Enclosed with this Bulletin are three revised chapters: continuity of employment, unfair dismissal III – remedies for unfair dismissal and wages i – deductions from pay. The chapter on continuity of employment has been updated in light of the recent ECJ decision in R v Secretary of State for Employment, ex parte Seymour-Smith & Perez [1999] IRLR 253, which held that the question as to whether the two year qualifying period for claims of unfair dismissal has a disparate effect between men and women amounting to indirect sex discrimination lay with the national court (the House of Lords) to decide. This case is discussed in more detail under Sex Discrimination, below.

Section 1 of the Bill proposes to amend the Trade Union and Labour Relations (Consolidation) Act 1992 by inserting a new Schedule A1.

This Schedule sets out the legal procedures for obtaining union recognition (for employers of 21 employees or more) for collective bargaining purposes.

Schedule 1 to the Bill also provides that a worker has a right not to be subjected to any detriment by an act or deliberate failure to act by his employer if the act or failure is on the grounds that the worker:

(a) acted with a view to obtaining or preventing recognition of a union by the employer;

(b) indicated that he supported or did not support recognition of a union by the employer;

(c) acted with a view to securing or preventing the ending of bargaining arrangements;

(d) indicated that he supported or did not support the ending of bargaining arrangements;

(e) influenced or sought to influence the way in which votes were to be cast by other workers in a ballot;

(f) influenced or sought to influence other workers to vote or to abstain from voting in such a ballot;

(g) voted in such a ballot; or

(h) proposed to do, failed to do, or proposed to decline to do, any of the above.

If a worker suffers a detriment for any of the above reasons, he has a right to present a claim within three months to an employment tribunal. However, this does not apply if the action or failure to act by the worker constitutes a breach of his worker’s contract with the employer or was an unreasonable act or omission. Further, this does not apply if the worker is an employee and the detriment amounts to a dismissal within the meaning of the ERA 1996. If an employee suffers such a detriment, he may bring a claim to a tribunal on the grounds of unfair dismissal or that he was made redundant and the reason or principal reason for his selection for redundancy was one of the above grounds. There is no qualifying period to bring a claim under this section.

The Bill also makes provision for maternity and parental leave, in accordance with the requirements of the Parental Leave Directive. Schedule 3 to the Bill provides that there is to be a minimum 18 week ordinary maternity leave period with a right to return to the same or similar position. Further, the Bill provides that employers are not permitted to allow an employee to return to work during a compulsory leave period, which is a period to be prescribed by regulations. However, the compulsory leave period can be no less than two weeks.

The Bill provides for the Secretary of State to make regulations entitling an employee who has a specified service period and has (or expects to have) responsibility for a child to be absent from work on unpaid parental leave in order to care for that child. The regulations will determine when this leave may be taken and how much leave employees are to be granted but, in accordance with the Directive, this period is not to be less than three months. An employee may have the choice to exercise all or part of the parental leave entitlement by either varying the terms of his contract of employment as to hours of work or by varying his normal working practice as to hours of work. An employee must be allowed to return to work to the same or similar position.

The Bill provides for employees to be given the right to take a reasonable amount of time off during their working hours, where it is reasonable for them to do so, in order to deal with a domestic incident (defined as an incident which occurs in the employee’s home or affects a member of the employee’s family or a person who relies on the employee for assistance).

The Bill grants workers the right to be accompanied to a disciplinary or grievance hearing by either an official of a trade union or a fellow worker. The worker has the right to choose his companion. Further, the elected companion may address the hearing and he and the worker may confer throughout the course of the hearing.

Section 117 of the Employment Rights Act 1996 will be amended such that if an employment tribunal makes an award of compensation and the applicant has not been re-engaged or reinstated, the amount of compensation shall include an additional award of not less than 26 nor more than 52 weeks’ pay (unless that section does not apply — s 117(4)).

Further, the Bill provides for the following sums to be index linked to the RPI:

(a) guarantee payments (s 31, ERA 1996);

(b) unfair dismissal awards (basic and compensatory) (s 120(1) and 124(1), ERA 1996 and s 156(1), TULR(C)A 1992;

(c) the maximum amount payable on insolvency of employer (s 186(1)(a) and (b), ERA 1996);

(d) the maximum amount of a week’s pay for purposes of certain calculations (s 227(1), ERA 1996); and

(e) remedies for the right to membership of a trade union (s 176(6), TULR(C)A 1992).

The Employment Rights Act 1996 consolidates the law relating to substantive employment rights, and the Employment Tribunals Act 1996 consolidates the law relating to employment tribunals and the Employment Appeal Tribunal; both Acts came into force on 22 August 1996. Between them, the two Acts consolidate in full the remaining provisions of the Employment Protection (Consolidation) Act 1978, together with a great deal of other employment legislation (e.g. the relevant provisions of the Wages Act 1986 and Sunday Trading Act 1994). The Trade Union and Labour Relations (Consolidation) Act 1992, which consolidated those aspects of employment law which relate to such areas as the rights and responsibilities of trade unions, and provisions relating to industrial action, are not affected by this exercise otherwise than in some very minor respects. The legislation relating to discrimination on grounds of race, sex and disability is also largely unaffected.

The Employment Rights (Increase of Limits) Order 1998 (SI 1998 No 924), which came into force on 1 April 1998, increases the limits on awards under employment protection legislation, following the statutory annual review. The new limits, together with the existing limits and details of the chapter references affected (other than those chapters revised since April 1998), are set out below.

(1) The daily limit on guarantee payments rises from £14.50 to £15.35 per day. (See G9011 and G9014 guarantee payments.)

(2) The limit on a week’s pay for calculating basic and compensatory awards for unfair dismissal, statutory redundancy payments, and weekly amounts payable under the insolvency provisions of the ERA 1996 for debts such as arrears of pay, rises from £210 to £220 per week. (See W2002 a week’s pay, I5022 insolvency of employer and T6035 trade unions and the closed shop, and U6011, U6015, U6017 and U6047 unfair dismissal iii. Note that as a result, both the maximum statutory redundancy payment (see R3048) and the maximum basic award for unfair dismissal rise from £6,300 to £6,600.)

Note that William Hill Organisation Ltd v Tucker, referred to in A1067, has now been reported at [1998] IRLR 313.

In February 1998, the DTI published a consultation paper containing proposed amendments to the legislation which requires employers to inform and consult employee representatives in relation to a transfer of an undertaking (see C5002 et seq.) or collective redundancies (see C5019 et seq.). The main proposals are as follows.

Whom to inform or consult. Currently, companies can choose to inform and consult either a recognised union, or elected representatives of the affected workforce. If the proposals are adopted, employers would have to consult representatives of any recognised trade union, and could only consult other types of representatives where there were employees who were not covered by a union.

Non-union representatives. It is proposed that non-union representatives should be capable and independent and either be elected for the purpose (on an ad hoc basis), or elected as a standing body (a suitable existing standing body could be used).

Elections. Currently, there are no provisions for the conduct of elections. It is proposed that where employee representatives are to be specially elected, the conditions set out in the consultation paper (paragraph 26) must be followed.

Discharge of duty. Where an employer genuinely provides full opportunities for the election of representatives but the employees fail to take this up, the employer can discharge its duty by providing the required information directly to individual employees.

Compensation. It is proposed that the maximum compensation payable to each employee for the employer’s failure to meet its obligations to inform and consult in relation to transfers, will be increased from four weeks’ pay to ninety days’ pay. A similar sum (with no provision for set-off between the two) would apply in relation to such failure in relation to redundancies.

‘Affected’ employees. The employer will be required to consult all those who may be affected by the dismissals or measures to be taken, not just those who may be dismissed at that time. In cases of both redundancy and transfers, ‘affected’ will be taken to mean affected either directly or indirectly.

In Goodwin v Patent Office [1999] IRLR 4, the issue for the EAT was whether the applicant was a ‘disabled person’ within the meaning of section 1(1) of the DDA 1995 (see D4007 et seq.). The EAT (allowing the applicant’s appeal from a decision of the employment tribunal to the contrary) held that he was. The EAT stated that tribunals should adopt an inquisitorial or interventionist approach in disability cases, and should adopt a purposive approach to the construction of the DDA 1995. They should refer to the Guidance issued by the Secretary of State, the Code of Practice or (where there is doubt as to whether a mental illness falls within the definition) the World Health Organisation’s International Classification of Diseases. In deciding whether an impairment affects the applicant’s ability to carry out normal day-to-day activities (see D4013), employers must focus on what an employee either cannot do or can only do with difficulty, rather than on the things that he can do. The fact that a person can do a certain thing does not mean that his ability to carry out the activity is not impaired. The decision also confirms that a ‘substantial’ impairment in the DDA 1995 (see D4014 et seq.) means ‘more than minor or trivial’ rather than ‘very large’. In deciding this issue, the tribunal should examine how medical treatment has actually affected an applicant’s abilities and then consider what effects there would have been but for such treatment.

The Disability Discrimination (Repeal of section 17 of, and Schedule 2 to, the Disabled Persons (Employment) Act 1944) Order 1998, which came into force on 1 April 1998, repeals section 17 of, and Schedule 2 to, the 1944 Act, which provided for the establishment of a national advisory council and district advisory committees. The effect of this repeal appears to be that the National Disability Council, established under section 50 of the DDA 1995 (see D4061), is now (by virtue of section 50(10)) no longer barred from giving advice to the Secretary of State on its own initiative regarding the operation of, and arrangements made, under various statutory provisions (including the provisions of Part II of the DDA 1995, relating to discrimination in employment).

In O’Neill v Symm and Co Ltd [1998] IRLR 233, the EAT held that where an employer dismissed a disabled employee but was unaware of the employee’s disability, the dismissal could not constitute less favourable treatment of that employee ‘for a reason which relates to a disabled person’s disability’, within the meaning of section 5(1)(a) of the DDA 1995. Therefore, the dismissal did not amount to discrimination against that employee for the purposes of that section. (See the discussion of that issue in D4035.)

O’Neill v Symm was referred to in Ridout v T C Group [1998] IRLR 628, in which the issue was whether the employers were under in breach of their duty under section 6 of the DDA 1995 to make a reasonable adjustment to a room with bright lights, in which they were interviewing a job applicant who suffered from photosensitive epilepsy.

On the facts, the EAT held that the applicant had a rare form of epilepsy, and the employment tribunal were therefore entitled to conclude that no reasonable employer could be expected to know, without being told in terms by the applicant, that the interview arrangements might disadvantage her. Section 6(6)(b) of the DDA 1995 therefore applied (no duty owed where employer is unaware of disability — see D4041). The EAT stated that that provision requires a tribunal to measure the extent of the duty, if any, against the actual or assumed knowledge of the employer both as to the disability and its likelihood of causing the individual a substantial disadvantage in comparison with persons who are not disabled.

In Morse v Wiltshire County Council [1998] IRLR 352, the EAT recently confirmed that whether or not any adjustments were reasonable in the circumstances will be determined by the employment tribunal objectively. Thus it may not be sufficient for an employer simply to assert that adjustments were considered and thought to be unreasonable if the employment tribunal finds that there were other reasonable adjustments which could have been made by the employer. The EAT also confirmed in that case that the duty to make adjustments also exists in respect of dismissal. This means, for example, that selection criteria in a redundancy exercise may have to be adjusted to take account of disadvantages caused by a disability. (See D4039.)

In Clark v Novacold Ltd [1998] IRLR 420, the EAT upheld the employment tribunal’s decision that when the applicant was dismissed for absence due to disability, he had not been treated less favourably for a reason which related to his disability than others to whom that reason did not apply, within the meaning of section 5(1)(a) of the DDA 1995. This was because he was treated no differently than a person who was not disabled would have been treated in similar circumstances.

The EAT held that the proper comparator, where a disabled person is dismissed for absence due to disability, is someone who is off work for the same amount of time but for a reason other than disability. Such a comparator would possess all the characteristics of the applicant save for the fact of disability, and thus a comparison between them would prove whether or not the difference in treatment was due to the applicant’s disability. (See the discussion of this issue in D4036.)

However, the EAT held that the employment tribunal had not been correct in assuming that section 5(2) of the DDA 1995 (failure to make adjustments — see D4037) should only be considered if they found in favour of the applicant under section 5(1). In fact (stated the EAT), section 5(2) gives additional rights which are not contingent on the applicant having succeeded under section 5(1).

In British Sugar plc v Kirker [1998] IRLR 624, the EAT took a contrary view (compared with Clark v Novacold Ltd referred to above, decided by a different division of the EAT) of the issue of whether section 5(1) of the DDA 1995 (less favourable treatment) requires a like-for-like comparison. In this case, the EAT held that no such comparison is required, unlike in the SDA 1975 and RRA 1976. The scheme of section 5(1) simply requires the applicant to show that he was less favourably treated than other employees where the reason for his treatment — a reason connected with his disability — does not apply to those other employees.

A further case on the issue of ‘who is an employee?’ (see E5002 et seq.) was Fleming v Secretary of State for Trade and Industry [1997] IRLR 682, in which the Court of Session in Scotland held that the appellant managing director and majority shareholder was not an ‘employee’ of the company for the purposes of the employment protection legislation. The court held that whether or not a person is an employee is a question of fact, and the fact that a person is a majority shareholder is always a relevant factor, and may be decisive. However, the court would not lay down any rule of law to that effect. In the present case, there were also other factors indicating that the appellant was not an employee, i.e. that he was able to decide not to draw his salary and that he personally guaranteed the company’s obligations.

In White and others v Chief Constable of South Yorkshire Police and others [1999] IRLR 110, the House of Lords allowed the Chief Constable’s appeal against the Court of Appeal’s decision in Frost and others v Chief Constable of South Yorkshire Police and others [1997] IRLR 173 — see E6010), and held that the police officers at the Hillsborough Stadium disaster could not recover damages for psychotic injuries caused by their involvement. The House of Lords held that the police officers, not being within the range of foreseeable physical injury, were ‘secondary’ victims and could only recover if they came within the ‘control mechanisms’ set out in Alcock v Chief Constable of South Yorkshire Police and others [1992] 1 AC 310 (the case dealing with the claims, for psychotic injury, of relatives of victims of the Hillsborough disaster). These were:

(i) there must be a close tie of love and affection between plaintiff and victim;

(ii) the plaintiff must have been present at the accident or its immediate aftermath;

(iii) the psychotic injury must have been caused by the direct perception of the accident or its immediate aftermath and not upon hearing about it from someone else. The fact that the plaintiff police officers were employed by the defendant Chief Constable was not a reason for treating them as primary victims and allowing them to recover damages for psychiatric injury, in circumstances in which they would otherwise be secondary victims and not satisfy the criteria set out above. Nor were the police officers entitled to be treated as primary victims because they had given assistance at the scene and could therefore be regarded as ‘rescuers’. There is no authority whereby a rescuer is in any special position with regard to liability for psychiatric injury.

Note that the Court of Appeal decision in Kapfunde v Abbey National plc (see E6070) has now been reported at [1998] IRLR 583.

In Levez v TH Jennings (Harlow Pools) Ltd [1999] IRLR 36, the ECJ held that the two-year limitation in section 2(5) of the Equal Pay Act 1970 on arrears of remuneration is precluded if the section infringes the Community law principle of ‘equivalence’, which requires that a procedural rule must not discriminate as between community law rights and national law rights. The final decision is left to the English courts to determine whether that provision infringes the ‘equivalence’ principle, but it now appears very likely that the two-year limitation will be declared to be contrary to EU law. (See E7073 and E7073/1.)

The appeal from the Court of Appeal’s decision in Preston (see E8520) has now been heard by the House of Lords ([1998] 1 All ER 280), which has held that two questions should be referred to the ECJ. For a more detailed discussion of this decision (together with a discussion of the recent ECJ decision in Maggorian v Eastern Health and Social Services Board and another [1998] IRLR 86), see equal pay.

Note that the Public Interest Disclosure Act 1998, referred to (as a Bill) in H2001, received Royal Assent on 2 July 1998. It applies to disclosures relating to: crimes; breaches of a legal obligation; miscarriages of justice; dangers to health and safety; or damage to the environment (see further whistleblowers). Employees will be able to apply to an employment tribunal if they have suffered dismissal or victimisation. The Secretary of State will have power to make regulations on compensation awards and the bodies to whom a worker may make disclosure. At the time of writing, the Act is expected to come into force later in 1999. (See also under Unfair Dismissal II below.)

The House of Lords has reversed the decision of the Court of Appeal in Pickford v Imperial Chemical Industries plc ([1998] IRLR 435 — see H2044). Their Lordships held (by a majority) that the employer had not been negligent in failing to warn the plaintiff employee of the need to take breaks from her typing work. They also held that where the trial judge was unable to decide from the medical evidence alone what the exact cause of the plaintiff’s condition was, he was entitled to consider all the other evidence and conclude that she had failed to prove that the condition was caused by typing, as opposed to merely being associated with it.

In Boyle and others v Equal Opportunities Commission [1998] IRLR 717 the ECJ ruled on an application brought by five employees of the EOC that certain conditions of the EOC’s maternity scheme were void or unenforceable in that they discriminated against female employees and were thus contrary to Article 119 of the EC treaty and various EC directives, including 92/85/EEC (see M2001). The applications had been referred to the ECJ by the employment tribunal. The ECJ ruled inter alia that Article 11 of the 1992 Directive (see M2003) did not preclude a clause in an employment contract which made the payment during maternity leave of pay higher than statutory maternity pay (SMP) conditional on the worker returning for one month after the birth of the child, failing which the worker had to prepay the difference between the pay received and the SMP.

* The Social Security Benefits Up-rating Order 1999 (SI 1999 No 264) has raised the lower rate of SMP (see M2005) to £59.55 from 4 April 1999 (from £57.70). In addition, the lower earnings limit for National Insurance Contributions (M2004) has been increased to £66 a week (from £64).

* The Statutory Maternity Pay (Compensation of Employers) Amendment Regulations 1999 (SI 1999 No 363) came into force on 6 April 1999, amending the Statutory Maternity Pay (Compensation of Employers) and Miscellaneous Amendment Regulations 1994 (SI 1994 No 1882) (see M2007). These Regulations reduce the additional amount which can be recovered by a small employer in respect of SMP payments to 5% (formerly 7%).

In King v Hundred of Hoo Nursery [1998] IRLR 564, the EAT was required to consider the qualifying requirements for a woman who wishes to claim the right to return to work after maternity absence (see M2018). As a result of that case, it is suggested that the last part of the first paragraph of M2018 (beginning ‘The first such . . .’) should read as follows.

‘The first such requirement is that the employee must inform her employer in writing at least 21 days before her absence begins, or as soon as reasonably practicable:

(i) that she will be (or is) absent from work wholly or partly because of pregnancy or confinement; and

(ii) of the expected week of childbirth (or date if childbirth has already occurred).

(ERA 1996, s 75(1).)

In addition, the employee must include, with the information set out in (i) and (ii) above, the information that she intends to return to work with her employer pursuant to her right under section 79 (ERA 1996, s 80(1)). In King v Hundred of Hoo Nursery [1998] IRLR 564, the EAT held that in order to be ‘included’, this additional information need not be in writing, but may be notified orally with the information specified in (i) and (ii) above. The EAT also held that the additional information does not have to be provided at one and the same time as the information specified in (i) and (ii), in order to be regarded as having been "included" with that information.’

The DSS has now published the Partnership in Pensions Green Paper. This proposes the most radical overhaul of pension provision since the Pensions Act 1995. Its overall aim is to encourage workers to provide for their own retirement provision whilst maintaining a state system for the lowest paid. Essentially, the main proposals are that:

(a) the basic state pension will be maintained (with a minimum income guarantee for those on income support);

(b) the State Earnings Related Pension Scheme (SERPS) (see P2002) is to be replaced with a State Second Pension (SP) — there will be a tier system with those earning below £9,000 and those earning between £9,000 and £18,000 receiving enhanced benefits. It is aimed that SP will become a flat rate for lower earners once stakeholder pensions prove successful;

(c) stakeholder pension schemes will be introduced and be available to everyone. These are schemes with defined minimum standards and specified charging structures. Companies will be required to allow access to such schemes through the payroll system for employees not allowed access to an Occupational Pension Scheme; and

(d) employers will be able to make membership to an occupational pension scheme a condition of employment — although an employee opt-out will be available (perhaps with a condition that the employee has made suitable alternative pension arrangements).

It is proposed that the Welfare Reform Bill will introduce the basic framework for pension reform and then further consultation will take place on the detailed legislative provisions. A summary of the provisions is available, free, from Welfare Reform (Pensions), Freepost (HA4441) Hayes UB3 1BR. This is also available on the DSS website (www.dss.gov.uk/hq/pubs/pengp).

As anticipated in P2005, the 1986 Disclosure Regulations have now been replaced by the Occupational Pension Schemes (Disclosure of Information) Regulations 1996 (SI 1996 No 1655), with effect from 6 April 1997, which provide inter alia for specific sanctions for any breach to be enforceable by the new Occupational Pensions Regulatory Authority. A new requirement is that, for each scheme year which ends on or after 6 April 1997, an annual report must be made available free of charge to scheme members and recognised trade unions, which is required to contain more detailed information than was required under the 1986 Regulations.

Note that the EAT decision in Adams v Lancashire County Council (see P2027) was subsequently reported at [1996] IRLR 154. An appeal against that decision was dismissed by the Court of Appeal, which substantially upheld the reasoning of Robert Walker J in the EAT; see [1997] IRLR 436.

* The pensions schemes earnings cap (see P2034) has been increased to £90,600 (from £87,600) from 6 April 1999 by virtue of the Retirement Benefits Schemes (Indexation of Earnings Cap) Order 1999 (SI 1999 No 592).

In Longden v British Coal Corporation [1998] IRLR 29, the House of Lords allowed in part the employers’ appeal against the decision of the Court of Appeal ([1995] OPLR 165 — see P2035). It upheld the Court of Appeal’s decision that the incapacity pension, payable to the plaintiff between his early retirement following an accident at work and normal retiring age, did not have to be set off against his damages for the difference between the retirement pension he would have received, and the incapacity pension he would receive, after normal retiring age. However, the House allowed the employers’ appeal in holding that an appropriate portion of the lump sum payment which the plaintiff received when he was prematurely retired on ill-health grounds would be set off against his claim for loss of retirement pension.

In Weathersfield Ltd v Sargent [1999] IRLR 94, the receptionist at a truck rental company was instructed to tell black or Asian enquirers that no vehicles were available. As a result she found her position intolerable and resigned. The respondent argued that the complainant could not establish that she had been less favourably treated on racial grounds, because the treatment had to be related to the race of the applicant and not that of a third party. However, the Court of Appeal held that an employee is unfavourably treated on racial grounds if she is required to carry out a racially discriminatory policy, even though the instruction concerns others of a different racial group to the applicant. The court upheld the EAT decision in Showboat Entertainment Centre Ltd v Owens (see R1009).

With effect from 1 October 1997 (by virtue of the Armed Forces Act 1996 (Commencement No 3 and Transitional Provisions) Order 1997 (SI 1997 No 2164)), there came into force amendments made (by section 23 of the Armed Forces Act 1996) to the provisions of the Race Relations Act 1976 relating to racial discrimination claims by members of the armed forces. Briefly, the effect of these changes is as follows.

Section 75 of the 1976 Act (see R1033) has been amended by substituting a new subsection (9). Previously, a complainant was excluded from the right to make a complaint to an employment tribunal, but could only use the internal service redress procedures. Now a complainant may go to an employment tribunal, but must invoke the internal service redress procedures first, although this requirement does not apply in the circumstances specified in the Race Relations (Complaints to Employment Tribunals) (Armed Forces) Regulations 1997 (SI 1997 No 2161), which also came into force on 1 October 1997. These circumstances are broadly where an internal complaint has been made and has not been withdrawn.

In Northern Joint Police Board v Power [1997] IRLR 610, the EAT held, on a preliminary point, that discrimination against an English person, or a Scot, based on their ‘national origins’ is discrimination on ‘racial grounds’ within the meaning of section 3(1) of the 1976 Act (see R1006). The EAT held that the Scots and the English are separate ‘racial groups’ defined by reference to ‘national origins’. In order to determine whether a group is defined by reference to ‘national origins’, there must be identifiable elements (both historical and geographical), separate from an individual’s origins, which at some point in time reveal the existence of a nation. On that basis, there was no doubt that England and Scotland were once separate nations, and therefore an employment tribunal can entertain an allegation of discrimination on the basis of national origins. It is then for each individual to show that his origins are embedded in such a nation, and that he was discriminated against in that context.

However, the EAT held that the applicant could not bring a claim on the basis that he had been discriminated against on grounds of his ‘ethnic origins’. That term has a racial flavour to it, and there was no common racial element within the group classified as Scots, given the wide variations in origin, background and race within Scotland.

Note that the Court of Appeal decision in Harrods Ltd v Remick (see R1022) has now been reported at [1997] IRLR 583.

In Tattari v Private Pensions Plan Ltd [1997] IRLR 586, the Court of Appeal held that PPP is not a ‘qualifying body’ within section 12 of the Race Relations Act 1976 (see R1029), because it does not have the power or authority to confer on a person a professional qualification or other approval needed to enable them to practice a profession, exercise a calling or take part in some other activity. Thus the applicant could not bring a complaint that PPP’s failure to include her on their list of specialists, because it did not recognise her EEC certificate of higher specialist training, was discriminatory.

In Waters v Commissioner of Police of the Metropolis [1995] IRLR 589, the Court of Appeal upheld the decision of the EAT ([1995] ICR 510 — see R1043 and also Sex Discrimination below).

In Nagarajan v London Regional Transport [1998] IRLR 73, the Court of Appeal upheld the decision of the EAT that the appellant employee had been discriminated against by way of victimisation under the Race Relations Act 1976 (see R1016) in connection with two job applications.

The Asylum and Immigration Act 1996 (Commencement No 3 and Transitional Provisions) Order 1996 (SI 1996 No 2970) brought section 8 of that Act (see R2025/1) into force on 27 January 1997. It does not apply to employment which began before that date.

The Immigration (Restrictions on Employment) Order 1996 (SI 1996 No 3225), which also came into force on 27 January 1997, sets out the exceptions to, and the documents which provide a defence to, section 8 of the Asylum and Immigration Act 1996 referred to above.

The Order:

Note that in Marshall v NM Financial Management Ltd [1997] IRLR 449, the Court of Appeal upheld the decision of the deputy High Court judge ([1997] IRLR 20 — see R4002 and R4012).

For a case in which the Court of Appeal held that an employer’s interest in maintaining a stable workforce (see R4004/1) is one which can be properly protected, within the limits of reasonableness, by a non-solicitation covenant (although not in every case), see Dawnay Day & Co Ltd v De Braconier D’Alphen and others [1997] IRLR 442.

In Dentmaster (UK) Ltd v Kent [1997] IRLR 636, the Court of Appeal, allowing an appeal from the High Court judge, granted the plaintiffs an interlocutory injunction to enforce for a period of six months a post-termination covenant restraining the defendant ex-employee from soliciting the business of anyone who had been a customer of theirs during the last six months of his employment, and with whom he had dealt at any time in the course of his employment. This was held to be fair, on the basis of previous decisions (in particular the Office Angels case — see R4008), especially having regard to the brevity of the restraint period, and the limited scope of the covenant.

In FSS Travel & Leisure Systems Ltd v Johnson [1998] IRLR 382, Mummery LJ in the Court of Appeal restated the law regarding the extent to which an employer can protect trade secrets by means of a restrictive covenant in an employee’s contract of employment (see R4005):

‘The critical question is whether the employer has trade secrets which can be fairly regarded as his property, as distinct from the skill, experience, know-how, and general knowledge which can fairly be regarded as the property of the employee to use without restraint for his own benefit or in the service of a competitor . . . It must be possible to identify information used in the relevant business, the use and dissemination of which is likely to harm the employer, and establish that the employer has limited dissemination and not, for example, encouraged or permitted its widespread publication … It is not sufficient for the employer to assert a claim that he is entitled to an accumulated mass of knowledge which he regards as confidential . . .’

With effect from 1 October 1997 (by virtue of the Armed Forces Act 1996 (Commencement No 3 and Transitional Provisions) Order 1997 (SI 1997 No 2164)), there came into force amendments made (by section 21 of the Armed Forces Act 1996) to the provisions of the Sex Discrimination Act 1975 relating to sex discrimination claims by members of the armed forces. Briefly, the effect of these changes is as follows.

Section 75 of the 1976 Act (see S2016(c)) has been amended by inserting new subsections (9A) to (9E). Previously, a complainant who was a member of the armed forces could make a complaint to an employment tribunal, in the same manner as a civilian complainant. Now an armed forces complainant may go to an employment tribunal, but must invoke the internal service redress procedures first, although this requirement does not apply in the circumstances specified in the Sex Discrimination (Complaints to Employment Tribunals) (Armed Forces) Regulations 1997 (SI 1997 No 2163), which also came into force on 1 October 1997. These circumstances are broadly where an internal complaint has been made and has not been withdrawn.

For a case in which the EAT applied the ECJ decision in P v S (see S2005/2) and held that discrimination arising from a declared intention to undergo a gender reassignment falls within the scope of the SDA 1975, see Chessington World of Adventures Ltd v Reed [1997] IRLR 556.

In Falkirk Council and others v Whyte [1997] IRLR 560, the EAT in Scotland upheld an employment tribunal’s decision that one of the selection factors applied by the employers was a ‘requirement or condition’ within the meaning of section 1(1)(b) of the SDA 1975, even though it was stated to be a ‘desirable’ qualification rather than an absolute bar to obtaining the post, where it was clear that the qualification was the decisive factor in the selection process. The EAT stated that if the case turned on whether the relevant factors had to become an absolute bar for the post in question, then cases such as Perera v Civil Service Commission (see S2007) would not be followed.

* The European Court of Justice has reached a decision in the case of R v Secretary of State for Employment ex parte Seymour Smith and Perez [1999] IRLR 253 as to the validity of the two year qualifying period for claims for unfair dismissal (see S2008 and S2010). A number of matters were ruled upon by the ECJ but the essence of the case, whether or not the two year period had such a disparate effect between men and women as to be indirectly discriminatory, was referred back to the national court (the House of Lords) to decide.

The ECJ ruled that any award of compensation for unfair dismissal constituted ‘pay’ within the meaning of Article 119 of the EC Treaty of Rome 1957. However, a claim for reinstatement or re-engagement would not be pay, with the result that any claim alleging sex discrimination in the statutory conditions relating to this area would fall under the Equal Treatment Directive. This opens the way for future claims against the unfair dismissal legislation in the employment tribunal since claims under Article 119 can be brought by all employees but claims under a Directive can only be brought by employees of an emanation of the State.

Further, the ECJ held that the point in time at which the validity of a rule is to be assessed may depend on various circumstances and it is for the national court to decide. The position at the time the law was passed must be considered in order to decide whether or not the Government acted ultra vires by passing the rule. Even if the rule was lawful at the time it was adopted (e.g. because there was no significant disparity between its effect on men and women at that time), it may be necessary to consider whether the law still conformed with the requirement of EC law at the point in time when it was applied to the individual. It is for the House of Lords to now assess the whether the available statistics indicated that a considerably smaller percentage of women than men could comply with the two year qualifying period:

‘With regard, in particular, to statistics, it may be appropriate to take into account not only the statistics available at the point in time at which the act was adopted, but also statistics complied subsequently which are likely to provide an indication of its impact on men and on women’.

However, the Court did indicate that it appeared to them, on the face of it, that the statistics available did not show that a considerably smaller percentage of women than men was able to fulfil the requirement imposed by the qualifying period, with 77.4% of men and 68.9% of women in 1985 (the year in which the two year period was introduced) fulfilling that criteria.

Finally, as to the question of objective justification, the ECJ held that a disparate impact could be objectively justified if the rule under consideration reflected a legitimate aim of its social policy (e.g. encouraging recruitment by eliminating the fear of unfair dismissal claims being brought against employers who had only just recruited the employee) and was unrelated to any discrimination based on sex. The case will now go back before the House of Lords for consideration.

In Waters v Commissioner of Police of the Metropolis [1997] IRLR 589, the Court of Appeal upheld the decision of the EAT ([1995] ICR 510 — see S2011) that an employee cannot be victimised by her employer for the purposes of section 4(1)(d) of the SDA 1975 where she alleged that she had been assaulted by a male colleague, where the alleged assault had not been committed in the course of her colleague’s employment so that the employer could not be vicariously liable for it. Thus the allegation was not in respect of an act by the employer which would amount to a contravention of the SDA within the meaning of section 4(1)(d).

In Grant v South West Trains Limited [1998] IRLR 206, which had been referred to the European Court of Justice by an employment tribunal (see S2005/2), the ECJ ruled that an employer’s refusal to grant travel concessions to an employee’s partner of the same sex, where they were allowed to the spouse or partner of the opposite sex of an employee, did not constitute discrimination contrary to Community law.

The ECJ held that there were three main issues in the case. First, it held that because travel concessions were refused to a male person living with a male just as to a female worker living with a female, there was no direct sex discrimination. Second, in the present state of Community law, stable relationships between two persons of the same sex were not regarded as equivalent to marriages or stable relationships outside marriage between persons of the opposite sex, so that employers were not required to treat them as such. Third, discrimination based on sexual orientation is not included in ‘discrimination based on sex’ prohibited by Article 119 of the EC Treaty; the ECJ distinguished P v S and Cornwall County Council [1996] IRLR 347 (see S2005/2), as that case applied only to gender reassignment and did not apply to differences of treatment based on sexual orientation.

Following its decision in the Grant case, the ECJ wrote to Lightman J, who had referred the Perkins case to the ECJ ([1997] IRLR 297 — see S2005/2) asking whether in the light of the Grant decision, he would wish to withdraw the reference. A further hearing was scheduled (reported as R v Secretary of State for Defence, ex parte Perkins (No 2) [1998] IRLR 508), in which Lightman J held that in view of the Grant decision, the answer to the question referred to the court in Perkins was so obvious as to leave no scope for reasonable doubt and enabled the court to resolve the question of European law itself. Accordingly, the reference would be withdrawn. Lightman J went on to hold that although Grant was a decision on the meaning of the word ‘sex’ in the Equal Pay Directive, it must reasonably inferred that the same word has the same meaning in the Equal Treatment Directive (which was relevant here). The European Court clearly proceeded on this basis.

In Smith v Gardner Merchant Ltd [1998] IRLR 510, the Court of Appeal upheld the finding of the EAT ([1997] IRLR 342 — see S2005/2) that discrimination on the ground of sexual orientation is not discrimination on the ground of sex within the meaning of the SDA 1975.

However, the Court of Appeal also held that discrimination stemming from the victim’s sexual orientation may at the same time constitute discrimination on the ground of his or her sex. Where a male employee has been harassed and suffered less favourable treatment by reason of his homosexual orientation, to compare like with like for the purpose of the comparative analysis required by section 5(3) (see S2005), his treatment must be compared with that of a female homosexual. If the fact showed that the harasser would have subjected a female homosexual to like harassment, no sex discrimination would have been established. The case was remitted to the employment tribunal to decide these issues.

In London Underground v Edwards (No 2) [1998] IRLR 364, the Court of Appeal dismissed an appeal by the employers from the decision of the EAT ([1997] IRLR 157 — see S2008). In so doing, the Court of Appeal stated that it is not appropriate to lay down a ‘rule of thumb’ for defining what amounts to a ‘considerably smaller’ proportion for determining the potentially discriminatory nature of a requirement or condition, since this issue has to be resolved in an infinite number of different employment situations.

In Coote v Granada Hospitality Ltd [1998] IRLR 656, the ECJ held that the wording of section 4 of the SDA 1975 (see S2011) is in breach of Article 6 of the EC Equal Treatment Directive (76/207/EEC — see S2002) by not enabling proceedings to be brought by a former employee against her employer where the employer, after the employment relationship had ended, victimises the ex-employee by refusing to provide references as a result of the employee having brought proceedings in respect of alleged sex discrimination. (In this case, the employment tribunal had ruled that it had no jurisdiction to hear the complaint on the basis that the SDA 1975 only protects discrimination which occurs during the employment relationship and does not apply to cases where an employer subjects a former employee to a detriment, following the race discrimination case of Post Office v Adekeye (No 2) (see R1018/1 race discrimination); on appeal, the EAT referred the case to the ECJ.)

The three ACAS Codes referred to in S7004 have all been revised, with effect from 5 February 1998. The revised Codes have been brought into effect as follows:

The Employment Relations Bill has proposed a number of changes to this area. These are outlined at the beginning of this Stop Press.

In RJB Mining (UK) Ltd and others v National Union of Mineworkers [1997] IRLR 621, the employers were granted an injunction restraining the union from proceeding with a series of one-day strikes, on two separate grounds.

The Employment Relations Bill proposes a number of changes to this area. These are outlined at the beginning of this Stop Press.

On 29 August 1997, the Department of Trade and Industry issued a consultation letter in relation to the ‘check off’ system for the deduction of trade union subscriptions direct from pay at source (see T6043). The DTI stated that in its view, workers paying their subscriptions by check off should retain the right to opt out of the system at any time. It also believes that employers should obtain the written consent from workers to begin deducting subscriptions by check off. However, the DTI considered it ‘burdensome and unnecessary’ for employers to be required to seek further written authorisation from workers at least every three years, as currently required. It took a similar view about the requirement that employers should give prior notification to workers of increases in check off deductions. It therefore proposed to repeal these requirements by means of a deregulation order under the Deregulation and Contracting Out Act 1994. Such an order has now been approved by Parliament, as outlined below.

The Deregulation (Deduction from Pay of Union Subscriptions) Order 1998 (SI 1998 No 1529), made under section 1 of the 1994 Act, repeals the requirements that employers must: (i) obtain repeat authorisations from individual employees at least every three years, to confirm their wish to continue paying their trade union subscriptions direct from salary; and (ii) notify employees at least one month in advance if the amount to be deducted is to increase. The Order was made on 23 June 1998, and came into effect immediately. Employers continue to be required to obtain written authorisation from employees before they can begin making check off deductions from their pay. Moreover, employers must continue to give their employees a regular itemised pay statement showing the amount of any deduction. Employees remain free to withdraw from the check-off at any time.

The Employment Protection Code of Practice (Disclosure of Information) Order 1998 (SI 1998 No 45) brought into effect, as from 5 February 1998, the revised Code of Practice on Disclosure of Information to Trade Unions for Collective Bargaining Purposes (see T6048). The Employment Protection Code of Practice (Time Off) Order 1998 (SI 1998 No 46) brought into effect, as from the same date, the revised Code of Practice on Disclosure of Information to Trade Unions on Time Off for Trade Union Duties and Activities (see T6059).

In January 1998, the DTI issued a consultation document seeking views on the approach the Government should take in the negotiations on proposed amendments to the EC Acquired Rights Directive 1977 (77/187/EEC — see T7003), which may then need to be incorporated into the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE).

In June 1998, the DTI announced that agreement had been reached on amendments to the Directive at the Social Affairs Council. The amendments aim to promote a partnership approach to business restructuring, by ensuring that employers understand their obligations and that employees’ rights are safeguarded. It is hoped that these changes will reduce current uncertainty about the application of the Directive, without reducing its scope or restricting the current rights of workers involved in transfers.

At the time of writing, the text of the amendments is awaited. However, the DTI press release states that the amendments will:

(a) make clear that the Directive applies to sub-contracting operations;

(b) specify that it applies to transfers from the public to the private sector;

(c) enable Member States to apply the Directive to pension rights;

(d) spell out the requirements for consultation under the Directive; and

(e) give employee representatives the power to negotiate to save jobs when an insolvent business is transferred.

The DTI has also published a consultation paper containing proposed amendments to the legislation which requires employers to inform and consult employee representatives in relation to a transfer of an undertaking or collective redundancies; for details, see under Collective Consultation above.

In Cornwall County Care Ltd v Brightman [1998] IRLR 228), where a transferee dismissed employees after the transfer and re-employed them on less favourable terms and conditions, the employees were held to be unfairly dismissed since the reason for the dismissals had been the transfer. However, the EAT held that the employees had ‘accepted’ the new terms and conditions by continuing to work for the transferee and so were unable to continue to claim a right to their original terms and conditions. That claim was ‘bought out’ by the compensation for unfair dismissal. (For variation of terms of employment, in particular the implications of the Court of Appeal’s decision in the Wilson and Meade cases, see T9110 et seq.; for the House of Lords’ decision in those cases, see below.)

In Warner v Adnet Ltd [1998] IRLR 394, the Court of Appeal rejected a submission that the provisions of Regulation 8(1) and 8(2) of TUPE (see T9102) are mutually exclusive. The Court held that the two sub-paragraphs must be read as a whole. Although Reg 8(1) covers a dismissal for a reason connected with a transfer, which will then be automatically unfair, Reg 8(2) expressly contemplates circumstances in which Reg 8(1) will be disapplied and that the view formed by a tribunal under Reg 8(1) is a provisional or prima facie finding. In the Court’s view, there would be no point in including the concept of an economic, technical or organisational (ETO) reason in the Regulations if a finding that a dismissal by reason of a transfer was determinative of an employee’s claim for unfair dismissal. ‘If the transfer is not the reason, there is no need to enquire further. If it is the reason, Reg 8(2) may apply. If it does, Reg 8(1) is then disapplied and the dismissal is not automatically unfair.’

In ECM (Vehicle Delivery Service) Ltd v Cox [1998] IRLR 416, the EAT considered the implications of the ECJ decision in Süzen (see T8006/4 et seq.). The EAT held that when properly understood, there is no conflict between the decision in Süzen and that in Schmidt (see T8006). There is an economic entity, as distinct from a mere activity, where the employees concerned are dedicated to a particular contract and their continued employment is contingent upon the continued existence of the service contract.

The EAT went on to hold that there is nothing in Süzen which requires TUPE to be interpreted so as to allow a transferee to cause the Regulations to be disapplied by refusing to take on the workforce. Adopting a purposive approach to the interpretation of the Regulations, it would not be proper for a transferee to be able to control the extent of its obligations by refusing to comply with them in the first place. ‘The issue of whether employees should have been taken on cannot be determined by asking whether they were taken on.’

In Wilson and others v St Helens Borough Council; Meade and another v British Fuels Ltd [1998] IRLR 706 the House of Lords held that under Regulations 5 and 8 of TUPE (and under Articles 3 and 4 of the EC Acquired Rights Directive):

(a) dismissal of an employee before, on or after a transfer was effective and not a nullity; and

(b) the employee had no right as against the transferee to continue in his employment on the same terms and conditions.

Lord Slynn (with whom the other Law Lords agreed) stated that the provisions of Regulation 8 of TUPE pointed to the dismissal being effective and not a nullity. Nor was there an automatic obligation on the part of the transferee under Regulation 5 to continue to employ the dismissed employee. The effect of articles 3 and 4 of the EC Acquired Rights Directive was that the existing rights of employees were to be safeguarded if there was a transfer, i.e. that the employee could look to the transferee to perform those obligations that the employee could have enforced against the transferor. The precise rights to be transferred depended on national law; there was no separate Community law right to continue in employment. It followed that TUPE gave effect to and were consistent with the Directive. It was unnecessary to refer a question to the ECJ on the matter.

Thus in the Wilson case, the employees’ appeal against the decision of the Court of Appeal ([1997] IRLR 505) was dismissed, and in the Meade case, the employers’ appeal against that decision was allowed. (See T9011 for an analysis of the Court of Appeal decision, in relation to the effect of a pre-transfer dismissal.)

* The ECJ has reached a decision in R v Secretary of State for Employment ex parte Seymour Smith and Perez [1999] IRLR 253 as to the validity of the two year qualifying period for unfair dismissal (see U4003). Further discussion on this is contained under Sex Discrimination, above.

In Nash v Mash/Roe Group Ltd [1998] IRLR 168, an employment tribunal ruled that the provision in section 109 of ERA 1996 (which excludes jurisdiction to hear claims of unfair dismissal where there is no normal retiring age and the employee is over 65 — see U4026) is unlawful indirect sex discrimination and a breach of Article 119 of the Treaty of Rome, and therefore must be disapplied. The applicant, a man aged 69 at the date of his dismissal, successfully argued that the upper limit of 65 adversely affected a considerably greater proportion of men than women (based on statistics of men and women over 65 in work), and no evidence was tendered to justify the provision. However, there may be an appeal.

In G F Sharp & Co Ltd v McMillan [1998] IRLR 632, the EAT in Scotland (allowing an appeal from an employment tribunal) held that where a contract of employment has been frustrated by operation of law (in this case by the employee’s permanent inability to carry out the work he was employed to do), it cannot be treated as subsisting. It therefore followed that the statutory provisions regrading minimum periods of notice and payment in lieu of notice do not apply. In addition, a right to notice pay in the event of frustration cannot be derived from the provisions of section 203 of ERA 1996 (void agreements to preclude that Act — see U4033). Those provisions are designed to strike out express terms and cannot apply in respect of a term of the contract implied by law. (For frustration of a contract of employment, see U4006 — see also S5041 sickness and sick pay.)

Following the decision of the EAT in Scotland in Davidson v City Electrical Factors Ltd [1998] IRLR 108 (see U4003), the President of the EAT subsequently issued a public statement (reported at [1998] IRLR 435) confirming that the Davidson decision is binding on all tribunals; it is a decision of the EAT sitting in Scotland, but it is immaterial where the decision was given since the EAT is a single court whose decisions apply equally throughout Great Britain. In the light of that statement, the last sentence in the paragraph referring to Davidson should be disregarded.

Note that the following reasons for dismissal (or selection for redundancy) should be added to those reasons (or principal reasons) whereby the qualifying period (see U4004) and the upper age limit (see U4026) do not apply:

(a) a specified reason related to working time (ERA 1996, s 101A, inserted by the Working Time Regulations 1998 with effect from 1 October 1998 — see working time); and

(b) a specified reason related to the national minimum wage (ERA 1996, s 104A, inserted by the National Minimum Wage Act 1998 with effect from 1 November 1998 — see Wages below).

In addition, when the Public Interest Disclosure Act 1998 comes into force (at the time of writing, expected to be later in 1999), that Act will insert a new section 103A into the ERA 1996, as a result of which the qualifying period and upper age limit will not apply where the reason or principal reason for dismissal (or selection for redundancy) is that the employee made a protected disclosure. (See further Unfair Dismissal II below.)

The Employment Protection Code of Practice (Disciplinary Practice and Procedures) Order 1998 (SI 1998 No 44) brought into effect, as from 5 February 1998, the revised Code of Practice on Disciplinary Practice and Procedures in Employment (see U5021 et seq. and U5039 et seq.).

Note that the following reasons for dismissal (or selection for redundancy) should be added to those reasons (or principal reasons) for dismissal (or selection for redundancy) which are automatically unfair (see U5011 et seq. and U5061):

(a) a specified reason related to working time (ERA 1996, s 101A, inserted by the Working Time Regulations 1998 with effect from 1 October 1998 — see working time);

(b) a specified reason related to the national minimum wage (ERA 1996, s 104A, inserted by the National Minimum Wage Act 1998 with effect from 1 November 1998 — see Wages below).

The Public Interest Disclosure Act 1998, which received the Royal Assent on 2 July 1998, will amend the ERA 1996 so as to protect workers who disclose information about certain types of matters from being dismissed or penalised by their employers as a result. It applies to disclosures relating to crimes, breaches of a legal obligation, miscarriages of justice, dangers to health and safety or the environment, and to the concealing of evidence relating to any of these.

To qualify for protection, the worker making the disclosure must be acting in good faith throughout, and must have reasonable grounds for believing that the information disclosed indicates the existence of one of these problems. Disclosures are protected if they are made:

(a) to the employer or other person responsible for the matter;

(b) to a Minister of the Crown, in relation to certain public bodies;

(c) to a regulatory body designated for the purpose by order;

(d) for the purpose of obtaining legal advice;

(e) in particular circumstances whereby they are reasonable; or

(f) in relation to exceptionally serious problems.

A worker who is dismissed or penalised (i.e. subjected to a detriment), or selected for redundancy, as a result of making a protected disclosure will be entitled to complain to an employment tribunal, which may award him compensation or make a re-employment order. The levels of compensation for dismissal are to be determined by regulations. Any such dismissal or selection for redundancy will be automatically unfair (see U5011 et seq. and U5061 respectively), and the normal qualifying period and upper age limits will not apply (see Unfair Dismissal I above). At the time of writing, the Act is expected to come into force later in 1999.

In Alboni v Ind Coope Retail Ltd [1998] IRLR 131, the EAT held that in determining both (i) the reason for dismissal and (ii) whether the employers acted reasonably in the circumstances in treating it as a sufficient reason for dismissal, an employment tribunal is not only entitled but is bound to have regard to events between notice of dismissal and the date that dismissal took effect. ‘Dismissal’ means the date of determination of the employee’s actual employment, rather than the date on which the employee is notified of the fact that the employment will come to an end on some future date. The EAT regarded the matter as beyond doubt, following the Court of Appeal’s decision in Parkinson v March Consulting Ltd (see U5071).

In Lock v Cardiff Railway Company Ltd [1998] IRLR 358, in allowing an appeal from the employment tribunal’s rejection of the appellant’s unfair dismissal claim, the EAT inter alia held that the employment tribunal had failed to have regard to the provisions of the ACAS Code of Practice on disciplinary practice and procedures, as required by section 207 of TULRCA 1992 (see U5021). The EAT commented that even where the Code is not expressly referred to by the parties, employment tribunals should always have it to hand as a guide to themselves as to what is good sound industrial relations practice.

* The National Minimum Wage Act 1998 received Royal Assent on 31 July 1998 and came into force on 1 April 1999. The Act introduced for the first time in the UK minimum hourly rates of pay which will apply across all sectors of the economy, whatever the size of the employer’s organisation. Although the Act establishes the framework for the introduction of the national minimum wage, much of the Act establishes the framework for the introduction of the national minimum wage, much of the detail is contained in the National Minimum Wage Regulations 1999 (SI 1999 No 584). These Regulations were originally issued in draft form in September 1998 for consultation. The finalised Regulations (which contain significant amendments to the draft Regulations) were laid before Parliament in February 1999. They, too, came into force on 1 April 1999.

The main features of the legislation are as follows:

as a general rule, the national minimum wage applies to all workers who work or ordinarily work in the UK. However, certain groups of workers are excluded, notably workers under the age of 18, certain apprentices and trainees and people living and working within a family (such as au pairs and nannies);

the national minimum wage has been introduced at a basic rate of £3.60 per hour. However, the Regulations also provide for:

a development rate of £3.00 per hour for 18 to 21 year olds (set to rise to £3.20 in June 2000); and

a special rate of £3.20 per hour for workers aged 22 or more who are in the first six months of a new job and have agreed with the employer to undergo certain training.

In all cases, the minimum wage represents a floor below which wages must not fall and the Government does not wish it to be regarded as a going rate;

the rules for calculating whether the national minimum wage has been paid are contained in the Regulations. These Regulations incorporate a number of amendments following the consultation process but the calculation remains fairly complex. Points to note include:

the national minimum wage is an average figure calculated over a pay reference period which is the worker’s actual pay period up to a maximum of one calendar month;

when calculating national minimum wage pay, certain components of a worker’s pay can be counted in but others are excluded. So, for example, incentive pay and bonus payments are included, whereas overtime and shift premia are not. No benefits-in-kind count towards national minimum wage pay (except accommodation, where special rules apply);

when calculating hours for which the national minimum wage must be paid, it is important to establish the type of work which a worker is performing. The Regulations provide for four different categories of work — time work, salaried hours work, output work and unmeasured work. Hours have to be calculated in accordance with the rules governing the particular kind of work in question;

it is an offence for an employer to refuse or neglect to pay the national minimum wage. In addition, workers have a contractual right to recover any shortfall in wages. They also have the right not to be victimised or dismissed for asserting their rights under the Act;

all employers have a duty to keep ‘sufficient records’ to show that they are paying their workers at least the national minimum wage. It is left to the employer to determine what will be sufficient but it should bear in mind that, if there is a dispute, the burden is on the employer to prove that the national minimum wage has been paid (the complex record keeping provisions in the draft regulations distinguishing between workers paid at least £12,000 per annum and those paid under that figure have been dropped in the final Regulations);

if a worker has reasonable grounds to believe that he has not been paid the national minimum wage, he has the right to see the relevant records and to make copies if he so wishes. Workers also having the right to complain to an employment tribunal where an employer has failed to comply with these requirements. It is also a criminal offence for the employer to fail to keep such records;

the Act gives certain powers to ‘enforcement officers’ who will, in general, be appointed from the ranks of the newly created Inland Revenue and Contributions Agency (however, in the agricultural sector, agricultural wages inspectors will enforce the Act). Such officers have various powers to obtain information and, if an officer believes that the national minimum wage is not being paid, he will be able to serve an enforcement notice on an employer (subject to a right of appeal) requiring him to pay the minimum wage. If an employer fails to comply with such an enforcement notice, an officer may complain to an employment tribunal or take other civil proceedings to recover the difference. There is also provision for an officer, if satisfied that an employer has not complied with an enforcement notice, to serve a penalty notice on an employer, requiring him to pay a financial penalty; and

the final Regulations no longer give workers the right to a national minimum wage statement.

The role of the Low Pay Commission (which was originally set up in July 1997 on a non-statutory basis but which has since been placed on a statutory footing) is crucial to the operation of the national minimum wage. The Commission’s first report has been implemented in a large part by the Regulations and it has now been asked to produce a second report evaluating the introduction and impact of the national minimum wage. It has also been specifically asked to review the position of 21-year olds to see whether they should qualify for the full adult rate of £3.60 per hour.

The section at W7029 at point (v)(A) should read ‘unusual and unforeseeable circumstances beyond the control of the employer.

* The first cases brought under the Working Time Regulations 1998 (SI 1998 No 1833) have begun to emerge. In Barber and Others v RJB Mining UK Ltd The Times, 8 March 1999, it was held that Regulation 4(1) (see W7010) imposes a contractual obligation on employers to ensure that employees work no more than the statutory maximum of 48 hours in one week. Therefore, minimum workers who had been required to work over the average of 48 hours were entitled to a declaration that they did not need to work until the average was bought below 48 hours.

In Janciuk v Winerite Ltd [1998] IRLR 63, the EAT held that the employment tribunal had correctly assessed the appellant employee’s damages for breach of contract on the basis that he was not entitled to compensation for the loss of a chance that had a contractual disciplinary procedure been operated, he might not have been dismissed. Where the employer breached the contract by dismissing the employee without following the contractual disciplinary procedure, the measure of damages is based on an assessment of the period for which the employment would have continued if the procedure had been followed. This accords with the principle in Laverack v Woods of Colchester Ltd that the employee will be compensated on the basis that the employer would have chosen to perform the contract in the least burdensome way (see W8025).

In William Hill Organisation Ltd v Tucker [1998] IRLR 313, the Court of Appeal held that whether an employee who had given notice to terminate his employment could be sent on ‘garden leave’ during the notice period (see W8021) depended on the terms of the contract of employment. If there was an express contractual term to that effect, the answer was definitely ‘yes’. In the absence of such a term, the question of whether the employee had a ‘right to work’ during the notice period was one of construction of the particular contract in the light of the surrounding circumstances. In this case (the employee was a senior dealer in a firm involved in ‘spread betting’), the employee did have such a right, the employer was therefore not entitled to send the employee on ‘garden leave’, and accordingly, the employer was not entitled to an injunction restraining the employee from working for a competitor during his notice period. The Court of Appeal also stated that injunctions to enforce ‘garden leave’ clauses should not be granted to any greater extent than injunctions to enforce justifiable covenants in restraint of trade previously entered into by an employee.

In Hill v General Accident and Fire and Life Assurance Corporation Ltd [1998] IRLR 641, the Outer House of the Court of Session in Scotland accepted the general proposition that where provision is made in the contract of employment for payment of salary or other benefit during sickness, the employer cannot bring a sick employee’s contract to an end solely with a view to relieve themselves of the obligation to make such payment, or for a specious or arbitrary reason or for no cause at all. However, the court went on to state that:

(a) it does not follow from the House of Lords’ decision in Malik v BCCI (implied duty of mutual trust and confidence — see W8029) that an employer may not exercise the power of dismissal where there is cause, if the practical effect would be to bring the employee’s sick pay entitlement to an end — Malik did not usher in a new approach towards the interpretation of contracts of employment; and

(b) it cannot be held that there was an implied term that gross misconduct was the only cause warranting dismissal of an employee while in receipt of sick pay — if the Aspden case (see W8019) could be understood as laying down a general proposition to that effect, it would be disagreed with.

Thus the court held that in the present case, construing the contract as a whole (including the implied term of trust and confidence), the employers were entitled to terminate the employee’s contract by reason of redundancy, notwithstanding that he was absent from work and properly in receipt of sick pay, and was only four months away from qualifying for long-term sickness provision. To hold otherwise, stated the court, would in a redundancy situation be grossly disadvantageous to employees who happened to be well as against those who happened be ill at the material time.

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