Friday, 29 July 2011

Equal Pay

[Thanks to David Campion of EAD Solicitors for preparing this case summary.]

The Court of Appeal has handed down its decision in St Helens and Knowsley NHS Trust v Brownbill, which restates the proposition that for the purposes of equal pay, a distinct term within a Claimant's contract can be less favourable than a comparable, distinct term within a comparator's contract, irrespective of whether the Claimant's contract is, as a whole, more favourable.

Five female hospital workers sought to claim equal pay. Although the Claimants received higher basic hourly pay and, all but one, received higher overall pay than their male comparators, the Claimants all received less pay per hour for weekend work and unsocial hours, in respect of which the Claimants claimed equal pay.

As a preliminary issue, the ET rejected the Claimants' contention that there was a term within their contracts relating to unsocial hours which was less favourable than a similar term in their comparators' contracts. The ET held that in reality the Claimants' enhancements formed part of their normal working hours and basic pay. This decision was overturned by the EAT, with whom the CA agreed, who held that the terms relating to unsocial hours and weekends were discrete and comparable.

The CA held that in line with the House of Lord's decision in Hayward v Cammell Laird Shipbuilders Limited [1988] AC 894, that the terms in the Claimants' contracts were distinct and capable of comparison and therefore should not all be "lumped together". The CA stressed that equal pay is focused on each distinct term relating to remuneration as opposed to the totality of pay received.

Thursday, 28 July 2011

Fiduciary Duties

[Thanks to Kathleen Donnelly of Henderson Chambers for preparing this case summary]

The Court of Appeal has handed down its decision in Philip Towers v Premier Waste Management Limited concerning the fiduciary duties of a company director. The director, Mr Towers, had taken an undisclosed loan of equipment from one of the company's customers. When the matter came to light, the company claimed he was liable to account to the company. Mr Towers argued that the loan was a private arrangement between friends and the value of benefit was negligible (the equipment was old and dilapidated).

Lord Justice Mummery giving the judgment of the Court of Appeal held that:
  • the director's no conflict duty extended to preventing Mr Tower from disloyally depriving the company of the ability to consider whether it objected to the diversion of the opportunity offered to the company;
  • the strict loyalty and no conflict duties were breached on the facts;
  • the absence of evidence that the company would in fact have taken the opportunity or suffered any loss were not relevant.
The judgment also includes dicta of wider application to any appeal concerning the adequacy of reasons: see paragraph 53, "Brevity is a compliment to the judge" and "A judge should not feel obliged to be a legal windbag".

Court of Appeal speaks out on Employment Tribunal system

[Thanks to Laurie Anstis of Boyes Turner for being the first to spot this]

In a fascinating judgment handed down today, the Court of Appeal has delivered a robust, compelling and bold defence of the employment tribunal and judicial system.

Lord Justice Mummery (who is a past president of the EAT) delivered the following comments when dismissing the appeal in Gayle v Sandwell & West Birmingham NHS Trust:-

9. Before I turn to the detailed submissions on Ms Gayle's appeal I should address the topic of procedural justice and efficiency in the ETs. In the final paragraph of the EAT judgment given by Mrs Justice Slade it is said that:-

"33.It is a matter of great regret that so much public money and time has been spent on this matter."

10. I agree. Similar comments have been made in recent public discussions and consultations about the workings of the ET system generally. Some of the criticisms are justified, others need correction and all of them must be seen in their proper perspective.

11. The ETs are under enormous pressure in these difficult economic times. Their caseload has increased by over 50% in one year, which comes as no surprise at a time of high unemployment. The cases have become more complex with the legislative expansion of employment protection since the tribunal system was first established. They take longer to process. It is not proper for me to comment on proposed reforms of substantive employment law. That is a controversial policy area for public debate and Parliamentary action. Procedural efficiency and justice are, however, of direct concern to the judiciary: the courts and the tribunals are equipped with wide discretionary powers to ensure that cases are dealt with justly.

12. One area of debate is about cases of little or no merit, but considerable nuisance value. All are agreed that they should be cleared out of the system as soon as possible. They should not be allowed to take up a disproportionate amount of time in the ET or cause the other party to incur irrecoverable legal costs and loss of valuable working time.

13. As for procedural justice and efficiency generally I would make the following points with particular reference to the EAT's comments on what happened in this case.

14. First, Ms Gayle's litigation has now reached the third level of decision. That is not typical: most employment disputes do not even go one round, because they are settled through the good sense of the parties or thanks to the good offices of ACAS. When they are contested the vast majority of cases only go one round.

15. Secondly, this case is based on events of nearly 5 years ago. Most cases are in fact finally decided at the level of the ET within months, not years, of the relevant events.

16. Thirdly, the hearing of this case in the ET lasted nearly three weeks at the end of 2008 and beginning of 2009. With hindsight it is easy for a person who was not involved in the case to say that a hearing should have been shorter. It is much more difficult to achieve short hearings in practice when one or both parties are determined to take every point of law, evidence and procedure. My point is that most cases in the ET take only a day or two, not weeks as here.

17. Fourthly, the EAT heard the appeal a year later. Most ET decisions are not appealed. Appeals, which are limited to points of law, are as of right, though the preliminary procedure devised in the EAT and streamlined over the years usually sifts out the hopeless points at an early stage and without a contested hearing.

18. Fifthly, an appeal to this court on a point of law may only be brought with permission. A year passed before the appeal was heard in this court. The appeal has to compete for a place in the list with very many other appeals on every kind of case from the whole of England and Wales. Rightly or wrongly many other appeals are treated as having greater priority and there are not enough judges in this court to hear and decide them all expeditiously. The important point is that most employment cases never reach a full court hearing. The hopeless ones are sifted out by a single Lord Justice at the permission stage. The unusual feature of this appeal is that this hearing is the third time in which the case has been judicially considered in this court: permission was refused on a paper application; at the oral hearing of the renewed application via video-link permission to appeal was granted, though coupled with a caution from Lady Justice Smith about the outcome, when she said "Mr Bedford may have a point. I am not convinced that in the end the point will succeed�"; and then there was the hearing of the appeal for a morning before the full court. The appeal focused on one point only based on the significance of a sentence or two in a single, very long, paragraph in an ET judgment of 97 paragraphs.

19. Sixthly, in every case the parties, who both think that they have a good case, are entitled to expect that their case will be dealt with justly. That takes time, care and patience, as well as considerable practical experience and specialist knowledge. It takes much longer than most people begin to appreciate to perform properly the most vital function in the whole civil justice and tribunal system. Establishing the facts soundly in every case at first instance is, in practice, of far greater practical importance than the limited corrective powers exercisable by the appellate courts in the relatively small proportion of cases that reach them. In the ET the issues have to be identified. In a case like this a mass of conflicting evidence is produced. It has to be assimilated, organised, analysed and assessed by the ET. There were nearly a dozen witnesses in this case. The ET then had to listen to competing legal arguments and detailed submissions from the parties. It had to consider and write up the decision with its detailed findings and reasoned conclusions.

20. Seventhly, as for those who complain about the time taken and the legal costs and other expenses and losses incurred, I think that they would want the hearings to be conducted in the interests of justice to both sides. I have seen very few constructive suggestions for practical improvements. If workers are given rights, there must be properly qualified, impartial and independent tribunals to adjudicate on them in accordance with a fair procedure. If workers are not given the necessary means for the just adjudication of their claims, procedures of a more rough and ready non-judicial kind may be used. The alternative procedures would probably not be impartial, independent or just, and are unlikely to do much for public order, social harmony or national prosperity.

21. Eighthly, the ETs continue to make good progress in managing cases efficiently and justly to ensure that the oral hearing concentrates on what really matters without wasting time and money on what does not matter or is only marginally relevant. If the ETs are firm and fair in their management of cases pre-hearing and in the conduct of the hearing the EAT and this court should, wherever legally possible, back up their case management decisions and rulings.

22. Lastly, the parties and their advisers themselves have duties to discharge personal and professional responsibilities in the preparation and presentation of the cases in the tribunals. They must keep a proper sense of proportion in the issues raised for decision, in the selection of legal points worth taking and of relevance in the quantity and quality of the evidence that they need to call. Contrary to the way that some observers see it and the way that some participants do it, justice in the tribunals (and in the courts) is not a war, or a battle, or a game. It is not a talent contest for spotting the winner and awarding a prize: it is (or certainly should be) a reasonable, sensible and civilised way of sorting out disputes that the parties have unfortunately been unable to sort out themselves. In my view, some (though by no means the majority) of the shortcomings identified by critics are not in the system itself, or in the tribunals, or in their practice and procedure, but in the attitudes and approaches of some litigants to the process of reasonable resolution of conflict.

Wednesday, 27 July 2011

Appointing Arbitrators: Is Discrimination allowed?

[Thanks to Simon Oakes of Outer Temple Chambers for providing this case summary]

Is it possible to discriminate on religious grounds in the appointment of arbitrators? Yes, was the unanimous conclusion of the Supreme Court in Jivraj v Hashwani.

The case concerned a failed joint venture; the joint venture agreement contained an arbitration clause. That clause provided that all arbitrators were to be respected Ismailis. One party tried to appoint a non-Ismaili arbitrator, arguing that this provision fell foul of the 2003 Employment Equality (Religion or Belief) Regulations (now covered by the Equality Act 2010) which prevented employers from discriminating on religious grounds.

Although appointing an arbitrator involves the retention of their services, similarly to instructing a solicitor, the Supreme Court held that arbitrators are not 'employed' and therefore are not covered by the Regulations. Merely having a contract to do work is not enough.

The Regulations did not apply here because arbitrators perform an independent role. Applying the principles from the case of Allonby, arbitrators are not employed 'under a contract of work' - they are not in subordination to the person receiving the service, nor under their direction. Rather, they are independent service providers. The Court also doubted whether people like plumbers would be caught by the Regulations, but did not express a decided view.

The Supreme Court also considered the s.7 exception which allows employers to discriminate when being of a particular religion or belief is a 'genuine occupational requirement'. The Court held that the test is not one of 'necessity' but rather, whether the discrimination was legitimate and justified.

Paid Holiday for Sick Workers

[Thanks to Lionel Stride of Temple Garden Chambers for preparing this case summary]

The EAT (Bean J) has handed down its decision inNHS Leeds v Larner, which is authority for the proposition that the entitlement to paid annual leave of a worker absent for the whole of a pay year through sickness does not depend on the worker submitting a request for such leave before the end of the relevant pay year.

The appellant, Mrs Larner, was signed off sick for the whole of the pay year 2009/2010. She was subsequently dismissed on grounds of incapability due to ill-health but her employer refused to make any payment in respect of her untaken annual leave on grounds that no formal request for leave had been made. The main issue on appeal was whether the failure to make such a request under Regulation 15(1) of the Working Time Regulations 1998 (as amended) precluded the normal entitlement to payment in lieu of annual leave following dismissal.

The EAT held that the situation was analogous to the CJEU decision inPereda v Madrid Movilidad SA, where it was held that an employee who had been injured during a period of booked annual leave, and therefore off sick, remained entitled to a replacement period of leave on his return. Similarly, as Mrs Larson had been unable to take her annual leave by reason of sickness, she retained her "right to enjoy a period of relaxation and leisure", or payment in lieu on dismissal, in the following year.

Interestingly, the EAT stated, obiter, that the position might be different in the case of a fit employee who fails to make any request for leave during the whole of a pay year. The reason being that such an employee would have had an opportunity to exercise his/her right. Expect more cases too follow!

Is it unlawful for an employer to deduct a bonus he doesn't owe to an employee?

Is it unlawful for an employer to deduct a bonus he doesn't owe to an employee?

[Thanks to Simon Oakes of Outer Temple Chambers for providing this case summary]

Is it unlawful for an employer to deduct a bonus he doesn't owe to an employee? No (rather obviously), said the EAT in Hellewell v AXA Services .

Before even beginning to consider whether deductions from employees' wages are authorised by statute, or contractually agreed by the parties (ss.13(1) and (2) Employment Rights Act 1996), Tribunals will first have to decide whether the claimant had a legal entitlement to such a payment.

In this case, the claimant employees argued that their employers were contractually obliged to give them bonus payments. The EAT disagreed, because of the wording of the contractual provisions on which the employees tried to rely. First, the relevant provision did not oblige the employers to pay a bonus, but rather provided for the conditions to be met before an employee would be considered for a bonus. Secondly, the contract relieved the employers of any obligation to pay bonuses where, as was the case here, employees had committed gross misconduct.

So, if an employer doesn't have to pay, well, an employer doesn't have to pay.

Supreme Court: Employment Status

If it looks like an employee and quacks like an employee, it's probably not a self-employed subcontractor. So say the Supreme Court in the long awaited decision of Autoclenz Ltd v Belcher.

The case is concerned with whether an individual, who is expressly described as a self-employed contractor in his contract, is really a 'worker' (and thus entitled to certain rights including minimum wage and paid holiday) due to the true nature of the relationship between the parties. In fact, in this case, the Supreme Court also upheld a finding that they were 'employees', but the claims for minimum wage and holiday only required they prove they were 'workers'.

Twenty car valeters signed contracts describing themselves as self-employed subcontractors. They paid their own tax and had to purchase their own insurance, uniforms and materials (the latter two of which they could do from Autoclenz). Their contracts stated they were under no obligation to attend work, although the tribunal found as a fact - in practice - they were expected to attend work and provide services personally. The tribunal also found that they went into the contracts with their eyes open about being self-employed.

So what trumped? The written contract, or the reality?

The Supreme Court held the real situation trumped what was written in the contract. It was not necessary for the valeters to prove a 'sham', in the sense that the parties intended to mislead HMRC. The fact that the employer had written a 'substitution clause' into the contracts did not reflect the reality, as everyone expected the valeters to carry out their duties personally.

The question is: what is the true agreement between the parties? That might be what is written down, but is not necessarily so

Thursday, 21 July 2011

TUPE – Service Provision Changeovers

[Thanks to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary]

The EAT (Bean J) has handed down its decision in Nottinghamshire Healthcare NHS Trust v Hamshaw and others (EAT/0037/11), which is authority for the proposition that there cannot be a relevant transfer under TUPE, either by way of a transfer of an undertaking under reg 3(1)(a), or a service provision change under reg 3(1)(b), where the services provided to a client are not fundamentally or essentially the same as they were before the change of provider.

In this case Nottinghamshire Healthcare NHS Trust ran a care home. This was then closed and residents re-housed into homes of their own. Their care was transferred to two new independent providers. A number of care workers in the former home were offered jobs with the new providers. The Trust considered TUPE applied. The providers said it did not.

The EAT (upholding the employment tribunal decision) held there was no TUPE transfer. There was neither a transfer of an economic entity retaining its identity (reg 3(1)(a)) nor a service provision change (reg 3(1)(b)). Under the new arrangements former residents were to live in their own flat. The care provided was different. The individual care user was to be helped autonomously to undertake domestic tasks and all the paraphernalia of a fully staffed care home was not available. The economic entity had lost its identity. And even the seemingly wider definition of a relevant transfer by way of service provision change could not apply where the activity carried on by the new provider was not "fundamentally" or "essentially" (per Judge Burke QC in Metropolitan Resources Ltd v Churchill Dulwich Ltd [2009] IRLR 700) the same as the service provided before the change.

Compulsory Retirement Age: ECJ Judgment

'Confusing' is the word that comes to mind when reading today's ECJ decision in Fuchs v Land Hessen. If you want three words, 'verging on incomprehensible' work quite well.

The ECJ was asked to decide a number of questions on when a compulsory retirement age is justified. It seems to hold (para 50) that a retirement age is potentially justified to encourage the promotion of a younger workforce. Even more controversially, it suggested it is legitimate to retire older workers to prevent possible disputes concerning employees' fitness to work beyond a certain age.

The ECJ also seems to adopt a test of whether it is "reasonable" to adopt a retirement age (paras 60 and 83), rather than whether it is proportionate to do so. Reasonable and proportionate, whilst similar, are not quite the same thing.

On the facts, the ECJ held that a German law requiring state prosecutors to retire at 65 (albeit subject to some exceptions) on a generous pension was justified.

A question which was referred to the ECJ was whether cost alone can justify discrimination (in the UK, we currently have the controversial 'costs plus' justification). Unfortunately, the ECJ did not deal with this point.

Payment For Overtime

[Thanks to Keira Gore of Outer Temple Chambers for preparing this case summary]

The Court of Appeal has handed down its decision in Driver v Air India Ltd holding that where a contractual payment is not specified the law implies a reasonable sum.

The principal issue in this case was whether Mr Driver was entitled to be paid for ad hoc overtime by Air India under a contract of employment. The contract provided that the provisions regarding overtime payments were "set out in notices and circulars issued by Air India from time to time".

No such notices or circulars were issued, but Mr Driver was paid for overtime in the past. Air India argued that in the absence of any notices or circulars there was no contractual right to payment for overtime. Air India could not explain the previous payments.

Lord Justice Rix, giving judgment in favour of Mr Driver, found that where a contractual payment is not specified the law implies a reasonable sum. Further, although a contract is not to be construed by subsequent conduct, the previous payment of overtime was highly relevant.

Monday, 18 July 2011

Constructive Dismissal

[Thanks to Ed McFarlane of Deminos HR for preparing this case summary]

The EAT (Lady Smith) has handed down its decision in McBridge v Falkirk Football Club, which is authority for the propositions that:

(i) the duty not to act in a manner likely to undermine trust and confidence - the well-known 'Malik' test is judged from an objective standpoint, so an employer cannot rely upon factors in a particular industry, in this case, of 'an autocratic style of management' being 'the norm in football', as a defence to a breach of the implied term of trust and confidence.

(ii) a term ought not to be implied into a contract of employment which is imprecise, unnecessary or not obvious.

The Claimant, the Club's U19 team manager, resigned after his right to pick his team was arbitrarily removed after an Academy Director was appointed. At the employment tribunal, his claim for Constructive Dismissal failed; the tribunal, having implied into the Claimant's contract a term that he would relinquish his right to pick his team once an Academy Director was appointed, found no breach by the Club.

The EAT overturned the employment tribunal's decision, substituting a finding of Constructive Unfair Dismissal, sending off the claim to a fresh tribunal for remedy. The EAT criticised the employment tribunal for implying a term in the Claimant's contract which contradicted an express term, and in any case was neither necessary, obvious nor precise, and gave useful guidance on when to imply terms at paragraphs 54 and 55.

This judgment will give succour to beleaguered football managers, with the EAT referring with approval to an aspect of a Premier League arbitration panel ruling in Keegan v Newcastle United.

Thursday, 14 July 2011

Duty to Consider Request to Work Beyond Retirement

[Thanks to Naomi Ling of Outer Temple Chambers for preparing this case summary]

In the case of Ayodele v Compass Group, the EAT has held that a request to remain in employment after the age of 65 must be considered 'in good faith'. An employer may not rely on a blanket policy of requiring employees to retire at the age of 65; even if such a policy is in place (which is in itself permissible), it must approach requests to be allowed to continue working with an open mind.

Mr Ayodele was informed by his employer of its intention to retire him at age 65 and his entitlement to request an extension. He did so, but his request was refused without reasons, as was his appeal. He brought a claim for unfair dismissal and age discrimination. The employment tribunal upheld the Claimant's claim that he had been unfairly dismissed on the basis that the Respondent had not given genuine consideration to the request and was therefore in breach of their obligations under paragraphs 7 and 8 of Schedule 6 to the Employment Equality (Age) Regulations 2006.

Unusually, at first instance the Claimant gave evidence that there had been substantial discussion of his request, whereas the Respondent's witness asserted that he had already decided that the policy would apply rigidly and the meetings were only a formality. On the basis of the Respondent's account, the ET and EAT held that a duty to 'consider' a request necessarily connoted an obligation to consider in good faith, in the sense that an employer must genuinely consider whether it should be accepted. However, the EAT noted that it will usually be very difficult to show bad faith. No inference can be drawn from the refusal of a request, nor from the fact that a policy exists of not agreeing to such requests.

Wednesday, 13 July 2011

Supreme Court: National Security Proceedings in ETs

[Thanks to Nicholas Hill of Outer Temple Chambers for preparing this case summary]

The Supreme Court has handed down its decision in Home Office v Tariq, holding that the use of a closed material procedure in employment tribunal proceedings is compatible with Article 6 of the European Convention on Human Rights and EU Law.

Mr Tariq was suspended from his job as an immigration officer with the Home Office after the arrest of his brother and cousin as part of a major counter-terrorism investigation. There was no suggestion that Mr Tariq had been involved in any terrorism. Mr Tariq commenced proceedings in the Employment Tribunal for direct and indirect discrimination on grounds of race and religion. The Home Office denied the claims and made a successful application for use of a closed material procedure. The procedure excludes a claimant and his representative from certain aspects of the proceedings on grounds of national security. The claimant's interests are represented by a special advocate.

The Court of Appeal dismissed Mr Tariq's appeal but declared that Article 6 required Mr Tariq to be provided with the gist of the allegations made against him.

The Home Office appealed against the declaration and Mr Tariq cross-appealed against the conclusion that a closed material procedure was permissible.

The Supreme Court unanimously dismissed Mr Tariq's cross-appeal and by a majority of 8-1 allowed the Home Office's appeal.

It is a basic principle of EU law that national law should provide effective legal protection of EU law rights. In considering whether a closed material procedure provides effective legal protection the courts should look for guidance in the case-law of the ECHR The ECHR has established that demands of national security may necessitate a system for determining complaints under which a claimant is, for reasons of national security, unable to know the secret material by reference to which his complaint is determined. The system was necessary and contained sufficient safeguards in the form of special advocates.

Article 6 provides the right to a fair trial. The ECHR has held that that where the liberty of the subject is involved the provision of a gist is required by Article 6 but this case did not involve the liberty of the subject. The procedure would not impair the very essence of the right to a fair trial because the claim would be determined by an independent and impartial tribunal and the disadvantages that the procedure gives rise to would as far as possible be minimised.

Equal Pay, TUPE Red-circling, and Genuine Material Factors

The EAT (Lady Smith presiding) has held that red-circling of an individual's pay following a TUPE transfer will normally be a genuine material factor justifying a disparity in pay between a man and a woman.

That much is uncontroversial. But the EAT also held that an employer is under no duty to 'narrow the pay gap' after the transfer, for example by freezing the salary of the transferred employee(s) until others have caught up and equalised. Provided the decision to award everyone pay rises (and thus perpetuate the pay gap) is not tainted by sex, the employer will still be able to establish a defence to an equal pay claim.

This is a nice, clear judgment on a tricky area of the law. Paragraphs 37-39 are the ones to read.

Skills Development Scotland v Buchanan.

Striking Out Unfair Dismissal Claims

The EAT (Lady Smith presiding) has suggested, in Reilly v Tayside Public Transport, that an employment judge should not strike out unfair dismissal claims as having no reasonable prospect of success, where the principal issue is whether dismissal fell within the range of reasonable responses (see para 12 of the judgment).

Her reasoning was that sometimes wing members outvote a judge on the substantive hearing, and so it is wrong for the judge to pre-empt the possibility of that happening by striking out the claim before it reaches the substantive hearing.

This is curious reasoning. If the rules provide the power for a judge, sitting alone, to declare a case has no reasonable prospect of success, then why should that judge be prevented from exercising that power? Judges in criminal cases routinely find there is no case to answer, when in theory a jury might think differently. The whole point of a peremptory assessment of the merits of a case is that the judge has to be convinced it has no reasonable prospect of success in front of a 3-person panel. If he thinks there is a chance wing members might disagree with him, the case will not be struck out.

Perhaps more pertinently, the EAT also held that it is dangerous for judges to embark on assessing the evidence at a strike out pre-hearing review. Lady Smith’s comments at paragraphs 10 and 11 are salutory and worth reading.

Thursday, 7 July 2011

Employment Status: Profit Share Partners

[Thanks to Catriona Stirling of Cloisters Chambers for preparing this case summary]

The EAT (Langstaff J) has handed down its decision in Williamson & Soden Solicitors v Briars, which is authority for the proposition that agreement by an employee of a firm to be remunerated by way of profit share, does not necessarily make him a partner. The question to be determined is whether he comes within the definition of employee, which principally involves consideration of the question of control, in the sense of distinguishing between "those who are bosses and those who are bossed".

Mr Briars was originally an employee. He later agreed to be remunerated by "profit share". The ET held that he remained an employee. In doing so, it did not refer expressly to the Partnership Act 1890 and did not ask at the outset whether the definition given in that Act for partnership, which was "carrying on a business in common with a view of profit", had been satisfied. The Respondent claimed that the tribunal had erred in law in failing to do so.

The EAT dismissed the appeal. The question was whether the solicitor was an employee, which was a question of fact to be determined by applying the appropriate legal tests. It was not a rule of law that the tribunal must have regard to the definition given in the Act or refer expressly to the Act in so doing.

Wednesday, 6 July 2011

Striking Out Unfair Dismissal Claims

[Thanks to Robert Dickason of Outer Temple Chambers for preparing this case summary]

The EAT (HHJ Richardson) has handed down its decision in Lockey v East North Homes Leeds, which is authority for the proposition that unfair dismissal and breach of contract claims should not be struck out for having no reasonable prospect of success when it is arguable that part of the employer's reasoning for finding gross misconduct was flawed.

Mr Lockey had been dismissed for gross misconduct, having failed to carry out a management instruction, sworn at a senior member of staff, and behaved unacceptably in front of a client. The Tribunal accepted at the PHR that the third of those reasons was arguably flawed because the employer had not interviewed the client.

At that point, held the EAT, the tribunal should have allowed the claims to proceed. In order to determine whether dismissal for gross misconduct was unfair in the circumstances, it would be necessary to hear evidence as to whether the employer might reasonably have dismissed on the first two grounds only, particularly when they were factually disputed and might not, in the circumstances, amount to gross misconduct.

Tuesday, 5 July 2011

Dismissals for Refusing Pay Cut

[Thanks to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary]

The EAT (Langstaff J) has handed down its decision in Garside & Laycock v Booth , which is authority for the proposition that the question whether a dismissal is fair for "some other substantial reason", where the dismissal is for failure to accept wage-cutting proposals, is whether it was reasonable for the employer to dismiss, rather than asking whether it was reasonable for the employee to accept lesser terms offered to him.

In this case the employer needed to cut costs and increase profit. It asked employees to accept a pay reduction of 5%. Mr Booth refused and was dismissed from a job he had held for the previous seven years. Out of 77 employees he was the only one, by the time of dismissal, who held out against the change. The employment tribunal found the dismissal unfair.

But the EAT held the tribunal had gone wrong in a number of areas. Firstly, it was incorrect to say the test was that an employer may only offer less favourable terms if the very survival of the business depended on it. Catamaran Cruisers Ltd v Williams [1994] IRLR 386, on which the tribunal purported to rely, was not authority for such a burdensome requirement. Nor was it correct to assess the reasonableness of the employer's decision by asking what was reasonable for the employee to do. The test was whether the employer, having established "some other substantial reason", acted reasonably.

Monday, 4 July 2011

Inadvertent Conversation About Sexual Orientation

[Thanks to Sarah Russell of Ventura for preparing this case summary]

The Court of Appeal has handed down its decision in Grant v HM Land Registry, which is authority for the proposition that idle conversation about someone being gay, when he has already made it public, will not, without more, constitute discrimination.

The claimant was gay. He had been 'out' at Lytham Land Registry office. On transferring to the Coventry office he did not reveal his homosexuality. His new manager mentioned his sexual orientation to a colleague at Coventry. The Court of Appeal found that as his manager had no ill purpose, then there could be no direct discrimination or harassment.

Elias LJ emphasised that even if the claimant was upset by the disclosure, the effect did not amount to harassment, and tribunals ought not to allow trivial acts to be caught by the concept. 'Outing' someone could, however, be an act of direct discrimination and harassment in other circumstances.

Implied Terms

[Thanks to Dr John McMullen of Wrigleys Solicitors LLP for providing this case summary]

The EAT (HHJ Pugsley) has handed down its decision in Tasneem v Dudley Hospitals, which is authority for the proposition that there was no implied term in the claimant's contract of employment that he be informed of the opportunity of a new consultant's contract on offer in the NHS.

The Claimant was a locum consultant. In 2006, for quality reasons, the NHS Trust increased the number of substantive consultants over locums. The Claimant did not succeed in getting a substantive post and was dismissed from his locum post. The employment tribunal found this was for some other substantial reason and was fair. The claimant made various claims including breach of contract, the latter based on earlier events.

In September 2003 the NHS had sent a letter to NHS employers requiring that they give all consultants the opportunity of intimating by 31 October whether they wished to commit to a new contract. As the Claimant was not on the email system this was not copied to him. But the tribunal found that he was well aware of it and could have applied, but for his own reasons did not reply until after the deadline.

The EAT held that the Trust was not in breach of contract in not expressly informing him of the new contract. Scally v Southern Health and Social Services Board [1999] IRLR 215 could be distinguished. There it was found an employee cannot reasonably be expected to be aware of a change in pension arrangements. In this case the Claimant could reasonably be expected to know about the new contract opportunity and, as a matter of fact, did know.

The EAT also agreed the employment tribunal was right to dismiss the Claimant's claims for less favourable treatment on ground of fixed term status, race discrimination and unfair dismissal.