Employment and Immigration Law Legal Updates 4/2/2009

Welcome to the latest edition of steeles Employment Enews

Long-term Sickness Absence and Holiday Entitlement

Steeles Law Employment Specialist Alison Davies comments on the European Court of Justice (ECJ) ruling that employees on long-term sick leave accrue their holiday entitlement despite not working.

The decision in Stringer and others v HMRC C-520/06 and the conjoined case of Schultz-Hoff v Deutsche Rentenversicherung Bund C-350/06 has been highly anticipated and is long overdue.

The decision clarifies the previously confusing position as to whether an employee can accrue their statutory holiday entitlement (under the Working Time Regulations) during a prolonged period of absence from work due to illness.

When the Stringer case was appealed to the House of Lords, guidance was sought from the ECJ on:

• Whether the entitlement to annual leave arises at all where the worker has been on sick leave for the whole of the leave year.
• Whether a worker who has been absent on sick leave for all or part of the leave year in which employment terminates is entitled to payment in lieu of untaken leave; if so, how should that be calculated?
• Whether member states are free to provide that the right to take annual leave is extinguished if not taken by the end of the relevant year, where a worker has been prevented from taking annual leave because of illness.
• Whether a worker on indefinite sick leave must be allowed to give notice to take annual leave, and to take that leave, during a period that would otherwise have been sick leave.

The ECJ ruled (agreeing with most of the Advocate General's opinion) that:

• Annual leave under Article 7 of the European Working Time Directive continues to accrue during sick leave. This only applies to the 4 week minimum holiday entitlement currently provided by the European Working Time Directive and not the 4.8 weeks provided by the Working Time Regulations in the UK. Nor does the Judgment apply to any additional contractual holiday to which an employee may be entitled under his/her contract of employment.
• When employment terminates, workers must be paid in lieu for the annual leave which they have accrued but not taken due to illness. This is so whether the worker has been on sick leave for all or part of the leave year in question. Pay in lieu should be calculated at the worker's normal rate of pay.
• It is a matter for national law to determine whether a worker is entitled to take annual leave during a period that would otherwise be sick leave. However, if a worker on sick leave is prevented from taking annual leave, national law must enable that worker to take their holiday at a later date, even after the end of the leave year. As a result, an employee will have the right to carry statutory holiday entitlement over to the following year if the employee is too ill to take it in the year to which the holiday entitlement relates.

This ruling will have an immediate impact on the public sector. Public authorities will have to give the ruling direct effect, which means that they will have to implement the necessary changes, as ruled by the ECJ, immediately.

The private sector will now have to await the decision in the House of Lords where the case will return for a final hearing. The House of Lords will have to determine whether the UK's Working Time Regulations are compatible with this ruling, if they rule that they are incompatible the Government will be obliged to amend existing legislation.

Comment

The practical and financial implications for employers of this ruling are numerous, particularly in the current state of the UK economy. Employers in the public sector may now have to backdate any holiday entitlement not paid to an employee due to the fact they were on sick leave.

Furthermore, if the House of Lords rules that existing legislation is incompatible, thus requiring the Government to introduce amending legislation, many employers will need to review their policies and contracts to reflect this clarification of the law.

Perhaps most difficult for an employer to accept is the proposition that an employee who is dismissed or resigns during a long period of sick leave will be entitled to a lump sum payment in lieu of holiday accrued but untaken.

For any enquiries regarding this article or to discuss any other employment matters please contact Alison Davies at Steeles Law on 0207 421 1720 or employment@steeleslaw.co.uk.

Exemption from the Duty to Make Reasonable Adjustments

The Employment Appeal Tribunal has clarified the position in respect of what an employer must know about an employee's/job applicant's disability in order to be expected to make reasonable adjustments.

Steeles Law Employment Specialist Alison Davies comments.

Under the Disability Discrimination Act 1995 (the DDA), reasonable adjustments may be required where premises or working arrangements put a disabled person at a substantial disadvantage compared to others. A failure to make reasonable adjustments could amount to discrimination under the DDA.

Section 4A(3)(b) of the DDA exempts employers from the duty to make reasonable adjustments in certain circumstances. The case of Eastern And Coastal Kent PCT v Grey UKEAT/0454/08 has considered the four elements to the test which exempts an employer from the duty to make reasonable adjustments. Those being that the employer:

1. Did not know that the disabled person had a disability
2. Did not know that the disabled person was likely to be at a substantial disadvantage compared with persons who were not disabled
3. Could not reasonably be expected to know that the disabled person had a disability; and
4. Could not reasonably be expected to know that the disabled person was likely to be placed at a substantial disadvantage in comparison with persons who were not disabled.

This case has confirmed that those four elements to the test are collective and not individual. Each element must be satisfied in order for an employer to benefit from the exemption to make reasonable adjustments.

This case concerned a job applicant for a position where the prospective employer failed to make reasonable adjustments with respect to her dyslexia. The EAT held that the test applied by the Tribunal when determining whether the employer could benefit from the exemption was incorrect as it did not consider all four parts of the test cumulatively.

The Tribunal had found that the very fact that the employer knew, or ought to have known that the employee had a disability, automatically meant that the employer also knew that this would put the applicant at a substantial disadvantage compared with other candidates who did not have dyslexia.

In fact, what the Tribunal ought to have done, once it had established that the employer knew or ought to have known that the applicant had a disability, is consider whether the employer knew or ought to have known that the disability would put the applicant at a substantial disadvantage. This is not something that can be implied simply because someone has a disability.

Comment

This decision is, to a certain extent, helpful to employers. When an employer knows or ought to know that an employee/job applicant has a disability, but does not know and is not expected to know that the employee is likely to be placed at a substantial disadvantage, the employer will not be obliged to make reasonable adjustments.

However, employers should proceed with caution. If an employee is suffering from a disability (of which the employer was aware or ought to be aware) it is likely that they will suffer some disadvantage and will be able to argue that the employer ought to have known this. If a Claimant is successful in arguing their case, the employer will not benefit from the exemption.

For any enquiries regarding this article or to discuss any other employment matters please contact Alison Davies at Steeles Law on 0207 421 1720 or employment@steeleslaw.co.uk.

Does Your Company have the Relevant Documentation to Show Employees' Entitlement to Work in the UK?

As was found recently with Primark, the effects of the rules regarding employing illegal workers can be significant, even if those workers are not actually the company's own employees!

Steeles Law's Head of Immigration, Mark Barnett, discusses.

In the Primark case, the workers in question were employed by a sub-contractor, TNS Knitwear, who were the subject of an article in the News of the World, which alleged that TNS had broken UK employment, tax, and immigration laws, although the company itself subsequently strenuously denied that that was the case.

The adverse publicity for Primark generated by the story proved to be widespread, although quite how it affected their sales figures is unclear.

In any event, it is imperative that all businesses have the correct documentation for all of their employees, proving their entitlement to work in the UK, in order to avoid civil penalties and potential criminal prosecutions, if subsequently found to be employing illegal workers.

The penalty per individual found to be employed illegally by the company can be up to £10,000. In 2008, the UK Border Agency served civil penalties against companies for infringing these regulations to the value of over £1 million.

One of the services provided by Steeles Law's Immigration team is to undertake an Immigration Audit, often at the client's premises, to ensure compliance with these rules, identify any issues, deal with them and ascertain what steps, if any, need to be taken to make their HR systems fully compliant.

If you would like to arrange an Immigration Audit or to discuss any other immigration matter please contact Mark Barnett at Steeles Law on 0207 421 1720 or immigration@steeleslaw.co.uk.

These articles copyright © 2009 Steeles Law llp. All rights reserved.