Brexit and employment law
It is just possible that you are not already completely sick of the Brexit debate – but don’t worry there is still plenty of time until 23 June. One argument that often crops up is that employers are prevented from running their businesses by “mountains of EU red tape”, with the implication that if there is a no vote, any law with a vaguely European origin will be repealed on 24 June. Employers trying to get to grips with just how to calculate holiday pay under the Working Time Regulations might well appreciate this prospect.
But what would actually happen? Much would depend on the post-membership relationship with the EU negotiated by the UK Government. If we joined the European Economic Area alongside Norway then that would involve continuing to abide by the vast bulk of the EU law dealing with employment and equality. If we negotiated our own access to the Single Market (like Switzerland), any deal is likely to come with employment law strings attached.
If the UK went entirely its own way, then that would certainly give the Government the option of repealing or amending laws relating to working time, business transfers, redundancy consultation, agency workers, equality and health and safety.
However, this is very unlikely to happen all at once. Whilst it is de rigueur to decry “red tape”, it is not always obvious which laws could easily be got rid of. Would reducing protection against discrimination be a vote-winner? Would any Government want to be known as the one that lessened health and safety protection? In truth it would take several years for a Government to address each area of the law and decide which rules should stay and which can be dispensed with.
In the meantime, we would still have to wrestle with the decisions of the European Court of Justice. Our courts would have to decide how each set of Regulations should be interpreted given that they were originally passed to comply with EU Directives – even though those directives are no longer applicable to the UK. There is every possibility that our law on the calculation of holiday pay, for example, would become even more complicated, not less.
Whichever way the vote goes, EU employment law will be with us for some time to come.
Calculating Holiday pay – Commission
Talking of European employment legislation, few areas have caused as much convoluted case law as the how to calculate holiday pay under the Working Time Regulations, which are the UK implementation of the European Working Time Directive. The latest issue that the Employment Appeal Tribunal (EAT) has had to struggle with is the extent to which holiday pay must include an element representing the commission that the employee could have earned if he or she had not gone on holiday. In British Gas Trading Ltd v Lock the European Court of Justice (ECJ) has already ruled that the Directive requires that commission must be included in the calculation. So, commission must be included. The problem is that the Working Time Regulations say the opposite, so there is a conflict between the Directive and the Working Time Regulations. Usually this sort of conflict is resolved by creatively interpreting the UK law to fit in with the Directive, but this can be difficult to do where – as here- they say opposite things.
Mr Lock was employed in a sales role by British Gas and the majority of his remuneration consisted of commission payments on completed sales – paid in arrears. British Gas accepted that when he took annual leave the result would be that he would lose out on future commission payments.
He claimed that he should receive a sum representing such payments as part of his holiday pay and, following the ECJ ruling, the tribunal upheld his claim. The employer appealed to the EAT arguing that the clear words of the Regulations excluded commission from the calculation of a normal week’s pay and that it was not possible to interpret the UK Regulations in a way that complied with the ECJ’s ruling on the meaning of the EU Directive.
The EAT dismissed the appeal and the case is now on its way to the Court of Appeal. The result will also affect the related point as to whether overtime should be included in holiday pay. Whilst this continues, there is still uncertainty.
Termination by mutual agreement
When is a dismissal not a dismissal? That was the key issue in Khan v HGS Global Ltd. The employee in that case worked in a call centre in Chiswick but the contract on which he worked became the subject of a transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006. The new employer was based in High Wycombe – some distance away – and a number of employees were concerned about their increased journey times.
Following consultation, the new employer offered employees with a journey time of more than 1 ¼ hours a choice of three options. They could transfer under TUPE to the new employment in High Wycombe; they could apply for redeployment with their current employer – or they could opt to be made redundant. Mr Khan who did not want to face the extra journey time, chose redundancy. He was given a statutory redundancy payment plus a payment in lieu of notice and his holiday pay.
He claimed unfair dismissal but the tribunal held that he had not been dismissed at all. The EAT agreed. It was generally accepted that where there was a genuine redundancy exercise taking place then an employee who volunteered for redundancy was simply volunteering to be one of the employees selected for dismissal. In this case, however, there was no redundancy situation at all. The employer did not want to dismiss anyone but was merely offering the option of redundancy for those who did not wish to work in the new location. No pressure was put on employees to take that option. Mr Khan had simply agreed with his employer that his contract should end. That was a termination by mutual consent – not a dismissal.
Trust and confidence
Both employer and employee have a duty not to act in such a way as to undermine the trust and confidence at the heart of the employment relationship. When the employer breaches this duty then the employee can resign and claim a constructive dismissal. When the employee is the one to blame – as the EAT finds in the case of House of Fraser v Christofidou – then the result may be a summary dismissal.
The employee in that case was employed in the House of Fraser’s Oxford Street store. The loss of stock through theft was a major concern – some £640,000 of stock was lost in 2013 alone – and the employer closely monitored sales on eBay to see if it correlated with lost stock. This monitoring led the employer to notice that an eBay account registered to the employee’s home address had been selling a large number of items that matched stock that had been lost from the store.
When challenged, the employee said that the account was operated by her ex-husband. He no longer lived at the address and the employee claimed to know nothing of his business venture. The employer wanted to talk to her ex-husband but while the employee offered to pass on the employer’s contact details to him, she refused to give the employer his details herself. She was also evasive and inconsistent in her answers about her dealings with her ex-husband in a way that the employer found to be highly suspicious. She was dismissed for gross misconduct.
The tribunal found that the reason for dismissal was not theft of the employer’s stock – the employer accepted that they did not have enough evidence to reach a conclusion on that point. Rather, the employer had dismissed her because her response to the investigation had led to a loss of trust and confidence.
The tribunal found that the dismissal was unfair, however, because the employer had not taken sufficient steps to contact her ex-husband. The tribunal also accepted the employee’s explanation that the eBay account was in reality nothing to do with her and upheld her claim for breach of contract (wrongful dismissal) on the basis that she was not guilty of gross misconduct.
On appeal, the EAT held that it was perverse of the tribunal to find the dismissal unfair purely on the basis that the employer had failed to contact the employee’s ex-husband. This failed to take into account the fact that the employee had refused to cooperate with the employer’s attempts to do just that. On the wrongful dismissal claim, the EAT pointed out that the employee had been evasive and inconsistent in her response to the investigation. This conduct amounted to a breach of her obligation to maintain trust and confidence. The employer was therefore entitled to dismiss her without notice.
Many employers feel that they could sometimes manage absence somewhat more effectively. They can nevertheless take comfort from the example being set by the Spanish Civil Service. Mr Garcia was due to be given a commemorative plaque for 20 years’ service with the public utilities provider in Cadiz – but when they tried to find him to make the award, it turned out that no-one had seen him in his office for at least six years. It appeared that he had gone home because ‘there was nothing to do’ and stayed there – while continuing to collect his salary.
If the Spanish authorities were slow to notice that they had an absence problem, they weren’t too quick about dealing with it either. A legal claim against Mr Garcia began in 2010 but only concluded this year with him being fined. He wasn’t sacked from his post because by the time the legal case was concluded, he had already retired. We can only wish him well as he takes his well-earned rest.