Summary: In our June update we review recent cases on topics including religious and disability discrimination, jurisdiction and the protection of confidential information. We also consider an employment tribunal level decision on holiday pay and voluntary overtime and the right to privacy in relation to disciplinary proceedings.

Territorial scope for discrimination is the same as for unfair dismissal

The Court of Appeal has confirmed that the test for determining the territorial scope of the Equality Act 2010 is the same as the Lawson v Serco test which applies to unfair dismissal and other claims under the Employment Rights Act 1996.

In R (Hottak and another) v Secretary of State for Foreign and Commonwealth Affairs, two Afghan nationals who had worked for the British military in Afghanistan appealed against a High Court finding (in relation to Judicial Review proceedings) that they were not protected by the Equality Act. The Court of Appeal upheld the decision of the High Court. It confirmed that the test for jurisdiction, whether an individual has a sufficiently close connection with Great Britain (as set out in Lawson v Serco and later clarified in Ravat v Halliburton Manufacturing) is the correct test for discrimination purposes. The claimants in this case argued that a more generous standard should be applied for discrimination cases, but this idea was rejected as “artificial, unjustified and unwise”. Further, being employed by the British Government was not a determinative factor and was not enough in this case for the individuals to demonstrate a close connection in the absence of other factors.

Whether or not an individual has a sufficiently close connection with Great Britain is a question of fact. However there is now a growing body of case law which is helpful to consider when analysing the situation of particular employees. It is also useful that the Court of Appeal has clarified that the test is the same for both the Employment Rights Act and the Equality Act, putting paid to arguments to the contrary.

Lack of umbrella contract relevant when assessing whether individuals qualify for Equality Act protection

In Secretary of State for Justice v Windle & Arada, the two claimants sought to bring race discrimination claims. Both were engaged as interpreters, providing services on a case-by-case basis. The Court Service was not obliged to offer them any work and nor were they obliged to accept work offered. The extended definition of “employment” in the Equality Act covers individuals employed “under a contract personally to do work” but case law has confirmed that individuals must also be in a relationship of subordination with the “employer”, distinguishing them from individuals who are independent providers of services.

At a preliminary hearing, the Tribunal held the claimants were not covered by the extended definition of employment. Crucially, it gave weight to the lack of umbrella contract applying between individual engagements, finding that it was a factor which pointed towards them being independent providers of services. The EAT overturned this decision. The decision was then appealed to the Court of Appeal.

The Court of Appeal reinstated the decision of the Tribunal. It disagreed that the lack of an umbrella contract was only a relevant factor when assessing “employment status” in the narrow sense. The lack of mutuality of obligation outside of the period when work was carried out was a relevant factor which tended to indicate that the there was a lack of subordination in the relationship while at work. It also confirmed that the factors to be considered when assessing the extended definition are not essentially different, it is just that the “passmark is lower”.

Employment status remains a tricky area, particularly when considering the “worker” definition or the extended definition for discrimination purposes. It is helpful for those who engage self-employed individuals that the Court of Appeal was willing to accept a narrow interpretation in a discrimination context but it is still important to remember that each case turns on its own facts.

Discrimination and the danger of comparators

Croydon Health Services NHS Trust v George is an example of the difficulty of successfully identifying comparators in discrimination cases. The case related to a midwife who was reported to a supervisory authority following an incident at work. There were other performance concerns and the employee retired, although prior to her retirement she was demoted. She complained that the referral and her treatment after her resignation amounted to race discrimination.

In considering her claim, the Tribunal relied on a comparison with another employee who was subject to disciplinary proceedings just before retirement but who was not referred to the supervisory body. This employee was treated as an actual comparator in relation the supervisory referral and as the basis for a hypothetical comparator on the post-resignation issues. On appeal, the EAT found that the Tribunal’s approach was unsafe. It had failed to take into account the significant differences between the claimant and the comparator or to consider if there were reasons why the claimant was treated as she was.

Identifying an actual comparator can be extremely helpful for a claimant seeking to establish discriminatory behaviour. However, this case is a reminder to employers that, even where two employees may be similar at first glance, it is important to put forward evidence of any differences which might explain the difference in treatment. In particular in this case, the decisions were taken by two different managers and the EAT gave significant weight to this in the absence of a clear policy. This is therefore a factor worth focusing on in relevant cases.

Misconduct in the context of disability – causal link loosened by EAT decision

In Risby v London Borough of Waltham Forest, the EAT appears to accept a looser causal link between an employee’s disability and something arising in consequence of it. A disabled employee who had been dismissed following two racist outbursts brought unfair dismissal and discrimination arising from disability claims. His outbursts had occurred following the employer’s decision to hold a disciplinary meeting at a venue that did not have disabled access.

The EAT, setting aside the decision of the Employment Tribunal, found that the claimant’s misconduct was a product of the indignation caused by the employer’s decision. There was therefore a sufficient link between the conduct and the disability; the Tribunal had erred in finding that the two were unrelated, and the case was remitted.

Discrimination arising from disability can be justified, so it may be that when the case is reconsidered by the Tribunal, it finds that the decision to dismiss an employee for making racist statements is a proportionate means of achieving a legitimate aim. However, this is a potentially worrying development for employers as, on the face of it, the decision seems to extend the scope of discrimination arising from disability claims beyond what is envisaged, for example, by the EHRC Employment Statutory Code of Practice. Until we have further clarification, employers should carefully consider whether there could be any link between misconduct and employee’s disability before dismissing or applying any other disciplinary sanction.

Holiday pay: voluntary overtime can be “intrinsically linked to the contract”

In the Fulton and others v Bear Scotland case, the EAT found that non-guaranteed overtime should be included when calculating holiday pay. In White and others v Dudley Metropolitan Borough Council, the Employment Tribunal has extended this, holding that an employee’s holiday pay should take into account voluntary overtime, to the extent that it is regular enough to be considered part of their “normal pay”.

Whilst this is a first instance decision which may be appealed, it is consistent with the view expressed in Fulton and with the recent decision of the Northern Ireland Court of Appeal in Patterson v Castlereagh Borough Council. It is therefore a strong indication of the direction that the law is likely to head in relation to holiday pay.

Council successfully challenges an order for re-engagement

In Lincolnshire County Council v Lupton, the EAT held that, in making an order for re-engagement of an unfairly dismissed employee, the Tribunal had erred by failing to specify the nature of the employment that the Council was required to re-engage the claimant into. Perhaps more startling was the Tribunal’s failure to consider the practicability of re-engagement with regards to the claimant’s personal circumstances, and the evidence she produced at the hearing. The issue of practicability when considering re-engagement of dismissed employees is a mandatory consideration. In this instance, the Tribunal had only considered the large size of the employer, and not the suitability of the claimant to carry out the roles that were available.

As a general rule, when considering re-engagement, employers are not required to create a new job for a successful claimant where re-engagement has been ordered by the Tribunal. The onus is on the claimant to ask for a list of available positions and identify ones that may be suitable for their skills, experience and personal circumstances.

Police evidence used in an employment disciplinary – when can employees have a reasonable expectation of privacy?

Under Article 8 on the European Convention of Human Rights, everyone has the right to respect for their private life. In Garamukanwa v Solent NHS Trust the EAT heard an appeal which related to an employee’s right to privacy in the context of an internal disciplinary where the employer used evidence of misconduct gathered by police as part of a criminal investigation. After a complaint was made about him to the police by a colleague, Mr Garamukanwa was arrested but not charged. However, the police provided the Trust with the evidence it had collected. This included photographs from his phone showing that he had been sending malicious anonymous emails to colleagues and may have also been following them. This evidence was relied upon by the Trust when dismissing him.

Mr Garamukanwa subsequently brought a number of claims including race discrimination and unfair dismissal, contesting that the Trust had breached his Article 8 right to privacy in relying on the evidence. The Tribunal dismissed his claims as it did not accept that this right was engaged, predominantly because the emails in question impacted on work-matters, were sent to work email addresses and had the potential to cause significant distress to work colleagues. On appeal, the EAT agreed with the first instance decision. Mr Garamukanwa could not have had a reasonable expectation of privacy when the evidence of his misconduct was intrinsically linked to work matters. It was also of note that it was not until the matter was with the Tribunal that he complained about the use of the evidence in his disciplinary hearing. Perhaps the most unusual aspect of this matter was the fact that the police decided to share the evidence with the Trust in the first place, particularly as no charges were brought against Mr Garamukanwa.

Early conciliation – EAT shows leniency for claimant’s EC error

In Adams v British Telecommunications Plc, the EAT has upheld an appeal against the decision of the Employment Tribunal which had held that it did not have jurisdiction to consider complaints of unfair dismissal and unlawful race discrimination. The claimant had originally submitted her claim without the full early conciliation number. On learning of her error, she submitted a second claim rectifying the defect, but this was presented out of time, and the Tribunal refused to extend the time limits.

The EAT held that the Tribunal had erred in treating the fact that the claimant had submitted her first defective claim in time as meaning that it was reasonably practicable for her to submit her second claim in time. It had failed to consider whether there was an any impediment to submitting the second claim within the timeframe. In respect of the discrimination claim, the Tribunal had also failed to consider the prejudice to the claimant in determining whether it was just and equitable to extend the time limits for her discrimination claim. The prejudice to her was significant – she lost the right to bring her claim – whereas the prejudice to her former employer if time was extended was minimal. Whilst the EAT confirmed that there is no presumption that time limits should be extended, it made it clear that it was not appropriate to deprive an individual of their access to justice by reason of a minor error in the ET1 form.

Religious discrimination – employer’s response to highly unusual facts can still be a PCP

In Pendleton v Derbyshire County Council and The Governing Body of Glebe Junior School, the EAT considered whether religious discrimination could be made out in what it described as “highly unusual circumstances”. The case concerned a primary school teacher whose husband, the head teacher of another local school, had been convicted of making indecent images of children and of voyeurism. Mrs Pendleton was a practising Anglican Christian and believed that her marriage vows were sacrosanct. She stood by her husband and, as a result, was dismissed from her own teaching position. The Tribunal, while finding her dismissal to be unfair, did not find that it amounted to indirect religious discrimination on the basis that there was no group disadvantage. The EAT overturned this decision and, while the facts are unusual, its finding contains principles which are of more general application.

First, the EAT confirmed that there was a provision, criterion or practice (“PCP”). While a one-off breach of a policy does not constitute a PCP, that is not the same as the application of a practice that will only occur in highly unusual circumstances. In this case, the dismissal of an individual who chose not to end a close relationship with someone convicted of voyeurism and making indecent images of children was a policy or practice of the employer and the fact that it had not happened previously did not prevent it from being a PCP.

Second, in reaching its decision that there was no group disadvantage, the Tribunal had confused the neutral application of the policy with its impact on a particular group. It did not matter that the employer would have dismissed individuals who stood by a spouse or partner for non-religious reasons. Even though the disadvantage applied to both groups, individuals who shared the claimant’s religious belief in the sanctity of marriage were placed at a particular disadvantage in comparison to those affected by the policy but who did not share the religious belief. This meant that the claimant was able to demonstrate group disadvantage and, since the employer had not shown that her dismissal was justified, the EAT found that she had suffered indirect religious discrimination.

Employer granted order for deletion of confidential information taken by ex-employee

In what is thought to be the first publicised order of its kind, the High Court in Arthur J Gallagher Services UK Ltd v Skriptchenkov and others granted an interim injunction to secure the former employer’s (AJG’s) confidential information from misuse by AJG’s ex-employee (who had taken it) and by his new employers (the defendants). The defendants had admitted that they were using AJG’s confidential information to approach AJG’s clients and offer them lower prices. The High Court said the defendants had showed a high degree of subterfuge in using AJG’s confidential information and could not be trusted to seek out and delete the relevant material from their own IT systems. Accordingly, in addition to the more common order of inspection and imaging of the defendants’ electronic devices and databases, the High Court also ordered the deletion of AJG’s confidential information from those systems.

The order for deletion of material from the defendants’ IT systems is draconian, but the High Court said there was no lesser way to protect AJG’s information pending the full hearing. In deciding this, the court took into account the fact that the defendants’ evidence showed that they knew the information was confidential and had knowingly misused it.

Trade Union Bill receives Royal Assent

Following agreement by the House of Commons and the House of Lords on its text, the Trade Union Bill received Royal Assent on 4 May 2016. It is now the Trade Union Act 2016 and it will be brought into force by statutory instrument.

Enterprise Bill receives Royal Assent

The Enterprise Bill also received Royal Assent on 4 May 2016. The Enterprise Act 2016 contains a number of employment related provisions, including in relation to apprenticeships, rights for retail workers who work on a Sunday, and the capping of termination payments for public sector employees.