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News & Blog

Employment Law Newsletter – June 2014

Welcome to our June 2014 Employment Law Newsletter, keeping you up to date with changes in employment law and informing you of recent case developments over the last month.

DEVELOPMENTS TO LEGISLATION

Immigration penalties from an employment perspective

The Immigration Act 2014 received Royal Assent on 14 May 2014, making a number of “fundamental changes” to the immigration system to make it easier for the government to remove illegal immigrants and to make life more difficult for them while they are in the UK. The employment law implications are less fundamental, but it will now be easier for civil penalties to be enforced for employing someone in breach of immigration law.

The Act will:

• Prevent employers appealing against a civil penalty unless they have first made an objection to the Secretary of State.

• Provide that a civil penalty may be recovered as though it were due under an order of a court. This means that the debt may be registered with the court, and enforcement action pursued without further order.

Commencement dates for these provisions are not yet known.

From 16th May 2014, the maximum civil penalty for employing an individual who does not have the right to work in the UK rose from £10,000 to £20,000. It is therefore essential that you undertake the necessary checks as part of your recruitment processes. If you require any further guidance in this regard please do not hesitate to contact us.

Early conciliation now mandatory

Acas early conciliation became mandatory for most cases from 6 May 2014. This means that any employee wishing to bring a claim will first need to notify Acas who will offer conciliation services to the parties before tribunal proceedings commence.

Employers should be aware that in most cases the new scheme also allows Claimants an extension of time for presenting their related claim. Therefore, it is no longer as simple as waiting 3 months from termination and being able to safely assume a claim has not been made. However, in most cases, employers should receive notification from Acas as part of the conciliation process so will usually have an idea that a claim might be on its way. They will also have an opportunity to avoid the claim altogether if the matter can be resolved through conciliation.

Flexible Working

The Children and Families Act 2014 contains provisions to extend the right to request flexible working to all employees with at least 26 weeks’ continuous service. The changes are due to come into force on 30 June 2014. The new duty will require employers to deal with requests in a reasonable manner within a three-month decision period, which will be supported by an Acas statutory Code of Practice. Our next breakfast briefing will cover these changes together with other family friendly developments on the horizon. To book your place, please visit http://www.dbf-law.co.uk/events/june-2014-breakfast-briefing-employment-law/

CASE LAW DEVELOPMENTS

Statutory holiday pay should include a sum in respect of commission
In the case of Lock v British Gas Trading Ltd the ECJ has held that, where a worker’s remuneration includes contractual commission, determined with reference to sales achieved, the Working Time Directive precludes a national law that calculates statutory holiday pay based on basic salary alone. If commission payments are not taken into account, the Court decided that the worker will be placed at a financial disadvantage when taking statutory annual leave as no commission will be generated during the holiday period. In such circumstances, the worker might be deterred from exercising the right to annual leave which would be contrary to the directive’s purpose.

This case was referred to the ECJ by the Leicester employment tribunal. The case is now likely to return to the tribunal to consider whether the Working Time Regulations, which are fairly clear that holiday pay is calculated on basic salary, can be interpreted in line with the ECJ’s decision and, if it can, the level of holiday pay to which the claimant was entitled.

This decision may well have quite a far-reaching and costly impact on employers who have commission arrangements with their employees so please watch this space for further developments!

Age discriminatory comment was not the reason for employee’s constructive dismissal

In Clements v Lloyds Banking plc and others the EAT has upheld an ET decision that an employee in his fifties, about whom the employer had performance concerns, was constructively dismissed when his manager expressed the desire to move him out of his job and announced a new appointee for the role. However, the manager’s age discriminatory comment “you’re not 25 anymore” was found not to be a material part of the conduct that caused the employee to resign. Therefore whilst the employee succeeded in his claim of unfair dismissal the tribunal did not find that the dismissal was discriminatory as the employee did not show a causal link between the comment and the dismissal/resignation.

In these types of course of conduct cases, it is a bit artificial to carve out such a comment when the claim was that he was being edged out of his job and his age formed part of this. However, it is likely that the tribunal was influenced by two key bits of evidence: in his resignation letter the employee made no mention of the ageist remark; and the person who was eventually appointed to the role was someone who was close in age to the employee.

Receiving pay was not a prerequisite for employment status

In Secretary of State for Business, Innovation and Skills v Knight the EAT has held that an individual can still be considered an “employee” for the purposes of the Employment Rights Act 1996 even if they have not exercised their right to be paid. The individual was the Managing Director and sole shareholder of a company but she remained entitled to a redundancy payment from the Insolvency Service despite not receiving pay for two years. She had elected to forgo her salary in an attempt to keep the company afloat.

This case adds more confusion to the question of whether a business owner/shareholder can also have employment status and emphasises that each case will turn on its facts.

Constructive dismissal: employee affirmed contract by giving far more notice than was contractually required

In Cockram v Air Products plc the EAT has held that an employee who gave much longer notice than was contractually required had affirmed his contract and therefore waived his right to claim constructive dismissal. To succeed in a claim of constructive dismissal an employee needs to show that there has been a fundamental breach of their employment contract and that they have resigned or terminated the contract in response to that breach.

The EAT did emphasise that the question of whether a contract has been affirmed or terminated following an employer’s fundamental breach of contract is fact-sensitive. In this case, an employment judge was entitled to find that the giving of long notice, which had been for the employee’s own financial gain, had the effect of affirming the contract or treating it as continuing. In upholding the judge’s decision, the EAT clarified that it is possible for an employee to affirm their contract even after they have resigned in response to a fundamental breach. This case is helpful to employers and might help to reduce the situations in which employees are able to successfully claim constructive dismissal.

UNISON granted permission to appeal High Court decision on employment tribunal fees

UNISON has been granted permission to appeal the High Court’s decision to dismiss its application for judicial review of the introduction of fees in the employment tribunal.

The union had argued before the High Court that the introduction of fees was in breach of EU law, as it denied access to justice for workers with legitimate claims against their employers, and also had a discriminatory effect on protected groups such as women, ethnic minorities and disabled people. The application was dismissed, primarily on the basis that it had been brought prematurely, before there was sufficient evidence to support UNISON’s claims.

In March 2014, the Ministry of Justice (MoJ) published tribunal statistics for October to December 2013 (the first full quarter since the introduction of employment tribunal fees on 29 July 2013). The statistics showed a 79% drop in employment tribunal claims compared to the equivalent period in 2012.

UNISON reports that the Court of Appeal decided that the question of fees is of “sufficient general importance to merit permission to appeal”. The union plans to ask the court to consider the statistics published by MoJ earlier this year in deciding the appeal.

Contact Us
If you require any further clarification in relation to the above developments, or if you need any further assistance, then please do not hesitate to contact our specialist employment solicitors on 0161 832 3304.

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