Monday 29 March 2004

Interim Employment Order

An interesting decision on the effect of TUPE upon the rare beast of an interim order for continuation of employment.

Under s163 of the TULR(C)A 1992, an employment tribunal can make an interim order for continuation of employment if, in a trade-union dismissal case, the IT1 is lodged within seven days of dismissal and the tribunal considers the case is 'likely' to succeed. The effect of the interim order for continuation of employment is that the employee continues to receive pay and benefits until the full hearing, but is not required to work. Even if s/he ultimately fails at the full merits hearing, s/he gets to keep the money. A similar provision exists in whistleblowing dismissal cases.

In Dowling v Berkely Logistics Ltd., the EAT (Burton P.) held that if a TUPE transfer occurs after an interim order for continuation of employment is made, the employment does not transfer to the transferee. The reasoning is, essentially, that the continuation of employment is a statutory fiction and the individual is not, in reality, an employee immediately before the transfer.

Tuesday 23 March 2004

Handbook on Employment Law

You are receiving this Email as a subscriber to Daniel Barnett's Email bulletin list.
I apologise if this Email irritates you: it will not be sent again as a stand-alone Email.

** New edition - March 2004 **
Employment Law Handbook
(Law Society Publishing)

Click here for more details

or purchase from Amazon
(free delivery, normally within 24 hours)

Monday 22 March 2004

Statutory Disciplinary

The final version of the Employment Act (Dispute Resolution) Regulations 2004 have been approved by Parliament. They flesh out the framework statutory disciplinary and grievance procedures in the Employment Act 2002.

I will shortly be producing detailed lecture notes on these, together with a pack of training materials which can be used to train clients. For details, please Email me. I will also be producing a new edition of Managing Dismissals Fairly, to be published in October 2004, containing guidance for solicitors and HR departments on the practical steps to take (and evidence to gather) when dismissing employees.

The new statutory procedures are confirmed as coming into force on 1st October 2004.

LINK to the Regulations: Click here

Rolled up Holiday Pay 2

In my bulletin of 17th March 2004 on rolled-up holiday pay, I published Nick Sidall's offer to make copies of the judgment available on request.

Due to the large number of take-ups, he has asked me to say that the judgment is now available on his Chambers' website, from the link below (direct link).

Wednesday 17 March 2004

Rolled up Holiday pay 3

For all those who thought the saga had ended with Marshalls Clay v Caulfield (see bulletin dated 4th August 2003, reproduced below), think again!

An employment tribunal sitting in Leeds, in the case of Robinson-Steele v RF Retail Services Ltd, has decided it does not want to follow the EAT's decision in Marshalls Clay to the effect that rolled-up holiday pay can be lawful. So it has referred the issue directly to the ECJ.

The two questions referred are:

1. Is article 7 of Council Directive 93/104/EC consistent with provisions of national law which allow pay for annual leave to be included in a worker's hourly remuneration and paid as part of remuneration for working time but not paid in respect of a period of leave actually taken by the worker?

2. Does article 7.2 preclude the national tribunal from giving credit to an employer for such payments when it seeks to give to the applicant an effective remedy according to powers contained in the national regulations?

I understand the employer (who wanted the tribunal to follow Marshalls Clay) is considering an appeal.

Counsel for the employer, Nick Siddall from Kings Chambers, is willing to distribute copies of the decision. He can be contacted on

Implied Terms - Financial Advice to Employees

Judgment was handed down yesterday by the Court of Appeal in Crossley v Faithful & Gould Holdings Ltd.

Mr Crossley was a senior executive who qualified for benefits under a long-term disability scheme. He decided to retire from the company on health grounds, not knowing that he had to remain employed to receive the LTDS benefits. His employer assisted him with the medical retirement process, including drafting letters for him, but failed to advise him that medical retirement would mean he lost the (substantial) benefits under the LTDS scheme and the insurer would be entitled to stop payment (which it did).

The High Court dismissed his claim, finding there was no implied term that the employer should warn him of the effect of resignation upon his LTDS.

The Court of Appeal dismissed the appeal (and, therefore, Mr Crossley's claim). Following the House of Lords decision in Scally v Southern Health & Social Services Board, and the more recent Hagen v ICI Chemicals, the Court held that there is no general obligation on an employer to exercise reasonable care for the employee's economic well-being save in very specific circumstances (as set out in Scally). The Court thought the decisive point was that Mr Crossley had access to his own financial advisor who could have explained the effect of resignation to him, had he asked.

ACAS Guide to Internet and Email Policies

ACAS has published an update guide to Internet and Email policies.

It sets out why policies are desirable, what a policy should cover, management issues arising from a policy and explains the relevant legal considerations.

Tuesday 9 March 2004

Delay by Employment Tribunals

In a series of four conjoined appeals (the lead case being Kwamin v Abbey National plc), the EAT has handed down guidance on what delays are, and are not, acceptable between a case finishing and the tribunal issuing its decision. If there is excessive delay then this, without more, will give rise to grounds for appeal.

Burton P. held that:
  • a reserved judgment should be sent to the parties within 3 1/2 months of the closing speeches (or written submissions, if later). This is analogous to the 3 month period in the High Court, with an extra 1/2 month to reflect the time taken for the chairman to consult the wing members.(para 9)
  • in lengthy cases, scheduled to last more than few days, the administrative arrangements should include a one- or two- day slot for the chairman to write the judgment, after the case has finished. The chairman should not be catapulted straight into another case (para 10)
  • however, the fact that a judgment takes more than 3.5 months to promulgate is not a reason to set the judgment aside - for a re-hearing would merely cause further delays for the parties, with the risk of witnesses memories fading further (para 12)
  • the issue for the appellate court is whether the party who has lost has been deprived of a fair trial by virtue of the delay in judgment (para 13)
  • the losing party must demonstrate one or more errors or omissions in the decision which, whilst not necessarily amounting to perversity in their own right, are sufficient to show the decision is unsafe by virtue of the delay (para 15.1)
  • the appeal court should also consider whether the whole judgment must be set aside, or just parts of the judgment (para. 15.3)
  • a distinction should be drawn between cases where the decision was taken and a first draft produced shortly after the hearing, but there was then long delay in tidying up that draft, and cases where no "all but final" draft of the decision produced within a short time of the hearing (para 15.6)
After setting out the general principles, the EAT analysed the four cases at length. They are useful reading for anybody who wishes to know which side of the line their cases fall on.

Sunday 7 March 2004

Temp Workers get Employment Rights

The Court of Appeal has ruled that temp workers are entitled to employment rights against the 'end-user' company.

Previously, temps engaged through an agency have been unable to claim unfair dismissal against the person they work for. In DACAS v BROOK STREET BUREAU (5th March 2004), the Court of Appeal overturned this long-standing position and stated that once the temp had been working for a year, they obtained the right to claim unfair dismissal against the 'end-user' company.

Daniel Barnett, barrister at 1 Temple Gardens, comments: "This rectifies a long-standing hole in employment rights. Previously, employers could effectively buy protection from unfair dismissal claims by paying the premium of agency fees to an employment agency. The law worked under the fiction that since there was no direct contract between 'employer' and 'employee', there was no contract of employment. If there was no contract of employment, the worker could not claim unfair dismissal."

He adds, "This has the knock on effect that companys are now liable if temps injure anybody, or cause damage to anything, in the course of their employment. One of the main advantages of using agency workers have now gone, and many employers will review their use of expensive agency workers. This is likely to cause a downturn in the employment agency industry."


1. Mrs Dacas had been supplied to Wandsworth Council, through the Brook Street Bureau, as a cleaner. She had worked as a 'temp' for four years before Wandsworth dismissed her. She lost her claims against Wandsworth and Brook Street in the Employment Tribunal, on the grounds she was not an employee of either organisation. The Employment Appeal Tribunal held she was an employee of Brook Street, but the Court of Appeal has overturned that and said she was an employee of Wandsworth.

2. Lord Justice Sedley commented in the judgment, "The conclusion of the Employment Tribunal that Mrs Dacas was employed by nobody is simply not credible. There has to be something wrong with it."

3. Lord Justice Mummery stated "What difference does the presence of the employment agency really make to the status of Mrs Dacas? ... practical reality and common sense [show] that the Applicant works [for Wandsworth] under an implied contract"

4. In order to obtain unfair dismissal rights, in common with all employees, the temp will have to have worked for the end-user company for one year.

5. The Court of Appeal's decision is available at

Brook Street v Dacas

Status of Agency Workers

The Court of Appeal has overturned the EAT's decision in Dacas v Brook Street Bureau (for which, see my bulletin of 26/3/03, below). By a majority, they give a clear steer that the end-user in an 'temp' worker scenario is, for unfair dismissal purposes, the employer.

Mrs Dacas was a cleaner working for Wandsworth Council. She was not employed directly by the Council; rather, she was engaged through the Brook Street Bureau as a 'temp'. She worked for Wandsworth for four years - more than long enough to give her employment rights if she were an employee.

The employment tribunal held that she was not an employee of Wandsworth (because there was no direct contract between them, and thus no contract of employment). Nor was she an employee of Brook Street because, although a contract existed, it lacked day-to-day control over her activities and therefore could not be said to be her 'employer'. Accordingly her claims for unfair dismissal failed against both potential employers.

She appealed against the finding that she was not employed by Brook Street Bureau (but did not appeal the finding against Wandsworth). The Employment Appeal Tribunal upheld her appeal, on the grounds that paying wages, having the right to terminate and having the right to exercise disciplinary functions was sufficient 'control' to say that Brook Street Bureau was her employer. This was a controversial decision at the time (see my comments below in the 26/3/03 bulletin).

The Court of Appeal has overturned the EAT's decision, holding that Brook Street was not the employer within the meaning of the Employment Rights Act 1996.

Giving the leading judgment, Mummery LJ makes it plain that this judgment is intended to set the benchmark for future cases concerning agency workers (paras. 6-7). He stated that the mere fact the contract recorded that Mrs Dacas was not the employee of either Brook Street or Wandsworth could not be determinative, and that (echoing Franks v Reuters) tribunals should always investigate whether an implied contract of employment has arisen between the employee and the end-user (ie Wandsworth). In a crucial passage, which seems to go further that Franks v Reuters by suggesting that the end-user might be the employer as the norm, rather than as an exception, he states:

"...the fact and degree of control over the work done by Mrs Dacas at West Drive over the years is crucial. The Council in fact exercised the relevant control over her work and over her. As for mutuality of obligation, (a) the Council was under an obligation to pay for the work that she did for it and she received payment in respect of such work from Brook Street, and (b) Mrs Dacas, while at West Drive, was under an obligation to do what she was told and to attend punctually at stated times. As for dismissal, it was the Council which was entitled to take and in fact took the initiative in bringing to an end work done by her at West Drive. But for the Council’s action she would have continued to work there as previously. It is true that the obligations and the power to dismiss were not contained in an express contract between Mrs Dacas and the Council. The fact that the obligations were contained in express contracts made between Mrs Dacas and Brook Street and between Brook Street and the Council does not prevent them from being read across the triangular arrangements into an implied contract and taking effect as implied mutual obligations as between Mrs Dacas and the Council." (para 53)

However, the Court of Appeal could not substitute a finding that Wandsworth was the employer for the technical reason that Mrs Dacas had only appealed the finding vis a vis Brook Street Bureau, not vis a vis Wandsworth.

Sedley LJ commented "The conclusion of the Employment Tribunal that Mrs Dacas was employed by nobody is simply not credible. There has to be something wrong with it." (para 71). In other words, he was saying that employment tribunals must find that someone is the employer in these agency situations - and went on to say that it would be the end-user. Importantly, he said that one year's employment (ie enough time to accrue unfair dismissal rights) was sufficient to mean an implied contract of employment had arisen (para. 77) - contrast this with the five years service which the Court of Appeal said could give rise to an implied contract in Franks v Reuters. This leaves the position uncertain for cases where there is no qualifying period of employment (eg whistleblowing).

Munby J., whilst agreeing with the other two judges that Brook Street Bureau was not the employer, disagreed with the majority's decision that Wandsworth would be the employer. He considered the lack of mutuality of obligation between the parties fatal, and thought the pre- Franks law, namely that an agency worker is employed by neither agency nor end-user, should stand.

for relevant emplaw commentary, go to
Employment Agencies / a general note
(professional versions only)

Agency Workers can be 'Employees'
26th March 2003

The Employment Appeal Tribunal's decision in Dacas v Brook Street Bureau (unreported, EAT/492/02, 11th December 2002) has been placed on the EAT website.

Mrs Dacas had been working as a temp cleaner, via the Brook Street Bureau, for Wandsworth Council for 6 years. Her contract was terminated summarily. The tribunal found that she was employed by neither Brook Street nor Wandsworth. Whilst she accepted the conclusion as against Wandsworth, Mrs Dacas appealed against the finding that she was not an employee of Brook Street.

Burton J.’s decision turned heavily on the precise findings by the tribunal. The tribunal had found that there was “considerable control” exercised over Mrs Dacas by Brook Street, in the sense that it paid her wages, was entitled to discipline her / terminate her services. It held, however, that day-to-day control was exercised over her not by Brook Steet but by Wandsworth.

It went on to hold that, because of a clear statement in the contract that Mrs Dacas was not an employee of the agency, the agreement between the parties prevented her being an employee. Whilst it is not entirely clear from the EAT decision, it seems that the tribunal also relied on the lack of day-to-day control by Brook Street as pointing against an employment relationship.

The EAT overturned the tribunal’s decision. It held that because of the words in the tribunal’s decision that the agency exercised “considerable control”, then the Ready Mixed Concrete test (see above) was met. Since there was plainly mutuality of obligation, and since it was impossible to say that Mrs Dacas was in business on her own account, the only conclusion that could be drawn was that she was an employee of Brook Street. Although the contract provided that she was not an employee, it was settled law that a label would only be determinative when the other pointers were inconclusive. Here, according to the EAT, the other pointers clearly showed that Mrs Dacsas was an employee of the agency.

The result of this decision is in stark contrast to all the previous cases on agency workers. Dacas v Brook Street does not purport to overrule them and – indeed – does not expressly consider the recent authorities such as Hanbury & Brook Street v EDS and Hewlett Packard v O’Murphy. Whilst the EAT may have been straining to achieve a fair result, its legal reasoning is open to further analysis. In particular:

1. the EAT does not appear to have considered whether the need for control is actually a need for control over day to day activities (which did not exist in Dacas);

2. whilst the EAT asserts that the Ready Mixed Concrete test is met, it does not appear to have considered stage 3 of that test, i.e. whether there are provisions of the contract inconsistent with it being a contract of service.

Despite my comments, the ramifications of this decision are significant. Previously, tribunals have been prohibited by authority from finding that an agency worker is an employee (of anybody). Now the path is open for them to find that the worker is the employee of the temp agency, irrespective of any denials to that effect in the contract between worker and agency. This may have considerable impact on potential liabilities for agencies - they may find themselves liable for any actual (or even constructive) dismissals by their client companies, over which they have no control. In the absence of appropriate indemnities in their contracts with their client companies, temp agencies could find themselves unknowingly liable for very significant sums of money.

Saturday 6 March 2004

New ACAS Website

ACAS have re-vamped their website.

It is now much more user friendly (and that dreadful blue background has gone). They have a new 'A-Z of Work' section, which has some excellent advice leaflets on all aspects of the employment relationship.

Tuesday 2 March 2004

New EAT Decision

Dennis Wise v Leicester City Football Club
(24th February 2004, HHJ Peter Clark)

Dennis Wise was dismissed from Leicester City FC following a fight with a teammate. The original disciplinary hearing was unfair. At his first-tier appeal, which was a full rehearing chaired by a Court of Appeal judge, he was reinstated. However, the second-tier appeal (the appeal having now been brought by the football club), which was a review, overturned the first-tier appeal and confirmed the original dismissal decision.

The employment tribunal held the dismissal was fair, because the first-tier appeal (being a re-hearing) cured the procedural defects of the original decision. However, the EAT disagreed and substituted a finding of unfair dismissal. They held that the first-tier appeal, since it did not uphold the original decision, was not capable of curing its procedural defects. The second-tier appeal, being a review hearing only, was likewise not capable of curing the procedural defects of the original hearing (even though it did uphold the original decision). Accordingly the dismissal was unfair.

Holiday pay when sick

Inland Revenue v Ainsworth
(4th February 2004, Burton P.)

Readers will be aware of the (some would say, bizarre) case of Kigass Aero Components v Brown [2002] IRLR 312, in which the EAT held that workers on long-term sick leave are entitled to four weeks' paid holiday under the Working Time Regulations 1998, even if they have exhausted all their entitlement to contractual pay.

In Inland Revenue v Ainsworth, a different division of the EAT was invited to overturn Kigass (and similar cases). Burton P. declined to overturn them, on the basis that it was inappropriate for the EAT to overturn one of its own recent decisions. However, he made it clear he thought there were complex arguments on both sides and gave permission to proceed to the Court of Appeal. I understand the Court of Appeal will be dealing with this point relatively quickly.