Category Archives: EAT

Commission Payments Add Value to Holiday Pay!

FG Solicitors - Holiday Pay CommissionSUMMARY: Employers will need to take into account commission payments when calculating holiday pay.

The Employment Appeal Tribunal (“EAT”) has handed down its decision in the case of British Gas Trading Limited v Mr Z J Lock & Secretary of State for Business, Innovation and Skills.

The issue for the EAT, in the Lock case, was whether holiday pay must take into account elements of normal pay such as commission. In October 2014, the EAT was already scrutinising how employers calculated holiday pay and ruled in Bear v Fulton that employers must take into account non-guaranteed overtime payments when calculating pay for the basic four week holiday entitlement under regulation 13 of the Working Time Regulations 1998. Unsurprisingly, in Lock, the EAT has decided that workers’ remuneration for annual leave periods must also include both commission and basic pay, if this is what they are normally paid.

The Law:

Under the Working Time Regulations 1998 (“WTR”) all workers have a statutory holiday entitlement of 5.6 weeks’ annual leave and they are entitled to be paid at the rate of a week’s pay for each week of statutory holiday. This entitlement is pro-rated for part-time workers.

The WTR derives from the European Working Time Directive (“WTD”), however, the WTD only entitles employees to 4 weeks’ holiday, which is 1.6 weeks’ less than the WTR entitlement.

The Facts of the Lock case:

Mr Lock, who was employed by British Gas as a salesman, had a remuneration package that included a basic salary plus commission which was based on the number and type of contracts he persuaded customers to enter into.  However, the remuneration that he received when he took holiday consisted of basic salary and any commission which he had earnt prior to his leave commencing but that fell due during his period of holiday. This meant he could not earn commission when he was on leave and, as his basic pay was significantly less than his normal pay, this was a disincentive to take annual leave.

In April 2012, Mr Lock claimed to an Employment Tribunal (“ET”) that the failure to pay him commission for the period that he was on holiday leave was contrary to the WTR. As the WTR derive from European law, the ET referred the matter to the Court of Justice of the European Union which ruled that the WTD provides that results based commission should be taken into account when calculating holiday pay. The ET subsequently held that the WTR could be interpreted so as to include commission payments in the calculation of holiday pay for the four weeks’ annual leave provided by Regulation 13 of the WTR.

The ET’s decision was appealed by British Gas. The EAT dismissed the appeal.

Implications for businesses:

  • If workers’ remuneration ordinarily comprises basic pay and commission businesses will need to calculate holiday payments for a worker’s 4 weeks’ statutory holiday entitlement (pro-rated for part-time workers) so that it includes commission which would have been earned but for the taking of leave.
  • Businesses may choose to pay the remaining 1.6 weeks’ statutory entitlement excluding commission, which would have been earned but for the taking of leave.
  • Failure to include commission when calculating holiday pay for the 4 weeks’ entitlement means the worker may apply to the ET for any underpayments provided that the claim is made within 3 months of that underpayment being made. If a claim involves a series of underpayments, any claims for the earlier underpayments will fail if there has been a break of more than three months between such underpayments.
  • Any claims presented to the ET for a series of backdated deductions from wages, including any shortfall in holiday pay, will be limited to cover a period of a maximum of 2 years.

British Gas Trading Limited v Mr Z J Lock & Secretary of State for Business, Innovation and Skills UKEAT/0189/15

Contact Details

For more details about the issues in this article or if you would like advice on how to calculate holiday pay, please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.

HOT OFF THE PRESS: Commission to be included in holiday pay

Megaphone - Hot Off the Press (123rf ref 8981071)The Employment Appeal Tribunal (“EAT“) has given its decision in the Lock case today.

In summary, the EAT has decided that workers’ remuneration for annual leave periods must include both commission and basic pay if this is what they are normally paid.

We will be producing a full update on the decision and its implications for businesses. However, if you have any questions in the meantime, please do not hesitate to contact a member of our employment law team.

Contact details:

fgmedia@fgsolicitors.co.uk

+(0) 808 172 93 22

Is Caste Discrimination a Workplace Consideration?

 

DiscriminationSUMMARY: Chandhok and another v Tirkey establishes that race discrimination can include caste discrimination.

Caste discrimination in the workplace

The recent Employment Appeal Tribunal (“EAT”) decision in Chandhok and another v Tirkey (“the Tirkey case”) caused a bit of a stir. Whilst many of us focused on the significant award of nearly £184,000 made to the claimant, a domestic worker, in relation to her minimum wage claim, the case was of greater importance as it considered the issue of caste discrimination in the workplace. Until now there has been much debate as to whether a worker who had suffered caste discrimination had the right to legal redress.

Caste usually refers to social levels in certain cultures and racial groups. The impact is that individuals’ positions in society are fixed by birth or occupation and are hereditary. For example, an individual’s caste could be determined by the occupation of their forefathers.

In 2010 the Government-commissioned report on caste discrimination (“the 2010 report”) recognised that caste discrimination could be an issue for employers. This was the case even though from a legal perspective the concept was not expressly addressed in the Equality Act 2010, which only makes reference to “race” which includes “colour; nationality; ethnic or national origin”.

Examples of workplace caste discrimination

The 2010 report did however provide examples of workplace caste-based unfair treatment, bullying and harassment. These included:

  • Exclusion from work social events and networks.
  • Humiliating behaviour such as “women of so called upper castes not taking water from the same tap from where the so called lower caste person drinks”.
  • Bullying and harassment by superiors which also affected promotion, task allocation and dismissal.  Examples given included:
    • Not permitting someone of a low caste to take holiday when requested.
    • An individual being promoted to manager but his team not accepting his authority because he was of lower caste than them.
  • Recruitment – if employees are taken on by recommendation, this could be because they are of the same caste.
  • Task allocation – a higher caste manager was alleged to allocate better paid work to higher caste employees.

The equal treatment principal

Whilst employers are fully familiar with the legal requirement that all workers must be treated equally regardless of a protected characteristic under the Equality Act 2010, caste discrimination has always been a grey area.

Caste discrimination is a type of race discrimination

The Tirkey case has however provided some long awaited clarity, confirming that caste discrimination can be classified as a type of race discrimination. This case also provides a clear (if extreme) example of caste discrimination in the UK – on the particular facts it was found that Ms T was the victim of unlawful harassment on the ground of her race (as well as other successful claims).

The facts of this case are as follows:

  • Ms T worked for Mr and Mrs C as a domestic worker. Her caste (which is inherited and immutable) is the Adivasi, which is known as a “servant caste”. Adivasis have been recognised as being at the lowest point of almost every socio-economic indicator, and are frequently equated with Dalits (once known as “untouchables”). Ms T claimed that Mr and Mrs C treated her badly and in a demeaning manner, and that this was in part because of her low status which was infected with considerations of caste.
  • The employment tribunal was told that over a four and a half year period Ms T:
    • worked an 18-hour day, seven days a week;
    • slept on a foam mattress on the floor;
    • was prevented from bringing her Bible to the UK and going to church;
    • had her passport held by Mr and Mrs C and she had no access to it;
    • was not allowed to call her family; and
    • was given second-hand clothing instead of choosing her own clothes.

This is (we hope) an extreme situation which does not involve a normal employer/employee relationship. Employers should however be aware that caste discrimination can and does occur in many business situations.  The 2010 report stated that caste awareness in Britain is concentrated amongst people with roots in the Indian subcontinent, who comprise five per cent of the population.

Equality and diversity initiatives can be beneficial

Employers with robust management initiatives around equality and diversity should be in a position to prevent unlawful discrimination on the grounds of a worker’s caste.  Main considerations for any equality and diversity strategy should involve the following:

  • Having a top level commitment to equality and diversity in the workplace.
  • Ensuring there is an equal opportunities policy in place which makes it clear that discrimination, bullying and harassment will not be tolerated. Employees should be made aware of the existence of the policy and the likely sanctions for breaching it.
  • Making sure equality training is an integral part of any training programme.
  • Analysing business decisions and practices which could have the effect of discriminating on the grounds of any protected characteristic including race (caste).  Areas for review include: discipline and grievances; recruitment; promotion; pay and reward; terms and conditions; and access to training.
  • Investigating complaints of discrimination, bullying and harassment under the grievance procedure or, where relevant, the anti-harassment and bullying policy.
  • Having strategies which ensure that the workforce is diverse and is representative of the areas/communities from which it is drawn.
  • Monitoring the effectiveness of the equal opportunities policy.
  • Taking remedial action where inequality is identified.

Those businesses that strive to remove workplace bias will find themselves much better off in terms of staff morale, productivity and access to untapped talent.

Cases

Chandhok and another v Tirkey [2015] IRLR 195

Contact details

For more details about discrimination in the workplace, developing workplace equality and diversity strategies and training please contact:

fgmedia@floydgraham.co.uk

+44 (0) 1604 871143

This update is for general guidance only and does not constitute definitive advice.

Carrying over holiday entitlement when on sick leave – how much and when?

HolidaysSUMMARY: In the recent case of Plumb v Duncan Print Group Ltd UKEAT/2015/0071, the EAT dealt with the issue of a sick worker’s right to carry over holiday entitlement.

Holiday is a hot topic for employers – recent decisions on holiday pay have led many employers to re-think how overtime could be taken into account in such payments.

However, an equally vexing problem which employers need to solve is how to deal with the holiday entitlement of those workers who are on sick leave. The EAT considered this in the recent case of Plumb v Duncan Print Group Limited.

Background

As a reminder, there are the following important principles to take into account when considering a sick worker’s entitlement to annual leave:

  1. Workers are generally only entitled to take annual leave in the leave year in respect of which it is due. For example, if the leave year is between January and December, an employee must take all of their annual leave entitlement by the end of December.
  1. An exception to the principle in point 1 is that annual leave may be carried over where the worker was unable or unwilling to take annual leave because he was on sick leave and as a consequence did not exercise his right to annual leave. The worker does not have to have made a request for annual leave in order to carry it over.
  1. On termination of employment, if the worker is entitled to annual leave in respect of any previous leave year which was carried over because of sick leave, the employer should pay the worker in lieu of that annual leave.

When considering carrying over annual leave, we are only referring to carrying over the 4 weeks of annual leave that a worker is entitled to under the (European) Working Time Directive, not the additional 1.6 weeks that a worker is entitled to under the (British) Working Time Regulations or any additional contractual annual leave.

Where clarity was required

There were 2 areas which needed clarity:

  1. How far back should a payment in lieu of holiday go on the employment ending?

In relation to point 3 above, it is clear that a worker should be paid in lieu for holiday they were unable to take because of sick leave.  What was not clear before this case, was how far back a worker could claim holiday for.  To take an extreme example, if they had been off sick for 5 years and had not taken any holiday, if their employment was terminated in the sixth year, could they claim a payment in lieu of all the 5 years of holiday they had been unable to take?

  1. Should a worker unwilling but able to take annual leave be entitled to carry over holiday?

Another point which required clarity was whether a worker who was unwilling to take annual leave during sick leave should be permitted to carry it over, even if he would have been physically able to take the annual leave during the sick leave period, had he chosen to do so.

Facts of the case

Mr P (the employee) was on sick leave between 26 April 2010 and 10 February 2014, when his employment terminated.  Mr P did not take or request any holiday until summer 2013 when he requested permission to take all of his accrued holiday from 2010 onwards.  The employer agreed to pay for accrued holiday for the current leave year (2013/2014) but refused to pay for untaken holiday for the previous 3 leave years.  The leave year ran from 1 February to 31 January.

Mr P brought a claim for payment in lieu of untaken leave for the 2010/2011, 2011/2012 and 2012/2013 leave years. The employment tribunal dismissed his claim and he appealed to the EAT (Employment Appeal Tribunal).

Decision

The EAT allowed Mr P’s appeal in respect of accrued leave for the 2012/2013 holiday year (i.e. he would be entitled to a payment in respect of these years), but dismissed his appeal in respect of accrued leave for the previous two holiday years.

The EAT made it clear that:

  • Sick workers can carry over untaken holiday leave for 18 months after the end of the leave year.
  • Sick workers are not required to demonstrate that they are unable to take their holiday.  They can choose not to take holiday during sick leave.

What does this mean for employers?

  • Employers now have more clarity on how much annual leave an employee can carry over from previous years.  Taking the example given earlier, an employee on the termination of their employment would not be entitled to payment in lieu of annual leave for the entire 5 years they had been off sick.  They could only carry over untaken holiday leave for 18 months after the end of the leave year and on termination would be entitled to a payment in lieu of this holiday.  A practical example of this would be:
    • The leave year runs between 1 January and 31 December.
    • Mr A has a full time contract and is off sick from 1 January 2010 until his dismissal on 1 January 2015.
    • Mr A has not taken any annual leave in this 5 year time period and his contract of employment does not state anything about carrying over annual leave.
    • Mr A would be entitled to a payment in lieu of 8 weeks annual leave on the termination of his employment.  This relates to the annual leave for the leave year ending 31 December 2013 and for the leave year ending 31 December 2014.
  • Employers should check their contracts of employment in relation to the carry-over of holiday entitlement.  If employers allow more carry-over of annual leave than is necessary, employers may want to amend these contracts.  Contracts should also not set out that carry-over of annual leave is never permitted.
  • Employers should permit workers to carry over untaken annual leave while they are on sick leave even if they consider that workers would have been able to take this annual leave had they chosen to do so. Whether to take annual leave during sick leave is a decision for the worker and they are entitled to choose not to take the annual leave even if they would have had the ability to take it.  They are also not required to request the annual leave if they wish to carry it over.

Cases

Plumb v Duncan Print Group Ltd UKEAT/2015/0071

Contact Details

For more details about holiday leave entitlement and its interaction with sick leave please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 1604 871143

This update is for general guidance only and does not constitute definitive advice.

STOP PRESS: Overtime = Holiday Pay

FG Solicitors Stop PressEmployment Appeal Tribunal (“EAT”) Hands down Judgment in Relation to Holiday Pay

Broadly, the appeal involves a determination of the meaning of ‘normal remuneration’ in a number of cases. The European Directive provides that employees are entitled to be paid ‘normal remuneration’ during holidays to which they are entitled under EU Law. This has been interpreted to mean their typical average pay and not only basic pay.

By comparison, the UK law entitles employees with normal working hours to receive basic pay only during any period of holiday.

The conclusion of the EAT in this appeal is that employees are entitled to be paid their average earnings. So by way of example, overtime payments would be accounted for in calculating an employee’s holiday pay.

Potentially, a significant number of UK workers, who have historically received basic pay only, may now have claims for unlawful deduction of wages given that the employers’ appeal in this case has failed.

The employers’ appeal to the EAT has however succeeded on the issue of how far back employees can claim. The position now appears to be that if there is a gap of more than 3 months in any claimed series of deductions, the Employment Tribunal will lose its jurisdiction to hear claims for the earlier deductions.

More to follow…

Cases:

Bear Scotland Ltd v Fulton and Baxter

Hertel (UK) Ltd v Wood and Others

Amec Group Ltd v Law and Others

Please contact FG Solicitors for further information on what employers should be doing now.

fgmedia@fgsolicitors.co.uk

+44 (0) 1604 871143

This update is for general guidance only and does not constitute definitive advice. 

Right to be Accompanied – ACAS Code to be amended

FG Solicitors - Right to be accompaniedSUMMARY: An Employment Appeal Tribunal has held that the choice of companion is absolute when an employee has the right to be accompanied and, subject to the companion being a fellow worker or trade union official, does not need to be reasonable.  The ACAS Code will be amended accordingly.

Legal Background

Most employers are aware that employees have the right to be accompanied by a fellow worker or trade union official at a disciplinary or grievance meeting.

The ACAS Code currently suggests that it would not be reasonable for an employee to be accompanied by a companion whose presence would compromise the hearing or who was based in a remote geographical location.

However, the ACAS Code does not have statutory force.  It is the wording of the legislation that should always take precedence as can be seen by this case.

Facts of this case

The employees requested to be accompanied by Mr L, a union official, at a grievance meeting.  The employer refused the request, so they were accompanied by a different companion at the meeting.

The employees subsequently brought claims that their right to be accompanied had been breached.

The Employment Appeal Tribunal’s (EAT) decision

The EAT, overturning the Employment Tribunal’s decision, held that the employees could not waive their right to be accompanied and that they had an absolute right to choose their companion, so long as the companion was a trade union official or fellow worker.  By not permitting the employees to be accompanied by their choice of companion, the employer had breached their rights which were set out in legislation.  This was the case even though the employees had agreed to be accompanied by a different companion and despite the ACAS Code indicating that there were circumstances in which an employer could reject an employee’s choice of companion due to unreasonableness.

The EAT however considered that the effect of the breach was minimal and that compensation should reflect this; it suggested that the employees could be awarded a nominal sum of around £2.  The legislation states that a failure to allow a worker to be accompanied attracts an award of compensation of up to 2 weeks’ pay (which is currently capped at £450 per week).  It will be for the Employment Tribunal to decide the exact amount of compensation on the above facts.

Subsequently, ACAS has announced that it intends to amend the ACAS Code to reflect the EAT’s decision.

What does this mean for employers?

Employers should always ensure that they permit employees to be accompanied at grievance or disciplinary meetings by their choice of companion, so long as the companion is a trade union official or fellow worker.  If the companion may prejudice the hearing, employers should not generally insist on the employee having a different companion.

Employees have a free-standing right to bring a claim for a breach of their right to be accompanied.  However, given that the compensation for such claims is likely to be low, and that a tribunal fee will need to be paid before such a claim can be brought, such claims are likely to be an unattractive for most employees.  Employees may take their chances in rolling such a breach into a decision to bring a claim for unfair dismissal or constructive unfair dismissal instead, where the potential compensation awards are significantly higher.

We would therefore always advise taking legal advice if an employer is considering rejecting an employee’s choice of companion.

Case: Toal and another v GB Oils Ltd UKEAT/0569/12, 22 May 2013.

Contact Details

For more details about this case or the right to be accompanied please contact:

fgmedia@floydgraham.co.uk

+44 (0) 1604 871143

This update is for general guidance only and does not constitute definitive advice. 

Paying for private psychiatric treatment is reasonable adjustment

8080232_mSUMMARY: An Employment Appeal Tribunal confirms that a reasonable adjustment would have been for the employer to pay for psychiatric treatment for an employee

Legal Background

The Equality Act 2010 imposes a duty on employers to make reasonable adjustments to help disabled employees in certain circumstances.   This includes where a disabled person is placed at a substantial disadvantage by an employer’s provision, criterion or practice (PCP).  The PCP in this case was that the employee be able to return to work performing the essential functions of her role.

This case was decided under the Disability Discrimination Act 1995 and the code of practice in force in 2010, but the Equality Act 2010, now in force, is not materially different.

Facts of this case

Mrs B, a reception and finance manager, went off sick with work-related stress and severe depression on 4 May 2010 and never returned to work.

Her employer asked for her to be referred to a private consultant psychiatrist, Dr P, who she saw in August 2010.  Dr P suggested specialist cognitive behavioural therapy and 6 psychiatric sessions at a cost not exceeding £750, saying that there would be no guarantee that she would be able to return to work but he was hopeful that would be the outcome.

The employer asked Dr P further questions, to which he responded in October and then the employer asked more questions.  Before Dr P responded to these further questions, Mrs B resigned on 23 November 2010, stating that the employer had ignored Dr P’s recommendations and claiming disability discrimination (failure to make reasonable adjustments) and unfair constructive dismissal.

The Employment Appeal Tribunal’s (EAT) decision

The EAT upheld the Employment Tribunal’s decision that the employer had failed to make reasonable adjustments by failing to refer Mrs B to private psychiatric services and/or counselling by October 2010 at the latest.

The EAT considered that the reasonable adjustments were job-related because they involved payment for a specific form of support to enable Mrs B to return to work and to cope with the difficulty she had been experiencing at work.

It was not sufficient that the employer had offered Mrs B a different job at a substantially reduced salary.

The EAT also noted that at no time between 19 August and 23 November 2010 did the employer take any steps to resolve with Mrs B her concerns.  Instead, there was effective silence from July 2010.

What does this mean for employers?

Employers should be aware that both mental and physical illnesses can constitute disabilities.  If there is a possibility of a disability and suggestions are made as to how the employee can be helped, even if it is uncertain that the assistance will result in the employee being able to return to work, these should be given serious consideration.

This consideration should include consultation with the employee, who should not be left without communication once they are on long term sick leave.  The employer should have very good reasons for not making suggested reasonable adjustments and should be aware that such adjustments can include paying for private medical treatment, even if this may be available on the NHS.

Case: Croft Vets Ltd v Lynda Butcher (UKEAT/0430/12/LA)

Hazel Robbins, Solicitor

Contact Details

For more details about this case or making reasonable adjustments please contact:

fgmedia@floydgraham.co.uk

+44 (0) 1604 871143

This update is for general guidance only and does not constitute definitive advice.

Follow the ACAS Code

Yellow Brick Road

SUMMARY: A recent case has emphasised that if in doubt, employers should follow the ACAS Code of Practice, even if the dismissal is for “some other substantial reason”. Continue reading

Disciplinary appeals – is there a risk in changing the sanction?

16524281_sSUMMARY:  In a recent case, the Employment Appeal Tribunal (EAT) (overturning an Employment Tribunal decision) held that a decision on an internal appeal to overturn a decision to dismiss and instead demote the employee still amounted to dismissal. Continue reading

Facebook related claims update – balancing freedom of speech with rights to protection against discrimination

Social Media Apps (123ref)SUMMARY: Recently there have been two claims involving postings on Facebook, one in the Employment Appeal Tribunal and one in the High Court. Continue reading