Employment Matters Bite Size October 2008

Your monthly guide to all the recent changes in the world of Employment Law

Legislation

New national minimum wage rates
The changes to the national minimum wage announced by the Government this year came into force on 1 October 2008. 

• For workers aged 22 and over, the minimum rate will go up from £5.52 an hour to £5.73 per hour; 
• Workers aged 18-21 will be entitled to £4.77 an hour (previously £4.60 per hour); and
• The new minimum rate for workers aged 16-17 is £3.53 an hour (previously £3.40 per hour). 

Distinction between ordinary and additional maternity leave to be removed
Women whose expected week of childbirth begins on or after 5 October will have the right to the same terms and conditions during the additional maternity leave (AML) (the second 26 weeks) as they were entitled to during ordinary maternity leave (OML) (the first 26 weeks).   This means that employees on maternity leave who currently receive benefits such as company cars, gym membership, health insurance etc during OML should continue to receive them during AML.   Employers who currently discount periods of AML for the purposes of accruing contractual annual leave or for assessing seniority may also face claims of unlawful discrimination.  

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Cases

Calculating compensation

It can be hard to know whether an employer has caused an employee’s stress-related illness, particularly when there other stressful events taking place in the employee’s life.

The EAT has clarified that rather than simply decide whether or not a claimant’s illness was, at least in part, caused by the employer and award compensation for the period during which she was unable to work, an employment tribunal should try and establish the extent to which the illness was caused by the employer, and what proportion of the illness was the result of other factors.

The employee worked in a care home. It was alleged that she had been stealing from patients. She was dismissed following police investigations and disciplinary proceedings carried out by the employer, although she denied the allegations and the police proceedings were eventually dropped. The employee did find new work following her dismissal, but it was at a lower pay, and she later had to leave that job due to illness.

The employment tribunal found that the dismissal was unfair and awarded compensation for the employee’s loss of earnings.   It also found that her illness was at least partly caused by the dismissal and they therefore awarded compensation for her losses during her sickness absence.

The employer appealed and the appeal was allowed by the EAT. It said that, as the employee’s illness started 20 weeks after her dismissal, it must be considered whether it could be said that this illness “was sufficiently caused by the actions of the employer as would justify a finding that she was responsible for the illness and consequently for the loss of earnings”. The case was remitted back to the employment tribunal with instruction that it should consider the percentage by which the employer’s actions were responsible for the illness, as against other factors which probably also contributed to it.

Adey-Jones v O’Dowd

EAT Considers Scope for Justifying Direct Age Discrimination

Many employers have redundancy schemes based on length of service and age and, since the Employment Equality (Age) Regulations 2006, commentators have expressed concern at the vulnerability of these to claims of age discrimination.  Under the regulations different treatment can be justified if it is a proportionate method of achieving a legitimate aim.

The EAT has given guidance on how the defence of justification might be used to support these policies, highlighting the need to ensure that the difference in treatment is proportionate.

The claimant was made redundant at the age of 36, having completed seven years of service which, under the employer’s redundancy policy, resulted in a payment of 55% of her gross annual salary.  By contrast a 50 year old colleague with 10 years’ service was entitled to 175% of his or her gross salary.

The tribunal found that there was discrimination but that this was justified; the employer’s aim of rewarding and encouraging loyalty, and protecting older employees being legitimate. In addition, the popularity of the scheme meant that compulsory redundancies were avoided; the scheme was a proportionate means of achieving a legitimate aim.

The EAT found that, despite the tribunal identifying that the scheme had some legitimate aims, it had not properly considered whether the methods adopted to achieve those aims were proportionate. Whilst generosity and popularity were important in achieving the aims of the scheme, the tribunal did not deal with the need to balance these aims with the discriminatory effect on the claimant.

MacCulloch v Imperial Chemical Industries plc

Employer able to impose garden leave by implied right to refuse work

Companies often rely on “garden leave” clauses to stop departing employees jumping ship straight to a competitor as soon as they hand in their notice.  Under these clauses the employer is not required to provide work during the notice period but the employee may not work anywhere else.

In this case the contract of employment contained no garden leave clause but the employer sought an injunction in the High Court to stop two senior employees from taking up employment with a competitor until their periods of notice following their resignations had ended. The employer had discovered that they had been gathering confidential information for months before their resignations, and had encouraged other employees to leave with them. 

The employees notified the company that they were treating this as a repudiatory breach of their contracts of employment, which they would accept, and that they would not therefore have to serve their notice period (enabling them to take up work with the competitor immediately).  They argued that the employer was in breach of its duty to provide them with work.

The court granted the injunction, since the employees’ right to work under their employment contracts was qualified, in that the employees must be “ready and willing” to do the work.  As these employees had engaged in wrongdoing, by taking confidential information and other employees to a competitor, thereby damaging the claimant’s business, they were clearly in breach of their contract and not “ready and willing” to work for the employer.  It was therefore reasonable for the employer to withhold work from them for the remainder of their notice periods.

This case highlights the difficulties an employer may face if it does not use express garden leave clauses in employment contracts.  It demonstrates how the employee’s right to work and the employer’s right to refuse to provide work interrelate.  Employers should note that the best way to avoid litigation is to have an express term in the contract.

SG&R Valuation Service Company LLC v Boudrais and others