Wright, Johnston & Mackenzie Solicitors

Workers on Sick Leave can Accrue Holiday Pay

Last month the House of Lords, in the case of HM Revenue and Customs v Stringer and others, decided that ‘holiday pay’ falls within the definition of wages under the Employment Rights Act 1996.  This means that non-payment of holiday pay is regarded as an unlawful deduction, allowing workers to bring a claim under that Act. 

In overturning the earlier decision of the Court of Appeal, the effect of this decision is that a series of non-payments can be the subject of a tribunal claim, even if they stretch back as far as 1998 (when the Working Time Regulations came into force).  Employees will have three months from the deduction (the date when the payment should have been made) to make a claim, or three months from the last deduction in the series.  Further, the employee may be allowed to have his complaint heard late, if they can show that it was not “reasonably practicable” for the complaint to be lodged in time, although that is a difficult test to meet.

The Lords have also decided that workers can accrue holidays whilst they are on sick leave. This means that workers who leave their employment after being on long-term sick leave can claim full pay for their holidays, even if they have exhausted their sick pay entitlement. 

This decision is not good news for employers.  The House of Lords did not address the various consequences of the decision, such as: can an employee who is off sick for more than one holiday year carry over his or her holiday entitlement?  If so, how does that fit in with the Working Time Regulations, which provide that holidays must be taken in the year of entitlement? 

Many employers currently have policies that say that holidays cannot be carried over to the following year if they are not used.  Accordingly, they do not pay the “expired” holidays to leavers.  Is it now illegal to do this?

Our view is that, as result of the Stringer decision, if a worker leaves employment after being on long-term sick leave, they will be entitled to receive pay in lieu of any unused statutory minimum entitlement to holidays at the end of their employment.  That entitlement is likely to extend to statutory minimum entitlement to holidays accrued in previous holiday years, if the employee could not take those holidays due to sickness. 

If an employer does not provide the statutory minimum holiday entitlement to workers who have been on long-term sick, they are likely to face claims of unlawful deductions from wages and disability discrimination.

A further consequence of the Stringer decision is that for workers on long-term sick it seems that holidays will accrue every year until the worker comes back or leaves. So, if an employee returns to work after, say, a year and a half of sick leave, they will have a right to a long holiday (or a few short ones) on their return.  This does not sit well with the Working Time Regulations, which provide that leave may only be taken within the year that it is due.  Unfortunately, answers to these inconsistencies may not be available until they are addressed by the Courts in future cases.

This decision will be of crucial importance for employers who are managing the often, difficult situation where an employee has been absent from work for a prolonged period owing to long-term sickness. Statutory holiday entitlement will accrue. Employers may wish to designate statutory leave during sickness absence using the notification procedures in the Working Time Regulations. For further guidance on how the decision might affect your practices, please contact a member of the Employment group.

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New 'Fit Note' unveiled

The Government has announced details of its new ‘Fit Note’ to be introduced to replace the MED3 sick note. A12-week consultation on the design of the Fit Note is currently taking place, and it is intended that the new Notes will start to be used in Spring 2010.

Rather than just having a simple ‘fit/unfit’ to work choice, as the current forms do, the new Fit Note will contain suggestions as to how an unwell individual can be eased back into work.

The Fit Note aims to enable people to get the best possible advice about staying in work and, if they cannot work, what steps their employer can take to help them return to work sooner. For example, if the employee has a problem with mobility, suggesting a job where they can work sitting down rather than standing up.

The Fit Note has been developed with the support of healthcare professionals, employer representatives and trade unions.The Government’s goal is that under the new system, Fit Notes will be computer-generated in GPs surgeries, replacing the current hand-written forms. 

Managing people back into work can be a difficult process for employers - particularly where conditions such as mental health problems and back problems are the cause. Hopefully, the new Fit Note will benefit both employers and employees and provide positive guidance to assist with an employee’s return to work. They will be of particular importance when dealing with employees suffering from a disability under the Disability Discrimination Act.

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Tougher powers to enforce Minimum Wage come into effect

New provisions, effective from 6th April, give enforcement officers further powers to impose penalties for underpayment of wages by employers.  Enforcement officers can obtain information from employers relating to National Minimum Wage (NMW) payments and they can take documents away for copying.  The most serious cases of underpayment can be tried in the criminal courts.

Calculating arrears for workers who have been underpaid will be by a new formula. It makes reference to the NMW rate at the time when the underpayment is rectified, as well as the rate at the time when the underpayment originally took place.

An employee could, therefore, be repaid arrears at a higher rate than he would have originally received had no underpayment taken place. The formula for the calculation also takes into account the length of time arrears have been outstanding. This is intended to compensate the employee for having to wait for full payment and also to act as a deterrent to employers.

To avoid the possibility of action against them, all employers should check rates of pay for their employees to ensure that the rates are equal to, or above, the NMW rates.

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Restaurant Tips – Wages or not?

In May, the Court of Appeal in England upheld the Employment Appeal Tribunal (EAT) decision in the Annabel’s Nightclub & Others case.  The Court’s decision confirmed that tips and gratuities paid via the particular tronc system operated by the employers’ concerned, could not be included in “wages” for National Minimum Wage purposes. 

It is rumoured that, in some clubs and restaurants in London’s West End, tips can be so great that they result in some staff being liable to higher rate income tax. At the opposite end of the scale, there are still establishments where waiting staff, if tips are not taken into account, may not earn the National Minimum Wage.

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Noise at Work

Under the Control of Noise at Work Regulations 2005, there is a maximum permitted noise level of 87decibels(A) in the workplace. Employers must legally provide ear protectors to workers exposed to 85dB(A) and over, and make them available, on request, to workers exposed to 80dB(A).

Long standing litigation involving major companies in the knitting industry (widely known as “the Nottinghamshire & Derbyshire Deafness Litigation”) has recently concluded.  The Court of Appeal in England decided that employees, who can show that they are suffering from hearing loss induced by noise at work, have a free standing claim if the risk that they might be adversely affected was ascertainable and should have been ascertained by their employer. 

In those circumstances, a claim can be successfully brought under the general provisions of the old Factories Act 1961, the relevant part of which simply provides that: “There shall, so far as is reasonably practicable, be provided and maintained safe means of access to every place at which any person has at any time to work, and every such place shall, so far as is reasonably practicable, be made and kept safe for any person working there”.

In Baker v Quantum Clothing Group & ors, a woman who had been exposed to considerable noise at work between 1971 and 1989 raised an action against her employers. The Court of Appeal unanimously allowed her appeal.  The essential point was that the risk was ascertainable and should have been ascertained by her employers. It could then have been “readily guarded against. In such a case the onus on the employer has not been discharged.”

  Employers today will be more concerned with the Control of Noise at Work Regulations than with the Factories Act rules. Nevertheless, this case should serve as a salutary warning to employers who employ staff in noisy workplaces.  It is important that employers ensure employees are not exposed to unacceptable noise levels.

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Off-site Health and Safety Duties

The House of Lords has limited the scope of employers’ strict liability for equipment used off site by employees whilst carrying out their duties. In Smith v Northamptonshire County Council, it was decided that a local authority was not liable for the injury of a care worker, who used a defective wheelchair ramp at a client’s home. The claimant, a driver and carer employed by Northamptonshire County Council, was injured when the edge of the ramp crumbled while she was pushing a client from her home to a minibus. The NHS had provided the ramp ten years earlier.

The central issue was whether the ramp constituted “work equipment . . . provided for use or used . . . at work” under the Provision and Use of Work Equipment Regulations 1998.

In reaching their decision, the Law Lords considered (1) whether the ramp was part of the employer’s undertaking; and, (2) whether the ramp was provided to the employee by the employer (or by someone else with the employer’s consent). The Council did not provide the ramp and had no responsibility or right to repair it. The Law Lords ruled in favour of the Council, finding that it did not have the requisite level of “control” over the ramp and, therefore, was not liable under the Regulations.

This judgment provides useful clarification for employers of their potential liability with regard to employees who frequently work off site. It shows that there must be a specific link between the work equipment and the employer’s undertaking before the employer will be duty-bound by the strict responsibilities in the Regulations.

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Constructive Dismissals and Grievances

The Employment Appeals Tribunal (EAT), in Parsons v Burworth Estates, has held that a Tribunal can consider a constructive unfair dismissal claim on a ‘severed’ basis, where some of the employee’s complaints had been the subject of a grievance but others had not.

The EAT had previously held in Cyprus Airways v Lambrou that there was no basis for such a severed approach by tribunals. However, in Parsons, the EAT stated that Cyprus Airways did not enunciate any general principle about severance. It held that, in a case where the claimant relies on a series of quite discrete breaches for the purpose of his constructive dismissal claim but has failed to lodge a grievance in respect of some of them there was no reason why he should not pursue his claim, in relation to the matters which were the subject of the grievance.

A claimant will still have to establish that he resigned in response to a breach of contract by the employer.

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Farmer fined £10,800 for electric shock death of worker

A fruit farmer was fined £10,800 after a berry picker was killed by an 11,000-volt shock from an overhead cable. Polish migrant worker Gerard Faltynowski suffered a massive electric shock and died when he struck the live cable with part of a polytunnel.

Fruit farmer, Peter Thomson, had been warned about the danger posed to his workers just two weeks before the fatal incident, but took no action. In May, Perth Sheriff Court was told that Thomson, who employed up to 250 workers at any one time, had not taken the proper steps to ensure a safe workplace.

The Court heard that Mr Faltynowski was carrying equipment that was nearly 7 metres long, while the overhead cable was less than 6 metres off the ground. A colleague watched as Mr Faltynowski failed to lower the metal equipment enough to bring it under the wires and was fatally electrocuted.

Thomson admitted failing to carry out an adequate risk assessment. His company, Thomas Thomson (Blairgowrie) Ltd, admitted failing to provide a safe system of work. The offences took place between 1 July and 28 July 2006 at Mains Field, Blairgowrie, Perthshire.

The Court was told that the victim would not have been killed if he had managed to drop the equipment just 2cm further. It was also told that if the proper minimum procedures had been implemented, the Polish student would not have died.

The company was fined £9,000 and Thomson was fined £1,800.

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Survey finds workers are ‘fearful’ of raising concerns about Health and Safety in current economic climate

Over half of UK businesses making cutbacks this year say that bosses’ bonuses will be the first to go before health and safety management, according to a new survey from the British Safety Council (BSC).

However, the results of the survey appear to show that the recession is having a significant effect on health and safety in the workplace. One in 10 workers claimed to be fearful of raising concerns about health and safety issues in the current economic climate. And one in 12 workers feels under pressure from their boss to take risks with people’s safety in order to save money. With one person each day in the UK dying in the workplace, the BSC has stressed that these findings should give cause for concern.

The BSC’s second annual survey into the attitudes of bosses and workers regarding safety in the workplace revealed that while 95% of bosses said they were confident about what they were legally required to do to make their workplace safe, a quarter (26%) of them were not aware of the three main pieces of safety legislation and advice - the Health and Safety (Offences) Act, the Corporate Manslaughter Act and the Institute of Directors’ ‘Guidance for Directors’.

While the majority of workers (70%) feel more inclined to be productive in an environment where their employer is attentive to their health, safety and wellbeing, only 59% of bosses now think that a proactive approach to health and safety enhances the bottom line, compared with 72% in 2007.

In 2007/08 non-existent or inferior health & safety measures in the workplace killed 229 men and women and injured 136,000 employees, costing industry £7.8bn.

If you are unsure of your obligations or rights regarding health and safety in the workplace, our Employment team at WJM will be happy to provide you with guidance. We can refer you to our preferred H&S specialist for advice tailored to your organisation.

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Car firm fined after worker crushed

A car parts company has been ordered to pay almost £6,000 after one of their workers was crushed in an accident in a workshop.

Trevor Rollin suffered multiple fractures when a tool rack collapsed and fell on him at the International Automotive Components Group premises last August.  Mr Rollin became trapped after the rack collapsed while he was using an overhead crane to unload tools. The hearing heard that he received multiple fractures, cuts and bruises.

International Automotive Components Group was fined £3,200 and ordered to pay £2,600 costs after pleading guilty to a breach of the health and safety legislation.

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Pregnancy and Work

Maternity rights of employees are of such significance that two recent news items are worth noting, even though they make no change to the law:

First, EC proposals to amend the Pregnant Workers Directive 92/85 to increase the period of compulsory paid maternity leave to 18 or 20 weeks, six of which would have to be on full pay after the birth and the rest either before or after the birth, were, for the time being, blocked by the European Parliament in early May. 

Second, the Department of Business Enterprise and Regulatory reform, BERR (soon to be merged with the DIUS, see below) have published a new guide,  “Pregnancy and work: what you need to know”. It can be accessed at http://www.berr.gov.uk/files/file51453.pdf  .

The guide is in two parts, one for employers, and the other for employees.  It is not a legal guide but does provide a wide-ranging consideration of the issues facing pregnant women and their employers. It is set out as two column checklists headed “What to do” and “Why” and is a useful practical summary. 

While the BERR guidance paper is useful, if problems do arise, it is important to seek advice on the legal position - our award winning Employment Group would be happy to assist you.

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Employment Status

In Little v BMI Chiltern Hospital, the EAT has held that the fact that an employer could, and did send home workers half way through a shift without pay when their services were not required, meant there was no mutuality of obligations. For there be to be a contract of employment there must be mutual obligations between the employer and the employee. The employer has to provide work and pay for it to be done and the employee has to do the work. 

The EAT has dismissed the appeal by a worker who was sent home. His contract was to provide freelance services.  There was no employment contract and so no “unfair dismissal”.

Under a series of letters written over time, Mr Little worked as a “bank theatre porter” for the hospital. He would assist, when required, two porters who were employed by the hospital but he had reserved the right to turn down offers of work and stated his wish to be a self-employed contractor. The letters provided that, if he declined a number of assignments, the hospital could end the arrangements, and specified that there was no mutuality of obligation. When the hospital dispensed with his services, Mr Little claimed unfair dismissal.

An Employment Tribunal (ET) concluded that it had no jurisdiction to hear such a claim since Mr Little was not the hospital’s employee. Mr Little did not argue that there was an “overarching” contract of employment but rather that each separate period of work he did for the hospital amounted to a separate contract with mutuality of obligation each time. However the previous cases he referred to in support of his claim all concerned cases where, although there was no obligation to provide work in the first place, once it was offered and accepted there was an obligation to perform it and an obligation to provide it until that engagement ceased. The Tribunal rejected his arguments.  Mr Little appealed and lost.

The EAT determined that the crucial factor in this case was that the hospital could, and did, send Mr Little home mid-shift if there was no work to be done. He would not be paid for the remainder of the shift. Since there was clearly no obligation to provide work, even when the contract was being performed, there was no mutuality of obligation to make this situation a series of separate contract of employment. The only contract was to provide freelance services.

Furthermore this lack of mutuality of obligation was in line with what the parties envisaged and had expressly allowed for in their written agreements. Considering the status of those agreements, the EAT observed that it is important to recognise that how the arrangement worked in practice is not a substitute for the written agreement between the parties.  However, where the operation of the relationship demonstrates that the parties do not realistically intend or envisage that the terms would be carried out as written, that may form a foundation for finding that the written words do not truly reflect the intentions of the parties. In the present case the documentary evidence plainly envisaged that there would be no mutuality of obligations. The appeal was dismissed.

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Equality Bill – Sexual Orientation

If enacted in its present form, the new Equality Bill will mean that churches will no longer be able to reject gay job applicants. Under existing law, churches have an exemption which means it is not illegal for them to reject a gay job applicant, if the intended employment is “for the purposes of an organised religion” provided certain specified conditions are fulfilled.

The new Bill uses similar wording to the 2003 Regulations, which it will replace, but adds the crucial extra words, “for the purposes of an organised religion only if the employment wholly or mainly involves (a) leading or assisting in the observation of liturgical or ritualistic practices of the religion, or (b) promoting or explaining the doctrine of the religion (whether to followers of the religion or to others)” 

The official explanatory note to the Bill confirms that the proposed revision would not entitle a church to refuse employment to a gay person who applied for a post as, say, a church youth worker, if the reason for the refusal was the person’s sexual orientation.

Observers have noted that at least one ET may have effectively applied the proposed new law in 2007.  In Reaney v Hereford Diocesan Board of Finance, the Bishop of Hereford had refused to employ a gay man as Diocesan Youth Officer because of his sexuality.  The man sued. Notwithstanding that the Tribunal recognised that it must not substitute its own view as to what was reasonable for the view of the Bishop, the Tribunal ruled that this was unlawful and ordered the diocese to pay the man almost £50,000 compensation for breach of the 2003 Regulations.

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Gangmaster convicted of operating without a licence

The Gangmasters Licensing Authority (GLA) has fined Soul Recruitment Ltd of Edinburgh £200 for operating as a gangmaster business without a licence. The company supplied a workforce of approximately six workers a week from December 2007 until April 2008 to a beef processing business in the West Lothian area without the necessary licence.

- Employers should be aware that the GLA will continue to take action against those who are operating outside the law as well as licensed gangmasters who flout the rules. The GLA has released a statement saying that they are not solely targeting gangmasters and that they can also prosecute growers, processors and packers who use unlicensed gangmasters.

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