February 2010
Authors:
Noel Deans
noel.deans@klgates.com
+44.(0)20.7360.8187
Paul Callegari
paul.callegari@klgates.com
+44.(0)20.7360.8194
Daniel J. Wise
In this edition we report on the EAT decision in Lyons v Mitie
Security Ltd (loss of entitlement to minimum paid holiday leave); the
Court of Appeal decision in G v X (right of employees to be legally
represented at internal disciplinary hearings); the EAT decision in
Ashby v Monterry Designs Ltd (whether a shareholder and director
of a company was also its employee); and, in brief, EAT decisions
on the scope of the Disability Discrimination Act (Patel v Oldham)
and loss of an employee’s right to rely on an alleged fundamental
breach because he has affirmed the contract (Daley v Serco) and
two ECJ decisions on age discrimination (Wolf and Petersen).
daniel.wise@klgates.com
+44.(0)20.7360.8271
K&L Gates includes lawyers practicing
out of 35 offices located in North
America, Europe, Asia and the Middle
East, and represents numerous GLOBAL
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www.klgates.com.
EAT decision on loss of entitlements to paid holiday
In Lyons v Mitie Security Ltd the EAT has decided that notice requirements given by
employers can result in the loss of some of an employee’s right to paid holiday leave
under the Working Time Regulations.
The employer in Lyons required that applications for holiday be made wherever
possible four weeks before leave begins. It also provided that leave could not be
carried over. Less than four weeks before the end of the leave year, the employee
requested payment in lieu for the nine days of holiday leave he had left before the
end of the leave year. He was refused. He resigned and brought a claim for
constructive unfair dismissal.
The claim was dismissed by the ET, which said that the employer had been entitled
to refuse. The employee appealed to the EAT. He contended that the Working Time
Regulations gave him the inalienable right to four weeks paid leave. The EAT held
that the right to four weeks paid leave was not absolute. While the Regulations give
workers the right to four weeks annual paid holiday, they also provide that a worker
should give notice of at least double the length of the leave period sought and
provide that employers can specify longer notice periods if they are reasonable.
Therefore, an employee who failed to give adequate notice could lose some of his
leave entitlement for that year.
This is a welcome decision for employers. Provided employers act fairly and
reasonably they ought not be subject to last-minute leave requests (which could be
costly and leave them short-staffed) or claims for constructive unfair dismissal.
On Notice
Court of Appeal decision on right to
legal representation at disciplinary
hearings
EAT decision on the employment
status of shareholder and director of
company
In G v X School the Court of Appeal has confirmed
an employee’s right to legal representation at
disciplinary hearings where the hearing may
determine the employee’s right to practise a
profession.
In Ashby v Monterry Designs Ltd the EAT has
given a useful decision on when a shareholder and
director of a company will also be considered its
employee. The claimant and another were the two
directors and 50-50 shareholders of a company.
They ran it between them, although the claimant
had charge of day-to-day activities and the
employees reported directly to her. In April 2007
the company was sold, but the claimant stayed on as
a part-time employee for the new owners. In August
2007 she resigned and then brought a claim for
constructive unfair dismissal.
The employee in this matter was a teaching assistant.
A complaint was made that he had had sexual
contact with a 15 year-old boy. Although the CPS
decided not to prosecute, the governors conducted
an investigation. They refused to allow him to be
accompanied by anyone other than a trade union
representative or colleague at the ensuing
disciplinary hearing where he was dismissed for
abuse of trust. The governors were then obliged to
report him to a body which determines whether he
should be placed on a list of those deemed
unsuitable to work with children.
The employee brought a claim in the High Court to
overturn the decision as unlawful because he had
been entitled to legal representation. He was
successful and the decision was confirmed by the
Court of Appeal on the basis that the employee’s
right to practise his profession might have been
irretrievably prejudiced by the disciplinary
proceedings. Accordingly, Article 6 of the European
Convention on Human Rights (ECHR) gave him a
right to be legally represented.
This case follows the important decision in Kulkarni
(see On Notice October 2009). Both Kulkarni and
this case concerned a public sector employer.
However, there are several private sector professions
where the consequences of dismissal for serious
misconduct may have similar consequences for the
employee’s future career, e.g. those regulated by the
FSA. Employers can expect to see an increasing
number of cases where employees will argue that
they have a right to legal representation and
employers would be well advised to take advice as
to whether they must agree to the request.
Her claim failed in the ET on the basis that she had
not been an employee for the necessary qualifying
period of 12 months, specifically prior to April
2007. The fact that she ran the Company and had
invested in it prior to April 2007 were seen as
incompatible with an employment relationship.
The EAT overturned the ET and held that there was
no reason in principle why someone who is a
shareholder and director of a company cannot also
be an employee. Taking all relevant matters into
account (e.g. how the claimant was paid (salary or
not), whether she kept regular working hours, and
how the parties conducted themselves) the claimant
was held to be an employee.
The ET decision in this case was given before the
Court of Appeal decision in Neufeld (see On Notice
May 2009). This test gives more scope for directors
and shareholders to be considered employees. This
might give potential third party purchasers of a
company pause for thought when assessing potential
liability as attached to shareholders or directors of
the target company.
February 2010
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On Notice
In brief
EAT decision on scope of Disability
Discrimination Act
Patel v Oldham MBC is a case on the definition of
“long term” effect within the Disability
Discrimination Act. The case stated that the effect of
an illness which develops from another illness can
be taken into account in order to reach the required
period of 12 months in order for the effects to be
considered to be “long term” (i.e. the effects of the
two illnesses may be aggregated). The decision
therefore potentially widens the scope of the Act.
The employee in Patel suffered from a form of back
pain which then developed into a syndrome causing
leg pain. The ET dismissed her claim on the basis
that the duration of the effects of the two
impairments could not simply be added together.
However, the EAT concluded that the ET took the
wrong approach. In principle, if the secondary leg
pain developed from the original back pain they
could be added together.
EAT decision on loss of employee’s right to rely
on alleged fundamental breach
Daley v Serco is a useful example of how an
employee may lose the right to rely on an incident as
a fundamental breach of contract in a constructive
dismissal case by not acting with sufficient speed.
The employee, who was employed by the prison
service to transfer prisoners, made claims of
constructive unfair dismissal and race
discrimination. His claims were based on 30 specific
allegations. One of these was that his employer had
conspired to have him falsely arrested and detained
in April 2006. His claims failed entirely before the
ET which found that the employer was not in breach
of contract (nor had it discriminated against him).
Importantly, with regard to the allegation of false
arrest, the ET said that because he had not resigned
for 15 months following the alleged breach he had
affirmed his contract. The EAT agreed with the ET
on that point and the rest of its judgment.
Directive. In Wolf a would-be employee applied for
a post in the Frankfurt fire service. His application
was not considered, as the maximum recruitment
age for the post was 30. He brought a claim alleging
that the maximum recruitment age was
discriminatory. In Petersen a panel dentist on the
German NHS equivalent was informed that her
authorization to practise on the panel would expire
at 68. She brought a claim for age
discrimination. Both of the claims failed before the
ECJ and the age-based policies were declared
lawful.
In Wolf, the maximum recruitment age of 30 was
said to be permitted as it was “a genuine
occupational requirement”. The ECJ accepted that
the maximum recruitment age was there to ensure
“the operational capacity and proper functioning of
the professional fire service” citing the high
physical demands of the fire service. In Petersen,
the ECJ identified 2 possible justifications for the
maximum practising age - ensuring the financial
stability of the system by limiting the pool of
dentists employed within the NHS and protecting
patients from the declining powers of ageing
practitioners. The ECJ did not decide whether either
of these applied in this particular case and sent the
case back to the German court for that
determination.
While the decisions may seem far removed from
many employers’ day-to-day activities, they do
provide useful guidance to employers as to the type
of the reasons which will justify such rules. In
particular, in both cases the ECJ accepted that agerelated decline in performance is capable of
justifying such rules. This is likely to be
increasingly relevant as more employees decide to
work for longer. It is not yet clear whether the
default retirement age in the UK will be left at 65,
modified or scrapped altogether and the
Government’s consultation on the issue has just
been completed. While the Government has yet to
commit itself to a position, it seems unlikely that the
retirement age will simply be left as it is.
Two ECJ decisions on justifying age-based
recruitment policies
The ECJ has recently given two decisions (in Wolf v
Frankfurt and Petersen) on when age discrimination
can be justified under the Equal Treatment
February 2010
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On Notice
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February 2010
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