Employment Law Update June 2006

In this issue...

Holidays

• Increased holiday entitlement proposals amended

Sex discrimination

• Returning to work from maternity leave to the "same job"
• Workplace relationships
• Equal pay victimisation

Additional paternity leave

• Further DTI consultation

Disability discrimination

• Are employers required to extend company sick pay as a reasonable adjustment under the Disability Discrimination Act?
• Failure to perform risk assessment not of itself a failure to make a reasonable adjustment

Single Equality Act

• Consultation on proposals for Single Equality Act Bullying
• The costs of bullying

Agency workers

• Who "employs" the agency worker?
• Unions press Brown on protection of agency workers

Statutory dispute resolution

• Employer's note fulfils Step 1 of the statutory grievance procedure
• Dispute Resolution Consultation: Review of "procedural fairness" options

Smoking ban

• 1 July looms

Holidays

Increased holiday entitlement proposals amended

Under the Working Time Regulations 1998 every worker - whether part-time or full-time - is entitled to four weeks' paid holiday per year, or proportionally for part of a year. In April we reported on the proposed statutory increase to:

1. 4.8 weeks on 1 October 2007 (equivalent to 24 days for a worker working five days a week); and
2. 5.6 weeks on 1 October 2008 (equivalent to 28 days for a worker working five days a week).

The government has now amended the proposed regulations following the public consultation. They now propose:

1. To delay the introduction of the second increase from 4.8 to 5.6 weeks until 1 April 2009. The initial increase is still proposed to come into effect on 1 October 2007, as originally suggested.
2. As a transitional measure, to allow payment in lieu of the additional 0.8 week holiday entitlement between 1 October 2007 and 1 April 2009, to allow for the recruiting and training of additional staff to cover the increased holiday entitlement.
3. Employers that already meet the full requirements of the regulations as at 1 October 2007 (giving the equivalent of 28 days' holiday, without payment in lieu and any carry-over for no more than one year) will be "taken outside of the regulations", as long as they continue to meet those requirements.

The third change is stated to be "an incentive for early compliance with the regulations". Significantly, it also appears to address the potential contractual problem identified under the original draft for employers who already provide a contractual right to "statutory holiday entitlement plus bank holidays". Under the original draft many employers who already offered 28 days or more contractual holiday entitlement would have been faced with need to carry out mass variation of employment contracts. We await detail as to what "taken outside the regulations" means in full.

The other main provisions of the draft regulations remain unchanged. For further details, please see our April 2007 Employment Law Update.

The parliamentary process is now on-going, with the draft regulations expected to be approved by Parliament by the end of June. Unfortunately, the full text of the draft regulations is not yet available, we await the detail!

Sex discrimination

Returning to work from maternity leave to the "same job"

A woman returning to work from Ordinary Maternity Leave is entitled to return to the "job in which she was employed before her absence" and when returning from Additional Maternity Leave to the "job in which she was employed before her absence or, if it is not reasonably practicable ..., to another job which is both suitable for her and appropriate...". Although these provisions have been in place for some time, the EAT has considered, for the first time, what the "job in which she was employed before her absence" actually means.

In the case of Blundell v Governing Body of St Andrew's Catholic Primary School, Mrs Blundell was employed as a primary school teacher. At the time she went on maternity leave Mrs Blundell was in her second year of teaching the reception class. Teachers were generally rotated by the head teacher every two years to broaden their experience. The head teacher would ask staff to express a preference for roles for the following academic year, although there was no guarantee that the preference would be accommodated. Upon her return from maternity leave Mrs Blundell was assigned to teach Year 2.

Mrs Blundell claimed that in allocating her the role of Year 2 teacher on her return from maternity leave her employer had failed to allow her to return to the "job in which she was employed before her absence". She argued that her job was the job of reception class teacher.

The EAT confirmed that the purpose of the relevant legislation was to "provide that a returnee comes back to a work situation as near as possible to that she left". Where the employee's role is variable, the tribunal may have regard to the normal range within which variation has previously occurred. In this particular case, Mrs Blundell could not insist on coming back to teach the same year group, since the school customarily required teachers to change year groups every two years. Accordingly, the employee had not been prevented from returning to the same job. However, there was a finding that she had been subjected to a detriment because she had not been consulted over which year group she would be assigned to teach, which she would have been if she had not been absent on maternity leave.

For the first time, we now have some judicial guidance on the scope of the phrase "the job in which she was employed before her absence". Where the employee's role is variable, the tribunal need not "freeze time" at the moment she takes maternity leave, but may "have regard to the normal range within which variation has previously occurred".

This case also serves as a reminder to ensure that when carrying out staff consultations over job role developments, employers must consult with any employees on maternity leave. The recent changes to the maternity regulations, make it clear that employers may make reasonable contact with the employee (and vice-versa) while she's on maternity leave, to discuss a range of issues, such as, to discuss her plans for returning to work, or to keep her informed of important developments at the workplace.

Remember, employees on maternity leave should also be informed of any relevant promotion opportunities or job vacancies that arise during maternity leave.

Workplace relationships

It is estimated that over a quarter of employees meet their long-term partner at work and that more than half have had a personal relationship or office affair with a work colleague. However, from a managerial perspective, office romances can create difficulties if they either do, or have the potential to, impact on the workplace. In particular, a relationship between a manager and one of his or her subordinates may result in allegations of bias and favouritism being made by other disgruntled members of staff.

Generally, employers should not interfere in the personal lives of their staff. But, does a policy preventing employees who are in a personal relationship working as supervisor/subordinate amount to sex discrimination? In Faulkner v The Chief Constable of Hampshire Constabulary, the EAT said no.

The EAT held that a policy preventing police officers in a personal relationship from working together as supervisor and subordinate was justified by the need to ensure actual and apparent correctness in working relationships. In particular, it met the real need to manage the risk that undue influence or favouritism (for example allocation of favourable shift patterns) would either actually affect the integrity of one or both of the partners, or would be perceived to do so.

Equal pay victimisation

The House of Lords in St Helen's Borough Council v Derbyshire and others, upheld a tribunal's finding that letters sent to school dinner ladies who were pursuing equal pay claims against the council, and which stated that the continuance of those claims could lead to redundancies and deprive children of school dinners, amounted to victimisation under the Sex Discrimination Act 1975.

The case concerned a group of school dinner ladies who argued that they were entitled to the same rates of pay as road sweepers. Many of the dinner ladies reached a settlement, but a small group refused to settle. The council then wrote a letter to all staff stating that, if successful, the cost of the claims would mean that school meal provision would have to be scaled back and that this would lead to a reduced workforce. A second letter was sent to the women urging them to settle and referring to the first letter.

The employment tribunal and EAT found that the letters were "effectively a threat" amounting to victimisation. However, the Court of Appeal overturned this, holding that the letters were 'an honest and reasonable attempt by the council to compromise proceedings'. However, the House of Lords has now restored the tribunal's original finding that the letters went beyond a "honest and reasonable attempt to settle a claim". Instead, the object of the letters was to put pressure on the women to settle; that they were treated less favourably than staff who were not pursuing equal pay claims; and that the letters amounted to a detriment. Accordingly, there was no reason for interfering with the tribunal's decision that the letters amounted to victimisation.

Employers need to be aware that where an employer pressures an employee complaining of discrimination to settle or abandon her claim this can constitute victimisation, even where the pressure is indirect. An employer is entitled to take steps to protect its own interests but must avoid doing anything that might make a reasonable employee feel she is being unduly pressured to concede her claim. Whether the line between protecting their interests and undue pressure amounting to victimisation has been crossed will depend on the facts of the particular case.

Additional paternity leave

Further DTI consultation

On 14 May, the DTI published a further consultation dealing with the administration of additional paternity leave and pay. The basic proposal is that if a mother returns to work before her child's first birthday, the father will be able to take some, or all, of the second half of the child's first year as paid additional paternity leave (APL). This further consultation deals with how the government proposes to administer this new right.

Timing

The introduction of paid APL will be brought into force alongside the extension of maternity pay to 12 months "by the end of this Parliament". The DTI has now confirmed that the earliest possible implementation will be for babies due on or after 5 April 2009 - although this is "not a firm date".

Eligibility

As for existing paternity leave, this is for employed fathers who have completed six months' service with their employer into the 15th week before the week the baby is due.

The leave can only be taken once the baby is at least 20 weeks old and before reaching one year old, and must be taken for the purpose of caring for the child. The ability to take this leave will be dependant upon the mother returning to work and giving up all or part of her remaining maternity leave during that period.

The government proposes that it will be for the father and mother to self-certify to the father's employer key personal facts as to the father's eligibility. The employer will not be required to carry out further checks, such as with the mother's employer or HMRC.

Notice

The government proposes that eight weeks' notice of his intention to take APL must be given to mirror the period required by a mother to return to work early from maternity leave. The employer will then have 28 days within which to confirm that the individual meets the eligibility requirements.

Where there is a change of plans as to the start date (whether early, postponement or cancellation), the government seeks views as to whether the minimum notice period should be four or six weeks. Where insufficient notice is given and it is not reasonably practicable for the employer to accommodate the change, the employer can insist that the APL be taken. If this means APL is taken when the mother has not returned to work, the APL will simply be unpaid leave.

The consultation runs until 3 August.

Disability discrimination

Are employers required to extend company sick pay as a reasonable adjustment under the Disability Discrimination Act?

The Court of Appeal has confirmed in O'Hanlon v HMRC that an employer would only very rarely be obliged, as a reasonable adjustment under the DDA, to give more sick pay to a disabled person than it would otherwise give to a non-disabled person on sick leave.

The purpose of the DDA is to enable disabled persons to play a full part in the world of work, and should not be interpreted in a way which encourages people to stay away rather than return to work. Furthermore, it was acknowledged that is not reasonable to expect an employer to subsidise indefinitely its long-term sick who also qualify as disabled.

In this case, the employer had already made reasonable adjustments and the employee was still unable/unwilling to return to work. This is a different situation to the one posed in Nottinghamshire County Council v Meikle [2004] IRLR 703, where the employer had caused the absence by failing to make reasonable adjustments which would have enabled the employee to remain in work. This case provides some welcome clarification of the uncertainty raised by the Meikle decision. A disabled employee will now find it very difficult to claim pay during sick leave once any contractual entitlement to pay has been exhausted unless, as in the Meikle case, the employer has caused the absence by failing to make reasonable adjustments which would have enabled the employee to remain in work.

Failure to perform risk assessment not of itself a failure to make a reasonable adjustment

Does an employer's failure to make an assessment of a disabled employee of itself amount to a failure to make a "reasonable adjustment"?

Last year in Tarbuck v Sainsbury's Supermarkets Ltd the EAT criticised the earlier decision of Mid-Staffordshire General Hospitals NHS Trust v Cambridge and, the DRC's current Code of Practice that a failure to make a proper assessment of reasonable adjustments (which may include consulting the employee) would of itself be a breach of the duty to make reasonable adjustments.

The EAT has considered this issue again in Spence v Intype Libra Ltd. In this case, an IT manager had become disabled and claimed that his employer had failed to make a reasonable adjustment by not obtaining and consulting on a medical report before dismissing him. In rejecting the claim, the EAT stated that an employer "may carry out an assessment and fail to make reasonable adjustments; equally, he may fail to carry out the assessment but make all necessary reasonable adjustments. Mr Spence's contention is that even if he takes such steps as are reasonable to mitigate or eliminate the harm, he will be potentially liable for any failure to carry out an assessment. We do not think that conclusion is compatible with the language of the legislation."

Neither Spence and Tarbuck mean that employers should ignore the need to conduct a proper assessment of any adjustments that might be reasonable, including consulting with disabled employees. The desirability of carrying out a risk assessment was not in issue. In both cases, the EAT reminded employers that they will not be able to rely on their ignorance as a defence, if a tribunal takes the view that there were steps that would have been reasonable for the employer to take to alleviate the disadvantage suffered by the disabled person. The essential issue is whether or not reasonable adjustments have been made with or without a risk assessment.

In practice, employers should carry out a proper assessment of whether and, if so, what adjustments can reasonably be made to accommodate a disabled employee. Part of that assessment should be consultation with the disabled employee. Otherwise, employers risk missing a reasonable adjustment which they should have made.

But this may not be the final word. We understand that the DRC is backing a further appeal to the House of Lords to support its contention that a failure to make a proper assessment of reasonable adjustments would of itself be a breach of the duty to make reasonable adjustments under the DDA.

Single Equality Act

Consultation on proposals for Single Equality Act

The Department for Communities and Local Government has issued a consultation including proposals for the creation of a Single Equality Act and modernising discrimination law. The proposals span equality law in its widest sense. In addition to employment, they also cover private members' clubs, education, positive duties of public authorities, and the provision of goods and services.

The consultation runs until 4 September 2007.

Bullying

The costs of bullying

Bullying and harassment in the workplace are detrimental not only to the individuals affected but also to the organisation, which can incur significant costs and suffer damage to its reputation. Employees who are bullied or harassed in the workplace can potentially bring a number of claims against their employer:

1. Discrimination based statutory vicarious liability;
2. Breach of contract (this could be a breach of the implied term relating to trust and confidence, or of an express term of the employee's contract);
3. Negligence for breach of the employer's duty of care resulting in personal injury;
4. Breach of a statutory duty placed on an employer (for example, a breach of the employer's duty to provide a safe place and system of work under the Health and Safety At Work etc Act 1974); and
5. Vicarious liability under the Protection from Harassment Act 1997.

Employers need to ensure that they have adequate policies for dealing with workplace bullying and that these are actively promoted and enforced. To bring home to individuals the unacceptability of bullying, employers may wish to remind staff that, in addition to acts of bullying being gross misconduct for which dismissal may result, they may also be personally financially liable to the victim. A recent employment tribunal case provides a useful illustration of this for individual line managers.

A 34-year old Vietnamese woman suffered workplace bullying. In particular, her line manager had posted a humiliating nickname on a notice board and used it as his internet password. Following her race and sex discrimination claim, she was awarded £15,000 for injury to feelings from her employer plus £3,000 aggravated damages and interest of £2,417. In addition, the individual line manager was also ordered to personally pay £2,000 damages for injury to feelings plus interest!

Agency Workers

Who "employs" the agency worker?

Over the past three years we have reported on a series of decisions where the courts have grappled with the question of 'who employs the agency worker?'. Are they employees of the agency or the end user, or neither?

In 2004, the landmark Court of Appeal decision in Dacas v Brook Street Bureau, explored the concept of an implied contract of employment existing between an agency worker and an end user. In 2005 and 2006, decisions in Cable and Wireless plc v Muscat swung the pendulum further in favour of finding an implied contract of employment with the end user when an individual had worked under the day-to-day control of the same end user for a significant period of time. However, the beginning of this year brought us James v Greenwich Council and Cairns v Visteon UK Limited, swinging the pendulum back slightly away from the end user.

We now have a further two cases swinging the pendulum further away from the likelihood of an implied contract of employment being found between the agency worker and end user. In Heatherwood and Wexham Park Hospitals NHS Trust v Kulubowila and other, the EAT held that for a contract to be implied it must be reasonably necessary to do so to give business reality to a situation. It must be fatal to the implication of a contract if the parties would have acted as they did in the absence of an implied contract. In this case, the affairs of the parties were consistent with the express arrangements (the contract of services between Mr Kulubowila and the agency and the contract between the agency and the NHS trust for the supply of Mr Kulubowila's services). If the relationship is consistent with the agency arrangement, then an implied contract should not be found.

We now also have, Astbury v Gist Ltd, in which the EAT considered whether an employment agency acted as agent for the end user entering into a contract of service between the worker and end user. The EAT held that as the contractual documentation expressly precluded the agency from being able to act as the end user's agent for such purpose, the employment agency could not be seen as agent for the end user to establish an employment relationship between agency worker and end user.

As acknowledged by the EAT, the possibility raised in Dacas of an implied contract with the end user "caused something of a stir in the world of employment". While the possibility of an implied contract of employment still looms, the recent run of cases illustrate that to establish an implied contract, the agency worker must overcome a higher hurdle than initially appeared following Dacas and Muscat.

Unions press Brown on protection of agency workers

With the draft EU directive on temporary workers being bogged down with disputes between member states, the TUC appears to be using the change in the Labour leadership to step up its pressure on the government to legislate to increase the rights of agency workers.

UNITE (the merged Amicus and TGWU) is calling on Gordon Brown to introduce legislation to give agency and temporary workers employment status including access to pension rights.

Statutory dispute resolution

While the Gibbons Review marks the beginning of the end for the statutory dispute resolution procedures, the procedures' demise will be a slow process and we expect them to remain in place until at least 2009. As such, employers need to keep informed of the ever growing body of case law concerning the procedures.

Employer's note fulfils Step 1 of the statutory grievance procedure

Under Step 1, the employee is obliged to send a statement of grievance in writing to his employer. A fundamental question that continues to arise is what actually constitutes a "grievance in writing by the employee". The statutory requirement is simply that the grievance should be in writing. But has an employee complied with Step 1 where he presents his complaint at a meeting with his line manager and the line manager notes it down contemporaneously?

In Kennedy Scott Ltd v Francis, the EAT said YES.

Whether Step 1 has been complied with will always depend on the facts of the case. However, the focus is on substance, not technicality. Step 1 does not go so far as to require the employee to personally physically write the statement that is submitted to their employer.

In this case, the note which served as a written statement of grievance was produced with the intention of providing a document that would evidence the employee's grievance. Employers should be aware that if the means they use to investigate employees' complaints involve an initial meeting at which notes are taken, that these notes may signal compliance with Step 1 of the SGP.

Dispute Resolution Consultation: Review of "procedural fairness" options

In March the DTI published the consultation entitled 'Success at work: Resolving disputes in the workplace' seeking the proposed repeal of the Statutory Dispute Resolution. For more information please see our March 2007 briefing note: End of the road for the Statutory Dispute Resolution Procedures?. The DTI has now published a 'supplementary review of options for the law relating to procedural fairness in unfair dismissal'. The review sets out three options:

Option A

Return to the position prior to the introduction of the Dispute Resolution Regulations. Procedural failings would ordinarily render a dismissal unfair, but a tribunal could reduce compensation in proportion to the likelihood that, if the correct procedure had been followed, the employee would have been dismissed in any event (the "Polkey" doctrine).

Option B

As above, but provide for 'alternative findings reflecting the balance of procedural and substantive unfairness in the dismissal'. Under this option, a tribunal could find that a dismissal was procedurally unfair but substantively fair, and make an award of compensation to reflect this.

Option C

Reverse the Polkey decision in full and revert to the "no difference" rule. Under this option, procedural fairness would be governed by the "no difference" rule - if there is a procedural failing in a dismissal which would otherwise have been fair, and the employer can show that following the correct procedure would have made no difference to the outcome, the dismissal will be deemed fair. From an employer's point of view Option C would be preferable to avoid purely procedural unfair dismissal findings be found. In the review, the government expresses a preference for Option B, but does not offer any further details about how the proposal for 'alternative findings' would operate in practice.

The closing date for responses is 20 June.

Smoking Ban

1 July looms

Remember from Sunday 1 July 2007 England will be the last part of the United Kingdom to become smokefree. Smoking will be prohibited in enclosed premises which are open to the public and in workplaces. For more information please see our briefing note "Smoke-free workplaces" from May 2007.