Employment Law Update

In this issue…

Statutory dispute resolution

• What can amount to a statement of grievance?
• Tribunal jurisdiction not "automatically" ousted by lack of written grievance
• Time limit calculation
• Automatic extension of time: SGP
• Automatic extension of time: DDP
• Separation of SGP and DDP

Unfair dismissal

• Expired disciplinary warnings cannot be taken into account when deciding whether to dismiss

Sex discrimination

• EOC successfully challenges the 2005 changes to the SDA 1975
• Dangers of Office Affairs!

Religious discrimination

• Wearing of the veil

Holiday entitlement

• Calculators to the ready

April 2007 changes

Statutory dispute resolution

As contained in our briefing note "End of the road for the Statutory Dispute Resolution Regulations?", the Gibbons review has emphatically recommended "the complete repeal of the Statutory Dispute Procedures". Although the end is in sight, for now and for the immediate future, considerable time and energy will continue to be spent by lawyers, tribunals and businesses alike grappling with the interpretation and application of these regulations. There is now a rapidly growing body of case law, particularly concerning the statutory grievance procedures (SGP).

What can amount to a statement of grievance?

2007 has seen a number of EAT level decisions in connection with the SGP. As a brief reminder, an employee is obliged to send a statement of grievance in writing to his employer, the employer is obliged to deal with that complaint and, finally, the employee has the right to appeal if dissatisfied with the outcome. Without raising a grievance (and waiting 28 days) an employee is prevented from bringing an employment tribunal claim based on the issues which should have been covered by the grievance. While sounding quite straightforward, numerous issues have arisen before the tribunals suggesting that the reality is somewhat different.

A basic issue which continues to come up is what actually constitutes a "grievance". The Employment Act 2002 merely requires that a grievance should be in writing. There is no further guidance given and tribunals are accepting as grievances very broadly worded complaints including letters of resignation where detailed complaints are merely outlined. It also appears that just about anything in writing indicating that the employee is unhappy about something can amount to a grievance.

So far, the EAT has confirmed:

• There is no need for the letter to set out the exact nature of the complaint;
• It does not need to state that it is a grievance;
• There is no need for the employee at the time of sending the letter to intend for it to be a grievance;
• It may be contained in something else such as a flexible working request;
• The grievance may be written and submitted by a third party on behalf of the employee (such as a solicitor).

As to what cannot amount to a statutory statement of grievance, we can at least say that a discrimination questionnaire is not a statement of grievance. Although Regulation 14 is very specific on this point, it did not initially stop the debate which resulted in an EAT decision in Holc-Gale v Makers UK Limited. In that case, Mrs Holc-Gale tried to claim that her written statutory questionnaire in relation to a potential equal pay claim could double as her statement of grievance. However, the EAT confirmed that Regulation 14 was specifically designed to exclude the statutory questionnaire procedure from the statutory definition of a grievance. However, even that has a slight loophole. Although Regulation 14 applies to statutory questionnaires in relation to most forms of discrimination legislation, it was not updated to include age discrimination when the new age regulations came into force in October last year. However, this loophole is being closed from 6 April.

It has been suggested by some tribunal chairmen that an ET1 rejected on the basis that the SGP had been followed, could itself amount to the written statement of grievance relied upon in a subsequent filed ET1. This point came before the EAT in the case of Gibbs v Harris. Fortunately, the EAT has clearly held that the original ET1 could not constitute a written statement of grievance. In particular, an employee cannot be said to have "sent" a statement of grievance to the employer by submitting an ET1 to the employment tribunal. The tribunal could not be seen as the employer's agent in forwarding on the rejected ET1 to the employer (which in many cases, they do not do).

Tribunal jurisdiction not "automatically" ousted by lack of written grievance

DMC Business Machines PLC v Plummer is a warning to employers to plead in their ET3 any alleged failure by the employee to raise a grievance. In this case, the EAT held that an employee's failure to lodge a grievance does not "automatically" deprive the tribunal of jurisdiction to hear the claim. Either the tribunal must raise it because the ET1 form does not state that a grievance has been raised, or (where the employee wrongly states that they have submitted a written grievance), the employer must explicitly plead the breach in its ET3.

Automatic extension of time: SGP

Regulation 15 provides that the original time limit (generally three months) for bringing a tribunal claim is extended by a further period of three months where the employee attempts to lodge a claim with the tribunal within the normal time limit, but in circumstances where he/she has failed first to lodge a grievance. However, to benefit from the three-month extension, the employee must lodge the statement of grievance within one month of the expiry of the original time limit.

A question arose in discrimination claims: does 'original time limit' for bringing a Tribunal claim mean the normal three months or does it include any extension of time as a result of the Tribunal exercising its just and equitable discretion under discrimination legislation? The EAT in BUPA Care Homes (BNH) Ltd v Cann and Spillett v Tesco Stores Ltd has now confirmed that in a discrimination case, the "original time limit" includes any extension by virtue of the exercise of the Tribunal's just and equitable discretion. So, even though the grievance was submitted in these cases more than four months after the act of discrimination complained of, the claims were permitted to proceed.

Automatic extension of time: DDP

In relation to the statutory dismissal and disciplinary procedures (DDP), the "normal time limit" for an employee to bring a claim will be automatically increased by three months if the employee reasonably believes that a disciplinary or dismissal procedure is still ongoing at the time the "normal time limit" expires. This might happen if he has an outstanding appeal, for example.

In Codemasters Software Company Limited v Wong, the EAT confirmed that where an employee lodges an appeal the day before the expiry of the three-month time limit for an unfair dismissal claim, there will be a reasonable belief that the DDP is still ongoing and time will be automatically extended by a further three months.

Tenby v Smee's Advertising Limited illustrates the importance of ensuring that compliance with the DDP is completed as early as possible to avoid giving the employee a reasonable belief that the procedure is ongoing and in turn, the benefit of the three-month time extension. In this case, the employee sent a letter asking for further clarification 10 days before the expiry of the time limit. The employer responded 12 days later, she therefore was entitled to the three-month extension. If the employer had replied within nine days she would not have been entitled to the automatic extension.

Separation of SGP and DDP

Regulation 6(5) disapplies the SGP where the grievance is that the employer has dismissed or is contemplating dismissing the employee. But, what is the position where the complaint is one of discrimination, notwithstanding that it relates to the dismissal decision? In Lawrence v HM Prison the employee suffered from eczema which caused intermittent absences from work. He was dismissed because of these absences. The EAT has confirmed that the grievance procedure does not apply in those circumstances. So, where an employee claims discrimination arising from a dismissal:

• he is under no obligation to lodge a step 1 grievance letter; and
• he is not entitled to a three-month extension of time.

This does not mean, of course, that the allegation of discrimination can be ignored. It just means it can be dealt with in the course of the dismissal process.

Unfair dismissal

Expired disciplinary warnings cannot be taken into account when deciding whether to dismiss

Last year the Court of Session in Diosynth Limited v Thomson reminded employers that they cannot take into account an expired written warning when deciding the sanction for a subsequent disciplinary offence, even where the repeated misconduct concerned important health and safety issues.

The recent case of Airbus UK Limited v Webb again serves as a reminder to employers that a tribunal is obliged, and not merely entitled, to ignore expired warnings. In this case, the employee committed a similar misconduct offence (misuse of company time) three weeks after the expiry of the previous warning. As Mr Webb would not have been dismissed if the previous warning had not been taken into account, his dismissal was found to be unfair.

The EAT pointed out that "perhaps the lesson for employers is to take care when giving warnings, particularly final warnings, to tailor them to the particular circumstances". The EAT also stated that despite the ACAS code, it may be reasonable for employers to draft rules regarding warnings so they do not expire after 12 months in relation to misconduct which is the same or substantially the same. The case also does not sit comfortably with the over-riding test of the range of reasonable responses.

Sex discrimination

EOC successfully challenges the 2005 changes to the SDA 1975

In October 2005, the Sex Discrimination Act 1975 was amended in light of changes made in Europe to the Equal Treatment Directive, in particular introducing new sections relating to pregnancy discrimination and sexual harassment.

While the 2005 changes should have improved protection for women, the Equal Opportunities Commission have challenged the 2005 changes as still failing to protect women to the extent required by the directive and in some respects being a retrograde step with women potentially losing aspects of existing maternity rights established in UK case law.

In a judicial review, the High Court has agreed that the 2005 changes do not adequately implement the Equal Treatment Directive. As a result, s4A (harassment, including sexual harassment), s3A (discrimination on the grounds of pregnancy or maternity leave) and s6A (exception relating to terms and conditions during maternity leave) will need to be recast.

Harassment (s 4A)

Section 4A(1) provides that a person subjects a woman to harassment if, on the grounds of her sex, he engages in unwanted conduct that has the purpose or effect of violating her dignity or of creating an intimidating , hostile, degrading, humiliating or offensive environment for her.

This definition requires that the harassment must be unwanted conduct which is on the grounds of a woman's sex, whereas the directive defines harassment as unwanted conduct related to the sex of a person. This means that unlike the SDA definition, the directive extends protection to cover situations where a woman is harassed by conduct which is directed at, and related to the sex of, a third party.

Two recent failed cases illustrate the point. In Brumfitt v Ministry of Defence the training officer addressing a mixed audience generally used sexually explicit language offensive to women. He was found not to have discriminated against the claimant on the grounds of her sex as the comments were not addressed specifically to her. However, it appears likely that she would have succeeded in a claim under the wider proposed definition. Similarly, as happened in Kettle Produce Limited v Ward, a manager barging into the ladies toilet, when he would be likely to have similarly barged into a men's toilet, may not render his employer liable for discrimination on grounds of sex, but such conduct would be likely to be conduct related to sex.

Vicarious Liability

The EOC also objected to the absence of provisions which would allow an employer to be vicariously liable for discriminatory acts carried out by customers or clients.

A recasting to include vicarious liability for acts of third parties will effectively restore the position prior to the 2003 House of Lords decision in Pearce v Governing Body of Mayfield Secondary School which had overruled the early case of Burton v De Vere Hotels Limited (known as the Bernard Manning case in which the catering business employer was held liable for the racist and sexual harassment of two waitresses working at an event where Mr Manning was performing). Accordingly, in future employers will need to take steps to protect employees from continuing and/or regular objectionable conduct from clients.

Pregnancy (s3A)

Prior to the 2005 changes, pregnant women did not have to show that they had been treated worse than they would have been before they were pregnant - the need for a "comparator". The High Court acknowledged that women occupy a special position during pregnancy and maternity leave and that the 2005 change was a retrograde step which should be recast removing the current "comparator" hurdle.

T&Cs during maternity leave (s6A)

The High Court agreed with the EOC that s6A(1) did not adequately provide protection in respect of discretionary bonuses paid during compulsory maternity leave (two weeks in most cases). The recommended change will expressly reflect the position as established by the ECJ in Lewen v Denda and applied in the UK in Hoyland v Asda. When calculating a contractual bonus entitlement for an employee who had been on maternity leave during the relevant year, no reduction can be made for the period of compulsory maternity leave.

The court also agreed with the EOC that in relation to additional maternity leave, the 2005 regulations are unclear whether a woman is protected if she is not consulted about a change to her job while on maternity leave or if she falls behind in a queue for promotion because time on AML is excluded from length of service.

The recommended change will again confirm the generally accepted position reflected in the current government guidance of examples of benefits that continue to apply during additional maternity leave, eg being informed and consulted on pending redundancies, changes affecting their job or working conditions and information about pay rises, bonuses, training, promotions or vacancies and the right to appraisal.

So what happens next?

The government has confirmed that it does not intend to appeal the ruling and will be making the statutory changes "as soon as reasonably practicable" in consultation with the EOC. The most significant proposed change in practice will be in relation to the definition of harassment extending the scope of possible sexual harassment claims. This may also have implications for other areas of discrimination law as equivalent provisions relating to harassment also use similarly flawed definitions which logically must also fail to correctly implement the relevant directive.

Dangers of office affairs!

The case of B v A provides yet another example of a dismissal due to an office affair being unfair but not sex discrimination. In this case, the EAT held that a tribunal had wrongly applied a "but for" test when finding that the dismissal by a solicitor of his personal assistant, with whom he had been involved in an intimate relationship, was an act of sex discrimination. The dismissal was prompted by the solicitor's jealousy on discovering that his assistant was having an affair with a younger man.

There have been several cases over the years falling into a category of "dismissed former lovers", which have consistently failed on the basis of direct sex discrimination. However, question whether, depending on the facts of a given case, it may be possible to argue that a dismissal prompted by the end of a relationship amounts to harassment under section 4A(1) SDA. If a relationship ends and the spurned party reacts by dismissing the other, then there has arguably been less favourable treatment (because the dismissal was on the ground of rejection of unwanted conduct of a sexual nature). In light of the forthcoming changes to s4A (see above), this would appear to be an option more likely to be pursued in future.

Religious discrimination

Wearing of the veil

The EAT, in the highly publicised case of Azmi v Kirklees Metropolitan Council, has rejected a teacher's claim of religious discrimination based on a management instruction not to wear a veil while she was teaching. Mrs Azmi was employed to teach children learning English as a second language for which communicating fully with the children was of the utmost importance. The council believed that when she wore the veil the children could not see her facial expressions and her diction was not as clear or loud as it needed to be.

The EAT upheld the finding of the tribunal that the instruction did not amount to direct discrimination on the grounds of religion and belief as she had not established that she had been less favourably treated than the appropriate comparator ie a non- Muslim employee who had covered their face while teaching. It could amount to indirect discrimination but was lawful, being proportionate in support of a legitimate aim.

This case provides an interesting example of balancing the interests of the school and local authority in providing the best quality education possible and Mrs Azmi's desire to express her religious beliefs by wearing a veil in class.

Holiday entitlement

Calculators to the ready

Under Regulation 13, Working Time Regulations 1998, every worker - whether part-time or full-time - has the right to four weeks' paid holiday per year, or proportionally for part of a year. This is about to change. From 1 October 2007 this will increase to 4.8 weeks and from 1 October 2008 to 5.6 weeks.

The current position

1. Every worker is entitled to four weeks' annual leave. A week's leave should allow workers to be away from work for a week. It should be the same amount of time as the working week: if a worker does a five-day week, he or she is entitled to 20 days' leave; if he or she does a three-day week, the entitlement is 12 days' leave.
2. The leave entitlement under the WTR is not additional to bank holidays. There is no statutory right to take bank holidays as holiday.
3. The WTR do not require a worker to have served a particular period of working time in order to qualify for paid annual leave although there are special provisions for accrual in the first year of service.
4. Workers must give appropriate notice that they intend to take holiday leave to employers under the terms of the WTR. This can be set out in the contract. The default position is that twice as much notice as the period of holiday leave requested must be given.
5. Employers can refuse permission for holiday leave provided they give notice which is at least as long as the holiday requested, so long as this does not effectively prevent the worker from taking holiday at all.
6. Employers can set the times that workers take their leave, for example for an annual shutdown (except in maternity situations).
7. Workers are only entitled to be paid for leave taken. No monies can be paid to a worker in respect of untaken holiday other than on the termination of a contract. Accordingly, if a worker has not taken his full holiday entitlement during a leave year, no payment can be made.
8. On termination of employment only, the employee has the right to be paid for accrued but not taken holiday.
9. Contractual holiday pay goes towards discharging the statutory entitlement under WTR.

The new proposals

1. The statutory entitlement to paid holiday will 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 5 days a week).
2. The increased entitlement is subject to a statutory maximum of 28 days. This means that a worker who works a six day week will not ultimately rise to 32 days due to cap.

   Working week	Current	1 Oct 2007	1 Oct 2008
   3 days	12	14.4	16.8
   5 days	20	24	28
   6 days	24	28	28 (capped)

3. Employers cannot buy out the extra days.
4. There will not be a right to carry forward into a subsequent holiday year the extra days, however, the extra days can be carried forward by agreement between the worker and employer.
5. Other aspects of holiday entitlement under the WTR remain unchanged, such as:
   • Employers can still require holiday to be taken at specific times.
   • Employers can refuse holiday at specific times.
   • Notice requirements remain the same.

Transitional calculations

Where a worker's holiday year begins before 1 October, the additional holiday entitlement will be calculated by multiplying the proportion of their holiday year that is left to run by the additional holiday entitlement that applies from 1 October.

Example: Holiday year from 1 January

	2007	2008	2009
3-day working week	12.6	15	16.8
5-day working week	21	25	28
6-day working week	25.2	28 (capped)	28 (capped)

Do the extra days need to be taken on bank holidays?

The increased holiday entitlement is clearly intended by the government to represent the bank holidays - 5.6 weeks being the equivalent to 20 days plus the eight existing bank holidays. However, the term bank holiday does not appear in the draft regulations.

It will remain the position that workers do not have the automatic right to take holiday actually on a bank holiday. Rather the number of paid annual leave days is generally increased.

Employers will be able to require workers to take holiday leave on bank holidays provided they have given the requisite notice. An employer is already entitled to nominate particular dates as days of closure, when workers are expected to take annual leave, such as factory shutdowns or bank holidays. In the absence of agreement the employer must give notice of such specified dates of at least twice the length of the period of leave the worker is being ordered to take.

Where employers want to require staff to take holiday on bank holidays, they should specify the days at the start of each holiday year.

Potential problem?

A potential problem, that will hopefully be addressed before the new regulations come into force, is what happens in relation to workers who already have a contractual right to "statutory holiday entitlement plus bank holidays". With such a generally worded contractual clause, the worker will contractually still be entitled on 1 Oct 2008 to "statutory holidays" (now being 28 rather than 20) plus the 8 bank holidays (making a total of 36 days). The current wording of the draft regulations does not give the employer the right to vary unilaterally a contractual right to bank holidays in addition to statutory holiday entitlement simply because the statutory holiday entitlement is increased. Whether this is a problem for an employer will depend on the wording of the contractual holiday clause. A contractual clause currently stating entitlement to 20 days plus eight bank holidays will not present a problem, but a contractual clause simply providing "statutory entitlement plus bank holidays" will do, as the wording of the draft regulations currently stands.

April 2007 changes

Reminder of the legislative changes coming into force in April.

1 April

• Maternity and adoption leave and pay - Changes to the provisions on maternity and adoption leave and pay, which came into force on 1 October 2006 in relation to employees whose expected week of childbirth/placement for adoption is on or after 1 April, are now fully in operation. (Remember these could apply to an employee who commenced maternity leave as early as week of 14 January 2007).These include:
  • Extension of paid leave from six to nine months;
  • Removal of the qualifying criteria for AML/AAL;
  • Extension of notice periods for return to work to eight weeks;
  • Introduction of 'keeping in touch' days;
  • Concept of reasonable contact.
• Statutory maternity/paternity/adoption pay increases to £112.75 a week.
• Age discrimination - The transitional provisions regarding the duty to consider requests to work beyond retirement now expired.

2 April

• Smoking ban - Comes into force in Wales

6 April

• Flexible Working - The right to request flexible working extended to 'carers' of adults.
• Statutory Sick Pay increases to £72.55.
• Sex discrimination - Gender Equality Duty comes into force placing a statutory duty on all public authorities to eliminate unlawful discrimination and harassment and promote equality of opportunity between men and women.
• Age discrimination - Amendments to address "technical glitches" to age claims to bring it in line with other forms of discrimination law.
• Information and consultation - The Information and Consultation of Employees Regulations 2004 will be extended to cover employers with 100 or more employees.
• Occupational pensions - The Occupational Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006 and The Occupational Pension Schemes (Consultation by Employers)(Modification for Multi-employer Schemes) Regulations 2006 will be extended to cover undertakings with more than 100 employees.
• Statutory dispute resolution procedures - The ambit of the Statutory Dispute Resolution Procedures extended to also apply to disputes in relation to detriment relating to:
  • Information & consultation representatives and employees
  • Occupational & personal pension scheme representatives
  • European Public Limited-Liability Companies

30 April

• Religious discrimination - The Equality Act 2006 will amend the definition of "any religion, religious belief or similar philosophical belief" (regulation 2(1)) by removing the word "similar" so that it covers being of no religion or belief and widens the scope of what might be regarded as a philosophical belief. [Delayed from original implementation date of 6 April].
• Sexual orientation and religion or belief discrimination - Protection against discrimination in the provision of goods and services on the grounds of religion or belief and sexual orientation.
• Smoking ban - Comes into force in Northern Ireland.