holiday pay for long term sickness absentees

Posted on December 8, 2011 by Martin Malone

Two recent cases have shed some helpful light on the implications of the decision in Stringer and ors v HMRC which established that holiday pay continues to accrue while employees are on long term sick leave and are entitled to be paid for it.

First, in KHS AG v Schulte [2011] EUEJC C214/10 the European Court of Justice has confirmed that it is permissible for member states to impose a cut-off on the carry forward of unused holiday allowances for employees on long term sickness leave. In the particular German case the cut-off under the relevant collective agreement was 15 months, but the opinion of the Advocate General given in August suggests that on the same principle a cut-off period of 18 months (as recommended by the International Labour Organisation) would also be acceptable. This will no doubt be taken into account in the amendments needed to the Working Time Regulations to reflect the earlier decisions on accrual. Continue reading →

more TUPE and variation of terms

Posted on November 22, 2011 by Martin Malone

The EAT has given further helpful guidance on determining whether a variation to terms and conditions after a services transfer pursuant to TUPE 2006 falls within the ambit of Regulation 4(4) and Regulation 7(1) (automatically unfair dismissal for a reason connected with the transfer) of TUPE 2006. The decision in Enterprise Managed Services Ltd v Dance is arguably of greater relevance in today’s work environment than that in Smith v Brooklands (also reported this month) since it concerns re-tendering between contracting businesses. However, the EAT in Dance follows the same approach as that in Brooklands (unsurprising since the leading judgment was given by HHJ McMullen in both cases).

In this case, Mr Dance and others were employed by Williams which, along with another contractor, Enterprise, provided services to MHS. From around October 2008 meetings were held between MHS and its contractors emphasising, amongst other concerns, budgeting constraints and the requirement that future services would have to be provided at reduced cost but achieve high service performance. Both Williams and Enterprise depended on MHS for the supply of work. In January 2009 Enterprise reviewed terms and conditions for its workers, introducing performance related pay and different hours. These altered terms were accepted by its staff. Williams made no changes but lost the contract and Mr Dance and others transferred by operation of TUPE to Enterprise in April 2009. Continue reading →

variation of terms after a TUPE transfer: when is it permissible?

Posted on November 22, 2011 by Martin Malone

One of the most difficult issues a transferee employer has to deal with after the transfer of a business to it is when it can make changes to the terms and conditions of staff in the transferred company. TUPE 2006 makes clear that any purported variation of an employment contract will be void if the sole or principal reason for the variation is the transfer itself or a reason connected with the transfer that is not an "economic, technical or organisational reason" (Regulation 4(4)).

This has led to a great deal of caution exercised by transferee employers and their advisors when intending to implement changes. However, the legislation is quite clear. There is no absolute prohibition on changes to terms and conditions in the context of a TUPE transfer unless such changes are solely or mainly by reason of the transfer, or are for a reason connected with the transfer (which is not an economic, technical or organisational reason). On occasion, it can be said that sight of the wood is lost for the trees.

The case of Smith & others v Trustees of Brooklands College illustrates this point succinctly. Continue reading →

an employee may well be reasonable in resisting pay cuts, but that does not automatically make it unreasonable to dismiss and re-engage them

Posted on October 26, 2011 by Martin Malone

In these continuing hard times, with profits squeezed and businesses facing collapse, it is becoming increasingly common to consider salary reductions as a cost saving exercise. Although some consider it a risky option, given the prospect of employment tribunal claims for unfair dismissal and breach of contract, it is well established that dismissal for refusal to accept a change of contract terms is potentially fair (as "some other substantial reason" for dismissal), and will actually be fair if the employer acts reasonably in deciding to dismiss. Such fairness, of course, calls for genuine efforts to negotiate the changes before resorting to giving notice of dismissal and offering re-engagement on new terms.

Two recent cases have reiterated this general principle and made certain aspects of it very it clear Continue reading →

extension of flexible working rights

Posted on September 26, 2011 by Martin Malone

The Government has made clear for some time its intention to extend the right to request flexible working to most employees rather than just those who having caring responsibilities.

In September 2010 the Department for Business Innovation and Skills announced an intention to extend flexible working rights to all parents of children under 18 from April 2011 (covering a further 300,000 employees) and plans to roll out the rights to all employees. Extension of the rights would be accompanied with a new and simplified system for requesting parental leave.

However the April 2011 change was postponed. The reason given by the Government was the economic climate but it was made clear that the widening of entitlement remained firmly on its agenda (in accordance with the Coalition Agreement). Continue reading →

pay cuts and dismissal

Posted on August 14, 2011 by Martin Malone

In the current economic climate, it is an unfortunate fact of life that employees are facing numerous constraints concerning pay and benefits. Pay freezes are commonplace and several councils have made the news by requiring employees to accept pay cuts or face dismissal. As a general principle, the unilateral imposition of material contract variations which are detrimental to employees can entitle the affected employees to resign and claim breach of contract and constructive unfair dismissal.

In a decision which will be welcomed by employers, the EAT has recently clarified that when deciding whether or not dismissal of an employee for refusing to accept a pay cut does constitute “unfair dismissal”, the question to be considered is NOT the reasonableness of the stance adopted by the employee. Rather it is whether the employer acted reasonably in dismissing the employee for refusing to do so. Continue reading →

employee or self-employed

Posted on August 14, 2011 by Martin Malone

Many employment law rights (such as unfair dismissal and statutory redundancy pay) are restricted to “employees” as defined. It is usually obvious whether a person has a contract of employment (i.e. a contract of service between an employer and an employee) or a contract for services (i.e. made by an employer with an independent contractor/self-employed person). Perhaps a simple and straightforward example of the difference is the contrast between the jobs of chauffeur and taxi-driver.

In some ways, the debate over whether someone is an employee (or worker) or self-employed has perhaps become something of an “old chestnut”. Yet no matter how many cases give guidance on how to approach the question, grey areas remain. One such common grey area has been the extent to which any written contract should provide the answer. Many outside the law would be surprised to learn that the contract is, in itself, by no means determinative. Continue reading →

termination payments: a trap for employers

Posted on July 25, 2011 by Martin Malone

A Ms. O’Farrell worked for Publicis Consultants UK Ltd. Her contract provided for three months’ notice. She was made redundant in May 2009 and was provided with statutory redundancy pay and holiday pay. Her dismissal letter also said that she would receive an ex-gratia payment equivalent to three months’ salary (£20,625) free of Tax and NI deductions. Continue reading →

do you need to pay an employee who is held in custody?

Posted on July 19, 2011 by Martin Malone

The normal rule is that an employee who is ready and willing to work but is unable to do so by reason of sickness, injury or other unavoidable impediment will, if his contract continues and subject to its terms, still be entitled to pay.

In a recent case an employee, perhaps somewhat cheekily, argued that this meant he was entitled to pay for a period when he was prevented from coming to work because he had been remanded in custody Continue reading →

Termination of employment status, or termination of employment contract, or both? A conundrum.

Posted on April 17, 2011 by Martin Malone

Strange as it might sound, it is possible for one’s status as an employee to end in circumstances that do not terminate one’s contract of employment. This was the thorny issue in Société Générale London Branch v Geys, decided by the Court of Appeal on 30 March 2011.

In that case, it was crucial to establish upon which of three potential dates Mr Geys’s contract ended, because it was only if it lasted until the latest possible date in January 2008 that a contractual entitlement to a huge bonus (the substance of his claim) could arise.

Société Générale had terminated his employment at a meeting on 29 November 2007, but Mr Geys had written back indicating that he was affirming his contract. Nonetheless, Société Générale made a payment in lieu of notice (in line with his contract) on 18 December 2007, and formally notified him of this by letter on 6 January 2008. The Court of Appeal overturned a previous ruling by the High Court and found that Mr Geys’s contract of employment ended on 18th December – thus he had no entitlement to the extra bonuses.

From Mr Geys’s point of view that, no doubt, was the most interesting (if disappointing) part of the judgment. However, of more general interest is what happened on 29 November 2007, because it highlights the conflict between “pure contract law” and statutory concepts of dismissal which underlie other claims such as unfair dismissal.

There was doubtless a repudiatory breach of contract by Société Générale – they made clear that Mr Geys’s no longer had a job. Yet such a unilateral breach cannot terminate a contract if – as happened here – the other party refuses to accept it. Hence the contract must continue, until ended in accordance with its provisions. However, Mr Geys’s status as an employee was clearly ended on that date – so for statutory purposes, it would be the Effective Date of Termination (EDT).

At first glance this is hard to get one’s head around – how can a contract of employment exist when (arguably) the essential mutuality of obligation has gone and one party is no longer an “employee”? Understandably, perhaps, the Court of Appeal wants the Supreme Court to consider whether an unaccepted repudiatory breach should, in fact, be able to terminate the contract.

However, what if the Supreme Court follows this route? The whole doctrine of constructive dismissal (which is a contractual concept which can be the basis for statutory unfair dismissal) relies on an employee promptly resigning in acceptance of a fundamental breach of contract by an employer. Where does it leave the employer’s defence that the employee affirmed the contract if the contract can be terminated by that unilateral breach alone? Will the EDT (so important for strict time limits) be at the date of resignation (as now) or the date of the breach?

The current situation is the product of conflicting legal concepts – but removing that conflict could generate just as many problems. In a case in which the date of dismissal, constructive or actual, is an important consideration proper resolution of the point could be vital, thus underlining the need for expert legal advice in any such situation.