Deposit Orders

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

Do the procedural rules governing employment tribunals require that a deposit order should set out that the effect of a breach of the order would be achieved by the legal mechanism of striking out?

No, held the EAT in the case of Akanu-Otu v Secretary of State for Justice in the first of the appeals by two Claimants.

The Claimant, a prison service nurse, was ordered to pay a deposit order in respect of her race discrimination claim. The order provided she should pay £300 within 21 days, failing which she would not be allowed to "take part in the proceedings relating to that [the discrimination] matter". It did not specify that failure to do so would result in the claim being struck out.

The claim was struck out following a failure to comply. After her application to review the strike out decision on the ground that the deposit order was defective was refused, the Claimant appealed.

The EAT dismissed her appeal, finding no deficiency in the deposit order. The order used the language in the then rule 20(1) of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2004 (its replacement, rule 39 of the 2013 Rules, was noted to be different in terminology and content) and made it clear that the Claimant's failure would not allow her to continue with her claim.

There was no requirement in the rules, nor anywhere else, that deposit orders must set out that the effect would be achieved by the legal mechanism of striking out

The EAT also held, at paragraphs 25 - 28, that had the order been found to be defective, as the accompanying guidance notes explained the effect of a deposit order, it would have been capable in the circumstances of remedying the defect.

Interestingly, in both cases, failure to give earlier indication of a change of the basis of each appeal from the terms in the appeal notice led to an award of costs.

Injunctions and Trade Secrets

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

How should the courts deal with interim injunction applications relating to ex-employees' use of confidential information?

The High Court addressed a number of important questions in ESL Fuels Ltd v Fletcher. The Defendants worked as senior executives for ESL before setting up Prema Energy Ltd to produce Prema 35. The Claimant sought an interim injunction to prevent this on the basis that Prema 35 was manufactured using ESL's trade secrets.

The Defendants argued that, when considering the status quo, the relevant date was when the claim was served. By then Prema was already selling Prema 35, implying that no interim injunction should be granted. The High Court disagreed, concluding that the relevant status quo was the position before the most significant recent change. In this case, the state of affairs before the Defendants set up in competition with Claimant.

In relation to whether the courts should consider the merits of the underlying case before deciding on an interim injunction application, the Defendants argued that, following Lansing Linde Ltd v Kerr, the court should make some assessment of the merits. The court should not focus solely on the question of whether there was an issue to be tried.

The High Court concluded that the first limb of the American Cyanamid test was the relevant issue, namely, was there a serious issue to be tried? But this did not preclude considering any clear conclusion on the merits that could be reached at the preliminary stage. In this case no such clear preliminary conclusion could be reached.

Despite the status quo favouring the Claimant, the balance of convenience favoured the Defendants. There was a real risk of Prema being "strangled at birth" if it were prevented from doing business until the case was resolved. A limited interim injunction, preserving the confidentiality of the manufacturing process, was granted to protect the Claimant. But, on the basis that the Defendants had given an undertaking to preserve the profits pending the outcome of the case, they were not prevented from selling Prema 35.

Employment Status: Agency Workers

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

Do the principles set out in James v Greenwich LBC, dictating that in an agency arrangement a contract can only be implied between an individual and end user where it is necessary to do so, still apply in light of the Supreme Court's decision in Autoclenz Ltd v Belcher?

Yes, held the EAT in Smith v Carillion.

The Claimant was on a construction industry blacklist and claimed that he was dismissed by the end user because of his trade union activities. Following James, the employment tribunal rejected the Claimant's claims on the grounds that he was not an employee because it was not necessary to imply a contract between him and the end user.

Dismissing the appeal, the EAT rejected the suggestion that the test of necessity in James was no longer good law in light of Autoclenz, which requires employment tribunals to look at the substance of an agreement in employment status cases. Slade J held that the principle in Autoclenz excludes the possibility of a contract if the express agreement does not represent the true position. Autoclenz does not permit a different approach to be adopted in determining whether a contract is to be implied between the Claimant and the end user.

Indirect Discrimination

Thanks to Paul Smith of Broadway House Chambers for preparing this case summary

In an indirect discrimination claim not based upon age, is the passage of time a valid consideration in identifying the pool for comparison?

No, held the EAT in Naeem v Ministry of Justice.

The Appellant was a Muslim prison chaplain and subject to a length of service incremental pay scale common to all Ministry of Justice employed prison chaplains. Prior to 2002 the Ministry of Justice only employed Christian chaplains, and the appellant had commenced his employment in 2004. He argued that because he and the other Muslim chaplains could only progress through the pay scale from 2002 onwards, they were subject to a disadvantage in terms of their earnings.

In the employment tribunal, the key question was whether the pool for comparison should include the Christian chaplains employed prior to 2002; it accepted that it should. On appeal, the EAT disagreed because to include them would contravene section 23 of the Equality Act 2010, which provides that there must be no material difference between a Claimant and the comparison group save for the protected characteristic. There had been no Muslim prison chaplains employed prior to 2002, and thus the correct "like for like" comparison in this case was a non-Muslim employee who started in 2004.

A contrast was drawn with the Supreme Court's decision in Homer v Chief Constable of West Yorkshire Police. Homer was an indirect discrimination case where the Claimant's age was inextricably linked to a time-related PCP. In Naeem the EAT stated that because there is no link between the protected characteristics of religion/belief or race and time in the way there may be with age, time-related factors predating the Claimant's employment (such as the date of the Ministry of Justice's change of recruitment policy) were not appropriate in the exercise of identifying the pool.

Restrictive Covenants

Thanks to Paul Smith of Broadway House Chambers for preparing this case summary

In the 'information age', may employees' relationships with clients still constitute an employer's proprietary interest requiring the protection of restrictive covenants?

Yes, held Queen's Bench Division of the High Court in East England Schools v Palmer.

This case centred on an employee of an education-sector recruitment consultancy, within whose contract of employment was a restrictive covenant. This covenant prohibited her from soliciting or dealing with the candidate teachers or client schools with whom she had dealt in her last 12 months, for a period of 6 months after the end of her employment. After her employment terminated, the (former) employer sought to enforce this covenant.

The High Court made findings of fact that this particular market is driven by the client candidates themselves rather than the consultancies, that there is little loyalty owed by the ultimate recruiters to the consultant, and that much of the relevant information about clients was publicly available in any event. Where, then, is the proprietary interest requiring protection?

The court decided that, notwithstanding these facts, the employer still required protection because it was central to the employee's role that she was to build relationships with client recruiters and candidates. A good, trusting relationship could make the difference between otherwise equal consultancies in a highly competitive marketplace. In addition, such employees would be privy to certain important information which was not publicly available, even if much other information was. These factors warranted protection.

As an aside, this decision at paragraphs 84 to 87 provides a useful run-down on the authorities relevant to severance, or the "blue pencilling" of elements within restrictive covenants which would otherwise render them unenforceable.

New BIS TUPE Guidance Published

The title pretty much says it all.

Here is the... link.  A treat for any CRATUPEAR fans.

TUPE Amending Regulations Published

The final version of the The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014 (seriously?  The acronym is CRATUPEAR!), made by parliament last week, has now been published.  It comes into force on 31st January 2014.

There is no official version available online at the moment, but Practical Law have obtained a copy and made it available on their website (you don't need to be a subscriber).

Thanks to Laurie Anstis of Boyes Turner for spotting this.
 

Territorial Jurisdiction

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

The EAT (Supperstone J) has handed down its decision in the case of Hasan v Shell International, which is authority for the proposition that the Bleuse principle is not applicable to territories outside of the EU.

The Claimant, a mariner, brought claims for unfair dismissal, discrimination, and breach of contract against his employer, the first Respondent (a company based in Singapore); the owner and charterer of vessels he worked aboard, the second Respondent (a company based in London); and a company contracted to carry out daily management of the Claimant, the third Respondent (a company based in the Isle of Man).

The employment tribunal declined jurisdiction to hear the Claimant's claims as he did not work in an establishment in the UK nor aboard a registered vessel with a port in Great Britain specified as the vessel's port of choice, and the breach of contract (a dismissal letter sent from the Isle of Man) occurred outside of England and Wales.

The Claimant appealed. In particular, he argued there was jurisdiction to hear the discrimination claim in accordance with the Bleuse principle - those who seek to enforce directly enforceable EU derived rights where the proper law of is that of England and Wales, ought to enjoy relaxed territorial limitation to allow the exercise of those rights.

Upholding the decision of the employment tribunal and declining a reference to the CJEU, the EAT declined to apply the Bleuse principle which had no application to territories (in this case Singapore and the Isle of Man, being the countries to which his vessel were registered) outside of the EU.

Redundancy Consultation: Expiry of Fixed Term Contract Does Not Count Towards 20+ Headcount

Thanks to Saul Margo for preparing this case summary

Where a dismissal results from the expiry of a fixed-term contract, does it follow that the dismissal counts towards the threshold under s.188 of TULR(C)A 1992 whereby it is necessary to consult if 20 or more employees are 'dismissed as redundant'?

No, held the Court of Session in University College Union v University of Sterling.

The Court of Session confirmed that the termination of a fixed-term contract amounts to a dismissal. However, when determining whether the dismissal amounts to a redundancy dismissal it is necessary to consider whether the dismissal is for "a reason not related to the individual concerned" within the meaning of s.195 of the ERA 1993.

In the four test cases before the Court of Session at least one of the reasons for the dismissal in each of them was that the employee had agreed to accept that the contract would come to an end at a particular time or on the occurrence of a particular event. The Court of Session concluded that such a reason did relate to the individuals as it had to do with their particular circumstances and their particular decisions. Accordingly, they were not dismissed as redundant and, in turn, their dismissals did not count for 'totting up' purposes when counting the number of people needed to trigger collective consultation requirements.

Unfair Dismissal - Allegations of Historic Child Abuse

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

Does the fact of an allegation against a school caretaker of child abuse, occurring prior to and outside of employment, amount to a substantial reason for dismissal?
 
Not on these facts, held the EAT, in Z v A (Langstaff P) dismissing a school’s appeal against a finding of unfair dismissal in respect of a dismissed caretaker, who had been the subject of an allegation of abuse. The investigating police expressed no view to the school as to the veracity of the allegation before dismissal, and had not warned the school against employing the Claimant.
 
The EAT emphasised that when considering dismissal for SOSR, the reason must be “…of a kind justifying dismissal…” and that those five words should not be overlooked. There was no rule that the mere fact of an allegation of abuse made a resultant dismissal fair, each case depended on its facts. There is no presumption that such a dismissal will be fair unless there is some exceptional reason to decide otherwise (para. 29). The EAT emphasised the approach set out by the Court of Appeal in Leach v Ofcom, and that SOSR was not to be used as a convenient label to stick on any situation where an employer feels let down, or a conduct reason is not available or appropriate. The employment tribunal’s conclusion that the school acted unreasonably in dismissing the Claimant was not perverse.
 
The Claimant’s cross-appeal against a refusal by the tribunal to award damages for psychiatric injury arising from the dismissal failed. The tribunal found that the Claimant had insufficient evidence to show that the dismissal (as opposed to the impact of the allegations) caused him psychiatric injury.

Unfair Dismissal: Relevance of Previous Warnings

Thanks to Angharad Davies of Dere Street Barristers for preparing this case summary

Can an employment tribunal decide that it is within the range of reasonable responses for an employer to dismiss an employee taking into account a final written warning when an appeal against it remained outstanding, without hearing evidence regarding the imposition of the warning?

Yes, holds the EAT in Rooney v Dundee City Council

The Claimant had a final written warning for failing to follow an instruction, which she appealed. The appeal hearing was rearranged a number times but never heard.

A separate disciplinary issue then arose, for inappropriate behaviour, whilst the final written warning was still 'live'.

The disciplinary officer upheld allegations which, in isolation, would only have justified a final written warning. However, the second incident bore similarities to the circumstances for which the first written warning was imposed. Therefore, taken together, the incidents justified dismissal.

The Claimant appealed. As part of the appeal the circumstances of the first written warning were reviewed. The decision was taken that the warning was justified and therefore there was no reason to ignore it. The dismissal was upheld.

The EAT was referred to the guidance given in Wincanton Group v Stone & Gregory. When considering the reasonableness of the dismissal where there is a valid warning the tribunal should take into account the fact of the warning including whether there had been an internal appeal. The decision taken by the employer is to be considered in light of section 98(4) but a final written warning implies that any misconduct will often and usually be met with dismissal.

The EAT upheld the tribunal's decision that the dismissal was fair. The tribunal had applied the appropriate test, namely whether dismissal was within the range of reasonable decisions an employer might take, the employment tribunal had been made aware that the warning was under appeal, and had considered the Wincanton guidelines.

Religious Discrimination: Difference between 'holding' and 'manifesting' belief

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

Is there a clear dividing line between holding and manifesting a religious belief?

No, holds the EAT (Mitting J presiding) in Grace v Places for Children.

The Claimant, a short serving children's Nursery Manager, alleged unlawful religious discrimination having been dismissed after holding an unauthorised training session, at which manifestations of her religious beliefs led to various complaints from staff.

The employment tribunal dismissed a claim of unlawful religious discrimination, distinguishing the treatment of the Claimant because of the inappropriate way that she manifested or shared her beliefs from treatment on the ground of her beliefs as such.

The EAT rejected the Claimant's appeal, holding that the fact that the tribunal had referred to in its judgment the case of Chondol v Liverpool CC (a social worker dismissed for 'improperly foisting' his beliefs on service users), with its readily distinguishable facts, did not amount to an error of law. All facts in cases of this nature are likely to differ from other cases.

The EAT noted that there is "no clear dividing line between holding and manifesting a belief and that an unjustified unfavourable treatment because an employee has manifested his or her religion may amount to unlawful discrimination".

Dismissal: Whether Teacher Dismissed

Thanks to Sarah Fitzpatrick of Collingwood Legal for preparing this case summary

Can a letter from a governing body of a community school confirming that a decision had been taken to dismiss have the effect of giving notice to terminate the employment of a teacher employed at that school?

No, held the EAT in Birmingham City Council v Emery.

There is detailed legislation governing community schools set out in the Education Act 2002 and subsequent secondary legislation. In essence, while the governing body of the school decides who to appoint and dismiss, those decisions must be given effect by the local authority. Accordingly, save for exceptions not relevant to this case, the local authority is deemed to be the employer of a teacher at a community school.

Ms Emery was employed as a teacher at Benson Community School. She was dismissed due to lengthy absences on account of ill health. The local authority and governing body argued that Ms Emery was given valid notice of dismissal by a letter from the governing body to Ms Emery which confirmed that a decision had been made to dismiss her and the local authority would serve notice to terminate her contract. The next day the local authority sent her a letter which served notice to terminate her contract of employment.

The EAT upheld the tribunal's decision that valid notice had not been given until Ms Emery received the letter from the local authority.

Disciplinary Hearings and High Court Injunctions

Thanks to Rosalie Snocken of Old Square Chambers for preparing this case summary.

Can a court intervene to restrain an employer from requiring an employee to face a charge of potential gross misconduct at a disciplinary hearing if the conduct complained of is not sufficiently serious to support such a finding?

Yes, holds the Supreme Court in West London Mental Health NHS Trust v Chhabra.

The Appellant is employed by the Respondent Trust as a consultant forensic psychiatrist.  Proceedings in this case arose when the Appellant applied for a declaration and injunctive relief from the High Court ahead of a scheduled disciplinary hearing at which the Trust’s case manager intended to present certain matters as allegations of grossmisconduct under the Trust’s disciplinary policy.

Lord Hodge JSC (giving the only judgment) held that the evidence against the Appellant taken at its highest was not capable of supporting a charge of gross misconduct.   The Court would have held that the categorisation of the Appellant’s conduct as gross misconduct was itself a sufficient ground for injunction in this case.

The Court further held, however, that an injunction should be granted also on the basis that the HR adviser involved had gone beyond his remit by suggesting extensive amendments to the investigation report, which had the effect of stiffening the criticism of the Appellant within the report.  Whilst an HR adviser could advise on questions of procedure, ensuring that all necessary matters had been addressed or achieving clarity, it was not part of his remit to guide the report’s conclusions.  The Court regarded this involvement as a breach of an implied contractual right to a fair disciplinary process.  The Court also made criticisms of other procedural aspects in concluding that an injunction should be granted.

The Court remarked that, as a general rule, it is not appropriate for the courts to intervene to remedy minor irregularities in the course of disciplinary proceedings between employer and employee.  Here however, the irregularities were serious and  any common law damages that the Appellant may obtain if she were to succeed in a claim based on those irregularities after her employment were terminated might be very limited.

Specifically on Maintaining High Professional Standards in the Modern NHS (“MHPS”), the relevant NHS disciplinary procedure, the judgment also considers the respective roles of case manager and case investigator and the discretion which the Supreme Court found a Trust has, in cases where there are both capability and conduct concerns, to proceed to a conduct hearing separately where this is appropriate in the circumstances.  

Equal Pay: First Consideration by EAT under Equality Act 2010

Thanks to Lisa Joyce of DTM Legal LLP for preparing this case summary

Does an equal pay claim have to establish either direct or indirect discrimination?

Not always, if the reasons provided by the employer for inequality of pay are not accepted by the Claimant, according to the decision in Calmac Ferries v Wallace.

The Claimants, the only two female port assistants at Largs ferry terminal brought identical equal pay claims under theEquality Act 2010. The Respondent conceded that the work of the two women was like work to that of the comparator.

The tone of the Claimants' claim suggested that they were seeking to remedy their perceived unfairness in the pay arrangements, rather than an inequality between employees on grounds of their gender. However, the Claimants' pool of two was too small to establish a systematic disadvantage to women as a group and they failed to provide a PCP.

The Respondents applied to strike out the claims, arguing that it was for the Claimants to establish a case of indirect discrimination and that on the pleaded cases they could not do so.

Despite this, on the basis that the Respondents' material factor defence was not conceded, there remained a prima facie case of discrimination which had to be answered on the facts. The application was refused.

Warning: Online ET1 not working

A programming bug appears to have arisen with the online ET1 form.

On the first main page of the form (screenshot below), the online system is insisting, wrongly, that the required information is not completed - and is not letting users progress to the next page.

It is therefore necessary to lodge ET1s by hand if facing a limitation deadline (email and fax copies are no longer permitted).  Not all tribunal hearing centres will accept an ET1 by hand - the list of tribunals which will accept hand delivery of an ET1 is on page 7 of this leaflet.  Bear in mind hard copy forms, when being posted, must be posted to the Leicester or Glasgow processing centres, not the local tribunal.  Also bear in mind that the Xmas post will cause delay - watch out for limitation problems.

Daniel Barnett

Age Discrimination: Statutory requirement defence

Thanks to Naomi Cunningham of Outer Temple Chambers for preparing this case summary If a contractual entitlement to enhanced redundancy pay is determined by reference to a statutory scheme that discriminates on grounds of age, does that give the employer a defence of statutory authority? No, holds the EAT in Heron v Sefton MBC. Ms Heron was employed from August 1995 by the Training and Enterprise Council, under terms that did not include the Civil Service Compensation Scheme. Two TUPE transfers later, having meanwhile acquired a contractual right to CSCS terms, she was made redundant by Sefton MBC. The CSCS capped the sum payable to an employee of over 60 at 6 months' pay, and Sefton implemented that cap. Ms Heron complained of age discrimination. Sefton raised a defence of statutory authority, which succeeded at first instance. But on appeal, the EAT made short work of it. Ms Heron's entitlement was contractual, not statutory: it was 'a requirement of a contract which incorporated the terms of an enactment.' The difference in Sefton's treatment of Ms Sefton and her younger colleagues was not something it was required to do under an enactment. Implicitly, the result might have been different had the CSCS applied directly to Ms Sefton's employment.

New TUPE Implementation Date

The Department for Business, Innovation and Skills has published its seventh statement of new regulation.

This states that the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2013 will come into force on 31st January 2014.  The main changes are summarised here.

Also mentioned is the extension of the right to request flexible working to all employees with 26 weeks' service, which will come into force on 6th April 2014.

Right to Be Accompanied

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

Was the EAT correct to hold in Toal v GB Oils Ltd that a worker's right to be accompanied at a disciplinary or grievance hearing under section 10 Employment Relations Act 1999 is limited only by the reasonableness of the request to be accompanied, not in the choice of a companion under s10 (3)? 

Yes, holds a different division of the EAT in Roberts v GB Oils Ltd (the appeal involving the same employer). The Claimant was refused his first choice of companion at a disciplinary hearing at which he was fairly dismissed for misconduct, and failed at the employment tribunal in his claim for a breach of s10 Employment Relations Act 1999.

Upholding the Claimant's appeal, the EAT followed the earlier decision in Toal, despite reservations as its effect, and held that the statute was clear, after considering paragraph 15 of the relevant Acas Code, which pointed to a broader interpretation of 'reasonable' extending to the choice of companion.

The EAT observed however that there was a safeguard for an employer against a worker's wanton choice of an unsuitable companion, as an employment tribunal could in such a situation reduce compensation to the worker to nil.

There is uncertainty as to what the situation might be if a worker withdraws a request to be accompanied by a particular and substitutes a new request for a companion, this possibility was not raised at the employment tribunal.

The EAT remitted the matter of compensation up to the two-week's pay limit to the employment tribunal, but made no comment on the observation in Toal that quantum for a breach of this right might be in the order of forty shillings.

Agency Workers Regulations 2010

Thanks to Sian McKinley of Cloisters for preparing this case summary

Do the Agency Workers Regulations 2010 apply to agency workers placed with an end user indefinitely?

No, holds the EAT in Moran v (1) Ideal Cleaning Services Ltd; (2) Celanese Acetate Ltd.

The Claimants were employed by the first Respondent and placed with the second Respondent. They had worked for the second Respondent for between 6 and 25 years until they were made redundant. They argued that the Agency Workers Regulations 2010 applied to them so as to entitle them as agency workers to the same basic working and employment conditions as if they had been recruited by the second respondent directly.

The employment tribunal dismissed their claims and this was upheld by the EAT on the following basis:
 

• the Regulations only apply to workers supplied by a temporary work agency to work temporarily for the end user
• the concept of “temporary” in the Regulations means not permanent. A permanent contract is one which is indefinite whereas a temporary contract will be terminable upon a condition being satisfied
• the arrangements under which the Claimants worked were indefinite in duration and therefore permanent
• the Claimants therefore fell outside the scope of the Regulations.