HR Two Minute Monthly: holiday pay; shared parental leave; access requests

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Summary: Our April update includes reports on the latest holiday pay decision, data subject access request developments and the April 2015 legislative changes being introduced, not least the new shared parental leave regime.

Holiday pay includes commission

The Employment Tribunal in Lock v. British Gas has confirmed that the Working Time Regulations should be interpreted to provide that commission and similar payments are included in holiday pay. This decision is no surprise in light of the ECJ's judgment in this case last May and the EAT’s subsequent Bear Scotland decision last November.

Frustratingly, however, we are still waiting for the Lock Employment Tribunal to consider various practical holiday pay issues that are vexing employers, including determining the correct reference period to use when working out holiday pay, and whether any compensation is due if the commission schemes already effectively compensate employees for periods of holiday.

Unfair dismissal – two cases on investigations

Employer need not extensively investigate every defence put forward by an employee

The range of reasonable responses test applies to the level of investigation carried out by an employer as well as to the decision to dismiss. In Shrestha v Genesis Housing Association Ltd, the Court of Appeal considered how far an employer is required to go to fulfil this requirement.

Mr Shrestha was disciplined by his employer for fraudulently claiming mileage expenses. In his disciplinary hearing he put forward three reasons why this was: difficultly parking, one-way systems and road works. The employer considered and discounted his explanation, but did not specifically analyse in detail his arguments in relation to each and every journey that was in issue. The Court of Appeal, upholding the Employment Tribunal and EAT decisions below, found that the dismissal was fair. What mattered was the reasonableness of the investigation as a whole. On the facts, the employer was not required to extensively investigate every line of defence put forward by the employee for every journey.

Less investigation may be required where employee admits misconduct

In CRO Ports London Ltd v Wiltshire, the employee admitted committing misconduct. There was an accident due to a serious breach of health and safety rules. The employee took full responsibility but as he had a previously unblemished record and as the practice which led to the accident was common he did not expect to be dismissed. The Employment Tribunal found that his dismissal was unfair, finding that the employer’s investigation was not reasonable for a number of reasons.

The EAT overturned the decision and remitted the case to a fresh Employment Tribunal. The employer had limited the investigation it had carried out because the employee had admitted the misconduct. This was potentially within the band of reasonable responses and the Employment Tribunal was wrong to draw conclusions based on what further investigations may have uncovered.

The key point to note for employers is that if an employee admits committing the misconduct, further investigation may be unnecessary, but this will depend on the nature of the admission and whether any issues remain outstanding. Where an employee gives a qualified admission of guilt by suggesting, for example, that there are surrounding circumstances that should be taken into account, further investigation may well be merited.

Employer actively looked for misconduct to avoid paying notice

In Williams v Leeds United Football Club, the employer notified the employee that he was to be made redundant. Shortly afterwards, in an effort to see if it could find reasons to avoid paying for the redundancy, the employer conducted an investigation of the employee’s computer and discovered that he had forwarded a pornographic email five years earlier. The employer treated this as gross misconduct and the employee was dismissed, thereby losing his entitlement to notice pay.

The High Court confirmed that the employer was entitled to rely on the employee’s repudiatory breach. It did not matter that the event had occurred years before, nor did it matter that the employer had actively looked for a reason to avoid paying notice.

Uplift on damages does not apply to Employment Tribunal injury to feelings awards

Following a Court of Appeal decision, uplifts of 10% have been applied to damages which compensate for suffering, distress or inconvenience, to reflect the fact that claimants in certain types of claim can no longer recover some heads of cost from the unsuccessful party in civil court litigation.

Two EAT cases in close succession, Chawla v Hewlett Packard Ltd and Pereira de Souza v. Vinci Construction UK Ltd, have said that this 10% uplift does not apply to injury to feelings awards. The rationale for this decision is that claimants do not generally recover their costs in the Employment Tribunal and the changes to the costs regime in the civil courts were not relevant to litigation in the Employment Tribunal. This is good news for employers, however it is worth noting that there are earlier conflicting EAT decisions and ultimately clarification is required from the Court of Appeal.

Developments on Data Protection subject access requests

There have been two developments this month regarding subject access requests made under the Data Protection Act 1998.

Enforced subject access now unlawful

With effect from 10 March 2015, it is unlawful for an employer to require a job applicant or an existing employee to make a subject access request in order to retain and supply a copy of their criminal record. This was already viewed as bad practice by the Information Commissioner, but it is now a criminal offence with the potential for up to an unlimited fine.

High Court considers purpose of an access request when granting order for compliance

In Aku Babitu Kokolo v Commissioner of Police for the Metropolis, the Metropolitan Police Service (MPS) refused to comply with a subject access request made by a Kenyan national who had been convicted in Kenya. The individual sought the material primarily because he believed it would be useful in relation to his criminal appeal. The MPS refused to disclose the information on the basis that it was an attempt to obtain information outside of the procedure set down in separate legislation.

The High Court confirmed that the courts have a discretion whether to order compliance with a subject access request. It held that whilst the primary purpose of the application was to assist in his appeal, Mr Kokolo also wanted to verify that the information held about him was accurate. Verifying accuracy is a key theme under the Data Protection Act. Given he was subjected to the death penalty in Kenya, it was also proportionate to grant an order requiring the MPS to comply with his access request. The existence of collateral proceedings in which the data would then be used was not sufficient grounds for refusal.

This is an interesting decision as it demonstrates that the Courts will look at all the circumstances when exercising their discretion on whether to order compliance. The fact that there is litigation envisaged and that data obtained via the subject access request will be used in those proceedings will not prevent an order for compliance, provided there is also a genuine reason for the request which accords with one of the purposes of the Data Protection Act.

Disability discrimination – cases on diabetes and employer’s knowledge

Type 2 diabetes was not a disability

In Metroline Travel Limited v. Stoute, the EAT held that a condition controlled by a minor alteration of the employee’s diet is not a long-term condition restricting an employee’s ability to carry out ordinary day-to-day tasks. In this case, the employee was a bus driver who suffered from Type 2 diabetes which he controlled largely by avoiding sugary drinks. The EAT, interpreting statutory guidance on the definition of disability, said that in this situation the employee was not disabled.

Reasonable steps to investigate whether employee is disabled avoids constructive knowledge of disability

An employer must have actual or constructive knowledge of an employee’s disability before the duty to make reasonable adjustments can apply. In Donelien v Liberata UK Ltd the employer took various steps to determine whether an employee actually had a disability. This included commissioning an occupational health report which was defective and which said that the employee was not disabled. The employer failed to get the occupational health report properly redone. Despite this, the EAT held that the employer had, nonetheless, done all it could reasonably be expected to do to discover any disability. This was because it had not relied solely on the occupational health report, but had taken other steps to determine if the employee was disabled. This included holding several return to work meetings, having discussions with the employee, and reviewing GP reports that it had been sent. The requirement is for an employer to do all it can reasonably be expected to do to discover any disability. In this case, taken overall, the employer taken sufficient reasonable steps to discover whether the employee was disabled, and so avoided having constructive knowledge of the disability.

Advocate General suggests associative discrimination applies to indirect discrimination claims

Associative discrimination applies when an individual suffers discrimination because of their association with a person with a protected characteristic. UK law currently provides for associative direct discrimination and associative harassment. The Advocate General’s opinion in Chez Razpredelenie Bulgaria AD now suggests that the principle may also extend to indirect discrimination claims. The opinion relates to discrimination in the provision of goods and services, not employment law, but if the ECJ follows this opinion, it could necessitate a significant change to the Equality Act 2010.

Injury to feelings awards aren’t taxable

The EAT, in Timothy James Consulting Ltd v Wilton, held that injury to feelings awards are not taxable. This decision runs contrary to other case law and to the current approach of HMRC, creating considerable uncertainty. Read more for further discussion on this issue.

TUPE – service change provisions can apply even when activities are carried out on behalf of more than one “client”

In Ottimo Property Service Ltd v Duncan, the EAT was asked to consider whether, in the context of a service provision change, the reference to “client” (i.e. the party who is outsourcing its activities) was broad enough to cover groups of clients. The issue arose in relation to a maintenance manager who provided services to several residential blocks, each operated by their own management company.

The EAT held that there could be a service provision change where there were a group of clients. For this to be the case, however, the clients must be the same before and after the transfer and they must share a common intention. This is a new point of law and permission was given to appeal to the Court of Appeal. This case is of particular relevance to real estate transactions where this type of structure is common.

April 2015 employment law changes

5th April 2015 sees the introduction of Shared Parental Leave and substantial changes to other family leave rights. You can find out more with our guide to key facts and figures, and a summary of the changes.

6th April 2015 sees increases in various rates and limits:

  • For dismissals where the effective date of termination is on or after 6 April 2015:

    • the maximum amount of a week’s pay, used to calculate unfair dismissal basic awards and statutory redundancy payments, rises to £475 (from £464).
    • This means the new maximum statutory redundancy payment is £14,250 (up from £13,920).
    • The maximum compensatory award for ordinary unfair dismissal claims increases to £78,335 (from £76,574) – subject also to the additional cap of a year’s pay, if lower.

  • The flat weekly rate for statutory maternity pay, adoption pay, paternity pay and shared parental pay increases to £139.58 (from £138.18).
  • Statutory Sick Pay increases to £88.45 per week (from £87.55)

Financial Services Updates

There have been several developments in the financial services sector:

  • The PRA and FCA have issued a joint consultation on whistleblowing in “relevant firms”. The deadline for responses is 22 May 2015.
  • The European Banking Authority has published a consultation on sound remuneration policies under CRD IV.
  • The FCA has published a statement confirming that the new Senior Managers and Certification Regime will start on 7 March 2016.

Revised Acas Code of Practice on Disciplinary and Grievance Procedures

Acas has revised its Code of Practice on Disciplinary and Grievance procedures. The main changes relate to the right to be accompanied: the Code now confirms that the requirement for requests to be reasonable relates to the making of the request and not to the choice of companion. T

New Guidance on Whistleblowing

BIS has issued new guidance for employers and Prescribed Persons on whistleblowing. This guidance has been issued in lieu of formal action recommended by the Whistleblowing Commission.

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