UK: Employment Law Update – September 2019

Last Updated: 13 September 2019
Article by Alistair McArthur

We are pleased to provide you with the Herrington Carmichael LLP employment law update for September 2019.

This is a key note summary of some of the main developments in employment law in the last month.

1. Holiday pay cannot be pro-rated for 'part year workers'

In the most recent case about the way holiday pay is calculated, of Brazel v The Harpur Trust, the Court of Appeal has ruled that holiday pay for permanent workers who only work part of the year cannot be pro-rated.

The Claimant was a music teacher, working only school term time. She was required to take her holiday outside of the school term and her employer paid her accrued holiday entitlement three times a year, at the end of each term. The Claimant's holiday entitlement was calculated by reference to 12.07% of the hours she worked. Whilst this is not a method of calculation prescribed by the Working Time Regulations 1998 (WTR), it is one regularly used by employers to calculate holiday entitlement of casual workers. The Claimant argued that her holiday pay was incorrectly calculated and should be calculated using the average of the 12-week period immediately preceding the holiday. This is as set out in the WTR.

The Employment Tribunal ruled that, in circumstances where an employee is on a permanent contract but only works part of the year, they are still entitled to 5.6 weeks of holiday, and this should be calculated using the average of the 12-week period immediately before the holiday. Using this calculation (rather than the 12.07% multiplier) gave the Claimant a greater amount of holiday entitlement and, in turn, pay.

The Respondent appealed on the grounds that they did not consider it to be equitable as such an approach would result in the Claimant receiving a higher proportion of her annual salary as holiday than that of a full-time worker. The Court of Appeal rejected this appeal.

This decision confirms the importance of complying with the WTR and getting your calculations right, rather than just working on the basis of assumptions. All employees who work irregular hours should have their holiday pay calculated based on the 12 week reference period, even where this causes a disparity as to the amount of holiday different employees will receive.

2. Illegal employment contracts

In case of Chikale v Okedina, The Employment Appeals Tribunal (EAT) held that an illegal contract is not automatically unenforceable.

Ms Chikale had been brought to the UK, on a domestic worker visa, by Ms Okedina. Ms Chikale was required to work seven days a week for two years, for which she was paid a total of only £3,300. The Claimant's visa had expired but she continued to work in breach of immigration rules, having been falsely advised by Ms Okedina that the relevant steps were being taken to extend her visa.

Ms Chikale asked for more money and Ms Okedina summarily dismissed her. She then brought claims against the Respondent. Ms Okedina tried to rely on the defence of illegality, arguing that the contract with Ms Chikale was unenforceable from the point at which the visa had expired. The EAT, however, concluded that Ms Chikale was unaware of the fact that she was illegally working and rejected the defence of illegality. MS Okedina appealed.

The Court of Appeal rejected the appeal. Firstly, it concluded that the legislation was not aimed at employees working illegally, but imposed penalties on employers who were employing such individuals. As Ms Chikale had no knowledge that she was working illegally, she should not be denied remedies under this defence. Secondly, it concluded that Ms Okedina could not rely on the defence of common law illegality, as Ms Chikale had not knowingly participated in the illegal performance of her contract. Therefore there was no reason to deny her a remedy.

It is important to note that the facts of this case are exceptional, as in most cases involving illegal workers, the individuals are likely to have knowledge of their visa status. This case does however demonstrate the Courts willingness to take a pragmatic approach to protect vulnerable employees.

3. Protected disclosures – reasonable belief in public interest

In the case of Okwu v Rise Community Action, the EAT found that, in relation to whether a protected disclosure was in the public interest or not, it only requred the employee to have reasonable belief that it was.

The Claimant was employed by, Rise, a charity providing support for individuals affected by domestic violence. After issues were raised about the capability of the Claimant, her probation period was extended by three months. The Claimant wrote to the Respondent raising concerns that Rise were breaching Data Protection legislation. The Claimant's employment was later terminated and she brought an unfair dismissal claim against the Respondent on the basis that she had been dismissed for whistleblowing. The Employment Tribunal found that matters she raised concerned only her own position and were not in the public interest.

The Claimant appealed the decision and the EAT found that the Tribunal had failed to consider whether she had reasonable belief that her disclosure was in the public interest. The EAT said that it was hard to see how it could not have been, given the sensitive nature of the information involved. The appeal was allowed on the grounds of this and remitted to the Tribunal for reconsideration.

This case highlights the importance for employers to consider carefully whether a complaint made by an employee could amount to a protected disclosure, taking into account the mindset of the employee making the disclosure.

4. Pleadings for constructive unfair dismissal

In Upton-Hansen Architects v Gyftaki, the EAT held that if an individual is found to have been constructive dismissed, an employer needs to prove a potentially fair reason for the dismissal to successfully defend the claim. The employer lost the claim at the Tribunal stage and appealed to the EAT on, amongst other points, the Tribunal had not considered whether there was a fair reason to dismiss the Claimant. The EAT, however, dismissed this appeal on the grounds that the employer had not pleaded any such reason. The employer had not asserted that if the dismissal was found to have happened, such dismissal was fair, nor had they attempted to assert what the potentially fair reason would be in that case. The EAT held that a generic denial of any matter does not serve to positively identify what, if anything, the employer's case will be on that aspect, in the event that constructive dismissal is found, thus the appeal was dismissed on this ground.

This case underlines the importance of properly pleading cases and defences. The fact that the burden of proving a potentially fair reason for dismissal is on the employer and confirms that in cases of constructive unfair dismissal, a potentially fair reason for dismissal should be pleaded in the alternative.

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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