Resolutions expected in the New Year: Three key cases to look out for in 2015

January 19, 2015

As we start the New Year, we take a look ahead at three cases scheduled to be heard in 2015 that could result in important developments in employment law impacting holiday pay, tribunal fees and unfair dismissal compensation.

Holiday pay - Lock v British Gas Trading Ltd

Under the UK Working Time Regulations 1998, a worker is entitled to be paid during statutory annual leave.  The rate of pay is calculated by reference to a week’s pay as defined in the Employment Rights Act 1996 (“ERA”).

A worker’s entitlement to receive holiday pay arises from the EU Working Time Directive, which is silent on the method of calculating holiday pay.  The calculation of holiday pay has been the focus of a number of recent cases at both national and EU level.

In 2014, in Lock v British Gas Trading Ltd, the EU Court of Justice (EUCJ) decided that contractual commission should form part of the calculation of a week’s pay for holiday pay purposes.

The case is now due to return to the Employment Tribunal to determine whether the ERA can be interpreted in line with the EUCJ’s decision and the appropriate reference period for calculating the commission element of holiday pay.  The case is expected to be heard in February.

Employment Tribunal fees –challenge by UNISON

Following the introduction of fees in employment tribunals on 29 July 2013, in February 2014 UNISON challenged the lawfulness of the fees regime through judicial review proceedings.  This initial challenge was dismissed by the High Court, but UNISON was granted leave to appeal the High Court’s decision.

Instead, UNISON brought a second challenge in the High Court following the publication of statistics showing a sharp decline in the number of claims being brought in the employment tribunal following the introduction of fees.

On 17 December 2014, this second challenge was also dismissed.  The High Court was not convinced by UNISON’s arguments that the fees regime denied potential claimants from access to justice and indirectly discriminated against certain groups of potential claimants (such as women and ethnic minorities).

UNISON has been given leave to appeal this second decision and has indicated that it intends to join this appeal with the appeal of the first decision, so this is by no means the end of the story.  Change may also come from Parliament following the general election in May.  In particular, the Labour Party has vowed to “reform the employment tribunal system to ensure workplace justice is affordable”.  Watch this space.

Unfair dismissal compensation- challenge to the 52 week cap

Since 29 July 2013 the maximum compensatory award in ordinary unfair dismissal has been capped at the lower of the statutory maximum (currently £76,574) and 52 weeks’ gross pay.

The law firm, Compromise Agreements Ltd, brought an application for judicial review challenging the introduction of the cap of 52 weeks’ gross pay on the basis that it discriminated against older workers who are more likely to be out of work for longer than a year and therefore are put at a disadvantage by not being able to recover more than one year’s salary (subject to the statutory maximum).

The initial application was dismissed and the decision was appealed.  The Court of Appeal’s decision on the application is expected in 2015.


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