On Notice
October 2009
Authors:
Noel Deans
noel.deans@klgates.com
+44.(0)20.7360.8187
Paul Callegari
paul.callegari@klgates.com
+44.(0)20.7360.8194
Daniel Wise
daniel.wise@klgates.com
+44.(0)20.7360.8271
In this month’s edition of On Notice, we highlight the significant and well
publicised decision of the European Court of Justice in Perada v Madrid
Movilidad SA on the effect on holiday entitlements of sickness absence
during annual leave. We also summarise the important Court of Appeal
case of Kulkarni v Milton Keynes Hospital NHS Foundation Trust on
whether an employee has the right to legal representation at internal
disciplinary hearings, and the EAT decisions in Tapere v South London
& Maudsley NHS Trust (TUPE and constructive dismissal) and Amnesty
International v Ahmed (direct discrimination). Finally, a reminder of the
increase to the limit on weekly earnings for the purposes of calculating
statutory redundancy payments which came into effect on 1 October.
Effect on holiday entitlements of sickness absence during
annual leave
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In Perada v Madrid Movilidad SA the ECJ has given an important decision on
whether, when an employee falls sick during paid annual leave, he is able to
postpone his holiday and take it at another time. It has ruled that the employee is
entitled to take the paid leave at another time, either in the current or next
holiday year.
The employee, who is Spanish, worked for a business which removed illegally
parked cars. His employer set his summer holiday period to be between 16 July and
14 August. The employee had an accident on 3 July and was unable to work again
until 13 August. Therefore, he ended up spending almost all of his holiday period
simultaneously on sick leave and holiday leave. When he came back to work he
requested that his employer allocate him a new period of annual leave in November
and December, to make up for the holiday period during which he was ill. His
employer refused.
The ECJ ruled in his favour. It said that under the Working Time Directive an
employee has the absolute right to 4 weeks' annual paid leave and that annual leave
and sick leave have different purposes. Accordingly, an employee who was on sick
leave during a period of annual leave has the right to request and take that annual
leave during a period where it does not overlap with sick leave.
The case clearly has significant consequences for public sector employers who are
immediately bound by the ECJ decision. It has been assumed in the past by many
employers and employees that an employee’s illness while on holiday was simply a
matter of bad luck. That appears likely to change. Employers are likely to be
confronted with an increase in the amount of time their employees take off. Many
employers are already seeking to reduce contractual sick pay entitlements and will
be tempted to make their contractual leave (and perhaps other) arrangements less
generous in order to offset the effects of the decision.
The following points should also be borne in mind. The decision says nothing
about how such leave is to be certified. Employees therefore appear to be bound by
the usual rules on self-certification and the production of a doctor’s statement, with
all of the evidential difficulties that that entails. Further, it should be noted that the
case only concerns the minimum annual paid leave requirements as imposed by the
Working Time Directive.
On Notice
Thus, if the employee has already had 4 weeks of
annual leave (as required by that Directive) it
appears that the employer may be able to refuse
the request for holiday to be postponed and taken
at a later stage.
Please contact Noel Deans for further details.
Right of employee to legal
representation at internal
disciplinary hearing
In Kulkarni v Milton Keynes Hospital NHS
Foundation Trust the Court of Appeal has given
an important decision on the right of employees
to be represented by lawyers at internal
disciplinary hearings.
The employee (a doctor) was suspended by his
employer, an NHS Trust, pending investigation
of a serious complaint by a female patient. The
employer refused to allow him to be represented
at the disciplinary proceedings by a lawyer. He
brought a claim in the High Court claiming that
this was unlawful and a breach of his
employment contract.
His claim failed in the High Court but
succeeded in the Court of Appeal. It was
decided the terms of his particular employment
contract gave him the right to be legally
represented. The Court also indicated, although
it was not necessary for its decision, that in
cases where an employee was facing
disciplinary proceedings where he could
potentially lose his job and effectively his
ability to practise in that field, Article 6 of the
European Convention on Human Rights
(ECHR) might give him a right to be legally
represented.
employers would be well advised to take advice
as to whether they must agree to the request.
Further, employers should also review their
terms of employment. The case ultimately turned
on the interpretation of the employment contract,
as to which judges in the High Court and the
Court of Appeal took very different views.
There is no statutory right to legal representation.
An employee may be “accompanied” at a
disciplinary or grievance hearing under the
Employment Relations Act 1999 (and under the
ACAS Code of Practice). But both stop short of
giving a right to full legal representation. The
case is likely to be appealed to the new Supreme
Court. Further developments will be reported in
On Notice.
Please contact Paul Callegari for further details.
EAT decision on TUPE and
constructive dismissal
In Tapere v South London and Maudsley NHS
Foundation Trust the EAT has given an
important decision on what constitutes a
substantial change to an employee’s material
detriment following on a TUPE transfer. Under
regulation 4(9) of TUPE, where a transfer
involves such a change in their working
conditions employees can elect not to transfer to
the new employer and be treated as dismissed.
In this case, the employee underwent a TUPE
transfer in April 2007. Her employment contract
contained a mobility clause requiring her to work
anywhere within her employer’s area. That area
had widened on her transfer to her new
employer. She was therefore required to travel a
further 10 miles to work in Beckenham, rather
than Camberwell where she had been before.
The case has obvious implications for public
sector workers who (unlike private sector
workers) can rely on the ECHR directly. Faced
with career-threatening disciplinary charges, they
are likely to contend that they are entitled to full
legal representation.
She resigned and claimed that this change fell
within regulation 4(9) of TUPE and claimed
unfair dismissal. The ET dismissed her claims. It
decided that the change in travelling time was
not significant enough to trigger regulation 4(9)
nor was it a fundamental breach of contract.
However, the case may have implications for the
private sector, too. 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 more and more
cases where employees argue that they have a
right to legal representation and in such cases
However, the EAT allowed her appeal. It
decided that she had been dismissed and sent the
case to back to the ET to decide whether the
dismissal was unfair or not.
The most significant aspect of this decision is
that the question of whether a change is to an
employee’s material detriment should not be
decided objectively. The test is subjective.
October 2009
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On Notice
What matters is the impact of the change from the
employee’s point of view. Therefore, posttransfer changes, e.g. to an employee’s job title or
(as here) place of work, although permitted under
an employee’s contract, can lead to unfair
dismissal claims if the employee can prove that
the change falls within regulation 4(9) of TUPE.
Therefore, regulation 4(9) has a potentially
wide impact.
Please contact Jackie Cuneen for further details.
EAT decision on direct
discrimination
In Amnesty International v Ahmed the EAT has
decided that an employer cannot avoid liability
for direct racial discrimination against an
employee on the ground that it had a
"benign motive".
In this case, the employee was a UK national of
northern Sudanese origin. She worked
temporarily for Amnesty International as a
researcher on Sudan. She applied for the role on a
permanent basis. She was refused the job on the
basis that her north Sudanese origins might mean
that her employer would be perceived to lack
impartiality in Sudan and that her employment
could pose a security risk for the organization
when she visited Sudan or Chad. The employee
resigned and claimed race discrimination and
unfair constructive dismissal.
Both the ET and the EAT found that there had
been direct racial discrimination. The correct
approach was to consider the reason for the
alleged discriminatory treatment. In this case the
decision was based solely on her ethnicity.
Unfortunately for the employer, the ET could not
take into account the employer’s underlying
motives. There was no defence of justification for
direct discrimination claims. The employer’s
motives, which might have supported a defence
of justification for a claim of indirect
discrimination, were irrelevant for these purposes
as this was a direct discrimination claim.
The employer also tried to rely on its duty to
ensure its employees’ health and safety as
contained in the Health and Safety at Work Act
1974. This was so that it could rely in turn on the
defence in the Race Relations Act 1976, whereby
anything which an employer does “in pursuance
of an enactment” cannot be discrimination. This
too failed. The EAT said that the defence applies
only when the statute requires the employer to do
something defined and specific. The duty was
too general to be relied on in this case.
The case illustrates the strictness of the rules on
direct discrimination and the absence of a
defence of justification. However, employers
should also note that there is a defence of
“genuine occupational requirement” under
section 4A of the Race Relations Act 1976. The
employer did not seek to rely on this defence as
it did not consider that it applied. But there is a
defence if, having regard to the nature of the
employment, being of a particular race or ethnic
or national origin is a genuine and determining
occupational requirement (and it is
proportionate). The EAT in this case, clearly
uncomfortable with the decision it had been
forced to reach, specifically drew attention to
this defence and commented that it was not
convinced that the employer's conclusion on this
point "was conclusive".
Please contact Daniel Wise for further details.
Increase in limits
On 1 October 2009 the Government increased
the limit on a week's pay for the purposes of
calculating statutory redundancy payments from
£350 to £380. The increase applies to all
dismissals by reason of redundancy which take
effect on or after 1 October 2009.
National Minimum Wage rates also increased.
Please contact Laura O'Brien for further details.
Stop press: default retirement age
is lawful
On 25 September 2009 the High Court gave its
decision in the Heyday litigation. Although the
judge was critical of the default retirement age
and the discriminatory effects of it, he decided
that the UK's default retirement age of 65 is
lawful. Employers can, therefore, continue with
the current practice of forcing employees to
retire at 65 - at least for the time being. The
Government has confirmed that it will review the
concept of a default retirement age in 2010, as a
result of which it may be abolished.
Please contact Paul Callegari for more details.
October 2009
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On Notice
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October 2009
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