Employer’s Ability to Pay

"But it's going to ruin us", says the client. "We can't afford to pay - we'll go bust."

It's never easy to hear a(n employer) client say that, and always slightly unreal saying that tribunals don't take an employer's ability to pay into account when assessing unfair dismissal compensatory awards. But at least we can now show them paragraphs 19 and 20 from this judgment, where the EAT states, with no equivocation, that the employer's ability to pay is not a relevant consideration.

It undoubtedly reflects tribunal practice and (the sparse) existing caselaw. Personally, I think this will change at some point. Section 123 of the Employment Rights Act 1996 requires the tribunal to award such sum as is "just and equitable in all the circumstances having regard to the loss sustained by the complainant." It doesn't say 'having regard only to the loss sustained by the complainant'. There is a powerful case for saying that one relevant circumstance is the impact a substantial award would have on the jobs of other members of the workforce. But for now, the law is clear. An employer's inability to pay is not relevant.

Daniel Barnett

Age Discrimination and a Week's Pay

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

The EAT (Wilkie J) has handed down its decision in CIBC v Beck, which is authority for the proposition that a briefing document referring to a "younger" replacement for a person who has been dismissed is capable of reversing the burden of proof that the employee was dismissed on the grounds of his age, where the word "younger" has been retained in the face of advice from HR that it was inappropriate. The fact that the Tribunal also made findings consistent with a non-discriminatory explanation and initially considered that age discrimination was inherently unlikely did not prevent the burden of proof from reversing.

The Tribunal was not obliged to find that the burden of proof had been discharged by the selection of a shortlist in which many of the candidates were older than the Claimant, in circumstances in which the shortlist was produced by a different manager from the person who made the decision to dismiss.

In calculating a week's pay for the purposes of making a protective award, the Tribunal was entitled to exclude a discretionary bonus when the date for considering whether to award the bonus had not yet occurred. The decision was not inconsistent with EU law.

Staying Tribunal Proceedings

[Thanks to Louise Jones of Temple Garden Chambers for providing this case summary]

The EAT (HHJ Ansell) has given judgment in Gloucestershire Constabulary v Peters, finding that the tribunal erred in respect of a case management decision not to allow a further stay of proceedings brought under the DDA by an employee who was also the subject of a police fraud investigation.

The EAT noted that Employment Judges dealing with case management decisions do have "a very, very wide discretion under rule 10" which the EAT should be reluctant in the extreme to interfere with, but observed the principle in Bastick v James Lane (Turf Accountants) Ltd [1979] ICR 778 that for the EAT to interfere, it was necessary to show that the tribunal had improperly taken into account some matter, or had failed to take into account a relevant matter, or that the decision was perverse.

In this case, the employee was facing a police investigation into periods of historic sick leave, effectively to enquire into whether she had been as unwell as she maintains. Before the tribunal, she claimed that she had suffered a disability since 2003. The Employment Judge refused to grant a further stay, there having between two earlier stays, but the EAT held that there was a substantial overlap of issues between the ongoing, high-level police investigation and the tribunal proceedings which had not been properly taken into account by the Employment Judge and he had incorrectly exercised his discretion. An open-ended stay, however, was not appropriate and a limited, final stay was ordered by the EAT to give the Police time to "get their tackle in order".

Disability Discrimination

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

The Court of Appeal has handed down its decision in Aylott v Stockton on Tees Borough Council, which provides useful guidance in relation to disability discrimination claims following the case of Lewisham Borough Council v Malcolm [2008] 1 AC 1399.

Following Malcolm, Mummery L.J. confirmed that the proper comparator in cases of disability-related discrimination is currently 'someone who had behaved in the same way as the person concerned, but [who] did not suffer from that person's disability'. Thus the old comparator - someone who had not acted in the way that led to the dismissal or detriment - used in the case of Clark v Novacold [1999] ICR 951 no longer applies. To reduce unnecessary complexity, the Court of Appeal then made the following 3 points:

• Since Malcolm, expert advisors have correctly shifted their target to the failure of the duty to make reasonable adjustments, which imposes a form of positive discrimination. This was described as a 'positive' change of perspective.
  
• It is not sensible or legally correct simply to carry across from the longer established fields of discrimination law (race and gender) their principles and precedents, particularly as the 'disability-related' discrimination and requirement to make 'reasonable adjustments' do not even appear in that context.
  
• Justification is no defence to direct discrimination on the grounds of disability nor any failure to comply with the duty to make reasonable adjustments but remains a defence to disability-related and indirect discrimination cases.

In issuing this guidance, however, the Court of Appeal recognised that Malcolm will no longer be applicable to discrimination in employment in any event once s.15 of the Equality Act 2010 is in force; assuming that the provision remains unaltered.

ECJ Ruling on Employee Benefits

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

The European Court of Justice has ruled that (most) benefits provided to employees under salary sacrifice schemes are VATable. Salary sacrifice schemes are enormously popular, not only the £10 retail voucher scheme operated by Astra Zeneca which led to the present case, but also in particular 'cycle to work' schemes which allow employees to buy bikes at a substantial discount. No doubt they will now wither, if not die.

Astra Zeneca offers its employees a remuneration package which, as well as normal salary, includes selected benefits which employees can choose from a list. Each selected benefit gives rise to a deduction from the normal salary. Among those benefits, Astra Zeneca offers its employees retail vouchers to be used in certain shops, worth £10 each in the shops. This is advantageous to the employees as the deduction from salary for each £10 voucher is less than that amount (between £9.25 and £9.55 is deducted).

Astra Zeneca claimed reimbursement from HMRC of the input VAT which it incurred when buying the retail vouchers. HMRC rejected the claim, asserting that Astra Zeneca had to pay VAT in respect of retail vouchers it purchased if/when they were supplied to its employees as part of their remuneration packages (the employees, of course, are not taxable persons for the purpose of VAT).

The ECJ agreed with HMRC, holding that the provision of a retail voucher by a company to its employees as part of their remuneration constitutes a supply of services effected for consideration.

Specifically the ECJ ruled:

"Article 2(1) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, as amended by Council Directive 95/7/EC of 10 April 1995, must be interpreted as meaning that the provision of a retail voucher by a company, which acquired that voucher at a price including value added tax, to its employees in exchange for their giving up part of their cash remuneration constitutes a supply of services effected for consideration within the meaning of that provision".

Astra Zeneca UK v HMRC.

Employment Status

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

The EAT (Silber J presiding) has handed down Judgment in the case of Community Dental Centres Ltd v Sultan-Darmon which is authority for the proposition that an unfettered right of substitution in a contract is fatal to worker status.

The Claimant, a dentist, brought an unlawful deductions claim against his Practice. It was agreed that he was not an employee, but the Tribunal found he was a worker. On appeal, the EAT held that the Claimant's right of substitution meant that he could not be a worker, because he was not obliged to "perform personally any work or services" within the meaning of s230(3) Employment Rights Act 1996, and dismissed the claim for lack of jurisdiction.

The EAT took pains to get its teeth into a range of authorities on worker status and preferred the Byrne Brothers (Formwork) Ltd v Baird line (a working time case) to Redrow Homes (Yorkshire) Ltd v Buckborough. It extracted the principle that where a genuine right of substitution exists, there cannot be worker status. It was not sufficient that the individual might be obliged to personally find a substitute; that analysis (as in Redrow Homes) was inconsistent with established authorities.

Remedies in Discrimination Claims

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

The EAT (Wilkie J) has handed down its decision in St Andrew's Catholic School v Blundell. The case concerned the victimisation of a teacher over a 4 month period, culminating in her dismissal. The Tribunal awarded £22,000 injury to feelings, £5,000 aggravated damages, 5 years loss of future earnings, and recommended the Respondent send a letter to all parents and teachers stating that the headmistress accepted all criticism of the Claimant's teaching ability was unfounded.

The EAT's judgement is an interesting source of reading on remedies in SDA cases. In particular, it:

• reduced compensation for injury to feelings to £14,000. The judgment includes a helpful review of some post-Vento mid- to upper-range authorities;
  
• upheld the aggravated damages award on the basis of the manner in which the Respondent conducted the remedies hearing, criticising the Claimant's teaching ability, contrary to the evidence presented at the liability hearing;
  
• upheld the award in principle of 5 years future loss of earnings; and,
  
• held that the terms of the tribunal's recommendation should be amended so as not to require the headmistress to make statements with which she ("however wrongheaded") does not agree.

Territorial Jurisdiction

[Thanks to Leanne Targett-Parker of Temple Court Chambers for providing this case summary]

The EAT (Underhill P) has handed down its decision in MOD v Wallis, which is authority for the propositions that:

a) when working in Europe for an organisation, and being eligible for that position because the Claimants were the spouses of UK armed forces personnel, there is a sufficiently close connection between that employment and Great Britain to be within the scope of domestic, unfair dismissal legislation; and,

b) despite, on a literal reading s6 of the Sex Discrimination Act 1975, an ET would lack jurisdiction on a sex discrimination claim in Europe, the Equal Treatment Directive is intended to confer rights on expatriate employees and domestic rules limiting territorial scope must be displaced, enabling the ET to have jurisdiction on a sex discrimination claim at least within Europe.

The Claimants were wives of service personnel working at NATO headquarters in Europe, employed by schools attached to those headquarters, and were dismissed when their husbands' service ended.

This case goes marginally further than the Lawson v Serco 'special connection' being a feature of the work done, by including as a factor the trigger for the employee's eligibility to apply for the job.

Amendment of Claims

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

The Court of Appeal has handed down its decision in New Star v Evershed, which is authority for the proposition that adding a public interest disclosure claim to an unfair dismissal claim with similar facts does not require "wholly different evidence" such that the application to amend should be refused.

The claimant had made a disclosure about work colleagues being bullied but the same allegations had been raised in the context of his unfair dismissal claim, where he argued that they contributed to the intolerable atmosphere causing him to resign. Although the respondent said the allegations were irrelevant to the unfair dismissal claim, they had not been struck out and remained part of the case.

The Court of Appeal accepted that this was not a mere 're-labelling' and specific findings would now have to be made about the individual components of the public interest disclosure claim; but it upheld the reasoning of the Employment Appeal Tribunal that there was a substantial overlap in the issues.

Part-Time Judges' Pensions - ECJ Reference

[Thanks to Claire Darwin of Matrix Chambers for providing this case summary]

The Supreme Court has unanimously referred the appeal of Mr O'Brien QC, a former fee-paid part-time Judge who is seeking retrospective admission to the Judicial Pension scheme, to the Court of Justice of the European Union.

O'Brien and others argue that the specific exclusion of part-time judges paid a daily fee from the protection of the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000 is incompatible with the Part-Time Workers Framework Directive (97/81/EC), and that the 2000 Regulations have not properly implemented the Directive into UK law.

The Directive leaves Member States free to define who is a worker in accordance with national law and practice, provided that the definitions respect the content of the pan-European Framework Agreement on part-time work.

The Supreme Court has referred the following questions to the Court of Justice:

(1) Is it for national law to determine whether or not judges as a whole are workers within the meaning of the Framework Agreement, or is there a Community norm by which this matter must be determined?

(2) If judges as a whole are workers within the Framework Agreement, is it permissible for national law to discriminate (a) between full-time and part-time judges, or (b) between different kinds of part-time judges in the provision of pensions?

Lord Walker, delivering the judgment of the court, observed that judicial office "partakes of most of the characteristics of employment". This suggests that the Supreme Court is of the view that judges generally are workers within the 2000 Regulations; however the court has not expressed a concluded view on this issue.

Supreme Court Press Release
Supreme Court Judgment