Questions and answers

The employment law team at Boodle Hatfield answer questions on workplace

Payment in lieu clauses

Q:  We recently heard that if
we have a payment in lieu of notice ("Pilon") clause in our contract
of employment, when we ask someone to leave, we cannot reduce the Pilon to take
into account the fact that they are likely to go straight to another job
elsewhere. Is this right? It could be expensive.

A:  Employers will welcome the
Court of Appeal’s recent overturning of the EAT’s decision in the Cerebus case
since it effectively helps them on the issue of termination payments. Where
there is a discretion in the contract for an employer to make a Pilon, the
employer now does not need to pay in full where the employee has obtained
employment elsewhere during the notice period.

Before the EAT’s decision in this case, the above position was assumed
(therefore the employee had to mitigate his loss). The EAT’s decision changed
that, stating that the employer was bound to pay the full payment in lieu of
notice, and if the employee was lucky enough to find alternative employment
during that period, he could effectively be doubly compensated.

The Court of Appeal’s decision was a majority decision: the two judges in
the majority decided that because the employer had a discretion only, and not an
obligation, to make a payment in lieu of notice, the mitigation rules should

Katie Pyne


Q:  I understand that new
Regulations have come in concerning part-timers which effectively gives them
lots more new rights. We employ a lot of part-timers and are worried about what
exactly we have to do. Are the new rights much wider than the previous law?

A:  The new Part-Time
Regulations came into force on 1 July 2000. They are very narrow and may not
help many part-timers in practice.

Part-timers are able to bring claims only by showing their treatment or
terms are pro rata worse than that given to a full-timer working on the same
contract for the same employer. Part-timers working under a different type of
contract or for a different employer are precluded from making a comparative
claim. The message for employers is clear – if you use different types of
contract or different employing entities, it may be possible still to pay
part-timers relatively less. Where part-timers carry out work which is not the
same or similar, but of equal value, or where the work is equivalently rated,
the Regulations will also not assist. Furthermore, part-timers not employed
contemporaneously with full-timers will also find that the Regulations will not

Part-timers will therefore have recourse to the old law for many of the
practical difficulties encountered by them. For example, the Equal Pay Act of
1970 allows claims by part-timers (albeit only with members of the opposite
sex) even if they are employed by an associated employer, on a different type
of contract or where the work is of equal value or equivalently rated.

Article 141 of the Treaty of Rome allows part-timers to compare pay with
that of a predecessor (again provided that the comparator is of the opposite
sex). The Sex Discrimination Act allows claims to be made in relation to a
hypothetical man. This Act also covers recruitment, and is still the only legal
source for a right to work part-time in certain cases.

Simon Fitzpatrick

Positive discrimination

Q:  We are an equal
opportunities employer and we are keen to ensure that the number of ethnic
minority and female people we have in our senior management positions reflects
society at large. Can we positively discriminate?

A:  In general, UK law is
hostile towards positive discrimination. There is little prospect of any
positive discrimination measures being made lawful in the near future, although
the Government is currently considering the possibility of allowing such
measures in the selection of political candidates.

There are, however, a number of small exceptions to this general rule. The
Sex Discrimination Act 1975 and the Race Relations Act 1976 allow positive
action in relation to training for individuals who are job applicants or other
non-employees, where it reasonably appears that during the proceeding year
there were comparatively few persons of that sex or racial group doing that
particular work in Great Britain. Trade unions, employee associations and
professional trade organisations can similarly positively discriminate in
recruitment and training on the same grounds as above. The "genuine
occupational qualification" rules also allow employers to target one race
or sex for particular jobs in certain circumstances

One of the main curbs on positive action is European law. The ECJ initially
took a fairly strict line declaring that any positive action which effectively
guaranteed a female candidate the position in question, in circumstances where
a male was equally qualified, was unlawful. However, in recent times the ECJ
has shown a more relaxed approach.

James Lynas

Adoption and Parental Leave

Q:  We are a small company
with only five employees. One female employee, who has been with us since 1999,
has a three-year-old son. She is now planning to adopt a 10-year-old girl in
May 2001. The employee has asked for a couple of weeks’ unpaid leave, starting
on the date the girl will be placed with her. Can she get this?

A:  The statutory right to
maternity leave does not presently extend to women who are adopting children.
However, as your employee has over a year’s service, she has the right to
unpaid parental leave in respect of the girl. Employees with one or more years’
service may take 13 weeks’ parental leave for each child born or adopted on or
after 15 December 1999 ("the cut off date").

Parental leave for adopted children may be taken up until the earlier of the
fifth anniversary of the date on which the child was placed for adoption, or
the child’s 18th birthday. For children born to your workers, it may be taken
up until the child’s fifth birthday.

The right to leave does not cover the son, as he was born before the cut off
date. This cut off date may be contrary to the Parental Leave Directive and is
being challenged.

Julian Parry

Trade union recognition

Q:  My company has just
received a letter from a trade union asking us to give them voluntary
recognition. What should we do?

A:  The short answer is to
seek more information from the union and delay the start of any formal
procedures under the Employment Relations Act 1999. Before agreeing to
voluntary recognition, it is important to get clear information from the union
on the groups of workers for whom they wish to be recognised, the union’s
proposals for voluntary recognition and the precise mechanics of collective
bargaining, as they see it. This would include the timing of meetings, the
issues on which they wish to be consulted and the areas where they wish to have
power to negotiate.

It is important to remember that a request for voluntary recognition does
not trigger the compulsory recognition procedures introduced by the Employment
Relations Act 1999. This means that if there is voluntary recognition, outside
of the legislative procedures, then the company can in future walk away from
the recognition agreement.

Once the union makes a formal request under the legislation, however, then
the automatic recognition procedures will begin. Once this happens, any
voluntary recognition agreement will have to stay in force for three years.

If agreement cannot be reached after a formal request is issued the union
can involve the Central Arbitration Committee, who will order automatic
recognition where 50 per cent of staff in the relevant bargaining unit are
union members.

The union may be reluctant to progress their application to CAC if they are
not confident of the level of support in the workforce, since if it fails, it
will be barred from making another application for three years.

Warren Wayne

Appointments without advertising

Q:  I have heard recently that
it is dangerous legally to recruit people or appoint existing employees to
senior posts without advertising these posts. This seems a bit of a hassle,
particularly in cases where you know that advertising would largely be a waste
of time and resources. What’s the legal position?

A: Appointing individuals without advertising is not specifically
unlawful, but frowned upon both by the EOC and the CRE Codes of Practice. It
can also constitute indirect sex or race discrimination. This was the claim
brought against the Lord Chancellor when he appointed a special advisor without
advertising the post. Four elements need to be fulfilled for such a claim to

a) There must be a requirement or condition imposed.
b) With which a considerably smaller proportion of one sex or race can comply.
c) Which cannot be justified on objective grounds.
d) Which must be to the applicant’s detriment because she cannot comply with

Appointing an individual only from those people known to the appointor could
well constitute imposing the requirement or condition as set out above at (a).       

Whether or not a considerably smaller proportion of individuals of one sex
or race can comply with the requirement or condition is a matter of fact in
each case. If, when looking at the relevant pools, the numbers of those who
could comply and those who cannot are very small in both instances, one could
argue that element (b) has not been fulfilled.

The test of justification at (c) is strictly interpreted. The justifying
reason must be that the appointor acted in the way it did to achieve a
legitimate objective in a way which was both necessary and appropriate. The
"uniqueness" of the individual concerned, and the reasons for wishing
to avoid advertising would need to be carefully canvassed.

The "detriment" test (at (d) above) gives employers another ray of
hope. The claimant must show some material and substantial physical or economic
detrimental consequence as a result of the discrimination.

Russell Brimelow

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