ABG Employment Newsletter – September 2011

Unfair dismissal – driving HGV without a licence

In the case of Wincanton plc -v- Atkinson & another the EAT has overturned a tribunal’s decision that the company had unfairly dismissed two lorry drivers who had been driving illegally after they had mistakenly allowed their HGV licences to expire and had therefore been driving without any licence or insurance whilst carrying dangerous loads.

The EAT said that the tribunal had placed too much emphasis on the fact that there had not actually been any adverse consequences from the employees’ mistake. The view of the EAT was that it was well within the band of reasonable responses for the company to dismiss the employees because of the potentially horrific consequences of their mistake, even if those consequences never actually materialised.

This is a helpful decision for employers because it confirms that they are entitled to take into account potentially serious consequences which might arise from an employee’s negligence or mistake even though those consequences have not actually materialised.

So in this case the employer had been entitled to dismiss the drivers even though they had lengthy good service. By driving without valid licences they had invalidated their insurance, put the company’s reputation at risk and potentially jeopardised the company’s operator’s licence.

Employment status – express terms that do not reflect the actual legal relationship

The Supreme Court has recently upheld the Court of Appeal’s decision in the case of Autoclenz Ltd -v- Belcher that car valeters whose contracts described them as self-employed and contained a substitution clause were in fact employees and had employment status.

The Supreme Court has confirmed that, when deciding whether or not an individual has employment status, an employment tribunal can disregard terms included in a written agreement which do not reflect the genuine agreement of the parties. The focus of the tribunal’s enquiry should be on the actual legal obligations of the parties.

In this case the company had advertised for self-employed valeters and issued them with contracts describing them as subcontractors or independent contractors. There was also a substitution clause which stated that the valeters could provide a substitute and that there was no obligation on them to provide their own services.

In reality the valeters were provided with company overalls and the company provided all the necessary cleaning products and equipment and arranged group insurance cover. For all practical purposes they were integrated into the company’s business and were expected to turn up for work personally every day rather than send a substitute.

The tribunal had ruled that the written contract did not reflect the reality of the situation and that the valeters were employees and had employment protection rights. Although this ruling was initially set aside by the EAT, it has now been upheld and confirmed both by the Court of Appeal and the Supreme Court.

It may also be noted that HMRC had accepted that the valeters were self-employed for tax purposes, so the case demonstrates that it is possible for an individual to be self-employed for tax purposes but nevertheless to be an employee under employment law.

Holiday pay and sickness absence

There has been another ruling from the EAT in the line of recent cases about whether workers on long term sick leave are entitled to receive holiday pay.

In this latest ruling in NHS Leeds -v- Larner the EAT has confirmed that an employee who had been off sick for the entire leave year but had not requested any statutory holiday or holiday pay was entitled to a payment in respect of that year’s holiday entitlement when her employment was subsequently terminated. The EAT said that her failure to request holiday during the leave year did not mean that she had lost the right to payment.

In this case the EAT followed the European Court’s decision in Pereda to the effect that where, owing to sickness, an employee has not been well enough to exercise the right to enjoy a period of relaxation and leisure on holiday, holiday entitlement carries over to the next leave year even though the employee has not made a request to carry it over. In the circumstances the right to be paid for that entitlement crystalizes on the termination of employment.

TUPE and transfer of care services

n the case of Nottinghamshire Healthcare NHS Trust -v- Hamshaw & others the EAT has upheld a tribunal’s decision that TUPE did not apply to the transfer of care services from an NHS Trust to private sector service providers where a residential care home for vulnerable adults was closed and their care transferred to private sector care providers. Significantly the residents were re-housed into their own homes and the new provider provided care for them at home.

The tribunal and EAT concluded that there was a fundamental difference in the ethos of the old and the new care arrangements and in these circumstances there was no relevant transfer for the purposes of TUPE. This meant that the NHS Trust, as the former employer, was potentially liable for claims brought by the former care workers.

This case shows that TUPE will not apply where there has been a significant change in the nature of the services provided by a new service provider: TUPE may apply where the services are fundamentally or essentially the same, but in this case there were significant changes which meant that the services post the alleged transfer were fundamentally different.

Summary dismissal during notice period

The EAT has clarified that, where an employer has given notice dismissing an employee at the end of the notice period and then dismisses the employee with immediate effect before the notice has expired, the effective date of termination will be the date of the immediate dismissal.

This occurred in a recent case in which the employee’s immediate dismissal had the effect of depriving her of achieving the one year qualifying period necessary to bring an unfair dismissal claim.

The employer had given the employee 6 months’ notice and by the time the notice expired she would have achieved just over one year’s service. She was placed on garden leave during her notice period. About 3 weeks before the notice expired, the employee issued Tribunal proceedings claiming unfair dismissal. The employers then dismissed her with immediate effect, before she had achieved the one year qualifying period.

The EAT ruled that in the circumstances she had less than one year’s service and so was no longer able to bring a claim for ordinary unfair dismissal. However, the employer’s actions may have backfired in that the case has been remitted to the tribunal to decide whether the employee was automatically unfairly dismissed for asserting a statutory right, namely, a right to claim unfair dismissal. A claim for automatic unfair dismissal can be brought notwithstanding that the employee has less than one year’s service.

The difficulties encountered by the employer in this case could easily have been avoided by the simple expedient of dismissing the employee with immediate effect at the outset and making a payment in lieu of notice or some other compensatory payment in respect of her notice period.

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