October 2016 - Shared Parental Leave vs Maternity Leave


Message from the Editors,
Dan Hobbs & Clare Harrington

Welcome back to 'Five from 5', the free bi-monthly employment law bulletin created by the employment team at 5 Essex Court in association with Bloomsbury Law Online.

This month's bulletin contains five short articles on (i) settlement agreements; (ii) approaching changes in employment law; (iii) holiday pay; (iv) judicial assessment; and (v) shared parental leave.

The editors continue to draw upon the vast pool of experience and knowledge held by the 5 Essex Court employment law team whose members include Queen's Counsel, part-time employment judges and those appointed by the Attorney General to represent the Crown.


1When is a settlement agreement truly the end of the matter?

Clare Harrington

In a judgment last February, the Glasgow Employment Tribunal determined that it had jurisdiction to set aside a settlement agreement entered into between Mr Dahhan and Glasgow City Council, on the ground that it was invalid because Mr Dahhan did not have capacity to contract at the time of signing. The Council appealed this decision.

The issue for the Employment Appeal Tribunal (‘EAT’) was whether an employment tribunal (‘ET’) has power to set aside a purported settlement agreement on the basis that one of the signatories to the agreement lacked capacity (Glasgow City Council v Dahhan UKEATS/0024/15/JW).

This was a novel case as no previous authority appeared to determine what the situation was where the issue was one of contractual capacity as opposed to an absence of agreement through error or misrepresentation.

In her judgment, Lady Wise acknowledged that both the ET and EAT are bodies created by statute and that their powers are therefore limited to those bestowed by the legislation. It was acknowledge by the parties that the ET does have jurisdiction to set aside agreements at least in relation to matters over which it has jurisdiction. The real issue in this case was whether what the claimant sought to do was an extension of that power and, if so, was such an extension permissible?

Lady Wise considered that once it was accepted that the Tribunal, when presented with a proposed settlement agreement, had to consider its validity, there was no sound basis for drawing a distinction between invalidity on the ground of misrepresentation and invalidity on the ground of lack of capacity to contract. Lady Wise concluded that it would be illogical for a Tribunal to be required to decline to give effect to the contract entered into through misrepresentation that was otherwise valid but could not refuse to enforce a contract that was a nullity from the outset due to a lack of capacity. The EAT dismissed the appeal.

2Approaching developments in employment law

Dan Hobbs

ACAS have published this very useful table which we thought our readers might also appreciate.

Proposed changes to employment law Launch date
National Minimum Wage
The national minimum wage increase.
1 Oct 2016
Compulsory gender pay differences
Employers will be required to publish whether or not there are differences in gender pay.
Dec 2016
Trade Union Bill
The Bill will introduce a number of proposed changes.
  • 50% turnout threshold for there to be a valid ballot on industrial ballot.
  • Threshold of 40% support from all eligible members entitled to vote in order to take industrial action in key sectors.
  • 4 month time limit for which the ballot will remain valid to authorise industrial action.
Protection of NHS whistleblowers when applying for NHS jobs
A new law to ensure that whistleblowers in the NHS are not discriminated against in recruitment by employers when applying for NHS roles because of having made a protected disclosure.
Apprenticeship levy
An apprenticeship levy will be imposed on all large employers. Employers will receive an allowance to offset against the payment of the levy.
6 April 2017
National Minimum and Living Wage
Future changes to the rate of the National Minimum Wage and the National Living Wage will take place in April each year.
April 2017
Tax-free childcare scheme
Families where both parents work and each earns less that £150,000 per year will be eligible to receive 20% of their yearly childcare costs of up to £2,000 for each child or £4,000 if the child is disabled.
TBC 2017
Shared Parental Leave for grandparents
Shared Parental Leave is to be extended to allow grandparents to take time off work to help with childcare.
During 2018

3Requirement to include commission in holiday pay affirmed by Court of Appeal

Alice Meredith

Mr Lock, a sales consultant with British Gas, earned a basic salary but was also paid monthly commission in arrears, fluctuating based on sales achieved. He could only earn commission while working, so that taking leave resulted in a loss of income for him. His claim was that British Gas had wrongly failed to calculate his holiday pay so as to include a commission element.

Following a reference to the European Court of Justice, in 2014 the ECtJ held that the calculation of holiday pay must take commission payments into account.

In British Gas Trading v Lock [2016] EWCA Civ 983 the Court of Appeal upheld ET and EAT judgments that the Working Time Regulations 1998 could and should be interpreted as incorporating a requirement for employers to include commission in the calculation of holiday pay. Whilst this did not follow from a natural interpretation of the wording of the legislation, words could be implied into the 1998 Regulations to ensure that they reflected the judgment of the ECtJ.

It had been hoped that the Court of Appeal would assist Employment Tribunals in the calculation of holiday pay by providing more detailed guidance as to how commission payments should be reflected within holiday pay. However, the Court of Appeal made clear that they would not provide guidance on the mechanics of this, leaving a continuing lack of clarity in this regard.

The Court of Appeal judgment may yet be appealed to the Supreme Court by British Gas – watch this space.


Plus ca change!

Victoria von Wachter

Those of us old enough to remember will recall that many years ago when we were young and enthusiastic, there was a system trumpeted by the Employment Tribunal that every claim would be examined by an Employment Judge to assess its viability and that claims that had no chance of success or which were outside the jurisdiction of the Employment Tribunal would be rejected.

That system, although technically still in place was about as successful as me trying to look like Kim Kardashian! - Now Brian Doyle – our very own President of Employment Tribunals in England & Wales and all round good egg – has revitalised the system into what he terms Judicial Assessment under Rules 2 & 3 of the Employment Tribunal Rules of Procedure.

This allows for an Employment Judge, with the freely given consent of the parties, to assess the worth of a claim and defence – probably at a CMD and in person. Provision is also made for this process to be achieved by phone or email.

The system can only be activated after a proper CMD with issues identified. No evidence will be heard and it will be made clear that the assessment is provisional only. The Employment Judge conducting the assessment will take no further part in the conventional litigation although s/he may engage in judicial mediation on the same case if mediation is requested.

The assessment process will be confidential and attract without prejudice status. Parties who wish to use material produced at an assessment at trial will be drummed out of the brownies.

One point of concern is that settlement is envisaged as a possibility following immediately after Judicial Assessment. All other areas of pre-trial settlement are normally subject to some form of qualified scrutiny. There may be reefs and shoals ahead when an unrepresented litigant agrees to a settlement following on directly after a Judicial Assessment and without professional help and then finds s/he has made a bad bargain and wants to renege on it.


Shared Parental Leave vs Maternity Leave

(Snell v Network Rail - ETS/4100178/2016)

Amy Clarke

This case is the first challenge to an employer’s decision about enhanced pay during a period of shared parental leave.

The Claimant and his wife both worked for national rail. The policy in place at the relevant time was that mothers were paid at an enhanced rate for up to 26 weeks of shared parental leave, (and at the statutory rate for 13 weeks thereafter) but there was no equivalent benefit for fathers, who were only entitled to statutory shared parental pay for the duration of their period of leave. The claimant raised a grievance, which was not upheld and resolved the issue by way of bringing a claim for discrimination on the grounds of sex. His claim was successful, and he was awarded £28,321 in damages. Network Rail has subsequently changed its policy, and enhanced pay is no longer offered for either parent.

The issue of whether it is discriminatory to enhance maternity pay but not shared parental pay remains unresolved by the higher courts, but this decision ought to prompt employers to review their policies about enhanced pay to avoid falling into the trap that Network Rail did, and also to ensure that there is parity between the provisions of any policies relating to shared parental leave in general.

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