Among the updates in this edition we see some cautionary tales for employers in relation to disciplinary procedures, dealing with medical evidence and considering reasonable adjustments when making a disabled employee redundant. We also look at an interesting case which provides some useful guidance for employers when an employee seeks to resign in breach of contract.

Contractual disciplinary procedure not a two-way street

The issue

Miss McMillan was employed by an NHS trust. Her contract of employment incorporated the trust's disciplinary procedure. Miss McMillan was subject to disciplinary proceedings for misconduct and was given a final written warning. When she appealed this decision, the appeal panel considered increasing the sanction to dismissal. The High Court granted an injunction restraining the trust from doing so, on the ground that the employment contract did not contain an express power permitting the appeal panel to increase the sanction in such a way. The trust appealed.

The ruling

The Court of Appeal dismissed the appeal. On its interpretation of the trust's disciplinary procedure, the trust was not contractually entitled to increase the sanction on appeal. The disciplinary procedure only gave the right of appeal to the employee. This suggested that only the employee should derive benefit from it, rather than the employer using it to review the sanction for its own purposes. In principle, there is nothing wrong with a provision allowing an increase in sanction. However, it was not expressly set out in the contract in this instance. The fact that there was no further right to appeal internally was also an important factor in the Court's decision.

Comment

Employers should be wary of seeking to increase disciplinary sanctions on appeal if their disciplinary procedure does not expressly provide for it. Even if a disciplinary procedure is expressly non-contractual (preventing an employee from seeking an injunction for breach of contract, as in this case), increasing a sanction to dismissal could still lead to that dismissal being considered unfair.

A link to the full report is here: McMillan v. Airedale NHS Foundation Trust [2014] EWCA Civ 1031.

Severe obesity may be a disability

The issue

The Advocate General of the Court of Justice of the European Union (the CJEU) considered whether there is a free-standing prohibition on discrimination against obese individuals under European law and, if not, whether obesity could be a disability under the relevant EU Directive.

The opinion

The Advocate General found that no free-standing prohibition on obesity discrimination exists under European law. However, he concluded that severe obesity could create limitations, for example in relation to mobility and endurance, which could amount to a disability under the Directive. In his view, it is irrelevant whether the obesity is self-inflicted due to the individual's excessive eating, or the result of a medical problem. It seems likely that the CJEU will follow the Advocate General's opinion.

Comment

The Advocate General's opinion chimes with the findings of the Employment Appeal Tribunal (the EAT) in the case of Walker v. Sita Information Networking Computing Limited. The EAT ruled that obesity does not automatically constitute a disability but that its effects might bring an individual within the scope of disability protection. Employers should therefore take extra care to ensure that any obese employees are not treated unfavourably because of their condition.

A link to the full report is here: FOA, acting on behalf of Karsten Kaltoft v. Kommunernes Landsforening, acting on behalf of the Municipality of Billund C-354/13.

Employer's failure to get medical advice made dismissal unfair

The issue

An employee returned to work after being on sick leave due to cancer. Criticisms were raised about her work and she once more went off sick, this time with work-related stress. She complained that her manager had undermined her and been unsupportive. She withdrew her complaints but her employer decided to investigate them nonetheless. It found no evidence of inappropriate behaviour by the manager. The employer then brought disciplinary proceedings against the employee alleging gross misconduct on the grounds of making unfounded and inappropriate allegations. The employer discounted medical evidence that the employee was suffering from post-traumatic stress which could cause her to be over-sensitive to perceived criticism. She was dismissed without notice for gross misconduct. The employee appealed the decision. This only resulted in her sanction being reduced to dismissal on notice. Her medical evidence was again ignored.

The ruling

The EAT agreed with the Employment Tribunal that the dismissal was unfair. The employer did not appear to have a cogent reason for rejecting the medical evidence. The EAT held that if the employer had concerns about the validity of the medical evidence, it should have obtained its own medical report. The fact that it had not done so meant it was unreasonable to have reached a finding of gross misconduct.

Comment

Employers often have doubts about medical evidence supplied by employees. This case makes it clear that such evidence should not be dismissed out of hand. Instead employers should arrange for their own impartial medical report and compare the findings.

Perth & Kinross Council v. Gauld UKEATS/0046/13/JW.

Failure to make reasonable adjustments in a redundancy situation

The issue

Mr Charles was at risk of redundancy. He went off sick with a disability which rendered him unable to attend administrative meetings. His employer repeatedly tried to contact him to arrange interviews for posts which it considered to be suitable alternative employment. As it received no response from him, he was eventually dismissed by reason of redundancy. The EAT considered whether Mr Charles' employer had taken sufficient steps to accommodate his disability when considering him for the alternative roles available.

The ruling

The EAT found that the employer had failed in its duty to make reasonable adjustments by refusing to dispense with the need for a formal interview for Mr Charles. The employer had acknowledged that his condition prevented him from attending administrative meetings but still required him to attend an interview in order to be considered for alternative roles. However, the EAT did point out that it did not automatically follow that, if the employer had made the necessary adjustment and assessed Mr Charles' suitability without an interview, he would have been offered an alternative role and avoided dismissal.

Comment

When faced with recruitment or dismissal of people with disabilities, employers should be careful to consider what adjustments might be reasonable to accommodate their particular needs.

A link to the full report is here: London Borough of Southwark v. Charles UKEAT/0008/14.

No release and no pay for employee who resigns in breach of contract

The issue

Mr Rodgers, a broker for Sunrise, resigned without giving notice, having accepted a job with a competitor in New York. The issue for the High Court was whether Sunrise could nevertheless keep the employment contract alive, in order to enforce Mr Rodgers' express obligation not to work elsewhere whilst employed by Sunrise. And in order to do this, did Sunrise have to continue to pay Mr Rodgers, even though he refused to work?

The ruling

The High Court found that Mr Rodgers' departure did not end his employment. It was a repudiatory breach but this did not automatically terminate the employment contract. The employer in such a situation has a choice. It can accept the breach as terminating the contract with immediate effect. But it may instead choose to affirm the contract and keep it in force, if it has good reason for doing so. Sunrise's desire to prevent Mr Rodgers from working for a competitor was considered to be a good reason. The High Court further found that the employer does not have to pay the employee if he does not return to work. Readiness to work and wages are in general mutual obligations. The non-performance of one obligation excuses the performance of the other and the contract is suspended rather than brought to an end. An injunction was therefore granted restraining Mr Rodgers from working for the competitor until the remainder of his contract with Sunrise had expired, despite the fact that he was not being paid.

Comment

The Court's clarification that an employer can elect to waive an employee's repudiatory breach and hold him to his contract, and that it need not pay him if he does not work, is helpful for employers. However, the case highlights the need for the employer to make its position clear - Sunrise's lawyers had responded to Mr Rodgers' walk-out by expressly stating that Sunrise was electing to waive his breach and affirm the contract as continuing. If Sunrise had simply stopped paying him without stating its position, it might well have been held to have accepted Mr Rodgers' breach as having brought his employment to an end, freeing him to join the competitor immediately.

A link to the full report is here: Sunrise Brokers LLP v. Rodgers [2014] EWHC 2633 (QB).

Bonuses — PRA policy statement on clawback

Detail

The Prudential Regulation Authority (PRA) has issued a policy statement on bonus clawback. It provides that firms should use reasonable efforts to claw back bonus amounts from individuals if there is reasonable evidence of employee misbehaviour or material error, or if the business suffers a material failure of risk management. Clawback will apply for seven years from the date of the bonus award. The rules will apply to awards made on or after 1 January 2015.

Key date

1 January 2015

Comment

Those firms affected by the changes will need to review their remuneration policies and their employment contracts to ensure that the new clawback rules are covered. The PRA and FCA have also opened a joint consultation considering issues such as deferral periods for variable remuneration, clawback, bailed out banks, buy-outs and techniques for calculating bonus pools, so more changes are on the horizon.

A link to the PRA's policy statement is here.