1. Discrimination: responsibility for shareholder remarks, post-termination victimisation, speculative claims

  1. Employers may need to disown influential shareholders' remarks

Employers may need to distance themselves from discriminatory remarks made by shareholders who are closely connected to or wield influence over the management of the business.

The ECJ has ruled that homophobic remarks about the recruitment of gay players, made by a shareholder in a football club in an interview to a journalist, shifted the burden of proof to the employer to show that a recruitment decision was not discriminatory.  This was because, although the shareholder had no power to make binding recruitment decisions, he was perceived by the media and public as playing a leading role in the club and the club had failed to distance itself from the remarks. (Asociatia ACCEPT v Consiliul National C-81/12)

  1. Post-employment victimisation is prohibited after all

The EAT has ruled that post-employment victimisation is unlawful, departing from its previous decision in Rowstock v Jessemy. (Onu v Akiwiwu)

Such victimisation often consists of an employer giving an unfairly negative reference or refusing to give a reference (when it is normal practice to do so) for an ex-employee because they made a discrimination claim.

The conflicting decisions derive from a drafting error in the Equality Act. The government did not intend to exclude protection from such conduct, but the EAT has reached conflicting conclusions as to whether the wording can be interpreted to provide it or, if not, whether words can be read in to comply with EU law. The issue will have to be resolved by the Court of Appeal, due to hear Rowstock later this year.

  1. Hope that "something may turn up" on cross-examination insufficient to prevent strike-out

Employers should succeed in striking out a claim where, putting the claimant's case at its best, there is still no evidence of an essential part of the claim. The claimant's hope that "something may turn up" later in the claim will usually be insufficient to avoid strike-out.

The EAT upheld the strike out of a disability discrimination claim where there was no evidence that the managers making the relevant recruitment decision knew of the claimant's disability. The hope that the managers might admit to knowledge under skilled cross-examination was not sufficient to allow the claim to proceed. Presumably a claimant would have to show that the chance of something probative turning up on cross-examination – or perhaps in disclosure – was realistic. (Patel v Lloyds Pharmacy)  

2. Disability: ECJ ruling on definition

The ECJ has confirmed that a person who can work to a limited extent or limited hours can still be "disabled". Relying on the UN Convention on the Rights of Persons with Disabilities (to which the EU itself signed up as part of the Treaty of Lisbon), the ECJ ruled that disability requires an impairment that "in interaction with various barriers" may hinder the full and effective participation in professional life "on an equal basis with others". UK law focuses on the effect on "normal day-to-day activities", which has been held to exclude specialist work-based activities; this approach may need to be adjusted to reflect this ECJ ruling.

The ECJ also confirmed that the origin of the disability is irrelevant – it can be caused by a temporary illness if the disability is sufficiently long-term. A reduction in working hours can be a reasonable adjustment if it enables the individual to remain in employment.

Finally, the Court considered that a national law allowing termination on reduced notice after 120 days' absence in one year was potentially indirect discrimination. The ECJ ruled that it might be appropriate to adopt such a rule to achieve the Member State's legitimate aim of giving employers the confidence to recruit and retain employees likely to have repeat absences - but this was for the national court to decide.

Directors' service contracts often contain this type of early termination provision and the ruling serves as a reminder of the potential for indirect disability discrimination claims when operating such a clause; justification will be key and the ECJ view on potentially legitimate aims is therefore of interest. The same potential for indirect discrimination (unless justified) applies to absence control policies given that disabled workers have the additional risk of disability-related illness and therefore a greater risk of accumulating days of absence and reaching the absence control policy limit. (HK Danmark v Dansk, C-335 & 337/11)  

3. Collective redundancy consultation: risks of using pre-existing employee body

Employers contemplating using an existing employee consultative body for collective redundancy consultation, rather than organising elections for ad hoc representatives, should carefully consider the body's terms of reference to determine whether it is appropriate.

The EAT has recently upheld an appeal from a tribunal decision that a body was appropriate, and remitted the case to be reconsidered. The tribunal had failed adequately to consider the purpose of the body, the impact of some members being co-opted rather than elected, and the fact that the body was expressed to be "non-negotiating". The burden of proof is on the employer to show that the body had authority to represent the affected employees.

The EAT also ruled that it is not enough for an employer to provide an opportunity to consult on ways of avoiding and minimising dismissals and mitigating the consequences – it must raise these issues itself if the employee representatives do not.

The trigger for the obligation is when dismissals are "proposed" and the EAT followed previous case law that this could not be read as meaning "contemplated" (the word used in the EU Directive), which might well be satisfied at an earlier stage of the process. (Kelly v Hesley Group)  

4. TUPE: no breach of I&C duties where a transfer does not go ahead

TUPE imposes an obligation on a transferor to inform and consult representatives for its own "affected" employees. Previous case law has established that transferor employees may be "affected" even if they do not transfer, for example if some of the work they do has been transferred so their jobs change or are at risk.

The EAT has recently confirmed that this does not extend to the situation where the transfer has an indirect effect on the work available for the transferor's non-transferring employees, for example because the transfer of a more profitable part of the business makes the remaining part less viable and ultimately it is closed.

Equally, the exclusion of that part from the transfer does not render the employees left behind "affected", even if the transferee originally envisaged taking that part too then changed its mind. There can be no complaint of a breach of the obligations to inform and consult about a transfer which doesn’t actually take place. (I Lab Facilities v Metcalfe)

5. Employees working abroad: employee working outside EU could not claim UK statutory holiday pay

The principle that UK laws which are derived from EU law must be construed as permitting claims in England, where English law is the proper law of the contract, only applies where the employee works in the EU.

The claimant, who worked in Dubai, claimed holiday pay under the Working Time Regulations, which expressly only extend to Great Britain. He sought to rely on the 2008 ruling in Bleuse v MBT Transport that a German claimant who had worked in Germany under a contract governed by English law could claim statutory holiday pay in England, on the basis that the EU law on holiday pay is directly effective and UK law must be construed to provide an effective remedy for breach of such rights if possible. This ruling left open the question of whether an English governing law was enough, or whether the claimant had to be an EU national or be working in the EU. The EAT has answered the latter, ruling that the Directive and Bleuse do not apply to employees working outside the EU (although the point received little discussion).

The EAT also confirmed that the test for the territorial scope of a claim under section 10 of the Employment Relations Act 1999 (the right to be accompanied to a disciplinary hearing) is the same as that for unfair dismissal, namely that the claimant's connections with Great Britain and British law must be sufficiently strong such that Parliament is presumed to have intended protection to apply and, if the claimant lives and works wholly abroad, stronger than the connection to another country. (Dhunna v Creditsights)  

6. Collective agreements: clause could not be construed as giving employer choice of two pay rates

Overturning the EAT, the Court of Appeal has construed a contractual clause in a collective agreement, which provided that the employer would increase pay by one of two possible percentages, as requiring the employer to pay the higher of the two. It was fanciful that the unions would have agreed that the employer could choose between them and this must have been obvious to the employer. It would have been nonsensical for the clause to provide for a maximum pay increase (which would be the effect if the employer could choose), rather than a minimum. (Anderson v LFEPA)

Of course, best practice is to avoid ambiguity by careful drafting!  

7. Period of continuous employment: start date may be changed by activities prior to official start date

Employers should take care when asking a new recruit to attend meetings or events prior to the start date of employment specified in the contract. The date on which continuous employment began could be brought forward (so that unfair dismissal rights are accrued earlier).

It will be a question of fact and degree whether the activities can be seen as performed under the contract of employment. This will be much less likely if attendance is not compulsory and if the time is not paid for. It may also be relevant if the employer regularly sends non-employees to attend such meetings. (Koenig v Mind Gym, EAT)  

8. New statutes: Enterprise and Regulatory Reform Act and Growth and Infrastructure Act

The Enterprise and Regulatory Reform Bill finished its passage through Parliament and received Royal Assent on 25 April 2013.  BIS has also published commencement dates for various parts of the Act.  The most significant employment law provisions are as follows:

  • from 25 June 2013, the qualifying period for unfair dismissal will not apply where the main reason for dismissal is the employee's political opinions or affiliation
  • changes to whistleblowing protection will also apply from 25 June 2013: employers can be vicariously liable for detriment by colleagues, a new public interest requirement is imposed and the good faith test removed (though bad faith can reduce compensation). Employers should update their whistleblowing policies and consider staff training
  • protection for pre-termination negotiations (to be inadmissible in ordinary unfair dismissal claims) – planned for summer 2013
  • power to impose an additional cap on the unfair dismissal compensatory award – planned for summer 2013
  • repeal of the third party harassment provisions in the Equality Act 2010 (unknown implementation date)
  • abolition of discrimination questionnaires (unknown implementation date)
  • financial penalties for losing employers (likely 2014)
  • prohibition of caste discrimination (added to the Bill at a late stage by the House of Lords; likely 2014/15)
  • power to introduce tribunal discretion to order equal pay audits (not before 2014).

The Growth and Infrastructure Bill has also received Royal Assent. The provisions introducing a new employee shareholder status (planned for 1 September 2013) were the subject of much debate and disagreement, but remained in the final Act following concessions won by the House of Lords. These included:

  • job applicants who refuse a job offered only on the basis of employee shareholder status will no long lose jobseeker's allowance
  • employers offering the new status must provide the individual with a statement explaining the employment rights being sacrificed and the rights attaching to the shares
  • the employer must pay the reasonable costs of the individual taking independent legal advice on the offer, whether or not the offer is accepted
  • there will be a seven day cooling off period from the day legal advice is received, to allow the individual to back out.

Further details of the new status are set out in our earlier private equity briefing and blog posting.

The Queen's Speech on 8 May included little of employment law interest.  The announcements included increased fines for businesses employing illegal workers, a £2,000 employment NIC allowance for all businesses, measures to stop the use of offshore companies to avoid paying NICs, and a Deregulation Bill removing the ability of employment tribunals to make wider recommendations in successful discrimination cases.

The Children and Families Bill (providing for shared parental leave) has been carried over to the 2013-14 parliamentary session.  

9. Employment tribunals: draft fees order and consultation on fee remission

The Government has stated that it is "working towards" implementing fees in employment tribunals and the EAT at the end of July 2013.  A draft fees order has been laid before Parliament including the fee levels set out in the government response to consultation (summarised here).  Employers may see an increase in claims over the next couple of months by claimants wishing to avoid the fees – the transitional provisions provide that fees will only apply to claims or appeals submitted after the order comes into force.

A letter and Q&A from the Ministry of Justice explain how the rules are to work in practice.  The Q&A states that tribunals are to have the power to order an unsuccessful party to reimburse the successful party's fees (although this is not yet in the draft order).

The Government has also published a consultation paper on fee remissions for the courts and tribunals.  It proposes that claimants will have to satisfy both a disposable capital test and an income test.  Remission of any fee up to £1,000 will not be available to claimants with disposable capital of more than £3,000.  The introduction of a disposable capital test may prevent many claimants who have recently become unemployed from claiming remission;  those with savings just over the £3,000 threshold may baulk at gambling a third of their savings to bring an unfair dismissal claim.