Discrimination against homosexuals - the MacDonald decision

CONTENTS

1. Discrimination against homosexuals - the MacDonald decision
2. Advertisement - job vacancy

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1. Discrimination against Homoseuxals

The Scottish Court of Session has overturned the controversial decision of the EAT in Secretary of State v MacDonald.

The EAT decided as follows (from bulletin 2/10/2000):

The EAT has departed from previous authorities which hold that discrimination against homosexuals does not fall within the Sex Discrimination Act 1975.

It held that the word 'sex' in the Sex Discrimination Act 1975 is ambiguous - potentially including sexual orientation as well as gender. Despite the previous authorities to the contrary, it held that it is obliged to look at rights under the European Convention of Human Rights when, in two recent cases (Lustig-Prean and Salgueiro da Silva Mounta v Portugal), the European Court held that discrimination against homosexuals offended articles 8 (right to respect for privacy) and 14 (right not to be discriminated against when enjoying Convention rights) respectively.

Due to these new authorities, it was time to reconsider the traditional UK approach.

Accordingly, when considering a case of discrimination against a homosexual employee, the correct comparator under the Sex Discrimination Act 1975 is now a heterosexual (be it male or female) rather than a homosexual of the opposite gender.

The Court of Session has restored the orthodox approach in its decision of 1st June 2001, rejecting arguments that the Sex Discrimination Act 1975 can be used to bring claims based on sexual orientation.

All three judges considered that the word 'sex' in the Act meant 'gender', and there was nothing in the European Convention of Human Rights to indicate otherwise. The EAT had overstated the impact of the ECHR.

An important point was identifying the correct comparator. The majority thought that the correct compator with a gay man should be a lesbian. The dissenting judge thought that the comparator with a gay man should be a woman who was also sexually attracted to men. The majority, in considering that the correct comparator was a lesbian, held that Mr MacDonald had not been treated less favourably and therefore rejected his claim.

The decision can be downloaded from http://www.scotcourts.gov.uk/opinions/XA172_00.html

Comment
The Court of Session has departed from the EAT's decision, which appeared to be governed as much by laudable conceps of political correctness than strict application of legal principles. This, of course, is one of the arguments in favour of having two lay members sitting on the EAT (it is also one of the arguments against!)

Whilst this decision will be a blow for the rights of homosexuals in the workplace, the government is obliged to introduce legislation prohibiting discrimination on grounds of sexual orientation by December 2003 under the Equal Treatment Framework Directive.



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Employee Consultation Rights Bill

The Employee Consultation Rights Bill has been published. It has little prospect of being enacted due to the imminent general election (unless re-adopted in the next session of parliament).

It provides an obligation for all employers with more than 50 employees to inform and consult workers (and their representatives) on "large business issues", including:
• developments relating to employment within the undertaking, including foreseeable redundancies; and,
• proposed decisions of the employer which are likely to cause significant changes to the organisation of work or to contracts of employment.
The obligation to inform extends to providing "information on all relevant facts".

An obligation of confidence is imposed on the workforce representatives, who are prohibited from disclosing information to others. The Bill provides that breach of the confidentiality requirement is "actionable at law". If the employer says information is confidential (and thus cannot be disclosed by the workforce representatives), the representatives can apply to the CAC for a declaration as to whether the information is truly confidential.

The penalty for failing to inform and consult, or for providing inadequate or inaccurate information, is that each affected employee shall be paid a 'protective award' of four weeks' gross pay on application to an employment tribunal.

The Bill can be found at http://www.parliament.the-stationery-office.co.uk/pa/cm200001/cmbills/027/2001027.htm

New Acquired Rights Directive - 2nd message

Further to my bulletin of 23rd March 2001 (reproduced below), the Acquired Rights Directive 2001 appeared in the Official Journal on 22nd March 2001. It therefore comes into force on 11th April 2001. Thanks to all those who Emailed me with the date.

Henry Scrope, who is responsible for the excellent www.emplaw.co.uk site, has put together a table comparing the old and new Acquired Rights Directives. It can be accessed via his commentary page on http://www.emplaw.co.uk/cgi-bin/frame/load/data/11001802.htm . Although access to the site normally costs £5+VAT for a 24-hour password, he is offering 24-hour passwords free of charge. Readers can obtain a free trial password by Emailing disclaw@community.co.uk .

New Employment Tribunal Rules of Procedure and ACAS Arbitration Scheme

The DTI has, today, laid the Employment Tribunals (Consitution and Rules of Procedure) Regulations 2001 (SI 2001/1171) before parliament. They are due to come into force on 18th April 2001.

The main changes from the existing 1993 Regulations are as follows:

• new reg. 10 inserts an overriding objective to enable tribunals to deal with cases 'justly'.
• consolidation/simplification of rules relating to directions regarding evidence.
• costs rules amended to make it clear that the unreasonable conduct of a party's representative may be taken into account when deciding whether to order costs.
• costs rules also amended to introduce a DUTY to consider costs in certain circumstances, including where proceedings had no reasonable prospect of succes
• costs rules also amended to increase assessment limit from £500 to £10,000
• the word 'frivolous' in the tribunal's power to strike out 'frivolous' etc. cases has been replaced with 'misconceived' - this would appear a wider power to strike out
NB the Regulations have not yet been posted on the HMSO website, but no doubt will appear there soon.

In addition, the DTI has given a firm(er) timetable for introduction of the much-heralded ACAS arbitration scheme for unfair dismissal claims. Full guidance will be available in April, and the scheme is expected to commence in late May 2001.

Race Discrimination - Anya v Oxford University - C of A

On Friday 23rd March, the Court of Appeal handed down its decision in Anya v Oxford University (http://www.courtservice.gov.uk/judgments/judg_home.htm).

NOTE: the EAT decision in this case is summarised in my bulletin of 16th May 2000


FACTS
Dr Anya (who is a black Nigerian) had, with one other candidate (who was white) been shortlisted for a senior academic post. One of three interviewing panel members knew Dr Anya extremely well, and had formed a view that he was not suitable for the post. He told one, but not the other, member of the panel of his views before the interview took place. In the event, the panel unanimously offered the post to the other candidate. Dr Anya claimed racial discrimination.


ISSUE
It was common ground that Dr Anya had been treated less favourably (having not been offered the post). The question was: was it legitimtate to infer that this was on grounds of race?


THE EMPLOYMENT TRIBUNAL
The employment tribunal recited a number of incidents which Dr Anya complained of which pre-dated the interview. It then held that despite the interviewers having been caught making inconsistent statements, they were fundamentally truthful and honest witnesses. Accordingly it accepted that the other candidate was the better person for the job and that there was no racial inference to be drawn. Having found that there was no racial inference to be drawn, it thought it unnecessary to consider the other allegations (which drifted back over some lengthy period of time).

The Employment Appeal Tribunal noted that no evidence of overt discrimination had ever been identified. It held that it was unncessary for the tribunal to make express findings of fact on each of the ancillary, historical matters, because the tribunal was entitled to take an "overview" and it was quite apparent that, even if findings of fact were made in Dr Anya's favour, they would not amount to "compelling grounds" to find that the non-appointment to the academic post was 'proabably' on grounds of race.


THE COURT OF APPEAL
The Court of Appeal has allowed Dr Anya's appeal, overturning the employment tribunal and the EAT.

The Court stated that inferences of racial motive could only be drawn from detailed primary findings of fact. A single allegation of discrimination could not be viewed in isolation, but the history of dealings between the parties should be taken into account in order to determine whether it is appropriate to draw an inference of racial motive in respect of the principal allegation.

The employment tribunal had erred in deciding that the appointment of the other candidate was not racially motivated, and then considering it unnecessary to deal with all the other, historical, matters that had been raised. Instead, it should have made primary findings of fact on all those other matters and then, looking at the relationship between Dr Anya and the interviewers as a whole, decided whether racial motive could be inferred. By focussing on the actual interview itself (and the circumstances immediately surrounding it), the tribunal failed to make sufficient findings of fact as to all the cirumstances to enable it to be in a position to draw inferences.

Accordingly, "in spite of the daunting consequences of doing so", the case was remitted to the employment tribunal.


COMMENT
Whilst undoubtedly correct from the purist viewpoint, this approach will result in the legthening of many of the already complex and time-consuming race cases before tribunals. It seems now that a tribunal will be making an error of law if it does not permit an Applicant, whether represented or not, to trawl with tedious particularity through every real and perceived grudge that has arisen during his/her employment history.

Members of the Employment Lawyers' Association will have seen a letter by HHJ John Prophet, President of Employment Tribunals, to the Editor in this month's ELA Briefing. In it, he describes how tribunals are succeeding with ensuring speedier justice whilst continuing to safeguarde the interests of justice. This decision of the Court of Appeal seems to promote the latter, but without engaging in the modern approach of balancing it with the former.

New Acquired Rights Directive

On 12th March 2001, the EC Council adopted the new Acquired Rights Directive 2001. This repeals and replaces the Acquired Rights Directive 1977 (which is the source of the TUPE regulations).

The preable states it is a codifying Directive and, indeed, on reading it I have been unable to find any material differences between it and the 1977 Directive (as amended).

Nevertheless, for those who want to see it, it can be downloaded from http://europa.eu.int/eur-lex/en/dat/2001/l_082/l_08220010322en00160020.pdf

The implementation date is the 20th day following its publication in the Official Journal of the European Communities - which could be very soon, or quite some time away!

Damages for Manner of Dismissal - House of Lords

A busy day for the House of Lords, who have handed down five judgments - three of which are employment related.

First, in Johnson v Unisys Ltd. (http://www.parliament.the-stationery-office.co.uk/pa/ld200001/ldjudgmt/jd010322/johnso-1.htm), the House of Lords upheld the rule in Addis v London Gramaphone Co Ltd. [1909] AC 488 that damages are not recoverable at common law for the manner of dismissal. The Lords differed in their reasoning but, unanimously, held that such damages could not be recovered.

It therefore remains the case that damages for wrongful dismissal are limited to the net monies that would have been earned during the notice period.


FACTS
Mr Johnson is now 52 years old. He worked for over 20 years for a computer software company. Over the years he suffered from work-related stress, of which the employers were aware. In January 1994, general allegations were made of misconduct and, without any specific allegations being put or any fair hearing held, he was summarily dismissed.

As a result, he developed a severe psychiatric illness involving in-patient treatment, hypnotherapy for 2 years, intensive psychotherapy, anti-depressant drugs etc., and his health continued to remain severely affected. He still remains unemployed, and his loss of earnings was pleaded in excess of £400,000.

He brought a claim for unfair dismissal, but was awarded only £11,698 due to the (then) statutory maximum.

Accordingly he issued a claim in the county court for (as later amended) breach of the implied term of trust and confidence, in that the manner of dismissal should not be such so as to damage/destroy the relationship between the parties. The County Court Judge, upheld by the Court of Appeal, struck out the claim. Mr Johnson appealed to the House of Lords. NOTE that the claim was solely for financial losses, not for general damages for the psychiatric illness.


DECISION
A number of issues arose:

(i) Was Addis v Gramaphone Co Ltd truly authority for the proposition that damages are irrecoverable for manner of dismissal?
4 of the 5 Lords said that it was authority, albeit that it was a difficult decision to understand. In a minority, Lord Steyn held that the headnote was wrong and that, properly constructed, Addis did not give rise to any such rule of law.


(ii) Should Addis be overruled?
The House of Lords unanimously agreed that social conditions since Addis in 1909 were wholly different. "It is no longer right to equate a contract of employment with commercial contracts (Lord Steyn)". "...over the last 30 years or so, the nature of the contract of employment has been transformed. It has been recognised that a person's employment is usually one of the most important things in his or her life...The law has changed to recognise this social reality (Lord Hoffman)". It was therefore open, if appropriate, to depart from the rule in Addis.

However, the policy arguments divided the House of Lords (even if the end result was the same). The two main arguments were:

Policy Argument 1: Can the implied term of mutual trust and confidence 'trump' an express term entitling an employer to dismiss on notice?
Lord Steyn thought the two terms could co-exist. Even if employment could be terminated on notice, it did not abrogate the employer from the co-existent implied term not to exercise the right to dismiss in a way which damaged the employee's prospects of future employment. He described the term of trust and confidence as "an overreaching obligation implied by law as an incident of the contract of employment."

Three of the others (Lords Bingham, Hoffman and Millett) considered that the terms could not co-exist. The express term trumps the implied term. The term of trust and confidence was only relevant to an ongoing employment relationship, and ceased to have effect in connection with the termination of that relationship.

Lord Nicholls did not consider this point.


Policy Argument 2: Does the Unfair Dismissal legislation provide an adequate remedy?
On this point the House of Lords was divided 4:1.

In the majority, Lords Bingham, Nicholls, Hoffman and Millett held that parliament had intended all issues relating to losses flowing from the unreasonableness of the manner of a dismissal to be dealt with by the unfair dismissal legislation. Parliament having intervened in this way, and provided a effective remedy to resolve such disputes, it was inappropriate for the civil courts to introduce a right to bring claims for losses flowing from dismissal in the civil courts - particularly when such claims would bypass the time limits and compensation limits for unfair dismissal. Malik v BCCI was not an exception - in Malik the breaches of contract by the bank occurred before the dismissal.

Lord Steyn, in the minority, considered that the unfair dismissal legislation would still be perfectly workable if the House of Lords departed from Addis. The fact that parliament legislated because it thought the courts lacked the right at common law to provide an effective remedy did not preclude the courts from deciding that, in fact, they do have the right at common law to provide a remedy.

For the above reasons, by a 4:1 majority the House of Lords held that the rule in Addis should stand.

Lord Steyn, in the minority, held that Addis should be overruled. However, he held that Mr Johnson's appeal must fail in any event because Mr Johnson had no realistic prospect of establishing causation on the facts of the case. His losses, on the facts, were too remote and there was no reasonable prospect of success.


My summary of today's two other employment decisions by the House of Lords will follow>

Aiding Racial Discrimination - House of Lords

CASE 2: Anyanwu (+ another) -v- South Bank Student Union (+ another)
(http://www.parliament.the-stationery-office.co.uk/pa/ld200001/ldjudgmt/jd010322/anyanw-1.htm)

It deals with the issue of liability under section 33(1) of the Race Relations Act 1976, which provides:

"33(1) A person who knowingly aids another person to do an act made unlawful by this Act shall be treated for the purposes of this Act as himself doing an unlawful act of the like description."

FACTS
The Appellants, Messrs Anyanwu and Ebuzoeme, were students at South Bank University. They were elected as full-time officers of the South Bank Student Union, and were employed by the Union.

Various allegations of misuse of funds and bullying were raised against them by the University (not the Union). Following a disciplinary hearing, they were expelled from the University and banned from entering University premises. Accordingly their employment as officers of the Union ceased (it was not clear whether this was due to an express dismissal or frustration, but this was immaterial to the point before the House of Lords).


THE CLAIMS
The Appellants brought claims under the Race Relations Act 1976 against the Union, as employer, and against the University for knowingly aiding the employer to commit an unlawful act, under RRA 1976 s.33(1).

On an application to strike out the claims, the employment tribunal struck out the claim against the University, the EAT reinstated it, the Court of Appeal struck it out again, and the House of Lords (for the reasons set out below) re-reinstated it!


THE REASONING
The phrase 'knowingly aids' in section 33 did not imply that the University had to desire, intend, aim for or bring about the dismissal of the Appellants. All it meant was that the 'aider' had "given some kind of assistance to the other person which helps him do it. The amount or value of that help or assistance is of no importance. Nor is the time at which it is given. It may or may not have been necessary. All that is needed is an act of some kind, done knowingly, which helps the other person to do the unlawful act." (per Lord Hope)

Lord Bingham identified a 3-stage test:
(1) what is the act of the [student union] which is made unlawful by the Act, which it is said that [the University] knowingly aided the [student union] to do?

(2) what is it alleged that [the university] did which knowingly aided the doing of that unlawful act by [the student union]?

(3) do those allegations, if fully established, bring the Appellants complaints against [the university] within section 33(1) of the Act?

By contrast, Lord Hope postulated a 2-stage test:

(1) what was the act done by [the Union] which was made unlawful by the Act?

(2) did the act which is in question aid [the Union] to do that act?
In short, the House of Lords held that the expulsion of the Appellants did 'aid' the Union in dismissing them. This is because if they had not been expelled, they would not have been dismissed.


COMMENT
This is a very wide interpretation of section 33, apparently relying on little more than a causal link between the discriminatory act and liability for the person who 'knowingly aids'. It does not require that the person aiding should have any knowledge that the end result of the principal's acts will be unlawful under the Race Relations Act. Under this test, it would seem that an employment agency who introduced Mr Racist as an employee to a new company will be liable for his racist acts. The decision makes almost turns liability under the Race Relations Act 1976 into a strict liability for the acts of third parties.

One suspects that subsequent courts will restrict this case to its facts. Indeed, this is already being seen in the next decision, Hallam (below).


CASE 3: Hallam v Cheltenham Borough Council (+ others)
(http://www.parliament.the-stationery-office.co.uk/pa/ld200001/ldjudgmt/jd010322/hallam-1.htm)

This case is on exactly the same point as Anyanwu, above, but on a wholly different set of facts.

FACTS
The Appellant contracted with the local council to hire a hall for her daughter's wedding. Her husband was of Romany gypsy origin, and her daughter (obviously!) was half-gypsy.

The police, who had suffered problems with local gipsies some months earlier, advised the Council that they were concerned about the risk of disorder. The Council therefore insisted that all guests hold tickets. The Appellant refused, booked another venue, and successfully sued the Council for repudiatory breach of contract, and racial discrimination.

THE CLAIM
In addition to her claim against the Council, she brought a claim of 'knowingly aiding' a racial act against the police officers.


THE TRIAL JUDGE
The trial judge held that there needs to be an element of "joint enterprise", and the police fell short of knowingly aiding the Council to racially discriminate.


THE DECISION
In what is probably the shortest House of Lords judgment I have ever seen, the House sets out the facts and refers to Anyanwu, its previous decision, as containing the law.

It then states, without any analysis, that the trial judge's decision was one that was open to him on the facts. It does not seem to have any difficulty in reconciling the trial judge's finding that there must be an element of joint enterprise, with its own views in Anyanwu to the effect that the 'aider' does not need to know of the consequences of its 'aiding' act, or that the principal is about to commit a discriminatory act.

COMMENT
Anyanwu seems to be a case of hard facts making bad law - and the House of Lords already seems to be retreating from this statement of the law in Hallam. Yet there is now a very clear conflict of guidance for tribunals when deciding questions under section 33 of the Race Relations Act. Wet towel time, perhaps?

First Human Rights case in the EAT?

The EAT has, this morning, handed down its decision in what is thought to be the first case focussing on the application of the Human Rights Act 1998. By coincidence, it comes on the same day as the Lord Chancellor's Department issues a press release stating that the Human Rights Act has caused "no significant impact" on the courts.

The case is De Keyser Ltd. v Miss L Wilson (EAT/1438/00). The offical transcript is not yet available, but should be available soon from the EAT website.

Facts: The Applicant claimed constructive dismissal arising from stress at work. The Respondent instructed a doctor to examine her. The letter of instruction (which, as the EAT takes great pains to point out, was written by an employment consultant and not a solicitor!) was couched in very strong terms, setting out in great detail aspects of the Applicant's private life which the Respondent believed to be the cause of her stress. There was little doubt that the letter contained highly intrusive and sensitive information, but it was common ground that the employer had not been told the information in confidence, nor as part of the discovery process during litigation.

The Applicant objected to the letter, and asked the tribunal to direct that a fresh expert be appointed. The tribunal, of its own motion, called the parties for a hearing as to why the Notice of Appearance should not be struck out. Following the hearing, the tribunal struck out the IT3 on grounds that "the manner in which the proceedings have been conducted on behalf of the Respondent [have] been scandalous and in breach of article 8 (right to respect for private and family life) ECHR and the Human Rights Act 1998".

The Respondent appealed.

Issue: Was the tribunal right in striking out the Notice of Appearance because the Respondent had breached the Applicant's right to respect for her private life, contained in ECHR Art. 8?

Decision: No. Lindsay P. considered that the tribunal was wrong to have struck out the IT3. The following factors were central:

• the letter of instruction was sent a week prior to the Human Rights Act 1998 coming into force;
• it did not contain any information given in confidence, but (although the decision is not entirely clear on this) only information in the public domain;
• the Respondent was not a public authority;
• it was open to the tribunal to direct that another expert be instructed - thus the fact that the doctor might have been irretrevably prejudiced was not fatal;
• most importantly, the tribunal had not expressly considered whether a fair trial of the issues was still possible;
• there was no disobedience to a court order (although the relevance of this to an article 8 argument is not entirely clear);
• the right to respect for privacy is qualified by the right to both parties to have a just trial of the issues between them - and it must be borne in mind that it was the Applicant who invoked the right to such a trial by bringing the claim
Accordingly the EAT re-instated the IT3.

The decision is also important because it gives a 13-point guide to instructing an expert in employment tribunals. They are (summarised):
1. give careful thought as to whether to instruct an expert at all - a prudent party will first explore the need for expert evidence with the tribunal in correspondence or at a directions hearing;
2. the joint instruction of a single expert is the preferred course;
3. if a joint instruction occurs, the parties must agree responsibility for fees/expenses. It is perfectly acceptable to agree to bound by the tribunal's subsequent views;
4. if one side will not agree to share fees/expenses, it is legitimate for the other side to instruct somebody themselves - although the weight may be reduced if they do not send the instruction letter to the other side for comment;
5. if a joint expert is to be used, tribunals may fix a timetable for agreeing the identity of, and instructions to, the expert;
6. letters of instruction should be detailed and set out specific questions;
7. letters of instruction should avoid partisanship and should emphasise the expert's overriding duty to the court;
8. if the identity of a joint expert, or the wording of instructions, cannot be agreed, the tribunal may assist;
9. the tribunal may give directions as to the areas to be covered by expert evidence;
10. where there is no joint expert, the tribunal should specify a timetable for disclosure/exchange of reports;
11. a timetable might provide for the raising of supplementary questions to the expert;
12. the tribunal should encourage 'without prejudice' meetings of separate experts, to narrow the issued and produce Schedules of points of agreement/dispute;
13. if a party fails to follow these guidelines, the tribunal may consider whether there has been unreasonable conduct within the meaning of rule 12 (as to costs).

Comment: This decision demonstrates the robust approach of the EAT to Human Rights points. As expected (by me, anyway!), the impact of the Human Rights Act has not been significant to date in employment disputes. The EAT is making it quite clear that parties should not take technical 'human rights' points, and that the overriding question is whether justice can be done between the parties.

Slightly worryingly, however, the EAT comes very close to suggesting that a person waives his/her right to respect for privacy simply by bringing a claim in which their private life may be relevant.

Employment Agency Worker not Employee (CA decision)

The Court of Appeal has handed down its decision in Montgomery v Johnson Underwood Ltd. (CA, 9.3.2001), on the issue of whether a worker for an employment agency is employed by the agency (for the purpose of claiming unfair dismissal).

Mrs Montgomery signed up with Johnson Underwood (an employment agency) and was assigned to work for X Ltd. as a receptionist. She worked for X Ltd. for almost 2 1/2 years, being paid by Johnson Underwood ('JU'). X Ltd. eventually asked JU to terminate the assignment because they were dissatisfied with the number of personal phone calls she was making. Mrs Montgomery claimed unfair dismissal against both JU and X Ltd.

The Employment Tribunal, as upheld by the a majority of the EAT, held that Mrs Montgomery was employed by JU but not by X Ltd.. NOTE: The EAT decision was summarised in my bulletin of 6th May 2000.

The Court of Appeal disagreed, and reversed the finding of the ET and EAT. It stated that Mrs Montgomery was not an employee of the employment agency. There had been no appeal against the finding that she was not an employee of X Ltd.. Thus Mrs Montgomery is left without any remedy.

The reasoning of the Court of Appeal is as follows:

• the first 2 of the 3 steps set out by McKenna J. in Ready Mixed Concrete v Minister of Pensions and National Insurance, ie mutuality of obligation (as developed by the House of Lords in Carmichael) and control, are the irreducible minimum for finding a contract of employment exists.

• In other words, mutuality and control are not factors amounting to "material for the melting pot" - they are the two "basic and essential facts". If either of these are lacking, there cannot be a contract of employment as a matter of law.

• The employment tribunal found as a fact that JU lacked control over Mrs Montgomery. Accordingly she was incapable of being an employee.

• Obiter: it is likely that, in these circumstances, there is sufficient mutuality of obligation. The agency is obliged to pay, and the worker obliged to work for the agency's client.

The Court of Appeal echoed the EAT's call for legislative intervention into the status of agency workers, so as to clarify whether parliament intended agency workers to be covered by unfair dismissal legislation.

A final note for those who occasionally feel frustrated at delays in the EAT: Brooke LJ was highly critical of the delays to this case which occurred at EAT level, and commented that it "besmirch[ed] the administration of justice." He directed that his criticisms be sent to the President of the EAT so that he can consider what administrative steps need to be taken to "ensure that the law's delays do not cause so much hardship in future."

The decision can be downloaded from http://wood.ccta.gov.uk/courtser/judgements.nsf/6ff876ba66f8361a8025683c00411386/acc5fbc95fac82a580256a0d00581fec/$FILE/montogmery_v_underwood.htm

Extension to Disability Discrimination Act

The government has today announced that it will be extending the Disability Discrimination Act 1995 to include:

• increased protection for people with cancer (the quoted example being people in remission from cancer, who may not fall within the definition of a disabled person);

• removing some of the excluded sectors from the Act, such as police, firemen and prison officers. It will also cover barristers(!), pupil barristers and employees on board ships, aeroplanes or hovercrafts;

• a legal duty on public bodies to provide equal opportunities for disabled persons;

• persons registered as partially sighted being DEEMED to be disabled (and not having to come within the normal definition);

• abolition of the 'small employer' exemption by October 2004 (employers with less than 15 employees are currently excluded from the DDA). Nnote that the EC Equal Treatment Framework Directive requires the small-employer exemption to be abolished by December 2006 - thus the proposals go slightly further than the government's obligations.

Increase in National Minimum Wage

The rumours have been confirmed!

The government has announced that it is to increase the national minimum wage from £3.70 to £4.10 in October 2001, following the Low Pay Commission's recommendation.

It will then increase another 10p to £4.20 in October 2002.

No increase for young workers (18-21 years old) has been announced - thus it presumably remains stable at £3.20 per hour.

The EOC has issued a press release welcoming these increases. I have not yet seen any press releases from the CBI or similar bodies, but they objected to the recommendations of the Low Pay Commission and lobbied against the proposed increases.

More information is available at http://www.dti.gov.uk/er/nmw/

Fixed Term Employee Regulations 2001

The government yesterday (Friday) issued a consultation paper and draft Regulations on its proposals for new rights for fixed term employees. Responses to the consultation paper are sought by 31st May 2001.

The proposals seek to implement the EC Directive on Fixed Term Working 1999 (which required member states to introduce legislation by 10th July 1999!).

The draft Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2001, upon which the government is consulting, contain the following provisions for fixed-term employees:

• fixed-term employees are defined as employees (or ex-employees) who worked under a contract of employment which was fixed for a term in advance, or was agreed to terminate upon the occurrence (or non-occurrence) of a specified event;

• a fixed-term employee has the right not to be treated less favourably than a comparable non-fixed term employee engaged in the same or broadly similar work, either in connection with terms and conditions of employment or being subjected to a detriment. There is a defence of objective justification, and the level of pay is excluded (one of the particular points the government is consulting over);

• a fixed term employee who suspects less favourable treatment can ask for written reasons for that treatment. If the employer fails to provide written reasons, a tribunal is entitled to draw an adverse inference (for a change!)

• A NOVEL PROPOSAL: An employee working under a fixed term contract has a right to be notified by the employer of any suitable available vacancies (ie non fixed-term) that may arise.

• The usual remedies for breach of rights: declaration, recommendation or compensation. Compensation is unlimited, having regard to the employee's loss, but no award shall be made for injury to feelings.

• IMPORTANT: Where a employer renews a fixed term contract, and the employee has been working for 4 years (or more) under a series of fixed-term contracts, it is deemed by law to become an indefinite contract and the attempt to fix the term is void. Note that this is not retrospective - any continuity of employment prior to the Regulations coming into force shall not count. This proposal (particularly whether 4 years is appropriate) is another of the central questions being asked in the consultation document.

More information, including the draft Regulations, the EC Directive and the consultation document, is available from http://www.dti.gov.uk/er/fixed/index.htm

House of Lords - When is a Compromise Agreement not a Compromise Agreement?

A very surprising, and highly controversial, judgment has been handed down today (1st March) by the House of Lords in the case of BCCI (In compulsory liquidation) v (1) Munawar Ali, (2) Sultana Runi Khan and Ors - yet another twist to the BCCI saga.

The decision is concerned with the scope/interpretation of COT3 compromise agreements signed by ex-staff of the bank, via ACAS.

In consideration for one month's salary offered by the bank, and after an interview with an ACAS official, the employees signed a COT3 agreement stating that the payment was:

"…in full and final settlement of all or any claims whether under statute, Common Law or in Equity of whatsoever nature that exist or may exist and in particular, all or any claims, rights or applications of whatsoever nature that the Applicant has or may have or has made or could make in or to the Industrial Tribunal, except the Applicant's rights under the Respondent's pension scheme"

Clear? One would have thought so. But the House of Lords disagrees by a 4:1 majority (Lord Hoffman dissenting). It held that the wording of this clause did not preclude the employees from proceeding with claims for 'stigma' damages arising from the collapse of the bank and their dismissal.

In the leading judgement, Lord Bingham held that:

"it is no part of the court's function to frustrate the intentions of contracting parties once these have been objectively ascertained. But …in the absence of clear language, the court will be very slow to infer that a party intended to surrender rights and claims of which he was unaware and could not have been aware" (paras. 9 -10).

Whilst this is put forward as a cautionary principle not a rule of law (para. 17), it led him to conclude that the parties did not intend:

"to provide for the release of rights and the surrender of claims which they could never have had in contemplation at all." (para. 19)

Lord Nicholls also holds that the applicant in singing cannot reasonably be regarded as having taken on himself the risk of a subsequent retrospective change in the law.

The House did not deal in any detail with the traditional view that parties were not entitled to avoid the plain and obvious meaning of a clause by reason of a mutual mistake as to the law (ie the existence of a right to claim stigma damages).

Two passages may make employment lawyers raise their eyebrows even further:

• Lord Nicholls described the signing of a COT3 agreement as an "informal release" - which seems rather at odds with the fact that it is a legally binding agreement under statute;

• Lord Nicholls also stated that the wording of the COT3 would probably not be sufficient to have compromised a claim for underpayment of wages ("What if it later came to light that due to a clerical error Mr. Naeem had been significantly underpaid while employed? It would be surprising if Mr. Naeem could not pursue such a claim") - para. 35.

Lord Bingham concluded his leading judgment by stating:

"On a fair construction of this document I cannot conclude that the parties intended to provide for the release of rights and the surrender of claims which they could never have had in contemplation at all. If the parties had sought to achieve so extravagant a result they should in m opinion have used language which left no room for doubt..."

One wonders what wording would suffice!

EOC Equal Pay Taskforce Report

The Equal Opportunities Commissions has, this morning, published its seminal taskforce report on Equal Pay - www.eoc.org.uk

The report, which is well worth reading for anybody practising in discrimination law, highlights the following issues:

• the gap between average hourly earnings for men and women working full-time has narrowed from 31% to 18%, but the gap between hourly earnings of women working part-time and men working full-time has hardly changed at all, it being 39%.

• the averages hide a stark contrast between earnings of professional women, which are rising, and the growing number of women trapped in part time, low paid jobs.

• average hourly earnings for women in some minority ethnic groups are lower still than for white women, and disabled women have lower average hourly earnings than women who are not disabled.

• the UK has the widest gender pay gap of all EC states.


The taskforce report identifies three main causes of unequal pay:

"Women now do as well as or even better than men in terms of educational achievement; the sexes enter higher education in equal proportions, and women’s employment is catching up with men’s (69%, compared to 79%). There are complex reasons why the gap in earnings persists despite this progress, which can be broken down into three areas:.
• sex discrimination in pay systems, which accounts for 25-50% of the gender pay gap...
• women are concentrated in low paid jobs such as shop assistants, teachers, secretaries and nurses
• women still take prime responsibility for childcare, so many go into part-time jobs, which are usually badly-paid

Finally, the report makes a number of recommendations (including changes to the law, changes to the tribunal system and employer training).

The full report will be available later in the year.

Age Discrimination

The government yesterday confirmed that it would be introducing legislation to tackle age discrimination at work (although it will be the next parliament -whoever it is - that brings in the legislation).

This is pursuant to the EC Equal Treatment Framework Directive that requires all member states to prohibit age discrimination in employment by December 2006 (see bulletin 5/12/00).

An 'Age Advisory Group' was also announced yesterday, which has been set up to advise the government. The first step, after the Group's initial report, will to be embark on a wide consultation procedure to determine the scope of legislation. The government has postulated that such legislation might include outlawing internal corporate retirement ages if they are lower than the state retirement age.

Two important ECJ cases

CONTENTS
1. ECJ decision - An Employer's Right to Insist on Overtime
2. ECJ Advocate General Opinion - 13 week rule for holiday entitlement unlawful

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1. ECJ - An Employer's Right to Insist on Overtime

The ECJ this morning gave its decision in Wolfgang Lange v Georg Schunemann GmbH, a case referred by the German national courts.

Mr Lange was dismissed because he refused to work overtime. There was a dispute of fact over what had been agreed - however, the national court referred three questions to the ECJ for a ruling.

1. Are employers OBLIGED to state in the statement of terms and conditions that an employee may be required to work overtime?
Answer: Yes. Directive 91/533 sets out the employer's obligations to inform employees of the conditions applicable to the contract or employment relationship. Although a right to insist on overtime does not fall within the requirement to inform an employee of the length of their normal working week (since overtime, by definition, is not part of the normal working week), it does fall within the obligation to notify employees of "the essential elements of the contract of employment relationship", because an obligation to work overtime is an essential element of the employment relationship. NOTE: UK Law probably complies with this already under ERA 1996, s1(4)(c).
2. If the employer does NOT set out the obligation to work overtime in writing, does it nullify the obligation? In other words, is the contract does not mention overtime, is the employee in breach of contract if s/he refuses to work overtime.
Answer: No. If the employee has agreed to work overtime (eg verbally or by conduct), and for some reason it has not been reduced to writing, this does NOT render the contractual term void.
3. If the employer does not provide a written statement containing the obligation to work overtime, and is therefore in breach of the law, is the employer deemed to be obstructing the proper taking of evidence (which has consequences in German law)?
Answer: No (this isn't really relevant to UK law!)

The decision is at http://europa.eu.int/jurisp/cgi-bin/gettext.pl?lang=en&num=79989791C19990350&doc=T&ouvert=T&seance=ARRET&where=()

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2. ECJ - 13 week rule for holiday entitlement unlawful

The Advocate-General has this morning handed down his opinion in BECTU v UK.

It is common knowledge that regulation 13(7) provides that workers do not acquire the right to 4 weeks' annual paid leave until they have been working for 13 weeks.

BECTU (the Broadcastin, Entertainment, Cinematographic and Theatre Union) has 30,000 members in the broadcasting, film and theatre sector - many of whom work under very short contracts and thus do not acquire the right to paid holiday. They brought a claim in the High Court seeking a declaration that regulation 13(7) was incompatible with the Working Time Directive. They also sought clarification of whether, once the 13 week period had elapsed, that 13 weeks was to be taken into account when calculating how much paid leave the worker was entitled to.

The Advocate-General, in a very clear and forceful opinion, has stated that the 13-week qualification period is unlawful. The right to paid holiday is "an automatic and unconditional right granted to every worker.". There is no provision within the Directive to make it subject to any qualification period. The Directive "precludes national legislation under which a worker does not begin to accrue rights to the paid annual leave...until he has completed a qualifying period of employment with the same employer even if, once that qualifying period has been completed, his employment during the qualifying period is taken into account for the purpose of computing his leave entitlement."

The opinion is at http://europa.eu.int/jurisp/cgi-bin/gettext.pl?lang=en&num=79989791C19990173&doc=T&ouvert=T&seance=CONCL&where=()

Part Time Pensioners - Preston v Wolverhampton HA (House of Lords)

This afternoon the House of Lords handed down its opinion in Preston v Wolverhampton HA (see bulletins 16/5/00 for the ECJ decision, and 15/9/99 for the original reference from the House of Lords).

The House of Lords followed the ECJ ruling, in that:

(1) the 6-month time limit for bringing a claim for backdated pensions under the Equal Pay Act 1970 was lawful (under EPA 1970, s2(4), a claim must be brought within 6 months of the end of employment); but,

(2) the 2-year backdating limitation (EPA 1970, s2(5)) was not compatible with Article 119, and thus part-time pensioners would be entitled to back-date their pension claims to 8th April 1976 (the date of the ECJ's decision in Defrenne v Sabena, when it was held that Article 119 had direct effect).
And an additional point:
(1) Where there is a series of employment contracts of limited length, within a "stable employment relationship", the claim has to be presented within 6 months of the expiry of the last of those contracts - not within 6 months of each contract coming to an end. This is of importance for professions such as schoolteachers. However, when a worker works on an occasional basis under a series of contracts, but in the absence of a "stable employment relationship", she must bring a claim within 6 months of the end of each particular contract of employment.

The decision is on the internet at http://www.parliament.the-stationery-office.co.uk/pa/ld200001/ldjudgmt/jd010208/presto-1.htm

New SI: Increase in Deposits

Yesterday the government published The Employment Tribunals (Increase of Maximum Deposit) Regulations 2001.

As we had been forewarned (see bulletin 27/11/00), the power for tribunals to order an Applicant to pay a is being increased from a maximum of £150 to a maximum of £500.

The change comes into force on 23rd February 2001.

The statutory instrument is available at http://www.legislation.hmso.gov.uk/si/si2001/20010237.htm

Sellars Arenascene v Connolly - C of A

CONTENTS
1. Sellars Arenascene Ltd. v Connolly - Court of Appeal
2. Beuvale Furnishings Ltd. v Chapman - EAT

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1. Sellars Arenascene Ltd. v Connolly (CA, 2.2.01)

A decision of the Court of Appeal, handed down this morning.

Issue: Is a controlling shareholder capable of being an employee, for the purpose of the unfair dismissal legislation?

The employment tribunal held that Mr Connolly was not an employee of company X (which, following a series of TUPE transfers and a change of name, became Sellars Arenascene Ltd.) because he was the controlling shareholder. In particular, he was "an accomplished and expert entrepeneur operating a number of businesses", he "retained overall control", and he "behaved as an employee but had an interest as shareholder over and above that of employee and stood to gain if the company prospered."

The Court of Appeal, upholding the decision of the EAT, overturned the employment tribunal's finding and held that Mr Connolly was an employee.

It held that, although ultimately a question of fact, the employment tribunal was clearly wrong to regard the above factors as being inconsistent with employment. Many senior employees are accomplished and expert entrepeneurs. Many senior employees have control of a company, and many senior employees stand to gain if a company prospers. These factors were not inconsistent with employment and, the tribunal having misdirected itself, the Court of Appeal thought it appropriate to substitute its own view.



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2. Beauvale Furnishings Ltd. v Chapman

This case is unreported. The transcript can be found at http://wood.ccta.gov.uk/eat/eatjudgments.nsf.

Beauvale Furnishings Ltd. v Chapman [29.11.2000, HHJ Reid QC]
A bold decision of the EAT on illegality of contracts of employment. The parties agreed that the employee would be 'labelled' a self-employed consultant, despite being an employee in reality. This was so the employee could continue claiming legal aid in a personal matter, and could defer payment of income tax and pay the lower class 4 NI contributions. In fact the Applicant then failed to declare his income to the revenue. The EAT held that the deliberate mislabelling as 'self-employed' tainted the contract with illegality and thus prevented him claiming unfair dismissal.