Employment Law Newsletter – December 2011

Welcome to December’s edition of our employment law newsletter, keeping you up to date with forthcoming changes to legislation and case developments.

Government issues response to consultation on employment tribunal reform

The government has published its response to the Resolving Workplace Disputesconsultation on reforming the employment tribunal system, and has finalised the proposals for change. The government has identified the following areas for reform: promoting and extending the use of workplace mediation; making changes to compromise agreements; increasing the role of Acas to facilitate early conciliation; increasing the maximum amount for cost and deposit orders in the tribunal; removing lay members in unfair dismissal claims; and introducing discretionary financial penalties for unsuccessful respondents. These changes will be implemented by way of regulations which are expected to come into force in April 2012.

Consultation on “protected conversations”

On 10 November 2011, David Cameron confirmed that the government is to consult on the introduction of “protected conversations”, as he put it “so a boss and an employee feel able to sit down together and have a frank conversation at either’s request”. Nick Clegg previously suggested that such a conversation could concern performance or retirement.

The Prime Minister also used his speech to confirm that the qualifying period for unfair dismissal will increase from one to two years from April 2012, and that fees will be introduced for individuals bringing employment tribunal claims. In the meantime the Business secretary, Vince Cable, has stated that a decision on the unfair dismissal proposals for “no fault” dismissals made in the recently leaked “Beecroft Report” will be announced shortly.


ECJ limits holiday carry-over by sick workers

In the case of KHS AG v Schulte the European Court of Justice has held that the length of time an employee on long-term sick leave can continue to carry over untaken statutory annual leave under the principle in the Stringer and Schultz-Hoff cases is not indefinite. In this case, a German collective agreement provided that, in cases of sickness, all holiday not taken within 15 months of the end of the relevant leave year would be lost. The ECJ held that there must come a time when one of the purposes of the leave (to give the employee a break from work) can no longer be met. In view of this, the limit of 15 months on the carry-over period in this case did not infringe the Working Time Directive.

Unreasonable behaviour and costs orders

In Barnsley Metropolitan Borough Council v Yerrakalva [2011] the Court of Appeal has held that an employment tribunal, when exercising its discretion to order costs, must look at the whole picture and ask whether the party in question behaved unreasonably in bringing or conducting the case. In doing so, the tribunal must identify the relevant conduct, what was unreasonable about it and what effects it had.

In practice, it will be important for a party seeking a costs order to identify not only the unreasonable nature of the other side’s conduct, but also the impact of that conduct on the preparation and presentation of its case and the costs it incurred as a result.

Workers only entitled to statutory holiday pay if they take or seek to take holiday

In the case of Fraser v South West London St George’s Mental Health Trust the EAT has held that workers are only entitled to statutory holiday pay if they take statutory holiday or give notice to their employer that they wish to take such holiday. It would be contrary to the purpose of the regulations if workers could receive statutory holiday pay regardless of whether they take time off, as this would create a financial incentive for them not to exercise their holiday rights.

The EAT noted, however, that workers on long-term sick leave do not necessarily relinquish their untaken statutory holiday entitlement at the end of each leave year. The earlier case of Pereda held that they have a choice: to take statutory holiday while off sick, or to ask for the holiday to be deferred until their return to work. In the EAT’s view, however, if a sick worker wishes to defer taking their statutory holiday to another leave year, they must make a request to their employer in this regard. As the worker in this case failed to make any such request, her untaken statutory holiday entitlement extinguished at the end of each leave year. Therefore, she was not entitled to payment in respect of it when she was dismissed.

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             Associate Solicitor

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