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AT considers whether prison officers had reasonable belief of danger arising from bad weather

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The Employment Appeal Tribunal considered the situation in which an employee is entitled to refuse to travel to work in bad weather. It found workers could refuse where travelling would cause serious and imminent danger.

This case concerned a group of prison officers stationed at HMP Dartmoor. The prison had in place an adverse weather policy; this provided for staff to gather at a designated pick-up point to await transport to prison premises. The policy provided that if staff waited for more than 3 hours after the beginning of the shift, they were entitled to return home on full pay.

On 18 January 2013, the Claimants were due to begin work at 8am. It had snowed heavily, so the Claimants and around 40 other staff members gathered at the pick-up point to await transport to the prison. The prison sent 4×4 vehicles to the pick-up point; most staff took the transport, but 13 members of staff, including the Claimants, refused to get in. Mr May, one of the Claimants, claimed that he had spoken to the Devon Highways Agency who had informed him that the road was closed and driving on it was prohibited. Another Claimant, Miss Bolton, claimed she had been told by a prison governor that the road was “not good at all”. After waiting until 11am, the staff returned home.

The prison refused to pay the Claimants for that day’s work. The prison submitted that one of its governors had spoken to the local police and had been informed that the prison was permitted to use the closed roads with caution. The prison’s evidence was that at least some of the Claimants were informed of the police sanction.

The Claimants claimed unlawful deductions to wages and unlawful detriments connected to their right to refuse to work where they had a reasonable belief of serious and imminent danger.

The EAT held that the fact that the road was closed due to snow was properly regarded as “circumstances of danger”. As to the Claimants’ belief, the EAT decided that the proper approach was not to consider the Claimants collectively, but rather to look at the individual beliefs of each of them. The fact that other staff had completed the journey without incident did not necessarily mean that the Claimants lacked the requisite belief. On the other hand, the EAT did not accept the Claimants’ argument that they were in any event entitled to pay for staying at the pick-up point for the 3 hours stipulated in the adverse weather policy. It was possible for staff unreasonably to refuse prison transport and not work; it would plainly be inappropriate for a full day’s pay to be payable only because they stayed at the pick-up point for three hours.

This case has been remitted to the employment tribunal, so there is not as yet a final decision on whether the Claimants did hold the requisite belief. In the meantime, this case serves to show the merit in employers creating a clear adverse weather policy and highlights the importance of keeping staff fully updated when weather problems interfere with usual working patterns.

Edwards and others v The Secretary of State for Justice UKEAT/0123/14

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EAT holds that mentally ill employee dismissed for gross misconduct must be culpable

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The EAT has remitted a case to the tribunal to consider whether a mentally ill employee could be considered culpable for his actions which led to his summary dismissal for gross misconduct. It emphasised that the conduct must have been wilful and that the mitigating circumstances of the illness must be taken into account.

Mr Burdett was employed by Aviva Employment Services Ltd as a senior approval specialist from 2006. In 2007 Mr Burdett was diagnosed with paranoid schizophrenia for which antidepressants and anti-psychotic medication were required. Mr Burdett stopped taking his medication on medical advice in 2008; as a consequence, he was hospitalised after suffering from hallucinations and having sexually assaulted members of the public. He received a police caution for the assaults, but did not notify Aviva of it. In 2010, Mr Burdett again discontinued his medication, though without having taken medical advice. In 2011, Mr Burdett sexually assaulted two Aviva employees and a member of the public. He was arrested and detained under the Mental Health Act 1983. Aviva suspended Mr Burdett and commenced a disciplinary investigation, during which Mr Burdett admitted to the assaults and explained that he had made a “serious error of judgment” with regards to his medication. A disciplinary hearing held in January 2012 was adjourned pending medical evidence.

In April 2012, Mr Burdett pleaded guilty to the assaults and was made subject to a three-year mental health treatment requirement. The disciplinary hearing was continued in May 2012, following which Aviva summarily dismissed Mr Burdett for gross misconduct. Having been unsuccessful with an internal appeal, Mr Burdett brought claims for unfair dismissal and discrimination arising from disability.

The EAT agreed that the reason for dismissal was the sexual assaults and Mr Burdett’s decision to discontinue his medication. However, the EAT found that Aviva did not have reasonable grounds for a belief of gross misconduct because it had not properly considered whether Mr Burdett was culpable for his actions. In determining culpability, account needed to be taken of the effect of Mr Burdett’s mental illness. Though Mr Burdett admitted to making a “serious error of judgment”, it must be shown that this was done wilfully, which necessitates consideration as to the reasons why Mr Burdett ceased his course of medication.

The EAT also considered that Aviva did not properly consider Mr Burdett’s suggestion that he work from home in order to minimise future risk of harm to other employees.

This surprising decision emphasises that, where an employer is considering dismissing an employee for gross misconduct, it should first satisfy itself that the employee is culpable for those actions. This will be particularly relevant where the employee suffers with mental illness, as the mitigating features of that illness will require full consideration. Employers also ought to consider all the options open to it when determining the appropriate sanction and be open to viable alternatives to dismissal.

Burdett v Aviva Employment Services Ltd UKEAT/0439/13

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Employer’s duty to offer a suitable alternative vacancy to a woman on maternity leave arises when it becomes aware of potential redundancy

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The EAT has held that an employer’s duty under the Maternity Leave Regulations to offer a woman on maternity leave a suitable alternative vacancy arises when the employer becomes aware that her role is redundant or potentially redundant. The failure to make such an offer renders the woman’s dismissal automatically unfair.

Mrs Wainwright had worked for Sefton Borough Council as Head of Overview and Scrutiny for over 12 years. The council had been planning redundancies since 2010 and executed that plan in 2012. As part of the restructure, in June 2012, the council proposed to combine Mrs Wainwright’s role with Head of Member Services, held by Mr Pierce, to create a single role of Democratic Services Manager. Mrs Wainwright went on maternity leave in July 2012. On 26 July 2012, Mrs Wainwright’s and Mr Pierce’s positions were formally placed at risk of redundancy. In December 2012 the council invited Mrs Wainwright and Mr Pierce to interview for the new role, following which it was offered to Mr Pierce. Mrs Wainwright was put on the redeployment register; Mrs Wainwright was given three months’ notice in January 2013 of her dismissal for redundancy.

Mrs Wainwright brought claims for breach of the Maternity Leave Regulations and direct discrimination. In response, the council argued that its duty to offer an alternative role only arose once the reorganisation was completed, i.e. when Mr Pierce was chosen for the combined role in December 2012. It also submitted that the new position created was not a vacancy in the usual sense, in that it was only open to two candidates, so Mrs Wainwright was only entitled to advantageous treatment once she was in the redeployment pool.

The EAT found that it would undermine the purpose of the legislation to say that the employer is only obliged to offer an alternative vacancy once a restructure is complete; the obligation to offer alternative employment arose on 26 July 2012 when Mrs Wainwright’s role was formally put at risk of redundancy. Further, it was wrong to say that the new role is not a vacancy simply because it was only available to a limited pool. In any event, it was open to the council to offer a suitable vacancy other than that of Democratic Services Manager. The EAT held that the council had been wrong to ask Mrs Wainwright to take part in an interview process at all; the right under the regulations is to be offered a vacancy regardless of whether the woman is the best person for the job.

Sefton Borough Council v Wainwright UKEAT/0168/14

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Employee resigning in breach of contract held to notice period without pay

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The Court of Appeal has upheld an injunction against an employee trying to walk away from a long notice period and non-compete restrictions. You may remember our coverage of this case when it was heard by the High Court in the summer.

Mr Rodgers had been a broker at Sunrise Brokers LLP and his contract of employment provided: (i) that the contract could not be terminated for the first 3 years and thereafter could be terminated on 12 months’ notice; (ii) that Mr Rodgers could be placed on garden leave and continue to receive salary and benefits; and (iii) that there were extensive post-employment non-compete restrictions on Mr Rodgers.

In March 2014, Mr Rodgers told Sunrise that he wanted to leave. He attended a short meeting with Sunrise in April 2014 and did not return after this. HR recorded this as an unauthorised absence and Sunrise stopped paying Mr Rodgers.

Sunrise said that they had not accepted Mr Rodgers’ breach of contract, namely his refusal to work, as bringing the contract to an immediate end and that he was still an employee and therefore not allowed to work for anyone else. Mr Rodgers’ solicitors responded saying that Mr Rodgers’ early resignation had been accepted by Sunrise as evidenced by their cessation of payment, or that in the alternative, the non-payment of wages was itself a breach of contract by Sunrise which Mr Rodgers accepted as ending the contract.

The Court of Appeal upheld the High Court’s decision and held that Sunrise had not accepted Mr Rodgers’ breach of contract. In the circumstances Sunrise’s failure to pay a salary did not amount to breach of contract because Mr Rodgers’ right to payment depended on his willingness to work. The Court of Appeal rejected Mr Rodgers’ submission that the effect of the injunction was to compel him to work. It found this argument unfounded for the following reasons: (i) Mr Rodgers had a start date of January 2015 with his new employer, which suggested that Mr Rodgers could cope until then without pay; (ii) Mr Rodgers had not submitted evidence to show that the lack of payment would cause him financial hardship; (iii) Mr Rodgers did not submit evidence to the effect that his skills would atrophy whilst idle; (iv) the length of the restraint period was caused by Mr Rodgers’ decision not to return to work.

This case demonstrates that the principle of “no work, no pay” does not amount to compelling an employee to work and can apply, but only where the employer wants the employee to work and the employee refuses. Mr Rodgers’ arguments on compulsion may have been more convincing had he provided better evidence.

Sunrise Brokers LLP v Rodgers [2014] EWCA Civ 1373

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Beauty consultant who provided services through a chain of companies was not able to bring a discrimination claim

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The Court of Appeal has held that a beauty consultant who provided her services via a chain of companies was not ‘in employment’ under the Equality Act 2010 and therefore could not claim discrimination.

Mrs Halawi sold Shiseido cosmetics at a counter in the World Duty Free shop at Heathrow airport. She had set up her own limited company, Nohad Ltd; through this and a management company, CSA, Mrs Halawi provided Shiseido her services in selling its products in WDF’s space at the airport. Mrs Halawi was able to provide a substitute and had done so before; she was also able to refuse work offered. Mrs Halawi was paid only for time she spent working; she had no sick pay or holiday pay entitlement.

WDF revoked Mrs Halawi’s airside pass with the effect that she could no longer enter the airport. Mrs Halawi brought claims against CSA and WDF for discrimination. To bring her discrimination claim, she had to show that she was ‘in employment’ according to the Equality Act 2010.

The Court of Appeal held that Mrs Halawi was not employed by either CSA or WDF and she was unable to bring a discrimination claim. The Court found that Mrs Halawi’s right to send a substitute and the lack of any control over her work were incompatible with an employment relationship.

This case highlights that, where services are being provided through a structure of companies as part of a genuine business arrangement, protection from discrimination is unlikely.

Halawi v WDFG UK Ltd (t/a World Duty Free) [2014] EWCA Civ 1387

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EAT finds that holiday pay must include non-guaranteed overtime

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The Employment Appeal Tribunal has ruled that holiday pay must include pay for non-guaranteed overtime, i.e. that which the employee must work but the employer is not obliged to offer.

The appeal before the EAT was based on a combination of questions relating to holiday pay raised in first instance cases. The cases concerned situations where employment contracts set out ‘normal working hours’ whilst also requiring the employee to work additional hours when asked. One case also concerned payments referred to as a ‘radius allowance’ (payable to employees whose daily commute was over 8 miles) and ‘travelling time payments’ (payable to employees according to the time they spent travelling).

The task before the EAT was to determine whether overtime pay and/or other contractual payments should be included in the first four weeks of statutory holiday pay pursuant to the Working Time Regulations 1998. It was also asked to consider whether, if those payments do form part of holiday pay, employees could make claims against their employers for historical underpayments of holiday pay.

The EAT held that the correct interpretation of the legislation is that any ‘normal’ pay is included, being any payment which is intrinsically linked to the employee’s performance of his contractual duties. As overtime in these cases was always accepted and worked in settled patterns, this should have formed part of ‘normal pay’ for the purposes of calculating holiday pay. To hold otherwise would disincentivise taking holiday. The overtime was also intrinsically linked to contractual duties given that the employers required staff to work the additional hours. It was held that radius and travelling time payments were payable for time spent travelling between sites and was connected to the performance of contractual duties. Therefore, these payments were also part of ‘normal pay’ and must be accounted for in holiday pay.

The EAT concluded that, despite employees’ entitlement to overtime pay when on annual leave, historical underpayments could only be claimed where a period of no longer than three months separated each deduction. Despite being given leave to do so, the Claimants have since elected not to appeal this point. This is a surprising decision given that there was much scope to argue this finding.

In the wake of this decision, employers would be prudent to review the working arrangements of their staff to assess whether changes need to be made to company remuneration policies.

Bear Scotland Ltd v Fulton and another UKEATS/0047/13, Hertel (UK) Ltd v Woods and others UKEAT/0160/14 and Amec Group Ltd v Law and others UKEAT/0161/14

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EBA reports on use of role-based allowances in EU banking sector

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The European Banking Authority has found that it is incorrect to categorise role-based allowances as part of employees’ fixed remuneration and to do so circumvents the limit on variable remuneration introduced by the CRD IV Directive.

At present, performance-based bonuses in certain regulated roles are limited to 100% of the employee’s fixed salary, though this can be increased to 200% with approval from shareholders.

On 15 October 2014, the EBA published an opinion and report on the compatibility of role-based allowances with the CRD IV Directive and its cap on variable remuneration. The EBA analysed data provided by national authorities to identify the types and applications of role-based allowances. It found that such provisions are commonly found where performance-based bonuses would otherwise exceed the limit.

The EBA identified that in order for an allowance to qualify as fixed remuneration and therefore legitimately fall outside of the limit on bonuses, it should be: (i) permanent, in that it is tied to the particular role rather than to performance; (ii) for a predetermined amount; (iii) non-discretionary; and (iv) non-revocable. It found that as many of the role-based allowances it analysed were discretionary and could be revoked at any time, they could not be regarded as fixed remuneration. The result of this is that many companies awarding role-based allowances will have to revise their remuneration to comply with CRD IV.

The EBA has given competent authorities a deadline of 31 December 2014 to take appropriate supervisory action to ensure that: (i) remuneration policies are amended to categorise correctly such payments as variable remuneration, and; (ii) such payments do not lead to contraventions of the bonus cap. The EBA will also redraft its own policies, with the final revised version due in 2015.

In view of this report, it is key for firms in the banking sector to review the terms of their remuneration policies to ensure that all payments are correctly classified.

EBA Opinion (EBA/Op/2014/10)

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Compensation ordered for failure to provide employee liability information where there was a reasonable belief employees would bring claims

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The First Tier Tribunal has held that an outgoing employer breached its obligations under the TUPE regulations by failing to notify the incoming employer of potential claims for unlawful deductions of wages. The fact that the failure to pay happened after the deadline for notification was not a barrier, as the outgoing employer had reasonable grounds for believing wages would go unpaid before it passed information to the incoming employer.

Eville & Jones (UK) Ltd and Grants Veterinary Services Ltd provided veterinary services to abattoirs under contract with the Food Standards Agency. Before those contracts were due to expire, the FSA invited Eville and Grants to tender for new work. Eville successfully secured a new contract but Grants did not and Grants’ employees transferred under TUPE to Eville. Grants’ financial situation worsened due to its failure to secure a contract and it entered administration.

Under the TUPE regulations, Grants was obliged to provide Eville with employee liability information, which includes notification of potential tribunal claims from its employees, by 19 March 2012.

On 27 March 2012, Grants wrote to its employees initially advising that the March salaries would be paid late. Eville learnt of the delay and asked the FSA to assist in ensuring that Grants paid the salaries owed. Grants nonetheless failed to pay its employees the March wage and Eville paid the arrears from its own funds.

Eville brought proceedings against Grants for breach of TUPE regulations on the basis that Grants failed to notify it of potential tribunal claims arising from its failure to pay salaries.

The tribunal found that by the time of the deadline for providing employee liability information, Grants was aware of its financial difficulties and were making insolvency arrangements which would make it unlikely that its employees would be paid. Once Grants had failed to pay the salaries, it had reasonable grounds to believe that claims may be brought against Eville for unlawful deductions of wages. Therefore, Grants had not complied with its duty to provide employee liability information.

The tribunal awarded Eville £500 per employee. With 131 employees transferred to Eville, this amounted to £65,500. Though this was significantly more than the loss Eville had suffered, the tribunal found it would not be just and equitable to reduce the award as Grant’s failure to notify had been significant and not inadvertent.

Eville & Jones (UK) Ltd v Grants Veterinary Services Limited (In Liquidation) ET/1803898/12

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