Employment Law Bulletin

July 2009

News

The Creation of the Department for Business Innovation and Skills (BIS)

The Department for Business Enterprise and Regulatory Reform (BERR), formerly, the Department for Trade and Industry (DTI) has transmogrified into the Department for Business Innovation and Skills (BIS). The new department was created on June 5, 2009 by way of a merger between BERR and DIUS.

Lord Mandelson is the responsible minister overall and Pat McFadden MP remains the responsible employment minister. It is an unfamiliar site to navigate but the employment page may be found using the following link.

As the new website for BIS is in transition, the former BERR website can still be accessed and indeed certain web references to BERR documents remain the same. These can however be accessed from the new BIS site

There are a number of interesting items under "new business" on the website.

• First, there is coverage of the MacLeod report on employee engagement. The report makes an interesting reading.
• BIS is also consulting on draft regulations that will outlaw the blacklisting of trade unionists. View the consultation document.
• BIS is consulting on the interaction between employment tribunal jurisdiction and a relevant regulator for the purpose of whistleblowing under the Public Interest Disclosure Act 1998. Again, the consultation document may be obtained here.
• For those interested in transfer of undertakings, BIS has reissued the third (2009) edition of government guidance on TUPE which may be obtained here.

The End of Sick Notes

The Department for Work and Pensions has proposed that the existing sick note issued by doctors be replaced with a "fit note" which will allow the doctor to say whether a person is fit or unfit for work, and indicate if they may be fit for some work.

The aim is that this will help employers manage absence and help employees stay in work or get back to work as quickly as possible.

If an employee may be fit for some work the fit note could make recommendations about what an employer could do to help the employee back to work sooner rather than later. For example, this could include changing the employee's role or duties or the environment in which they work. The employer would not be bound to implement such recommendations but should use them to inform discussions with the employee. The employer can then consider all of the circumstances to determine if the employee is fit for work and in what capacity and what changes can be made.

If approved by Parliament the new regime will be introduced in April 2010.

Changes to the National Minimum Wage Rate

From October 2009 the National Minimum Wage will increase slightly to £4.83 for workers aged 18 to 21 and to £5.80 for workers 22 and over. The minimum wage levels were previously £4.77 and £5.73 respectively.

From October 2010 the adult minimum wage rate will be extended so that it applies to workers aged 21 and over.

The National Minimum Wage and the tronc system

From October 2009 new legislation will also prevent the practice used by some employers (in restaurants and bars for example) of paying tips collected from customers to their workers through payroll so that the tips go towards workers' wages and help the employer discharge their liability to pay the National Minimum Wage. From October no service charges, tips, gratuities and cover charges will count towards the National Minimum Wage.

The Tronc system challenged in the courts

In the recent case of (1) Annabelle's (Berkeley Square) Limited (2) George (Mount Street) Limited (3) Harry's Bar Limited -v- Revenue & Customs Commissioners [2009] WLR (D) the Court of Appeal determined a similar issue of whether customer tips paid to workers under a tronc scheme could count towards the National Minimum Wage. The tronc scheme essentially meant that tips from customers were paid to a troncmaster's bank account and distributed to workers in accordance with rules of the scheme. The Court of Appeal held that payment from the troncmaster was not a payment from the employer and thus could not be used by the employer to discharge its liability to pay the National Minimum Wage.

The National Minimum Wage and apprentices

The Low Pay Commission has recommended that a minimum wage for apprentices be introduced and the Government response to this is expected in the summer.

Cases

Employees' Entitlement to Holiday Pay during Sick Leave

The judges in the House of Lords have now handed down their decision in H M Revenue & Customs v Stringer & Others [2009] UKHL 31, 10 June 2009 in relation to an employee's right to holiday pay whilst on sick leave.

This decision was made on the return of the case to the UK courts following the European Court of Justice case Schultz-Hoff v Deutsche Rentenversicherung Bund C-350/06; Stringer and Others v HM Revenue & Customs C-520/06 (ECJ) [2009] IRLR 214. The European Court of Justice held:

• It is up to Member States to determine whether an employee on sick leave be entitled to take paid annual leave during that sick leave.;
• An employee on sick leave has the right to be paid annual leave at the end of the leave year and/or of a carry-over period even where the worker has been on sick leave for the whole or part of the leave year and where his incapacity to work has persisted until the end of his employment, which was the reason why he could not exercise his right to paid leave.
• On termination of employment an employee on sick leave has the right to receive pay in lieu of annual leave not taken even if the employee has been on sick leave for the whole or part of the leave year which was the reason why he could not exercise his right to paid annual leave. Such allowance in lieu must also be paid at the employee's normal rate of pay.

It was for the House of Lords to apply this decision in the context of the UK litigation.

In the recent Stringer case it was held by the House of Lords that:

• Holiday entitlement continues to accrue throughout sick leave and as such employees can take paid statutory holiday during their absence;
• Holiday pay does count as 'wages' and therefore employees on sick leave can bring a claim of unlawful deduction from wages under the terms of the Employment Rights Act 1996.

This decision sets aside an order of the Court of Appeal in Commissioners of Inland Revenue v Ainsworth and Others [2005] ECWA Civ 441 made in 2005, which had held that employees who were on sick leave were not permitted to accrue holiday during their absence or to receive payment in respect of any untaken holiday and restores the order of the Employment Appeal Tribunal made in Kigass Aero Components v Brown [2002] ICR 697 in 2002.

Dismissals and Disabled Persons

In Fareham College Corporation v Walters (EAT/0396/08) the EAT has held that an employer's failure to make reasonable adjustments to avoid dismissing a disabled employee constituted an act of discrimination under the Disability Discrimination Act 1995. The Claims in this case was on long term sick leave. The College had a return to work policy which supported sick employees and specifically highlighted the possibility of a phased return.

Nonetheless, the Claimant, who wanted to return on a phased basis, was dismissed. It was held that the College's refusal to offer the Claimant a phased return to work amounted to a "provision, criterion or practice" which had placed her at a substantial disadvantage compared with a non-disabled employee and the college had not made reasonable adjustments to eradicate that disadvantage. It had declined to enter into discussions about working hours and provided not objective justification for refusing the Claimants request to work part time.

This decision sharpens up the law in relation to disability discrimination and highlights the importance of considering real adjustments to working life in terms of re-entry into the workforce such as a phased working pattern or part time work where possible.

---

View this newsletter online · Forward to friend · Unsubscribe