Note from the Editor A number of our recent Briefings have described the way that the issue of non‑payment and underpayment of the National Minimum Wage (NMW) was gaining momentum. The Government has now confirmed that employers who fail to pay their workers the NMW will face an increased financial penalty of up to 100 per cent of the unpaid wages and a higher maximum penalty of up to £20,000. Regulations introducing these new limits came into force in February 2014. The Government also intends to legislate at the earliest opportunity to allow the maximum £20,000 penalty to apply to each underpaid worker. This is also applicable to unpaid interns, many of whom, because of the work they do, qualify for the NMW. At our last annual seminar we drew your attention to the on‑going redundancy case of USDAW v Woolworths, in which the Employment Appeal Tribunal (EAT) held that in the context of collective consultation the words “at one establishment“ should be ignored for the purpose of deciding whether the collective consultation obligations are triggered by 20 or more people being made redundant within 90 days. The case has now been referred by the Court of Appeal to the Court of Justice of the European Union. There has been speculation as to whether future redundancy cases in which “one establishment” is an issue will be stayed, pending the decision from Europe. As has been widely reported, the High Court has rejected trade union Unison’s judicial review challenge to the introduction of employment tribunal and EAT fees which came into force in July last year. Unison has indicated that it will appeal against the decision. The Government has announced a delay in the extension of the right to request flexible working to all employees. The Government has confirmed that the extended right will not be brought into effect in April 2014 as originally intended. The revised implementation date is not yet known.
Finally, a great turn out of 50 people attended our January Briefing where Devan Khagram looked at the issue of workplace stress. This is clearly a hot topic for many employers. The next Briefing will be on March 25th at 8.30 a.m. when Anna Robinson and Rhodri Thomas will talk about the doʹs and don’ts of the recruitment process. Case Update Jurisdiction — British national working on a Singapore‑flagged vessel In the case of Hasan v Shell International Shipping Services Ltd H, a British national, was employed by Shell, a company registered in Singapore. Shell contracted out Hʹs day‑today management to a company registered in the Isle of Man and also entered into a manning agreement with an English company. A jurisdiction clause was incorporated into Hʹs contract, which stated that the contract was enforceable under English law. H spent his leave in the UK and was paid in pounds sterling. During the 23 years of his employment, H worked for 19 months on UK‑flagged vessels. H was dismissed while working on a ship, the Galea, which had a Singaporean flag. He was informed of this by a letter sent from an address in the Isle of Man. H brought tribunal claims in England for discrimination, unfair dismissal and breach of contract against Shell and the companies based in the Isle of Man and England. The EAT held that H could not bring discrimination, unfair dismissal or contract claims in an English employment tribunal. With regard to discrimination, H was not protected by the Equality Act 2010 because, at the time of dismissal, he was working wholly outside Great Britain on a vessel that was not registered in the UK. H’s unfair dismissal and contract claims failed because the employer did not reside or carry on business in England and Wales. Nor, if H had sought a remedy in the county court, would the cause of action have arisen wholly or partly in England and Wales. These jurisdictional rules have since been changed by the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013, which potentially make it easier for overseas employees to bring claims. Comment This case demonstrates that jurisdiction clauses in contracts of employment will not bind tribunals when it comes to the question of whether they have jurisdiction to hear claims. As a result of the recent changes, tribunals now have jurisdiction to deal with proceedings where one of the following applies: The respondent, or one of the respondents resides or carries on business in England or Wales One or more of the acts or omissions complained of took place in England or Wales The claim relates to a contract under which the work is or has been performed partly in England or Wales The connection with Great Britain by virtue of which the claimant is entitled to present the claim is at least partly a connection with England or Wales. Redundancy – Ignoring volunteer for redundancy In the case of Stephenson College v Jackson, SC placed a number of staff in a selection pool and scored them against selection criteria to identify who should be redundant. J was the person with the lowest score and was therefore facing a compulsory redundancy. J’s colleague, C, scored one point more, but volunteered himself for redundancy in J’s place because he was unhappy at work. SC did not accept C’s offer of voluntary redundancy, and instead completed its redundancy procedure and dismissed J as redundant. C resigned and left his employment.
An employment tribunal – upheld by the EAT – decided that the decision to refuse C’s voluntary redundancy rather than make J redundant was a decision that no reasonable employer would have taken and therefore J’s dismissal was unfair. The fact that C had only scored 1 point more in the redundancy scoring exercise was obviously highly relevant to their decisions. Comment When employers ask for volunteers for redundancy they usually reserve the right to refuse applications, in case all their best workers apply. Employers should continue to reserve this right, but should bear this case in mind in the event that a similar factual situation should arise. Dismissal recommended by an external consultant The (hopefully!) unusual facts in the case of GM Packaging v Haslem were that the Managing Director of GM became aware that H was engaging in sexual activity with a member of his staff on company premises after hours. GM then delegated an external HR Consultant to advise upon whether a dismissal should take place. The HR consultant carried out an investigation and recommended that H be dismissed and GM accepted the recommendation. H’s appeal was also delegated to an HR Consultant and the appeal was rejected. H complained that the dismissal was unfair. He objected to the use of the HR Consultant. A tribunal found that it was fair and reasonable to delegate matters to an HR Consultant, but found that the principal activity complained of – H having sex on the premises – was not gross misconduct and therefore his dismissal was outside the band of reasonable responses. The EAT upheld the Company’s appeal, as H had also shown in conversation that he had a complete lack of respect for his employer and the tribunal had substituted their own view as to the reasonableness of the sanction of dismissal. Comment Both the tribunal and the EAT appear to have appreciated that a company with nine employees cannot have a dedicated HR function and, in the circumstances, hiring in professional help was a reasonable step to take. In doing so they took into account, as they were required to do, the size and administrative resources of the employer. Implied Contractual terms In the case of CSC Computer Services Ltd v McAlinden the Court of Appeal had to decide whether the practice of paying employees at least RPI wage increases could become a contractual term, even if the practice had been based on a mistaken belief by an employer that the employees had secured a contractual right to those increases at an earlier time. The case concerned whether or not a term should be implied or, more properly, inferred into the employeesʹ contracts of employment, to the effect that they were entitled to a guaranteed minimum annual pay increase equal to RPI. The employees in question transferred by way of a TUPE transfer to CSC Computer Services Ltd. The employees relied upon a pre and post transfer practice of paying such annual increases, as well as communications from CSC that indicated that the employees had a contractual entitlement to such increases. Accepting, for the sake of argument, that CSCʹs belief that the right existed pre TUPE transfer was a mistaken one, the Court of Appeal was not prepared to accept that that meant that no contractual entitlement could arise. The Court of Appeal pointed out that what the court was concerned with was the effect of communications by an employer to a class of its employees, partly by words and partly by conduct. The effect of those communications had to be viewed objectively. Comment In this case the employerʹs subjective understanding was irrelevant. CSC had conveyed the impression to its employees that they had a contractual right to RPI pay increases and the fact that it may have been acting on a mistaken belief was irrelevant. Age Discrimination In the case of Naeem v Ministry of Justice, N was a Muslim prison chaplain and subject to a length of service incremental pay scale common to all Ministry of Justice‑employed prison chaplains. Prior to 2002 the Ministry of Justice only employed Christian chaplains, and the appellant had commenced his employment in 2004. He argued that because he and the other Muslim chaplains could only progress through the pay scale from 2002 onwards, they were subject to a disadvantage in terms of their earnings. In the employment tribunal, the key question concerned the pool for comparison. The tribunal decided that it should include the Christian chaplains employed prior to 2002. On appeal, the EAT disagreed. The EAT said to include them would contravene the Equality Act 2010, which provides that there must be no material difference between a Claimant and the comparison group save for the protected characteristic. There had been no Muslim prison chaplains employed prior to 2002, and thus the correct “like for like“ comparison in this case was a non‑Muslim employee who started in 2004. A contrast was drawn with the Supreme Courtʹs decision in Homer v Chief Constable of West Yorkshire Police. Homer was an indirect discrimination case where the Claimantʹs age was inextricably linked to a time‑related PCP. In Naeem the EAT stated that because there is no link between the protected characteristics of religion/belief and time in the way that there may be with age, time‑related factors predating the Claimantʹs employment (such as the date of the Ministry of Justiceʹs change of recruitment policy) were not appropriate in the exercise of identifying the pool. Comment This case suggests that the approach of the EAT when identifying a group for comparison in indirect discrimination cases will require the members of the group to have no material difference with the Claimant, other than the protected characteristic. If a comparison group has any other material differences to the Claimant, then it is more difficult to prove that the reason for a detriment being suffered is because of a protected characteristic, as it could have been caused by one of the other material differences.
This Edition’s Topic – Without Prejudice Discussions – where are we now? The recent case of Portnykh v Nomura International plc has demonstrated that, since the case of BNP Paribas v Mezzotero (in which the court decided that not all off‑the‑record discussions between employer and employee could be “without prejudice” and there must be a pre‑existing dispute between the parties) employers and, judging from the Portnykh case, tribunals, have never fully recovered confidence in how to approach “offthe‑record” conversations. The introduction of “pre‑termination discussions” last year muddied the waters still further. The general principle is that oral or written statements which are made in a genuine attempt to settle a dispute are not admissible as evidence in a court/tribunal of any admissions by the parties. The case of Unilever v Procter & Gamble Company established that the general principle will not apply if the parties attempt to use the “without prejudice” exception as a cloak for perjury, blackmail or other ʺimproprietyʺ. The case went on to state that the impropriety must be “unambiguous” for the general principle to be set aside and that the test must be strictly applied. Subsequent to the Mezzotero case, the ruling in Brunel University & another v Vaseghi & Webster went a step further to suggest that the “without prejudice” principle would be overridden by the need for the truth in discrimination cases. This was not upheld, however, in the case of Woodward v Santander where the suggestion that there should be a wider exception to the without prejudice principle where discrimination alleged was rejected. The latest case on this issue is Portnykh v Nomura International plc. P was informed by NI that he was going to be dismissed for misconduct, but that they would be willing to allow him to resign. NI then claimed that P had suggested structuring the termination as a redundancy, which NI was willing to do. P subsequently brought a whistleblowing claim, in which he alleged that he had never been given a reason for his dismissal. NI sought to rely on the contents of the without prejudice correspondence that had begun after P had suggested that he be made redundant, as evidence of their version of events. An employment judge found that there was no dispute at the time that the without prejudice correspondence was entered into, and that it would be an abuse of the without prejudice rule if P was able to rely upon it to conceal that he had requested that his dismissal be treated as a redundancy. The EAT disagreed with both findings of the tribunal. The EAT said that, whilst there is not automatically a dispute when an employer offers an employee a compromise agreement, in this case P had been told that he was to be dismissed and there were discussions about an alternative manner of dismissal, so there was obviously a dispute. With regard to “unambiguous impropriety”, the EAT made the point that the Employment Judge had not appreciated how limited a concept it is. There must be an abuse of the privilege. However, it was not an abuse of the rule for a party simply to be disadvantaged by the exclusion of evidence. Conclusion There is an obvious public policy need to continue to uphold the “without prejudice” principle as it allows parties to make a genuine attempt to settle their differences, without pursuing the issues at a formal hearing. It is also in the best interests of the judicial system that parties can resolve their differences without always resorting to litigation.