Employment Status and Agency Workers

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

Is it necessary to imply a contract between an agency worker and an end-user where factors point to a contract as the underlying reality?

No, held the Court of Appeal in Smith v Carillion, upholding the decisions of the employment tribunal and Employment Appeal Tribunal.

The Claimant was a 'blacklisted' agency worker with a management role in the construction industry. The Claimant argued that a 'worker' contract could be implied between him and his end-user, Mowlem (now Carillion), and alleged unfair dismissal by Mowlem for Trade Union activities.

The Court of Appeal rejected various grounds of appeal, and following James v Greenwich London Borough Council, refused to imply a contract between the Claimant and Mowlem. Various factors, such as the Claimant's integration into Mowlem's business and an interview, could not undermine the employment tribunal's finding that there was no contract between the Claimant and Mowlem. The Court noted 'A contract cannot be implied merely because the court disapproves of the employer's objective' if an 'employer' seeks to avoid legal obligations.

A Human Rights appeal was dismissed primarily because the acts complained of, with one possible exception, occurred before the HRA came into force. The Court rejected an argument that the provisions protecting 'employees' (but not 'workers') as safety representatives under S44 ERA should extend to 'workers'. The Court suggested obiter that protection for 'workers' under S146 TULR(C)A 1992 from detriments for Trade Union activities could extend to former workers.

TUPE, Insolvency and the National Insurance Fund

Thanks to Claire Darwin of Matrix Chambers for preparing this case summary

Is the Secretary of State for Business, Innovation and Skills (in accordance with the statutory scheme at Part XII of the Employment Rights Act 1996) liable for debts which accrue after a TUPE transfer?

No, held the EAT in BIS v Dobrucki.

The ordinary position is that any debts owed to employees by a transferor will transfer to the transferee under Regulation 4 of the TUPE Regulations 2006, even if those debts have not yet accrued or crystallised at the time of the transfer.

However, Regulation 4 is disapplied if the insolvency proceedings are analogous to bankruptcy proceedings and have been instituted with a view to liquidation of the assets and are under the supervision of an insolvency practitioner (Reg 8(7)).

Further, Regulation 4 is modified if the purpose of the insolvency proceedings is not with a view to liquidation of assets so that it does not transfer liability for the sums payable to the relevant employee under the statutory schemes (Reg 8(5)). The transferee will remain liable for other debts however, including sums in excess of those available under the statutory schemes.

Accordingly, the employment tribunal was wrong to hold that the Secretary of State was liable for sums owed in respect of post-transfer dismissals by the transferee. Such sums had never been owed by the transferor (because they related to post-transfer events), and therefore liability for such sums could not have transferred under Regulation 4.

The Employment Appeal Tribunal held that the statutory scheme at Part XII of the Employment Rights Act 1996 can only apply to the liabilities of the transferor i.e those debts which have accrued prior to or coincident with the transfer. The deeming provisions in Regulation 8(3) of the TUPE Regulations 2006 do not alter the position and do not have the effect that debts which have accrued post-transfer become the responsibility of the Secretary of State.

Philosophical Belief Discrimination

Thanks to Jennifer Danvers of Cloisters for preparing this case summary.

Does an accusation made as part of a heated conversation that a letter written by the Claimant was “too left-wing” amount to harassment related to belief?

Not necessarily, held the EAT in Henderson v GMB.

At first instance the employment tribunal held that Mr Henderson had been fairly dismissed for gross misconduct, but that he had suffered direct discrimination and harassment on the basis of his “left-wing democratic socialist beliefs” for which he was awarded compensation for injury to feelings. Both parties appealed.

In a detailed and carefully worded judgment that touches on many interesting aspects of discrimination complaints based on philosophical belief, Simler J upheld GMB’s appeal and dismissed the appeals of Mr Henderson.

The following points are of particular importance:

• Simler J rejected any suggestion that philosophical belief should be given less protection than religious belief.

• The awareness of alleged discriminators that a Claimant was manifesting a protected belief, will be key, so as to avoid the trap of conflating the “respondent’s reasons for treating the Claimant as it did with [the Claimant’s] reasons for acting as he did”.

• So as to avoid trivial acts being caught by the concept of harassment, context and seriousness must be carefully considered, particularly where there is a single incident.

Simler J did not consider it necessary to decide the interesting point of whether there is a distinction between direct discrimination based on how a belief is manifested and treatment based on the belief itself.

Acas Code of Practice

The revised Acas Code of Practice on Disciplinary and Grievance Procedures came into force yesterday, pursuant to The Code of Practice (Disciplinary and Grievance Procedures) Order 2015.

The change is minor, reflecting the EAT's judgment in Toal v GB Oils, ie that an employee has an absolute right to request his/her choice of trade union representative or workplace colleague to accompany him/her, provided the request to be accompanied is itself reasonable. The 'reasonableness' requirement does not apply to the precise choice of companion, provided they fall within the statutory categories.

Supreme Court on Disability Discrimination

Thanks to Karen Jackson of didlaw for preparing this case summary Is the proportionality test under sections 15 and 35(1)(b) of the Equality Act 2010 the same as the test under Article 8 of the European Convention on Human Rights? No, held the Supreme Court in a unanimous decision dismissing Akerman-Livingstone v Aster Communities Limited, a housing repossession case brought by Shelter with intervention by the EHRC. Under section 35(1)(b) of the Equality Act eviction is unfavourable treatment for the purposes of section 15. Article 8 of the European Convention on Human Rights protects the right to respect for a person's home. The Appellant suffered from severe chronic PTSD which was a disability. The Respondent sought repossession of the Appellant's flat following repeated offers (eleven) to rehouse him. His inability to move arose from disability. The Supreme Court agreed with the Court of Appeal that the housing association had discharged its duty to accommodate under s.193(2) of the Housing Act 1996 but that the first instance decision had incorrectly failed to consider proportionality under the Equality Act. No landlord is entitled to evict a disabled tenant because of something arising in consequence of disability unless he can show eviction to be a proportionate means of achieving a legitimate aim. Lady Hale would have allowed the appeal to give full consideration to the proportionality test under the Equality Act test but opined that there would be no kindness to the Appellant to prolong matters further since a possession order would inevitably ensue. The other Lords agreed that a different approach to proportionality under the Equality Act was required and that it was wrong to equiparate Article 8 and s.35(1)(b). The housing authority had gone out of its way to accommodate the Appellant and needed possession to allow it to meet its obligations under the Housing Act. This would constitute a proportionate means of achieving a legitimate aim.

Resignation amounting to Constructive Dismissal is not Harassment

Thanks to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary

Is an act of constructive dismissal in itself an act of harassment for the purposes of the Equality Act 2010?

No, held the EAT in Timothy James Consulting v Wilton.

The Claimant had a successful career in the recruitment industry and joined Timothy James, a smaller business.

Tensions arose, and several incidents occurred involving a director, Mr O'Connell, with whom the Claimant had previously had a personal relationship. Amongst other things, the Claimant was subjected to "a tirade of criticism" and described as "a green eyed monster". This was with reference to an alleged jealousy of another female colleague with whom Mr O'Connell had now formed a relationship. The employment tribunal concluded that the treatment afforded to the Claimant was because she had previously had a relationship with Mr O'Connell. It was therefore related to the protected characteristic of sex. The employment tribunal found three such incidents of sexual harassment.

In the end, the Claimant resigned, claiming constructive dismissal. The employment tribunal also found that the constructive dismissal was, in itself, an act of harassment under the Equality Act 2010. The EAT disagreed on this point. On a correct interpretation of the Equality Act, an act of constructive dismissal does not, in itself, fall within the meaning of harassment.

The employment tribunal made an order of £10,000 for injury to feelings for the harassment that did occur. It went on to gross this up to take into account income tax. The employer appealed on the grossing up point. The EAT upheld the appeal. On the true construction of the Income Tax (Earnings and Pensions) Act 2003, an award for injury to feelings under the Equality Act 2010 is not liable to income tax. The EAT relied upon a decision of HHJ McMullen QC in Orthet Limited v Vince-Cain [2005] ICR 324 in which the learned judge set out a lengthy and detailed consideration of the relevant case law and principles. This was to be preferred over contrary decisions of lower tribunals dealing with tax appeals.

Compensation: Importance of clear structure and reasoning

Thanks to James English of Hempsons solicitors for preparing this case summary

Can an employment tribunal carry out a speculative assessment of a Claimant's working hours, possible dismissal and the impact on their loss of earnings?

Yes, held the EAT in Little v Kerry Ingredients (UK), but they must set out their findings and reasons clearly.

The Claimant was employed as a Maintenance Engineer by the Respondent food processing company. Following a heart attack, he returned to work on full pay, working about 50% of his normal hours. His employer asserted that this was a 'non-job', he was productive for only 20% of his time, and his duties were covered by his colleagues and an agency worker. His claims, including unfair dismissal and disability discrimination, were upheld. The employment tribunal found that he would have worked 70% of his hours for a further 39 weeks, although there was a 20% chance he would be fairly dismissed within that time.

The employer's appeal was upheld. Whilst it was not wrong for the employment tribunal to engage in the speculative assessment that he would increase his hours from 50% to 70%, they had to engage with the evidence before them. It might have been a legitimate conclusion but they had to spell out their findings. The finding that he would not return to work full-time fed into the prospect that he might have been fairly dismissed, bearing in mind the duty to make reasonable adjustments. These conclusions were not necessarily perverse but the employment tribunal would need to set out their findings clearly. The matter was remitted to the same tribunal to consider these matters.

Reimbursement of EAT Fees by Respondent

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

If a Union pays an Appellant's fee, does Rule 34A (2A) of the EAT Rules permit the EAT to order unsuccessful Respondents to pay the EAT fees of the Appellant?

No, held the EAT in Goldwater v Sellafield Ltd. Rule 34A (2A) provides 'If the Appeal Tribunal allows an appeal...it may make a costs order against the Respondent specifying the Respondent pay to the Appellant an amount no greater than any fee paid by the Appellant...' .

As the GMB had paid its members' EAT fees, the EAT could not order the Respondent to pay a fee where "the plain fact is that the Appellants have paid no fees at all...and...the maximum order that can be made is therefore nil."

The EAT noted that the judgment was limited to Rule 34A (2A) and not other rules which allow for costs orders for 'costs incurred by another party'. Practitioners may wish to note that the corresponding rule 76 (4) in the employment tribunals permits an employment tribunal to order a party to pay costs 'where a party has paid a Tribunal fee', similar to Rule 34A (2A).

The judgment is likely to be controversial and if followed in the EAT and in employment tribunals, would present a stark contrast to the costs rules allowing insurers to recover costs on public policy grounds (see Mardner v Gardner). This might lead to supported parties entering 'loan' arrangements to pay fees and so be able to recover them.

Employment Tribunal Fees: Bits and Bobs

Several developments on tribunal fees: each small, but cumulatively worth a mention. 1. Parliament has made an amending statutory instrument, clarifying an ambiguity in the original fees order. It is now clear than an employer counter-claim for breach of contract is charged a 'type A' fee, irrespective of whether the employee is also bringing 'type B' claims. 2. Bristol University have published a research study, Employment Tribunal Claims: Debunking the Myths, which makes some interesting (albeit probably uncontroversial) observations about fees. 3. The always excellent blogger Richard Dunstan has produced apost on how the fee system can be restructured to achieve a much fairer result without spending more government money. Definitely worth reading.

Judicial Bias (unusual case)

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

Was there bias in a salaried Employment Judge, hearing a part-time workers claim from a Tribunal lay member, deciding the case with the benefit of his own experience of the bench?

No, held the EAT in McGrath v Ministry of Justice, dismissing the Claimant's appeal. The Claimant compared his lack of a pension with the pension of a full-time salaried Employment Judge. An Employment Judge sitting alone dismissed the claim, as the roles were not comparable.

The employment tribunal heard evidence from a retired Employment Judge as to what his role entailed vis-à-vis lay members. The Employment Judge hearing the case, a Regional Employment Judge, drew on and made observations from his own experience as well as the evidence before him. The Claimant characterised the Employment Judge's approach as taking a 'personal view' leading to an unfair hearing.

The EAT disagreed, there was no closed mind, the Employment Judge gave the Claimant an opportunity to deal with his observations, and had fully engaged with the Claimant in challenging his perception of the roles of lay members and Employment Judge. The whole of the evidence had been considered. Furthermore, the Employment Judge's reasoning was plainly and unarguably right.

The EAT made observations as to the value of lay members, whilst noting that Parliament's will was that lay members should have less involvement in employment tribunals.

Damages for Injury to Feelings and Personal Injury

Thanks to Karen Jackson of didlaw for preparing this case summary .

Is cutting off email access for a sick employee a provision, criterion or practice (PCP) which triggers the reasonable adjustment duty? Does the Vento uplift in Simmons v Castle (CA) apply in the employment tribunal?

Yes and no respectively, held the EAT in Chawla v Hewlett Packard Ltd.

In a case of "almost unmanageable proportions" arising from three grievances, four ET1s and five preliminary hearings, the employment tribunal held that the employer was liable for a number of discriminatory acts.

The EAT agreed with the employment tribunal's decision on liability. The PCP of allowing no email access caused substantial disadvantage and triggered the duty to make reasonable adjustments. Delaying Mr Chawla's joining of the employer's share purchase plan was direct discrimination. Failure to pay a retention bonus was not discrimination, nor was forcing the employee to deal with company lawyers around his grievances, nor forbidding co-workers from communicating with him. A claim for harassment failed.

On remedy, no award had been made for loss of earnings because the liability issues established had only a "fractional influence" on the employee's illness. The employer's default exacerbated the illness but did not cause it. The EAT held that the employment tribunal had erred in making no injury to feelings award in respect of stress generated by the reasonable adjustments failure. The EAT increased the overall award from £5,000 to £8,000, but in doing so said specifically that the rationale for the uplift inSimmons does not apply to litigation in the employment tribunal.

ET1 form

The online ET1 form has been updated, so that it now has a 'save' and 'return' function.

Finally.

Repudiatory Breach of Contract

Thanks to James English of Hempsons solicitors for preparing this case summary

Is it a repudiatory breach of contract to forward an obscene and pornographic email at work?

Yes, held the High Court in Williams v Leeds United Football Club.

Mr Williams, a senior employee, brought a claim for wrongful dismissal against his former employer, an association football club. He had been dismissed, with notice, on grounds of redundancy. Within a week of being given notice, however, the Club summarily dismissed him on grounds of gross misconduct. It had discovered that over 5 years earlier, he had forwarded an email containing obscene and pornographic material (aptly described as 'dirty Leeds') to a junior female employee, and two friends at other football clubs. The club refused to pay him the balance of his notice pay, some £200,000.

Mr Justice Lewis, sitting in the High Court, dismissed the notice pay claim. Although it was clear that the club had planned to stop paying his notice pay before notice was served (knowing it to be a breach of contract) and had forensic investigators actively seeking evidence of misconduct, there was no evidence that they knew of the offensive email before redundancy notice was given. The sending of the email 5 1/2 years earlier was a breach of the duty of trust and confidence, particularly given his senior position. The nature of the images, the fact that it could amount to harassment of the female employee and the potential consequences to the club was sufficiently serious to amount to repudiatory conduct. The Club was thus entitled to dismiss him without notice.

Unfair Dismissal: Scope of Investigation in Conduct Dismissals

Thanks to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary

In a suspected misconduct case does an employer have to investigate every line of defence put forward by an employee?

No, held the Court of Appeal in Shrestha v Genesis Housing.

In this case Mr Shrestha was employed as a floating support worker required to travel by car to see clients at their homes. An audit of his expenses claims for a three month period in 2011 revealed excessive mileage. For example the total claim for July 2011 was for 197 miles, whereas the AA figures for the same journeys totalled 99 miles.

The Claimant asserted that the high mileage he claimed was due to a number of factors, namely difficultly in parking, one way road systems and road works, causing closures or diversions.

The employer did not put each specific journey to the Claimant and analyse the purported reasons for the additional mileage. This was because every single journey that the Claimant had made was above the AA suggested mileage. It concluded that it was simply not plausible that there was a legitimate explanation for each and every journey. The employer concluded that gross misconduct had occurred and the Claimant was dismissed.

The employment tribunal dismissed a claim for unfair dismissal, a decision which was upheld by the EAT and Court of Appeal. According to the Court of Appeal the tribunal was required to apply the test in British Home Stores Limited v Burchell, which includes the employer carrying out as much investigation into the matter as was reasonable in the circumstances. But the band of reasonable responses test applies to an investigation into suspected conduct as well as to the reasonableness of the decision to dismiss.

The Court of Appeal considered that the employer's investigation was reasonable and should not be interfered with. According to the Court of Appeal, to say that each line of defence put forward by the Claimant must be investigated unless it is manifestly false or unarguable is to adopt too narrow an approach and would add an unwarranted gloss to the Burchell test. The investigation should be looked at as a whole when assessing the question of reasonableness.

Shared Parental Leave: BIS Eligibility Calculator / Resources

Jo Swinson, the Employment Relations Minister, has today issued a press release about the imminent introduction of Shared Parental Leave.  Meanwhile, the Department of Business, Innovation and Skills has developed an online calculator to help prospective parents calculate their eligibility for shared parental leave and their pay entitlements.

To learn more about shared parental leave, see the Acas Good Practice Guide or the BIS Technical Guide.

Strike Out and Detriment

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

May an employment tribunal strike out a victimisation claim based on a procedurally flawed grievance process if removal of the flaw would have made no difference to the outcome of the grievance?

Not usually, held the Court of Appeal in Deer v University of Oxford.

The Claimant, a former PHD student, appealed the dismissal at pre-trial review of her victimisation claims for a defective grievance investigation and appeal process consequent upon earlier claims.

The tribunal found there was no detriment for the purposes of a victimisation claim because it appeared to be the case that any cure of the procedure would not have made a difference to the outcome. A further appeal on a rejection of a DPA request was rejected on other grounds.

The Court of Appeal, upholding the Claimant’s appeal in relation to grievance procedure (and substituting deposit orders), held the Claimant’s sense of injustice was capable of being a detriment in and of itself. The fact that curing the procedure would have no effect on the outcome, whilst relevant to remedy, was not perilous to liability in a claim of this nature.

The Court reminded itself: “…although the concepts of less favourable treatment and detriment are distinct, there will be very few, if any, cases where less favourable treatment will be meted out and yet it will not result in a detriment.” (paragraph 26)

Tribunals' Annual Report

The Senior President of Tribunals has issued his Annual Report, which is well worth reading for first-rate summaries of what has been happening in the EAT and ETs over the last 12 months, and what is expected in the future. The relevant sections are:-   report from the President of the Employment Appeal Tribunal (Mr Justice Langstaff) - from page 70 report from the President of Employment Tribunals (England & Wales) (Judge Brian Doyle) - from page 73 report from the President of Employment Tribunals (Scotland) (Judge Shona Simon) - from page 80, with a further section on devolution issues from page 89.

'Loss of a Chance' Compensation

Thanks to Grahame Anderson of Littleton Chambers for preparing this case summary

Can an employment tribunal reduce victimisation compensation because the Claimant was unlikely to be appointed to a role?
 

Yes, held the EAT in Das v Ayrshire & Arran Health Board.

During his employment the Claimant (a doctor) had made a number of complaints about treatment directed towards him and towards patients. His employment ended in 2009. In 2012, the Respondent advertised for a post and the Claimant was the only applicant. In part because of the Claimant’s history, the Respondent decided to withdraw the vacancy and made no appointment.

The tribunal held that the Respondent’s failure to interview the Claimant was because of the risk he would make a claim under the Equality Act 2010, which amounted to an act of victimisation.

However, it reduced compensation by 90%. He had performed badly in earlier interviews and had had a number of temporary roles: there were no guarantees he would get the job.

The EAT held that this decision was not perverse. There was sufficient material on which the employment tribunal could speculate about what would have happened had the Claimant been interviewed. A crucial finding was that the Respondent was prepared to appoint no one, rather than appoint someone they did not think suitable.

Annual Compensation Limit Increase

It's time for the annual increase in compensation limits, requiring us to yet again commit a series of essentially meaningless numbers to memory.

The Employment Rights (Increase of Limits) Order 2015
applies where the dismissal (or detriment, or whatever it is that is being complained about) takes place on or after 6th April 2015.

The main changes are:-

• max for a week's pay - £475 (prev £464)
• max compensatory award - £78,335 (prev £76,574)

TUPE: Organised Grouping of Employees

[Thanks to Georgina Bryan, pupil barrister at Littleton Chambers, for preparing this case summary.]

Does a single employee constitute an organised grouping for TUPE purposes where he or she has been instructed by the employer to carry out all of the activities necessary to provide the services for the client?

In the circumstances of this case, yes, held the Court of Appeal in Rynda (UK) Limited v Rhijnsburger (see, also, EAT decision) .

The Respondent had worked as an asset manager for an LLP which provided asset management services to the H20 fund. The Appellant took over provision of these services. At this time the Respondent was responsible for managing the Dutch properties in the fund. She had no other duties and was the only employee who carried out this task.

At paragraph 44 the Court of Appeal summarised the approach to service provision changes set out in the authorities as follows:

1. Identify the service the company was providing to the client
2. List the activities performed in order to provide that service
3. Identify the employees who performed those activities
4. Consider whether the company organised those employees into a grouping for the principal purpose of carrying out those activities.

In this case, the Court of Appeal held that the principles had correctly been applied, and that the fourth requirement was met as the LLP had decided that the Respondent should work full time on the Dutch properties with no significant assistance.

The Court distinguished Eddie Stobart Ltd v Moreman, as it was a “positive decision of the employer” rather than “fortuity” that resulted in the Respondent dealing with the properties. Seawell Ltd v Ceva Freight (UK) Ltd was also distinguished, on the basis that the Respondent was not part of a team. Any inconsistency between the authorities will fall to be resolved on another occasion.