January 30, 2020

U.K. Employment Law Update: Holiday Carry-Over Limits, Protected Disclosures and TUPE’s Application Scope

European Court of Justice: Limitation of Holiday Carry-Over in Cases of Sickness Absence

In Terveys- ja Sosiaalialan Neuvottelujarjesto v. Hyvinvointialan liitto ry and Auto-ja Kuljetusalan Tyontekijaliito AKT ry v Satamaoperaattorit ry (joined cases C-609/17 and C-610/17), the European Court of Justice (ECJ) ruled on whether, in cases of sickness absence, national law could limit the carry-over of any holiday entitlement in excess of the four-week entitlement under the EU’s Working Time Directive (WTD).

The WTD mandates that every worker is entitled to four weeks’ annual holiday. Member States are permitted to treat workers more favourably, however, and the U.K. provides for an additional 1.6 weeks’ holiday, bringing total entitlement to 5.6 weeks’ holiday.

EU case law has established that, under the WTD, a worker can carry over their four-week holiday entitlement to the next leave year, where sickness absence prevented them from taking that holiday. The question for the ECJ was whether additional leave provided for by national law (such as the 1.6 weeks in the U.K.) must be permitted to be carried over if the employee was unable to take it due to sickness, or whether national laws could prohibit that.

The ECJ ruled that, since it was national law that provided for the additional leave, Member States could determine the conditions for any additional holiday. Current U.K. case law provides that only the four weeks need be carried over.

In light of this decision, employers in the U.K. should therefore allow the carry-over of four weeks’ holiday where a worker was prevented from taking the holiday due to sickness absence. However, employers do not need to allow the carry-over of the additional 1.6 weeks’ holiday or any additional contractual entitlement to holiday. It is expected that this will continue to be the position following Brexit until and unless it is varied by the U.K. courts and/or U.K. legislation.

Whistleblowing: Dismissal Officer Unaware of Protected Disclosures

In Royal Mail Group Ltd v. Jhuti [2019] UKSC 55, the Supreme Court considered the fairness of the dismissal of an employee by a manager who was unaware that the employee had made protected disclosures.

Jhuti concerned an appeal against a Court of Appeal decision that we reported on in November 2017. As a reminder, in that case, an employee, Ms. Jhuti, had raised some protected disclosures with her line manager. Thereafter, the line manager subjected her to bullying and harassment, and fabricated performance issues for which she was ultimately dismissed. The Court of Appeal found that the dismissal was not unfair because the manager who dismissed Ms. Jhuti had not been aware that she had made protected disclosures and genuinely believed her to be a poor performer.

Overturning the Court of Appeal’s decision, the Supreme Court held that while it is generally unnecessary to look behind the dismissing manager’s reasoning, where there is evidence suggesting that the real reason for the dismissal has been “hidden” from them behind an “invented reason,” it is the Employment Tribunal’s duty to look behind that reason. The Supreme Court found that in this case the line manager’s state of mind (rather than that of the decision-maker) should be attributed to the employer, where that person is “in the hierarchy of responsibility above the employee.”

This decision will no doubt come as a blow to employers. Going forward, they should ensure that their investigations prior to dismissal are thorough, well-recorded and with sufficient reasoning to reduce the risk of a “hidden” reason being found.

TUPE: Does It Apply to Workers?

Dewhurst v. Revisecatch & City Sprint 2201911/2018 is an Employment Tribunal (ET) decision that could potentially have wide-ranging ramifications for companies involved in a transfer affected by the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).

The claimants were cycle couriers who claimed that, although they were not employees, they were “workers” for the purposes of U.K. employment law. As such, they claimed, their contracts had transferred from their previous employer, City Sprint, to Revisecatch under TUPE when the former lost a client contract to the latter. The issue for consideration was whether TUPE could apply to workers, in addition to employees.

It had previously been thought that TUPE protected only employees, but in this case the ET found that TUPE’s definition of an “employee” should be construed as applying not only to employees, but also to a broader class which included workers. Independent contractors who are genuinely self-employed would, however, continue to be excluded under TUPE.

Whilst this decision will likely be of concern to employers, it is only a first instance decision, which is not binding and may yet be appealed. However, companies affected by TUPE may need to consider if there are any workers to whom TUPE may apply, both in terms of the information and consultation process and the automatic transfer principle. This could be further complicated where there are individuals labelled as independent contractors, but who are, in reality, workers.

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