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Employment Law – A Look forward to 2015

24/03/2015

The direction of Employment Law in 2015 and thereafter rests somewhat in the hands of the general public when it’s decided who will form the next Government following the General Election on 7 May. However the combination of existing Bills in Parliament and current cases for which decisions are expected this year already provides some interesting material which employers should be aware of in 2015.

Collective Redundancy Consultation

The EAT in USDAW v Ethel Austin Ltd, or the ‘Woolworths case’ as it is better known, held that the words ‘at one establishment’ in S.188 of Trade Union and Labour Relations (Consolidation) Act 1992 (“TULRCA”) were incompatible with the relevant European Directive and should therefore be disregarded for the purposes of any collective redundancy (i.e. a redundancy involving 20 or more employees). Accordingly, there was a duty to collectively consult with all Woolworth employees and not just those based at stores where there were 20 or more employees facing redundancy.

The EAT granted the Secretary of State (as any additional protective awards would be paid out of the National Insurance Fund (“NIF”)) leave to appeal to the Court of Appeal. The Secretary of State requested that the case be stayed pending the Court of Justice of the European Union (“ECJ”) ruling on a Northern Ireland case (Lyttle v Bluebird UK Bidco 2) which had referred three questions to the ECJ for determination on domestic legislation that is in substantially the same terms as S.188 TULRCA. However the Court of Appeal declined to stay the case and instead referred it to the ECJ, suggesting that it be heard with Lyttle so the ECJ had the benefit of hearing claims from legally represented employees (the employees in Lyttle do not have the benefit of legal representation in the ECJ).

Should the EAT’s decision ultimately be upheld, there are huge potential ramifications not only in respect of the protective awards that would need to be paid out of the NIF but also in respect of future redundancies carried out by employers at various locations. Accordingly the ECJ’s decision is one that is hotly anticipated by employers who engage employees at various locations.

Employers can take some comfort from the Advocate General’s Opinion regarding the Woolworths case, Lyttle and a similar Spanish case Canas v Nexea which was delivered on the 5 February 2015. Somewhat surprisingly, this opined that the relevant European Directive does not require employers to aggregate the number of dismissals across all of their establishments when determining whether the threshold for collective redundancy consultation is met. Whilst the decision of the ECJ is still awaited it is expected that it will follow the opinion of the Advocate General, meaning employers will be able to continue to base their calculations for the purposes of collective consultation on the number of employees it proposes to dismiss as redundant at each shop, office, warehouse etc. rather than aggregating them.

Judicial Review of Unfair Dismissal Compensation Cap

From 29 July 2013 the cap on Unfair Dismissal compensation was reformed so that the maximum award that can be made to a Claimant for a claim of ‘ordinary’ Unfair Dismissal (as opposed to a claim which removes the cap completely such as whistleblowing or discriminatory dismissal) is the lower of 52 weeks’ actual pay or the numerical cap (currently £76,574). This cap was challenged by a small firm of solicitors on the basis that it indirectly discriminated against older people as they were more likely to have difficulties finding new employment following dismissal and therefore should be eligible for more compensation without the statutory cap.

This application was dismissed by the High Court on the grounds that it did not have reasonable prospects of success and was refused leave to appeal. Instead the Claimant applied to the Court of Appeal for permission to appeal the High Court’s decision and that application was heard between 25 July and 24 October 2014. The outcome is expected to be published ‘sometime’ in 2015.

Even if the application to the Court of Appeal is successful it appears that there will be a long uphill struggle to successfully argue that this cap should be removed entirely. It remains to be seen however whether a Labour Government, should there be one after May 2015, would look to revert to simply having a numerical cap only.

Holiday Pay

The Working Time Regulations 1998 (the “WTR”), which are derived from the Working Time Directive (“WTD”) provide that workers are entitled to be paid during statutory annual leave at a rate of a week’s pay for a week’s leave calculated in accordance with the Employment Rights Act 1996. Having previously held that workers must continue to receive their normal remuneration during their annual leave, the ECJ, in Williams and others v British Airways plc held that ‘normal remuneration’ covered not only basic salary but also remuneration which is intrinsically linked to the performance of tasks which a worker is contractually obliged to perform and payments that relate to that worker’s professional or personal status.

Whilst this case was concerned with the Aviation Directive and not the WTD, the ECJ held that the same principles applied to both.

In the subsequent case of Lock v British Gas Trading Ltd the ECJ applied the decision in Williams to the WTD. It held that pay under the WTD cannot be calculated based on basic salary alone, where a worker’s normal remuneration includes commission determined with reference to sales achieved. Lock has been returned to the Employment Tribunal where it will be decided how much holiday pay Mr Lock was entitled to.

The EAT has subsequently considered similar matters; such as whether holiday pay should include an amount in respect of a worker’s overtime in a number of conjoined appeals including Bear Scotland v Fulton and another. The EAT in that case held that the workers in question should be regarded as having no normal working hours and therefore their holiday pay should be calculated on the basis of average earnings within the last 12 weeks (including query non-guaranteed overtime). The outcome of this decision was considered in a previous ebulletin (http://rosenblatt-law.co.uk/bulletins/employment-law-review-2014/).

These decisions have raised serious questions about whether payments in respect of basic pay alone are sufficient to satisfy an employer’s obligation of paying employees holiday pay. The situation remains very unclear. Accordingly the Employment Tribunal has been, and will likely continue to be, faced with a variety of cases challenging employers’ calculations of holiday pay and querying what other aspects of remuneration should be included in the calculation. What can be said with some certainty is that if an employee’s remuneration consistently and regularly contains sums in excess of their basic salary entitlement then their employer should seriously and carefully consider what constitutes a normal week’s pay for the purposes of calculating appropriate holiday pay.

Shared Parental Leave

Shared parental leave and pay came into force 1 December 2014 but only becomes available to employees in respect of children expected or due on or after 5 April 2015 or who have a child placed with them for adoption after this date. Eligible employees will be entitled to share a maximum of 52 weeks’ leave and 39 weeks’ statutory pay.

Zero Hours Contracts

Zero hours contracts do not guarantee workers any work but can currently prohibit them from working elsewhere. Following significant coverage in the media there has been a proposal to ban such exclusivity clauses in zero hours contracts and this proposal is contained in the Small Business, Enterprise and Employment Bill 2014-2015 (the “Bill”). The Bill is expected to complete its legislative passage before Parliament dissolves on 30 March 2015 but Commencement Orders (and therefore effective legislation) are unlikely to be in place until shortly after the General Election at the earliest.

Under the current proposals, the legislation will give the Secretary of State the power to create anti-avoidance measures regarding exclusivity clauses in zero hours contracts. These ‘anti-avoidance’ measures are currently contained in draft regulations which propose to protect zero hours workers, and workers who work under a ‘prescribed contract’, from suffering a detriment as a result of performing work under another contract.

The draft regulations define a ‘prescribed contract’ as a contract which guarantees less than a certain level of weekly income. This minimum income will be calculated by reference to an agreed number of hours multiplied by the minimum wage. Exclusivity clauses contained in ‘prescribed contracts’ would therefore be unenforceable in the same way as exclusivity clauses in zero hours contracts. However, any individual who receives basic pay above £20/hour under their contract will be exempt from the prohibition.

Caste Discrimination

Section 9(1) of the Equality Act 2010 provides a non-exhaustive definition of the protected characteristic of race and includes (a) colour; (b) nationality; and (c) ethnic or national origins. At present ‘caste’ is not specifically included.

However, the EAT in Chandhok and another v Tirkey held that the definition of race in the Equality Act is wide enough to cover a claim for caste discrimination as it fell under the ‘ethnic’ or ‘national origin’ limb of race discrimination.

Obesity as a disability

In the European case of FOA, acting on behalf of Kaltoft v Kommunernes Landsforening, acting on behalf of the Municipality of Billund C-354/13 the ECJ held that there is no general stand-alone principle prohibiting discrimination on the ground of obesity under EU law. However, severe or morbid obesity which hinders an individual’s full and effective participation in professional life on an equal basis with other workers can in certain circumstances amount to a disability. Therefore, depending on the severity of the condition and whether it creates limitations for the individual, it is possible that obesity can satisfy the definition of disability and thereby provide protection from discrimination under EU law.

The Northern Ireland Industrial Tribunal applied this decision in Bickerstaff v Butcher NIIT/92/14. A claim of harassment related to a disability was upheld on the basis that the Claimant’s morbid obesity condition constituted a disability. However, for those concerned that this decision may lead to an avalanche of successful obesity-based disability discrimination claims it is important to note (i) this claim was against an individual Respondent only (following settlement of the claims against the Claimant’s former employer) and (ii) that no response to the claim by the Respondent was even presented to the Tribunal.

 

Please note that this summary is not intended to be exhaustive and should not be taken as legal advice on any of the subjects covered. If however you do require legal advice on the subjects covered or any employment law matters please contact Richard Freedman on 020 7955 1513 or richardf@rosenblatt-law.co.uk

 

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