Accusations of Gross Misconduct Do Not Always Justify Suspension

Where employees are accused of gross misconduct, suspending them on full pay pending a disciplinary investigation is all too often a knee-jerk reaction. However, such a step is not always justified and a firm of architects which fell into that trap found itself liable to pay a substantial compensation award.

Airport departures board 1The case concerned a senior architect who had exhausted her annual entitlement to paid leave but felt that she had to fly to Greece for two days in order to deal with an urgent family matter. Due to a misunderstanding, she believed that the additional leave had been authorised by her line manager.

After the firm refused permission on the evening before she was due to fly, she took the view that the die had by then been cast and embarked on her trip. She was immediately suspended on her return and her email account was blocked. She resigned shortly before a disciplinary hearing was due to take place and launched Employment Tribunal (ET) proceedings.

In ruling on the matter, the ET found that the decision to suspend her was not taken due to concerns about her alleged misconduct but was motivated by the firm’s nervousness that she would be upset and make a scene in the office, setting a bad example to junior colleagues. The firm’s HR advisers appeared to have taken the view that any charge of gross misconduct would generally warrant suspension.

The firm had also acted unfairly in taking into account an incident the previous year which was also said to have resulted in her exceeding her holiday allowance. That matter had been resolved at the time and should not have been brought up again. After upholding her complaints of wrongful dismissal and unfair constructive dismissal, the ET awarded her a total of £34,083 in compensation.

In ruling on the firm’s challenge to that outcome, the Employment Appeal Tribunal (EAT) found that the ET was wholly justified in concluding that there was no fair reason for the woman’s suspension, which amounted to a breach of the implied term of trust and confidence in her employment contact.

Arguments that she was partly to blame for her own dismissal and that she had failed to take adequate steps to mitigate her loss were also rejected. The EAT accepted that the reasons the ET gave for awarding her 40 weeks’ net loss of pay were inadequate. The same ET was directed to consider that issue afresh, but the firm’s appeal was in all other respects dismissed.

Foster Carers Union Refused Compulsory Collective Bargaining Rights

What are the criteria that have to be met before a trade union can be listed as such under the Trade Union and Labour Relations (Consolidation) Act 1992? The Employment Appeal Tribunal (EAT) tackled that thorny issue in ruling that a union established to represent foster carers could not fit the bill because its members do not work under contracts.

The union’s application to be entered onto the list maintained under the Act was rejected by a certification officer (CO) on the basis that it was not an organisation consisting wholly or mainly of workers – a worker being defined by the Act as an individual who works under contract. The CO’s decision meant, amongst other things, that the union could not seek compulsory recognition by local authorities for collective bargaining purposes.

In dismissing the union’s challenge to the decision, the EAT found that it was bound by previous judicial rulings, which established that the relationship between foster carers and local authorities is not contractual in nature. It noted the CO’s argument that recognising foster carers as workers for the purposes of the Act would risk compromising their parental role and turning the home environment into a workplace, to the detriment of children’s welfare.

The EAT also rejected claims that the CO’s decision amounted to a violation of the union’s right to freedom of assembly and association, enshrined in Article 11 of the European Convention on Human Rights. The refusal of a listing did not preclude foster carers from forming a union or other association.

Even had such a breach been established, the EAT noted that it had no power to declare the terms of the Act incompatible with human rights. It was also not possible to read down the legislation so that the term ‘worker’ would encompass any person in an employment relationship, whether or not under a contract.

As regards whether the requirement that only unions whose members are workers can be listed is necessary in a democratic society, the CO had identified two specific aims – maintaining the distinction between those who work under contract and those who do not, and promoting the rights and wellbeing of children in foster care. The EAT considered both to be perfectly legitimate, and the latter in particular clearly outweighed the fairly minimal intrusion into the union’s rights represented by the refusal of a listing.

Zero-Hours Contract Music Teacher Triumphs in Holiday Pay Test Case

Where workers are employed on permanent contracts but work for only part of the year, how should their holiday pay be calculated? The Court of Appeal addressed that burning issue in a test case concerning a school music teacher.

MusicThe teacher was not a casual worker, but worked only during school terms under a zero-hours contract. The trust that ran the school was not required to provide her with a fixed minimum amount of work. The number of hours she worked was dependent on the level of pupil demand for her tuition and she was paid monthly at an agreed hourly rate.

Being a worker within the meaning of the Working Time Regulations 1998 (WTR), she was entitled to 5.6 weeks of paid annual leave. The trust calculated her holiday pay by reference to a formula recommended by the Advisory, Conciliation and Arbitration Service that was apparently directed at casual workers who are not retained between periods of work. Application of that formula resulted in a pro-rata reduction in her holiday pay that reflected the fact that she did not work throughout the year.

The teacher complained to an Employment Tribunal that that approach amounted to an unlawful deduction from wages. It was argued that the formula bore no relation to the calculation of holiday pay required by the WTR and produced a lower figure. Her holiday pay should have been calculated on a straightforward arithmetical basis by taking her average weekly remuneration during the 12 weeks prior to the calculation date and multiplying that figure by 5.6. Her claim, though initially unsuccessful, was subsequently upheld by the Employment Appeal Tribunal.

In challenging that decision, the trust pointed out that the teacher worked only about 32 weeks per year and yet, on her case, was entitled to holiday pay calculated on the same basis as if she worked 46.4 weeks. If that were correct, she would receive 17.5 per cent of her actual earnings in holiday pay, whereas she would only be entitled to 12.05 per cent if she worked all the year round. Parliament could not have intended such an anomalous result and a pro-rata reduction was therefore justified.

In ruling on the appeal, the Court noted that the case raised an issue of general public importance on which there was no prior authority. It acknowledged that it might at first sight seem surprising that the holiday pay to which part-year workers are entitled represents a higher proportion of their annual earnings than in the case of full-year workers. That had the potential to produce odd results in extreme cases. For example, an exam invigilator who worked under a permanent contract, but only for one week a year, would in principle be entitled to 5.6 weeks of paid annual leave.

Dismissing the appeal, however, the Court found that there was no requirement of EU law to pro-rate the holiday pay entitlement of part-year workers to that of full-year workers. On any natural construction of the WTR, they made no provision for such pro-rating. The method of calculating holiday pay contended for by the teacher might produce anomalies in some atypical cases, but had the advantage of simplicity and did not lead to unprincipled or obviously unfair results. Referring to the exam invigilator example, the Court noted that those who work for only a few weeks a year would normally expect to be engaged on a freelance basis, rather than having permanent contracts.

Even Illegal Workers Have Employment Rights – Court of Appeal Ruling

Can foreign nationals who work illegally in this country rely on their employment contracts in bringing proceedings before an Employment Tribunal (ET)? The Court of Appeal tackled that issue in a decision which signals a judicial clampdown on the exploitation of overseas workers.

PassportThe case concerned a foreign live-in domestic worker whose employer had provided false information in order to obtain a six-month visa for her to come to Britain. After the visa expired, she continued in her employment in breach of immigration control. Her employer retained her passport and, after forging her signature, unsuccessfully applied to extend the visa, again on a false basis.

During the period of almost two years in which she worked for the employer, she was required to work very long hours, seven days a week, and received only £3,300 in pay. After she asked for more money, she was summarily dismissed and ejected from the employer’s home.

Proceedings were subsequently launched on her behalf alleging, amongst other things, unfair and wrongful dismissal, unpaid holiday pay and breaches of the National Minimum Wage Regulations 1999 and the Working Time Regulations 1998. All her complaints, save one of discrimination, were upheld by an ET, which ordered the employer to pay her £72,271 in damages. That decision was later confirmed by the Employment Appeal Tribunal.

In challenging that outcome, the employer argued that, due to her inability to work legally in the UK, the Immigration, Asylum and Nationality Act 2006 rendered the worker’s employment contract illegal and unenforceable by either party. As the worker’s complaints had been made either under that contract or arising out of it, they should have been dismissed.

In rejecting the appeal, however, the Court noted the well-recognised problem of vulnerable foreign workers being trafficked or otherwise brought to this country for exploitation. In many instances, as the facts of the present case illustrated, they are duped by their employers into believing that their presence and employment in the UK is legitimate.

The Court noted that the Act is targeted at employers and does not state that no person shall be a party to an employment contract where the employee does not have the appropriate immigration status or that such a contract should be unenforceable by either party. Penalties imposed by the Act for entering into such contracts fall upon employers alone.

Whilst acknowledging the undoubted public interest in preventing foreign nationals from working in Britain illegally, the Court ruled that, in the circumstances of the case, there was no public policy requirement to construe the Act in such a way as to deprive the innocent worker of all contractual remedies against her employer.

Junior Doctor’s Rest Breaks Victory Will Cost the NHS Millions

In a decision which will cost the NHS many millions of pounds, the Court of Appeal has ruled that a hospital trust failed to properly monitor a group of junior doctors’ working patterns so as to ensure that they received adequate rest breaks.

In a test case backed by the British Medical Association, a junior doctor argued that she and 20 colleagues who were in their foundation year at a teaching hospital were not afforded a contractual minimum of 30 minutes of natural breaks during each four-hour shift. Her breach of contract claim was, however, rejected by a judge.

Group of Doctors leaving hospitalIn upholding her appeal against that ruling, the Court found that the terms and conditions of service under which she worked required the rest break target to be met during at least 75 per cent of rostered duty periods. The software-driven method used by the trust to monitor compliance with that obligation produced skewed results, albeit inadvertently, due to its reliance on artificially produced expected data as opposed to data actually recorded for each duty period.

In those circumstances, the Court found that the monitoring method employed by the trust was irrational and in breach of contract. Had a compliant method been used, it would have been discovered that the requirement to ensure that at least 75 per cent of natural breaks were taken was being breached.

The Court’s ruling means that the 21 doctors concerned in the case are entitled to receive a back-dated 100 per cent supplement to their basic pay during the relevant eight-month period. Their entitlements come to about £250,000 but, as the same flawed monitoring method has been used by hospitals across the country, the overall cost to the NHS will be many times that sum.

Pursuit of Scottish Independence Is a ‘Philosophical Belief’, Tribunal Rules

The distinction between political opinions and philosophical beliefs is far from easy to make. However, in a guideline decision, an Employment Tribunal (ET) has ruled that a commitment to the cause of Scottish independence falls into the latter category and is thus protected by the Equality Act 2010.

The case concerned a former Ministry of Defence (MoD) employee who devoted most of his free time to campaigning for a political party whose principal policy was the pursuit of an independent Scotland. He had risen to senior elected and unelected positions within the party at both national and local level.

He complained to the ET that the MoD had subjected him to direct discrimination due to his philosophical belief that Scotland should stand apart from the United Kingdom. He claimed that less favourable treatment that he had endured included suspension of his security clearance and, ultimately, his unfair dismissal.

Pointing to his affiliation to the party, the MoD argued that his belief in restoration of Scottish national sovereignty was a matter of political opinion and could not qualify as a philosophical belief, within the meaning of Section 10(2) of the Act. That issue was considered by the ET as a preliminary issue.

The ET found that the man’s support and active membership of the party did not of itself amount to a philosophical belief. Such a belief required more than a mere preference for one political party over another. However, ruling in his favour, the ET noted that he had set his belief in Scottish independence above his political affiliations and had built his whole life around his commitment to that cause.

The ET noted that the issue of Scottish independence is concerned with fundamental questions about how people live and are governed north of the border. Sovereignty and the right to self-determination of the Scottish people were at stake. The man’s belief pertained to weighty and substantial aspects of human life and behaviour and was worthy of respect in a democratic society. The ET’s decision opened the way for him to pursue his discrimination claim to a full hearing.

Superyacht Skipper Can Pursue Unfair Dismissal Claim in England

SuperyachtThe limited territorial reach of English Employment Tribunals (ETs) can pose difficulties to those who lead globe-trotting working lives. In a guideline case, however, the former captain of a superyacht which moved from port to port won the right to pursue his unfair dismissal claim in this country.

The captain launched proceedings before an ET in London after he was sacked for alleged gross misconduct. His employer, a Guernsey-based company that provides crews for luxury yachts, argued that the case had almost no connection to England and that the ET had no jurisdiction to consider the matter. That issue was considered at a preliminary hearing.

The ET noted that the yacht was registered in the Cayman Islands and owned by a company that was based there. Although a British citizen, the captain was resident in Florida, received his salary in euros and paid his taxes in the US. During his captaincy, the yacht had sailed widely, visiting a number of Caribbean ports.

The ET accepted that the captain’s place of work was wherever the yacht happened to be at any one time and that the UK could not be viewed as his home base. On the other side of the balance, however, was evidence that the yacht had spent about half of the relevant period in UK waters, more than in any other jurisdiction, and that she was berthed in England on the date of his dismissal.

Ruling in the captain’s favour, the ET also noted that he had been recruited and promoted in England by an English-resident businessman. The latter, whilst not his employer and whilst having no legal title to the yacht, was the vessel’s effective owner. Although an array of entities was apparently involved in running the yacht, the businessman acted as her paymaster and exercised control by issuing instructions to the captain from his home in the UK. In those circumstances, the ET found that it had jurisdiction to entertain the captain’s claim.

Self-Employed Radio Presenter Relieved of £140,000 Tax Demands

Distinguishing between employment and self-employment is a multi-faceted task and not just a matter of ticking boxes. That was certainly so in one case concerning a radio personality who was relieved of six-figure tax demands after a tribunal found that he fell into the latter category.

The man had for 18 years presented a humorous sports-related radio show. He had no contract with the radio station and was paid fees for his work through his personal service company. HM Revenue and Customs (HMRC), however, took the view that he was an employee of the radio station in all but name.

HMRC raised demands against the company for over £140,000 in Income Tax and National Insurance Contributions that it claimed should have been deducted from the man’s fees at source. It pointed out that, during the four tax years to which the demands related, he had derived about 90 per cent of his income from the radio station. On that basis, it was submitted that, far from operating as a free entity, presenting the show was effectively his job.

In upholding the man’s appeal against that decision, however, the First-tier Tribunal (FTT) accepted his evidence that the radio show was just one of the strings to his bow and that he saw himself primarily as an independent comedy script writer. He enjoyed a large measure of artistic freedom in creating the content of the show, the success of which depended on his humour and originality.

He performed no other role for the radio station and was paid in the form of a fee for each show he presented. He had no entitlement to holiday or sick pay, pension or paternity leave, and received no retainers or bonuses. He worked simultaneously for other broadcasters, and as a freelance script writer. In the circumstances, his relationship with the radio station was not one of employment.

The ‘Good Work Plan’ Phase Two – Protecting Vulnerable Workers

Following Matthew Taylor’s 2017 independent review on modern working practices, entitled ‘Good Work’, in February 2018 the Government published its response and launched consultations on how best to implement many of the review’s recommendations.

The Government has now announced phase two of the Good Work Plan, which focuses on protecting vulnerable workers. It includes proposals to:

  • give workers enhanced rights to tackle unscrupulous employers who do not comply with the law; and
  • create a single labour market enforcement body, with powers to enforce minimum wage regulations, including ensuring agency workers are not underpaid, and the law relating to workers’ entitlement to holiday pay.

Business Secretary Greg Clark also confirmed that Matthew Taylor has been appointed as the interim Director of Labour Market Enforcement.

A consultation on the latest proposals has been launched. This closes at 11:45pm on 6 October 2019.

Employment Tribunals Don’t Punish, They Compensate

Some employers treat their staff disgracefully but, no matter how bad their conduct may be, the objective of the tribunal system is not to punish them but to compensate those who suffer at their hands. A case on point concerned an immigrant worker who was plunged into depression after suffering extortion at his boss’s hands.

The man, an Indian national, was employed as a PR consultant and sales adviser by a travel agency which had sponsored his entry into the UK on a five-year visa that required him to be paid at least £23,000 a year. He purportedly received that salary, but the agency’s managing director threatened that if he did not repay half of his wages each month, his employment would be terminated.

Although he complained that he did not have enough to live on, he initially complied with that demand. Following an angry confrontation with his boss, however, he went on sick leave, suffering from anxiety and depression. He had been in the job for only about six months and was still on sick leave when he was dismissed.

After he launched proceedings, an Employment Tribunal (ET) found that he had been automatically unfairly dismissed for making a protected disclosure. His boss’s demand was nothing short of extortion and, in subsequently claiming that he had been given two previous warnings and had committed an act of gross misconduct, the agency had sought to contrive bogus reasons for his dismissal.

Despite the relatively brief duration of his employment, the ET awarded him a total of £124,658 in compensation. That included the pay he should have received had he remained in the agency’s employ throughout the period of his visa. A 25 per cent uplift was applied to the award to reflect the agency’s complete failure to comply with the Acas Code of Practice.

In upholding the agency’s challenge to the award, the Employment Appeal Tribunal (EAT) found that the ET had erred in law in a number of respects. Amongst other things, it had awarded full loss of earnings in respect of the man’s post-dismissal sickness period without making any finding as to whether, or to what extent, the dismissal had worsened or prolonged his depression.

The ET had also failed to consider whether he could have been lawfully dismissed on the basis of long-term sickness absence and whether he could reasonably have been expected to mitigate his loss by returning to India in search of alternative work. The ET should also have stood back and considered the overall size of the award before deciding to apply the full 25 per cent uplift. Given that the man had valued his claim at only about £64,000 in his schedule of loss, the award of almost double that sum had effectively taken the agency by surprise.

The EAT noted that, in cases of such serious employer misconduct, there is always a danger that ETs may, consciously or subconsciously, adopt a punitive approach. However, it was satisfied that the ET in this case had not fallen into that trap. In the circumstances, the matter was sent back to the same ET for reassessment of the man’s compensation in the light of the EAT’s ruling.