UK: Employment case update on British Gas Trading v Lock, Butterworth v The Police and Crime Commissioners Office for Greater Manchester & Ors and more

25 February 2016

James Froud


British Gas Trading v Lock

Employment Appeal Tribunal decision concerning the question of whether commission payments should be included in the calculation of holiday pay


The facts of this case will be familiar to those following the story. Mr Lock was employed by British Gas Trading (BGT) as an energy trader working 'normal' hours. In addition to basic salary he earned results-based sales commission, which comprised approximately 60 per cent of his overall pay. When he took holiday he received basic pay, together with any commission which happened to be due to him (from earlier sales) at that time. However, Mr Lock complained that his commission payments were lower for the months following his taking annual leave because he was unable to generate sales whilst on holiday. He claimed this amounted to an unlawful deduction from wages.

Following a reference to the Court of Justice of the European Union (ECJ) (which confirmed that commission payments must be taken into account when calculating holiday pay), the Employment Tribunal was asked to determine whether domestic legislation, in the form of the Working Time Regulations 1998 (WTR) can be interpreted so as to give effect to EU law. The Tribunal said that it could and consequently Mr Lock succeeded in his claim. BGT appealed.

For our previous bulletin on this case, click here.


The EAT rejected BGT's appeal, relying on its earlier decision in Bear Scotland & Ors v Fulton & Ors (see our bulletin here), which concerned non-guaranteed overtime payments and the calculation of holiday pay. Mr Justice Singh, sitting alone, rejected BGT's submission that the present case could be distinguished from Bear Scotland; there was no material difference between a case concerning non-guaranteed overtime from one concerning results-based commission.


The Judgment preserves the status quo and reinforces the conclusions drawn from earlier decisions: employers who are not yet including commission and overtime payments within holiday pay should address this situation as a matter of urgency. Otherwise they will be making underpayments for holiday for which workers can claim in the employment tribunal. For the many employers who are already including commission within holiday pay, it will be important to check that the method of calculation adopted is appropriate.

Butterworth v The Police and Crime Commissioners Office for Greater Manchester & Ors

Employment Appeal Tribunal decision concerning liability for post-termination acts of discrimination and harassment following a statutory transfer.


The Claimant was employed by Greater Manchester Police Authority ("GMPA") from 1996 to 2011, when her employment terminated under a settlement agreement. Eighteen months later, the GMPA was dissolved and its functions transferred to the Respondent under the Police Reform and Social Responsibility Act 2011 ("PRSRA"), the effect of which was similar to that of TUPE.

The Claimant issued proceedings against the Respondent (with whom she had never been employed), alleging various post-termination acts of sex discrimination, harassment and victimisation. The Tribunal struck out the claims, finding that in the absence of any employment relationship existing between the parties at any time it did not have jurisdiction to hear them. The Claimant appealed, on two primary grounds: (i) that the duty not to discriminate was a liability which transferred to a 'successor' employer under the PRSRA; and (ii) that section 108 Equality Act 2010 ("EqAct") applies, which prohibits discrimination and harassment by one person against another arising out of or connected to a relationship that used to exist between them.

Dismissing the appeal, the EAT held: the PRSRA could not be interpreted as creating liabilities for a 'successor' employer in respect of individuals it has never employed; and to enjoy protection under section 108 EqAct, a Claimant needs to establish some previous employment relationship with the Respondent.


The circumstances in this case are rather unusual but the decision should nevertheless be welcomed by 'transferee' employers concerned about the potential to incur unanticipated employment liabilities associated, loosely or otherwise, with statutory transfers. The decision may also serve to deter spurious claims from individuals with no previous connection to an organisation.

C Craig v Bob Lindfield & Sons

Employment Appeal Tribunal decision on whether a term of 'reasonableness' should be implied into a contractual provision permitting an employer to lay-off employees without pay indefinitely.


The Claimant's employment contract expressly incorporated the Respondent's Handbook, which allowed for lay-off and short-term working for an indefinite period without pay. After a drop in workflow, the Claimant was laid off for 4 weeks without pay. In the meantime, Mr Lindfield of the Respondent kept in touch and assured the Claimant that he would return as soon as work picked up. The Claimant then resigned and claimed that he had been constructively dismissed because the lay-off had gone on for an unreasonable period.

The Employment Tribunal held that reasonableness should not be implied so far as the length of lay-off was concerned – and even if that were incorrect, the period complained about was not unreasonable in all the circumstances. Consequently, there had been no repudiation of the employment contract and the Claimant was not justified in treating himself as constructively dismissed. The Claimant appealed.

The EAT dismissed the appeal, ruling that there was no such implied term. It expressly did not rule out the possibility of a constructive dismissal claim in such circumstances if an employer breached its duty of trust and confidence, for example, by prolonging the lay-off unduly simply to maximise profits, but this was not the case in the circumstances.


This decision is helpful for employers, reinforcing the common law principle that courts and tribunals will not be quick to imply variations to express contractual terms unless there is a need to do so. When employers expressly reserve discretion in respect of contractual rights there is an implied obligation that such discretion is exercised in a manner which is neither irrational, nor perverse – but no such fetter exists in the absence of a discretionary trigger.

Stimpson v Citibank N.A.

Employment Tribunal decision on whether a trader had been dismissed unfairly for disclosing confidential client information.


The Claimant was a FOREX trader with the Respondent. He was dismissed for gross misconduct when it was discovered that several years earlier (2010–2012) he had disclosed confidential client information to other traders at different banks via Bloomberg chats. In justifying its decision the Respondent applied a strict reading of its Handbook and Code of Conduct as they related to the sharing of confidential information. The Claimant claimed wrongful and unfair dismissal.

The ET found in favour of the Claimant. It held the Respondent's investigation was inadequate in that it failed to consider how the Code of Conduct was actually applied in the FOREX business or the extent to which the information shared by the Claimant was already in the public domain. The Tribunal considered that a reasonable investigation would have revealed a culture of information sharing between FOREX traders (including the Claimant's immediate superiors) and that the Claimant might reasonably have believed this was permitted at the time.


It is worth noting that the Tribunal was particularly influenced by the Respondent's failure to interview any witnesses who might have corroborated the Claimant's defence and the fact the Claimant had not shared confidential information for 3 years, ever since he was instructed by management to avoid disclosing confidential information via online chats. However, this case serves as a useful reminder that employers should not ignore relevant surrounding circumstances when deciding whether to terminate employment. Contracts and internal policies should not be read and relied upon in isolation.

Croydon Health Services NHS Trust v KJ Beatt (2016)

Employment Appeal Tribunal decision concerning a claim for unfair dismissal and whether misconduct, or the making of protected disclosures, were the real reason for termination.


Mr Beatt, a cardiologist, was dismissed for gross misconduct. He brought a claim before the employment tribunal, alleging that he had been automatically unfairly dismissed because the termination was motivated by his having made several protected disclosures about health and safety concerns, rather than any misconduct on his part. He claimed the disciplinary process was a sham which was designed to remove him for whistleblowing.

In rejecting the trust's evidence, the Employment Tribunal made a link between a number of the disclosures relied upon by Mr Beatt and some of the allegations of misconduct. It was unpersuaded by the magnitude of the charges and consequently concluded that the disclosures were the principal factor operating on the minds of the disciplinary panels. Accordingly the dismissal was automatically unfair. The Trust appealed.

The EAT upheld the appeal in favour of the Trust. It found the Tribunal had embarked upon its own assessment of the misconduct charges against Mr Beatt. The Tribunal had provided no analysis leading to the conclusion that the trust's evidence of misconduct was false. The EAT confirmed the Tribunal should have adopted the "timeless" basis for determining the reason for dismissal, being: "the set of facts known to the employer, or [the] beliefs held by him, which cause him to dismiss the employee". The case was remitted to a different tribunal for reconsideration.


This case serves as yet another reminder that employment tribunals are not permitted to substitute their own views for those of the employer. The tribunal's role is to determine what factors were on the mind of the employer when it made the decision, not the factors the tribunal itself believes, on its own assessment.