Discipline & Grievances
"Rarely can legislation have been so counter-productive. Provisions designed to reduce tribunal disputes have spawned satellite litigation in which arcane and complex points of law have been argued, frequently so remote from reality that they would surprise even the most desiccated Chancery lawyer conjured up by the imagination of a Charles Dickens."
(President of the EAT, the Honourable Mr Justice Elias)
He is of course talking about everyone's favourite, the Statutory Dispute Resolution Procedures. Last year the Government accepted the need for their complete repeal. The Employment Act 2008 has recently been passed and provides the legislative authority to repeal the universally unpopular procedures, hopefully, from April next year. While the end is in sight, employers are still stuck with having to work with these bureaucratic procedures, which continue to generate much case law including, we suspect, case law on the interpretation of the transitional provisions coming into force in April 2009.
We finally have some Employment Appeal Tribunal (EAT) guidance on how tribunals should approach uplifts in compensation. The only relevant factors are the nature and extent of the employer's default and the reasons for it (such as ignorance rather than cynical calculation). The maximum 50% uplift is not necessarily warranted in all cases of deliberate failure on the employer's part, since there may be some reason (albeit misguided) for the employer's actions. Also, a procedural failure that has no adverse consequences to the outcome for the employee may well justify a lower uplift. Finally, a nil award as a result of 100% contributory fault necessarily attracts a nil uplift.
Other cases including technicalities around extension of time limits, what amounts to a grievance (just about anything it seems!), and whether the grievance matches the claim also continue to mount. Many of this year's cases involve equal pay claims, an equally technically fraught legal area. In keeping with the season, we simply raise a toast to the thought the end is in sight rather than trawl the numerous technicalities generated by case law yet again this year.
Large-scale public sector equal pay claims now appear to be the norm. Unfortunately the bottomless pit of claims does not have a corresponding bottomless pit of money to settle them.
We have seen an endless stream of cases on often very technical points mainly regarding comparators and also the interplay with the statutory grievance procedures making their way through the various levels of the appellant courts. This looks like continuing into next year as negotiating settlements continues to prove to be difficult in many cases.
Following a landmark Court of Appeal decision, unions appear to be taking a more cautious approach in settling disputes requiring a balancing of sometimes conflicting member's interests. The GMB Union was found to have indirectly discriminated against its female members in recommending settlement of equal pay claims. While the union had been pursuing a legitimate aim (that of striking a balance for all its members between back pay, future pay and pay protection for its members), the court found it had manipulated female members into settling equal pay claims to achieve this and therefore was not justified.
It's two years since discrimination on the grounds of age was prohibited for employers and the case law is just making its way through the tribunals and courts. So, what have we learnt this year?
1. Recruitment - the phrase "youthful enthusiasm" in a job advert is a no go.
2. Benefits - the use of menu style benefit packages may be the way forward. Inclusion of an age-related insured benefit within a flexible benefits package does not necessarily make the package discriminatory.
3. Justification – while establishing a legitimate aim may be relatively easy, showing that the policy is a proportionate means of achieving that aim can be very difficult.
a. Just because a scheme has been collectively agreed does not mean it is objectively justified.
b. Employers can potentially invoke cost to justify age discriminatory decisions so long as it is not the only factor and so long as concrete evidence that they were compelled to act in a discriminatory way is produced.
4. Redundancy Schemes – length of service criterion within a redundancy selection matrix is lawful. But enhanced contractual schemes that do not "mirror" the statutory scheme need to be objectively justified – very difficult.
5. Dismissal - it is not age discrimination when an employer dismisses an employee it suspects of having "ageist tendencies".
6. Retirement – we are still awaiting the European Court of Justice (ECJ) decision in the Heyday case in which Age Concern is challenging whether the default retirement age of 65 is even lawful. In the meantime anyone who wants to be singing "So long, farewell, auf wiedersehen, goodbye" to reluctant retirees at 65 needs to double check their birthdays. An employer made the mistake of actually retiring an employee the day before he turned 65. This meant they could not rely upon the default retirement age exemption costing them £36,000. Instead the employer was left singing 'What a difference a day makes"!
Mrs Coleman is probably the most famous employment disability discrimination claimant of 2008. She claimed she had been discriminated against not because of her own disability, but because her son was disabled. In applying the ECJ ruling that associative discrimination is covered by the Equal Treatment Directive, the Tribunal has now found that the Disability Discrimination Act (DDA) is capable of including associated discrimination.
So, the judiciary have now become parliamentary draftsman! The DDA will now need to be amended to insert the words "or a person associated with a disabled person" as held in this case. This could potentially extend protection to carers not only in relation to disability but also to other areas such as age discrimination. Has Europe opened the floodgates for further claims in the UK? Well, the South London Tribunal seems to think so.
We also had the House of Lords in a housing disability discrimination case, turn on its head the well-established "comparator" test for DDA purposes. Previously an employee dismissed for sickness absence arising from a disability would be compared with a person who has not been absent from work rather than, as it is now, a non-disabled person who has also been absent. The new approach makes it more difficult for many disabled employees to show that they have been discriminated against for a reason related to their disability. This will impact:
- In the short term: the focus has shifted to the issue of reasonable adjustments.
- In the long term: legislation will be changed. The Government is currently consulting on having different comparator tests for employment and non-employment disability claims.
Speaking of reasonable adjustments, we have also had cases looking at this issue confirming:
- The duty to make reasonable adjustments is not triggered during a period when the employee is on sick leave.
- An employer can consider wider implications for its whole workforce, not only factors relating to the individual concerned.
In April, changes to the Sex Discrimination Act 1995 widened the definition of harassment, and make employers liable for harassment by third parties in certain situations – a return to the old Bernard Manning case position. It also eliminates the need for a comparator for discrimination on the grounds of pregnancy or maternity bringing the legislation into line with the Webb decision.
We have also had another example of a failure to agree to a flexible working request made following a period of maternity leave, amounting to unlawful sex discrimination, which in turn may amount to a constructive unfair dismissal.
Finally, the ECJ was asked whether a worker who has undergone in-vitro fertilisation (IVF) is a "pregnant worker" when "in vitro" embryos exist, but have not yet been implanted? Unsurprisingly, the Court has held that she is not. Otherwise, a pregnancy could last for nine years rather than nine months! However, if a woman is dismissed due to undergoing IVF then it would amount to an act of discrimination since only women can become pregnant.
Can a public statement amount to direct race discrimination even where there is no individual victim complaining about it? The ECJ says yes. It held that a company's statement in the Belgium media that it would not employ Moroccans was an act of direct discrimination in breach of the EC Race Directive. Recourse in the UK is not currently permitted unless a 'victim' comes forward. However, the Government is currently considering introducing representative actions in discrimination cases which would allow bodies such as trade unions or the Equality and Human Rights Commission (EHRC) to bring such cases in the UK courts.
Any employer who has had to face a 'serial claimant', will welcome the EAT decision confirming that there is no victimisation where discrimination proceedings are brought to 'harass' the employer. An employee dismissed for bringing proceedings was not subjected to victimisation because his dismissal resulted from the manner in which he brought proceedings, rather than the fact of those proceedings. The claimant had brought a number of claims over the years and had five cost orders totaling £6,700 made against him.
Religion & Belief
Religious discrimination cases continue to attract lots of press interest. We have had the high profile cases of the BA cross-wearing employee, the Christian registrar who refused to perform same-sex unions and the hairdresser interviewee who wore a headscarf and won compensation after being turned down for a position. In an example of the old adage that any publicity is good publicity, the hairdressing business involved has reportedly never been busier following the case.
We have also had examples where it is not necessary for the victims of alleged discrimination to themselves possess the particular religion or belief. An employee can suffer unlawful discrimination due to someone else's religious beliefs. In one case a Christian employee of a Christian charity refused to follow an instruction not to promote non-Christian employees. In another, an employee was harassed when he refused to take part in religiously motivated disciplinary action against another employee. Both won their claims.
The EAT has held that those known to be heterosexual are not protected against homophobic 'banter' harassment. A male employee known to be heterosexual, had been subjected to sexual innuendo and homophobic 'banter' when his manager learned that he had attended boarding school and once lived in Brighton. An appeal was heard by the Court of Appeal in October and we are currently awaiting their decision.
Outside the issue of pension rights, this form of discrimination has had a lower profile than other anti-discrimination laws. This has largely been due to the fact that until recently the employee had to show that part-time status was the sole reason for the discriminatory treatment. This has now been overturned bringing part-time workers protection in line with other types of discrimination law, where the discriminatory factor need not be the sole, or even the main, factor influencing the employer. It simply needs to be a material factor.
What amounts to remuneration? This appears to be the maternity question of 2008. We started the year with confirmation that contractual sick pay is remuneration. Accordingly, a woman on maternity leave is not entitled to claim more favourable contractual sick pay for periods when she is ill while on maternity leave.
We then had a change in legislation removing the differing rules for non-cash benefits during additional maternity leave for women with an expected week of childbirth starting on or after 5 October 2008. Employers now have to provide non-cash benefits for the whole 52 week maternity leave period.
What is not clear is what happens to pension contributions, complicated even further when pension contributions are made via a salary sacrifice scheme. Government guidance is that employers only need to make pension contributions for so long as the woman is in receipt of maternity pay. This will remain a grey area, while the period of statutory maternity leave (52 weeks) remains longer than the statutory maternity pay period (39 weeks).
Time off for care of dependants
There has been relatively little case law on this right since it was introduced at the end of 1999. We finally have some EAT guidance where the leave is requested following disruption to child care arrangements.
- How long a period can be taken? The intention behind the leave is to allow the parent breathing space to put in place alternative arrangements. While there is no set length, a period of one or two days is recommended in Government guidance. It is not surprising that the EAT rejected a claim where the employee requested leave for two months
- What does 'necessary' and 'unexpected' mean? Can the right apply where the employee has had advance notice of the disruption? Yes. The EAT confirmed that 'unexpected' does not mean the same as 'sudden' or 'in emergency'. The amount of time between the employee learning of a need to take time off because of a disruption to childcare and actually taking that time off is a relevant factor in determining whether it was 'necessary' for the employee to take that time off. It does not, however, go to deciding whether the disruption was 'unexpected'.
The long running serial of 'who employs the agency worker? Are they employees of the agency, the end-user, or neither?" has finally reached the series finale. The terror that rampaged (ok, the bit of a concern) following the 2004 Court of Appeal Dacas decision, suggesting that implied contract of employment might readily be found between agency workers and end-user companies, has been put to rest.
The beginning of the year saw another important Court of Appeal decision on this issue. In the James v Greenwich decision, the Court of Appeal confirmed that simply because an agency worker had worked for the same end-user for several years does not mean it is likely that an implied contract of employment will be found. The question is one of necessity: is it necessary to imply a contract of employment to give effect to the business reality of the relationship between the worker and the end-user? Outside situations in which the contractual arrangements are a sham, it is now difficult to envisage situations when it is necessary to imply a contract with the end-user.
But as one storyline ends, another begins. The UK has finally agreed to the new Temporary Workers Directive, subject to a 12 week qualifying period applying in the UK. The Directive will provide agency workers with the right to equal treatment in basic working and employment conditions with employees of the end-user. The Government will have until 2011 to introduce the provisions.
Variation of Contract
Employees have been reminded this year of their options if faced with a unilateral variation of contract being imposed. The four distinct choices are:-
- acquiescing in the variation;
- resign and claim constructive dismissal;
- refuse to work under the new terms, and force the employer to take what steps it thinks appropriate; or,
- stand and sue, by working under protest and seeking damages (either for breach, or for unfair dismissal).
What an employee cannot do is combine the options. An employee who agrees to changes 'under protest' but then refused to work under the new terms, can be fairly dismissed. The EAT held that a decision to dismiss in such circumstances was fair as, having agreed (albeit under protest), he could not renege on his agreement - therefore he was refusing to obey lawful and reasonable instructions and could be fairly dismissed.
The Court of Appeal has added a shade of grey to the Acas espoused principle that employers cannot take into account expired warnings in its decision to dismiss. It remains the position that an employer cannot rely upon an expired warning as the principle reason for dismissal. But, once an employer has decided it has grounds for dismissal, it may take into account expired warning in the decision to actually dismiss.
In a scenario where an employer is faced with say 3 employees who all committed the same act of gross misconduct, if the employer before deciding to dismiss any of the employees considers expired warnings and decides to dismiss only the employee who had an expired warning, then they are acting unfairly. But if instead the employer looks at the current misconduct and decides it will dismiss all three employees unless there is a reason not to dismiss a particular employee and then looks at any expired warning and decides to only dismiss the employee with the expired warning (deciding to give the other two a second chance) than it is a fair dismissal. This appears to be a very fine line!
Effective Date of Termination (EDT)
The EDT is an important date for calculating whether an employee has enough continuous employment to bring a particular claim, such as unfair dismissal and also whether their claim has been presented to a tribunal in time.
We have seen a reminder that employers should not let things drift on and on! An employer, who wanted to dismiss a teacher due to capability reasons, suspended him on full pay for three months and then removed him from the payroll. The problem was, the removal from the payroll did not amount to an actual dismissal in the circumstances. The matter was allowed to drift for six months as a compromise agreement was being negotiated. When the employee eventually refused to sign the compromise agreement, they had the one year qualifying service for bringing an unfair dismissal claim!
Also, when an employer sends a letter of dismissal via the post, the EDT will be when the employee actually read the letter, not necessarily when delivered.
Where an employer provides an enhanced pension on retirement through ill-health, it will generally be expected to give consideration to ill health retirement before dismissing for incapacity. When dealing with employees on long-term sick leave, employers should ensure appropriate medical advice is received on relevant issues which include qualification for ill-health retirement.
The current severe economic downturn makes for tough times for all. Redundancies are on many employers' minds and it's easy to trip up without careful planning and implementation.
Enhanced contractual schemes that do not "mirror" the statutory scheme need to be objectively justified and several tribunal cases this year have shown this is going to be difficult to do, even when the scheme has union support.
As part of a redundancy exercise, the employer should consider whether there is alternative employment available for any redundant employee(s). You don't need to create alternative employment, but where suitable alternative posts exist they must be considered. The EAT has now said that employers need to consider whether any "at risk" candidate is suitable for a vacancy before opening the selection process up to other internal or external candidates. Also remember, at risk employees who are on maternity leave have special protection which effectively trumps that of any other employee whose role is redundant at the same time.
On the other hand, an employer may want an employee to take a suitable alternative position. An employee who unreasonably refuses such offer loses their entitlement to a redundancy payment. The EAT this year has stated that the objective suitability of the post is not the only issue - an employee can refuse a suitable post provided they are acting reasonably. An employee may reasonably refuse a suitable alternative, where their view as to its suitability is adversely affected by poor handling of the whole process by the employer. It is for the employer to establish that the employee's refusal is unreasonable.
Transfer of Undertakings Regulations (TUPE)
New points continue to arise with this area of employment law both as a result of "new" and "old" TUPE.
The unasked question since TUPE was introduced under the 1981 regulations, was did it have any application in relation to off-shoring. The EAT has now confirmed that notwithstanding that enforcement may prove difficult, TUPE does potentially apply to a transfer outside the UK (even outside the EU).
We now have the first appellant level guidance on how TUPE 2006 applies to service provision changes. Where a contract is split following a change of service provider, tribunal will look for the link between the employee and the work or activities being performed to ascertain where the transfer lay. Although this is the principle, this may be difficult in practice as one tribunal found. In one case, the tribunal simply found it impossible to trace the link as the service provision change involved a reduction from 17 providers to nine, with the work of those no longer providing services being reorganised and dispersed across the remaining contractors.
Sadly, 2009 promises to bring more insolvencies. Employees do not transfer from an insolvent company under TUPE 2006 where the insolvency has been entered into with a view to liquidating the assets of the company. Existing BERR guidance had suggested that sales by administrators would never fall within this exemption. However, the EAT has recently held that Tribunals will have to determine in each case whether a company has entered administration to promote the survival of the company as a going concern (and therefore does not benefit from the exemption) or to obtain a more advantageous realisation for its creditors (and does benefit). The case implies that on most "pre-pack" administrations (where the administration is entered into with a view to an asset sale already agreed in principle with the buyer), the exemption will apply.
And finally the 2008 Awards…
The nice try award 2008
This goes to a Mr Toon. He had entered into a contract of employment which entitled him to a week's notice if he was dismissed during the first three months of employment, otherwise he was entitled to one month's notice. The employer withdrew its offer of employment before he started and paid him for one week. Mr Toon argued that as he was dismissed before rather than during the first three months of employment he was entitled to one month's notice. Bizarrely the tribunal agreed! It took the EAT to restore the well-known contractual principle that the tribunal should assume that the party being sued would have performed the contract in the way most advantageous to it. In this case, the employer could have chosen to give one week's notice on the first day of the contract. So Mr Toon had already received all that he was entitled to - one week's gross pay. But a nice creative try on the part of Mr Toon.
The red-faced award 2008
With a late entry, this goes to the Judicial Appointments Commission (JAC) for their recent recruitment advert. The advert headed "Can you help put right the wrongs?" goes on to say: "We all know somebody who has been unfairly treated at work, but we often feel helpless to do anything about it. If you are a barrister, solicitor or Fellow of ILEX and have a passion for upholding the rights of workers, then why not consider a move into the Employment Tribunal? The Judicial Appointments Commission is currently looking for 20 Salaried and 34 Fee Paid Chairmen to join the tribunals at this exciting time in its development."
JAC seem to have forgotten that since December last year, employment chairman have been called employment judges and their job has always been to impartially administer justice in accordance with the law rather than biased in favour of upholding workers rights!