Friday 28 December 2001

IR35 Decision - Court of Appeal

The Court of Appeal has handed down its decision in the IR35 case, Professional Contractors' Group v Inland Revenue.

In 1999, the government decided to prevent individuals, who would otherwise be classified as employees, from obtaining the financial advantages of self-employment by setting up one-man service companies and hiring out their services. This decision became known as 'IR35', the number of the Inland Revenue circular setting out the changes (which were enacted in three tranches, coming into effect on 6th April 2000).

The Professional Contractors' Group brought an application for judicial review, challenging the legislation as being contrary to European Law. On 2nd April 2001, Burton J. dismissed the application, holding the IR35 legislation to be lawful (see bulletin of that date).

The Professional Contractors' Group appealed.


The Court of Appeal upheld Burton J.'s decision, holding the IR35 legislation to be lawful. It rejected arguments that the legislation was anti-competitive or inhibited freedom of movement, and refused to refer the matter to the ECJ.

Of interest is Robert Walker LJ's comments about the confusing distinction between employment and self-employment, and his floating the possibility of recognising a middle status reflecting the "no-man's land between Schedule D and Schedule E, rather than insisting on the gulf which exists in theory (but, not always, in practice)..." (decision, para 54).

The full decision can be seen here.

Thursday 27 December 2001

Miriki v General Council of the Bar

The Court of Appeal has handed down its decision in Miriki v General Council of the Bar (21st December 2001).

Mrs Miriki was employed by the Bar Council. She was off work during a period when her department within the Bar Council was being reorganised, due to a combination of maternity leave and contracting malaria whilst on holiday in Nigeria. The Bar Council were unable to contact her during the consultation period, and eventually informed her of her redundancy during a meeting when she returned.

She claimed unfair dismissal and race discrimination. The employment tribunal held the dismissal had been fair, on grounds of redundancy, and dismissed the race claim. The EAT overturned the decision. It permitted various grounds to be argued at the substantive appeal which were wider than those permitted at the preliminary hearing. The Bar Council appealed.

The Court of Appeal held it was inappropriate for the EAT to allow arguments on wider grounds than those permitted at a preliminary hearing, subject to the EAT's case management powers to make limited departures from those grounds (which did not happen). The proper course for an Applicant who wished to raise further grounds was to appeal to the Court of Appeal.

Whilst obiter, of significant importance is the Court of Appeal's further departure from the House of Lord's controversial decision in Anya v University of Oxford (which provided that employment tribunals have to consider all allegations of race discrimination raised by Applicants, no matter how historical or peripheral, because they might be material to a decision whether to draw an inference of race discrimination). The Court of Appeal stated:

"Anya was a very different case...Each case must be decided in the light of its own particular circumstances. It cannot be right that in every case the tribunal must make express findings of every pirce of circumstantial evidence, however peripheral, merely because the applicant chooses to make it the subject of complaint."

The full decision can be seen here.

Thursday 13 December 2001

Discrimination Legislation

The government has, today, published its consultation document on legislation required to comply with the EC Equal Treatment Framework Directive. This requires the UK to introduce legislation prohibiting discrimination on grounds of age, religion or belief, and sexual orientation within the fields of employment and training.

It will also require the extension of some of the provisions of the Race Relations Act 1976 and the Disability Discrimination Act 1995 - the most important one being the removal of the 15-employee 'small employer' exemption.

The government is also considering introducing a single 'Equality Commission' (to replace the EOC, CRE and DRC).

The government summary very kindly points out that the cost of the new legislation will only be £157 per employer, whereas the benefits could amount to up to £567million.

The consultation period finishes at the end of March 2002.

For further information, and a copy of the consultation paper, click here.

Wednesday 12 December 2001

Sex Discrimination (Amendment) Bill 2001

The Sex Discrimination (Amendment) Bill 2001 was laid before the House of Lords earlier today.

If enacted, it will extend anti-discrimination legislation in connection with the provision of goods and services to private member clubs, but it will continue to permit wholly single-sex clubs.

It will also permit discrimination in sporting activities where a prize of over £1,000 is offered (ie a similar prize need not be offered to competitors of the other gender).

The Bill can be seen here.

Tuesday 4 December 2001

Dignity at Work Bill 2001

The Dignity at Work Bill 2001 has been introduced in the House of Lords.

It provides that all employees "shall have a right to dignity at work", and that a dignity clause shall be implied into all contracts of employment.

It prohibits harassment, bullying and any conduct which causes the employee "to be alarmed or distressed", including:
• behaviour on more than one occasion which is offensive or abusive;
• unjustified criticism on more than one occasion;
• punishment imposed without reasonable justification; or,
• changes in the duties or responsibilities of the employee to the employee's detriment without reasonable justification.
The right applies to contract workers as well as employees.

The Bill provides for complaints to be brought before an employment tribunal. The tribunal can make a declaration, a recommendation or order compensation (including damages for injury to feelings).

There is a statutory defence that can be made out if:
• the employer has in force a 'Dignity at Work Policy' and has taken reasonable steps to enforce it;
• the acts complained of are repudiated by the person in charge of the policy within 3 days of complaint ('repudiated' is not defined, but it is stated to include a repudiation in writing to the employee and to any other employees who witnessed or knew of the act complained of); and,
• the employer takes all steps reasonably necessary to remedy any loss suffered by the complainant.
The Bill will also amend section 95(1)(c) of the Employment Rights Act 1996 (the section defining constructive dismissal), to provide that breach of the implied dignity clause can amount to constructive dismissal.

The Bill can be seen here. I am offering odds on the Bill failing to be enacted due to lack of parliamentary time!

Monday 3 December 2001

Launch of Age Positive Website

The government has launched an Age Positive website to provide practical help for employers and individuals, as part of a major publicity drive in the run-up to the new anti- age discrimination laws that must be introduced by December 2006.

The website has a 'Games' section, which allows you to test whether you are guilty of age stereotyping!

The government has also published its assessment of the voluntary Code of Practice on Age Diversity in Employment. According to the government statistics:
• 25% of older people believe that they have been discriminated against;
• 90% of people believe that employers discriminate on grounds of age;
• about 30% of employers are aware of the Code of Practice;
• the use of age as a criterion in recruitment has reduced to 13%

A copy of the full press release is available here.

Tuesday 20 November 2001

New Cases


1. ECJ Opinion - Maternity Benefits
2. New EAT Cases

1. ECJ Opinion - Maternity Benefits

The Advocate General has provided his opinion in C-476/99 Lommers v Minister van Landbouw, Natuurbeheer en Visserij. At present, it is available in French, German and Dutch only.

According to the Federation of European Employers, he has advised the ECJ that is lawful for an employer to offer subsidised childcare to female employees in preference to male employees. They state that "in an extensive and frequently convoluted rationale, [Advocate-General] Alber sets aside the views of the European Commission which clearly opposed such a measure as not constituting legitimate positive action under the 1976 Equal Treatment Directive." The case now goes to the ECJ for a final decision sometime next year.


2. New EAT Decisions

These cases unreported (although some may be reported in due course). The transcripts were posted today on the EAT website.

(Lord Johnstone, 18th October 2001)
In order for the duty to make reasonable adjustments under the Disability Discrimination Act 1995 to bite, the disabled employee needs to establish that an "arrangement made by or on behalf of an employer" places him at a substantial disadvantage. The EAT considers that the word "arrangement" envisages positive steps taken by the employer, and an arrangement cannot arise by means of an omission. Thus the failure to pay a disabled employee his sickpay through administrative error was not capable of amounting to an arrangement, and thus not capable of triggering the duty to make reasonable adjustments.

(Lindsay J., 6th November 2001)
A further gloss on the Court of Appeal's decision in Anya v University of Oxford (see bulletin 24/3/01) - although the EAT takes pains to insist it is following Anya and not limiting its application. Anya provided that in discrimination cases, the employment tribunal must examine every issue raised by an Applicant, and make findings of fact on each of them. However, this case states that the tribunal does not need to go through every allegation raised by the applicant, when the issues raised are "otiose".


As foreshadowed in vague (and it seems, somewhat inaccurate) reports in the Sunday papers, the government has today announced its new proposals to help parents work more flexibly - primarily to allow working parents to work part-time. The proposals will apply to parents of children under 6 years old (and to parents of disabled children under 18 years old).

According to this afternoon's DTI press release, the proposals will operate in the following way:

"- The employee makes a written request to their employer, which is followed up by a meeting. The employer should make a practical business assessment on how the flexible working can be arranged. It is estimated, on the basis of current practice, that 80% of requests will be settled at this meeting.

"- If a request cannot be accepted, the employer must fully explain the business reasons in writing. The employee can appeal a negative decision using dispute resolution and ultimately go to an employment tribunal. Estimates, based on current practice, suggest that only 1% of requests will end up at a tribunal."

A copy of the full press release is available here.

Monday 19 November 2001

Age Equality Commission Bill 2001

The Age Equality Commission Bill 2001, a private member's Bill introduced in the summer, has now been published on the internet.

It proposes the establishment of an Age Equality Commission, whose duties shall be to advise the government on matters relating to age discrimination, assess the impact of (but not draft) legislation prohibiting age discrimination, and prepare guidelines for eliminating age discrimination.

To see the Bill, click here.

Thursday 8 November 2001

Employment Bill 2001

The government has published the Employment Bill 2001, which has formed the subject of much rumour and speculation in recent weeks.

It covers working parents, dispute resolution, and improving the skills of employees.

The main provisions are:
• six months' paid, and a further six months' unpaid, maternity leave for working mothers;
• six months' paid, and a further six months' unpaid, leave for adoptive parents;
• two weeks' paid paternity leave for working father;
• an increase in SMP from £62pw to £100pw;
• reimbursement of maternity, paternity and adoptive payments by employers from the government, with small employers receiving 100% reimbursement plus a bonus payment on top;
• the establishment of union learning representatives (with a right to paid time off work);
• a questionnaire procedure in Equal Pay cases;
• a power for the Secretary of State to introduce regulations protecting fixed-term workers;
• new systems for handling disputes in the workplace;
• a fast track system for some employment claims.
If enacted, it is anticipated these rights will come into force from April 2003.

The government has also formally announced it will not be introducing charges for applicants bringing tribunal claims.

For further information, click here.

Friday 2 November 2001


These cases are unreported (although some may be reported in due course). The transcripts were recently posted on the EAT website.

(Lindsay J., 2nd October 2001)
The police were entitled to refuse to employ a transsexual as a police constable, since the job involved making intimate body searches and thus it needed to be undertaken by one gender to preserve decency or privacy (SDA 1975, s7(2)(b))

(Douglas Brown J., 26 September 2001)
Mr O'Murphy worked for Hewlett-Packard through the medium of a limited company which, in turn, had been engaged via an employment agency. The EAT held that he was not an employee for unfair dismissal purposes. The contract between Hewlett Packard (the client company) and the employment agency stated that "staff provided…will be under the control of [Hewlett Packard] regarding performance and discipline and shall obey all reasonable and lawful instructions given by [Hewlett Packard]" - thus there was clear control by the client company. However, because there was no contractual nexus between Hewlett Packard and Mr O'Murphy, save for a confidentiality agreement, there could be no contract of employment implied between them.

(Ms Recorder Cox QC, 21 September 2001)
A breach of the term of trust and confidence, ie conduct calculated and likely to destroy or seriously damage the relationship of confidence and trust between employer and employee, will always amount to a fundamental breach of contract entitling the employee to resign. In other words, it is an error of law for a tribunal to find that a breach of trust and confidence has occurred, but then go on to say it was not sufficiently fundamental to entitle the employee to resign.

(Ms Recorder Cox QC, 21 September 2001)
Under s186 of the Employment Rights Act 1996, the DTI is obliged to make payments of arrears of wages to employees of an insolvent employer, subject to a statutory cap (then £220, now £240) for each week's pay. The issue in this case was whether the cap should be applied before or after deductions for tax and national insurance (the former being more favourable to the DTI, the latter more favourable to the employee). The EAT confirmed pre-existing authority that the cap should be applied before deductions for tax and national insurance: thereby resulting in the employees recovering less that the statutory cap for each week's pay.

(HHJ Peter Clark, web transcript undated 2001)
The Council proposed to make about 350 staff redundant - thus triggering obligations to consult with the recognised unions at least 90 days before the first dismissal took place (s188 TULCRA 1992). For that purpose, 'dismiss' meant the date on which notice of dismissal takes effect, not (as previous authority suggested) the date that notice of dismissal is given. Moreover, it is not open to an employer in such circumstances to argue that dismissal would be futile (as in a Polkey redundancy case) - subject to the statutory defence, the duty to consult is mandatory.

(Ms Recorder Slade QC, 13 September 2001)
When exercising discretion whether to extend time under the 'just and equitable' jurisdiction of the Race Relations Act 1976, the tribunal is under a duty to make a finding as to the reason for the delay in presenting the claim. Failure to make such a finding is an error of law.

Thursday 18 October 2001

Sex Discrimination (Election Candidates) Bill

The government has published the long-expected Sex Discrimination (Election Candidates) Bill.

It inserts a new section 42A into the Sex Discrimination 1975, which has the effect of disapplying the 1975 Act to any arrangements relating to the right of a registered political party to regulate the selection of that party's election candidates in national, European and local elections.

In other words, it will be permissible for political parties to adopt women-only shortlists, a practice which was previously ruled unlawful.

In order for the exemption to apply, the arrangements must be for the purpose of reducing inequality in the numbers of men and women elected.

The Act (assuming it is enacted) will expire at the end of 2015, unless extended by statutory instrument.

The Bill can be downloaded from here.

Friday 12 October 2001

House of Lords on Victimisation

House of Lords Opinion - Victimisation under the Race Relations Act 1976

Yesterday (Thursday, 11th October) the House of Lords handed down its decision in Chief Constable of West Yorkshire Police v Khan, holding that an employer who refuses to provide a reference for an employee who has claimed race discrimination is not necessarily thereby guilty of victimisation.

Sergeant Khan had applied for, and been refused, promotion to inspector on several occasions within the West Yorkshire police. He lodged a claim with the employment tribunal alleging that the refusal to promote him was on grounds of his race (Indian).

Whilst that claim was pending, he applied for promotion/transfer to the Norfolk police force. The West Yorkshire police refused to provide a reference (after seeking legal advice) on the grounds of the pending litigation. They argued that they were placed in the invidious position of either having to repeat what might be a racially motivated assessment (thereby re-discriminating and possibly giving rise to an award of aggravated damages), or not repeating their previous comments and affecting the Force's credibility in Sergeant Khan's discrimination case.

By refusing to provide a reference because of a pending race discrimination claim, was the police force guilty of victimisation?

The House of Lords unanimously held that the police force was not guilty of victimisation.

Lord Nicholls pointed out that a finding of unlawful victimisation would mean that West Yorkshire police should have given Norfolk police a reference which have repeated the very views which were being challenged in pending judicial proceedings in the industrial tribunal as evidence of unlawful racial discrimination. This, said Lord Nicholls, "is a surprising proposition. To my mind it has only to be spelled out for it to be apparent that this cannot be right". He went on to say that "Employers, acting honestly and reasonably, ought to be able to take steps to preserve their position in pending discrimination proceedings without laying themselves open to a charge of victimisation".

The question which mattered was therefore "was Sergeant Khan refused a reference by reason that he had brought proceedings against the chief officer of police under this Act?"

The House of Lords said the answer was no. The reason why West Yorkshire Police refused to give a reference was NOT because Sergeant Khan had brought proceedings against them but because they were advised by their in-house legal department that it would be inappropriate to give a reference because there was pending litigation raising relevant issues. In traditional legal language, the institution of proceedings by Sgt Khan was a causa sine qua non of the refusal to give a reference but it was not the causa causans of that refusal.

Lord Mackay said that "once proceedings have been commenced, a new relationship is created between the parties. They are not only employer and employee but also adversaries in litigation. The existence of that adversarial relationship may reasonably cause the employer to behave in a way which treats the employee less favourably than someone who had not commenced such proceedings" and suggested that "a test which is likely in most cases to give the right answer is to ask whether the employer would have refused the request if the litigation had been concluded, whatever the outcome".

The House of Lords also considered who the correct comparator should be. Lord Scott stated that "the treatment of Sergeant Khan should be compared to the treatment that would have been accorded to an officer in a position the same in all respects as Sergeant Khan's save only that this hypothetical officer had not done the protected act, ie, in this case, had not brought race discrimination proceedings... It provides to employees who do one or other of the protected acts specified in section 2(1) the protection that Parliament must have intended them to have."

Thanks to Henry Scrope of DiscLaw Publishing ( for sending me his summary of this case (which I have shamelessly plagiarised).

Wednesday 10 October 2001

New TUPE decision


An important - and perhaps controversial - EAT decision considering when a TUPE transfer occurs. The case is reported on the EAT website.

CELTEC LTD -v- ASTLEY + others
(EAT, Hooper J. presiding, 5th October 2001))

Prior to 1990, vocational training and enterprise activities were managed by the Department of Education. In 1989, the government announced the creation of Training and Enterprise Councils (known as TECs). Approximately 80 TECs were set up, using (in the main) the same premises, databases and staff as had been doing the job under the Department of Education. They took over the Department of Education's existing contracts with suppliers and other third parties.

This case was concerned with the North Wales TEC, which began operations in about September 1990. In common with the other TECs, it was a company limited by guarantee and was initially staffed by civil servants, previously working for the Department of Education, who were seconded out for a 3-year period to the TEC. The terms of secondment provided that they continued to be civil servants and that, at the end of the period, they could extend the period of secondment or return to normal civil service duties.

In September 1991 the government decided to end the secondments and arrange for staff to be directly employed by the TECs. Following a period of consultation, all staff were offered the opportunity to return to the civil service at the end of their secondment, or resign from the civil service and enter into contracts of employment with the TEC. Many employees, including the Respondents to this appeal, adopted the latter option. The three in question, who brought their claims as test cases, resigned and entered into new contracts in about October 1993 (although the process extended until 1996 for other employees).

It was common ground at the appeal that a TUPE transfer took place. The question was, when did it occur?

If the TUPE transfer took place in September 1990, then "at the time of the transfer" (being the wording in ERA 1996, s218, dealing with continuity of employment) the employees were, and remained, employees of the Department of Employment. Thus s218 would not grant them continuity of employment.

If, however, the TUPE transfer was a gradual process occurring between September 1990 and October 1996 (as the staff transferred), then the employees would have retained continuity of employment for their years spent with the civil service.

The majority of the EAT (including Hooper J.) held that the correct test for the timing of the transfer is "when the new employer takes over the actual occupation and control of the old business". This occurred in September 1990, and thus the employees remained employed by the Department of Employment after the transfer. Thus continuity of employment was not preserved.

The minority member agreed with the decision of the original tribunal, holding that the transfer took place over a period of six years and was effected by a series of transactions, ie the transfers of the individual employees.

The EAT granted permission to appeal to the Court of Appeal without recalling the parties for argument - thus acknowledging the importance/complexity of the point.

[Thanks to John Bowers QC of Littleton Chambers, Counsel for the successful TEC, for sending me this transcript.]

Friday 28 September 2001

Amendment to the Working Time Regulations

In the light of BECTU v UK (see bulletins dated 26th and 28th June 2001), the government has this afternoon announced an amendment to the Working Time Regulations. This follows a 4-week consultation period which concluded last month.

The amendment will remove the 13-week qualifying period for holiday pay, and will substitute a right to take one-twelfth of the annual holiday for each month worked, rounded to the nearest half-day.

This remains technically in breach of the EC Working Time Directive, since it replaces the 13-week qualifying period with, in practice, a one-month qualifying period. However, similar systems are operated by other European jurisdictions and it is unlikely that the new law will be challenged.

The amendments are due to come into force from 25th October 2001. The amending SI is not yet available, but soon should be placed on the HMSO website at

AND a reminder: from Monday, the national minimum wage increases to £4.10ph for adult workers (from £3.70), and to £3.50ph for workers under 21 (from £3.20).

Monday 10 September 2001


After many months of waiting, the DTI has published its consultation paper on amendments to the TUPE Regulations. The consultation period lasts until 15th December 2001.

The main proposals, on which views are sought, are:

• options for new rules as to when TUPE applies, particularly in contracting-out cases;
• proposals for better protection of occupational pension rights;
• greater flexibility when applying the Regulations to transfers of insolvent businesses, to make it more attractive for potential buyers to rescue those businesses and save jobs (including that some - albeit limited - liabilities of insolvent transferors be met from the DTI National Insurance Fund);
• better guidance for both employees and employers on the extent of protection against transfer-related dismissals - in particular, clarifying the 'ETO' defence;
• making it clear that TUPE does not preclude transfer-related changes to terms and conditions, where the changes are made for an ETO reason; and,
• a legal requirement for the old employer (transferor) to give the new employer (transferee) proper notification about the rights and obligations being transferred.

The full consultation document, and information about the consultation process, can be found at

[Thanks to Simon Jeffreys of CMS Cameron McKenna for notifying me of this news item]

Sunday 2 September 2001


These cases are unreported (although some may be reported in due course). The transcripts were recently posted on the EAT website.

(Douglas Brown J., 10th July 2001)
A short delay by an employer in paying sick-pay, where there was a genuine dispute over whether the employee was malingering and the employer was seeking medical evidence, was not a fundamental breach of contract amounting to a constructive dismissal.

(Mr Commissioner Howell QC, 27th July 2001)
An employee claiming to be physically disabled within the meaning of the Disability Discrimination Act 1995, but who was actually suffering from a functional overlay (ie there was nothing physically wrong with them, but he had a psychological condition which had the effect of physically handicapping him) was not suffering from a 'physical impairment' within the meaning of the Act. Moreover, there is no duty on a tribunal to investigate whether the functional overlay amounts to a 'mental impairment' within the meaning of the Act unless the parties call evidence on the point and pursue it as a discrete argument.

(Douglas Brown J., 25th July 2001)
A useful summary of the principles relating to when a chairman can sit alone to hear a case.

(HHJ Wakefield, 26th April 2001)
An unrepresented employer's witnesses failed to attend the tribunal hearing because, for unforeseen reasons, the employer was understaffed and could not spare the witnesses on the day of the hearing. The chairman proceeded with the hearing without asking the employer whether it wished to seek an adjournment. The EAT held that there is no duty on a tribunal chairman to ask an unrepresented litigant whether they wish to apply for an adjournment in such circumstances.

Thursday 16 August 2001

Leggatt Report


The government has, today, published Sir Andrew Leggatt's report on the tribunal system.

The report is long! Readers brave enough to try it can access it, together with the consultation paper issued by the government based on the report's recommendations, from here. Ignore the date of March 2001 on the website - it was only made publicly available today!

With regard to employment tribunals, the main recommendations are:

(a) ETs should remain as tribunals - there should be no new 'employment court' system set up to deal with all claims arising from employment disputes (paras 3.22-3.24). However, further consideration should be given to transferring employment-related claims (eg personal injury sustained at work) to the ETs jurisdiction (Part II, ETs, para. 28)

(b) Administrative responsbility for ETs and the EAT should be transferred from the DTI to the LCD (paras. 3.25-3.28)

(c) A recommendation to the government that it introduces a system of licensing for unqualified employment advisers (or set up other safeguards) (paras. 4.33-4.39)

(d) Possibly increase the number of locations at which ETs sit (Part II, ETs, para 7)

(e) Legal aid should not be extended to employment tribunals (Part II, ETs, para 12)

(f) Costs should not follow the event (Part II, ETs, para 24) - although a study should be set up to look into this issue further in the future (Part II, ETs, para 23)

(g) The test for permission to appeal from the EAT to the Court of Appeal be brought in line with other areas of law, namely from 'real prospect of success on a question of law' to 'cases which raise an important point of principle or practice' (Part II, ETs, para. 29)

The consultation paper invites views on a vast range of issues. The closing date for submissions is 30th November 2001.

Monday 30 July 2001

Burden of Proof Directive

Further to my bulletin dated 25th July, the SEX DISCRIMINATION (INDIRECT DISCRIMINATION AND BURDEN OF PROOF) REGULATIONS 2001 have today been placed on the HMSO website.

They come into force on 12th October 2001.

Wednesday 25 July 2001

Burden of Proof Directive

SEX DISCRIMINATION - BURDEN OF PROOF DIRECTIVE ==============================================

The Sex Discrimination Burden of Proof Directive 1997 was due to come into force at the beginning of this week.

Richard Lister of Lewis Silkin tells me he has made enquiries of the Cabinet Office, who say that Regulations were laid before parliament last Friday, and are due to come into force in 12 weeks time.

The Regulations will make two changes to the Sex Discrimination Act 1975:

First, inserting a section 63A which provides that where an applicant proves facts giving rise to a prima facie case of discrimination, the tribunal SHALL uphold the complaint of discrimination unless the Respondent proves that he did not commit the act. In other words, the burden of proof formally shifts from Applicant to Respondent. This is no more than already happens in practice pursuant to King v GB China Centre.

Secondly, the definition of indirect discrimination will be amended from making in unlawful to impose an unjusifiable "requirement or condition" to a "provision, criterion or practice". This will not make a significant difference.

Monday 23 July 2001

Tribunal Reform Consultation Paper


Within a week of the introduction of the new procedural regime, the government has issued a consultation paper on further reform of the employment tribunals.

Subscribers may have seen some details of these proposals in a leaked report to The Times on Friday 20th July. The full consultation paper is now available at . Responses are invited by 8th October 2001.

The main proposals, on which the government seeks views, are:

- organisations which do not have dispute resolution procedures in place - or do not use them when workplace disagreements arise - to have arrangements for managing such disagreements;

- increasing awards at employment tribunals where a basic new dispute resolution procedure has not been used by the employer - with awards being reduced where an employee has not used the grievance procedures before applying to the tribunal;

- limited extensions to the time limit for lodging tribunal claims where an internal disciplinary or grievance procedure is still in play - in order to facilitate resolution in the workplace;

- an issue fee (£100 has been mooted) to issue an application in the tribunal. Exemptions would apply to those on benefits;

- a presumption in favour of awarding costs in 'weak' cases, with an obligation for tribunals to provide reasons where they do not award costs;

- tribunals to be allowed the discretion to award wasted non-legal costs (such as a party's overnight expenses) in circumstances where a party has acted vexatiously.

- a fast-track system to be introduced for certain jurisdictions (such as unlawful pay deductions and breach of contract);

- allow the Presidents of the Employment Tribunals to issue practice directions, in order to achieve greater consistency throughout the country

- introducing a fixed period of conciliation to focus parties' minds within that period on whether or not they were interested in reaching a settlement.

- a limited amendment to unfair dismissal legislation to allow employment tribunals to disregard minor procedural errors by employers, provided such errors have made no difference in practice and the dismissal is otherwise fair.

Wednesday 18 July 2001

Upper Qualifying Age Decision


The Employment Appeal Tribunal has today handed down the long-awaited decision in HARVEST TOWN CIRCLE v RUTHERFORD, dealing with the question of whether the upper qualifying age for unfair dismissal and redundancy is contrary to Article 141 of the Treaty of Amsterdam.

Harvest Town Circle dismissed Mr Rutherford, who was aged 67. He claimed unfair dismissal. The Respondent relied on sections 109 and 156 of the Employment Rights Act 1996 (which states that employees cannot claim unfair dismissal / redundancy if they are over the normal retirement age, presumed to be 65).

Mr Rutherford responded by arguing that ss 109 and 156 were contrary to Article 141 - ie equal pay for men and women. This is because unfair dismissal and redundancy rights count as 'pay', and more men than women work beyond age 65. Therefore the upper qualifying age is indirectly discriminatory on grounds of sex against men, since more men will work beyond 65 and therefore fail to receive the 'pay' of unfair dismissal and redundancy rights.

The Employment Tribunal found for Mr Rutherford and, following the earlier case of NASH v MASH/ROE [1998] IRLR 168, held that ss 109 and 156 were unlawful and should not be followed.

The EAT overturned the tribunal's decision on technical points, but left the matter open for future attempts.

The basis of the decision was twofold:

First, the EAT held that the statistics used by the employment tribunal were unsatisfactory. It gave guidance on the statistics that would probably be needed to attack ss 109 and 156 successfully, and remitted the matter back to the employment tribunal.

Secondly, it held that the tribunal had erred in failing to invite the Secretary of State to give evidence on objective justification. It held that it was not for a small employer to justify such a fundamental statutory provision, and the Secretary of State should - if necessary - be witness summonsed to explain how the sections can be objectively justified or, alternatively, explain why he was not going to attempt to justify them.

The upper qualifying age saga has not been laid to rest. The EAT's guidelines on the necessary statistics (which are set out in detail in the
decision) are cumbersome and will be an extremely difficult hurdle to overcome. Nevertheless, there can be little doubt that an attempt will be made. The decision is undoubtedly correct - and it is not for the EAT to make findings of facts on statistics that are not currently available.
However, it means that employers remain uncertain as to whether they have immunity from unfair dismissal claims when dismissing staff over retirement age.

Monday 16 July 2001

New Tribunal Procedure Rules

1. New Tribunal Procedure Rules
2. Advertisement - Boodle Hatfield



The Employment Tribunals (Constitution and Rules of Procedure) Regulations
2001 come into force today, replacing the 1993 Regulations of the same name.
They apply to all tribunal proceedings, irrespective of when (or if) the case commenced.

The full Regulations can be downloaded from (and see for the amendment to the commencement date from 18th April 2001 to 16th July). They are already included in the latest update to Harvey on Employment Law at [R-1317].

The important changes are:

(1) introduction of an "overriding objective" to deal with cases "justly", which is defined to include ensuring the parties are on an equal footing, saving expense and dealing with cases in a way that is proportionate to the issues. The parties are placed under a duty to assist the tribunal in furthering the overriding objective. Users of the civil courts will recognise this formula from the Civil Procedure Rules. Applicants may wish to rely on this to persuade tribunals to order Respondents to share the cost of instructing experts. This 'proportionality' requirement may go some way towards limiting the effect of the recent House of Lords decision in Anya v Oxford University (see bulletin dated 24/3/01), which obliged tribunals to investigate every detailed historical allegation of less favourable treatment in discrimination cases.

(2) late IT3s are no longer deemed to include an application to extend
time. Such an application must now expressly be made (the old position being that there was a 'deemed' application if reasons for the delay were given when lodging the IT3).

(3) the costs rules have changed, so that the tribunal has power to award
costs if a party - or his/her representative - has acted "vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by a party has been misconceived". The introduction of the 'misconceived' test should, in theory, increase the number of costs orders made. Further, the tribunal now has power to assess costs in the sum of up to £10,000 (increased from £500). The ability for the parties to agree a higher sum of costs, or for the tribunal to refer the costs to the county court for taxation, remains.

(4) the rules relating to giving directions as to evidence have been simplified.



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Friday 13 July 2001

New EAT Decisions

The following decisions have been placed on the EAT website in the last few days. The judgments can be downloaded from

* * * * * * *


A standard misconduct unfair dismissal case. It is of use because of the proposition laid down by the court - perhaps more clearly than in previous cases - that:

"We think that in general terms any employer who operated a disciplinary process in which he who investigated the alleged defence was he who judged it, or any employer who operated a disciplinary process in which there was no right of appeal, would (and in most cases perhaps should) be found to have been outside the bounds of the fairness required by section 98 of the Employment Rights Act 1996. It must be all the stronger when those two features are present in the same process."

This will be a very helpful quotation for Applicants who are pursuing claims involving procedural unfairness. Note, on the facts, the EAT did not interfere with the finding that the dismissal was fair.

* * * * * * *

EKPE v METROPOLITAN POLICE COMMIESSIONER (Mr Recorder Langstaff QC, 25th May 2001)

This deals with the vexed question of what amounts to a disability. Several issues arose in the case. The interesting one deals with 'normal day-to-day activities'.

The Applicant had difficulty applying make-up and putting rollers in her hair. The tribunal held these were not 'normal day-to-day activity', because "they are activities carried out almost exclusively by women.
Secondly, using rollers is an activity that the Tribunal believes is only carried out by a minority of women. Even if the Tribunal is wrong as to the proportion of women who use rollers, it is clear that these are activities that are normal only for a particular group of people, namely mostly women."

The EAT overturned this, stating "we should nonetheless emphasise that what is normal cannot sensibly depend on asking the question whether the majority of people do it. The antithesis for the purposes of the Act is between that which is "normal" and that which is "abnormal" or "unusual" as a regular activity, judged by an objective population standard. Just as what is "substantial" for the purposes of the Act may best be understood by defining it as anything which is more than insubstantial, so too may what is "normal"
best be understood by defining it as anything which is not abnormal or unusual (or, in the words of the Guidance, "particular" to the individual applicant)."

* * * * * * *

(Charles J., 15th May 2001)

An unremarkable case on the facts. It contains a useful analysis of the extent to which tribunals are obliged to give reasons, and contains helpful guidance on Meek v City of Birmingham and subsequent cases. A good case to rely on when attacking a tribunal's decision as containing inadequate reasoning.

Thursday 5 July 2001

Fixed Term Workers Regulations


Implementation of the Fixed Term Employees (Prevention of Less Favourable
Treatment) Regulations 2001, which were planned to come into force on 10th July 2001, is being delayed. No alternative commencement date has been announced.

For details of the draft Regulations, see bulletin dated 10th March 2001.

The government has explained the delay (at as being due to "particular problems with implementation in the UK", without stating what those problems are. It relies on a clause in the Fixed Term Workers Directive
( giving member states up to an extra year to implement the Directive if "special difficulties" exist.

What the government omits in its press release is that the implementation date for the Directive was 10th July 1999. Even allowing for the extra year, the Directive should have been implemented by 10th July 2000. The UK has therefore been, and continues to be, in breach of the Directive.


Fixed Term Workers - Correction


A correction to the previous message.

I stated that the Fixed Term Workers Directive had to be implemented by 10th July 1999. In fact, this date was a misprint in the English version of the Official Journal. The implementation date was corrected by a Corrigendum to the Directive, to 10th July 2001 with a 12-month extension if "special difficulties" exist.

So the government will not be out of time for implementing the Directive provided it can establish the "special difficulties".

(Thanks to the three people who corrected me on this!)

Tuesday 3 July 2001

Seminar Notes - Remedies in Employment Disputes


The notes from the 2 Gray's Inn Square seminar on Remedies in Employment Disputes (June 2001) are available free of charge to subscribers to this mailing list.

For a copy of the notes (Word format, 122K), please REPLY to this Email.

Thursday 28 June 2001

Consultation Paper on Paid Holiday

The government has today published a consultation paper proposing changes to the Working Time Regulations 1998.

These proposals are as a result of Tuesday's decision of the ECJ in BECTU v UK (see bulletin 26.6.01), holding that the UK 13-week qualifying period for holiday pay is in breach of the Working Time Directive.

Curiously, the proposed amendments provide that in the first year of employment, holiday pay "shall the rate of 1/12th for each month of employment". In other words, holiday entitlement will not start until the worker has worked for one month.

This appears to remain incompatible with the Working Time Directive, which provides for the right to paid holiday to begin accruing from the first day of employment.

The consultation paper can be downloaded from (Adobe Acrobat needed). The closing date for responses is 27th July 2001.

Wednesday 27 June 2001

Lord Chancellor changes Discount Rate


This afternoon, the Lord Chancellor has announced a reduction in the discount rate to 2.5%.

This will affect awards for long-term future loss of earnings in unfair dismissal and discrimination claims (the reduction from the long-standing 3.0% discount rate means that multipliers will be higher, and therefore awards will be higher).

The change will take effect from 28th June 2001.

Tuesday 26 June 2001

13-week holiday rule unlawful

A number of people have been having problems receiving bulleins recently.
Until the problem is resolved, all messages are being sent in 'text' format.
Apologies for the unattractive appearance.


The ECJ has held, following the Advocate-General's opinion (see bulletin 8th February 2001), that the condition under the WORKING TIME REGULATIONS stating that the right to paid holiday does not accrue until workers have been employed for 13 weeks is unlawful.

This means that the UK will have to change the WORKING TIME REGULATIONS to remove the 13-week qualification period for paid holiday.

This decision will particularly affect people working in the media (who usually work on short-term contracts). It will also affect sectors such as cleaning, catering and security services, where short-term contracts abound.
Likewise, supply teachers (who often work for short periods) and temporary workers will benefit.

Monday 25 June 2001

TUPE decision - ADI v Firm Security

Instructions on how to subscribe to this bulletin, and a DISCLAIMER, appear at the bottom of this Email.

On Friday (22nd June 2001), the Court of Appeal handed down its decision in ADI (UK) Ltd v Firm Security Group Ltd..

ADI provided security services at a shopping center. ADI terminated the contract, and the shopping centre initially stated it would take over the employment of the nine security officers. However, following a dispute over terms (prior to the 'transfer'), with the officers apparently indicating reluctance to be transferred, the shopping centre announced it would not be taking on any of the nine security officers.

The Employment Tribunal
The employment tribunal held (by a majority) that the provision of security services was not a discrete economic entitity and, in any event, there had been no transfer because neither assets nor staff were taken on by the shopping centre.

The Employment Appeal Tribunal
The EAT held (again, by a majority) that there had been a discrete economic entity, but that - due to the lack of transfer of assets and staff - there had been no transfer of the undertaking.

Issues for the Court of Appeal
The Court of Appeal (in line with precedent, by a majority!) allowed the transferor's appeal. It considered the following issues:
1. whether the tribunal was under a duty to consider whether the shopping centre had avoided taking staff on the avoid the effect of the TUPE regulations; and,
2. if so, what the effect of that was.

Issue 1: Was there a duty to investigate the motive behind not taking on any staff?
Both May and Dyson LJJ considered that there was an active duty on tribunals to investigate the motive behind not taking on any workers - provided the issue was raised by one of the parties. May LJ went further, and stated that there was not a positive burden of proof on the person arguing against the transfer to establish the reason for not taking on the workforce.

Issue 2: What is the effect of deliberately not taking on the workforce?
May and Dyson LJJ held that transferees could not escape the effect of the TUPE Regulations by the simple device of refusing to take on a workforce - the very mischief which the Regulations are designed to prevent. Thus, if it is decided that the transferee failed to take on the workforce so as to avoid there being a transfer, the tribunal should treat the case as if they had taken on all of the workforce. It must be noted that this point, whilst clearly agreed with by the majority of the Court of Appeal, was conceded by the transferee and was not fully argued.

In the minority, Simon Brown LJ held that the reason for not taking on the workforce was not relevant. The simple question was whether the workforce transferred (this being one of the many factors in deciding whether a TUPE-transfer had taken place). The reason was immaterial - either the workforce transferred (pointing to a TUPE-transfer), or it did not.

Because the point about the effect of a deliberate refusal to take on the workforce was conceded by the transferee, this is not as authoratitive a ruling as would otherwise be hoped for. Nevertheless, it follows the clear and useful dicta of the Court of Appeal in ECM v Cox. A purposive construction of the Acquired Rights Directive has always been adopted, and this approach is more consistent with a purposive construction.

To all people with TUPE headaches - take courage! May LJ stated that sections of the 1977 Directive have been "emasculated out of existence by purposive judicial interpretation", and that "the concept of transfer is now a judicially constructed fiction derived from the purpose of the Directive and the Regulations...". It is always heartening to know the Court of Appeal has trouble with TUPE concepts too!

Please note that I have prepared this note from a copy of the transcript which has been approved by the Court but which is subject to editorial corrections. Any quotations from the decision cannot be regarded as authoritative.

Friday 22 June 2001

Government to promote Dispute Resolution

Instructions on how to subscribe to this bulletin, and a DISCLAIMER, appear at the bottom of this Email.

Determined to show it still has ideas after the general election, the government has this afternoon (Friday) announced a review of employment disputes to encourage dispute resolution.

Alan Johnson, employment relations minister, today announced that the government is concerned about the increasing number of tribunal claims - which do not appear to be related to the recently introduced causes of action (such as working time, minimum wage, parental leave etc.)

The government will therefore be issuing a consultation document shortly to consider alternative methods - other than litigation - of promoting good employment practice in the workplace. The review is not intended to amend employment rights, but will concentrate on the way in which those rights are exercised.

A factual background paper is available at

Wednesday 20 June 2001

The Queen's Speech - Legislation proposals

Employment Law (UK) List -
Instructions on how to subscribe to this bulletin, and a DISCLAIMER, appear at the bottom of this Email.

The Queen's speech this morning included proposals for the following legislation:

• The Welfare Reform Bill, which will increase the rate of statutory maternity pay to £100pw from 2003, and increase the payment period from 18 to 26 weeks; and,

• The Female Representation Bill, which will allow political parties to "increase the representation of women in public life" via all women shortlists, should they so desire. Readers will recall that the 1997 Labour party women-only shortlist policy was declared contrary to the Sex Discrimination Act.

There was no mention of introducting anti-discimination legislation to comply with the EC Equal Treatment Framework Directive. Nor was there the much anticipated proposal for parternity pay. Still, there are four more sessions of parliament to go!!

Thursday 14 June 2001

New Faces / EAT cases

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1. New Faces and Places
2. New EAT decisions


1. New Faces and Places

The government lineup for employment posts is as follows:

Work & Pension Secretary - Alastair Darling
Minister for Trade - Baroness Symons
Minister for Work - Nick Brown
Minister for Pensions - Ian McCartney
DTI Minister of State for Employment Relations and Regions - Alan Johnson

(I know it's not particularly interesting news, but occasionally it is useful to have a check list of who's who!)


2. New EAT Decisions

These cases are unreported (although some may be reported in due course). The transcripts were posted on the EAT website ( on 12th June 2001.

Jiad v BBC World Service [Hooper J., 5th June 2001]
An appeal by a litigant in person on grounds, in essence, of inadequate reasoning/perversity. The decision contains no points of law, but is of interest because of a costs order granted to the successful Respondent at the end of the appeal. This costs order was made despite stating that the appeal had been conducted properly by the Appellant, on the ground that the appeal was "of no merit and should never have been brought". Is this a sign of things to come under the new costs test (not yet in force)?

Asda Stores v Malyn [Lindsay J., 6th March 2001]
A long-standing ASDA employee allowed her son to use her 10% staff discount card. This was in breach of a very clear store policy, which the employee had signed and had drawn to her attention (in writing) on a number of occasions, stating that misuse of the card was gross misconduct. Despite the fact that the discount achieved was only £3, ASDA dismissed her because it said it had to be seen to apply the disciplinary rules consistently between all employees. The ET found the dismissal was unfair because, during the disciplinary process, the staff member has said she had not realised that gross misconduct would result in dismissal. The EAT overturned that decision. It laid down the following four rules (albeit tentatively, saying that it was overturning the decision on other grounds and the four principles did not form the ratio):

A dismissal will be fair, despite the employee's ignorance as to the actual consequences of an act, if:

1. there is a provision in the disciplinary code stating that a particular act or omission would amount to gross misconduct, with the possible sanction of dismissal (and it was reasonable in the industry to have that as an act of gross misconduct);
2. the employer takes reasonable steps, including asking the employee to sign it, to bring the disciplinary code to the attention of employees;
3. the employee knows he is doing wrong under the code; and,
4. the employee had access to the code.

Lana v Positive Action Training in Housing Ltd. [Mr Recorder Langstaff QC, 15th March 2001]
Ms Lana was a trainee quantity surveyor. She had a contract with Positive Action for Positive Action to find her a training contract / work placement for a year. Positive Action placed her with a firm (W) for training. After five months, she told W that she was pregnant, and W immediately cancelled the remainder of her placement. Positive Action subsequently terminated their contract on the basis that the placement had been terminated by W in circumstances beyond their control, and they had no alternative placements to offer. The tribunal found that this was a non-discriminatory reason for terminating the contract, and dismissed the claim under the Sex Discrimination Act. The EAT overturned this finding. It held that W was the agent of Positive Action for the purpose of providing training, and that Positive Action was accordingly vicariously liable for any discrimination by W under section 41 of the SDA 1975. Accordingly it remitted the case to a fresh tribunal.

Tuesday 12 June 2001

Worker Consultation - EC Directive

Today's papers are flooded with the news that the EC has finally approved the proposed Directive for Informing and Consulting Employees in the European Community.

Assuming the Directive is formally passed and published (which is now fairly automatically - the approval being the controversial stage), the UK will have to implement the Directive within seven years (faster for employers with 150+ employees).

The legislation will require all employers with over 20 workers in a single workplace (or 50 workers throughout different workplaces) to inform and consult their employees on all crucial decisions, including:

• the reasonably foreseeable development of the undertaking's activities and its economic and financial situation (Art 4(1)(a));
• the situation, structure and reasonably foreseeable developments of employment within the undertaking (Art 4(1)(b)); and,
most importantly - any decisions likely to lead to substantial changes in the work organisation or contractual relations (Art 4(1)(c)).

There are provisions enabling the domestic legislation to contain obligations of confidentiality, and there is an exception to the consultation requirement where "the nature of th[e] information or consultation is such that, according to objective criteria, it would seriously harm the functioning of the undertaking or would be prejudicial to it."

An important point on enforcement: the Directive states that domestic legislation must provide that, in cases of serious breach of consultation requirements relating to Art 4(1)(c) (ie the third bullet-point above), any business decisions taken - or dismissals made - will have no legal effect until the employer has fulfilled his consultation obligations (or, if no longer possible, made adequate redress).

This is an enormously controversial Directive, and the CBI's response has been quite scathing (see link to CBI below).

Prior to the election, the government published the Employee Consultation Rights Bill (see bulletin dated 3rd April 2001). It is insufficient to comply with the Directive, because it provides a penalty of up to four weeks' pay for breach of the obligations (rather than, as the Directive requries, stating that decisions to dismiss or vary contracts will - if the breach of the consultation obligations is serious - be of no effect). If the Bill is not made Directive-compliant, it will generate a significant (and expensive for the government) number of Francovich claims.

Wednesday 23 May 2001

Remedies in Employment Disputes - Seminar Advertisement


Remedies in Employment Disputes

a seminar by the 2 Gray's Inn Square Chambers Employment Group

Wednesday, 27th June 2001


• gathering evidence for the compensatory award, eg proving and disproving a failure to mitigate; the problem of older workers; employees who start a new business
• remedies in discrimination claims, including 'personal injury' damages in the tribunal, and remedies other than compensation
• settlement and compromise agreements, with special consideration of the tax implications of settlement
• TUPE update (written presentation only)


Milan Dulovic (1982)
Adrian Roberts (1988)
Daniel Barnett (1993)


Date: Wednesday, 27th June 2001

Venue: The Morrison Hall, 1 Atkin Buildings, Gray's Inn, London

Time: 6.15pm registration (seminar commences 6.30pm; drinks and buffet 8.30pm)

Fees: First Delegate - £50+VAT; Subsequent Delegates - £45+VAT

For further information and a booking form, please contact Claire Halas on

Tuesday 22 May 2001

ACAS Arbitration Scheme

Employment Law (UK) List -
Instructions on how to subscribe to this bulletin, and a DISCLAIMER, appear at the bottom of this Email.

The new ACAS Arbitration Scheme went 'live' yesterday (21st May 2001). It was initially delayed after fears that it would contravene the Human Rights Act 1998.

It is available for unfair dismissal claims only (ie not discrimination, working time, breach of contract etc.) and cannot be used where there are issues as to whether the employee was dismissed, or whether the employee has sufficient continuity of service to bring a claim. The parties must agree to adopt the arbitration route, and it is not appropriate for complicated questions of law (eg TUPE or EC issues). The hearings are private and are inquisitorial rather than adversarial in nature.

A short - and excellent - summary of the arbitration procedure can be found at .

The relevant statutory instrument, namely the ACAS Arbitration Scheme (England and Wales) Order 2001 (SI 2001/1185) can be found at

ACAS have produced a guide to the arbitration scheme, at .

Wednesday 9 May 2001

Jurisdiction for Ex-Employee to bring Sex Discrimination Claim

The Court of Appeal has held that claims cannot be brought under the Sex Discrimination Act 1975 by ex-employees, in respect of alleged acts of discrimination occurring after the dismissal.

The case is Christine Rhys-Harper v Relaxion Group plc (C of A, 3rd May 2001, reported at$FILE/civil_rhys_harper.htm).

The Applicant was dismissed in October 1998. Shortly after dismissal, in November, she raised allegations of sexual harassment by her manager whilst she was employed. The Respondent held an investigation and rejected her complaint. She claimed that the failure to allow her complaint was a detriment for the purposes of the Sex Discrimination Act 1975.

Does section 6 of the Sex Discrimination Act 1975, which refers to a woman "employed by" a Respondent to claim that she was subjected to a detriment, allow an ex-employee to claim that she was subjected to a detriment?

No. The wording of section 6 is plain, and only allows claims brought by people who were employees at the date of the alleged discrimination. The ECJ in Coote v Granada Hospitality (where it was held that a reference provided after a dismissal was capable of founding a claim of victimisation under the Sex Discrimination Act) allowed very limited categories of claims. The Court of Appeal's reasoning in Post Office v Adekeye, where the Court held that ex-employees could not claim under the Race Relations Act 1976, should be followed when considering non-victimisation claims under the Sex Discrimination Act 1975.

Whilst a consistent approach towards ex-employees under the sex and race legislation is laudable, it is regrettable that Coote still complicates matters in claims of victimisation. Further, it is unfortunate that the sex and race legislation does not protect ex-employees in these situations - but that is a legislative matter and not one for the courts!

Friday 6 April 2001

Discrimination against homosexuals - the MacDonald decision


1. Discrimination against homosexuals - the MacDonald decision
2. Advertisement - job vacancy


1. Discrimination against Homoseuxals

The Scottish Court of Session has overturned the controversial decision of the EAT in Secretary of State v MacDonald.

The EAT decided as follows (from bulletin 2/10/2000):

The EAT has departed from previous authorities which hold that discrimination against homosexuals does not fall within the Sex Discrimination Act 1975.

It held that the word 'sex' in the Sex Discrimination Act 1975 is ambiguous - potentially including sexual orientation as well as gender. Despite the previous authorities to the contrary, it held that it is obliged to look at rights under the European Convention of Human Rights when, in two recent cases (Lustig-Prean and Salgueiro da Silva Mounta v Portugal), the European Court held that discrimination against homosexuals offended articles 8 (right to respect for privacy) and 14 (right not to be discriminated against when enjoying Convention rights) respectively.

Due to these new authorities, it was time to reconsider the traditional UK approach.

Accordingly, when considering a case of discrimination against a homosexual employee, the correct comparator under the Sex Discrimination Act 1975 is now a heterosexual (be it male or female) rather than a homosexual of the opposite gender.

The Court of Session has restored the orthodox approach in its decision of 1st June 2001, rejecting arguments that the Sex Discrimination Act 1975 can be used to bring claims based on sexual orientation.

All three judges considered that the word 'sex' in the Act meant 'gender', and there was nothing in the European Convention of Human Rights to indicate otherwise. The EAT had overstated the impact of the ECHR.

An important point was identifying the correct comparator. The majority thought that the correct compator with a gay man should be a lesbian. The dissenting judge thought that the comparator with a gay man should be a woman who was also sexually attracted to men. The majority, in considering that the correct comparator was a lesbian, held that Mr MacDonald had not been treated less favourably and therefore rejected his claim.

The decision can be downloaded from

The Court of Session has departed from the EAT's decision, which appeared to be governed as much by laudable conceps of political correctness than strict application of legal principles. This, of course, is one of the arguments in favour of having two lay members sitting on the EAT (it is also one of the arguments against!)

Whilst this decision will be a blow for the rights of homosexuals in the workplace, the government is obliged to introduce legislation prohibiting discrimination on grounds of sexual orientation by December 2003 under the Equal Treatment Framework Directive.


2. Job Advertisement


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are looking for a


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• expanding practice
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CV to Thomas Dunton solicitors, 217/219 High Street, Orpington, Kent BR9 0NZ
Telephone 01689 822554

Tuesday 3 April 2001

Employee Consultation Rights Bill

The Employee Consultation Rights Bill has been published. It has little prospect of being enacted due to the imminent general election (unless re-adopted in the next session of parliament).

It provides an obligation for all employers with more than 50 employees to inform and consult workers (and their representatives) on "large business issues", including:
• developments relating to employment within the undertaking, including foreseeable redundancies; and,
• proposed decisions of the employer which are likely to cause significant changes to the organisation of work or to contracts of employment.
The obligation to inform extends to providing "information on all relevant facts".

An obligation of confidence is imposed on the workforce representatives, who are prohibited from disclosing information to others. The Bill provides that breach of the confidentiality requirement is "actionable at law". If the employer says information is confidential (and thus cannot be disclosed by the workforce representatives), the representatives can apply to the CAC for a declaration as to whether the information is truly confidential.

The penalty for failing to inform and consult, or for providing inadequate or inaccurate information, is that each affected employee shall be paid a 'protective award' of four weeks' gross pay on application to an employment tribunal.

The Bill can be found at

Monday 2 April 2001

New Acquired Rights Directive - 2nd message

Further to my bulletin of 23rd March 2001 (reproduced below), the Acquired Rights Directive 2001 appeared in the Official Journal on 22nd March 2001. It therefore comes into force on 11th April 2001. Thanks to all those who Emailed me with the date.

Henry Scrope, who is responsible for the excellent site, has put together a table comparing the old and new Acquired Rights Directives. It can be accessed via his commentary page on . Although access to the site normally costs £5+VAT for a 24-hour password, he is offering 24-hour passwords free of charge. Readers can obtain a free trial password by Emailing .

Wednesday 28 March 2001

New Employment Tribunal Rules of Procedure and ACAS Arbitration Scheme

The DTI has, today, laid the Employment Tribunals (Consitution and Rules of Procedure) Regulations 2001 (SI 2001/1171) before parliament. They are due to come into force on 18th April 2001.

The main changes from the existing 1993 Regulations are as follows:

• new reg. 10 inserts an overriding objective to enable tribunals to deal with cases 'justly'.
• consolidation/simplification of rules relating to directions regarding evidence.
• costs rules amended to make it clear that the unreasonable conduct of a party's representative may be taken into account when deciding whether to order costs.
• costs rules also amended to introduce a DUTY to consider costs in certain circumstances, including where proceedings had no reasonable prospect of succes
costs rules also amended to increase assessment limit from £500 to £10,000
• the word 'frivolous' in the tribunal's power to strike out 'frivolous' etc. cases has been replaced with 'misconceived' - this would appear a wider power to strike out
NB the Regulations have not yet been posted on the HMSO website, but no doubt will appear there soon.

In addition, the DTI has given a firm(er) timetable for introduction of the much-heralded ACAS arbitration scheme for unfair dismissal claims. Full guidance will be available in April, and the scheme is expected to commence in late May 2001.

Saturday 24 March 2001

Race Discrimination - Anya v Oxford University - C of A

On Friday 23rd March, the Court of Appeal handed down its decision in Anya v Oxford University (

NOTE: the EAT decision in this case is summarised in my bulletin of 16th May 2000

Dr Anya (who is a black Nigerian) had, with one other candidate (who was white) been shortlisted for a senior academic post. One of three interviewing panel members knew Dr Anya extremely well, and had formed a view that he was not suitable for the post. He told one, but not the other, member of the panel of his views before the interview took place. In the event, the panel unanimously offered the post to the other candidate. Dr Anya claimed racial discrimination.

It was common ground that Dr Anya had been treated less favourably (having not been offered the post). The question was: was it legitimtate to infer that this was on grounds of race?

The employment tribunal recited a number of incidents which Dr Anya complained of which pre-dated the interview. It then held that despite the interviewers having been caught making inconsistent statements, they were fundamentally truthful and honest witnesses. Accordingly it accepted that the other candidate was the better person for the job and that there was no racial inference to be drawn. Having found that there was no racial inference to be drawn, it thought it unnecessary to consider the other allegations (which drifted back over some lengthy period of time).

The Employment Appeal Tribunal noted that no evidence of overt discrimination had ever been identified. It held that it was unncessary for the tribunal to make express findings of fact on each of the ancillary, historical matters, because the tribunal was entitled to take an "overview" and it was quite apparent that, even if findings of fact were made in Dr Anya's favour, they would not amount to "compelling grounds" to find that the non-appointment to the academic post was 'proabably' on grounds of race.

The Court of Appeal has allowed Dr Anya's appeal, overturning the employment tribunal and the EAT.

The Court stated that inferences of racial motive could only be drawn from detailed primary findings of fact. A single allegation of discrimination could not be viewed in isolation, but the history of dealings between the parties should be taken into account in order to determine whether it is appropriate to draw an inference of racial motive in respect of the principal allegation.

The employment tribunal had erred in deciding that the appointment of the other candidate was not racially motivated, and then considering it unnecessary to deal with all the other, historical, matters that had been raised. Instead, it should have made primary findings of fact on all those other matters and then, looking at the relationship between Dr Anya and the interviewers as a whole, decided whether racial motive could be inferred. By focussing on the actual interview itself (and the circumstances immediately surrounding it), the tribunal failed to make sufficient findings of fact as to all the cirumstances to enable it to be in a position to draw inferences.

Accordingly, "in spite of the daunting consequences of doing so", the case was remitted to the employment tribunal.

Whilst undoubtedly correct from the purist viewpoint, this approach will result in the legthening of many of the already complex and time-consuming race cases before tribunals. It seems now that a tribunal will be making an error of law if it does not permit an Applicant, whether represented or not, to trawl with tedious particularity through every real and perceived grudge that has arisen during his/her employment history.

Members of the Employment Lawyers' Association will have seen a letter by HHJ John Prophet, President of Employment Tribunals, to the Editor in this month's ELA Briefing. In it, he describes how tribunals are succeeding with ensuring speedier justice whilst continuing to safeguarde the interests of justice. This decision of the Court of Appeal seems to promote the latter, but without engaging in the modern approach of balancing it with the former.

Friday 23 March 2001

New Acquired Rights Directive

On 12th March 2001, the EC Council adopted the new Acquired Rights Directive 2001. This repeals and replaces the Acquired Rights Directive 1977 (which is the source of the TUPE regulations).

The preable states it is a codifying Directive and, indeed, on reading it I have been unable to find any material differences between it and the 1977 Directive (as amended).

Nevertheless, for those who want to see it, it can be downloaded from

The implementation date is the 20th day following its publication in the Official Journal of the European Communities - which could be very soon, or quite some time away!

Thursday 22 March 2001

Damages for Manner of Dismissal - House of Lords

A busy day for the House of Lords, who have handed down five judgments - three of which are employment related.

First, in Johnson v Unisys Ltd. (, the House of Lords upheld the rule in Addis v London Gramaphone Co Ltd. [1909] AC 488 that damages are not recoverable at common law for the manner of dismissal. The Lords differed in their reasoning but, unanimously, held that such damages could not be recovered.

It therefore remains the case that damages for wrongful dismissal are limited to the net monies that would have been earned during the notice period.

Mr Johnson is now 52 years old. He worked for over 20 years for a computer software company. Over the years he suffered from work-related stress, of which the employers were aware. In January 1994, general allegations were made of misconduct and, without any specific allegations being put or any fair hearing held, he was summarily dismissed.

As a result, he developed a severe psychiatric illness involving in-patient treatment, hypnotherapy for 2 years, intensive psychotherapy, anti-depressant drugs etc., and his health continued to remain severely affected. He still remains unemployed, and his loss of earnings was pleaded in excess of £400,000.

He brought a claim for unfair dismissal, but was awarded only £11,698 due to the (then) statutory maximum.

Accordingly he issued a claim in the county court for (as later amended) breach of the implied term of trust and confidence, in that the manner of dismissal should not be such so as to damage/destroy the relationship between the parties. The County Court Judge, upheld by the Court of Appeal, struck out the claim. Mr Johnson appealed to the House of Lords. NOTE that the claim was solely for financial losses, not for general damages for the psychiatric illness.

A number of issues arose:

(i) Was Addis v Gramaphone Co Ltd truly authority for the proposition that damages are irrecoverable for manner of dismissal?
4 of the 5 Lords said that it was authority, albeit that it was a difficult decision to understand. In a minority, Lord Steyn held that the headnote was wrong and that, properly constructed, Addis did not give rise to any such rule of law.

(ii) Should Addis be overruled?
The House of Lords unanimously agreed that social conditions since Addis in 1909 were wholly different. "It is no longer right to equate a contract of employment with commercial contracts (Lord Steyn)". "...over the last 30 years or so, the nature of the contract of employment has been transformed. It has been recognised that a person's employment is usually one of the most important things in his or her life...The law has changed to recognise this social reality (Lord Hoffman)". It was therefore open, if appropriate, to depart from the rule in Addis.

However, the policy arguments divided the House of Lords (even if the end result was the same). The two main arguments were:

Policy Argument 1: Can the implied term of mutual trust and confidence 'trump' an express term entitling an employer to dismiss on notice?
Lord Steyn thought the two terms could co-exist. Even if employment could be terminated on notice, it did not abrogate the employer from the co-existent implied term not to exercise the right to dismiss in a way which damaged the employee's prospects of future employment. He described the term of trust and confidence as "an overreaching obligation implied by law as an incident of the contract of employment."

Three of the others (Lords Bingham, Hoffman and Millett) considered that the terms could not co-exist. The express term trumps the implied term. The term of trust and confidence was only relevant to an ongoing employment relationship, and ceased to have effect in connection with the termination of that relationship.

Lord Nicholls did not consider this point.

Policy Argument 2: Does the Unfair Dismissal legislation provide an adequate remedy?
On this point the House of Lords was divided 4:1.

In the majority, Lords Bingham, Nicholls, Hoffman and Millett held that parliament had intended all issues relating to losses flowing from the unreasonableness of the manner of a dismissal to be dealt with by the unfair dismissal legislation. Parliament having intervened in this way, and provided a effective remedy to resolve such disputes, it was inappropriate for the civil courts to introduce a right to bring claims for losses flowing from dismissal in the civil courts - particularly when such claims would bypass the time limits and compensation limits for unfair dismissal. Malik v BCCI was not an exception - in Malik the breaches of contract by the bank occurred before the dismissal.

Lord Steyn, in the minority, considered that the unfair dismissal legislation would still be perfectly workable if the House of Lords departed from Addis. The fact that parliament legislated because it thought the courts lacked the right at common law to provide an effective remedy did not preclude the courts from deciding that, in fact, they do have the right at common law to provide a remedy.

For the above reasons, by a 4:1 majority the House of Lords held that the rule in Addis should stand.

Lord Steyn, in the minority, held that Addis should be overruled. However, he held that Mr Johnson's appeal must fail in any event because Mr Johnson had no realistic prospect of establishing causation on the facts of the case. His losses, on the facts, were too remote and there was no reasonable prospect of success.

My summary of today's two other employment decisions by the House of Lords will follow>