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Employment Law Case Updates - November 2014

12 November 2014

Here are some recent important decisions of the Courts and Tribunals that highlight key developments in employment law.

Should overtime payments be taken into account when calculating holiday pay?

In the latest development on the types of payments that should be included in holiday pay calculations, the Employment Appeal Tribunal (EAT) has ruled that non-guaranteed overtime should be included. Potentially this means that employers have not paid their staff enough holiday pay since 1998 and therefore could have a very significant impact on many businesses in many sectors. However, the EAT did confirm that a gap of three months or longer between periods of holiday will break the “series of deductions” needed to make unlawful deductions from wages claims. It is anticipated that this decision will be appealed and the government has also announced that it is setting up a taskforce to assess how the impact of the decision on businesses can be limited. We suggest that employers should take advice on their individual risk level prior to making any changes to current practices (other than, perhaps, accruing for possible liabilities).

Bear Scotland v Fulton and others, EAT

Are employers liable for discriminatory terms in insurance policies underpinning benefits?

The EAT has held that an employer was not responsible for less favourable treatment of a fixed-term employee as a result of the terms of a permanent health insurance (PHI) policy. In this case, an employee was not entitled to PHI cover because his fixed term employment was due to expire before the end of the 26 week qualifying period (even though his employment was extended). This decision confirms that an employer will not necessarily be liable where potentially discriminatory terms are set by an insurance company in the underlying policy. However, employers should assess whether any potentially less discriminatory benefits are available through other providers and ensure that employment contracts state that entitlements are subject to the terms of the relevant policy.

Hall v Xerox UK Ltd, EAT

When does an employer breach its duty of care when taking disciplinary action?

In this case the employee argued that her employer had breached its duty of care to her by commencing disciplinary proceedings against her. The employee had allegedly provided a false reference about a former colleague. The employer’s initial investigation found some discrepancies in the evidence and it therefore commenced disciplinary proceedings. The Court of Appeal held that, provided an employer carries out a reasonable investigation, if the decision to commence disciplinary proceedings is within the range of reasonable decisions open to the employer, then it will not be in breach of its duty of care. This case is clearly helpful for employers as it reinforces that employers can reach different decisions without breaching their duty of care to their employees.

Coventry University v Mian, Court of Appeal 

Is “set off” available in Tribunal claims?

In this case the employee was claiming for loss of pension rights during his notice period. The employer had a claim against the employee in relation to overpayment of wages. However, the employer was out of time to bring this as a counter claim to the employee’s Tribunal claim. The Tribunal confirmed that, none the less, the legal defence of “set off” was available and the employer could therefore reduce its liability to the employee by the amount that the employee owed to the employer. The EAT also held that the amount to be set off does not need to be undisputed for the defence to apply as the court or Tribunal may be able to reach a decision as to the amount of the debt. This is a particularly helpful decision for employers as it confirms that the employer does not need to bring a claim against an employee in order to have amounts owed by the employee taken into account in the employee’s Tribunal claim.

Ridge v HM Land Registry, EAT

Can anything be done if the Employee Liability Information is incorrect?

Under TUPE, an old employer must provide prescribed information (the ELI) about the transferring employees to the new employer at least 28 days prior to the transfer. In this case, the old employer was in financial difficulties and was unable to pay employees their current wages. However, it did not inform the new employer in time. Liability to pay the employees transferred to the new employer, who then brought a claim under the ELI rules. Crucially, the Tribunal held that the loss caused by the failure to provide the ELI was not the cost of paying the employees (which liability would have transferred regardless) but the lost ability to manage the situation better eg by amending contractual terms. The Tribunal ordered the old employer to pay compensation of £500 per employee: £65,500 in this case. The case highlights the importance of ensuring that the provision of ELI is always timely and accurate and dealing with ELI claims in all contractual documents regarding actual or possible TUPE transfers.

Eville & Jones (UK) Ltd v Grans Veterinary Services Limited, Employment Tribunal

For further information please contact Kirsti Laird on +44 (0)20 7427 6411 or kirsti.laird@crsblaw.com