The Maternity Alliance , an advice and campaign group, has been partially successful in its challenge to the lower earnings limit as it affects entitlement to Statutory Maternity Pay (SMP), in round one of what promises to be a long fight.
Mrs Banks had worked as a part-time checkout operator for nearly a year. She earned just below the lower earnings limit and neither she nor Tesco paid any National Insurance contributions. As a result she did not qualify for SMP when she started maternity leave.
Neither did she qualify for Maternity Allowance or any Government means tested benefits or any contractual or company maternity pay.
But three days paternity leave on full pay is given to all Tesco male employees, regardless of their earnings or length of service; so too is two weeks adoptive leave.
Mrs Banks brought her claim on three grounds: firstly, challenging the failure to pay her equivalent to the company paternity paid leave scheme; secondly, arguing that the failure by Tesco to pay Mrs Banks equivalent to SMP was in breach of Article 119 of the Treaty of Rome; and thirdly, indirect sex discrimination.
The Article 119 equal pay claim is that the failure to pay Mrs Banks any payment undermines or jeopardises the purpose of maternity leave and therefore breaches Article 119 of the Treaty of Rome. She argued that the failure to pay at least equivalent to SMP was either an unauthorised deduction of wages under Part II of the Employment Rights Act 1996 or the Equal Pay Act 1970 when interpreted to comply with Article 119.
The Pregnant Workers Directive (92/85/EEC) states that the purpose of maternity leave is to protect women before and after they have given birth. The Directive also states that an "adequate allowance" must be paid during the fourteen week maternity leave, but "adequate" means at least equivalent to each EU country's minimum sick pay. Also each member state can lay down conditions of eligibility for receiving the statutory maternity allowance.
The UK Government argues that it has fully implemented the Pregnant Workers Directive by providing SMP with identical levels of payment as for statutory sick pay and the same eligibility criteria: to have been in employment for 26 weeks or more and to have been paid above the lower earnings limit (LEL). The problem is that over two million women in the UK earn below the LEL (around £61 per week), compared to a half a million men, and at Tesco 50,000 staff earn below the LEL, 97 % of them women.
Mrs Banks' case is that no pay at all is not an adequate allowance - and entitlement to SMP cannot be looked at in isolation. She argues that the failure to receive SMP together with the fact that she was not entitled to any other state or company benefits during maternity leave is a breach of the Pregnant Workers Directive. Mrs Banks could not directly use the Pregnant Workers Directive as Tesco is a private company rather than a state body; but can rely on Article 119 of the Treaty of Rome to eliminate discrimination in pay between men and women to overrule UK law which violates this principle.
The Tribunal agreed with Mrs Banks in her claim for paid maternity leave equivalent to paternity leave. She was entitled to comparable parental leave to a man engaged on work rated as equivalent and her claim succeeded under the Equal Pay Act 1970.
But she has lost her claim to receive at least the equivalent of SMP. Importantly, the Tribunal agreed that SMP is pay for the purposes of Article 119 and wages in Part II of the Employment Rights Act.
The Tribunal also found that a nil payment of benefit could not be an "adequate" allowance under the Pregnant Workers Directive.
But her claim failed because discrimination on grounds of sex involve a comparison between the situation of men and women.
The conditions of eligibility for SMP do not involve that comparison but instead, a comparison of two groups of women: those who earn less that the LEL, and those who earn more. That, the Tribunal said cannot amount to discrimination.
The Maternity Alliance is likely to challenge the Tribunal decision and the way has also been paved for a direct attack on SMP eligibility under the Pregnant Workers Directive, and a challenge to the eligibility conditions for Statutory Sick Pay using indirect discrimination arguments, where comparisons can be made between the sexes.
TUPE transfer a matter of fact not law
DRB Maintenance Limited v (1) Andrew Douglas and (2) Peter Andrew Douglas, unreported 22. 5. 97 EAT Scotland
The Employment Appeal Tribunal in Scotland has shown that after Betts, TUPE still covers a wide range of situations. The two employees worked for a company called Baillie and Spence Limited. Their employers arranged that they would leave their employment to work with Amalgamated Maintenance Services Limited (AMS).
Both men carried out small building works. They were the only two people who did this type of work and the intention was that they would continue that role with AMS. They were not paid any redundancy payments nor were they given any notice of their termination of employment.
They remained in employment until June 1996 when they were both made redundant, paid redundancy payments and pay in lieu of notice on the basis of their four continuous years of employment with AMS (now called DRB).
The men claimed additional redundancy payments based on their length of service with Baillie and Spence as well as AMS. The Industrial Tribunal found that the movement of the Respondents from their former employer to AMS was a transfer within the meaning of the TUPE Regulations.
At the EAT the employers argued on the basis of Suzen that mere movement of staff from one employer to another was not sufficient for there to be a transfer. They also argued that the tribunal ought to have made a finding of fact as to what happened to the equipment that the men used in their employment once they started work for AMS.
In a significant move, the EAT demonstrated the limited effect of the Betts decision. This case was different because in Betts once the transfer took place the old employer did not retain the assets or employees. It shut down the business.
The DRB case demonstrates the continuing breadth of TUPE and should act as a warning to employers who believe they can avoid TUPE by arrangements which do not involve the transfer of assets.
The EAT in Scotland expressed themselves entirely satisfied that the tribunal was entitled to categorise the two men as an identifiable economic unit which undoubtedly emerged under the umbrella of a new employer in the same state. They held that was sufficient to justify the finding that a transfer took place without an express finding as to whether their assets went with them.
Stigmatised by work
Malik v Bank of Credit and Commerce International [1997] IRLR 462
In a landmark decision the House of Lords have decided that employees can bring claims for damages for financial losses suffered because of the stigma attaching to their reputations as former employees of BCCI which put them at a disadvantage in the labour market.
This case could have implications for people working in the financial services sector and people working in areas where their reputation and ability to get future work is, to an extent, reliant on their former employer's reputation.
In the House of Lords, the Malik case was considered on the basis of a series of assumed facts. Firstly, that BCCI operated in a corrupt and dishonest manner.
Secondly, that the employees were innocent of any involvement. Thirdly, that following the collapse of the Bank, its corruption and dishonesty became widely known. Fourthly, that the employees were at a handicap in the labour market because they were stigmatised by reason of their previous employment by BCCI. Fifthly, that the employees had suffered loss as a result.
Whilst this series of assumed facts are fairly unusual it does not mean that these facts will have to exist in every case for damages to be recoverable.
The House of Lords set down a three part test to decide whether, in principle, damages for loss of reputation should be recoverable: (1) that conduct by an employer is in breach of the implied term of trust and confidence; and (2) that prejudicially affects an employee's future prospects and this gives rise to continuing financial losses; and (3) it was reasonably foreseeable that such a loss was a serious possibility.
The House of Lords also said that "in principle, so far as the recoverability of continuing financial losses are concerned, there is no basis for distinguishing (a) wrongful dismissal following a breach of the trust and confidence term (b) constructive dismissal following a breach of the trust and confidence term, and (c) a breach of the trust and confidence term which only becomes known after the contract is ended for other reasons". The Malik case fell into the final category as the employees did not know about the corruption in the business until after they had been dismissed due to the collapse of the Bank.
Now it has been established that stigma damages are recoverable and these claims can be added to unfair dismissal and wrongful dismissal applications. There will be much further litigation involving these claims from now on.