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Employment Law Case Update - November 2014

Employment Law Case Update - November 2014

Burnetts' team of employment law solicitors examine the latest case law developments.

Overtime and Holiday Pay

This month’s ruling in Bear Scotland v Fulton, Hertel (UK) Ltd v Wood and Amec Group Ltd v Law means that when holiday pay is calculated, non-guaranteed overtime (overtime which the worker must work if offered) must be taken into account. 

This decision arises in a further wave of litigation involving holiday claims from both current and former workers.  The European Court of Justice (“the ECJ”) in Williams determined that pay during annual leave should reflect normal remuneration to avoid workers being deterred from taking annual leave.  The ECJ ruled in that case that normal remuneration included any payments which are intrinsically linked to the tasks workers are required to perform under the contract. 

The EAT in Bear extended that logic to say that any overtime which an employee must work if offered should be considered part of “normal remuneration” and therefore included in holiday pay.  Taxable payments for travel time (but not travel expenses) should also be included.

However, the ruling applies only to the basic four weeks leave granted under the EU Working Time Directive and not the additional 1.6 weeks under the Working Time Regulations 1998 in the UK.  This gives employers an administrative nightmare in calculating two different rates of holiday pay which could fall due in one period of holiday such as a Christmas factory shutdown, as that may include some days of bank holiday and some days of annual leave.

The claims in Bear been brought as unlawful deductions from wages claims.  The time limit for such claims is normally three months from the pay date which includes the shortfall in wages.  However, in relation to a series of deductions, the deadline becomes three months beginning with the last deduction in the series.  If a claim is not brought within that period, then consideration will be given to whether time should be extended if it was not reasonably practicable to bring the claim earlier. 

In this case, the EAT held that claims in respect of back pay will not be possible if there has been more than three months between payments in which there has been a shortfall.  The EAT decided that a series “punctuated” by a gap of more than three months is a series for which the tribunals have no jurisdiction, subject to an extension of time being granted.  Backdated claims will also be stopped if the employer can show that they have paid the 1.6 weeks holiday correctly (ie. at the lower rate) which breaks the chain of how far back the worker can go.

The parties have been given leave to appeal to the Court of Appeal but as yet it is not known whether any appeal will be submitted.

In the meantime employers need to:

  • Check the contract of employment to see if overtime is non-guaranteed overtime.
  • Consider precisely what amounts to normal remuneration in their business.
  • Decide whether they wish to pay the higher rate for the 4 weeks’ leave required by the Directive and revert to basic pay for the additional 1.6 weeks’ leave or to pay the higher rate for all leave to make it administratively more straightforward.
  • Decide whether or not to make overtime purely voluntary and infrequent in the future and make any required amendments to contracts of employment.
  • Consider the cash flow implications of any claims that may be brought.

If you have any questions on this article or on holiday pay generally, please contact Natalie Ruane on 01228 552222.

Suitable Alternative Vacancies for Pregnant Women

Another common query is about how to deal with women who are absent on maternity leave when a redundancy situation arises. Most employers know that women in this position are entitled to preferential treatment under regulation 10 of the Maternity and Parental Leave Regulations 1999 (“  Regulation 10”), but we often get queries about what the preferential treatment consists of and when Regulation 10 applies. The recent case of Sefton Borough Council v Wainwright has looked at this in detail.

Mrs Wainwright was employed by Sefton Borough Council (the Council) from May 2001 until she was made redundant in April 2013. She lost her job as part of a restructuring exercise.

In December 2012, the Council told Mrs Wainwright and a male colleague, Mr Pierce, that their roles were being deleted and that a new post (which amalgamated the two positions) was being created. Both Mrs Wainwright and Mr Pierce were invited to apply for the new post. Mr Pierce was considered the better candidate for the role and was offered it. Mrs Wainwright was placed on the redeployment register. She wasn’t offered and didn’t express any interest in any of the vacancies which were made available to people on that register so Mrs Wainwright was given three months' notice in January 2013 and was dismissed for redundancy at the end of that period.

Mrs Wainwright brought claims in the employment tribunal for, amongst other things, breach of Regulation 10. The Council sought to defend that claim by arguing that the Regulation 10 duty was only engaged once the restructuring exercise was complete. The Council argued that the role arising out of the restructure was not a vacancy in the conventional sense, as it was only available to Mrs Wainwright and Mr Pierce. The Council accepted that Mrs Wainwright was entitled to advantageous treatment, but argued that the preferential treatment only applied once she was on the Council’s redeployment pool register. Until that time, it was feasible that she would not be redundant and would be offered the new role.

The employment tribunal disagreed. It held that Mrs Wainwright had a right to be offered the new role once the employer knew that there was a redundancy situation affecting Mrs Wainwright if that new role was a suitable alternative vacancy for her.

The EAT has now supported the tribunal’s decision rejecting the Council's arguments about the injustice that would be suffered by the male colleague if Mrs Wainwright had been offered the vacancy as soon as the new role was proposed.  

The EAT felt that it would undermine the purpose of Regulation 10 if the employer was free to wait until after a restructure had been completed before applying those rules. The EAT stressed that Regulation 10 was an absolute right, which meant that a woman had the right to be offered a suitable vacancy even if she was not the best candidate for the job.

This decision suggests that the Regulation 10 rights apply as soon as the employer becomes aware that the employee may be at risk of redundancy. Looking at a restructure won’t make any difference.

The Maternity and Parental Leave regulations do not offer a woman immunity against being considered for redundancy but if there are suitable vacancies that the woman on maternity leave could be given she will need to be given that role even if a colleague would otherwise be more suitable for it. Employers will still be able to arguable about the suitability of the vacancy but interview and selection for new roles in a restructure situation will be much more challenging where one of the possible contenders is off on maternity leave.

Maternity rights are a complex and ever changing area. Anyone with questions about this case or maternity rights generally should contact Natalie Ruane at Burnetts Solicitors on 01228 552222 or by email at nr@burnetts.co.uk

About the author

Natalie Ruane profile photo

Natalie Ruane

Natalie is a Partner and leads the Employment Law & HR team and specialises in education.

Published: Monday 24th November 2014
Categorised: Employment

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