Labour & European Law Review (LELR) Magazine picture

Labour & European Law Review

21st February 2013 - LELR Weekly Issue 307

 

 

Dismissal because of political opinion

Following the decision of the European Court of Human Rights in Redfearn v United Kingdom (weekly LELR 305), the government has tabled an amendment to the Enterprise and Regulatory Reform Bill disapplying the two year qualifying period for unfair dismissal if the dismissal was on the grounds of political opinion or affiliation.

Mr Redfearn was a bus driver who was dismissed after he became a BNP councillor. He could not bring a claim for unfair dismissal because he did not have the requisite qualifying service and instead had to bring a claim under the Race Relations Act (now the Equality Act).

When he lost his case in the domestic courts, he lodged a claim at the European Court against the government on the basis that UK laws failed to protect him from dismissal and this interfered with his right to freedom of expression (article 10) and freedom of assembly and association (article 11) under the European Convention on Human Rights.

The court said that, whatever anyone thought about the BNP and its policies “the fact remains that Article 11 is applicable not only to persons or associations whose views are favourably received or regarded as inoffensive or as a matter of indifference, but also those whose views offend, shock or disturb ...”

It said that the most appropriate remedy for someone dismissed because of their political beliefs or affiliation in the UK was a claim for unfair dismissal under the Employment Rights Act 1996.

The government amendment simply states that the qualifying period “does not apply if the reason (or, if more than one, the principal reason) for the dismissal is, or relates to, the employee’s political opinions or affiliation.” It is not clear what might constitute a political opinion or affiliation.

The government has said that once the bill has gone through the necessary Parliamentary stages, this additional protection will come into effect two months after Royal Assent and would apply to dismissals after that date.

 

To read the amendments to the bill, visit the Parliamentary website

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Looking behind a contract

Following a Supreme Court ruling about the need for tribunals to look “behind” a written contract to see if it was a sham, the Employment Appeal Tribunal said in Qantas Cabin Crew (UK) Ltd v Lopez and Hooper that there was a big difference between employees not being clear about the terms of their contract and the whole contract being a sham.

Basic facts

Mr Lopez and Ms Hooper, both employees of Qantas Cabin Crew Australia (a subsidiary of Qantas), applied successfully in February 2010 to transfer from Australia to a base in London.

In October 2010 Ms Hooper signed and returned an offer letter; Mr Lopez did not sign it but agreed its terms which included a relocation allowance of £4000 and Living Away From Home Allowance (LAFHA), to be paid in addition to their salary. This became known as the October contract.

In November 2010, they were both asked to sign contracts which differed from the October document in two significant ways. One was to the relocation payment (which was to their benefit) and the other to the LAFHA which stated that it would be included in their salary.

Before signing the November contracts, they were given a tax briefing and directed to a set of questions and answers which stated that it was more tax efficient to include the allowance in their salaries.

Both claimants lodged grievances and subsequently submitted tribunal claims for unlawful deduction of wages under the Employment Rights Act (ERA) 1996 when they were not paid the higher relocation allowance and the LAFHA was included in their salary.

Tribunal decision

Relying heavily on the Supreme Court decision in Autoclenz v Belcher (which said that courts should look at all the circumstances of a case and “go behind” the written contract if it was a sham), the tribunal said that the October contract applied.

This was (at least in part) because the claimants knew that the references to the higher relocation payment in the November contract was a mistake caused by cutting and pasting part of another contract.

EAT decision

The EAT overturned the tribunal’s decision. It said there was a significant difference between employees not being clear about the terms of their contract and “the contractual nature of the whole relationship between the parties” being a sham.

The tribunal had therefore wrongly applied Autoclenz as there was no suggestion by the claimants, who “had their eyes open when they signed these agreements”, that they were a sham, adding that “neither the October nor the November agreement is asserted by the Claimants as an unenforceable agreement on the particular terms which favour them”.

Given the facts of the case, the November contract prevailed and the payment of allowances for food and accommodation was therefore included within their salary, for reasons of tax efficiency. As it was in respect of expenses it was excluded from the definition of “wages”, and the claimants could not bring a claim under Part 11 of the ERA.

Although their claim for location payments was not a payment related to expenses, their argument that they should be paid the higher amount failed “as a matter of construction” of the contract.

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Pro rata leave

Under the European Working Time Directive, workers are entitled to a minimum of four weeks’ paid leave every year. In Heimann and Toltschin v Kaiser GmbH, the Court of Justice of the European Union (CJEU) said that the situation of workers on short-time contracts was comparable to that of part-time workers and paid annual leave should therefore be reduced proportionally to the reduction in working time.

Basic facts

Mr Heimann and Mr Toltschin worked for Kaiser, a sub-contracting business in the motor industry employing several hundred employees. In 2009, owing to financial difficulties, the company decided to reduce its staff numbers and dismissed Mr Heimann and Mr Toltschin on 30 June and 31 August 2009, respectively.

However, after coming to an agreement as part of a social plan with its works council, the men’s contracts were extended for exactly one year on a ‘zero hours short-time working’ contract.

Although the men were not obliged to work and Kaiser was not obliged to pay them a salary, it meant they were entitled to an allowance from the Federal Employment Agency which the employer paid and which replaced their salary for the duration of the short-term contract.

When the contracts came to an end, the two men claimed compensation for annual leave not taken in 2009 and 2010. Kaiser claimed that, during the period of ‘zero hours short-time working’, they did not acquire any rights to paid annual leave.

Decisions of lower courts

The German court, the Abereitsgericht Passau, asked the CJEU to decide whether the “pro rata temporis” rule (under which workers only accrue paid annual leave for the time they actually work) was compatible with European law.

Decision of CJEU

The CJEU noted that the entitlement to paid annual leave was a particularly important principle of European Union social law, which member states could not interpret restrictively.

It also pointed out that EU law precluded national legislation or practices that did not provide an allowance in lieu of paid annual leave to a worker off sick for the whole or part of the leave year, on termination of the employment relationship.

However, it then went on to say that the situation of a worker on short-time working was “fundamentally different” to that of a worker unable to work as a result of an illness.

First of all, short-time working was part of an agreement between the employer and the employees’ representatives, which allowed for “the suspension ... of the reciprocal obligations of the employee and the employer as regards work and salary”. Secondly, workers on short time were free to do what they liked with their spare time, unlike workers on sick leave.

Finally, it said that if employers had to pay annual leave during the period of short-time working, they would be much less likely to agree to a social plan under which the contract of employment was extended for purely social reasons, in the interests of the worker.

However, although their situation was different to someone on sick leave, the CJEU said it was comparable to that of a part-time worker and paid annual leave should therefore be reduced proportionally to the reduction in working time.

 

Comment

The CJEU has confirmed the entitlement of all workers to paid annual leave. Mr Heimann and Mr Toltschin were on zero hours contracts so that if they did not work, they were not paid. The CJEU said that such a working situation was comparable to that of a part-time worker, rather than a worker who is unable to work by reason of ill health, and so the annual leave entitlement must be calculated pro rata the time worked over the leave year or reference period.

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