UK: Employment Briefing - September 2010

Last Updated: 30 September 2010
Article by Brian Gegg, Jesper Christensen and Marc Meryon

Article 6 ('The Right to a Fair Hearing') Not Engaged

In Hameed v Central Manchester University Hospitals NHS Foundation Trust, the High Court considered whether Central Manchester NHS Foundation Trust was in breach of Article 6 of the European Convention of Human Rights when it dismissed Dr Hameed for gross misconduct.

Dr Hameed had enjoyed a successful and unblemished career as a hospital ophthalmologist until an incident in 2008 when she sanctioned the use of non sterile scissors in surgery, putting patients' health at risk. The Trust commenced a disciplinary process compliant with the Department of Health framework (MHPS) which resulted in her dismissal for gross misconduct.

Dr Hameed argued that the disciplinary process was in breach of Article 6 which provides:

'In the determination of his civil rights and obligations...everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law'.

Dr Hameed argued that the procedure adopted at the disciplinary hearing did not comply in a number of respects even though it complied with MHPS. She argued that the panel which heard the case was not independent or impartial: only one member of the panel was not employed by the Trust. She argued that, as in the case of Kulkarni (see Employment Briefing September 09), if she were dismissed for gross misconduct she would find it very difficult to work as a doctor again. The High Court rejected this argument. They did not accept her contention that her dismissal would have the same effect as that of Dr Kulkarni. The misconduct alleged against her was of a very different type and she had an excellent record. Dr Hameed's case did not fall within the type of exceptional circumstances envisaged in Kulkarni.

This case is a useful reminder that Article 6 will only be engaged in exceptional circumstances and that dismissal for gross misconduct, without more, is unlikely to suffice. Leave to appeal has been granted.

Holiday Pay During Sick Leave

An employment tribunal in Khan v Martin McColl has considered the impact of HMRC v Stringer (see Employment Briefing July 09) where an employee on long term sick leave did not request holiday during his sick leave. On the termination of his employment on 14 August 2009 his employer paid him for accrued holiday during the last year only of his employment. Mr Khan brought a claim for unlawful deduction from wages and a claim under the Working Time Regulations in respect of 4 weeks' holiday that had accrued during his 15 month period of sick leave together with two weeks' holiday carried forward from the previous year, 2007. The House of Lords in Stringer had made it clear that claims of holiday pay can be a series of deductions.

The company argued that there was no right to carry forward from 2008 to 2009, that they had paid for 2009 and the right to holiday pay for 2008 expired on 31 December 2008. The limitation period for the claim for 2008 expired on 31 March 2008. The tribunal agreed, noting however the unfairness to Mr Khan that he would not realise that there had been a deduction until he made a claim for the whole of his holiday pay in August 2009. The tribunal noted that there was no recorded authority on this point and referred to the ECJ's reasoning in Stringer when making its decision. The tribunal commented that Mr Khan did not apply to take holiday during 2007 or 2008 or at any time during sick leave. Mr Khan did have the (at least notional) opportunity to take leave. Until the House of Lords decision in Stringer Mr Khan would not have known that he had the right to claim holiday pay during his sick leave. However, the tribunal ruled that this was not germane.

The clear lesson for employees on long term sick leave is that they need to ensure they request holiday leave or pay in lieu within 3 months of expiry of the holiday year or risk losing the right to claim this pay. This is a tribunal decision and therefore does not bind other tribunals or other courts. The tribunal noted the previous case of Shah v First Yorkshire Ltd but did not think the tribunal decision in that case was inconsistent with its decision.

TUPE: ETO Reason Established Where Narrower Product Range

In Nationwide Building Society v Benn and others the EAT ruled that the dismissals of Mr Benn and some of his colleagues fell within the ETO (economic technical or organisational) exception of the TUPE Regulations where the difference in product range of the transferee company entailed a change in the workforce. This was a section of the workforce, being the transferred employees, not the whole of the workforce.

Mr Benn's employment with Portman Building Society transferred to Nationwide Building Society on 28 August 2007. The former PBS employees contended that their terms of employment were altered to their detriment by NBS. Their job role and responsibilities were downgraded when they were assimilated into NBS roles. The NBS bonus scheme which was to replace their PBS bonus scheme was substantially less beneficial to them. As a result, Mr Benn and several of his transferred colleagues resigned.

The EAT agreed with the tribunal that both a diminution in the role that Mr Benn and others were expected to do and potential reduction in bonus resulted in their constructive dismissal. In doing so they applied Regulation 4(9) of TUPE ('a substantial change to the employee's working conditions to their material detriment'). However NBS's narrower product range was an organisational reason entailing a change in the workforce. The EAT disagreed with the tribunal's contention that the ETO reason must entail a change in the workforce as a whole. It applied even though the change was only to the job functions of a body of transferring employees.

The EAT further disagreed with the tribunal's finding that there had been a breach of Regulation 13(6) (consulting appropriate representatives where measures are intended). No claim under regulation 13(6) had been pleaded and it would have been contrary to the principles of natural justice to decide on this point without letting the parties make submissions.

This case is interesting and of practical importance since it is generally understood that harmonisation in itself cannot satisfy the ETO exception. Here, however, the difference in PBS's and NBS's operational structures satisfied the ETO test even though the change in function only affected a group of the transferring employees, not the workforce as a whole.

Court of Appeal Rules on Compulsory Retirement at 65

In Seldon v Clarkson Wright & Jakes and Secretary of State for Business Innovation and Skills the Court of Appeal upheld a tribunal decision that a law firm's rule that its partners should be compulsorily retired on reaching the age of 65 could be justified as a proportionate means of achieving legitimate aims. Partners are not 'employees' for the purpose of the default retirement age of 65. The legitimate aims were stated to be:

  • Ensuring associates were given the opportunity of partnership after a reasonable period;
  • Facilitating the planning of the partnership and workforce by having a realistic long term expectation as to when vacancies would arise;
  • Limiting the need to expel partners by way of performance management, thereby contributing to the congenial and supportive culture in the firm.

The Court of Appeal did not accept Mr Seldon's contention, relying on the Heyday decision (see Employment Briefing April 09), that legitimate aims must be of a social policy/ public interest nature. It noted that whilst UK laws should be justifiable by being of a social policy/ public interest nature, the same did not apply to a private employer. It would be difficult for an employer to find such a reason. The Court of Appeal also agreed with the tribunal that the fact that all the partners (with equal bargaining power) had agreed to the rule was a relevant factor.

The government has now launched consultation over its proposal to remove the default retirement age of 65. This will mean that employers will now need to pay close attention to this decision when deciding whether to introduce a retirement age. In Seldon, the Court of Appeal noted that it may not be appropriate to apply the same retirement age across a whole workforce. Employers will need to consider whether the categories of legitimate aim identified in Seldon (noted as 'dead man's shoes' and 'collegiality') have been properly used after analysis of whether these are appropriate for a particular sector of the workforce.

And Finally...
Phasing Out the Default Retirement Age

As noted above in Seldon v Clarkson Wright, the government has invited consultation on the proposal to scrap the default retirement age from 1 October 2011. Transitional arrangements would commence on 6 April 2011. The government states that this measure is one of the steps it is taking to enable people to work for longer, alongside raising the state pension age to 66.

The government is also proposing to remove the 'right to request' retirement procedure for requests to work beyond retirement age. It will still be possible to specify a retirement age but this must be objectively justifiable (see Seldon v Clarkson Wright above).

Equality Act Guidance

The Equality and Human Rights Commission has published a series of guidance documents on the Equality Act 2010 with practical examples on how the law has changed.

Directive on Equal Treatment Between Self Employed Men and Women

On 4 August 2010 a European Directive was introduced aimed at improving social protection for self employed women, particularly in the case of maternity. Women are granted a maternity allowance and leave of at least 14 weeks. The provision on social protection for assisting spouses and life partners is also improved. EU member states now have to introduce the Directive into national law within two years.

Trade Unions Plan Strike Action in protest at Cuts

Certain unions, including the RMT, have indicated that they are planning coordinated action in response to public sector cuts. The intended day of action is 20 October 2010 (the day on which George Osborne will disclose details of a spending review). A further day of demonstrations is planned for 23 October.

Review of Doctors' Working Hours

The government is to review the 48 hour limit on doctors' working hours after repeated criticisms that the European Working Time Directive limit has led to a severe worsening in patient care.

Guidance for Employers on Illegal Workers

The UK Border Agency has published 'Guidance for Employers on Preventing Illegal Working', aimed at helping employers understand the status of asylum seekers, refugees and those with Humanitarian Protection. The guidance helps employers understand what documents they should be asking prospective employees to produce as well as their own legal rights and obligations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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