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Posted 27 January 2015
by Stephen Jennings

Tozers employment law newsletter – January 2015

Can you increase the sanction on appeal?
That was the question put to the Court of Appeal recently. The employer, an NHS Trust, had incorporated a formal and detailed disciplinary procedure into the employee’s contract and there was no provision in the procedure for an increase in the level of sanction on appeal. The employee appealed against the imposition of a written warning and the Trust contemplated increasing the severity of that sanction, which would lead to the employee’s dismissal.

The court held that the contractual procedure did not allow for increased penalty on appeal. To construe the procedure in that way was inconsistent with the terms of the contract and the ACAS guide on discipline and grievances. If the Trust wished to reserve its right to increase the disciplinary sanction on appeal, that should have been made explicit in the procedure. So the answer is that you can, but only if your procedure makes that clear.

The consequences of poor drafting
The Court of Appeal has overturned the High Court’s decision to read words into a non-compete covenant. The covenant, if read literally, offered the employer no protection at all. The Court of Appeal disagreed with the High Court’s view that the clause was ambiguous and that there had been a drafting error. The court held that the only interpretation available was the one that rendered the covenant useless. In the court’s view, the employer had simply not thought through the extent to which its chosen words would in fact provide adequate protection. The employer had made its bed and now had to lie in it.

Reasonable adjustments in a redundancy process
The EAT has upheld a tribunal decision that an employer failed to make reasonable adjustments for a disabled employee in a redundancy exercise. The employee’s disability meant that he was unable to attend administrative meetings, which the tribunal held included interviews. The tribunal found that the employer failed to consider alternative ways of assessing his suitability for roles into which he might have been redeployed as an alternative to redundancy.

However, as the EAT went on to note, the requirement to adjust attending an interview for a role does not lead automatically to the conclusion that the employee would have been appointed. That would be the subject of evidence and submissions at the remedy hearing. In this case, the employee argued that he could have been interviewed at home, rather than the workplace, or could have provided information in advance as part of a less formal process. He had been with the employer for several years, so his managers could have been consulted about his suitability especially for a post two grades below his current post. 

Military reservists: removal of qualifying period for unfair dismissal and additional payments for employers
Section 48 of the Defence Reform Act 2014 came into force with effect from 1 October 2014 and removes the statutory qualifying period for unfair dismissal where the dismissal is connected with the employee’s membership of the Reserve Forces (the Territorial Army, Royal Naval Reserve, Royal Marines Reserve or Royal Auxiliary Air Force).

Section 46 and Schedule 7 of the Defence Reform Act 2014 also are in force and provide a power for the Secretary of State to make payments to small and medium-sized employers of reservists who are called out for service. These payments are in addition to the award currently available in respect of replacement costs incurred as a result of the reservist’s absence.

TUPE service provision changes: first define the organised grouping
The EAT has held that a tribunal erred when finding that an employee was assigned to the organised grouping of employees that transferred to a new contractor on a service provision change. The employee was responsible for managing various projects, including the contract that was the subject of the service provision change and other ancillary contracts that did not transfer to the new contractor.

The EAT held that the tribunal should have first defined the organised grouping of employees, and then determined if the employee was assigned to that grouping. Instead, it reached a broad conclusion without distinguishing between the contract that had transferred and the ancillary contracts. The tribunal also appeared to have placed too much emphasis on the percentages put forward by the parties as estimates of time spent by the employee on each contract. Consequently, it was not possible to say whether the tribunal had applied the correct test under TUPE.

Time off for dependants: failure to contact employer as soon as reasonably practicable
The EAT has upheld an employment judge’s decision that an employee was not automatically unfairly dismissed for exercising the right to take time off for dependants. The employee had been taking his heavily pregnant partner to hospital, at first due to illness and then because she had been admitted to give birth. However, he had failed to tell his employer the reason for his absence as soon as it was reasonably practicable to do so.

There have been few appellate authorities on the exercise of the right to take time off for dependants. This case is interesting as the employment judge correctly looked at two occasions that the employee had to take time off. The first was a day on which he took his partner to the hospital several times and the second was the following day, when she was admitted to give birth. On each occasion the employee, whose mobile phone battery had run down, could, and should, have used alternative available means to make contact with his employer, but had failed to do so.

Itemised pay statements: deductions should be explained
An employee had exhausted his sick pay entitlement. When he was absent from work, whether his pay was adjusted for the month-end payroll depended on information being received and processed in time. In months when that information was received too late, the employer adjusted the employee’s next month’s pay. This was a deduction and not, as the tribunal had found, an adjustment.

The deduction to the employee’s pay was shown as a separate entry on his payslip with a minus sign. The EAT held that this did not properly particularise the deduction as required by section 8 and that the employee was entitled to a declaration to this effect. The employer should have included some abbreviated words to make it clear that the sum was recovery of an overpayment. However, the EAT refused to order the employer to pay compensation to the employee since the deductions were apparent from the payslip and their purpose had been explained to him before he commenced proceedings.

National minimum wage

Standard adult rate (minimum hourly rate) Development rate (minimum hourly rate) Young workers rate (minimum hourly rate) Apprenticeship rate (minimum hourly rate) Accommodation offset limit (maximum daily deduction from NMW)
1 October 2014 to 30 September 2015 £6.50 £5.13 £3.79 £2.73 £5.08

Family-friendly rights: further draft regulations and new Acas guide published
The government has published new draft regulations relating to family-friendly rights and Acas has published a new guide to help employers and employees with understanding shared parental leave.

The new regulations extend the existing unpaid parental leave regime to the parents of children aged between five and 18, create new rights for couples adopting a child born to a surrogate mother and extend current adoption rights to individuals adopting a child from outside the UK and fostering children as part of a Fostering for Adoption placement.

The new rights are coming into force on a variety of dates ranging from 25 November 2014 to 5 April 2015.

Click here to look at the ACAS Guide which we think is clear and helpful.

Reasonable adjustments – ignoring a final written warning for sickness absence
The employee had received a final written warning for repeated absences, about 90% of which had been disability-related. He was then dismissed following further absence caused by a shoulder injury that was unrelated to his disability. The EAT rejected the employee’s argument that the employer should have ignored the final written warning when deciding whether to dismiss the employee for the later absence. In the EAT’s view, the mental process of disregarding a warning was not the kind of “step” that is contemplated by section 20(3) of the Equality Act 2010. In any event the tribunal had set out no sustainable basis for concluding that it was reasonable for the employer to disregard the warning, and the fact that it had shown leniency in the past did not mean it was legally bound to do so again regardless of the business impact.

The EAT also rejected the argument that the dismissal was unfair because the employer had failed to reconsider at the time of dismissal whether the earlier final written warning had been justified. There was nothing to suggest the warning had been given in bad faith or was manifestly inappropriate.

Draft guidance on tax-free childcare
The government has published draft guidance on its tax-free child care scheme which is scheduled to commence in autumn 2015. The guidance can be found here.

The guidance includes advice for employers offering childcare vouchers to their employees. It confirms that once the new scheme is in place, employers will not be able to offer new employees childcare vouchers on a tax and NICs exempt basis (see clause 62 of the Bill). An employee who changes employer within the same group is treated as a new employee for these purposes as are employees who move to a different PAYE scheme. Employees must notify employers of their leaving childcare voucher schemes three-months before joining the government’s childcare scheme. For employees within salary sacrifice schemes, this will be classed as a “life event”, which will not call into question the previous salary sacrifice arrangement.

ICO publishes updated code of practice for CCTV and surveillance cameras
The Information Commissioner’s Office (ICO) has published an updated code of practice for CCTV and other types of surveillance cameras. It provides best practice advice, for those involved in operating CCTV and surveillance cameras that view or record individuals’ information, on how to comply with the Data Protection Act 1998. It includes new guidance on how to comply with the Protection of Freedoms Act 2012 and complements the Surveillance Camera Code of Practice.

The code now provides specific guidance on particularly intrusive technological developments that the ICO believes may become increasingly popular, including body worn video, automatic number plate recognition systems, unmanned aerial systems (sometimes referred to as drones), and automated recognition technologies. It also includes an expanded section on handling and responding to data subject access requests.

Organisations should check that their existing policies comply with the new code. In many respects, the code remains the same as its 2008 predecessor, based on compliance with the eight data protection principles. However, in the new code the ICO recognises that surveillance cameras are no longer a passive technology that records and retains images, but a proactive one that can be used to identify people and keep detailed records of their activities.

Tozers has a model policy which we are happy to provide on request and we are also able to help our readers review and update their existing policies for a fixed fee of £250 plus VAT.

The unintended consequence of tax avoidance
The Court of Appeal has upheld the finding that a beauty consultant was not in “employment” under section 83 of the Equality Act 2010 as she did not have a contract of employment or a “contract personally to do work”. She provided her services through a limited company to a business which supplied staff to a third party (a cosmetics company) to work in an airport duty-free outlet.

The court rejected the argument that the EAT’s decision had not given effect to EU law. Personal service and a requirement of subordination to the employer are key ingredients of an employment relationship under EU law, and the employment tribunal had made clear findings of fact that these two criteria were not satisfied. With regard to personal service, there was a power of substitution which was used on occasion. Subordination meant more than a relationship of economic dependency; the finding that the individual was not subject to the outlet’s control meant that she was not generally bound to act on its instructions.

Time spent carrying out trade union activities was not working time
Time spent by trade union representatives attending union meetings was not “working time” within the meaning of the Working Time Regulations 1998. A health and safety representative and a shop steward brought claims against their employer after it refused to take into account time spent on their union activities when calculating the 11 hour rest period that the employees were entitled to within a 24 hour period. The tribunal found that such time could not count as working time, because it was not time spent at their employer’s disposal, nor carrying out their duties, and was not classified as working time under any relevant agreement.

ACAS early conciliation – six month review
From 6 May 2014 most claims brought in the Employment Tribunal must be subject to early conciliation through ACAS. Six months on, ACAS has released data to show the level of effectiveness in the service:

  • Over 37,000 early conciliation notifications have been made (April to September 2014), with one of the parties indicating they did not wish to engage in the conciliation process in about 20% of these cases;
  • Just 18% of cases (April to June 2014) resulted in a formal COT3 settlement;
  • 24% of cases (April to June 2014) progressed to a tribunal claim;
  • 58% of cases (April to June 2014) did not either result in a COT3 settlement or proceed to a tribunal claim.

While some of the 58% of cases may include situations where employer and employee reached an agreement without a formal COT3, this seems a high percentage. It could reflect the cost and stress of tribunal proceedings, the realisation that a claim is weak, or in some cases the speculative nature of the original approach to ACAS.

If the effect is that the weaker cases are removed, we may see an increase in the proportion of issued claims that succeed. Whether this is the case remains to be seen. The cynics amongst us may believe the real reason behind the decline is due to the new fee structure but the figures are interesting food for thought for an employer invited to undertake early conciliation.

Offensive tweets – strictly for the birds
The EAT has held that an employment judge failed to take full account of the public nature of Twitter when finding that an employee’s dismissal for posting offensive tweets was unfair. The judge did not properly consider whether the employee’s purportedly private use of Twitter was truly private, given that he was followed by 65 of his employer’s stores.

The EAT declined to provide any general guidance on dismissal for social media misuse, pointing out that cases are fact-sensitive and that the usual “range of reasonable responses” test applies. The EAT appeared to suggest that Twitter has a more public nature than Facebook, making dismissals relating to offensive tweets potentially easier to defend for employers than a similar post on Facebook.

Regulations introduce two-year limitation period for retrospective holiday pay and other wages claims
The Deduction from Wages (Limitation) Regulations 2014 have been published. The regulations, which are designed to limit the impact on businesses of the EAT’s recent decision in Bear Scotland Ltd v Fulton (and joined cases), impose a two-year limitation period on most unlawful deductions from wages claims, including claims for holiday pay. The new limitation period will apply to claims presented on or after 1 July 2015.

The regulations also provide that regulation 16 of the Working Time Regulations 1998 does not confer a contractual right to paid leave. This is intended to ensure that, in most cases, workers will not be able to avoid the limitations on wages claims in the tribunal by bringing a breach of contract claim in the civil courts. This amendment took effect on 8 January 2015.

Further advice
Please contact our employment team at Broadwalk House, Southernhay West, Exeter EX1 1UA. Call 01392 207020 or email employment@tozers.co.uk

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About the author

Partner in the litigation department specialising in employment law, he is the relationship manager for many of the firm's employment clients