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Oliver McCannn   


Employers Update - July 2011

Welcome to the July edition of Employ!

Keeping you abreast as to developments in the field of HR and employment law.

If you have any questions or wish to explore our employment law service options please contact us - we can tailor a service option to suit your needs!

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

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


In This Edition:

Employ! Email Updates

Employ! is Taylors FREE monthly employment law newsletter which keeps busy HR professionals up to date with developments in the fast-moving world of work. Sign up now to have Employ! sent to you via email each month.

Rare Argument – Taylors Success!

Taylors have successfully represented national sports retailer, JJB Sports Plc, in an unfair dismissal claim where the employee was made redundant without prior consultation and without the opportunity to appeal.

What do I need to know?

Due to legal issues, full details cannot be disclosed at present. However, the Manchester Employment Tribunal accepted the argument that, having regard to the particular facts of the case, consultation and an appeal would have been utterly futile.

Such arguments rarely succeed and should not be seen as a green light to overlook the importance of individual consultation which should apply in most redundancy cases. This case should be confined to its own facts and any future redundancies considered on their own facts, not those of others.

Employers are encouraged to take advice on any proposed redundancies before instigating the process. Note also that Taylors offer a special Redundancy Protection Scheme – see our website for details.

Legal Representation and Disciplinaries!

Over the past 18 months or so, there have been a number of cases which suggest that in some circumstances the nature of a disciplinary process and its implications for the employee were such that Article 6 of the European Convention on Human Rights (right to a fair trial) would be engaged and so support the employee’s right to legal representation.

The common theme was that Article 6 would be engaged where the accusations were so serious that an adverse outcome would effectively debar the individual from working within that profession ever again. This was applied on R v Governors of X School, and Kulkarni v Milton Keynes Hospital.

However, subsequent cases have sought to water down the effect of those decisions with R (Puri) v Bradford Teaching Hospitals NHS Trust and R (on the application of Kirk) v Middlesbrough Borough Council & Ors.

This has been reinforced now after the Supreme Court last month overturned the decision of the Court of Appeal in R v Governors of X School. The Court found that Article 6 was not engaged within internal disciplinary proceedings in relation to a teacher accused of sexual misconduct with a minor. The concluded that the outcome of the disciplinary procedure would not have such a substantial influence or effect on the subsequent barring procedure operated by the ISA, which itself was expected to make its own findings of fact on the available evidence and make its own judgement on the seriousness of the conduct before placing someone on the barred list.

What do I need to know?
This judgment is of particular significance to public sector employers where the application of the European Convention on Human Rights has direct effect. Public sector employers should now be aware that an employee is not automatically entitled to legal representation at a disciplinary hearing, even where that might result the employee being referred to the authorities and potentially placed on the children's barred list.

However the Court did not rule out legal representation completely! It stressed legal representation may be required in limited cases, ie. where the outcome of disciplinary proceedings is sufficiently connected to or would substantially influence an external regulatory body in its own decision-making process.

The Pay Gap!

A court has held that there is no duty to narrow the pay gap between the pay of men and women where that pay gap arises from factors or decisions not tainted by sex.

What do I need to know?
Where a woman is employed to do work which is of equal value to that performed by a man, if any term of her contract of employment is less favourable than a similar term in the man’s contract, the relevant term in the woman’s contract shall be treated as so modified as not to be less favourable.

Accordingly, in the case of less favourable pay, the woman’s contract will be treated as though it had the same pay provisions as contained in the man’s contract. However, establishing that a woman is employed to do work of equal value to that performed by a man will not necessarily lead to the importation into the woman’s contract of what is referred to as an “equality clause”. That is because it is open to the employer to show that the difference in pay or other conditions is explained by something that has nothing to do with sex. So, in an equal value case, if the employer establishes a genuine explanation – not a sham, fraud or pretence - for the variation in the contracts and that that explanation does not involve sex, then that is the end of the matter. In particular, he need not show objective justification. If the employer proves a gender neutral explanation for the difference in pay, that is sufficient.

In this case, an Employment Tribunal had previously held that a disparity in pay between a man and woman who performed work of equal value was originally caused by a TUPE transfer (between 2002 and 2004) and so the current employer was not liable for that disparity during that period (as the disparity was not tainted by sex). However, the Tribunal then went on to hold the employer liable for the disparity post 2004 as they had continued to award pay increases and performance related pay (PRP) bonuses to this individual and had failed to take active steps (such as red circling/freezing the salary of the higher paid male employee) in order to address the pay gap.

The Employment Appeal Tribunal disagreed and held that the current employer was not liable for the disparity in pay post 2004. The pay increases and the PRP bonuses were normal arrangements applied to all employees equally across the board. The cause of the original pay disparity was TUPE and so not related to sex and the continued pay increases and PRP payments which were applied equally to all employees (regardless of sex) did not break that causal connection.

Holiday Law – a Continuing Saga!

One step forward, two steps back - just as we thought matters had settled down with holiday leave another twist in the tale occurs!

What do I need to know?
Last year, we thought we had clarity on the position of annual leave and sickness absence following the developments in Ainsworth v HMRC and Pareda. From those cases we concluded:

  • that annual leave under the Working Time Regulations 1998 does accrue whilst on sick leave
  • where it is not possible to use that annual leave due to sickness before the end of the holiday year, it may be carried over into the next holiday year
  • it is permissible to take holiday whilst off sick
  • where an employee falls ill whilst on holiday leave, then they can insist on such absence being treated as sick leave.

However, the case of KHS AG v Schulte proceeds through the European Court of Justice with the Attorney General having given her opinion, which throws matters into confusion once more.

Here, a German case has referred the issue of whether or not the right to take accrued holiday leave can expire after a period of time. The AG has given her opinion as follows:

  • EU law does not require that workers on long-term sick leave accrue the right to paid annual leave without any time limitations. She said that allowing a worker to take accrued leave several years after the leave year to which it related would not achieve the Directive's purpose of enabling the worker to recuperate from the effort and stresses of that year, which is most effectively met when workers take leave in the year it arises.
  • A national law under which annual leave entitlement expires 18 months after the end of the relevant leave year (effectively giving workers up to two and a half years to use a year's leave entitlement) would be sufficient for the effective exercise of the right to annual leave in cases of long term sick leave. She commented that this was a guideline only, but also expressly mentioned that a period of six months would be insufficient.

This opinion is not binding on the ECJ and so we await greater clarity but this could be at least a favourable twist in the tale for employers!

A Raw Deal?

It has been held that an employee who was dismissed for refusing to accept a 5% pay cut was not unfairly dismissed.

The employer needed to cut costs and increase profits after sales had dropped substantially from the previous year. The business had to maintain at least 2% profit to maintain working. To achieve that, the employer proposed a 5% pay cut across the entirety of its staff. The Claimant refused and was eventually dismissed. At the time of dismissal he was the only one of 80+ employees who refused to accept the pay cut.

What do I need to know?

  • the reason for dismissal was “some other substantial reason”
  • the employer acted reasonably in that there was a genuine business need to reduce costs and that the procedure it adopted leading up to dismissal was reasonable
  • the test of fairness was not whether it was reasonable for the employee to accept lesser terms
  • it was not necessary to prove that the very survival of the business was at stake

This case may prove useful in these continuing difficult economic times to support a unilateral imposition of lesser terms. However, the key to successfully imposing terms is ensuring that there is a sound business reason for what is proposed and that what is proposed and the manner of introducing the new terms is reasonable. Usually this requires careful strategic management from start to finish and taking legal advice is critical to reducing your exposure to claims.

Your Questions Answered

Q. Is it discrimination to simply inform another colleague that one of the members of staff is homosexual?

A. Much depends in what context the discussion arises. If it is a factual discussion with no element of malice or ill purpose, then it will not constitute either harassment or direct discrimination.

However, if the conversation is held with ill purpose, perhaps to “out” the colleague against his or her will or to create an intimidating environment, then at that point the conversation may overstep the line.

Q. I have an employee who is on long term sick. They are currently in receipt of permanent health insurance benefits. I have heard that you cannot dismiss an employee whilst they are in receipt of such benefits – is this correct?

A. This is a complex legal area, in relation to which you will need to obtain careful legal guidance. There are restrictions on your ability to dismiss an employee in receipt of PHI payments. However this may not necessarily apply in all cases and careful examination of the employee’s contract of employment, the staff handbook and the PHI scheme will be critical to determine what, if any, options you have to dismiss.

Note also that if dismissal is an option, there must still be a fair reason and procedure adopted and you are almost certainly required to comply with your obligations to make reasonable adjustments under the Equality Act 2010 as well.

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