How Has EU Membership Shaped UK Employment Law?

Year Published: 2016

Since the passage of the European Communities Act 1972, UK courts and tribunals must interpret national law in accordance with European law.

As the EU membership debate rages on, we’ve set out eight of the key European cases that have had a major impact on UK employment law.

  1. No cap on discrimination compensation

Marshall v Southampton and South-West Hampshire Area Health Authority (No.2) (1993)

Prior to this case, there had been a cap on the amount of compensation that could be awarded to claimants in sex discrimination cases.

Ms Marshall had claimed almost £20,000 for sex discrimination, but her compensation was subject to an £8,500 cap, which had been set down by the Sex Discrimination Act 1975.

Ms Marshall went on to successfully argue that the compensation cap was contrary to EU law.

As a result, the European Court of Justice (‘the ECJ’) decided that member states could not set down a cap on compensation in discrimination cases.

Now, discrimination claims are understandably feared by businesses precisely because compensation is potentially unlimited.

  1. Pregnancy and maternity discrimination

Dekker v Stichting Vormingscentrum voor Jonge Volwassen (VJV-Centrum) Plus (1990)

In this case, Mrs Dekker had applied for a job when she was three months’ pregnant. Despite being the most suitable candidate for the job, she was informed that she would not be appointed because she was pregnant and because of the financial implications for the business.

Somewhat unsurprisingly, the ECJ made it clear that refusal to employ a woman because she is pregnant or because of the costs associated with employing a pregnant woman is direct discrimination on grounds of sex.

The Equality Act 2010 now expressly sets out pregnancy and maternity as one of the nine ‘protected characteristics’, and makes it unlawful to subject an employee to unfavourable treatment as a result of pregnancy or maternity.

  1. Sexual orientation discrimination

Grant v South-West Trains Ltd (1998)

In this case, Ms Grant’s same-sex partner was denied travel benefits because South-West Trains’ travel subsidy scheme extended only to employees and their married or common law spouses of the opposite-sex.

Ms Grant claimed that because unmarried opposite-sex partners were given the benefits, the refusal of benefits to her partner constituted sex discrimination. She also argued that the denial constituted “sexual orientation” which should come under the umbrella of ‘’sex discrimination’’.

Somewhat surprisingly, the ECJ did not find discrimination on the basis of sex or a “sexual orientation”.

They said that male workers and female workers would be affected in exactly the same way by the denial of benefits so there was no discrimination on the basis of sex. Further, they declared that European protection against discrimination did not extend to sexual orientation.

The Equal Treatment Framework Directive subsequently made provision for sexual orientation discrimination, and this is now a separate protected characteristic under the Equality Act 2010.

  1. Associative disability discrimination

Coleman v Attridge Law (2008)

Before this case, UK tribunals could only make a finding of disability discrimination if the claimant was disabled.

In the Coleman case, the claimant was not herself disabled but was the primary carer of her disabled son. She brought claims against her employer on the grounds that she had been treated less favourably because of her disabled child.

Ms Coleman went on to successfully argue in the ECJ that EU law does cover direct discrimination on the ground of an association with a disabled person.

The UK Employment Appeal Tribunal (‘the EAT’), following judgment by the ECJ, held that it was unlawful for employees to be treated less favourably or harassed because of their association with a disabled person.

‘Associative discrimination” is now covered in the Equality Act 2010.

  1. Annual leave during long-term sick leave

Stringer v HM Revenue and Customs sub nom Commissioners of Inland Revenue v Ainsworth; Schultz-Hoff v Deutsche Rentenversicherung Bund (2009)

The Working Time Regulations 1998 expressly bans the carrying over of holiday to another leave year, even where a worker has been unable to take holiday because they have been on long term sick leave.

However in 2009, the ECJ decided that a worker on sick leave must be allowed to carry holiday entitlement over into subsequent leave years (up to a maximum of four weeks for full time employees).

So if for example a full time employee is off for the whole of 2016 as a result of sickness absence, they should be allowed to carry over four weeks annual leave into 2017 and possibly into 2018.

There has been no clear ruling on how long employers should allow employees on long-term sick to carry over holiday leave. The EAT has however suggested that absent employees should be able to carry forward the untaken annual leave for up to 18 months from the end of the leave year in which the leave arises.

  1. Holiday pay calculations

Williams v British Airways plc (2011)

In this case, Mr Williams, and other pilots who worked for British Airways claimed that their holiday pay was too low, because it only reflected their basic pay, and not additional ‘extras’ that they would have received had they been in work.

Under their contracts, the pilots were entitled to:

  1. Basic pay;
  2. A “flying time” supplement of £10 per flying hour; and
  3. An allowance per hour of time spent away from their base airport.

The ECJ ruled that the holiday pay of pilots should include allowances on top of their basic salary, which were included in their overall pay.

Following this case, there has been a succession of cases addressing the issue of what should be included in a worker’s holiday pay calculation. It is now no longer an option to simply pay employees their basic pay and ignore additional elements such as overtime, commission and allowances. Workers should not be incentivised from taking holidays, and the central theme running through the case law is that workers should be paid what they are normally paid when they are in work.

  1. Working time

Landeshauptstadt Kiel v Jaeger (2003)

In this case, a doctor remained on call between shifts and was given a room to sleep in at the hospital. He successfully argued that all of his time spent at the hospital, even when sleeping, should be classed as ‘working time’.

An important factor for the ECJ in this case was that the doctor was required to be physically present in the hospital at all times so that he could provide his services immediately in case of need.

The case continues to be an important influence in UK working time cases. Now, employers must be careful to differentiate between time during which a worker continues to be ‘at their disposal’ i.e. required to carry out duties if needed, and time when a worker is free to do what they like and pursue their own interests.

  1. Terms and conditions of employment during a TUPE transfer

Foreningen af Arbejdsledere i Danmark v Daddy’s Dance Hall A/S (1988)

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (known as ‘TUPE’) is now a key part of UK employment law and works to protect employees where their employment transfers to another business (e.g. where the business is sold or taken over).

The background to this legislation is the ECJ’s decision in ‘the Daddy’s Dance Hall case’ in 1988. In that case the ECJ made it clear that changes to an employee’s terms and conditions of employment are void, if the only reason for the changes is a TUPE transfer.

Under the current TUPE Regulations 2006, a variation of contract is void if the sole or principal reason for the variation is the transfer unless:

  • The sole or principal reason for the variation is an economic, technical or organisational (ETO) reason entailing changes in the workforce, provided that the employer and employee agree the variation; or
  • The terms of the employee’s contract permit the employer to make the variation.

How would leaving the EU affect our existing employment rights?

It is worth remembering that tribunals are already bound by rulings from the ECJ. Even if we leave the EU, these decisions will continue to be binding unless a judge has good reason to depart from them, or they are overridden by an act of parliament. It is however unthinkable that all employment rights derived from Europe would be removed were we to leave the EU.

As a result of ECJ guidance, our discrimination legislation now provides for new protected categories, preventing discrimination based on age, sexual orientation or religion. It is difficult to see why anybody, whatever their political agenda, would want to remove these protections in our businesses.

Other protections derived from the EU, for example the right to minimum rest breaks, parental leave and minimum periods of annual leave, have equally become engrained within our businesses. Again it’s difficult to envisage any government removing these protections completely if we leave the EU. In fact, the UK government has even enhanced rights for workers and have gone beyond what was required by European directives, for example increasing annual leave entitlement from 4 to 5.6 weeks.

For more information on any employment law matters please contact our Employment Law and HR team on 0161 475 7676.


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