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Global HR Update: United Kingdom

By Faegre Baker Daniels  10/10/2013
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Compensation for Breach of Data Protection Legislation

In Halliday v Creation Consumer Finance Ltd [2013] EWCA Civ 333, the Court of Appeal considered the issue of compensation for distress caused to an individual by a breach of the United Kingdom’s data protection legislation, the Data Protection Act 1998 (DPA).

Halliday purchased a television through a credit arrangement with Creation Consumer Finance Ltd (CCF). CCF distributed Halliday’s data in breach of the DPA and this resulted in him being given a poor credit rating. Halliday brought a claim for compensation for the distress he suffered as a result of the breach. The Court decided that compensation should be awarded but felt that it should be relatively modest (£750) to reflect the fact that: (a) the distress suffered had been no more than frustration; (b) CCF had not behaved maliciously; and (c) the breach had been due to a technical error and was an isolated incident. Interestingly, the Court added that the usual principles for assessing awards for injury to feelings in discrimination cases (which can range from £600 to £30,000) should not apply to the assessment of compensation for breaches of the DPA.

Although this was a commercial case, it is still of interest to employers as they are also required to comply with the DPA. The case shows that the courts will award compensation for breaches of the DPA, but the awards may be relatively modest, at least in comparison to injury to feelings awards in discrimination claims.

Failure to Follow Grievance Process Can Amount to a Fundamental Breach of Contract

In Blackburn v Aldi Stores Ltd UKEAT/0185/12, the Employment Appeal Tribunal (EAT) held that an employer’s failure to follow its own grievance-appeal process could amount to a fundamental breach of contract, even where the underlying grievance procedure was noncontractual.

Blackburn worked for Aldi Stores Ltd (Aldi). He raised a grievance about various issues including health and safety, lack of training and mistreatment by a manager. The grievance and his subsequent appeal were heard and dismissed by the same manager. This was not in accordance with Aldi’s grievance procedure which, although noncontractual, stated that an appeal should be heard by a more-senior manager. Blackburn resigned and brought a claim for constructive dismissal. Overturning the Employment Tribunal’s decision on appeal, the EAT held that Aldi’s failure to follow its own grievance-appeal procedure could amount to a fundamental breach of contract entitling Blackburn to resign, even though the grievance procedure was noncontractual.

The EAT noted in particular that the right to an impartial appeal was an important feature of both the ACAS Code (the U.K. Government’s guidance on grievance and disciplinary procedures) and Aldi’s own grievance procedure, and failed to understand why an organization of Aldi’s size had not been able to provide a different manager to hear the appeal. The case was remitted to the Tribunal to determine whether or not, on the facts, Aldi’s failure to follow its appeal procedure had in fact amounted to a fundamental breach.

This is a reminder to employers to ensure they follow their own grievance procedures and the ACAS Code at all stages of a grievance process. Failure to do so, even where the company grievance procedure is noncontractual, could expose the company to constructive dismissal claims.

Holiday Payments on Termination Must Reflect Normal Pay

In Podlasiak v Edinburgh Woollen Mill Ltd ET/270129/13, an Employment Tribunal held that a payment in lieu of untaken holiday made on termination of employment must be equivalent to the pay the worker would have received had she taken the holiday during employment.

Podlasiak was employed by Edinburgh Woollen Mill Ltd under a contract which provided that on termination of her employment she would be paid £1 in lieu of an untaken holiday.

When her employment terminated, she had three days’ untaken holiday and the company made her a payment of £1 in accordance with the contract. Podlasiak claimed that she should have been paid £176 which is the amount she would have been paid if she had taken the holiday during her employment. The Tribunal upheld her claim on the basis that this reflected current European law which required that on termination of employment, employees should be in the same financial position they would have been in had they taken their holiday during their employment.

This is a first-instance decision and therefore not binding on other Tribunals. However, in the absence of other clear authority, employers would be well-advised to calculate holiday payments on termination based on the amount the employee would have received, had they taken the holiday during their employment.

© Copyright 2013 Faegre Baker Daniels LLP. All rights reserved.

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