Articles | Employment bulletin February 2016

STOP PRESS: Holiday pay and equal pay reporting. Plus monitoring of employees’ private messages; the right to work in the UK; and age discrimination in redundancy exercises.


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David Clay

David Clay

FSP Employment Seminar 17 March 2016

The employer’s prenup: post-termination restrictions

FSP Employment Seminar


Join us for our next Breakfast Briefing on 17 March, where Louise Smyth will explain how to use and enforce post-termination restrictions to prevent ex-employees from damaging your business. We’ll provide a light breakfast and there will be opportunities to network and ask questions of the team. Read more to book your place.


Plus equal pay reporting

Holiday pay and equal pay reporting


The Employment Appeal Tribunal (EAT) has just delivered the latest decision in the long-running holiday pay case of Lock v British Gas. As explained in our previous reports on this case (read more), the majority of Mr Lock’s pay was made up of commission but his holiday pay was based on his basic salary only. Mr Lock argued that his holiday pay should include his commission. After the European Court of Justice confirmed that commission payments must be taken into account when calculating holiday pay for the 4 weeks’ holiday derived from the Working Time Directive, the original Employment Tribunal found in Mr Lock’s favour and declared that the UK’s Working Time Regulations could be interpreted to comply with EU law.

The EAT has now upheld this decision and dismissed British Gas’ appeal. In a decision which is consistent with its recent judgments in cases concerning the inclusion of non-guaranteed overtime, the EAT emphasised the principle that holiday pay should reflect all the income that a worker would usually receive had he or she been working.

There is a good chance that this decision could be appealed again to the Court of Appeal, but in the meantime the EAT’s judgment means that employers should continue to ensure that holiday payments include a sum to reflect the commission (if any) that would otherwise have been earned during the holiday period.

Separately, the government has published draft regulations requiring employers with at least 250 employees to prepare an annual report setting out the gender pay gap in their business. The regulations are expected to come into force in October 2016 and we will provide further details in next month’s bulletin.

Monitoring communications in the workplace

Can you spy on employees’ private messages?

Monitoring communications in the workplace


Monitoring employees’ workplace communications can help an employer to check that there is no abuse of its IT policies, that its confidential information is being protected and that none of its staff are being subjected to bullying or harassment. However, employers must be careful to balance their own interests against employees’ right to privacy under Article 8 of the European Convention on Human Rights.

A recent case in the European Court of Human Rights (ECHR) concerned a Romanian engineer in charge of sales who was asked to set up a Yahoo Messenger account by his employer for the purpose of responding to client enquiries. Having monitored the employee’s activities for around a week, the employer presented the employee with a transcript of messages he had exchanged with his brother and fiancé (some of which related to his health and sex life) and dismissed him for using the account to send personal messages in breach of its internal rules. After Romanian courts dismissed the employee’s claims, he applied to the ECHR on the basis that his dismissal was a disproportionate infringement of his Article 8 rights to privacy.

The ECHR accepted that the employee’s Article 8 rights were engaged by the employer’s monitoring and use of transcripts, but held that the employee’s right to privacy had not been infringed on this occasion. In reaching its decision the ECHR found that it was not unreasonable for an employer to check its employees were completing professional tasks during work hours, noting that the employer’s monitoring was limited in scope and proportionate and that the employer had accessed the account in question in the belief that it contained only client-related communications.

The decision of the ECHR has been widely reported in the press as giving employers a green light to snoop on employees, but in practice this is not the case. Before carrying out any monitoring a UK employer must put in place and communicate to its employees a proportionate monitoring policy with specific aims and apply that policy in compliance with UK data protection legislation. Unfettered monitoring of employees is likely to give rise to claims under both UK and EU law, generating both unwanted costs and high profile negative publicity.

Checking employees’ right to work in the UK

Have you got the right policy?

Checking employees’ right to work in the UK


Where an employer takes on a person who does not have the right to work in the UK it risks a civil penalty of up to £20,000 (per worker) and, if it does so knowingly, criminal sanctions. It is therefore important to make sure the necessary checks are carried out. A recent High Court case confirms that a ‘blanket policy’ of checking all workers’ entitlement to work in the UK is the safest course of action for all employers.

The case concerned Ms Sirunyan, an Armenian national with a French husband. As an EU national, Mr Sirunyan’s husband was entitled to work in the UK and accordingly so was Ms Sirunyan. To obtain confirmation of her right to work in the UK, Ms Sirunyan applied for a residence card but her application was, mistakenly, refused. Ms Sirunyan appealed the decision and in the meantime applied for a job with NCO Europe, which she was offered subject to proving her eligibility to work in the UK.

When Ms Sirunyan was unable to provide such proof her employment was terminated. Ms Sirunyan brought a claim of discrimination on grounds of her nationality as she argued that NCO Europe would not have insisted a UK national demonstrate their right to work in the same way.  She also claimed that her termination was unreasonable as she was married to a French national and so by default had a right to work.  

The Court dismissed the claim after NCO provided evidence to show that it operated a blanket policy whereby every employee was required to provide right to work documentation, regardless of their nationality. Ms Sirunyan was therefore unable to show that she had been treated less favourably on the grounds of nationality. The reasonableness of NCO’s policy was not relevant.

Had Ms Sirunyan been able to demonstrate that in practice NCO only required documentation from non-UK nationals then her claim may have succeeded. The case shows that as well as avoiding civil penalties and criminal sanctions, implementing a blanket policy on right to work checks will also leave employers better placed to defend discrimination claims. While no employer wants the administrative burden of carrying out checks on all employees, the consequences of not doing so are worth avoiding.

Restructuring and redundancies 

Be wary of age-related benefits 

Restructuring and redundancies


Broadly speaking, to establish a prima facie case of age discrimination employees must show that, because of age, they have been treated less favourably than a comparable employee in not materially different circumstances. A recent case in the Employment Appeal Tribunal (EAT) shows the application of these rules in practice.

The case centred on a restructuring exercise affecting Regional Directors at the Royal Bank of Scotland (RBS). RBS initially indicated that employees who were not invited to interview for new roles would have the chance to apply for voluntary redundancy, which for employees over 50 would also include the option to take early retirement. Two Regional Directors under 50 successfully applied for voluntary redundancy, but Mr Donkin, in his early fifties, was ultimately not given that opportunity after RBS realised that his early retirement benefits would cost around £500,000. Mr Donkin took up an alternative role but later brought a claim on the basis that RBS’ failure to allow him to apply for voluntary redundancy was direct age discrimination.

The EAT held that Mr Donkin had made out a prima facie case of discrimination. The two Regional Directors under 50 were appropriate comparators. Although Mr Donkin was entitled to early retirement benefits and his younger colleagues were not, this was due purely to his age and was therefore not a material difference in circumstances.

The fact that Mr Donkin was prevented from applying for voluntary redundancy amounted to less favourable treatment. The reason for that treatment was the cost of his severance package, which again arose from his age. The EAT confirmed that when identifying the reason for less favourable treatment, the question to ask is not why an employer takes into account an employee’s age, but whether it has done so.

The decision confirms that where an employer applies a criterion which distinguishes between people based on age (or any other protected characteristic), this is itself discriminatory. In cases of direct age discrimination, employers then have the opportunity to justify their actions as a proportionate means of achieving a legitimate aim. In the case of Mr Donkin that point will be considered at a separate hearing, but if RBS relies solely on a costs argument then justifying its approach may prove difficult.