A further Government consultation will be launched to consider the use of compromise agreements in settling employment claims. There isn’t a practitioner in the landwho wouldn’t agree that the agreements in their current form are long-winded and clunky. Advising an employee on a compromise agreement takes far longer than it should and overcomplicates the matter. The consultation ahead will consider whether this is the case. Again I cannot imagine anyone who will make any representations to the contrary but there you go, there will be a consultation.

The consultation will consider:-
1. whether CAs are unnecessarily complex and prescriptive;
2. whether the law should be amended so that all existing and future claims can be covered off;
3. whether CAs can be simplified by removing the list of all possible causes of action;
4. whether, having simplified them, they can be renamed settlement agreements.

It is not clear whether as part of this consultation the Government intends to consult on the idea of protection conversations. Protected conversations would enable employers to have frank discussions with employees but the discussions would be inadmissable in any subsequent Tribunal proceedings.

You’ll find further updates on this in our blog here, on twitter and via our newsflash. If you wish to sign up to our newsflashes and monthly newsletters please email us at info@didlaw.com.

There has been much confusion in recent years about when holiday pay is payable to employees on long-term sick leave. Can it be carried forward and accumulated indefinitely? Does the amount which has to be paid in lieu or accrued include or exclude the statutory and Bank Holidays? What is the rate of pay for the accrued holiday? Through a number of cases including Stringer, Pereda and now KHS AG v Schulte the position is becoming much clearer.

For employers the issue is to avoid accruing a large financial liability which may be substantial. This has to be balanced against an employee’s right to paid holiday which is an important social principle of EU law which cannot be derogated from.

To summarise, the current law is as follows:
1. employees on long-term sick leave accrue holiday while they are off sick (Stringer, HL);
2. if employees cannot take leave during the year because they are still off sick they must be allowed to either defer it until they are better or carry it forward (Pereda, ECJ);
3. the Working Time Regulations 1998 prohibit making a payment in lieu of unused holiday unless on termination of employment but Stringer overruled this and says employees can be paid in lieu;
4. the WTR also prohibit the carry forward of statutory holiday which is why Stringer said it must be paid in lieu; this is doubtful following Perede and subsequent cases – see below;
5. European law says holiday may be carried forward but accrued holiday may expire if it is not taken within a reasonable period of time following the leave year in which it arises (KHS AG v Schulte). In German national law this period is 15 months. In KHS AG v Schulte the ECJ held that expiry after 15 months was reasonable in order to reflect the purpose of Article 7 of the Working Time Directive which is to provide rest from work (not relaxation and leisure) and that to allow unlimited accumulation of accrued holiday did not reflect the purpose of Article 7;
6. in an earlier ECJ case, Schultz-Hoff, expiry after 6 months was not held to be reasonable or compatible with the Directive. This means that currently somewhere between 6 and 15 months may be reasonable as an expiry period but the decision ultimately lies with Member States. International Labour Convention #132 suggests that 18 months is reasonable;
7. in the domestic case of Fraser v St George’s (EAT) it was held that the employee must request carry forward to be entitled to it pursuant to Regulation 15 of the Working Time Regs 1998. This may be incompatible with European law but at the moment it stands as good law in England and Wales. This conflicts with the decision in NHS Leeds v Larner which says carry forward is possible without making a request. Employees would be well-advised to make a request as a precautionary measure.;
8. where an employee has booked a holiday but falls ill before or during the holiday they are permitted to count this as sick leave and defer their holiday (Shah v First West Yorkshire);
9. how much statutory holiday must be paid in lieu or carried forward? In English law under the WTR all 5.6 weeks which includes the usual statutory and Bank Holidays (despite the fact that both payment in lieu and carry forward are not permitted by the WTR anyway! Confused, you might be… The statute says it is not possible but the case law says it is);
10. accrued holiday pay is payable at the employee’s full rate of pay irrespective as to whether they are on an insurance scheme, on reduced pay or SSP. They are entitled to 5.6 weeks’ or 28 days’ pay holiday in a given leave year. If an employee is receiving a % of salary on a PHI scheme the employer is liable to make up the balance to full pay for the holiday period. If no pay is being received the full amount is payable by the employer or the full amount net of SSP, whichever is applicable.

What does this mean? For employers: whereas in the past they may have been happy to leave employees who are long-term sick on the books they might now face an unlimited liability for statutory holiday pay dating back years. This might precipitate steps being taken to dismiss for capability sooner than previously. Employers who operate PHI schemes will be unable to end those schemes without potentially triggering a substantial liability. For employees: as the law stands at present, employees who are off on long-term sick should be sure to put in a request to carry forward accrued holiday before the end of the year in which it falls. The case NHS v Larner (which held that carry forward is possible without making a request) goes before the Court of Appeal here at the end of March 2012. This might give further clarity on this matter under domestic law. We wait to see what the Government consultation on Modern Workplaces brings to this area. And of course there is sure to be more litigation.

In a nutshell: if you have an employee on long-term sick leave best advice is to offer to make a payment in lieu of statutory holiday of 5.6 weeks or an apportioned amount if some leave has been taken. Make any payments before the end of the relevant leave year or very soon into the new leave period. This will prevent the build up of a huge liability. Allow carry forward for those on long-term sick leave and stipulate how long before the carry forward expires. Have a policy. If you decide not to allow carry forward or to continue the “use it or lose is” regime you may fall foul of the law. And be sure to apply your policy equitably across all staff so there can no question of detriment or discrimination. If you need advice around this tricky area or to amend your internal policies to reflect the new law please do not hesitate to contact us.

The Government Equalities Office has announced the creation of a new Equality Advisory & Support Service to support vulnerable and disadvantaged people who are facing discrimination. The service will provide initial telephone advice and support and will encourage early resolution of issues. The service replaces the Equality and Human Rights Commission’s helpline and legal grants programme which the Government is to cease funding which follows the EHRC’s consultation on Buiding a Fairer Britain. The Government considered but decided against a further, separate form of funding for discrimination claims beyond eligibility for Legal Aid.

The Government has launched its consultation on fees to issue claims in the Employment Tribunals. As you will be aware from previous posts I do not believe this will achieve anything other than to deter the most financially strapped of claimants to pursue legitimate claims and for that reason I am violently opposed to it. I also do not believe it will do anything significant to lower the number of claims submitted. The Government would do better to look at the way employers deal with employee grievances and at inappropriate management and workplace behaviours in order to avoid litigation arising in the first place. Anyway, rant aside, I have listed what is proposed.

1. To render a fee according to three bands of claim. Level 1, for claims about unpaid wages and redundancy; level 2 for unfair dismissal claims and level 3 for discrimination claims. It is proposed that there should be a fee to issue and then further fees for hearings. Indications are fee to issue £150-£250 and fees for hearings £250-£1,250. In discrimination cases which quite often require a case management conference and at least one (or more) pre-hearing reviews, the costs could mount very quickly.

2. A similar scale of fees with a 4th level for claims which are valued in excess of £30,000 but with issue fees only (no hearing fees). Indications are between £200 and £1,750 to issue.

3. Proposed fees for the Employment Appeals Tribunal of £400 to issue and £1,200 per hearing.

We’ll let you know what the outcome of the decision is after 6 March 2012 when the consultation closes.

Does time spent onshore by oil and gas workers count towards annual leave under Regulation 13 of the Working Time Regs 1998? Yes, said the Supreme Court in Russell v Transocean. If a shift pattern is so many days or weeks on a rig followed by so many days or weeks onshore the employer is entitled to count the time spent onshore as holiday. These workers do not have the right to take time off when they are offshore: they cannot choose to take holiday during those shifts. It is not necessary that holiday must always be taken from time that would otherwise be work. A rest period is simply any period that is not working time. The employer is entitled to insist that the time spent onshore is annual leave.

This case has a useful application for other employers who want to stipulate when holiday must be taken such as factory shutdowns and other holidays imposed on staff, provided notice is given to staff to reserve holiday for those occasions. This is already widespread practice but some employers do not appreciate that this can be done. The present case will bolster their confidence.

Every employment lawyer knows that the EAT Rules of Procedure are absolutely clear on the information which must be provided to the EAT in order to institute an appeal. We all know that the application of the time limits is draconian and many solicitors quake at the thought of inadvertently falling foul of either the time limit or the documentary requirements. The case of Patel v South Tyneside Council and Ors is refreshing in that it demonstrates a common sense approach by the EAT to new methods of service. P’s representatives emailed a notice of appeal to the EAT on 17 June and received a successful delivery notice. On contacting the EAT on 22 June it was discovered that the email had not appeared in the EAT’s inbox. The notice of appeal was resubmitted on 23 June and at the sift subsequently determined to be out of time. The Council argued that the delivery notification was not evidence of delivery to the EAT because it had been sent by a third party, Daemon. The EAT held that it was immaterial that the delivery notice was sent by Daemon. The message had hit the EAT server and therefore the notice had been received in time. P and his representatives were entitled to assume the notice of appeal had been properly served.

The case is a reminder that it is fatal to leave delivery of a notice of appeal right up the last moment. It is always advisable to enter the appeal at least four or five working days before the time limit so that you can check whether it has arrived and have time to rectify any issues. The same goes with issuing claims in the Employment Tribunals using the online claim form. I know from bitter experience that those too can go missing and it is therefore imperative to print and keep the receipt which is produced online. It is also important to note the time and date of submission which will enable the ET to track it if it goes missing.

The Government has conducted a review and published results which recommend the creation of an Independent Assessment Service (IAS) to provide an in-depth assessment of individuals’ physical and/or mental function as soon as they have been off work for four weeks. The impetus behind the proposed IAS is the cost to business of sick days and the fact that the new fit note regime has not produced the anticipated improvements by returning sick employees to work sooner. The problem with the fit note is that GPs continue to sign employees off sick as completely unfit and fail to make recommendations. In turn employers have no idea what kinds of adjustments they should make and whether some illnesses can be compatible with work under proper management and supervision. The loss to business each year of sick days is extreme: 140 million days annually. Of course many employers are still not doing enough to tackle absenteeism and short-term absences but it appears they are for the most part ill-equipped to deal with employees who are significantly unwell and suffering from disabilities. From my experience the way employers respond to mental health issues and in particular depression has not seen any improvement despite its increased frequency and in spite of greater tolerance and understanding of it in society at large. The review suggests, among other recommendations, that employer support in the form of medical treatments, rehab and rehabilitation should attract tax relief. No date has been announced for delivery of the Government response. We’ll keep you posted.

Can a tribunal award costs if an employer believes a claim is scandalous and vexatious if the claim is struck out at a PHR for jurisdictional reasons? Not necessarily said the Court of Appeal in Dean & Dean v Dionissiou-Moussaoui. In this case the claims were struck out for non-compliance with the statutory grievance procedure (no longer in force) and because the time limit had passed. The employer sought substantial costs from the employee on the basis that the sexual misconduct claims were false and it could demonstrate they were. The tribunal and the EAT held that costs could not be awarded against the claimant because the evidence had not been tested and they could not therefore determine whether the claims were true or false.

It is a long-established principle that unless a determination is made on the facts and the evidence is tested an employer is not entitled to state that claims are false. As far as costs are concerned the general rule remains that each party bears its own costs in the Employment Tribunals. Some would argue that there is a trend towards more costs awards being made in tribunals but it is still rare for costs to be awarded against claimants in all but the most exceptional circumstances.

The EAT decision in Fraser v Southwest London St George’s Mental Health Trust is really helpful in settling a line of unsatisfactory and diverging judicial decisions on the subject of payment of holidays for sick workers. Mr Justice Underhill held that an employee on long-term sick leave must request annual leave in accordance with Reg 15 of the Working Time Regs 1998 to be entitled to pay for it. The facts of this case concern a nurse who injured her knee in an accident at work in 2005. She was eventually dismissed in 2008 and the Trust paid her for accrued but untaken annual leave in the final year of her employment but not for the two previous years. During most of the two previous years she had not been paid at all as her entitlement to sick pay had expired. Having considered other case law in this area Underhill J decided that the decision in Canada Life v Gray was wrongly decided, as was List Design Group v Douglas, and that his conclusion in this case was consistent with the European authority Pereda v Madrid Moviidad SA. An employee on sick leave may choose to take holiday during sick leave or ask for it to be deferred. But it is clear that the employee has to ask for the obligation to pay to arise on the employer. If Ms Fraser had requested to take leave following her recovery St George’s might have had to accede to that request, or if she had not had the chance to take her holiday before her employment terminated, she might have been entitled to a payment in lieu. But that was not what happened in this case and St George’s was not obliged to pay her.

Karen Jackson

Claimants in the Employment Tribunals have a duty to mitigate their loss between the time of their dismissal and their claim being heard in Tribunal. This is a long-established principle and requires the claimant to keep a log of efforts to seek work, notes of interviews held, etc. It is for the claimant to demonstrate that there is a good reason if they have failed to mitigate their loss. But is an employee who considered themselves wronged by an employer obliged to consider the offer of a new job by that employer? Yes is the answer, says the EAT in the case of Debique v Ministry of Defence. Ms Debique worked in the British Army before giving birth to a daughter. She found it hard to combine motherhood whilst serving as a soldier. After a dispute she gave notice and left the Army. She brought a successful claim for unlawful indirect sex discrimination and race discrimination. She was awarded £15,000 for injury to feelings but nothing for loss of earnings on the basis that she had failed to mitigate her loss. She had refused an offer of an alternative posting which would have addressed her childcare difficulties. The EAT held that her refusal to accept the offer was an unreasonable failure to mitigate her loss. The test formulated in Wilding v BT was applied and the EAT refused to disturb the earlier tribunal’s finding. There was also no case for aggravated damages.