Employment Law Titles ~ Autumn 2008

£60,000 Compensation Award for Waitress Sacked by Text

 

A waitress who was sacked via a text message, after she claimed that the manager of the restaurant where she worked had sexually harassed her, has been awarded almost £60,000 in compensation.

 

Jane Price told the Exeter Employment Tribunal (ET) that she had suffered post-traumatic stress disorder and agoraphobia as a result of the bullying and harassment she had been subjected to while working at the Steak House and Omelette bar in Plymouth. She admitted showing colleagues the scars left by a breast enhancement operation she had undergone to combat a hormone deficiency. However, she claimed that the former manager, Peter Tunney, had begun a campaign of sexual harassment. He had tried to kiss her and had grabbed her breasts. Two days after she complained about his behaviour to the restaurant owner, Mr Tunney’s brother-in-law Alex Psaras, she was sacked by text message.

 

Mrs Price brought a claim against the restaurant for unfair dismissal, sexual discrimination and harassment. She also claimed sexual discrimination against Mr Tunney, who has since been sacked by the restaurant.

 

Although the Tribunal Judge said that Mrs Price had participated in the ‘culture of banter and flirtation’ that existed amongst the mainly young staff and management at the restaurant, The ET upheld her claims.

 

The owner of the restaurant, Mr Psaras, was given six months to make a compensation payment made up of £23,741 for harassment and £30,216 for the ‘discriminatory dismissal’. In addition, Mr Tunney was ordered to pay Mrs Price £5,256 because he was considered partly liable.

 

Following the ET’s decision, Mr Psaras said, “I sent the most expensive text ever sent.” He claims that the compensation award could ruin his business.

 

Failing to follow proper procedures when dismissing an employee can be a very expensive mistake. If you are considering dismissing staff, contact us for advice before you act.

 

A Minute Late is Too Late – Update

 

An employee must bring an unfair dismissal claim within three months of his or her effective date of termination and the time limits for presenting claims to the Tribunals Service are normally strictly enforced. If the deadline is missed, the Employment Rights Act 1996 states that the claim will only be accepted if it is presented ‘within such further period as the tribunal considers reasonable in a case where it is satisfied that it was not reasonably practicable for the complaint to be presented before the end of that period of three months’.

 

In Beasley v National Grid Electricity Transmissions, the Court of Appeal has confirmed the decision of the Employment Tribunal (ET) and the Employment Appeal Tribunal (EAT) that Mr Beasley’s claim for unfair dismissal was presented outside the three-month period because the claim form arrived by email at the Tribunals Service 88 seconds after the deadline. Mr Beasley contended that the ET had not taken material considerations into account when reaching its decision and even if it had, its reasoning was defective because the judgment did not show that it had done so and he therefore did not know why he had lost his claim.

 

As regards the steps taken by Mr Beasley to present his claim on time, the evidence before the ET was that when he sent the claim form at 23:44 on 6 May 2006, he misread the email address to which it had to be sent. The undelivered email was returned to him at 23:45. At 23:57 he sent a test email to the correct address before sending the actual claim form at midnight. The form was not received by the Tribunals Service until 88 seconds after midnight. The EAT held that the ET was entitled to make the finding it had, based on the evidence that Mr Beasley could have sent the claim form at 23:57 instead of the test email.

 

The Court of Appeal found that although the reasons given by the ET for its decision could have been more detailed, it had considered Mr Beasley’s confusion regarding the time limit and the reasons were sufficient for him to know why he had lost. It had heard evidence that although he had been told that submitting a grievance would extend the time limit by 28 days, he was given specific advice by his solicitor, the day before the time limit expired, that he should get his claim in immediately. Although he did have a reduced window of opportunity in which to lodge his claim, and had experienced difficulty with the format used and in reading the email address, in the Court of Appeal’s view it was open to the ET to conclude that it was reasonably practicable for him to have presented his claim in the time available. The Court referred to the earlier case of Fishley v Working Mens College in which the EAT referred to computers etc. as ‘temperamental creatures’ and said that if an application is left to the very last minute, ‘then a temporary impediment, such as the breakdown of a piece of office equipment or something of that kind is one of the risks of life which has to be taken’.

 

The Court recognised that this was a harsh decision but the relevant legislation is strictly worded and does impose a harsh regime.

 

Contact <<CONTACT DETAILS>> for advice on Employment Tribunal claims and procedures.

 

Advocate General Supports Default Retirement Age – If Justified

 

We have previously reported that Heyday, an organisation for people in or nearing retirement, has challenged the Government over the inclusion in the Employment Equality (Age) Regulations 2006 of a mandatory retirement age of 65 or over, on the grounds that this means that the Regulations do not fully implement the EC Equal Treatment Framework Directive 2000/78. The Directive outlaws age discrimination in employment and vocational training. Heyday wants the UK legislation amended to give workers over 65 the same protection from discrimination as younger workers. In order to settle the issue, the matter was referred to the European Court of Justice (ECJ).

 

The Advocate General has now delivered his opinion, which is that:

 

 

 

The Advocate General’s opinion is not binding on the ECJ, but is followed in a majority of cases. The ECJ’s ruling is expected shortly before Christmas.

 

 

 

Partner Note

The Advocate General’s recommendations can be found at http://curia.europa.eu/jurisp/cgi-bin/form.pl?lang=EN&Submit=Rechercher$docrequire=alldocs&numaff=C-388/07&datefs=&datefe=&nomusuel=&domaine=&mots=&resmax=100.

 

Agency Workers and Triangular Working Arrangements

 

Whether or not a contract of employment can be implied between an agency worker and the end-user has been a hot topic in employment law in recent years. To clarify matters, all agency cases were stayed until the Court of Appeal handed down its judgment in James v Greenwich Council in February this year. One such case was an appeal against the decision of the Employment Tribunal (ET) in Beck v London Borough of Camden and Supporta Care Ltd.

 

Mrs Beck had worked exclusively for Camden for six and a half years. She worked through an employment agency, supplying home help services to residents of the Borough, and had signed a document headed ‘Terms of Engagement – Contract for Services’, which stated that she was not an employee of the agency. She had her own rota and at one stage moved agencies on Camden’s recommendation. The Borough also operated an in-house homecare service and in 2005 Mrs Beck applied for, and was provisionally offered, a position as an in-house support worker. However, a criminal record check revealed that she had recently received a police caution in relation to an assault and she was told she could no longer work for Camden.

 

Mrs Beck brought a claim of unfair dismissal and breach of contract, both of which depended on her having employee status. The ET ruled that she was an employee of neither Camden nor the employment agency.

 

Mrs Beck appealed to the Employment Appeal Tribunal (EAT) against the finding that she was not an employee of Camden. She argued that the ET had failed to make a finding as to whether Camden’s conduct satisfied the test in James v Greenwich for implying a contract of employment between the parties. In giving Mrs Beck her own rota, Camden had created a mutuality of obligation which, taken together with the degree of control exercised by the Borough over her work, gave rise to a contract of employment.

 

The EAT dismissed the appeal. In its view the ET had applied the correct test of necessity. It had taken into account guidance regarding the circumstances in which an employment contract should be implied, as provided in James v Greenwich, and had considered the point about Mrs Beck’s work rota when reaching its judgment. The ET had also applied correctly the guidance given in James v Greenwich when reaching its finding that the express agency agreement was not a sham but accurately represented the working relationship between the parties. The ET found that the affairs of the various parties in the triangular relationship were as consistent with the express arrangement in existence as they were with the third contract which Mrs Beck was asking them to imply. In the EAT’s view, the ET was entitled to find that there was a genuine agency agreement.

 

In June this year, political agreement was finally reached on the wording of the draft EU Agency Workers Directive. If final agreement on the Directive is reached, agency workers in the UK will be entitled to equal treatment (i.e. at least the basic working and employment conditions that would apply to the worker concerned if they had been recruited directly to occupy the same job) after 12 weeks in a given job.

Contact <<CONTACT DETAILS>> if you would like advice on your temporary or permanent staff agreements.

 

‘Associative’ Discrimination – ECJ Rules

 

In a decision that will have far reaching implications, the European Court of Justice (ECJ) has ruled (Coleman v Attridge Law) that a woman with a disabled child is entitled to protection from discrimination at work on the grounds of her child’s disability. The case concerned the interpretation of the EC Equal Treatment Framework Directive and its impact on disability discrimination legislation in the UK.

 

Sharon Coleman’s son was born with serious respiratory problems. She brought a claim of disability discrimination and constructive dismissal against her ex-employer on the grounds that she had been discriminated against because of her son’s disability. Amongst her claims of unfair treatment were that she was not permitted to work from home, even though other employees were allowed to do so to care for non-disabled children, and that she was placed in a pool of staff selected for redundancy after she said that she intended to make a formal request for flexible working in order to care for her son. Ms Coleman claimed that her employer’s actions had created a hostile environment which forced her to resign.

 

The wording of the Disability Discrimination Act 1995 (DDA) is such that it protects disabled employees but does not afford protection to an employee who is discriminated against because he or she cares for a disabled person. Ms Coleman argued that the Equal Treatment Framework Directive does give protection from unfair treatment which arises out of association with a disabled person. The Employment Tribunal referred the question to the ECJ in order to establish whether the UK law properly implements the Directive.

 

The ECJ has followed the opinion of the Advocate General and ruled that the purpose of the Directive, as regards employment, is to combat all forms of discrimination on grounds of disability. Limiting its application only to people who are themselves disabled would render the Directive less effective and reduce the protection which it is intended to guarantee. Where an employer treats a non-disabled employee less favourably because of the disability of his or her child, whose care is provided primarily by that employee, such treatment is contrary to the prohibition of direct discrimination laid down in the Directive. Likewise, the Directive also protects an employee from unwanted conduct amounting to harassment that is related to the disability of the employee’s child.

 

Says <<CONTACT DETAILS>>, “As the Equal Treatment Framework Directive also covers discrimination based on religion or belief, age or sexual orientation, employees should also be protected from associative discrimination on these grounds. Employers are advised to be careful when considering requests for flexible working arrangements from employees who have caring responsibility for disabled or elderly people and to check their recruitment and equal opportunity policies in the light of this decision.”

 

Compulsory Liability Insurance

 

Employers are required by law to have a minimum level of Employers’ Liability Insurance (ELI) to insure against liability for injury or disease to their employees that occurs in the course of their employment in Great Britain. Only very small companies – which employ only their majority shareholder – and sole traders who do not employ anyone else are exempt from the requirement.

 

The law is enforced by the Health and Safety Executive and employers can be fined up to £2,500 per day for failing to have the necessary insurance cover in place.

 

Previously, employers have been required to display one or more copies of their ELI certificate at each place of business where relevant employees work. However, from 1 October 2008 the requirement to display the certificate is satisfied if it is made available in electronic form and each relevant employee to whom it relates has reasonable access to it in that form.

 

In addition, the Government intends to repeal the regulation that requires companies to retain compulsory ELI policies for 40 years. This proposal has met with criticism from a number of backbench MPs who are seeking to block the move because they believe it will make it harder for victims of asbestos-related diseases to trace the insurers of former employers so that they can claim damages.

 

The MPs are calling on the Government to set up a central database for the compulsory recording of all ELI policies, before any change in the law takes place, and have tabled a motion to prevent the change being introduced.

 

Deficient Judgment Cannot Stand

 

An Employment Tribunal (ET) must always give reasons for its decisions, as laid down in Rule 30 of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2004. Clearly, for justice to be done, it must be apparent to those involved why the successful party won and the unsuccessful party lost. Rule 30 imposes a form of discipline on the ET, keeping it focused on what is relevant and important to the case and ensuring that the reasons for a decision are set out in a way that will easily be understood by the Employment Appeal Tribunal (EAT) if the case goes to appeal.

 

In Agu v Roc UK Ltd., Miss Agu, who worked on a part-time basis as a sales advisor at Roc’s service station in Buckingham, claimed to have been the victim of sex discrimination. She named two male comparators who, she claimed, were allocated more extra hours over and above their core contracted hours than she was. The work rotas showed that this was indeed the case. However, the ET rejected Miss Agu’s claim in one short paragraph. It accepted the explanation given by the manager of the service station, that he allocated the extra hours according to need, and found that ‘no evidence was presented of preferential treatment’ of the two male comparators.

 

The EAT was in no doubt that the ET’s judgment did not comply with Rule 30(6), which sets out the information that should be included in the written reasons for a judgment. It did not refer at all to the law applicable to the circumstances of the case. Nor did it inform the parties how the relevant findings of fact and the relevant law had been applied in order to determine the issues. Whilst a judgment ‘should not be criticised for brevity alone’, no reasons were given for the ET’s conclusion that there was no difference in treatment between Miss Agu and the male comparators with regard to the allocation of extra working hours. How the ET reached that conclusion from the evidence and why Miss Agu lost were simply not demonstrated by the written judgment. Indeed, the finding that there was no evidence of preferential treatment of the male comparators was perverse.

 

The EAT allowed the appeal, describing the ET’s judgment as ‘so deficient it cannot stand’. The claim was remitted to a fresh Tribunal.

 

Discriminatory Recruitment Policy

 

The European Court of Justice (ECJ) has ruled on a number of issues that arose in the Belgian courts in the context of proceedings between a body for the promotion of equal treatment and an employer who reportedly stated in public that he would not recruit persons of Moroccan origin – Centrum voor Gelijkheid van Kansen en voor Racismebestrijding (CGKR) v Firma Feryn NV (Feryn).

 

CGKR claimed that Feryn, a firm specialising in the sale and installation of up-and-over doors, was operating a racially discriminatory recruitment policy. One of the firm’s directors was reported in newspaper articles as saying that the firm would not recruit persons of Moroccan origin as fitters, because customers did not want Moroccans coming into their homes. The director made similar statements on television.

 

The national court held that the public statements in question did not constitute acts of discrimination but were merely evidence of potential discrimination. They indicated that persons of a certain ethnic origin would not be recruited by Feryn should they apply for a job with the company. The CGKR appealed to a higher court, which referred several questions to the ECJ for a preliminary ruling on the meaning of the EU Race Discrimination Directive.

 

The ECJ has followed the opinion given by the Advocate General in March this year. The EU Race Discrimination Directive must be understood in the framework of a wider policy ‘to foster conditions for a socially inclusive labour market’. It therefore found that:

 

 

 

 

 

First Criminal Prosecution for Deliberate Non-Payment of the NMW

 

The owners of a Sheffield butcher's shop have been ordered to pay more than £11,000 to two former employees because they failed to pay them the National Minimum Wage (NMW). This is the fourth successful NMW prosecution to date but it is the first in which the employers have faced criminal prosecution for deliberate non-payment of the NMW.

 

David Jackson and his daughter Pauline Smout, owners of Jackson's Butchers in Sheffield, were prosecuted by the Revenue and Customs Prosecutions Office (RCPO). They pleaded guilty to neglecting to pay two former employees the NMW. Mr Jackson and Ms Smout had also failed to keep adequate pay records and had made false entries in the records they did keep. Mr Jackson produced these false records in an attempt to show HM Revenue & Customs (HMRC) compliance officers that they had been paying the correct amounts.

 

Mr Jackson was fined £700 plus costs and ordered to pay £9,065.85 in compensation to the two former employees. Ms Smout was fined £100 plus costs and ordered to pay £2,009.74 in compensation.

 

Andy Millican, Criminal Investigation Team Leader for HMRC said, “This prosecution sends a clear message to employers that HMRC and RCPO will actively pursue those we suspect of flouting National Minimum Wage law. If employers obstruct us and refuse to comply with the law they could receive a fine and a criminal record.”

 

The six potential criminal offences under section 31 of the NMW Act are:

 

 

Each criminal offence carries a maximum £5,000 fine and a criminal record.

 

The Government is proposing changes to the NMW Act which it hopes will further deter non compliance and provide a fairer way of dealing with arrears of the NMW. These are being taken forward in the Employment Bill, which is currently going through Parliament. Subject to parliamentary approval, the Government intends the provisions to come into force on 6 April 2009.

 

Partner Note

The proposed changes will introduce:

 

 

For further information on how arrears will be calculated, see http://www.berr.gov.uk/employment/pay/national-minimum-wage/page44848.html.

 

 

Gay Church Worker Awarded £37,000 Compensation

 

A recent case has illustrated once again that employers who fail to take appropriate action to prevent homophobic treatment of a gay employee can find themselves liable for substantial compensation payments.

 

Stephen Price, who is openly homosexual, brought claims of constructive dismissal, sexual harassment and discrimination on the grounds of sexual orientation against his employer, the Presbyterian Church of Wales.

 

Mr Price had worked as assistant manager at the Coleg Trefeca Centre, a 37-bed retreat in Brecon that is used by church groups across the country. The Cardiff Employment Tribunal (ET) heard how he was consistently bullied because of his sexuality. His manager, Mair Jones, continually made comments about sex, called Mr Price a ‘stupid poof’ and told other staff members that he ‘batted for the other side’. Ms Jones claimed to have innocently chosen a birthday gift for him of a toilet roll decorated with pink fairies.

 

The ET found that the Church’s internal investigation into Mr Price’s claims of harassment was inadequate. It failed to take any disciplinary action against Ms Jones and although Mr Price was initially moved to another office in Cardiff, he was subsequently told to return to Coleg Trefeca, at which point he resigned.

 

The ET upheld Mr Price’s claims against his employer, finding that he had been treated less favourably than if he were a heterosexual man. Ms Jones had humiliated him and subjected him to considerable harassment. In failing to take steps to prevent the treatment endured by Mr Price, the Church had discriminated against him. Expecting him to go back to work with Ms Jones did amount to constructive dismissal.

 

Mr Price was awarded compensation of £11,924 for constructive dismissal and £25,000 for injury to his feelings.

 

Says <<CONTACT DETAILS>>, “Discriminatory treatment of any kind because of an employee’s sexual orientation is unlawful. Employers who fail to investigate properly complaints of harassment or bullying lay themselves open to discrimination claims, for which the amount of compensation payable is unlimited.”

 

Government Consults on Flexible Working

 

Earlier this year, an independent review was published on how best to implement the Government’s intention to extend the right to request flexible working arrangements. The review recommended that the right be extended to those with parental responsibility for children aged 16 and under and that this should be done in a single step, rather than phased in over time.

 

The Government has announced its intention to implement the change with effect from April 2009.

 

The review also recommended that businesses would benefit from increased information and guidance on dealing with requests for flexible working and that more should be done to raise awareness of the right, both among employers and employees.

 

The Department for Business Enterprise and Regulatory Reform has launched a consultation on implementing the recommendations of the review. One suggestion is that the need for an employer to send a formal letter, when agreeing to an employee’s request to change their working pattern, should be removed.

 

The consultation, Amending and Extending the Right to Request Flexible Working to Parents of Older Children, closes on 18 November 2008 and can be found at http://www.berr.gov.uk/files/file47434.pdf.

 

Guidance on Noise at Work in the Music and Entertainment Sectors

 

From 6 April 2008 the Control of Noise at Work Regulations 2005 have applied to the music and entertainment sectors, which are defined in the Regulations as all workplaces where:

 

 

Employers in these sectors must assess and manage the risks to employees and freelancers from damage due to exposure to noise and put effective controls and protective measures in place to ensure the legal limits on noise exposure are not exceeded.

 

A ‘Sound Advice’ website (http://soundadvice.info/) has now been launched providing practical guidance on controlling noise at work in the music and entertainment sectors. This aims to control or reduce exposure to noise without stopping people from enjoying music and advises on what you need to know, what you need to do and how to make sure the controls put in place are effective for a variety of different venues and types of music. It covers pubs and clubs, concert halls and theatres, studios, schools and colleges, amplified live music, marching bands and freelancers. The guidance is also available in printed form. See http://www.hse.gov.uk/pubns/books/hsg260.htm.

 

The guidance has been developed and supported by representatives from a wide range of music and entertainment sectors, as well as Environmental Health Officers and the Health and Safety Executive.

 

 

 

 

Health and Safety – Definition of ‘Work Equipment’

 

In Spencer-Franks v Kellogg Brown & Root Ltd. & Others, the House of Lords considered whether a door closer was ‘work equipment’ for the purposes of the Provision and Use of Work Equipment Regulations 1998 (PUWER).

 

Work equipment is defined by PUWER as ‘any machinery, appliance, apparatus, tool or installation for use at work (whether exclusively or not)’. The Regulations impose a strict duty to ensure that work equipment is fit for purpose when it is ‘provided for use or used by’ an employee by an employer or a person who has control over the equipment, to the extent of their control.

 

Mr Spencer-Franks suffered an injury to his mouth when asked to inspect and repair the closer on the door of the central control room of the Tartan Alpha offshore oil platform operated by Talisman Energy (UK) Ltd. (Talisman). He was employed as a mechanical technician by Kellogg Brown and Root Ltd. (KBR), which contracted to supply workers to the platform. He claimed that the linkage arm of the door closer struck him in the face, because the tension screw had not been put in properly, and brought an action against KBR and Talisman for breach of their obligations under PUWER.

 

The Scottish Court of Session found that although the screwdriver Mr Spencer-Franks was using to carry out the repair was work equipment, the door closer was not and even if it had been judged as such, he was not using it within the meaning of PUWER. In reaching its decision the Court followed the approach in Hammond v Commissioner of Police of the Metropolis in which the Court of Appeal found that a police van might be the work equipment of a policeman driving it but not of a police mechanic repairing it.

 

The House of Lords has reversed the Court of Session’s decision, holding that the door closer was work equipment. The purpose of the Work Equipment Directive, which PUWER implement, is to provide comprehensive protection for workers and it covers a wide range of objects used in the course of work. The door was used all the time by workers going in and out of the control room and the closer was fitted so that it was kept closed. It was, therefore, apparatus for use by employees at work and the word ‘use’ should be defined broadly and should include repair work. The door closer did not cease to be work equipment because it had broken down or was being repaired.

 

With regard to the example of a mechanic injured whilst mending a works van, the Law Lords were of the view that it could not make any difference to whether or not the van should be deemed to be work equipment if the repair were carried out by the driver of the van or by a different worker in the same undertaking.

 

The Lords considered the possibility that PUWER impliedly exclude apparatus which forms part of the premises in which the work takes place. In the case of work premises on land, this argument might apply, but in the Lords’ view the intention of the Regulations, when read with other relevant legislation, was that they should apply to all equipment on an offshore installation.

 

Says <<CONTACT DETAILS>>, “Employers and those in control of work equipment are advised to carry out regular spot checks and maintenance to ensure that anything that could be classified as work equipment is fit for purpose and not to wait until it could be dangerous before carrying out a repair.”

 

 

ICO Guidance on Transfer of Employee Information

 

When the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) came into force on 6 April 2006, they established a new duty on the transferor – when there is a relevant transfer of a business, a part of a business or a service provision change – to supply specific information about the transferring employees to the new employer by providing what is termed ‘employee liability information’.

 

This information consists of:

 

 

The information must be given at least two weeks before the completion of the transfer, unless this is not reasonably practicable. The transferee can bring a claim for compensation in the Employment Tribunal, if the transferor fails to provide the required information, and is entitled to a minimum of£500 from the transferor for each employee for whom information was not provided.

 

The Data Protection Act 1998 allows the disclosure of this information because it is required by law. The Information Commissioner’s Office (ICO) has now published guidance to help organisations comply with their data protection obligations when passing on this information. This includes recommended good practice for carrying out this duty under the TUPE Regulations, advice on requests for information over and above what is required by law and how employment records should be dealt with on the transfer of a business.

 

A copy of the guidance can be downloaded from the ICO website. See http://www.ico.gov.uk/what_we_cover/data_protection/guidance/good_practice_notes.aspx.

 

In Brief

New Guidance for CDMs

The Health and Safety Executive has updated its website on managing occupational health risks in the construction industry, providing new information for Construction Design and Management coordinators (CDMs). The website gives information for CDMs, clients, designers, principal contractors and contractors on how to manage occupational health risks and meet the requirements of the Construction (Design and Management) Regulations 2007.

See http://www.hse.gov.uk/construction/healthrisks/index.htm and also
http://www.hse.gov.uk/pubns/indg411.pdf.
 

In Brief

 

New Minimum Wage Rates – A Reminder

Employers are reminded that from 1 October 2008 the adult National Minimum Wage (NMW) rose from £5.52 to £5.73 an hour. The minimum rate for 18- to 21-year-olds increased from £4.60 to £4.77 an hour and for 16- to 17-year-olds the rate is now £3.53 an hour instead of £3.40.

 

According to research from Bibby Financial Services, there is still a lack of awareness among small businesses in the UK regarding the NMW, with almost one third not fully aware of the latest increases.

 

 

Partner Note

Research reported at http://www.onrec.com/newsstories/22709.asp.

 

Normal Retirement Age – Take Care

 

Since the introduction of the Employment Equality (Age) Regulations 2006, the enforced retirement of an employee who is below the age of 65 has generally been unlawful, unless it can be objectively justified. The Regulations provide for a default retirement age of 65 (Regulation 30), provided certain conditions are met. These include giving employees at least six months’ notice, in writing, of their intended date of retirement and notifying them that they have the right to request to continue working beyond either the default retirement age or the normal retirement age set by the employer. Employers have a duty to consider such a request.

 

In Plewes v Adams Pork Produce Ltd. (Adams), the employer’s failure to comply precisely with the Regulations has proved to be an expensive error. Mr Plewes’s contract of employment clearly provided that the normal retirement date for all employees was the day before the employee’s 65^th birthday. Mr Plewes was notified of his retirement date and he put in a request to carry on working, but Adams turned this down. He was therefore retired on the day before his birthday, although a few weeks later he was back doing his old job, this time through a recruitment agency, on a lower salary than before.

 

Mr Plewes brought a claim against Adams for discrimination on grounds of age and unfair dismissal. The Employment Tribunal (ET) held that Adams could not rely on the default retirement exemption because Mr Plewes was required to retire before his 65^th birthday. In the absence of any objective justification for a retirement age lower than the default age, his dismissal was judged to be discriminatory on the grounds of age and also unfair. Because of Adams’ mistaken belief that it could retire Mr Plewes on the date specified in his contract, the company had not followed the statutory dismissal procedures. As a result of this failure, the ET applied a 50 per cent uplift to the compensation awarded, bringing the total to over £36,000.

 

Says <<CONTACT DETAILS>>, “Employers are advised to make sure their employees’ contracts of employment comply fully with the requirements of the age discrimination legislation as regards the normal retirement age. Although the employer in this case was in breach of the Regulations, it would not be surprising if it were to appeal against the level of the compensation awarded.”

 

 

 

 

 

 

 

 

Pension Contributions During Maternity Leave – Clarification Needed

 

Following judicial review proceedings brought against the Government by what was then the Equal Opportunities Commission, legislative changes were required in order to make the Sex Discrimination Act 1975 (SDA) fully compliant with the EC Equal Treatment (Amendment) Directive. 

 

On 23 July 2008, regulations came into effect making changes relating to the terms and conditions of employment during maternity leave and these apply to employees whose expected week of childbirth begins on or after 5 October 2008. One requirement is that there should be no difference between the contractual non-cash benefits allowed to women who are on ordinary or additional maternity leave. Previously, employers were only obliged to provide such benefits during ordinary maternity leave – i.e. for the first 26 weeks. No contractual agreement made between the employer and the employee can override the new requirement.

 

Non-cash benefits are benefits to which the employee is entitled under her contract of employment, apart from sums payable by way of monetary wages or salary. Examples of non-cash entitlements include items such as company cars, mobile phones, living accommodation, accrued contractual holiday entitlement, medical insurance and employer-provided health checks.

 

Statutory Maternity Pay (SMP) used to be payable for the first 26 weeks of maternity leave – i.e. for the same period during which the employer was obliged to provide contractual non-cash benefits prior to these changes. Currently, SMP is payable for 39 weeks, although the Government has stated its intention to increase this to 52 weeks.

 

Given the changes to the SDA, one would expect employers’ occupational pension contributions, as a non-cash benefit, to be payable throughout the period of additional maternity leave for an employee whose expected week of childbirth commences on or after 5 October 2008. However, guidance provided by HM Revenue and Customs states that employers need not continue to make employers’ occupational pension contributions during unpaid additional maternity leave, nor do they need to count unpaid additional maternity leave as ‘reckonable service for the purposes of occupational pension contributions’. Likewise, guidance provided by the Department for Business, Enterprise and Regulatory Reform (DBERR) states that the employer need not continue pension contributions during unpaid additional maternity leave unless the contract of employment provides otherwise.

 

Perhaps HMRC and the DBERR do not consider pension contributions to be a non-cash benefit? Social Security legislation requires that paid maternity leave has to be pensionable, so when SMP becomes payable for the full period of ordinary maternity leave plus additional maternity leave, then one would expect pension contributions to be payable for the entire period. Meanwhile, there appears to be a discrepancy between employment law and social security legislation that requires clarification.

 

For advice on making sure your policies and procedures take account of the changes to the SDA, please contact <<CONTACT DETAILS>>.

 

 

 

Pleural Plaques – No Fault Proposals

 

Pleural plaques are small, localised areas of pleural thickening on the membrane covering the lungs, caused by the inhalation of asbestos fibres. Pleural plaques are in themselves benign but their presence is associated with an increased risk of developing asbestos-related conditions such as mesothelioma. At one time, it was possible to claim damages for negligent exposure to asbestos in the workplace which resulted in the presence of pleural plaques.

 

In October 2007, however, the House of Lords ruled (Johnston v NEI International Combustion Ltd.) that ‘the existence of pleural plaques does not constitute actionable or compensatable damage’. This essentially means that people diagnosed with the condition are no longer entitled to claim damages.

 

In response to this judgment, the Ministry of Justice has published a consultation paper which examines the law and the medical evidence underpinning the Lords’ decision and considers the possibility of changing the law of negligence to allow compensation to be claimed by those diagnosed with pleural plaques, effectively overturning the judgment.

 

The consultation also invites views on the merits of establishing a ‘no fault’ payment scheme for individuals who have been diagnosed with pleural plaques through exposure to asbestos at work. Two possible approaches are put forward for consideration, which are:

 

l        to establish a ‘no fault’ payment scheme limited to those with work related exposure to asbestos and diagnosed with pleural plaques within a fixed period prior to the House of Lords judgment who had not already received compensation; or

 

l        to establish a ‘no fault’ payment scheme for all those similarly exposed and diagnosed now or in the future.

 

A no fault scheme would provide a payment to any qualifying person exposed to asbestos in the workplace and diagnosed with pleural plaques, without any requirement on the part of the applicant to prove negligence on the part of an employer. The paper considers:

 

 

The consultation can be found at http://www.justice.gov.uk/docs/cp1408.pdf.

 

 

Protecting Business Interests

 

When an employee leaves to go to work for another organisation, their employer may wish to have in place safeguards to protect sensitive information relating to the business, to prevent it from falling into the hands of a competitor.

 

One possible way of doing this is through a post-termination restrictive covenant, but this will only be enforceable if the ex-employer can show that it is reasonably necessary to protect his legitimate business interests, which include trade secrets or confidential information and customer information. A restrictive covenant that goes beyond what is reasonably necessary to protect these interests will not be enforceable. However, a restrictive covenant that is widely drafted may be reasonable in the case of senior employees, depending on the individual circumstances involved.

 

In addition, all employees have a duty to serve their employer with honesty and fidelity. Company directors owe a fiduciary duty to act in the best interests of the company, as do employees who hold a senior position within the organisation. Employees who become shareholders may also be bound by the terms of any shareholder agreement entered into.

 

In Kynixa Ltd. v Hynes and others, Mr Hynes, Ms Preston and Ms Smith had held key roles working for Kynixa, a specialist provider of rehabilitation and case management services for people who have suffered an injury. Over a period of time, all three resigned and went to work for a competitor company, without informing Kynixa of their intentions or the identity of their new employer.

The High Court found that all three ex-employees had breached their duty of fidelity by positively misleading Kynixa as to their true intentions. In addition, Mr Hynes and Ms Preston were found to be in breach of their fiduciary duties because they had not informed Kynixa of their negotiations with a competitor. The two also held shares in the company and were found to be in breach of restrictive covenants, contained in the shareholders’ agreement, which ran for one year from the date when they ceased to be connected with Kynixa. Mr Hynes and Ms Preston argued that this was too long a period to be enforceable but the Court judged that although the post-termination covenants were very wide, in the circumstances they were reasonable to protect the legitimate interests of the business and were therefore enforceable. Kynixa operated within a small, fiercely competitive market and the disclosure of trade secrets to a competitor could be particularly damaging to its business. Furthermore, Mr Hynes and Ms Preston had a choice as to whether or not to enter into the shareholder agreement and they had both chosen to do so for (potentially) substantial gain.

 

As a result of this ruling, substantial damages will be payable to Kynixa by the three ex-employees.

 

We can advise you when drafting post-termination restrictive covenant clauses to ensure that they are tailored to cover the particular circumstances relating to the individual employee concerned. Contact <<CONTACT DETAILS>> for advice.

 

 

Race Discrimination – Victimisation

 

The Court of Appeal has confirmed (Oyarce v Cheshire County Council) that the burden of proof in victimisation claims made under Section 2 of the Race Relations Act 1976 remains with the employee. Upholding the conclusion of the Employment Appeal Tribunal (EAT), the Court ruled that the ‘reverse burden of proof’, contained in Section 54A of the Act, does not apply in victimisation claims.

 

Victimisation occurs when an employer treats an employee less favourably because he or she has previously complained that the employer has discriminated against them.

 

In 2003, the Race Relations Act 1976 was amended so that once an employee has made out a case that their employer has committed an act of discrimination, it is then necessary for the employer to prove otherwise in order to defend the claim. This is known as the reverse burden of proof and it puts a heavy onus on employers to defend allegations of discrimination.

 

Section 54A states that where the employee proves facts from which the Employment Tribunal (ET) could conclude that the employer has committed a discriminatory act, the ET is required to uphold the complaint unless the employer provides an adequate, non-discriminatory explanation for the treatment.

 

It had been assumed that the reverse burden of proof applied to harassment and victimisation claims as well as direct and indirect race discrimination cases. However, the Court of Appeal’s ruling means that in claims of victimisation on the grounds of race, the burden of proof stays with the employee, putting the onus on them to prove their case rather than transferring it to the employer to defend theirs.

 

In another case (Okonu v G4S Security Services (UK) Ltd.) the EAT held that the reverse burden of proof also does not apply in cases of discrimination on the grounds of colour or nationality, because the EU legislation that led to the introduction of Section 54A concerned only discrimination on the grounds of race or ethnic or national origin.

 

Says <<CONTACT DETAILS>>, “The result of these two cases is that there now appears to be a somewhat unsatisfactory two-tier approach to the burden of proof in discrimination cases and the enforcement of such claims. The burden of proof reverses in claims for other types of discrimination and in some race discrimination claims, but not in those relating to victimisation or discrimination on the grounds of colour or nationality. This is a somewhat confusing situation for employers. We can help you ensure your workplace policies and contractual arrangements minimise the risk of a claim of discrimination arising.”

 

Redundancy – Suitable Alternative Employment

 

In the current economic climate, employers may face the need to reduce staffing levels. If you are making employees redundant, one of the requirements is that you must follow a fair redundancy dismissal procedure and keep the individuals affected, and possibly their representatives, informed throughout the restructuring process.

 

Sometimes, it is possible to avoid redundancy dismissals by offering employees suitable alternative work within the organisation. Indeed, if a suitable alternative post is available and the employer does not offer it to an employee selected for redundancy, the redundancy dismissal may well be unfair dismissal, in which case the employee is entitled to claim compensation.

 

For an offer of suitable alternative work to be valid, it must be offered to the employee before the expiry of their current contract. The offer should show in what way the new job is different from the employee’s existing position and the job must start either as soon as the old contract of employment ends or within four weeks of it ending. Whether or not the job is suitable will depend on a number of factors including the job status, the remuneration level, where the employee is to work, the working environment and the hours of work.

 

If the employer and the employee reach agreement that the job is not suitable after all, the employee can still claim a Statutory Redundancy Payment (SRP). However, if the employer believes that the alternative job offered is clearly suitable and the employee unreasonably refuses to accept it, he or she will not be paid a SRP. Employers should take care in such circumstances however. The decision as to whether or not an employee’s refusal of suitable alternative employment is reasonable is a subjective one.

 

In Commission for Healthcare Audit and Inspection v Ward, Ms Ward was offered a new post during a restructuring exercise. She had already survived an earlier reorganisation. This and the way the offer was communicated to her left her disillusioned with the process. She didn’t think the new post was suitable and refused to take up the offer. The Commission considered that her refusal was unreasonable and that she was not therefore entitled to a SRP.

 

Ms Ward brought a claim to the Employment Tribunal (ET), which judged that although there was a material difference between the old and the new posts, on balance the new job was suitable, though clearly not ideal. However, in its view the fact that the suitability of the new job is marginal may affect whether or not it is reasonable for the employee to refuse it, as can the circumstances surrounding the offer and the relationship of the parties concerned. The circumstances in this case were such that the ET found that Ms Ward had not acted unreasonably in refusing the new role and she was therefore entitled to a SRP.

 

The Employment Appeal Tribunal upheld the ET’s decision. The ET was entitled to consider the degree of suitability of the alternative role when deciding whether Ms Ward’s refusal was reasonable. Following earlier case law, Ms Ward’s actions must be looked at in relation to the way the facts appeared, or ought reasonably to have appeared, to her at the time she made her decision. It is possible for an employee to reasonably refuse an objectively suitable offer based on their own perceptions. It is for the ET to reach a judgment based on the individual facts of the case.

 

Says <<CONTACT DETAILS>>, “This case illustrates that the manner in which the redundancy process is conducted is important. Whether or not an employee’s refusal to accept suitable alternative employment is reasonable is a subjective judgment and so the way they are treated is key. To avoid problems, take advice before you take any action if you face having to make staff redundant.”

 

Statutory Dismissal Procedures – Unreasonable Delay

 

The Court of Appeal has considered, for the first time, whether an unreasonable delay on the part of an employer in completing the statutory dismissal procedure makes the dismissal automatically unfair (Selvarajan v Wilmot).

 

Three employees, who worked as receptionists at a medical practice, were dismissed on the grounds of their conduct because they had claimed and been paid for unauthorised overtime. One of their claims against the employer in the Employment Tribunal (ET) was that the dismissals were automatically unfair because the employer took almost four months to carry out the appeal procedure and so had failed to complete the dismissal procedure within a reasonable time. The employer argued that even if there was an unreasonable delay in dealing with the appeal, the dismissals could not be automatically unfair as all three steps of the statutory dismissal procedure had been completed.

 

The employees failed in their claim on this point in the ET. In its judgment the procedure was completed and there was therefore no failure to comply with the statutory requirements. The employees appealed against the decision. The Employment Appeal Tribunal (EAT) rejected the ET’s argument. In doing so, it followed prior decisions of the EAT that a failure to comply with the general requirements of the statutory procedure precludes its completion and one of these requirements is that the required steps should be taken without unreasonable delay.

 

However, the Court of Appeal has gone against the line of EAT authorities and overturned the EAT’s decision. The Court held that a failure to comply with a requirement of a procedure is not itself a failure to complete it. In this case, even though there had been a delay, the statutory dismissal procedure had been completed. Mummery L J concluded that, “the question whether the procedure has been completed must be addressed before the question of non-compliance with the general requirements of the procedure. If the procedure has been completed, the question whether there has been non-compliance with the general requirements of the procedure never arises.” The dismissals were not, therefore, automatically unfair.

 

The statutory dispute resolution procedures which applied in this case are set to be repealed in April 2