Pay Deductions on Strike Days – Court of Appeal Rules

In a decision which will be required reading for employers, trade unions and their members, the Court of Appeal has ruled on the thorny issue of exactly how much pay can be withheld from workers when they go on strike.

Three teachers argued that the amount of pay referable to a day on which they were on strike should be calculated as 1/365 of their annual salary. Their employer said that the correct fraction was 1/260, on the basis that that was the number of week days in each year. The sums of money at stake were small but, if the teachers won, the cost to the education sector as a whole would be £300,000 per strike day.

The employer’s arguments were upheld by a judge; however, the teachers appealed. The issue hinged on the terms of their contracts and the correct interpretation of the Apportionment Act 1870, which established the principle that monies are apportioned on the basis that payments accrue daily.

The Court accepted that, in principle, the Act applied to the teachers’ contracts. In dismissing their appeals, however, it rejected arguments that, by operation of the Act, their pay accrued at an even rate from day to day. The terms of their contracts in any event excluded any assumption that their pay accrued by equal amounts on each of the 365 days of the year.

Where Do Globe-Trotting Employees Hang Their Hats?

In an age of easy travel and global companies, it can be hard to say where some employees ‘hang their hats’. In one case, a globe-trotting worker – who confined his time in the UK to less than 90 days each year in order to maintain his non-domiciled status for tax purposes – paid the price for his peripatetic lifestyle when an Employment Tribunal (ET) refused to hear his unfair dismissal claim.

The Danish national lived in Switzerland and was employed by a worldwide shipping company based in Bermuda. His employment contract was governed by the laws of Bermuda and, although he worked in Britain for more time than anywhere else, he was never in the country long enough to be subject to UK taxation.

He claimed that he had been unfairly dismissed for whistleblowing. However, the ET ruled that it had no power to consider his complaint because his employment was not sufficiently closely connected to the UK.

In rejecting his appeal against that decision, the Employment Appeal Tribunal found that the ET was plainly and obviously right to decline jurisdiction to hear the case.

Holiday Pay and Unearned Commission – British Gas to Appeal

As anticipated, British Gas has lodged an appeal against the decision of the Employment Tribunal (ET) in Lock v British Gas Trading Limited and Others that the Working Time Regulations 1998 could be interpreted ‘purposively’ in order to achieve compliance with the EU Working Time Directive (WTD). This followed the decision of the Court of Justice of the European Union that Mr Lock’s holiday pay should include commission as any reduction in a worker’s remuneration in respect of his paid annual leave that would be liable to deter him from exercising his right to take that leave is contrary to the objective pursued by Article 7 of the WTD.

In reaching its decision, the ET expressed the view that there was no difference in principle between payment for non-guaranteed overtime (Bear Scotland Limited v Fulton) and payment in respect of commission so far as holiday pay was concerned, and was confident that its decision was in line with the underlying intention of Parliament to accurately transcribe the WTD into UK law.

The grounds for appeal against the ET’s decision are:

  • The ET was wrong to conclude that the decision of the Employment Appeal Tribunal (EAT) in Bear Scotland v Fulton had any bearing on the decision in Lock; and
  • The EAT had in any case erred in Bear Scotland in concluding that domestic law could be interpreted purposively in order to give effect to EU law.

For the time being, uncertainty on this issue prevails, therefore.

We will keep you informed of any developments on this important matter.

Meanwhile, employers affected by recent decisions on what constitutes ‘normal remuneration’ for the purposes of calculating holiday pay are recommended to seek advice on their individual circumstances.

Need Skilled Migrant Workers for Your Business? Be Careful!

Many businesses rely on skilled workers from abroad, but the immigration rules which apply to them are both complex and strict. In an illustration of the point, the owners of a care home were left wishing that they had taken professional advice after a Home Office swoop put their livelihood in jeopardy.

The home held a licence to sponsor entry into the UK by skilled workers from outside the European Economic Area. One such worker had been registered by the home as a public relations professional. However, following a site inspection by immigration officers, suspicions were raised that he was in fact employed as a senior carer, a post which did not meet the required skill level.

The home’s sponsorship licence was revoked despite its owners’ plea that losing access to migrant workers would ruin the business. In dismissing the home’s appeal against this decision, the High Court found that the Home Office had rationally concluded that the worker’s role was inconsistent with his declared job description.

Union at War with Airline in Collective Bargaining Row

plane landingThe bad old days in which company bosses were constantly at odds with trade unions have largely been consigned to history. However, in one case, the relationship between an airline and a union representing its pilots was so acrimonious that High Court intervention was required.

The airline had been required by the government’s Central Arbitration Committee (the CAC) to recognise the union for the purposes of collective bargaining. The CAC also laid down a specified method by which negotiations in respect of pilots’ ‘pay, hours and holidays’ were to be carried out annually.

The union launched High Court proceedings, arguing that the airline had failed to meet the obligations imposed by the CAC. The Court observed that it was clear that the airline wished to minimise the union’s involvement in its business and that the union was equally determined to maximise the extent to which the airline was required to negotiate with it.

Rejecting the union’s arguments, the Court found that, whilst the airline was required to bargain in respect of contractual terms affecting pay, hours and holidays, that did not encompass shift and rostering arrangements which did not relate to the core terms of employment. The airline was also entitled to communicate with its staff about proposed pay increases before negotiating such matters with the union.

Redundant Shop Workers Suffer European Setback

WoolworthsThousands of shop workers who were made redundant when their employers went bust in the recession have suffered a set-back in their fight for compensation after the European Court of Justice (ECJ) clarified a crucial issue of law in relation to collective redundancies.

The workers lost their jobs when nationwide retailers Woolworths and Ethel Austin became insolvent. Trade union USDAW applied to an Employment Tribunal (ET) for protective awards in favour of its redundant members on the basis that the collective consultation procedure prescribed by the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) had not been followed.

That procedure was only triggered if it could be shown, amongst other things, that the number of redundancies was 20 or more ‘at one establishment’. The ET made protective awards in respect of some workers, but denied them to about 4,500 others on the basis that fewer than 20 people were employed at the shops where they worked.

In challenging that decision before the Employment Appeal Tribunal, the union argued that the ET had erred in law in treating the workforce at each shop as an independent entity. It was submitted that, in order to give effect to EU Council Directive 98/59EC, which TULRCA is intended to implement, the expression ‘at least 20 at one establishment’ should be interpreted as referring to the number of redundancies across a business as a whole.

The employers appealed to the Court of Appeal, which referred that issue of law to the ECJ for an opinion.

Stressing the need for legislative uniformity across the European Union, the ECJ has ruled that where an undertaking comprises several entities, it is the entity to which the workers made redundant are assigned to carry out their duties that constitutes the ‘establishment’, not the business as a whole. The term ‘at least 20’ requires account to be taken of the redundancy dismissals in each establishment considered separately. 

 It remained for the Court to determine whether the stores could be classified as separate establishments.

Limited Term Contracts and Redundancy – Supreme Court Guidance

Limited term contract (LTC) workers, who were amongst those who lost their jobs during a round of cost cutting at a university, were entitled to the same consultation rights as their permanent colleagues, the Supreme Court has ruled.

The university planned to make 140 of its permanent staff redundant during a period of 90 days or less and the duty to consult their trade union under the Trade Union and Labour Relations (Consolidation) Act 1992 was therefore triggered.

However, the university took the view that it did not have to include in the collective consultation process those workers whose LTCs came to an end during the consultation period. A union representing four of those workers mounted a challenge to that decision but the Inner House of the Court of Session ruled that, although they had been dismissed, they had not been made redundant.

In allowing the union’s appeal, the Supreme Court noted that it was common ground that the workers were dismissed when their LTCs expired and were not renewed. The reason for their dismissal was not related to their individual circumstances but to the university’s need to cut costs. By failing to offer them new LTCs, the university had made them redundant and the obligation to consult the union therefore arose.

Final Warnings Must Be Given in Good Faith to Have Any Effect

In a guideline decision, the Court of Appeal has ruled that final warnings given in bad faith are not to be taken into account when assessing whether there was sufficient reason for dismissing an employee.

A contracts manager had been given a final warning in respect of alleged breaches of his employer’s recruitment policy. He was said to have assisted his ex-partner’s son to obtain a position with the company. The warning was still on his file when he was later found to have used his work computer to send inappropriate emails.

He was dismissed for gross misconduct and, in rejecting his unfair dismissal claim, an employment tribunal (ET) found that the disciplinary procedure followed by the company was fair and reasonable and that dismissal was within the band of reasonable responses. That ruling was subsequently upheld by the Employment Appeal Tribunal.

In allowing his appeal, however, the Court of Appeal found that the ET had wrongly failed to consider the man’s arguments that the final warning had been given in bad faith. He claimed that the disciplinary proceedings had been initiated to cover up a more senior employee’s part in the matter and that he was told that it would ‘pay him to forget about the whole thing and move on’.

The Court ruled that a warning given in bad faith could not be relied upon for the purpose of determining whether there was a good enough reason to justify the man’s dismissal. His case was therefore sent back to a freshly constituted ET for reconsideration.

Whistleblowers Benefit from Tribunal Test Case

In a guideline decision which will come as a comfort to workplace whistleblowers, the Employment Appeal Tribunal (EAT) has ruled that the recurring issue of whether a disclosure is ‘in the public interest’ – and thus protected by law – depends not upon some empirical formula but upon the state of mind of the employee concerned.

A branch director who worked for a leading estate agency firm had complained that the costs and liabilities of running the office had been deliberately mis-stated and that this had had a downwards impact on his bonus and those paid to 100 senior managers. An employment tribunal (ET) found that the disclosures were protected and that he had been unfairly dismissed as a result of making them.

In challenging that ruling before the EAT, the agency pointed to the requirement in Section 43B(1) of the Employment Rights Act 1996 that disclosures have to be made in the public interest in order to be protected. It was submitted that the disclosures related to the personal contract of each of the 100 senior managers and so did not qualify as having been made in the public interest. 

In dismissing the appeal, however, the EAT found that the public interest test could be satisfied even where the basis of the disclosure turned out to be wrong or where there was in fact no public interest in it being made. What mattered was whether the particular worker’s belief that the disclosure was in the public interest was objectively reasonable. The amount of the man’s compensation will be assessed at a later date.

Putting 2014/15 to bed: Notes for Employers

Although the 2014/15 tax year has come to a close, there are still some tasks that employers may need to do in order to put the year to bed.

RTI reporting

Under real time information (RTI) you need to tell HMRC that your final FPS submission for the tax year is the last one for that year. This should have been done when submitting your FPS at or before the time of the last payment in the 2014/15 tax year. If you have not yet done your last FPS, this should be done as soon as possible as it is now late. Don’t forget to tell HMRC the late filing reason.

If you still need to make your final submission for 2014/15 or need to correct anything submitted on an earlier FPS, after 20 April 2015 this must be done by means of an earlier year update (EYU). This must reach HMRC no later than 19 May 2015.

Any PAYE or NIC outstanding for 2014/15 must be paid over to HMRC as soon as possible as the payment deadline has now passed. Penalties are charged if PAYE is paid late on more than one occasion in the tax year. Interest is also charged on late-paid PAYE.


The P60 is the certificate of pay and tax deducted which you must give to each employee employed by you on 5 April 2015. The deadline for giving your employees their P60s is 31 May 2015. The P60 can be in paper or electronic form.

Expenses and benefits reporting

If you have provided your employees with non-cash benefits or expenses, you need to tell HMRC about them by 6 July 2015. Form P11D is used to report details of benefits and expenses provided to employees earning at a rate of at least £8,500 a year and to directors, irrespective of their earnings level. Benefits provided to employees earning at a rate of less than £8,500 a year should be reported on form P9D. Remember to take account of the cash equivalent of any benefits provided to employees when deciding which form to use.

You must also file form P11D(b) by the same date. This is Class 1A return.

The forms can be filed electronically using a commercial software package, HMRC’s PAYE online service or HMRC’s Online End of Year Expenses and Benefits. Alternatively, paper forms can be filed if preferred.

You must also pay your Class 1A National Insurance by 22 July if you make the payment electronically. An earlier deadline of 19 July applies if you make the payment by cheque.

You should also give your employees a copy of their P11D or P9D by 6 July 2015.

Need to know It is important to meet the deadlines to avoid penalties and late payment interest.