Employment Review - February 2009
In this month’s review we look at the controversial decision in Stringer -v- HMRC which will reshape the law on holiday for employees on sickness absence; review the upcoming amendments to the Employment Tribunal’s Rules of Procedure; we examine the principle of ‘double recovery’ in the context of a constructive dismissal claim; a clarification of the requirements an employer must fulfil to rely on the statutory defence to a claim for failure to make reasonable adjustments in a disability case and a reminder to check your spelling!
A Sickening Development for Employers?
Amendments to Employment Tribunal Rules
EAT allows ‘double recovery’
TUPE: Consultation obligations
EAT clarifies ‘reasonable adjustments’ defence
Spelling check reminder
The European Court of Justice has finally delivered its opinion in the long running case of Stringer -v- HMRC (formerly Ainsworth). The opinion could have serious implications for employers in relation to how they deal with holidays for employees on long term sickness and will already be impacting on the public sector.
The Stringer case is actually a number of conjoined cases. In one the worker claimed that they should be able to elect to take holiday during a period of sickness absence and in another the worker claimed that, on termination, they should be paid for any accrued holiday that they had been unable to take during sickness absence. Although the claims were allowed by the Employment Tribunal, the decisions were overturned by the Employment Appeal Tribunal. The EAT found that:
- a worker accrued holiday whilst on sick leave but could not take paid holiday during a period in which they were absent from work on sick leave
- a worker who was off work on long-term sick leave for an entire year would have no right to paid annual leave for that year, as there is no statutory right to carry over unused holiday to the next leave year
- an employee who had no right to paid annual leave because they had been off due to sickness during the entire leave year would not have a right to payment in lieu of this holiday on the termination of their employment
The case was appealed to the House of Lords and subsequently referred to the European Court of Justice.
The ECJ have now delivered their judgment and made the following key decisions:
Whether a worker can take annual leave during a period when they are off sick is a matter for national law to decide. However, if a worker on sick leave is not allowed to take holiday, national law must allow the worker to take their holiday at a later date, even after the end of the leave year.
If an employee is off sick for an entire leave year, they must still be able to take their holiday for that year at a later date or paid in lieu of it if their employment terminates
The decision of the ECJ is a blow for employers as it indicates that they cannot escape liability for paying holiday pay, or allowing leave, to employees on long term sickness. Whilst the ECJ has left it to the UK government to determine whether workers should be allowed to take holiday during a period of sickness absence, if they are not allowed to do so, workers will be able to carry their unused holiday entitlement over indefinitely. The only small consolation is that these principles only apply to the 20 days minimum holiday specified in the Working Time Directive, not the 24, soon to be 28, days holiday specified in the Working Time Regulations.
So what happens now?
Firstly, the Stringer case will be referred back to the House of Lords who will need to determine whether the Working Time Regulations can be interpreted in line with the ECJ’s decision. If the House of Lords decide that the Working Time Regulations can be interpreted in this way then the decision of the ECJ will have retrospective effect for all employers. If the Regulations cannot be interpreted in this way then the government will have to amend the legislation so that it does give effect to the ECJ’s verdict. This means that, for the time being at least, we are in limbo as to whether the Stringer decision will apply retrospectively or whether it will be delayed pending the draftsmen putting new regulations in place.
Whilst we await further news on this issue, employers can continue as they are. However, employers would be wise to ensure that they have a good grasp on the potential liabilities that may arise in relation to employees on long term sickness when the ECJ’s verdict does ome into effect, either through a re-interpretation of the current Working Time Regulations or new legislation. This is particularly the case for those employers who operate a permanent health insurance scheme, as PHI schemes will generally require a person to remain in employment in order for them to benefit under the scheme. This means that employers who operate these schemes will have employees on the books that are never going to return to work, but under Stringer, will now be accruing holiday for each year that they remain an employee.
The situation is different for public sector workers. As they are essentially employed by the government, the principle of direct effect will apply. This means that rulings of the ECJ will apply to them, regardless of any inconsistencies or interpretation of the UK legislation. The decision in Stringer now means that public sector employees must be allowed to take their accrued holiday on their return from sickness absence, or paid in lieu of it on termination, even if the holiday year in which it was accrued has ended. We will report on any further developments in this case in future updates.
Amendments to Employment Tribunal Rules
Following in the wake of the Employment Act 2008 which, amongst other things, repeals the statutory dispute resolution procedures with effect from 6 April 2009, the Employment Tribunal (Constitution and Rules of Procedure)(Amendment) Regulations 2008 have been laid before Parliament. These Regulations will amend the Employment Tribunals Rules of Procedure 2004 to reflect some of the changes required post April 2009..
The most significant changes to be introduced by the Regulations are as follows:
The Regulations remove an Employment Judge’s discretion not to issue a default judgement in certain circumstances. Now, an Employment Judge will have to issue a default judgement if a Response is not filed, or if further information has been requested by the Employment Tribunal and not provided.
Keeping up to speed with current technology, the Regulations introduce new rules for circumstances where evidence is given by video link or conference telephone. Where electronic communications are used in public hearings and any evidence is given, the public must be able to see and hear all parties to the communication. When the hearing is to be held in private, the Tribunal or Employment Judge must be able to see and hear all parties to the communication.
The Regulations clarify the rules on the withdrawal and dismissal of claims. In particular, a new rule is to be introduced which provides for the automatic dismissal of proceedings that have been settled through Acas where the parties have confirmed in writing their understanding that the proceedings will be dismissed upon withdrawal by the Claimant, and the Claimant has indeed withdrawn their claim.
The new rules will enable an Employment Judge sitting alone to conduct stage one equal value hearings, these being preliminary hearings in equal pay litigation.
The new amended Rules of Procedure will come into effect for Employment Tribunals on 6 April 2009
In the case of Stuart Peters -v- Bell, the Employment Tribunal has ruled that employees who are unfairly constructively dismissed will be entitled to their full contractual notice period, even if they have mitigated their loss by undertaking other work during that period. This rule, which essentially allows double recovery for Claimants, was settled by the Court of Appeal in relation to normal unfair dismissal claims in 1976 in the case of Norton Tool -v- Tewson. However, until now, it had not been clarified whether the rule applied in unfair constructive dismissal cases.
In this case, Ms Bell had been unfairly constructively dismissed on 10 April 2007 and had not been paid for her six month contractual notice period. During what should have been her six month notice period Ms Bell found temporary work, which lasted for three months. The Employment Tribunal, following the decision in the Norton Tool case, did not offset the earnings she received from her temporary employment against the award for her six months’ notice pay. Her former employer, Stuart Peters, appealed on the basis that the Norton Tool principle did not apply to constructive dismissal cases.
The Employment Appeal Tribunal disagreed, holding that there was no reason why the principle in Norton Tool could not apply to a constructive dismissal case. However, there is some cause for optimism for employers. HHJ Burke did state in his judgement that he hoped that the principle might be reconsidered by the House of Lords when the opportunity arises, given the seemingly unfair effect on Respondents when a Claimant is able to work throughout their notice period, but then also recover loss of earnings from their former employer.
Given the small amounts involved in this case, it is unlikely that the decision of the EAT will be appealed and therefore we will have to await further case law on this point before the Norton Tool principle can be successfully challenged.
TUPE: Consultation obligations
The EAT has decided, in the case of Amicus -v- Glasgow City Council, that there is no obligation on a buyer of a business to consult with employees about any measures it plans to take in respect of them after the employees have transferred to it.
Under the TUPE Regulations, there is a duty on the seller of a business to consult with his employees about any measures that the buyer intend to take after completion. However, it has now been confirmed that there is no corresponding obligation on the buyer after completion.
EAT clarifies ‘reasonable adjustments’ defence
The EAT has had to consider the requirements an Employer must fulfil in order to rely on the statutory defence to a claim for a failure to make reasonable adjustments for a disabled person in the case of Eastern & Coastal Kent PCT -v- Grey.
In this case Mrs Grey was a qualified nurse who was applying for a position with the PCT.
Mrs Grey was dyslexic and it was accepted that this was a disability for the purposes of the Disability Discrimination Act 1995 (DDA). When applying for the position, Mrs Grey confirmed on her application form that she had a disability, which she defined as a “learning difficulty/disability”. However, Mrs Grey did not specify any special arrangements that she required at her interview as a result of her condition, despite there being a question to this effect on the application form. Although the PCT were aware of Mrs Grey’s disability from the information provided on her application form, this information was not passed to the panel who conducted the interviews. Mrs Grey did not perform well at the interview and consequently was not offered the post. Mrs Grey then brought a claim for, amongst other things, the PCT’s failure to make reasonable djustments for her in her interview.
The duty to make reasonable adjustments is set out in section 4A of the DDA and provides that where a provision, criteria or practice of an employer, or a physical feature of it’s premises “places the disabled person at a substantial disadvantage in comparison with persons who are not disabled, it is the duty of the employer to take such steps as it is reasonable, in all the circumstances of the case, for him to take in order to prevent the provision, criteria, practice or feature having that effect.”
An employer has a statutory defence to a claim for a failure to make reasonable adjustments pursuant to section 4A(3) of the DDA. The defence is available where an employer did not know, and could not reasonably be expected to know, that someone is likely to be placed at a substantial disadvantage by a disability. The defence is regularly used by employers to defend claims from rejected applicants, as in this case.
Mrs Grey’s claim was successful and the PCT appealed to the EAT on the basis that the Employment Tribunal had not properly considered the test for the statutory defence and that the PCT could not have known that Mrs Grey was likely to be placed at a substantial disadvantage. The EAT dismissed the appeal holding that, in order to rely on the statutory defence, an employer had to be able to satisfy all of the following 4 limbs, as set out in the legislation:
The employer must not know that the disabled person has a disability; and
The employer must not know that the disabled person is likely to be at a substantial disadvantage compared with persons who are not disabled; and
The employer could not reasonably have been expected to know that the disabled person had a disability; andThe employer could not reasonably have been expected to know that the disabled person is likely to be placed at a substantial disadvantage in comparison with persons who are not disabled.
These criteria are quite onerous on employers and those seeking to rely on the statutory defence in the future will have to do more to convince an Employment Tribunal that the defence is valid. The PCT fell down in this case because they knew of Mrs Grey’s disability but did not consider that she would be at a substantial disadvantage because she had not asked for any special arrangements at her interview.
On a practical level, employers should be very aware of applicants who disclose a disability on their application form to ensure that they make an assessment to identify appropriate arrangements for the interview to accommodate the disability. This exercise should be done even if the applicant themselves have not identified any special measures they wish to be put in place. Relying on the applicant to speak up, as the PCT did here, is not a defence to a failure to make adjustments.
For contact details of our Employment Team, please see below
The EAT has given us a reminder to check our spelling when issuing claims in the Employment Tribunal. In the case of Anthony Chowles t/a Granary Pine -v- West, the EAT has held that where a Respondent’s name has been misspelt and his address misstated on an ET1 then the claim could not be said to have been sent to him. In consequence, the Respondent would not have to put in a response, nor could he be subject to a default judgement for a failure to respond. In this case, the Claimant had stated that his employer was Anthony Charles, rather than Chowles, and had made 2 errors in the postal address.
A common sense point perhaps but, in the days when over-reliance on spell-check is rife, this case serves as a good reminder to us all to check the spellings of names and addresses when dealing with the Employment Tribunal.
This update is only a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist advice should be sought from a member of the Freeth Cartwright Employment Team in relation to any queries that may arise.
David Potter
Cumberland Court,
80 Mount Street,
Nottingham NG1 6HH
Tel: 0115 936 9389
Fax: 0115 859 9617
david.potter@freethcartwright.co.uk
Joanne Kay
Floor 2, West Point,
Cardinal Square,
10 Nottingham Road,
Derby DE1 3QT
Tel: 0845 634 1724
Fax: 0115 859 9617
joanne.kay@freethcartwright.co.uk
Julian Middleton
One Colton Square,
Leicester LE1 1QH
Tel: 0116 248 1115
Fax: 0845 634 2595
julian.middleton@freethcartwright.co.uk
Pat Jones
First Floor,
St James Building,
61-95 Oxford Street,
Manchester M1 6FQ
Tel: 0845 634 2561
Fax: 0845 634 2541
pat.jones@freethcartwright.co.uk
Vanessa DiCuffa
One Victoria Square,
Birmingham B1 1BD
Tel: 0845 634 2584
Fax: 0845 634 2576
vanessa.dicuffa@freethcartwright.co.uk
This update is only a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist advice should be sought from a member of the Freeth Cartwright Employment Team in relation to any queries that may arise.