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.

Johnson v Unisys Damages

A request for help...

I am putting together a seminar on Johnson v Unisys damages (for injury to feelings in unfair dismissal claims arising out of the dismissal).

Would anyone who has argued the point be able to Email me to tell me (a) whether damages were awarded; (b) if so, how much; and (c) which tribunal it was.

Also, if anyone has any tribunal decisions where the point is considered at length (whatever the result), could you let me have a copy? My address is 2 Gray's Inn Square Chambers, Gray's Inn, London WC1R 5AA (DX: 43 Chancery Lane).

Many thanks,

Redundancy Ready Reckoner

The DTI has put a redundancy calculator on its webpages. So the dilemma now is do we work it out manually, take the time to pull the paper 'ready reckoner' out a file, or take the time to log on to the DTI site? Personally, I still think manual calculation is quickest!

Incidentally, the DTI calculator is slightly misleading as it says the maximum for a week's pay is £260. It doesn't give any indication that the maximum changed recently, so people with an EDT prior to the 1st Feb may get the wrong figure out of the calculator.

PILON Clauses

In this month's Tax Bulletin, the Inland Revenue has produced new guidance for the tax treatment of payments in lieu of notice (PILONs).

The issue arises where a contract of employment contains a right (but not obligation) for the employer to make a payment in lieu of notice. If that right is exercised, then any payment to the employee is regarded as an emolument from employment and is therefore taxable in full.

By contrast, if the employer does not terminate using the PILON clause, but instead chooses to breach the contract, then four consequences follow:
1. the payment is regarded as damages for breach of contract, and as a 'termination payment' by the Revenue. It therefore falls into the £30,000 tax-free category;
2. class 1 national insurance contributions are also not payable (which saves money for both employee and employer);
3. the employee is under a duty to mitigate his/her losses, and must give credit for any earnings received during the notice period;
4. the employer (probably) loses the right to rely on restrictive covenants within the contract.

In summary, the Revenue's position is:
• a settlement that is substantially the same value as any payment that would have been made under the PILON clause is likely to be viewed as being made under the PILON clause - therefore fully taxable.

• in other words, in the absence of any identifiable breach of contract, the Revenue will assume that the payment has been made lawfully, even if it is not precisely the same amount as provided for by the contract;

• the Revenue may often accept that the payment has been made as damages for breach if, for example, the payment was reduced to reflect mitigation of loss, an adjustment has been made to reflect tax and NI consequences, or the decision not to exercise the PILON clause is evidenced in writing.

The Tax Bulletin makes it clear that incomplete documentation is usually the trigger for the Revenue assuming the payments are taxable. The moral is clear - documentation must be plainly drawn up at the time of the payment showing the payment is being made in breach of contract rather than pursuant to a PILON clause. Plainly, few employers will want to do this if there are restrictive covenants which it wishes to remain in force.

New TUPE Regs - Further Consultation

Following the consultation back in September 2001, the government has announced a period of further consultation.

The long-awaited draft TUPE regulations are now being promised to us in "the first half of this year", with a view to consultation enabling a vote in parliament in autumn. The DTI state that the current anticipated date for implementation of the new TUPE regulations is Spring 2004.

The reforms are said to:

- apply TUPE more comprehensively to service contracting operations
involving labour-intensive services such as office cleaning,
catering, security guarding and refuse collection (while leaving
unaffected the position in relation to "professional services" such
as accountancy, consultancy and legal advice);

- ensure that the new employer is better informed of the ongoing
employment rights of the employees he or she takes on; and

- improve the way TUPE operates when insolvent businesses are sold,
to help promote the 'rescue culture' and save businesses and jobs
that would otherwise be lost.

Disabled Employees - Statistics

The Department for Work and Pensions has published a report on employment retention following the onset of sickness or disability.

The report reveals:

• every quarter, 2.6% of the workforce become disabled within the definition of the Disability Discrimination Act 1995 (608,000 individuals). Surprisingly, only 0.3% of the workforce becomes disabled for the purpose of social security benefits (73,000 individuals) - indicating the government applies much more stringent standards before it to treat someone as entitled to disability protection, than the standards it places on employers;

• 5% of those who become disabled within the meaning of the DDA 1995 leave work immediately. After 9-12 months have elapsed, 13% have left employment.

Employment Act 2002

Two new matters arising from the Employment Act 2002.

1. Flexible Working
The government has published a basic and a detailed guide to flexible working, together with a set of forms to print off to use when requesting / granting / refusing flexible working.




2. Dispute Resolution
The government has quietly changed the proposed implementation dates for the statutory disciplinary and grievance procedures, from autumn 2003 to April 2004.

New EAT Decisions

Some new EAT decisions, posted on the EAT website in the last week.

London Borough of Hillingdon v Thomas (Ms Recorder Slade, 26/9/02)

Hillingdon dismissed a senior personnel officer who had been caught accessing pornography on the internet at work. The staff handbook provided that this amounted to misconduct. The employment tribunal held that whilst it may be misconduct, it was not gross misconduct and so the dismissal was unfair. The EAT held this finding was perverse, and substituted a finding that it was within the range of reasonable responses for Hillingdon to dismiss a staff member for accessing pornography. This authority is going to be very helpful for all employers who dismiss for similar offences, although it must still be borne in mind that the employee must have been told that accessing pornography is prohibited.


Cape Industrial Services v Ambler (HHJ Peter Clark, 20/12/02)

This case contains a plethora of appeal points: most uninteresting. Two interesting points shine through.

First, at paragraph 47, the EAT says that an employer who complies with a contractual grievance procedure will not be in breach of the term of trust and confidence if the employee has requested departure from that procedure (but the employer insists on sticking to the contractual procedure). It is not clear whether the EAT intended this statement to apply in all cases, and some caution should be exercised in following it rigorously.

Second, at paragraphs 51-52, the EAT restates that in a constructive dismissal case, the employer is not required to justify its conduct (i.e. the constructive dismissal) under ERA 1996, s98(1), but merely to show the reason for the constructive dismissal.

Flexible Working Regulations

The draft of the Flexible Working (Eligibility, Complaints and Remedies) Regulations 2003 have been published.

These are in addition to the Flexible Working (Procedural Requirements) Regulations 2003, which were summarised in the bulletin of 25th November 2002 (reproduced at the foot of this bulletin).

The new Regulations provide:
• a request for flexible working can only be made if the employee has been continuously employed for six months;

• a penalty if the employer fails to hold a meeting with the employee, or fails to notify the employee of his decision, of up to eight weeks' pay. The explanatory notes make it clear that the statutory cap on a week's pay applies (which, when the Regulations come into force in April 2003, will be £260 per week.

Note that there is no enforcement mechanism where the employer has unreasonably refused a request to work part-time, or where the reason given is not one of the prescribed reasons in (the new) section 80G of the Employment Rights Act 1996, although s80H of the Act does give the Secretary of State a broad power to impose penalties in this regard. So, provided employers hold a meeting and notify the employee in writing of a refusal, employers can still get away with paying lip-service only to the flexible working provisions.

Manner of Dismissal Damages - McCabe v Cornwall County Council (Court of Appeal)

The Court of Appeal has today handed down its decision in cCabe v Cornwall County Council (CA, 23rd December 2002).

Readers will be delighted to know the law on manner of dismissal remains as confused as ever, despite the valiant attempts of the Court of Appeal to analyse and distinguish the existing cases of Johnson v Unisys, Gogay v Herts County Council and Eastwood v Magnox.

All three Lord Justices (Auld, Brooke and Sedley LJJ) point to the difficulties in understanding this area of law. Sedley LJ comments on the absurdity (my word, not his!) of an employee being able to recover substantial damages at common law if his employment terminates because of psychiatric trauma caused by the implied duty of care, but as soon as the employer's conduct becomes serious enough to be a breach of trust and confidence, his leaving "becomes a matter of constructive dismissal and his loss becomes subsumed in his limited statutory rights."

The decision is worth reading, if only as a summary of the distinction the courts are drawing become breaches of trust and confidence prior and separate from dismissal, in which case it seems actions can be brought in the civil courts for substantial sums of damages, and breaches of trust and confidence prior to but bound up in dismissal, in which case the remedy is for unfair dismissal - with all the compensation caps that entails.

Injury to Feelings - Court of Appeal

[Two job advertisements for the Citizens Advice Bureaux specialist support unit in Wolverhampton appear below]

The Court of Appeal has handed down its decision in Vento v Chief Constable of West Yorkshire Police (CA, 20th December 2002).

This is likely to become the lead case on the assessment of damages in discrimination cases.


Facts

Ms Vento always wanted to be a police officer. She was initially prohibited from joining the force due to the height requirement. When this requirement was relaxed in 1995, she joined the force as a probationary constable, aged 28. At that time, she was married with three children.

After about two years, a series of incidents occurred which led to a number of criticisms being made of her, eventually leading to her dismissal on grounds of lack of honesty and lack of performance. The employment tribunal found this was less favourable treatment which would not have occurred if Ms Vento were a man, and found in her favour on liability for sex discrimination.


Injury to Feelings

The employment tribunal noted she had been put through "four traumatic years" of bullying, leading to clinical depression. She then had the "shock and disappointment" of dismissal, a total of 22 days in the tribunal "in which her private life was subject to minute scrutiny", the uncertainty of an appeal on liability and the loss of "a satisfying and congenial career". They awarded £50,000 for injury to feelings.

The Employment Appeal Tribunal held this was plainly excessive, having regard to authorities such as Tchoula v ICTS and Armitage v Prison Service. It halved the award, substituting a figure of £25,000 for injury to feelings.

The Court of Appeal agreed that £50,000 was plainly too high. Mummery LJ, giving the leading judgment, stating that:

"45. This is the first time for many years that the Court of Appeal has had the opportunity to consider the appropriate level of compensation for injury to feelings in discrimination cases..."

Mummery LJ went on to point out that the total award to Ms Vento of £74,000 (which included the award for aggravated damages and personal injury general damages):

"61. ...is in excess of the JSB Guidelines for the award of general damages for moderate brain damage, involving epilepsy, for severe post-traumatic stress disorder having permanent effects...and for total deafness and loss of speech. No reasonable person would think that that excess was a sensible result. The patent extravagance of the global sum is unjustifiable as an award of compensation."

He set out three bands of damages for injury to feelings (at paragraph 65):

"i. The top band should normally be between £15,000 and £25,000. Sums in this range should be awarded in the most serious cases, such as where there has been a lengthy campaign of discriminatory harassment...This case falls within that band...

"ii. The middle band of between £5,000 and £15,000 should be used for serious cases which do not merit an award in the highest band.

"iii. Awards of between £500 and £5,000 are appropriate for less serious cases, such as where the act of discrimination is an isolated or one off occurrence. In general awards of less than £500 are to be avoided altogether, as they risk being regarded as so low as not to be a proper recognition of injury to feelings."

The Court of Appeal accordingly substituted an award for injury to feelings of £18,000.


Aggravated Damages

The employment tribunal thought the police force's conduct to be high-handed, warranting an award of aggravated damages. Reasoning included that no apology had been made by the officers concerned, that the police force had unreasonable condemned Ms Vento as dishonest, that the Deputy Chief Constable attended the tribunal to apologise, but when questioned it transpired he had not read the tribunal's decision and did not know what he was apologising for.

The employment tribunal awarded £15,000, on top of the £50,000 for injury to feelings, as aggravated damages.

The Employment Appeal Tribunal thought this was too high, and substituted an award of £7,000.

The Court of Appeal again had regard to the totality of the award compared with damages in personal injury cases. It reduced the award yet further, to £5,000


General Damages for Personal Injury

Ms Vento developed clinical depression and an adjustment disorder, which lasted for three years. Basing its decision on the JSB Guidelines, the employment tribunal awarded £9,000. The EAT held this a reasonable assessment and did not interfere. It did not form part of the appeal to the Court of Appeal, and therefore stands.


Damages for Future Loss of Earnings

The employment tribunal awarded Ms Vento £165,829 for future loss of earnings, on the basis that she was now only able to work in a clerical capacity, whereas if she had not been driven out the police force there was a 75% chance she would have remained there until retirement.

The EAT overturned this. It stated that the employment tribunal had failed to give sufficient regard to statistics showing that only 9% of female police constables remain in the police force for 18 or more years.

The Court of Appeal reinstated the employment tribunal's award. It held that the employment tribunal had taken that statistic into account, but rejected it on various grounds (including that the statistics were out of date, relating to a period before the police force introduced family friendly policies, and also that Ms Vento was incapable of having more children and therefore she was different from other female police officers who might give up their careers to have children). This section of the judgement is really a decision on the facts and does not lay down any principle of law.

Disclosure Orders

The EAT, in Ken Read v Dawson & Ette (Burton P., 11/11/02), has made some interesting observations on a tribunal's interlocutory powers when considering applications for discovery and inspection.

The principles to be drawn from Burton P.'s decision include:

(a) an order (or refusal of an order) under regulation 4(5)(a) of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2001, namely requiring the attendance of any person to give evidence or produce documents, is not a 'decision' of a tribunal within the meaning of the rules. A tribunal therefore has no jurisdiction to review the order (or refusal of the order);

(b) nor should such an application be renewed, if it has earlier been refused, unless fresh circumstances to exist. A party who unsuccessfully seeks such an order is not entitled to a second bite at the cherry without good reason;

(c) when deciding to order disclosure of particular documents under regulation 4(5)(b) of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2001, tribunals should have regard to the overriding objecting. This is not to say that the Civil Procedure Rules are deemed to be incorporated into the tribunal proceedings, notwithstanding the express reference to rule 31 of the Civil Procedure Rules 1998 in regulation 4(5)(b); there is no requirement in a tribunal for an application for discovery to be supported by formal evidence or a statement of truth.

Extension of Young Worker Protection

The government has today announced regulations to limit working hours of young workers, to come into force on 6th April 2003.

The new laws apply to workers between school-leaving age and 18, and limit working time to:
• 40 hours per week;
• 8 hours per day; and,
• night working prohibited between 10pm - 6am or 11pm - 7am.
These regulations are being introduced following the government's consultation over the summer (see bulletin dated 14th June 2002).

A further amendment is being made to the Working Time Regulations, so that all overtime (not just guaranteed overtime) is included in the calculation of average nighttime working limits. This affects all workers, not just those under 18,

DTI Guide to TUPE

The DTI has, this evening, published a summary guide to TUPE. It deals with current law, not the proposals we are all awaiting.

Continuity of Employment

The Court of Appeal has overturned the EAT's decision in Curr v Marks & Spencers plc (see bulletin dated 9th April 2002 for the EAT decision).

An employee had a four year break in her employment, pursuant to the Marks & Spencers' Child Break scheme. Whilst it was clear that there was no governing contract of employment during those four years (so as to enable continuity of employment to continue accruing), the majority of the EAT held that she was "absent from work in circumstances such that...[she] is regarded as continuing in the employment of her employer for any reason" under ERA 1996, s212. Accordingly her continuity of employment remained unbroken during the four year gap and she was entitled to a redundancy payment based on her accrued continuity of employment dating back to 1973.

The Court of Appeal has overturned that decision, holding (reluctantly) that continuity of employment was broken during the four year Child Break gap. Because the M&S Child Break scheme involved a resignation from work (albeit with a guarantee of re-employment at the end of four years), there was no way in which Ms Curr could be regarded as "continuing in the employment of her employer". The very fact she resigned showed she was not continuing in employment. The position might have been different if there had been an agreement or custom that she remained regarded as employed for the purpose of, for example, pension arrangements - but this was not the case. Therefore she lost the benefit of 17 of her 25 years' service for the purpose of calculating her redundancy payment.

New EAT Practice Direction

The new EAT Practice Direction has now been published. It came into force on Monday (9th December).

Some practical points to note:
• the Notice of Appeal must state the order the Appellant will ask the EAT to make (as well as the grounds of appeal);
• it is now the responsibility of the parties, and ultimately the Appellant, to prepare the appeal bundles (this was previously done by EAT staff). Practice Direction 6 sets out the required contents of the bundle. For preliminary hearings, four copies of the bundle must be lodged at least two weeks before the hearing. For full hearings, four copies of the bundle must be lodged at least seven weeks before the hearing.
• cases will be considered on paper to sift them into one of four categories:
1. rule 3(7) cases - i.e. where the EAT lacks jurisdiction and the appeal is rejected summarily;
2. cases requiring a preliminary hearing
3. cases that can go straight to a full hearing; and,
4. cases that go straight to a full hearing, but are fast-tracked. This will normally include appeals against interlocutory decisions, appeals where the outcome of other cases will depend on the decision or appeals involving a reference to the ECJ or a declaration of incompatibility under the Human Rights Act
• Skeleton arguments must be lodged at least 10 days (previously 7) before a preliminary hearing, or 21 days (previously 14) before a full hearing. The Appellant must include a chronology with its skeleton.
• transcripts will not be provided of decisions where reasons are given verbally at the hearing
The Practice Direction is set out below.

Liversidge - House of Lords refuses Appeal

The House of Lords has refused permission to appeal in Chief Constable of Bedfordshire v Liversidge [2002] IRLR 651.

The law is therefore settled. Under the Sex Discrimination Act 1975 and the Race Relations Act 1976, the Chief Constable of a police force is not liable for sex or race harassment upon a police officer by other officers in his command. (note: Liversidge dealt with the RRA, but the position was confirmed as identical for sex discrimination in Chief Constable of Cumbria v McGlennon (15/7/02).

The position with respect to race has been amended with respect to discrimination occurring after April 2001 (in which case, the chief constable is now liable) - but it remains the case that a female police officer cannot claim sex discrimination arising out of harassment by one of her colleagues.

Christmas Gift from the Croydon Tribunal

The regional chairman in Croydon has directed that in any cases where an IT3 is due to be filed between 21st December 2002 and 4th January 2003 (inclusive), time is extended to 14th January 2003.

This does not apply to Originating Applications.

Whilst I have not seen a copy of the direction, I have confirmed it with the tribunal staff in Croydon.

Income Tax (Earnings and Pensions) Bill

The Income Tax (Earnings and Pensions) Bill was introduced in the House of Commons today. Its purpose, in the explanatory notes, is stated to be "to rewrite tax legislation relating to income from employment, pensions and social security so as to make it clearer and easier to use."

The "clearer and easier" Bill has 725 clauses and eight Schedules. I have no intention of reading or summarising it! If anybody wants to produce a summary, I would be happy to distribute it.

Annual Increase to Tribunal Awards

Hot off the press, the annual increase to the limits on tribunal awards have been published. They take effect as of the 1st February 2003 (for unfair dismissal claims, this is for all claims where the EDT is on or after 1st February 2003 rather than the date of the tribunal hearing).

The main increases are:

Current From 1st Feb 2003
Maximum amount of "a week's pay" (for the purpose of
calculating, inter alia, the basic award or
redundancy payments) £250 £260

Maximum compensatory award £52,600 £53,500

Minimum basic award in prescribed situations
(eg trade union related dismissal) £3,400 £3,500