Employment Law Watch : Employment & Labor Lawyer & Attorney : Reed Smith Law Firm

In the recent case of Compass Group plc v Ayodele, the UK Employment Appeal Tribunal (“EAT”) has ruled that an employer must give genuine consideration, in good faith, to an employee’s request to work beyond retirement under the Employment Equality (Age) Regulations 2006 (the “Age Regulations”). A blanket refusal to grant any such request without giving any consideration to the employee’s representations in circumstances where the decision is pre-determined (e.g. by a company policy), will result in the dismissal for retirement being unfair.

This case will be of interest to those employers who have already served notice of retirement on employees on or before 5 April 2011 which, because of the forthcoming abolition of the default retirement age of 65 on 1 October 2011, is the last date on which employers could serve valid retirement notices under the Age Regulations.

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This post was written by Tom Remington.

In Duncombe and others v Secretary of State for Children, Schools and Families [No.2], the UK Supreme Court has decided that a teacher employed by the Secretary of State for Children, Schools and Families to work in a European School in Germany enjoyed the protection against unfair dismissal contained in the Employment Rights Act 1996 (the “ERA”), such that he was entitled to pursue a claim in the English Employment Tribunal in connection with the termination of his employment. The Supreme Court found that Mr Duncombe’s employment had a sufficiently close connection with Great Britain, more so than with any other jurisdiction, to justify this conclusion.

In its decision, the Supreme Court examined the principles already set out by the House of Lords in the landmark 2006 case of Lawson v Serco Ltd. 

This is an important decision for employers based in the United Kingdom who engage staff to work abroad and highlights the need to give careful consideration to the employment law rights that any such employees might have.

What happened in this case?

Mr Duncombe was employed on a series of fixed-term contracts to work in a European School in Germany by the predecessor to the Department for Children, Schools and Families. After nine years’ employment and on the expiry of Mr Duncombe’s final fixed-term contract, his employment was terminated (as required by the relevant EC Regulations governing the administration of the European Schools under the so-called “nine-year rule”) and he subsequently brought Employment Tribunal claims for wrongful and unfair dismissal. 

The arguments in Mr Duncombe’s case centred around the territorial scope of the ERA and the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002. The case went all the way to the Supreme Court. The Supreme Court has already ruled on 30 March this year on a different aspect of the case, finding that the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 did not operate to convert Mr Duncombe’s fixed-term contract into a permanent contract after he had been continuously employed for nine years on a series of successive fixed-term contracts (on the grounds that the nine-year rule objectively justified the use of a final fixed-term contract), thereby defeating Mr Duncombe’s wrongful dismissal claim. The Supreme Court has now also ruled on Mr Duncombe’s claim that he is protected against unfair dismissal under the ERA, despite working exclusively in Germany.

In reaching its decision, the Supreme Court relied on the decision of the House of Lords in Lawson v Serco Ltd. In that case, it was held that there are three categories of employees who are entitled to claim unfair dismissal protection under the ERA, as follows:

1. employees who work in Great Britain;
2. peripatetic employees who are based in Great Britain (e.g. pilots and travelling sales staff); and
3. expatriate employees in ‘exceptional circumstances’ such that, despite their workplace being abroad, other relevant factors are sufficiently powerful to give the employment relationship a closer connection with Great Britain than any other country’s system of law (e.g. a foreign correspondent who is posted abroad).

The Supreme Court held that MrDuncombefell within the third category in Lawson v Serco Ltd, basing its decision on the following key factors:

• his employer was based in Great Britain;
• as well as being based in Great Britain, the employer was the Government of the United Kingdom, giving it the closest connection with Great Britain that any employer could have;
• Mr Duncombe’s employment was governed by an English law contract;
• Mr Duncombe was employed in an international enclave which had no particular connection with the country in which he happened to be situated (Germany);
• Mr Duncombe did not pay local taxes; and 
• it would be anomalous if a teacher who had been employed by the British Government to work in the European School in England enjoyed greater protection than a teacher employed by the British Government to work in the same sort of school in another country.

The Supreme Court therefore remitted Mr Duncombe’s claim of unfair dismissal to an Employment Tribunal for it to reach a decision on the merits of his case.

What the Supreme Court’s decision means for employers.

On the facts, it is perhaps not surprising that the Supreme Court decided that Mr Duncombe’s employment had a sufficiently close connection with Great Britain to entitle him to unfair dismissal protection under the ERA. However, the case does highlight the English courts’ willingness to give employees who work outside of Great Britain unfair dismissal protection (and potentially other domestic rights) where their employment has a demonstrably close connection with Great Britain.

English employers would be wise to consider carefully the legal rights that their expatriate employees may have both before engaging them and, in particular, when considering whether to terminate their employment.

On a separate note, it is worth pointing out that the Supreme Court did not have to deal with the particularly interesting point which was thrown up by the lower courts in this case concerning the extension of the territorial scope of UK employment law to give effect to directly effective EU rights. The Employment Tribunal and the EAT, applying their view of the principles in Lawson v Serco Ltd, both decided that the Mr Duncombe was not entitled to bring a claim for unfair dismissal, which would have meant that his remedy would have been limited to contractual notice rights. However, applying the principle in Bleuse v MBT Transport Ltd [2008], the Court of Appeal found it necessary to extend the remedy of unfair dismissal to Mr Duncombe in order to give him an effective remedy for breach of certain specific rights under EU law (namely those derived from the EU Fixed-term Working Directive). This decision of the Court of Appeal effectively gives employees working outside the UK, but in the EU, a "back door" means of pursuing an unfair dismissal claim in the Employment Tribunal in circumstances where they do not fit within the Lawson v Serco Ltd categories but where the Court considers that to be necessary to give them an effective remedy for a failure to give effect to an EU derived right (such as rights under the Fixed-term Working Directive). There was no need for the Supreme Court to consider the Bleuse issue as it had already decided (in its first decision) that Mr Duncombe’s fixed term contract did not convert to a permanent contract under the Fixed-term Employees Regulations (so that no effective remedy was therefore required) and because in this second decision of the Supreme Court, it decided that Mr Duncombe fell within one of the Lawson v Serco Ltd categories and was therefore entitled to bring a claim for unfair dismissal under the ERA. The Court of Appeal's decision on the Bleuse issue therefore remains good law and UK employers need to be especially careful when considering the rights of employees who work outside the UK but in an EU Member State, particularly where their contracts are governed by English law.

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This post was written by David L. Weissman, Cindy Schmitt Minniti and Daniel A. Schleifstein.

Connecticut recently became the first state to mandate that employers provide paid sick leave for service workers (the “Act”), effective January 1, 2012. 

The Act may indicate an emerging trend of which employers should be aware. Cities, including San Francisco, Washington, D.C., and Milwaukee, have already passed mandatory paid sick leave legislation in recent years, and legislation is currently pending in Philadelphia and Denver. Massachusetts and California (the latter of which enacted its own Paid Family Leave legislation back in 2002) are also moving to pass similar legislation.

Which companies are covered?

The Act applies to companies with 50 or more employees in Connecticut not already offering at least five paid days off for full-time workers.

Which employees are covered?

Covered by the Act are "service workers." They are hourly paid, overtime-eligible workers employed in dozens of specific occupations listed in the federal Bureau of Labor Statistics Standard Occupational Classification system. Included are waiters, cashiers, cooks, hair stylists, security guards, nursing aides, administrative personnel, and employees without discretionary and independent authority. 

The Act excludes manufacturing workers, salaried employees, day or temporary workers, workers at nationally chartered nonprofit organizations, managers with authority to hire and fire staff, professionals such as lawyers and physicians, outside salespeople, and certain computer professionals.

What is required?

Hours: Service workers accrue one hour of sick leave for every 40 hours of work but no more than 40 hours in a calendar year. They can carry over as many as 40 hours into the next calendar year, but cannot use more than 40 hours of leave in any year. Service workers employed prior to January 1, 2012 can begin accruing sick leave as of January 1, 2012. Service workers hired on or after January 1, 2012 can begin accruing sick leave on their hire date. Service workers cannot use accrued sick leave until they have worked at least 680 hours after the benefit starts accruing, and they must have worked an average of 10 hours a week for the employer during the most recently completed calendar quarter.

Pay: Service workers' paid sick leave must be the greater of: (1) the worker's normal hourly wage, or (2) the statutory minimum wage required while the worker is on leave. If the service worker's hourly wage varies, the “normal hourly wage” is the average hourly wage paid to him or her in the pay period prior to the leave. An employer does not have to pay a service worker for unused sick leave upon termination, unless otherwise provided by an employer policy or a collective bargaining agreement.

Notice: Covered employers must inform each service worker at hiring that: (1) s/he is eligible to accrue paid sick leave, in what amount, and how it can be used; (2) retaliation for requesting or using sick leave is illegal; and (3) s/he can file a complaint with the labor commissioner for any violation. 

Displaying a poster with this information, in English and Spanish, in a conspicuous place, accessible to employees, at the employer's place of business, satisfies this notice requirement.

What qualifies as "sick leave"?

An employer must allow a service worker to use paid sick leave for the worker’s, or his or her spouse's or child's: (1) illness, injury, or health condition; (2) medical diagnosis, care, or treatment of a mental or physical illness, injury, or health condition; or (3) preventive medical care.

If the service worker is a victim of family violence or sexual assault, paid sick leave is also available for: (1) medical care or psychological or other counseling for physical injury or disability; (2) services from a victim services organization; (3) relocating; or (4) participation in any civil or criminal legal proceedings.

What about service workers subject to a labor agreement?

The Act does not preempt or override the terms of any collective bargaining agreement effective prior to January 1, 2012.

Do employees need to provide advance notice prior to taking sick leave and may employers require verification?

Employers may require service workers to provide notice: (1) up to seven days before taking any leave that is foreseeable, or (2) as soon as practicable for any leave that is not foreseeable.

If the leave is for three or more consecutive days, the employer can require reasonable documentation verifying the leave's purpose. 

What are the penalties for failing to comply?

Prohibited is retaliating against any employee by terminating, suspending, constructively discharging, demoting, unfavorably assigning, refusing to promote, disciplining, or taking any other adverse employment action against an employee because the employee: (1) requested or used paid sick leave under the Act or an employer's own paid sick leave policy, or (2) filed a complaint with the labor commissioner alleging an employer violated the Act’s provisions, regardless of whether the employee is a service worker or would otherwise be excluded from sick leave pay.

The Act permits the filing of administrative complaints but not court actions.

Civil penalties include $500 fines for each instance of retaliation and "all [other] appropriate relief." This may include payment for used paid sick leave, reinstatement to the employee's previous job, back wages, and employee benefits for which the worker would have been eligible if the retaliation or discrimination had not occurred. 

The Act provides for penalties of up to $100 for any other violation.

What do we recommend?

Connecticut employers should take the following steps to ensure compliance:

• Review paid and unpaid personal leave policies in your employee handbook.
• Determine whether and which employees are covered by the Act.
• Obtain posters and/or add to interviewing/hiring documents to explain the Act and its benefits.
• Train and sensitize supervisors and managers on Act documentation and record-keeping, and the illegality of retaliation.
• Consult an experienced, knowledgeable labor & employment attorney to ensure full compliance.

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In a unanimous opinion, the California Supreme Court has ruled that California's overtime laws apply to workers from out of state who perform work in California for a California-based employer. Sullivan v. Oracle Corp., No. 06-56649 (9th Cir. June 30, 2011). Answering certified questions from the U.S. Court of Appeals for the Ninth Circuit, the court ruled that California laws on overtime pay applied to software trainers employed by California-based Oracle Corporation with respect to work they performed in California, even though the employees resided in Colorado and Arizona. The court noted that "California's overtime laws apply by their terms to all employment in the state, without reference to the employee's place of residence. . . . To exclude nonresidents from the overtime laws' protection would tend to defeat their purpose by encouraging employers to import unprotected workers from other states." The court rejected Oracle's argument that interstate comity required that the employee's resident state's wage law traveled with the employee, as well as Oracle's complaints about the practical burdens on employers that might result from requiring them to apply California law to such employees.

Answering two other certified questions, the court also held that California's Business & Professions Code section 17200 applies to the overtime work issue (providing a four-year limitations period for such claims), but that time-barred FLSA wage claims that had accrued as to work performed in other states could not be resurrected in California under that longer limitations period.

While Sullivan specifically addresses a California-based employer's obligation to follow California's wage and hour laws for its out-of-state-resident employees who perform work in California, the case has implications for all employers with employees working in California who do not reside there. All employers with employees working in California, even on a transient basis, should be prepared to observe the state's wage and hour rules for work performed in the state.

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This post was written by Bailey E. Axe, Joel S. Barras and Joseph C. Rudolf.

Pennsylvania Gov. Tom Corbett signed House Bill No. 797 into law Thursday, July 7, amending the Workers' Compensation Act (“WCA”) to include coverage to firefighters suffering from a cancer caused by exposure to certain known carcinogens. Notably, these new provisions allow firefighters who have retired in the past 300 weeks (approximately 5.7 years) to apply for compensation benefits and receive a presumption of work relatedness for these types of cancers.

This legislation, effective immediately, provides a “work-related” presumption for cancers caused by the Group 1 carcinogens. Compensation available under this new provision is available to those firefighters (1) who have served four or more years in continuous firefighting duties, (2) who can establish direct exposure to a Group 1 carcinogen, and (3) who passed a physical exam prior to asserting a claim, or prior to engaging in firefighting, and the exam failed to reveal any evidence of cancer. Those claims brought by volunteers must be based on evidence of direct exposure to a Group 1 carcinogen as documented by reports filed pursuant to the PennFIRS Reporting System.

Significantly, the employer may rebut the “work-related” presumption with “substantial competent evidence” that shows the firefighter’s cancer was not caused by the occupation of firefighting.

House Bill No. 797 also provides for a lengthy accrual period for potential claims The legislation allows a claim on the basis of cancer as defined to be made within 600 weeks after the last date of employment to which a claimant was exposed to the hazards of the disease (compared with the 300-week limitation for other “occupational diseases” defined in the WCA). However, the “work-related” presumption only applies to claims made within the first 300 weeks.

The full text of the legislation may be found here.

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