Employment Review - May 2007
In this month’s review we consider some recent decisions on sick pay and holiday entitlements, as well as a case illustrating that it is not always easy for employees to demonstrate that changes have been implied into their contracts of employment by the conduct of the parties.
Employers do not have to extend Company sick pay for disabled employees.
Part-time working and statutory holidays.
“We give you the weekends off. What are you complaining about?”
Smoking Ban due to come into force in England.
When does overtime become contractual?
Employers do not have to extend Company sick pay for disabled employees.
This case addressed the question of whether an employer was required to make a reasonable adjustment by extending Company sick pay for disabled employees.
Mrs O’Hanlon was employed by HM Revenue and Customs. She suffered from clinical depression, which in the circumstances constituted a disability. HMRC’s sick pay policy provided full pay for up to 6 months’ absence and half pay for a further 6 sick months’ absence in any 12 months, subject to an overriding maximum of 12 months’ paid leave in any 4 year period. Over 4 years Mrs O’Hanlon took a total of 365 days’ sick leave, 320 of which related to her disability.
She argued in the Court of Appeal that as a reasonable adjustment:
- She should have received full pay when, after the expiry of 6 months’ full pay under the sick pay policy, she was absent for reasons of disability; or
- Periods of absence for reasons of disability should have been discounted for the purposes of calculating her entitlement to sick pay.
The Court of Appeal rejected her argument and held that it did not consider it to be a reasonable adjustment to amend the policy and extend sick pay. They commented that extended payment for disability-related absences would provide a disincentive to return to work.
The Court of Appeal further found that it would be difficult, even where an employer had considerable resources, as HMRC did, to distinguish between disability and non-disability-related periods of sickness absence. The Court did not therefore agree
that disability-related absences should be discounted for the purposes of calculating sick pay entitlement.
A note of caution for employers, however, is that the Court of Appeal’s decision in Meikle v Nottinghamshire County Council
still stands. In that case it was held that where an employer failed to make a reasonable adjustment that would have enabled the employee to return to work, it would be reasonable for the employer to extend the period of full pay for the period of absence for which its failure to make adjustments was responsible.
O’Hanlon v Commissioners for HM Revenue & Customs
Part-time working and statutory holidays.
We now have a decision on the thorny issue of the entitlements of part-time workers in respect of public holidays.
Mr McMenemy worked on Wednesdays, Thursdays and Fridays. His employer’s standard employment contract for both full-time and part-time employees provided that employees were only entitled to public holidays where they fell on the employee’s normal working days. Consequently Mr McMenemy was not allowed time off in lieu when public holidays fell on a Monday.
Mr McMenemy brought a claim under the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000. These Regulations provide that where a comparable full-time worker receives or is entitled to receive pay or any other benefit, a part-time worker is to receive that pay or benefit on a pro-rata basis. Mr McMenemy claimed that he had been treated less favourably than a comparable full-time worker because whilst he worked 3/5th of the year, he did not receive 3/5th of the overall holidays that a full-time worker received because the fact that he did not work on Mondays meant that he did not receive 3/5th of the bank holidays.
The Court of Session dismissed Mr McMenemy’s appeal and agreed with the previous decisions of the Tribunal and the Employment Appeal Tribunal in this case. The Court of Session held that Mr McMenemy had not been treated less favourably because he was a part-time worker, but rather because he did not work on Mondays. The Court of Session agreed that the Tribunal was entitled to construct a hypothetical employee to determine this point. What would have happened if there had at that time been a full-time employee who did not work on Mondays? It was open to the Tribunal to conclude that such an employee would have been treated in the same way as Mr McMenemy with respect to bank holidays falling on Mondays.
The Respondent in this case was assisted by the fact that for a period, Mr McMenemy’s line manager worked from Tuesday to Saturday and did not receive a day off in lieu when he missed a Monday public holiday. It was therefore easier for the Respondent to persuade the court that a full-time employee who did not work Mondays would be treated in the same way as Mr McMenemy.
McMenemy v Capita Business Services Limited
“We give you the weekends off. What are you complaining about?”
In this case, the EAT held that an employer could require a worker to take his annual leave in single days every other Saturday.
Mr Sumsion was employed by the BBC as a standby carpenter for a fixed term of 24 weeks on the production of “Sea of Souls”. His contract provided that he must be available for work six days per week and provided for leave to be taken on any 6th non-scheduled day in a week. The 6th day was taken to be a reference to Saturday.
Mr Sumsion requested to be allowed to take all his leave in one block before the end of the contract but this request was turned down.
Mr Sumsion brought a claim under the Working Time Regulations 1998 arguing that the BBC had failed to afford him his entitlement to annual leave.
The Tribunal and the EAT held that the BBC was not in breach of the Working Time Regulations. The EAT held that contrary to Mr Sumsion’s assertion, there was no particular reason why Saturdays were different to other days of the week and commented that there are many industries in which a six day working week is the norm.
The effect of this decision is that it is open to an employer, by agreement with a worker, to require the worker to take annual leave in single days on any day on which the worker could be required under the contract to work.
Sumsion v BBC (Scotland)
Smoking Ban due to come into force in England.
The long-awaited ban on smoking in public places comes into force in England on 1 July 2007.
We have recently been asked by a number of clients to advise on the key implications of the ban, and having done so, have unearthed a number of interesting differences between the laws in Scotland and Wales (where a ban is already in force) and England. This has particular impact for businesses that operate throughout the United Kingdom and we recommend that such businesses audit their existing smoking policies to ensure compliance in all areas. If businesses do not currently have a policy in place, we are able to provide a template policy.
When does overtime become contractual?
This case concerned an assertion by two employees that the fact that they had worked 2.5 hours per week overtime for a year made it a term of their contracts.
The two Claimants in this case worked for North Lanarkshire Council carrying out emergency repairs to roads and other Council property. Following their appointment they were asked to extend their working day by 15 minutes in the morning and 15 minutes in the evenings. This amounted to 2.5 hours’ overtime a week, for which they were paid a premium overtime rate. The arrangement was not contained in their written contracts.
The arrangements went on for over a year, after which time as part of a harmonisation process, terms and conditions were
changed. The Claimants argued that they were, on the whole, worse off under the new harmonised terms and sought to have
their pre-harmonisation pay red-circled. They argued that their pre-harmonisation pay included the weekly 2.5 hours’ overtime.
The EAT overturned the Tribunal’s initial decision and held that the fact that overtime had been in place for a year was not
sufficient in itself to imply a variation to an existing contract.
The first question for the Tribunal was what were the parties’ intentions when the contract was entered into? In this case, the Tribunal found that the intention was not to create a contractual right to overtime. The next question was whether the contracts had been varied by the implementation of overtime for a year.
The EAT found that there was no indication that the parties intended to vary the contract such as to make the overtime a contractual right.
This case suggests that the test for inferring that a contract has been varied is more stringent that the test for implying a term at the outset. When asked to determine whether a term is implied into a contract at the outset, the Tribunal will ask itself what an “officious bystander” would have concluded were the terms of the contract. However, once the contract has been entered into, the EAT suggested there needed to be a clearer indication of an intention to vary than simply asking whether an “officious bystander” would have considered the contract to be varied.
We still recommend that employers make clear to employees where terms are noncontractual, but this case does provide some comfort to employers who neglect to do so.
North Lanarkshire Council v McDonald & Thomson