Employment law keeps you on your toes. Its dynamic nature is a key reason I
chose to specialise in it, and it remains a major attraction. (Apologies to
my readers who would prefer that things stood still for a while so they can
manage their staff with fewer things to worry about!)
My original introduction to this month's Newsletter was going to observe a
quieter month on the case law front and congratulate the Government on
stepping forward to fill the breach. But wait - at the 11th hour the
European Court makes an important decision on working time and the role of
HR in disciplinary decisions comes under scrutiny at the Employment Appeals
Tribunal - readers are advised to take a careful look at that one.
Meanwhile, on the legislative side, I suspect anyone impacted by the
potential National Living Wage is fully aware of that proposal and already
adjusting staff cost budgets. All employment lawyers and HR professionals,
though, need to be aware of possible changes ahead to the £30,000 tax free
exemption on termination payments.
As I say, keep paying attention!
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The European Court of Justice decision in the case of Federación de
Servicios Privados del Sindicato Comisiones Obreras v Tyco Integrated
Security SL and anor is the latest employment law development to hit the
main news headlines. The Court held that for workers who do not have a
fixed or habitual place of work, time spent travelling between their homes
and their first and last customers of the day constitutes working time
under the Working Time Directive.
This decision does not apply to the ordinary worker who commutes to and from
their normal place of work, but it is likely to have a significant impact on
any businesses whose workers travel from place to place, for example sales
people, and do not have a regular work base.
This could mean that employees' working time will breach the average 48 hour
working week mandated by the Directive, which led to statements from some
about the value of the opt-out available in UK.
The Court made the point that this did not mean that employers must pay
employees anything extra for this working time (although workers who have
not opted-out of the 48 hour limit might seek a compensatory payment is they
are now asked to do so). Also, if these journey times must also be treated
as working time for National Minimum Wage purposes, that extra working time
could mean for some workers that their average hourly pay is less than the
A further hit on employment costs is set to arrive from April 2016 in the
form of the National Living Wage which will increase the minimum wage that
must be paid to workers aged 25 and over to £7.20 per hour (rising to £9 per
hour by 2020). This will be, in effect, a new tier to the National Minimum
The Office for Budget Responsibility estimates that around six million
people will be impacted. Measures to reduce the burden of the increased
costs on businesses include a 2% reduction in corporation tax and a 50 per
cent increase to the National Insurance Employment Allowance. Nonetheless,
for certain businesses and sectors this has major cost implications, coming
as it does at around the same time as many employers will face additional
pensions liabilities under auto-enrolment.
For employment lawyers the single element of the tax rules which matters
most in practice is the £30,000 exemption on termination payments. For
budget after budget we check whether the rule will change - an increase in
the figure perhaps? But no - it has remained in place and resolutely fixed
at £30,000 for as long as I can remember.
Is this all about to change? Quite possibly, yes. The government has issued
a consultation document in which it considers:-
- removing the distinction between contractual and non-contractual
payments (so that, for example, a PILON payment would also attract tax-free
- introducing a two year qualifying period, so no employee can
receive a tax-free termination payment unless they have been working for two
- changing the fixed £30,000 tax-free sum to an amount which
increases the longer an employee has worked; nothing specific is proposed
but a worked hypothesis suggests a £6,000 tax-free sum after two years'
employment, increasing by £1,000 for each additional year of employment.
The possibility of restricting the national insurance exemption to this same
amount is also mooted
- making injury to feelings awards (which are arguably completely tax
free) subject to tax for some or all of the award
- altering the present foreign service relief exemption
There is a suggestion that the concession be limited to redundancy
situations only but at the same time new concessions may apply to other
circumstances of dismissal.
A significant reduction in the value of the concession is in the offing.
Definitely watch this space.
Sticking with the tax theme, the First-tier Tribunal has held that a £30,000
payment received by an employee under a compromise agreement was taxable
because it was made to compensate him for a change to his contract,
requiring him to work more than 10 miles from his original workplace.
Mr Hill maintained that the payment benefitted from the £30,000 exemption as
it was made in return for his agreement not to claim against his employer
for failing to consult on the TUPE transfer that resulted in his workplace
changing. The tribunal disagreed - the payment was general earnings. The
facts showed that the change of Mr Hill's actual workplace (as opposed to
his contractual one) had happened some three years before transfer. In
addition, he was required to repay some of the payment if his employment
ceased within two years of it being paid. (Hill v HMRC  UKFTT 0295
Acas has published statistics showing the impact of the first year of Early
Conciliation. Three out of four employees and employers agreed to try EC in
its first year of operation. 63% of notifications received between April and
December 2014 did not proceed to a tribunal claim, a further 15% resulted in
a formal settlement, and 22% progressed to a tribunal claim of which just
over half subsequently settled through Acas.
Ramphal v Department for Transport (UKEAT/0352/14) is a must note for HR
departments and anyone else involved in disciplinary proceedings.
The investigating officer's report into the disciplinary matter originally
recommended a finding of misconduct and a sanction of a written warning.
After numerous comments and amendments by HR - note that all of the drafts
would have been discoverable documents so required to be produced in the
tribunal - the final report found the employee to have committed gross
misconduct and recommended immediate dismissal.
The Employment Judge decided that the dismissal to be fair but the
Employment Appeals Tribunal (EAT) said his approach was wrong. He had
failed to take account of Supreme Court guidance that the role of HR should
be to provide advice limited essentially to matters of law and procedure.
Questions of culpability are matters for the investigating officer.
The EAT said: "an employee facing disciplinary charges and a dismissal
procedure is entitled to assume that the decision will be taken by the
appropriate officer, without having been lobbied by other parties as to the
findings he should make as to culpability.....and also given notice of
representations made by others to the Dismissing Officer that go beyond
legal advice, and advice on matter of process and procedure."
Regular readers will know that I feature any case which casts light on the
question of whether a person working overseas can bring claims under UK law.
Over time the test for this has drifted away from any fixed parameters and
towards the general question of whether the employment is more closely
linked to UK law than the law of somewhere else.
So it was in R (on the application of Hottak and anor) v Secretary of State
for Foreign and Commonwealth Affairs and another (2015 EWHC 1953), a case
related to Afghan interpreters working for British armed forces in
Afghanistan. The High Court said they could not bring claims under the
Equality Act 2010 because it could not be said that the interpreters had
closer connections with Britain and British employment law than with
Afghanistan and Afghan law.
The two Afghan nationals relied on the fact that that they were both
employees of HM Government so that the Equality Act applied to their
employment in Afghanistan.
Referring to the principles in the Lawson v Serco line of cases in relation
to the Employment Rights Act 1996, the Court considered that the
interpreters were not expatriate or peripatetic workers and that they had no
physical contact or connection with Great Britain at all. Their contracts
were not governed by English law. Their connection with Great Britain was
limited to the identity of their employer. Their position could not be
distinguished from that of locally employed members of staff in a British
Embassy, which in a previous case was considered to be outside the scope of
the Employment Rights Act, and the territorial test for both pieces of
legislation was the same.
Another common theme of mine is the willingness of the tribunals and appeal
courts to permit age discrimination as justifiable, in contrast to the less
frequent circumstances in which other forms of discrimination are allowed.
As we suspected when age discrimination was introduced almost 10 years ago,
age is regarded differently to the other forms of prohibited discrimination.
The Employment Appeals Tribunal (EAT) has held in Chief Constable of West
Midlands Police and others v Harrod and others (UKEAT/0189/14) that the
compulsory retirement of large numbers of police officers pursuant to
regulation A19 of the Police Pension Regulations 1987 could be objectively
justified and was therefore not indirectly discriminatory on age grounds.
Police offers are not employees and, in the absence of misconduct or
capability issues, A19 is the only way of ending an officer's service.
However, it clearly disadvantages those over 48.
The employment tribunal assessed whether it was absolutely, as opposed to
reasonably, necessary to retire the officers under A19 and concluded that
there were alternative, less discriminatory, ways of achieving the aim of
increasing efficiency. The EAT said this test was wrong. It was critical for
the police forces to have certainty in achieving the necessary budgetary
cuts, and retiring officers under A19 was the only way to have the required
The EAT concluded that the right of an agency workers to be informed of
vacancies within the end user company means just that, and no more. The
workers do not have equal status with comparable permanent employees in
being considered for a particular vacancy. A short summary - but that's
what you need to know. (Coles v Ministry of Defence UKEAT/0403/14.)
In British Waterways Board v Smith (UKEATS/0004/15) Mr Smith had made
derogatory comments on Facebook about his managers and work. He referred to
having been drinking whilst on standby - which was specifically prohibited.
Mr Smith described the comments as 'banter' (a term with which those of you
with teenage sons will be familiar) and said that he had in fact not been
drinking. Nonetheless, he was summarily dismissed for gross misconduct as
his comments had undermined the confidence his employer or the public could
have in him.
The EAT, reversing the tribunal's decision, found the dismissal to be fair.
Fair procedure was followed and the employment tribunal had made the error
of substituting their view for that of the employer. Whilst this is a
decision based on its particular facts, it illustrates again that employers
do have some weapons against damaging use of social media, particularly if
the employer has a good social media policy in place.
Employers are familiar with an employee's right to be supported by a work
colleague or eligible union representative at disciplinary and grievance
hearings. They might be forgiven for thinking that if that right is
respected, there need be no concerns. Wrong, according to Stevens v
University of Birmingham (2015 EWHC 2300).
The University refused to allow a representative of a professional defence
organisation to accompany an employee at an investigation meeting concerning
serious allegations of misconduct. This, said the High Court, was unfair
and a breach of the implied term of trust and confidence.
Although the express terms of the relevant contractual disciplinary
procedure mirrored the statutory requirement, so was not infringed, the
overriding obligation of trust and confidence had to be considered. Mr
Stevens had two contracts of employment, one for an academic role with the
University and one for a clinical role with the NHS Foundation Trust. The
alleged misconduct related to the conduct of clinical trials and impacted
Mr Stevens would have been allowed his choice of companion under the Trust's
disciplinary procedure, had it (rather than the University) initiated
disciplinary proceedings. This was a key factor in the decision. However,
the case remains a reminder that in cases with serious implications for an
employee operating just the core statutory right may not be enough.
In BT Managed Services Ltd v Edwards and anor, Mr Edwards was employed as a
Field Operations Engineer as part of a team dedicated to a contract
providing operational maintenance for mobile phone networks. The team had
its own separate and dedicated structure within BT, including its own
managers, operatives, support staff, budget and cost centres.
In 2006, Mr Edwards went on long-term sick leave and was in due course seen
as permanently incapacitated, without no prospect of returning to work. He
remained employed so as to be paid under a PHI scheme.
In 2012 the contract on which he had worked was transferred. There was
clearly a TUPE situation with an organised grouping of employees whose
principal purpose was to undertake the work under the contract. But was Mr
Edwards part of that grouping?
No, said the EAT. Someone permanently unable to contribute to the activity
was almost by definition excluded from 'assignment' to the organised
grouping. Such link as remained between Mr Edwards and his team was for
administrative purposes only and a mere administrative or historical
connection on its own was not enough. Some level of participation, or
evidence of absence being temporary, was needed.