June 26 2006 Employment Law Enews

Welcome to the latest edition of employment law enews.

Damages over £25,000 for breach of contract claims cannot be recovered in civil courts following tribunal decision

Ex-employees who have breach of contract claims, can issue their claims either in the employment tribunal or in the civil courts. Although employment tribunals can award up to £25,000 in damages, that limit does not apply in the civil courts. It is generally cheaper and safer for an employee to bring the claim in the employment tribunal. The employee may represent himself and, unlike in the civil courts, there is no risk of having to pay the ex-employer's legal fees if the employee loses.

The Court of Appeal recently held in the case of Fraser v HLMAD that damages in excess of £25,000 for claims of breach of contract, cannot be recovered by issuing a separate claim in the Civil Courts, when the employee has already issued a claim in the employment tribunal.

Mr Fraser was dismissed from his employment with HLMAD, and initially brought a claim in the Employment Tribunal for unfair dismissal and breach of contract. In his ET1 form, he expressly reserved the right to pursue any damages in excess of £25,000, by issuing a separate claim in the High Court.

Mr Fraser brought a further claim in the High Court, with a view to recovering any potential damages in excess of £25,000.

Although Mr Fraser's damages amounted to £80,000, he could only recover £25,000.

Employees whose loss is higher than £25,000 will have to decide whether to issue a claim in the employment tribunal and forego the amounts over £25,000, or issue a claim in the civil courts for the full amount and risk an award of costs against them if they lose.

Whilst this case highlights a potential trap for employees, employers should be aware that this statutory cap applies to counter-claims. Therefore, it may be appropriate for employers with counter-claims in excess of £25,000 to bring a separate claim in the High Court.

Proposals to extend statutory holiday entitlement

The Department of Trade and Industry has issued a preliminary consultation paper proposing to extend worker's statutory holiday entitlement.

Under Regulation 13 of the Working Time Regulations 1998, a worker is currently entitled to 20 days' paid annual leave (pro-rata for part-time workers). Workers are not entitled to public or bank holidays in addition to the 20 days. An employer may therefore require a worker to take a day of statutory leave on any public or bank holiday (i.e. the employer can offer 12 working days' holiday plus public and bank holidays).

The new proposals seek to extend statutory holiday entitlement to include permanent and bank holidays, which would increase a worker's statutory entitlement to paid annual leave from 20 days to 28 days (pro-rata for part-time workers).

In particular, the consultation is seeking views on whether these additional days should be allowed to carry over to the following year, whether employers should be able to pay employees in lieu of these additional days, and how best to implement the new regulations such as the rate in which the additional days should be phased in.

The proposals will maintain some protection for employers. Workers will not have a statutory right to take leave on a bank or public holiday if the employer does not agree. Employers may also insist that a worker takes a day's statutory leave on a bank or public holiday.

A government response to the consultation paper and draft regulations are expected at the end of the year.

New update on taxation of computer equipment provided for employees

It is becoming an increasingly common business practice for employees to be provided with computer equipment at home for home-working purposes, or laptops to facilitate work on the go. The Government has traditionally granted tax relief of up to £2,500 for computers provided to staff in these circumstances. In the Chancellors budget this March however, this relief was withdrawn with effect from 6 April 2006, for circumstances when it is deemed that the computer equipment is provided for private use. This has created a confusing tax-relief distinction between private and business use, and many are concerned that this distinction will be difficult to assess in practice. Is there now a potential need for employer's to keep detailed records as to the use of such equipment?

The HM Revenue & Customs (HMRC) has given a statement on the situation in an attempt to clear up the confusion. They have stated that computer equipment provided to employees will maintain its tax relief, provided that any private use "is not significant". They also suggested that where computers are provided for employment purposes at home, it is "unlikely" that any private use will be significant compared to the primary business reason for providing the equipment.

This statement has simply caused further problems. It is not clear what will constitute significant use, and the position remains uncertain for employers who are considering the burden of introducing detailed record keeping in these circumstances. Also the use of the word "unlikely" suggests that there is always scope for a finding that private use is significant. The HMRC have thankfully stated that they will provide further guidance later in the year once the Finance Bill has achieved Royal Assent (expected at the end of July).

Male nurse wins sex discrimination appeal

In the recent case of Mr Moyhing v Barts and London NHS Trust, a male student nurse, Mr Moyhing succeeded in his claim that he had suffered direct discrimination on grounds of sex as the result of a policy which required him to be accompanied by a female when providing intimate care to female patients. Female nurses were not subjected to the same requirement when treating male patients.

Although the injury to feelings award made to Mr Moyhing was not substantial (£750), the case is an important reminder that the test for assessing detriment in sex discrimination cases is whether a reasonable worker might take the view that the discriminatory treatment is to their detriment. Mr Moyhing claimed that he felt upset and angry as a result of being subjected to a chaperone. The EAT found that the tribunal at first instance had been wrong to assume that, because the policy in question was for a rational and cogent reason, it could not be questioned.

This article copyright © 2006 Steeles Law llp. All rights reserved.