Employment Review - July 2009
In this month’s review we consider the final outcome of a long running case regarding sick leave and holiday pay. This case has implications for all employers when dealing with long terms sick leave. Practical advice is given below.
We also consider a decision affecting the risk assessment of equal pay claims, a case which has implications for employers regarding who is classed as disabled under the DDA, a notable cases relating to unfair dismissal, and a case which reinforces the obligation on employers to properly address any complaint based on discrimination and harassment..
In addition, we provide details of the government’s decision to bring forward a review of the default retirement age and a consultation on the public sector duties in the proposed Equality Bill..
Equal Pay Risk assessment - consider ‘piggyback’ claims
“Likely” in the Disability Discrimination Act interpreted as “could well happen”
What is the effective date of termination?
Statutory redundancy pay to rise
Sexual Harassment and Sexual Orientation Discrimination
Religious and Race Discrimination in Faith School Admissions
Equality Bill - update
Sick leave and Holiday Pay - the Final Decision
Government hints at the end of the default retirement age
Equal Pay Risk assessment - consider ‘piggyback’ claims
The Employment Appeals Tribunal has held that a man may bring a “piggyback claim”, using as his comparator a woman who has brought a successful equal pay claim. In addition, failure to offer a settlement to a man with a piggyback claim, when claims by female comparators were settled, amounted to a detriment for the purposes of the Sex Discrimination Act 1975.
The claims involved three groups of employees: women being paid less than the male comparators for like work, the male comparators who earned more than the women for doing like work and another group of men earning the same as the women for doing the same or a very similar job.
Some of the women successfully claimed for equal pay after using the higher paid male colleagues as a comparison. Therefore, the council agreed to settle all of the women’s claims by increasing their wages to the same level as the higher paid men. In addition, the council agreed to pay back pay to the date on which the unequal treatment started up to the statutory maximum of six years before the date the claim was brought. This left the other group of males being paid less than the women for doing the same job. This male group of employees had also brought claims for equal pay, using the females as the comparator. The council did not settle their claims when the women’s claims were settled. Therefore, the men continued their claim for equal pay to the employment tribunal. They also presented claims for sex discrimination, as they suffered a detriment on the grounds of their sex when the council settled the women’s claims but not the men’s.
The tribunal allowed both claims and awarded the men compensation related to the date the women’s claims were presented to the tribunal. The council appealed against this decision arguing that since the original comparable employee had also been a man it was impossible for the men’s claim of equal pay to be allowed.
The men counter claimed against the decision to limit their compensation to the date the women presented their claim.
The appeals tribunal decided that the men should be treated equally as the female litigants. They awarded the men back pay to the same date as the women. The tribunal’s decision that the men had also been discriminated against on the grounds of their sex was upheld on appeal. This was because the council did not treat the men equally when they settled the women’s claims.
This case is of particular relevance to those involved in equal pay claims or employers risk assessing their potential liability for such claims. When carrying out risk assessments for equal pay claims employers should take into account any ‘piggyback’ claims that might be brought by male employees. These claims may come from male employees doing “like work”, “work rated as equivalent” or “work of equal value” to women who may have an equal pay claim. In practice, this is likely to be men on the same pay band or doing the ame job as female litigants. In addition, if employers wish to settle equal pay claims brought by female employees, this case makes it clear that a failure to settle any ‘piggyback’ claims without justification may amount to sex discrimination.
“Likely” in the Disability Discrimination Act interpreted as “could well happen”
Recently the House of Lords has upheld that the meaning of “likely” in the Disability Discrimination Act (‘DDA’) should be interpreted as “could well happen” rather than “more probable than not” when determining whether an employee had a disability. This will make it easier for employees to establish they are disabled for the purposes of the DDA.
This decision has a substantial effect on how the DDA will be interpreted by tribunals and courts. The word ‘likely’ is used throughout the Act. For example, for a person to be classified as disabled, paragraph 2(1) of the DDA states that the “the effect of an impairment is a long-term effect where… the period for which it lasts is likely to be at least 12 months; or it is likely to last for the rest of the life of the person affected. Paragraph 2(2) states that the condition “is to be treated as continuing to have that effect if that effect is likely to recur”.
This case centred on Paragraph 6(1) of the DDA which states that “an impairment which would be likely to have a substantial adverse effect on the ability of the person concerned to carry out normal day-to-day activities, but for the fact that measures are being taken to treat or correct it, is to be treated as having that effect”. The practical result of this paragraph is that when employers or tribunals are considering whether an employee is disabled for the purposes of the DDA, the employee must be considered without taking into account the affect of any medicine or other treatment. For example, if an employee is taking pain relief or other medicine to suppress the pain from a back problem, whether they are disabled will depend on their condition without the effect of the drugs.
In this case, Mrs. Boyle was employed by SCA as a stock controller and had been suffering with vocal hoarseness caused by vocal nodes. She began a strict regime to protect her voice as recommended by her medical adviser and in August 1992 underwent surgery to remove the nodes. Mrs Boyle continued with her regime and the nodes did not return. Part of her regime included refraining from raising her voice and keeping away from background noise.
In September 2000 a partition separating Mrs. Boyle’s office from the noisy stock room was removed by SCA. She argued that this would be detrimental to her health in that it would prevent her following her regime and would risk her vocal nodes returning. SCA disagreed believing that the surgery had cured the illness.
Mrs. Boyle brought a claim for SCA’s failure to comply with its duties to make reasonable adjustments under the DDA and a further claim, having been made redundant, under the DDA for her dismissal.
SCA argued that because of the surgery in 1991, Mrs Boyle’s nodules were not likely to have a substantial adverse effect; she had been cured. Therefore, she was not disabled and her claims should be dismissed. This argument was rejected. It was held that her management regime amounted to “treatment” within the meaning of paragraph 6(1). Without that treatment, Mrs Boyle would more likely than not have suffered from hoarseness and vocal nodes, which would have had a substantial adverse effect on her day-to-day activities. In any event, the House of Lords went on to find that Mrs Boyle’s condition was more likely than not to recur within the meaning of paragraph 2(2).
How this Decision Effects Employers
The overall effect of this decision is that it will be easier for employees to prove that their impairment is a disability for the purposes of the DDA. Previous case law had suggested that ‘likely’ should be interpreted as ‘more probable than not’, which was a sterner test for claimants than ‘could well happen’.
This decision may swing borderline cases of disability in favour of the employee. In particular, in cases in which there is a debate about whether the claimant’s condition is likely to recur or whether an impairment would be likely to have an adverse effect on a claimant if medication or other treatment was withdrawn.
This decision may make it particularly difficult for employers, as in this case, where the disability is concealed by the medication or treatment the employee receives.
Recent case law has confirmed that an employer cannot be liable for disability-related discrimination unless they know or ought to know of the condition in question. However, this case demonstrates that when an employee raises concerns related to their medical condition they should be taken seriously irrespective of how disabled the employee may appear.In addition, it is particularly important to give consideration to any health issues where the employee’s concern is that the management of his or her condition is likely to be adversely affected by the employer’s proposed action, which in this case involved the taking away of the partition. The duty to make reasonable adjustments is not limited to an employer’s current workplace, methods of work and policies; it should also be considered when an employer is planning to make changes to any of these factors.
What is the effective date of termination?
The Court of Appeal has recently confirmed that the effective date of termination (‘EDT)’ is when an employee reads the dismissal letter, as opposed to the date when the letter was written, posted or delivered.
The EDT is crucial when calculating tribunal deadlines. An employee has three months from the EDT to bring an unfair dismissal claim.
Miss Barratt was an employee of Gisda Cyf. She attended a disciplinary hearing on Tuesday 28th November. She was told to expect a letter that Thursday regarding her possible dismissal, however she was away when the letter arrived by recorded delivery that day. Mrs. Barratt did not sign for the letter and although she rang home whilst she was away, she did not inquire about any letter that may have arrived. She returned that following Sunday and opened the letter on Monday 4th December.
When Miss Barratt brought a claim for unfair dismissal, the employer raised a jurisdiction issue of whether the she had brought the claim out of time. If the effective date of termination was considered to be prior to the date she read the letter, before 4th December, then the claim would have been out of time.
The Court of Appeal accepted that the claim had been brought within time, relying on a precedent that the decision to terminate employment is effective when communicated. It also found that, Miss Barratt may have precluded herself from being able to rely on that precedent if she had purposely gone away to avoid receiving or reading the letter, however it also asserted that there was no duty on Miss Barratt to enquire about the letter whilst she was away.
The Court of Appeal’s decision will create uncertainty for employers. This case demonstrates that it will be difficult for employers and their advisors to accurate assess when a claim for unfair dismissal will be timebarred without knowing when the employee opened the letter of dismissal. One way to avoid this issue is for employers to invite the employee to a further meeting, after the decision to dismiss has been made. At this meeting the employee can be told the result of the dismissal hearing. Thus, avoiding the uncertainty of when the employee knew they were dismissed.
Statutory redundancy pay to rise
All workers are entitled to statutory redundancy pay after two years of continuous employment. It is calculated based on age, length of service and pay.
The government has announced that the limit of the weekly pay used to calculate statutory redundancy pay is to rise from £350 to £380 (the equivalent of a rise from £18200pa to £19760pa) on 1 October 2009.
This increase should be taken into account by employers when assessing the cost of any redundancy exercise that will lead to dismissals after the end of September 2009.
Sexual Harassment and Sexual Orientation Discrimination
A lesbian couple has successfully claimed sexual harassment, sexual orientation discrimination and unfair dismissal against their employer, following crude remarks and their employer’s failure to address their concerns.
Miss Moules and Miss Amos were both employed in the sales department of Aquatec Rainsoft and lived together. They were taunted by their colleagues about their relationship and subject to crude comments. One colleague, Mr. Thoburn, had branded their relationship “disgusting” adding that he “didn’t know how you could do it”.
The women were outraged by the comments but were further horrified when their bosses at the company failed to take their concerns of sexual harassment seriously. Their boss told them to stop complaining and not to “expect anything to be done about it”. Their
complaints were not investigated and the colleagues against whom the complaints were made were not questioned.
Within days of making the complaint, Miss Amos was fired over the phone, following which Miss Moules resigned. Miss Moules successfully claimed constructive dismissal at Bristol Employment Tribunal and in a settlement her partner received £5000 for unfair dismissal. Additionally, the employer was ordered to award each woman £5000 for injury to feelings for discrimination on the grounds of sexual orientation.
The tribunal ruled that Mr. Thoburn’s comments, such as “disgusting” would not have been used by him in relation to a heterosexual couple and so was less favourable treatment. He further argued that it was an act of harassment as it was not wanted and was “a violation of the women’s dignity and a remark which created a hostile, humiliating or offensive environment for them”.
The tribunal found that the employer had exacerbated the situation by failing to address the complaint or to take steps to assure that it would not happen again, adding that the way it was handled had belittled the complaint causing further injury to feelings.
The key lesson for employers is to not to dismiss any complaint relating to an allegation of discrimination, be it, sexual orientation, race, religion, gender or age. Any such complaint should be taken seriously and properly addressed. All employers are now expected to comply with the ACAS Code of Practice when dealing with grievances. This includes meeting with the employee to discuss the grievance and providing a written decision. Failure to comply with the Code of Practice may result in a 25% uplift to any award
made to the employee by the employment tribunal.
Religious and Race Discrimination in Faith School Admissions
The case involves the decision by a faith school, Jew’s Free School (JFS), to not admit a 12 year old boy (M) on the grounds that his mother was not Jewish. The school argued that it did not recognise the validity of his mother’s conversion to Judaism and M was unable to satisfy that the Office of the Chief Rabbi (OCR) recognised that his mother was Jewish.
M’s father brought a claim on the grounds that JFS’s admissions policy is unlawful on the basis that the criteria are racially discriminatory. Originally, Lord Justice Munby in the High Court ruled that the entry policy was legitimate and there had been no unlawful discrimination. The boy’s father then appealed and the case was taken to the Court of Appeal.
The Court of Appeal held that requiring a pupil’s mother to be Jewish, whether by descent or conversion, as a qualification for admission to a Jewish school was a test of ethnicity rather than religion which contravened the Race Relations Act 1976. A faith school is allowed to discriminate on the basis of religion since their purpose is to educate children in what are generally the religious beliefs of their parents (as recognised by Article 2 of the First Protocol to the European Convention on Human Rights). However no school is permitted to discriminate in its policy on racial grounds under section 1 of the Race Relations act 1976.
The Court of Appeal applied the principles of Mandla v Dowell-Lee {1983} 2 AC 548, in which the Sikhs were classified as a racial group within meaning of section 3 of the RRA 1976, to M’s situation and concluded that: Jews constituted a racial group defined principally by ethnic origin and additionally by conversion; and to discriminate against a person on the ground that they or someone else was or was not Jewish was therefore to discriminate against them on racial grounds. The judges said that “the requirement that if a pupil is to qualify for admission his mother must be Jewish, whether by descent or by conversion, is a test of ethnicity which contravenes the Race Relations Act”.
This decision is interesting from an employer’s point of view, as it demonstrates that not all decisions or rules that appear to be religion-related will be discrimination on the grounds of religion or belief. However, they may amount to race discrimination if the issue is more related to a person’s ethnicity than religion. A controversial example is any requirement of an employee not to wear a garment, such as a berka, covering their face. Traditionally race discrimination is harder to justify than religious discrimination. However, employers can take heart from the fact that the tribunals have taken a more employer-friendly approach to justifying such discrimination than the High Court in claims regarding school rules.
The Governments newly proposed Equality Bill is designed to amalgamate, update and simplify all the other discrimination duties.
The Bill contains specific duties for public sector employers. These include: publishing equality data (such as gender pay gap, and ethnic minority employment rate) for those organisations with more than 150 employees; involving and consulting employees and service users on their equality objectives; setting equality objectives and using public funds to contribute to their delivery. It is still undecided which public bodies will be accountable to this bill and what specific duties it will entail.
The Government Equalities Office (GEO) is consulting on proposals for the specific duties that will underpin the Equality Bill and the criteria for deciding which public bodies should be subject to them. Interested parties can find details of the consultation here: www.equalities.gov.uk/news/equality duties.aspx
The consultation closes on 30 September 2009.
Sick leave and Holiday Pay - the Final Decision
The case of HM Revenue & Customs v Stringer has been discussed in previous editions of Employment Review. This case has a considerable impact on all employers, as it concerns whether employees are entitled to holiday pay while they are on long term sick. This case has now reached its final verdict. Below is a review of the decision and the practical implications it has for employers.
The key findings of this decision are:
1. Annual leave accrues during sick leave even if the worker is unable to work during the whole of the leave year.
2. Employees on long term sick must be able to take the statutory paid holiday entitlement, even if they are not at work for the entire leave year.
3. Employees who have been unable to take annual leave due to being on sick leave have a right to be paid in lieu of accrued holiday on termination.
4. Claims for non-payment of statutory holiday pay may be brought as “unauthorised deductions from wages” under the Employment Rights Act 1996 (ERA), as well as directly under the WTR.
There is one remaining key issue that remains unresolved: whether employees must give notice to employers that they are taking annual leave before they have a claim for unpaid holiday. This is because there are currently two conflicting decisions on this issue. However, until this issue is addressed by the courts, it is best practice to presume that employees do not need to give such notice.
Practical Implications of this Decision
Employers will need to ensure that their policies for the management of sick leave and holiday pay are updated to comply with this judgement.
One way to avoid any claims based on this judgement is to ensure that employees on long term sick leave take all their statutory holiday leave in the leave year, even if they are not at work. Employers should be aware that this judgement only applies to statutory leave. If employees are entitled to more than 28 days holiday a year, whether they can take additional paid holiday leave during periods of sickness absence will depend on the terms of their contract.
The important practical effect of the fourth bullet point is that a worker can take advantage of the more generous time limits which apply to unlawful deduction claims. Claims under the WTR have to be brought within three months of the relevant holiday; therefore claims are quickly out of time. However, the decision will allow claims to be brought as unlawful deduction from wages. Such claims can be brought within three months of the last in a series of deductions, so allowing a claim to go back more than three months and claim for a series of unpaid holiday entitlement.
Some employers may be concerned that employees have high-value, historical claims for unpaid holiday leave. One method to prevent unlawful deduction from wages claims is to pay current holiday entitlement to such employees. This may break the series of authorised deductions and ensure that any historical claims are now out of time. However,
whether this tactic will succeed will depend on whether the tribunal exercises their discretion to extend the time limits.
This decision may also influence employers’ attitude to employees on long term sick. Depending on the terms of their employment, employees may have only been entitled to Statutory Sick Pay. However, this decision will also entitle employees to holiday pay, even if they are off work for the full leave year. This decision may encourage employers to avoid paying holiday pay by terminating their employment sooner than they otherwise would. In these circumstances employers should ensure that they take care to avoid unfair dismissal claims and claims for disability discrimination.
Finally, this decision may have an impact on employees’ permanent health insurance (PHI) benefit. Points for employers to consider are:
Whether paying holiday pay brings an end to benefits under the rules of the scheme.
PHI policies should be drafted (or varied where possible) to ensure that PHI payments are set off against holiday payments.
Whether termination of employment of employees on long term sick will end their PHI benefits. If so, termination may be in breach of contract.
Government hints at the end of the default retirement age
A planned review of the retirement age, which allows employers to retire people at the age of 65, is to be brought forward by a year. This is in a response to the changing demographic and circumstances of the working population. Most people retire before the age of 65 but 1.3 million have said that they would continue to work beyond that age if it was allowed.
The TUC has welcomed the move asserting that it is wrong to terminate a person’s employment simply because they are too old. The government intends to ask both employers and employees their views but it seems at the moment the government are keen to give employees the option of continuing to work, with a further aim of reducing age discrimination in the work place.
This move may be in response to the decision of the European Court of Justice in the case know as ‘Heyday’. Following their decision, the UK must justify their need for a default retirement age of 65 and the UK’s statutory retirement provisions.
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.
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