LLP Members are not Workers

[Thanks to Dean Fuller of Fox for writing this case summary]

Can an LLP member be a worker?

No, says the Court of Appeal in Clyde & Co LLP v Van Winkelhof.

Ms Bates Van Winklehof brought a whistleblowing complaint against Clyde & Co LLP alleging she had suffered a number of detriments, in particular being expelled as a member. The employment tribunal said it was not satisfied that she was a 'worker' and therefore she could not pursue her whistleblowing claim. She successfully appealed to the EAT. However, the Court of Appeal has today handed down judgment in the case, reversing the earlier decision of the EAT which had held that an LLP member could be a 'worker' within the extended definition in section 230(3)(b) of the ERA.

The Court of Appeal agreed with the appellant that Ms Bates was not in a subordinate position and therefore a worker within the meaning of the relevant definition and that she could not be a worker because of section 4(4) of the Limited Liability Partnerships Act 2000. At para 67 Elias LJ concludes "a member of an LLP who, if it had not been registered as an LLP would have been a partner in an 1890 Act partnership, can be neither an employee nor a limb (b) worker...It follows that the Claimant cannot pursue her whistleblowing claim."

Preserving Continuity Between Associated Employers

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

Is continuity of employment preserved when an employee is absent from work at one employer due to a temporary cessation of work, and then starts different work for an associated employer?

Yes, says the EAT in Holt v EB Security Ltd.

Fourteen days after the first employer dismissed the Claimant, he was taken on by an associated employer in a completely different job, then dismissed within a year. He argued that his continuity of employment was preserved, meaning that he could claim unfair dismissal. The employment tribunal disagreed.

The EAT held that continuity was preserved under S212(3)(b) of the Employment Rights Act, following Bentley Engineering v Crown. Looking back from the vantage point of his new job, there was a temporary cessation of work, and the Claimant was absent from work due to that cessation. There is no need for the associated employer to resume the operations of the first employer; any work with an associated employer would suffice to preserve continuity.

The EAT directly addressed the criticisms of Harvey as to the rightness of Crown, in which continuity was preserved during a cessation of work for the Claimants of up to two years.

List of Issues

[Thanks to Jahad Rahman of Rahman Lowe Solicitors for preparing this case summary]

Can a tribunal refuse to allow the late calling of further witnesses in the absence of a proper explanation?

Yes, says the EAT in North Bristol NHS Trust v Harrold.

The Claimant alleged that the Respondent subjected her to direct discrimination on the grounds of her race and victimised her by giving false evidence to the Nursing and Midwifery Council such that they caused her to be struck off.

On the third and final day of the liability hearing, the employment tribunal refused the Respondent's application to adjourn to call as witnesses the people who made the decision to report the Claimant to the NMC.

The EAT upheld the tribunal's decision and held that when deciding whether to grant an application to adjourn to call further witnesses, an employment tribunal must balance the interests of both parties and "not accede automatically to the wishes of the Respondent". In particular, a hearing will not have been unfair if it caused no substantial prejudice to the party claiming to be aggrieved.

On the facts, the EAT found that the Respondent should have appreciated that the critical issue was why the Claimant was referred to the NMC. This would have required the presence of those responsible for referring the Claimant to the NMC. There was no proper explanation as to why the Respondent had not arranged to call the witnesses earlier and in light of this, the EAT concluded that there was no injustice to the Respondent.

Conduct Dismissals and Previous Warnings

[Thanks to Rad Kohanzad of Atlantic Chambers for preparing this case summary]

When deciding whether a dismissal is within the range of reasonable responses, can an employment tribunal take into account matters which the employer did not take into account?

No, says the EAT in Nejjary v Aramark Ltd.

The Claimant was dismissed for three matters. On appeal his employer upheld the dismissal, expressly relying on only one matter as gross misconduct. The tribunal found that the decision to dismiss for this one matter would have been outside the range of reasonable responses but given that the employee had previous warnings on file, it found that the decision to dismiss was within the range of reasonable responses.

The EAT held that the tribunal had erred in taking into account matters which the employer had not had in mind as part of the reason for dismissal. The reason for dismissal "is the reason which was extant and operative in the mind of the employer".

Inadequate Explanations and Burdens of Proof

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

Can a tribunal take into account inadequate explanations, falling short of dishonest explanations, in determining whether the burden of proof has shifted?

Yes, says the EAT in Birmingham City Council and Semlali v Millwood.

A black employee was treated disadvantageously when compared with an Asian colleague who was found to be in materially the same circumstances. The employment tribunal accepted that this did not, without more, justify a shifting of the burden of proof. The tribunal was however permitted to take inadequate explanations into account and in so holding, Langstaff P drew a distinction with the dicta in Madarassay where it was held that the absence of an adequate explanation is not relevant to whether there is a prima facie case of discrimination.

The employee had not been offered a permanent contract. The tribunal disbelieved, and found inconsistent, the explanations that the employer had offered for this; but made no findings that the explanations were dishonest. Langstaff P held, "Although a tribunal must by statute ignore whether there is any adequate explanation in stage one of its logical analysis of the facts, that does not mean, in our view, to say that it can and should ignore an explanation that is frankly inadequate and in particular one that is disbelieved"

On the facts, the tribunal did not make sufficiently clear precisely what it regarded as the shortcomings in any explanation of the employer as the "something more" in addition to difference in status and less favourable treatment, and the case was accordingly remitted.

Costs

[Thanks to Michael Reed Employment Legal Officer at the Free Representation Unit for preparing this case summary]

Can a tribunal hear a costs application if they have expressed an opinion demonstrating that they have already reached a conclusion on costs?

No, said the EAT in Oni v NHS Leicester City.

Mrs Oni lost her case. The tribunal found it was 'without foundation' and doubted the 'genuineness of these complaints'.

The tribunal also said 'not only was the bringing of the various claims unreasonable but the manner in which they have been conducted was also unreasonable.'

NHS Leicester City applied for costs. Mrs Oni asked the tribunal to recuse themselves because they had already said her claim had been brought and conducted unreasonably - the key issue when considering costs.

The tribunal refused, but the EAT found they were wrong to do so. Tribunals may express themselves fully on the issues before them, which may involve trenchant critisism of the parties. But they should not reach conclusions on other issues, such as costs, until they become relevant.

The EAT also advised that tribunals should enquire into a party's means when considering costs. The County Court form EX 140, used to gather information on a debtor's financial position, may be a useful tool for doing so.

Government Response to Consultation on TUPE

The Department for Business, Innovation and Skills has published its response to its call for evidence on the effectiveness of TUPE.

It's very bland - quite extraordinarily so. It identifies the concerns expressed by employers, points out there are arguments against all those concerns, and also points out that the government's freedom to manoeuvre is limited by the Acquired Rights Directive. It concludes by saying the government will think about things, but might simply improve existing guidance rather than amend the Regulations.

Vince Cable's Employment Law Consultations

BLOGPOST substantially rewritten at 12pm 14/9/2012 following publication of consultation document

Vince Cable has announced various consultations on employment law this morning. The consultation papers are here.   Here are my initial thoughts (and you can hear me on the Today programme on iPlayer, at 2:51:20).


CAP ON UNFAIR DISMISSAL COMPENSATORY AWARD
The consultation proposes reducing the cap on the compensatory award from £72,300 to the lower figure of the national median average earnings (£25,882) or an individual's annual net salary. The rationale is a huge increase in the award in 2000 (to £50,000) and above-inflation rises since then.  This is utterly disingenuous; the annual rises are inflation linked to the nearest £10 (thus, technically, there may be a rise that marginally greater than inflation; but it is deeply misleading of the government to suggest its anything other than trivial), and the increase to £50,000 was to link the compensatory award back to the inflation-adjusted equivalent to that which it had been in 1971.

The government is being vague on the exact cap - it's saying a cap of one year's earnings, subject in any event to something between 1x and 3x median earnings.  Not to be decided by parliament, but by a statutory instrument.   Let's see how long we have to wait for that one.

A lower cap doesn't make it easier to dismiss staff. An employer must still act reasonably to justify dismissing someone with more than two years' service. Instead, it makes it cheaper for employers to behave unreasonably.

A reduction in the cap doesn't address the real problem that businesses face: that of vexatious or unreasonable employees with unrealistic expectations. That needs to be dealt with by rigorous enforcement of costs rules, and requiring employees who bring hopeless claims to repay an employer's legal costs, as happens in other areas of litigation.

Many jobs last as long as a marriage - some last longer. People are as reliant on employment income as they are on spousal income. Nobody would suggest capping maintenance payments at one year's earnings; it is absurd to do so for unfair dismissal claims.

The proposals mean that bad employers can take a calculated risk that the maximum exposure is £25,882 - and take a commercial decision to act badly when they might not previously have done so. Employment law comes down to three basic principles: (1) be reasonable; (2) be consistent; and (3) be nice - until it's time to stop being nice. If employers follow those three rules, they'll be fine.

Employees will still try to claim discrimination - which has uncapped compensation because of European laws - in order to put commercial pressure on employers and inveigle higher payouts.

SETTLEMENT AGREEMENTS
There's nothing new about employers and employees being able to settle employment claims before going to a tribunal.

Vince Cable is publishing standard template 'settlement agreements'. You can see sample templates at the back of the consultation document.  One question that DBIS is posing is whether there should be recommended tariffs for levels of settlement, depending on length of service, reason for dismissal etc.

The government is missing, however, the sensible development of abolishing the need for employees to get independent advice from a CAB, union or lawyer before settling claims.  Many settlements are straightforward and advice isn't needed, just as it isn't needed when settling a claim for a neighbour dispute or a badly installed kitchen.  Admittedly there is a risk of employers pressuring employees to sign on the dotted line and withholding pay entitlements until they do. But as long as suitable safeguards are included, such as a cooling off period and a statement that the employee should consider taking advice, it would be a sensible move forward to save enormous costs for businesses.  But it's not going to happen.


EMPLOYMENT TRIBUNAL FEES
This is the most insidious of all the changes, although it's not obvious from the terms of the Press Release.

Straightforward claims for unpaid wages will cost £390 to take to a hearing. There is no way an employee on £300 a week, who has been underpaid £50, can afford to bring a claim. It makes justice unaffordable for workers on low incomes and gives unscrupulous employers comfort that their actions won't be challenged.


Claims such as unfair dismissal and discrimination will cost £250 to launch, and a further £950 to get a hearing date - £1,200 in total. This prices many ex-employees out of the tribunal, and will encourage employers not to settle claims because they will gamble that the employee can't/won't pay the £1,200 fee.

Without Prejudice discussions

[Thanks to Jahad Rahman of Rahman Lowe Solicitors for preparing this case summary]

Is evidence of without prejudice negotiations revealed during testimony admissible?

No, says the EAT in Gallop v Newport City Council.

Mr Gallop was employed by Newport City Council as a training officer. He was dismissed for alleged gross misconduct. Prior to his dismissal, the parties attempted to reach a compromise but those attempts failed and no agreement was reached.

He brought a claim for unfair dismissal and disability discrimination. During the course of the tribunal hearing, one of the Council's witnesses mentioned, in response to a question asked by a wing-member of the tribunal, that they had been approached by a trade union representative to discuss a possible settlement agreement.

The tribunal found that Mr Gallop had been unfairly dismissed. On the issue of compensation, during the remedy hearing, Mr Gallop confirmed that he was happy with the money offered in the compromise agreement but his legal adviser was not happy with it. The tribunal concluded that if he had not been dismissed, there was a 50% chance that he would have entered into a compromise agreement. As a result, the tribunal reduced the loss of earnings, pension loss and notice pay awards by 50% and awarded Mr Gallop 50% of the sum previously offered by the Council.

Mr Gallop appealed the decision. The EAT held that the tribunal should not have taken into account the without prejudice negotiations "absent a clear waiver by the parties". The EAT found that the parties had not voluntarily waived privilege in this case because the point only arose as a result of an innocent enquiry by one of the wing-members of the tribunal. As such, Mr Gallop's appeal against the 50% reduction to his compensatory award was allowed.

TUPE: Harmonisation of Terms

[Thanks to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary]

In what circumstances is a dismissal to effect contractual changes automatically unfair under TUPE, and what is the appropriate remedy?

These questions were addressed by the EAT in Manchester College v Hazel.

Manchester College successfully bid for Offender Learning contracts from the Learning and Skills Council. The Claimants transferred to Manchester College under TUPE.

There were hidden costs which were not appreciated in the due diligence exercise prior to the transfer. The college began a process of costs savings, which included a request for 300 voluntary redundancies. Following this, the college decided to effect further savings by harmonising terms and conditions across 37 different contracts of employment. The Claimants were asked to agree to wage reductions. They objected and were dismissed with an offer of employment on the new terms. They accepted the new contracts, continued in employment and sued for unfair dismissal.

The majority of the employment tribunal held that the reason for the dismissals was connected with the transfer and not for an economic, technical or organisational reason entailing changes in the workforce. The redundancy process had ended and what was on the employer's agenda now was simple harmonisation of terms and conditions. It was not enough that the college was making some other employees redundant alongside the harmonisation process. It is the reason for dismissal of a particular employee that must entail a change in the workforce of either number or functions. The fact that others are dismissed for the reason of redundancy (a change in the number of the workforce) does not alter the fact that the particular employee may have been dismissed for the reason of harmonisation (not a change in the workforce). The dismissals were automatically unfair. The EAT held this was a correct construction of TUPE.

The employment tribunal considered that the appropriate remedy was re-engagement on their new contracts, but on their old rates of pay. This was practicable since the employees had continued working and had the trust and confidence of the employer. The EAT agreed. In its opinion, this remedy was the only way of recognising the breach of TUPE that had occurred.

Listing hearings without asking for non-available dates

[Thanks to Fatim Kurji of No 5 Chambers for preparing this case summary]

Where there are other witnesses available, is the tribunal entitled to refuse an application for an adjournment?

Not always, says the EAT in University of East Anglia v Miss E Amaik Wu.

The EAT held that although the determination of whether to grant an adjournment is a matter of case management discretion for the employment tribunal, in this instance the tribunal had taken into account irrelevant matters, and failed to take into account relevant matters, in refusing the request for an adjournment. Accordingly the appeal was allowed.

On the eve of the hearing date for the claim for unfair dismissal and race discrimination, the tribunal adjourned the case for want of a judge. The tribunal sent out new dates without seeking the parties' dates to avoid. One of the Respondent's witnesses was unable to attend the new date and applied for an adjournment, which was refused by the tribunal.

The EAT overturned the refusal on appeal noting that there were many allegations against the witness directly, making her a relevant and important part of the hearing. It did not assist to say that the Respondent could ask for a witness order as the considerations for determining that request were the same as for an adjournment. Further the Claimant had not shown any prejudice. These were irrelevant factors that the tribunal had taken account of. The tribunal had also failed to take into account that it had failed to ask for available dates when relisting the matter. The EAT therefore overturned the tribunal's decision and, for expediency, reheard the application for an adjournment, and granted it.

Employment status - minicab driver

[Thanks to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary]

Was a minicab driver an employee where, under his contract, he could work as and when he liked?

No, says the EAT in Knight v Fairway & Kenwood Car Service.

The Claimant was a minicab driver working for Fairway & Kenwood. His written terms provided that, as long as he made weekly rental payments and sent appropriate notifications to the company, he was allowed to work as and when he pleased. He paid his own tax and national insurance and, if registered for VAT, had to account for VAT to HMRC. He left after a disagreement and claimed damages for wrongful dismissal.

The employment tribunal found there was no contract of employment as there was no mutuality of obligation between the parties. The EAT, although expressing some criticism of the way the legal test was applied by the employment judge, dismissed the appeal.

The EAT said that it was "likely" that the Claimant was employed either throughout a particular shift or from the beginning to end of an individual job, and there was an overarching umbrella contract. But that umbrella contract was not an employment contract. His written terms did not require a minimum or reasonable amount of work (applying the test set out by Langstaff J in Cotswold Development Construction Limited v Williams). Nor was there scope for inferring such an obligation from the fact that the Claimant in fact worked 7 days a week. This meant that there was no jurisdiction to hear the Claimant's claim.

Constructive Dismissal

[Thanks to John Cook of SAS Daniels LLP for preparing this case summary]

In order for an employee to succeed in a claim of unfair constructive dismissal does the principal reason for the resignation need to be a fundamental breach of the contract of employment?

No, says the EAT in Logan v Celyn House Ltd.

The Claimant was employed as a veterinary nurse and resigned in response to a grievance decision which she found unsatisfactory. The grievance had involved a number of matters, including alleged bullying (which the employment tribunal had found was a figment of her imagination) and a failure to pay contractual sick pay (which the employment tribunal had found was a repudiatory breach of contract). The employment tribunal found that the principal reason for the resignation was the alleged bullying and not the sick pay matter and rejected a claim of constructive dismissal.

The EAT held that the employment tribunal had been wrong to look for the "principal reason" for the resignation. It should have asked itself whether the breach of contract involved in failing to pay the sick pay was a repudiatory breach and, if so, whether it was a reason for the resignation, not whether it was the principal reason. It was enough that the employee resigned, at least in part, in response to the fundamental breach of failing to pay contractual sick pay.