Related posts:No related photos. Comments are closed. Our resident experts at Pinsent Curtis Biddle bring you a comprehensiveupdate on all the latest decisions that could affect your organisation, andadvice on what to do about them.Contributions by Jonathan Coley, Helen Corden, Pam Kaur and Charles Rae,Pinsents Birmingham Marshalls Clay Products Limited v Caulfield and others, EAT Further guidance from the EAT on the legality of rolled up holiday pay * * * * * The EAT considered five appeals on the controversial question ofrolled-up holiday pay and whether an employer could fulfil the requirement topay employees for holidays by including an amount in their wage packets eachweek. The facts of the first appeal, by Marshalls, illustrate the position. Inthis case, there was an agreement that included in the rate paid for every hourworked (including overtime) was an identified sum by way of holiday pay, whichwas paid to employees throughout the year. Key pointsThe EAT decision follows two recent cases concerning the legality ofrolled-up holiday pay, Blackburn v Gridquest (Court of Appeal) and MPB v Munro(Scottish Court of Session). In Gridquest, the Court of Appeal held that where a contract was silent onthe issue, it was not open to an employer to unilaterally allocate part of a week’spay as holiday pay. In Munro, the Scottish Court of Session went further, andheld that even where a contract expressly states that part of a weekly orhourly rate relates to holiday pay, that does not satisfy the Working TimeRegulations 1998. In Marshalls, the EAT identified five categories of contract (listed below)dealing with the issue of holiday pay, and held that employers using categories1 to 3 would not be discharging their obligations to give employees paidholiday pay in accordance with the Working Time Regulations 1998, but wouldhave to make an additional payment for holiday pay. However, categories 4 and 5were legitimate ways of paying staff for their holidays: 1. Contracts which are silent as to holiday pay 2. Contracts which purport to exclude liability for or entitlement toholiday pay 3. Contracts where rates are said to include an amount for holiday pay, butthere is no indication or specification of an amount 4. Contracts providing for a basic wage or rate topped up by a specific sumor percentage in respect of holiday pay 5. Contracts where holiday pay is allocated to and paid during (orimmediately before or after) specific periods of holiday. What you should do The position for employers in England is now clearer, though employers inScotland will still be bound by the Munro decision. Following the Marshallsdecision, employers wanting to roll-up holiday pay legally into an hourly orweekly rate of pay must: – Clearly incorporate rolled-up holiday pay into the individual contract ofemployment, and thus expressly agree it with employees – Clearly identify the allocation of the percentage or amount of holiday payin the contract and preferably in the payslip – Ensure the rolled-up holiday pay amounts to a true addition to thecontractual rate of pay – Keep records of holidays taken – Take reasonably practicable steps to ensure workers take their holidaysbefore the expiry of the relevant holiday year. A v B, EAT Useful guidance on the reasonableness of investigations * * * * B, a social worker, was accused of sexual impropriety with a14-year-old girl in his care. Following an investigation and disciplinaryhearing, he was dismissed for gross misconduct. The tribunal found the decisionto dismiss B was fair, notwithstanding that the investigation had taken two anda half years to complete, potentially significant evidence had not beendisclosed to B during the investigation or at the disciplinary hearing, and theinvestigating officer had failed to take statements from some witnesses whoseevidence may have assisted B. However, the EAT reversed the tribunal’s decisionand held that the tribunal had been wrong to find that the investigationcarried out by B’s employers was reasonable in all the circumstances. Key pointsThe EAT stressed that when conducting investigations employers must considerthe gravity of the charges and their potential effect on the employee. Seriousallegations of criminal behaviour, where disputed, must always be the subjectof a careful and conscientious investigation and the investigator should focuson potential evidence that points towards the innocence of the employee as wellas on proving the charges. The EAT also held that in deciding whether an employer has carried out suchinvestigation as was reasonable in all the circumstances, a tribunal shouldconsider any delays. In certain circumstances, a delay in the conduct of theinvestigation might itself render an otherwise fair dismissal unfair,especially where the consequence of the delay is that the employee is or mightbe prejudiced. Finally, the EAT held that where the investigation is defective it is noanswer for an employer to say that even if the investigation had beenreasonable it would have made no difference to the decision. If the investigation is not reasonable in all the circumstances, thedismissal is unfair and the fact that it may have caused no adverse prejudiceto the employee becomes a factor in deciding compensation. What you should do – Consider carefully the scope of any investigation and what should beinvolved – Identify and interview all relevant witnesses, even if you think they mayhave forgotten relevant evidence – Carry out the investigation in a timely manner – Disclose all relevant evidence to the employee – Take into account evidence that may point towards the innocence of theemployee as well as that which may prove the charges. Virgin Net Limited v Harper, EAT Can an employee with less than one year’s service claim compensation forloss of a chance to claim unfair dismissal? * * * * Harper commenced employment with Virgin on 4 April 2000. Heremployment contract was expressed to be terminable on three months’ noticeeither way. Harper’s employment was terminated on 2 March 2001 with immediateeffect. Harper brought a successful claim in the employment tribunal forwrongful dismissal. The issue was whether the tribunal was correct to awardHarper damages for being denied the right to claim unfair dismissal. Key pointsThe EAT considered the fact that Harper’s claim was founded on Virgin’sdecision to dismiss her without notice. If she had been given the contractualnotice to which she was entitled, she would have had one year’s service andcould have brought an unfair dismissal claim. The EAT considered itself boundby the decision in the House of Lords in Johnson v Unisys that it was notpossible to recover damages for breach of contract arising from the fact of orthe manner of dismissal. The EAT decided, therefore, that Harper could notclaim damages for losing the chance to claim unfair dismissal. The EAT drew a distinction between a situation where employment wasterminated without giving the requisite contractual notice, in which case anemployee could not claim for loss of opportunity to claim unfair dismissal, anda situation where the employer failed to follow a contractual disciplinaryprocedure which, if followed, would have resulted in an employee obtainingsufficient service to claim unfair dismissal. Although the EAT did not statethat such a claim should succeed, it left the door open by expressly refusingto rule such a claim out. What you should do – Ensure that where your disciplinary procedures exceed the minimum to beimposed by statute, they are expressed as non-contractual – Make sure you follow all disciplinary procedures before dismissing anemployee, particularly where the procedures are contractual. Frewin v Consignia Plc, EAT Tribunals considering fairness of capability dismissal should considerthe cause of the illness * * * * Frewin was dismissed by the Post Office on grounds of capability ashe was suffering from a stress-related illness. He was absent from 8 July 1999to the date of his dismissal on 21 August 2000. Frewin claimed his illness hadbeen a direct result of bullying in the workplace. Key pointsThe tribunal found Frewin had been fairly dismissed. Basing its decision onthe earlier EAT authority of London Fire & Civil Defence Authority v Betty,the tribunal concluded that its consideration as to whether the Post Office hadacted fairly in dismissing the employee on the grounds of ill health wasunaffected by the consideration as to who was responsible for Frewin’sinability to work. The EAT, however, limited the decision in Betty purely to confirming that ifthe illness was caused by the employer it did not make the dismissalautomatically unfair. The EAT concluded that in considering the fairness of any dismissal forincapacity, a tribunal must now consider whether that incapacity was caused bythe employer. What you should do – When considering any dismissal for a capability-related reason, understandthe illness suffered, the likely cause of that illness and whether it could bework-related – If there is a possibility of the illness being caused by work, considerthe contributory factors and whether they can be removed – Put in place a bullying and harassment policy – To avoid liability for stress-related illness, make a confidentialcounselling service available to employees. Case of the month by Jonathan ColeySteven Horkulak v Cantor Fitzgerald International – High Court City constructive/wrongful dismissal case about alleged bullying * * * * * This case has received much publicity in the press due to the sizeof the award made (just shy of £1m) and the fact that it threw the practice andmanagement style of this well-known City broking house into the limelight.Horkulak earned, subject to bonuses, approximately £400,000 a year. He had afixed-term contract due to expire in September 2002. He resigned in June 2000and claimed constructive dismissal arising out of the abusive and bullyingbehaviour of his boss, Lee Amaitis. Key pointsHorkulak’s case relied on Amaitis’ conduct being a fundamental breach of theimplied term of trust and confidence. Horkulak succeeded. In reaching hisjudgement in the High Court, Mr Justice Newman set out a helpful analysis ofthe development of the implied term. Building on the ruling of the House of Lords in Johnson v Unisys, the Judgereiterated that the notion of an employment contract giving rise to a”master and servant” relationship was now obsolete, and the move awayfrom this required paying particular attention to the element of co-operationwhich underpinned the contract of employment. The Judge rejected any suggestion that where substantial sums were paid byan employer it acquired a right to treat employees according to a differentstandard of conduct from that which might otherwise be required. The Judge alsogave little time to the argument ‘if you can’t stand the heat, get out of thekitchen’, which depended on the argument that broking houses are an inherentlystressful environment. The Judge concluded that Amaitis was indeed a dictatorial manager whoseexercise of authority was extreme. He was at various times referred to as”intemperate”, “unyielding” and “dictatorial”.The Judge accepted that Amaitis was prone to using abusive language. He heldthat frequent use of foul language did not sanitise its effect and indeed thelanguage was a hallmark of Amaitis’ management style and had the expresspurpose of confirming Amaitis’ authority and removing any rational discussion.The threat to “break Horkulak in two” was wholly inconsistent withany continued relationship of trust and confidence. Cantor tried to defend its position by referring to Horkulak’s poorperformance. While the Judge accepted Cantor was entitled to expect highperformance levels, it also had to deal with any failure to meet theseperformance levels in an appropriate way. In this case, Amaitis did not discussany failures in performance with a view to how the performance could beimproved, but to demonstrate the level of his disapproval and to reassert hisauthority as the “boss”. Threats of dismissal were used tointimidate. What you should do – Ensure all line managers are trained in appropriate management style – Make sure proper procedures are in place for monitoring and supervisingperformance and an effective appraisal system exists – Review bullying and harassment policies to ensure any concerns areidentified. Star ratings * Our rating system is designed to help busy HR professionals prioritisetheir reading. Does this ruling have immediate implications for your practicesand policies? Is it a one-off decision based on unusual facts? Or is it one tokeep an eye on as it goes to appeal? Case round up will help you decide. Eachcase is rated from one to five stars; the more essential it is that you knowabout it, the more stars it will have. Case round upOn 1 Sep 2003 in Personnel Today Previous Article Next Article read more