Discrimination Overseas - Jurisdiction

The EAT has handed down its decision in the important case of Saggar (&ors.) v Ministry of Defence.

Under the sex and race discrimination legislation, an employee can claim discrimination "unless the employee does his work wholly outside Great Britain". This case considers the position of three army officers who were based outside Great Britain and answers three questions.

1. What is the time at which whether the Applicant works outside Great Britain to be judged?
Burton P. held that one looks at the time of the allegations of discrimination. There is no discrimination at an establishment in Great Britain if the person being discriminated against (abroad) is either someone who used to work in Great Britain, but has not done so for many years, or who is employed under a contract which contemplates he might be employed in Great Britain, but in fact he never was (para. 27)

2. What is work?
In one of the cases, the overseas officer attended training courses in Great Britain during the year. If this was 'work', then she did not do her work 'wholly' outside Great Britain, so the tribunal would have had jurisdiction to hear her complaints.

The EAT held that attendance at a training course may be work (and, on the facts in this case, was work) - the important factors being the contractual position, the content of ther work, its duration and regularity (paras. 36-37)

3. Is there a de minimis exception?

Yes. One of the cases involved an army chaplain who attended a funeral in Great Britain (which was held to be 'work'), whilst based in Germany. The EAT held that a de minimis principle applies, and that "it would offend against the de minimis principle to found jurisdiction on a one day visit" (para. 45).

New ACAS Code on Disciplinary and Grievance Procedures

The revised ACAS Code on Practice on Disciplinary and Grievance Procedures in the Workplace was laid before parliament yesterday. Subject to parliamentary approval, it will come into force on 1st October 2004.

There is substantially more information about the new dispute resolution procedures than appeared in the draft Code (which went out to consultation earlier this year). In keeping with ACAS Codes, it is written in user-friendly language and is a very good summary of the law (and good practice) relating to conduct issues in the workplace.

I am offering in-house seminars on the new dispute resolution procedures (in-house, up to three hours). Click the link on the right for more details (including fees).

Bias

An interesting (and unusual) decision on tribunal bias has been put on the EAT website today.

In Breeze Benton solicitors v Weddell, the EAT held that there was an appearance of bias if a chairman, who was alleged to have been critical of a litigant in proceedings a year earlier, sat again in another case involving that litigant.

The tribunal chairman had, it was said by Breeze Benton, criticised the firm (and awarded costs against it) fifteen months earlier when one of the two partners appeared in person to defend an unlawful deductions claim. The chairman did not accept the firm's recollection was accurate (although from the EAT's description, the firm's conduct undoubtedly warranted criticism). The firm did not appeal at the time against the costs order, but complained in an incorrectly addressed letter to the Lord Chancellor's department which they did not chase up.

Fifteen months later, the same firm was again before the tribunal for a 10-day hearing. It was allocated to the same chairman who, before the parties came into the room, anticipated the point and raised it with the regional chairman, who said it was not possible to reallocate the case to another chairman without adjourning it for some months. The Respondent then formally applied for the chairman to recuse himself on grounds of apparent bias. The tribunal unanimously refused, partly on the basis that the two wing members could outvote the chairman if necessary, and partly on other grounds.

The EAT, on existing authority, held that it is no answer to a recusal application to say that the Chairman is only one of three members with an equal vote, given the important position of the legally qualified and presiding member of a tribunal of three members (para. 44(3)).

But of significance, the EAT also held that "the very fact that [the Respondent] had complained [to the Lord Chancellor's Department] about the Chairman's conduct made it inappropriate that the Chairman should sit..." (para. 47). This approach must be questioned. If correct, it means that the vexatious litigant (and, indeed, unions and large companies who regularly appear in cases in the same region) can 'cherry-pick' their chairmen by complaining about those whom they do not like appearing in front of. This approach is dangerous as it can be easily abused: if a chairman decides (say) three consecutive cases against a local large employer, will the mere fact that that employer then complains (whether on good grounds or not) mean that the chairman has to recuse himself from hearing future cases? Surely not.

ACAS Booklet on Redundancy

ACAS has updated its booklet on redundancy.

In line with all the ACAS booklets, it is becoming more practical and user-friendly. This one contains really useful information, particularly the 'walkthrough' of how to conduct a redundancy exercise in appendices 1 and 2.

The only adverse comment is that the booklet mentions in passing, but does not explain in any detail, the mandatory dismissal procedures which come into force from 1st October 2004. These will apply to all dismissals of less than 20 staff within a 90 day period.

Effect of Human Rights Act on unfair dismissal claim against private-sector employer

The Court of Appeal has, this morning, handed down a rather academic decision dealing with the vexed question of whether tribunals must take account of the Human Rights Act 1998 (in this case, the right to respect for privacy) when deciding unfair dismissal claims brought against private sector employers. The case, X v Y, is well known because of the rather unusual facts. The EAT's decision is reported at [2003] IRLR 561.

Facts

Mr X worked with vulnerable children. On a Saturday in January 2001, he drove to a transport cafe, entered the toilet, met a man he did not know, and "they began to engage in sexual activity". A passing policeman arrested them.

Mr X accepted a caution, and his name was placed on the Sex Offenders register. His employers, who worked closely with the Probation Service, discovered this. After full hearings, they dismissed him on the grounds of (a) having committed a criminal offence; and (b) thereafter not having disclosed it. The tribunal found the dismissal was fair.

The Issue

The issue for the Court of Appeal was whether a tribunal is bound to have regard to the right to respect for privacy in private life, accorded by article 8 of the ECHR, when deciding whether a dismissal is fair or unfair.

The tricky point was that the employer was a private-sector employer, and the Human Rights Act only provides that public bodies must comply with the ECHR. Thus, the issue because, should the tribunal (as a public body) apply the ECHR in private-sector cases?

The EAT's Decision

The EAT (HHJ Peter Clark presiding) held that article 8 was not engaged, therefore the main issue did not need to be determined. He considered that an act of 'cottaging', committed in a public place and which attracted a criminal caution was a public matter not a private matter.

The Court of Appeal's Decision

The majority of the Court of Appeal (Mummery and Dyson LJJ) agreed with HHJ Peter Clark, holding that article 8 was not engaged on the facts of this case. In a compelling minority judgment, Buxton LJ doubted this (thinking that acts in a secluded room in private could properly be categorised as private in nature), but thought that the acceptance of the caution by Mr X subsequently removed the private aspect of it.

Mummery LJ went on to consider the alternative point: what should a tribunal do when faced with an argument that a private-sector employer must respect an individual's right to privacy. Buxton LJ agreed with this part of the judgment, but Dyson LJ did not comment on it.

Mummery LJ stated that there should be no difference in approach, whether the employer is private- or public-sector. He described the effect of the ECHR as "oblique", rather than horizontal (para. 59). He then set out eleven factors to be considered by tribunals when deciding the impact of ECHR rights on the fairness of a dismissal. However, he did not actually give an answer - instead he restated basic principles and said it was for employment tribunals to decide! So matters are no clearer.

Costs

The Court of Appeal has upheld, in principle, the ET and EAT's decision in McPherson v BNP Paribas, although it has varied the amount of costs payable by Mr McPherson.

Mr McPherson withdrew his ET claim about two weeks before the hearing. He cited ill-health, although there were doubts about the extent of the ill-health. He had failed to comply with a number of tribunal orders in the run-up to the hearing. The tribunal, and the EAT, held that the late withdrawal was (against the background of breach of tribunal orders) unreasonable conduct. He was ordered to pay all of BNP Paribas's costs. See my bulletin of 27/8/03 for a summary of the EAT's decision.

The Court of Appeal (Mummery LJ) held that:

"it would be legally erroneous if, acting on a misconceived analogy with the CPR, tribunals took the line that it was unreasonable conduct for employment tribunal claimants to withdraw claims and that they should accordingly be made liable to pay all the costs of the proceedings. It would be unfortunate if claimants were deterred from dropping claims by the prospect of an order for costs on withdrawal, which might well not be made against them if they fought on to a full hearing and failed. As Miss McCafferty, appearing for Mr McPherson, pointed out, withdrawal could lead to a saving of costs. Also, as Thorpe LJ observed during argument, notice of withdrawal might in some cases be the dawn of sanity and the tribunal should not adopt a practice on costs, which would deter applicants from making sensible litigation decisions.

"On the other side, I agree with Mr Tatton-Brown, appearing for BNP Paribas, that tribunals should not follow a practice on costs, which might encourage speculative claims, by allowing applicants to start cases and to pursue them down to the last week or two before the hearing in the hope of receiving an offer to settle, and then, failing an offer, dropping the case without any risk of a costs sanction.

"The solution lies in the proper construction and sensible application of rule 14. The crucial question is whether, in all the circumstances of the case, the claimant withdrawing the claim has conducted the proceedings unreasonably. It is not whether the withdrawal of the claim is in itself unreasonable..."

On the facts, the Court of Appeal agreed that Mr McPherson had acted unreasonably, but allowed his appeal to the extent that is substituted a smaller period of time in connection with which costs would be payable (effectively excluding the first months of the litigation, when Mr McPherson had not been conducting the litigation unreasonably).

Failure to Attend at Tribunal

The Employment Appeal Tribunal has, in Cooke v Glenrose Fish Co Ltd, performed a U-turn on the approach for tribunals to take when a party fails to attend.

The previous position, set out by the EAT in London Borough of Southwark v Bartholomew [2004] ICR 358, was that it was incumbent on a tribunal to telephone the litigant to establish whether they were on their way, and the reason for non-attendance.

Burton P., has now held there is no such duty (although a tribunal should consider doing so). Since there is no obligation on a party to attend a hearing, it is perfectly legitimate to hear the case in a party's absence without further enquiry. However, if the non-attending party then applies for a review, a review should ordinarily be allowed if a good reason for the non-attendance is put forward.

Importantly, Burton P. makes it clear that (unlike for extensions of time), it is not good enough for a tribunal to refuse a review on the grounds that a litigant may have a strong claim against his solicitor. The aggravation, uncertainty and cost of satellite litigation militates against encouraging litigants to sue their solicitors for negligence. Provided the attending party can be compensated in costs, there would normally be no good reason not to allow a review and order a retrial.

Statutory Dispute Resolution - DTI Guidance

The DTI's Guidance Notes to the forthcoming mandatory disciplinary and grievance procedures (coming into force 1st October 2004) have just been placed on the DTI website.

Overall, it is a well drafted and thought out document, which goes some way towards explaining the horrendously complex (and in places, incomprehensible) regulations.

I will be updating my Dispute Resolution Analysis Notes to incorporate the guidance. In the meantime, here are a few key points:

• the Guidance Notes make it clear the dismissal procedures do apply for dismissals on grounds of redundancy and, as importantly, retirement
• they make it clear that the mandatory DDPs are an addition to ordinary concepts of fairness under s98(4) of the ERA 1996
• it has useful sections on overlapping procedures and on extensions of time for presenting claims.

New Equality Commission - DTI White Paper

The DTI has, today, issued a White Paper seeking views on the new integrated equality commission, to be known as the Commission for Equality and Human Rights (CEHR).

The new commission will combine the functions of the EOC, CRE and DRC (whoops - redundancy time) in challenging discrimination, as well as promoting human rights issues. In addition to taking over the functions of those three organisations, it will be responsible for tackling discrimination on grounds of age, sexual orientation, religion and belief.

The White Paper sets out proposals for the structure and mandate of the new organisation. The deadline for responses is 6th August 2004.

Transexual Discrimination

The House of Lords has handed down its decision in A v Chief Constable of West Yorkshire Police.

In 1998, the Chief Constable of West Yorkshire rejected Ms A's application to become a constable in the West Yorkshire Police on the ground that, as a male-to-female trenssaxual, she could not perform the full searching duties required of a police constable. The issue was whether he thereby discriminated against her unlawfully in breach of the Sex Discrimination Act 1975

The Chief Constable admitted that the refusal was prima facie discriminatory, but defended the claim on the basis that being able to search is a genuine occupational qualification.

The House of Lords held that gender was not a genuine occupational qualification. Men could perform searching duties, and so could women. To put it another way, it was not a genuine occupational qualification that somebody needed to be either a man or a woman to undertake searching duties - both male and female officers undertook searching duties. The genuine occupational requirement defence was not drafted to cover gender reassignment, and this case did not fall within the exception.

Note that this is an enormous oversimplification of a very complex judgment Moreover, the case is now largely of historic interest only, due to the subsequent implementation of the Sex Discrimination (Gender Reassignment) Regulations 1999.

Rolled up Holiday Pay

The Court of Appeal has, for the first time, considered the thorny issue of 'rolled-up' holiday pay.

In an astonishingly robust and clear judgment, Laws LJ held in the conjoined appeals of Clarke v Staddon and Caulfield v Marshalls Clay Products (see my bulletin of 4/8/03 for the EAT decision) that 'rolled-up' holiday pay complies with the EU Working Time Directive. He examined the policy behind the Directive and relied heavily on the fact that the Directive does not state that the payment has to be received at the time the holiday is taken.

He then asked the question: does rolling-up holiday pay undermine or negate the relevant article of the EU Working Time Directive, and held that it did not. He also held that since the Working Time Regulations 1998 were enacted to implement the Directive, if they said anything different, they were ultra vires. However, he went to hold that the WTR 1998 did allow for rolled-up holiday pay.

But he said it was unsatisfactory that there were two inconsistent decisions; one from the English Court of Appeal and the other from the Scottish Court of Session (in MPB Structures v Munro - see my bulletin of 8/4/03). As a result, he thought that the issue should be referred to the European Court of Justice, and adjourned the hearing to enable Counsel to suggest a draft form of reference. He made it clear that the reference would (if possible) be joined with the reference from the Leeds employment tribunal on the same point (see my bulletin 17/3/04).

Also of significance: he held (in a passage I have some reservations over) that the EAT sitting in England is not bound by the decisions of the Scottish Court of Session. This must be doubtful because the EAT - whether sitting in England or Scotland - is one statutory body. It cannot be right that the same court may, or may not, be bound by decisions of higher courts depending on where the Applicant lives.

New Draft CRE Code of Practice

The CRE is consulting on a revised statutory Code of Practice on Racial Equality in Employment. It is now twenty years since the current statutory code of practice came into force. Since then, there have been a number of important amendments to the Race Relations Act 1976, as well as new EU legislation governing racial equality in the workplace.

To reflect these changes, revisions have been made to the new code, including:

• greater accessibility, in terms of language and style;
• an accurate reflection of current legislation and the modern world of work;
• more real-life employment tribunal case studies; and
• detailed guidance on topics such as positive action, ethnic monitoring and racial equality policies.

The code aims to give practical guidance to employers, recruitment agencies, trades unions and individual employees on how to meet their obligations under the Race Relations Act. It will have statutory status; this means that any of its provisions can be referred to in an employment tribunal.

The consultation paper is available on the CRE website. Consultation closes on Friday, 6th August 2004.

ACAS Guides

ACAS has updated its booklets on Absence and Labour Turnover, and on the new Employment Equality Legislation.

Note: I could not open the two bottom links directly. If you experience similar problems, go to http://www.acas.org.uk/about_acas/whatsnew.html and save the guides to your hard disk, then open them from there.

Employment Status

The Employment Appeal Tribunal has handed down its decision in Staffordshire Sentinel Newspapers Ltd v Potter (HHJ Peter Clark, argument 18th March 2004).

It confirms that an "irreducible minimum" for there being a contract of employment is personal service. Following Express & Echo Publications v Tanton [1999] ICR 693, CA, the EAT held that a provision in Mr Potter's contract that he be entitled to substitute "a suitable person" to perform his duties, whenever he wanted, was fatal to him accruing status as an employee.

Note that other cases have held that such a provisions is not necessarily conclusive. Thus in MacFarlane v Glasgow City Council [2001] IRLR 7, it was held that a gym instructor whose contract provided he could select a substitute from a list pre-approved by the gym did not cease to be an employee because of that provision. A similar result was reached in Byrne Brothers (Formwork) Ltd v Baird [2002] IRLR 96.

The position therefore appears to depend on the extent of the substitution clause. If the worker has an unfettered discretion to appoint a substitute, he cannot be an employee. If he has a heavily fettered discretion, or requires the employer's approval, the substitution clause will not prevent him from accruing employee status.

Continuity of Employment

The Court of Appeal has handed down its decision in Bower v Stevens (& ors.), a curious case about continuity of employment in solicitors' firms.

Mrs Stevens was employed by Hughes Hooker, a solicitors' firm which "attracted a degree of notoriety", where the controlling partner was "a man well practised in flaunting the norms of professional behaviour and personal integrity in the pursuit of financial gain."

Mr Bower (who was not involved in any wrongdoing) was a salaried partner in the firm. The controlling partner did not pay Mr Bower's wages etc. for some time. By the end of 2000, there were just the two partners left who resolved to dissolve the firm on 31st March 20001. In early March, the controlling partner was struck off the roll of solicitors. By operation of law, this meant that Mr Bower became sole principal with just three weeks to go before the firm closed.

Some of the employees brought a claim against the two partners for unauthorised deductions, wrongful dismissal, unfair dismissal and redundancy payments. The controlling partner took no part (he was in and out of bankruptcy). Mr Bower argued (before the EAT and Court of Appeal) that the change in partnership from two to one partners meant that continuity of employment was broken.

Under s218(5) of the Employment Rights Act 1996, continuity of employment is deemed to be preserved when there is a change of partners. The Court of Appeal held, resolving inconsistent EAT authorities, that this includes the situation where two partners become one - which must achieve the purpose of the section - even though it did not rest easily with the natural wording of s218(5) which required a need for partners (plural) after the change to trigger the deemed continuity of employment.

Thus the employees had continuity of employment to claim unfair dismissal, redundancy payments and the longer notice periods.

New EAT Decisions

Haberdashers' Monmouth School v Turner
(Burton P., 8th March 2004)

An unusual case concerning constructive dismissal. Ms Turner had been a teacher for 22 years, on (as everyone believed) a self-employed contract. The school wanted to formalise her position and offered her employment. The contract did not recognise her 22 years' previous service and, after taking legal advice, Ms Turner refused to sign the contract on the basis she had been working under an implied contract of employment for 22 years, and her continuity of employment should be recognised. She resigned, claiming constructive dismissal. The tribunal found (i) she had been an employee for 22 years; and (ii) accordingly the school's refusal to recognise this was a repudiatory breach of contract.

The EAT held that the tribunal's approach was wrong. The correct approach, following classic contract law cases, was to ask whether the school had shown an intention not to be bound by the terms of the contract (which is necessary for a repudiatory breach). Importantly, the fact a party to the contract may make a genuine and honest mistake as to the legal interpretation does not mean it no longer intends to be bound; to the contrary, it may well intend to be bound by the contract but has just made a mistake over what the contract requires. Accordingly the case was remitted.

Sexual Orientation Attack

The much reported attack on the sexual orientation discrimination legislation, brought by Amicius and other unions, was rejected by the High Court yesterday.

Amiucus (and six other major unions) argued that various exemptions in the Employment Equality (Sexual Orientation) Equality Regulations 2002 were incompatible with the obligations imposed on the UK by the EU Equal Treatment Framework Directive 2000 and also conflicted with provisions of the European Convention on Human Rights.

In an extremely long and thorough judgment (apparently the judge had to deal with over 200 pages of skeleton argument and 14 bundles of authorities), Richards J. rejected the unions' arguments and held that the exceptions to the general prohibition on discrimination were lawful. The issues raised are quite fascinating, even extending to an invitation (which the judge refused!) to decide whether extracts from the Bible prohibit homosexuality (paras. 36-38).

The exceptions challenged were (in summary):

* reg 7(2): where being of a particular sexual orientation was a genuine and determining occupational requirement

* reg 7(3): where the employment is for the purpose of an organised religion, and either religious doctrine prohibits a particular sexual orientation, or appointment of the individual would offend the strongly held religious convictions of a significant number of the religion's followers

* reg 20(3): admitting students into religious training, where the religion meets the conditions of reg 7(3)

* reg 25: nothing in the Regulations shall render unlawful anything which prevents or restricts access to a benefit by reference to marital status

I recommend that anyone dealing with the sexual orientation legislation read this decision: it involves detailed consideration of the policy behind the legislation and extensive construction of the various exceptions.

Scott v Inland Revenue

The Court of Appeal has handed down judgment in Scott v Inland Revenue. The case straddles the border on whether it warrants a bulletin, but I have done so as it contains a small number of useful 'soundbites' on diverse points that advocates might want to quote in tribunals.

* disclosure: there is an ongoing duty of disclosure in tribunals (when standard disclosure is ordered). Thus the Inland Revenue ought to have disclosed to the Applicant that it changed its normal retirement date from 60 to 65 after he was dismissed, but before the remedies hearing (paras. 20-21);

* aggravated damages: aggravated damages are separate from awards for injury to feelings, and the two should not be amalgamated (paras. 34-35)

* costs: the fact that an Applicant drops some of his claims (he dropped the named individual Respondents) and failed on one other (an "inconsequential head of claim had failed") is not relevant to the decision whether to award costs. At most, it is relevant to the issue of how much should be awarded (para. 47)

Amendments to EAT rules - consultation

The DTI is consulting on some minor changes to the EAT Rules of Procedure 2001, largely to bring them into line with the proposed ET Rules of Procedure. It is proposed the changes will come into force on 1st October 2004, the same date as the statutory disciplinary and grievance procedures.

The amendments, on which views are sought, are:

• introducing an overriding objective;
• introducing a requirement that the claim and response forms (the new name for the IT1 and IT3) must be lodged with the Notice of Appeal and written reasons for the decision;
• importantly, the time limit for appealing changes from 42 days from the decision being sent to the parties to 42 days from the date of the order - which presumably means the day that the verbal order/decision is given at the tribunal hearing. Thus it is possible that parties will have to draft their Notices of Appeal without having seen the written reasons! There seems to be no provision for an extension of time in these circumstances;
• a formal system of 'permission to appeal' will be introduced. If the judge or registrar thinks the appeal has no reasonable prospect of success, there will be an oral permission to appeal hearing (currently the registrar and then, in turn, the judge, consider the position on paper only - and if permission is not given the appellant must go to the Court of Appeal);
• a provision for temporary restricted reporting orders, while the substantive application is being considered;
• a general re-wording of the costs provisions, to make costs more likely in the event of an amendment or an adjournment caused by a party. It also allows the EAT to summarily assess costs (with no £10,000 cap, as in the ET), take the paying parties financial position into account, make wasted costs orders against representatives, and award costs to litigants in person. Interesting, it does not introduce a right to recover costs, in line with the ET, if the appeal was 'misconceived' (presumably on the legal fiction that no appeal could be misconceived or the judge would never have let it through to a full hearing!). Successful parties will have to continue relying on the argument that pursuing a hopeless appeal amounts to unreasonable conduct.

Responses to the consultation paper are sought by 25th June 2004.

Stress at Work - House of Lords

The House of Lords has, this morning, handed down judgment in Barber v Somerset County Council. This is one of the four co-joined cases heard before the Court of Appeal as Sutherland v Hatton - but was the only one of the four to appeal to the House of Lords.

The majority of the House of Lords, in a 4-1 judgment, allowed the appeal and overturned the Court of Appeal's decision.

Despite that sounding enormously exciting for Claimant / Applicant lawyers, all five judges made it very clear that they believed the Court of Appeal's (restrictive) interpretation of the law relating to stress at work claims to be correct - largely because Mr Baber's legal team accepted it was correct (para. 39). Lord Scott stated that the Court of Appeal had "succinctly and accurately express[ed] the principles that ought to be applied." (para. 5). Lord Walker described, as "a point of great importance", the distinction between an individual believing they suffered from stress at work, and telling their employer that they suffered from stress at work.

The decision was overturned, though, on the facts. The majority (Lords Walker, Bingham, Rodger and Steyn) thought that even though the legal principles enunciated by Hale LJ in the Court of Appeal were correct, the County Court judge was "entitled to form the view" that the Defendant employer was in breach of its duty of care (para. 70). The minority (Lord Scott) thought that - again, although the Court of Appeal's exposition of the law was correct - the trial judge might have reached a different conclusion if he had the benefit of Hale LJ's judgment, and as a matter of policy, the Court of Appeal had been correct in interfering.

Thus, by a 4-1 majority, the County Court judge's finding that Mr Barber could recover damages for stress at work was reinstated.