Previous Article Next Article Case round upOn 1 Jul 2002 in Personnel Today Our resident experts at Pinsent Curtis Biddle bring you a comprehensiveupdate on all the latest decisions that could affect your organisation, andadvice on what to do about themPitney Bowes Management Services Ltd v French (EAT/408/00) EAT Company-specific profit sharing schemes transfer under TUPE * * * * Employees of the transferor, Sainsbury’s, had been contractuallyentitled to participate in a profit sharing scheme receiving benefits paid inSainsbury’s shares. Following a TUPE transfer, Pitney Bowes argued it was notbound to continue the scheme as it had no control over it, could not accesscommercially sensitive information relevant to its operation and could notissue Sainsbury’s shares. Both the employment tribunal and the EAT held thescheme did transfer under TUPE. Key pointsOne of the many areas of uncertainty under TUPE has been the extent to whichbenefits intrinsically linked to the identity of the transferor can transferunder TUPE. Do the obligations transfer at all and, if so, what must thetransferee do about terms that are impossible to replicate precisely? In thiscase, whereas the employment tribunal held the obligation on the transferee wasto replicate the scheme exactly, the EAT at least took account of the practicaldifficulties of doing so. Thus employees are entitled to benefit from a‘substantially equivalent’ scheme. The transferee’s obligation under TUPE is toreplicate the features of the scheme as far as it can and substitute anycompany-specific provisions with terms that leave the transferring employees ina comparable position overall. What you should do – Transferees should undertake careful due diligence to identify alltransferring obligations including those relating to bonus or profit sharingschemes. You will need to identify how ‘transferor specific’ elements can bereplaced.l Also, identify the extent to which the transferor has been able tovary or withdraw the schemes, as you will have the same powers. This mayfacilitate the tailoring of the scheme to your business. – Provide for consultation with unions or employees over replacement schemes– the EAT said it would expect to see this. HM Prison Service v Beart (EAT/650/01) EAT EAT gives further guidance on reasonable adjustments under the DisabilityDiscrimination Act * * * Mrs Beart suffered from clinical depression. Following a conflict withher line manager, she took a long period of sick leave. The prison’soccupational health physician recommended she be relocated or redeployed, asthe conflict was a cause of the depressive illness. The prison failed to follow this advice, and Mrs Beart argued it hadbreached its duty under section 6 of the DDA to make reasonable adjustments.The EAT upheld this complaint, even though the tribunal had found it was only a‘substantial possibility’ that she would be able to return to work had she beenrelocated. Key pointsThis case makes it clear that where a disabled person is disadvantaged bycertain arrangements, an employer should not discount taking a particular stepjust because it is not guaranteed to work. The extent to which the adjustment in question is likely to workwill be relevant in assessing whether it is reasonable to make it, but otherfactors such as its practicability and cost must also be considered. What you should do – Where a person covered by the DDA complains that certain arrangements putthem at a disadvantage, give detailed consideration to the full range of stepsyou could take. – Consult the employee as to what steps he or she feels would beappropriate. – Even if the employee has no suggestions, consultation with his or her GPand with disabled charities or other relevant organisations may be appropriate.– Do not discount adjustments just because they are not guaranteed to work.If there is a chance they may work it might be safer to try them, particularlywhere they would be cheap and easy to implement. Hussain v H M Prison Services(EAT/1250/00) EAT EAT clarifies the liability of employers for the discriminatory acts of thirdparties * * * Hussain, a prison officer of Pakistani origin, was subjected to racistabuse on several occasions by various prisoners. He argued the Prison Servicehad not taken sufficient steps to protect him from abuse and had subjected himto a detriment. The EAT upheld the tribunal’s rejection of the complaint andgave useful clarification on how such liability is established. Key pointsThe principle that employers can be liable for the acts of third partiestowards their employees was established in the notorious case of Burton v deVere Hotel Company, 1997, ICR 1 – the so-called ‘Bernard Manning’ case. Thehotel chain was found to have unlawfully discriminated against two of itswaitresses by failing to take steps to prevent them suffering abuse at thehands of the comedian Bernard Manning during his act at a hotel function. In Hussain, the EAT said in deciding whether the employer has subjected theemployee to a detriment through the acts of third parties, several factors mustbe considered: – Did the employer cause or allow that thing to happen in circumstanceswhere he could control whether it happens or not? The key issue is whether theemployer could, by the application of good employment practice, have preventedthe abuse or reduced the extent of it.l Lack of foreseeability or theunexpected nature of the event complained of could be relevant to whether theevent could be controlled. In this case, the Prison Service had clearly warned the prisoners that abusewould not be tolerated. The tribunal had correctly recognised there were limitsto what could be done. What you should do Undertake risk assessments to identify potential liabilities caused by thediscriminatory acts of third parties. This is particularly important in respectof employees who come into contact with the general public or other thirdparties in the course of their employment. – Analyse what steps could be exercised to reduce this potential and whatmight constitute ‘good employment practice’. – Provide clear guidance to third parties that abusing your staff will notbe tolerated. – Give clear advice to employees that harassment from third parties shouldbe reported to managers and ensure managers are trained to recognise and dealwith harassment. British Bakeries Ltd v M L O’Brien (EAT/1479/00) EAT Offences labelled as ‘gross misconduct’ in a disciplinary code may not alwaysmake summary dismissal lawful * * * O’Brien was summarily dismissed for gross misconduct. When he claimedwrongful dismissal, the employer argued that his conduct fell within thedefinition of ‘gross misconduct’ in the employment contract. Key pointsIt is common for contracts, rules or disciplinary procedures to define thetypes of behaviour that would be regarded as gross misconduct. But will suchoffences always enable a lawful summary dismissal? According to the EAT, evenif a contract defines certain acts as constituting gross misconduct, it willnot normally be sufficient (in the absence of clear contractual wording) merelyfor the employer to prove there has been conduct, however trivial, fallingwithin the definition. The conduct must be sufficiently serious to be arepudiatory breach of contract. What you should do – If it is absolutely fundamental that certain types of misconduct shouldautomatically lead to summary dismissal, make sure this is made crystal clearin the employment contract. – Remember, however, that even if a dismissal is lawful (ie permitted underthe employment contract) it may still be unfair. Tribunals are often wary of a‘tariff’ approach to disciplinary sanctions (ie certain types of misconductautomatically leading to dismissal) and may find no reasonable employer wouldhave dismissed. The Scottish Ministers v Dunlop (EAT/1227/01) EAT Variation to contract was ‘dismissal in disguise’ * * * Following an industrial accident, Dunlop’s employer considered himunfit for his current job. He was offered a different job on a lower grade andmuch lower salary. He accepted this, but claimed unfair dismissal. The firstissue was whether he had been dismissed. Key pointsThe EAT rejected the employer’s argument that there had been a consensualvariation to Dunlop’s contract. The contract had been withdrawn. This was anill-health termination and Dunlop could claim unfair dismissal, even though hehad accepted the alternative job. What you should do Always remember the need for a potentially fair reason and a fair procedure.Take care in the manner in which variations are proposed to employees’contracts, particularly where duties or salary are affected. Remember, termination of a contract is a ‘dismissal’ even if the employmentrelationship continues. Case of the month by Jon Fisher EAT declares ‘rolled-up’ holiday payments unlawfulMPB Structures Limited v Munro(EAT/1257/01) EATAnother controversial EAT decision on holiday pay, with potentiallycostly implications* * * * * MPB Structures added anallowance of eight per cent to each weekly pay packet as holiday pay. The EATheld this fell foul of the Working Time Regulations which prevents workers fromcontracting out of their entitlements. In the EAT’s view, the only way the regulations can be met isfor holiday pay to be paid at the appropriate rate, as and when holiday istaken.Key pointsIn a terse judgment, the EAT said the regulations were meant to ensureworkers got appropriate holiday leave. For this, they must have the necessaryfunds. The EAT felt that the employer placing the onus on the workerto save the holiday pay element of the wage did not accord with this aim. Thiswas particularly so where the worker took leave at the beginning of a holidayyear and so had not built up sufficient holiday allowance to constitute wagesfor the holiday period.This is one of a number of recent EAT decisions on holiday paywhich are difficult to reconcile. Most have concerned Reg 16(5) which statesthat contractual payments made for a period of leave go towards discharging anemployer’s obligations under the regulations in respect of that period ofleave: Gridquest Ltd t/a Select Employment v Blackburn, 2002, IRLR 168 forexample, and The College of North East London v Leather, EAT/0528/00.These cases, which were not referred to in this judgment,proceeded on the basis that rolled-up holiday pay is permissible under theregulations.If the EAT is right in this case, employers who pay rolled-uprates will be deemed not to have paid any holiday pay for the purposes of theregulations. The implications of this are particularly serious when oneconsiders the decision in List Design Group v Catley, EAT/0481/01 (see CaseRound up, April), which permitted employees to recover non-payments forprevious holiday as arrears of wages. Employees who have been paid a rolled-up rate could potentiallyclaim arrears of holiday pay going back to 1 October 1998, when the regulationscame into force.What you should do – Given the uncertain legal position, consider whether there isa practical alternative to paying your workers a rolled-up rate.– Keep an eye out for the Court of Appeal’s decision in Gridquest which itis hoped will clarify the legal status of rolled-up holiday payments. Beprepared to act swiftly in changing your arrangements if the Court of Appealfollows this judgment. Comments are closed. Related posts:No related photos.