EU referendum: 12 European cases that have shaped UK employment law

The “Brexit” referendum on whether or not the UK should withdraw from the European Union takes place on 23 June 2016. Stephen Simpson rounds up 12 key European cases that have had a major impact on UK employment law.

1. Terms and conditions of employment during a TUPE transfer

Foreningen af Arbejdsledere i Danmark v Daddy’s Dance Hall A/S (1988)

The mere mention of the seminal Daddy’s Dance Hall case is enough to send TUPE specialists into a fit of excitement.

This is the 1988 decision in which the ECJ decided categorically that changes to an employee’s terms and conditions of employment are void if the only reason for the amendments is a TUPE transfer, and that employees cannot agree to opt out of their TUPE rights.

While the principle has been eroded to some extent, it is still a key one for employers to think about when embarking on the sale or purchase of a business.

Under the current TUPE Regulations 2006, a variation of contract is void if the sole or principal reason for the variation is the transfer unless:

• the sole or principal reason for the variation is an economic, technical or organisational (ETO) reason entailing changes in the workforce, provided that the employer and employee agree the variation; or
• the terms of the employee’s contract permit the employer to make the variation.

2. Pregnancy and maternity discrimination

Dekker v Stichting Vormingscentrum voor Jonge Volwassen (VJV-Centrum) Plus (1990)

The importance of this case for claimants who are arguing that they were discriminated because of pregnancy cannot be overstated.

The ECJ made it clear that treating a women unfavourably because of pregnancy or maternity leave is direct sex discrimination.

According to this case, it is not necessary for the woman to identify a non-pregnant comparator in similar circumstances to demonstrate discrimination.

This principle can now be found in the Equality Act 2010, which sets out pregnancy and maternity as one of the nine protected characteristics.

The Act prohibits “unfavourable treatment” (rather than less favourable treatment) because of pregnancy or maternity. This means that there is no need for a comparison with another person not having a child.

3. Equal pay: work of equal value

Enderby v Frenchay Health Authority and Secretary of State for Health (1993)

This enduring equal pay case sets out an important principle in equal pay claims where one group is arguing that they do work of equal value to another group made up predominantly of workers of the opposite sex.

The ECJ decision in Enderby established that, where the statistics are sufficiently compelling to show disparate impact between the two groups made up largely of different genders, the burden of proof switches to the employer to show that there was a genuine material factor other than sex to explain the difference.

The ECJ in Enderby, which involved female speech therapists arguing that they were paid less for doing work of equal value to male pharmacists and psychologists, said:

… if the pay of speech therapists is significantly lower than that of pharmacists and if the former are almost exclusively women while the latter are predominantly men, there is a prima facie case of sex discrimination, at least where the two jobs in question are of equal value and the statistics describing that situation are valid…

Where there is a prima facie case of discrimination, it is for the employer to show that there are objective reasons for the difference in pay.”

4. Cap on discrimination compensation

Marshall v Southampton and South-West Hampshire Area Health Authority (No.2) (1993)

The central issue in this historic discrimination case was whether or not it was valid for the Sex Discrimination Act 1975 to have an upper limit on the amount of compensation that could be awarded.

The tribunal wanted to award Ms Marshall almost £20,000 for sex discrimination, but her compensation was subject to a limit (£8,500 at the time).

Ms Marshall challenged the compensation limit as being contrary to EU law. The ECJ held that member states cannot fix an upper limit on compensation for loss and damage suffered as a result of sex discrimination.

Both the Sex Discrimination Act 1975 and Race Relations Act 1976 were subsequently amended to remove the cap on discrimination awards.

To this day, discrimination claims are feared by employers precisely because compensation is potentially unlimited.

The record award was made in 2011 in Michalak v The Mid Yorkshire Hospitals NHS Trust, in which a former NHS doctor was awarded £4.5 million for sex and race discrimination.

5. Pregnancy and maternity discrimination

Webb v EMO Air Cargo (UK) Ltd (1994)

This decision, which goes hand in hand with Dekker (see above), reiterated that a pregnancy discrimination case cannot be defended on the basis that a sick man absent for the same amount of time would have been treated in the same way.

The claimant in this case was taken on as a clerk, initially to cover another employee’s maternity leave, but expected to stay on after the other employee’s return.

Several weeks after starting work, the claimant learnt that she was pregnant and informed the employer.

The employer took the view that it had no alternative but to dismiss the claimant.

When the case got to Europe, the ECJ made it clear that it is contrary to EU law to dismiss a woman who, shortly after her recruitment, is found to be pregnant.

6. Gender reassignment discrimination

P v S and Cornwall County Council (1996)

Gender reassignment is now one of the nine protected characteristics under the Equality Act 2010.

Discrimination against transgender people was initially prohibited via an amendment to the now repealed Sex Discrimination Act 1975, following this ECJ decision.

P was dismissed by a council after informing it of an intention to undergo gender reassignment surgery. P commenced action against the council on the basis that the dismissal amounted to sex discrimination.

When the case got to Europe, the ECJ held that a person dismissed because he or she intends to undergo, is undergoing or has undergone gender reassignment is treated less favourably than persons of the sex to which he or she was deemed to belong before undergoing gender reassignment.

7. Sexual orientation discrimination

Grant v South-West Trains Ltd (1998)

This case revolved around whether or not it was sexual orientation discrimination for the employer to limit travel concessions to “spouses and dependants”.

The female claimant argued that the rule discriminated against her because her female partner could not benefit from the concessions.

The case went to the ECJ, which decided to many people’s surprise that European protection against discrimination on the basis of sex did not extend to sexual orientation.

The Equal Treatment Framework Directive subsequently made express provision for sexual orientation, which is now a protected characteristic under the Equality Act 2010.

8. Working time and on-call working

Landeshauptstadt Kiel v Jaeger (2003)

This German reference is one of the most important in a line of cases in which the ECJ has given a liberal approach to what counts as “working time”.

The ECJ decided that doctors’ on-call duty, during which they were required to be physically present in the hospital but were permitted to sleep when they were not required, constituted working time.

The case continues to be an important influence in UK working time cases. For example, it was cited in the recent EAT decision in Edwards v Encirc Ltd.

There, the EAT held that the time employee representatives spent attending trade union and health and safety meetings constituted “working time” under the Working Time Regulations 1998.

9. Rolled-up holiday pay

Robinson-Steele v RD Retail Services Ltd and other cases (2006)

Rolled-up holiday pay arrangements provide that a specific part of a worker’s wages represents holiday pay.

As payment in respect of a period of holiday is spread throughout the year, the worker is then paid nothing when he or she physically takes the holiday.

This practice used to be common until the ECJ decision in Robinson-Steele, which decided that the approach of rolling up holiday pay into wages is unlawful.

The issues was referred to Europe after the UK courts and tribunals could not come to a conclusion on this point.

10. “Associative” disability discrimination

Coleman v Attridge Law (2008)

It is rare for European decisions to introduce a whole new type of claim into employment tribunals, but that is what happened in this case.

Ms Coleman claimed that her employer discriminated against her because she is the primary carer for her disabled son, including an unsympathetic attitude when she sought to take time off to care for her son.

At the time, UK disability laws provided protection only for a “disabled person” discriminated against because of his or her disability.

Ms Coleman successfully argued in the ECJ that EU law does cover direct discrimination and harassment on the ground of an association with a disabled person.

This type of discrimination, now commonly referred to as “associative discrimination”, is covered in the Equality Act 2010. A number of associative discrimination claims have been successful in employment tribunals.

11. Annual leave during long-term sick leave

Stringer v HM Revenue and Customs sub nom Commissioners of Inland Revenue v Ainsworth; Schultz-Hoff v Deutsche Rentenversicherung Bund (2009)

The Working Time Regulations 1998 expressly ban the carrying over to another holiday year of the European minimum of four weeks’ annual leave. There is no right to payment for statutory leave that a worker has failed to take by the end of a leave year.

The ECJ in 2009 held that the right to paid annual leave continues to accrue during sick leave and a worker on sick leave must be allowed to carry leave over into subsequent leave years.

The ECJ said that, on termination of the employment relationship, a worker who has been on sick leave and unable to take paid annual leave is entitled to a payment in lieu.

However, uncertainty remains as to how long employers have to allow employees on long-term sick leave to carry over holiday leave.

In Plumb v Duncan Print Group Ltd, the EAT suggested that absent employees should be able to carry forward the untaken annual leave for up to 18 months from the end of the leave year in which the leave arises.

The uncertainly has not been helped by the UK Government’s failure to amend the Working Time Regulations 1998 to take account of European case law.

12. Holiday pay calculations

Williams v British Airways plc (2011)

In 2011, the ECJ delivered its decision in a seemingly esoteric employment law case about whether or not pilots on annual leave are entitled to continue to receive allowances for the amount of “flying time” and time away from their base airport.

While the case did not receive much fanfare at the time, it has taken on added significance in the past few years because of the subsequent Lock and Bear Scotland cases, with which every HR professional will be familiar.

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Williams effectively wiped away the orthodox view from UK case law that holiday pay has to include only a worker’s base pay, and not additional payments such as overtime pay and commission.

The decisions in Lock and Bear Scotland, which were heavily dependent on the ECJ decision in Williams, mean that UK employers now have the additional burden of having to calculate workers’ holiday pay with these extras included.