Holiday Pay – Limit on Backdated Claims

Following the widely publicised case of Bear Scotland and others which was decided by the EAT last month, Vince Cable established a Task Force to assess the potential impact of the decision.  The Bear Scotland case received significant attention following the ruling that overtime should be included in holiday pay.  Many businesses feared substantial backdated claims for holiday pay.

Draft regulations were placed before Parliament on 18 December.  These regulations set a maximum back pay liability for any claim for underpaid holiday of two years.  It is important to note that the draft regulations will only apply from 1 July 2015.

The two year limitation on backdated claims will apply equally to all claims regarding unlawful deductions from wages, not just those concerning holiday pay.  The draft regulations will also prevent individuals from pursing claims through the civil courts in a bid to go back further than two years.

This is positive news for employers.  However, there remains a six month window before the regulations come into force in which employees who bring claims might still seek to go back further.  The Bear Scotland decision provided that for the purposes of backdated claims, any gaps between holidays of three months or more breaks the chain and thus would serve as a backstop.  This point may be challenged on appeal, however, for now employers will hope that this aspect of the case can be used to limit any claims lodged in the interim period.

Jack Boyle
Senior Solicitor – Employment Law

Employment Tribunal Fees Survive – for now

There have been a number of challenges to employment tribunal fees since their introduction in July 2013. A second challenge in the divisional courts was heard in the High Court in England this week. The claim that the fee regime is unfair was once again dismissed, meaning that the fee regime will remain in place.  However there were strong indications in the judgment that the judge expected the decision to be appealed and the fee regime to be challenged again in a higher court.

The claims

The challenge again came from UNISON. They made their claim on two grounds:

  1. Fees are unlawful because they infringe the EU principle of effectiveness. This is because the cost of going to the employment tribunal is said to be such that it is virtually impossible (or at least exceptionally difficult) for a significant number of potential applicants to afford to bring a claim.
  2. Secondly UNISON claimed that the fee scheme indirectly discriminates against women, ethnic minorities and the disabled. As you may be aware, discrimination cases cost more to bring to an employment tribunal. Stats show that women are far more likely to raise a discrimination claim than men, and therefore the fee regime indirectly discriminates against women. UNISON claimed that the same applied to all people likely to bring a claim for discrimination.

The reasons of dismissal of the appeal

UNISON relied heavily on statistics showing the dramatic drop in tribunal hearings. The stats provided from the Tribunals Statistics Quarterly showed a 79% drop for the same period in the previous year. The judge however was not persuaded by the claimant’s reliance on these statistics. He stated that there could be a number of other reasons for the drop, for example changing the qualification period for an employee to be eligible for unfair dismissal from one year to two years or further encouragement via ACAS to settle. He was further not swayed that it was clear in practice that the fee regime made it impossible or exceptionally difficult to bring a claim to the tribunal. He stated that if an employee really wanted to bring a claim then he had 3 months to arrange his funding for it.

With regard to the discriminatory claims, the judge held that the fact that discrimination cases took up more of an employment tribunal’s time was fair reason for the claimant to pay more to be heard. He further stated that the regime was not intended to break up potential claimants into subgroups, but rather apply to all claimants as one.

The future for fees?

Employers should be warned that this ruling definitely does not draw a line under matters. The judge made a number of references in his judgment suggesting that he expects to see more challenges to employment tribunal fees in the future. It was stated that the fee regime had not yet been running long enough to enable the claimants to prove that it was disproportionately unfair. With reference to the statistics, it was stated that if a claimant could show that he personally found it impossible to pay such fees, then he might have more of a chance of a successful claim. Furthermore UNISON have confirmed that they intend to appeal this decision and leave to appeal has already been granted.

For now, the battle for employers has been won, but the war is most definitely not over.

Andrew Wallace 
Trainee Solicitor – Employment Law

Obesity discrimination? Fat chance…

It will not come as a surprise to many employment lawyers to discover that the European Court (CJEU) has ruled that, whilst there is no express EU principle prohibiting “obesity discrimination”, that condition may fall within the framework of “disability”.  As such, the protection of the Equality Act 2010 may be available for some obese employees.

What are the facts of this case?

A Danish employee with 15 years’ service brought a discrimination claim against his employers after he lost his job.  He weighed 25 stone and claimed that the reason for his dismissal was related to his size.  The Danish court referred this matter to the European Court to clarify firstly whether obesity could be deemed to be a disability under the discrimination legislation and secondly how to determine if an obese person is protected against discrimination.

What was the European Court’s finding?

The court stated that “under given circumstances, the obesity of the worker entails a limitation which results in particular from physical, mental or psychological impairments which in interaction with various barriers may hinder the full and effective participation of that person in professional life on an equal basis with other workers, and the limitation is a long-term one, such obesity can fall within the concept of disability within the meaning of the directive.”  The case has been referred back to the Danish courts for them to determine whether or not the worker is sufficiently obese that he qualifies as having an impairment.

What does this mean?

There has been widespread panic amongst employers that this will result in every obese worker being protected by discrimination legislation.  That is not strictly the case.  The question as to whether or not someone is disabled will very much be a question of fact.  That worker will require to demonstrate that the degree of their obesity is such that it has a long-term, adverse impact on their day-to-day activities.  Furthermore the burden of proof will remain on the claimant at tribunal to demonstrate that they are entitled to the protection of the legislation.

What does this mean for employers?

Employers should not panic.  Many employers are speculating that they will no longer be able to dismiss overweight employees for fear that they will face an employment tribunal claim.  This is not correct.  Not every obese employee will be classified as disabled under the legislation.  The European Court suggests that each case will be fact specific.

Furthermore, provided that the reason for dismissal is not discriminatory (i.e. not because of the worker’s obesity), the employer can still persuade a tribunal that any dismissal is fair.

It may be that, in extreme cases, employers may wish to take advice regarding making reasonable adjustments for obese employees.  However provided that employers are effectively managing their staff on a regular basis, any problems relating to overweight employees should be limited.

Simon Allison
Partner – Employment Law

99 Problems But A Snitch Ain’t One

HR professionals and employment lawyers are relatively familiar with the territorial limitations on the right to claim unfair dismissal.  However what protection does a non-UK based individual have against a UK company in the event of blowing the whistle on its employer?  The EAT has recently given some guidance on the territorial limitations for automatically unfair dismissals and more specifically the protection for whistle-blowers who work abroad.

Can an employee who works abroad raise a claim in the UK?

The short answer is possibly, yes.  The overarching principle is dependent on the connection between the employment relationship and Great Britain being so strong that the unfair dismissal provisions should apply to the employee’s circumstances.  In certain circumstances, an employee who works outwith the UK but whose employers are based in the UK will be permitted to pursue a claim of unfair dismissal through the UK tribunal system, provided that the employee has a much stronger connection with the UK than any other jurisdictions.

What were the facts of the case before the EAT?

In the case of Smania v Standard Chartered, a banker working in Singapore sought to argue that UK whistle-blowing legislation applied to him.  This employee made allegations of financial misconduct and was subsequently dismissed.  His employer’s registered office was based in the UK and regulated by both UK law and the relevant Asian regulation.  Despite the fact that he was based in Singapore, he sought to pursue a claim of automatic unfair dismissal through the UK tribunal system.

What did the EAT decide?

The EAT decided that the territorial limitations on the laws relating to unfair dismissal were in essence the same as the laws relating to whistle-blowing dismissals.  It stated that, whilst it may be “desirable in a general sense” that there should be protection for anyone making a protected disclosure anywhere in the world, UK law could not be read to have such a world-wide application.  The EAT could not see any reason for legislation concerning protection from automatic unfair dismissals being any different from the law relating to unfair dismissals.

Furthermore the EAT held that the European Convention on Human Rights did not extend to Singapore and could therefore not be extended on this occasion to compel a different interpretation of the whistle-blowing-protection legislation.

What does this mean for employers?

This EAT judgment is authority for the principle that, whilst an employee who works outwith the UK can, in certain circumstances, pursue a complaint against its UK employer under whistle-blowing legislation, this is still subject to the same territorial limitations which would apply to the more standard claim for unfair dismissal.  However the connection between the employment relationship and Great Britain requires to be sufficiently strong to permit this.

Whilst a UK-based employer may encounter many problems with regards to its oversees staff, it appears that there are no additional rights which can be enforced against the employer under the whistle-blowing legislation.  The overseas whistle-blower does not therefore have any greater rights to advance a claim in the UK than other overseas workers.

Simon Allison
Partner – Employment Law

Bad Weather Policies: Dashing Through the Snow …

Paddy Power has offered odds of 11/4 for there being a white Christmas in Dundee this year.  Odds are slightly better for a white Christmas in Aberdeen and Edinburgh at 3/1.  Either way it is clear that the frost on my car windscreen earlier this week spells the beginning of the cold weather.  With that in mind, employers would be well advised to consider the repercussions of the bad weather in the lead up to the festive season.

Absent employees – No dough

Employees are required to attend work even in extreme weather conditions.  If an employee is unable to attend work because of bad weather, an employer is generally entitled to treat the absence as unauthorised and is under no obligation to pay that employee.  Having said that, it is always preferable to make employees aware of any bad weather policy prior to the bad weather and best practice would be to have the policy clearly outlined in writing.  Employers would be well advised to consider creating bad weather policies to cover these scenarios.  Such policies should address how the employer will treat lateness due to bad weather and what will happen with regards to pay.

Closed workplace – No go

If an employer requires to close its premises at short notice due to extreme bad weather, in the absence of express written agreement the employer still requires to pay its employees their salary.  Even if there is no work available as a result of bad weather and office closure, it would be unlawful to withhold pay without the employees’ consent in writing.  Some employers have “lay-off” clauses in their staff contracts.  Such clauses can permit employers to lay-off employees without pay.  However these clauses can be relatively complicated and an employer should take legal advice about such a clause before attempting to operate such a clause.

Untruthful employees – No snow

Occasionally employees will exaggerate the extent of the bad weather in their locality and might suggest that the snowfall is heavier than it is, in an attempt to enjoy an extra duvet day.  If an employer discovers that an employee has lied about the weather in an attempt to avoid attending work, the employer would be entitled to take disciplinary action against that employee on the basis of misconduct.  Before taking such action however, the employer would still require to conduct a full investigation and then reach a fair decision regarding the appropriate disciplinary sanction based on its reasonable belief.

School closures – No show

Whilst there is statutory protection for employees who require to take emergency leave as a result of childcare arrangements, school closures do not generally fall within this category.  Emergency leave is available when there is an “unexpected disruption to childcare” and, unless there are specific applicable circumstances, this does not expressly include a school closure.  Having said that, employers should try and be as flexible as possible with employees who are unable to attend work due to school closures.  Employers might want to encourage employees to work from home on such occasions.  Alternatively employers might want to permit employees to make up the time at a later date.  It would however be important for an employer to adopt a consistent approach when dealing with such situations.

Ultimately the handling of bad weather procedures is an opportunity for employers to enhance staff morale and productivity in the workplace by considering solutions to the climatic conditions.  Experience demonstrates that employers who deal with these issues in a fair manner have a happier, healthier workforce.  ‘Tis still the season to be merry!

Simon Allison
Partner – Employment Law

Is the end in sight for tribunal fees?

According to the Ministry of Justice, since tribunal fees were introduced in July 2013, employment tribunal claims have dropped by around 70%. Although this is partly attributed to added encouragement to settle through ACAS, it is in no small part due to the fact an employee must pay as much as £1200 to proceed to a hearing. This has caused much discussion, particularly in Scotland, about whether or not this provides access to justice for employees.

The Smith Commission

Included in the much publicised Smith Commission last week, was the suggestion that all powers over the management and operation of the tribunals should be devolved to the Scottish Government. It should be noted that all power to create laws for the workplace were recommended to remain with Westminster. However both the SNP and Scottish Labour Party have previously made it clear that they are against tribunal fees. It is therefore very likely that when these powers are finally devolved to the Scottish Government, tribunal fees will be reduced significantly. The extent of the reduction is still to be determined, but there is a distinct possibility that fees will be removed completely.

What does this mean?

This means that in Scotland there will likely be a significant rise in the number of claims being raised by employees. But it will not only be Scottish employees making claims. It is likely that employees in England and Wales could also be persuaded to head to Scotland in an attempt to avoid their own fee regime. If a claim occurs in England and Wales, and the employer also resides or carries on business in Scotland, then the employee will potentially be able to raise a claim north of the border.


The suggestions put forward by the Smith Commission will only become law after the general election next year. It will only be then that the Scottish Government can make reforms to the tribunal fees system. Therefore we are unlikely to see any changes implemented until 2016. It is worth noting that there are also currently cases being heard in both England and Scotland deciding whether tribunal fees prevent access to justice. The outcome of these cases will also have an effect on tribunal fees.

My advice to employers for now would be to make the most of the employer friendly system while you still can!

Andrew Wallace
Trainee Solicitor – Employment Law