New EAT Decisions

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Bamsey v Albion Engineering (HHJ Ansell, 27/3/03) --------------------------------------------------

Authority for the proposition that, when calculating holiday pay under the Working Time Regulations 1998, an employer should exclude the value of over time which is not contractually guaranteed, even if the employee habitually works the overtime.

This decision is an example of statutory construction at its most polished level, and is worth reading just to appreciate the difficulty of some of the issues faced when construing conflicting UK and EC law. Leave has been given to appeal to the Court of Appeal.

This case deals with the definition of redundancy. The Glamorgan Holiday Hotel, due to a fall-off in business, sought to impose a unilateral variation to all workers' contracts, reducing the number of working weeks in the year from 52 to 42. Most employees accepted the new terms; seven did not and= were dismissed. They claimed redundancy payments.

The EAT upheld the tribunal's decision that they were not redundant within the meaning of s139 of the Employment Rights Act 1996. There was no diminution in the need for employees to carry out work of a particular kind; the = same number of employees were still needed, even if they were needed for fewer weeks in the year. Accordingly they were not redundant and could not claim a redundancy payment.

Equal Pay Questionnaire

The new Equal Pay Questionnaire is available on the internet as a Word file.

It is available from the Women & Equality Unit's website at
http://www.wome= nandequalityunit.gov.uk/pay/update_question.htm

Agency Workers

Another decision on agency workers (see bulletin 26/3/03) - this time from the Court of Appeal.

It is authority for the proposition that an implied employment relationship may arise between 'temp worker' and the 'client' of the temp agency. It supports the 'status' rather than 'contract' approach to determining who is an employee.

In Franks v Reuters, Mr Franks initially went to work as a 'temp' for Reuters via an employment agency. In the event, he ended up working for five years for Reuters before his engagement was terminated. He was paid (as is normal) by the agency, but subject to the day to day control of Reuters.

The tribunal found there was no contract of employment between Mr Franks and Reuters, thus no mutuality of obligation - and therefore he could not be an employee. The EAT agreed.

The Court of Appeal (Mummery LJ) held that the employment tribunal failed to consider whether there was an implied contract of employment which had come about through conduct. Interestingly, whilst accepting that mere length of service did not confer employment status, Mummery LJ accepted a submission that dealings over a period of years (as contrasted with weeks or months, as with most temp workers) "are capable of generating an implied contrac tual relationship. (para 29)".

The case was therefore remitted back to the tribunal for consideration as to whether an implied contract of employment existed.

'Rolled Up' Holiday Pay

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The Scottish Court of Session (equivalent to the Court of Appeal) has handed down its decision in MPB Structures Ltd v Munro.

It is authority for the proposition that it is unlawful, under the Working Time Regulations, to provide 'rolled-up' holiday pay instead of allowing workers to have four weeks' pay when the holiday is taken.

Some employers, particularly in high-turnover industries, provide a 'rolled-up' hourly rate which includes an element for holiday pay. They then do not pay monies whilst the employee takes his holiday, on the basis that they have already been paid it.

MPB Structures paid a rate of =C2=A310ph, which represented (approximately)
C2A39.25 salary and C2A30.75 specifically for holiday pay. The Court of Session ruled that this was contrary to the Regulations, and that the company was still obliged to make a payment of holiday pay during the four weeks' paid holiday under the Working Time Regulations. The payment of C2A30.75ph could not be set-off against this obligation.

This answers the question which the Court of Appeal largely left open in Gridquest v Blackburn (see bulletin 24/7/02). The question of whether a company, in these circumstances, can recover the 'overpaid' salary of C2A30.7 5ph remains open (but, in my view, is doubtful - a court would probably say it was paid under a mutual mistake of law, and thus the company has no remedy).

Bankers' Bonuses

The Employment Appeal Tribunal has handed down its decision in Barton v Investec, upholding Louise Barton's appeal from her unsuccessful employment tribunal case where she claimed the secretive culture of awarding bonuses in city institutions was discriminatory on grounds of sex and/or a breach of the Equal Pay Act 1970..

It is authority for the proposition that city institutions operating secret bonus systems are at significant risk of losing equal pay or discrimination claims. The EAT stated:

"30. ...This Court would certainly wish to make it clear that no Tribunal should be seen to condone a City bonus culture involving secrecy and/or lack of transparency because of the potentially large amounts involved, as a reason for avoiding equal pay obligations."

The decision sets out guidelines for inferring discrimination, pursuant to the new s63A of the Sex Discrimination Act 1975 which was inserted into the Act in 2001 (see bulletin dated 30th July 2001). The decision states, at = para. 25,:

"25. We therefore consider it necessary to set out fresh guidance in the light of the statutory changes:

(1) Pursuant to section 63A of the Sex Discrimination Act 1975, it is for the Applicant who complains of sex discrimination to prove on the balance of probabilities facts from which the Tribunal could conclude, in the absence of an adequate explanation, that the Respondents have committed an act of discrimination against the Applicant which is unlawful by virtue of Part 2 or which by virtue of section 41 or 42 SDA is to be treated as having beencommitted against the Applicant. These are referred to below as E2809Cs uch factsE2809D

(2) If the Applicant does not prove such facts he or she will fail.

(3) It is important to bear in mind in deciding whether the Applicant has p= roved such facts that it is unusual to find direct evidence of sex discrimination. Few employers would be prepared to admit such discrimination, even to themselves. In some cases the discrimination will not be an intention but merely based on the assumption that E2809Che or she would not have fitted inE2809D.

(4) In deciding whether the Applicant has proved such facts, it is important to remember that the outcome at this stage of the analysis by the Tribunal will therefore usually depend on what inferences it is proper to draw from the primary facts found by the Tribunal.

(5) It is important to note the word is E2809CcouldE2809D. At this stage the Tribunal does not have to reach a definitive determination that such facts would lead it to the conclusion that there was an act of unlawful discrimination. At this stage a Tribunal is looking at the primary facts p roved by the Applicant to see what inferences of secondary fact could be drawn from them.

(6) These inferences can include, in appropriate cases, any inferences that it is just and equitable to draw in accordance with section 74(2)(b) of the Disability Discrimination Act [note from DB: presumably this should read Sex Discrimination Act] from an evasive or equivocal reply to a questionnaire or any other questions that fall within section 74(2) of the Sex Discrimination Act see Hinks -v- Riva Systems EAT/501/96.

(7) Likewise, the Tribunal must decide whether any provision of any relevant code of practice is relevant and if so, take it into account in determining such facts pursuant to section 56A(10) SDA. This means that inferences may also be drawn from any failure to comply with any relevant code of practice.

(8) Where the applicant has proved facts from which inferences could be drawn that the Respondents have treated the Applicant less favourably on the grounds of sex, then the burden of proof moves to the respondent.

(9) It is then for the respondent to prove that he did not commit, or as the case may be, is not to be treated as having committed that act.

(10) To discharge that burden it is necessary for the respondent to prove, on the balance of probabilities, that the treatment was in no sense whatsoever on the grounds of sex, since E2809Cno discrimination whatsoeverE2809D is compatible with the Burden of Proof Directive.

(11) That requires a Tribunal to assess not merely whether the respondent has proved an explanation for the facts from which such inferences can be drawn, but further that it is adequate to discharge the burden of proof on the balance of probabilities that sex was not any part of the reasons for the treatment in question.

(12) Since the facts necessary to prove an explanation would normally be in the possession of the respondent, a Tribunal would normally expect cogent evidence to discharge that burden of proof. In particular the Tribunal will need to examine carefully explanations for failure to deal with the quest ionnaire procedure and/or code of practice.

The end result of the appeal was that the tribunal's decision was quashed a= nd the case was remitted for rehearing in front of a fresh tribunal.

Legislation Commencement Dates

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The government has completed its consultation on harmonising commencement dates for employment legislation (see bulletins dated 16/10/02, 6/8/02 and 1= 6/5/02).

In order to simplify matters for business, the DTI will set 6th April and 1st October as the two dates each year when domestic employment regulations come into effect (with the exception of the annual increase in compensation limits, which will remain as 1st February).

EC Directives will be implemented on a 'case-by-case' basis, having regard to the commencement dates for domestic regulations. From January 2004, the DTI will publish an annual statement of forthcoming employment regulation.

This announcement implements one of the recommendations of the Better Regulations Taskforce, which reported last year.