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Employment Update 22 July 2011


United Kingdom

Read the 'Employment Law Update' newsletter, 22 July 2011, on

Welcome to our fortnightly round-up of what's happening in employment law.

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Holiday and long term sick leave - AG opinion

The Advocate General has delivered her opinion in the German case KHS AG v Schulte, which examines the relationship between holiday entitlement under the Working Time Directive and long-term sick leave.

Although the opinion is not yet available in English, an ECJ press release confirms that EU law does not require workers on long-term sick leave to accumulate the right to paid annual leave or payment in lieu of annual leave entitlement indefinitely, in order to achieve the Directive's objective of enabling workers to recuperate. The Advocate General emphasised that the purpose of annual leave, which is to recover from the effort and stress of the working year and draw new strength for the rest of the working year, is not achieved if that leave is not taken until years later. Accumulating entitlement over several years, which may double or triple the minimum leave entitlement, does not increase the recuperative effect.

The Advocate General also confirmed that a national law under which annual leave entitlement expires 18 months after the end of the leave year is consistent with the purpose of the Directive, as workers would have up to two and half years to take their leave entitlement. The 18 month period represents a guideline which Member States should follow as far as possible for the purposes of implementing the Directive. The Advocate General also considered that a possible carry-over period of only six months would be insufficient.

The Advocate General's opinion is not binding on the European Court of Justice so it remains to be seen whether this opinion will be followed. 

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Dismissal for refusing pay cuts

The Employment Appeal Tribunal (EAT) has confirmed that an Employment Tribunal applied the wrong test when considering whether dismissing an employee for refusing to accept a pay cut was fair. Instead of focusing on the reasonableness of the employer's actions, the Employment Tribunal had focused on the reasonableness of the employee's refusal to accept the change.

In Garside and Laycock Ltd v Booth, the employer was undergoing trading difficulties and asked its employees to accept a 5% pay cut. The employer had a number of meetings with staff, after which employees were asked to vote on whether they would accept a 5% pay cut in order to avoid further redundancies. A majority of the employees voted in favour. Mr Booth was one of only two employees who ultimately refused to accept the pay cut. The employer had further meetings with Mr Booth and subsequently terminated his employment, offering him a new contract on the reduced pay. Mr Booth was not prepared to accept this and appealed against the decision to dismiss him. During the appeal hearing, Mr Booth was offered a review of his pay levels after 6 months, but he rejected that as well.

Mr Booth brought a claim for unfair dismissal. The Employment Tribunal upheld his claim, confirming that the reason for the dismissal was "some other substantial reason" but the employer had failed to show that the dismissal was fair. It noted that the employer's financial situation was not desperate, it had engaged in a poor attempt at consultation and concluded that it was reasonable for Mr Booth to seek to maintain his terms and conditions and not to agree to a significant reduction in pay. The employer appealed against the finding of unfair dismissal.

The EAT allowed the employer's appeal and remitted the case to a fresh tribunal. Although the Employment Tribunal had identified an earlier case on this point, it had relied on a principle that was ultimately rejected in that case. It also assessed the reasonableness of the employer's decision by asking what it was reasonable for Mr Booth to do. This is the reverse of what is required under the Employment Rights Act 1996 (ERA), which requires a tribunal to consider whether the employer acted reasonably or unreasonably in treating the reason as a sufficient reason for dismissing the employee. The EAT noted that although an employer's decision, in order to be reasonable, may take account of whether the employee affected by the decision regards it as reasonable, that is very different from saying that the decision depends on what the employee thinks is reasonable or unreasonable. The focus of the Tribunal's attention is required to be on the reasoning and reasonableness of the employer.

The EAT also commented that when determining whether a dismissal is fair "in accordance with equity" (s. 98(4)(b) of ERA), it may be highly relevant to consider who the cuts would fall on (e.g. the whole workforce or non-management staff only). Reasonableness would depend upon the procedural aspects of a decision, which requires a close focus upon the nature of the proceedings and how appropriate they were. 

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EHRC applies to intervene in religious discrimination claims

The Equality and Human Rights Commission (EHRC) has applied to intervene in four cases at the European Court of Human Rights all involving religious discrimination in the workplace.

If given leave to intervene, the EHRC states that it will argue that the way existing human rights and equality law has been interpreted by judges is insufficient to protect freedom of religion or belief. It will say that the courts have set the bar too high for someone to prove that they have been discriminated against because of their religion or belief; and that it is possible to accommodate expression of religion alongside the rights of people who are not religious and the needs of businesses.

The EHRC has stated that it is concerned that rulings already made by UK and European courts have created a body of confusing and contradictory case law. It provides the example that some Christians wanting to display religious symbols in the workplace have lost their legal claim so are not allowed to wear a cross, while others have been allowed to after reaching a compromise with their employer. The EHRC thinks there is a need for clearer legal principles to help the courts consider what is and what is not justifiable in religion or belief cases, which will help to resolve differences without resorting to legal action.

The four cases that the EHRC has applied to intervene in include the Eweida case, which related to an employee's entitlement to wear a cross at work and the Ladele case, which involved the requirement to officiate at civil partnerships.

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Best Practice Code for High-Quality Internships

A new voluntary Best Practice Code for High-Quality Internships has been published this week, developed by the Gateways to the Professions Collaborative Forum.

The Code will provide guidance to professions offering internships on best practice for the design and running of internships, and will help to ensure that both interns and employers obtain the maximum benefit from such placements. The Code sets out six principles of best practice for internships: preparation; recruitment; induction; treatment; supervision and mentoring; and certification, reference and feedback.

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Women on Boards:call for quotas

The European Parliament has adopted a resolution on women and business leadership which calls for an increase in female representation in corporate management bodies to 30% by 2015 and to 40% by 2020, if voluntary measures do not manage to increase the proportion of women.

Vice-President Viviane Reding, the EU's Justice Commissioner, said "It is good news that the European Parliament supports the European Commission's approach towards more women in economic decision-making positions. Today's vote confirms that the Commission is acting at the right time and in the right way.

"We need to act now because in economically difficult times it’s essential to use the untapped potential of the well-educated female workforce. We are taking the right approach because we want to give companies a last chance to act through credible self regulation. I have called on publicly listed companies in the EU to sign the "Women on the Board Pledge for Europe" to voluntarily increase women's presence on corporate boards to 30% by 2015 and to 40% by 2020. However, if there has not been credible progress by March 2012, I stand ready to take the necessary legislative steps at EU level".

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