HR Two Minute Monthly - January 2014


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Summary: This month’s summary of employment law developments includes cases on the extent to which an employer can rely on an occupational health report, when an individual is not in employment for the purposes of the Equality Act and ill-health dismissals, as well as the Advocate General's opinion that commission payments should be included in the calculation of holiday pay.

Beauty consultant was not in employment for the purposes of the Equality Act

For the first time, the Employment Appeal Tribunal (EAT) has considered who is in “employment” for the purpose of claiming discrimination under the Equality Act 2010.

In Halawi v WDFG UK Ltd (t/a World Duty Free) and another, the EAT held that Mrs Halawi, a beauty consultant working in the World Duty Free store at Heathrow airport, was unable to bring a claim for discrimination as she was not in employment for the purposes of the Equality Act.

Mrs Halawi worked through a complicated arrangement providing her services to a management company, which supplied staff to sell Shiseido cosmetics in World Duty Free shops. Mrs Halawi did not contract directly with the management company, but instead set up her own limited company for this purpose. There was no obligation on Mrs Halawi to work personally, and on occasion she sent a substitute. She did not get paid if she did not work and could refuse work.

In these circumstances, Mrs Halawi was not in employment for the purposes of discrimination law. Mrs Halawi had no contract personally to do work and there was insufficient control over her working arrangements to amount to an employment relationship. While Mrs Halawi may have looked like an employee to a member of the public at the airport, she was neither a worker nor an employee of the management company or the World Duty Free store.

It is important to remember that the test for employment in the field of discrimination is much broader than the narrower test applied for claims such as unfair dismissal.

Whistleblowing: Recommendations from Public Concern at Work’s Commission

A commission set up by the charity Public Concern at Work has published a report, which makes 25 recommendations for improving protection for whistleblowers and encouraging compliance with whistleblowing law. The report is significant because the government has said that it will take this report into account and consider changes to legislation, or introduce statutory codes of practice or guidance.

The recommendations include:

  • Issuing a code of practice on whistleblowing, which would have to be taken into account by tribunals when deciding whistleblowing claims.
  • Referring whistleblowing claims to the relevant regulator, unless the claimant objects.
  • Extending the scope of whistleblowing protection to (amongst others) job applicants, volunteers, interns, partners and non-executive directors.
  • Extending the current six categories of relevant wrongdoing.
  • Clarifying that so-called “gagging clauses” do not prevent a worker from blowing the whistle.

Requiring Christian to work on Sundays was justified

The Court of Appeal in Mba v Mayor and Burgesses of the London Borough of Merton has upheld a Tribunal’s ruling that Merton Council was justified in requiring a Christian care worker to work on a Sunday.

Mrs Mba worked in a home for children with complex needs, who needed round the clock care.  Under Mrs Mba’s contract of employment, the Council could require her to work on a Sunday. Mrs Mba believes that Sunday should be a day for worship, not work. The Council tried to accommodate Ms Mba’s belief and she was not required to work on a Sunday for two years. However, eventually the Council decided that the arrangement could no longer be accommodated and required Mrs Mba to work her share of Sundays.  The Council looked at whether there were any other ways of achieving its aim of running the care home effectively in terms of the service it provided and taking into account cost and staffing considerations, without requiring Mrs Mba to work on a Sunday, but found none.

The Court of Appeal held that the tribunal was wrong to say that Mrs Mba’s claim should fail on the basis that not working on a Sunday was not a ‘core’ part of Christianity. The Court said that it was not necessary to show that most or all Christians believed that not working on a Sunday was a fundamental belief. The focus should be on Mrs Mba’s belief.

However, despite succeeding in this argument, Mrs Mba’s claim failed because the Court of Appeal found that, although the Council’s requirement for Mrs Mba to work on a Sunday indirectly discriminated against her, it could be justified. The key factors in this decision were that there were no other viable and practical alternatives to requiring Mrs Mba to work on a Sunday and that Mrs Mba agreed to work on Sundays in the employment contract that she signed. Employers should ensure that they consider alternatives thoroughly before introducing a potentially discriminatory practice.

Acas consultation on the right to be accompanied at disciplinary and grievance hearings

UK employment legislation provides employees with the right to be accompanied at disciplinary and grievance hearings where they reasonably request to be accompanied. In the case of Toal v GB Oils Ltd, the EAT held that the concept of reasonableness only applies to the making of the request, not the identity of the companion. Therefore, subject to the companion satisfying the test of being a trade union representative or a colleague, employers cannot refuse to allow an employee to be accompanied by a particular person where the employee has made a reasonable request.

This decision has subsequently been followed by a different division of the EAT in Roberts v GB Oils Ltd, and ACAS has launched a consultation on revisions to the Acas Code of Practice on Disciplinary and Grievance Procedures.  Acas is seeking views on changes to the Code relating specifically to the legal right of workers to be accompanied at a disciplinary or grievance hearing.

Employers wishing to resist an employee’s choice of companion should consider the effect of such refusal, and in particular whether this could impact on the fairness of the disciplinary or grievance outcome.

Commission payments to be included in calculation of holiday pay

In the case of Lock v British Gas Trading Ltd and others, the Advocate General gave an Opinion that, where a worker’s remuneration is made up of salary and regular commission (or another regular variable element intrinsically linked to their role), this should be included in the calculation of holiday pay.

Mr Lock was paid a basic salary each month, along with commission payments for sales agreements entered into by clients. Commission was also paid monthly, but was paid some time after the sale was agreed, and comprised about 60% of his total remuneration.  When Mr Lock went on holiday, he received basic salary and any commission due to be paid that month. However, in the months following his holiday, his remuneration would be less because he had been unable to make any sales during his holiday.  Mr Lock brought a claim for holiday pay in respect of unpaid commission.

In the Advocate General’s opinion, Mr Lock’s holiday pay should include a payment for the commission that he was unable to earn because he was on holiday.  The Advocate General said that if a worker’s holiday pay does not include commission, this may deter him from taking his holiday entitlement. He said that it was for the national court to decide how that extra payment should be calculated but that it should be commensurate with the pay that he earned normally whilst at work.  The Advocate General suggested that it could be the average amount received by the worker over a representative period, for example, the previous 12 months.

The ECJ is not obliged to follow the Advocate General’s Opinion, but if it does, this may have financial consequences for employers with workers who receive regular commission or other payments.

Changes to TUPE Regulations

The government has confirmed that changes to the TUPE Regulations will come into force on 31 January 2014.

The amendments include allowing changes to the workforce's location following a transfer to amount to an “economic, technical or organisational reason entailing changes in the workforce”. This means that redundancies arising in such circumstances are potentially fair.

Significantly, the service provision change element of the regulations is being retained. A summary of the changes can be found in our BLP: Looking Ahead factsheet on the proposed changes to TUPE.

Knowledge of disability: reliance on occupational health report

In Gallop v Newport City Council, the Court of Appeal held that an employer was not entitled to rely on the view of occupational health that an employee was not disabled for the purposes of discrimination law. The employer must apply its own mind to the test for disability.

Mr Gallop was absent from work due to stress. The Council took advice from occupational health, who said that Mr Gallop was suffering from a stress-related illness but that he would not be covered by disability discrimination legislation.

The Council relied on this report to say it had no knowledge of his disability (nor ought it to have had knowledge). Therefore, the Council argued that was not in breach of its duty to make reasonable adjustments, which requires such knowledge. This argument succeeded at the tribunal and EAT, but was overturned by the Court of Appeal.

The Court of Appeal held that employers should make their own judgement as to whether an employee is disabled. Whilst it is likely that this will involve seeking medical advice, an employer cannot simply accept a medical adviser’s opinion that an employee is not disabled.  Employers should ask the medical adviser specific practical questions, directed to the particular circumstances of the employee’s condition, and use the response received to form a judgement as to whether the criteria for a disability are satisfied.

Ill-health dismissals

The Scottish Court of Session in BS v Dundee City Council has reviewed the law relating to long term ill-health dismissals.

The employee, BS, was off work with depression for over a year, signed off for eight weeks at a time.  He was given a date by which he was to return to work or the Council would consider dismissal. BS did not return by that date and was dismissed.

The Court held that the key question in long term ill-health dismissals is whether the employer can be expected to wait any longer before deciding to dismiss.

In reaching a decision to dismiss, the employer should consult the employee and take his views into account. It must also ascertain the medical position and the employee’s prognosis, but this does not require the employer to pursue a detailed medical examination. Instead, a balancing exercise between the needs of the employer and the employee should be carried out, taking into account the availability of temporary cover (including its cost), whether the employee has exhausted his sick pay, the administrative and occupational health costs that might be incurred and the size of the employer. Each case will be very fact specific.

In this case, the final occupational health report received by the Council prior to BS’s dismissal said that his condition was improving and BS would expect to return in one to three months, if he were signed fit by his GP.  However at the final meeting between BS and the Council prior to dismissal, BS said that he was not ready to come back and was not any better.  The tribunal found that the Council should have got a further medical report before taking the decision to dismiss, and gave little weight to what BS had said about his return.  The Court and the EAT disagreed with the tribunal and held that in this case, further medical evidence was unlikely to have been helpful and BS’s opinion should have been included in the balancing exercise that was required.

Disclosed documents may only be used for the purposes of those proceedings

In IG Index plc v Cloete the High Court struck out proceedings in which the claimant relied on information and documents disclosed in earlier employment tribunal proceedings without the Court's permission.

Mr Cloete claimed unfair dismissal against IG Index in the employment tribunal.  The list of documents that Mr Cloete disclosed during the tribunal proceedings showed that he had confidential documents in his possession, which belonged to IG Index. IG Index brought a claim in the High Court for damages against Mr Cloete in relation to breach of the express terms of his contract with IG Index.  The High Court held that IG Index had used the information disclosed in the tribunal to bring the claim for damages and struck out IG Index’s claim.

The case is an important reminder of the rule that a party may use disclosed documents only for the purpose of the proceedings in which they are disclosed.

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