Time off for dependents

The Employment Appeal Tribunal (EAT) has held, in Royal Bank of Scotland plc v Harrison, that an employee's entitlement to take time off for dependants under section 57A of the Employment Rights Act 1996 because of an unexpected disruption or termination of care arrangements for a dependant is not limited to last minute unavailability or emergencies.

The facts are interesting: Mrs Harrison had been given 2 weeks' notice by her child minder that she would be unable to look after her children on a certain day. Mrs Harrison tried but was unable to find alternative care arrangements for that day and therefore asked for a day off under section 57A. RBS refused her request and disciplined her for unauthorised absence when she took the day off. RBS contended that time off under section 57A was only to cover a "sudden and unexpected emergency". The Employment Tribunal and the EAT disagreed, the EAT holding that: 

• the word "unexpected" does not involve a time element and that there was no requirement to imply the words "sudden" or "emergency" to section 57A; and
• a tribunal will take time into account in determining whether time off under the section is "necessary". The longer the period of time between the employee's learning of the disruption and the disruption occurring, the less likely it is the tribunal will find it was necessary for the employee to take the time off.

Impact on employers

This case highlights the problems that can occur in interpreting employees' rights under the legislation. Employers should review their policies on time off for dependants under section 57A to ensure that they do not unduly restrict this right and should take care when applying their policies to consider the individual employee's circumstances and the efforts they have made to make alternative arrangements.

20 October 2008

Continuity of employment in insolvency context

The Employment Appeal Tribunal (EAT) has held, in Da Silva Junior v Composite Mouldings and Design Limited, that continuity of employment was preserved where an employee of a company in voluntary liquidation was subsequently employed by a company with the same majority shareholder.

Mr Da Silva was employed by Andream Limited, a company in which Mr Greenwood was majority shareholder. Mr Greenwood was also the sole shareholder of Composite. On 1 December 2006, Mr Da Silva and the other employees of Andream were dismissed because of Andream's financial difficulties and Andream went into a members' voluntary liquidation. Composite acquired some of Andream's assets from the liquidator and began trading in January 2007. On 14 January 2007, Mr Da Silva began working for Composite.

Mr Da Silva was subsequently dismissed by Composite and the EAT held that he had sufficient continuity to bring his unfair dismissal claim because Composite was an "associated employer" of Andream at the time he became employed by Composite. The Insolvency Act 1986 provides that, following a voluntary winding up, a company continues to exist until it is actually dissolved. Andream had therefore not ceased to exist. Further, although the liquidator was legally in charge of Andream, in practical terms Mr Greenwood controlled both companies. They were therefore associated employers and Mr Da Silva was able to pursue his unfair dismissal claim.

Impact on employers

At a time where insolvencies are on the increase, this is a reminder that a break in continuity of employment will not necessarily occur where one company is liquidated and a new one set up to employ some of its staff.

It should be noted that TUPE was not considered in this case. However a voluntary liquidation is considered to be a "solvent" liquidation and the normal TUPE rules (including the preservation of continuity of employment) would normally apply.

20 October 2008

Justifying discrimination in age related benefit schemes

The Employment Appeal Tribunal (EAT) has given further guidance on justifying age discrimination in an appeal against a tribunal decision that a contractual redundancy scheme was not discriminatory on the grounds of age (Loxley v BAE Systems). This case involved similar issues to those rising in the ICI case reported in our 11 August E-Bulletin.

BAE's voluntary redundancy scheme calculated payments on the basis of age and length of service. The amount payable was reduced for every month of service after age 57 and employees over 60 were excluded because the company's pension scheme allowed the employees to take their pension at age 60 without any reduction in benefits. Mr Loxley, who was 61, complained that the scheme discriminated against him on the grounds of age.

Age discrimination can be justified if it amounts to a proportionate means of achieving a legitimate aim. The EAT held that preventing employees nearing retirement from enjoying a windfall from their redundancy could be a legitimate aim and therefore was potentially justifiable. However, the tribunal had failed properly to consider whether it was proportionate to exclude an employee entirely from any redundancy payment because of his or her entitlement to a pension. The case was sent back to a fresh tribunal to consider this question.

Impact on employers

As this case and the ICI case demonstrate, the scope for employers to show a legitimate aim in justifying age discrimination is fairly wide. However, establishing proportionality will be more difficult. In order to do so, an employer will have had to conduct a proper analysis of the effects of the provision in question and examine alternatives to show that its legitimate aim cannot be achieved by less discriminatory means.

Note that the EAT also said that the fact that the scheme had been agreed with recognised trade unions supported the employer's contention that it was justified. Employers should therefore involve employee representatives wherever possible when establishing or modifying any enhanced redundancy scheme or other benefit schemes in order to give some protection against allegations of discrimination.

20 October 2008

True status of contractor – contractual clause was a sham

In Redrow Homes (Yorkshire) Limited v Buckborough and Sewell, the Employemtn Appeal Tribunal (EAT) has held that the claimants were workers for the purposes for Working Time Regulations and therefore entitled to holiday pay. In doing so, it upheld the tribunal's finding that a substitution clause in the contract was a sham.

In a 2004 Court of Appeal case, Redrow had sought to claim that tradesmen working on their building sites were self-employed and not "workers". Redrow lost that case and, as a result, amended its standard contracts in an attempt to ensure that its contractors could not in future claim to be workers. The main change to the contract was the introduction of a clause providing that the obligation to perform work was not personal to the contractor and could be performed by other persons. The clause also obliged the contractor to provide other persons if necessary to carry out the works or maintain the stipulated rate of progress.

The EAT held that the clause failed on two grounds.

Firstly, it was a sham because the parties had a common intention that it was not actually intended to create the rights and obligations it set out. The evidence of the parties was that neither of them expected that contractors would provide substitute personnel or refuse work offered to them. The EAT said that a contractual term could be a sham even if there was no intention to deceive third parties or the court.

Secondly, the nature of the contract was that the tradesmen contracted to do the work personally (even if that involved bringing in other personnel) and were therefore workers for the purposes of the Working Time Regulations 1998.

Impact on employers

This decision makes it very difficult to engage an individual as a consultant or a contractor with any certainty that the underlying legal relationship will reflect what has been set out on paper. The likelihood is that their true status will be as a worker or even an employee. Engaging through a personal service company will not make any difference because of HMRC's IR35 regime.

The right to provide a substitute to carry out the work has been held in other cases to be the key factor that distinguishes a contractor from an employee. Consultancy and contractor agreements often include a substitution clause for this reason, even though in reality neither party intends to rely on it because the engagement is essentially a personal one. According to this decision, a common intention not to rely on the right to provide a substitute will render the clause a sham, making it easy for a court or tribunal to find that the true underlying status of the contractor was either an employee or worker (each case will depend on what the other aspects of the relationship were).

This decision has implications for individuals currently treated as self-employed contractors or consultants and their position should be reviewed particularly in relation to rights under the Working Time Regulations.

20 October 2008

Legislative round up

Consultation on extending the right to time off for civic duties

The Government has issued a new consultation seeking views and extending the right to time off for public duties under Section 50 of the Employment Rights Act 1996. The Government's aim is to encourage a wider spectrum of individuals to get involved in direct decision-making in their communities by removing the barrier of a lack of time. It also seeks to modernise the list of activities entitling people to time off work in order to better reflect the kind of roles available and encourage more people to participate. The proposals include extending the time off entitlement to those that want to help young offenders, those involved in the local courts and probation services and community and council tenants who want to take an active role in the management of their estates. It is expected that legislation will be implemented in April 2009. The consultation closes on 19 December 2008.

EC proposals to improve maternity leave

The European Commission has published proposals for revising the Pregnant Workers Directive as follows:

• increasing the minimum period of maternity leave from 14 weeks to 18 weeks;
• increasing the period of compulsory leave from 2 weeks to 6 weeks;
• recommending that maternity pay during the 18 week period should be equivalent to 100% of the woman's salary, although Members States could set a ceiling on the level of maternity pay of at least the rate of sick pay;
• introducing a duty to provide written reasons for dismissal where a woman is dismissed within 6 months of the end of her maternity leave;
• introducing a right to return from the minimum period of maternity leave to the same or equivalent job;
• the introduction of a right to request to work flexibly on return of maternity leave.

The EC's proposals are likely to have little practical impact on the statutory maternity leave and pay in the UK, where more generous rights already exist. The only proposal which could cause concern is that for maternity pay to be 18 weeks' full pay. Currently in the UK, statutory maternity pay (SMP) is 90% of normal pay for 6 weeks and a flat rate, currently £117.18 per week, for the remainder of the maternity pay period. What is unclear is whether the suggested cap on maternity pay at the level of sick pay would be at the level of statutory sick pay (SSP), which is currently £75.04 a week or company sick pay which varies between businesses. It is more likely to be statutory sick pay. The Pregnant Workers Directive currently allows a cap on maternity pay and SMP set at the same level as SSP has been held to be sufficient to comply with that Directive.

20 October 2008