Case round-up

This week’s case round-up

Five-year temporary assignment
Franks v Reuters Ltd and another, Court of Appeal, 10 April, 2003

Employers who use agency staff should take note of this decision in which
the Court of Appeal has allowed an agency worker’s complaints for unfair dismissal
and redundancy against the ‘client’ for whom he worked (and not the employment
agency) to be re-heard by an employment tribunal.

Franks gained a temporary placement through an employment agency as a driver
for Reuters. After six months, he became a full time driver, but five years
later, Franks was told that his services were no longer required. Throughout
his engagement, Franks was paid by the employment agency (now in liquidation).
Franks brought tribunal complaints against Reuters for unfair dismissal,
redundancy and breach of contract.

The tribunal dismissed his complaints, finding that Franks was not an
employee of Reuters. There was no mutuality of obligation between the parties –
a necessary condition of an employment relationship – and that decision was
upheld by the Employment Appeal Tribunal. However, Franks successfully appealed
to the Court of Appeal.

The court held that the tribunal had failed to address the question as to
whether there was an implied contract of service between Franks and Reuters. It
should have considered all the facts, including what had been said and done as
well as relevant documentation, and then determined whether there had been an
implied contract. The court also stated that while a person does not become an
employee simply through length of service, the lengthy period of time for which
Franks had worked for Reuters (five years) was such that it was capable of
creating an implied contractual relationship. Franks’ claims are to re-heard by
an employment tribunal.

‘Rolled up’ pay unlawful
MPB Structures Ltd v Munro, Court of Session, 1 April, 2003

To meet obligations under the Working Time Regulations 1998, many employers
use a ‘rolled up’ rate of pay, which incorporates holiday pay in the weekly or
hourly salary. Staff holidays are therefore unpaid. However, the Scottish Court
of Appeal has recently confirmed that such a practice is unlawful.

Munro was employed by MPB and paid a ‘rolled up’ rate of pay, which included
an 8 per cent allowance for holiday pay in each weekly pay packet. This was
expressly provided for in his employment contract. Despite this, Munro brought
a successful complaint for unpaid holiday pay. The tribunal found the
contractual provision which included holiday pay in the weekly rate was void
under the Working Time Regulations 1998.

MPB’s appeals to the Employment Appeal Tribunal and the Court of Session
were unsuccessful. The courts found that ‘rolled up’ arrangements were not in
accordance with the regulations, and would discourage staff from taking
holidays – conflicting with what the regulations sought to achieve. It was not
only essential for payment to be made for annual leave, but also for it to be
made in association with taking that leave.

MPB was liable to give holiday pay to Munro, and received no credit for
payments already made (8 per cent allowance), since the ‘rolled up’ rate did
not qualify to discharge MPB’s liability in respect of holiday pay.

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