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News & Blog

Employment Law Newsletter – November 2012

Welcome to November’s edition of our employment law newsletter, keeping you up to date with changes in employment law, and informing you of recent case law developments.

Pension Entitlements

From 1st October 2012, all employers are obliged to automatically enrol eligible employees into a pension scheme.  The new duties are being gradually imposed over the four year period depending upon the size of the company, with larger employers being affected before smaller employers and new companies.

Changes to National Minimum Wage

The National Minimum Wage was again changed with effect from 1st October 2012.  The following rates are now applicable:

Standard adult rate:  £6.19

Development rate (18-20 year olds):  £4.98

Young workers’ rate:  £3.68

Apprentice rate:  £2.65

New contracts proposed by the Chancellor of the Exchequer

George Osborne has announced that there will be a new type of employment contract known as an’ owner – employee’ contract.  Employees will be able to ‘give up’ their UK rights on unfair dismissal, redundancy, the right to request flexible working and time off for training, and will be required to provide 16 weeks’ notice of a firm date of return from maternity leave, instead of the usual 8.  In return they will be given between £2,000 and £50,000 of shares that are exempt from capital gains tax.  It is hoped that the new contracts will be introduced by April 2013.  A consultation is currently underway which will expire on 8th November 2012.

Encouragement for settlement agreements

Vince Cable announced in September that there would be a consultation on new proposals to encourage the use of compromise agreements to bring about the termination of employment, with the agreements being renamed ‘settlement agreements’.  Proposals are also being considered to reduce the cap on unfair dismissal awards, and to consider the effectiveness of TUPE 2006.

Introduction of gender quotas postponed

Following a recent debate, EU commissioners have postponed plans to introduce a mandatory 40% quota for women on company boards which had been proposed.  The proposals are that the quote will be an objective for companies to meet, and not a legally binding obligation.  Sanctions would however be imposed on companies that failed to meet the target.

RECENT CASE LAW DEVELOPMENTS

Equal pay claims to be heard in civil courts

174 former employees of Birmingham City Council crossed another hurdle last week in their battle to claim compensation for missed bonuses.  The Supreme Court rejected the Council’s argument that the claims should have been brought within 6 months of the employees leaving their jobs, and instead the women have 6 years to submit any claims.  The judgment is being hailed as ‘landmark’ by solicitors acting for the employees, as it could open the door for claims by thousands of other workers.  The women were among workers who claim to have been denied bonuses which were given to staff in traditionally male-dominated jobs, in some cases amounting to tens of thousands of pounds.  The ruling is significant as it confirm that some equal pay claims can be made in the county court over a six year period, rather than needing to be issued in a Tribunal within months of the end of employment.   

Umbrella contracts/continuity of employment

The EAT held in Pulse Healthcare v Carewatch Care that individuals engaged under a zero hours contract were actually employed under a global contract of employment with continuity preserved.  Carewatch Care provided care for severely disabled individuals.  A TUPE situation arose and the employees argued that they should transfer to the new contractor.  The zero hour contracts stated that there was no obligation to provide work and the employees were free to work for another employer. However the tribunal actually found that the contract did not reflect the true position. In practice the employees performed services, were required to carry out work when offered it and had to do it personally.  It was also noted that given the critical care that these individuals were giving it would be ridiculous to assert that the employee of relied only on ad hoc arrangements.

Uplifts for failure to comply with ACAS Code

The EAT in Local Government Yorkshire v Khan has held that uplifts for failure to comply with the ACAS code cannot be made in favour of workers.

Constructive dismissal

The EAT has held in Logan v Celyn House Ltd that in order for an employee to succeed in a claim for unfair constructive dismissal, the principal reason for the resignation need not be the actual fundamental breach of the contract of employment which the employee resigned in response to. The Claimant was employed as a veterinary nurse and resigned in response to a grievance decision which she found unsatisfactory. The grievance had involved a number of matters, including alleged bullying (which the employment tribunal had found was a figment of her imagination) and a failure to pay contractual sick pay (which the employment tribunal had found was a repudiatory breach of contract).  The EAT stated it was enough that the employee resigned, at least in part, in response to the fundamental breach of failing to pay contractual sick pay.

Conduct dismissals and previous warnings

The EAT has held in Nejjary v Aramark Ltd that the tribunal cannot take into account matters which the employer had not taken into account when dismissing an employee. The EAT held that the tribunal had erred in taking into account matters which the employer had not had in mind as part of the reason for dismissal.  The reason for dismissal “is the reason which was extant and operative in the mind of the employer”.

Preserving continuity between associated employers

The EAT has held in Holt v EB Security Ltd that continuity of employment is preserved when an employee is absent from work at one employer due to a temporary cessation of work and then starts work for an associated employer.  The Claimant was dismissed by the first employer but 14 days later he was taken on by an associated employer in a completely different job.  He was however dismissed within a year of starting the second job.  He needed his continuity of employment to be preserved in order to be able to pursue a claim in the Employment Tribunal.  The EAT stated that there was a temporary cessation of work and he had been absent by reason of that and there was no need for the associated employer to resume the operations of the first employer.  Any work with the associated employer would suffice to preserve continuity.

Au pairs and domestic migrant workers

The Court of Appeal has held in Nambalat v Taher & Ors that an au pair is not entitled to the National Minimum Wage even where certain tasks are not shared with the family.  Domestic workers and au pairs are exempt if they live in the family home, make no payment towards accommodation or meals, and are not family members but are treated as such in the sharing of tasks and leisure activities.  The requirement is that the work is done in the context in which the worker is treated as a family member. People provided with free accommodation and meals would of course be expected to do more.

Injury to feelings

The Court of appeal have held in Simmons v Castle that, with effect from 1 April 2013, “the proper level of general damages in all civil claims for: (i) pain and suffering, (ii) loss of amenity, (iii) physical inconvenience and discomfort, (iv) social discredit, (v) mental distress, or (vi) loss of society of relatives, will be 10% higher than previously”.  Although this relates to a personal injury appeal, it is likely that injury to feelings awards in discrimination claims will go up by 10%.

Post termination restrictions

The High Court has held in FW Farnsworth Limited v Lacey that an employee can be bound by post termination restrictions contained within an unsigned contract of employment if the terms of that contract have been impliedly accepted by that employee.  The employee had signed and returned a contract early in his employment but not a latter contract following a promotion a few years later.  The latter contract had post termination restrictions and a number of elective employee benefits.  The employee’s act of applying for private medical insurance and not showing any protest was an unequivocal act to him having accepted all the terms of the latest contract including the restrictive covenants.

LLP members not workers

The Court of Appeal held in Clyde & Co and another v Bates van WInkelhof that a former equity partner of a limited liability partnership was a worker, and was not therefore able to proceed with a whistleblowing claim against the LLP.

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

Shiva Shadi Partner

Anna Bunting Partner

Claire Smith Partner

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