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 →

end of compulsory retirement, but..?

Posted on September 26, 2011 by Martin Malone

In April 2011 my colleague Kath Kelly wrote an article about the end of the statutory retirement age and highlighted some possible alternatives. The time is now upon us because this Friday 30 September is the last date on which notice given last April can take effect. Consequently, any attempts to impose compulsory retirement after this date and based on the state retirement age will be ineffective as well as being potentially discriminatory and constituting unfair dismissal.

However, Kath also highlighted possible alternatives to statutory retirement and one of these is an employer justified retirement age. Clarification in this respect has been provided by the European Court in the case of Prigge -v- Lufthansa. Continue reading →

carrying forward untaken holiday entitlement

Posted on August 14, 2011 by Martin Malone

As is well known, the general rule is that employees must either take their full holiday entitlement during the holiday year in which it accrues or else forfeit the right to any holiday not so taken. Under the Working Time Regulations 1998, a worker has no right to carry untaken holiday forward to the next year; nor can a worker in that position claim pay in lieu either, unless his employment has ended.

However, there is an important exception to these general rules. Within the last few years European case law has established that if a worker is unable to take annual leave because of long-term sickness absence, he or she accumulates the right to take that leave on returning to work (or pay in lieu if their employment is terminated) – even if that return is not until the next leave year.
Continue reading →

Hugely significant pensions case in Europe

Posted on March 24, 2011 by Martin Malone

As you have probably read in the mainstream press the European Court has ruled that different insurance premiums for women and men constitute sex discrimination and that they are not compatible with the EU Charter of Fundamental Rights (see EC Press Release of 1st March 2011: Sex Discrimination in Insurance Contracts). The European Court ruled in early March in an important Belgian case which decided whether pension providers in the EU (and insurance companies in the EU generally) can, when calculating premiums and benefits including annuity rates, lawfully take into account the fact that women generally live longer than men.

Superficially of course it is sex discriminatory to do so. However there is specific provision in relevant EU law to enable notice to be taken of the relevant biological facts. EU law provides that “Member States may decide … to permit proportionate differences in individuals’ premiums and benefits where the use of sex is a determining factor in the assessment of risk based on relevant and accurate actuarial and statistical data…” (Article 5 of Directive 2004/113/EC).

The Association Belge des Consommateurs Tests-Achats, a consumer association (and two private individuals) brought proceedings in Belgium claiming that this provision was invalid in that it infringed more fundamental provisions, specifically Articles 21 and 23 of the Charter of Fundamental Rights of the European Union. As the case concerned the compatibility of an EU Directive with the Charter of Fundamental Rights, the Belgian Constitutional Court referred the case to the European Court for a ruling.

The preliminary opinion of the European Court’s Advocate General Kokott was handed down in late September 2010. It has now been adopted by the full court. The preliminary opinion came down firmly on the side of the Association Belge des Consommateurs Tests-Achats. Advocate General Kokott proposed that the full European Court should declare Article 5(2) of Directive 2004/113 invalid on the basis that it infringes the prohibition of discrimination on grounds of sex, which is enshrined as a fundamental right. He pointed out that “The Court would be keeping good company if it delivered such a judgment: more than 30 years ago the Supreme Court of the United States of America held in connection with pension insurance funds that the Civil Rights Act of 1964 prohibits different treatment of insured persons on the basis of their sex”.

Recognising the enormity of the consequence of his conclusion Advocate General Kokott recommended a three year phase in of the new rules if the full European Court decision follows his opinion. Since it has now done so, one result could be a boom in off-shore life insurance as of course any ECJ ruling will be effective only in EU Member States.

Does the birth of twins create double parental leave?

Posted on January 25, 2011 by Martin Malone

Well, it’s a straightforward question with a predictable answer. However, it’s got as far as the Court of Justice of the European Communities (formerly the European Court of Justice). The decision of the European Court includes in its summary the delightfully philosophical question “what is the meaning of birth?”!

Mrs Chatzi was employed at a tax office in Thessaloniki, Greece, and in May 2007 gave birth to twins. Under national legislation she was entitled to nine months’ parental leave. In January 2009 she applied for a further nine months for the other twin and this was refused in May 2009. The case was referred to the European Court on the grounds of discrimination by virtue of birth and whether the Charter of Fundamental Rights applied to each of the twins or the mother.

Sensibly, the CJEC took the view that the rights in this context apply to the mother (in her context as a worker) and not the children. The stated purpose of the Parental Leave Directorate is to “facilitate the reconciliation of parental and professional responsibilities for working parents” (rather than their children).

But that was not the end of the story. What is the position if children are born in quick succession but not twins? I won’t trouble you with the detail of the judgment but the decision of the European Court is that it wont get involved in such issues and it is up to the national court to make its mind up based on the particular facts of the case!

TUPE – employers can thank the European Court

Posted on March 23, 2010 by Martin Malone

Under the TUPE regulations, on acquisition of a business or undertaking employers automatically take on employees working in that business or undertaking. Their employment contracts “have effect after the transfer as if originally made between the person so employed and the [new employer]“. As a general rule the new employer cannot change the terms of those contracts. So what happens when the employment contracts provide for salaries to be as negotiated from time to time by the original employer (or an employer’s organisation) with a particular trade union?

The Court of Appeal has recently given a definitive answer to this question. A Mr Alemo-Herron and his fellow claimants worked for Lewisham LBC. Their terms and conditions of employment were subject to collective agreements made from time to time between Lewisham and the National Joint Council for Local Government Services (NJC). In 2002 their employment transferred under TUPE to a company called CCL and again in 2004 to Parkwood Leisure. CCL awarded pay increases in line with post-2002 NJC agreements and (without acknowledging any liability to do so) so did Parkwood in 2005. However, Parkwood refused to award pay increases in line with a 2007 agreement negotiated between Lewisham and the NJC.

Mr Alemo-Herron and other employees sued. When their case came before the EAT, they won. The EAT held that Parkwood was obliged to give effect to the pay increase agreed between Lewisham and the NJC in the 2007 collective agreement despite the fact that it was negotiated after the date of the transfer and despite the fact that Parkwood had nothing to do with the negotiations. The EAT reasoned that it was a contractual term that successive collective agreements would increase pay. There was no basis for discontinuing this practice, the TUPE regulations clearly applied and so the employees won.

Parkwood appealed to the Court of Appeal. The judges there took a different view. They considered that the relevant part of the TUPE regulations could be given either a “static” interpretation, as had been given by the EAT, or a “dynamic” interpretation. They favoured the latter. The Court of Appeal pointed out that in a similar case in 2006 the European Court of Justice had given a “dynamic” interpretation to the relevant part of the EC Acquired Rights Directive, pursuant to which the British TUPE regulations were made (Werhof v Freeway Traffic Services GmbH and Co KG ECJ 2006 in which the ECJ ruled that changes in a collective agreement between a worker’s organisation and the transferor employer made more than 12 months after what in the UK would be called a TUPE transfer were effectively not covered by the Acquired Rights Directive).

Although it is possible for British regulations to “gold plate” EC rules and thus provide employees with more protections than the minimum required by EC directives, the Court of Appeal found there was nothing to require the TUPE regulations to be interpreted in such a way in this case. Accordingly it followed the lead of the European Court of Justice (which, incidentally, pursuant to the recent Lisbon Treaty, is now technically called the “Court of Justice of the European Communities”). Overruling previous decisions to the contrary the Court of Appeal thus held in effect that if an employee’s employment is transferred to a new employer by reason of a TUPE transfer and his or her terms of employment incorporate terms of a collective agreement to which the new employer is not a party, the new employer does not need to give effect to subsequent pay increases agreed under that collective agreement.

So this time British employers, who traditionally worry about the impact of EU law on British employment law, will want to give at least two cheers for the European Court. It clearly paved the way for a decision by our Court of Appeal which employers will applaud.