ROYDS Employment Department Legal Update

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2 Crane Court _ Fleet Street _ London EC4A 2BL DX102 Chancery Lane Tel: +44 (0)20 7583 2222 _ Fax +44 (0)20 7583 2034

www.royds.com

ROYDS Employment Department Legal Update JULY 2007

NEWS •

The statutory entitlement to holidays is increasing. The government has published in draft the Working Time (Amendment) Regulations 2007 which will operate to increase the statutory minimum holiday entitlement, initially to 4.8 weeks (an extra 4 days) from October 1st 2007 and then to 5.6 weeks (a further 4 days) from the 1st April 2009. This is to put into practice the government's manifesto of making statutory holidays additional to, rather than inclusive of, bank holidays. In practice, most employers do this anyway so it will make little, if any, difference. However, for those employers who do not, they will need to take account of the increase, firstly, from the 1st October this year and secondly from the 1st April 2009 and build this into their holiday allowance. Complications arise with regard to calculating the pro-rata entitlement to the extra leave. The Regulations make provision that where the leave year begins before the 1st October 2007, the individual is entitled to such a proportion of 0.8 weeks' extra leave as is equivalent to the proportion of the leave year that falls after the 1st October. There are similar provisions for the increase in April 2009 and payment in lieu of the initial increase (0.8 weeks) is allowed up until that date. In order to assist with calculation, the DTI has provided a calculator on its website. This can be found at www.dti.gov/uk/employment/holidays/page40455.html.



The Tribunals, Courts and Enforcement Act 2007 has received Royal assent although the commencement date is still not yet known. The importance of this is that Tribunal Chairmen will now be called "Employment Judges"; and it makes enforcement of Tribunal awards easier.

Partners: R J Lloyd-Davies, P D Wootton, R M Woodman, J W R Millar Craig, J M Cassidy, S Wilkinson, J D North, J N Rampton, P W Hart, A H Seymour, J M H Buckland, C B Rodda, S B Welfare, Gemma Webb, F R Davey. Vivien Davies. Hazel French, J M Sawer, S McKirgan Senior Associate: Dr R Clark Consultant: A M Alexander, A A Maberly, C R Wright Privy Council Agents • Royds is regulated by The Law Society • A member of Inteleges International Association of Law Firms – www.inteleges.com Associated Offices in: Barcelona, Beirut, Berlin, Brussels, Dublin, Hamburg, Helseinki, Kiev, Lisbon, Lugano, Luxemburg, Malmo, Mexico City, Milan, Montreal, Mumbai, New York, Paris, Prague, Rotterdam, Tel Aviv, Tortola, Zurich Surrey Office: 18 Crown Lane, Morden Surrey, SM4 5BS DX41652 Morden Tel: 0208 542 1067

ROYDS Continuation Page No. 2 ___________________________________________________________________________ • The consultation on resolving disputes in the workplace (effectively about the repeal and replacement of the statutory dispute dismissal procedures) has now closed. It appears that the majority are of the view that the Regulations should be repealed but there is considerable disparity about what should replace them. •

ACAS has reported a fall in Tribunal claims – but the main reason for this is a decline in the number of equal pay and working time claims. Unfair dismissal claims are the most common area of dispute. So far, there has not been the predicted explosion of age discrimination claims.



The Corporate Manslaughter Act 2007 has received Royal Assent. It comes into force on the 6th April 2008 and creates a new offence of corporate manslaughter in England, Wales and Northern Ireland and corporate homicide in Scotland. This will make it easier to prosecute organisations which cause deaths by a failure in management of health and safety. If found liable, they will be subject to unlimited fines. However, Company Directors will not be personally liable for such failures.



The National Minimum Wage Act 1998 (Amendment) Regulations 2007 came into force on the 17th July 2007. In particular, they provide an exclusion from qualifying for the national minimum wage for those aged 26 or over who are undertaking a course of higher education requiring attendance for a period of work experience.

Commentary 

Disability and Medical Reports

In Spence –v- Intype Libra Ltd, the EAT has held that the failure by an employer to obtain an up to date medical report before dismissing a disabled employee was not on its own a failure of the duty to make reasonable adjustments. The issue was whether or not the adjustments had themselves been made. Separately, with regard to whether or not the condition is long term, the EAT held that the Tribunal should have disregarded events which occurred after the date on which the alleged discrimination occurred. Partners: R J Lloyd-Davies, P D Wootton, C R Wright, R M Woodman, J W R Millar Craig, J M Cassidy, S Wilkinson, J D North, J N Rampton, P W Hart, A H Seymour, J M H Buckland, C B Rodda, S B Welfare, Gemma Webb, F R Davey. Vivien Davies. Hazel French Senior Associate: Dr R Clark Consultant: A M Alexander, , A S Finlay. A A Maberly, C De Wolfe Privy Council Agents • Royds is regulated by The Law Society • A member of Inteleges International Association of Law Firms – www.inteleges.com Associated Offices in: Barcelona, Beirut, Berlin, Brussels, Dublin, Hamburg, Helseinki, Kiev, Lisbon, Lugano, Luxemburg, Malmo, Mexico City, Milan, Montreal, Mumbai, New York, Paris, Prague, Rotterdam, Tel Aviv, Tortola, Zurich Surrey Office: 18 Crown Lane, Morden Surrey, SM4 5BS DX41652 Morden Tel: 0208 542 1067

ROYDS Continuation Page No. 3 ___________________________________________________________________________  False Warranties in Settlement Agreements In Collidge –v- Freeport plc, the High Court has held that an employee who entered into a settlement agreement with the employer falsely warranting that he was unaware of circumstances that would have amounted to a repudiatory breach of contract entitling his employer to dismiss him without notice, was not entitled to receive payment of the settlement sum. Among the terms of the settlement agreement, which provided for payment of a sum in full and final settlement of all claims, was a term that "as a strict condition" of the agreement, the employee warranted that he was unaware of any circumstances which would constitute a repudiatory breach which would entitle the employer to dismiss him. The payment was made in reliance (among other things) on that warranty. Subsequent to signing the agreement the employer found out that the warranty was false and refused to pay. The caveat comment on this particular case is that the employer, at the time of entering into the agreement, had suspicions that the employee might be providing a false warranty in this regard. The possibility remains therefore that an employer might enter into a settlement agreement knowing that the employee is giving false warranties, "safe" in the knowledge that it will not be required to pay because it will subsequently assert that the warranties given were false. This may be an academic comment (!) but it is certainly worth ensuring that all compromise agreements contain conditions for payment linked to such warranties. 

Constructive Dismissal – Grievance & Compensation

The case of Gab Robbins (UK) Ltd –v- Triggs, in the EAT, examined constructive unfair dismissal by reason of failure to conduct an adequate grievance procedure, and also the issue of compensation for constructive dismissal where the employee was off sick at the time. The case surrounded an overworked secretary who was signed off sick and lodged a grievance for bullying and overwork. The Tribunal, backed up by the EAT, found that the Claimant's treatment, culminating in the final straw of an inadequate investigation into her complaints, amounted constructive unfair dismissal. The EAT held that the argument of whether or not the employer's handling of the grievance fell within the "range of reasonable responses" (which had been argued by the employer) did not apply here, where the failings in the grievance procedure Partners: R J Lloyd-Davies, P D Wootton, C R Wright, R M Woodman, J W R Millar Craig, J M Cassidy, S Wilkinson, J D North, J N Rampton, P W Hart, A H Seymour, J M H Buckland, C B Rodda, S B Welfare, Gemma Webb, F R Davey. Vivien Davies. Hazel French Senior Associate: Dr R Clark Consultant: A M Alexander, , A S Finlay. A A Maberly, C De Wolfe Privy Council Agents • Royds is regulated by The Law Society • A member of Inteleges International Association of Law Firms – www.inteleges.com Associated Offices in: Barcelona, Beirut, Berlin, Brussels, Dublin, Hamburg, Helseinki, Kiev, Lisbon, Lugano, Luxemburg, Malmo, Mexico City, Milan, Montreal, Mumbai, New York, Paris, Prague, Rotterdam, Tel Aviv, Tortola, Zurich Surrey Office: 18 Crown Lane, Morden Surrey, SM4 5BS DX41652 Morden Tel: 0208 542 1067

ROYDS Continuation Page No. 4 ___________________________________________________________________________ were the final straw of cumulative bad treatment. With regard to the award for constructive unfair dismissal, the employer argued that her losses did not stem from the constructive dismissal because she had been off sick since September 2004 and was not constructively dismissed until March 2005. Therefore it argued that her losses could not flow from the constructive dismissal. The EAT however held that, because constructive dismissal consists firstly, of repudiatory conduct by the employer (the breach), and secondly of acceptance of that breach, the employer's breach here (the repudiatory conduct) had caused the illness in September 2004, and the employee had accepted that breach in March 2005. It therefore followed that her losses stemmed from the breach of the implied term caused by the employer's course of conduct and that she was therefore entitled to losses. 

Foreign Nationals as Employees of Agency

In Consistent Group Ltd –v- (1) Kalwak & Others (2) Welsh Country Foods Ltd, the EAT has upheld a Tribunal decision that staff supplied by an agency to work for a third party were employees of the agency. The reason for this is that the EAT found the agency provided accommodation and transport for the foreign national workers and as such exercised an exceptional level of economic control over them sufficient to give rise to a contract of employment, even though it did not manage their day-to-day activities. This case has implications for those who engage foreign nationals through an agency, albeit the EAT commented that the facts in this case were exceptional because of the extremely high degree of control exercised over the foreign nationals by the agency. Nonetheless, the case is worth noting. 

Discrimination & Grievance Procedures

In a pre-hearing review, the Claimant, Christine Odoemelam, had her claims for race discrimination struck out on the basis that the Tribunal had no jurisdiction to hear them because she had not lodged a grievance under Section 32 of the Employment Act 2002. The EAT (to whom she appealed) found that she had not raised a grievance with her employer about her allegations of race discrimination on the basis that she had not spelt out in the letter (which Partners: R J Lloyd-Davies, P D Wootton, C R Wright, R M Woodman, J W R Millar Craig, J M Cassidy, S Wilkinson, J D North, J N Rampton, P W Hart, A H Seymour, J M H Buckland, C B Rodda, S B Welfare, Gemma Webb, F R Davey. Vivien Davies. Hazel French Senior Associate: Dr R Clark Consultant: A M Alexander, , A S Finlay. A A Maberly, C De Wolfe Privy Council Agents • Royds is regulated by The Law Society • A member of Inteleges International Association of Law Firms – www.inteleges.com Associated Offices in: Barcelona, Beirut, Berlin, Brussels, Dublin, Hamburg, Helseinki, Kiev, Lisbon, Lugano, Luxemburg, Malmo, Mexico City, Milan, Montreal, Mumbai, New York, Paris, Prague, Rotterdam, Tel Aviv, Tortola, Zurich Surrey Office: 18 Crown Lane, Morden Surrey, SM4 5BS DX41652 Morden Tel: 0208 542 1067

ROYDS Continuation Page No. 5 ___________________________________________________________________________ purported to comprise the grievance) the specific allegation of less favourable treatment which was set out in the Tribunal Claim Form. The other issue dealt with by the EAT was whether there was a requirement for her to raise a grievance under Section 32 of the EA 2002 where claims are brought against co-workers. Employees may bring claims against both the employer and individual staff of the employer for discrimination or victimisation. The claim may be either/or, or both. As against the employer, a grievance needs to be lodged. The question was whether a grievance should also be lodged against the fellow employees. The argument ranged around the issue of vicarious liability of the employer i.e. if the employer is deemed to be vicariously liable for the acts of the employees, the discriminatory act could also be an act of the employer as well as the co-worker. Therefore, ran the argument, a grievance should be lodged against the employees as well. The decision of the EAT was given on the basis that just because the co-worker's act was treated as the employer's for the purposes of rendering the employer vicariously liable, this did not mean that the discriminatory acts amounted to "action by the employer" such as to render the acts those of the employer and so require a grievance to be lodged. Where an employee acts outside the work environment, the employer is not vicariously liable and therefore an employee would not be able to bring a claim for discrimination against that co-worker in such a situation. The EAT decision was that an employee should not be required to raise a grievance against co-workers in order for the Tribunal to have jurisdiction to hear his or her complaint. 

Illegality

In Enfield Technical Services –v- Payne/Grace –v- BF Components Ltd, the EAT has clarified the doctrine of illegality. It held that in order to defeat an unfair dismissal claim on the grounds of an illegal contract of employment there must be "some form of misrepresentation [or] some attempt to conceal the true facts of the relationship". The EAT held that the fact the parties had wrongly labelled the relationship, or entered into an arrangement which had the effect of depriving the Inland Revenue of tax, was not enough to render the contract unlawful. Illegality has to have some deliberate attempt to conceal the true facts of the employment relationship. 

Information & Consultation

Partners: R J Lloyd-Davies, P D Wootton, C R Wright, R M Woodman, J W R Millar Craig, J M Cassidy, S Wilkinson, J D North, J N Rampton, P W Hart, A H Seymour, J M H Buckland, C B Rodda, S B Welfare, Gemma Webb, F R Davey. Vivien Davies. Hazel French Senior Associate: Dr R Clark Consultant: A M Alexander, , A S Finlay. A A Maberly, C De Wolfe Privy Council Agents • Royds is regulated by The Law Society • A member of Inteleges International Association of Law Firms – www.inteleges.com Associated Offices in: Barcelona, Beirut, Berlin, Brussels, Dublin, Hamburg, Helseinki, Kiev, Lisbon, Lugano, Luxemburg, Malmo, Mexico City, Milan, Montreal, Mumbai, New York, Paris, Prague, Rotterdam, Tel Aviv, Tortola, Zurich Surrey Office: 18 Crown Lane, Morden Surrey, SM4 5BS DX41652 Morden Tel: 0208 542 1067

ROYDS Continuation Page No. 6 ___________________________________________________________________________ A first penalty notice for a failure to inform and consult has been issued by the EAT under the Information & Consultation of Employees Regulations 2004. The case of AMICUS –vMacMillan Publishers Ltd came before the EAT as a result of AMICUS' first complaint under the Regulations which was upheld by this CAC in February 2006. A subsequent complaint was also upheld in February 2007. However the CAC has no power to impose a sanction, requiring the applicant instead to apply to the EAT for the issue of a penalty notice. The EAT awarded £55,000, on the basis that they wanted an award which would deter others from overtly failing to comply with the Regulations but at the same time reflected the fact that the breach was not the most serious which could have been committed.



Dyslexia as a Disability

In Patterson –v- Commissioner of Police for the Metropolis, the EAT has overturned a Tribunal decision that a policeman with mild Dyslexia who needed 25% longer than non-Dyslexic candidates to complete an examination, was not disabled. The EAT held that the Tribunal should compare what the individual could do and would be able to do absent the impairment in determining whether or not he is disabled, rather than comparing his performance to the average person in the population as the Tribunal had done. 

Victimisation and Burden of Proof

In Oyarce –v- Cheshire County Council, the EAT has confirmed that the reverse burden of proof (the shift of the burden proof on to the Respondent) to show that the alleged discriminatory acts did not occur (or if they did they were not for a discriminatory reason) in race discrimination does not apply to claims for victimisation on the grounds of race. This reversal of the burden of proof applies to direct and indirect discrimination but not victimisation. It should be noted that this decision only applies to victimisation on the grounds of race and not any other victimisation (i.e. sex, orientation etc.). 

Collective Consultation – a numbers game

Partners: R J Lloyd-Davies, P D Wootton, C R Wright, R M Woodman, J W R Millar Craig, J M Cassidy, S Wilkinson, J D North, J N Rampton, P W Hart, A H Seymour, J M H Buckland, C B Rodda, S B Welfare, Gemma Webb, F R Davey. Vivien Davies. Hazel French Senior Associate: Dr R Clark Consultant: A M Alexander, , A S Finlay. A A Maberly, C De Wolfe Privy Council Agents • Royds is regulated by The Law Society • A member of Inteleges International Association of Law Firms – www.inteleges.com Associated Offices in: Barcelona, Beirut, Berlin, Brussels, Dublin, Hamburg, Helseinki, Kiev, Lisbon, Lugano, Luxemburg, Malmo, Mexico City, Milan, Montreal, Mumbai, New York, Paris, Prague, Rotterdam, Tel Aviv, Tortola, Zurich Surrey Office: 18 Crown Lane, Morden Surrey, SM4 5BS DX41652 Morden Tel: 0208 542 1067

ROYDS Continuation Page No. 7 ___________________________________________________________________________ As everyone knows, if an employer proposes to make 20 people redundant within a 90 day period, this triggers the minimum one month consultation period. In Optare Group –v- TGWU, the employer made 17 compulsory redundancies straight on the back of 3 voluntary ones. When the unions objected that the consultation provisions had not been complied with, the employer responded that the 3 voluntary redundancies had left themselves and that they had not proposed to dismiss them. Both the Tribunal and the EAT disagreed on the basis of asking the question, who was really responsible for the dismissals. It concluded that it was evident that the employer had intended to make 20 people redundant within a 90 day period and therefore the collective consultation provisions were triggered. This is a warning to any employers who try to get around the collective consultation requirements by excluding those who apply for voluntary redundancy from the numbers affected. 

SSP and Agency Workers

The Court of Appeal has upheld a High Court decision that agency workers whose agency contracts are for a specific period of 3 months or less are not entitled to statutory sick pay. In The Commissioners for Her Majesty's Revenue & Customs –v- Thorn Baker Ltd, the Court of Appeal held that agency workers may be entitled to SSP if, in the one contract they:•

Work longer than the original period and the total period worked exceeds 3 months.



The contract is extended for more than 3 months.

The Revenue has however confirmed that agency workers with contracts of less than 3 months can become entitled to SSP if they have another contract following on from the first, separated by 8 weeks or less and:•

The total length of the contracts exceeds 13 weeks.



The period actually worked exceeds 13 weeks.

Partners: R J Lloyd-Davies, P D Wootton, C R Wright, R M Woodman, J W R Millar Craig, J M Cassidy, S Wilkinson, J D North, J N Rampton, P W Hart, A H Seymour, J M H Buckland, C B Rodda, S B Welfare, Gemma Webb, F R Davey. Vivien Davies. Hazel French Senior Associate: Dr R Clark Consultant: A M Alexander, , A S Finlay. A A Maberly, C De Wolfe Privy Council Agents • Royds is regulated by The Law Society • A member of Inteleges International Association of Law Firms – www.inteleges.com Associated Offices in: Barcelona, Beirut, Berlin, Brussels, Dublin, Hamburg, Helseinki, Kiev, Lisbon, Lugano, Luxemburg, Malmo, Mexico City, Milan, Montreal, Mumbai, New York, Paris, Prague, Rotterdam, Tel Aviv, Tortola, Zurich Surrey Office: 18 Crown Lane, Morden Surrey, SM4 5BS DX41652 Morden Tel: 0208 542 1067

ROYDS Continuation Page No. 8 ___________________________________________________________________________ • The contracts are extended so that together they run for more than 13 weeks. 

And finally ……beware the Nanny …

A somewhat unhappy case has come before the EAT concerning a dispute between a nanny and her former employer. Davis –v- Pyrz, was an employer's appeal on several grounds from a Tribunal's decision on claims and counter claims between the employer and the nanny, who had left without giving notice. The nanny brought a claim for deductions from wages – deemed lawful by the Tribunal and EAT as being agreed in respect of a deposit. The employer had brought claims of breach of contract for failure to give notice, and also other breaches of contract including theft of a CD and skirt, non-payment of a telephone bill and failure to repay costs of a travel ticket. The EAT overruled the Tribunal in determining that it did in fact have jurisdiction to hear the alleged breaches of contract by the nanny; that the employer had been entitled to one week's notice (rather than one month as it alleged); and that the amount awarded to the employer for breach of contract for failure to give notice should have been the difference between what the nanny would have earned had she worked her notice and the sums incurred by the employer as a consequence of her failure to do so. A salutary warning about vetting nannies …. It is surprising the number of domestic claims which come before the Tribunal.

This bulletin is provided for general information purposes only and should not be applied to specific circumstances without prior consultation with us. For further information, please contact: Richard Woodman – [email protected] or Gemma Webb – [email protected]. Royds Solicitors, 2 Crane Court, Fleet Street, London EC4A 2BL. Tel: 020 7583 2222, Fax: 020 7583 2034

Partners: R J Lloyd-Davies, P D Wootton, C R Wright, R M Woodman, J W R Millar Craig, J M Cassidy, S Wilkinson, J D North, J N Rampton, P W Hart, A H Seymour, J M H Buckland, C B Rodda, S B Welfare, Gemma Webb, F R Davey. Vivien Davies. Hazel French Senior Associate: Dr R Clark Consultant: A M Alexander, , A S Finlay. A A Maberly, C De Wolfe Privy Council Agents • Royds is regulated by The Law Society • A member of Inteleges International Association of Law Firms – www.inteleges.com Associated Offices in: Barcelona, Beirut, Berlin, Brussels, Dublin, Hamburg, Helseinki, Kiev, Lisbon, Lugano, Luxemburg, Malmo, Mexico City, Milan, Montreal, Mumbai, New York, Paris, Prague, Rotterdam, Tel Aviv, Tortola, Zurich Surrey Office: 18 Crown Lane, Morden Surrey, SM4 5BS DX41652 Morden Tel: 0208 542 1067