Credit Management magazine October 2017

HR MATTERS
Psychiatric injury and
compensation
Gareth Edwards examines cases of psychiatric
injury and compensation, voluntary overtime and
holiday pay.
AUTHOR – Gareth Edwards is a partner in the employment team at Veale Wasbrough Vizards. gedwards@vwv.co.uk
EMPLOYEE claims for
psychiatric injury can expose
employers to potentially high
levels of compensation. A
recent case – BAE Systems
(Operations) v Konczak –
has confirmed the approach that should
be taken by tribunals and courts when
assessing compensation and emphasised
the need for medical evidence.
During her employment, Ms Konczak
alleged that she was being subjected to
bullying and harassment, and she was
subsequently moved to a new team at a
different location.
When Konczak’s line manager, Mr
Dent, suggested at a meeting that she
should move back to her previous team in
a different role, she broke down in tears.
Following this meeting Dent suggested to
Konczak that women took things in a more
emotional way than men. Konczak was
subsequently signed off with work-related
stress and was eventually dismissed.
She brought various claims in the
Employment Tribunal (ET). The ET upheld
her sex discrimination claim in respect
of Dent's comment, and found there
had been a failure to make reasonable
adjustments, and her dismissal had been
unfair, discriminatory and had amounted
to victimisation.
She was awarded £318,629.66
compensation for pecuniary loss. BAE
appealed against this decision on the
grounds that the ET had failed to consider
the extent to which events prior to the
meeting had caused or contributed to
Konczak’s mental state.
The Employment Appeal Tribunal (EAT)
remitted the case to the ET, which held that
the psychiatric injury was indivisible. After
having their appeal dismissed by the EAT,
BAE appealed to the Court of Appeal (CA).
The CA dismissed BAE's appeal. It
agreed with the ET’s view that Konczak had
not been suffering with a mental illness up
until the meeting with her line manager.
However, the sexist remarks had been the
'final straw' that caused her to become
mentally ill. On this basis, the ET had been
right to reject BAE’s argument that the
compensation should be apportioned due
to a pre-existing illness.
Voluntary overtime and holiday pay
THERE have been a number of cases over
the years concerning holiday pay, but one
area that’s not been settled is whether
genuinely voluntary overtime forms part
of a worker's 'normal remuneration'? In
Dudley Metropolitan Borough Council v
Willetts the Employment Appeal Tribunal
(EAT) has determined that it can.
Traditionally, holiday pay in the UK
has been calculated by reference to
complicated statutory provisions that
determine what a week's pay should be.
In particular, a week's pay for those with
normal working hours has focused on
their basic pay, excluding commission,
bonus, overtime and allowances.
This approach does not fit with the
requirements set out in Article 7 of
the Working Time Directive that says
workers must be paid their 'normal
remuneration' while on holiday – which
might well include commission, bonuses.
in addition to basic pay. As a result, the
UK's traditional approach has been
challenged.
It should be noted that the challenge
relates to the four weeks' holiday required
For each worker or
group, employers should
identify whether their
working patterns are
sufficiently settled or
regular to be described as
'normal'.
under European legislation. The extra 1.6
weeks' holiday the UK Government grants
in our domestic law can still be paid in the
traditional way if employers so choose.
Past cases have stressed the need for a
link between overtime payments and the
tasks the worker ‘is required to carry out
under his or her contract of employment’.
This left open the possibility that genuinely
voluntary overtime would fall outside the
scope of holiday pay altogether because
of a lack of any contractual requirement
to carry out the work.
The EAT decided that if voluntary
overtime is worked for a sufficient period
of time on a regular and/or recurring
basis so as to justify the description as
'normal', it should be taken into account
when calculating holiday pay. When
considering the issue of what is 'normal',
the judgment refers to working patterns
being 'sufficiently regular' and 'settled'.
On the facts in the Dudley case, pay
and call-out allowances received for
regularly working an overtime rota one
week in four or one week in five were
considered normal remuneration, as was
additional voluntary overtime that was
not unusual or rare, but regular.
Going forward, employers should
identify any workers or groups of workers
who have normal working hours in their
contract, but whose pay varies on account
of overtime, allowances or commission.
For each worker or group, employers
should identify whether their working
patterns are sufficiently settled or regular
to be described as 'normal'. If so, consider
if their holiday pay reflects their basic
pay, or the normal remuneration they
receive.
The Recognised Standard / www.cicm.com / November 2017 / PAGE 50