Employment Briefing - May 2015
Published byMartin Stephen
- Contact the Team
- Can Bad Faith Warnings lead to dismissal?
- Ruling on Holiday Pay and Commission
- Gender Pay Gap
- Collective Consultation: ECJ Decision
Welcome to May’s Employment Briefing.
When major chain stores are financially challenged or go into administration, store closures inevitably follow. In this edition of Employment Briefing we look at a European Court of Justice ruling on the administration of Woolworths and the subsequent store closures.
We also highlight a little publicised piece of legislation which will require businesses with over 250 employees to publish their gender pay gaps.
Elsewhere we've rounded up the other significant employment cases and summarised them for you. This month we cover holiday pay and bad faith warnings.
As ever, if you have any questions or points for discussion, please get in touch.
Contact the Team
If you have an employment issue, please contact the team:
Martin Stephen: mss@wjm.co.uk 0141 248 3434
Liam Entwistle: lae@wjm.co.uk 0141 248 3434
Andrew Wilson: ajpw@wjm.co.uk 0131 524 1500
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Can Bad Faith Warnings lead to dismissal?
The Court of Appeal has held that a warning given in bad faith cannot be relied on for the purpose of determining whether there is sufficient reason to dismiss an employee.
In the case of Way v Spectrum Property Care Limited, the Claimant, Mr Way started employment with Spectrum Property Care Ltd in October 1998. He gained a series of promotions and eventually became an Electrical Contracts Manager before being dismissed in December for misconduct after sending inappropriate emails.
The Claimant alleged that the final written warning which he received was given in bad faith. The Employment Tribunal had refused to hear evidence as to whether the warning was given in bad faith, and dismissed the claim for unfair dismissal.
On appeal, it was found that a warning given in bad faith is not to be taken into account in deciding whether there is, or was, sufficient reason for dismissing an employee. An employer would not be acting reasonably in taking into account such a warning when deciding whether the employee's conduct was sufficient reason for dismissing him; and it would not be in accordance with equity or the substantial merits of the case to do so.
Ruling on Holiday Pay and Commission
Last year the ECJ ruled in the case of Lock v British Gas that commission ought to be included in situations where commission is a regular feature of an employee’s remuneration.
Following that decision, the Tribunal has interpreted the Working Time Regulations 1998 (WT Regs) so as to include commission payments in the calculation of holiday pay in respect of the four weeks statutory annual leave set out in Regulation 13 WT Regs.
In reaching its decision, the Tribunal stated that so far as holiday pay is concerned, it saw no difference in principal between non-guaranteed overtime and commission. Although the Tribunal was not bound by the EAT’s decision in the case of Bear Scotland Limited v Fulton, it endorsed the same reasoning.
Unhelpfully, there is still no decision as to what reference period should be used to work out average pay.
Gender Pay Gap
March 2016 will see the introduction of a mandatory requirement for businesses with 250 or more employees to publish data about the gender pay gap within their organisation.
The power to "require employers to publish information relating to the pay of employees for the purpose of showing whether, by reference to factors of such description as is prescribed, there are differences in the pay of male and female employees" was first introduced by the Equality Act 2010.
However, initial voluntary programmes did not achieve the desired results, with only 270 out of a possible 7000 businesses signing up for the initiative, and as few as five companies agreeing to comply with the "Report" part of the undertaking by signing up to publish their gender pay gaps.
A failure to comply with the new mandatory requirement, however, is likely to be treated as a criminal offence, for which the penalty will be a fine of up to £5.000. Businesses affected by the change will be concerned that publishing such data could leave them more vulnerable to challenge under the equal pay provisions of the Equality Act. It is therefore important to ensure that clear rationales are in place in connection with all areas of pay and reward within the business.
At present details of specific publishable information is yet to be confirmed. There is also no certainty as to whether the requirement will be limited to simple differences in median hour rates or will require a more detailed breakdown of pay by average basic and total earnings and by job category or grade.
Collective Consultation: ECJ Decision
“Where an undertaking comprises several entities, the term ‘establishment’ in the directive on collective redundancies must be interpreted as referring to the entity to which the workers made redundant are assigned to carry out their duties.”
This is the decision handed down by the European Court of Justice in the judgement dated 30th April in the Woolworths and Ethel Austin cases.
Woolworths and Ethel Austin were companies active in the high street retail sector throughout the United Kingdom, operating chains of stores under the trade names ‘Woolworths’ and ‘Ethel Austin’ respectively. They became insolvent and went into administration, which resulted in the dismissal on grounds of redundancy of thousands of employees across the United Kingdom.
When establishing headcount to see whether an employer needs to engage in collective consultation (required when contemplating 20+ redundancies in a period of 90 days), Woolworths was right to count each store as a separate 'establishment'. This, in turn, meant that it did not need to engage in collective consultation with staff who worked in a store with a headcount of less than 20.
The Court pointed out that the directive establishes minimum protection for workers in the event of collective redundancies, and such minimum protection does not prevent the Member States from adopting rules that are more favourable to workers. While the Member States are entitled to lay down such rules, they are nevertheless bound by the autonomous and uniform interpretation given to the term ‘establishment’ in EU law.
The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at May 2015. Wright, Johnston & Mackenzie LLP cannot be held responsible for any action taken or not taken in reliance upon the contents. Specific advice should be taken on any individual matter. Transmissions to or from our email system and calls to or from our offices may be monitored and/or recorded for regulatory purposes. Authorised and regulated by the Financial Conduct Authority. Registered office: 319 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 300336.
