Newsletter September / October 2014


The big employment law topics of the moment remain the calculation of holiday pay and Shared Parental Leave. The next holiday pay/overtime cases which are in the system have still not been reported, so look out for those next month. Separately, I have sent you a briefing on Shared Parental Leave, although in this context please note the Ford case reported below, especially if you offer enhanced maternity pay. Otherwise my update covers the usual mixed bag of cases and regulatory changes.

Darryl Evans
T: +44 (0)7771 725341

National Minimum Wage increase

The annual increase to national minimum wage rates has taken effect from 1st October. The new rates are:

  • workers aged 21 and over: £6.50 per hour
  • 18-20 year olds: £5.13 per hour
  • 16-17 year olds: £3.79 per hour
  • apprentices: £2.73 per hour

Fathers' new right to attend antenatal appointments

This 'family friendly' change also took effect from 1st October 2014. An expectant father, or the partner of a pregnant woman, can now take unpaid time off work to attend antenatal appointments with the mother. The entitlement is to unpaid leave for one or two appointments and the amount of time off is capped at 6.5 hours for each appointment. Equivalent rights apply to adoptive parents. The Department of Business, Innovation and Skills has produced a guide for employers which provides more information.

Worker entitled to holiday pay

Plastering Contractors Stanmore Ltd v Holden (UKEAT/0074/14) is a reminder that, in order to become entitled to holiday pay, it is not necessary for a staff member to be an employee. Worker status qualifies, the qualification criteria for which are less stringent and which category therefore includes a wider range of staff members.

Mr Holden was employed for four years before accepting £200 in exchange for becoming a labour-only subcontractor for the same company. Despite the new contractual arrangements the Employment Appeals Tribunal (EAT) found that he was a worker. The necessary mutuality of obligation existed during each assignment or period of work undertaken, the requirement for the personal performance of work had been met and Mr Holden had been recruited by his former employer to work as a member of its workforce, so the requirements of integration and control had also been satisfied.

He was not an employee because the Tribunal found that although there was mutuality of obligation during the periods when he was actually working, there was no overall mutuality, so that the "employer" could not compel him to work, and equally had no obligation towards him to provide work. Nonetheless, as a worker he should have received holiday pay.

Employment status for discrimination purposes

To add to the challenges of deciding which staff members have what protections, Windle v Arada and another (UKEAT/0339/13) deals with qualification for protection under discrimination law. The bottom line is that anti-discrimination protection catches an even wider class of people than the worker category who can claim paid holiday (among other rights).

A person can claim protection from discrimination if he/she can demonstrate that he/she was working 'under a contract personally to do work'. The key difference from the tests for 'worker' status is that there need not be overall mutuality of obligation. So the claimants here, who were interpreters, were potentially eligible for protection even though no such mutuality existed and they were therefore neither employees nor workers.

The case was in fact remitted back to the Employment Tribunal by the EAT for it to establish whether the interpreters were providing their services in a position of subordination, which is a prerequisite of working under a contract personally to do work.

Male employee not entitled to enhanced paternity pay

Like many employers (especially larger ones) Ford offers to pay women on maternity leave enhanced pay over and above the minimum statutory maternity pay entitlements. Like the vast majority of those employers, it does not enhance in an equivalent way the pay of men who take paternity leave. Since 2011 that leave has extended beyond the core two week paternity leave period to a potential Additional Paternity Leave (APL) period in which the father uses up the unused maternity leave period of the mother (although this right will be replaced by the new Shared Parental Leave scheme).

Is this distinction unlawful discrimination against men? Mr Shuter thought so and took his claim to the Employment Tribunal.

Unfortunately for him, the Tribunal found Ford's approach to be lawful. There was no direct discrimination because the appropriate comparator was a woman who had also taken APL (which is possible, where the pregnant mother's partner is a female, for example) and who would have been treated in the same way. Although the policy was indirectly discriminatory, it was objectively justified by Ford's need to recruit and retain women in a male-dominated workforce.

In my briefing on Shared Parental Leave I drew attention to the hazardous question of whether, under that new sharing regime, it would be possible to treat men and women differentially in terms of enhanced pay. This case provides some comfort to employers who wish to do that, but I say that with caution. It was only a (non-binding) Tribunal decision, and Ford's ability to demonstrate a need to recruit and retain women as justification for the approach may not be replicated in other businesses. (Shuter v Ford Motor Company Ltd ET/3203504/13.)

Single remark did not amount to harassment

In Quality Solicitors CMHT v Tunstall (UKEAT/0105/14) the claimant alleged that she had suffered discrimination at work on the basis that she had overheard a colleague saying to a client "She is Polish but very nice". Her employer's version was that the words used were "She is Polish and very nice". The Tribunal held that it did not matter which was the correct version, because neither one could amount on its own to harassment on the ground of race.

In order to meet the definition of harassment on the grounds of race the conduct has to be unwanted conduct which has the purpose or (as was claimed in this case) the effect of violating the claimant's dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for her.

One incident can on its own amount to harassment and a Tribunal is entitled to take into account the claimant's own viewpoint as well as the context, but can only decide that the conduct has the effect of violating the Claimant's dignity where it could reasonably have been perceived as doing so. Here it seems that the Tribunal felt that the claimant was overly sensitive.

Fixed term employee discrimination

To round off this little section on discrimination we have the rare sighting of a claim under the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002.

In Hall v Xerox UK Ltd (UKEAT/0061/14) the employer provided income protection for employees who were off work for at least 26 weeks. However, fixed-term employees ceased to be members when their fixed term expired.

Mr Hall was injured on 12th April 2012, but his contract ended on 20th July 2012, so the insurer advised that with effect from 20th July the scheme no longer applied to him.

The EAT decided that the discriminating act was that of the insurer, not Xerox, and so the employer was not liable.

Time off for dependants

Mr Ellis took his heavily pregnant partner to hospital, at first due to illness and then, on the following day, because she was being admitted to give birth. Perhaps excusably in the circumstances, he failed to tell his employer the reason for his absence as soon as it was reasonably practicable to do so, albeit that his father did telephone the employer after the first occasion.

You may be surprised to discover that his claims for unfair dismissal following this failure were unsuccessful. The legislation states that the employee must inform the employer of the need for dependant's leave as soon as reasonably practicable. Mr Ellis's excuse that his mobile phone battery had expired was not held to be sufficient as so many means of communication are now available. As he had not met the statutory requirements to take the leave his dismissal was not automatically unfair and it was also held to be fair under the normal regime. The fact that Mr Ellis had a history of poor attendance may have been relevant. (Ellis v Ratcliff Palfinger Ltd UKEAT/0438/13.)

Redundancy - one post replaced by two

In Hakki v Instinctif Partners Limited (UKEAT/0112/14), Ms Hakki was an HR Co-ordinator, reporting to the HR Manager, and also provided administrative assistance to the employer's CEO. When business expanded significantly, the employer decided to create two new full-time posts: HR Adviser and PA to the CEO/FD. At the same time, and even though these posts took over her duties, the employer decided that Ms Hakki's role was redundant.

The EAT concluded that because the two new roles differed materially from Ms Hakki's former role, that role had become redundant. The requirement for an employee to carry out that job had ceased. It was also significant that Ms Hakki accepted that she was not qualified to carry out the HR Advisor role. She did apply for the PA role, but was not successful. Thus there was no suitable alternative employment for her because she was not qualified or appropriately skilled to carry out either of the two new roles.

TUPE service provision changes: who is part of the organised grouping of employees?

Mr Armitage worked for the building contractors Costain, responsible for managing various projects for the same client. One of the contracts he managed - the only one offering guaranteed work - was taken over by a new contractor and was therefore the subject of the service provision change under TUPE; other ancillary contracts which Mr Armitage managed did not transfer to the new contractor. 67% of Mr Armitage's time was spent on the transferring contract.

The EAT, overturning the Tribunal's decision, held that the Tribunal should have first defined the organised grouping of employees and then determined if the employee was assigned to that grouping. Instead, it reached a broad conclusion without distinguishing between the contract that had transferred and the ancillary contracts.

Of particular note is that the EAT accused the tribunal of placing too much emphasis on the percentages of the employee's time spent on each project.

The case was sent back to the Tribunal for reassessment, but it provides further emphasis that it is the organisation's grouping of employees which determines who transfers under TUPE, not the allocation of their time. (Costain Ltd v Armitage and another UKEAT/0048/14.)

More cases on the rights of international workers

Regular readers know that I like a good case on the question of whether an international worker is covered by UK employment law protection. Over the years it has become increasingly clear that this is a matter of factual assessment by the Tribunal as much as the application of hard and fast rules. This means each decision provides an extra clue on whether a particular employee will be able to bring statutory claims in UK.

Well joy of joys, this month I can report two cases on the subject! And the result is a 2-0 win for employers.

First we have Fuller v United Healthcare Services Inc and another (UKEAT/0464/13) in which a US citizen employed by a US company and required to spend around half of his working time in the UK, could not claim unfair dismissal under the Employment Rights Act 1996 or discrimination under the Equality Act 2010. The employee had not given up his base in the US, despite carrying out work in the UK and other countries and being provided with accommodation in London. He entered into a contract with an "overwhelmingly close connection" with the US and this contract had not been overtaken by events. He was paid in US dollars. The dismissal had been carried out in the US, and the employee's assignment to the UK had finished before his employment was eventually terminated.

The employee's claim for UK protection also failed in Creditsights Ltd v Dhunna (2014 EWCA Civ 1238). The employee on this occasion worked for a British company and moved to Dubai. The Tribunal decided he had severed links to UK and was not protected. The EAT overruled that decision on the basis that it was necessary to compare the strength of his connections to UK law with the strengths of connections to Dubai laws.

The Court of Appeal restored order. There was no legal justification for the comparison proposed by the EAT. The tests of the application of UK rights concern the degree of connection to UK laws and the relative merits of any competing systems of law have no part to play in that. The object of the exercise is not to decide which system of law is more or less favourable to the employee. A corollary of this of course is that a person will not be denied UK protection if he qualifies for it, just because he may have rights in another country as well.

And finally - some tax

The First-tier Tribunal has held that a compensation payment related to discrimination and injury to feelings that was made to an employee on the termination of their employment was taxable as a termination payment. Where the alleged discrimination is the act of termination, the payment will, almost inevitably, be connected with the termination and taxable as a termination payment.

That said, some of the Tribunal's comments, in which it criticised some previous case law and particularly of the method to be used for apportioning an agreed global settlement payment, leaves some uncertainly. More decisions may follow in this area. In the meantime, specialist tax advice should be taken where compensation for discrimination is paid. (Moorthy v HMRC 2014 UKFTT 834 (TC).)

The information and any commentary contained in this newsletter are for general information purposes only and do not constitute legal or any other type of professional advice. Darryl Evans and Evans Employment Law Limited do not accept any and, to the extent permitted by law, exclude all, liability to any person for any loss which may arise from relying upon or otherwise using the information contained in this newsletter. If you have a particular query or issue you are strongly advised to obtain specific, personal advice and not to rely on the information or comments in this newsletter.

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