unfair dismissal if the employee has been employed
for one year or more (either on the fixed-term or a succession of shorter
contracts where there has been no break in employment). Even if the employee has been employed
for less than a year, the statutory dismissal procedure should still
be followed, as if the employee later (successfully) claims that the
failure to renew the contract was due to discrimination covered by legislation,
the employee’s compensation could be increased by between 10% and 50%.
Statutory Maternity Pay
An early reminder… from April 2005 the standard rate for statutory
maternity, paternity and adoption pay will increase to £106 per week.
The changes were announced in December 2004.
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