Compensatory Awards - Deductions

The EAT (HHJ McMullen presiding) has handed down an important decision dealing with a common problem for tribunals when assessing the compensatory award.

Knapton v ECC Card Clothing Ltd is authority for the proposition that:

• if an employee chooses to draw his pension early, following dismissal, the value of his pension benefits should not be deducted from any compensatory award;
• if his remuneration package includes life insurance, the compensatory award should not include compensation for the cost of purchasing that insurance, to the date of the hearing, unless the employee actually purchased alternative insurance cover. Assuming the employee has not died, he has suffered no financial loss by being uninsured. Whilst this decision was only dealing with unfair dismissal compensatory awards, the EAT's reasoning makes it clear that the principles will similarly apply to discrimination awards.

Knapton v ECC Card Clothing Ltd

[Thanks to Andrew James of Thompsons solicitors, solicitors for the Appellants, for notifying me of this decision]

ATypical Workers

Remember s23 of the Employment Act 1999? That's the section that gave the government the right to roll out employment rights to all categories of workers, not just 'employees'.

The DTI has, today, announced the results of its review of employment rights under s23. Is it going to clarify the status of agency workers, or give clergy express rights to claim unfair dismissal? The potential is just endless...

Well, have a look at the DTI's press release. In the face of this opportunity to clarify the employment rights of atypical workers, the government plans to...

• fulfil the Government's commitment to make time equivalent to bank holidays additional to annual holiday entitlement.
• crack down on rogue employers (whatever that means)
• errr... that's about it!

For anyone who wants to read the full response to the employment status consultation, have a look here. And for the DTI's 'Success at Work' strategy paper, which sets out the government's vision for access to employment rights in the future, click here.

[Thanks to Gaby Charing, Policy Adviser on Discrimination and Employment Law to the Law Society, for telling me this had been published]

Revised DDA Code of Practice on Meaning of Disability

The Secretary of State for Work and Pensions has issued revised Guidance on matters to be taken into account in determining questions relating to the definition of disability.

The new Guidance comes into force on 1st May 2006. However, the old Guidance (dating back to 1996) will continue to apply to claims arising out of acts of discrimination occurring before 1st May.

The revised Guidance can be downloaded as a pdf or a Word docment from the DRC website.

Polkey Reductions

The Court of Appeal has handed down an important decision emphasising the wide discretion that a tribunal has to make a Polkey reduction. The case, Gover v PropertyCare Limited is authority for the following propositions:

• a Polkey reduction (i.e. that a dismissal would have occurred, or probably occurred, in any event if a fair procedure had been followed) is a matter for the impression and judgment of the tribunal. An appellate court should not interfere lightly with the tribunal's assessment (para. 22)
• this is part of the overriding obligation to award compensation that is 'just and equitable'. Whilst not saying so in terms, King v Eaton (no. 2) (that tribunals should only 'reconstruct' the world as it would have been if it can be done reasonably easily) is thrown into considerable doubt (para. 19)
• more generally, the Court of Appeal cast doubt on the long-standing assumption that appeals to the Court of Appeal involve a review of the employment tribunal's reasoning, rather than that of the EAT (see para. 8)

This decision is quite complicated, but important nevertheless.

Gover v PropertyCare Ltd.

[Thanks to John Bowers QC of Littleton Chambers, and Martin Budworth of Kings Chambers (Counsel for employer and employee respectively), for telling me this decision was published]

Response Forms

The EAT has handed down yet another decision taking a common-sense approach to the overzealous application of the procedural rules. This case is authority for the proposition that the administrative rejection of a Response by the Secretary (not a chairman) is a 'decision' which is capable of review.

A few weeks after the prescribed Response Forms became compulsory, the Respondent sent a Response Form which it had downloaded from the ETS website. As is now well-known, the forms on the website were not prescribed, and so the Response was rejected.

Still within the 28 days, the Respondent lodged another Response Form. This one was also rejected, on the apparent basis that the boxes were the wrong size and so the ETS could not scan the form into their computer (HHJ Burke QC, at paragraph 7 of the judgment, commented that he could not see how the boxes could be said to be of the wrong size).

On appeal, HHJ Burke held:

• tribunals have power to review the administrative decisions of the Secretary not to accept a Claim or Response Form on the basis it is a 'decision' within the meaning of the rules - therefore the power of review exists
• there is no requirement in the Rules about the size of the text or the boxes, or a need to be able to scan the forms into the ETS's computer system. Thus there was no valid reason for rejecting the Response Form
• since no tribunal could reasonably decide otherwise on review, it was appropriate to allow the appeal and substitute a decision that the Response Form should be accepted.

Butlins v Beynon

Age Discrimination

With age discrimination legislation only months away, the Age Positive campaign is launching Age Positive Week 2006, taking place 8th - 12th May 2006. This includes events and activities to challenge ageist attitudes and stereotypes and to raise awareness of ageism in the workplace.

Awards exist in the 'employer' and 'individual' categories - and you can even nominate yourself! Click here for information about the Age Positive week generally, or here for information about the awards.

Discrimination

In Brown v London Borough of Croydon, the EAT has reaffirmed that it is not necessary for tribunals to adopt the traditional two-stage approach when considering discrimination claims.

Traditionally, tribunals have been expected to consider the separate questions of (1) was there less favourable treatment of the Claimant? and, if yes, (2) what is the reason why the Claimant was treated less favourably?

Until Shamoon v Chief Constable of Northern Ireland was decided by the House of Lords in 2003, it was an error of law (and thus, capable of appeal) if the tribunal did not identifty, and answer, these two questions in turn. In Shamoon, the House of Lords said it was not always necessary to ask and answer the two questions, and in appropriate cases (usually with a hypothetical comparator) it was permissible for tribunals simply to ask, 'why was the Claimant treated that way?'

Notwithstanding Shamoon, in Igen v Wong the two-stage test was reaffirmed. Now, the EAT has restated that it is not compulsory to adhere rigidly to the two-stage test, and that in an appropriate case the traditional sequential analysis is not necessary.

Brown v London Borough of Croydon

Collective Redundancies

The DTI is proposing a minor amendment to the law on collective redundancies, to bring UK legislation in line with the ECJ decision in Junk Kuhnel.

The amendment to s193 of TULR(C)A 1992 will make it clear that employers must notify the Secretary of State at least 30 (or 90) days before any notice of redundancy has been issued, rather than before notice of redundancies takes effect.

The DTI is consulting on the wording of the proposed Collective Redundancies (Amendment) Regulations 2006 (consultation closes 9th June 2006). It is intended to bring the change into force in either October 2006 or April 2007.

The DTI does not intend to amend s188 of TULR(C)A 1992 (requiring employers to inform and consult employee representatives) as it believes that obligation to inform and consult "in good time" and at least 30/90 days before the first of the dismissals takes effect is not inconsistent with Junk (the logic of amending one, but not the other, does rather escape me). It is, however, amending its Guidance Notes on redundancy consultation.

View consultation paper here (large .pdf file - takes about 45 seconds to download on broadband)

Collective Redundancy Consultation

The EAT, in Vauxhall Motors v TGWU, has given guidance on when (and if) an employer needs to begin fresh consultation with a union about multiple redundancies under TULR(C)A 1992, s188.

Vauxhall were proposing to make several hundred people redundant. They sent all relevant information to the union, and also to the DTI on form HR1.

Consultation proved successful in deferring the redundancies for about 18 months. However, about 46 employees remained at risk of redundacy. Vauxhall sent a new HR1 to the DTI in respect of those 46 employees, but did not re-notify the union or launch fresh consultation.

The EAT agreed with the tribunal that s188 consultations were not a "piece of elastic" which could stetch indefinitely through time. However, overturning the tribunal, on these facts the 46 employees were a sub-set of the several hundred that the union had originally consulted over, and therefore Vauxhall had fulfilled its obligations under s188. Accordingly the decision granting a protective award of 70 days' pay per employee was quashed.

Vauxhall Motors v TGWU

Late Response Form - Costs

The EAT has handed down a decision which is likely to be used as authority for the proposition that a Respondent who triggers the need for a review hearing (because of not lodging an ET3 within 28 days) should pay the costs of that hearing.

The Respondent failed to lodge a Response Form, so the tribunal ordered that it could take no further part in the proceedings.

The Respondent subsequently wrote stating that it had been subject to a takeover, that it could not trace receipt of the Claim Form, and asking for the Claim Form to be re-sent to them.

The tribunal treated the letter as an application for review, and held that the Respondent had deliberately shut its eyes to the claim (having been in pre-action correspondence with the Claimant), and that's its denial of receipt was implausible. The application for review was therefore refused without a hearing.

The EAT, whilst critical of the Respondent, stated that it was wrong for the tribunal to refuse the review without, at least, having a hearing.

However, the EAT ordered costs against the Respondent. In an important paragraph (para. 34), HHJ Peter Clark held that the fact the Respondent had failed to deal with the Response Form properly led to the proceedings in the EAT which - technically - were unnecessary. This warranted a costs order (which was not resisted by the Respondent).

The wording of the EAT costs rules are slightly different to the ET costs rules, allowing costs were an appeal is 'unnecessary'. However, review applications triggered by late Response Forms will probably fall under the 'unreasonable conduct' limb of the ET costs rules - so expect this to become a standard authority to be quoted in costs applications following successful (or, indeed, unsuccessful) reviews of default judgments / decisions that the Respondent can take no further part.

British School of Motoring v Fowler

Rolled up Holiday Pay - Unlawful

This morning the ECJ handed down judgment in the rolled-up holiday pay cases. The judgment is already being heralded - misleadingly - as preventing rolled-up holiday pay.

Essentially, the ECJ has ruled that rolled-up holiday pay is, prima facie, unlawful. However, if the holiday pay element of the rolled-up payments is sufficiently transparent, the employer can set off those payments against money due for the specific period when leave is actually taken. So it actually makes little difference in practice.

The ECJ considered three conjoined cases, one referred by the Court of Appeal and two by the Leeds employment tribunal, namely:

• Caulfield v Marshalls Clay Products Ltd. (now Hanson Clay Products)
• Clarke v Frank Staddon Ltd; and,
• Robinson-Steele v RD Retail Services Ltd

In its decision (which, unusually, departed from the Opinion of the Advocate General), the ECJ ruled:

• employers cannot simply allocate part of an existing wage packet to holiday pay. The holiday pay must be ADDITIONAL payment to that made in respect of work actually done (para. 52)
• employers MUST pay holiday pay during the specific period during which the worker takes leave. It is unlawful to stagger payment over the year (para. 63)
• but if the employer does roll-up extra money in respect of holiday pay, it can set-off the extra money already paid against the payments it ought to make during the specific holiday period. The burden is on the employer to prove the transparency of the payment (paras. 68 and 69).

A storm in a teacup, really. The Court of Appeal said, back in 2004, that rolled-up holiday pay is lawful as long as the rolled-up element is transparently set out (eg on payslips) and a genuine payment in respect of holiday. The ECJ has now said that it's technically unlawful, but that as long as it's transparently set out and a genuine payment in respect of holiays, the payments can be set-off, i.e. no loss for the employees and it doesn't matter a hoot.

Incidentally, as I type this, the TUC has put out a press release claiming the judgment is a great victory for the workforce. But it really isn't - it's a technical victory with almost no practical impact on existing UK law and practice.

Click here to read the ECJ decision in the three conjoined cases

I've had half a dozen Emails telling me about this judgment- I'm not going to name the people, but thanks anyway!

Statutory Grievance Letters

The EAT has handed down another decision on whether a letter of complaint from an employee qualifies as a statutory grievance letter enabling an employee to bring a tribunal claim.

This issue was the content of the letter - did the letter raise the same complaint as the employee was seeking to have determined by the tribunal?

Elias P. has set out the following test (para. 25): "It seems to me that the objective of the statute can be fairly met if the employers, on a true reading of the statement and having regard to the particular context in which it is made, can be expected to appreciate that the relevant complaint is being raised."

On the facts, Elias P. held that the grievance letter, albeit containing a variety of lengthy complaints about the employee's health, did not raise an issue which an employer could reasonably understand had arisen under the DDA 1995. Thus his disability discrimination claim was not allowed to proceed.

Canary Wharf Management v Edebi

What is 'contemplating dismissal'?

The EAT has handed down a decision dealing with the transitional provisions for the Employment Act 2002.

The statutory dismissal procedure (with impact on automatic unfairness, compensation adjustments and, as in this case, potential extensions of time for presenting a claim) applies to dismissals after 1st October 2004, unless the employer 'first contemplates dismissing...the employee' before 1st October 2004.

The employer had investigated an allegation of misconduct, with the investigation concluding on 24th September 2004. On 25th October, the Claimant was told he was facing a gross misconduct charge with potential dismissal at the end.

The EAT (HHJ Peter Clark) upheld the employment tribunal's decision that the employer had plainly contemplated dismissing the employee prior to 1st October 2004, even though it had not told the employee that it was contemplating dismissal. The threshold for establishing that the employer was contemplating dismissal was a low one. This meant that the statutory procedures did not apply, and the Claiman was not entitled to an extension of time to present his claim; thus his unfair dismissal claim failed.

Madhewoo v NHS Direct

Whats new in the final (Age Discrimination) regs?

Well, one person was brave enough to take me up on the challenge of summarising the changes between the original draft Regulations, and the final draft which came out this morning...

Louise Bland of Lupton Fawcett has produced this summary, which I reproduce below...

• Regulation 3 – the controversial list of “examples” of proportionate means of achieving a legitimate aim has been removed (formerly Reg 3(2)).
• Regulation 7(4) – the wording has been amended so that those who are older than the employer’s retirement age (or 65), or who would reach the employer’s retirement age (or 65) within 6 months of their application, are excluded from the protection for job applicants.
• Regulation 11 (and Schedule 2) relating to pension schemes has been amended, particularly the definitions. I haven’t had time to read all of this in detail.
• Regulation 14 – extension of protection to those seconded to the Serious Organised Crime Agency.
• Regulation 30 – the point to note is that the exception relating to retirement at 65 has not been extended to partnerships.
• The original regulations 30, 34, 35, and 36 have gone – these created exceptions for work-related invalidity benefit schemes, provision of benefits mirroring statutory benefits, provision of more generous benefits to replace statutory benefits, and provision of benefits before the statutory qualifying period.
• Regulation 32, relating to benefits based on length of service, has been substantially reworded. All length of service benefits are excepted unless the disadvantaged employee has more than 5 years’ service, in which case the employer has to show that it “reasonably appears” to him that the criterion of length of service “fulfils a business need” such as encouraging the loyalty or motivation, or rewarding the experience, of some or all of his workers. A different slant on the original wording which possibly makes these benefits easier to justify.
• Regulation 33 introduces a new exception relating to the provision of enhanced redundancy payments – this effectively replaces the old regulations 34 – 36 but in a more specific way.
• Regulation 34 introduces a new exception for the provision of life assurance cover to retired workers who have retired early on the grounds of ill health.
• There are several amendments to the Duty to Consider procedure in Schedule 6

o References are to the “operative date of termination” instead of to the date of “dismissal”.

o Paragraph 2 (2) makes it clear that employers cannot rely on a notification included in the contract of employment or a policy or procedure given to the employee – a specific notification must be sent in accordance with paragraph 2(1).

o Paragraph 5(2) now specifies exactly what the employee must request – either that his employment continues indefinitely, that it continues for a stated period, or that it continues until a stated date.

o The time periods have changed (paragraph 7) – the meeting must be held “within a reasonable period” after the employer has received the request and the decision must be given “as soon as is reasonably practicable” after the date of the meeting.

o The employer no longer has to consider the request “in good faith”.

Agency Workers

The Cout of Appeal has, this morning, handed down its judgment in Cable & Wireless v Muscat.

Upholding the EAT and ET, the Court of Appeal affirmed the principles in Dacas v Brook Street Bureau that an agency worker could be an implied employee (and, on the facts in Cable & Wireless, was an employee) of an end-user in a tripartite agency/worker/end-user case.

The judgment of Smith LJ is well worth reading: she neatly disposes of all the criticisms made of the Dacas case (including the oft-cited criticism that the Court of Appeal in Dacas did not consider that contracts can, in this circumstance, only be implied on grounds of necessity).

Cable and Wireless v Muscat

[Thanks to Caroline Shimmin of Steele Raymond, who successfully represented Mr Muscat, for sending me the judgment]

Age Discrimination Regulations

... and to make it even easier for people, they've just this second gone up on the DTI website.

A quick glance at the transitional provisions for the 'right to request working beyond retirement' screams 'litigation, litigation, litigation' !!

If anybody fancies doing a summary of the changes, I'd be delighted to send it out...

DTI Age Discrimination Website

Final Age Regulations Published

The DTI has, today, published the final draft of the Employment Equality (Age) Regulations 2006 and laid them before parliament.

Sadly, I haven't got time to summarise the changes right now. But I've uploaded them to my website for anyone who wants to look - they are here and the accompanying notes are here (both large downloads). They are stamped 'draft' as they have not yet been approved by parliament.

PLEASE NOTE if the links do not work, it is because my website cannot cope with the traffic. Try again in 5 minutes.

Purchasers of my age discrimination analysis notes will soon receive an updated set of the notes, examining all the changes and discussing the potential difficulties arising from the Regulation (the update is FREE to all purchasers)

Part-Time Pensioners: House of Lords Decision

The House of Lords has, this morning, delivered its opinion in Powerhouse Retail Limited v Burroughs.

Arising from the 60,000 part-time pension cases brought in the 1990s, it deals with the narrow point of time limits for bringing an equal pay claim when there has been a TUPE transfer.

Pension rights do not transfer under TUPE to the transferee. Thus rights to claim for an equal pension for part-timers, implied by the equality clause under the Equal Pay Act 1970, do not transfer under TUPE.

Under s2(4) of the Equal Pay Act 1970, a claim must be brought within six months of the last day on which the Claimant was employed in the employment.

The transferors argued that the employment had ended in 1992, when the TUPE transfer took place, and that the claims were presented more than six months after that date. The employees argued that employment should be regarded as continuing, under TUPE-fiction, so that their claims were within time against the transferor.

The House of Lords unanimously accepted the transferor's arguments (upholding the Court of Appeal). Time limits for an equal pay claim will expire six months after the date of the TUPE transfer, as that is the date on which the employment with the transferor ends.

Powerhouse Retail Limited v Burroughs

DWP Pension Debate

The Department for Work and Pensions has opened an online 'Pensions Debate'.

Taking the form of easy, multiple-choice questions, it demonstrates the issues facing the UK in the next fifty years and explains the four 'Adair Turner' options in a very simple and comprehensible way.

It's definitely worth doing this - it just takes a few minutes, and there's no doubt you'll come through feeling you at least understand the issues behind the pensions crisis.

(Incidentally, it's anonymous)

Take part in the DWP Pensions Debate

Statutory Grievance Procedures - Time Limits

This case is important...

The Employment Appeal Tribunal (HHJ Peter Clark) has, for the first time, considered the rather complex s32(4) in the Employment Act 2002, which provides that no extension of time will be permitted for lodging a Claim Form unless a grievance letter is sent within one month of the 'normal' time limit for bringing a claim.

The EAT held that 'normal' time limit meant something different from 'ordinary' time limit, which is expressly defined as meaning the three-month period for unfair dismissal and discrimination claims WITHOUT any extension on the not reasonably practicable / just and equitable basis.

Properly construed, 'normal' time limit must mean the time limits including any escape-route extensions. Thus under the DDA 1995, a complaint could still be presented to a tribunal even though the grievance letter was presented more than four months after the alleged discriminatory constructive dismissal, because it was just and equitable to extend the ordinary three month time limit for bringing a claim.

Although not dealt with in the judgment, this will presumably apply to constructive unfair dismissal cases where a grievance is not sent within four months, but the Claimant establishes it was not reasonably practicable to present a Claim within the ordinary three-month time limit.

The crux of the judgment can be found at paras. 29-38. The appeal was brought with the assistance of the Disability Rights Commission.

Spillett v BUPA