We posed six timely legal queries to our panel of solicitors. Put your knowledge to the test by second-guessing their answers
1 One of your employees is on long-term sick leave after an accident. She has had to cancel her two-week summer holiday, but thinks she can rebook it when she returns to work. Is she right?
a) Yes – she can rebook it or carry the holiday over
b) Yes – but she can rebook only at a time of your choosing
c) No – being ill on holiday does not invalidate the holiday
Under the EU working time directive, workers have a right to at least four weeks’ paid annual leave, even where it coincides with periods of sick leave.
“If you are taken ill on holiday, it’s still regarded as sick leave and you would be entitled to holiday when you returned – the sickness, not the holiday, is the supervening event,” says Richard Nicolle, employment partner at Dentons.
Staff on long-term sick leave who have already booked holiday are entitled to cancel and have it reclassified as sick leave, adds Geoffrey Mead of Eversheds. “If they choose not to take holiday while they’re sick, they’re also entitled to carry that over, even where this would not normally be allowed.”
A relevant case is the recent Employment Appeal Tribunal of Sood Enterprises Ltd v Healy (where Healy suffered a stroke and required a long period of sick leave). It found that the employee should be paid for all accrued holiday and confirmed that employees on sick leave can carry over up to four weeks.
Answer: a
2 You are preparing your business for a potential sale, and there will need to be a reduction in headcount. If you do this, are you at risk of legal action under Tupe law for dismissing people prior to the sale?
a) Yes – Tupe applies and you could be at risk of legal action
b) No – Tupe applies but your actions are legally sound
c) No – Tupe does not apply with a business sale
Under the Transfer of Undertakings (Protection of Employment) Regulations 2006, a dismissal would automatically be unfair where the sole or principal reason for the dismissal is either the transfer itself or a reason connected with the transfer that is not an economic, technical or organisational reason entailing changes in the workforce (known as an “ETO reason”), explains Susan Doris-Obando, a senior associate at Freshfields Bruckhaus Deringer.
“In the past, the courts have held that dismissals made with a desire to achieve a business sale by making the business more attractive to potential transferees risk being found to be connected with the transfer and not for an ETO reason. So any liability for automatically unfair dismissals would fall on the transferee, unless there were any agreed indemnities,” she says.
Mead at Eversheds says: “If the buyer asked the seller to dismiss people, that directly relates to the sale, so Tupe is engaged and the dismissals become unfair. If the original employer can justify the business reasons for the dismissal as not being connected to the sale, they are fair, providing due process has been followed.”
This may be difficult to prove, he adds, but a court might look at whether there had been any previous redundancies and anything potential buyers had said about the business when considering any claims. Changes to Tupe legislation have been proposed and are scheduled for October.
Answer: a
3 A member of your staff has been posting extreme remarks on Facebook. His profile shows where he works, so you’re worried about your reputation. Do you have any say over what he does outside work?
a) Yes – personal postings are always company business
b) No – unless you have a robust social media policy
c) No – what he says outside work is untouchable
In this case, provided the remarks do not have a demonstrable impact on the workplace, he is entitled to make them, says Donald MacKinnon, director of legal services at Law At Work.
He points to the recent case of Adrian Smith, a manager at a housing trust who was demoted and had his salary cut after posting on Facebook that gay weddings were “an equality too far”. Smith won a High Court case against his employer, Trafford Housing Trust, where the court ruled that the remarks did not amount to misconduct and the sanctions taken were in breach of contract.
“The court took the view that these were his beliefs. If he’d said ‘My colleagues X and Y who are getting married are immoral’, it’s more specific and the action taken might have been justified,” says MacKinnon.
When it comes to safeguarding reputation, much will depend on “what he does, and what the employer’s policy says he can and can’t say”, advises Catherine Wilson, a partner in the employment practice at Thomas Eggar. A media worker with thousands of Twitter followers may inflict more reputational damage than someone moaning about a bad day at the office to a handful of friends.
Victoria Russell, senior associate at Silverman Sherliker, says that if the employer has a policy on social media use, they may find themselves in a stronger position: “There’s not a lot of case law, but recourse will often depend on whether there was a social media policy to start with.”
Answer: b
4 You work in an industry where you need a lot of staff on stand-by. You’d rather avoid drawing up permanent contracts for them as things change so much, but is it legal to keep them on a zero hours contract?
a) Yes – zero hours contracts are always perfectly legal
b) Yes – as long as you pay for any time waiting on site
c) No – the government has ruled zero hours contracts invalid
It’s rare for employment contracts to make headline news, but organisations as diverse as Buckingham Palace and Sports Direct have hit the press this summer for their use of zero hours contracts – where staff tend to be kept on “stand-by” with no guarantee of when work will be available. The CIPD has suggested there needs to be a closer investigation of such arrangements.
Moral arguments aside, the contracts themselves have been around for decades, says Jane Klauber, a partner at Russell-Cooke solicitors. On the whole, they are also perfectly legal. “No-one would pretend that zero hours contracts are the preferred option for the employee, but as long as the employee accepts the arrangement, there is no legal objection,” she says. Generally, she adds, workers on these contracts tend to be “as and when” or casual staff, who would not accrue the same rights as employees. But it’s possible to employ zero hours staff on an employment contract without specifying the minimum hours they work a week: they would then accrue benefits such as holiday on a pro-rata basis.
Where there could be an issue, however, is if staff are expected to remain on site while they wait for work. According to Nicolle, this could be regarded as working time, and therefore subject to working time regulations. “Broadly, if someone is required to attend their place of work, that would be working time and should be paid for. If they can sit at home and are free to do other things, that shouldn’t be paid.”
Answer: b
5 You recently held a party for clients and two of your staff ended up in a fight, with one needing hospital treatment. You’re still trying to work out what happened, but can you legally discipline the aggressor even though this happened off work property?
a) No – your responsibility for staff stops at your front door
b) Yes – but only if they were identifiable as your employee
c) Yes – providing it was an official work event
The bottom line in this case is that the party was hosted by the employer, so staff should be expected to behave in a professional manner, says Phil Richardson, an employment law solicitor at Stephensons. Had this been a casual drink after work, arranged between colleagues, the lines would have been more blurred.
“Most disciplinary policies will spell out that physical violence with another employee is gross misconduct, even if it’s outside work hours,” he says. Klauber at Russell-Cooke agrees: “The more related to work the activity is, the stronger the case.”
It will be important to establish exactly who was behind these actions, and also rule out any hint of bullying or harassment. The other issue is whether the staff members have inflicted any reputational damage on the organisation. “The more senior they are, and the more identifiable they are with the employer, the more serious it could be,” says Klauber.
Answer: c
6 One of your staff is consistently under-performing and her manager is keen to find some way to exit her from the business. A drawn-out performance management procedure could damage morale and productivity. What is the most appropriate option?
a) Start an official disciplinary process against the staff member
b) Use a protected conversation to discuss their exit
c) Initiate termination proceedings
Since the end of July, employers have been able to enter discussions with staff in cases just like this under the new regime of “settlement agreements” – legally binding contracts that waive the employee’s right to make a claim, in return for a financial settlement when they exit the business. “There is no material change in the law, but the key difference is that there does not need to be an existing dispute for an employer to begin a protected conversation,” says Mead.
The caveat is that if any part of the process would be viewed as unfair dismissal (for example, discrimination), or the employer has acted “improperly”, the conversation would still be admissible in court. MacKinnon at Law at Work says: “If you march in and say ‘take this deal or I’ll sack you’, that will still amount to constructive dismissal.” And, of course, before you enter such a process you should take care to ensure straightforward performance management avenues really have been exhausted – and that the manager’s worries are genuinely justified.
Answer: b
Your legal to-do list
New developments crossing your desk soon
Reform for whistleblowers
Until June this year, whistleblowing legislation (under the Enterprise and Regulatory Reform Act) provided protection for workers who made “protected disclosures” about wrongdoing “in good faith”.
But under new legislation, a disclosure will be protected only if the worker reasonably believes it is in the public interest. The requirement that the disclosure be made in good faith has been removed. If a tribunal finds that a disclosure has not been made in good faith, compensation awards could be reduced by up to 25 per cent.
Further changes to the law will come into force later in the year, among them the introduction of vicarious liability for the employer where a worker who has made a protected disclosure has suffered detriment.
✶ bit.ly/ERRact
New-look Tupe
The abolition of the “service provision change” in Tupe might sound arcane, but it has potentially widespread ramifications. These rules govern use of contractors, including contracting out and outsourcing, and mean that many of these activities currently fall under Tupe legislation.
Proposed changes, to be outlined in October, should mean the underlying nature of the work is the crucial factor in determining whether Tupe applies – “sourcing” activities (outsourcing, re-tendering or bringing activities back in house) would not automatically fall under Tupe.
The government has said it will clarify whether the rules will apply retrospectively to current contracts. “The test will likely be: are the activities fundamentally the same? If so, Tupe applies,” says Jane Klauber of Russell-Cooke.
✶ bit.ly/CIPDTupeFS
Start of tribunal fees
From July, claimants are required to meet employment tribunal fees, a major change to the existing system. There are two levels: for level 1 claims, which include those for unpaid wages, holiday pay and redundancy payments, the issue fee will be £160, with a hearing fee of £230. For level 2 claims – relating to unfair dismissal, discrimination and equal pay – the issue fee is £250 and the hearing fee £950.
Unions are campaigning strongly against the fees, claiming they are unfair to employees wishing to seek redress for poor treatment, and Unison has secured a hearing in October for a potential judicial review.
✶ bit.ly/ETfees
Collective redundancy changes
The outcome of the Employment Appeal Tribunal case of Usdaw v Woolworths is significant for employers considering larger scale redundancies.
The judge ruled that the words “at one establishment” should be deleted from the law requiring employers to consult when 20 or more redundancies are taking place. When Woolworths folded in 2008, employees in stores with 20 or more staff were awarded 60 days’ pay, but around 3,000 staff who worked in stores with fewer than 20 employees missed out on awards.
The original tribunal concluded that because there were fewer than 20 employees affected at one store, there was no need for consultation. But thanks to the successful appeal, organisations will now have to consult where there are more than 20 redundancies, regardless of how they are distributed across the business.
Welcome settlement agreements
Settlement agreements are broadly similar to the compromise agreements that came before them, but are designed to make it easier for employers to address workplace disputes. “They mean the employer can put all their cards on the table and say they’d like a member of staff to leave in exchange for a financial settlement, knowing it won’t be referred to in a subsequent tribunal,” says Donald MacKinnon of Law at Work, though there is an exception made where the circumstances are found to equate to unfair dismissal.
✶bit.ly/AcasSA
✶ CIPD Law on Tour is a series of practical one-day workshops on the hot topics in employment law. They run this autumn from 8-25 October.
cipd.co.uk/lawontour
✶ The CIPD is also holding a one-day workshop on Tupe, including how it affects contracting out. bit.ly/CIPDTupe