Frontline UK Case Updates - July 2018

Latest UK Employment Law case updates - July 2018

1. Termination date not extendable in cases of genuine gross misconduct
2. Right of appeal critical to fair dismissal of suspected illegal worker
3. Warning issued following long-term absence was disability discrimination
4. Holiday pay should include regular voluntary overtime 

Termination date not extendable in cases of genuine gross misconduct

Lancaster & Duke Limited v Wileman (Employment Appeal Tribunal)

The EAT has confirmed that where an employer is entitled to dismiss an individual summarily for gross misconduct, that employee is unable to rely on their statutory minimum notice period to extend their deemed effective date of termination.

In this case, a senior employee was dismissed for gross misconduct following a series of workplace incidents and a failure to disclose her knowledge that a colleague planned to leave the business. The dismissal, which was issued without notice, any due process or any right to appeal, took effect two days before the second anniversary of the employee's employment; on which date she would have accrued protection against unfair dismissal. 

The employee alleged that her effective date of termination should be extended to accommodate her statutory minimum entitlement to one week's notice, which would give her the requisite length of service to bring an unfair dismissal claim.  The Tribunal agreed and unsurprisingly found her dismissal to be substantively unfair. On appeal, however, the EAT noted that the wording of  the relevant legislation, along with assumptions made in previous case law, made clear that rights to statutory minimum notice could be discounted where a party is entitled to terminate without notice on the grounds of gross misconduct. It held that the Tribunal had erred in its approach, and remitted the question of whether the employee's actions genuinely constituted gross misconduct for a determination.

In deciding this case, the EAT has formally confirmed a position which has been long-assumed in case law and leading textbooks. The question of what is sufficient to exceed the threshold of gross misconduct entitling dismissal without notice, however, should remain subject to careful, case-by-case assessment.

Right of appeal critical to fair dismissal of suspected illegal worker

Afzal v East London Pizza Ltd t/a Dominos Pizza (Employment Appeal Tribunal)

The EAT has held that a dismissal will generally be unfair where an employee (who qualifies for protection against unfair dismissal) is dismissed without a right of appeal, in circumstances where the employer has a genuine but erroneous belief that an individual's right to work for UK immigration purposes is invalid or has expired.

The relevant employee in this case, a Pakistani national, had worked for his employer under time limited immigration permission. When this expired, he applied for indefinite leave to remain based on his 5 years' residence in the UK. He attempted to email evidence of such application, which would confer an ongoing right to work, to his employer. The employer could not open the attachment and, in the genuine belief that his continued employment would constitute illegal working, effected an urgent dismissal. Upon learning of their mistake, the employer subsequently offered re-engagement as a new starter but without preserving continuity of employment or offering retrospective pay. The employee claimed unfair dismissal.

The Tribunal held that the dismissal was fair on the basis that: (i) the employer's belief that continued employment would be in breach of statute was both reasonable and genuine, and could be justified as "some other substantial reason" for the purposes of the Employment Rights Act 1996; and (ii) whilst it is 'generally good practice' to include a right to appeal in termination correspondence, it was not necessary in this instance since there were no grounds for 'back-calculating or back-filling' a belief it did not have at the point of termination.

The EAT disagreed, noting that the provision of the ability to appeal is 'virtually universal' in modern employment relations practice. Whilst there may be limited cases in which a right of appeal is superfluous, this was not one; instead it would have offered an appropriate forum in which the employer's mistaken belief could have been rectified. On receipt of appropriate evidence, the employee could then have been re-instated with no risk of sanction on the grounds of illegal working. The employee's appeal was permitted and the case remitted to the Tribunal for determination.

This decision does not penalise employers for being cautious and – in view of the significant civil and criminal penalties for employing illegal workers - dismissing those they reasonably believe do not have appropriate immigration permissions. However, it does stress that a fair investigation and process, including a right to appeal, will be vital for establishing a fair dismissal. Employers should also proactively remind immigrants of such application deadlines in order to avoid unnecessary dismissals.

Warning issued following long-term absence was disability discrimination

DL Insurance Services Limited v O’Connor (Employment Appeal Tribunal)

The EAT has held that a decision to issue a disabled employee with a written warning in response to an extended period of sickness absence , which followed an otherwise irregular history of attendance, was not objectively justified and therefore represented an act of unlawful discrimination arising from her disability.

The employee in this case knew of the employee’s disability and had previously taken care to accommodate the frequent and long periods of sickness absence it caused her. However, after a particularly long absence, the employer considered that it should initiate disciplinary proceedings and ultimately issued her with a written warning on the basis that she had been absent for 60 days in the previous 12 months, which significantly exceeded the relevant ‘trigger points’ in their sickness absence policy. This move also extinguished the employee’s right to contractual sick pay while the warning subsisted. The employee initiated a discrimination claim in response, alleging that she had been treated unfavourably because of something (i.e. her unavoidable absences) arising in consequence of her disability.

Both the Tribunal and EAT upheld her claim, disregarding the employer’s attempt to justify objectively the written warning as a proportionate means of achieving a legitimate aim. Both considered that the employer’s inability to rely on this defence stemmed from its failure to follow due process: whilst aims of improving attendance levels were legitimate, the employer had not spoken to the employee’s line manager to assess the impact of continued absence, had not made any referrals to occupational health in line with internal policy, and ultimately could not explain why they thought that a warning would facilitate a return to work from serious illness.

This case indicates the importance of implementing a formal sickness absence procedure and following it in all cases. Managing ongoing sickness absence is a challenging issue which will require careful assessment on a case-by-case basis. However, the consistent application of a justifiable, standardised absence process may help employers to evidence the proportionality of the actions they deem necessary.

Holiday pay should include regular voluntary overtime 

Flowers v East of England Ambulance Trust (Employment Appeal Tribunal)

The EAT has re-emphasised the fact that entirely voluntary overtime payments should be factored into the calculation of holiday pay where they are made over a sufficient period of time on a regular or recurring basis, so as to justify the label ‘normal remuneration’.

Employees of the relevant ambulance trust worked irregular overtime which was classified as either: (i) non-guaranteed shift-overrun periods, to undertake mandatory work that exceeded the end of a scheduled shift; and (ii) genuinely voluntary overtime for which they signed up of their own accord. The employees considered that their holiday pay should factor in such overtime payments, relying in part on their contracts stating that holiday pay would include ‘regularly paid supplements… including payments for work outside normal hours’ because it reflected their usual pay, when  calculated over a 3 month reference period. They advanced claims for unlawful deductions of holiday pay on the basis of both this contractual wording and their general right to receive ‘normal remuneration’ whilst on holiday under the Working Time Directive (“WTD”), as interpreted within EU and UK case law.

The Tribunal distinguished between the two types of overtime, holding that whilst non-guaranteed shift-overrun payments should form part of ‘normal remuneration’ under both the relevant contractual provision and the WTD, whether or not an individual worked voluntary overtime was at their absolute discretion and so should not be included when calculating holiday pay. On appeal against the latter point, the EAT disagreed. It held that previous case law had clearly established that voluntary overtime payments should be factored into holiday pay calculations where it was carried out over a sufficient period of time on a regular and/or recurring basis so as to justify the description ‘normal’. Working patterns must therefore be assessed on a case-by-case basis as a matter of fact – a task which was remitted for completion by the Tribunal. 

This case re-emphasises that when assessing holiday pay, an employer should focus on an employee’s regular remuneration in fact, regardless of whether elements of pay are due in respect of voluntary or non-contractual overtime. This will inevitably require case-by-case assessment and lead to increased costs but failure to do so will create a latent ticking-time-bomb liability.