GMB v Allen - EAT overturns decision

Unions will be jumping for joy this morning. The EAT has overturned last summer's employment tribunal decision (see bulletin 9th June 2006) which resulted in many unions withdrawing from negotiations in the North East equal pay litigation.

GMB had encouraged its members to agree a settlement agreement (in the North-East equal pay litigation) which seriously undervalued the women's claims. The tribunal found this was indirectly discriminatory by the union, and it was believed that the GMB would be liable to pay in excess of £1m in compensation.

The EAT has overturned this decision. Notwithstanding criticisms of the GMB's method of obtaining the (potential) Claimants' consent to the undervalued settlements, it held that settlement of the claims was a legitimate aim and the means adopted were proportionate. In the crucial sentence, Elias P. stated that "In short, the fact that the objective might be achieved by using unlawful, even dishonest practices does not necessarily mean that the means are disproportionate once it is accepted that the aim itself is legitimate." (para. 89). An easy to understand example illustrating the point is given at para. 90.

GMB v Allen

Illegality

Elias P. has handed down a judgment clarifying (and possibly weakening) the illegality doctrine in the combined cases of Enfield Technical Services v Payne / Grace v BF Components Ltd.. And about time too - rigid application of the illegality doctrine has historically caused manifest injustice to employees. This is a case where it is well worth reading the full decision.

The EAT declines to follow cases such as Salvesen v Simons, and holds that in order to defeat an unfair dismissal claim on grounds of an illegal conract of employment, there must be "some form of misrepresentation [or] some attempt to conceal the true facts of the relationship" (para. 49). The fact that parties have wrongly labelled the relationship, or have entered into an arrangement which has the effect of depriving the Inland Revenue of tax to which it was entitled in law, is not enough to render the contract unlawful.

This brings the doctrine of illegality for unfair dismissal closer into line with how it operates in discrimination cases since the Court of Appeal's decision in Hall v Woolston Leisure Services.

I understand that permission to appeal is to be sought in both cases.

[Thanks to Ed McFarlane of Mentor (representing Enfield Technical Services) for telling me about this case]

Tribunals, Courts and Enforcement Act

Boring but important.

The Tribunals, Courts and Enforcement Act 2007 received Royal Assent last week. The two points of relevance to employment lawyers are:

• tribunal chairmen become 'employment judges'
• it makes enforcement of tribunal awards easier

The commencement date is not yet known, and will be announced in due course by the Secretary of State.

Tribunals, Courts and Enforcement Act 2007

Failure to Inform and Consult

It's taken three years, but we have the first award by the EAT for failure by an employer to inform and consult under the Information and Consultation of Employee Regulations 2004.

Macmillan Publishers Ltd. failed to arrange a ballot to elect employee representatives following a valid request. This was the third occasion on which Macmillan was in breach of the ICE Regulations.

Whilst the CAC can make a declaration that the procedures have been breached, only the EAT can impose a financial penalty (of up to £75,000).

The EAT considered that this was a "significant failure, because it must have been plain, reading the legislation, that the relevant provisions were being ignored at almost every stage" (para 18). Elias P. analysed the purpose behind the ICE Regulations and set out some factors to take into account at paras. 21-25. The EAT then imposed a penalty of £55,000, recognising that although there was a very serious breach, it was not the most serious breach that could be envisaged.

Amicus v Macmillan Publishers

Dyslexic Policeman is disabled

The EAT has held that a senior policeman who was diagnosed with minor dyslexia was disabled within the meaning of the Disability Discrimination Act 1995.

After over 15 years in the police force, and promotion to the rank of Chief Inspector, the Claimant discovered he was dyslexic. He had not previously had difficulties with report writing, financial literacy or any of the other aspects in his complex and demanding job. However, medical evidence suggested that he ought to be given 25% extra time in his examinations for promotion to the rank of Superintendent as a result of his (newly diagnosed) dyslexia.

The tribunal reminded itself that a diagnosis was not a disability, and that the important thing to look at was what the Claimant could do, rather than what he could not do. They concluded that the dyslexia had only a minor/trivial impact upon the Claimant's day-to-day activities, and that he was therefore not disabled.

The EAT overturned this finding and substituted a finding of disability. It stated that a tribunal should not compare the performance of the employee with the average person in the population (as this tribunal had done). Rather, it is the comparison between what the individual can do and would be able to do without the impairment which is important in determining whether someone is disabled (para 39). The EAT concluded it was self-evidenct that a person who needed 25% longer to complete an examination because of his dyslexia was at a substantial disadvantage to the position if he did not have dyslexia, and he was therefore disabled. The EAT added that any finding to the contrary would undermine the whole purpose of the DDA (para. 70).

Patterson v Commisioner of Police for the Metropolis

Part-time tribunal chairman not 'worker'

The EAT (Elias P presiding) has held that a fee-paid, part-time chairman of various social security appeals' tribunals was not a worker, so as to attract the protection of the Part Time Workers (Prevention of Less Favourable Treatment) Regulations 2000.

The part-time chairman claimed he did not receive equal (pro rata) pension rights to full-time chairmen.

Dealing with the preliminary point as to whether he qualified as a 'worker', the EAT held there was no EU concept of 'worker' which trumped (or provided interpretative assistance) to the meaning of 'worker' within UK legislation. Accordingly, the Claimant had no way of circumventing or disapplying regulation 17 of the Part Time Workers Regulations, which provides that individuals acting in a judicial capacity on a daily fee-paid basis were excluded from the regulations. In those circumstances, the part-time chairman was excluded from the definition of 'worker' and his claim was struck out.

Addendum

Addendum Sophie Buckley, principal legal officer at the EOC, has asked me to point out that the EAT's decision in Oyarce v Cheshire County Council only applies to victimisation on grounds of race (not sex or other forms of prohibited discrimination, where the statutory wording is different).

A corrected version of the bulletin appears below.

Victimisation: Burden of Proof

The EAT has confirmed "with some degree of hesitation and disquiet" (para. 38) that the reversed burden of proof in race discrimination claims does not apply to allegations of victimisation.

It held that a close examination of s54A of the Race Relations Act 1976 and the Equal Treatment Directive 2000 shows an intention to treat victimisation separately from direct and indirect discrimination. The reversal of the burden of proof, whilst applying to direct and indirect discrimination, does not apply to victimisation.

Oyarce v Cheshire County Council

Victimisation: Burden of Proof

The EAT has confirmed "with some degree of hesitation and disquiet" (para. 38) that the reversed burden of proof in discrimination claims does not apply to allegations of victimisation.

It held that a close examination of s54A of the Race Relations Act 1976 and the Equal Treatment Directive 2000 shows an intention to treat victimisation separately from direct and indirect discrimination. The reversal of the burden of proof, whilst applying to direct and indirect discrimination, does not apply to victimisation.

Oyarce v Cheshire County Council

Equal Pay - Material Factor Defence

As part of an extensive job evaluation scheme by Middlesbrough Borough Council, a pay protection scheme was introduced to protect those in receipt of higher pay against an immediate and significant reduction in pay. Agreement on the scheme was reached in February 2005 by which time a number of equal pay claims related to pre-April 2005 terms were under way but were not resolved. The Claimants submitted that they too should receive the benefits of the protected pay arrangements, arguing that had the Equal Pay Act "equality clause" been applied to them at the correct time they would have been in receipt of a higher rate of pay, and thus the protected pay scheme would have applied to them. The ET agreed. The Council appealed.

The EAT has allowed the appeal. Given that the purpose of the scheme was to cushion better paid employees from a potentially disastrous sudden drop in pay, the Council was justified in limiting it to those who were actually in that group. Further justification lay in the fact that the need to agree a pay protection scheme with the trades unions was crucial to the making of the job evaluation scheme.

The EAT held that the scheme was not, to the knowledge of the Council at the time, exacerbating existing discrimination. However (1) the benefits under the scheme were limited to those who, to the knowledge of the Council, were in receipt of higher pay when it was introduced, (2) at least some of the outstanding claims were likely to succeed, and (3) the Claimants were overwhelmingly female. The decision not to extend the payment protection scheme to those who were subsequently found to be entitled to equal pay was therefore tainted by sex discrimination and therefore required objective justification - a requirement which, as noted above, the EAT found the Council had satisfied.

[Thanks to www.emplaw.co.uk for permssion to reproduce their summary of this case.]

Middlesbrough Borough Council v Surtees & Ors

Boring but important

Last week, the Cabinet Office published the government's draft legislative programme for the forthcoming year.

Included is the Employment Simplification Bill, the contents of which cover:

• implementation of the Gibbons review of workplace dispute resolution (including repeal of the statutory dispute resolution procedures and implementation of a package of replacement measures - although the content of that package is not yet known);
• clarification and strengthening of the enforcement framework for the national minimum wage
• various minor amendments to existing statutes

If you want to read the summary, click the link above and selection Chapter 5, item 10.

PILON clauses

The Inner House of the Court of Session has held that PILON clauses cannot be implied into contracts of employment - i.e. if an employer wants to pay money in lieu of notice without being in breach of contract, there must be an express term allowing it to do so.

In this case, a financial director/company secretary's contract expressly stated he was entitled to 12 months' written notice. It was terminated without such notice. The company argued that the contract was subject to an implied term entitling them to pay in lieu (an effect of which would have been to deprive the Pursuer (Claimant)of a bonus). The Court of Session disagreed.

The Court stated that it had "strong reservations as to whether, in the 21st century, there is any scope for the implication of such a term", also holding that such an implied term would be contrary to the express right to receive twelve months' notice.

Morrish v NTL Group

PILON Clauses

The Inner House of the Court of Session has held that PILON clauses cannot be implied into contracts of employment - i.e. if an employer wants to pay money in lieu of notice without being in breach of contract, there must be an express term allowing it to do so.

In this case, a financial director/company secretary's contract expressly stated he was entitled to 12 months' written notice. It was terminated without such notice. The company argued that the contract was subject to an implied term entitling them to pay in lieu (an effect of which would have been to deprive the Pursuer (Claimant)of a bonus). The Court of Session disagreed.

The Court stated that it had "strong reservations as to whether, in the 21st century, there is any scope for the implication of such a term", also holding that such an implied term would be contrary to the express right to receive twelve months' notice.

Morrish v NTL Group

RIP Wigs and Bands

The Lord Chief Justice has, this morning, announced the abolition of wigs and bands in civil cases, from 1st January 2008. Gowns will continue to be worn.

Court dress remains unchanged in criminal cases.

Collective Redundancy Consultation

17 + 3 = 20, conculdes the EAT in Optare Group v TGWU.

The employer made 17 compulsory redundancies, immediately on the back of 3 voluntary redundancies. The union alleged that the collective consultation requirements were engaged, as the employer proposed to make 20 people redundant. 'Oh no', said the employer, 'you can't count the 3. We didn't propose to dismiss them - they left themselves'.

Funnily enough, the ET and EAT both disagreed. Holding that one asks the question, 'who really is responsible for the dismissals', it was evident that the employer had proposed to make 20 people redundant within a 90 day period - thus the collective consultation provisions were engaged and a protective award could be made.

Weirdest Employment Disputes

Earlier this week, to celebrate the EAT's 30th anniversary, The Times Online dusted off its archives to search for some of the most colourful employment disputes over the last few years. For tales of witches, dogs and axe-wielding murderers, visit here.

Equal Pay

This Court of Appeal has handed down judgment in South Tyneside Council v Anderson & ors. The appeal relates to the last of a group of equal pay claims brought by female school support staff in the north-east. Each was paid at a rate determined by the grade to which she was contractually assigned, set out in a collective agreement known as the 'White Book'. Their chosen comparators were men employed by the local authority whose earnings were significantly higher. Although they were doing identically rated work, none of the men actually worked in schools.

The Newcastle Employment Tribunal held that the female claimants were in the same employment as their comparators and that the pay inequalities between them put the local authority in breach of the women's equality clauses. This decision was upheld by the EAT. The local authority’s subsequent appeal concerned only workers like Ms Irving who were employed on the recommendation of the governing body of a community school (as opposed to those employed directly by the local education authority).

On appeal, the local authority argued that the women and their comparators could not be described as being 'in the same employment' because it was open to each such governing body to decide what an individual worker's terms and conditions of employment should be. The Court rejected this argument and held, on the contrary, that workers of either sex were subject to 'common terms and conditions of employment' for the purposes of the Equal Pay Act section 1(6). Whatever their place of work, they were employed by the same employer and paid by reference to a collective agreement (the White Book) to which any governing body would invariably be required to refer. Ms Irving and her male comparator "were therefore to be treated as in the same employment. From this, coupled with the inequality of pay, a breach of the implied equality clause ineluctably followed".

[Thanks to John Bowers QC, counsel for Tyneside, for telling me about this decision and to www.emplaw.co.uk for allowing me to adopt their summary.]

Unfair Dismissal, Age Discrimination and Article 119

The novel approach of the ECJ in Mangold v Helm (bulletin 24/11/05, [2006] IRLR 143) has been rejected by the EAT in the case of Lloyd-Briden v Worthing College.

Mr Lloyd-Briden's claim had been struck out pursuant to s.109 ERA 1996 (as it then was) because he was older than 65 at the time he tried to claim unfair dismissal. He relied on Mangold to suggest that the provision was contrary to the general EU principle against age discrimination, and therefore should be set aside.

In the EAT, Wilkie J. held that the principle in Mangold must be limited to cases where a Member State had breached part of the Directive (in Mangold the German government was found to have breached Art.18 of the Framework Directive), since otherwise the Directive itself determines the extent to which EU law intervenes to affect the outcome of domestic employment litigation. Accordingly, the ET's decision to apply s.109 contained no error of law and the appeal was dismissed (paragraphs 21-22).

Thanks to Karen Moss of 3 Paper Buildings, counsel for the successful Respondent, for telling me about this case

Commercial Agents

The House of Lords has handed down its decision in Lonsdale v Howard & Hallam. This is an important case for those dealing with commercial agents.

The Commercial Agents (Council Directive) Regulations 1993 (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 House of Lords, upholding the Court of Appeal, has conclusive stated that English courts should not follow the French practice of awarding two years' losses as compensation. Instead, the correct measure of damages is to value the income stream which the agency business would have generated. This will often require expert evidence, and the best evidence of te value will be the price at which the agent could have sold his 'business' on the open market. The key passages in the judgment are paras. 10-13 and 21.

EAT Scotland

The EAT in Scotland has announced it is closing between 2pm Friday (6th July 2007) and Monday 16th July.

For information on how to deal with documents that need to be served during the intervening week, please see this notice.