Gordons Legal Employment Update – 26 May 2017

Unlawful Deductions from Wages

The case of Fulton and anor v Bear Scotland Limited, was reconsidered last week. We now know that the EAT had been correct to say that a gap of more than three months between non-payments or underpayments of wages would break the “series” of deductions in a claim for unlawful deductions from wages.

The EAT held:

• That the EAT’s original decision was correct and that a gap of more than three months between non-payment/underpayments of wages would break the chain; and
• That part of the EAT’s original decision was a binding precedent (the Claimants argued that it was not).

In practice what this means is that employees cannot claim for older deductions, beyond the three month gap, and it therefore narrows the exposure for employers.

Comment:  This decision was expected, but important confirmation all the same. It is also a useful reminder for employers, who have not changed the way in which they pay holiday pay in light of the recent decisions, to make the change sooner rather than later. If you have any queries about this please do let us know, particularly if your organisation provides employees with commission and / or overtime.

Whistleblowing

In the case of Beatt v Croydon Health Services, the COA held that, where the making of a disclosure is the principal reason for dismissal, the decision-taker’s belief about whether the disclosure is protected is not relevant.

In this case, the Claimant was involved in a surgical procedure that led to a patient’s death. The Claimant believed that the contribution to the patient’s death was the fact that his most trusted nurse was suspended during the operation. The Claimant made numerous disclosures regarding the incident and the hospital decided that the disclosures were not protected because they were made in bad faith and/or were not in the public interest.  Subsequent disciplinary proceedings were made against the Claimant and he was dismissed.

The Employment Tribunal found the principal reason for the Claimant’s dismissal was the making of protected disclosures. The COA agreed with the Employment Tribunal’s finding that objectively the disclosures were protected, and that the principal reason for the dismissal was making those disclosures. The COA upheld the Employment Tribunal’s finding of automatic unfair dismissal.

Comment: Whistleblowing cases are predominantly about causation. The reason for the treatment / dismissal (rather than the cogency of the protected disclosure) is the important point and this is emphasised by the COA’s Judgment in this case.

Zero Hours Contracts

The government-commissioned inquiry into controversial employment practices is expected to make a recommendation next month. One of the proposed measures is for employees on zero-hours contracts to be given the right to request fixed hours.

Whilst there is a consensus that some workers, who are on zero-hours contracts, might be being exploited by businesses, the Confederation of British Industry (“The CBI”) has previously discussed figures that showed that almost two thirds of people are satisfied with the number of hours they work, and being in work gave people more opportunities to increase their hours.

The “right to request fixed hours” would be parallel to the current right to request flexible hours.  Once a request has been made, Employers will have to respond to the request providing their reasons for the decision. Companies can refuse those requests, but have to give good business reasons for doing so.

The CBI in submission to the Taylor review said flexible working arrangements should benefit both parties. The CBI has indicated that it backs this idea.

McDonald’s found in a trial in 23 restaurants, that one-fifth of employees on zero-hours contracts asked for a move to a fixed contract with minimum guaranteed hours, while the rest preferred to stay on flexible contracts.  McDonald’s plans to roll this out nationally this year providing existing employees the chance to switch from zero-hours contracts to fixed contracts with minimum guaranteed hours.

Comment:  If this recommendation comes into force, it will have a significant impact on individuals who are on zero-hours contracts as well as businesses. It is inevitable that companies will experience a high volume of requests from individuals hoping to secure work and obtain full employee rights.

Deduction for Strike Action

In the case of Hartley and ors v King Edward VI College, the Supreme Court held that S.2 of the Apportionment Act 1870 was the relevant section that needed to be applied to determine the rate at which a College was entitled to make deductions from employee’s pay for each day of strike action.

In this case, the employees’ contracts were annual contracts and the apportionment was to be made on a daily basis over 365 days. No further apportionments were stipulated other than on a calendar basis.  The College had deducted 1/260th of the employees’ annual salary in respect of one day of strike action  In fact, the College were only entitled to deduct 1/365th based on S.2 of the Apportionment Act 1870 and the contractual terms.

The Supreme Court held that where an employment contract is an annual contract, as was the case here, it must be apportioned on a daily basis over 365 days, resulting in a daily figure of 1/365. S.7 of the Apportionment Act 1870 states that the Act will not apply where it is ‘expressly stipulated that no apportionment shall take place’. Therefore, unless stated otherwise, the principle of equal daily apportionment will apply. In this case, there was nothing in the contract that stipulated any apportionment other than apportionment on a calendar day basis. The College was therefore only entitled to make deductions from pay at a rate of 1/365th of their annual salary.

Comment: It is important to ensure that the employment contract deals with the basis of accrual so that the level of any deduction is clear to the parties.

If you require any further information on the above developments then please do not hesitate to get in contact with a member of the Employment Team, on the following number 0113 227 0100.