MChoice UK Limited v Aalders

In this month’s ENews, we look at when the effective date of termination is, whether an employee that has been absent for more than one year due to sickness and failed to submit a request to take annual leave is entitled to be paid for that accrued leave on termination, and whether a recent case from the European courts has provided clarity on the justification defence for contractual retirement age of 65.

Effective date of termination

In the case of MChoice UK Limited v Aalders, the Employment Appeal Tribunal has held that where an employer dismisses an employee with notice and then dismisses that employee summarily during the notice period, the effective date of termination is the date of the summary dismissal.

In this case, Ms Aalders commenced employment with MChoice UK Limited on 1 February 2010. She was entitled to 6 months’ contractual notice. On 26 July 2010, she was given notice to terminate her employment and was placed on garden leave. Ms Aalders presented a claim for unfair dismissal on 11 January 2011 prior to the termination of her employment. Ms Aalders then received a letter informing her that the Company no longer required her to be on garden leave and that her employment was being terminated that day with immediate effect. The issue that the Tribunal had to consider was whether the employment had ended on 21 January 2011 (the date that she been dismissed summarily), which would mean that she did not have a claim for unfair dismissal as she had less than 1 year’s service, or on the date when her notice expired which would have given her 1 year’s service and the right to claim unfair dismissal.

The Employment Appeal Tribunal held that the effective date of termination was 21 January 2011, the date on which the employee was summarily dismissed.

Accordingly, Ms Aalders did not have the necessary period of qualifying service to bring a claim for ordinary unfair dismissal.

Entitlement to accrued holiday during sick leave

In the case of NHS Leeds v Larner, the Employment Appeal Tribunal held that a worker who had been absent for more than 1 year due to sickness and who failed to submit a request to take annual leave before the end of the holiday year is nevertheless entitled to be paid for that accrued leave on the termination of their employment.

Mrs Larner was employed by the NHS as a clerical officer. The leave year ran from April to March. On 5 January 2009, Mrs Larner went on sick leave. She was dismissed on the grounds of incapacity on 6 April 2010. On the termination of her employment, Ms Larner brought a claim for the leave year from 1 April 2009 to 31 March 2010. The Employment Tribunal held that Mrs Larner should be entitled to claim holiday pay for the leave year from 1 April 2009 to 31 March 2010. NHS Leeds appealed to the Employment Appeal Tribunal. It argued that Mrs Larner had lost her statutory holiday entitlement as she had failed to give notice that she wished to take her holidays.

NHS Leeds relied on Section 15(1) of the Working Time Regulations which provides that, subject to the employer’s right to give counter notice, a worker may take statutory holiday by giving notice to the employer. NHS Leeds was of the view that the requirements of Regulation 15(1) are mandatory and, unless the worker gives notice to take holiday, then no holiday entitlement arises and no entitlement to holiday pay arises. The Employment Appeal Tribunal did not agree with NHS Leeds argument. The Employment Appeal Tribunal held that because Mrs Larner was signed off sick, she was therefore presumed not to have been well enough to exercise her right to enjoy a period of “relaxation and leisure”, and therefore she did not have the opportunity at any time to take her annual leave. Therefore, she had the right to carry over her leave entitlement to the following year and this did not depend upon her making a formal request to carry over her leave.

The Employment Appeal Tribunal commented that the situation might have been different in the case of a fit worker who fails to request statutory holiday during the relevant leave year. In such circumstances, the worker’s holiday entitlement might be lost, certainly if their contract provides as such because they had the opportunity to exercise their holiday right.

What is clear from this case is that employers should robustly manage employees on sick leave and incorporate in their policies and contracts what employees should do if they want to exercise their right to holiday or they will be allowed to carry over holiday in circumstances where they are on long-term sick leave.

Can a retirement age of age 65 be justified?

The European Court of Justice has handed down a decision dealing with the justification of German retirement laws under the age provisions of the Equal Treatment Directive. The ECJ held that establishing an age structure that balances young people and older civil servants in order to encourage recruitment and promotion of young people, to improve personal management, and therefore prevent possible disputes concerning fitness to work, whilst at the same time seeking to provide a high quality service, could be a legitimate aim.

As you will be aware the UK no longer has a default retirement age. If employers want to retire employees at 65 or another age they will now need to show that the age they have chosen is a "proportionate means of achieving a legitimate aim". If it is, then any dismissals at that age will not be age discriminatory. However, if an employer cannot show that this is a proportionate means of achieving a legitimate aim then dismissals solely because an employee has reached a retirement age will be age discriminatory and unfair.

The recent ECJ cases justifying retirement ages need to be considered with some caution because the abolition of the default retirement age in the UK is likely to give the Employment Tribunals a steer that fixed retirement ages will only be justified in exceptional circumstances.

However, the UK Employment Tribunals and Employment Appeal Tribunal will look at European case law for guidance when assessing whether a fixed retirement age operated by an employer is a proportionate means of achieving a legitimate aim.

Those employers who wish to justify a fixed retirement age should consider the following points.

  • Employers must demonstrate and identify the specific aims (of which there can be more than one) which has given rise to the Employer adopting a contractual retirement age.
  • Employers must have good evidence to demonstrate that the decision to adopt a compulsory retirement age is proportionate, For example statistical evidence and/or staff surveys may provide the appropriate evidence.
  • Employers will have to justify their position of having a contractual retirement age in relation to all groups of employees within the organisation.

Employers who wish to continue using a retirement age will therefore be looking at the legitimate aims they are trying to achieve with their retirement age and how they will argue that the retirement age they have chosen is a proportionate means of achieving those aims.

Sejal Raja
sejal.raja@rlb-law. com
© RadcliffesLeBrasseur
August 2011


Disclaimer

This briefing is for guidance purposes only. RadcliffesLeBrasseur accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.