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• Employment Update - January / February 2008

Statutory limits for 2008

The Employment Rights (Increase of Limits) Order 2007 has now been published. This increases the compensation limits for Tribunal awards and statutory payments awarded in respect of dismissals which are effective on or after 1 February 2008. The changes are as follows:

Guarantee Payments (which apply during lay-offs) will also increase from 1 February 2008, to £19.60 per day.

TUPE 2006 may apply to the transfer of a business to a country outside the UK

Holis Metal Industries v GMB is the first case to consider the application of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (''TUPE 2006'') to the transfer of an economic entity to outside the UK and indeed outside the EU.

In this case, the EAT considered the preliminary issue of whether TUPE 2006 applied to the transfer of part of a business from the UK to Israel. The EAT upheld the Tribunal's finding that TUPE had the potential to apply to a transfer from the UK to a non-EU entity, even where the undertaking in question did not remain in the UK after the transfer had taken place.

The Facts:

Newell Ltd (''Newell'') owned a factory in Tamworth where it ran a track, pole and blind manufacturing business employing 180 workers, 76 of whom were represented by the GMB.

Newell sold the track and pole element of its business to an Israel-based company, Holis Metal Industries Limited ("Holis"). Following the transfer, the business was relocated to Israel and the 107 employees in this part of the business were subsequently made redundant.

The GMB brought claims against both Newell and Holis for failure to consult under regulation 13 of TUPE and section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992.

Holis applied to strike out the claim against them, on the basis that TUPE did not apply since the transfer was to a business based outside both the UK and the EU.

The Employment Tribunal held that TUPE 2006 did apply to the transfer. The Tribunal Judge stated that the issue of territory was provided for by TUPE 2006 and that regulation 3(1)(a) should be given its "plain interpretation". In accordance with the facts before him, both the transfer and redundancies took place within in the jurisdiction, because the company was situated in the UK immediately before the transfer. Holis appealed the decision.

At the appeal, Holis argued that there was a common law presumption that UK legislation does not have extra-territorial effect unless clearly indicated. In addition, they argued that UK legislation does not apply to foreign persons or corporations.

GMB argued that Regulation 3 of TUPE 2006 gave jurisdiction when the entity was present in the jurisdiction prior to the date of transfer.

The Decision:

The EAT upheld the Tribunal decision that TUPE 2006 applied, since the entity was present in the UK both before and after the transfer. However, on the more general application of TUPE to a transfer to outside the UK, or even the EU, the EAT expressed a view that they would potentially apply.

The EAT noted that it would be "contrary to protective policy underlying both TUPE and the directive if workers could be deprived of their rights simply by effecting a transfer to a company outside the UK. This could not be the intention of parliament".

Therefore TUPE did potentially apply to transfers outside the UK irrespective that enforcement of any Tribunal awards may prove difficult. Upholding TUPE did not offend the principle that legislation should not have extra-territorial jurisdiction, and the fact that a business was based in the UK provided sufficient connection to the UK to allow the UK courts jurisdiction.

Holiday entitlements for workers on long-term sick leave – the latest Opinion

The Advocate-General of the European Court of Justice has published her opinion in the eagerly-awaited case of Stringer v HMRC (formerly Commissioners of Inland Revenue v Ainsworth) regarding whether or not holiday entitlement continues to accrue for workers who are absent from work on long-term sickness.

In summary, the Advocate-General's opinion is that:

1. Paid holiday does accrue whilst an employee is absent on sick leave;
2. Workers may not take their holiday whilst they are on sick leave;
3. On termination of the contract of employment, workers are entitled to a compensatory payment for holiday which is accrued but not yet taken - even if the worker was on sick leave for a full holiday year.

This Opinion is of particular interest because it is likely to indicate the final outcome of this case as the Advocate-General's opinion is usually followed by the full court.

The Advocate-General's Opinion

In April 2005, the Court of Appeal held that the right, under the Working Time Regulations 1998, to four weeks' statutory paid holiday did not continue to accrue whilst an employee was off on long-term sick leave. The employees appealed this decision to the House of Lords, who then referred certain questions to the European Court of Justice.

On 24^th January 2008, Advocate-General Trstenjak gave her Opinion on the matter.

The Advocate-General's speech contained the following statements:

''(1) Article 7(1) of Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organisation of working time must be construed as meaning that a worker on indefinite sick leave is entitled to designate a future period as paid annual leave, during a period in which he would otherwise be on sick leave.

However, he may not take this leave during a period in which he would otherwise be on sick leave.

(2) Article 7(2) of Directive 2003/88 must be construed as meaning that, where an employment relationship is terminated, workers are in any event entitled to a compensatory payment as a replacement for leave which has been acquired but not taken due to illness (allowance in lieu). This is also the case where the worker was on sick leave for all or part of the leave year in question.

In assessing the amount of this entitlement it is necessary to ensure that the amount of the allowance in lieu that the worker receives is equivalent to that of his normal pay.''

If the ECJ follows the Advocate-General's opinion, whilst it will clarify this murky area of law, it will be disappointing for employers with employees away from work for in excess of a complete holiday year. This decision could have far-reaching implications, not just in terms of sickness absence, but also for employees taking extended maternity leave.

Heterosexual employee uses sexual orientation discrimination law to gain compensation for harassment

In the case of Sharon Legg v Rubyz Limited, a heterosexual woman who worked as a bouncer at a gay club and who alleged that she had been subjected to harassment at work on the grounds that she was heterosexual, won her claim against her employer for compensation for unlawful discrimination.

Ms Legg used the Employment Equality (Sexual Orientation) Regulations Act 2003 as the basis for her claim that she was discriminated against on the grounds of her sexual orientation. This case represents a landmark decision which demonstrates that legislation implemented to protect a minority group, can equally provide protection to the majority.

The Facts

Ms Legg started working as a bouncer at Dreams, a gay nightclub in Bournemouth, in May 2005. She was promoted to Head of Security a year later.

However Ms Legg, who was heterosexual, alleged she had been subjected to a difficult working environment, with the other door staff (who were homosexual or bisexual) refusing to follow her instructions, and frequently subjecting her to abuse because she was not a lesbian.

Ms Legg also alleged that she was subjected to repeated harassment by her boss, who called her a "breeder".

Ms Legg's employment was terminated in June 2006 without any prior warning, following a dispute with a colleague, and she brought an Employment Tribunal claim for unfair dismissal and discrimination on the grounds of her sexual orientation.

The Decision

Ms Legg was successful in her claim for sexual orientation discrimination and was awarded £3,000 for injury to feelings. The Tribunal awarded her £3,222 for her unfair dismissal, but held that the dismissal was not on the grounds of her sexual orientation.

This case highlights the fact that the minority groups that many of the discrimination laws were designed to protect do not have the monopoly on equality rights provided by that legislation, and that these provisions apply equally to the majority and provide a legal remedy for all victims of unlawful harassment at work.

Wording "youthful enthusiasm" in job advertisement infringes Age Regulations

In the recent Northern Ireland case of McCoy v James McGregor and Sons, an Industrial Tribunal (Northern Ireland's Employment Tribunal) held that a job advertisement searching for an applicant with "youthful enthusiasm" was contrary to the Employment Equality (Age) Regulations (Northern Ireland) 2006.

The Facts

Mr McCoy ("the Claimant") brought a claim of age discrimination in recruitment. McGregor's ("the Respondent") were a commercial trading company involved in timber importation and distribution. Two of their sales representatives resigned, giving the company little notice, in order to set up a new business in direct competition. The respondents sought to replace these staff and placed an advertisement in an Irish newspaper on the 28 December 2006 which read:

"McGregor & Sons Ltd Hard Wood Importers, exciting opportunity for two Sales Representatives. You need at least 5 years experience. Knowledge of the timber industry an advantage. Good people skills. Youthful enthusiasm. We offer attractive salary. Company car. Profit share scheme. Pension Scheme. Well-established customer base. Contact John Dixon..."

Whilst the 58 year old Claimant had over 30 years' experience in the industry, the jobs were instead offered to two applicants with significantly less experience, who were both some 15 years his junior. At each of his interviews, the Claimant was asked his age, and then questioned in light of that about his motivation and enthusiasm. The implication was that this would be an issue since he was older.

The Tribunal reached an unanimous decision that, on the balance of probabilities, the Respondents had unlawfully taken age into account as a relevant factor in their selection process. In reaching their decision, the Tribunal:

• drew an inference of discrimination from the wording of the job advert when taken in the context of the other evidence;
• ruled that the specific request in the interviews for the age of the applicant clearly linked the Claimant's age to the requirement of energy, motivation and "youthful enthusiasm"; and
• relied on the lack of transparency and ad hoc scoring employed during the interviews.

This case serves as a useful reminder to employers of the need to ensure that recruitment practices are non-discriminatory. Equality and Diversity policies should be followed throughout the recruitment process as well as during employment. Employers should consider the wording of job advertisements carefully in order to avoid offending the Age Regulations, or other discrimination legislation, as well as ensuring that the selection process itself is objective and fair.

Court of Appeal clarifies whether an employee qualifies as "disabled" if their symptoms are resolved, but subsequently recur

In Richmond Adult Community College v McDougall, the Court of Appeal has cleared up the issue of whether an employee qualifies as disabled, when their symptoms have ceased but are 'likely to recur'.

The EAT had historically grappled over this question of whether a Tribunal can take events subsequent to the complained of act into account when assessing whether or not a person was "disabled" under the Act at the time of the alleged discrimination.

The Court of Appeal has confirmed the position that they cannot.

The Facts

The Claimant, Ms McDougall, suffered from the lifelong condition of a persistent delusional disorder. She had not suffered an episode for three years up to the relevant date. After receiving medical evidence that revealed her history of mental illness, Richmond Adult Community College ("the Respondent") withdrew her offer of employment. Shortly afterwards, the Claimant suffered a relapse and was committed under the Mental Health Act.

The EAT had held that the Tribunal should have considered the Claimant's relapse when deciding if her symptoms were "likely to recur". Decisions on this point had previously been inconsistent, but the EAT felt that to ignore the reality of what had actually happened was unattractive.

The Decision

The Court of Appeal disagreed, holding that this approach is impermissible and that the likelihood of recurrence (central to the issue here of whether or not the Claimant was disabled) must be judged at the date of the act of discrimination, without taking into account subsequent events.

Series of discriminatory comments against pregnant employee paves the way for an anticipated 200K award

In the recent case of Manning v Safetell, a senior employee who became pregnant unexpectedly and who was then labelled "useless" and told that she would "never be the same again" by her boss has won a claim against her employer for sex discrimination.

The Facts

Mrs Manning ("the Claimant") worked as a Sales Director for Safetell (''the Respondent''). She alleged that the Managing Director subjected her to sex discrimination from the time he learned of her pregnancy in 2005 until she resigned in October 2006. The discrimination occurred on at least 24 separate occasions, with the treatment complained of including negative comments, as well as demotion whilst on maternity leave. Some of the comments allegedly made by the Managing Director were very blatant. He was for example alleged to have said or written the following to or about the Claimant:

• "I can't do without a Sales Director for 18 months – you will never be the same again";
• (in a Memo): "Feel betrayed...tempted to dismiss and take the consequences";
• She had displayed "a lack of honesty when pregnancy suspected"; and
• (in her Appraisal): "pregnancy has quite naturally had an adverse effect on her ability".

In its ruling the Tribunal stated, "It is not often that the Tribunal is faced with such a blatant response to notification of pregnancy". The exact level of compensation has been predicted to be in the region of an award of £200,000, with the exact figure and Claimant's separate claim of constructive dismissal being decided by the Tribunal in February.

Watch this space for further information...

BA employee loses religious discrimination claim

British Airways (''BA'') employee Ms Eweida who made the headlines in 2006 with her claim of religious discrimination for BA's decision to ban her from wearing her cross to work has this month lost her case in the Employment Tribunal.

The Facts

In October 2006, Ms Eweida, a Christian working at the British Airways check-in counter at Heathrow Airport in London, was told that she must either cover up, or remove, her small cross necklace. The BA uniform policy permits employees who wear a hijab, kara or a turban as a mark of their religion to wear these openly. BA explained that the reason for this was that it is not possible to hide these religious symbols under the uniform. The Claimant argued that the policy singled out Christians unfairly because they could not openly assert their religious belief, as the symbol of their religion could be easily hidden under a uniform.

The Claimant refused to comply with BA's instructions and was placed on unpaid leave. The Claimant argued that the airline discriminated against Christians and had "rules for one minority group but not the other". The Archbishop of York raised a rather interesting point that if the Claimant's cross was three-foot tall she would be able to wear it openly, as she would have difficulty hiding it!

Ms Eweida lost her first hearing against BA, but won an injunction on appeal in the Reading Employment Tribunal.

The Decision

In a recent hearing, the Court ruled the airline is entitled to prohibit the Claimant from visibly wearing her cross. The Court concluded that other types of religious symbols, such as turbans, bangles, and other religious markings are unable to be concealed and are therefore acceptable.

A BA spokesman said: "It is not practical for some religious symbols - such as turbans and hijabs - to be worn underneath the uniform. This is purely a question of practicality. There is no discrimination between faiths whatsoever.''

The Alliance Defence Fund (ADF) which provided funding for the Claimant's case against the airline has stated that it will appeal the ruling. Despite losing her case, Ms Eweida intends to return to work wearing her cross.

Watch this space for further information...

Stop Press!

Compulsory retirement at 65 not objectively justified

In the recent case of Hampton v Ministry of Justice (''Hampton'') the Employment Tribunal decided that the compulsory retirement of a Recorder (a part-time judge) who was an 'office holder' within the meaning of Regulation 12 of the Employment Equality (Age) Regulations 2006 was not objectively justified and therefore constituted unlawful age discrimination.

This case is interesting as it appears to conflict with other recent decisions, including Seldon v Clarkson Wright and Jakes (''Seldon''), which was decided last week. In the Seldon case,the Employment Tribunal concluded that the compulsory retirement of a partner in a law firm was objectively justified.

Both Hampton and Seldon concern the application of the Employment Equality (Age) Regulations 2006, which prohibit direct and indirect discrimination on the grounds of age. An important difference between discrimination under these Regulations and other discrimination legislation  is that direct discrimination can be objectively justified where the treatment is a ''proportionate means of achieving a legitimate aim". Clearly the decisions made by the tribunal are poles apart, and demonstrate that ultimately the outcome is very much dependant on the facts of each case.

In Hampton v Ministry of Justice Mr Hampton was retired from his role as a Recorder in March 2007 on the basis that he had attained the age of 65.

Mr Hampton complained to the employment tribunal that he had been discriminated against on the grounds of his age.

The Ministry of Justice (the Ministry) conceded that Mr Hampton had been subjected to less favourable treatment but sought to argue that their decision to retire all Recorders upon attaining the age of 65 was objectively justified.

They argued that there was a need to effect compulsory retirements in order to introduce 'new blood to the judiciary' and to enable them to provide 'sufficient experience' to junior Recorders.

The Tribunal disagreed, deciding in favour of Mr Hammond, and stating that each year new vacancies were created by Recorders becoming Judges. They dismissed the Ministry's argument regarding the "introduction of new blood" stating that this was undermined by the Ministry's own plans to reduce the number of Recorders by 10% over a 15 year period.

The tribunal did not accept that the policy of retiring Recorders at 65 was a proportionate means of achieving the legitimate aims, therefore the retirement could not be objectively justified.

The polarity of recent decisions has added to the uncertainty in this developing area of law. Clearly this is an unsatisfactory situation for employers, who have no guarantees that their decision to retire an employee at the age of 65 can be objectively justified and will not fall foul of the Age Regulations, even if they follow the correct retirement procedure.

Given the ambiguous state of the law in this area, a decision of the EAT on what constitutes "objective justification'' would be welcome to provide employers with some certainly, to enable them to make strategic plans for the future of their businesses.