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The Employers Update - February 2010

Welcome to February’s edition of Employ with ongoing updates on developments in HR and Employment Law. If you wish to discuss any of the matters raised within this Employ please do not hesitate to contact a member of the Employment Team.

We would also like to bring to your attention that the Taylors seminar, in conjunction with AFR Consulting, on Interviewing and Recruitment has proven to be so popular that we are now running a third session on Tuesday 16th March at Stanley House, Mellor between 8:15am and 12noon.

The event not only considers some of the many legal issues which can arise throughout the recruitment process but also focuses on Competency Based Interviewing (presented by Chris Reynolds, Assessment and Development Profession at RPK).

To book please contact Oliver McCann at oliver.mccann@taylors.co.uk or on 0844 8000 263.

Oliver McCann - Partner and Head of Employment
James Bellamy - Employment Solicitor

Tel: 0844 8000 263
Email: oliver.mccann@taylors.co.uk


In This Edition:

» A right to vary pay?
» Holiday leave – the ongoing saga!
» Statutory payments based on age maybe unlawful!
» Forthcoming changes to law!
» Your Questions Answered

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A right to vary pay?

It has been a long established position that terms incorporated into Employment contracts, especially those that go to the root of it, cannot be changed unilaterally. To do so exposes the Employer to a claim for breach of contract and constructive Unfair Dismissal.

However, to what extent can an employer rely on a clause to vary terms and conditions of employment be relied upon where it is contained in the contract of employment or even staff handbook?

A recent case saw the EAT dismiss an appeal by 700 Asda employees who brought claims following their employer unilaterally altering their pay and work regimes.

Asda took the decision to rely on the contractual clause contained in the Handbook in order to move a minority of staff on to a new pay regime which had been accepted by the majority of Asda staff voluntarily in order to ensure harmony of terms across all staff. The EAT stated a number of factors that had to be present that granted the right:

  1. There had to be a clearly defined clause in either the employment contract or the staff handbook that allowed the employer to unilaterally alter the terms.
  2. The Employer must not act unreasonably, capriciously or arbitrarily so as to breach the mutual trust and confidence. In this case they consulted with all of their employees prior to making the changes and the majority of staff had accepted the new pay regime.
  3. The power was exercised properly. Her it was exercised to meet the changing demands of the business.

As such whilst this is welcome news for Employers it is important to ensure that clear and unambiguous clauses are inserted into the contracts of employment or the Staff Handbook and that proper processes are followed throughout before you impose the unilateral variation.

Holiday leave – the ongoing saga!

The recent case law on entitlement to holidays whilst sick has been well documented with the cases of Stringer and most recently Pereda being decided in the European courts.

It had been thought that English law under the Working Time Regulations 1998 are incompatible with the recent European court decisions because they do not allow leave to be carried over in to subsequent leave years and nor do they allow for a payment in lieu of untaken leave except upon termination. As such what is the position with an employee who is on long term sick, unable to take holiday leave in a particular leave year?

An employment tribunal found that the WTR which provides that entitlement to leave under the Regulations must be exercised in the year of accrual, should be interpreted consistently with the Directive so far as possible. Following Pereda, national law is required to permit an employee who falls sick during annual leave to take that annual leave at a different time, and if necessary in the following leave year.

In the tribunal's opinion, it is consistent with the purpose of health, safety and welfare of workers (the main thrust behind the Working Time Directive) to allow workers who did not have a period of leisure due to ill health to take that leave in the following year if necessary.

Statutory payments based on age maybe unlawful!

The European Court of Justice has recently made a decision that German national law was incompatible with the EU Equal Treatment Directive (“the Directive”) and further that an individual can enforce its rights under general principles under the Directive. National Courts must ensure the protection afforded under the Directive is effective!

German law states that statutory notice periods to terminate employment are to be calculated by disregarding service accrued before the age of 25. The complainant was dismisses at 28 years of age, having worked for her employer since age 18. Her employer calculated her notice entitlement in accordance with national law by disregarding 7 years service accrued up to age 25. The complainant disputed this stating that statutory notice periods were age discriminatory and should be disapplied. She succeeded the ECJ concluding that the statutory notice periods could not be objectively justified.

This decision could see a challenge to the way in which redundancy pay and basic awards are calculated under UK law which is based on age during each year of service. Can it really be objectively justified?? Only time will tell, but it is highly probable that a challenge will be mounted in the near future following this case.

Forthcoming changes to law!

Some upcoming changes to the law you should be aware of:


  1. Paternity Leave
    Following the governments u turn on the additional paternity leave due to the current economic crisis, the new Paternity Leave Regulations 2010 come into force this year. It allows fathers or partners of mothers or adopters, to take paternity leave of up to 26 weeks in the first year of their child’s life or the first year after the child’s placement for adoption. The additional paternity leave has effect in relation to children whose expected week of birth is on or after 3 April 2011. There are also related changes to the entitlement to paternity pay.
  2. Employee Study and Training (Eligibility, Complaints and Remedies) Regulations 2010
    A right to request time off to undertake study or training is introduced for employees in organisations with 250 or more employees. Employees’ with 26 weeks continuous service will be entitled to make such requests. Employers will be obliged to consider seriously requests that they receive, but will be able to refuse a request where there is a good business reason for doing so. The maximum amount of compensation that may be awarded where an employer does not comply with the procedural requirements in respect of a request for time off to train, or refuses an application on impermissible grounds, is eight weeks' pay. The procedure to be followed requires either a meeting be held to discuss the request or the request be agreed within 28 days of receipt of the request and also sets out how the decision on the request must be notified.
  3. Normal minimum pension age rises to 55
    The minimum age at which people can start to receive pension payments from an occupational or personal pension scheme, rises from 50 to 55.
  4. Registration with the Independent Safeguarding Authority
    Further implementation of the Safeguarding Vulnerable Groups Act 2006 includes voluntary registration with the Independent Safeguarding Authority for all new entrants from 26 July 2010. Employers must check that they are registered from 1 November 2010. Individuals already working in a regulated activity and who have not moved into a new role with a new employer will be able to apply for registration from 1 April 2011, with mandatory registration by 31 July 2015.
  5. Whistle blowing matters
    With effect April 2010 Employment Tribunals will have the power to pass whistle blowing allegations arising during claims to a prescribed regulator i.e. Health and Safety Executive. The claim form will be amended to specifically identify whether any allegations of whistle blowing are being made and if so whether they wish the prescribed regulator to be advised. Both parties will be contacted by the Employment Tribunal to advise when this has been done.

Your Questions Answered

1. Please could you explain how the new Fit note system is to work when it comes in effect 6th April 2010?

You are not alone in not understanding fully how the system is to work in practice. What we do know is:

  • The fit note will list common changes which could be made to an employee’s work environment to help facilitate a return to work. Where a GP considers another option there is an opportunity for the GP to make comments.
  • There will no longer be a fit for work option as GP’s have insufficient knowledge of the individuals job to make that determination
  • The fit note will state “you maybe fit for work taking into account the advice” leaving it to Employers, in consultation with the Employee, to make the decision on accommodating changes to facilitate a return to work
  • Maximum length of a fit note will be 3 months in the first 6 months of a health condition
  • If an employer cannot facilitate a change or adjustment then the existing statement from the GP is sufficient evidence to establish that an employee has a health condition preventing them from working

Further guidance is expected shortly and we will provide a link to this once it is available. However we can envisage disputes between employees’ and employers on whether or adjustments/changes can in fact be made to facilitate a return to work. For example, if an employer believes it can facilitate a return to work by making temporary changes but the employee believes they are not well enough for that will that mean the employer is entitled to discipline the employee for failing to co operate or being on unauthorised absences?

2. We run a security business and have recently lost a contract with a client after they decided to operate the services in house. We alleged that the TUPE 2006 regulations would apply but they refuse to accept this stating that they have ceased the type of service we operated an replaced it with one that is entirely different. Can the client get away with this as we thought TUPE covered contracting – in situations?

The client may be correct. Contracting-in is caught by TUPE 2006 as a service provision change. However it is necessary that the “activities” carried out by the outgoing contractor are to be carried on by the client or a new contractor i.e. in other words there is seamless continuity of the activities. Where there activities or service being carried on are materially different to that operated by the outgoing contractor then there are arguments that TUPE 2006 does not apply. Each case will be determined on its own individual facts and will require an analysis as to whether the activities carried on by the new contractor, or client, are fundamentally or essentially the same as those carried out by the outgoing contractor.

Clearly this leaves the matter open to abuse from those Companies wishing to avoid the application of TUPE 2006 and so it will be necessary to investigate alleged differences in the activities to ensure they are not a sham.

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