Holiday Pay – is it such a big deal?

There has been lots in the press about the Employment Appeal Tribunal (EAT) decision on holiday pay.  The EAT decided that non-guaranteed overtime which the employee is contractually bound to perform if asked must be taken into account.

This is not a great surprise.  It is in accordance with the intention of the original EC Directive that the workers should not suffer any detriment by taking holiday.  Indeed the conclusion of the EAT can be reduced to the very simple proposition – “‘Normal pay’ is that which is normally received.”

This also applies to taxable travel time payments in excess of the actual expenses incurred.  Guaranteed overtime was already to be included.  Overtime which the worker requests but is not contractually obliged to do will not.

This only matters for holiday pay calculated for the 4 weeks holiday which is covered by the Working Time regulations.  The additional 1.6 weeks holiday which makes up the statutory holiday in Britain, or any additional contractual holiday are not covered.

On a procedural point the EAT decided that as claims to the Employment tribunal will be for “unlawful deduction from wages” a claim can only be brought if the employee has taken holiday within the last 3 months, and then only for previous holidays if there has not been a break of more than three months between them.  This limits the extent of claims via the ET.

It is highly unlikely that the EAT’s decision will be the last word on this issue.  Leave to Appeal to the Court of Appeal has been given, and after that there is still the Supreme Court.  The government intervened and sent a QC to argue against the propositions accepted by the EAT.  BIS has already set up a Task Force, containing only employers organisations, to “assess the possible impact”, though a tweet from BIS put the purpose rather differently – “limiting the impact”.

This one will run and run. Expect lots of anti EU rhetoric, and possibly unsolicited calls from claims companies.  If you are an employee who may have lost a substantial amount you should get advice and start a claim within 3 months of your last deduction, but expect that to be stayed until there is a final decision on this case, which could be another year.  If you are employer you may want to calculate the potential value of claims and make provision for them.  Employers may also want to review their contracts to see if they can be changed.

For advice on Employment Law contact:

Neil Howlett

Andy Hambleton

Is a verbal contract worth the paper on which it is written?

We regularly see clients who say “I haven’t got a contract”. What they mean is “I haven’t got a bit of paper”. Under English law almost any contract (except for buying land or a guarantee) can be made by word of mouth (or email). The main difference is that there is much more room for disputing the terms of a contract if it isn’t recorded – that’s more business for lawyers. Even for those areas where writing and signature are required the courts may find those in an exchange of emails.

A contract comes into existence once the parties have agreed the terms. It isn’t necessary for them to have agreed all the terms. The test is objective – the court looks at what the parties have said and whether the essential terms have been agreed. That is now commonly working through a set of emails.

Even for substantial commercial contracts there no requirement for greater formality. It is possible to create a legally binding contract before a document is drawn up and signed by the parties, even where they both expect to move on to that. As one judge put it – “Even if certain terms of economic or other significance have not been finalised, an objective appraisal of their words and conduct may lead to the conclusion that they did not intend agreement of such terms to be a precondition to a concluded and legally binding agreement.”

Even where there is an agreed intention for further condition to be fulfilled or terms to be agreed that may not prevent the contract coming into existence, if a reasonable person experienced in the business sector would think it had. A statement that a ‘formal contract will then follow in due course’ did not necessarily indicate that acceptance of a signed quotation was not legally binding.

If the parties can’t agree such further terms the existing contract is not invalid. If the parties can’t agree the court will, if necessary, enforce terms that are standard in the sector or give business efficacy to the terms agreed. What the court is very unlikely to do is to write in for you the terms that are often the most important, such as limitations on liability or practical protections for your assets and intellectual property.

The lesson is that when negotiating contracts all written communications relating to negotiations and contractual terms should be marked “Subject to Contract” unless and until you are to enter into a binding agreement on the basis of the terms agreed. As you approach that point be ready to instruct a solicitor to prepare a formal contract. Help us do that for you by letting us have clear “Heads of Agreement” setting out the essential commercial terms, and marked “Subject to Contract”. Help us save you money and protect your business.

 

Flexible Working – Does it work?

All employees who have worked for an organisation for more than 26 weeks now have the right to request flexible working arrangements. This includes part-time working, flexitime, job sharing, shift working or homeworking.

This is a much wider right than was available previously. It remains only a right to request and only once every 12 months. The old prescriptive rules on how to deal with such requests are gone; requests have to be considered in a reasonable manner and within a reasonable time. ACAS has produced a Code of Practice and Guidance for employers to help them understand the changes and how to handle requests in a reasonable manner.

Employers can refuse requests if granting the request would have an adverse impact on the business based on one of the business reasons set out in the legislation. These are: the burden of additional costs, an inability to reorganise work amongst existing staff, an inability to recruit additional staff, a detrimental impact on quality, a detrimental impact on performance, detrimental effect on ability to meet customer demand, insufficient work for the periods the employee proposes to work or a planned structural change to your business.

Although this system is fairly simple employers will need to be very careful about the overlap between a request for flexible working and direct or indirect discrimination. An employee seeking flexible working is supposed to specify the change which is being requested, when it is to come into effect, what effect they think the change would have and how they think any such effect might be dealt with. Employers are only required by this new law to consider requests that do that, and to respond to that specific request, but a failure to consider a request that doesn’t meet those criteria or a refusal of one that does may still result in a claim of Discrimination under the Equality Act 2010. Compensation for breach of the Flexible Working Regulations is capped at £4,000; compensation for Discrimination is unlimited. Remember that protected characteristics are wide: race, disability, age, sexual orientation or religion or belief, and part-timers should be treated equally with full timers.

There will also be challenges where several employees request flexible working; ACAS recognises that may require an employer to choose between them, though not many employers are likely to take up the suggestion of drawing names out of a hat! Remember too that health & safety obligations continue for employees who work at home.

Flexible working can work for both employers and employees. Here at Harris & Harris we have many years’ experience of partners and staff at all levels working part-time and job sharing – more than 40% of us work “flexible hours”, including many who by choice work less than 5 days a week. It requires flexibility on both sides, but it enables us to recruit and retain good people so it’s worth the effort.

For advice please contact Neil Howlett or Andy Hambleton.

Employment Tribunal statistics and Early Conciliation

The Ministry of Justice has published the quarterly employment tribunal statistics for October to December 2013 – the first full quarter since the introduction of fees for applications.  Compared with the same period in 2012 there was drop in the number of individual applications lodged of nearly two thirds.

Is this necessarily a good thing? Although there were quite a few claims that were never likely to succeed, and those imposed costs on employers, I don’t think that two thirds of claims were without any merit. Even if there were do we know if it is those claims that have dropped out? Knowing the character of some of the people who brought them I doubt it.

If that means that valid claims are not being made is that wholly good for employers? Will it allow those whose employment practices are poor to get away with that? Those employment practices are undercut those who do things properly and are anti-competitive. Is this the law of unintended consequences?

Early Conciliation through ACAS is coming in April – that may help good employers resolve disputes, but bad employers will probably ignore it, and there is little incentive for them to improve,

For advice please contact Neil Howlett or Andy Hambleton.

New Year’s Resolutions

When Frome Chamber of Commerce ran the first year of Discuss & Do events for entrepreneurs Johnny Martin was one of the speakers, as well as doing his usual seminars at The British Library.

His newsletter this month says :
“January can be a pretty tough month for trading after the hump of Christmas – unless you happen to be a fitness coach or selling diet supplements…so as well as reviewing your marketing plans, use the time to make sure you have all your business arrangements properly documented.  In my experience more cash is lost because of unclear and undocumented business arrangements than any other reason.”

As lawyers you’d expect us to agree, but sadly it’s true. New contracts don’t have to be expensive. We can review what you have; if it is satisfactory we will tell you, if we think it needs upgrading we can do that and will give you a price for that.

If you’ve got a slow period post Christmas here’s something useful you can do that will pay dividends.

If we can help please contact us.

If you want to see more of what Johnny has to say (he’s not a lawyer) see his blog.

Free employment advice service from ACAS

You don’t always need to pay for help with legal problems. Harris & Harris is always here – it may be cost effective to pay us for advice if the issue is serious or complex. However, there is free help available about employment problems from Acas, and they offer guidance on many everyday employment law issues.

Acas have a free online advice service for employers and employees who want answers to work related questions. It’s a good place to start. Sometimes Acas will give you the reassurance you want. If they can’t that’s the time to contact us. Acas will usually recommend that you get legal advice if they think you will need it.

Acas Helpline online offers 24 hour free advice and guidance on rights at work and employment law. Employers, employees and HR managers can receive an instant response to their work related questions and the service can help users feel more informed before a conversation with an Acas helpline adviser.

Helpline online answers over 600 of the most frequently asked workplace questions on topics ranging from maternity and family friendly rights to absence and bullying and harassment.

Available since June 2013, employers and employees have already used the service over 50,000 times. The top three questions so far are:

  • How can an employer change the terms of a contract when an employee does not agree to the change being made?
  • How can an employee raise a grievance?
  • What are the different types of dismissal?

The Acas Helpline team develop and improve the content to reflect the feedback received.

Acas Chief Executive, Anne Sharp, describes it as being an addition to their range of workplace advice services. To access helpline online visit www.acas.org.uk/helplineonline. You can also speak to an Acas helpline adviser on a whole range of workplace issues on 08457 47 47 47 from 8am – 8pm Monday to Friday and 9am-1pm on Saturday.

If you need more than Acas can provide please contact Neil Howlett or Andy Hambleton.

Social Media at Work – Who owns it?

Social Media accounts may be an important part of a business model. They will be part of the way a business communicates with customers and potential customers and the image the business presents to the world. They can be a valuable asset. They can also be used to damage a business’s reputation or to steal its customers.

Who owns social media accounts as between and employer and an employee? The lawyers answer is that this should be defined in the Employment Contract. In reality that doesn’t always happen. Many employers are willing to allow junior employers to set up accounts because they know how. They may monitor them, or not. They may not systematically collect logins and passwords.

So what happens when an employee leaves and none of these in place? All is not lost for the employer. In a recent case the High Court ordered one former employee of a publishing company to hand over business cards he had collected whilst an employee, and another to hand over the access details for LinkedIn groups that she had managed. Both ex-employees had taken steps while they were still working to set up a company whose business model was similar to their employees, persuaded other staff to leave and used the cards and LinkedIn groups to contact customers of their former employer. The employee who ran the LinkedIn groups claimed they were “personal”, which was rejected as they were done at work, and the employee who had the business cards was alleged to have purchased software to download them all before handing them back.

The judge did not have any difficulty in finding that there was a strong case that the employees had breached their duties of good faith before leaving. Having done that the judge granted the employers a “springboard injunction” to restrict the employees’ activities in their new business in such a way that they gained no unfair competitive advantage from their wrongdoing. That was effective immediately, and will last until a full trial. In most such cases the parties having had a first experience of litigation settle out of court.

Such “springboard injunctions” are well established, though not cheap to obtain. Employers need to find evidence of the employees’ wrongdoings, which here was fairly easy as they hadn’t covered their tracks. That’s why lawyers, if asked, will always advise employers to cover these issues in contracts, handbooks and policies, and also to negotiate post termination restrictions for key staff.

For advice please contact Neil Howlett or Andy Hambleton.

Protected Conversations – Are they safe?

From 29th July 2013 it will be possible for employers and employees to enter into discussions to end employment on a confidential basis.  These changes are intended to address the difficulty for employers that they cannot have “off the record” discussions with an employee unless there is an existing dispute between them.   Where the issues are ones of performance or absence or “fitting in” employers do not want to create a dispute.  Although well intentioned, this change in the law may create more problems than it solves.

The main problem with the new law is that it only prevents the use of the discussions in cases of Unfair Dismissal.   The discussions could still be used in a claim based on Discrimination, or one of the grounds where a Dismissal is Automatically Unfair.   They will also be admissible in a claim for Unfair Dismissal if there is “improper behaviour” which includes bullying and victimisation, or putting undue pressure on a party.  The gloss that it must include (but not be limited to) “unambiguous impropriety” isn’t that helpful. Exactly what will be regarded as improper behaviour will doubtless be fought out before the Employment Appeal Tribunal.

ACAS have issued a Code of Practice on Settlement Agreements and discussions. That is not statutory but is guidance on good practice, and failing to follow it may be “improper behaviour”.   This includes the requirement for a “reasonable period of time” to consider any proposed Settlement Agreement, which ACAS say should be 10 calendar days “as a general rule”, and that if there are to be face to face meetings that the employee should be allowed to be accompanied; similar to the rights they have to be accompanied at Disciplinary Hearings.

There remain many pitfalls even for the well intentioned employer.  Employers wanting to use this procedure are likely to need legal support.   They will want to be sure that there are no circumstances from which the employee involved in such a process might plausibly raise any claim for Discrimination, either direct or indirect.   They will also want to ensure that the process follows the ACAS guidance and that it cannot plausibly be alleged that any part of it amounts to “improper behaviour”. Employers will also need to consider what the Employee should do during any period when they are considering a proposed Settlement Agreement; can or should they be suspended or put on Garden Leave, and does the employer have the right to do that?

Finally, even if an agreement is reached for it to be enforceable against the employee it must still be in the form of a Compromise Agreement (to be renamed ‘Settlement Agreement’) on which the Employee must have independent advice and which must meet the statutory criteria contained in s.203(3) Employment Rights Act 1996.  Employees will expect employers to pay for the cost of such advice. It appears that the proposal to produce a Model Settlement Agreement has been dropped, and in any case it is likely that such model agreements would need to be edited to take into account the specific circumstances of each individual case.

See here for the ACAS Code of Practice

For advice please contact Neil Howlett or Andy Hambleton.

Eweida – Did the European Court get it right ?

There has been a lot of publicity about the European Court of Human Rights decision in Eweida & Others v UK. The principles are quite simple; the key to understanding the decisions is the distinction between the right to hold religious faith and the right to display that faith.

Article 9 of the European Convention on Human Rights provides that there is an absolute right to freedom of thought, conscience and religion. However the right to manifest one’s religion or beliefs is qualified. This right is subject to ‘only such limitations as are prescribed by law and are necessary in a democratic society in the interests of public safety, for the protection of public order, health, or morals, or for the protection of the rights and freedoms of others’. States have a ‘margin of appreciation’ for the way in which qualified rights are interpreted and the ECHR will not interfere with a decision that falls within that margin.

Two of the Applicants had sought to wear visible crosses, in breach of their employers’ uniform policies. That was a qualified right. The Court accepts that a manifestation of religious belief for the purposes of Article 9 need not be “mandated” by the religion but only needed to be “intimately linked”.

Ms Eweida worked for British Airways and wanted to wear a discreet cross visibly, having worn one under her clothing for some time. The Court held that British Airways’ desire to project a consistent brand image wasn’t sufficient, as there was no evidence that the wearing turbans and hijabs by other employees had any negative impact. In fact British Airways had recognised that in 2007 and changed their policy to allow it.

Ms Chaplin worked as a geriatric nurse. In her case the Court held that although her being permitted to manifest her religion must weigh heavily in the balance, the reasons put forward by her employers for asking her to remove the cross outweighed them. These were the protection of health and safety on a hospital ward.

The other two applicants wanted the ECHR to rule that their manifestation of their religious beliefs required their employers change their job descriptions where their beliefs conflicted with some of the duties they were normally required to perform. Ms Ladele was a registrar, whose employer required her to perform civil partnership ceremonies. They attempted to accommodate her but rota changes had created problems. Mr McFarlane had taken a job providing counselling services for Relate, but was unwilling to provide counselling for same sex couples.

Both of their applications failed. The ECHR noted that their employers’ justification for refusing their requests was the provision of non-discriminatory services, so departures from those required serious reasons by way of justification. In Mr McFarlane’s case they also took into account that he had been aware of the requirement about which he was objecting before he took the job but rejected the argument that accepting the job absolved his employers of any responsibility to consider reasonable accommodations.

The ECHR has left the decision to employers. If an employer is reasonable and can explain why a particular policy is necessary it is likely to be upheld. Employers know they should try to accommodate religious beliefs in the workplace and the four cases provide examples of the issues they are likely to face.

Many commentators think that the ECHR has reached the only decision it could. To have done less would have laid it open to complaints of failing to uphold rights granted by law. To be more prescriptive would have opened the door to many more applications, and to complaints that it was interfering in decisions at a level that should be left to domestic courts.

The principle was set out by South African judge Albie Sachs:
“The underlying problem in any open and democratic society based on human dignity, equality and freedom in which conscientious and religious freedom has to be regarded with appropriate seriousness, is how far such democracy can and must go in allowing members of religious communities to define for themselves which laws they will obey and which not. Such a society can cohere only if all its participants accept that certain basic norms and standards are binding.”

Employers can be liable for Facebook harassment by employees

Employee A uses employee B’s work computer to update employee B’s Facebook status in a way that is discriminatory and amounts to harassment.  As their employer are you liable?  Yes, according to a recent Employment Tribunal case. [Read more…]