Agency Worker not 'Employee'

[Thanks to Emma Price of Temple Garden Chambers for preparing this case summary]

The Court of Appeal has handed down its Judgment in the case of Tilson v Alstom Transport, which is authority for the proposition that a significant degree of integration of an agency worker into an organisation is not inconsistent with an agency relationship in which there is no contract between worker and end user.

The Court of Appeal also held that:

• the need to apply to a line manager before taking annual leave is not sufficient to justify the implication of a contract;
  
• there is no need to imply a contract between the agency worker and end user where there has been a breach of a clause of the contract between the agency and a third party providing services to the end user that relates to the agency worker;
  
• where the parties would have acted in exactly the same way if there had been no contract, that is fatal to the implication of a contract, The Aramis [1989] 1 Lloyd's Re 213 applied and, on the facts, the agency worker had declined to enter into a contractual working relationship with the end user.

Fixed Share Equity Partner is not an 'employee'

[Thanks to Rad Kohanzad, pupil at Old Square Chambers, for preparing this case summary]

In Tiffin v Lester Aldridge LLP, the Claimant was a fixed share partner within an LLP. When compared to the Equity Partners there was a substantial disparity between what the Claimant earned, the profits he received, his financial contribution, his involvement in the management of the LLP, and his voting rights. Dspite these differences, the EAT held that the ET had not erred in finding that the Claimant was a partner and not an employee.

Silber J stated that, there is no statutory provision or authority which states that for a person to be a partner s/he has to have a certain minimum number or certain minimum types of rights to vote or to participate in management decisions. Nor are there any which specify that the share of profit of a person or his or her contribution must reach a certain level before s/he can be regarded as a partner.

The fact that the Claimant had those rights and duties as well as a number of others, particularly the entitlement to a residue of the firm if it was wound up, meant that there was enough evidence for the ET to arrive at the conclusion it did and their decision could not be considered to be perverse.

Correction: Government abandons Socio-Economic Duty

Correction: A number of very worthy people have pointed out the announcement related to the socio-ecoomic duty on public authorities, not the equality duty. Sorry for the error.

The government is dropping the proposed socio-economic duty on public sector bodies, which would have required all public sector bodies to consider tackling wide socio-economic problems whenever taking an important decision.

More details on the BBC website.

Government abandons Equality Duty

The government is dropping the proposed Equality Duty on public sector bodies, which would have required (amongst other things) public sector employers to publish workforce data concerning the six core protected characterists.

This controversial element in the Equality Act 2010 was originally intended by the previous government to be implemented in April 2011, but plans were suspended pending a decision by the government on whether it would be implemented at all. Theresa May will announce later today that it will not be brought into force.

More details on the BBC website.

City Team Moves

[Thanks to Dr John McMullen of Short Richardson & Forth LLP for preparing this case summary]

The High Court has handed down its decision in Lonmar Global Risks Limited v West and Others

Hickinbottom J considered a claim for breach of contract and fiduciary duty against a team of employees formerly employed by Global Risks and for inducement of breach of contract and conspiracy against Tyser, a direct competitor of Global Risks and the new employer of Global Risks team.

Each of the employees were alleged to have solicited clients and other employees away from Global Risks whilst still employed by it. But the case illustrates the rule that many cases are fact sensitive. There were some breaches of enforceable restrictive covenants but no loss could be proved. Nor were the employees liable for breach of contract or fiduciary duty in failing to inform the company of any alleged wrongdoing or to inform the company of an impending team departure.

Unless an employee is a fiduciary (such as a director or senior manager) there is no duty to report one's own misconduct or of fellow employees. A fiduciary duty did not arise from the relationship of employer and employee per se. Finally there was no evidence of inducement of breach of contract by the new employer nor of conspiracy between the new employer and the departing team. [2010] EWHC 2878.

Discrimination: Cost As Justification

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

The EAT (Underhill P) has handed down its decision in Woodcock v Cumbria Primary Care NHS Trust, which challenges the orthodox view that an employer is not entitled to rely on cost alone when justifying discrimination.

Whilst the EAT emphasized that it was not departing from previous authorities in this area, it cast doubt on the "current orthodoxy" of the Cross v BA line of authority for the "cost plus other factor" approach to justification, suggesting that an employer can have a legitimate interest in considering cost alone, on the basis that if the cost of avoiding or rectifying a discriminatory impact would be disproportionately high, there would be scope for considering the proportionality of the measures (para. 32). The EAT also noted that the "cost plus" approach tended to lead Tribunals and parties into "artificial game-playing" of "find the other factor".

The Claimant was unfairly dismissed with notice with dismissal taking effect before a birthday triggered costly early retirement rights. On the facts, the Tribunal had correctly applied the "costs plus" test to the age discrimination, and the Claimant's appeal failed.

Serial litigants at risk of paying costs

The EAT has dismissed four appeals by alleged serial litigant John Berry.

Mr Berry was the subject of a fairly damning article in The Times earlier this year. He is in his 50s, and apparently scours the internet for job adverts calling for a 'recent school leaver' or suchlike, brings an age discrimination claim and - in the vast majority of cases - the employer settles for a few thousand pounds to avoid litigation.

Underhill P, sitting in the EAT, has dismissed four appeals by Mr Berry. Whilst making it clear that he was not in a position to assess Mr Berry's motivation in bringing his claims (Mr Berry not having attended the hearing), he stated at paragraph 29 that - in general - those who seek to exploit discrimination legislation for financial gain are liable to find themselves facing a liability for costs. This is a useful decision for anybody facing claims from Claimants who appear to be serial litigants.

Redundancy, and Discrimination Burden of Proof

[Thanks to Sarah Russell, paralegal at Pattinson & Brewer, for preparing this case summary]

The case of Hammonds LLP v C Mwitta is authority for the proposition that an otherwise fair dismissal is not rendered unfair by reason of the dismissal having taken place within the protected period for consultation in breach of s. 188 TULR(C)A. s.188(8) makes it clear that it does not confer any rights on the employee other than those provided in sections 189 to 192.

The EAT (Slade J) reiterated that the possibility that a respondent "could have" committed an act of discrimination is insufficient to establish a prima facie case so as to move the burden of proof to the respondent for the purposes of s. 54A of the RRA 1976 (Madarassy v Nomura International Plc [2007] ICR 867). The ET must find facts from which they could conclude that there had been discrimination on grounds of race, not there could have been. The EAT emphasised that the absence of an explanation for differential treatment may not be relied upon to establish the prima facie case.

The finding of race discrimination was set aside and the claim remitted for rehearing before a different panel.

Consultation Issue Referred to ECJ

[Thanks to Anna Thomas of Devereux Chambers for preparing this case summary]

The Court of Appeal in USA v Nolan has unanimously referred a point of general importance in industrial practice to the Court of Justice of European Union: when exactly does the employer's obligation to consult arise when carrying out collective redundancies? Is the point at which the obligation to consult arises before or after a strategic or commercial decision that will lead to collective redundancies?

In Nolan, the striking facts were:

• a decision to close an army base was taken in March 2006 by the Secretary of the US Army;
  
• the workforce were informed of the closure on 24 April; and consultation started on 5 June.

The Employment Tribunal found USA failed to engage in any meaningful consultation and made a protective award. The EAT upheld the protective award on this point.

S188 TULRA 1992 requires consultation when the employer is "proposing" to dismiss an employee. The Directive pursuant to which the 1992 Act was made requires consultation when the employer is "contemplating" redundancies. The EAT in UK Coal v NUM found that a duty arises to consult about reasons where closure and dismissals are inextricably linked. The ECJ case of Akavan v Fujitsi suggests a narrower interpretation - that the duty may only arise once the crucial operational decision has been taken. As things stand, the timing and scope of the obligation is not clear. Watch this space!

Incorporation of Collective Agreements

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

The Court of Appeal yesterday handed down its judgment in Malone and others v British Airways Plc, dismissing the individuals' appeal from the High Court's decision this February.

BA had unilaterally reduced crew complements on its aircraft below levels which had been agreed between BA and the union. The cabin crew claimed that the collective agreement had been incorporated into their individual contracts of employment, but BA argued that the provision in question was a collective provision only.

In a finely balanced judgment, the Court of Appeal held that although the particular provision impacted on the working conditions of the cabin crews (and was in that respect "apt for incorporation"), the "disastrous consequences" for the business if the provision were to be individually enforceable, drove the conclusion that the parties could not have intended such a consequence.

The CA largely decided the case on the hypothetical possibility of an individual or small group of cabin crew members bringing a flight to a halt by refusing to work under complement, which it regarded as "so serious as to be unthinkable".

It was accordingly held that the provision was intended as an undertaking towards its cabin crew employees collectively, binding only in honour.

TUPE

[Thanks to Dr John McMullen of Short Richardson & Forth LLP for providing this case summary]

The European Court has handed down its decision in Albron Catering which is authority for the proposition that the Acquired Rights Directive applies when the ownership of an undertaking is transferred by a group company, even where the employees affected are employed by another group company, provided they are assigned permanently to the undertaking being transferred.

In this case, all employees of the Heineken Group were employed by Heineken Nederlands Beheer BV. Seventy workers, including Mr Roest, however, actually worked in the catering department of Heinken Nederland BV, which catered for Heineken's staff in its various sites.

These catering activities were outsourced to Albron. The Dutch law states that an employee must be employed by the transferor for the rules on workers' acquired rights to apply (as is, interpreted literally, the case under TUPE in the UK).

Applying a purposive approach however the Court decided that the ARD provides protection to such employees because it is possible to regard the word "transferor" as being the group operating company to which the employees were assigned on a permanent basis irrespective of whether there is a contract of employment between the transferor and the employees concerned.

Compromise Agreements under the Equality Act

Everybody's talking about it, so I thought a bulletin might be useful.

On a literal interpretation of s147(5)(d) of the Equality Act 2010, it seems that it is impossible for a solicitor to sign off on a Compromise Agreement so as to settle discrimination claims, meaning that settlements must all go through Acas. Undoubtedly a drafting error, but that's what it seems to say.

So, what to do? The Law Society has asked the Home Secretary and the Government Equalities Office to look into the problem as a matter of urgency- see their practice note. Robin Allen QC of Cloisters has set out his views in a superbly argued briefing note as to why, in fact, s147 doesn't prohibit compromise agreements. But he recognises only a court can provide an authoritative determination.

The best summary of the different views (including my own) is here.

Parties Not Entitled to Insist on Tribunal Region

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

The EAT (Underhill P) has handed down its decision in Faleye v UKME, which is authority for the proposition that there is no right for a claimant in the employment tribunal to have his or her case managed in the tribunal region which covers his or her place of work. Transfers between regions are not governed by the Employment Tribunal Rules and can be made for any reason that seems good to Regional Employment Judges, subject only to any question of the transfer giving rise to injustice.

Injustice can arise where the tribunal office is remote from where one or more of the parties is based but there was no injustice in this case, which concerned a transfer from London South to London Central. Moreover, the Regional Judge was entitled to take into account the special expertise of the London Central tribunal in state immunity, an issue which arose in only one of the four joined cases.

Redundancy Selection

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

The EAT (HHJ Ansell) has handed down its decision in County Print v Page, which is authority for the proposition that:

(i) fair consultation in a redundancy exercise involves giving an employee an explanation for his scoring and a meaningful chance to comment on the scores.

The EAT took an opportunity to review authorities in this area, and, whilst cautioning against an impermissible "microscopic analysis" of scoring by tribunals, indicated that, particularly with subjective criteria, employees should have sufficient information to understand their scores and an opportunity to challenge them.

(ii) Employers seeking to run a Polkey chance of dismissal in any event argument under Software 2000 must rely on "cogent evidence", rather than simply arguing that there was a percentage chance of dismissal. On the facts of this case, the EAT observed that it was "completely fallacious" to say that as the Claimant was in a pool of three, there was a one-in-three chance of dismissal, even on similar scores.

Reasonableness of Sanction

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

The EAT (HHJ Peter Clark) has handed down judgment in Weston Recovery Services v Fisher, which considered the circumstances where dismissal for conduct not amounting to gross misconduct could be fair.

The employment tribunal had found that the Claimant's dismissal was unfair, on the basis that the relevant conduct (returning a vehicle in an unsafe condition) was not gross misconduct. The EAT did not interfere with the finding of fact that the conduct was not gross misconduct, but found as a matter of law, in line with s98(4) ERA, that the dismissal was fair: the employer passed the well-known BHS v Burchell test, had followed a fair procedure and imposed a sanction, dismissal, which fell within the range of reasonable responses. However, applying the tribunal's finding of fact, the Claimant was entitled to damages for wrongful dismissal, as the employer had not been entitled to dismiss the Claimant summarily.

Unfair Dismissal Qualifying Period may increase to two years

It leaked at the weekend, and was confirmed this morning by Lord Young on Radio 4's Today programme. The government is actively considering increasing the qualifying period for unfair dismissal from one year to two years. The timetable for a decision has not yet been announced, and it is likely there will be a consultation period (about this, and other employment law issues) first.

If the change occurs, it is moderately good news for business, but bad news for employees. In theory, employers would have an extra year to dismiss unreasonably - but they could still face allegations of discrimination (or unfair dismissal claims where no qualifying period is required, ie whistleblowing and certain health & safety, maternity and trade union related dismissals). Since such claims tend to be more expensive to defend than 'ordinary' unfair dismissal claims, it is unclear whether employers will find this proposal an entirely favourable change.

No Act of Parliament is required to bring in any change in qualifying periods - simply an Order by Ed Davey, the Minister for Employment Relations under s209 ERA 1996.

The length of service needed to qualify for unfair dismissal rights has been changed from time to time. It started in 1971 as six months. It was increased in 1980 to one year (two years for small firms of 20 or less employees) and to two years (for employees of any employer regardless of size) in 1985. In June 1999 it was reduced back to one year.

Also in June 1999, the House of Lords held by a 3:2 majority in R v Secretary of State for Employment, ex p Seymour-Smith that the (then) two year qualifying period for unfair dismissal was potentially discriminatory against women, as women were statistically less likely than men to accrue two years' employment. However, they also held that the Secretary of State for Employment could justify the social policy behind the two-year threshold, namely opening opportunities in the labour market, which meant the two year qualifying period was permitted to stand. It is likely a similar result would occur today if the increase to two years was challenged.