Wednesday 26 March 2003

Jurisdiction and Stays

An very important decision, Lawson v Serco Ltd, has been handed down by the EAT (delivered 11th March 2003).

The case is authority for the proposition that:

(1) employment tribunals have jurisdiction to hear claims where the Respondent is incorporated in, or carries on business in, England and Wales - irrespective of the applicable law to the contract or where the work takes place; and,

(2) employment tribunals have no jurisdiction to stay cases, so as to enable them to be determined in a more fitting jurisdiction.

The Facts

Mr Lawson worked as a security consultant for Serco Ltd, a company registered in the UK. He worked on Ascension Island in the South Pacific. He was domiciled on Ascension Island and did not pay UK tax because of working abroad. He was subject to management in the Ascension Island.

He brought a claim, heard before the Watford tribunal, for unfair constructive dismissal, alleging breaches of the Working Time Regulations. The Watford tribunal dismissed his claim for lack of jurisdiction.

The EAT's Decision

The EAT held that the Employment Rights Act 1996 applies to any employer who is domiciled/registered in England or Wales, or who 'carried on business' in England or Wales, irrespective of where the work took place or what the contract said about the applicable law.

Therefore, it held, an English tribunal had jurisdiction to hear Mr Lawson's claim, notwithstanding that he worked in the South Pacific.

It then considered that argument that the English proceedings should be stayed on the basis that Ascension Island was the more appropriate and convenient forum, applying normal principles of international law. It stated that:

"It is clear to us that there is no power to stay proceedings before a tribunal, and that once jurisdiction is established, the Tribunal cannot close its doors to parties who wish to appear before it."
For similar reasons, the EAT held that the Working Time Regulations 1998 apply in the Ascension Islands.


This is a momentous decision in terms of widening the jurisdiction of employment tribunals. I do not know whether leave was given (or sought) to go to the Court of Appeal.

Leaving aside jurisdictional issues, an important practical implication is that (unless this decision is overturned) tribunals will not be able to:

(a) stay cases pending disclosure of medical records. In many cases where GP notes are relevant, but the court/tribunal lacks power to order disclosure (as they are not in the Applicant's possession or control), the way to 'force' the Applicant to consent to the GP releasing the notes is by staying the case until s/he gives consent. This will no longer be possible, and it may mean that Respondents have no effective method of obtaining copies of medical records in litigation. This is particularly important in cases where the Applicant claims damages for personal injury.

(b) stay cases pending internal appeals (which can last for many, many months - if not years - with public sector employers);

(c) stay all employment tribunal cases pending clarification of the law from the high appellate courts, as we have seen in recent years with the Liversidge cases (whether chief constables are vicariously liable for harassment by their junior officers) or the Seymour Smith legislation (qualifying period for unfair dismissal, where thousands of cases were stayed pending the result).

Agency Workers can be 'Employees'

The Employment Appeal Tribunal's decision in Dacas v Brook Street Bureau (unreported, EAT/492/02, 11th December 2002) has been placed on the EAT website.

Mrs Dacas had been working as a temp cleaner, via the Brook Street Bureau, for Wandsworth Council for 6 years. Her contract was terminated summarily. The tribunal found that she was employed by neither Brook Street nor Wandsworth. Whilst she accepted the conclusion as against Wandsworth, Mrs Dacas appealed against the finding that she was not an employee of Brook Street.

Burton J.’s decision turned heavily on the precise findings by the tribunal. The tribunal had found that there was “considerable control” exercised over Mrs Dacas by Brook Street, in the sense that it paid her wages, was entitled to discipline her / terminate her services. It held, however, that day-to-day control was exercised over her not by Brook Steet but by Wandsworth.

It went on to hold that, because of a clear statement in the contract that Mrs Dacas was not an employee of the agency, the agreement between the parties prevented her being an employee. Whilst it is not entirely clear from the EAT decision, it seems that the tribunal also relied on the lack of day-to-day control by Brook Street as pointing against an employment relationship.
The EAT overturned the tribunal’s decision. It held that because of the words in the tribunal’s decision that the agency exercised “considerable control”, then the Ready Mixed Concrete test (see above) was met. Since there was plainly mutuality of obligation, and since it was impossible to say that Mrs Dacas was in business on her own account, the only conclusion that could be drawn was that she was an employee of Brook Street. Although the contract provided that she was not an employee, it was settled law that a label would only be determinative when the other pointers were inconclusive. Here, according to the EAT, the other pointers clearly showed that Mrs Dacsas was an employee of the agency.

The result of this decision is in stark contrast to all the previous cases on agency workers. Dacas v Brook Street does not purport to overrule them and – indeed – does not expressly consider the recent authorities such as Hanbury & Brook Street v EDS and Hewlett Packard v O’Murphy. Whilst the EAT may have been straining to achieve a fair result, its legal reasoning is open to further analysis. In particular:

(a) the EAT does not appear to have considered whether the need for control is actually a need for control over day to day activities (which did not exist in Dacas);

(b) whilst the EAT asserts that the Ready Mixed Concrete test is met, it does not appear to have considered stage 3 of that test, i.e. whether there are provisions of the contract inconsistent with it being a contract of service.

Despite my comments, the ramifications of this decision are significant. Previously, tribunals have been prohibited by authority from finding that an agency worker is an employee (of anybody). Now the path is open for them to find that the worker is the employee of the temp agency, irrespective of any denials to that effect in the contract between worker and agency.

This may have considerable impact on potential liabilities for agencies - they may find themselves liable for any actual (or even constructive) dismissals by their client companies, over which they have no control. In the absence of appropriate indemnities in their contracts with their client companies, temp agencies could find themselves unknowingly liable for very significant sums of money.

Saturday 22 March 2003

Failure to Consult under TUPE Regs

An important decision, Alamo Group v Tucker, has been handed down by the EAT, dealing with liability for failing to consult under regulations 10 and 11 of TUPE.

Regulations 10 and 11 provide that a sum of up to 13 weeks' pay (not capped at £260pw) is payable to all affected employees who are not consulted by their employer prior to a TUPE transfer. This can result in very substantial awards being made when a large number of employees are involved.

Over the last few years, there has been controversy over who pays this sum: the transferor or the transferee. The strict wording of TUPE suggests that, even though the obligation is on the transferor, the liability transfer to the transferee as soon as the sale of the business has taken place. This was the approach adopted by the EAT in Kerry Foods v Creber [2000] ICR 536, in which it was held that liability did transfer.

However, in TGWU v McKinnon [2001] IRLR 597, another division of the EAT declined to follow Kerry and held that liability does not transfer. Many commentators (well, me, anyway!) preferred the decision in TGWU v McKinnon and thought that, for a variety of reasons, Kerry was wrong on that and other counts.

In Alamo Group v Tucker (EAT 24/2/02), HHJ Altman gives a clear and well-reasoned judgment preferring the result in Kerry (whilst not adopting the same reasoning!). Subject to any appeal, it now seems that liability for failure to consult will transfer to the tranferee.

Practical Implications

In light of this judgment, transferees should take care to:

• ensure that proper indemnities are included in the purchase agreement, protecting them from any default by the transferor;

• perhaps insert a provision in the contract placing in escrow, at the time of completion, the potential liability under regulations 10 and 11 (i.e. 13 weeks pay for each affected employee). This can then be released to the vendor if no claims are lodged, and can provide security for the purchaser in the event that the vendor becomes insolvent and the contractual indemnities become worthless;

• provide all relevant information to the transferor about their intentions vis a vis affected employees - and, possibly, copy it to the relevant trade union or employee representatives (although this may not be commercially practical during negotiations).

Monday 17 March 2003

Disability Discrimination

The Disability Discrimination (Blind and Partially Sighted People) Regulations 2003 have been laid before Parliament today.

They provide that anybody who is blind or partially sighted (either certified as such by a consultant ophthalmologist, or registered as such with the local authority) is deemed to be disabled within the meaning of the Disability Discrimination Act 1995. In other words, they no longer need to establish that being partially sighted has a substantial adverse effect on their day to day activities.

The text of the statutory instrument is not yet available on the internet. When it becomes available, it will be accessible from

Tuesday 11 March 2003

Unified Tribunals Service

The Lord Chancellor's Department has today announced the creation of a unified tribunal service, which will swallow up the role of the Employment Tribunal Service. It is described in the LCD's press release as "The Greatest Shake-Up for 40 Years"

The new tribunal service will be responsible for employment tribunals, the EAT, the appeals service, immigration tribunals, lands tribunals, the criminal injury compensation authority and others.

But don't get too excited! It's not going to happen overnight. A consultation document, to discuss the mechanics of change, will be published later this year.

Sunday 9 March 2003

House of Lords: Comparators in Discrimination

On 27th February 2003, the House of Lords handed down its opinion in the important discrimination case Shamoon v Chief Constable of the Royal Ulster Constabulary.

The Facts

Chief Inspector Shamoon worked in the traffic division of the Royal Ulster Constabulary. The traffic division was split into three geographic regions. Along with her, there were two other Chief Inspectors (one for each of the other regions) who undertook appraisals of junior police offices.

The union was unhappy with the way in which Chief Inspector Shamoon conducted some of these appraisals, and asked her superior officer, the Superintendent, to remove appraisal responsibilities from Ms Shamoon. The Superintendent agreed.

The Tribunal's Decision

The tribunal took the two other, male, Chief Inspectors as comparators. They had not had their appraisal responsibilities removed. Accordingly, the tribunal found that Ms Shamoon had been treated less favourably than her comparators. It drew an inference this was on grounds of her sex and found in Ms Shamoon's favour.

The House of Lords

The House of Lords criticised the tribunal's approach. It made it clear that, when selecting a comparator, it is insufficient to select a male (or males) in a similar position. The comparator must be somebody where "the relevant circumstances in the one case are the same, or not materially different, in the other." (Sex Discrimination Act 1975, s5(3))

This meant that the male Chief Inspectors were not appropriate comparators within the meaning of the legislation. There were material differences. First, no complaints had been made against the other Chief Inspectors. Second, the Superintended lacked direct line responsibility for the other two Chief Inspectors. These differences meant that the male Chief Inspectors could not, as things stood, be valid comparators.

What the tribunal should have done was considered whether Ms Shamoon had been treated less favourably than the two male Chief Inspectors if, hypothetically, they had been subject to complaints and the same line management.


This decision appears to make it harder for Applicants to establish valid real comparators.

Two other matters in the decision are of interest.

First, the House of Lords said that the traditional two stage approach (namely (1) was there less favourable treatment; (2) was it on grounds of sex) is not mandatory and often will not be appropriate.

Second, Lord Scott stated that when deciding whether to infer that treatment was on ground of gender, a tribunal would normally be expected to identify matters such as discriminatory comments made by the alleged discriminator about the victim, or "unconvincing denials of a discriminatory intent coupled with unconvincing assertions of other reasons for the allegedly discriminatory decision."

Thursday 6 March 2003

House of Lords: Trade Union / Strikes

Last week the House of Lords handed down its opinion in In re P (a minor). This is authority for the propositions that:

(a) the definition of 'trade dispute', when deciding whether a trade union has statutory immunity, should be widely and purposively interpreted; and,

(b) an immaterial and accidental failure to comply with the statutory balloting procedures does not deprive a union of statutory immunity.

The Facts

P was an unruly child who had been permanently excluded (i.e. expelled) from school by the headmaster. However, the governors reinstated him on appeal. The teachers refused to teach him. The headmaster instructed them to do so and, following a ballot, the teachers went on strike.

P sought to obtain an injunction against the union requiring it to call off the strike. There were two main issues.

Issue 1: Definition of 'Trade Dispute'

P argued that 'trade dispute' is defined in s244(1) of the TULRCA 1992 as a dispute relating to "terms and conditions of employment".

There was no doubt that the terms and conditions of employment required the teachers to obey reasonable instructions of the headmaster. The dispute was over whether the instruction (to teach P) was reasonable. P argued that the terms and conditions were clear and, indeed, were common ground. The dispute was not over the terms and conditions - which were not in issue - but over the application or implementation of those terms.

The House of Lords, whilst accepting that as a compelling argument on a literal construction of the statute, rejected the argument. They held that the phrase 'trade dispute' should be interpreted widely so as to cover a genuine dispute between employer and employee relating to the job they are employed to do. Accordingly, the dispute was a 'trade dispute' within the meaning of the Act, and the union was entitled to statutory immunity (subject to compliance with the balloting procedures).

Issue 2: The Flawed Ballot

The balloting provisions, described by the House of Lords as "complicated", provide that "entitlement to vote in the ballot must be accorded equally to all the members of the trade union who it is reasonable at the time of the ballot for the union to believe will be induced to take the industrial action in question..." (s227(1))

Through administrative error, ballot papers were not sent to two eligible members. Their votes could not possibly have affected the outcome because the vote was overwhelmingly in favour of a strike.

However, the statute is clear; section 232A provides that the ballot is invalid if any eligible person is not given entitlement to vote. Although s232B provides an escape clause for "accidental" failures which are "unlikely to affect the result", the escape clause, on its face, applies to sections other that s232A.

The House of Lords held this was a drafting error. It relied on the fact that one of the sections referred to in the escape clause did not exist, so parliament must have intended to refer to another section - namely, s232A. The House held it would be absurd for such a minor breach of a complicated technical provision to invalidate the ballot, and a purposive construction of the Act, so stated that the 'escape clause' should also apply to s232A.

Wednesday 5 March 2003

New European Material

Lots been happening in employment law over the last week - sorry I haven't put updates out immediately.

This Email deals with two EU developments. I am sending, simultaneously, an Email dealing with two new consultation documents. At some stage (probably tomorrow), I will send an Email dealing with two new House of Lord's decisions on employment law.

1. Annual Equality Report

The Commission has today adopted the 7th annual report on equal opportunities. It looks at the adoption of the Directive on Harassment at Work, examined new caselaw on equal pay and considers how far gender issues have been given a role in each of other EU policies.

Whilst not funny, no doubt some commentators will rise an eyebrow at the line at page 24 of the report:

"In 2002, 12 women were stoned to death in Iran for 'moral' crimes. Men just get their hands amputated for similar offences."

It does rather put wearing a tie in the office into perspective.

2. Advocate General opinion on collective consultation obligations

Note: I have not read the AG's opinion. The report below was received from the Federation of European Employers (

The Advocate-General to the European Court of Justice has issued his opinion in the Ads Anker GmbH case (C-349/01). This concerns a company's refusal to supply corporate information when requested by employee representatives seeking to establish a European works council. Unlike the previous Kuhne & Nagel case (C-440/00), the point of dispute was not whether a head office should comply with a subsidiary's information request, as the parent company in this case was in Switzerland and therefore outside the jurisdiction of the European Union. The question was therefore whether a request through a subsidiary company could be resisted by other companies in a group over which the subsidiary did not exercise any direct legal authority.

The Advocate-General advised the court that it was clearly an obligation on all EU member states to require companies operating within their jurisdiction to furnish information requested for the purpose of determining whether a group met the size thresholds for the establishment of a European works council.

New Consultation Documents

Two new consultation documents have been issued in the last week...

1. Review of Employment Relations Act 1999

When the Act was passed, a review was promised after three years. This is it.

The DTI has undertaken a review and finds that the union recognition procedure is proceeding smoothly. However, the DTI is considering changing some discrete items, namely:
• clarifying the 'right to be accompanied' in disciplinary and grievance procedures, to make it clearer exactly when somebody has the right to a representative, and enabling a right to appeal ET decisions to the EAT when this right is breached;
• establishing a legal right for workers to access their union's services;
• allowing postal voting on union recognition votes
and various other 'tweaking' amendments.

Notably, the DTI has stated it will not be reviewing:
• the rules governing automatic union recognition where the majority of employees are union members;
• the 40% threshold for statutory recognition ballots;
• the 'small employer' exemption (under 21 employees) for automatic union recognition;
• the eight week protected period during which striking workers cannot be dismissed (although it is considering excluding 'lock-out' days from the 8 week period)
Consultation ends on 22nd May 2003.

2. Consultation of Prohibiting Blacklisting of Trade Union Members

Section 3 of the 1999 Act contains a power enabling the Secretary of State to introduce regulations prohibiting the compilation or use of trade union blacklists (i.e. a list which contains details of members of trade unions, or of trade union activists)

The DTI has stated that, whilst it does not intend to introduce such Regulations now, it is consulting on the form of proposed Regulations so that they can be introduced swiftly should the need ever arise.

The draft Regulations render it unlawful to compile, sell, supply or use a blacklist which has been compiled with a view to it being used by employers to discriminate in relation to the recruitment or retention of workers.

Consultation ends on 22nd May 2003.