Monday 29 December 2014

TUPE - Assignment to Organised Grouping of Employees

Thanks to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary
When are employees assigned to a service changing hands under TUPE?

The question is to be determined having regard to the way an organisation is structured and the employee's contractual duties within it, held the EAT in London Borough of Hillingdon v Gormanley.

Robert Gormanley Limited (RG) was a firm employing three members of the same family. It carried out painting and decorating work for the housing stock operated by the London Borough of Hillingdon. Hillingdon then told RG that it was not going to be given any more work and took the service back in house.

A central question was whether the three employees were assigned to an organised grouping of employees, the principal purpose of which was to carry out the activities concerned on behalf of Hillingdon, the client. The Employment Judge (following the finding of another Employment Judge at a pre-hearing review), held that the employees were assigned to an organised grouping of employees working within RG Limited on behalf of Hillingdon.

However the decision was overturned by the EAT. Neither Employment Judge had failed to make findings of fact relevant to the assignment issue.

The key authority on the definition of assignment remains the CJEU decision in Botzen v Rotterdamsche Droogdok Maatschappij BV [1985] ICR 519. This ruling requires consideration of the contractual duties of employees and their role in the organisational framework of the putative transferor.

In the present case, both Employment Judges had failed to consider the organisational framework within which the employment relationships of the employees took effect. The EAT considered that as the Claimants could be called upon to perform duties other than for Hillingdon under their contracts of employment (for example one of the employees was company secretary), the ruling that the employees were assigned to the Hillingdon contract had to be set aside.

Friday 19 December 2014

Holiday Pay - Cap on Backdated Claims

The government has introduced the Deduction from Wages (Limitation) Regulations 2014. They do two things:-

(1) limit all unlawful deductions claims to two years before the date the ET1 is lodged (with the exception of certain categories of unlawful deductions claims such as claims for SMP, SSP and guarantee payments, which remain unaffected); and,

(2) explicitly state that the right to paid holiday is not incorporated as a term in employment contracts.

The effect? To remove any chance employees have of bringing long-term claims for back holiday pay, either in the tribunal or civil courts. But the new Regulations don't apply to ET1s presented before 1st July 2015 - so anyone with a potential long-term backpay claim who wants to gamble on somebody else appealing the Bear Scotland decision should get their claim in now.

Anyone remember Preston v Wolverhampton? The ECJ held that the UK's backstop of two years on equal pay claims was unlawful, and the two year limit had to be removed. But that argument is unlikely to succeed here, partly because of the lesser nature of the right to holiday pay (Directive, as opposed to Article in the Treaty of Rome), and also because the six month delay in implementation gives workers a real chance to put in their claims (which is relevant to proportionality).

Thursday 18 December 2014

ECJ: Is Obesity a Disability?

Thanks to Ed McFarlane of Deminos HR for preparing this case summary
Is obesity a disability under EU law?

It can be, held the European Court of Justice in FOA (Kaltoft) v Billund. However, discrimination on the grounds of obesity is not itself unlawful.

Mr Kaltoft was a clinically-obese childminder for a local council in Denmark. He was dismissed due to redundancy; he alleged that obesity was a factor and brought proceedings. The District Court referred four questions on obesity to the ECJ for a preliminary ruling.

The first three questions dealt with whether it was unlawful to discriminate on the grounds of obesity, whether any such right was directly applicable, and querying the appropriate burden of proof. The ECJ held that obesity itself cannot be regarded as a ground for protection against discrimination, and therefore the second and third questions need not be answered.

The fourth question related to whether obesity could be deemed to be a disability under EU Directive 2000/78/EC (the general framework for equal treatment in employment and occupation) and if so, how to determine if an obese person is protected against disability discrimination.

The ECJ held that in the event that "under given circumstances, 'obesity' entails a limitation which results in particular from physical, mental or psychological impairments that in interaction with various barriers may hinder the full and effective participation of that person in professional life on an equal basis with other workers, and the limitation is a long-term one", it could be a disability. The origin of the disability, or contribution to it, were irrelevant.

It was a matter for national courts (e.g. employment tribunals) to determine whether the conditions required for obesity to be a disability are met.

Therefore, a worker with long-term obesity might be regarded as disabled.

Wednesday 17 December 2014

Employment Tribunal Fees

Thanks to James English of Hempsons solicitors for preparing this case summary
The High Court has today handed down its judgment in Unison's application for judicial review to challenge the employment tribunal fees system. The challenge was unsuccessful. Lord Justice Elias delivered the leading judgment.

The scheme was challenged on 2 grounds. Firstly, it was said to be unlawful under the EU principle of effectiveness, as it was virtually impossible or exceptionally difficult for potential applicants to bring a claim. The enforcement of Convention rights must be practical and effective rather than theoretical or illusory. Secondly, it was said that the scheme was indirectly discriminatory.

As far as the principle of effectiveness was concerned, the  High Court reviewed the limited case law where it was alleged that the cost of litigation denied the Claimant an effective remedy, including the costs of legal representation or by court fees. InPodbielski and PPU Polpure v Poland (2005), the CJEU found that the obligation to pay a fee to pursue an appeal breached the right to a fair and public hearing under Article 6. Limitations on a party's ability to bring proceedings must pursue a legitimate aim and must be proportionate. One of the reasons the scheme was held (rather cynically perhaps) to have breached Article 6 was that the principal aim seems to have been the State's interest in deriving income from the court fees.

The High Court held that any restrictions must satisfy the proportionality test. Even if it is not excessively difficult to bring a case, an unnecessary hurdle which serves no useful purpose would not be proportionate. However, what proved fatal for the case was the lack of evidence. Before the Divisional Court, Unison had relied upon notional rather than actual Claimants. Before the High Court, they still had no actual individuals for the court to consider, Lord Justice Elias stating "the court has no evidence at all that any individual has even asserted that he or she has been unable to bring a claim because of cost." Instead, Unison relied on the recent  employment tribunal statistics which demonstrated a substantial fall in claims. The High Court could not say if the potential Claimants were unable or unwilling to proceed.

As for indirect discrimination, the case focused on the grounds of sex. Type B claims (including discrimination and equal pay) attract a higher fee than Type A claims. The High Court held that a difference in fee could be justified by the level of service or resources required. As for the argument that women were more likely to bring such claims, the court focused on the appropriate pool, and this included male and female claimants. In any event, the scheme could be justified on the basis that those who used the employment tribunal system contributed to its running, it made the system more efficient, and it encouraged settlement.

The judgment clearly hints at 'round 3', when an actual disadvantaged Claimant may bring a test case.  And in any event, the Court has given permission to appeal.

Breaking News: Employment Tribunal Fees Judicial Review

It is being reported that Unison's judicial review application, challenging the legality of employment tribunal fees, was dismissed this morning by the High Court (without reasons being given; the reasons will follow on BAILII today).

A previous attempt to challenge the fees regime, last February, was similarly unsuccessful.

You can view a full history of the employment tribunal fees saga on the archive for these bulletins.

More to follow when the judgment is available.

Monday 15 December 2014

Taxation: Settlement Monies for Injury to Feelings

Thanks to Paul Smith of Broadway House Chambers for preparing this case summary
Are injury to feelings payments taxable?

If the payment arises out of the termination of employment, probably yes, held the First Tier Tribunal (Tax Chamber) in Moorthy v Revenue & Customs Commissioners.

The Appellant brought employment tribunal claims against his former employer, both in respect of the termination of his employment and also unlawful discrimination. The claims were subsequently settled in a global figure of £200,000.

No special provision was made in the settlement agreement that part of that sum was being paid in respect of perceived injury to feelings; indeed, the Appellant's argument was that none of the settlement sum was taxable as it had been paid in settlement of a discrimination claim. Whilst disagreeing, the Commissioners conceded that a £30,000 portion of the global sum would not be subject to taxation because it represented compensation for injury to feelings at the maximum allowable under the Vento and Da'Bell guidelines.

The First Tier Tribunal rejected the Appellant's argument that none of the sum was taxable, but curiously it also rejected the Commissioners' stance that injury to feelings awards are not taxable. Any payment made "directly or indirectly in consideration or in consequence of, or otherwise in connection with" the termination of employment was said to be taxable under s.401 Income Tax (Earnings and Pensions) Act 2003, and as the Appellant's payment came within that bracket the whole of it (save for the usual tax-free portion under s.403) would be subject to taxation.

The First Tier Tribunal drew a distinction between cases where injury to feelings compensation is paid where it is, or is not, "directly or indirectly in consideration or in consequence of, or otherwise in connection with" the termination of employment. In many cases this will be a difficult line for practitioners to draw where a termination (for whatever reason) has occurred, but it will not apply in situations where discrimination is alleged but where the employment relationship continues.

Thursday 11 December 2014

Disability Discrimination: Reasonable adjustments and correct comparator

Thanks to Ed McFarlane of Deminos HR for preparing this case summary
Is it a reasonable adjustment under the Equality Act 2010 to require a bus company to have a policy requiring non-wheelchair using passengers to move if occupying a space required by a wheelchair user?

No, held the Court of Appeal in FirstGroup PLC v Paulley, in a widely reported judgment. Mr Paulley, a wheelchair user, was unable to take a bus due to a passenger keeping a child's buggy in the wheelchair space. Mr Paulley argued for a reasonable adjustment changing the bus company's unenforceable policy requesting passengers to move from the wheelchair space, to one requiring passengers to move when necessary.

The Court noted that an absolute policy would be "unworkable in practical terms", there was no power in law for bus companies to enforce such a policy, it would not be a 'reasonable adjustment'. However, Arden LJ noted that bus companies "must take all reasonable steps short of compelling passengers to move from the wheelchair space".

The Court split on what had put Mr Paulley at a disadvantage, the majority (Underhill and Arden LJJ) held it was the (agreed) provision, criterion or practice 'PCP' applied by the bus company of a policy of giving priority to wheelchair users for wheelchair space, but that space was filled on a 'first come first served' basis.

Lewison LJ in the minority regarded Mr Paulley as being put at a disadvantage not by the PCP, but by the design of the bus with one wheelchair space, and regulations which prohibited a wheelchair from being carried other than in the designated space.

Arden LJ indicated that asking Parliament to look at the law was the proper remedy.

Disability Discrimination: Meaning of Disability

Thanks to Jonathan Gibbons of Black White and Grey Limited for preparing this case summary
Was an employment tribunal entitled to conclude that an employee who suffered from depression and anxiety was not disabled?

Yes, held the EAT in Saad v University Hospital Southampton NHS Trust and another.

It was accepted that Mr Saad suffered from a depressive and general anxiety disorder; an impairment for the purposes of the Equality Act 2010. However, the employment tribunal concluded that the impairment did not have a substantial adverse, nor a long-term effect on his ability to carry out normal day-to-day activities.

Dismissing a subsequent appeal, the EAT held that the employment tribunal was entitled to conclude, on the evidence before it, that the impairment did not have a substantial adverse affect on Mr Saad's normal day-to-day activities.

Contrary to the argument raised by Mr Saad, on a fair reading of the decision, as a whole, the employment tribunal did assess the effects of the impairment on the work environment including his ability to concentrate, communicate with colleagues and access the work place.

Further, the employment tribunal had not misdirected itself as to the meaning of "long-term". It did not fail to have regard to the fact that adverse effects could be long-term even if they fluctuated over time.

Wednesday 10 December 2014

10 Ways for HR to have a Happy Xmas

Okay, it's a little off beat, but I enjoyed reading this excellent blogpost by Gemma Reucroft so much that I thought I'd share it...

This is the ultimate advice checklist for how HR should deal with Christmas issues...

1. Employees sometimes do stupid stuff. At Christmas time and otherwise.

2. Just deal with it.

3. Resist the urge to worry too much about vicarious liability, discrimination and constructive dismissal. Although it is probably a good idea not to put any mistletoe up in the office.

4. Resist the urge to write any sort of policy.

5. Resist the urge to put any sort of disclaimer about behaviour in any Christmas party related literature. If someone wants to punch Bob from Accounts on the dance floor after 12 pints of beer then they will do it anyway. See points 1 and 2.

6. Resist the urge to write special rules about absence from work after social events. See point 2.

7. Apply Christmas common sense.

8. Avoid sprouts in an office environment at all times. This is especially important in small or poorly ventilated offices.

9. Never, ever, buy Secret Santa presents from Ann Summers.

10. Enjoy yourself. Put a tree up. Eat some Quality Street. Wear a Christmas jumper.

Friday 5 December 2014

Employment Status

Thanks to David Campion of Garden Court North Chambers, for preparing this case summary
Was a plumber engaged by a plumbing and maintenance company an 'employee'?

No, although he was a worker, held the EAT in Pimlico Plumbers v Smith.

Although the Claimant wore Pimlico Plumber's uniform and drove a van with Pimlico's logo, the written agreements gave the impression he was in business on his own account.

The Claimant was paid against receipt of invoices, personally accounted for tax and was VAT registered. He was required to provide his own tools, equipment and materials and maintained his own insurance. Although required to work a minimum number of weekly hours, he could choose particular working hours and could reject particular jobs. Pimlico was under no obligation to provide work if none was available.

In upholding the decision that he was not an employee, the EAT held the employment tribunal had been entitled to have regard to the Claimant's financial risk, the degree of autonomy as to quotations and how work was carried out. It was also of significance that both parties acted as though the Claimant was self-employed.

The EAT also upheld the decision that the Claimant was a 'worker', largely because it was envisaged that he would provide personal service. It was reaffirmed that an unqualified right to provide a substitute negates personal service but that where prior consent to a substitute is required the right is not unfettered.

There was no express provision which permitted substitution and, it was held, the most Pimlico Plumbers was willing to tolerate was a form of job-sharing or shift swapping without any legal obligation, which was insufficient to amount to an unfettered right of substitution.

Thursday 4 December 2014

Restrictive covenants

Thanks to James English of Hempsons solicitors for preparing this case summary
Could a company enforce restrictive covenants against a former employee where there had been no specific consideration?

No, held the High Court in Re-use Collections Limited v Sendall & May Glass Recycling Ltd.

Mr Sendall had worked for Re-use (a glass recycling business) since it was family-run, but it had left family control. He had no written contract of employment, and no post-termination restrictions. In February 2013 he signed a new contract of employment which included a number of restrictions including 6 month non-solicitation and non-dealing clauses, and a 12 month non-competition clause. Shortly, afterwards he left to join a competing business (May Glass), operated by his sons and which he was also involved in.

The High Court refused to enforce the restrictive covenants as Mr Sendall had not received "some real monetary or other benefit" for the variation of contract. He was unaware of one of the benefits which Re-use sought to rely upon and most were unrelated to the proposed new terms. His continued employment was likewise not a benefit since there had been no suggestion he would have been dismissed if he refused to sign up. The court’s reasoning offers guidance for any business considering this course of action.

Wednesday 3 December 2014

Compulsory retirement of judges

Thanks to Andrew Smith of Matrix Chambers for preparing this case summary
Is it lawful to impose compulsory retirement on serving judges when they reach their 70th birthday?

Yes, held an employment tribunal in White v Ministry of Justice.

The Claimant, a retired circuit judge, claimed that the MoJ’s requirement (which was in accordance with section 26 of the Judicial Pensions and Retirement Act 1993) amounted to unlawful direct age discrimination.

Whilst he did not dispute that the operation of a compulsory retirement age (“CRA”) was in pursuit of a number of legitimate social policy aims (as set out at para. 19 of the Judgment), he submitted that the chosen cut-off point was too young, and should instead be set at 75 (or, alternatively, 72).

The employment tribunal rejected the claim, concluding that the CRA of 70 was appropriate and reasonably necessary. As to whether a CRA was in principle permissible, the employment tribunal held that an alternative system (involving forced retirement based on an assessment of individual capacity) “would not only be distasteful and undignified but potentially damaging to the rule of law.”

Accepting the MoJ’s submissions that setting the bar at 70 was appropriate and reasonably necessary, the employment tribunal noted the “consistent thread running through the arguments in favour of 70…is that it has been chosen…to ensure so far as possible that judges retire while still at the top of their game.”

It was, the employment tribunal concluded, “of the highest constitutional importance that judges should not be perceived by the public to be ‘past it’ because of mere antiquity nor to be still in post whilst actually being ‘past it’ but declining to acknowledge the fact, given the very real difficulty of removing them from salaried office.”

The employment tribunal also observed that the chosen CRA had commanded the support of virtually all senior judicial figures since the 1990s and, on the evidence before it, all of the judges’ professional bodies.

Monday 1 December 2014

Does Mitchell apply in tribunals?

Thanks to Peter Taheri of 5 Essex Court for preparing this case summary
Does the strict post-Mitchell approach apply to case management in the employment tribunals as it does in civil litigation?

No, not directly, held Langstaff P in the important judgment inHarris v Academies Enterprise Trust (EAT).

Employment tribunals are not required to deal with claims as if the Civil Procedure Rules applied, but they are entitled to take a stricter line than previously and regard must be had to the insight given by cases such as Mitchell into that which constitutes justice. Langstaff P applied the point made by Smith LJ inGoverning Body of St Albans Girls’ School v Neary that the Employment Tribunal Rules are different from those of the civil courts. As the Employment Tribunal Rules were re-drafted and brought into force in 2013, with full knowledge of the civil courts’ new approach, Parliament’s decision to adopt a different regime in the employment tribunal was a conscious one.

However, significantly, Langstaff P also held that:
- overall justice means that each case should be dealt with in a way that ensures that other cases are not deprived of their own fair share of the resources of the Court;
- justice must be delivered within a reasonable time;
- in considering the justice of the matter, the employment tribunal must have regard to cost.

Decisions made in the employment tribunal can accommodate such post-Mitchell considerations because the employment tribunal has to deal with a case fairly and justly. Justice is a wide concept.

It would be entirely appropriate in a suitable case for the employment tribunal to take account of this “wider view of justice” – and so to take a stricter line than previously; but here, as the employment tribunal did not misstate the existing principles in employment law, the employment tribunal did not err in law.

Paragraphs 33-40 of Harris in particular merit careful reading.

Res Judicata

Thanks to Paul Livingston of Outer Temple Chambers for preparing this case summary
Was the Claimant entitled to pursue a claim for negligence in the High Court in respect of the same issues that had previously been alleged before the employment tribunal and dismissed as being out of time?

Yes, held the Court of Appeal in Nayif v The High Commission of Brunei Darussalam.

In 2011, Mr Nayif issued an employment tribunal claim against the High Commission alleging, amongst other things, that he had suffered race discrimination resulting in psychiatric injury. These claims were advanced outside the three month time limit and the employment tribunal, without engaging with the substantive merits of the case, refused to extend time. In 2012, Mr Nayif issued proceedings in the High Court for negligence, accepting that the issues were the same as those before the employment tribunal. The High Commission relied on the defence of issue estoppel/res judicata on the basis that the employment tribunal had dismissed a claim on the same issues. Both the Master (albeit with “considerable reluctance”) and the High Court felt bound by authority, particularly Lennon v Birmingham City Council, to strike out the claim.

The Court of Appeal disagreed, noting that a determination that an issue could not be considered at all did not amount to a final disposal of the claim. The apparently strict test in Lennon, suggesting that res judicata applies whenever there has been any order dismissing the case, was too wide and did not cover situations where the order dismissing proceedings was the result of a refusal to accept jurisdiction. As a result, Mr Nayif was allowed to pursue his action in the High Court.

The Court of Appeal considered, but rejected, Mr Nayif’s argument that striking his claim out as res judicata would constitute a breach of Article 6.

Wednesday 26 November 2014

Newsflash: Holiday Pay Claims

According to a report in WSB, Unite has announced it is not appealing the Employment Appeal Tribunal's decision in Bear Scotland v Fulton case, which has the effect of (largely) preventing claims for holiday-pay backpay going back to 1998.

And if anyone think that's the end of backpay claims, think again...  Someone else is bound to challenge Bear Scotland, and also test the (obiter) indications in previous cases that these backpay claims cannot be brought in the civil courts (with a six year limitation period).

Contract variations: effect of not objecting

Thanks to Naomi Cunningham of Outer Temple Chambers for preparing this case summary
Was an employment tribunal entitled to find that an employee had impliedly accepted a variation of her contract of employment by continuing to work, without expressly objecting to it, for 9 years?

Yes, held the EAT in Wess v Science Museum Group.

Ms Wess was employed in various curator roles from 1979. Originally she had been entitled to 6 months’ notice of termination. In 2003, she was sent a new contract which - among other changes - purported to reduce her notice entitlement to 12 weeks. She never signed the contract, as requested; but neither did she say that she objected to the new terms. She continued to work until her dismissal on 6 weeks’ notice.

The ET found that Ms Wess had impliedly assented to a variation of her contract, and the EAT held that that was a permissible conclusion. Although tribunals must be cautious in finding implied acceptance of a unilaterally-imposed new term whose effect is not immediate, the employer had made it plain here that future employment was offered on the basis of an entirely new contract.

The result is plainly right, even if contract pedants may regret that the EAT passed up the opportunity to clarify the often-blurred distinctions between affirmation, acceptance of variation, and waiver of breach.

Monday 24 November 2014

Psychiatric Injury

Thanks to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary
What are the rules relating to remoteness in damages claims for psychiatric injury? The Court of Appeal explains this in Yapp v FCO. 

Mr Yapp was appointed British High Commissioner in Belize. A year later he was withdrawn from the post and suspended, pending investigation of allegations of misconduct. He then received a writing warning. His suspension was lifted, but he developed a depressive illness and had to undergo heart surgery. He did not in fact receive any other appointment in the Foreign and Commonwealth Office until his retirement. 

He commenced proceedings against the FCO, complaining of the withdrawal of his post and the way the disciplinary process was conducted. He said the resulting stress had caused his depressive illness, which both constituted damage in itself, and led to pecuniary loss. 

The trial Judge found that the withdrawal of the claimant from his post was both a breach of contract and a breach of the duty of care which the FCO owed him at common law (but dismissed the claims in relation to the disciplinary process. 

The FCO appealed against the finding of liability. It further contended that, even if it were in breach, the claimant was not entitled to recover damages for his depression and its consequences on grounds of causation and/or remoteness. 

The Court of Appeal (lead judgment: Underhill LJ) dismissed the FCO's appeal against the findings of breach of contract and causation. But it allowed its appeal on the issue of remoteness of the claim for psychiatric injury. There is a masterly survey of the authorities on remoteness at para 79-133. And the judgments are rich in the analysis of the law in this area generally. 

In contract, the question is: was the damage in question of kind which was "not unlikely" to result? In tort, was the damage "reasonably foreseeable"? The former test requires a higher degree of likelihood of damage occurring than the latter. It therefore made more sense to start with the claim for the breach of the common law duty of care, since the tortious test of remoteness was more favourable to the claimant. 

The Court came to the conclusion that it was wrong to find that it was reasonably foreseeable that the FCO's conduct in withdrawing the claimant from his post without having had the opportunity to state his case might lead him to develop psychiatric illness. According to the Court, it would be exceptional that an apparently robust employee, with no history of any psychiatric ill health, would develop a depressive illness as a result even of a very serious set back at work. The FCO could not have foreseen, in the absence of any sign of special vulnerability, that the claimant might develop a psychiatric illness as a result of its decision. It therefore followed that if the losses were too remote to be recoverable in tort, they were also too remote to be recoverable in contract.