Reviews, Rehearings and DDA

The Court of Appeal has handed down its judgment in Taylor v OCS Group Ltd., dealing with issues relating to unfair dismissal and disability discrimination.

Unfair Dismissal
The Court of Appeal stated that the distinction between reviews and rehearings (in connection with appeals against dismissal) is unhelpful. The essential question when deciding whether a dismissal is fair under ERA 1996, s98(4) is whether the employer acted reasonably. There is no rule of law providing that a 'rehearing' can cure earlier procedural defects, whereas a 'review' cannot.

In particular, the Court held:

• if a first hearing is defective, the appeal can cure the defect if the appeal is comprehensive (para. 37)
• to the extent that the well-known case of Whitbread v Mills suggests that a rehearing can cure defects, whereas a review cannot, Whitbread should no longer be cited to tribunals (para. 47)

Disability Discrimination
This part of the judgment is not quite as easy to understand. The Court appears to be stating that, in order to establish a claim of disability-related discrimination under the DDA 1995:

• an employer must have in mind the disability-related reason (para. 70). Unless that reason affects the employer's mind, he cannot discriminate (para. 72)
• but the employer does not necessarily have to intend to discriminate on disability-related grounds. Discrimination can be unconscious as well as intentional (paras. 72-73)

On the facts, an employer who had dismissed a profoundly deaf employee for misconduct, in circumstances where the employee had not had a fair disciplinary hearing because of his inability to understand what was going on, was found by the Court of Appeal not to have been discriminated against disability-related grounds.

Taylor v OCS Group Ltd

Age Discrimination - New DTI fact sheets

The DTI has just published eight 'age legislation factsheets'.

They provide concise advice on topics such as 'objective justification', 'service related benefits', 'occupational pension rights' and 'redundancy'.

To view, click the link below and then follow the links on the right-hand side of the page.

View DTI Age Legislation Factsheets

Acas World Cup Guide

Acas has, this morning, published a really useful set of FAQs, dealing with both employers' and employees' questions about 'sickies', pub lunches and similar issues for World Cup devotees.

View Acas World Cup Guide FAQs

No Response Form - No Costs

The EAT has handed down a decision considering whether it is possible to award costs against a Respondent who fails to submit a Response Form.

It held that a tribunal's jurisdiction to award costs under the rules, when an employer fails to enter a Response, is limited to costs caused or incurred in dealing with one of the express matters set out in rule 9 (essentially making an application for review of a default judgment). The EAT's reasoning was heavily based on the fact that there is no obligation on an employer to enter a Response, thus an employer is not technically in breach of any rule if it fails to do so.

Accordingly, the EAT upheld the tribunal's decision on review to overturn the making of a £5,500 costs order in favour of a Claimant where the Respondent had not entered a Response.

Sutton v The Ranch Ltd

BNP/Racial Discrimination

The Court of Appeal has, this morning, overturned the EAT's controversial decision in Redfearn v Serco.

Serco dismissed Mr Redfearn, a BNP local councillor, following complains by the union that its (predominantly Asian) members objected to working with him. It was common ground that, whilst he was an active member of a political party with unpleasant racial views, those views had not affected the way he conducted himself at work. However, Serco was concerned (following some bad publicity) that employees and clients would be worried about them employing an active BNP local councillor.

Mr Redfearn, who lacked the qualifying period to claim unfair dismissal, brought a claim of race discrimination.

Overturning the EAT, the Court of Appeal held that his complaint did not fall within the Race Relations Act 1976. It was wrong to say that he had been dismissed 'on racial grounds', simply because race issues had been in the employer's mind when deciding to dismiss, and that the decision could be said to be referable to race.

To the contrary, Mummery LJ held that to allow Mr Redfearn's claim of direct discrimination to succeed would "cover cases that would produce consequences at odds with the legislative aim" and "turn...the policy of race relations legislation upside down... Mr Redfearn was no more dismissed 'on racial grounds' than an employee who is dismissed for racially abusing his employer, a fellow employee or a valued customer."

Mr Redfearn's case of race discrimination accordingly fails.

[Thanks to Nick Thomas of Pinsent Masons for telling me about this decision]

Strike Outs

The Court of Appeal has, this morning, handed down a decision reinforcing the extreme nature of a strike-out order and emphasising how infrequently they should be made.

In Blockbuster Entertainment v James, the Claimant:

• in breach of a tribunal order, failed to provide adequate further particulars of his claims
• in breach of another tribunal order, refused to allow the Respondent to photocopy his disclosure documents, and attended the tribunal on day one of a six day hearing with previously unseen documents (including an undisclosed tape recording of an important conversation)
• in breach of yet another tribunal order, refused to sign his witness statement, and attended on the morning of the hearing having made changes without notice to the employer (albeit the changes seem to have been minor).

The Court of Appeal upheld the EAT's decision, overturning the employment tribunal's decision to strike out the Claimant's case. Whilst the reasons are largely fact-specific, Sedley LJ gave the following guidance:

• the first object of any system of justice is to get triable cases tried. The courts are open to the difficult, as well as to the compliant. It does not necessarily matter if the litigant is difficult, querulous and uncooperative (para. 18)
• it is undesirable for a strike-out application to be made (or granted) on the first day of a six day hearing. If non-compliance is serious enough to warrant a strike-out application, this ought to be clear before the trial begins (paras. 19 and 21)
• it is not satisfactory for a tribunal to simply record that a strike out is "the only proportionate and fair course to take". The tribunal's reasons should spell out why a strike-out is the only proportionate and fair course to take (para 20). Although Sedley LJ dos not expessly say this, it would seem desirable for a tribunal to expressly consider other sanctions (such as refusing to admit evidence) and explain why they are insufficient.

[Thanks to John Bowers QC of Littleton Chambers, who represented Blockbuster Entertainment Ltd., for informing me of this decision.]

Injury to Feelings

The Employment Appeal has handed down a (short) judgment dealing with awards for injury to feelings. Although a small-value claim, the decision has general ramifications.

The EAT held that:

• tribunals must not take the size of the employer's organisation into account when assessing injury to feelings (para. 16)
• the fact they took into account the "complete failure" of the Respondent's equal opportunity indicated that the award included a punitive element, which was not permitted in an award for injury to feelings (paras. 19-20)

Accordingly the EAT reduced the injury to feelings award from £5,000 to £4,000.

Corus Hotels v Woodward

Brighton Moving...

With effect from 3rd July 2006, the Brighton hearing centre will move to City Gate House, 185 Dyke Road, Brighton BN3 1TL. According to the tribunal's notice, the new hearing centre is 10 minutes' walk from Brighton station. You can see the new location on this map.

Rumours that the move was prompted by complaints from the junkyard next door that the tribunal building was spoiling the area are hotly denied.

[Thanks to Ed McFarlane of RBS Mentor Services for telling me about the move]

Does a "normal retirement age" transfer under TUPE?

The Court of Appeal has upheld the EAT's decision in Cross v BA, that a normal retirement age does not transfer under TUPE.

The Claimants worked for British Caledonian, who had a retirement age of 60. After its take-over by BA in 1988, they continued to work for BA, whose retirement age was 55.

Some 13 years after the transfer, the Claimants were retired at age 55. They claimed unfair dismissal. BA argued that they had reached the normal retirement age, and therefore could not claim unfair dismissal. The Claimants argued that British Caledonian's normal retirement age was 60, and that this retirement age had transferred to BA under TUPE.

The Court of Appeal confirmed that a 'normal retirement age' is not the same a contractual retirement age, and is not one of the 'rights, powers, duties and liabilities' which transfers under reg. 5 of TUPE. Accordingly the Claimants could not maintain their argument that their normal retirement age was 'frozen', because of the TUPE transfer, at 60 (rather than 55). Since they had reached the normal retirement age of 55, they were not entitled to claim unfair dismissal.

Cross v BA

Costs

This appeal involved the question of whether it was reasonably practicable to bring a claim within three months. The tribunal found in the Claimant's favour, allowing a claim through out of time.

The employer had asserted, in the Response Form, that the claim was "abusive, vexatious and has been unreasonably conducted".

Following the Claimant's win, the employer appealed to the EAT. The employer lost the appeal - essentially on the basis that the question of time limits has been stated, again and again, to be a question of fact.

The point of note in this case is that the EAT awarded costs against the appellant employer. Two points of principle / reasoning were given, namely:

• the fact that the appeal had succeeded at its preliminary hearing was not a talisman against a costs order ultimately being made (para. 28)
• since the employer had, itself, threatened an appliation for costs in the Response Form, "the employers can have little complaint at being ordered to pay the costs of this appeal" (para 29) - a salutory warning to those who routinely include costs threats in pleadings or open correspondence with the other side.

Sims Ltd v McKee

Age Positive Week

Today sees the launch of Age Positive week.

The Age Positive website boasts a new 'Age to Z' guide - an alphabetical guide to age discrimination. Amusingly, the author seems to have got a little lost around 'M', having come up with the idea, 'Marriott Hotel is Positive about Age'.

Of more importance is a live Q&A session with Stephen Timms MP, Minister for Pensions Reform, who is responsible for the government's age awareness campaign. He will be answering questions online between 3pm and 4pm on Thursday, 11th May. Interested people are asked to submit questions in advance.

Narrow Escape for New TUPE

IDS Brief have just sent out a bulletin breaking the news of the near-repeal of TUPE 2006 by the House of Lords.

On Wednesday, a motion to revoke TUPE 2006 was defeated by a narrow vote margin of just 79:77. The attempt to repeal new TUPE was based on an argument that the drafting of new TUPE failed to meet policy aims, particularly in relation to insolvency.

Lord Sainsbury, defending new TUPE on behalf of the DTI, did admit "I do not pretend that the regulations are completely certain in their effect and in their capture." He went on to say, referring to the DTI guidance on redundancy payments when companies are insolvent, that "I concede that it might potentially confuse the reader".

Read the debate in Hansard

Age Discrimination Transitional Provisions

I'm being asked by a number of people to make my flowcharts for the 'right to request not to retire' transitional provisions publicly available.


Here they are...

View transitional priovision flowcharts

Age Discrimination Transitional Provisions

Acas has issued a fascinating discussion paper, setting out its views on the 2004 dispute resolution procedures, the future of the tribunal system and the future of conciliation.

Key points include:

• since the pre-acceptance procedures came in in October 2004, 10% of submitted claims have been rejected at the pre-acceptance stage. Less than half have of the rejected claims have been re-submitted.
• the fixed conciliation period (of 7 or 13 weeks) is not assisting settlement of disputes. Parties are not ready to settle so early on; indeed, the 7 week period can almost expire before large employers receive the papers and allocate the case to the correct person within its organisation. As Acas states, "The seven-week period is proving far too short to offer meaningful conciliation in many cases."
• although Acas has a power to conciliate once the fixed conciliation period has expired, it has taken a policy decision not to do so as if it routinely exercised its power to extend the conciliation period, it would undermine the purpose of the legislation. Exceptional cases where it would conciliate outside the fixed period include cases where a large number of unrepresented Claimants are involved, where there have been delays in receiving paperwork from the tribunal offices, or because of the incapacity of a party due to serious illness.
• due to budget cuts and the new performance measure imposed by the DTI (assessing Acas by the number of hearing days saved, rather than the number of cases settled), Acas has taken a policy decision to reduce the amount of time it will spend conciliating short-period cases (such as deductions from wages, breach of contract and redundancy claims). This is because a settlement in a short-period claim is regarded by the DTI as saving 1/4 day, whereas other types of settled cases are regarded as saving a greater amount of hearing time).

View Acas Policy Discussion Paper

ACAS Discussion Paper

Acas has issued a fascinating discussion paper, setting out its views on the 2004 dispute resolution procedures, the future of the tribunal system and the future of conciliation.

Key points include:

• since the pre-acceptance procedures came in in October 2004, 10% of submitted claims have been rejected at the pre-acceptance stage. Less than half have of the rejected claims have been re-submitted.
• the fixed conciliation period (of 7 or 13 weeks) is not assisting settlement of disputes. Parties are not ready to settle so early on; indeed, the 7 week period can almost expire before large employers receive the papers and allocate the case to the correct person within its organisation. As Acas states, "The seven-week period is proving far too short to offer meaningful conciliation in many cases."
• although Acas has a power to conciliate once the fixed conciliation period has expired, it has taken a policy decision not to do so as if it routinely exercised its power to extend the conciliation period, it would undermine the purpose of the legislation. Exceptional cases where it would conciliate outside the fixed period include cases where a large number of unrepresented Claimants are involved, where there have been delays in receiving paperwork from the tribunal offices, or because of the incapacity of a party due to serious illness.
• due to budget cuts and the new performance measure imposed by the DTI (assessing Acas by the number of hearing days saved, rather than the number of cases settled), Acas has taken a policy decision to reduce the amount of time it will spend conciliating short-period cases (such as deductions from wages, breach of contract and redundancy claims). This is because a settlement in a short-period claim is regarded by the DTI as saving 1/4 day, whereas other types of settled cases are regarded as saving a greater amount of hearing time).

View Acas Policy Discussion Paper

Repayment Clauses in Compromise Agreements

The Court of Appeal has handed down an important decision in CMC Group plc v Zhang.

Mr Zhang signed a contract (not strictly a compromise agreement, but that does not matter) settling his claim against CMC for $40,000. It contained a clause, common in compromise agreements, that the full $40,000 would be immediately repayable if Mr Zhang broke any terms in the agreement (namely, non-harassment / derogatory remarks clauses).

CMC Group alleged that Mr Zhang broke his side of the deal, and issued proceedings for the return of the $40,000. They obtained default judgment, with damages to be assessed. Mr Zhang appealed.

The issue for the Court of Appeal was whether the repayment clause was valid, or whether it amounted to a penalty clause.

The Court of Appeal noted that the other provisions in the agreement (such as Mr Zhang not being able to bring further claims) remained enforceable. They considered that fixed damages for breach of the non-derogratory statement clause of $40,000 were plainly excessive, when the damages flowing from a derogatory statement might only be nominal.

Accordingly the repayment clause was a penalty and, whilst CMC Group was free to bring a claim for the damages it had actually incurred, it could not recover the $40,000 without proving it had incurred that amount of loss.

The Court of Appeal has granted permission to appeal to the House of Lords.

CMC Group v Zhang

[Thanks to Julian Yew of Stephenson Harwood, amongst others, for telling me of this decision]

House of Lords dismisses Rutherford appeal

The House of Lords has, today, dismissed Mr Rutherford's appeal in Rutherford v DTI (previously Harvest Town Circle).

Mr Rutherford was over 65. He wanted to claim unfair dismissal, but was prevented by ERA 1996, s109 (the upper qualifying age). He argued that the upper qualifying age had an adverse impact on a higher proportion of men than women, as more men wanted to work beyond 65, and was therefore indirectly discriminatory and contrary to EU Article 141.

In five different speeches, the Lords held that Mr Rutherford had used the wrong statistics, and that the statistics he had produced did not support a finding of adverse impact. As Lord Walker acknowledged, the five diferent opinions do not yield an obvious legal principle to enable an easy summary of the case.

The appeal was dismissed, and the upper qualifying age is confirmed to be lawful. Hundreds of claims brought by the over-65s, all stayed by tribunals, will now be dismissed.

Just as a note, from October 2006 (when age discrimination laws come into force), the upper qualifying age disappears, and those over retirement age will be free to claim unfair dismissal.

View judgment

2nd Edition published today

• 170 pages of commentary and analysis on the Employment Equality (Age) Regulations 2006
• highlighting practical difficulties for employers and legal advisors
• sets out arguments on both sides when the Regulations are unclear

Click here to see a sample and for more information