We’ve picked out key cases that could have a big impact on employment law and HR policies and practices over the next 12 months.

Age discrimination: Can employers introduce lower salary scales for new entrants?

The European Court of Justice will consider whether the practice of paying new recruits less than rates paid to existing employees amounts to indirect age discrimination. The case of Horan and Keegan v Minister for Education & Skills involves salary scales for teachers, reduced by the Irish Government as a cost cutting measure in 2010. Evidence showed that when lower salaries were introduced, 70% of new teachers were aged 25 or under. Teachers who were already in employment did not have their pay altered.

In this case, both claimant teachers say they will each lose 100,000 Euros over their careers compared with a teacher appointed before the introduction of the new pay scale.

The case has not been listed for hearing yet.

Why is this important?

A policy, which adversely affects a group of people because of a protected characteristic (such as age) will amount to indirect discrimination unless their employer can justify it. Reducing costs can be a legitimate aim but not if it is the only reason.

If the employer (which in this case is the government) can show their policy was legitimate, it must then establish that its approach was “proportionate”. Generally, an employer will not be able to clear this hurdle if there is a less discriminatory way to achieve the same result. Here, the court will have to consider if the employer could have made equivalent savings by reducing the pay of all teachers rather than limited it to those who were new to the profession.

The outcome will provide guidance to organisations thinking of making cost cutting measures that disproportionately affect certain groups within their workforce.

Discipline: Is suspension a neutral act?

The Court of Appeal will re-consider whether suspending an employee, even where suspension might be appropriate, is a neutral act that causes no detriment to an employee.

The case of Agoreyo v London Borough of Lambeth concerned an experienced teacher, suspended as a “precautionary” measure, after she was accused of using excessive force to restrain two children in her class. The High Court said suspending her was a “knee jerk” response and the employer had breached the implied duty of trust and confidence it owed to Ms Agoreyo.

The Court of Appeal will hear the case on 29 January 2019.

Why is this important

Schools and colleges often automatically suspend any member of staff suspected of serious misconduct, particularly where allegations involve mistreatment of children. In this case, the High Court rejected the school’s argument that its overriding duty to safeguard children trumped everything else and justified Ms Agoreyo’s suspension. It said the school should have taken urgent steps to consider the allegations and to speak to the teacher before deciding whether or not it was appropriate to suspend her.

The High Court said that suspending an employee is not a neutral act – even if the employer tells the employee their suspension does not imply guilt and the employer is still breaching the employee’s contract.

The outcome will help organisations to decide whether suspension is appropriate and what steps they need to take before imposing it.

Holiday pay calculations for part time staff: Can organisations cap payments at 12.07%?

In Brazel v The Harpur Trust, the Court of Appeal will decide whether organisations can calculate holiday payments for part-time staff by using a fixed formula of 12.07% to annualised hours.

Under the Working Time Regulations, all workers are entitled to receive 5.6 weeks paid holiday per year, pro-rated for part time staff. In this case, Ms Brazel worked term time only under a zero hours contract under which she was entitled to take 5.6 weeks’ paid holiday.

To avoid overpaying her (when compared to full time employees), the employer capped her holiday pay at 12.07% of her annual hours. Ms Brazel argued that, over a three year period, this approach meant she had been unpaid £1,360.72. The Employment Appeals Tribunal said that the employer could not limit her pay in this way because it was contrary to the Working Time Regulations and the Part Time Worker Regulations.

The Court of Appeal will hear the case before 10 July 2019.

Why this matters

Contracts of zero hours workers often specify that paid holiday will accrue at a rate of 12.07% of the hours worked. The 12.07% figure derives from the fact that the standard working year is 46.4 weeks (52 weeks less the statutory 5.6 weeks holiday entitlement) and 5.6 weeks is 12.07% of 46.4 weeks. Generally, that is fine and works as a practical solution, particularly in circumstances where a worker does not have any regular pattern of working.

However, pay should be calculated separately. Workers without normal hours are entitled to be paid for holiday based on their previous 12 weeks’ pay. Any week where no pay is earned (for example, because they do not work) should be disregarded. In some cases, this will amount to 12.07% of their pay, but in others it won’t.

Part time workers (perhaps engaged under term time only contracts) should receive at least as much holiday as full-time workers, but this can be pro-rated to reflect the number of weeks they actually work compared with full time staff.

Disability discrimination: Is it discriminatory to base an ill health pension on part time hours introduced as a reasonable adjustment?

In Williams v Trustees of Swansea University Pension Assurance Scheme, the Supreme Court will decide whether a disabled employee who retired because of ill health at the age of 38 was treated unfavourably because his final salary pension was calculated by reference to his actual working hours rather than the full time hours he had worked for many years.

Mr Williams argued that this amounted to discrimination arising from disability and that, had his illness been sudden, (such as a non-fatal heart attack or stroke) he would not have worked part-time and his pension would reflect his full time pay.

He was initially successful, but the Employment Appeals Tribunal and Court of Appeal said that he had not been treated unfavourably and he could not compare his treatment with that of another disabled member of the pension scheme with a different medical history.

The Supreme Court will hear the case on 18 October 2018.

Why it matters

Potentially, this decision has huge cost implications for organisations with final salary pension schemes. If Mr Williams succeeds in arguing that reducing his pension did amount to discrimination arising from his disability, the onus will be on employers to show that this was a proportionate means of achieving a legitimate aim.

Collective bargaining: Under what circumstances can employers make offers to individual employees to resolve a dispute on pay? 

The Court of Appeal will determine whether the employer in Kostal UK v Dunkley acted unlawfully when it wrote to employees about its pay dispute with a recognised union before negotiations had broken down.

In this case, the employer offered a pay increase, conditional on making other cost saving changes. The workforce rejected the offer via a ballot. Approximately two months later, the employer wrote direct to its workforce to explain that they would not get their Christmas bonuses or pay increases unless the offer was accepted. Then, later the following year, it sent a further letter to its staff which said they would be dismissed (and offered re-engagement on new terms and conditions) if the offer wasn’t accepted. Eventually, the employer reached an agreement on pay by way of collective agreement.

A large number of employees brought claims arguing that Kostal had tried to induce them to opt out of collective bargaining. The Employment Tribunal and Employment Appeals Tribunal agreed that Kostal had attempted to circumvent collective bargaining. They said that the first letter was an immediate reaction to the ballot rejecting the offer and the second was intended to undermine the union’s mandate.

As there were two separate attempts, it made two separate awards to each affected employee. In total, the award amounted to £425,000.

The Court of Appeal will hear the case by 16 April 2019.

Why this matters

The strategy adopted by Kostal is (or has been) a common way in which employers have closed disputes over pay.

The law states that employers can’t make offers direct to members of a recognised trade union to change their terms and conditions, if they are doing so to undermine collective bargaining process. If breached, each affected employee can claim a mandatory award from the Employment Tribunal, currently £3,907.

This case will examine whether the employer’s actions were unlawful given that they did not bring an end to the collective bargaining process.

Contact us

The Irwin Mitchell schools and colleges team are sector specialists and work with educational institutions to help achieve their goals. We appreciate the challenges that you face and will support you with pragmatic and timely advice. Please contact Jenny Arrowsmith: jenny.arrowsmith@irwinmitchell.com or 44(0)113 218 6446 to find out how we can help you and for details of our fixed-price employment advisory service.