Continuity of Employment

The Court of Appeal has, this morning, handed down a judgment containing an important gloss on Carmichael v National Power (in which the House of Lords held that two tour guides working on a series of ad hoc engagements was not employed due to lack of mutuality of obligation).

Mrs Prater was a schoolteacher, who worked as a home tutor to children who were unable to attend school. She worked under a series of contracts, but without any guarantee that she would receive futher work once a particular placement finished (or, indeed, being under any obliation to accept a new placement when offered).

Although there were some short breaks when she was not working (eg August), there was no appeal from a finding that these amounted to 'temporary cessations of work', so that they would not break continuity of employment if Mrs Prater otherwise qualified as an employee.

The Court of Appeal (upholding the ET and EAT) held that each of Mrs Prater's short-term engagements amounted to discrete and self-contained episodes of employment, under a contract of employment. They therefore combined to give her sufficent continuity to accrue employment rights.

The Court of Appeal made it clear that Carmichael did not address the status of the Claimants when they were actually working as guides - only whether there was an 'umbrella' contract - and therefore Carmichael could be distinguished.

Cornwall County Council v Prater

Whistleblowing

The Employment Appeal Tribunal has handed down judgment in Bachnak v Emerging Markets Partnership (no. 2). For those with long memories, this case went to the Court of Appeal a few years ago on the issue of employment status.

Although Mr Bachnak finally established he was an employee, he failed to persuade the tribunal that (amongst other things) he had made his protected disclosures in 'good faith', which is a necessary condition for obtaining whistleblowing dismissal protection.

He appealed, on the basis the employment tribunal had applied a 'neutral' burden of proof, arguing that it was incumbent on the employer to establish bad faith, rather than on him (or, indeed, without a burden of proof at all) to establish good faith. The Employment Appeal Tribunal, commenting that there was no authority on this point, agreed that it is for the employer to establish bad faith (paras. 24-25). Unfortunately, the technical victory did not avail Mr Bachnak, as the EAT considered that the tribunal's findings did not depend on the burden of proof, so any error was immaterial.

Backnak v Emerging Markets

Thanks to Richard Samuel of 3 Hare Court, Counsel for Mr Backnak, for telling me about this decision.

Key cases for 2006

Michael Rubenstein has just published his seminal annual lecture, 'Key Cases for 2006'. In it, he summarises the 51 impending cases before the appellate courts this year, including 10 before the House of Lords and 12 before the European Court of Justice.

Key Cases for 2006 (.pdf file)

Please note: in previous years, this website has had difficulty coping with large amounts of traffic. If the link does not work, try again ten minutes later

Claim and Response Forms

Thanks to Gaby Charing, policy adviser on discrimination and employment law to the Law Society's Law Reform and Legal Policy Team, for sending me a copy of this letter from the Employment Tribunal Service

As subscribers will know, employment tribunals are not accepting Claim and Response forms which are generated by solicitors' own systems (eg LaserForms).

The ETS, in an open letter to the Law Society Law Reform and Legal Policy Team, has said that it has developed - and is about to launch - a scheme on its website which will allow users to send Claim and Response forms electronically via their case management systems. The ETS will then automatically convert the data into the prescribed format via its website and submit it to the correct tribunal office.

Clearly a step in the right direction. Let's hope it works!

Click to view letter from ETS to the Law Society (.pdf document, 200k)

Unfair Dismissal - Disparate Treatment

The EAT has handed down a judgment (worth reading for the gentle lampooning of Liverpool in the opening paragraph!) dealing with disparity of treatment between employees when dismissing.

It is well established that a dismissal is likely to be unfair if the employer has not dismissed employees for similar offences in the past, unless there is justification for departing from past practice.

In Enterprise Liverpool plc v Bauress, two joiners (both recently out of their apprenticeships) used their employer's van and materials to moonlight during working hours, when they should have been undertaking works for their employer. They were both dismissed.

The tribunal noted that an employee had previously not been dismissed for the same offence, and therefore declared the dismissals unfair (reducing compensation by 75% for contributory conduct).

The EAT (HHJ McMullen presiding) overturned this decision. The EAT pointed to two differences between the previous employee (who was given a final written warning) and the two employees who had been dismissed. First, the previous employee had admitted his guilt, whereas the two new employees had lied about it. Second, the previous employee had 30 years' service, whereas the two new employees were just out of their apprenticeship.

The EAT held that it fell within the band of reasonable responses to regard these as distinguishing features, and quashed the tribunal's declaration that the dismissal was unfair.

Enterprise Liverpool plc v Bauress

They're out...

The Transfer of Undertakings (Protection of Employment) Regulations 2006 have been published.

No big surprises after the draft (apart from removal of the professional services exemption from the new 'service provision change' concept).

Here are some of the main changes from the existing 1981 Regulations:

• it incorporates much of the caselaw that has developed since 1981 (including Litster and Beckmann), putting it on a statutory basis
• it is made clear that 'service provision changes' (i.e. first and subsequent generation contracting-out, and contracting-in) are covered by TUPE, when there is an organised grouping of employees whose principal purpose is to carry out the contracted-out activities. There is an exception if the service is for a single specific event or task of short-term duration. This has potentially serious implications for large solicitors firms, with one or more lawyers (largely) dedicated to servicing a particular client, which then moves its instructions to another firm
• variations to contracts of employment are void, unless

o the principal reason for the variation is an economic, technical or organisations reason entailing changes in the workforce; or,

o the transferor is insolvent, and either the transferor or transferee agrees the variations with the appropriate representatives of the employees (i.e. a trade union or elected employee representatives)

• liability for redundancy, notice and other payments to employees of insolvent companies are NOT transferred to the transferee.
• the transferor is obliged to provide 'employee liability information' to the transferee at least a fortnight before the transfer. This includes information about:

o the identity and age of employees

o their statement of terms and conditions of employment

o any disciplinary proceedings or grievance issued in the last two years

o any court or tribunal cases brought by the employees in the last two years, or any court or tribunal cases which the transferor has reasonable grounds to believe that an employee might bring

o any collective agreement which will have effect after the transfer

Failure to provide this information will enable the transferor to bring a claim against the transferee (in an employment tribunal) for such compensation as is just and equitable having regard to any loss suffered by the transferor. There is a minimum award of £500 per employee, unless the tribunal considers it just and equitable to award a lesser sum.

• the transferor will be liable (jointly with the transferee) for awards for failure to inform and consult with a trade union or employee representative.

The transitional provisions are as follows:

• the 2006 Regulations apply to any transfer which takes place on or after 6th April 2006; but,
• the duty on a transferor to provide a transferee with employee liability information shall not apply to a transfer which takes place on or before 19 April 2006

Click here to view TUPE 2006

Failure to enter an appearance

The EAT has just placed a new 'starred' judgment on its website, indicating a judgment of particular importance to practitioners. It is one of the last decisions of Burton P. during his tenure as president.

The employer, NSM Music Ltd., missed the 28-day deadline for lodging its Response Form. Under the 2004 procedural rules, a tribunal has the option of entering default judgment under rule 8 (allowing the employer to defend quantum), or ordering that the Respondent take no further part in the proceedings under rule 9 (which has the effect that the employer cannot even defend quantum).

The employer applied for a review, which was rejected without consideration of the merits. The employer then failed to lodge an appeal against the refusal of the review, which Burton P. stated should be "the sensible course for a Respondent (para. 13).

Thus the tribunal's decision, as unreviewed and unappealed, had the draconian effect that the employer was not only debarred from contesting liability at any hearing, but also remedy.

Compensation was assessed in due course, and the employer was ordered - in a short judgment - to pay £48,000 to the Claimant.

The employer wrote to the tribunal (within the necessary 14 days) asking for written reasons for the judgment - as a precursor for a possible appeal against the amount of the award. However, the tribunal refused on the grounds that rule 9, prohibiting the employer from taking any further part in the proceedings, included a prohibition on requesting written reasons.

That decision (the refusal to provide written reasons) was the subject of the appeal to Burton P..

Burton P. held:

• rather than a point blank refusal to provide written reasons, it would be good practice for an employment tribunal to first ask the employer why it wants them (paras. 20+22)
• that the rules - properly interpreted - allow an employer to request written reasons for the purpose of a review, even when it has been debarred from taking further part in the proceedings (para. 24+25)
• but the rules do not allow the employer to seek written reasons for the purpose of an appeal (para 26). However, this problem can be bypassed if the employer presents an appeal, and then the Employment Appeal Tribunal requests written reasons under rule 30(3)(b)
• it is important that an amendment to rule 9 should be carefuly considered when the Rules are reviewed (paras. 23+26)
• the Employment Appeal Tribunal has no power to order that the employer pay the judgment debt as a condition of being permitted to continue with the appeal - but it is open to a Claimant to go to the County Court and ask that the judgment debt be paid into court pending the outcome of any appeal (paras. 34-36)

A good summary of the (fairly complex) decision can be found at paragraph 28.

NSM Music Ltd v Leefe

TUPE Guidance Error

The TUPE Regs aren't even out yet on the internet (although many people have obtained possession of the version laid before parliament on Tuesday), and already the first error has been spotted!

Thanks to John Clinch of Unison for spotting this one...

At p33 of the official DTI Guidance, it says that a 'weeks' pay' for the purpose of the 13 weeks' pay award for failure to inform and consult is capped at £290pw under the Employment Rights Act 1996. It isn't!!

Official DTI Guidance

TUPE Consultation Response

The DTI has now published a summary of the responses received to its TUPE consultation papaer. You can see a copy (.pdf file) here.

The final version of the Regulations were laid before Parliament on Tuesday (7th). They are expected to be published on the OPSI and DTI websites next week, with a view to commencement on 6th April 2006.

The DTI has also published a Regulatory Impact Assessment on the new TUPE regs (available here), along with the official Guidance Notes on the TUPE regulations (available here).

Commercial Agents

The Court of Appeal has, this morning, handed down an important judgment dealing with the valuation of claims brought under the Commercial Agents (Council Directive) Regulations 1993.

These Regulations (which, over a decade on, many people remain unaware of) provide a statutory right to compensation for any self-employed intermediary who sells goods on behalf of, and in the name of, a principal.

Historically, the view has been taken in many first instance decisions (based upon French jurisprudence) that a commercial agent ought to be awarded compensation of two years' earnings if his agency is terminated, unless there is a good reason to depart from the two year presumption.

The Court of Appeal (Moore-Bick LJ giving the leading judgment) overturned these previous cases, holding:

* the correct measure of damages is the loss of the agency business, including whatever goodwill attaches to it. This will often require expert evidence

* as a result, there can be no presumption that the starting point for compensation is two years' earnings, as that does not involve any reasoned attempt to ascertain the true extent of the agent's loss. All cases suggesting there is a presumption of two years' loss of earnings are wrongly decided

* likewise, there is no room for importing a 'just and reasonable' test into the assessment of compensation


This decision is a compulsory read for anybody dealing with commercial agency cases.

Lonsdale v Howard & Hallam Ltd

Sleepy Tribunals

What to do when a tribunal member falls asleep?

It's been established for some time (see, for example, Stansbury v Datapulse) that a decision can be set aside if a member of the tribunal appears to be asleep.

But matters now go further. In Fordyce v Hammersmith & Fulhan Conservative Association, the EAT was asked to grapple with the situation where a wing member had apparently fallen asleep not one, but twice!

The first time, Counsel raised the problem with the tribunal but agreed to continue. The second time, Counsel did not complain but, instead, appealed the decision.

The Employment Appeal Tribunal held that, by initially agreeing to continue, Ms Fordyce had waived her right to object to the initial episode of slumber. But the right to object arose again when the wing member nodded off a second time (although, according to the decision, he was still turning pages in an automaton-like state), and so the tribunal's decision was set aside and a rehearing ordered. Funnily enough, the EAT ordered the case be heard by a different tribunal!

Fordyce v Hammersmith & Fulham Conservative Association

Expired Disciplinary Warnings

The Court of Session has, today, handed down an interesting judgment dealing with whether employers can rely on a written warning which has expired.

Mr Thomson worked in a chemical factory. He was well aware that failure to comply with important health & safety rules might cause serious injury and would potentially be regarded as gross misconduct.

In July 2000, he failed to comply with a basic health & safety measure, leading to a chemical spillage but no injury. He was given a written warning, expressed to last for twelve months.

In November 2001, about 17 months later (so five months after the warning expired), following an explosion in which somebody died, he was again found to have ignored the same health & safety measure. 17 other operators were also discovered to have ignored the health & safety measure. The other 17 were not dismissed, but Mr Thomson was dismissed on the basis that the employer thought he was incapable of following clear safety instructions even when they had been specifically brought to his attention in a disciplinary context.

The Court of Session held the dismissal was unfair, as it was ipso facto unreasonable to rely on an expired disciplinary warning. The Court of Session rejected what is arguably a stronger argument, that the fact a warning has expired is one factor to take into account in deciding whether the employer had acted reasonably in treating the health & safety breach as a sufficient reason to dismiss. Instead, the Court of Session held that it is unarguably the case that an expired warning cannot be a factor in deciding the sanction, and confirmed the EAT's substitution of a finding of unfair dismissal (rather than remitting the case to the tribunal to reconsider).

This case is important and well worth reading.

Diosynth v Thomson

[Thanks to Brian Napier QC, who acted for Mr Thomson, for informing me of this decision]

Compensation for Failure to consult under TUPE

The Employment Appeal Tribunal (Lady Smith presiding) has handed down a starred judgment (i.e. a judgment of particular importance) dealing with compensation for failure to consult under TUPE.

It held that tribunals should adopt the same approach when assessing compensation for failure to consult under TUPE, as that adopted when assessing compensation for failure to consult under s188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (i.e. multiple redundancy consultation).

In other words, the Susie Radin principle applies, that the tribunal should award the maximum 13 weeks' pay as compensation for failure to consult unless there are mitigating circumstances justifying a departure from the maximum award.

Sweetin v Coral Racing