Friday, 30 July 2010

Taxation of Awards

[Thanks to Lionel Stride of Temple Garden Chambers for providing this case summary]

The EAT (HHJ Peter Clark) has handed down its decision in Yorkshire Housing v Cuerden, which is authority for the proposition that awards of personal injury and injury to feelings relating to a tortious act (such as a failure to make reasonable adjustments in a disability discrimination claim) that pre-dates the termination of employment are not taxable and, consequently, should not be subject to 'grossing up'.

It was further held that awards in respect of pension and earnings loss should ordinarily be grossed up by taking into account the appropriate marginal tax rates for each part of the award: it is wrong simply to apply the highest marginal tax rate to the whole sum.

The EAT declined to comment on the controversial observations in Orthet Ltd v Vince Cain [2004] IRLR 857 that awards for injury to feelings are always non-taxable regardless of when the discrimination occurred, which remains open to argument.

Thursday, 29 July 2010

TUPE

[Thanks to James Medhurst of Employment Law Advocates for providing this case summary]

The EAT (Slade J) has handed down its decision in Nationwide Building Society v Benn, which is authority for the proposition that, where there has been a dismissal in the context of a TUPE transfer, it is an error of law for a tribunal to take into account a breach of the consultation requirements in concluding that the dismissal was unfair, in circumstances in which there has been no successful claim for a failure to consult. In this case, no such claim had even been pleaded. However, it would be permissible to take into account the extent of consultation, both collective and individual, about changes to terms and conditions.

An individual employee has no standing to bring a claim for a failure to consult in a case in which employee representatives have been elected but the consultation with those representatives is said to have been inadequate. Such a claim can only be brought by the elected representatives.

In order for there to be an economic, technical or organisational reason entailing changes in the workforce, it is not necessary for the entire workforce to be affected by the changes. It is sufficient for the changes to affect the transferred employees only.

Wednesday, 28 July 2010

Mandatory Retirement Ages

[Thanks to Tom Mountford, pupil barrister at Blackstone Chambers, for providing this case summary]

The Court of Appeal has handed down its decision in Seldon v Clarkson, Wright & Jakes, a case concerning the ability of a partnership to justify a mandatory retirement age of 65. The Court, dismissing the appeal of Mr Seldon, held:
  • the Framework Directive permitted Member States to derogate from the principle of equal treatment in relation to direct age discrimination by permitting justification. This power of derogation (Article 6) is directed at Member States implementing the Directive and not at private employers.

  • the UK implemented that derogation by way of, amongst other provisions, Regulation 3 of the Age Regulations which provides that a person discriminates against another as long as the first person cannot show the treatment or, as the case may be, provision, criterion or practice is a proportionate means of achieving a legitimate aim. Regulation 3 thus allows for employers to justify both direct and indirect discrimination. This was held by Blake J to be a lawful derogation in Age UK.

  • the requirement in Article 6 of the Framework Directive of an objective and reasonable justification by a legitimate aim, including legitimate employment policy, labour market and vocational training objectives, achieved by appropriate and necessary means, (which the ECJ in Heyday has glossed as a requirement of "legitimate social policy objectives") is not a test which private employers need to satisfy in seeking to justify direct age discrimination under Regulation 3 of the Age Regulations.

  • rather, an employer's legitimate aims are not limited to "social policy objectives". As the ECJ noted the legislation gives employers "some discretionary powers or a degree of flexibility". The Court of Appeal held that the appropriate test is whether an employer's actions are consistent with the social or labour policy of the United Kingdom which justified the Regulations.

  • the principle that a discriminatory measure may be justified by a legitimate aim other than that which was specified at the time when the measure was introduced, applied by the ECJ in the context of indirect discrimination in Sch├Ânheit, is equally applicable in the context of direct discrimination.

  • a private employer's aim of producing a happy workplace is within, or consistent with, the UK Government's social policy justification for the Age Regulations. To allow people to retire with dignity would also seem to be a justification for having a mandatory retirement age.

  • it is a legitimate consideration that a rule such as a mandatory retirement age in a partnership deed has been agreed by parties of equal bargaining power.

  • the assessment of justification in the context of a mandatory retirement age must be made at the point of termination, involving the two interrelated questions: (1) as at the date of termination was a rule requiring retirement at that age justified? (2) was the application of that rule justified in the particular circumstances?

  • however, in general, it is of the essence of a mandatory rule that it is generally applied. As such, it will be rare that the second question requires much beyond the justification of the general rule.

  • a compulsory retirement age cannot be defeated on the basis that a less discriminatory means could be employed by reference to a higher age. Such an effect cannot have been within the legislative intendment as it would mean that it would be impossible to justify any retirement age yet Recital 14 of the Directive seems to contemplate the legitimacy of a retirement age.

Tuesday, 27 July 2010

Pension Losses

The EAT has given Judgment in the case of Sibbit v The Governors of St Cuthbert's Catholic Primary School (HHJ McMullen presiding) which is a case dealing with the appropriate assessment of pension loss.

The case illustrates the correct approach to be followed by the Employment Tribunal when using the Guidance to Tribunals on the assessment of compensation for pension loss, and, crucially, in making the decision as to whether the "simplified loss approach" or the "substantial loss approach" ought to be followed.

In this case, Mrs Sibbit was a teacher dismissed on grounds of gross misconduct by the Respondent.

She was 58 at the time and intended to retire within 12 months of her dismissal, meaning that she would have a further one-year's pensionable service remaining but for her dismissal.

The Employment Tribunal found her to be unfairly dismissed and awarded pension loss in accordance with the simplified loss approach.

The Claimant appealed, arguing that the substantial loss approach ought to have been followed. The EAT agreed, stating that on the facts, the correct application of Section 123 (1) of The Employment Rights Act 1996 was for the Tribunal to follow the substantial loss approach set out in the Guidance.

The EAT held that they were entitled to interfere with the Tribunal's judgment; saying it was wrong as a matter of principle for the Tribunal to have awarded pension loss in accordance with the simplified loss approach when the guidance clearly indicated that the substantial loss approach would be more appropriate.

Wednesday, 21 July 2010

Effective Date of Termination

[Thanks to Rosa Dickinson of St Philips Chambers for providing this case summary]

The EAT (Silber J) has handed down judgment in Wedgewood v Minstergate Hull Ltd., which is authority for the proposition that the effective date of termination is not altered simply because the employee is absolved of their duty to work.

As the claimant wished to leave earlier than his notice expired on 1st December 2008, the respondent wrote to him on 26th November 2008 stating: "you can be released today and will still be paid up to and including your notice period date of Monday 1st December 2008".

The claim form was issued on 28th February 2009. At first instance, the tribunal found that the claim was out of time as the letter of 26th November 2008 had brought the EDT forward to that date.

The EAT allowed the claimant's appeal. Although the case of Palfry v Transco [2004] IRLR 916 means the EDT can be altered by agreement, on the facts of this case, the letter dated 26th November 2008 did not constitute a variation as it referred to "your notice period date of 1st December 2008". Applying the case of Lees v Greaves [1974] 2 All ER 393, the mere fact of the claimant not being required to work was insufficient to effect a variation.

Monday, 19 July 2010

Costs

It's another judgment from the EAT suggesting, even more bluntly than the previous two, that a Claimant who lies in the tribunal should be ordered to pay the Respondent's costs. See paragraph 21 of the judgment for the comment from the Hon. Lady Smith.

On the facts, the EAT substituted an order that a Claimant who had been defrauded his employer should have to pay the Respondent's costs for (basically) having the cheek to bring a tribunal claim. However, a couple of interesting pointers arose:

  • the fact that the Claimant's solicitors ceased acting does not, of itself, suggest the Claimant is not listening to legal advice (para 38).
  • a Claimant cannot argue he was acting reasonably in bring a claim because he simply wanted a 'declaration' of unfair dismissal (para 39). This largely contradicts Telephone Information Services Ltd v Wilkinson (1991) IRLR 148, a case which was not cited to the EAT, and probably rightly so (see here for a discussion of Wilkinson).

Nicolson Highlandwear Ltd v Nicolson

Wednesday, 14 July 2010

Collective Agreements

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

The EAT (Silber J) has handed down its decision in Worrall v Wilmott Dixon Partnership, which is authority for the proposition that:
  • to incorporate a term of a Collective Agreement into a contract, the term must be brought to the employees' notice or agreed (paragraph 20). It isn't enough for the term simply to be in a readily-available document, such as a handbook. On the facts, a term in a Collective Agreement providing for enhanced redundancy pay was held to have not been incorporated into the Claimants' contracts, as there was no evidence of it being brought to the Claimants' notice or agreed.

  • on a TUPE transfer, an incorporated Collective Agreement is frozen at the transfer, so transferred employees cannot benefit from future changes to the original Agreement. However, if legislation affects the original Agreement, then it also affects the transferred Agreement. In this case legislation would have deprived the Claimants - transferred Council staff - of enhanced redundancy pay, if a term to that effect had been incorporated into their contractsOn a TUPE transfer, an incorporated Collective Agreement is frozen at the transfer, so transferred employees cannot benefit from future changes to the original Agreement. However, if legislation affects the original Agreement, then it also affects the transferred Agreement. In this case legislation would have deprived the Claimants - transferred Council staff - of enhanced redundancy pay, if a term to that effect had been incorporated into their contracts.

Monday, 12 July 2010

Stigma Damages

[Thanks to Alfred Weiss of Zenith Chambers for providing this case summary]

The EAT (Cox J) has handed down its decision in Brown v Careham Hall, which is authority for the proposition that stigma damages will only be awarded where the employee's difficulty in finding new employment is attributable to the dismissal.

Brown was a care home worker automatically unfairly dismissed during her notice period amid allegations that she was rough with the residents. She claimed that her employer had torpedoed her new job by giving her an unfavourable reference. The tribunal concluded that even if she had not been unfairly dismissed, her employer would still have given her an unfavourable reference. It could not therefore be said that the difficulties she experienced in obtaining new employment were because of the unfair dismissal. Those difficulties were due to the reference and so could not sound in compensation under section 123 ERA 1996. The EAT also held that as the tribunal found that there had been a significant and serious breach of the now defunct statutory procedures, an uplift of 30% to 50% pursuant to section 31 EA 2002 was appropriate. However, where within that range the uplift was to fall was entirely a matter of fact for the tribunal and the EAT declined to interfere with the uplift of 30% awarded.

Thursday, 8 July 2010

Caps on Redundancy Payments not Age Discrimination

[Thanks to Richard Hayes of Devon Law Centre for providing this case summary]

Kraft Foods had an "exceptionally generous" contractual redundancy scheme. Because of the high levels of payment under the scheme, it capped redundancy payments at the sum that a redundant employee would have earned if he had remained in employment until normal retirement age.

Mr Hastie, a 62 year old employee, found his redundancy payment was capped at £76,560 - being what he would have earned if he had remained employed until 65. If no cap existed, he would have received about £90,000. He complained the cap amounted to indirect discrimination on grounds of age, as it would only bite against older workers.

The Employment Appeal Tribunal held that the cap was justified. The company's aim of preventing employees receiving a 'windfall' met a legitimate aim, namely giving appropriate payments to employees to compensate them for future loss of earnings. And the cap was a proportionate means of achieving that aim.

Kraft Foods v Hastie

Wednesday, 7 July 2010

Equality Act Implementation

[Thanks to Matthew White of St John's Chambers for providing this case summary]

According to a press release on the GEO website, the first wave of implementation of the Equality Act will go ahead to the planned October timetable following the publication of the first commencement order in Parliament next week. This will pave the way for the implementation of landmark provisions to protect disabled people from discrimination and tackle the gender pay gap.

Tuesday, 6 July 2010

Employment Tribunal Statistics 2009/10

[Thanks to James Medhurst of Employment Law Advocates for providing this case summary]

The Tribunal Annual Statistics for 2009/10 have just been published. The key findings are as follows:
  • There was a 56% increase from 2008/09 in the number of claims accepted by Employment Tribunals, which were at their highest ever level. This is mainly attributable to multiple claims.
  • There was a 14% increase in the number of single claims accepted by Employment Tribunals.
  • There was a 17% increase in the number of tribunal claims associated with unfair dismissal, breach of contract and redundancy. This is likely to be caused by the economic recession.
  • There was a 22% increase in the number of disposals by Employment Tribunals. This did not keep pace with receipts with the result that more than 400,000 claims remained outstanding.
  • There was a significant drop in the number of Employment Tribunal claims in which the first hearing took place within 26 weeks of the claim being received. It fell from 74% to just 65%.