June 2003
Employment Law Case Update
Introduction
We have prepared our latest Employment Unit Briefing by selecting decisions from the Tribunals and Courts in Scotland and England over the last 4 months which we believe will have relevance to the way you manage your business or organisation. The cases deal with a variety of employment law issues ranging from whistleblowing to payment of notice whilst an employee is on long-term sick leave. We give only a brief synopsis of the cases below but should you wish any further details of the case or if they raise issues which you would like to discuss, then please do not hesitate to contact us. drafting of unambiguous contracts can avoid some of these issues.
Dacas v Brook Street Bureau(UK) Ltd
This is an important decision from the EAT on the status of agency workers. The circumstances were that a worker had signed a “temporary worker's agreement” with an agency which stated that she was not an employee. During her time with the agency, the worker had been assigned to a local authority hostel where she worked for 6 years until the time of her dismissal. The issue was whether the worker was in fact an employee of the agency and therefore had the right to bring a claim of unfair dismissal against them. The EAT looked into all the circumstances surrounding the worker’s relationship with the agency and held that they all pointed in favour of employment; the agency exercised a considerable amount of control over the worker, “mutuality of obligation” existed between the parties, she was paid an hourly rate. It was felt by the EAT that the label which the parties put on the contract should not override the other indications as to the nature of the contract regardless of whether it reflected the original intention of the parties. The lesson here is that Tribunal looked to the reality of how the relationship worked and not simply what was stated in the contractual papers.
MPB Structures Ltd v Munro
This is a Court of Session decision concerning an employer who paid an 8% allowance for holiday pay to employees as part of their weekly pay. As a result, when the employees actually took their annual leave they did not receive payment from the employer as their holiday pay had been “rolled up” with their normal weekly pay. The Court held that this arrangement did not accord with the aim of the Working Time Regulations (“WTR”), or the Working Time Directive, as payment for annual leave should be made at the time of taking the leave. It followed that the rolled up payments did not discharge the employers liability to pay holiday pay. We see this as an important decision for clients who have employees working for a limited term or a specific period, such as those in the education, construction and tourism sectors.
Addison t/a Brayton News v Ashby
The EAT ruled that a child who is not over the compulsory school age of 16 years old is not a worker for the purposes of the WTR and therefore is not entitled to be paid annual holidays. The case concerned a 15 year old paper boy who claimed that he was entitled to 4 weeks paid annual leave. The EAT held that those who were not over compulsory school age were covered by the Children and Young Persons Act 1933 (as amended). The 1933 Act requires that any child who works must have at least 2 consecutive weeks of annual rest in any one year to be taken in school holidays. There is no requirement that that the child's period off work should be a paid. This leaves us with the rather ironic position that those over 16 are afforded far more extensive rights through the WTR, including rights to paid holidays and longer rest periods.
Torith Ltd v Flynn
The Employment Appeal Tribunal (EAT) held that the definition of a "worker" in regulation 2(1)(b) of the WTR creates a hybrid category of protected worker falling between the existing definitions of an employee working under a contract of service and a genuinely self employed contractor working under a contract for services. It followed that an Employment Tribunal (“ET”) had not erred in deciding that an apparently self employed joiner fell within the definition of "worker" for the purposes of the regulations and was, as a result, entitled to holiday pay. The EAT found that the phrase "any other contract" in regulation 2(1) was wide and meant that an individual who worked under a contract, other than a contract of employment, to perform work or services personally for another party, would fall within that definition. The only apparent exception to this general position is where an individual is carrying on a profession or business undertaking of which the other party was a client, as then the individual would be truly self-employed. This decision sends warning signals to clients who are engaging workers on a casual basis, as they may well find that these workers are not considered to be "self-employed" and they have more onerous obligations to the worker than was intended or expected. The
Darnton v University of Surrey
The Public Interest Disclosure Act 1998 provides certain protections for employees and workers who make a “qualifying disclosure”. These are known as whistleblowing cases. In order for a disclosure to come within the ambit of the Act, the disclosure must contain "information which in the reasonable belief of the worker making it tends to show a relevant failure". The issue for the EAT to consider here was the
June 2003
meaning of "reasonable belief" as the employee claimed protection under the Act on the basis that the employer had committed a breach of various legal obligations. It transpired however that the employee was wrong in his contention and the employer had not, in fact, breached any legal obligations upon them. Despite this, the EAT held that there could still be a qualifying disclosure if it was reasonable for the employee to believe that the factual basis of what was disclosed was true and that it tended to show a relevant failure, even if the employee was wrongly, but reasonably mistaken.
Sainsbury’s Supermarkets Ltd v Hitt
The Court of Appeal held that the band of reasonable responses test applies as much to the question of whether an investigation into suspected misconduct was reasonable in all the circumstances, as it does to the decision to dismiss itself. This is a significant decision as it effectively widens the scope for employers in terms of what will be considered by an ET to be a reasonable investigation into suspected misconduct. From now on, whilst an investigation may not have been as thorough as it could have been, an argument can be made to the effect that the investigation itself was within the band of reasonable responses. The incidence of claims arising from questioned investigation procedures may now be likely to reduce.
2000, he received a letter from his employers giving him 13 weeks notice of the termination of his employment in accordance with his contract. No payment was made to the employee in respect of the period of notice and the employee brought proceedings in the Tribunal claiming that he was entitled to be paid during his notice period. The EAT held that an employee is entitled to a week's pay for each week of his or her statutory notice period, whether working, or contractually entitled to pay while not working, or not contractually entitled to any pay. But where the employee is entitled under the contract of employment to a notice period which is one week or more longer than the statutory minimum period, that entitlement to notice pay is lost. This decision creates an illogical outcome albeit it was taken on a strict reading of the relevant sections of the Employment Rights Act 1996. As section 87(1) of the Act did not apply by reason of s.87(4) then the provision for notice pay whilst sick in s.88(1)(b) also did not apply. It follows that the employee had no entitlement to pay in respect of the notice period as his contractual notice of 13 weeks was more than his statutory notice of 12 weeks. It is unlikely that this was the intention of the legislators, and a significant part of the exit payment often paid to the long term sick on dismissal may now disappear.
Thanet District Council v Websper
The EAT held that an ET had been entitled to find that an employer who had refused to offer an alternative job to an employee suffering from work related stress, had breached its implied contractual duty to provide the employee with a safe place of work. Accordingly, the employee who had resigned following the employer’s refusal, was constructively dismissed. The EAT found that as the employee’s work had led to his ill health and the employee had maintained that his health problems would be exacerbated by his returning to work within the same division, then the employer was in breach of the implied contractual duty. This decision should be borne in mind by employers who have employees on long term sick due to stress and the obligations which are placed upon them in assisting the employee to return to work.
Hamilton v Tandberg Television Ltd
The band of reasonable responses has been applied in yet another area in this EAT case. Here the EAT upheld the decision of an ET to dismiss an employee’s claim that his employer’s failure to properly investigate his grievance was a fundamental breach of contract amounting to a constructive dismissal. The correct standard against which an employer's investigation of an employee's grievance should be judged is the "band of reasonable responses" test. Here it was felt that the investigation was within the band of reasonable responses and there was, as a result, no fundamental breach of contract by the employer on which to found a constructive dismissal. This decision arguably relaxes the test for employers, allowing them a wider scope in respect of the extent of the investigation they carry out. It may now be harder for an employee to argue that a failure to deal with a grievance appropriately will give rise to a successful claim for unfair constructive dismissal.
Scottbridge Construction Ltd v Wright
In this case the Court of Session held that a night watchman was entitled to be paid the national minimum wage in respect of all 14 hours (nightshift) that he was required to be on his employer's premises. This was so, notwithstanding that, while he was required to respond to an alarm at any time and do specific tasks which took up just four hours of his time, he was permitted to sleep when not carrying out those tasks. This case will have direct relevance for clients who have employees working on call or where staff are required to be at the employer’s premises at certain times.
This Briefing is intended to be a guide only. If you have any specific queries or require further information please contact Chris McDowall of the firm's Employment Unit or email empu@andersonstrathern.co.uk.
Scotts Company (UK) Ltd v Budd
In February 1998, an employee was certified as unwell by his doctor. After one year of absence, he had exhausted his contractual entitlement to sick pay. The employee remained in employment although he was not receiving any wages. In May