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March 2017 Newsletter - Appeal Court upholds contractual commission and holiday pay ruling

Posted on Thursday 16th Mar 2017

Locked Out 

Last year the Court of Appeal in British Gas Trading Ltd v Lock decided that contractual results-based commission must be included in the calculation holiday pay.

This week, British Gas has been refused permission to take its appeal to the Supreme Court. Thus the Court of Appeal’s decision stands, namely that results-based commission should be “taken into account” for the purposes of the four weeks’ leave derived from the Working Time Directive where it forms part of a worker’s “normal remuneration”.

This case should now return to the Employment Tribunal for it to decide what compensation should be paid to Mr. Lock. The wider point, though, is that the case is clear authority that results-based commission, along with non-guaranteed overtime and regular allowances (such as flight pay, in the case of airline pilots) should be reflected in  the first four weeks of holiday pay (i.e. that holiday which originates with the European Working Time Directive. 

There are still some outstanding questions such as how to deal with irregular commission payments (Mr. Lock, it will be remembered, received a substantial proportion of his wages from commission) but any client that has delayed making any changes to their holiday pay arrangements pending the outcome of Lock must now review their position on commission payment and European Directive holiday pay. 
Please contact us for advice. 

Increase in Tribunal Award Limits from 6 April 2017

Revised limits will apply to successful employment tribunal claimants whose effective date of termination is on or after 6 April 2017. Where the effective date of termination falls before 6 April 2017, the existing limits will continue to apply. The increases are as follows:
The maximum compensatory award for unfair dismissal which a tribunal can order will increase from £78,962 to £80,541.

The cap on a week's pay (used to calculate the unfair dismissal basic award and statutory redundancy pay) will increase from £479 to £489.

The limit on guarantee payments payable to employees in respect of a single day will increase from £26 to £27.

The minimum basic award for certain categories of unfair dismissal (dismissals for reasons of trade union membership or activities, health and safety duties, pension scheme trustee duties, acting as an employee representative or workforce representative) will increase from £5,835 to £5,970.

Acton Jennings’ indemnity policy continues to meet these awards at the revised limits providing our advice has been sought and followed or, where this is not reasonably practicable, due diligence has been observed and our client has acted in accordance with good HR practices. 

On the subject of employment tribunals, the Government has finally published its review on the introduction of Employment Tribunal fees and concluded that, although there are some areas of concern, as a whole the fee system has met its objectives and will not be repealed. However the Supreme Court is due to hear UNISON's judicial challenge to the fee system on 27 and 28 March and the outcome of this may change the Government’s position.

The Government did acknowledge that there are some areas of concern and has embarked upon  a further  consultation on whether the fee remission scheme (whereby fees are waived for those on low incomes) should be made easier to use with the lower gross monthly income threshold raised. 

The Government has confirmed that proceedings relating to payments from the National Insurance Fund i.e. payments for redundancy pay, involving insolvent employers where conciliation is not a realistic option, should be exempt from the fee regime.

Dress at Work

Dress codes at work have been much in the news recently. The House of Commons committees for Petitions and for Women and Equalities have issued a joint report on the subject following a petition signed by more than 138,500 people and led by Nicola Thorp a London receptionist, who was sent home from work in December 2015 without pay for wearing formal flat shoes rather than high heels. It calls on the Government to enforce to examine the law in regards to sexist dress rules that discriminate against employees.

Then only this week ECJ gave its important ruling in two cases G4S v Achibita, a case relating to a dismissal for failing to follow the company’s dress code, and Bougnaoui v Micropole,  a dismissal almost at the behest of a client who did not want the employee to wear a veil; i.e. a dismissal not because the employee was  in breach of a company dress code.

The ECJ ruled that a dress code (whether set down formally or an  informal code – whatever that means in practice) which has as its core principle the  projecting of neutrality to the company’s client or customer base (or, by extension, presumably, other employees), is not directly discriminatory against any given religion. It is however potentially indirectly discriminatory and this remains an area of immense complexity. 

We do have clients that enforce dress codes to the extent that they ban the wearing of football related merchandise such as shirts where that football club is or has been associated with a particular religious grouping. We see that rule as eminently defendable for the reasons given in the case above. 

The cases will go back to the national courts of Belgium and France for final decisions. Even at first blush it does not seem as if Micropole would succeed in its defence.

Some Might Snicker at Marathon Award
There are those that might think the only reason for reporting this case is to display our knowledge of chocolate bars and love of wordplay. Not so. The case demonstrates how difficult it is for an employer to obtain damages from departing employees who take confidential information when a financial loss cannot be quantified. 

Marathon Asset Management LLP (Marathon Asset Management LLP and another v Seddon and others [2017] EWHC 300 (Comm)) sought damages in the High Court of £15m against former employees Mr. Seddon and Mr. Bridgeman who copied and retained confidential information prior to their departure from the business. 

It is an implied term of every employment contract that an employee will carry out his employment with fidelity and good faith. The duty of fidelity includes an obligation on the employee to use confidential information solely for the purposes of the employment relationship. Over and above that implied term employers often include express terms setting down in writing what is confidential information and what the extent of the employee’s duty is in relation to that confidential information. 

Both defendants admitted copying and keeping the documentation in breach of their contracts of employment. 

Marathon Assert Management did not try to argue that it had suffered financial loss as a consequence of the breach of contract. Their main argument was that "if you take something, the law requires you to pay for it". It claimed the appropriate measure of damages in this case would be the financial value of the documents given a willing seller (in the Company's position) and a willing buyer (Mr. Seddon and Mr. Bridgeman) to release them from the duties of which they were in breach. Other secondary arguments were also advanced. 

The High Court rejected the argument largely on the basis that no financial damage had been sustained. Instead of the £15 million claimed it awarded just £2 compensation: £1 being payable by each defendant. About the cost of a Snicker bar, in fact. 

 Once the UK has left the EU, we are unlikely to be bound by these decisions but discrimination law precedes our involvement with Europe and will surely survive Brexit.

Figures Show Increase in Violence at Work
The Health and Safety Executive (HSE) statistics on violence at work published on 28 February show a significant rise in the number of threats reported by workers, with evidence, for the first time, of online bullying via social media and the use of smart phones.

The latest figures draw on findings from the 2015/16 Crime Survey for England and Wales (CSEW) and the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR), which also includes data covering Scotland. RIDDOR reported 4,697 injuries to employees where the “kind of accident” was “physical assault/act of violence” in Great Britain and included one death. This figure represents 6.5% of all reported workplace injuries.

The CSEW estimates that there were 698,000 incidents of violence at work, comprising 329,000 assaults and 369,000 threats. The number of assaults was broadly similar to the last few years. However, the number of threats was significantly higher due to the inclusion of threatening behaviour online. In the last survey, the number of threats was just over 250,000.

Health and social care specialists recorded a higher than average level of assaults and threats, a trend consistently seen over the last number of years.



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