Monday 17 December 2012

Conditional Benefits and Breaches of Undertakings

[Thanks to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary]
Can an employer withdraw a conditional benefit under a compromise agreement when the employee is in breach of his undertakings?

Yes, says the Queen's Bench Division, on the facts in Imam-Sadeque v Bluebay Asset Management.

Mr Imam-Sadeque (I-S) was a highly paid and senior investment manager.  He wanted to leave his employer. If he resigned, he would be a "Bad Leaver" for the purposes of a share option scheme. However, he entered into a compromise agreement which would deem him to be a "Good Leaver", and allow him to exercise share options worth £1.7million. But this benefit was conditional on compliance by the employee with promises not to compete or solicit BlueBay's employees.

The employee broke these terms by secretly setting up in competition and poaching an employee. The employer withdrew the benefit on account of these actions.

The High Court held that BlueBay was entitled to do this on account of  I-S's repudiatory breach of the agreement, and the shares were forfeited.

Nor was the condition a penalty. All the agreement did was to confer rights on I-S which he would not otherwise have had. The agreement conferred a conditional benefit which simply never accrued because the employee failed to fulfil the condition, namely performance of the agreement on his part. Furthermore this was an agreement struck between sophisticated parties of comparable bargaining power.

In the words of Popplewell J, It would be an "injustice" to BlueBay if the employee could escape his bargain.

Wednesday 12 December 2012

Volunteers and Discrimination Protection

[Thanks to Sarah Fraser Butlin of Cloisters for preparing this case summary]
Do volunteers fall within "occupation" in the Framework Directive so they are entitled to discrimination protection?

No, says the Supreme Court in X v Mid-Sussex Citizens Advice Bureau, upholding the Court of Appeal's decision last year.

The Appellant was an HIV positive CAB volunteer.  She alleged that she was 'dismissed' because of her disability.

Lord Mance gave nine reasons for rejecting her appeal:

1. There is no general EU law principle of equality.  Protection is only afforded in specific contexts.

2. "Access to occupation" in Article 3(1)(a) concerns "access to a sector of the market rather than particular employment or self-employment".

3. If protection was intended, "occupation" would appear in Article 3(1)(c), dealing with "employment and working conditions".

4. "Occupation" derived from ILO Convention No.111, and the ILO definition i.e. "the trade, profession or type of work performed by the individual, irrespective of the branch of economic activity to which he is attached".

5. The original proposal and impact assessment did not address voluntary activity.

6. The Council of Ministers expressly rejected a proposal to include "unpaid and voluntary work".

7. No enforcement action had been taken for non-inclusion of protection for volunteers.

8. The Appellant and EHRC accepted not all volunteers were protected.  But the Directive gave no indication of where to 'draw the line' (offending against legal certainty).

9. Volunteers and workers were not comparable.  Hence the assertion that comparable situations ought to be treated comparably did not assist.

The request for a CJEU reference was rejected, as the answer was clear.

Monday 10 December 2012

Procedural Fairness and Disparity of Treatment

[Thanks to Ed McFarlane of Deminos HR for preparing this case summary]
Is it perverse for an employment tribunal not to regard a dismissal as a reasonable response, if misconduct is committed by an employee in a safety critical role?

Yes, says the EAT in SPS Technologies Ltd v Chughtai, overturning a majority tribunal decision.

The Claimant was dismissed after admitting falsifying test data for the Respondent aerospace manufacturer. The employment tribunal found by a majority, the employment judge dissenting, that the dismissal was unfair. The majority held that dismissal was outside the band of reasonable responses, and found disparity of treatment by the employer of the Claimant and his supervisor, after the Claimant asserted that data falsification was 'common practice'. This was not backed up by the employer's thorough investigation.

The EAT held that the majority had fallen into error, having regarded the Claimant's evidence on falsification at tribunal as credible, they had substituted their view for that of the employer as to whether falsification was common practice. A disparity argument fell down as the employer would have dismissed anyone falsifying test data, but it reasonably found that there was no 'common practice' of falsification, so no action was taken against others. and the employer's clear evidence was that anyone falsifying data would be dismissed. The majority's view that the Claimant's dismissal was unfair as it was outside the band of reasonable responses was held to be perverse, with the appeal curing a procedural defect at the dismissal stage.

The EAT also overturned a finding of 30% contribution for conduct and no Polkey reduction, finding - like the employment judge - 100% on both contribution and Polkey.

Equal Pay

[Thanks to Sophia Berry, pupil barrister at Littleton Chambers, for preparing this case summary]

Do pay protection policies breach the Equal Pay Act 1970?

Not necessarily, said the Court of Appeal in Haq v The Audit Commission.

The Court held that the employment tribunal had not erred in law in finding that the Claimants had established a prima facie case of indirect sex discrimination. The employment tribunal was entitled to conclude that the Audit Commission's amalgamation of two administrative roles and its application of a pay protection policy to the affected employees had had a disparate adverse impact on the Claimants.

The employment tribunal's analysis of the objective justification question was, however, wrong in law. The Court of Appeal rejected the tribunal's suggestion that 'red circling' the pay of those employees with higher pay points or assimilating the roles and making the employees with higher points redundant would have constituted a less discriminatory means of achieving the Commission's legitimate aims than the pay protection policy. The EAT was entitled to substitute its own view of the matter for that of the employment tribunal and the majority (Lewison LJ and Sir Mark Waller) therefore dismissed the appeal. Mummery LJ, dissenting, concluded that the question of objective justification should be remitted to the employment tribunal as the EAT had approached it incorrectly.

Mummery LJ's judgment promotes negotiation as a means of saving time, effort and money and achieving better outcomes in equal pay claims. He notes that 30 years of equal pay litigation has not eradicated sex discrimination in pay and that courts may not be the best places in which to end the injustice of workplace discrimination.

Friday 7 December 2012

Trade Union Rights: Blacklisting

[Thanks to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary]
Can an employer refuse to be dictated to about whom to employ without breaking trade union membership discrimination laws?

Yes, said the EAT, on the facts of Miller v Interserve Industrial Services Ltd.

In this case the employer provided labour for "shut-down" projects at oil depots. The business was highly unionised. A full-time trade union official from UNITE pressured the employer to recruit three named employees with a view to their acting as shop stewards. By all accounts the full time official's approach annoyed the employer who regarded the union official as having a combative manner. As a result the employer declined to recruit the individuals concerned.

The employment tribunal found that, as a fact, this was because he resented being bullied by the union and he did not wish to be dictated to about whom to employ. Because of this motivation the employer had not refused to employ the employees because of their trade union membership contrary to section 137(1) of TULR(C)A 1992.

The EAT agreed. The employees were simply caught in the "crossfire" between the employer's manager and the union official. Their non-recruitment did not relate to their trade union membership.

However, the EAT said, the outcome of this kind of case will depend entirely on the assessment of the evidence in each particular case. The EAT would expect this kind of employer's explanation to be scrutinised narrowly. But on this occasion the employer passed the test.

Thursday 6 December 2012

Time Limits: Acts Extending over a Period

[Thanks to Sarah Russell, solicitor at Russell, Jones and Walker, part of Slater & Gordon Lawyers, for preparing this case summary]
Is banning a contractor from site an "act extending over a period" for the purposes of calculating the limitation date in a race discrimination claim?

No, it is a one-off event, said the Court of Appeal in Okoro & Anor v Taylor Woodrow Construction & Ors.

The Appellants were engaged through an agency to work for Taylor Woodrow.  A dispute arose, and on 7th April 2008, they were told that they were banned from site.  Another agency then sent them to the site on 18th April 2008.  They were again told that they were banned.  The Appellants presented a race discrimination claim regarding the ban on 6th August 2008.

A continuing act can occur where a policy disadvantages a person or group throughout their employment.  Time then runs from the date of dismissal.  In this case, the ban was held to be a one-off decision, particularly as there was no ongoing relationship between Taylor Woodrow and the Appellants.  The case was therefore out of time.

The Court of Appeal noted that if there had been a reconsideration of the original decision, time would have started to run again from the date of the re-consideration.

Monday 3 December 2012

TUPE settlements and credit against compensatory award

[Thanks to Ed McFarlane of Deminos HR for preparing this case summary]
Should a compensatory award be reduced to take into consideration sums received through a settlement with another party?

Yes, says the EAT in Optimum Group Services v Muir.

The Claimant won his unfair dismissal claim in a TUPE scenario against the Appellant, having settled his claim against the second Respondent before the hearing. The employment tribunal declined to reduce the compensatory award to take into account the Claimant's settlement with the second Respondent.

The EAT reduced the compensatory award to take into account the settlement with the second Respondent. Reminding tribunals that the compensatory award is not intended to operate as a 'penalty', the EAT held that it would not be right for a Claimant to make a 'profit' through double recovery; tribunals had no discretion in this matter. A Claimant's loss that has been made good must be taken into account (except where the Norton Tool principle applies to notice pay). The EAT also warned tribunals about taking into account irrelevant factors, such as a 'windfall' to a party, in these circumstances.

The EAT ordered the Claimant to disclose the amount of the settlement, and practitioners may consider it prudent to itemise sums paid for heads of claim if making a settlement in similar circumstances.