ABG Employment Newsletter – August 2012

Employment Tribunal fees in 2013

The Government has announced that a system of tribunal fees will be introduced in the summer of 2013. There will be a two stage fee structure under which all claimants will be required to pay an issue fee when they submit their claim followed by a hearing fee prior to the hearing.

The amount of each fee will depend on the type of claim. For straightforward claims such as unpaid wages, redundancy pay and pay in lieu of notice the issue fee will be £160 and the hearing fee £230. For other claims such as unfair dismissal and discrimination the issue fee will be £250 with a hearing fee of £950.

For those claimants who cannot afford the fees, there will be a remission scheme which will allow claimants to obtain a full or partial remission based on their income.

The new fee system will probably lead to some new tribunal tactics. For example, claimants who have paid a hearing fee of £950 on top of the issue fee of £250 may not wish to settle their claim unless the respondent is willing to reimburse those fees as part of the settlement terms.

Review of tribunal rules

At the Government’s request the former president of the Employment Appeal Tribunal has carried out a fundamental review of the Employment Tribunal Procedural Rules. He has put forward a number of recommendations for changes and simplification.

One of the most important recommendations is the introduction of an initial sift stage under which every claim will be reviewed by an Employment Judge after the claim form and response have been received. At this stage consideration will be given to whether or not the claim or the response should be struck out and, if not, what case management directions are required.

Statutory holiday pay during sick leave

During the last few years there have been a number of conflicting decisions from the courts and tribunals on whether a worker who is on sick leave for the whole or the remaining part of a holiday year must put in an artificial request for holiday leave in order to be entitled to receive holiday pay under the Working Time Regulations.

In the latest case the Court of Appeal has declared that a worker who had been on sick leave for the entire leave year and had not taken any holiday during that period or requested holiday was entitled to payment in lieu for that year’s unused statutory holiday entitlement when her employment subsequently ended. Her failure to request holiday or to ask for holiday to be carried forward to the next leave year did not mean that she lost the right to payment in lieu on termination of her employment.

It should be noted that this ruling only relates to payment in lieu on termination of employment. Where employment continues, the employee is not entitled to payment in lieu for untaken holiday, but is entitled to carry forward unused annual leave entitlement under the WTR into the next leave year.

Further, the ruling does not apply to any additional company holiday entitlement. Any unused company holidays will be forfeited at the end of the holiday year unless there is a contractual entitlement to carry them forward.

In a separate case the ECJ has confirmed that a worker who is away from work on holiday during a period of statutory leave and who then becomes unfit for work during that period is entitled to reschedule the period of leave that coincides with the period of unfitness for work.

This follows the ECJ’s ruling in the earlier Pereda case that a worker who becomes unfit for work before commencing a period of statutory leave that has been booked should be allowed to take that leave at a later date. So it does not matter whether the worker falls ill before or after the leave has started.

Compulsory retirement age of 67 justified

Sweden has a national retirement age of 67. All employees in Sweden have an unconditional right to work until the age of 67, but their employment can then be terminated at the end of the month in which they reach 67. The 67 year rule was introduced in 1974. The retirement age was lowered to 65 in the 1980s, but then raised back to 67 in the early 1990s.

The national retirement age was challenged by a postal worker who had worked part-time and was concerned that his pension provision would be insufficient. He claimed that the 67 year rule was in breach of the age provisions in the Equal Treatment directive.

In an interesting decision the ECJ has rejected his claim and held that the compulsory retirement age of 67 was justified. It was for the legitimate aim of encouraging diversity of ages within the labour market and, in particular, encouraging the recruitment of younger workers. The rule was also held to be an appropriate and necessary means of achieving that aim. It did not matter that the rule did not take into account the level of pension available to the employee on retirement.

Further legitimate aims put forward by the Swedish Government and accepted by the Court included the fact that the rule avoids the termination of employment contracts in situations which are humiliating for workers by reason of their advanced age.

This case is in line with other decisions of the ECJ which show that creating a balanced workforce, promoting the recruitment of younger workers and avoiding disputes over older workers’ fitness to work can all be legitimate aims. Nevertheless the big questions remains how far such aims can be relied on by individual employers who may wish to retain a compulsory retirement age for their workforce.

Redundancy following reduction in hours

In a recent ruling, which is perhaps somewhat surprising, the EAT has decided that a reduction in hours can result in a redundancy even though there is no reduction in head count and no change in the job content.

The main statutory definition of redundancy is where the employment is terminated because the employer’s requirements for employees to carry out work of a particular kind have ceased or diminished. In other words, the business requires fewer employees or specific job roles (work of a particular kind) have disappeared. Based on this definition, in a case in 2002 the EAT said that there was no redundancy where employees were dismissed for refusing to work reduced hours because the employer required the same number of employees to carry out the work.

However, in the recent case of Packman -v- Fouchon the EAT has departed from this earlier ruling. The employee was employed as a bookkeeper. Following the introduction of a new accountancy software package, the company had a diminished need for bookkeeping work and asked the employee to reduce her weekly hours. She refused and was then dismissed.

In these circumstances both the employment tribunal and the EAT ruled that she had been dismissed by reason of redundancy and was entitled to a statutory redundancy payment. The EAT said that there does not have to be a reduction in head count in order to satisfy the statutory definition of redundancy. It suggested that if the amount of work available for the same number of employees is reduced, then the dismissal of an employee which results from that situation is a redundancy.

The comments in this note are of a general nature only. Full advice should be sought on any specific problems.

Christopher Gigg 
[email protected] 
+44 (0)115 934 3310

Kathryn Meir
[email protected]
+44 (0)115 934 3308