Archive for the 'Contracts of Employment' Category

Agency workers gain employment rights

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Usefully Employed
on November 25, 2008
in Contracts of Employment
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Agency workers in the UK currently have few rights, as they are not employees under employment legislation. The chief remedy from which this bars them is that of unfair dismissal - there have been some well known cases involving workers having no rights on losing a job they’ve performed for some years in a manner more or less identical to an employee. The most well known of these was perhaps Mrs Dacas; the poor woman worked for four years cleaning for Wandsworth Council, through Brook Street Bureau agency, and got absolutely nothing when she was sent packing for querying her holiday pay and an isolated incident of rudeness. No investigation, no dismissal process, no pay-off, just a withdrawal of work. It was the judgment in that case that set the cat amongst the pigeons.

Employers’ groups see the short-termist hire-and-fire nature of agency work as vital to many businesses’ flexibility and operation, whereas other groups are concerned over reports of widespread exploitation. Several attempts have been made to imply employment relationships into the traditional tripartite agency/employer/worker relationship, but they have failed. The Court of Appeal case of James leads the way, and has been applied robustly since.

Legislation is now moving to fill the gap, but only after a huge amount of negotiation at a domestic and European level. The government reached an agreement in May with the TUC and CBI that agency workers would gain equivalent rights to employees, but only after 12 weeks’ service. The problem was that rights for agency workers was an approaching storm in Europe as well, and the government managed to broker a deal where it said yes to the Agency Workers Directive, subject to the 12 week qualification, and (separately) the retention of the right of UK workers to opt out from the 48 hour working week. This latter exception for the UK - most of Europe having 48 hours as an unalterable maximum - is of great political sensitivity. The notion of a maximum working week is anathema to British employers, and I would say anecdotally many of its employees too. It just seems a bit, well, French. 

The agency worker directive presently exists only as European Law - the full copy is available here, and must be implemented by UK legislation. There is currently no word as to when this will happen.

Sick pay and benefits shake-up

Published
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Usefully Employed
on October 26, 2008
in Absence and Contracts of Employment
. 1 Comment

From tomorrow - Monday 27th October - agency workers and those on fixed term contracts of less than three months will gain entitlement to statutory sick pay, something with which they’d previously had to live without.

Also, income support and incapacity benefit are merged and renamed Employment and Support Allowance. More details on those at the DWP here (including yet another extension of the term ‘customers’), and the full regulations concerning the SSP extension here.

On-call time - Minimum Wage & Working Time Regulations

Published
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Usefully Employed
on October 5, 2008
in Contracts of Employment, National Minimum Wage and Working Time Regulations
. 1 Comment

This blog is getting a little minimum wage-centric at the moment, but there’s a recent EAT case that re-emphasises what must, by now, be well settled law. Mrs Hughes worked in a care home, which provided her with a flat on-site. In return for a £150 per month rent subsidy, she was required to be on call for any emergencies that occurred, apart from when she was on annual leave. Furthermore, the provision and occupation of the flat were terms of the employment contract.

This type of arrangement is common, and furthermore is very useful. Many care homes are too small to employ sufficient waking night staff to deal with all situations that might arise. Mrs Hughes was called out around twice each month. Relations must have soured however, as she raised a grievance. Her employer’s response was to pay her for the time she was working during the call outs. However, whether due to this grievance or a further deterioration in the relations, they served notice to quit from the flat. This was constructive dismissal, so closely were the flat occupation and employment relationship tied.

She also brought actions claiming that she should be entitled to National Minimum Wage for the on call periods (9pm to 8am), and breach of her Working Time Regulations entitlements to rest breaks every six hours, and daily rest breaks. She won on most points: it has been established since the ECJ cases of SIMAP and Jaeger (all about junior doctors) that if you’re required to be on the premises then it’s working time, even if you’re asleep. The NMW is only payable when you’re awake. For a similar decision with a hotel caretaker required to stay in the hotel on some nights, see this case.

The present case of Hughes v Jones & Anor [2008] UKEAT can be found here, and the law is certainly correctly interpreted, but it’s a shame that employing live-in on call staff is effectively rendered impossible by the WTR.

Director / shareholder status claims stayed

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on September 19, 2008
in Contracts of Employment and Status
. 0 Comments

All Employment Tribunal claims depending on the status of majority shareholders / directors are being stayed until the Court of Appeal gives its judgment in Secretary of State for BERR v Neufeld. My prediction is that the court will uphold the notion that these people can be treated as employees where the contractual relationship is explicit, consistent with the parties’ situation, and not a sham. But we’ll wait and see!

A link to the Practice Direction is here (pdf).

Imposing annual leave during a notice period

Published
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Usefully Employed
on September 14, 2008
in Contracts of Employment, Garden Leave and Working Time Regulations
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Employers frequently do not wish an employee to stay at work during his notice period. Although everyone would accept that there is an obligation to pay notice even if the employee is sat at home, it can irk employers that they have to pay for the notice period, and then pay accrued holiday on top. Contracts of employment thus frequently contain a term that the employer can direct that accrued annual leave is to be taken during notice periods. 

This type of provision is perfectly lawful: the only statutory restriction on when an employer can require an employee to take his holiday is found at reg 15 of the Working Time Regulations 1998, which provides thatthe  notice to take holiday must be at least twice as long as the period of leave in question. These provisions can be excluded by agreement however. This is exactly what happened in Industrial & Commercial Maintenance Ltd v Briffa [2008] UKEAT, and employers are well advised to have this provision in contracts and ensure it is enforced.

Apprenticeships

Published
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Usefully Employed
on September 9, 2008
in Contracts of Employment, Disciplinary and Status
. 1 Comment

Apprentices aged under 19, or who are in the first year of their apprenticeships, do not qualify for the minimum wage. There has a been a de facto minimum of £80 per week for the last couple of years, simply as a matter of contract between employers and the Learning & Skills Council. Still, this isn’t much! A joint announcement by BERR and the Department for Children Schools and Families at the TUC Conference has announced that this will be increased to £95 per week. This is designed, says Ed Balls, to boost the earnings of workers such as carers and hairdressers. Apprentices in the construction industry already earn an average of around £175 per week - my opinion is that higher rates in construction are driven by labouring work being available at comparatively high pay, meaning that pay for apprentices is needed to make them attractive as set against a proper wage. The Low Pay Commission are studying whether the minimum wage exemption should be maintained.

Apprenticeships are very important to the government’s plans. They are seen to benefit school leavers by providing a career structure and a route to qualification, and of huge benefit to industry for much the same reasons, since recruitment and training is supported by government at relatively little cost to the employer. The government plans to raise the school leaving age to 18, but will include vocational training programmes such as apprenticeships. Balls further states that this will necessitate the creation of a further 150,000 apprenticeships over the next five years, which will come on top of the already impressive£1bn in funding available for these programmes.

It is difficult to argue with this policy. I always had a sense of unease over the goverment’s push in the late nineties to hugely increase the amount of students going on from school to do a degree, which had seemingly little focus on the resulting future career benefits, if indeed there were any for some. This new focus on apprenticeships, by comparison, can guide school leavers into their first job. Leaving school at 16 gives a school leaver sudden freedom of choice at a young age, and the stark difference between school and work means some of them inevitably don’t handle the change - to say that some unemployment, crime,and antisocial behaviour are possible consequences is not, I think, unreasonable. 

Download the press release here: Denham & Balls TUC Speech News Release

However, employers beware. I once dealt with an employer who had been delighted at the prospect of employing five workers for the price of one. But when they weren’t actually very productive, and required more supervision than this very small company had envisaged, the employer was shocked to be referred to the case of Flett v Matheson [2006] EWCA Civ 53. This case overturned previous authority, and held that a modern style tripartite apprenticeship was to be treated the same in law as a traditional common law apprenticeship, such as have existed for hundreds of years. The difference is important - if I wrongfully terminate an employee’s contract, I must pay him the balance of notice that I should have given him, subject to his duty to mitigate his loss by finding another job. If I wrongfully dismiss my apprentice, heads of damages bold and shocking to employment lawyers come to the fore. A contract of apprenticeship will not normally enable the employer to terminate it before its completion (save for gross misconduct, which of course is a contractual repudiation). In the Denning case of Dunk v George Waller & Son Ltd [1970] 2 All ER 630 (no link I’m afraid) it was held that damages can include diminution of future prospects, as well as loss of earnings and training for the remainder of the contract. This first head can be huge: see the operation of the principle in all its glory in this case, as an apprentice sacked three years into a four year apprenticeship was awarded £20,000 for wrongful dismissal.

Dismissal & re-engagement is still dismissal shocker

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on August 19, 2008
in Contracts of Employment and Unfair Dismissal
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…pretty obvious really. An employer will often wish to unilaterally vary a contract, and it may have good or bad reasons for doing so. A key moment when this might happen to a small business is with pay intervals. Many small construction / engineering businesses still have weekly paydays. Obviously this is expensive and increasingly rare, and movement to monthly pay intervals can save a significant amount of money. Some employees bitterly oppose this move however, and I’ve worked with several businesses trying to bring this in. The legal point arises because employees can point to their contracts, which will often state (as it is required to do by s1 ERtsA 1996) that pay is weekly. Moving to monthly pay therefore represents a unilateral variation of a contract, which of course is impossible under contract law.

The remedy is to consult with staff, and look at different methods of softening the blow. In the face of impacable hostility simply serve notice of termination of the old contract with an offer of immediate re-engagement on the same terms save for the pay interval.

This is a huge simplification but if it’s done right and the reasons on the business are pressing enough then the exercise works well - there’s no breach of the contract, there’s no unilateral variation. The employee is offered a choice - sign up to the new contract or don’t, and go home. The employer takes his chance withn unfair dismissal claim. On the facts above the employer would have a good shot at a fair dismissal, with the principal reason for s98 being Some Other Substantial Reason. This type of termination has reared its head in reports, usually surrounding introduction of restrictive covenants to existing staff, or organisational restructures. Obviously the process is fraught with worry and peril, the usual allegation against the employer being that it’s used to mask redundancy or an employee is being “managed out”.

In the recent case of Darby & Anor v. The Law Society [2008] UKEAT the employer, who should have known better, botched up this exercise by muddling its correspondence with words like ‘variation’. That’s fine at a negotiating stage - no-one wants to go through the process if unnecessary - but the cleanness of the procedure was lost. The case is a bit fact sensitive, but this sort of argument should never arise in the first place.

  • Record contractual variations in writing, and assume they don’t exist until this happens;
  • If you dismiss someone, be sure you’ve done it and communicate the reason and the circumstances. If you haven’t dismissed someone, but it might be taken that you have, affirm the employment relationship in writing.

Automatic unfair dismissal wasn’t raised in this appeal, but the statutory procedures would apply equally as they do to other dismissals.

Garden Leave without contractual provision

Published
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on June 25, 2008
in Constructive Dismissal, Contracts of Employment and Garden Leave
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Can an employer enforce garden leave absent a specific power in the contract of employment? Lawyers are always cautious on advising on enforcement of garden leave, as if in excluding the employee from work the employer puts itself in breach of any express or implied terms of the contract then the employee can resign without penalty. Garden leave is crucial however to an employer’s response to a key member of staff leaving, it can set up its new arrangements, contacts and personnel without having the immediate pressure of competition from the departing employee.

In the recently reported High Court case of SG & R Valuation Service Co v Boudrais & Ors [2008] EWHC 1340 (QB) the contract of employment had no such provision, therefore the court had to determine whether enforced garden leave is compatible with their existing contracts. It is settled law that there is no implied obligation on an employer to provide work for the employee: the oft-quoted principle being from Asquith J in Collier v Sunday Referee Publishing Co [1940] KB 647:

Provided I pay my cook her wages regularly she cannot complain if I choose to take any or all of my meals out.

This creates quite an image of a bachelor Asquith in war-torn Britain, being dressed by his valet in the morning, writing the odd judgment, before deciding whether it’s dinner at home or at his club. I hope it was like the Drones.

Collier is only the starting point however. The fact is that for many high value employees is their skills and expertise, as well as the interests of their own career, require them to remain in work. This will especially so if their future prospects are damaged by time away from the workplace. In this case it was held that “any dissociation from the market for a substantial period would result [the employees'] skills becoming stale”, and furthermore that a substantial part of their remuneration was performance-related bonus that they would be unable to achieve if kept from work. This means that a right to work must be placed in the contract of employment - given the nature of the parties this must have been the bargain they struck.

Mr Justice Cranston goes on to consider if this right to work is qualified in any way. He holds that it is, and usefully sets down the principle:

Employees who have a right to work have that right subject to the qualification that they have not, as a result of some prior breach of contract or other duty, demonstrated in a serious way that they are not ready or willing to work, or, to put it another way, that they have not rendered it impossible or reasonably impracticable for the employer to provide work. The breach of contract or other duty must constitute wrongdoing, by reason of which they will profit or potentially profit. In such circumstances, there is no obligation on the employer to provide work, although the contract of employment is ongoing. This is not an implied term in the employment contract but is a qualification to the legal construct, the right to work.

On the particular facts - emails between the departing employees which made their destructive intentions clear - the company did have a right to enforce garden leave. This case is a very useful reference point for employers, but also provides important safeguards for the “innocent” employee.

This case illustrates what a particular and nuanced exercise it is to construe a contract of employment in comparison with, say, a simple commercial contract. Also, finally, I was pleased to see the following at paragraph 17: 

Reference was made by the claimant to the ACAS Code of Practice on Disciplinary and Grievance Procedures. That suggests, sensibly enough, that where there is a difficulty with an employee and an allegation of gross misconduct a brief period of suspension on full pay should be undertaken. As I have said, that may well indicate good practice, but it says nothing about the contractual position of these defendants. Not only is there no evidence it was incorporated in their contracts, by usage or otherwise, but it lacks contractually binding language.

ACAS guidance is simply that - guidance as to good employment relations. Although failure to follow that guidance can be indicative of the reasonableness of a party’s action, or have statutory consequences, I’m pleased that the court here so thoroughly rejects it as valid extraneous evidence as to the construction of a contract of employment.