Employment Briefing - September 2013
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- FREE EVENTS: Protected Conversations - Helping Employers Prepare
- Introduction of Employment Tribunal fees
- Omission of ‘subject to contract’ results in binding agreement
- Overtime & Holiday Pay
- Sickness Absence & Holiday Pay
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FREE EVENTS: Protected Conversations - Helping Employers Prepare
Join us for this innovative and refreshing series of seminars on Protected Conversations and how employers can prepare for them.
The law has recently changed to allow employers and employees to enter into discussions to end employment on a confidential basis. While this can offer obvious advantages to employers who can speak freely regarding “difficult” issues, there are traps for the unwary in relation to what can, and cannot, be discussed.
WJM’s award winning Employment Law team will present an informative and entertaining seminar, featuring role play, to show how to protect employers from the pitfalls, with plenty of opportunity for any questions you have to be answered.
The same seminar will be run in three locations:
Glasgow: 5.00pm - 7.00pm, 12th September 2013 at WJM’s offices at 302 St Vincent Street, Glasgow, G2 5RZ.
Edinburgh: 5.00pm - 7.00pm, 9th October 2013 at The Caledonian Hotel, Princes Street, Edinburgh.
Inverness: 5.00pm - 7.00pm, 24th October 2013 at The Kingsmills Hotel, Culcabock Road, Inverness, IV2 3LP.
The seminars are free to attend but pre-booking is essential.
Read more - and book your place - through our events page
Book through events@wjm.co.uk stating which event you will be attending.
Introduction of Employment Tribunal fees
Following 29 July 2013, bringing claims to the Employment Tribunal and Employment Appeals Tribunal will no longer be free. It was hoped that introducing a fee for bringing Tribunal cases would discourage spurious and baseless claims. However, many groups, including UNISON, are concerned that the move will have devastating consequences for workers’ rights to justice.
An employee making a claim in the employment tribunal is now required to pay:
- an ‘issue fee’ payable on submitting their claim (or appeal); and
- a ‘hearing fee’ payable three to four weeks before the full hearing.
The level of fee varies with the type of claim, but in the case of an unfair dismissal, the issue fee will be £250, and the hearing fee £950.
UNISON has brought a judicial review of whether the fees are illegal on a number of grounds. This includes that the fees contradict EU law as reasonable people are not going to litigate when weighing up the costs against the possible benefits.
On the other hand, the new rules might not necessarily deter claimants: they can apply for remission of all or part of the fee, and the tribunal can order an unsuccessful employer to reimburse fees paid by a successful employee (although the Tribunal may only exercise this power in a limited number of cases).
The discussion around the introduction of these fees looks set to continue.
Omission of ‘subject to contract’ results in binding agreement
In Newbury v Sun Microsystems, the High Court held that a letter detailing a proposed settlement sum and a subsequent letter of acceptance constituted a binding agreement, despite the lack of a formal, written contract.
The case involved a claim by Mr Newbury and a subsequent counter-claim by Sun Microsystems. Formal proceedings were raised and the trial was set to commence on 12th June 2013. On 3rd June 2013, Sun’s solicitors wrote to Mr Newbury, offering a proposed settlement sum of £601,464.98, to be paid within 14 days. Mr Newbury’s solicitors gave written acceptance of the proposed terms, saying that they would forward the draft agreement to Sun’s solicitors the following day. However, the parties were subsequently unable to conclude and agree on the terms of the draft agreement. Mr Newbury’s solicitors argued that the terms of the agreement had already been agreed by virtue of the offer. Sun’s solicitors held that until the settlement was recorded in a suitably worded written agreement, there was no binding contract.
On the basis that the offer was sufficiently detailed and capable of being accepted, and it had been accepted, the High Court found in favour of Mr Newbury. Had Sun intended to negotiate the terms of the agreement further, the phrase ‘subject to contract’ should have been included in Sun’s letter.
Overtime & Holiday Pay
The Working Time Regulations provide that workers in the UK are entitled to 4 weeks ‘ordinary’ statutory annual leave and an extra 1.6 weeks of ‘additional’ statutory annual leave paid at a rate of one week’s pay for each week’s leave under the Working Time Regulations 1998.
In Crossland v. Corporations of Commissionaires Management Ltd. It was held that where an employee has normal contractual hours but overtime or additional hours may be worked, statutory holiday pay should be calculated with reference to the contractual hours only.
This is at odds, however, with the EU position. Article 7 of the Working Time Directive 2003/88/EC states that workers have a right to 4 weeks paid annual leave. In Williams and Others v. British Airways Plc., the European Court of Justice held that a worker is entitled to their basic salary as well as remuneration which is ‘intrinsically linked’ to the performance of their contractual obligations and in respect of which a monetary amount, included in the calculation of their total remuneration, is provided’.
The Employment Tribunal discussed this test in the recent case of Neal v Freightliner Ltd.
Mr Neal was contracted to work a basic 35 hour week comprising five seven-hour shifts and stated he may be required to work overtime when necessary. In reality, Mr Neal worked 8.5-9 hour shifts and occasionally shifts up to 12 hours long, all of which was paid overtime.
The Employment Tribunal held that voluntary overtime must be taken into account when calculating holiday pay. The fact that Mr Neal’s overtime was voluntary did not mean his performance was no longer ‘intrinsically linked’ as required under the ‘normal remuneration’ test in Williams. The overtime pay reflected the inconvenience of working extra hours and provided an additional link to the performance of his tasks and their inclusion as part of normal remuneration for the purposes of the calculation of holiday pay.
Although the employer has now lodged an appeal to the EAT, for the time being employers should consider taking paid overtime and commission into account when calculating holiday pay in respect of the minimum four weeks’ statutory annual leave. The Tribunal held that a week’s holiday pay would be the worker’s ‘average weekly remuneration in the period of twelve weeks’ before the holiday.
Sickness Absence & Holiday Pay
The Employment Appeal Tribunal in Sood Enterprises Ltd v. Healy has capped the holiday allowance that employees are able to automatically carry over while absent on long-term sick leave. The cap is at 4 weeks holiday allowance rather than the 5.6 weeks they would otherwise be entitled to.
Following a stroke, Mr Healy was absent from work for 11 months (straddling two holiday years) before he resigned in June 2011. The EAT held that unlike ‘ordinary’ annual leave of 4 weeks, provided for by the Working Time Regulations 1998, ‘additional’ annual leave of an extra 1.6 weeks, provided for by the same regulations, cannot be carried over unless there is an agreement in place between the parties.
Contracts of employment should be checked to ensure that they do not unintentionally agree to allow an employee to carry over ‘additional’ annual leave in cases of long-term sick leave. The tribunal further held that this applies to private companies as well as public bodies.
The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at September 2013. 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.
