Contingency Fees in Employment Tribunals

Some important - and very good - news for Claimants' solicitors...

The Damages Based Agreements Regulations 2010 have now been finalised and come into force on 6th April 2010.

Contingency fee agreements are where the representative charges a percentage of money recovered. This is not the same as a conditional fee agreements, more commonly known as 'no-win, no-fee', where the representative charges a base-fee plus an uplift in the event of success - which is unrelated to the damages recovered.

The Regulations provide that certain formalities must be met in the contingeny fee agreement, otherwise the agreement will be unenforceable and the representative will be unable to recover their percentage.

Importantly the cap on contingency fees, provisionally set at 25% when the consultation paper went out in December, has been increased to 35%. This will come as a huge relief to many advisors who traditionally charge 33%, and who thought the 25% cap would render contingency fee agreements uneconomic. Okay, the 35% includes VAT, but most Claimant solicitors will be able to live with it.

The final draft of the Regulations is not yet on the internet, but it should appear here soon. For what it's worth, the (old) draft Regulations are still available.

Incidentally, the Jackson costs report - published earlier this month - recommended revising contingency fee agreements so that barristers could also enter into them. At the moment, due to a surreal difference of opinion between the SRA (which considers employment litigation to be non-litigious), and the Bar Standards Board (which considers employment litigation to be litigious), only solicitors can enter into contingency fee agreements.

Age Discrimination - ECJ Decision

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

The ECJ has handed down its decision in Kücükdeveci v Swedex GmbH & Co, following a reference for a preliminary ruling in respect of a German national provision which provided that in calculating an employee's notice period, all years of service prior to the employee's 25th birthday are disregarded. The ECJ held:

• The German legislation contained a difference of treatment on grounds of age.
• It was a legitimate aim to afford employers greater flexibility in personnel management by alleviating the burden on them in respect of the dismissal of young workers, from whom it is reasonable to expect a greater degree of personal or occupational mobility.
• The legislation adopted was not an appropriate means of achieving that aim, as the extension of the notice period was delayed for all employees who joined the undertaking before the age of 25, even those with long service at the date of dismissal.
• The principle of non-discrimination on grounds of age as given expression by the Equal Treatment Directive 2000/78 must be interpreted as precluding such legislation.
• A national court faced with a national provision which it considers to be incompatible with the principle of non-discrimination on grounds of age must decline to apply that provision.

Illegality

[Thanks to Ed McFarlane of EEF for providing this case summary]

The EAT (Slade J) has handed down its decision in San Ling Chinese Medical Centre v Lian Wei Ji , which is authority for the proposition that a contract of employment is not tainted with illegality merely by circumstances that could lead to a work permit being revoked; actual revocation of a work permit is required.

On the facts, the employee was pressured to reduce her declared salary without varying her work permit. The employer issued two sets of payslips, showing the actual and ostensible pay.

The employee had not colluded in illegality and there was no tax evasion. The test for illegality in the third category in Hall v Woolston Hall Leisure Ltd, where an otherwise lawful contract becomes unlawful in performance, was not met.

The judgment follows a trend of judicial narrowing of the scope of the illegality defence, see bulletins 26th July 2007 and 20th November 2008.

Territorial Jurisdiction

The EAT (HHJ Peter Clark) has handed down its decision in BA v Mak, which is authority for the proposition that 'partly' for the purposes of section 8(1) of the Race Relations Act and Regulation 10(1) of the Age Regulations means more than de minimis.

In considering whether an employee works 'wholly or partly in Great Britain' for the purposes of the above provisions, the proportion of time spent working in Great Britain is not determinative. It is right to look at the nature of the job performed.

The Claimants were cabin crew of Chinese nationality ordinarily resident in Hong Kong. They completed 28 'flight cycles' between Hong Kong and London each year. The Claimants took part in a debriefing session on landing in Great Britain, had duties upon arrival and prior to departure from Great Britain, and underwent training in Great Britain. The EAT considered these activities to be an integral part of each flight cycle.

Moreover, the training requirements were absolutely essential to the industry. The EAT held that the Employment Tribunal was entitled to conclude that the Claimants worked partly at an establishment in Great Britain.

Right to Legal Representation at Disciplinary Hearings

The Court of Appeal has handed down its decision in G v X School, which is authority for the proposition that Article 6 ECHR requires that a claimant should be afforded an opportunity to be legally represented at a disciplinary/appeal hearing where it was determinative of a right to practise a profession.

G was a teaching assistant at X school. An allegation was made that he had had sexual contact with a 15 year-old boy. The school governors conducted a disciplinary hearing and dismissed him, reporting his dismissal to the Independent Safeguarding Authority (ISA) so that it could determine whether he should be placed on a 'barred' list of those unsuitable to work with children. G brought judicial review proceedings, challenging the governors' decisions not to allow him legal representation at a disciplinary or appeal hearing.

The Court of Appeal, following its decision in Kulkarni v Milton Keynes Hospital NHS Trust [2009] IRLR 829 found that (1) the right to practise a profession was a "civil right or obligation", (2) an ISA listing would fundamentally limit G's ability to practise his profession and (3) the school's internal process would have a "substantial influence or effect" on the decision-making of the ISA. G was therefore entitled to legal representation at the disciplinary and appeal hearings.

Whistleblowing Cases: Important Change

[This bulletin reproduces, with permission of the editors, the text of an update from www.emplaw.co.uk]

The Department for Business, Innovation and Skills has clarified its proposals to give employment tribunals the power to pass on whistleblowing (Public Interest Disclosure Act 1998) allegations arising during claims to a prescribed regulator.

For claims (or amended claims) arising on or after 6 April 2010, a number of changes will be put into place:

• the tribunal claim form (ET1) is to be amended so that claimants will be invited to tick a box, indicating whether their claim includes allegations of a protected disclosure and, if so, that they wish the tribunal to refer the allegations on;
  
  
• where this box is ticked and the tribunal identifies a protected disclosure, will the information be passed on to one or more relevant authorities on a prescribed list;
  
  
• the Tribunal Rules of Procedure 2004, will be amended to allow for such disclosure of otherwise privileged information;
  
  
• both parties to the tribunal proceedings will be contacted in writing by the tribunal to confirm that a relevant authority has been contacted and that a copy of the ET1 (or relevant extracts) has been disclosed.

During the consultation phase, the concern was raised that empowering the employment tribunal service to forward details of claims involving PIDA allegations to the "relevant regulator" if the claimant consents, as proposed, would give whistleblowing claimants "improper bargaining power". The Employment Lawyers' Association pointed out that this could be used by claimants as "leverage to get a higher financial settlement than they would otherwise expect", in return for not pursuing a serious allegation. It could also mean that serious claims of corruption would never reach the regulator.

The government response document includes, at Annex A, draft Employment Tribunals (Constitution and Rules of Procedure) (Amendment) Regulations 2010.

Paid Holiday: Loss of Entitlement

The EAT (HHJ Ansell) has handed down its decision in Lyons v Mitie Security, which is authority for the proposition that the right to statutory leave in Regulation 13 of the Working Time Regulations is not inalienable; statutory or contractual notice requirements could correctly operate so as to result in the loss of the right to leave at the end of the year leave in respect of leave not taken.

Considering Regulations 13, 15 and 17 of the WTR (the right to leave and the position on notice requirements for leave), the EAT asked whether an employer is legally obliged to permit an employee to take all of his paid leave within the leave year, even if the leave is requested towards the end of the leave year when it may not fit with the staffing patterns of the business. Noting the absence of case law, the EAT was satisfied that the right to statutory leave has been made subject to notice provisions, and thus the loss of leave at the end of the leave year could follow.

Acas Pre-Claim Conciliation Service

I have been asked by Acas to send out the following information to practitioners...


The Dispute Resolution Review published in 2007 highlighted the need for services to help employers and employees resolve disputes quickly and effectively without the need to go through formal tribunal procedures.

As a result, Acas expanded its Pre Claim Conciliation Service nationally from April 2009. Initially the service was mainly restricted to unfair dismissal and discrimination cases, but from October 2009 the service was extended to all ET jurisdictions for which Acas has the power to conciliate.

To access this service, the individual, the employer or their representative simply rings the Acas helpline on 08457 474747. In simple terms, if internal efforts (such as disciplinary and grievance procedures) to resolve the dispute have been attempted without success, the dispute is likely to end in a formal ET claim (but no claim has yet been made) and there appears to be an entitlement to bring such a claim, outline details of the dispute will be passed to a conciliator who will quickly contact the parties to offer Acas' help.

To date (end December 2009) there have been over 6000 referrals from the Helpline to Acas conciliators, with around 40% of appropriate referrals resolved. Significantly, these cases are resolved quickly - the median duration of cases by calendar days is for Fast Track (mainly wages) 10 days, for Standard Track (primarily unfair dismissal) 17 days and for Open Track (discrimination) 19.

If conciliation fails for whatever reason, the individual retains their right to enter a formal complaint to the ET should they so choose, at which point Acas conciliation would again be made available. However, our experience shows that a significant number do not pursue ET claims, possibly at least in part because of the information they have received during the PCC process and the opportunity this has given to explore both sides of their dispute in more depth.

More information, including the leaflet Pre Claim Conciliation Explained can be found on the Acas website.

DDA - Meaning of 'Long-term'

The EAT has handed down its decision in Patel v Oldham MBC, which is authority for the proposition that in determining whether the effects of an impairment are long-term for the purposes of the DDA 1995 Schedule 1 paragraph 2, the effect of an illness likely to develop or which has developed from another illness forms part of the assessment of whether the effect of the original impairment is likely to last or has lasted at least 12 months.

The Appellant suffered from myelitis (back pain) which developed into a secondary myofacial pain syndrome (leg pain). The Tribunal dismissed a DDA claim determining that the duration of the effects of these two impairments could not be aggregated in order to reachthe conclusion that they were long-term. Allowing the appeal, Slade J determined that the Tribunal had erred in failing to consider whether the secondary myofacial pain syndrome had developed from the Appellant's myelitis and remitted the matter for reconsideration.

Age Discrimination: ECJ Decisions

The ECJ has handed down judgment in two cases concerning the justification of difference of treatment on grounds of age: Wolf v Stadt Frankfurt am Main, on the interpretation of Article 4 (Occupational Requirements) of the Equal Treatment Framework Directive and Petersen v Berufungsausschusss fuer Zahnaertze fuer den Bezirk Westfalen-Lippe on the interpretation of Article 6 (Justification of differences of treatment on grounds of age).

Genuine Occupational Requirements

Mr Wolf applied to work as a fireman in the Federal State of Hesse, Germany. However his application was not considered because local regulations provided that recruitment to intermediate career posts in the fire-service (which involved fire-fighting on the ground and rescuing people) was not open to anyone over 30.

The ECJ held that the German Government's objective of ensuring the operational capacity and proper functioning of the professional fire service was a legitimate objective within Article 4(1).

The ECJ held that the maximum recruitment age was proportionate to its aims. The ECJ took into consideration that fire-fighters had to complete a two year training programme, and that an individual recruited before the age of 30 would ordinarily be able to complete the physically demanding role of a fire-fighter for at least 15 or 20 years. However, if the fire-service recruited older applicants, then the fire-service might be short of officials who could complete the most physically demanding duties or who could complete these duties for a sufficiently long period.

As the ECJ found that the difference in treatment on the grounds of age was justified under Article 4(1), it did not go on to consider justification under Article 6(1).

Justification under Article 6

In Petersen, the ECJ was asked to determine whether German legislation which introduced a maximum age of 68 for doctors and dentists practising on panels within the German national health system (which covers 90% of patients) could be justified. This rule was said to protect the health of patients, since it was thought that the performance of doctors and dentists declined from age 68 onwards. The ECJ held that, because dentists who practised outside the panel system were not bound by the rule, it was not necessary to achieve the protection of public health and could not be justified under either Article 2(5) or Article 6(1).

However the ECJ held that the distribution of employment opportunities among the generations could be a legitimate objective within Article 6(1). The ECJ held that the question of whether the measure was appropriate and necessary would depend on the local labour market, and whether there was in fact an excessive number of panel dentists or a latent risk that this would occur.

Risk Assessments for Pregnant Workers

In O'Neill v Buckinghamshire County Council, the EAT holds that, for an employer to fall under a duty to conduct a risk assessment for a pregnant worker, these preconditions must be met:

(a) the employee notifies the employer in writing that she is pregnant;

(b) the work is of a kind which could involve a risk of harm or danger to the health and safety of the expectant mother or her baby;

(c) the risk arises from either processes, working conditions or physical, chemical or biological agents in the workplace.

There is no more general obligation to carry out a risk assessment for a pregnant worker. In discharging its risk assessment obligations, where they arise, there is nothing in either the Pregnant Workers Directive or the Management of Health and Safety at Work Regulations 1999 to indicate that a meeting with the worker is required before the obligation to carry out a risk assessment is satisfied. But an employer must provide her with comprehensive and relevant information on the identified risks to her health and safety.

The EAT also provides tentative support for the proposition first adopted by the EAT in Hardman v. Mallon [2002] IRLR 516 and considered in Madarassy v Nomura [2007] IRLR 246, that, if an obligation to carry out a risk assessment, and a failure to carry out that risk assessment is established, then discrimination results.

Proof of detriment is not necessary. Employers, accordingly, need to be astute to carrying out risk assessments where the preconditions are met.

EAT Rules Simultaneous Employment is Permissible

The EAT (Silber J) has handed down its decision in Prison Officers Association v Gough, reaffirming that an individual can at the same time have two jobs with two different employers, provided the jobs are compatible with each other.

Silber J upheld the decision of the employment judge that the individuals concerned could be employees of both the Prison Service and the Prison Officers Association.

It was proper to apply the test as set out in 102 Social Club & Institute Ltd v Bickerton [1977] ICR 911 to the individuals work as officials with the POA, examining such factors as the nature of the payment made to them and what functions are being exercised, and the employment judge had made no error of law in finding the individuals to be employees of the POA, as well as of the Prison Service.

Dress Codes

The EAT (HHJ Peter Clark) has handed down its decision in Dansie v Metropolitan Police, which is authority for the proposition that requiring a male employee to cut his shoulder-length hair did not amount to discrimination or harassment under the SDA simply because a female employee would not, in similar circumstances, have been required to cut her hair, provided that the overall Dress Code was equally balanced between the sexes.

In upholding the Tribunal's decision, the EAT confirmed that the correct legal test is whether, applying contemporary standards and conventions, as well as the specific needs of the profession in question, the employer's dress code as a whole was asking its employees to display an equivalent level of smartness as between the sexes: as per Smith v Safeway Plc [1996] ICR 868 and DWP v Thompson [2004] IRLR 348. Accordingly, as the Dress Code of the Metropolitan Police was, overall, equally balanced between the sexes, they had not discriminated against Mr. Dansie, a trainee, by requiring him to cut his hair.

The EAT was satisfied that the Tribunal had been entitled to find on the evidence that a female recruit who failed to comply with the gender neutral dress/appearance code necessary for the service would have been treated in the same way.