Employment Notepad -August 2010
1. HOLIDAY PAY WHILST ON SICK LEAVE
The Employment Tribunal in Khan v Martin McColl dismissed a Claimant's claim to be paid for holiday he had accrued whilst on sick leave on the basis he had not requested to take the holiday he claimed he should have been paid in lieu of.
The law relating to holiday entitlement that coincides with periods of sickness is somewhat uncertain since the House of Lords' decision in Stringer v HMRC.
Stringer v HMRC addressed, to some extent, the discrepancy between the Working Time Regulations 1998 ("the Regulations") as presently drafted and the EU Directive which the Regulations are intended to implement. Unfortunately, the House of Lords did not address the practical issues employers might face when dealing with holiday entitlement and employees who are on sick leave, although it did confirm that employees continued to accrue their statutory holiday and should be entitled to take it or to be paid in lieu on termination of their employment.
The House of Lords did not specify if an employee was required to give notice that they were taking their holiday in order to be entitled to be paid for it.
On 26 May 2008 the Claimant, Mr Khan, went off sick and did not return to work prior to his resignation in 2009.
His employer paid him for the holiday he had accrued in 2009 but refused to pay him for his 2008 holiday entitlement which he had been unable to take.
The Tribunal considered both the European Court of Justice's and House of Lords' decisions relating to the case of Stringer v HMRC. The Tribunal confirmed its understanding of the ECJ decision was that employees should be entitled to take their holiday during lengthy periods of absence or to be paid in lieu of it upon termination.
However, the Tribunal went on to conclude that because Mr Khan had never asked to take his holiday and had therefore never been denied his right to take his holiday his claim should be dismissed. The Tribunal expressed its sympathy towards Mr Khan because he had been unaware he would need to request his holiday whilst he was on sickness absence.
Should this decision not be appealed, another Tribunal which is not bound by this decision may come to an altogether different conclusion with regard to the issue of whether holiday must have been requested and/or denied in order for a claim to succeed.
2. CRIMINAL INVESTIGATION vs. EMPLOYMENT TRIBUNAL
The EAT in Gloucestershire Constabulary v Peters and another considered whether the Tribunal was correct in refusing to stay a Claimant's claim of disability discrimination pending a police investigation into the Claimant's seemingly fraudulent sick pay claims.
The Claimant was employed by Gloucestershire Constabulary ("the Police"). She had been claiming sick pay on the basis of her disability; however, the nature and extent of her disability was questionable and was a matter being investigated by the Police.
The Tribunal, at the Police's request, postponed the case on several occasions but eventually refused the Police's request that the matter be postponed indefinitely. The Police appealed the Tribunal's decision.
The Employment Appeal Tribunal did, to some extent, overturn the Tribunal's decision not to postpone the Hearing. It held that whilst an indefinite postponement was not appropriate the Tribunal should have granted a limited postponement in order to allow the Police to, at least, conclude its investigation.
3. COMPENSATION FOR CAREER-LONG LOSS
In Wardle v Credit Agricole Corporate and Investment Bank ("Calyon"), the EAT was asked to consider the amount of compensation awarded by the Tribunal in favour of the Claimant following its finding of unfair dismissal and victimisation.
The Facts
Calyon is a French bank. The Claimant, Mr Wardle, brought a claim of race discrimination after his colleague, who was French, was promoted to a position instead of him. After submitting his claim he was summoned to a meeting at which he was summarily dismissed because Calyon claimed there had been a breakdown of trust and confidence as a result of Mr Wardle not making an effort to maintain a good working relationship with the successful candidate.
Mr Wardle claimed he had been unfairly dismissed and victimised against.
Victimisation is a form of discrimination whereby you are treated less favourably by reason of having carried out a protected act, in Mr Wardle's case, the bringing of a discrimination claim.
The Decision
The Tribunal held Calyon had discriminated against Mr Wardle by reason of his nationality in not promoting him and that the principal reason for his dismissal was because he had submitted a claim against Calyon.
Mr Wardle was a high earner - his basic salary was £104,000 - and he was likely to receive bonuses of 70% of his salary. In assessing what compensation it should award, the Tribunal took into consideration the future and career-long loss Mr Wardle would suffer as a result of his dismissal.
The Tribunal's award comprised loss of earnings, injury to feelings, aggravated damages and an uplift award for failure to comply with the Statutory Dismissal Procedure. Of the amount awarded, £164,898.44 constituted loss of earnings. The figure purported to include Mr Wardle's loss of earnings between 2012 (the date the Tribunal considered Mr Wardle would most likely have moved to another bank) up until 2024, this being the period the Tribunal considered Mr Wardle's loss would continue to be affected because of his dismissal.
The Employment Appeal Tribunal
The matter came before the Employment Appeal Tribunal because both parties appealed. Mr Wardle claimed the compensation was too low and Calyon claimed it was too high.
Whilst the EAT did adjust and reduce the overall award it considered Calyon should pay Mr Wardle, it confirmed that the Tribunal was correct to include an element of career-long loss in respect of Mr Wardle's financial loss.
4. DEFAULT RETIREMENT AGE
On 29 July 2010 the Government published a consultation document with regard to the phasing out of the Default Retirement Age (DRA), currently 65 years.
We previously reported the High Court's decision in the Heyday case in which Age UK challenged an employer's right to compulsorily retire employees who reach the DRA on the basis it was contrary to European Law. Whilst the High Court held the DRA was both legitimate and proportionate, it is believed its decision may have differed had it not been for the Government's announcement that it would review the DRA.
Since that case, the new coalition Government has come into power and has pledged its commitment to phasing out the DRA. The consultation sets out the Government's proposals which include:
- implementing transitional arrangements in 6 April 2011 to phase out the DRA;
- the DRA be abolished by 11 October 2011; and
- employers may agree contractual retirement ages provided these can be objectively justified and are a proportionate means of achieving a legitimate aim.
Everyone is welcome to comment on the Government's proposals and can do so at: www.surveymonkey.com/s/2VWVDND
The results of the consultation are expected to be published in November 2010.
5. ASYLUM SEEKERS : RIGHT TO WORK IN THE UK?
Since August 2005, people granted refugee status have been granted 5 years limited leave to enter and remain in the UK. After that period, the person concerned can apply to the UK Border Agency ("UKBA") for indefinite leave to remain.
The point at issue is that asylum seekers often do not have a right to work in the UK. However they are being issued with an Application Registration Card which will make it clear whether or not the individual is allowed to work.
The UKBA has issued guidance for employers addressing this issue and which is intended to assist employers in identifying the correct documents, those that can be relied upon and those documents that do not prove the right to work; the civil penalties for getting it wrong are high and very easy for UKBA to issue. A copy of the guidance is available online at:
6. PAYE/ NATIONAL INSURANCE LATE PAYMENT PENALTIES
HM Revenue & Customs (HMRC) has released new guidance on the late payments penalties which apply to the late payment of UK tax and National Insurance Contributions (NIC) withheld under the system of Pay As You Earn (PAYE) for periods starting on or after 6 April 2010.
The late payment penalties apply to all employers and contractors where they fail to pay any PAYE amounts in full on time. These include monthly, quarterly or annual PAYE, student loan deductions, construction industry scheme (CIS) payments, class 1 NICs, annual payments of employers' class 1A NICs, annual PAYE Settlement Agreements (PSA) payments and PAYE determinations and charges raised.
The amount of the penalty will depend on whether the payment is due on a monthly, quarterly, or annual basis.
Monthly or quarterly payments
Employers will not be charged a penalty if only one PAYE amount is late in a tax year except where it is unpaid over 6 months. If payments are late between 2 and 4 times in a tax year, the penalty charge is 1% of the total amount that is late in the tax year. The tax penalty is 2% if payments are late between 5 and 7 times in a tax year; 3% if payments are late between 8 and 10 times in a tax year; and 4% if 11 or more times late in a tax year.
Where the monthly or quarterly payments are overdue after 6 months, an additional penalty of 5% may be charged. A further penalty of 5% may also be charged if the payment has not been made in full after 12 months.
Annual Payments
Employers may have to pay a penalty of 5% of the amount that is not paid in full by the ‘penalty date'; an additional 5% penalty if the full payment is not made within 5 months of the penalty date; a further 5% if the full payment is not made within 11 months of the penalty date.
The ‘penalty date' for class 1A and 1B NICs, HMRC determinations and assessments, and amendments or corrections to returns is 30 days after the due date. Penalties apply to each PAYE reference number (PAYE scheme). If they operate more than one PAYE scheme, employers must ensure that the amounts due under each individual PAYE scheme are paid in full on time.
HMRC guidance states that employers can appeal against a penalty should there be a reasonable excuse for it being late. However, the examples provided are unlikely to apply to large employers with payroll departments and/or agents acting for them.
7. EMPLOYEE LIABLE FOR PAYE
In the recent tax case of Burton v HMRC, the Upper Tribunal held that an employee would be liable for his employer's underpayment of income tax on the basis he had failed to provide his employer with his Form P45 or P46.
Normally, it is an employer's responsibility to ensure its employees are taxed at the correct rate and that all PAYE is properly accounted for. Mr Burton's employer had been taxing him at basic rate which the Upper Tribunal deemed was the correct approach in the absence of a P45 of P46.
8. ACAS ANNUAL REPORT 2009/2010
Acas has published its annual report. Not surprisingly, given the current economic climate, the Tribunals are busier than ever and there has been a 13% increase in the number of claims received compared with last year. The increase is having the effect that the overall resolution rate has dropped slightly since last year.
Laytons cannot accept any responsibility for any liabilities of any kind incurred in reliance on this Notepad. For specific advice on these issues, please contact your client partner or one of the team at the addresses set out below:
London
James Davies email james.davies@laytons.com or
Stephen Cates email stephen.cates@laytons.com or
Keith Corkan email keith.corkan@laytons.com
Guildford
Tim Randles email tim.randles@laytons.com
Manchester
Keith Corkan email keith.corkan@laytons.com
Michelle Gray michelle.gray@laytons.com
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