NEWSLETTER VOLUNTARY OVERTIME MUST BE INCLUDED IN HOLIDAY PAY EMPLOYMENT. October 2017

Transcription

1 October 2017 NEWSLETTER EMPLOYMENT VOLUNTARY OVERTIME MUST BE INCLUDED IN HOLIDAY PAY In Dudley Metropolitan Borough Council v Willetts and others, the Employment Appeal Tribunal (EAT) has provided further clarification of the law on holiday pay, confirming that voluntary overtime can qualify as normal remuneration if it is paid over a sufficient period of time on a regular basis. This case was brought by 56 employees of Dudley Metropolitan Borough Council. As well as working their set contractual hours, they volunteered for additional duties and participated in on-call rotas for which they were paid a standby allowance plus a call-out payment if they had to work whilst on call. There was no obligation on the employees to accept an offer of overtime, or to participate in the on-call rota. The employees claimed that their holiday pay should include this voluntary overtime, as well as out-of-hours standby and call-out payments. The Employment Tribunal held that, for most of the employees, Jesper Christensen (Partner) E jesperchristensen@bdb-law.co.uk T +44 (0) Bircham Dyson Bell LLP Broadway London SW1H 0BL 51 Hills Road Cambridge CB2 1NT

2 2 October PAYMENTS FOR VOLUNTARY ELEMENTS OF WORK, NOT JUST OVERTIME, MUST BE TREATED NO DIFFERENTLY FOR HOLIDAY PAY PURPOSES THAN THE COMPULSORY NON- GUARANTEED OVERTIME... the voluntary overtime pay and allowances should have been included in holiday pay for the four weeks statutory minimum leave because they were paid with sufficient regularity to be considered part of normal remuneration. The EAT agreed with the Tribunal s reasoning. It is an established principle of EU law that holiday pay must correspond to normal remuneration so as not to deter workers from taking their annual leave. Whether a payment amounts to normal remuneration is for a Tribunal to decide on the facts of a particular case, but any elements of pay that are sufficiently regular or recurring are likely to qualify as normal. The EAT rejected the Council s argument that a payment must be intrinsically linked to the performance of tasks under the contract of employment, a test which has been applied in previous cases. In the EAT s view, once the claimants began working a shift of voluntary overtime or a period of standby or call-out, they were performing tasks required of them under their contracts of employment in any event. This decision clarifies that payments for voluntary elements of work, not just overtime, must be treated no differently for holiday pay purposes than the compulsory non-guaranteed overtime dealt with in Bear Scotland Ltd v Fulton. Employers should now assess whether employees receive regular payments which should be included in their statutory holiday pay. This may not always be straightforward, and the EAT did not provide guidance on what level of regularity or frequency is required for a payment to qualify as normal remuneration.

3 3October 2017 EMPLOYMENT APPEAL TRIBUNAL PROVIDES GUIDANCE ON MEANING OF UNFAVOURABLE TREATMENT IN DISCRIMINATION ARISING FROM DISABILITY CLAIM In Williams v The Trustees of Swansea University Pension and Assurance Scheme, the Court of Appeal has considered an employee s claim that the University s failure to base his ill-health pension on his previous full-time salary, rather than the part-time salary he was being paid at the date of his retirement, amounted to unfavourable treatment. Aisleen Pugh (Associate) E aisleenpugh@bdb-law.co.uk T +44 (0) A disabled employee can bring a discrimination arising from disability claim if their employer treats them unfavourably because of something arising in consequence of their disability, and the employer cannot show that this treatment was objectively justified (section 15, Equality Act 2010)....HE WAS ALLOWED TO TAKE HIS ACCRUED PENSION BENEFITS IMMEDIATELY, RATHER THAN HAVING TO WAIT UNTIL HIS NORMAL PENSION DATE... Mr Williams was employed by the University from 2000 until his retirement on grounds of ill health in 2013 at the age of 38. In 2010, at his request, he had reduced his hours from full-time to part-time due to his disability. Under the pension scheme rules, he was allowed to take his accrued pension benefits immediately, rather than having to wait until his normal pension date. His benefits were significantly enhanced in that he was treated as if he had accrued further pensionable service for the period of more than 28 years from his actual retirement date to his normal pension date. This was based on his final, part-time salary. Mr Williams brought a claim for unlawful discrimination arising from disability in the Employment Tribunal, arguing that his benefits should have been based on his full-time equivalent salary, not his part-time salary. The Employment Tribunal upheld his claim, finding that he had been treated unfavourably and that although the University had established a legitimate aim, they had not established that the treatment was a proportionate means of achieving that aim. After the University successfully appealed to the Employment Appeal Tribunal, Mr Williams appealed to the Court of Appeal. The Court of Appeal has now dismissed Mr Williams claim, ruling that he was not treated

4 4 unfavourably. Under the University Pension Scheme rules, only disabled employees were entitled to retire early and receive an enhanced pension. Mr Williams had therefore been treated more advantageously than non-disabled employees. The fact that Mr Williams was working part-time hours because of his disability could not be enough to shift the burden onto the employer to justify the treatment. Treatment that confers advantages on a disabled person will not amount to unfavourable treatment just because it could have been more advantageous. Employers will welcome this decision which confirms that a discrimination arising from disability claim will not succeed just because an individual who is treated advantageously believes that they could have been treated better. However, Mr Williams is believed to be seeking permission to appeal to the Supreme Court. EMPLOYMENT APPEAL TRIBUNAL RULES THAT A WEEK S PAY SHOULD INCLUDE EMPLOYER PENSION CONTRIBUTIONS UNDER THE EMPLOYMENT RIGHTS ACT October 2017 In University of Sunderland v Drossou, the Employment Appeal Tribunal (EAT) held that the long-standing practice of excluding employer pension contributions from the calculation of a week s pay under the Employment Rights Act 1996 (ERA) is incorrect. Tim Hayes (Associate) E timhayes@bdb-law.co.uk T +44 (0) Ms Drossou, a senior lecturer, brought a successful claim of unfair dismissal against the University of Sunderland. The University failed to comply with the Employment Tribunal s ruling to reinstate Ms Drossou and was therefore ordered to pay compensation instead. The Tribunal held that the University s pension contributions should be taken into account when calculating Ms Drossou s maximum compensatory award of 52 weeks pay. This conflicts with an Employment Tribunal decision dating from 1989 which established that employer pension contributions could be excluded from the calculation on the basis that they are not received directly by the employee but paid into the pension fund....employers SHOULD NOTE THAT IT WILL INCREASE THE POTENTIAL COMPENSATION FOR CLAIMS WHICH ARE CALCULATED BY REFERENCE TO A WEEK S PAY...

5 5October 2017 On appeal, the EAT agreed with the Tribunal s reasoning. The ERA provides that for an employee with normal working hours, a week s pay is the amount which is payable by the employer under the contract of employment (section 221(2) ERA 1996). The EAT confirmed that this wording means that the amount payable by the employer does not have to be payable directly to the employee. Unless this decision is successfully appealed by the University, employers should note that it will increase the potential compensation for claims which are calculated by reference to a week s pay as set out in section 221(2) ERA, including unfair dismissal, statutory redundancy, protective awards and TUPE. It will be particularly significant for payments or remedies where the value of a week s pay is uncapped, and where the employer contributes to a defined benefit pension scheme with a high employer pension contribution rate. COURT OF APPEAL CLARIFIES MEANING OF PUBLIC INTEREST REQUIREMENT IN WHISTLEBLOWING LEGISLATION In Chesterton Global Ltd (t/a Chestertons) and another v Nurmohamed, the Court of Appeal considered whether an employee s disclosure about accounting irregularities which affected his own commission payments could also be in the public interest because it concerned other employees in the same company. Zoe Merrikin (Solicitor) E zoemerrikin@bdb-law.co.uk T +44 (0) In order to be protected under the whistleblowing legislation, a worker must make a disclosure of wrongdoing which they reasonably believe they are making in the public interest. The addition of this public interest requirement in 2013 was intended to stop workers from bringing whistleblowing claims based on grievances about their own contractual terms. Mr Nurmohamed was employed as an estate agent by Chestertons until his dismissal in He alleged that his employment was terminated because he had made a protected disclosure when he informed the company that the management accounts deliberately overstated expenses in order to reduce the commission which he and around 100 other managers were paid by around 2-3 million. Mr Nurmohamed brought a number of claims in the Employment Tribunal, including a claim of automatic unfair dismissal for whistleblowing. The Employment Tribunal and the Employment Appeal Tribunal upheld his claims, finding that his disclosure satisfied the public interest test. Although he had a personal motivation for making the allegation, he also had his colleagues in mind, and the large number of managers potentially affected was sufficient for the disclosure to be in the public interest.

6 6 October MR NURMOHAMED S DISCLOSURE WAS IN THE PUBLIC INTEREST BECAUSE IT AFFECTED SO MANY EMPLOYEES... Chestertons appealed to the Court of Appeal, arguing that a disclosure which concerned the personal interests of a group of employees within the same organisation was insufficient to amount to a public interest. However, the Court of Appeal rejected this argument, finding that Mr Nurmohamed s disclosure was in the public interest because it affected so many employees; the extent of the financial misstatements was significant; and Chestertons is a substantial and prominent firm. Whilst noting that there can be no absolute rules for determining what is, and what is not, in the public interest, the Court identified four main factors to consider: the numbers in the group affected by the disclosure; the nature of the interest affected by the wrongdoing disclosed (for example, a serious health and safety risk is more likely to be in the public interest than a less important issue affecting the same number of people); the form of the wrongdoing disclosed (for example, disclosure of a deliberate act or cover up would be more likely to be in the public interest than the disclosure of an inadvertent oversight); and the identity of the alleged wrongdoer (the larger or more prominent an alleged wrongdoer, the more likely it will be that the public interest is engaged). This decision clarifies that a disclosure relating to the personal interests of a fairly small number of workers within the same organisation may potentially satisfy the public interest requirement. However, the Court of Appeal reiterated that the broad intent behind the public interest requirement was to exclude private workplace disputes. Employers should note that workers need only have an objectively reasonable belief that a disclosure is in the public interest. It does not matter if this belief is found to be mistaken.

7 7October 2017 NON-EXECUTIVE DIRECTORS PERSONALLY LIABLE TO CEO FOR LOSSES ARISING FROM WHISTLEBLOWING DISMISSAL In International Petroleum Ltd and others v Osipov and others, the Employment Appeal Tribunal (EAT) has upheld an Employment Tribunal s finding that two non-executive directors were personally liable for their part in dismissing an employee on whistleblowing grounds. Nicholas Le Riche (Partner) E nicholasleriche@bdb-law.co.uk T +44 (0) Mr Osipov was the CEO of International Petroleum Ltd (IPL), a gas and oil exploration company. Mr Timis and Mr Sage were non-executive directors, but effectively exercised executive and managerial control. Mr Osipov alleged that he was dismissed by Mr Timis and Mr Sage for making a number of protected disclosures relating to the way IPL s business was being conducted in the Republic of Niger. He also claimed that they had subjected him to various detriments, including being sidelined from negotiations and instructed not to visit Niger....COMPENSATION IN DETRIMENT CLAIMS IS LIMITED TO PRE-DISMISSAL LOSSES... Mr Osipov brought a claim for automatically unfair dismissal against IPL. He also brought a detriment claim against Mr Timis and Mr Sage in their personal capacities as well as against IPL. The Employment Tribunal upheld these claims, concluding that Mr Osipov had been dismissed by IPL for making protected disclosures. The Tribunal also found that the non-executive directors were workers and had been responsible for the decision to dismiss Mr Osipov and its implementation. Mr Osipov was awarded around 1.7 million in compensation, payable on a joint and several basis by Mr Sage and Mr Timis personally as well as IPL. The non-executive directors appealed to the EAT. They argued that the whistleblowing legislation does not allow employees to bring a detriment claim where the detriment in question is dismissal, so that compensation for dismissal could only be pursued against IPL. They also argued that compensation in detriment claims is limited to predismissal losses, so that they could not be liable for Mr Osipov s post-dismissal losses. However, the EAT rejected these arguments, finding that the instruction to dismiss Mr Osipov amounted to a detriment for which the non-executives were personally liable. There is nothing in the legislation which precludes an employee from bringing a separate detriment claim against managers involved in a decision to dismiss. In addition, those individuals can be held personally liable for losses arising from the dismissal.

8 8 This case illustrates that a dismissal can be actionable as a detriment claim against individuals, as well as being actionable as an unfair dismissal claim against the employer. A detriment claim may involve an injury to feelings award, which is not possible in an unfair dismissal claim. In addition, there is a lower standard of proof for a detriment claim. This case is therefore likely to encourage more claimants to seek compensation from individual decision-makers, which may also assist them tactically. Given this increased risk of claims, employers should ensure that managers are trained to recognise potential whistleblowing issues and to deal effectively with whistleblowing allegations. EMPLOYMENT APPEAL TRIBUNAL DECISION CHANGES BURDEN OF PROOF IN DISCRIMINATION CLAIMS October 2017 In Efobi v Royal Mail Group Limited, the Employment Appeal Tribunal (EAT) has ruled that the Equality Act 2010 does not impose an initial burden of proof on a claimant in a discrimination claim which must be met before the burden shifts to the respondent. Caroline Yarrow (Partner) E carolineyarrow@bdb-law.co.uk T +44 (0) This conflicts with established guidance in previous case law, but those cases concerned differently-worded burden of proof provisions in legislation which predated the Equality Act. Mr Efobi, who is originally from Nigeria, was employed by Royal Mail as a postman, but had graduate and post-graduate qualifications in IT. He applied unsuccessfully for over 30 IT-related jobs with Royal Mail. Mr Efobi believed that his applications failed because of his race and brought several claims in the Employment Tribunal, including a claim of direct race discrimination. Royal Mail s case was that Mr Efobi s CV did not demonstrate that he had the required skills for the positions he had applied for, whereas the successful candidates had produced detailed and relevant CVs. Mr Efobi did not produce evidence of the race of the successful candidates, or that Royal Mail s recruiters knew that he was Nigerian. Applying the Court of Appeal s guidance in the 2005 case of Igen Ltd v Wong, the Employment Tribunal concluded that Mr Efobi had not proved facts from which it could conclude that there had been...mr EFOBI S CV DID NOT DEMONSTRATE THAT HE HAD THE REQUIRED SKILLS FOR THE POSITIONS HE HAD APPLIED FOR...

9 9October 2017 discrimination, and his claim was dismissed. However, the EAT upheld Mr Efobi s appeal. Noting that Igen v Wong was decided under previous discrimination legislation, the EAT held that the Equality Act does not place any initial burden of proof on a claimant, but requires a Tribunal to consider all the evidence, from all sources. The Tribunal must then decide at the end of the hearing whether or not there are facts from which it can conclude that...the SUCCESSFUL CANDIDATES HAD PRODUCED DETAILED AND RELEVANT CVS... discrimination has occurred. If there are facts and no reasonable explanation is offered by the employer, the Tribunal must find that discrimination has occurred. Mr Efobi s claim was remitted to a different Tribunal for a re-hearing. Employment Tribunals will now have to look at the evidence from all parties, not just the claimant s, and then decide whether there are facts from which it can conclude that discrimination has occurred. An employer s failure to produce relevant evidence of a non-discriminatory motive may therefore lead to a Tribunal drawing inferences of discrimination which may form part of these facts. This highlights the importance of properly documenting and justifying decisions which could be the subject of discrimination claims.

10 10 AND FINALLY... October 2017 Ian Wasserman (Associate) E ianwasserman@bdb-law.co.uk T +44 (0) The new Data Protection Bill, which will replace the current Data Protection Act 1998, has had its first parliamentary reading and is due to have its second reading on 10 October The Bill will bring the European General Data Protection Regulation standards into national law, ensuring that the UK s data protection regime is in line with EU standards after Brexit. There will be more control for individuals over the use of their personal data, including new rights to move or delete data and to withdraw consent for its use. There will also be new criminal penalties and stronger sanctions for non-compliance. Employers should note that the new requirements are likely to involve substantial changes to data protection policies and procedures, including privacy notices, statements of consent, subject access request procedures and agreements with third party data processors. The Department for Business, Energy and Industrial Strategy has published its response to the Green Paper consultation on corporate governance reform. This includes proposals for a number of new requirements for larger companies aimed at increasing transparency and accountability, including publication and justification of the pay ratios between CEOs and average UK workers; a public explanation of how directors take employees and shareholders interests into account; and a new public register of all listed companies with significant shareholder opposition to executive pay packages. The Government is also asking the Financial Reporting Council to introduce a new requirement in the UK Corporate Governance Code for listed companies to ensure employees interests are better represented at board level....there WILL BE MORE CONTROL FOR INDIVIDUALS OVER THE USE OF THEIR PERSONAL DATA, INCLUDING NEW RIGHTS TO MOVE OR DELETE DATA AND TO WITHDRAW CONSENT FOR ITS USE... Following a period of consultation, the President of the Employment Tribunals has published Presidential Guidance on the principles for compensating pension loss, which has effect from 10 August In most cases, the Tribunals will compensate loss of occupational pension rights by simply aggregating the contributions the employer would have made to the claimant s pension scheme during the relevant period of loss. In more complex cases, such as final salary schemes or career loss cases, a separate

11 11 remedies hearing and expert actuarial evidence may be required, although the parties will be encouraged to agree the value of pension loss. Following the Supreme Court s decision that the fee system in the Employment Tribunal and Employment Appeal Tribunal was unlawful, details are still awaited from the Ministry of Justice of the procedures to be put in place for claims affected by the decision, including a refund scheme. In the meantime, it appears that Tribunals may allow claims to be presented out of time after they have initially been rejected or dismissed for a failure to pay the issue fee, on the basis that it is just and equitable to do so; and where claims were not brought at all because of the requirement to pay a fee. Employers are advised to undertake an audit of previous claims to check where fees have been paid, and to assess whether there are claims which employees or ex-employees may have been deterred from pursuing because of the prospect of having to pay a fee. The Parental Bereavement (Pay and Leave) Bill was introduced into Parliament in July This will give parents who have lost a child a right to statutory paid bereavement leave to allow them time to grieve away from the workplace. The Department for Business, Energy and Industrial Strategy is consulting with employers, employee representatives and campaigners, and more specific details will be published when the bill has its second reading on 20 October Although this is a private members bill, it is supported by the Government and meets a Conservative manifesto commitment. Acas has published new guidance for employers on gender reassignment discrimination. This follows a study carried out by the Institute for Employment Studies which highlighted a lack of knowledge about issues affecting transgender workers. The guidance covers key areas of employment where gender reassignment discrimination can occur, and provides advice on how to deal with the specific issues which may arise, such as supporting a trans employee, absence from work, developing trans inclusive policies, and handling complaints. Following judicial consultation, the Presidents of the Employment Tribunals have updated the guidelines for assessing injury to feelings awards in discrimination claims (known as the Vento bands). The lower band for less serious cases is now 800 to 8,400; the middle band is 8,400 to 25,200; and the upper band for serious cases is 25,200 to 42,000, although in exceptional cases this amount may be exceeded. It is up to the Employment Tribunal which band applies and where in the band the appropriate award should fall. These new limits will apply to claims presented on or after 11 September The bands will be reviewed again in March 2018 and then annually, with any changes coming into effect on 6 April each year. October 2017

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