Employment Law Briefing March 2019

Middlesbrough FC has won the right to pay staff below the minimum wage by providing other benefits to them. An EAT has found that Middlesbrough FC did not breach minimum wage legislation after deducting the costs of season tickets from staff wages.

According to HMRC, by making these deductions, the club was paying its staff less than the National Minimum Wage (“NMW”) and was in breach of the National Minimum Wage Act 1998 and therefore had issued a notice of underpayment. HMRC argued that NMW is a protective legislation to protect employees and no worker can agree to receive less than the relevant national minimum wage rate.

The issues related to whether the deductions are made for the employer’s own use or benefit. Where they are deemed to be for the employer’s own use or benefit, for example staff uniforms, then for the most part the deductions will be deemed to reduce the employees pay and, if this potentially reduces the pay below the national minimum wage, then this would place the employer in breach. When determining whether a deduction has been made for the employer’s own use and benefit, the two questions to be asked are: (1) who has asked for the deductions and why, and in terms of the why, (2) what the intent behind/the purpose of the deductions was? The answers to these questions will provide the best indication as to whether the deduction is for the employer’s own use or benefit.

It was argued on behalf of the club that the reduction had been made on the behest of the employees and for their benefit.  The staff had themselves requested the money for their season cards to be spread out over multiple weeks.

The EAT found that the deductions made were permitted under legislation. The employees had elected to dedicate part of their salary towards a benefit and the ET was reluctant to interfere notwithstanding that the remaining income would take them below the national minimum wage. 

The loss for HMRC comes after a number of actions against employers such as Iceland, Wagamama and John Lewis.

Disciplinary Proceedings: Is an employer in breach of the implied term of trust and confidence by progressing their own internal disciplinary proceedings without waiting for the completion of the police investigation?

In Gregg – v North West Anglia NHS Foundation Trust, the Court of Appeal held that in almost all circumstances, an employer is not required to postpone a disciplinary hearing pending the outcome of the police investigation into the employee.  It was held to be entirely reasonable for the Trust to decide that they did not want to wait for the conclusion of the police investigation before they commenced the internal disciplinary process and their decision to do so was not calculated to destroy or seriously damage its relationship with Dr Gregg.

Dr Gregg was suspended after 2 patients in his care died. Dr Gregg had sought an injunction to restrain the Trust from proceeding with its disciplinary processes pending the completion of the police investigation/ decision of Crown Prosecution Service whether to press charges in relation to the deaths and for full pay to continue whilst on suspension.

The High Court granted the injunction on the grounds that whilst the criminal proceedings were continuing, by continuing with the disciplinary proceedings would be in breach of the duty to maintain trust and confidence. The Court of Appeal overturned the injunction. 

The Court of Appeal provides important guidance on permissibility of concurrent criminal and disciplinary proceedings, grounds for termination and entitlement to pay during interim suspension. It held that there could be no deduction of pay for the duration of the interim suspension.

Court of Appeal finds for local authority over teacher suspension

In Agoreyo v London Borough of Lambeth, the Court of Appeal has held that an employer can suspend an employee without breaching the implied term of trust and confidence when it has reasonable and proper cause for doing so.

Ms Agoreyo was employed to teach 5-6-year old children at a primary school but in her first few weeks, three incidents took place involving the use of force to remove two children with behavioural issues from the classroom. She was suspended pending an investigation into allegations against her that she had used unreasonable force. The suspension letter stated that “The suspension is a neutral action and is not a disciplinary sanction. The purpose of the suspension is to allow the investigation to be conducted fairly.” She resigned the same day.

As Ms Agoreyo had less than 2 years’ service, she brought a claim in the civil courts for breach of contract arguing that she had been entitled to resign as a response to its repudiatory breach of contract. She claimed it was a “kneejerk” suspension.

The County Court found that the reasonable and proper cause to suspend Ms Agoreyo was on grounds of the school’s overriding duty to protect children but the High Court held that this finding could not stand given that the stated purpose of the suspension in the suspension letter was not to protect children but to ensure a fair investigation.

The Court of Appeal agreed with the County Court. Singh LJ in the Court of Appeal said the case depended on whether Lambeth’s response to the allegations of use of force had been reasonable and proper, and if it was “it could not be said that the employer had breached the implied term of mutual trust and confidence”. He further stated that suspensions depended on whether there was a reasonable and proper cause, which was “a highly fact-specific question. It is not a question of law and resolving whether it was ‘neutral’ would be unlikely to help in resolving any of the fundamental questions in the case”. Therefore, the correct and legal test was whether the school/ head teacher had reasonable and proper cause to suspend.

Were “Bad Leaver” provisions forcing an employee to give up their shareholding an unlawful deduction of wages or a penalty?

The EAT held in Nosworthy v Instinctif that “Bad Leaver” provisions requiring forfeiture of shares and loan notes was not unconscionable or an unenforceable penalty clause nor an unlawful deduction from wages.

Ms Nosworthy had started working in 2011. The business was sold in 2013 and as part of the sale to the buyer, she was given a small shareholding of 2% as a condition of its sale to Instinctif. Part of the consideration for the sale of her shares was deferred earn-out shares and loan notes in the buyer. These items were subject to good and bad leaver provisions so as a bad leaver she would not be entitled to any share or loan notes that became payable following termination of employment and would also be required to transfer (at cost) any shares they had already received and forfeit the loan notes.  A bad leaver included someone who voluntarily resigned.

The ET held that the bad leaver provisions were neither, as contended, unconscionable, nor a penalty. Nor was the forced share transfer an unlawful deduction from wages.

The EAT upheld the ET’s decision that the "bad leaver" provisions should not be set aside as unconscionable and did not amount should not be set aside as unconscionable. The bad leaver provisions in the agreement were drafted clearly and the employee had agreed to them. This was not a case of serious disadvantage or lack of ignorance. Neither had the company's remuneration committee, which had a discretion to reclassify her as a good leaver, failed to exercise that discretion in good faith. The bad leaver provisions were clear as to the consequences of voluntary resignation, and there were no exceptional circumstances to call into question the tribunal's decision that the company had acted in good faith.

It was also found and held that the “bad leaver” provisions were not unlawful deduction from wages as the shares were provided to Ms Nosworthy as a vendor of shares not in her capacity as a worker.

Unfair Dismissal: Can a final written warning be valid in the absence of a full investigation into an incident?

In Beattie v Condoratt War Memorial and Social Club & Ors the EAT said yes.

Mrs Beattie was employed as a bar steward. Mrs Beattie had received a final written warning, in respect of an incident of misconduct (a loss of 26 bottles of spirits which she could not provide an explanation for), which would remain on her record for 12 months. Within that period, a second incident occurred (when she refused to sell tickets for a function in order to avoid any allegations against her if any of the money went missing) which led to her dismissal.

The ET held that the club had failed to follow a fair procedure when dismissing Mrs Beattie, and the procedural flaws were such as to render the dismissal unfair; but that she would still have been dismissed and therefore reduced her compensatory award to nil.

Mrs Beattie appealed and challenged the final written warning on the basis that her employer had not investigated it separately.

The EAT held that the ET's conclusion on the validity of the earlier final written warning was one that it was entitled to reach. The ET had taken the correct approach since the general rule is that earlier decisions should not be reopened, and the ET had considered whether there was a case for issuing the final written warning. As it was fair to rely on this warning, the 100% reduction was appropriate.

This case is a reminder for employers to ensure that allegations are investigated thoroughly in particular where dismissal is a possibility and a disciplinary hearing should always be held.

Maternity Leave: communication over possible redundancy sent to employee’s inaccessible work email address. Was this unfavourable treatment of an employee on maternity leave?

South West Yorkshire Partnership NHS Foundation v Jackson and Ors: Ms Pease worked in the Trust’s Health and Wellbeing Service. She was on maternity leave when the Trust carried out a redundancy exercise. She attended an initial meeting. She was put “at risk” of redundancy the next day. Two days later an important email was sent by the Trust to Mrs Pease and others, attaching a redeployment document and guidance notes. The email stressed that the document had to be filled in and returned to HR as soon as possible so HR could start matching employees to available roles. Mrs Pease did not receive the email because it was sent to her work email address which she wasn’t accessing because she was on maternity leave.

Ms Pease found out shortly afterwards that she had missed an important email, managed to get a copy of the form and returned it straight away. She was not disadvantaged by the short delay.

Mrs Pease’s employment was eventually terminated by reason of redundancy. She subsequently brought a claim for unfair dismissal and a claim for maternity discrimination on the grounds that the Trust had sent her an important email to an email account she was not accessing and that this amounted to unfavourable treatment because the reason she didn’t get the email was because she was on maternity leave and she missed being considered for redeployment opportunities for a period of 9 days.

The ET agreed that she had been disadvantaged and awarded her £5000 as compensation. The Trust appealed.

The EAT held that, if the miscommunication came from an administrative error, an employee whose redundancy redeployment form was sent to an inaccessible work email address was not unfavourably treated because she was on maternity leave.

No Disability Discrimination: Lack of causal connection where employee refused to move workstations in mistaken belief this would exacerbate her medical condition.

Ms E Wood v iForce Limited: Ms Wood suffers from osteoarthritis which is a disability under the Equality Act. She worked for iForce at one of its warehouses packing items at a fixed workbench. Iforce introduced new working practices which would have meant Ms Wood would move between workbenches.  Ms Wood believed this would make her condition worse, and she refused to comply, despite her employer’s assurances to the contrary. IForce issued a final warning as it considered her refusal to be unreasonable. Ms Wood complained to the ET that this amounted to unlawful discrimination as the warning was unfavourable treatment because of something arising out of her disability.

The ET upheld her complaint, despite her mistaken belief; IForce appealed, contending that the ET erred in law in deciding that her erroneous belief could amount to a "something" that arose in consequence of Ms Wood having osteoarthritis.

The EAT held that there was no causal connection between her mistaken belief and her disability. There needs to be a connection. Did the 'something' (the warning) arise from the disability? No, it arose from her mistaken belief that moving benches would worsen her condition and the mistaken belief was not caused by her disability.

 

CASES ON REST BREAKS

Rest Breaks: Do employees need to request a rest break before making a claim they have been refused a rest break? PI damages available for failure to provide rest breaks.

Under the Working Time Regulations 1998 (WTR), workers are entitled to one rest break of 20 minutes in each working day of 6 hours or more.

In Grange v Abellio London Limited, Mr Grange had an 8.5 hour working day and paid for 8 hours with the intention that he takes a half hour unpaid lunchbreak. The nature of his work (employed as a “Relief Roadside Controller” which involved monitoring traffic conditions and the arrival and departure of buses so that he could regulate the service appropriately) meant he often could not take that break. In 2012, he was given express instructions to work the full 8 hours without a break and could leave half an hour earlier. In 2014, he lodged a grievance that he had been forced to work without a break which had contributed to the decline in his health.  He brought employment tribunal proceedings complaining that he had been denied his entitlement to a 20-minute uninterrupted rest break, as provided by the Working Time Regulations 1998 (WTR).

The ET followed the approach laid down by the EAT in Miles v Linkage Community Trust Limited which had held that there had to be an actual refusal of a request to exercise the right to a rest break in order to give rise to a legal liability under the WTR.

On appeal, the EAT held that this approach was not correct. The WTR had been introduced to comply with the EU Working Time Directive and had to be interpreted in a way that was consistent with the Directive’s purpose – which was to protect workers. This means that the entitlement had to be “actively respected” by the employer so the employer has a duty to give a worker an appropriate opportunity to take rest breaks and by putting in place arrangements which prohibited this was “effectively refusing” to give the worker a rest to which the worker was entitled.

It is therefore important for an employer to ensure that the right amount of rest and annual leave is taken.  

Compensatory rest does not have to be taken in one uninterrupted period

In Network Rail Infrastructure Ltd v Crawford it has been held that shorter breaks could be aggregated to amount to the required time.

Mr Crawford, who was a railway signalman for Network Rail, provided relief cover at various signal boxes, working eight-hour shifts. The requirements of his job meant that he could not take a continuous rest break of 20 minutes at any time during a shift.

As stated above, under the Working Time Regulations 1998 (WTR), workers are entitled to one rest break of 20 minutes in each working day of 6 hours or more. Mr Crawford was a worker who fell under one of the exceptions to this rule but was protected by regulation 24 of the WTR Regulations which provides that workers whose right to a rest break is excluded shall (a) be allowed to take “an equivalent period of compensatory rest”, or (b) be given “such protection as may be appropriate” in cases where this is not possible. 

Network Rail allowed rest breaks to be taken “between periods of operational demand when there are opportunities for ‘naturally occurring’ breaks”. It provided that the 20-minute break could be an aggregate of shorter breaks taken over the course of a shift. Mr Crawford complained that this breached the Working Time Regulations.

The EAT held that the practice of providing the 20 minute break as an aggregate of shorter breaks was unlawful.

The Court of Appeal has disagreed and ruled that there is no reason why a rest break should be uninterrupted. LJ Underhill said that the description of the compensatory rest required under the regulations as an equivalent period of compensatory rest “cannot be intended to import the identical obligation. Rather, the intention must be that the rest afforded to the worker should have the same value in terms of contributing to his or her well-being,”

This decision must be a relief to employers and gives them a greater flexibility.

 

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