Case law round-up June 2014

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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.