Summary: Our March blog outlines key employment law developments over the last month, including cases on age discrimination in pension schemes, constructive knowledge of a disability and injury to feelings awards in detriment claims. We also outline other points of note, including the Government’s plans to enhance employment rights, upcoming statutory pay increases, and new regulations relating to information on payslips.

Age-based transitional provisions in pension schemes are discriminatory

Two EAT cases this month consider whether the Government’s transitional arrangements for implementing detrimental changes to public sector pension entitlements can be objectively justified.

In the first case, involving the judges' pension scheme, the EAT said that the age-based transitional provisions, under which older judges are protected against the impact of the pension reforms, unlawfully discriminates against younger judges. The transitional arrangements seek to protect judges who are within 10 years of retirement. The Government argued that the protection of older judges, together with a wish to ensure consistency across the public sector, were both legitimate aims. At first instance, the Employment Tribunal rejected these arguments, but this was overturned on appeal. However, the EAT refused to accept that the identified legitimate aims were proportionate, given the extreme impact of the transitional provisions on younger judges. The EAT accordingly said that the transitional provisions were not objectively justified.

The second case involves age-based transitional provisions in the firefighters’ pensions scheme. In the firefighters’ scheme, anyone within 10 years of normal pension age is protected and there is a tapering of benefits for those between 10-14 years of normal pension age. As with the judges, the Government argued that protection of older workers, together with a wish to ensure consistency across the public sector and preventing a cliff edge between the protected and unprotected groups, were all legitimate aims. Both the Employment Tribunal and the EAT agreed with this. However, the question of whether the measures were a proportionate means of achieving such aims was remitted to the Employment Tribunal. The firefighters will now have a second bite at the cherry to persuade the Employment Tribunal that protecting older workers in this way is disproportionate.

Why this matters?

We expect both cases to be appealed to the higher courts. Similar transitional provisions and cut-off/benefits tapering are used in other public sector pensions schemes and further developments will be keenly awaited, not least because of the significant sums at stake (the estimated cost of extending the transitional provisions to the 200+ judges not protected by the transitional provisions has been put in the region of £70 million).

Employer did not have constructive knowledge of employee’s disability

The Court of Appeal has upheld a decision by the EAT that an employer did not have constructive knowledge of an employee’s disability.

The employee was frequently absent from work for short periods of time. She claimed a number of medical conditions, including stress and hypertension, which she gave as the reason for her absences, together with an assortment of other ailments, including viruses, colds, stomach upsets etc. In total, the employee was absent for 128 days in her last year of employment. She was referred to OH, who were asked to opine on whether there was any underlying medical condition causing the absence pattern. The report produced by OH was incomplete, but stated that she was not disabled. The employer made various efforts to obtain a better report from OH which proved unsuccessful. Separately, the employer took steps to ascertain for itself whether the employee was disabled, including reviewing correspondence from her GP and holding return to work meetings.

The employee was dismissed for the short-term absence issues and brought various claims in the Employment Tribunal, including for disability discrimination. The Employment Tribunal found as a fact that she was disabled at the time of her dismissal. The parties agreed that the employer did not have actual knowledge of disability but it was disputed as to whether there was constructive knowledge. The Employment Tribunal, EAT and Court of Appeal all found that there was no constructive knowledge, on the basis that the employer had taken all reasonable steps to ascertain whether or not the employee was disabled. This was not a case of the employer rubber-stamping the OH’s determination, since the employer had undertaken its own investigation and consideration before reaching a conclusion.

Why this matters?

The case is a useful reminder that the relevant question is what steps it was reasonable for the employer to have undertaken, and not whether there was anything else the employer could have done to ascertain whether the employee was disabled. Employers remain entitled to rely on OH reports, although if, as in this case, the report is inadequate or incomplete, the employer must request appropriate clarification and information, in particular where the report does not address all of the matters that have been raised in the referral.

Injury to feelings awards available for working time detriment and other types of detriment claims

The EAT has confirmed that an award for injury to feelings in a detriment claim is not limited to whistleblowing cases, but is potentially available in any detriment claim under Part V of the Employment Rights Act 1996, including working time detriment claims.

The case concerned the implementation of a new duty shift system for firefighters, which involved breaches of the Working Time Regulations 1998 in relation to daily rest and night work. Any firefighter who refused to sign up to the new shift system was compulsorily transferred to another fire station in the region. The claimants argued that this, and the practical impact of the transfer on the firefighters (for example, longer journey times) amounted to detriments for which they were entitled to recover compensation for injury to feelings.

The EAT agreed that in principle, injury to feelings awards are not limited to just whistleblowing cases. Working time detriment claims and any other detriment claims under Part V of the Employment Rights Act 1996 can also potentially attract injury to feelings, if the facts support the making of an award.

Why this matters?

It is useful to have this clarification from the EAT as to the wide availability of injury to feelings awards. Whether an injury to feelings award is made in a particular case, and the amount of any such award, will always depend on the facts of the case. The level of compensation awarded will be in accordance with the normal Vento guidelines.

Post-termination losses can be claimed for pre-termination detriments

The Court of Appeal has confirmed that it is in principle possible for a whistleblower to claim post-termination losses that are attributable to pre-termination detriments, although whether such losses are in fact recoverable is a question of fact.

In this case, the Claimant was a Managing Partner of an LLP law firm. He investigated reports of bullying by the Senior Partner, and at the conclusion of his investigation he produced a report setting out his findings. Shortly after that, in February 2015, the Claimant was removed from his post by the other LLP members. He argued this was a repudiatory breach of the LLP agreement which he purported to accept, so as to bring the LLP agreement to an end. The law firm did not accept that it had acted in repudiatory breach and argued that the LLP agreement had continued until the Claimant was lawfully expelled from the LLP in April 2015.

In March 2015, the Claimant issued Employment Tribunal proceedings claiming that the alleged repudiatory breach by the law firm was also a detriment as a result of him making a protected disclosure. He claimed losses accordingly. The law firm sought to argue that the lawful expulsion in April 2015 broke the chain of causation between pre-termination detriments and post-termination losses. However, the Court of Appeal disagreed. It found that there was nothing in law to prevent a whistleblower from claiming post-termination losses on the basis that they were attributable to pre-termination detriments.

Why this matters?

This case helpfully clarifies that a lawful act of termination will not break the chain of causation. However, it does not change the fact that in practice the recoverability of losses will always depend on the specific facts of the case and, as the judge observed in this case, claimants will often face formidable difficulties in doing so.

Court uses powers of disclosure and surrender to preserve confidential information

This case demonstrates the court’s powers to order disclosure of confidential information wrongly accessed and copied by the defendant, as well as for surrender of the defendant’s passport until after the disclosure had been provided.

The defendant, a former employee of the claimant, fled from the UK to Hong Kong taking the claimant’s confidential information with him. He was then extradited to the UK to face fraud charges and was sentenced to imprisonment for fraud. A Serious Crime Prevention Order was also made, requiring him, among other things, to deliver up the claimant’s confidential information, which he failed to do. The claimants issued civil proceedings which included applications for various disclosure orders in respect of the location of the confidential information and who it had been disclosed to, and an application to prevent the defendant from leaving the jurisdiction and requiring him to surrender his passport.

Both applications were granted. In respect of the disclosure application, the court noted that it had been shown that the defendant had copied the confidential information and disclosure was necessary to protect the claimant’s rights and allow them to retrieve it. Further, requiring him to surrender his passport was appropriate, although this should be for as short a period as possible and only until the defendant complied with the order (but not until the end of the trial).

Why this matters?

The case is a useful illustration of the court using its powers to help preserve confidential information. However, it should also be remembered that in deciding whether or not it is appropriate to exercise such powers, the court will first carry out a careful balancing exercise involving the weighing-up of the need to protect the claimant’s interests on the one hand with the risk of harm to the defendant on the other.

Corbiere Ltd and others v Xu and Secretary of State for the Home Department (Intervener)

Round up of other developments

Plans to enhance employment rights: The Government has announced its ‘Good Work plan’ in response to the Taylor Review of Modern Working Practices. The Government has also launched various consultations on employment status, agency workers, increased transparency and enforcement of employment rights.

Statutory pay increases: From 1 April 2018, statutory maternity, paternity, adoption and shared parental pay will increase to £145.18 a week (up from £140.98). Maternity allowance will increase to the same rate on 9 April 2018. From 6 April 2018, the weekly rate of statutory sick pay will be £92.05 (up from £89.35). From 1 April 2018 the national living wage for workers aged 25+ will increase to £7.83, the standard adult rate for workers aged 21-24 will be £7.38, and the development rate for workers aged 18-20 will be £5.90.

Increases to Employment Tribunal compensation: Tribunal compensation limits are due to increase from 6 April 2018. Of particular note are the increases to the compensatory award for unfair dismissal (rising from £80,541 to £83,682) and the limit on “a week's pay” (rising from £489 to £508).

General Data Protection Regulation: the ICO has updated its Guide to the General Data Protection Regulation.

Information on pay slips: Legislation has been laid before Parliament which will require employers to provide itemised pay slips to all workers (not just employees) and for payslips to show the number of hours paid for, where a worker is paid on an hourly rate basis. The new rules will come into force on 6 April 2019.

New rules on tax on PILONs: In recently published HMRC guidance, the Revenue has stated its view that the new rules relating to the taxation of payments in lieu of notice apply only where both the payment is made, and termination occurs, on or after 6 April 2018.