Employment Briefing – June 2014
Print newsletter30/06/2014

Case law round-up June 2014
Holiday pay should include commission – Lock v British Gas Trading Limited [C-539/12] The European […]
Holiday pay should include commission – Lock v British Gas Trading Limited [C-539/12]
The European Court of Justice (ECJ) has handed down an important decision that affects the calculation of holiday pay for workers whose pay includes an element of commission. In a nutshell, it found that a worker’s holiday pay must include an amount calculated to reflect the amount of commission the employee will lose out in the future as a result of taking leave. This decision will impact significantly on those sectors where pay arrangements include commission structures, in particular, those who employ workers on set working hours and who pay a basic salary plus commission.
Walker Morris comment
Affected employers will need to digest the implications of this decision and consider what action, if any, they should take at this stage. Please click here to read our analysis of the case and guidance for employers
Holiday pay and overtime – Neal v Freightliner Limited [ET/1315342/12]
On 30 and 31 July, the Employment Appeal Tribunal (EAT) is due to hear the appeal in the case of Neal v Freightliner Limited which centres on the issue of whether non-compulsory overtime should be included in holiday pay calculations under the Working Time Regulations.
The overall trend of case law in this area (as demonstrated by Lock v British Gas (see above)) is that where a worker’s pay consists of a basic salary and variable elements directly and intrinsically linked to work, then holiday pay should be calculated so that the worker receives pay comparable to their ‘normal’ pay whilst on holiday and is not, therefore, financially disadvantaged by taking leave.
Walker Morris comment
Employers who operate pay structures including non-compulsory overtime and/or commission should keep a close eye on developments. A review of holiday pay arrangements and a risk/options assessment may well be advisable.
We will be focusing on this topic and the practical steps for employers at our next employment breakfast briefing. Please contact us if you would like to receive an invite to this event.
Associative discrimination – employer does not have to make reasonable adjustments for an employee associated with a disabled employee – [Hainsworth v MOD [2014] EWCA Civ 763]
The Equality Act 2010 imposes a duty on employers to make reasonable adjustments for disabled employees and job applicants. Previous European case law (Coleman v Attridge Law [2008] ICR 1128) has held that the Equal Treatment Directive (from which the Equality Act derives) requires protection against ‘associative discrimination’ (i.e. discrimination because an individual is associated with a disabled person) in respect of direct disability discrimination and disability harassment.
Ms Hainsworth, who was employed by the MOD but based in Germany, had a daughter with Down’s syndrome. She applied for a transfer to the UK on compassionate grounds to enable her daughter to access specialist support but her request was refused. She brought a claim that this refusal was a breach of the MOD’s obligation to make reasonable adjustments under the Equality Act and argued that it was obliged to do so because of her association with a disabled person. The Equality and Human Rights Commission supported her claim.
The Court of Appeal dismissed her argument, holding that the Equality Act does not go as far as to require an employer to make reasonable adjustments for a non-disabled job applicant or employee, regardless of whether they are “associated” with a disabled person.
Walker Morris comment
Whilst this decision provides welcome clarification on the circumstances when associative disability discrimination claims can be made, (i.e. only in cases of direct disability discrimination or disability harassment), employers faced with a request for flexibility from an employee who is not disabled but who cares for someone who is disabled still require sensitive and careful handling. This is because the line between direct disability discrimination (where an associative discrimination claim can be made) and failure to make reasonable adjustments (where an associative discrimination claim cannot be made) can be quite subtle.
Constructive dismissal – employee ‘affirmed’ contract by giving more notice than needed – Cockram v Air Products plc [UKEAT/0038/14]
Section 95(1)(c) of the Employment Rights Act 1996 states that an employee is constructively dismissed where they ‘terminate the contract under which they are employed with or without notice in circumstances where they are entitled to terminate it without notice by reason of the employer’s conduct’. This occurs where the employer is in fundamental breach of contract and the employee must resign in response to the breach. It is, however, possible for the employee to waive the employer’s breach of contract and affirm the contract so employees should not wait too long before resigning in response to a breach.
Section 95 allows the employee to terminate the contract either with or without notice where they consider themselves to have been constructively dismissed. In this case, Mr Cockram was contractually required to give 3 months’ notice of termination. He resigned in response to an unfavourable grievance outcome but gave 7 months’ notice stating that he needed to do this because he had no other work available.
The EAT held that, in giving 4 months’ more notice than he was required to purely for his own financial benefit, Mr Cockram had, by his conduct, affirmed the contract and was therefore unable to pursue a claim of constructive dismissal.
Walker Morris comment
Constructive dismissal claims are very difficult for employees to win at the best of times. The Tribunal will always consider the employee’s conduct in the context of the individual case but giving more notice than is contractually required will almost certainly be fatal to an employee’s claim.

Employment Tribunal statistics continue to show a decrease in claims
The Government’s quarterly Employment Tribunal statistics for the period from January to March 2014 have […]
The Government’s quarterly Employment Tribunal statistics for the period from January to March 2014 have just been released and show a drop in single claims of 59% compared to the same period last year. This continues the downward trend in claims and follows a 79% drop in single claims for the period October to December. This trend is almost certainly linked to the introduction of fees last July.
Interestingly, only 5% of all Employment Tribunal claims issued during the period from July to December 2013 qualified for a fee remission demonstrating that fee remission is not an option for the vast majority of claimants.
The drop in claims is welcome news for employers and we are certainly seeing far fewer vexatious and ‘nuisance’ claims. There is an argument, however, that the fees (or the level of the fees) deny access to justice for many workers with legitimate claims and are a breach of EU law. On this point, many of you will be following UNISON’s judicial review challenge to fees with interest. UNISON has now been granted permission to appeal to the Court of Appeal and this is due to be heard between September and December this year. UNISON will be asking the Court of Appeal to consider the ET statistics which were not available when the case was first heard by the High Court and which will inevitably add weight to their case.
In the meantime, rumours have circulated on Twitter that shadow Business Secretary, Chukka Umanna, hinted at a recent conference that a Labour government would abolish Employment Tribunal fees although this has not been confirmed as official Labour policy.
It is clear that the issue of whether ET fees are here to stay (whether in their current format, at a reduced level or with any future change of administration) has yet to be resolved.

Flexible working changes from 30 June 2014 – time to update procedures
The Flexible Working Regulations 2014 come into force on 30 June 2014. This extends the […]
The Flexible Working Regulations 2014 come into force on 30 June 2014. This extends the right to request flexible working to all employees with 26 weeks’ continuous service. The existing statutory procedure for considering requests will be replaced by a new, more relaxed duty on employers to act reasonably within a reasonable period. Employers should consider updating their flexible working policies to reflect the new entitlement and to ensure that their existing internal procedures do not set a more onerous procedure than that required by law.

Immigration checking changes – what do employers need to know?
There have been a number of changes to immigration checking rules for employers together with […]
There have been a number of changes to immigration checking rules for employers together with an increase in the maximum civil penalty for employing an illegal worker from £10,000 to £20,000 per worker. The Home Office has published two new statutory codes of practice for employers; one on preventing illegal working and one on avoiding unlawful discrimination while preventing illegal working. There is also a raft of newly published guidance. Importantly, the range of documents that are acceptable to establish the right to work has been reduced and this change will affect all new recruits.
The new codes of practice, which apply to all employers regardless of size or resources, are statutory which means that they can be referred to in evidence and must be taken into account by Courts and Tribunals where relevant. It can be costly to fall foul of the requirements and can affect an employer’s ability to sponsor migrants who come to the UK to work in the future. It is therefore worth taking the time to make sure your organisation is operating in line with the legal framework and the new codes of practice.

National minimum wage – ‘travel time’ win for home care workers
In our last newsletter we reported on some of the ‘headline grabbing’ reasons given by […]
In our last newsletter we reported on some of the ‘headline grabbing’ reasons given by employers for not paying the national minimum wage (NMW) and commented that the mundane reality is that many breaches are due to administrative, payroll or time-recording failures (e.g. failing to record time ‘on call’ or driving between work appointments and visits). To illustrate this point, HMRC has recently ruled that around 3,000 home care staff should receive a share of £600,000 in unpaid wages after their employer had not paid them for time spent travelling between care visits. Travel time between visits and appointments (as opposed to commuting time) will almost always be subject to NMW requirements.
In a related case brought under the NMW Regulations, the Employment Appeal Tribunal has confirmed that where a care worker is required to work a ‘sleep in’ night shift at the employer’s premises but only to be available in an emergency, the employee must still be paid.
It is important to have sound systems in place to avoid the risk of inadvertent failure to record working time. Employers that breach the NMW face penalties of up to £20,000 as well as the risk of being publicly ‘named and shamed’. The Government also plans to legislate in the new parliamentary session so that employers can be given penalties of up to £20,000 for each individual worker they have underpaid. This will mean, for example, that if an employer underpays 10 workers it could face penalties of up to £200,000.

Pensions regulator issues report outlining auto-enrolment failings
The Pensions Regulator has issued a report outlining how it dealt with an employer that […]
The Pensions Regulator has issued a report outlining how it dealt with an employer that failed to meet its auto-enrolment deadlines and registration. The report, which named the company, gave details of an inspection which revealed that some employees had been enrolled up to 3 months after the company’s ‘staging date’ leading to a failure to pay pension contributions totalling £108,000. The report highlighted weak governance and lack of compliance support noting, in particular, that the compliance notice issued by the Regulator had not been brought to senior management’s attention.
Key points for employers to take from the report are:
employers should ensure they have sound governance structures in place to support compliance with auto-enrolment duties and to ensure accountability at board level
employers experiencing difficulties in meeting their auto-enrolment duties should contact the Regulator to discuss their situation
employers should test their payroll systems well in advance of their staging date to ensure they are able to fulfil the auto-enrolment requirements.
Walker Morris has a team of pension specialists who are able to assist with any queries relating to auto-enrolment.

Will obesity be redefined as a disability?
The European Court of Justice (ECJ) has recently heard a discrimination claim brought by a […]
The European Court of Justice (ECJ) has recently heard a discrimination claim brought by a Danish child minder, Karsten Kaltoft, against his local authority. Kaltoft was sacked because he could not perform his duties due to his size (25 stone). In particular, he was unable to bend down to tie up children’s shoelaces. He argued that obesity should be protected as a disability under anti-discrimination laws and the Danish court referred his case to the ECJ which now has to decide whether it is unlawful to discriminate on the grounds of obesity under European equal treatment laws.
In the UK, the Equality Act 2010 protects those suffering from physical or mental impairments which result from or are connected with a person’s obesity (e.g. medical conditions such as chronic back pain, diabetes or long term clinical depression) but it does not protect someone from discrimination on the grounds of obesity per se nor is obesity recognised as a disability in its own right. Moreover, under the Equality Act, an impairment will only amount to a disability if it is ‘long-term’ (i.e. expected to last for more than 12 months) and there is an argument that, with appropriate dietary and exercise measures, obesity in many cases could be resolved within 12 months.
Our view is that Mr Kaltoft will struggle to persuade the ECJ of his case. If, however, the ECJ does find in his favour it will be a significant extension of European equality law. It could impact on employers by requiring them to make reasonable adjustments to prevent obese employees from being disadvantaged at work by, for example, providing special car parking spaces, seating or desk space.
The USA has already seen a number of successful claims based on obesity discrimination at work and employers in the UK (where 64% of adults are now classed as overweight) will be watching this case with interest.

World Cup fever – an employer’s survival guide
The World Cup runs until 13 July and from past experience we know it can […]
The World Cup runs until 13 July and from past experience we know it can give rise to a few employment challenges (as well as injecting some much needed excitement into the working day)!
Businesses still have to run and targets still have to be met so keeping customers and employees happy can be quite a balancing act for employers. Many opt to issue guidelines to staff on points such as taking time off, website usage, flexible working (including watching matches during working time) and conduct at work/work-related events. There is a lot of wisdom in this approach as setting the ground rules at the outset means it is far easier to manage unacceptable conduct or absence and to maintain the good morale that the World Cup hopefully engenders.
Key points to consider in any guidance issued are:
- Be consistent and fair when dealing with requests for flexibility – some employees prefer cricket and not everyone is an England supporter!
- You may wish to monitor absence/lateness levels over the period and advise employees that you will be doing so. This can be enough to deter abuse of the system
- Consider flexibility where this is possible. Whilst there is no legal requirement to do so, allowing staff to swap shifts, watch a match and make up the time later or to take breaks during match times can buy an enormous amount of goodwill
- Be clear about what you consider to be acceptable use of social media and websites at work. If you are monitoring website use make sure that employees are aware of this. Ideally you should already have a website usage and social media policy in place
- Be clear about what is acceptable regarding alcohol at work or work-related events. If you have a no alcohol policy then remind staff of this. Make sure employees who don’t drink alcohol for religious reasons are not excluded from social events or made to feel uncomfortable
- Remind staff that harassment or racial comments related to the World Cup are unacceptable even if said ‘in banter’
- Don’t assume that only male employees are interested in football and be on guard against any actions or comments that could give rise to a complaint of sex discrimination.
A little forward planning can make a big difference and ensure that everyone has an enjoyable World Cup.