Deductions from Salary

Thanks to Naomi Cunningham of Outer Temple Chambers for preparing this case summary

Is recovery of a previous overpayment of wages or salary a 'deduction' which must be explained in an itemised pay statement?

Yes, held the EAT in Ridge v HM Land Registry EAT/0098/10/DM. Obviously.

Mr Ridge had exhausted his contractual sick pay, and was continuing to take intermittent periods of sick leave. That meant his entitlement to pay varied month by month depending on how many days he had worked. Some months his employer’s payroll administration knew how many days he had worked by payday, and paid him the appropriate amount. But sometimes they didn’t, with the result that he was overpaid one month, and then a deduction was made the following month to recover the overpayment.

The EAT held that those deductions were, er, deductions.

The EAT sometimes makes surprising decisions. This was not one of them.

Future Loss of Earnings / Pension Losses

Thanks to Chesca Lord of Cloisters for preparing this case summary

Is the simplified approach to pension loss appropriate where an individual would have remained a member of a final salary scheme to retirement, but whose only future pension entitlement following dismissal was likely to take the form of a money purchase scheme?

No, held the Court of Appeal in Griffin v Plymouth Hospital.

Mrs Griffin, a bone densitometrist, successfully brought complaints of constructive unfair dismissal and disability discrimination. The employment tribunal found that with reasonable adjustments she would have been able to continue in employment indefinitely, but would not now work for the Trust or as a clinical technician again.

Following an appeal on remedy, a remitted employment tribunal projected that the Claimant would equal her earnings but for discrimination within a 12-year time frame, excluding evidence of subsequent unpaid employment on the strict terms of the remittal. The Court of Appeal approved this approach.

However, the Court of Appeal found that in applying the simplified approach to pension loss, the employment tribunal misdirected itself. The key question was the likelihood the Claimant would have remained in the Trust's final salary pension scheme to retirement. The employment tribunal erred in treating the Claimant's age as decisive and failed to consider her specialist skills, the job market, and her medical condition, which made the substantial loss approach the only appropriate one in the circumstances. There was no basis for the finding that she would join another final salary scheme in future.

The Court of Appeal remitted the case to the employment tribunal to assess pension loss using the substantial loss approach.

In his concluding observations, Underhill LJ said that the Pension Guidelines, formulated in 2003, were in urgent need of review and expressed the hope that HMCTS Service and/or the Judicial College would undertake this imminently.

Fixed Term Worker Discrimination

Thanks to Michael Reed, Employment Legal Officer at the Free Representation Unit, for preparing this case summary

Is it a breach of the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 for an employer to purchase income replacement insurance that may not pay out to a fixed-term employee in circumstances where it would to a permanent employee?

Not in the circumstances of Hall v Xerox UK Ltd held the EAT.

The insurance provided income protection for employees who were off work for 26 weeks. But those on fixed-term contracts ceased to be a members of the scheme at the end of their term. Mr Hall was injured on 12th April 2012; his contract ended on 20th July. Although his contract was extended, the insurer concluded that he had exited the scheme on the 20th July. He was therefore worse off than a permanent employee. He brought a claim under the Fixed-Term Regulations.

The Employment Judge, with whom the EAT agreed, concluded that the act that disadvantaged Mr Hall was that of the insurer, not Xerox. For there to be less favourable treatment under the act, there must be an act or omission by the employer.

In the alternative, Mr Hall argued that the insurer was acting as Xerox's agent. But the EAT concluded that the insurer was unable to affect Xerox's relations with others. Nor did it fulfil any of Xerox's obligations to its employees. The contract between Xerox and the insurer affected the employees. But this fell well short of creating an agency relationship.

Court of Appeal - Territorial Jurisdiction

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

Does the test for whether an employment tribunal has territorial jurisdiction to hear a claim of unfair dismissal under the Employment Rights Act 1996 from a Claimant who lives and works abroad for a UK-based company include consideration of the relative merits of the systems of employment law of the two countries?

No, held the Court of Appeal in the case of Creditsights Ltd v Dhunna.

The Claimant was employed by a UK subsidiary of a US company. Initially he worked in London, but he then moved to the Dubai office, where he worked in what was considered to be a branch or representative office of the London office. He was subsequently dismissed, and brought a claim of unfair dismissal.

The Court of Appeal confirmed that the general test for whether an employment tribunal has territorial jurisdiction is the location of the work, but an employee may exempt him or herself from that general rule by demonstrating that he or she has sufficiently strong connections with Great Britain and British employment law, such that it can be presumed that Parliament must have intended that section 94 ERA should apply to him or her. For employees who both live and work abroad this involves a comparison of the connections with both locations and systems of law, but the submission that this exercise involved a comparison of the merits of the two systems of law was emphatically rejected.

TUPE service provision changes

Thanks to Nathaniel Caiden of Cloisters for preparing this case summary Does the percentage of time an employee spends on an activity immediately before an SPC transfer establish assignment? No, held the EAT in Costain Ltd v Armitage and ERH. The Claimant was a Project Manager at ERH managing telecommunications projects under two contracts for the same Client (the Welsh Assembly). Only one contract provided guaranteed work: that transferred to Costain. Whilst Costain accepted that there was an organised grouping of employees to which the majority of employees were assigned it distinguished the Claimant as an unassigned trouble-shooter. The employment tribunal found that the Claimant's employment had transferred on the basis that "immediately before the transfer" 67% of his time was spent on the transferring activity. The EAT considered the tribunal's reasons to be inadequate. The need for conscious organisation applies just as much to the assignment question as to the identification of an organised grouping of employees in the first place. A "bright lines" approach needed to be adopted at all stages: a snapshot of "time spent" failed to provide any certainty as to whether there was deliberate planning of the Claimant's work in line with the activity. Conversely, the fact that an employee is only spending a minority of his time on the activity immediately before transfer does not preclude assignment. The matter was remitted to a fresh employment tribunal.

Employment Tribunal Fees

In the Court of Appeal today, Unison applied to admit new evidence in their appeal against the decision dismissing their judicial review application challenging employment tribunal fees.

It is (reliably) being reported that the Court of Appeal decided to stay the existing appeal, and Unison is going to lodge a fresh judicial review application relying on the most recent statistics showing a substantial drop in the number of employment tribunal cases.

Claimant entitled to costs despite having insurance cover and not paying fees himself

Thanks to Rad Kohanzad of Serjeants’ Inn Chambers for preparing this case summary

When deciding whether to award costs, is it relevant for an employment tribunal to take into account the fact that the receiving party has had their legal expenses paid by an insurer?

No, held the EAT in Mardner v Gardner.

The Claimant succeeded in her case before the employment tribunal and applied for costs. Despite the costs threshold having been crossed, one of the reasons the employment tribunal refused to award the Claimant her costs was that she was not personally out of pocket because her case was funded by her legal expenses insurers.

Applying Parry v Cleaver [1970] AC 1, the EAT held this was an error because public policy dictates that the paying party should not avoid the costs consequences of their unreasonable conduct merely because the receiving party prudently entered into an insurance contract. That would allow the paying party to appropriate the benefit of the receiving party's contract, which would be wrong.

Time Off to Accompany a Pregnant Woman to Ante-Natal Appointments

From 1 October 2014 expectant fathers, or the partner of a pregnant woman, will be entitled to take unpaid time off work to attend antenatal appointments with their partner.

The Department of Business, Innovation and Skills has produced a guide for employers, which sets out a series of FAQs including who is entitled, how much time an employee can take off, and an employee’s right to redress if their request for time off is refused.

Military Reservists

The Reserve Forces (Payments to Employers and Partners) Regulations 2014 have been published - coming into force on 1st October 2014.

At present, when called up, military reservists are paid directly by the Ministry of Defence - and employers can claim expenses in respect of additional costs incurred whilst replacing the reservist (to a maximum of £110 per day).

From 1st October, small and medium employers will also be able to receive up to £500 per month for each full month a reservist is absent from work (reduced pro rata for parts of a month, or part-time workers).

Tribunal Member Appears Asleep due to Medical Condition

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

If a member of an Employment Tribunal is apparently sleeping for around 15-20 seconds, having been observed to be drooling by the Employment Judge, is that a material procedural irregularity to permit a judgment to be overturned?

No, held the EAT, in Elys v Marks and Spencer PLC. The unsuccessful Claimant appealed, arguing that one lay member had been asleep at different periods during a three-week hearing. The member had often closed his eyes to combat dry eyes, and had been taking painkillers.

The EAT noted that its function was to make findings of fact as to what had occurred at the hearing, and to decide either if there was inattention, or the appearance of inattention, to a properly informed and impartial observer. It concluded that there was neither. The member asked questions, his notes were extensive, and he took full part in discussions with the Tribunal. The 15-20 second 'drooling' incident was not 'of sufficient materiality to amount to a procedural irregularity'.

The EAT made observations for Tribunals in the situation of a member who has a medical condition that might be misinterpreted by litigants. It should be raised by the member with the judge at the first instance, and the EAT noted that had the member's conditions been raised with the parties at the outset, there might have been no appeal.

Employment Tribunal Statistics Quarter 2, 2014

The Ministry of Justice has just released the statistics for employment tribunals for April to June 2014.

They reveal a 71% drop in claims (70% in single claims) compared with the same period in 2013.

A more significant statistic is that single claims are down one-third on the last quarter (Jan-Mar 2014), which is probably in large part due to the introduction of compulsory Acas Early Conciliation on 6th May 2014 (it was voluntary from 6th April).

Employment lawyers shouldn't overlook that there remain many ways to be extraordinarily successful, even in a contracting market (see, for example, www.sevenstrategies.co.uk and www.emplawservices.co.uk).  But many people will be keeping their fingers crossed and hoping that there is a change of government after the next election, given Chuka Umanna's announcement on Monday that a Labour government will review the entire system.

Breaking News: Labour Party Announcement on Employment Tribuals

Speaking live at TUC Congress, Shadow Business Secretary Chuka Umunna is announcing that the next Labour Government will "scrap" the Government’s employment tribunal system and replace it with "a fairer system to ensure that affordability is not a barrier to employees seeking redress in the workplace." Full details here (and if you click now, Chuka Umanna is currently speaking live on the TUC webstream - NOTE this link only works for some viewers, other browsers will say that access is not authorised).  The announcement doesn't make it clear whether fees will be abolished entirely if the Labour party forms the next government, or whether some form of fees will remain. [Thanks to Laurie Anstis of Boyes Turner for tweeting about this]

(1) TUPE and (2) Adjournments

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

In Ejiofor t/a Mitchell & Co Solicitors v Sullivan and others, the EAT considered two questions:

(1) Can a business be transferred under TUPE when the transferor was trading unlawfully?

Yes. Although the undertaking ought to be a lawful one in the sense that if it is for an inherently unlawful purpose "such as a drug dealing or money laundering enterprise" then TUPE would not be applicable, TUPE does not require that all of the activities being transferred be entirely lawful.

The business in this case was a solicitors' firm. It is perfectly lawful to provide legal advice. It may be that the lack of certain qualifications held by certain people may have made some of the firm's activities unlawful at certain times, but the business was not carried out for an unlawful purpose. TUPE did apply.

(2) Where an employment tribunal finds that a dubious "sick note [is] produced simply to add spurious weight to a weak and very late application for an adjournment", must the employment tribunal direct further enquiries to substantiate the sick note before refusing the adjournment?

No. In this "perhaps rare" case, the circumstances did not require the employment tribunal to take any further steps before refusing the adjournment. There was no reason to decide that the attendance of the First Respondent was needed for a fair trial in these particular circumstances (listed in paragraphs 25-26 of the EAT judgment). The decision to proceed was within the employment tribunal's discretion.

Territorial Jurisdiction

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

Did the employment tribunal have jurisdiction to determine the claims of a US citizen, employed by a US company, paid in dollars but who lived and worked in London for half of his employed time?

No, on the facts as found by the employment tribunal, held the EAT in Fuller Appellant v United Healthcare Services.

The Respondents argued the employment tribunal did not have territorial jurisdiction to hear the numerous claims submitted by the Claimant, as the Claimant's employment did not have sufficient connection to the UK.

In particular, the Claimant was an American citizen, the Respondent was incorporated in the US and paid the Claimant in US dollars. Whilst half of the Claimant's many assignments involved working in London and living in rental accommodation there provided for him by the Respondent.

At PHR (now preliminary hearing) the employment tribunal dismissed the claims on grounds of jurisdiction. The Claimant appealed.

The EAT found, in light of the facts as found by the employment tribunal, the decision was one which it was entitled to make and there was no error in the application of the law on jurisdiction to the facts.

Employment Tribunal can Award Costs of In-House Lawyer

Thanks to Nicholas Hill of Outer Temple Chambers for preparing this case summary

Can an employer recover costs in respect of time spent by a legally qualified in-house representative?

Yes, held the EAT in Ladak v DRC Locums Ltd.

It has long been the position that such costs are recoverable (Wiggins Alloys Ltd v Jenkins [1981] IRLR 275) and the definition of 'costs' in the Rules of Procedure did not change the position.

The Claimant's claim was struck out as a result of his failure to comply with case management directions. The Employment Judge made an order for costs.

The Claimant/Appellant argued that the definition of costs, found successively in rule 38(3) of the 2004 Rules and rule 74(1) of the 2013 Rules, did not permit the award of in-house legal costs. He contended that the definition was exhaustive and the words 'fees, charges, disbursements or expenses' incurred by or on behalf of a receiving party were not apt to cover time spent by an in-house legal representative.

The EAT (HH Judge David Richardson) held that there was not the slightest reason for doubting the correctness of Wiggins Alloys Ltd v Jenkins. There was, in the enabling legislation and in the procedural rules, no basis at all for drawing a distinction between the use of in-house lawyers and independent solicitors. It would be absurd and capricious to do so (paragraph 12). The costs of an in-house legal department could permissibly be described as a charge or expense upon the employer (paragraph 16). A receiving party may claim costs where he is legally represented by a qualified employee (paragraph 19).

Adjournments

Thanks to Rad Kohanzad of Serjeants’ Inn Chambers for preparing this case summary

Should an employment tribunal briefly adjourn a hearing of its own motion for a mentally impaired litigant to recover his lucidity and obtain documents which he wanted to rely on?

Yes, in these particular circumstances, held the EAT in U v Butler & Wilson.

The Claimant arrived at the employment tribunal shortly after the decision to strike out his claim had been taken and explained that he was having a psychotic episode, which was also the reason for his breach of the order which led to the strike out. The Claimant explained that he had a bundle of documents being photocopied next door.

The Employment Judge asked the Claimant whether he wanted her to review her decision, which he confirmed that he did. Despite the Employment Judge noting that the Claimant was exhibiting symptoms consistent with his disability and was obviously unwell, she proceeded to review her decision and refused his application.

The EAT found that no Employment Judge acting reasonably could have failed to consider and grant a short adjournment in these circumstances.

As an important aside, the EAT observed that, having informed the Claimant of his right to review her decision, it was incumbent on the Employment Judge to make clear that the application need not be made immediately and could be made within 14 days of the reasons being sent to the parties.

Acas Early Conciliation

Earlier this year, the law changed so that anyone thinking of making an employment tribunal claim has to contact Acas first. Acas has, today, published the Early Conciliation statistics for the first quarter (6 April to 30 June 2014).

During April (when the scheme was voluntary), about 1,000 people contacted Acas each week. During May and June (when it has been compulsory), about 1,600 people have contacted Acas each week. The total number of requests for early conciliation is just over 17,000 during the quarter. Of those, 3% of the first contact comes from the employer rather than the employee.

Of the (approx) 11,000 cases which both began and ended their Early Conciliation period during the quarter, 16.5% resulted in a successful settlement (and a further 19% of employees told Acas they were not proposing to take the matter further).

Construction of Salary Increase clause in contract

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

Should an assurance of guaranteed incremental pay increases subject to performance contrary to absolute discretion in a written contract bind an employer?

No, on the facts, held the EAT in the Equality and Human Rights Commission v Earle.

The Claimant was employed by the Respondent as a senior legal policy adviser. The parties' written contract gave a base starting salary and a higher figure representing the top salary for the position with a chart including five points showing an incremental rise from base to top salary.

Clause 5.3 provided for annual salary review with the possibility of increase on assessment of the previous year's performance but providing no obligation on the Respondent to increase salary.

The employment tribunal found one of the Respondent's staff authorised to discuss salaries assured the Claimant her salary would increase yearly subject to satisfactory performance. The employment tribunal found this to be a contractual arrangement relying on Atrill v Dresdner Kleinwort rather than 'puff'.

The EAT overturning the employment tribunal's decision, applying Autoclenz v Belcher and Commerzbank v Keen, the question was 'What had been agreed between the parties?', whilst remembering employment contracts are relational. Viewed in context, any earlier understanding between the parties could not overrule a discretion contractually agreed.

New Acas Guidance on Dress Codes

Acas has issued new guidance on dress codes and appearance in the workplace.

It sets out the issues for employers to consider, rather than providing answers. Two of the areas it focuses on are tattoos and body piercings, and religious dress.