Newsletter July 2015


There have been both high profile and important cases this month. In the high profile category is one wrongly billed as a victory for Christians against homosexuals. Those of particular importance include decisions regarding holiday pay, one related to inclusion of overtime pay and the other concerning accrual during long-term sickness absence. Of course, there is also the regular dose of TUPE developments - what would my Newsletter be without that?

I start, though, with two Government initiatives which may have important consequences for our work.

Darryl Evans
T: +44 (0)7771 725341

Tribunal fee review

The government has announced the long-anticipated review into the effect of the fee system, the results of which are expected towards the end of the year. The number of claims being made has reduced so dramatically (between 50% and 80%, depending on the periods being compared) that it is likely that some changes will be made.

A view held by some is that the reduction purely comprises spurious claims which are now not being made. However, if that were the case, we would have expected to see an increase in the success rate of claims. In fact, that success rate has not improved, which suggests that a significant number of valid claims and are not being brought due to the fee regime.


HMRC has recently published a consultation document regarding potential changes to the treatment of individuals engaged through a personal service companies (PSCs) - the well-known IR35 rules. The measures being considered include placing an increased obligation on the 'employers' of these individuals to ensure that the correct tax is being paid and limiting IR35 to assignments above a certain duration, presumably with the aim of increasing compliance in more extreme cases.

The IR35 regime is generally regarded as failing so it is a likely outcome of this review that tax and national insurance costs to certain people working through PSCs will increase.

Race Directive covers associative indirect discrimination

The case of CHEZ Razpredelenie Bulgaria AD v Komisia za Zashtita ot Diskriminatsia (case C-83/14) is an important one in the area of 'associative discrimination' - that is, where a person who is not him/herself in the protected category but suffers discrimination owing to his/her link with someone who is. Does that apply to indirect as well as direct discrimination?

This case was not about employment, but concerned the placement of electricity meters in a specific district in Bulgaria that was predominantly populated by people of Roma ethnicity. The electricity supplier placed the meters at a height of approximately six metres. In other districts the meters were fixed at around 1.7 metres, which allowed users to check their usage. The reason given was that in this particular area there was a high incidence of tampering.

Clearly there was scope for someone of Roma ethnicity to bring a claim. But the claimant here was not a Roma - she just suffered the same inconvenience because she lives in that district.

The European Court of Justice held that she could claim. An individual may claim indirect race discrimination on the basis of their association with an ethnic group that is disadvantaged by a provision, criterion or practice, even if that individual is not part of that group.

This does not mean that she will succeed with her claim, only that she is entitled to make it. However, it is a significant decision for UK discrimination law which will now either have to be interpreted in line with this decision, or could even be found to be incompatible with EU law.

Race discrimination - wearing a Muslim jilbab

Ms Begum wore a jilbab, which covers the body from neck to ankle. When she attended a job interview for a position at a day nursery the manager commented that she would need to ensure that anything she wore was not so long that it caused a tripping hazard.

The nursery heard no more from her until she started her discrimination claim against them related to this condition of her work.

The Employment Appeals Tribunal (EAT) supported the nursery, however. It held that the provision, criterion or practice of ensuring that clothes did not present tripping hazards was not discriminatory, and even if it was, it was justified. The nursery manager was best placed to make a judgement as to the risk to health and safety presented by any employee's clothing. (Begum v Pedagogy Auras UK Ltd (t/a Barley Lane Montessori Day Nursery) UKEAT/2015/0309.)

Clash of the titans - religion v sexual orientation

We move on from race discrimination, but curiously do not leave the world of children's nurseries.

Mbuyi v Newpark Childcare (Shepherds Bush) Ltd (ET/3300656/14) made headlines which wrongly categorised the case as one in which religion trumped sexual orientation. That was because, when the nursery dismissed a Christian employee for expressing negative views about a colleague's homosexuality, the dismissal was held to be discriminatory.

In fact, the main reasons for the discrimination were the employer's procedural failings (which included a failure to carry out a proper investigation). The employer had to explain why it had fallen so short in its procedures and it could not, so the employment tribunal felt it had to infer that the dismissal had been based on stereotypical negative assumptions of the beliefs of evangelical Christians.

That said, the tribunal did comment that inappropriately expressing a religious belief of this type could in some circumstances justify a fair dismissal (Ms Mbuyi had less than two years of service so unfair dismissal was not in issue here). The implication is that, had the employer followed reasonable procedures, the decision may well have gone the other way.

Dismissal for breach of health and safety rule held to be unfair

In Newbound v Thames Water Utilities Limited (2015 EWCA Civ 677) Mr Newbound had been employed by Thames Water for 34 years before he was dismissed for gross misconduct. He had gone into a sewer without wearing breathing apparatus, in contravention of a new safety rule which had been brought verbally to his attention by his line manager.

The employment tribunal held that his dismissal was unfair, a decision which the EAT reversed, only to be overturned by the Court of Appeal, which reinstated the original unfair dismissal finding.

The reason for the unfairness was that despite having been told about the new rule in advance by his line manager, Mr Newbound had not been trained in the observance of the rule, he did not know that he could be dismissed if he failed to comply with it, and the practice of entering sewers without breathing apparatus had been condoned for many years. In addition, another employee, who was in charge of sewer entry, allowed him to enter without the breathing apparatus, and was himself only given a final written warning. That was held to be an unjustifiable disparity in treatment.

There are three lessons from this case. The first is the benefit of highlighting if a policy is important and if a breach is so serious that it could lead to dismissal. The second is the need to ensure consistency in sanctions. The third is that tribunals will not give limitless discretion to the employer to make its own decisions over disciplinary matters - there is a 'band of reasonable responses' within which a tribunal should not interfere, but that band is not of unlimited width.

Duty to disclose own wrongdoings

The EAT has decided that an employee was not under a general duty to disclose to his employer allegations of sexual misconduct made against him while working elsewhere.

The employment contract did contain express terms requiring disclosure of misconduct in certain circumstances, either during employment or in circumstances set out in additional documents. However, the employer did not provide these additional documents to the tribunal in evidence, so it was unable to establish that the employee was subject to an obligation to disclose. In the absence of an express term, disclosure was not obligatory.

Especially in regulated sectors contracts increasingly include a requirement to disclose wrongdoings. This case emphasises the value of that and of doing so in clear terms. (The Basildon Academies v Amadi UKEAT/0343/14.)

Is travelling to appointments working time?

The Advocate General of the European Court of Justice has given his opinion (which means advice to the ECJ - this is not a legal decision yet) that the time spent travelling by peripatetic workers between appointments counts as working time for the purposes of the Working Time Directive and that includes the journeys between their homes and their first and last assignments of the day. A peripatetic worker includes anyone who is not assigned to a fixed place of work, such as home-based salespeople.

This emphasises the benefit of requiring such employees to sign an opt-out from the requirement to limit average weekly working to 48 hours. (Federación de Servicios Privados del sindicato Comisiones Obreras v Tyco Integrated Security SL and another C-266/14.)

Calculation of holiday pay - what about voluntary overtime

You will remember, because I keep going on about it, the Bear Scotland case, in which it was held that overtime which the employee was obliged to work if requested by the employer may need to be included in the calculation of holiday pay.

That case did not, though, address purely voluntary overtime, so it remained uncertain whether that should be subject to the same principles. Well, the Northern Ireland Court of Appeal thinks it should.

Although the Northern Ireland Court of Appeal is not binding on English courts, this will no doubt be seen to point to an acceptance that holiday pay may need to include an allowance for any form of overtime.

Other uncertainties from Bear Scotland apply equally to voluntary overtime of course - such as: is the overtime 'normally' carried out, is it part of 'normal remuneration', over what reference period does the calculation need to be made, and how retrospective can claims be? (Patterson v Castlereagh Borough Council (2015 NICA47).)

Carrying forward accrued holiday during long-term sickness

Plumb v Duncan Print Group Ltd (UKEAT/0071/15) concerned the vexed question of what happens to an employee's holiday accrual if they are on long-term sickness absence. Does an employee who is covered by a permanent health insurance arrangement (so stays in employment whilst long-term ill, but the employment costs are covered by insurance) accrue holiday throughout and rack up a large accrued holiday entitlement which has to be granted or paid out when the employee returns to work or leaves?

In this case the EAT has held that the worker on sick leave need not demonstrate that they are physically unable to take annual leave in order to carry over accrued unused statutory holiday to a subsequent leave year. It is sufficient that they are absent on sick leave and do not choose to take annual leave during that period. That much, I think we have assumed.

The good news for employers from the decision is that the EAT also decided (relying on the ECJ decision in the Schulte case) that a worker should be able to take annual leave within 18 months of the end of the leave year in which it accrued. In other word, carry over is not unlimited. Use it (within 18 months of the leave year ending) or lose it.

The case may be appealed, though.

Unwanted employee transferred under TUPE

OK, it is TUPE time at last.

One of the risks I often identify in outsourcing contracts is that if a client receiving outsourced services fails to look ahead to the end of the contract and draft protections accordingly, it can find itself with the outgoing provider's weakest staff assigned to its service team, who remain attached like limpets to the provision of the service when it switches to the new provider because of the operation of TUPE. Here's a case in which the client was exposed to this type of risk even despite protecting itself in the contract.

Ms Jakowlew was employed as a care worker by Saga Care, working principally on a contract for the London Borough of Enfield. Owing to concerns about her conduct and that of two of her colleagues, the Council instructed Saga Care to remove them from the service, in accordance with the service contract terms. Saga Care disputed the Council's right to do this and did not immediately comply. Instead, it took disciplinary steps against the three employees and gave Ms Jakowlew a written warning.

At around the same time the service contract expired and the relevant services transferred to a new provider. There was confusion over whether Ms Jakowlew had transferred under TUPE. Eventually, Saga Care accepted that she had not, because of the Council's unwillingness to have her working on the contract. It continued paying her until it dismissed her for redundancy.

Ms Jakowlew claimed unfair dismissal, arguing that her employment had transferred under TUPE.

The EAT held that it had. She remained 'assigned' to the organised group of employees supporting the contract despite the requirement that she be removed, because the instruction had not been actioned.

The moral of the tale is: include wording in the services contract which allows you to control the composition of the staff providing the service and ensure those provisions are followed by the service provider. (Jakowlew v Nestor Primecare Services Ltd (t/a Saga Care) and another UKEAT/0431/14.)

Sub-contractor's employees can fall within TUPE

Jinks v London Borough of Havering UKEAT/0157/14 is an alert to the fact that where a service provider sub-contracts some of its services to another company, employees of that sub-contractor might fall within TUPE and transfer to the client or a new service provider when the contract ends.

The Council contracted with a company called Saturn to operate an ice rink and car park. Saturn sub-contracted the car park operation to Regal. Regal's subcontract ended when Saturn gave up the car park, the Council passing it on to a local NHS Trust. Mr Jinks, an employee of Regal, claimed that his employment transferred from Regal to the Council.

The employment tribunal struck out the claim as having no real prospect of success. For there to be a TUPE transfer, the 'client' must be the same both before and after the transfer. Saturn was Regal's client, not the Council.

The EAT disagreed. The question was: who was Regal running the car park on behalf of? The identity of the client is a question of fact, not law. The EAT sent the case back to an employment tribunal for reconsideration.

Maximum protective award ordered where employer had no knowledge of its legal obligations

'Ignorance of the law is no defence' is how the expression goes. The employer discovered its truth in E Ivor Hughes Educational Foundation v Morris and others (UKEAT/0023/15) when it faced liability for a full a 90 day protective award having undertaken no collective redundancy consultation because it was unaware of its legal obligation to consult.

Neither could it rely on the defence of 'special circumstances rendering it not reasonably practicable to comply with consultation requirements'. The employer could not possibly have considered such circumstances if it was not aware of the consultation obligation in the first place.

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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