Dismissal in criminal cases – can you have the courage of your employee’s convictions?

Back in January 2015 we posted a piece as a counter-argument to the public pillorying received by professional footballer Ched Evans in daring to challenge his 2012 rape conviction http://www.employmentlawworldview.com/mob-rule-and-a-moral-maze-but-what-does-uk-law-say-about-ched-evans-playing-football-again/.  On his release from prison in 2014, previous employer Sheffield United FC had said that he could resume training with it, but then instantly regretted it.  Club sponsors severed links, boycotts were threatened, famous names withdrew their patronage and the Twitternet foamed over with spittle-flecked abuse.  The Blades pulled the training offer immediately.  Other clubs would not go near him and the Ministry of Justice even blocked his playing in Malta.  Mr Evans’ career was effectively destroyed at that time, unless you have a particularly rose-tinted view of his current team, Chesterfield (average home gate: 5,675).

And yet, as it turns out, he was innocent.  Not of immoral or amoral behaviour, which he freely admitted, but of the criminal offence of rape.  This is the offence which put him inside for over two years, made him a new hate-figure for the Daily Mail (not that it is short of those, particularly) and ended his top-rank and international career.  If you were Sheffield United, which let Evans go immediately after his conviction, would you now feel a twinge of conscience?  Less pointedly, if as employer you dismiss an employee for a criminal thing he turns out not to have done, does that expose you legally?

Yes and no.  The question is partly whether you reasonably believe after a proper investigation that he did it.  In an extreme case like this one, it may also depend not on your view of his guilt, but on the public perception of it, even though that Court of Public Opinion is so easily confused between conduct which is criminal and that which is just morally reprehensible, as here.   A highly commercial organisation like a professional football club could potentially justify (legally at least) letting go a player whose presence generated huge public ill-will, damaging sponsor losses, etc., even if it did not itself believe him guilty of a criminal offence.  NB, that dismissal would be for “some other substantial reason” and hence with notice, and not for serious misconduct and hence without it.

As to an investigation, this is never easy where a criminal prosecution is underway.  The police will not generally tell you much about the evidence they have, and the employee may well be advised to say little or nothing to you for fear of incriminating himself.  A decision to prosecute says that the Crown Prosecution Service thinks it has a better than evens chance of a conviction, but just for Daily Express readers and Twittersphere critics, being charged and being actually guilty are not the same thing, okay?  However, a conviction (if you have waited that long) is a conclusion of guilt against a far higher standard of proof (beyond all reasonable doubt) than faced by the employer for a fair dismissal (on a balance of probabilities).  Reliance on a conviction to justify dismissal will therefore almost always be okay for the employer (assuming some meaningful connection between it and the job), even if the conviction is later overturned on appeal.  We can ignore cases like McCarrick -v- British Gas Plc back in 1991 where the employee said that his admission of theft from his employer and consequent conviction was not because he had actually done it, but because he had been advised by his lawyer that this would lead to a shorter sentence than his denying it and being convicted anyway.  Nothing like having Counsel confident in your case, I say.

On the other hand, if you do not do what you can to investigate (within limits – http://www.employmentlawworldview.com/employer-not-driven-to-investigate-all-defences-in-uk-disciplinary-process/ and so do not form a reasoned and independent view of your employee’s guilt, and the CPS then decides not to prosecute or the police not to charge or the jury not to convict, you will very probably be guilty of an unfair dismissal.  A knee-jerk decision to end someone’s employment on the basis of a police enquiry or charge alone will almost inevitably be unlawful.  On the other hand, if you have investigated properly and dismissed on the back of your findings, then a subsequent dropping of charges or acquittal will not prejudice the legal fairness of your decision.


Identifying the best recruiters in an unregulated industry

Various recent estimates of the values of the UK and global recruitment industry are put at a whopping £30 billion and $400 billion respectively.

Yet there is virtually no regulation and anyone can set up a recruitment practice from their bedroom.  There are few barriers to entry and recruiters are not required to have any particular qualifications or pass any recruitment specific professional exams or gain any industry certification.

There are not many areas left in business life which are so unregulated and yet which allow such scope for influencing the path of people’s careers at every stage both positively and negatively.

Without regulation, industry standards, professional body status or kite marks it can be difficult to know what you are getting when you retain the services of a recruiter. How does HR get value for money and maintain the quality of candidate shortlists? Here is my checklist for HR and in-house recruiters.

  1. Do not use multiple recruiters willy-nilly – make clear decisions about who your preferred suppliers are for each area of your business. Keeping this group relatively tight will allow you to negotiate better terms and also allow the recruiters to get to know and understand your business, which is likely to deliver better performance.
  2. Interview recruiters against your set criteria and evaluate them using quantitative and qualitative metrics. References from other clients and candidates can also be useful.
  3. Test them on their understanding of your business sector.
  4. Establish their understanding of equal opportunities legislation and any proposed legislation that will impact on the recruitment process.
  5. Ensure there is a proper contract for services between yourselves and the recruiter. Handshake agreements just don’t cut it when it comes to enforcing its obligations.
  6. If possible, get details about the size of the recruiters business, its past experience and the career backgrounds of the individuals who will handle your account.
  7. If a recruiter claims to be a specialist or expert then this needs to be tested. Push it on what gives it the right to describe itself in those terms.
  8. Big isn’t necessarily best. Some of the more boutique recruiters are very capable of providing excellent candidate shortlists and service quality in specialist fields. A mix of suppliers will give you access to suitable boutiques when required.
  9. Where possible choose a recruiter based physically within a sensible radius of your business so that it is easy to hold face-to face meetings. Updates and discussions using technology only can reduce the accountability of the recruiter and put unnecessary distance and formality into the relationship.
  10. Trying to get the recruiter to offer a substantial discount on fees is potentially a false economy. If the agreed fee is perceived by the recruiter as being too low there is likely to be a limit to how much effort and focus the recruiter is willing to apply to the assignment. There may be an element of resentment if “value-addeds” are sought for a knock-down fee rate. If you believe the recruiter is credible, better to pay the fee to ensure a good short list and the best service levels. However, this can depend very much on whether are seeking volume or one-off senior placements.  If you are yourself a prestigious business name, allowing the recruiter to mention you in its own publicity material can also have a branding benefit which it may be willing to reflect in a reduced rate for your business.

The recruitment industry is a multi-billion dollar business and good recruiters provide a key service to companies and their HR departments.  However, such a vast unregulated industry will inevitably contain recruiters of varying degrees of performance and quality.

Until the industry is regulated it is for HR practitioners to sift the wheat from the chaff and to partner effectively with those recruiters who can genuinely complement the work of HR in your business.

The number of recruiters to choose from is considerable both in the UK and internationally. Picking the right ones will both enhance the integrity of the HR department and create a positive candidate experience.

NLRB Tackles University Social Media Policy in Advice Memorandum

Second year pro football quarterback and Northwestern University alum, Trevor Siemian is making headlines on the field this season for the Denver Broncos. His alma mater is making headlines off of it in the realm of labor law.  Again.

Last year, Northwestern’ s scholarship football players filed an action with the National Labor Relations Board (NLRB) seeking a determination that they are employees and as employees have the right to organize and join a union consistent with the National Labor Relations Act (NLRA).   The NLRB’s Regional Director initially sided with the student-athletes, determining the scholarship football players are more employees than students.  However, the victory was short-lived.  The University appealed the Regional Director’s decision to the NLRB, which punted on the issue by dismissing the matter on jurisdictional (the NLRB concluded that it “would not effectuate the purposes” of the NLRA to assert jurisdiction ), rather than substantive grounds.

The NLRB decision didn’t completely shut the door on the players, explaining the Board would consider a reexamination of the issue “if the circumstances of Northwestern’s players or FBS football change such that the underpinnings of [the] conclusions regarding jurisdiction warrant reassessment.” This statement, coupled with the fact that the NLRB never addressed the merits of the argument may have made the University somewhat nervous, because the University made certain revisions to its “Football Handbook,” including changes to the Handbook’s social media policy.  Specifically, the Handbook’s policy was revised from a broader policy barring athletes from social media posts that “could embarrass you, your family, your team… or Northwestern University” to specifically prohibiting the athletes from  making posts that “contain full or partial nudity, sex, racial or sexual epithets, underage drinking, drugs, weapons, or firearms, hazing, harassment or unlawful activity.”

Earlier this week, the NLRB’s Office of the General Counsel admonished the University in an advice memorandum [pdf] that it’s social media policy, prior to the recent modification, violated the NLRA. However, the memorandum explained that it “would not effectuate the policies and purposes of the NLRA to issue complaint in this case because the employer, although still maintaining that athletic scholarship football players are not employees under the NLRA, modified the rules to bring them into compliance with the NLRA and sent the scholarship football players a notice of the corrections, which sets forth the rights of employees under the NLRA.”

Specifically with respect to student-athletes, the memorandum appears to have temporarily reignited the debate over whether student-athletes are “employees” under the NLRA. Proponents of treating student-athletes the same as other employees point to a footnote in the advice memorandum stating “[w]e assume, for purposes of this memorandum, that Northwestern’s scholarship football players are statutory employees.”  Northwestern maintains that its student-athletes are not employees and this is evidenced by both the memorandum’s current – and the NLRB’s previous – unwillingness to formally declare the student-athletes as employees.

In the broader sense, this week’s advice memorandum is a reminder to all employers that social media policies must pass muster under the NLRA. The NLRA provides employees’ with the right to engage in concerted activities for their mutual aid and protection.  It is well-established that such “concerted activities” involve social media posts and communication through various social media platforms.  Broad policies which can be interpreted to prohibit a wide array of social media posts may be unlawful under the NLRA.  Social media policies that are more specifically tailored to prohibit certain egregious or intolerable actions are more likely to comply with the NLRA.  Employers should review their social media policies and consult with local attorneys if any questions arise.

Momentum Continues Against Validity of Class and Collection Action Waivers – Delaware District Court Judge Refuses to Enforce Class Action Waiver

We have been closely monitoring the battle over the legality of class and collective action waivers under the National Labor Relations Act (NLRA). The National Labor Relations Board (NLRB) has been steadfast in its position that such waivers run afoul of the NLRA.  The Fifth Circuit was the first Circuit Court to weigh in, consistently holding in a pair of decisions in 2012 and 2014, and again in 2016 that class and collective action waivers are permissible and enforceable.  The Fifth Circuit rule presented a significant problem for the NLRB’s position as employers with sufficient contacts in Fifth Circuit states could appeal an NLRB decision invalidating their arbitration agreements to the Fifth Circuit.

However, earlier this year, the Seventh Circuit became the first Circuit Court to agree with the NLRB’s stance against class and collective action waivers.  Soon thereafter, the Ninth Circuit also joined the Seventh Circuit and the NLRB, thereby widening the split on the enforceability of the waivers.

Although the issue has yet to be decided by the Third Circuit, the momentum from the recent Seventh and Ninth Circuit decisions may have trickled eastward to the Third Circuit. Earlier this week, a Delaware bankruptcy judge refused to enforce a class action waiver in an employee arbitration agreement because the Court determined the waiver violated the NLRA.  Noting the issue was an issue of first impression in the Third Circuit, Judge Brendan L. Shannon determined “that a class-action waiver provision violates substantive rights at the heart of the NLRA.”  Notably, the Court separately determined that the entire arbitration agreement was unenforceable as a result of the invalid class action waiver even though it contained an opt-out provision for employees.

The Delaware decision is a District Court decision and is not the binding law of the Third Circuit.  However, it does serve as a reminder of the deepening split away from the previously unchallenged Fifth Circuit rule.  Employers are advised to review the law of the Circuit(s) in which their employees and operations are based.  Employers should also be aware that the decision making split between the Circuit Courts will likely lead to review by the U.S. Supreme Court in the near future.

The Delaware bankruptcy case is In re: Fresh & Easy, LLC Case No. 1:15-bk-12220 in the U.S. Bankruptcy Court for the District of Delaware.

The Accidental Leader

“Accidental leader – a long-serving employee who has spent all or a significant part of their career at one company and is promoted to the top job primarily on the basis of their loyalty, length of service and company knowledge

Some of us have experienced receiving a corporate communication on a Friday informing us that a new leader or executive has been appointed (commonly a CEO or MD) and that the new incumbent has either arrived or will start on Monday.

Furthermore, this new appointee was the Commercial or Finance Director last week but now the most senior person  you have worked with in the business for many years has left the business “for family reasons” or “to pursue new opportunities” and seemingly without so much as a by your leave.   Questions abound but are generally unanswered, or at least at that point in time.

This is not unusual.  Businesses regularly go through a change of leadership and some would advocate that it is essential for company survival.  The King is dead.  Long live the King!  So there is nothing necessarily worrying or intrinsically wrong with changes of this nature.  Or is there?

As HR professionals we tend to encourage consistent systems and processes and prefer the stability of working to a plan, e.g. succession planning and recruitment. We also like to think that our recruitment processes are robust and, given a little advance notice, capable of producing a credible shortlist of suitable senior candidates. And if we are a senior HR executive that we would be informed of the change in advance or even asked to actively participate in the hiring of a new leader.

Our professional sensitivities aside, should we then stand idly by and watch what may be an accidental leader take the helm?

It may be too late. The company hierarchy or the Board may have decided that promoting a company ‘lifer’ to the key leadership role is a bet on someone who is already deemed a safe pair of hands.  They know the business inside out and they have served the company for 20 or 30 years in a variety of key roles. What could possibly go wrong?

In stable businesses, operating in stable markets, with significant history and heritage, companies can often be well-advised to opt for what they believe is a low risk strategy and promote from within.  The rationale is that a history of positive comments from peers and customers plus long service equate to outstanding future potential. However, this approach is not without its risks and there is a danger that senior management can be too obliging and just nod through the internal candidate without a proper evaluation of leadership potential, either in absolute terms or relative to any talent available externally.

Similarly, it is well documented that an outstanding sales person will not necessarily make a good Sales Director.  The two roles require a materially different set of skills and competencies which are not necessarily present in the same employee-but companies can easily overlook this if care is not applied to the selection process.

What can HR do to ensure that it is part of all senior hiring decisions and how should HR respond to internal hiring decisions that it hasn’t been made (or allowed to be) part of?

  1. Develop robust policies and procedures for all facets of recruitment and promotion. Get sign off from senior management, including the Board if appropriate. Make sure these policies also cover inter-group, divisional transfers and expatriates.
  2. Include the provision of coaching, mentoring and development – the provision of this support could be the difference between success or failure for new leaders and ‘accidental leaders’ in particular.
  3. If the hiring decision is a fait accompli try and ensure where possible that all documentation and data are up to date and reflect the decision making process, e.g. succession plan score board, interview notes and performance ratings, etc. Senior appointments made on the nod are particularly vulnerable to allegations of discrimination since there is no hard evidence that the chosen candidate was actually the best one.
  4. Include external candidates in the recruitment process and use these as a benchmark to compare the proposed internal candidate with. This will add integrity to the recruitment process and help draw attention to the strengths and weaknesses of the internal candidate, enabling you to give constructive insights into the suitability of candidates.
  5. If you are senior and have access to the new leader and senior management, try and position yourself so that you can act as support and mediation if required. Build in sessions and activities which bring the new leader and the senior management team together at an early stage and which require the new appointee to act as such – that will reinforce their change of status relative to their former colleagues, which will benefit both.
  6. The new appointee is likely to be leaving a team behind and the team left behind may be getting a new head. Take an active role in applying the points mentioned above to that team also.
  7. Own the communication process for all the changes taking place, but don’t let this be corrupted or tainted by your own personal views about the appointment process or the individual appointee, especially if negative!

A kiss is just a kiss, a sigh is just a sigh; the fundamental things apply, as time goes by, says EAT

What a remarkably prescient little message from the late Louis Armstrong to all those employers on the receiving end of a service provision change under TUPE.  Regulation 3 of TUPE says that a service provision change occurs where activities cease to be carried out by one business and are contracted-out, moved between external contractors or moved back in-house.  However, that only applies where the activities carried out post-transfer are “fundamentally the same” as they were beforehand, so creating some scope for disapplying TUPE by making sure that they are not.

But how different does an activity have to be to be not fundamentally the same?  How samey is “fundamental”?  Is a kiss always just a kiss, as the Employment Appeal Tribunal has effectively just asked itself in the Salvation Army Trustee Company – v – Bahi & Others.  The Salvation Army took over provision of certain homeless person services for Coventry City Council.  The contract had previously been with another provider CCL, also a charity.  Four CCL employees were left in the lurch when the Sally Army won the replacement tender.  It refused to take them on because it thought the activities as now conducted were sufficiently different to disapply TUPE, and CCL refused to retain them because it thought they weren’t.

Continue Reading

Brexit Immigration Update

Immigration continues to dominate the Brexit debate – here is a round-up of where we currently stand:

Can they stay or must they go? EEA nationals currently in the UK

According to Telegraph reports, Home Office research has concluded that when the UK leaves the EU, just over 80 per cent of EU citizens already here will qualify for permanent residence and Cabinet sources have said that the remainder will be allowed to stay in the UK by way of some sort of ‘amnesty’ (although no detail has been given on how this will happen).   EEA nationals in the UK acquire permanent residence once they have been here for a five continuous year period in a qualifying status (namely, as a student, worker, or self-sufficient or self-employed person) whether or not they have a document from the Home Office to confirm their status (although obtaining such a document is arguably a practical precaution).  EEA nationals who have acquired permanent residence should therefore be able to remain in the UK indefinitely providing they do not leave the country for a continuous period of 2 years or more. There is still uncertainty, however, relating to EEA nationals who will have been here for less than 5 years by the time we leave the EU and it is this group who are being held out as notional ‘bargaining chips’ to ensure reciprocal protection for UK nationals in Europe.

A definitive position may be some while off but the only sensible approach must be to allow this group to remain – the practical consequences of losing such a sizeable workforce, not to mention the huge bureaucratic burden of assessing their status (and trying to enforce removal in some cases) can only be described as economic suicide.  It seems that a cut-off point will have to be introduced after which it would not be possible to guarantee the status of new EEA residents in the UK and, to alleviate concerns of a ‘rush’ of new arrivals, this would have to be a date which has already passed at the point of announcement. In the meantime, reports of an ‘amnesty’ (regrettably ill-judged though that label might be given that it relates to people who are in the UK entirely lawfully) might be the Home Office’s way of gauging public opinion. Whilst UK business would appear to be supportive, the majority of those who voted Leave may be less so.

Proposals requiring employers to publish details of their foreign workers

Since Home Secretary Amber Rudd’s speech at the Conservative party conference last week there has been widespread public criticism of the proposal to require employers to disclose publically how many foreign workers they employ, including from business organisations such as the CBI, the Institute of Directors and EEF (not to mention direct comparisons with passages from Hitler’s Mein Kampf). And yet, according to a YouGov poll, 59% of people say they either strongly or somewhat support the proposals – more than double the 26% who somewhat or strongly oppose them. The Home Secretary has since said that the proposal is ‘not something we’re definitely going to do’ and that has been further weakened over the weekend to (in effect) “something we are most definitely not going to do”. Latest thinking is that reports on foreign worker numbers would be made in confidence to the Government only for its research purposes rather than any actual action or deterrent effect.  There has been no discussion of enforcement, sanction or who would learn what from such bald numbers anyway.  Nonetheless it’s an indication of her desire to introduce strict if controversial measures in order to be seen to control immigration.  Whether or not such measures would be in any way effective seems at present to be a secondary consideration.  We already have strict laws requiring that businesses only employ staff who have the right to work in the UK with breaches leading to sizeable criminal penalties and/or criminal prosecution.  Requiring or encouraging employers to make recruitment decisions based on applicants’ nationalities where they already have the right to work in the UK will amount to unlawful discrimination under our current equality legislation.   The impression of the Government making it up as it goes along is almost irresistible.

Tightening the Resident Labour Market Test

Given that control over EEA migration is some time off (if at all), the Home Secretary has already announced that the Government will begin consulting on restrictions to our current work visa system (known as Tier 2), in particular tightening the resident labour market test to ‘ensure people coming here are filling gaps in the labour market, not taking jobs British people could do’ and to encourage employers to train the local workforce. The test currently requires employers to advertise vacancies in a prescribed manner for 28 days to demonstrate that no suitably qualified resident worker is available to fill the role.  The test only applies to the Tier 2 (General) visa category which is already subject to an annual cap of 20,700 for applicants from abroad in any event (the test doesn’t apply to intra-company transfers, high-earner roles and to those switching from another work visa category from within the UK).  Making the test stricter is therefore unlikely to have any material impact at all on net migration.  In fact, it may only succeed in making it harder for businesses to recruit vital skills for immediate hard-to-fill vacancies regardless of whether or not they are at the same time making every effort to upskill the local workforce.

No indication has been given as to how the test will be tightened but the very same issue was considered in depth (most likely at the request of Theresa May herself when she was Home Secretary) by the Government’s Migration Advisory Committee as part of its review of Tier 2 last year.  Its recommendations published in January 2016 stated: ‘Overall, we believe that the RLMT performs a useful function. It is a means to verify that suitable candidates cannot be found in the resident labour supply. It also allows authorities to monitor the recruitment practices of firms which can expose misconduct… We therefore recommend that the current RLMT be retained. However, there may be some scope to modernise the RLMT to ensure it reflects modern recruitment methods, whilst the Government could also look into improved enforcement in this area’.

What next for UK Immigration?

If we are facing the end to EEA free movement (either completely or in its current form), the key question is whether future EEA arrivals will be given some sort of favourable immigration status. Will Tier 2 be adapted to apply to them in a similar way as it applies to non-EEA nationals or are we looking at an entirely new system? More importantly, will our work visa system be adapted or designed in a way that can control migration without jeopardising UK employers’ ability to recruit the skills they need to succeed and grow, especially if it is without access to the EU’s single market.

The Prime Minister has ruled out an ‘Australian-style’ points-based system favoured by Brexit Leavers on the grounds that it would provide insufficient control on numbers.  Our current visa system is still labelled ‘points-based’ even though the points element, which originally enabled highly skilled non-EEA nationals to come to the UK without a job offer (on the strength of qualifications, work experience, past earnings and age), has all but disappeared.  Work visas are generally now only issued through licensed employers for a specific skilled role with a minimum prescribed salary and, in some cases as explained above, subject to the resident labour market test.

Although it would certainly be a blunt instrument, we could see Tier 2 extended to EEA nationals as a means of controlling all immigration from outside the UK (assuming this is the Government’s ultimate goal). In that case, an employer’s ‘wish-list’ for possible changes might include:

  • allowing for an increase to the current Tier 2 (General) annual visa cap of 20,700 taking into account future restrictions on EEA free movement and acknowledging the continued need for certain UK sectors to recruit the brightest and the best from around the world;
  • the introduction of a more sophisticated mechanism for identifying genuine skills shortages so that work visas are readily available to those employers that need them most, without having to go through the resident labour market test if it will serve no useful purpose. The skills shortage analysis would have to be regularly updated – the Home Office’s current Shortage Occupation List was last reviewed in 2013. That is just not meaningful in late 2016;
  • avoiding any restriction of visas based on the misconception that a role is only highly valued if it is highly paid. This approach was put forward by David Cameron’s Immigration Taskforce but thankfully rejected by the Government’s own Migration Advisory Committee in 2016 (you can see how it might creep back in, though);
  • continuing to allow talented international students who graduate from UK universities to switch into Tier 2 from within the UK by retaining an exemption from the resident labour market test (if necessary, only in certain roles/sectors);
  • introducing work visas for lower skilled but difficult to fill roles (the UK visa system originally had a category for this purpose but it was never activated in light of EEA migration).

Above all, making Tier 2 more challenging or expensive as a means of deterring employers from using it is not the answer nor should the Government assume that employers that do use it are not also doing what they can to train local workers. Proponents of further restrictions to Tier 2 often overlook the fact that it is already a complex, time-consuming, administratively burdensome and expensive system for any employer to get to grips with.  Some might say that this is a fair price for the privilege of being able to hire skilled staff from outside the EEA but there is little or no evidence that UK employers embark on the process specifically to avoid having to employ suitably qualified local staff.  Why would they?  There will no doubt be those that abuse the system but if this is a real concern, our resources would be better spent by enforcing the current rules instead of making them tougher.

For advice on any business immigration issue, please contact Partner and Head of UK Business Immigration, Annabel Mace on 020 7655 1487 or annabel.mace@squirepb.com.


Webinar: Employment Law Worldview Webinar Series – Spain

Squire Patton Boggs presents a series of webinars focusing on the key labour and employment issues in countries throughout Europe, the Middle East, Asia Pacific and the United States.

Given in English by our local labour and employment law experts, each 60-minute webinar comprises a 50-minute presentation covering key “hot topics” in the featured jurisdiction, followed by a 10-minute online question and answer session.

Intended to help you manage labour and employment law risk across your international operations, the webinars will be of interest to both HR professionals and in-house counsel.

On 10 November 2016 at 4 p.m. GMT (5 p.m. CET, 11 a.m. EST, 8 a.m. PST), the featured country is Spain. Ignacio Regojo and Juan Nasarre from our Madrid office will provide updates on:

  • The impact on employment law of the recent Spanish general election
  • Contracts of employment:
    • Brief overview of the types of contracts and their characteristics.
    • The consequences of recent European case law on the severance pay entitlements of fixed-term and temporary workers
  • Working Time Regulations:
    • Are employers obliged to record an employee´s working hours?
    • Issues with employees who work across different locations
  • Holidays: Calculating holiday pay
  • Severance payments in Spain: Types and methods of calculation.
  • Collective redundancies: Current issues
  • Employee monitoring: Recent case law.

Register online

Court of Appeal’s holiday pay decision offers glimmer of hope to employers

Never, as Winston Churchill would certainly not have said, has any Court judgement awaited so eagerly by so many said so little about so much.

The Court of Appeal has now issued its ruling in the Lock holiday pay case, confirming that the Working Time Regulations can and should be read to entitle employees to their “normal pay” while on holiday, not just basic salary.  In other words, “results-based” commissions need to be taken into account in the calculation of holiday pay.  This decision did not concern overtime but the principles there are the same.

To that extent the Court’s decision does not take us far unless you are a keen fan of legal theory as it relates to the boundaries of the rights of courts in EU Member States to bend domestic legislation to and beyond breaking point (Hello?  Anyone?).  In fact this ruling does not even take Mr Lock very far, since their Lordships expressly declined to answer the question weighing on employers across the country – I get the principle, but how on earth should I implement it in practice?  One of the guiding principles of EU law-making is that people should be able to work out from domestic Member State legislation what they need to do in order to comply with it.  Right now that is just not the case on this point, nor is it likely to be so in the near future.   As matters stand, even if there is no further appeal against this decision, neither British Gas nor Mr Lock is technically in a position to determine precisely what allowance should be made for commissions in his holiday pay.

However, there are some chinks of light in the decision for employers with lumpier or less predictable or regular bonus and commission schemes than Mr Lock’s daily accrual at British Gas.  It appears that the potential unfairness of calculating holiday pay by reference to earlier commissions or bonus in circumstances where they would not have been earned during the absence has finally been recognised.  “Is the banker who receives a single large results-based annual bonus in March entitled on his summer holiday to leave pay including an element referable to his bonus? … There may indeed be a question of what is “normal remuneration” is and whether its calculation ought to reflect his annual bonus, and if so, how“.  The Judge also asks into thin air “How ought the WTR deal with the type of worker who receives no commission for some months of each year?“, and follows this with a keen contender for the judicial understatement prize – “Other types of case will raise other questions“.  Sadly, however, the very next paragraph says defensively that “Nothing in this judgement is intended to answer them“.  Much obliged, my Lord.

Maybe it is reading too much into one word, but the reference above to “whether” the banker’s bonus ought to be taken in to account seems to me to put a further foot in the door of an argument that if the employee cannot show that he would probably have received a particular commission or bonus in a particular holiday period, he should not be paid for it.  That particular fight is clearly not yet over.

British Gas v Lock: UK Court of Appeal gives its verdict

The Court of Appeal has today given its decision in the long running holiday pay case of British Gas v Lock.  It has apparently confirmed that EU leave, i.e. the four weeks’ leave derived from the Working Time Directive, should include a sum in respect of contractual “results-based commission” where it forms part of a worker’s normal remuneration.

Any employer hoping for some useful practical guidance on the nuts and bolts of how commission should be taken into account for statutory holiday pay purposes will remain disappointed.  We understand the Court of Appeal only dealt with the narrow issue of whether UK legislation can be interpreted in such a way as to give effect to EU law requirements regarding the calculation of holiday pay.

A more detailed update will follow next week.