Employment Law Bulletin September 2013


This month brings with it a huge shift in the balance of power in the workplace. Or does it?

From 1 September, employee-shareholder contracts became a new way of governing employment relationships. They offer a minimum £2,000-worth of the company’s shares, and related tax advantages, to employees in return for their giving up some of their employment rights (most importantly the right to bring most types of unfair dismissal claim, including constructive dismissal).

Existing employees can’t legally be forced to sign up to these new contracts, but employers can insist that new recruits sign them. However, as only a few employment rights are forfeited, and there are real complications in relation to tax, valuation, shareholder rights etc., there must be some doubt as to how widespread take-up there will be. We will be covering employee-shareholder status in a forthcoming seminar, but if you have any queries in the meantime, do get in touch.


Gross misconduct and dismissal

Brito-Babapulle v Ealing Hospital NHS Trust

If you find an employee guilty of gross misconduct, you would think you can safely dismiss them without fear of unfair dismissal, wouldn’t you? Not necessarily, says the Employment Appeal Tribunal (EAT) in Brito-Babapulle v Ealing Hospital NHS Trust.

It held that it wasn’t inevitable that a hospital consultant who had been treating private patients while on sick leave from the NHS should be dismissed. She may have been guilty of gross misconduct but was it reasonable to dismiss her in light of all the mitigating circumstances?

The original employment tribunal had not considered this point, so the EAT sent it back to them to do so. Although the case itself says more about how employment tribunals should make decisions than it does about employers’ decisions to dismiss, it is a useful reminder of the principle that employers should always consider all the circumstances in a particular case before dismissing.


No carry-over of additional leave

Sood Enterprises v Healy

Last year, the Court of Appeal decided that workers could carry over their Working Time Directive (WTD) holiday entitlement of four weeks. But it didn’t go on to deal with what should happen to the additional 1.6 weeks’ leave provided to UK workers under the Working Time Regulations (WTR).

That was the question for the Employment Appeal Tribunal (EAT) in this case. Mr Healy was off work for almost a year after suffering a stroke, although his leave spanned two leave years. When he resigned he wasn’t paid for the leave which he’d been unable to take because of sickness, and brought an unlawful deduction from wages claim.

Mr Healy won his case and the tribunal ordered the employer to pay him more than the four weeks’ leave entitlement under the WTD (dipping into the extra 1.6 weeks). The EAT held that that was wrong – without a relevant agreement between Mr Healy and his employer, he could not be paid in lieu of all or any of the additional 1.6 weeks under the WTR.

So, some clarity for UK employers. Where a worker is on long-term sick leave then unless you’ve agreed otherwise they are only entitled to carry over up to four (and not 5.6) weeks’ leave. This is helpful for employers, but does not do much to reduce the complexity of this notoriously troublesome area of law in practice.


Claim against (ex) colleagues

Hurst v Kelly

The employee signed a compromise agreement preventing her from bringing any claims against her employer arising out of her employment or its termination. She subsequently brought a sexual harassment claim against her line manager. The employment tribunal held that it wasn’t able to hear the claim because the former employer hadn’t been named as a party (because claims against the employer had been waived in the compromise agreement).

The Employment Appeal Tribunal held that the tribunal had been wrong, and that claims for harassment under the Sex Discrimination Act 1975 (now incorporated into the Equality Act 2010) could be brought directly against the fellow employee alone.

Whilst the actual decision is a rather narrow technical point, the case does highlight that getting the wording of the settlement agreement (as compromise agreements are now called) right when settling claims is crucial. Here, if the employer had included a waiver of claims against other employees as well as itself, the claim would (presumably) never have been brought. As ever, it pays top get expert advice when drafting a settlement agreement…


Pack more into holiday pay?

Neal v Freightliner Limited

As if holiday pay under the Working Time Regulations 1998 (WTR) was not complicated enough already, an employment tribunal has now held, in Neal v Freightliner that a freight worker was entitled to have his voluntary overtime taken into account when his employer calculated his holiday pay.

This is not what the WTR say (they provide for holiday pay to be calculated on “normal working hours” which excludes overtime). However, the tribunal was applying a European Court of Justice case which said that the WTR are not compatible with the relevant European Directive. It awarded Mr Neal holiday pay calculated on a basis which included reference to his overtime as it was closely connected to the contractual duties.

To make things more complicated, this only applied to the basic four week entitlement to holiday, and not to the full 5.6 week entitlement under the WTR.

What does this mean for employers? As it is only at tribunal level, the decision is not binding on other tribunals, but further cases are bound to follow and sooner or later the point will be decided by a higher court. Until then, confusion and uncertainty will continue to reign, and employers may wish to consider including overtime in holiday pay, or at least be prepared to face demands for it from employees.


and finally……


Beware of conciliation officers bearing gifts

Employers are being warned to be vigilant after news that people are pretending to be from Acas.

Acas has said that companies claiming to be part of and/or acting on behalf of Acas are typically offering free advice and then asking employers to sign up to long-term and often expensive contracts for employment or health and safety advice.

There’s more of this here.

We’ll say no more about such disreputable antics…