Court of Appeal discourages EAT from substituting decision after successful appeal

Thanks to Paul Smith of Broadway House Chambers for preparing this case summary When may the Employment Appeal Tribunal substitute its own decision for that of the employment tribunal, rather than remit? Only in limited circumstances, held the Court of Appeal in Burrell v Micheldever Tyre Services. In this case, the employee succeeded in a claim of victimisation at first instance, but in the EAT the employer's appeal was upheld. The EAT, however, refused to remit the case back to the employment tribunal and instead determined that the victimisation claim failed. The employee appealed on the basis that the EAT ought to have remitted the matter. The Court of Appeal allowed the appeal for the reason that the employment tribinal's conclusions remained open to interpretation, but it reaffirmed the legal position concerning remittals, placing heavy reliance on the very recent decision of the same court in Jafri v Lincoln College [2014] EWCA Civ 449. In short, the EAT must not make its own assessment of a case on its merits: its role is restricted to monitoring the lawfulness of an employment tribunal's decisions. The EAT must remit a case unless (a) the original employment tribunal's error would not have affected the overall result, or (b) even if the error would have affected the result, the facts found by the original employment tribunal enable the EAT to determine what the result should have been. Maurice Kay LJ, giving the judgment of the court, stated (obiter) that he would have been minded to relax the law in this area in light of the fact that many employment tribunals are composed of judges sitting alone, and that the EAT has (since 2004) been subject to an overriding objective to "deal with cases justly". However, he felt bound by the decision in Jafri which reinforced the more rigid, conventional approach.

Reasonable Investigation: Misconduct which is also criminal

Thanks to Peter Taheri of 5 Essex Court for preparing this case summary

In a claim of unfair dismissal on grounds of misconduct, is an employment tribunal's failure to analyse whether the employer's investigation satisfied A v B [2003] IRLR 405 an error of law?

No, held the EAT in Yeung v Capstone Care Ltd.

In A v B, Elias P held that serious allegations of criminal behaviour must always be the subject of the most careful investigation. While it is unrealistic and inappropriate to require the safeguards of a criminal trial, a careful and conscientious investigation of the facts is necessary.

In Yeung, Langstaff P held that although the general propositions set out by Elias P deserve re-emphasis, an employment tribunal does not have specifically to mention A v B in a claim of unfair dismissal based on alleged criminal misconduct. The issue is whether the statute has been satisfied or not. A failure to give a specific analysis by reference to one case, though significant, is not a failure to convey an explanation to the Claimant as to why she lost.

Two other noteworthy points from the judgment:

1) The Claimant had not taken part in the disciplinary hearing but, on appeal, raised points that the employer felt merited re-investigation. However, the employer did not revert to the Claimant post-re-investigation with the new evidence.

Despite recognising the potential breach of natural justice, the EAT dismissed the appeal and held that the employment tribunal failing to deal specifically with the appeal officer's omission to revert to the Claimant was not an error of law: The point had not been raised below. The employment tribunal, "though tersely", had considered the point: it noted that the new evidence "corroborated" that from the original investigation. The new evidence only supported that which the appeal officer already considered sufficient to determine the appeal against the Claimant.

2) Despite the employment tribunal's omission to make an explicit finding that the investigation was reasonable, the insufficient reasons challenge was dismissed by the EAT: The employment tribunal had expressly recognised the need to find the investigation was reasonable and "plainly" the employment tribunal had thought the procedure was a fair one. Enough was said to tell the Claimant why she lost the case.

Adequacy of Reasons

Thanks to Barnaby Large of No.18 Barristers Chambers for preparing this case summary.

Can detailed reasons nevertheless fail to tell the parties sufficiently how their case was decided?

Yes, held the Court of Appeal in Co-Operative v Baddeley.

The Respondent sold products wholesale nearing their sell by date, save for prescription only medications (‘POMs’) and pharmacy only items (‘POIs’) which had to be incinerated.

The Claimant, the Respondent’s quality assurance officer, ensured sales excluded POMs or POIs. Trading Standards informed the Respondent they found POMs and POIs with a trader who provided the Claimant’s name.

The Claimant had raised concerns in relation to alleged selling of POIs and POMs from 2010, he said constituting protected disclosures.

The Claimant was dismissed and brought a claim he was unfairly dismissal principally due to these protected disclosures. The employment tribunal upheld the claim. The reasons, running for some 35 pages, explored the Claimant’s explanations without examining the Respondent’s investigations and conclusions. The Respondent appealed.

The EAT (Keith J. presiding), considering further reasons, dismissed the appeal. The Respondent appealed.

The Court of Appeal (Underhill LJ presiding) upheld the Respondent’s appeal, finding the reasons were not sufficient for the parties to understand why the employment tribunal reached its decision (referred to as ‘Meek Compliance’). They found “We are simply given a conclusion, which does not become any better explained by being repeated.”

Constructive Dismissal and Affirmation of Contract

Thanks to Will Young of Outer Temple Chambers for preparing this case summary

Can an employee be held to have affirmed the contract (and hence have lost any claim for constructive dismissal) if he or she gives longer than the contractual minimum notice period?

Yes, held the EAT in Cockram v Air Products Plc

The Claimant resigned his employment in response to what he considered to be a fundamental breach by the Respondent of the implied term of trust and confidence, but he gave 7 months notice rather than the 3 months required by his contract.

The EAT re-iterated that section 95(1)(c) of the Employment Rights Act 1996 varies the common law position by preventing the giving of notice when resigning from being automatically an affirmation of the contract.

Nonetheless, it held that the concept of affirmation remained relevant to the statutory question of whether there had been a constructive dismissal (as defined by section 95(1)(c) ERA). This would always be a fact sensitive question, and there was no rule that post-resignation conduct (such as working a long notice period) was excluded from consideration.

The Claimant had, for his own financial reasons, given a longer notice period than was contractually required, and had thereby affirmed the contract. His constructive unfair dismissal claim was therefore struck out.

Holiday Pay must Include Commission

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

Does the Working Time Directive require that a worker's statutory holiday pay not be limited to basic salary where commission is a part of remuneration?

Yes, held the European Court of Justice (ECJ), in British Gas v Lock, following the Advocate-General's preliminary ruling on the same case.

Mr Lock was a salesman on a basic salary with variable commission paid in arrears. Mr Lock's commission depended not on the time worked, but the outcome of that work, i.e. sales achieved. Mr Lock could not earn commission whilst on leave, and therefore would lose income by taking it. He brought a claim in the Leicester employment tribunal for his 'lost' holiday pay after taking leave in December 2011 to January 2012.

The employment tribunal made a reference to the ECJ to ask, broadly, if in calculating holiday pay, Member States must take measures to ensure that a worker taking leave is paid by reference to commission payments that the worker would have earned if at work, and, if so, how to work out that holiday pay.

The ECJ answered 'yes' to the first question, but left the calculation as a matter for the national courts to decide on the basis of the rules and criteria set out in the ECJ's case law on paid leave, and in light of the objective of the directive, to ensure that workers take paid leave.

The case reaffirms the principle that where a worker's pay consists of a basic salary and variable elements directly linked to work, then holiday pay should be paid on the basis that a worker receives pay comparable to normal pay whilst on holiday, and is not deterred from taking leave by financial considerations, cf. the pilots' case, Williams v British Airways.

The case leaves open the question of how best to ensure that the objectives of the directive are met, but did not consider whether employers might require workers to take their full entitlement to leave, thereby ensuring that they are not 'deterred' from taking leave, and it may be that some form of 'rolling-up' of commission on an averaging basis might be the best way forward.

Practitioners may wish to consider advising clients to review their contractual leave arrangements with a view to ensuring that commission or other relevant variable payments are factored into holiday pay due under the Directive. Any amendments to the Working Time Regulations to implement the effect of this judgment may take some time.

LLP Member is a 'worker'

Thanks to Lisa Joyce of DTM Legal LLP for preparing this case summary.

Can a member of a Limited Liability Partnership (LLP) be a 'worker' within the meaning of section 230(3) of the ERA 1996?

Yes, held the Supreme Court in Clyde & Co v Bates van Winkelhof.

Baroness Hale, giving the leading judgment, held that a member of an LLP (in this case, a fixed-share equity partner of a firm of solicitors) has worker status and thus is entitled to protection against whistleblowing detriments.  She stated that "one can effectively be one's own boss and still be a 'worker'", citing the example of a controlling shareholder in a company who is also the chief executive (para 39).  She made the point that such a finding is "entirely consistent" with the policy of the whistleblowing laws, and it is "particularly applicable to businesses and professions operating within the tightly regulated fields of financial and legal services." (para 46)

An employment tribunal will now decide the case on its merits.  For an excellent analysis of the implications of the decision, see this piece by CM Murray.

Admissibility of Evidence

Thanks to Paul Smith of Broadway House Chambers for preparing this case summary

Before deciding that evidence should be excluded, should an employment tribunal investigate the relevance of such evidence?

Yes, held the EAT in Kalu v Brighton & Sussex NHS Trust.

In this case, the employee brought claims of direct race discrimination and of victimisation, in which the protected act complained of was a (settled) previous race discrimination claim against the same employer. In his witness statement the employee had referred to matters which had been settled as part of the previous claim, and on the first day of the hearing he also sought to rely upon bundles of documents which had not been disclosed. The Respondents applied to have the offending evidence excluded. The employment tribunal duly excluded it, remarking that such evidence was not 'material' to the issues that fell to be decided.

The wing members (in a majority judgment) considered that although the employment tribunal had a wide discretion within which it could have excluded the undisclosed documents, it should not have excluded the paragraphs in the employee's witness statement. They commented that "the underlying principle for the Tribunal is the relevance of the evidence before it", and that the employment tribunal should show its reasoning and analysis in exercising its discretion. The excluded paragraphs gave insight into the background of the present claim and, as such, were relevant.

The President of the EAT, Langstaff J, in a dissenting judgment, agreed with the approach of the employment tribunal on the basis that they took into account the relevant factors in determining whether to exclude the evidence.

TUPE: Relocation and ETO

Thanks to Rad Kohanzad of Serjeants’ Inn Chambers for preparing this case summary Is the requirement to work in a different location following a TUPE transfer a 'change in the workforce' within the meaning of the (pre-2014 amendments) TUPE Regulations? No, held the EAT in NSL v Besagni.The London Borough of Barnet outsourced some of its parking operations and as a result the Claimants' workplace moved from Barnet to Croydon and Lancing. The Claimants refused to move and were consequently dismissed. TUPE Regulations provide that an employee is automatically unfairly dismissed if they were dismissed because of the transfer or for a reason connected to the transfer that is not an economic, technical or organisational reason entailing changes in the workforce. The EAT confirmed that, in accordance with Berriman v Delabole Slate Ltd [1985] ICR 546, the phrase 'changes in the workforce' does not include a change in the workplace. The position is likely to be different following the 2014 amendments to the TUPE Regulations which widen the meaning of 'changes in the workforce' to include changes in location.

Independent Trade Union

Thanks to Jasvir Kaur of Squire Sanders for preparing this case summary .

Is the question of whether a trade union is 'independent' a matter of jurisdiction for the employment tribunal when considering a claim for detriment on grounds related to union membership or activities?

No, held the Court of Appeal in Bone v North Essex NHS Trust

Mr Bone claimed he had been prevented from taking part in activities of an independent trade union. The employment tribunal upheld the claim. The EAT allowed the appeal on the basis that Mr Bone's union was not 'independent' and accordingly the employment tribunal did not have jurisdiction.

The Court of Appeal overturned the EAT's decision on the grounds that the issue of 'independence' was a constituent element of Mr Bone's claim and not a jurisdictional one. The employer never disputed the union was independent at the employment tribunal and the EAT erred in allowing a new line of defence. The matter has been remitted back to the EAT.

The Court of Appeal also found that a certificate of independence is retrospective in its effect for a reasonable period before the date of the certificate.

Tribunal Compensation Cap: High Court dismisses judicial review application

Under this statutory instrument, the maximum compensatory award a tribunal can make is a year's salary (which, itself, is capped at £76,574).

Last year, Alex Monaco of Compromise Agreements launched a judicial review application over the cap, arguing it disproportionately affects older people (as they are most likely to receive more than a year’s salary in compensation due to difficulty in finding another job).

On Tuesday (13 May), the High Court dismissed the judicial review application at a permission hearing. According to this report, the applicant is considering an appeal.

Employment Tribunal Fees - Remission Statistics

A written answer in the House of Commons has revealed that 24% of remission applications between 29th July and 31st December 2013 were granted (in part or in full).

Putting that in perspective, it amounts to remission being granted in just 5.5% of the 9,305 single claims and 1,519 multiple claim cases issued in that period.  In the original impact assessment for tribunal fees, the MOJ predicted that 31% of Claimants would be eligible for fees.

There is a full update on employment tribunal fees as part of the Employment Law MasterClass 2014.

[Thanks to various people on Twitter for these statistics, including Richard Dunstan, Michael Reed, Caspar Glyn QC and Darren Newman].

Employment status of director on insolvency of company

Thanks to Bonike Erinle of Farrar’s Building for preparing this case summary. Can the owner of a company be regarded as an employee for purposes of a claim for a redundancy payment? Yes, depending on the nature of the relationship between the individual and the company, held the Employment Appeal Tribunal in Secretary of State for BIS v Knight. The Claimant had been the sole shareholder and Managing Director of a company from the date of its incorporation in 1991 until the day it ceased trading in 2011. In the last 2 years of the company's trading, the Claimant forfeited her salary so as to enable other employees and creditors to be paid and, subsequent to the company's insolvency, applied for a redundancy payment from the Insolvency Service. The Tribunal received evidence to demonstrate that the Claimant had been engaged by her company by means of an unexecuted contract of employment, which set out a job description, stipulated working hours, stated a salary, provided for eligibility for bonuses and made provision for termination of the Claimant's contract of employment. The Claimant was also able to provide P60s which showed that she had been paid by the company (albeit in varying amounts, which fell below her contractual entitlement) as an employee. In dismissing the Secretary of State's appeal against the judgment in the Claimant's favour, the EAT reiterated the point that whether or not an individual is an employee of a company is a question of fact. As such, it was not perverse of the Tribunal to find that: (i) the Claimant was an employee of the company; (ii) there was no lack of mutuality or of consideration, and; (iii) the Claimant had not discharged or varied her contract of employment by not taking salary for the last 2 years. The Claimant's entitlement to a redundancy payment of £7,296 from the Insolvency Service would therefore stand.

National minimum wage

Thanks to Peter Taheri of 5 Essex Court for preparing this case summary

Where a care worker was required to work a number of 'sleep in' night shifts at the employer's premises, and be available for emergency purposes, did the night shifts constitute 'time work' for the purposes of the National Minimum Wage legislation (or was she merely 'on call')?

Yes, the worker was engaging in 'time work' on the 'sleep in' shifts, held the EAT in Esparon t/a Middle West Residential Care Home v Slavikovska.

The EAT recognised that it is 'very difficult' to distinguish between cases where the worker was 'at work', being paid to be on the employer's premises 'just in case', and where the worker was 'on call' and not deemed to be working the whole time.

An important consideration is why the employer requires the worker's presence. In this case, the worker was paid to fulfil the employer's legal obligations, under the regulations pertaining to care homes, to have staff available on the premises at all times. It was essential for the employer that staff be there even if they did nothing.

In the circumstances, the Claimant was entitled to be paid simply for being on the premises, regardless of whether she was allowed to sleep on shift.

Allegation of apparent bias

Thanks to David Leslie of Lyons Davidson for preparing this case summary Is there apparent bias where the Employment Judge's daughter is a partner in the firm representing a claimant? No, held the Employment Appeal Tribunal in South Lanarkshire Council v Burns. The EAT considered relevant authorities and held that in the above situation, although it might be best practice for the Employment Judge to inform parties of a family connection, there was no requirement for them to recuse themselves. Recusal would only be required if there was "something more, such as for example involvement by offspring in the case, before the informed and impartial bystander would be concerned about a real risk of bias". The EAT held that the Employment Judge's questioning of a Respondent witness did not amount to improper conduct of the hearing. The appeals against the Tribunal's findings in relation to unfair dismissal also failed.

Case Management Agenda

Back in March, the (then) President of the Employment Tribunals (England & Wales), Judge Latham, issued Presidential Guidance on Case Management, which included a case management agenda for preliminary hearings as an appendix at the back. The only problem was it was in .pdf format, so most people couldn't use it. Problem solved.  The assiduous James Arnold of Outer Temple Chambers has converted it into a Word document, which anyone is free to use.  -->  Download it here

Age Discrimination: Interesting Case

Thanks to Ed McFarlane of Deminos HR for preparing this case summary The EAT (Langstaff P) has handed down judgment in the case of Clements v Lloyds Bank, which concerned the interaction of discrimination and constructive unfair dismissal. The Claimant, in his 50s, was Head of Business Continuity for the Respondent. His manager told him in a discussion over performance in January 2012, 'You're not 25 any more'. The manager consistently denied making the remark. The employment tribunal found that the remark was made, and it was an act of age discrimination, but it did not form part of the conduct that led to the Claimant (successfully) claiming constructive dismissal on his resignation in July 2012. The Claimant appealed against the Tribunal's finding that his constructive dismissal was not caused by age discrimination, and lost. Whilst the 'age' remark was discriminatory, it was found not to be a material cause of the repudiatory breach of contract. The EAT noted that the ET had concluded that the resignation was not due to discrimination in any real causative sense, but how the Respondent went about trying to move the Claimant from his job because of his performance. The EAT asked whether a Claimant who resigns in response to a course of conduct that amounts to a repudiatory breach of contract can legitimately be said to have resigned in response to some aspects of that conduct, but not other aspects of it, even if those other aspects of conduct also amounted to a repudiatory breach, and held that the answer is that it depends on the facts found in their context. The EAT rejected a further ground of appeal to the effect that as the manager's evidence on the remark was not accepted, he should have been regarded as a liar, so his other evidence should have been treated with greater caution and the ET should have found conscious discrimination on the manager's part, the EAT noted that "it is always likely to be too cavalier an approach for a fact-finder to reject all of that which a witness says merely because on one point he is thought clearly to be telling an untruth."

Confidential Information: Inspection of Employees' Home Computers

Thanks to Sarah Russell of Slater & Gordon for preparing this case summary

Is it possible to obtain an interim injunction compelling former employees to allow viewing and copying of their personal computer?

Yes, in the circumstances of Warm Zones v Sophie Thurley.

The former employees were accused of having copied and/or disclosed a customer database to a competitor whilst still employed by Warm Zones. The overriding consideration in granting or declining the injunction was which course was likely to involve the least risk of injustice if it subsequently transpired to have been 'wrong' at the full hearing.

There was email evidence that strongly suggested the employees were attempting to sell information from the database. Their contracts of employment contained a confidentiality clause. The Judge was 'sceptical' as to whether the employees could prove alternative explanations for their behaviour at a full hearing. In the event that they couldn't, damages would not be an adequate remedy for Warm Zones.

The injunction was granted notwithstanding the employees' contention that the application was designed to seek privileged information and harass the First Defendant during her unfair dismissal proceedings against Warm Zones.

Constructive Dismissal and Contributory Conduct

Thanks to Mark Humphreys of Littleton Chambers for preparing this case summary

Can contributory fault be found in a case of constructive dismissal?

Potentially yes, but unusually and not in the circumstances of Firth Accountants v Law held the EAT.

Mrs Law was constructively dismissed and resigned after her employer raised performance and behaviour concerns about her with her son.

No contributory fault was found on the facts, but such a finding would, in any event, be unusual.

Constructive dismissal focuses on the respondent's conduct and their repudiation of the employment contract, for example here, by breaching trust and confidence.

In contrast, contributory fault relies on the complainant's conduct, its culpability and causative role.

However, the test for contributory fault in s.123 ERA can apply to any dismissal and so in an appropriate case may potentially be met with a constructive dismissal.

Changes to Employment Law

As of today, the time period for a transferor to provide employee liability information to a transferee increases from 14 days to 28 days before the transfer. This applies only apply to TUPE transfers that take place on or after 1 May 2014.

Further, from Tuesday (6th May), it becomes compulsory to notify Acas of an intended tribunal claim before presenting an employment tribunal claim form. Since 6th April, Acas early conciliation has been optional; from Tuesday it is compulsory.