02 Jul 2014

Employment Law Bulletin: July 2014

Insights, Publications

The controversy that is zero-hours contracts rumbles on. Despite some calls for banning them, the government has issued its latest indication of support for these arrangements which it says have a place in the labour market.

It seems that zero-hours contracts (under which employees’ hours are not guaranteed) are here to stay – for now at least. But the Business Secretary, Vince Cable, has announced that exclusivity clauses in these contracts which prevent employees from looking for work elsewhere will be outlawed. This is intended to clamp down on “less scrupulous” employers who have abused the system.

The problem is that it is a toothless ban. An employee who complains about an exclusivity clause can be sacked with no recourse. Before the ban, if there was an exclusivity clause, an employee who worked for another employer was in breach of contract and needn’t be offered more work by the old employer. After the ban, if there is an exclusivity clause, an employee who works for another employer isn’t in breach of contract any more (because the clause will be deemed void), and still needn’t be offered more work by the old employer – because it’s still a zero-hours contract.

Zero hour contracts remain a hotly debated issue. Some people think the balance of power remains too much in employers’ favour and that employees working under zero-hours contracts are unfairly abused by a proportion of employers. But at the same time, it’s recognised that these contracts are delivering work which might not otherwise be offered.

Caught in the middle of this are businesses which must weigh up the practical, financial – and moral – implications of having a supremely flexible workforce. There’s no single, simple answer. Being reasonable is probably the best position to take.

No reasonable adjustments needed for carers
Hainsworth v Ministry of Defence

It’s unlawful to discriminate against a person because of their association with someone who has a protected characteristic (gender, religion or race, for example). But where disability is concerned, is an employer under a duty to make reasonable adjustments in respect of that associated person? The Court of Appeal has said no.

Ms Hainsworth was a member of the British armed forces, based in Germany. She was not disabled, but her 17 year-old daughter had Down’s Syndrome. Ms Hainsworth wanted to transfer to the UK so that her daughter could access specialist education and training facilities. The Ministry of Justice refused the request. Ms Hainsworth claimed that that refusal was a breach of her employer’s duty to make reasonable adjustments under the Equality Act and, so, amounted to disability discrimination.

The Court of Appeal held that the duty to make reasonable adjustments only applies to help disabled employees or disabled prospective employees. It can’t be extended to cover people associated with them – carers, for example.

Remember though that associative disability discrimination is still a live issue when it comes to direct discrimination and harassment. Also, in some circumstances, it might be unreasonable (and thus potentially a constructive dismissal) to refuse to modify working arrangements for staff who care for disabled relatives even where there is no legal duty to do so.

New flexible working rules are in

A reminder that all employees with six months’ service now have the right to request flexible working under new rules which came into force on 30 June this year.

The essential point for employers to remember is that requests are just that. They can be refused on a wide number of grounds, including the cost to the business or the inability to cover work. You should take all requests seriously, and deal with them reasonably, but ultimately it’s your decision. Acas has some good guidance on this.

Talk to us about putting in place a new flexible working policy to deal with the changed law.

Right to holiday pay lives on
Bollacke v Klass & Kock

Under EU law, all workers are entitled to take at least four weeks’ annual leave. This is fixed. However, employers can pay workers in lieu of accrued but untaken holiday when the worker leaves.

Bollacke v Klass & Kock tested the extent of the employer’s obligation to pay. Mr Bollacke died whilst employed. He had accrued 140.5 days’ untaken annual leave – a high figure because of long-term sick leave – and the question for the Court of Justice of the European Union (CJEU) was whether he (ie his wife) retained the right to be paid for this accrued leave. The employer argued that payment in lieu isn’t due when the employment relationship has ended because the employee has died.

The CJEU didn’t agree. The right to annual leave is an essential principle of EU social law, it said. There is nothing in law to say that the right to pay extinguishes on death.

Delayed resignation needn’t forfeit claim
Chindove v Morrisons Supermarkets

Where an employer is in breach of contract it’s important that the employee acts quickly in response. If they don’t then the employee could be said to have accepted the breach, making any subsequent argument that they resigned in response to a fundamental breach of contract (the essence of a constructive dismissal) difficult to run.

But the Employment Appeal Tribunal (EAT) has made it clear that the fate of a claim doesn’t just depend on when the employee resigned. It’s also a lot – in fact, more – to do with their conduct in the period leading up to their resignation. In other words, has the employee shown that they intend to resign, whether they have yet or not?

In the Morrisons case, the employee didn’t resign until six weeks after the employer’s breach of contract. The EAT held that the time period shouldn’t be looked at in isolation. Rather, how did the employee behave during that time?

It’s all about context. Social and financial factors come into it; the decision to leave behind the security of employment will be a more difficult one for some people to make than for others. In this case, the employee was on sick leave for those six weeks, and that was relevant. It made it a very different scenario to one in which an employee remains at work, carrying out their duties – something which could be inconsistent with a decision to resign.

So even where an employee doesn’t resign straightaway after alleging breach of contract, be aware that a constructive dismissal claim could still be lurking.

Keeping schtum on spent convictions
R v Secretary of State

Criminal convictions which have become ‘spent’ (elapsed) do not usually need to be disclosed to prospective employers. However, there is an exception where the job being applied for involves working with children and vulnerable adults. In those cases all convictions and cautions, regardless of how old or how serious, must be brought to light.

However, the Supreme Court has now held that this requirement violates the right to private life under Article 8 of the European Convention on Human Rights.

The cases which led to this decision involved two people. T applied for a job at a football club and had had to disclose details of a warning he received for stealing two bicycles when he was 11. JB had been cautioned for stealing some false nails and because of that was rejected for a job as a care worker eight years later.

The Supreme Court held that the requirement for information like that to be disclosed was an unnecessary and disproportionate interference with the right to a private life. The criminal records system must be scaled back to “common sense levels”, the court said.

Deduction from wages allowed
Li v First Marine Solutions

Where an employee has breached their contract, for example by not working their notice period, then it may seem fair to reduce their final salary payment.

But deductions from wages can only be made in very limited circumstances. It really comes down to whether or not the employment contract allows for this, and if the deductible amount is a pre-determined, genuine estimate of the employer’s loss. Significantly, the deduction must not be an attempt to penalise the employee. If it is then it can’t be made.

In Li v First Marine Solutions, Ms Li resigned and, because she believed she had outstanding holiday (which it turned out she had not), didn’t work her one-month notice period. Her contract contained terms entitling her employer to deduct from her final pay an amount equal to the salary she would have earned if she had worked her notice (so, for example, if she had worked two of four weeks’ notice, she would have had two weeks deducted – and thus not been paid anything for her notice pay).

The Employment Appeal Tribunal (EAT) upheld the tribunal’s decision that the clause wasn’t a penalty and so the employer was entitled to make the deduction. It provided for a genuine pre-estimate of loss and could be adjusted depending on how much of their notice period an employee worked (the more they worked, the smaller the deduction would be). It was also relevant that the sum wasn’t excessive.

The EAT emphasised that the normal principle is ‘no work, no pay’ and said that employment tribunals should consider the reality of the employment circumstances and whether the effect of any deduction was intended.

The lesson for employers is to anticipate a scenario like this. When putting together an employment contract, think about the likely cost to your business of that employee leaving without fulfilling their notice obligations. How much would it cost to engage and train up a replacement, for example? Then make sure to capture this genuine estimate of your loss in a well-drafted set of clauses. At best, it will make an employee think twice before leaving you in the lurch. At worst, it will stand you in great stead if a legal argument ensues.

And Finally…

Discrimination law in the UK could expand to include obesity. Current equality laws do not protect people who are discriminated against because of their size or weight. But this could change if the Court of Justice of the European Union (CJEU) decides in favour of a Danish childminder who says he was sacked for being too fat.

The CJEU is currently sizing up the case of Mr Kaltoft, who is said to weigh 160kg (about 25 stone). He claims that his employer discriminated against him when it dismissed him, and that obesity should be a protected characteristic under equality law.

In anticipation of the outcome, newspapers have been full of commentary on the merits or otherwise of obesity entering the disability arena. A decision in Mr Kaltoft’s favour would have huge implications for employers in Britain, regularly dubbed the obesity capital of Europe. Bigger, more robust office chairs. Wider car parking spaces, closer to work. Duties which don’t include walking. These are just some of the potential adjustments that might need to put in place in future if employers are to avoid falling foul of obesity discrimination laws.

It’s a moot point for now. And in fact, some commentators think the chances of the law changing are pretty slim.