In this new series of briefings, our education employment team provides a monthly summary of recently reported employment cases which may be of interest to institutions in the education sector. Please do contact us if you need any further information on the cases or the underlying principles behind them.
Instruction not to speak native language at work
In Kelly -v- Covance Laboratories Ltd (2015), the Employment Appeal Tribunal considered whether an instruction to a non-native English speaker not to speak in her native language, Russian, at work constituted an act of race discrimination and harassment.
The EAT determined, on the specific facts of the case, that the employer’s request was not unlawful. In particular, the EAT was satisfied that the employer’s policy of requiring only English to be spoken at work was not applied because of Ms Kelly’s race or national origin, but owing to the nature of the employer’s activities (animal testing) and the security and communication requirements necessary to the laboratory environment in which she worked.
Mitigation of loss by claimants
In Cooper Contracting Limited -v- Lindsey (2016), the Employment Appeal Tribunal summarised the key principles which employment tribunals should consider when determining whether claimants have mitigated their losses in unfair dismissal cases.
Having found that Mr Lindsey had been unfairly dismissed, when assessing the level of compensation to award, the Employment Tribunal noted that Mr Lindsey had decided not to seek alternative employment, choosing to work as a self-employed tradesman. Whilst the Employment Tribunal found that this was a reasonable step for Mr Lindsey to take (and reflected this in the compensation awarded in relation to the period up to the hearing), it restricted the amount of compensation for future loss of earnings on the basis that there were employment opportunities available to him at a higher level of remuneration.
The Respondent appealed, arguing that the Employment Tribunal should have found that Mr Lindsey had failed to mitigate his losses between dismissal and the hearing. In rejecting the appeal the EAT outlined the following key principles relevant to the issue of mitigation:
- The burden of proof is on the employer to show that the Claimant acted unreasonably in failing to mitigate. The Claimant does not have to show that what he did was reasonable and if evidence regarding mitigation is not produced by the employer, the Employment Tribunal has no obligation to find it.
- There is a difference between acting reasonably and not acting unreasonably. Therefore the fact that it may have been perfectly reasonable for a Claimant to have taken on a better paid job, does not itself necessarily mean that the Claimant has acted unreasonably by failing to do so.
- What is reasonable or unreasonable is a matter of fact and therefore although the views and wishes of the Claimant should be taken into account, it is the Employment Tribunal’s assessment of reasonableness and not the Claimant’s that counts. However, the Employment Tribunal is not to apply too demanding a standard to the Claimant.
Monitoring employees’ ‘private’ communications
In Barbulescu -v- Romania (2016), the European Court of Human Rights considered the application of Article 8 of the European Convention on Human Rights, including the right to privacy, in the context of a Romanian employer monitoring an employee’s messenger account.
In this case, Mr Barbulescu was dismissed for using an online messenger service at work for personal purposes, contrary to his employer’s internal rules. Following an unsuccessful challenge in the Romanian courts, Mr Barbulescu brought a claim in the European Court of Human Rights, arguing that his right to privacy under Article 8 had been breached. He suggested that the Romanian courts should therefore have excluded all evidence relating to his personal communications.
On the facts of the case, the Court held that whilst Article 8 was engaged, the Romanian courts were entitled to consider the personal communications when determining whether his dismissal was lawful. It is important to stress that the decision is very fact and context sensitive and does not provide UK employers with an unrestricted mandate to monitor employees’ communications. The UK legal framework in this area is complex and UK employers must remain mindful of the range of legal duties owed to employees, and the various offences, including under the Data Protection Act 1998 and the Regulation of Investigatory Powers Act 2000.
Taxation of injury to feelings compensation
Whilst Moorthy v HMRC (2016) is a tax rather than employment case, it is of relevance to employers making termination payments to employees where an element of the compensation relates to a possible claim of injury to feelings.
Section 401 of the Income Tax (Earnings and Pensions) Act 2003 charges to income tax, payments and other benefits received directly or indirectly in consideration, or in consequence, of, or otherwise in connection with, the termination of a person's employment. The first £30,000 of such a payment is free of income tax provided it is a non-contractual payment. A payment that falls within section 401 is excepted from the income tax charge if it falls within one of the exceptions, which include payments made in connection with the termination of employment by the death of an employee or on account of injury to, or disability of, an employee.
Mr Moorthy was made redundant by his employer and brought an employment tribunal claim alleging unfair dismissal and age discrimination. The claim was settled through a settlement agreement for £200,000. His employer paid the first £30,000 free of tax but deducted tax at the basic rate on the balance. Mr Moorthy completed his self-assessment tax return on the basis that the whole amount was tax free. HMRC did not agree and decided that the payment was taxable save for the first £30,000. Mr Moorthy appealed against the HMRC’s decision arguing the balance over £30,000 was not taxable as it related to injury to feelings.
The matter went to the Upper Tribunal in the Tax and Chancery Chamber. It concluded that the amount over £30,000 was taxable on the basis that the exception for “injury” meant a medical condition that that resulted in the termination of employment and did not extend to injury to feelings. The Upper Tribunal said that the Employment Appeal Tribunal's interpretation of "injury" inTimothy James Consulting Ltd v Wilton (2014) (where the EAT in assessing compensation concluded that injury to feelings awards on termination were not subject to tax) was incorrect.
Whilst in this case Mr Moorthy’s employers had deducted tax so the issue was between Mr Moorthy and HMRC, employers need to be aware that HMRC could seek the underpayment from them when the correct amount of tax is not deducted from the settlement payment. In addition, depending on the terms of any settlement agreement, the employer may have undertaken to pay any tax or indemnify the employee. Finally, it is worth noting that this case does not affect payment for pre-termination discrimination where HMRC has accepted that such payments are free of tax.