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employment law MATTERS – November 2014

Welcome to the November issue of employment law matters.

We start by looking at holiday pay, a story that has captured news headlines over the past few weeks. It will be a difficult time for business, and I sounded a warning note in The Scotsman recently about this “new monster coming over the hill” for employers. You can take a look at my recent article which foreshadowed recent developments.

The controversy over how to calculate holiday pay has now travelled to Luxembourg and back, and in this issue of Employment Law Matters we bring you the latest on those important decisions.

STOP-PRESS: Overtime and holiday pay webinar

Robert Holland and Angela Brown, Senior Manager at Mazars are hosting a webinar on ‘Overtime and holiday pay – what it means for your company?’ on Thursday 20th November from 3-4pm. They will provide you with a guide to the practical implications from both a legal and accounting perspective.

Click here to register for the webinar

In the November edition, we also look at:

the upcoming introduction of shared parental leave,

sex discrimination based on unequal paternity/maternity pay

the latest Tribunal case on a Facebook-related dismissal.

As usual, if you have any questions, please contact me at robert.holland@balfour-manson.co.uk or any member of the Employment team.

Robert Holland
Twitter: @RobertHolland72 

BREAKING STORY – holiday pay
What’s the story?

In a nutshell, the issue is that the European Working Time Directive gives employees the right to holiday pay, but does not fully explain how that entitlement is to be calculated. The threat for employers at the moment is that, if it turns out they have been calculating holiday pay “incorrectly,”  they could see mass claims, conceivably even dating back to 1998 (on a worst-case scenario), when the WTD came into force.

How did it begin?

In 2011, in Williams and others v British Airways plc, the European Court of Justice ruled that a worker is entitled to holiday pay that reflects not only his or her basic salary, but also other “remuneration which is intrinsically linked to the performance of tasks which he is required to carry out under his contract of employment” and for which the worker receives monetary payment as part of his or her total pay-packet. What does that mean in practice? The pronouncement sparked off a whole new set of claims seeking an answer to that question.  

Earlier this summer, the ECJ decided in Lock v British Gas that, following the principle it had outlined in the Williams case, paid commission ought to be taken into account when calculating an employee’s holiday pay.  The Court determined that Mr Lock’s commission was “intrinsically linked” to his role as a salesman, and therefore his holiday pay ought to reflect these typical commission earnings.

As you can imagine, the ECJ’s logic could also cover analogous payments such as overtime, bonuses, shift allowances, and other pay supplements (depending on the circumstances).

Where are we now?

On Tuesday 4 November, the Employment Appeal Tribunal in the linked test cases of Woods v Hertel and Fulton v Bear Scotland issued its much-anticipated ruling. Here are some of the key points to take away from it:  

The EAT confirmed that any overtime that a worker cannot refuse must count as part of that worker’s “normal pay,” and therefore must be factored in to the holiday pay calculation. The judgment does not say in black and white that voluntary overtime must be included, but there’s perhaps an argument that it falls within the scope of the principles outlined above.  That question will be for another tribunal.

A big question was whether the Government had put in place legislation to keep the UK in line with European law. The EAT decided that the UK Working Time Regulations 1998 can be interpreted in such a way as to comply with the requirements of the European Working Time Directive. This means the cost of any holiday pay claims cannot be laid at the Government’s door (for failure to implement EU legislation), and in principle employers will be responsible for meeting the costs of compensation.

The EAT distinguished between UK employees’ two types of annual leave: the 20 days of “European leave” under EU law, and the extra 8 days granted by UK legislation. The European rules affecting holiday pay only apply to the European leave. Then, proceeding on the basis that underpaid holiday claims would be claims for the “unlawful deduction of wages”, which can only be brought within three months of the last in a series of deductions, the EAT decided that a gap of more than three months between underpaid “European holidays” in one holiday year and the next holiday year would break the chain of deductions. Employees will not be able to decide in retrospect what was “European leave,” and what was not, so as to create an unbroken series of deductions. This means that the scope for claims stretching years back could well be limited.

What’s Next?

However, it seems almost certain that this ground-breaking decision will be appealed, and so the issue could end up back in the UK Supreme Court. The Department of Business, Innovation & Skills has also announced the creation of a task force to look at the impact of the ruling on employers.

In the meantime, it may be prudent for employers to reflect on the way they manage and record staff overtime, performance-related pay, and other equivalent salary supplements. They should also look out for updates on this issue.  

Readers of this newsletter are invited to join us on Wednesday 26th November 2014 for an end-of-year Employment Law Breakfast Seminar covering holiday pay and one of this year’s other big developments, the introduction of shared parental leave.

For more information or to register please click here. 

Shared parental leave – are you prepared for 1st December?

In September, we looked at a new right to unpaid leave to accompany mothers on antenatal visits. We’re now marking 1st of December 2014 in the calendar, as that’s when new statutory provisions on shared parental leave (SPL) will come into force. These rules will entitle new parents to “share a pot of leave” between them following the birth of their child. Adoptive parents will also be able to rely on these rights following the placement of a child with them.

 As ACAS points out, “SPL enables parents to share the caring responsibilities evenly or have one parent taking the main caring role, depending on their preferences and circumstances.”

The new regime will apply to children who are due to be born, or placed with their adoptive parents, on or after 5 April 2015. Employers can expect to start to receive notices of eligibility and intention to take shared parental leave from their employees from January 2015.

 The big difference between SPL and traditional maternity/adoption leave is that eligible employees can “stop and start”: the regulations provide for “discontinuous” and “continuous” leave arrangements. This may represent challenges for employers looking to put in place consistent staff cover.

Here are some of the key points:

the mother must take the first two weeks following childbirth, but the remaining 50 weeks’ leave (and 37 weeks’ pay) can be shared;

employees must give no less than eight weeks’ notice before the commencement of the intended leave;

the employer can refuse to grant discontinuous leave.

ACAS has produced a helpful “Good Practice” guide to assist employers in planning for these important changes.  You can access the ACAS guide here.

ACAS also recommend that, as soon as employers become aware of a relevant pregnancy or adoption placement, they initiate an informal consultation with the employee to talk through the options available.

Employers will want to develop policies and procedures that set out the rules for applying for and taking Shared Parental Leave for their organisation.

If you need assistance with this, or advice on any other aspect of family-friendly workplace policy, don’t hesitate to contact our team. 

One rate for maternity/one for paternity: sex discrimination in the eyes of the law?

Whilst on the subject of parental leave and pay, it’s worth taking a moment to look at a recent discrimination case brought under the Equality Act 2010.  Additional paternity leave is to be abolished under the SPL system, but the following ruling could still be relevant to the new regime.  

In the case of Shuter v Ford Motor Company Ltd, the employer successfully resisted a sex discrimination challenge based on its different rates of pay for maternity and paternity leave. 

The employer held that Ford did not discriminate by paying the statutory minimum rate of additional paternity pay to a male employee on additional paternity leave (APL), whilst offering its female employees enhanced maternity pay (in the form of granting up to 52 weeks at their full basic pay).

The Tribunal found that there had been no direct discrimination against Mr Shuter on account of his sex, as he was treated in the same way as a woman in his position- that is, a woman taking additional paternity leave as the female spouse or civil partner of a mother.

However, on Mr Shuter’s indirect discrimination claim, the ET held that the policy of paying full pay to women on maternity leave 20 weeks after the birth of the child (the point at which fathers or partners would be eligible to commence APL) whilst only offering the statutory rate of APL did have a more detrimental impact on men than women.

Treatment that puts a person at a disadvantage in terms of the 2010 Act’s indirect discrimination provisions only becomes “discriminatory” if the employer “cannot show it to be a proportionate means of achieving a legitimate aim.”

Employers should look beyond the headlines in this particular case, and note that Ford only prevailed because it was able to defend its position with reasoning and evidence.  This is only a Tribunal decision, so it may be subject to appeal.

The Balfour+Manson team regularly advises on discrimination issues under equality legislation. If you have a query, get in touch with our team.   

Social media spotlight: Is a Facebook “like” grounds for dismissal?

This month brings yet another social media cautionary tale:  the Tribunal case of Blue v Food Standards Agency. The facts were rather unusual. Mr Blue worked for the Food Standards Agency as a meat hygiene inspector. It appears that he happened to join a Facebook discussion, “bantering” with two former colleagues who had been dismissed from the abattoir at which he was based.

Reports suggest that the workers who had lost their jobs were venting their feelings about their ex-boss, and musing darkly about what they wished they could to do him (although it seems they were not seriously intending to commit violence). Mr Blue allegedly typed “aye right, I wish,” and clicked to indicate that he “liked” a particular comment. This came to the attention of the management, and then the Food Standards Agency. After a disciplinary investigation the Agency dismissed him, claiming that the online activity was “unprofessional” and amounted to a “breach of trust.”

Mr Blue raised an action for unfair dismissal in the Employment Tribunal-and won.

The Tribunal awarded him the sum of £32, 799.13. It seems that whilst the Agency had a social media policy and guidance in place, this was, in the Tribunal’s view, primarily directed at the use of social media at work. This case therefore stands as a reminder that social media policies and guidance should be carefully worded to cover all social media use that might cause the employer reputational damage, or threaten its external relationships. 

What other lessons can we draw from this case?

In newspaper interviews, the apparently remorseful Mr Blue said “I thought it was just the same as having a chat down the pub.” The reality is that conversations on social networking sites that feel “private” don’t always stay that way. This case also illustrates that just “liking” or “re-tweeting” someone else’s comments can imply endorsement of those remarks.

For employers, it is interesting to note the Tribunal’s reasoning for making the finding of unfair dismissal. They seem to have looked back at the claimant’s previous good record, and then looked ahead to consider the impact of this incident on his ability to do the job, measuring the extent to which the relationship of trust and confidence between employer and employee had actually been affected.

Employment Judge Peter Wallington QC was reported as saying:

“There was no objective reason to believe that his performance would in future be different simply because of his foolish participation in what he had mistakenly believed to be a private online conversation that had become more public.”

This can be added to the list of social media cases where the Tribunal’s decision is carefully balanced in light of the particular circumstances, and suggests that in the territory of social media infractions, things will not always be clear-cut.

If you would like advice on refreshing your social media policy, or find that you develop a workplace issue in this field, you can speak to our Head of Employment Robert Holland, who regularly writes and speaks on this topic.


For further information on any of the above articles or to discuss your Employment Law requirements, please contact Robert Holland or any of the Employment team at Balfour+Manson.

Disclaimer: The views and opinions expressed in this article site are soley those of the original authors and other contributors and do not purport to give specific legal advice.