Case Law Review 2015

Publication date

Wednesday, November 18, 2015

Approval date

By Lynda Macdonald, freelance employment law trainer, consultant and author.

INTRODUCTION

This feature provides a summary of the most important employment law developments in the courts and tribunals through late 2014 and 2015. The year has seen some significant case decisions.

EMPLOYMENT STATUS

The question of employment status is important because it determines what employment rights an individual has. While “employees” (those employed under contracts of employment) enjoy the full range of employment rights, “workers” (those engaged on contracts to provide their services personally other than directly to a client or customer) have more limited rights. Self-employed individuals are not, in general, protected except in limited circumstances by the anti-discrimination provisions of the Equality Act 2010.

In Pimlico Plumbers v Smith EAT 0495/12, an employment tribunal was tasked with determining whether Mr Smith, a plumber, had been an employee, a worker or self-employed. Mr Smith’s written agreement labelled him as a “self-employed operative”.

The tribunal reviewed all the circumstances of Mr Smith’s working arrangements. On the one hand, there was no obligation on the company he worked for to provide him with any work; he provided his own tools, equipment and materials; he was responsible for his own tax and insurance cover and he was VAT registered. Additionally, he could choose which jobs he took on and, if a client took more than six months to pay for the work he had done, the company did not have to pay him.

On the other hand, he was required to work a minimum of 40 hours per week (although he could choose his hours); he was obliged to provide his services personally; he had to wear the company’s uniform and the van he drove sported the company logo.

The tribunal decided, first, that Mr Smith was not an employee, principally because there was no obligation on the company to provide him with any work, but also taking into account that the working arrangements meant that he bore considerable financial risk. The tribunal went on to decide, however, that he was a worker due to the obligation on him to provide his services personally, and also taking into account that he had to work for a minimum number of hours each week. This decision was upheld on appeal to the EAT.

JURISDICTION

Neither the Employment Rights Act 1996 nor the Equality Act 2010 contains any provision regarding the jurisdiction of employment tribunals to deal with claims from individuals who work overseas. This matter is, therefore, left to the courts to determine. The case of Fuller v United Healthcare Services Inc EAT 0464/13 is one in a line of such cases. Guidance provided previously by the Supreme Court (in Ravat v Halliburton Manufacturing and Services Ltd (Scotland) [2012] UKSC 1) provides that, if an individual’s employment relationship has a sufficiently strong connection with Britain, he or she may be able to bring a claim in a British employment tribunal.

In Fuller, the EAT held that an American citizen employed by a US company and paid in US dollars did not have a sufficient connection to the UK for a British employment tribunal to have jurisdiction to hear his complaints (for sexual orientation discrimination and unfair dismissal). This was despite the fact that the claimant had, during the final year of his employment, spent about half his time on an international assignment working in the UK and living in accommodation provided by his employer in London.

CONTRACTS OF EMPLOYMENT

For an employer to have the authority to change an employee’s contractual terms, there must either be agreement to the change at the time, or a pre-existing flexibility clause in the employee’s contract that clearly expresses the specific changes that the employer may make.

A stark reminder of this was issued by the EAT in Norman and anor v National Audit Office EAT 0276/14, a case in which the employees’ letters of appointment stated that their terms and conditions were “subject to amendment”. The phrase “subject to amendment”, the EAT held, “came nowhere near” being a clear and unambiguous right for the employer to vary the employees’ contracts without their consent.

In a case involving similar principles (Hart v St Mary’s School (Colchester) Ltd EAT 0305/14), the EAT ruled that the employer (a school) had acted in breach of contract when it imposed a new work pattern on a part-time teacher, requiring her to spread her hours over a five-day week rather than over only three days. The teacher’s contract stated that the “fractional part” of her contract “may be subject to variation depending upon the requirements of the school timetable”. The EAT held that this wording was insufficiently clear to represent an authority to make such unilateral changes to the teacher’s working hours as the school had done.

In the thought-provoking case of Elliston v Glencore Services (UK) Ltd [2014] EWHC 3431, the High Court ruled that the act of informing an employee of a contractual variation cannot amount to an actual variation of the contract. The claimant, a company secretary, had a contract under which he was entitled to be paid a sum of £418,774 in the event of his employment being terminated as a result of a change of control of the company. Subsequently, in the run-up to a planned merger, he was awarded a (non-contractual) “transaction bonus” of £487,925. When the merger took place some five months later, he received notice to terminate his employment in a letter which stated that he waived the right to receive any termination payment on account of his having received the transaction bonus. He did not sign the letter but subsequently argued in court that he was contractually entitled to the termination payment. The employer asserted that he had been informed at the time of the transaction bonus that he would not be entitled to the termination payment as well because it would be inappropriate for him to be allowed to “double-dip”.

The High Court ruled that the company could “inform” the employee of whatever it liked, but unless the employee had agreed to an offer to vary his contract, “informing” was a “futile waste of time”. The transaction bonus had been non-contractual and no conditions had been attached to its payment. The employee had not agreed to any variation to his contract and it followed that he was entitled to the contractual termination payment.

In Williams v Leeds United Football Club [2015] EWHC 376, the High Court held that an employer (a football club) did not breach an employee’s contract by refusing to pay for his 12-month redundancy notice period, having discovered that he had — some five years earlier — forwarded pornographic images to friends through the employer’s email system. Following the discovery, the employer dismissed the employee summarily for gross misconduct. He brought a wrongful dismissal claim seeking damages equivalent to the salary and other contractual benefits he would have been paid in respect of the 12-month redundancy notice period to which he would have been entitled if he had not been summarily dismissed.

This case shows that summary dismissal may be justified no matter how much time has passed between the employee’s gross misconduct and its discovery — provided the employer was genuinely unaware of the misconduct during the intervening period.

WORKING TIME

Working Time v Rest Periods

Under the Working Time Regulations 1998, workers are entitled to a daily rest period of not less than 11 consecutive hours. The case of Edwards and anor v Encirc Ltd EAT 0367/14 concerned whether time spent by night-shift workers at daytime union meetings was “working time” (thus interrupting their rest periods). The relevant wording, contained in reg 2(1) of the Regulations, states that working time is “any period during which the worker is working, at his employer’s disposal and carrying out his activities or duties”.

One of the claimants was a trade union shop steward and the other a health and safety representative. Each had attended a meeting during daytime hours (a trade union meeting and a health and safety meeting respectively). In both cases, the time between the end of the meeting and the start of the next night shift was six hours. Both brought claims to tribunal asserting that they had been denied their right to a proper rest period.

The tribunal took the view that the time the employees spent at the meetings was not working time. This was because (the tribunal thought) the employees were not under the control or direction of the employer while at the meetings, and they were not carrying out their contractual job duties.

The EAT disagreed, however, and found, first, that there is no need for a worker to be under the employer’s control and direction in order for him or her to be “at his or her employer’s disposal”. Second, the EAT ruled that it is not correct to interpret the words “carrying out his or her activities or duties” as referring only to the employee’s contractual duties. Time spent by an employee can be working time if the activities in which the employee is engaged arise from the employment relationship, are for the benefit of the employer, are done with the employer’s knowledge and are done at an approved time and in an approved manner.

In Federación de Servicios Privados del Sindicato Comisiones Obreras v Tyco Integrated Security SL and anor [2015] CJEU C 266/14, the Court of Justice of the European Union (CJEU) ruled that time spent by mobile workers who have no fixed place of work travelling between their homes and their first and last customers of the day must be counted towards the 48-hour week. Such time cannot be classed as rest periods.

Annual Leave

Previous court judgments have clearly established that when an employee has been unable, due to sickness, to take his or her full entitlement of statutory annual leave, the employer must permit the employee to carry over up to four weeks of the untaken leave to the following holiday year.

Employers may take some comfort from the case of Plumb v Duncan Print Group Ltd EAT 0071/15. The EAT ruled that, in light of EU law and the case law of the CJEU, any holiday leave that has been carried over as a result of sickness absence must be taken within a period of (at most) 18 months from the end of the holiday year in which the leave accrued — otherwise it is lost. The law does not require employers to allow carry-over without limit.

The EAT also ruled in this case that an employee, in order to benefit from the right to carry the leave over, does not have to show that he or she was unable due to his or her medical condition to take annual leave during his or her absence from work. The right arises simply by dint of the fact that the employee has been absent due to sickness and has chosen not to take annual leave during the period of absence (if that option was open to him or her). This case may be appealed to the Court of Appeal.

Holiday Pay

Last year we reported the case of Lock v British Gas Trading [2013] ECJ Case C-539/12 in which the CJEU ruled that a sales consultant was entitled to have sales commission included within his holiday pay.

Three cases heard together by the EAT (Bear Scotland Ltd v Fulton [2014]; Hertel (UK) Ltd v Woods and Amec Group Ltd v Law EATS 0047/13) concerned the question of whether overtime payments should be incorporated into holiday pay. The overtime the claimants worked (on a regular basis) was “non-guaranteed”, ie the employer was not obliged to offer overtime, but the employees had to work it if they were asked to do so.

The EAT ruled that non-guaranteed overtime must be factored into holiday pay provided that is a regular and permanent feature of the employment, ie paid for a sufficient period of time so as to be part of the employee’s “normal remuneration”.

The EAT did not address the position with regard to voluntary overtime, ie overtime which the employer is not obliged to offer and which the employee (if asked) is not obliged to work. Since then, however, the Northern Ireland Court of Appeal has ruled (in Patterson v Castlereagh Borough Council [2015] NICA 47) that there is no reason in principle why voluntary overtime should not be included in the calculation of holiday pay — provided it is a regular feature of the person’s employment.

MATERNITY RIGHTS

A woman on maternity leave whose job is redundant has the right to be offered a suitable available post in preference to any employees who are not on maternity leave (or adoption leave, additional paternity leave or shared parental leave). This provision was emphasised in the case of Sefton Borough Council v Wainwright EAT 0168/14.

As part of a cost-saving restructuring exercise, the Council had decided to merge two equally-graded posts into a single new post. One of the existing posts was occupied by a man and the other by Ms Wainwright who was on maternity leave.

Both employees were interviewed for the new post and it was accepted that both were qualified for the role. However, the Council judged that the man was the better candidate and so appointed him. When Ms Wainwright was subsequently made redundant, she complained to an employment tribunal that her redundancy dismissal was automatically unfair on account of the Council’s breach of its duty to offer her an available suitable post.

It was accepted that the new post was “suitable” for Ms Wainwright. The EAT ruled that the Council should have appointed her to it without requiring her to compete, notwithstanding that management viewed her male colleague as the better candidate. Ms Wainwright’s redundancy dismissal was, therefore, automatically unfair.

DISCRIMINATION

The CJEU has delivered a controversial judgment which could mean that the race discrimination provisions of the Equality Act 2010 are not fully compliant with EU law. The case of CHEZ Razpredelenie Bulgaria AD v Komisia za Zashtita ot Diskriminatsia ECJ Case C-83/14 was not an employment case, but the judgment is relevant to the employment field. The case introduces the possibility of a claim for indirect discrimination by association, which is not permitted under the Equality Act 2010 — discrimination by association is only possible where the claim is one for direct discrimination or harassment.

The claimant, Ms Nikolova, ran a grocer’s shop in a district in Dupnitsa in Bulgaria, which was inhabited predominantly by people of Roma ethnicity — although she, herself, was not Roma. The respondent company, who was the electricity supplier, adopted the policy of placing electricity meters at a height of around 6–7m in that district whereas elsewhere it was usual for the meters to be placed at around 1.7m. The reason for placing the meters at a greater height was that there had been a large number of cases of meter tampering in the particular district. As a result of the height of the meters, the residents were unable to check their electricity usage.

Ms Nikolova brought legal proceedings claiming that the company’s practice had a disproportionate adverse impact on Roma people, and, even though she herself was not Roma, that she was equally disadvantaged as her shop was based in the district where the practice was applied. The case was referred to the CJEU.

The CJEU agreed that Ms Nikolova had suffered a particular disadvantage on the basis of Roma origin even though she herself was not Roma. The policy adopted by the respondent company had an adverse effect not only on the Roma people who lived in the particular district, but also on people of other ethnic backgrounds who lived there. The CJEU observed that the fact that there were people of ethnic backgrounds other than Roma living in the district in question did not preclude the conclusion that the policy was applied because most of the people living there were Roma.

This case has considerable implications for UK law. Under the Equality Act 2010, an individual can only claim indirect race discrimination if he or she can show, first, that a provision, criterion or practice applied by his or her employer has a disproportionate adverse impact on a particular racial or ethnic group — and second, that he or she is a member of that group and has suffered that disadvantage. This case suggests that someone who is not a member of the racial group that is disadvantaged can claim indirect discrimination because of an “association” with that group (provided he or she has suffered the particular disadvantage).

In another interesting development to the scope of discrimination legislation, an employment tribunal ruled in Garry Abrams Ltd (GAL) v EAD Solicitors LLP and others (ET/2402068/14 and 2402069/14) that it has jurisdiction to hear a claim for discrimination brought by a limited company (which had been set up by Mr Abrams). The claim arose when EAD Solicitors terminated its contract with GAL when Mr Abrams reached age 62. The claim was one for direct associative age discrimination founded on the basis that GAL suffered detriment because of Mr Abrams’ age.

The EAT subsequently upheld the tribunal’s decision that the claim could proceed, stating that: “There is no reason in principle why an individual is any differently placed from a corporate body to complain over adverse treatment which he has suffered because of the protected characteristic of a third party”. The EAT also noted that the wording of the relevant provisions in the Equality Act 2010, (s.13(1)) refers to discrimination “against another … because of a protected characteristic” and there is no stated requirement in the Act for the “other” to be an individual person.

Sex Discrimination

Employers who pay female employees on maternity leave more than the prescribed rate of statutory maternity pay during some or all of the maternity leave period may wish to consider granting employees on paternity leave and/or shared parental leave equivalent benefits. In Shuter v Ford Motor Co Ltd ET Case No. 3203504/13, an employment tribunal ruled that a policy of providing full pay to women on maternity leave (but not to men on additional paternity leave) put men as a group, and the claimant as an individual, at a disadvantage. The claim for sex discrimination failed only because the indirectly discriminatory effect was justified in the particular circumstances. The employer was able to demonstrate that the policy was appropriate and necessary with a view to achieving the legitimate aim of recruiting and retaining women in a male-dominated working environment.

It is, nevertheless, possible that a claim for indirect sex discrimination in similar circumstances could succeed. Under the new system of shared parental leave, men and women can share up to 52 weeks’ leave. Although the Government has stated that it is not a legal requirement for employers to introduce enhancements to statutory shared parental pay for employees who take advantage of the new leave scheme, this could be challenged. A man could potentially argue that a policy of granting enhanced benefits to women on maternity leave but not to men or women on shared parental leave places more men than women at a disadvantage — because women would have the choice either to remain on maternity leave (with enhanced benefits) or switch to shared parental leave (without enhanced benefits) while men would only have the option to take shared parental leave (without enhanced benefits). Thus, a claim for indirect sex discrimination could potentially be established on the basis of disproportionate impact.

If this occurred, the employer would need to have objective justification for not conferring enhanced benefits on employees taking shared parental leave where female employees on maternity leave were granted such benefits. In the Shuter case, the justification was based on the fact that the employer had a very low proportion of female employees and had proper reasons for wishing to encourage the recruitment and retention of women in order to increase that proportion. That justification would not be available to employers whose workforce consists of roughly the same numbers of men and women.

Race Discrimination

The race provisions of the Equality Act 2010 protect employees against discrimination because of colour, nationality, ethnic origins and national origins. Caste is not included as a protected characteristic under the Act — although the Government is proposing to amend the Act so as to include it.

In Chandhok v Tirkey EAT 0190/14, the EAT judged that the definition of “ethnic origins” in the Equality Act 2010 is wide enough to include elements of caste identity, observing that “there is a close link between descent and caste”. Previous case law provides authority for the proposition that discrimination by reason of descent is unlawful. Ms Tirkey’s claim was allowed to proceed to a full hearing.

This decision does not mean that discrimination on the grounds of caste is automatically to be regarded as unlawful race discrimination. However, an individual who has been discriminated against on caste grounds may, depending on the circumstances, be protected under the Equality Act 2010, particularly if his or her descent can be considered to be part of his or her ethnic origins.

In a potentially significant decision, the Court of Appeal has ruled in Home Office (UK Border Agency) v Essop and others [2015] EWCA Civ 609 that employees claiming indirect discrimination must show the reason why they were disadvantaged by a provision, criterion or practice applied by the employer.

A claim was brought by 52 employees of the Home Office alleging indirect race and age discrimination on account of an allegedly discriminatory skills assessment that employees had to pass in order to be eligible for promotion. A report produced by the Home Office had shown that black or minority ethnic (BME) employees and those aged 35 or over had a proportionately lower pass rate than white and younger staff. The claimants asserted that their membership of the group that shared the protected characteristic of race and/or age, together with the fact that they had failed the test, was sufficient to establish that they had been disadvantaged by the requirement to pass the test in order to gain promotion.

The Court of Appeal accepted that the particular disadvantage suffered by BME employees and those aged 35 and over was the increased likelihood of failing the skills assessment. The Court went on, however, to uphold the Home Office’s argument that, in order for the claimants to establish that they were personally put at that disadvantage, they would each have to show the reason why they had failed the test. Proving that the test had a disparate impact generally on BME employees and those aged 35 and over was, on its own, not enough; each claimant would also have to show that the reason for his or her failure to pass the test was a factor related to race and/or age.

Religion or Belief Discrimination

A number of cases in recent years have dealt with the question of whether it is discriminatory to prevent employees from wearing certain items of clothing or jewellery while at work. In some cases, dress codes have been held — unless justified — to be indirectly discriminatory on grounds of religion or belief.

An example of a case in which safety issues provided justification for a restriction on an employee’s clothing occurred in Begum v Pedagogy Auras UK Ltd (t/a Barley Lane Montessori Day Nursery) EAT 0309/13. The EAT held that there was no indirect religious discrimination when a Muslim applicant for a job in a children’s nursery who wore a floor-length loose-fitting jilbab at her interview was asked if she would be willing to wear a slightly shorter jilbab in order to ensure there was no tripping hazard at work.

Age Discrimination

The case of Braithwaite and others v HCL Insurance BPO Services Ltd EAT 0152/14 concerned claims of indirect age discrimination on account of the employer’s decision to make changes to employees’ terms and conditions with the result that older employees were disadvantaged. As a result of various transfers of staff under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), different groups of employees had divergent terms of employment. Following a review of costs and a period of consultation, the employer proposed a number of changes in order to introduce standardisation across all employees’ contracts. A number of staff refused to agree to the changes and were consequently dismissed. They brought claims for indirect age discrimination (and unfair dismissal) arguing that the changes (which involved the removal of contractual benefits that they had previously enjoyed) caused a particular disadvantage to employees aged between the ages of 38 and 65.

The employment tribunal accepted that employees in the age group in question had suffered a disadvantage as a result of the requirement to agree to the new terms and conditions. The tribunal went on to hold, however, that the changes were justified as they amounted to a proportionate means of achieving a legitimate aim, namely the aim of ensuring the future viability of the business by reducing costs while also removing the age discrimination that was inherent in some of the original terms and conditions (which were based on length of service), thus, ensuring a fairer system of reward. The tribunal’s decision was upheld on appeal.

Disability Discrimination

The two conjoined Danish cases of HK Danmark on behalf of Ring and Werge v Dansk Almennyttigt Boligselskab and anor ECJ Cases C 335/11 and C-337/11 concerned whether an individual who, due to an impairment, was capable of working only part time could qualify as a disabled person. Both claimants were unable to work full time due to back problems and had been off sick for several weeks. Having subsequently been dismissed, they each claimed that their dismissals were discriminatory on grounds of disability.

Both employers argued that the claimants’ back problems did not amount to disabilities for the purpose of the EU Equal Treatment Directive 2000 (with which the UK’s Equality Act 2010 must comply) on the grounds that the effects of the back conditions did not prevent the individuals from working per se; it only prevented them from working full time.

The CJEU held that “disability” can include a long-term impairment that limits the person’s ability to participate in working life, and consequently an impairment that prevents an employee from working full time can fall within the definition. In other words, the impairment need not be absolute in order to qualify as a disability.

Another case in which the CJEU recently considered the definition of “disability” was the Danish case of Kaltoft v Municipality of Billund ECJ Case C-354/13. The CJEU ruled that obesity may in certain circumstances amount to a disability if it “entails a limitation resulting in particular from long-term physical, mental or psychological impairments which, in interaction with various barriers, may hinder the full and effective participation of the person concerned in professional life on an equal basis with other workers”. An example of where obesity could amount to a disability could be where it results in severe difficulties with mobility. The court stressed that the cause of a person’s obesity is irrelevant; the key issue is whether it hinders full and effective participation in working life.

Closer to home, the EAT ruled in Metroline Travel Ltd v Stoute EAT 0302/14, that an employee’s type 2 diabetes did not amount to a disability under the Equality Act 2010. The employee (a bus driver) took medication to reduce his blood sugar levels, in addition to which he had to abstain from sugary drinks in order to control the condition. The EAT did not accept that abstention from sugary drinks amounted to a measure to treat or correct the employee’s condition, nor was it sufficient to constitute a substantial adverse effect on his ability to carry out normal day-to-day activities.

In Land Registry v Houghton and ors EAT 0149/14, the EAT was asked to decide if the non-payment of a bonus to five employees because they had received warnings for absences that were disability-related, amounted to discrimination arising from disability, and if so whether the employees’ exclusion from the bonus scheme was justified. The bonus scheme was discretionary and under its terms any employee who had received a formal warning for sickness absence during the relevant period was automatically excluded from receiving a bonus.

The EAT held that the claimants had been subjected to unfavourable treatment (ie the non-payment of the bonus) and that this treatment had been a consequence of each employee’s disability. In addressing whether the employer’s actions were justified, the EAT identified that the employer had a genuine legitimate business aim in operating the bonus scheme, which was “acknowledging employees’ contributions towards corporate achievements and specifically to encourage and reward good performance and attendance”. The key question was whether the employer could show that the scheme was a proportionate means of achieving that aim, taking into account its discriminatory impact on the five claimants.

The EAT decided that the application of the bonus scheme was not a proportionate means of achieving the stated aim. Once an employee had received a formal warning for sickness absence, his or her exclusion from the bonus scheme was automatic — managers had no discretion. Furthermore, the scheme did not permit managers to acknowledge improvements in attendance following receipt of a warning. The claims were upheld.

TIME OFF FOR DEPENDANTS

Under s.57A of the Employment Rights Act 1996, employees have the right to take time off during working hours in order for them to deal with an emergency or other situation affecting dependants when necessary. However, the right only applies where the employee notifies the employer of the reason for the absence as soon as is reasonably practicable and, where possible, tells the employer for how long he or she expects to be absent.

In Ellis v Ratcliff Palfinger Ltd EAT 0438/13, the EAT ruled that an employee who took time off work to assist his partner (who was pregnant and unwell) but did not contact his employer to explain the reason for his absence or its expected duration was fairly dismissed for misconduct and not (as he claimed) automatically unfairly dismissed for exercising his right to take time off for dependants. Mr Ellis was, at the time of his dismissal, subject to two written warnings, the second of which stated that if there was any further misconduct within 12 months, he would be dismissed.

The EAT held that s.57A was simply not engaged because Mr Ellis had failed, as required by the legislation, to inform his employer of the reason for his absence, nor had he let the employer know the expected duration of his absence.

WHISTLEBLOWING

In Matúz v Hungary [2014] ECHR 1112, the European Court of Human Rights (ECHR) ruled that the dismissal of a journalist working for the Hungarian state television company amounted to an unjustified infringement of his right to freedom of expression. The journalist was dismissed because he had published a book containing allegations that certain excerpts of interviews had been cut from the cultural programme he presented. The key question for the Court was whether the interference with Mr Matúz’s right to freedom of expression could be justified on the basis that it was “necessary in a democratic society”, taking into account both his role as a journalist and his duty of loyalty to his employer. This, in turn, required a balance to be struck between the employee’s right to freedom of expression and the right of the employer to manage its business.

The ECHR went on to identify six factors that it considered to be relevant to this balancing exercise.

  1. The extent to which the information disclosed is in the public interest.

  2. The accuracy of the information that is disclosed.

  3. Any damage to the employer’s business caused by the disclosure.

  4. The employee’s motive in making the disclosure.

  5. The extent to which (if at all) the employee has made genuine efforts to raise the matter with the employer or another appropriate person.

  6. The level of sanction imposed on the employee as a result of the disclosure.

The ECHR concluded that the infringement of the journalist’s right to freedom of expression (ie his dismissal) was not justified, taking into account that the information disclosed was clearly in the public interest and was accurate, and the fact that he had previously disclosed his concerns directly to the employer.

In another whistleblowing case (Ahmed v City of Bradford Metropolitan District Council EAT 0145/14) the EAT held that the correct legal test for judging whether an employee has suffered a detriment because he or she has made a protected disclosure is whether the making of the disclosure had more than a “trivial influence” on the employer’s actions. The causal connection between the making of the protected disclosure and the detrimental treatment does not have to be direct or absolute.

Since June 2013, the Employment Rights Act 1996 provides that protection against dismissal or detriment on account of having made a protected disclosure only applies to disclosures that, in “the reasonable belief of the worker” are “in the public interest”. In Chesterton Global Ltd and anor v Nurmohamed EAT 0335/14, Mr Nurmohamed alleged that he had been dismissed on account of having disclosed (on three occasions) serious inaccuracies in his employer’s accounts to senior management. One of the questions that arose before the employment tribunal was whether the disclosure was “in the public interest”. The accounting mis-statements (to the tune of £2 million) had had the effect that inaccurate figures had been used to calculate Mr Nurmohamed’s commission payments and those of 99 other managers, but this had not had an effect on the wider general public.

The tribunal took the view that the phrase “in the public interest” does not necessarily mean of interest to the whole of the general public, but that it is sufficient if a section of the public is affected. This decision was upheld by the EAT who also agreed that Mr Nurmohamed had a reasonable belief at the time he made his disclosures that they were in the public interest. The test is whether the individual making the disclosure has a reasonable belief that it is in the public interest, and not whether it is actually in the public interest from an objective standpoint. Although Mr Nurmohamed was motivated in part by self-interest (as his commission payments had been adversely affected), he was also genuinely concerned about financial probity.

TRANSFER OF UNDERTAKINGS

The complexity of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) means that there is a regular flow of cases before the courts. In one of these, Rynda (UK) Ltd v Rhijnsburger [2015] EWCA Civ 75, the Court of Appeal had to determine whether a single employee was an "organised grouping of employees" for the purposes of TUPE.

The claimant was solely responsible for managing a portfolio of Dutch properties for one of her employer’s clients. When the part of the business to which she was assigned was moved to a subsidiary company, she entered into a new contract with that subsidiary but continued to do the same job. Eight months later, she was dismissed. She brought a claim for unfair dismissal, but her eligibility to bring this claim depended on her having sufficient length of service, which in turn depended on whether her move to the subsidiary company constituted a transfer of an undertaking under TUPE.

The Court of Appeal upheld the employee’s claim. It is well established that a single employee can constitute an “organised grouping of employees” whose principle purpose is the carrying out of activities for a specific client, provided the relevant tests are met. Ms Rhijnsburger worked solely on the Dutch properties at the time of the transfer and her assignment to that work was the result of a conscious decision on the part of the employer (both pre and post-transfer).

DISMISSAL

It is well established that, for a dismissal to be fair, the employer must act reasonably and take all relevant factors and circumstances into account. An example of a case in which the employer breached several of the basic principles of fairness was Newbound v Thames Water Utilities [2015] EWCA Civ 677. The claimant, Mr Newbound, had worked for the respondent for 34 years as a sewer worker when he was summarily dismissed. His dismissal followed an incident in which he had failed to wear breathing apparatus in contravention of recently introduced safety rules. Mr Newbound’s superior who had allowed him to enter the sewer without wearing breathing apparatus was not dismissed but instead given a written warning.

The Court of Appeal held that Mr Newbound’s dismissal was unfair for a number of reasons.

  • The safety requirements in question had been only recently introduced.

  • Mr Newbound had not received training regarding the importance of wearing breathing apparatus.

  • He had not been informed that a failure to wear breathing apparatus in sewers would be treated as a disciplinary offence leading to summary dismissal.

  • The employer had for many years condoned the practice of entering sewers without breathing apparatus.

  • Mr Newbound had previously been permitted, due to his long experience, to exercise his discretion as regards the wearing of breathing apparatus without being subjected to disciplinary action.

  • There was clear inconsistency between the treatment of Mr Newbound and that of his superior.

  • The employer had given insufficient weight to Mr Newbound’s long, previously unblemished service.

This case is also a reminder of the importance of thorough communication and training when new policies or rules are introduced.

In another case involving dismissal for a breach of safety rules, the issue was how much investigation an employer should carry out in circumstances where an employee has admitted guilt. In CRO Ports London Ltd V Wiltshire EAT 0344/14, Mr Wiltshire was summarily dismissed following an accident involving a heavy lift. Mr Wiltshire took full responsibility for the incident and admitted to the employer that he had acted in breach of health and safety rules. In his defence, however, he pointed out that the employer had, in effect, sanctioned the practice that had led to the accident and that there was no proper safety procedure in place.

Having heard Mr Wiltshire’s claim for unfair dismissal, the EAT overturned the tribunal’s decision that the employer had not carried out a reasonable investigation. Mr Wiltshire had admitted serious misconduct, and previous case law has established that in these circumstances — unless there is conflicting evidence — an employer will not generally be required to carry out further investigations. The overall question is whether an employer that has limited the scope of its investigations in light of an employee’s admission of misconduct has acted within the “range of reasonable responses”.

The fairness of a dismissal always stands to be judged at the time the employee’s employment is terminated, and not the date at which the initial decision to dismiss is taken. Where the date of the decision to terminate and the date of termination are not the same (ie where an employee is dismissed with notice), and where circumstances have changed, or where new information has come to light, during the notice period, it may be unfair not to reconsider the circumstances. This was the decision of the Court of Appeal in Fox v British Airways [2013] EWCA Civ 972, a case in which the employee was dismissed with notice on account of long-term sickness absence. The employee’s condition had improved during his notice period and his consultant had provided a report referring to the possibility of his being able to return to work. The employer, nevertheless, declined to extend the notice period.

When dismissing an employee for misconduct or unsatisfactory performance, employers often rely on earlier warnings. The Court of Appeal has ruled in Way v Spectrum Property Care Ltd [2015] EWCA Civ 381 that a warning issued in bad faith cannot legitimately be relied upon to justify an employee’s dismissal.

REDUNDANCY

The CJEU has made an important ruling (in USDAW and anor v WW Realisation 1 Ltd and ors ECJ Case C-801/14) popularly known as the “Woolworths case” — that an “establishment” for the purposes of collective consultation is the entity to which an employee is assigned. In most cases, this will mean the individual workplace (eg office, shop or factory) rather than the business as a whole.

When the liquidation of the retail chain Woolworths in 2008 resulted in the loss of several thousand jobs, claims were brought in the employment tribunal alleging a failure to comply with the duty to carry out collective consultation under s.188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A). Section 188 states that the duty to consult representatives in the event of proposed redundancies arises where the employer proposes to dismiss as redundant 20 or more employees at one establishment within a period of 90 days. A failure to comply with these provisions can lead to a “protective award” of up to 90-days’ pay for each affected employee. The meaning of the phrase “at one establishment” in this context was critical, as many of Woolworths’ stores had fewer than 20 employees. The question arose as to whether the collective consultation provisions were triggered in respect of the stores at which fewer than 20 employees worked. The CJEU, effectively overturning the EAT’s earlier ruling, held that EU law does not require an employer in a redundancy situation to aggregate the numbers of proposed redundancies at all its separate establishments for the purposes of the consultation threshold of 20 employees. Where any single establishment employs fewer than 20 employees, collective consultation over proposed redundancies will not be required in respect of those employees.

The meaning of the phrase “at one establishment” in this context was critical, as many of Woolworths’ stores had fewer than 20 employees. The question arose as to whether the collective consultation provisions were triggered in respect of the stores at which fewer than 20 employees worked.

The CJEU, effectively overturning the EAT’s earlier ruling, held that EU law does not require an employer in a redundancy situation to aggregate the numbers of proposed redundancies at all its separate establishments for the purposes of the consultation threshold of 20 employees. Where any single establishment employs fewer than 20 employees, collective consultation over proposed redundancies will not be required in respect of those employees.

CONCLUSION

Some of the judgments this year have been controversial and potentially very far-reaching. There is no reason to doubt that next year will produce further interesting developments.