Monthly Bulletin – November 2024 – Practical Perspectives 

Supreme Court re-instates injunction preventing Tesco from using fire and re-hire to remove ‘permanent’ right to retained pay 

In 2007, Tesco re-organised its warehouses resulting in mass relocations. As an alternative to potential redundancy, Tesco negotiated with USDAW (the recognised trade union) that it would give any staff who stayed on, and agreed to be relocated, a ‘Retained Pay’ payment which would be paid to them each month. Retained Pay was described in the contracts of employment as ‘permanent’. In 2021, Tesco attempted to remove Retained Pay by firing and re-hiring on new terms which excluded Retained Pay.

USDAW initially got an injunction from the High Court stopping Tesco from terminating the impacted contracts of employment. The High Court held that the contracts of employment were subject to an implied term that Tesco could not terminate the contracts for the purpose of removing Retained Pay. This decision was overturned by the Court of Appeal, who held that no such implied term existed; Tesco had the right to give notice in the ordinary way, and the entitlement to Retained Pay would only last as long as the particular contract endured.

USDAW appealed this decision to the Supreme Court. The Supreme Court, re-instating the injunction and overturning the Court of Appeal’s decision, held that Tesco’s right to terminate the employment contract, by giving the requisite notice, was qualified by a term implied by fact that Tesco’s right to dismiss could not be used for the purpose of depriving employees of the right to Retained Pay. 

The case is likely to be specific to its facts, but it does illustrate that there are exceptional occasions where an employer’s ability to exercise an express term of the contract of employment (here, the right to terminate a contract by giving contractual notice) will be limited by an implied term. Similar examples exist where an employer has tried to terminate employment to remove an employee’s right to receive permanent health insurance benefits (Aspden v Webbs Poultry).

Tribunal didn’t have to reduce compensatory awards where it had found contributory conduct by the employees

When looking at unfair dismissal compensation, employers often argue that the conduct of the employee has contributed to their dismissal. The Employment Rights Act 1996 makes it clear that contributory conduct by an employee can have an impact on the level of compensation awarded. Unfair dismissal compensation is focused on actual losses, mainly loss of earnings. The sum which would otherwise be awarded can, however, be reduced by the tribunal by â€˜such proportion as is just and equitable’ (s123(6) Employment Rights Act 1996), to take account of the employee’s contributory conduct.

In the recent case of Keirle and others v Notaro Homes, the Employment Appeal Tribunal was called upon to consider whether it can ever be ‘just and equitable’ to make no deduction once contributory fault has been found. In this case, the Claimants were dismissed. The Respondent said that the dismissals were because of social media posts made by each of the Claimants. The Claimants alleged that the real reason was that they had made protected disclosures. They claimed automatic unfair dismissal on grounds of whistleblowing. 

The employment tribunal made a finding that the Claimants had made blameworthy social media posts. However, the real reason for their dismissal was that they had made protected disclosures. The social media posts were just the “cloak for the dismissals”. Their claims succeeded.

At remedy stage, the tribunal didn’t apply any reduction to the compensatory award on account of the contributory conduct, in the form of social media posts. The Respondent appealed the remedy point, arguing that the tribunal must make some reduction where it had found contributory conduct.

The Employment Appeal Tribunal, rejecting the appeal, held that, although a finding of contributory conduct usually results in some reduction to the compensatory award, there is no legal requirement that there must be a reduction in every such case. It was open to the tribunal to decide that no reduction at all was just and equitable, as it had done in this case.

Sickness and holidays

If an employee falls ill during a period of booked holiday, then, provided they notify the employer, they are entitled to convert the holiday to sick leave. This saves them holiday days which can then be used at another time. What does this mean for employers? 

Here are some key points:

• Time off on holiday is paid as normal pay. Sick leave rules are different. If the employer pays Statutory Sick Pay, only then will this be payable (if the employee is entitled to it). If the employer operates enhanced sick pay, then this would be payable instead, unless policies state otherwise. 
• Make sure that the absence is logged as sickness on any attendance management system. Absences on holiday are not generally monitored, but the monitoring of sickness absence is very important. Again, a clear rule on this makes it less likely that employees will seek to re-categorise their leave as sick leave without good reason.
• Consider what evidence you can require the employee to produce in relation to their sickness. If the employee is abroad, then they may struggle to obtain a medical note. However, you could include in your sickness policy a requirement to produce medical evidence if possible. You could even agree to reimburse the cost of obtaining a doctor’s note abroad.
• If calling in sick whilst on holiday is a particular issue for your business, then consider amending your sick pay policy to state that any absences for sickness during pre-booked holidays will be paid at Statutory Sick Pay only. This provides a financial disincentive.

If an employee falls sick whilst on holiday and there is not enough time in the current holiday year for them to take the holiday days they have effectively ‘recouped’ whilst being off sick, then the employee must be allowed to carry over the holiday into the next holiday year. This rule applies to four weeks every holiday year (or the full 5.6 weeks for part year and irregular hours workers for holiday years beginning after 1^st April 2024). The carried over holiday must be taken within 18 months of the year it accrued.