MILS case studies
Holiday pay and voluntary overtime

RMIF Members who have been keeping an eye on Employment Law developments over the last few years will know about the changes relating to Holiday Pay. A number of cases have, over the last few years, clarified that payments such as commissions and overtime, where they form part of the employee’s normal remuneration, should be included in calculating holiday pay. Previously employers could often argue that basic pay only was satisfactory.

A recent case at the Court of Appeal; Flowers v East of England Ambulance Trust has confirmed that voluntary overtime should be taken into account when calculating holiday pay, provided it is sufficiently regular and settled for payments to be considered to amount to “normal” remuneration. In the case ambulance crew worked voluntary overtime. It was entirely voluntary i.e. they were free to choose whether or not to do it. Lord Justice Bean, delivering the lead Judgment, agreed that on the facts the overtime was sufficiently regular to be normal remuneration. It follows that, where there is very sporadic or occasional voluntary overtime, such payments could be distinguished and not included in holiday pay.

Conclusion


This ruling is not unexpected given the direction in which the caselaw was moving. Note that the developments on holiday pay only strictly apply to the 20 days of EU leave, not the additional 8 UK days, albeit given the complexity in distinguishing between the two types of leave, many employers pay all holiday at the same higher rate.

Parental leave and sex discrimination

Is it discriminatory to pay men more than the statutory minimum parental leave pay when women were paid more than the minimum for maternity leave?

This was the question for the Court of Appeal in the case of Ali v Capita Customer Management Ltd and Chief Constable of Leicestershire v Hextall. The court considered the case on 2 broad grounds, Discrimination and Equal pay and held that in either case it was not discriminatory.

The Court decided as follows:

Equal Pay


A contractual difference in shared parental leave pay between men and enhanced maternity pay for women is properly characterized as an equal pay claim. The clause in a contract providing women with a higher level of pay is more favourable to women than men.

Whilst there is a general prohibition against discriminatory actions the Equality Act 2010 does take a common sense approach and acknowledges that in some circumstances there are legitimate exceptions. Paragraph 2 of Schedule 7 to the act says:

"A sex equality clause does not have effect in relation to terms of work affording special treatment to women in connection with pregnancy or childbirth."

For the same reasons as direct discrimination (below), that is wide enough to include enhanced maternity pay. As a result, there is no claim for equal pay as it is specifically excluded by Equality Act 2010.

Direct Discrimination


The court also considered the exception at Paragraph 2 of Schedule 7 to the Act when considering whether men and women are in comparable positions and therefore where men are treated less favourably, is this discrimination in breach of the Act?

The court held that this exception is wide enough to include enhanced maternity pay. The minimum of 14 weeks' leave required by the Pregnant Workers Directive is not enough to change the position after 14 weeks and:

"The predominant purpose of such leave is not childcare but other matters exclusive to the birth mother resulting from pregnancy and childbirth and not shared by the husband or partner."

Perhaps logically the court held that men on parental leave and women on maternity leave are therefore not in comparable positions for the purposes of Equality Act 2010.

Indirect discrimination


There is a specific exclusion for indirect discrimination claims where there would be equal pay claims except for a specific exception. The exception for equal pay in paragraph 7 of schedule 2 therefore means that indirect discrimination claims cannot be brought either.

Conclusion


Remember, as an RMI member you have access to the RMI legal advice line, as well as a number of industry experts for your assistance. Should you require further information in respect of the article above, contact the legal advice line at any stage for advice and assistance as appropriate.


Witness anonymity in employment disputes

“An employee has disclosed misconduct about another employee and wishes to remain anonymous. Can they remain anonymous and how should I deal with this?”

An employer receiving such disclosures faces a difficult balancing act between the need to protect informants who might genuinely be in fear of reprisals and the need to give accused employees a fair hearing.



Anonymity


Anonymity in disciplinary proceedings is potentially problematic because it can hinder accused employees’ ability to effectively challenge the evidence against them. As matter of good practice, an employer should investigate why a witness wants anonymity and explore what can be done to persuade him/her to provide information openly.

Ideally, evidence in a disciplinary case is given openly. Where this is not possible, employers should have regard to the principles set out in Linfood Cash and Carry Ltd v Thomson [1989] IRLR 235:-

  • Informant’s statements should be reduced to writing (although they might need to be edited later to preserve anonymity) and made available to the employee with the alleged misconduct
  • In taking statements, it is important to note the date, time and place of each incident, the informant’s opportunity to observe clearly and accurately, circumstantial evidence, the reason for the informant’s presence or any small memorable details; and whether the informant had any reason to fabricate evidence
  • Further investigation should then take place, corroboration being clearly desirable
  • Tactful enquiries into the character and background of the informant would be advisable
  • A decision must then be taken whether to hold a disciplinary hearing, particularly when the employer is satisfied that the informant’s fear is genuine


An employer will generally be able to place greater reliance on statements from several anonymous informants, rather than just one. Corroboration is hugely important when a disclosure is entirely anonymous i.e. the informant’s identity is unknown even to the employer. As part of whistleblowing arrangements, many employers offer employees the option of reporting wrongdoing using an anonymous telephone hotline. Similarly, the internet provides a wide variety of means to provide information anonymously. The problem for employers who receive information in this way is that the motive and character of someone whose identity is unknown is a matter of speculation. If an employer has no other means of testing the truth of the allegations – such as factual corroborating evidence, or a witness statement from an employee – dismissal based on the anonymous tip-off alone runs a substantial risk of being found unfair.

Customers, suppliers and members of the public may come forward with relevant information about employee misconduct. The Court of Appeal in Leach v Office of Communications [2012] ICR 1269 held that the employer must assess for itself, as far as practicable, the reliability of what it has been told, by checking among other things, the integrity of the informant.

Comment

There is no general right to anonymity for employee informants. A failure to provide a witness with anonymity will only amount to a breach of contract if doing so is calculated or likely to damage the relationship of trust and confidence between employer and employee. If an employer provides an informant with an assurance that their identity will not be disclosed to the accused during disciplinary proceedings, this does not bind courts or tribunals exercising their power of disclosure. Thus, an employer cannot guarantee the informant anonymity in the event of subsequent legal proceedings.

Employment contracts for new employees

“I had an employee who started with me but then left after 3 weeks. I never found the time to issue him with a contract of employment. He is now saying he will take me to an Employment Tribunal, is there a risk?”

An employer must give all employees a “Written Statement of Employment Particulars” if their employment lasts a month or more. This is a right under the Employment Rights Act 1996, contained in Section 1 of that Act and is sometimes called a “Section 1 Statement”. This document isn’t technically an employment contract, but includes all the main terms and conditions of employment. The law says that an employer must provide a Section 1 Statement within two months of the start of employment.

There are rights to bring claims at an Employment Tribunal if an employer is in breach. These can include clarification of the terms and an employee can also sometimes gain compensation (2-4 weeks’ pay). This claim cannot be brought in its own right and has to “piggy back” on another successful claim.

In the above scenario, as the employee only worked for 3 weeks, the obligation wasn’t triggered because the employment has to last for a month or more.

Interestingly, in a recent case, Govdata Limited v Denton the Employment Appeal Tribunal (EAT) has also given a decision that employers will welcome. The EAT clarified that, where an employer provides a written Statement of Terms and Conditions late, but before a case begins in the Employment Tribunal, then the employee cannot claim the additional compensation. The case, however, should not be used as a reason for employers not to issue Statements of Particulars as soon as possible, as it is generally good practice and helpful a clarification of the terms, should there be any dispute between the employer and employee.

A final point to note. Next year, the right to a Section 1 Particulars of Employment is to be extended. From April 2020 onwards, the right to a written Statement of Particulars of Employment will extend to all ‘workers’ (this is a broader category than just employees).

Solicitor

Motor Industry Legal Services

Motor Industry Legal Services (MILS Solicitors) provides fully comprehensive legal advice and representation to UK motor retailers for one annual fee. It is the only law firm in the UK which specialises in motor law and motor trade law. MILS currently advises over 1,000 individual businesses within the sector as well as the Retail Motor Industry Federation (RMI) and its members.