E-NEWS: 25 November 2002

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

* Caution for employers over permanent health insurance schemes
* Christmas is coming: continuous employment and seasonal work
* Random drug testing policy upheld
* Race discrimination- stigma damages
* Bathroom issues-sex discrimination

CAUTION FOR EMPLOYERS OVER PERMANENT HEALTH INSURANCE SCHEMES

Many employers offer their employees the benefits of a permanent health insurance scheme. When an employee goes on long-term sickness absence, employers claim under a contract with their insurers, so that the benefits of the scheme can be provided to the employee. It is here that problems can arise and two recent cases highlight the issues for employers.

In Marlow v West Thames Housing Group Ltd, the Applicant's long-term sickness absence payments from the employer's insurers, were stopped after the insurers considered that the Applicant was no longer disabled within the meaning of the policy. This decision was not in relation to any medical assessment. The High Court held that the Applicant was contractually entitled to the benefits under the policy. She had signed an agreement relating to permanent health insurance, which varied the terms of her original employment contract. The employer was obliged to pursue their insurers to ensure that the benefits of the scheme were provided to the Applicant.

Similarly in Jowitt v Pioneer Technology (UK) Ltd, the employer's company handbook stated that employees on long term absence would be entitled to two-thirds of normal pay until retirement, if they were certified unable to work by a doctor. The Applicant was on long-term sickness absence and the insurance company stopped payments after 2 years, as they said that he was not incapable of undertaking any form of employment, which was a clause in the policy between the insurers and the employers. The Applicant was not aware of this clause and it was not stated in the Company handbook. The Employment Appeal Tribunal held that the words in the Applicant's contract were sufficient to enable him to rely on the provision of two-thirds pay for as long as he was unable to do the occupation he was doing immediately before he became sick. The employee knew nothing of the further clause in the insurance policy and was therefore not bound by it. He was entitled to the long-term disability benefit that the clause in his contract provided for.

Rosemary Graham, Associate Solicitor in steeles London Employment team says: "Employers cannot sit back and let their insurers determine the outcome of any claims in relation to such schemes. They need to ensure that the wording within the contract of employment is clear as this is likely to be the determining factor".

CHRISTMAS IS COMING: CONTINUOUS EMPLOYMENT AND SEASONAL WORK

The rules on continuity of employment for the purposes of unfair dismissal and redundancy include some special provisions, which allow breaks in employment to count as continuous employment. One such provision is that employment is deemed to be continuous where there is a temporary cessation of work.

A recent case looked at continuity in the context of seasonal work. In Mrs J Johnson v Nestle UK Ltd (unreported), the Applicant worked as a packer and her work was broadly seasonal. She always received an appointment letter and a termination letter after each period of work. Her employment finally ended, her contract was not renewed and she claimed redundancy payment.

The Employment Tribunal looked at the fact that in total she had worked for 596 days and had 266 days out of work (44.63%). They held that the time she was out of work was a substantial amount compared to the time she was in work, and decided that she would be unable to claim redundancy payment.

Employers whose businesses require workers on a seasonal basis should therefore note, that if temporary breaks in employment are very short, this could make them liable to make statutory payments.

RANDOM DRUG TESTING POLICY UPHELD

In the recent case of O'Flynn v Airlinks, the Employment Appeals Tribunal held that random drug testing policies for employees were lawful in certain cases. The employer in this case randomly tested 10% of its employees for drugs each year. When the Applicant was chosen for a random test, she admitted to taking cocaine and cannabis and was dismissed. She then claimed unfair dismissal.

It was held that employees had a right to privacy in their own home, however, if their actions at home could affect their work by threatening public safety and/or the employer's 'legitimate' business interests, the right to privacy was lost. In these circumstances random drug testing would be lawful.

RACE DISCRIMINATION- STIGMA DAMAGES

Employees who take action against their employer risk being seen as 'troublemakers' by prospective employers. In considering compensation for an unlawful act by an employer, should the Tribunal award stigma damages?

In Leeds Rhinos Rugby Club & Others v Sterling the Employment Appeal Tribunal considered the level of damages to be awarded where race discrimination had already been proven. The Applicant submitted that he would have difficulty in securing another contract as a result of the proceedings. The Employment Appeal Tribunal found this to be unsupported by evidence and held that the first employer could not be liable for the attitudes of other clubs.

The Employment Tribunal had made a recommendation that the Applicant should be offered a new contract by his former employer, due to the difficulty he could face in finding employment. The Employment Appeals Tribunal disagreed and found that this remedy was outside the Race Relations Act 1976.

BATHROOM ISSUES- SEX DISCRIMINATION

It has recently been held that an employer had not erred in refusing to allow an employee undergoing male-to-female gender reassignment, to use the female toilets at work. The employee was not treated less favourably on grounds of sex. She was believed to still be male and anyone the employer's believed to be male had to use the male toilet. She was not entitled to claim constructive dismissal, as there had been no breach of the implied term of trust and confidence. If a person is undergoing gender re-assignment, the Tribunal has to consider the needs of that person and the needs of other employees.

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