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September 2009 Updates

Default retirement age of 65 upheld

In R (on the application of Age UK) v Secretary of State for Business Innovation and Skills and ors (more commonly known as the Heyday Challenge), the High Court has held that the UK's default retirement age ("DRA") of 65 is lawful.

The European Court of Justice had previously held that the DRA would be age discriminatory unless justified by "legitimate social policy objectives" (such as those related to employment policy, the labour market or vocational training') which were achieved by "appropriate and necessary means".

The High Court was satisfied that the Government had proved that a DRA of 65 was a proportionate means of achieving legitimate social policy aims, such as securing the integrity of the labour market and its short-term competitiveness. Please note, however, that the Government currently intends to review the DRA of 65 in 2010 and the Tory party has recently announced that, if it wins the next election, it will increase the DRA to 66 for men within the next seven years.

Six months of maternity leave to be transferable to father

The Government has announced a consultation on allowing new mothers to transfer some of their maternity leave entitlement to the father. Under the proposals, mothers with maternity leave outstanding in the second six months of a child's life will be able to transfer up to six months of maternity leave to the father. Up to three months of that leave will be paid at the same rate as statutory maternity pay if the leave is taken during the mother's 39-week maternity pay period. The Government intends that the law will be in force by April 2010 and will be effective for parents of children due on or after 3 April 2011.

Illness during annual leave

The European Court of Justice has held in the case of Pereda that, if someone is ill whilst on holiday, the period for which they are ill cannot count towards the minimum period of 28 days' paid annual leave under the Working Time Directive.

In this particular case, the employee suffered an accident at work roughly two weeks before he started four weeks of pre-booked annual leave. As a result of the accident, the employee was out of action for six weeks in total. Accordingly, his sick leave almost entirely overlapped with his planned holiday. He subsequently put in a request for an additional period of annual leave, but his employer refused to approve it on the grounds that he had already taken all of his annual leave entitlement. According to the European Court of Justice, the employee's period of sick leave should not have counted towards his annual leave entitlement.

In its decision, the Court emphasised that there can be no derogations from the entitlement to paid annual leave. This is because the purpose of annual leave is to help protect a worker's health and safety and to enable them to rest and enjoy a period of relaxation and leisure. By contrast, the purpose of entitlement to sick leave is to ensure that a worker can recover from being ill. Consequently, if a worker decides not to take annual leave during a period of illness, they must be granted a replacement holiday period. This principle is likely to apply whether the employee falls sick before or during the actual period of leave.

As a result of this decision, we would recommend that all employers review their sickness absence and annual leave policies and procedures and related contractual provisions as well as what they do in practice and update things as necessary to take account of this change in the law.

Collective redundancy consultation

In Akavan Erityisalojen Keskusliitto AEK ry and ors v Fujitsu Siemens Computers Oy, the European Court of Justice has clarified a number of points relating to the duty to inform and consult with employees about collective redundancies under the Collective Redundancies Directive. The Court held, amongst other things, that:

  1. An employer triggers the duty to consult when there is a decision or change of activity which compels the employer to plan for redundancies.
  2. In a group of companies, the obligation to consult falls on the subsidiary within which redundancies may be made, even if the decision was made by the parent company.
  3. The obligation to consult is not dependant on the employer being able to supply all necessary information to employee representatives.
  4. The obligation to inform and consult arises when there is an intention to make collective redundancies. This intention will be deemed to form when the employer adopts 'strategic decisions' or 'changes in activity' compelling the employer to contemplate or plan for redundancies.

In order for the obligation to consult to arise, however, the subsidiary within which the redundancies may be made must have been identified by the parent company.

Constructive unfair dismissal and giving credit for sums earned from
other employment during a notice period

The Court of Appeal has overturned the Employment Appeal Tribunal in Stuart Peters v Bell, holding that, unlike cases of actual unfair dismissal, constructively dismissed employees must give credit for sums earned from other employment during the notice period. Although the Court of Appeal didn't deal specifically with the point, this principle would logically apply also to any sums earned on a self-employed basis, or with regard to any State benefits claimed.


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SRA number 404293