Employment Law Review - January / February 2022

Welcome to our employment law update bringing you up to speed with this month's key cases and developments.

This month, the Court of Appeal has handed down a significant decision on holiday pay claims relating to unpaid annual leave; we explore how organisations should now manage risk. We highlight some recent Employment Appeal Tribunal decisions which provide useful guidance to employers dealing with grievances, and also highlight the significant cost implications if employers fail to follow the ACAS Code of Practice. We also set out the latest on the Government's mandatory vaccine mandate.

The rising cost of unpaid holiday claims

The Court of Appeal (CA) has concluded that Mr Smith, a worker, was able to recover compensation for leave he had taken, but which was unpaid, for the duration of his engagement with Pimlico Plumbers. This overturns the Employment Appeal Tribunal's earlier decision that Mr Smith could only pursue claims for untaken and unpaid leave. This CA decision has far-reaching consequences where employment status is disputed; workers, or indeed those incorrectly classified as 'self-employed', who have not received paid annual leave, will be able to recover compensation going back to the start of their engagement (provided that is after the right to paid annual leave came into effect). We recommend that employers now carry out a thorough audit of all such 'contractors'. The CA also made it clear that employers must set up and maintain systems to ensure that workers are able to take paid leave, and to 'recognise and accept' worker status in 'appropriate cases'. Employers who fail to do so leave themselves open to expensive, historic holiday pay claims.

The European Working Time Directive (EU WTD) provides all workers with a legal right to receive 4 weeks paid leave in each holiday year. Workers who have not been afforded the right to take paid leave during the holiday year are (following a previous decision of the European courts in King v Sash Windows) allowed to carry over any untaken leave indefinitely and entitled to compensation for it on termination of employment. This applies equally to leave that was taken, but unpaid by the employer. The Working Time Regulations 1998 (WTR) which implement the EU WTD into UK law, provide all workers in the UK with the legal right to 5.6 weeks paid leave. Any claims for compensation for unpaid leave are presented to an Employment Tribunal either under the WTR, or as unlawful deduction from wages claims (which have previously been limited to a back pay period of two years).Mr Smith initially presented his claim to an Employment Tribunal in 2011 following his suspension. However, key to his claim was the issue of employment status. Pimlico Plumbers engaged him as a plumber on a 'self-employed' basis, but Mr Smith believed that he was a 'worker'; a view upheld by the Supreme Court in 2018. As a worker, Mr Smith was now able to assert his right to paid annual leave and was seeking compensation for unpaid leave throughout his engagement with Pimlico Plumbers. The Employment Tribunal and the Employment Appeal Tribunal concluded that there were no 'carry over rights' because Mr Smith's claim was for leave that had been taken (but had not been paid by Pimlico Plumbers).The CA disagreed. It made it clear that workers who have taken unpaid leave are in the same position legally as those who haven't taken any at all; both are entitled to compensation. The purpose of the 4 weeks paid leave under EU WTD was rest, relaxation and leisure, and would not be met where an individual was worrying about whether they would be paid or not. The CA went on to say that employers who do not allow workers to exercise their right to paid annual leave must compensate staff, in particular if they had been incorrectly treated as self-employed. The CA highlighted that employers needed to show that it “specifically and transparently gave the worker the opportunity to take paid annual leave, encouraged the worker to take paid annual leave and informed the worker that the right would be lost at the end of the leave year.” The 4 weeks paid leave under EU WTD could therefore be carried over and accumulate each year until the end of the employment relationship.

Dismissal for raising numerous “frivolous and vexatious grievances” was fair

The Employment Appeal Tribunal (EAT) has confirmed that the dismissal of an employee who raised numerous “frivolous and vexatious grievances”, which amounted to gross misconduct, was fair. This is a helpful decision for employers as it demonstrates that where an employee is genuinely seeking to abuse internal processes, for example by raising of multiple grievances and not seeking to conclude them, this may constitute gross misconduct justifying a summary dismissal. However, employers should be very careful before taking steps to discipline or dismiss an employee who has raised a grievance, especially where the grievance alleges discriminatory conduct, as doing so may expose employers to claims of victimisation.

Mr Hope was employed by the British Medical Association (BMA) as a policy adviser. He raised seven grievances against senior managers in just over a year. Mr Hope refused to progress any of the grievances, nor was he willing to withdraw them, nor did he attend a grievance meeting to resolve them. The BMA concluded the grievance in his absence. The grievance manager felt that Mr Hope's behaviour had been vexatious and disrespectful and that refusing to attend the grievance meeting was an abuse of process. Mr Hope was subsequently invited to a disciplinary meeting and was eventually dismissed for gross misconduct on the basis that he had raised frivolous grievances, failed to follow reasonable management instructions to attend the grievance meeting and there had been a fundamental breakdown of the working relationship between him and senior management. Mr Hope bought an unfair dismissal complaint. The ET and the EAT concluded that his dismissal had been fair.

Waiting for a grievance to conclude can be relevant when it comes to considering whether a claim is out of time

The Employment Appeal Tribunal (EAT) has confirmed that a grievance can be a relevant factor when an Employment Tribunal (ET) is exercising its discretion to extend the limitation period to allow a claim that would otherwise be out of time. This case does not give employees blanket permission to wait to conclude an internal grievance process, whilst their limitation period expires. However, the case highlights the scope for an ET to extend the limitation period to allow an otherwise out of time claim where there is a genuine desire to resolve issues internally and no evidential prejudice to a Respondent caused by the delay. The grievance will need to be sufficiently detailed and mirror the claims being pursued to demonstrate a lack of prejudice.

Ordinarily, a claim must be presented to a court or tribunal within a specified 'limitation period'. For discrimination complaints in the ET, that period is 3 months less a day from the act(s) of discrimination, or the date of the final act where there is a series of alleged discriminatory acts. An ET has the discretion to extend this 3 month time limit on the basis that it would be 'just and equitable' to do so.The Claimants, Mr Souter and Ms Leishman presented disability discrimination claims to an ET outside of the 3 month limitation period. The Claimants had waited until their internal grievances were no longer being progressed before submitting claims to the ET. The Claimants asked the ET to exercise its discretion to extend the limitation period. The ET found that it was just and equitable to extend time and allowed the out of time claims to proceed. In taking this decision the ET concluded that the grievances were relevant in two ways:

  • that there was a genuine desire to use the process to resolve differences with their employer (which is to be encouraged); and
  • importantly, that the grievances crystallised the allegations and put the Respondents on notice of the claims; this gave them the opportunity to investigate and preserve evidence.

The Respondents appealed stating that the ET should not have relied on the fact that the Claimants had raised grievances before submitting claims, meaning that evidence could be preserved. The EAT concluded that the ET was entitled to allow the claims to proceed. It stated that the issues relevant to deciding whether an extension is just and equitable are fact-sensitive; the ET must decide which factors are relevant and the weight they carry. The ET was entitled to consider the Claimants' genuine attempts to pursue internal resolution and it was also entitled to attach weight to the lack of evidential prejudice to the Respondents.

Failure to comply with the ACAS Code will be costly for employers

The Employment Appeal Tribunal (EAT) held that a 25% uplift to compensation for a failure to follow the ACAS Code of Practice on Disciplinary and Grievances (Code) can also be applied to compensation awarded for injury to feelings and aggravated damages; this did not constitute double counting. This is an important decision for employers to be aware of as it confirms that an uplift for a failure to unreasonably follow the Code can result in a significant increase to any compensation awarded.

The Code sets out procedures that organisations must follow when conducting disciplinary or grievance processes. Internal processes and policies must at the very least reflect the Code, although they can go further. The Code is non-statutory guidance, but any case that reaches an Employment Tribunal will consider whether an employer has unreasonably failed to follow the Code in respect of any disciplinaries or grievances.After the Claimants (Ms Biggs and Ms Stewart) informed their employer that they were pregnant, their employer set about engineering their departure. Ms Biggs' grievance was ignored, and she subsequently resigned. Ms Stewart was dismissed for gross misconduct, with no hearing, right to appeal or details of the charges against her. The Claimants successfully brought claims for unfair dismissal and maternity discrimination. The ET awarded compensation including a maximum 25% uplift for breach of the Code. The ET also awarded injury to feelings, together with £5,000 aggravated damages each; these awards were also uplifted by 25% to reflect the breach of the Code. The employer appealed to the EAT arguing that the 25% uplift on the injury to feelings and aggravated damages involved 'double-counting'. The EAT disagreed. It concluded that the ET's reasoning indicated no obvious or significant double-counting for aggravated damages and injury to feelings on the one hand, and the 25% uplift on the other. The EAT also confirmed that a final sense check will always need to be applied to consider whether the sum of money represented by the percentage uplift would be disproportionate.

Mandatory vaccines in health and care settings

The Government has confirmed that the requirement for vaccination as a condition of deployment will end; this applies to the vaccination of residential care home staff and staff across wider health and care settings. The Government has also confirmed that there will be no further enforcement of the regulations making vaccination a condition of deployment in health and care, or a condition of entry to a residential care home. Before the regulations can be formally withdrawn a two-week consultation will be required. It is envisaged that this will be a formality as there is wide consensus that removing the requirement for mandatory vaccination will have a positive impact on staffing across the sector. The Government also alluded to the fact that staff who had previously been dismissed from care home settings, following their choice not to be vaccinated, may once again apply for a job in a care home once the restrictions have been formally lifted.

On demand videos

Neurodiversity in the workplace - We were delighted to be joined by Áine Maher to explore different neuro-identities and how employers can harness the strengths associated with these unique thinking styles. In case you missed the webinar live and would like to watch it back in your own time, please contact us for a copy of the recording.

Right to disconnect and a new standard on mental health at work - Our next webinar is due to take place on Thursday 10th February. If you're unable to join us live, please do register and we'll share the recording with you after the event. You can register here.


The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.

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