E-NEWS: 18 October 2002

Welcome to the latest edition of Enews produced by Steele & Co., Solicitors. In this issue we report on:

* Stress at Work- Warning for Employers
* "Rolled-up" Rates of Pay Unravelled
* Calculating the Daily Rate of Pay
* Employee's Entitlement to Enhanced Redundancy Payments.

STRESS AT WORK-WARNING FOR EMPLOYERS

Managing stress at work has been a crucial issue to employers since the infamous case of Walker v Northumberland County Council [1995] IRLR 35. Mr Walker suffered two nervous breakdowns as a direct result of his workload. It was held that after the first breakdown, the "local authority ought to have provided additional assistance to reduce his workload and, in choosing to continue to employ him without providing effective help, it acted unreasonably and in breach of its duty of care."

The recent case of Young v Post Office [2002] EWCA Civ 661, further highlights the need for employers to exercise extreme care when dealing with stress at work. The Court of Appeal held that "Where an employee has already suffered from psychiatric illness resulting from occupational stress, it is plainly foreseeable that there might be a recurrence if appropriate steps are not taken when the employee returns to work. The employer owes the employee a duty to take such steps and to see that the arrangements made are carried through."

On the facts of the case, it was not enough that the employee was visited at home by his managers and allowed to return to work at his own pace, completing only the tasks that he felt able to. Promises that his situation would be assessed were not kept and the employee was very quickly exposed to the exact same pressures that contributed to his first breakdown. Consequently, he suffered a second breakdown and could never return to work.

As a further point of caution it was also held that "An employee who is known to be vulnerable is not necessarily to be regarded as responsible for a recurrent psychiatric illness if he fails to tell his employer that his job is becoming too much for him."

Cheryl Edmonds, Associate Solicitor at steeles says that: "Reducing stress at work is something that all employers need to be actively involved in. Extra care must be taken in relation to employees who are known to have suffered stress. Stress reducing measures relevant to each individual employee should be implemented and must be adhered to. Employers must monitor such employees closely and not expect them to inform them that they are having difficulties."

"ROLLED-UP" RATES OF PAY UNRAVELLED

Some employers pay employees a "rolled-up" rate of pay, which includes some element of holiday and/or sickness pay. An employer can then avoid paying employees at the time that they take annual leave. Regulation 16(5) of the Working Time Regulations provides that "Any contractual remuneration paid to a worker in respect of a period of leave goes towards discharging any liability of the employer to make payments under this regulation in respect of that period."

The Court of Appeal recently overturned an earlier decision by the EAT that an employer could avoid paying holiday pay by claiming that a "rolled-up" rate of pay (which included an element of holiday pay) was paid, even though there was no contractual term to that effect.

The Court of Appeal stated that Regulation 16(5) clearly refers to "contractual remuneration" and held that, "An employer cannot unilaterally decide that the week's pay is a payment not only for the hours worked during the week but includes an element of holiday pay. A week's pay is the amount payable by the employer under the contract of employment for the normal hours in a week." Further, "If the worker has not agreed that the sum paid includes a sum in respect of a period of leave, it is no part of the contract that the sum includes an element of holiday pay."

Consequently, employers should ensure that if they wish to pay employees a "rolled-up" rate of pay, then this is expressly provided for in the employee's contract of employment and agreed with the employee.

CALCULATING THE DAILY RATE OF PAY

A recent case has confirmed how employers should calculate an employee's daily rate of pay, for the purposes of payment for accrued holiday entitlement. The correct way of calculating an employee's daily rate of pay, is to divide the annual salary by the number of working and not calendar days in the year. This approach is in line with the Working Time Regulations 1998.

EMPLOYEE'S ENTITLEMENT TO ENHANCED REDUNDANCY PAYMENTS

Employees facing redundancy often claim that if enhanced redundancy payments have been made in the past, they too are entitled to benefit from these enhanced terms.

The Employment Tribunal in Albion Automotive Ltd v Walker discussed whether a contractual entitlement to enhanced redundancy payments arose by reason of custom and practice. They highlighted relevant considerations as including; whether the enhanced terms have been drawn to the attention of employees, the amount of time the policy has been followed for, whether the employees had a reasonable expectation that the enhanced terms would apply, whether the terms were written, whether specific authorization was required to implement the terms and whether the nature of the communication of any policy supported the inference that the company intended to be contractually bound by it.

The EAT recently dismissed the employer's appeal in this case, holding that there was "such an intention to be bound that there was a term to that effect incorporated in the Respondent's contracts of employment."

AUTUMN SEMINARS

Places are still available on our remaining seminars being held this month. The morning session of our seminars in Cambridge and Norwich will cover a few of the more common problems to face HR Managers in today's workplace (entitled "A Bad Day at the Office"). This will be followed by an update of the most recent employment law developments in the afternoon.

The dates for the seminars are as follows, if you would like to book a place or receive further information, please e-mail us:

"A Bad Day at the Office"

"A Bad Day at the Office"

* Thursday 24th October - Cambridge, Holiday Inn.

* Tuesday 29th October - Norwich, Park Farm Hotel

WE CAN HELP YOU:

Please use the links on this page if you:

* Want to receive more information/advice on any of the matters in this edition (please give details of the matter you require advice on).

* Want advice on any employment matters

* The employment team also conducts practical in-house training and workshops for companies on a wide range of issues including:-

Managing sickness absence/stress in the workplace
Misconduct and the disciplinary procedure
Poor performance
Handling redundancy situations
Avoiding unlawful discrimination claims
Avoiding unfair dismissals
Employment law update and practical advice for line managers

* Our aim is to offer line managers practical training to ensure that costly mistakes are avoided. All of the training workshops are tailored to meet the exact requirements of each individual business.

* If you are interested in finding out more about such training please do not hesitate to give us a call.

Visit our web site http://www.steeleslaw.co.uk

See this and other articles from Steele & Co on the web at: hrmguide.co.uk

This bulletin is intended for general guidance only and should not be relied upon without detailed legal advice on your specific circumstances.

This article copyright © 2002 Steeles Law. All rights reserved.