Questions and answers

The employment law team at Pinsent Curtis Biddle answer questions on
workplace issues

Statement of terms and conditions

Q:  I have heard of a case
relating to the statement of terms and conditions of the employee. We use them
to set out the contractual terms for our employees – should we?

A:  No. We advise clients that
they should additionally use comprehensive contracts of employment issued at
the stage of offer and acceptance of the job.

The case is Lovett v Wigan Metropolitan Council. The Court of Appeal held
that the terms and conditions discussed during an employee’s interview and
covered in a subsequent letter formed a contract of employment. Contrary to the
employer’s arguments, the statutory written particulars and appended documents
that were issued following commencement of the employment relationship were
held to not form part of the contract.

An employee has the right to receive a written statement of the substantive
terms and conditions from the employer within two months of starting work but
this is not intended to carry contractual force. In Lovett it was found that
there was no evidence that the employee had it properly made clear to him that
his career progression depended on "he needs of the department".
Although this condition was contained in the statutory written particulars, it
was not in line with what had been agreed orally and confirmed in the offer
letter and therefore could not form part of the contract.

Lovett does not mean that there is new law for employers to grapple with,
but it is a reminder of how the courts regard the statement of particulars – as
a statutory obligation and not a contractual document.

Christopher Booth

Compromise Agreements

Q:  Is it true that it is
going to be more difficult to rely on a compromise agreement in the future?

A:  In one sense, yes. The
decision in BCCI (In compulsory liquidation) concerned the interpretation of
compromise agreements signed by ex-staff of the bank, via Acas. In
consideration for one month’s salary and after an interview with an Acas
official, the employees signed an agreement stating that the payment was:

"…in full and final settlement of all or any claims whether under
statute, common law or in equity of whatsoever nature that exist or may exist
and in particular, all or any claims, rights or applications of whatsoever
nature that the applicant has or may have or has made or could make in or to
the industrial tribunal, except the applicant’s rights under the respondent’s
pension scheme".

The House of Lords held that this wording did not preclude the employees
from proceeding with claims for "stigma" damages arising from the collapse
of the bank and their dismissal.

The court did not intend to frustrate the parties’ intentions but in the
absence of clear language, it will be "very slow to infer that a party
intended to surrender rights and claims of which he was unaware and could not
have been aware".

Lord Nicholls described the signing of a compromise agreement as an
"informal release" and this would seem to be at odds with the fact
that it is a legally binding agreement under statute. He also stated that the
wording of the agreement would probably not be sufficient to have compromised a
claim for underpayment of wages.

Martin Brewer

Race and "national origin"

Q:  What is the latest
position on "national origin" under the Race Relations Act?

A:  In BBC Scotland v Souster
it was held that the Race Relations Act covers discrimination against an
individual on the basis that he or she is English. Under the Act’s definition
of national origin, the Scots and English are separate racial groups.

The situation arose in this case because Souster was English and had been
employed as a presenter of a Scottish television programme. His contract was
not renewed and a Scottish woman was appointed in his place and he argued that
he had been discriminated against on racial grounds.

The Court of Session said that the Act was applicable in this situation by
deciding that the issue of "national origin" should not be restricted
by the nationality test, which would not serve to distinguish between the
Scots, Welsh, English or Northern Irish. The employment tribunal to which the
case has been returned will now decide Souster’s case.

Geoff Tyler

Holiday entitlement

Q:  Are employees going to be
able to claim their holiday entitlement under the Working Time directive from
Day One of their employment?

A:  Many are aware that UK
workers do not acquire the right to four weeks of annual paid leave until they
have been working for thirteen weeks. However, the Advocate General of the
European Court maintained in Bectu v UK that the 13-week qualification period
is unlawful. The right to paid leave is "an automatic and unconditional
right granted to every worker" and there is no provision within the
directive that makes it subject to the 13-week period.

The Advocate General even went so far as to say that the Working Time
directive "precludes" national legislation from making the right
subject to a qualifying period. It remains to be seen whether the European
Court will follow this.

Ashley Norman

Transfer of Undertakings

Q:  What is the latest
European Court case law on transfer of undertakings?

A:  The European Court case of
Ayse Suzen in 1997 indicated that there must be, for a transfer, a transfer of
significant tangible or intangible assets or, alternatively, in a
labour-intensive function, a taking over by the new employer of a major part of
the workforce in terms of numbers and skills.

British courts have given many recent decisions flying in the face of these
conditions finding a transfer without either condition being satisfied. But the
latest ECJ case in Oy Liikenne Ab v Liskojarvi and Juntunen (Case C-172/99, 25
January 2001) indicates that the European Court is still proceeding with its
hard line.

In this case, there was a transfer of bus operators operating bus routes in
Helsinki. Most of the staff were taken on but not the majority of buses. The
European Court held that this was an asset reliant undertaking and the mere
fact of taking over of a major part of the workforce was not a conclusive
factor and therefore, since the buses were not (in the main) transferred, there
was no transfer of an undertaking.

This indicates the very stark contrast between the more liberal approach to
transfers in Britain and the tests laid down by the European Court. New Tupe
regulations due later this year are urgently needed to clarify the confusion.

Dr John McMullen
National Head of Employment Law

Pension rights and part-time workers

Q:  We employ many part-timers
and are concerned about the situation with regard to pension rights. Can you
explain what the position is?

A:  Many employers are
concerned about the position of part-time workers’ pensions following the
decision by the House of Lords in Preston.

There are three key elements to the decision: the six-month limitation
period, the position of employees on fixed-term contracts and the two-year
restriction on backdating claims.

The six-month limitation period is set out in the Equal Pay Act and was open
to challenge if the House of Lords found that it was less favourable than
similar domestic limitation periods. The House of Lords found that the
procedural rules under the Equal Pay Act were not overall less favourable than
those governing breach of contracts claims which are subject to a six-year
limitation period. This means that claims presented more than six months after
the termination of the applicant’s employment will be statute barred.

Where there are successive fixed-term contracts concluded at regular
intervals in respect of the same employment to which the same pension scheme
applied, resulting in a stable employment relationship then the limitation
period will only start to run from the end of the employment relationship. If
this stable employment relationship cannot be shown, then the limitation period
will run from the end of each separate contract.

Employers cannot rely on the Equal Pay Act to defeat a claim for periods
prior to the two years being taken into account. Successful applicants will
therefore have the right to their future pension benefits calculated by
reference to periods of service subsequent to 8 April 1976 (the date when the
ECJ first held that Article 141 could be relied on directly by individuals). This
will be subject to the employee paying contributions he or she owed for the
relevant period. This will be important in contributory schemes, particularly
where the contributions are relatively high. This will not be a deterrent for
employees in non-contributory schemes or where the contributions are low. It
may still be possible – even if indirect discrimination is made out in
principle – that the discrimination is justified on grounds other than sex.

Men who work part-time may also be entitled to retroactive membership of
pension schemes if their female colleagues are found to be indirectly
discriminated against.

Robert Mecrate-Butcher

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