NEWS AND RECENT CASES
Compensation against one respondent can be demanded from any
In discrimination cases, employees can sue both their employer and anyone they think has helped their employer to act in a discriminatory manner. In London Borough of Hackney v Sivanandan, the Court of Appeal confirmed that where employees claim money from multiple parties, compensation must be awarded on a joint and several basis (i.e. the employee can claim the full amount from any of the parties and the unsuccessful respondents then have to sort out who ought to pay which proportion of the damages between themselves).
In 1999, Ms Sivanandan, a race equality adviser applied for two positions at a race relations body, which was funded by the local authority. After failing to be shortlisted for either position, she successfully brought claims for race and sex discrimination against: (1) the race relations body; and (2) the local authority; and (3) its employee, Ms White.
In terms of a remedy, the Tribunal ruled that although liability should be apportioned between Ms White and the other respondents, it limited Ms White’s award to £1,250 in respect of injury to feelings only. The other respondents were jointly and severally liable for the £400,000 compensation awarded to Ms Sivanandan.
The Employment Appeal Tribunal overturned this decision on the basis that in cases where the damage suffered by the employee was caused by the collective action of the respondents, a tribunal cannot limit the liability of one respondent. Whilst the question of who must pay effectively comes down to the whim of the claimant, who will likely ‘cherry pick’ the respondent with the largest financial assets, as stated above the Respondents can then bring proceedings against each other in order to achieve a fairer apportionment of the costs of losing.
This decision should and will make individuals who are made a party to discrimination claims more anxious about the impact and more likely to seek and need independent advice.
Ill health claimant’s application to postpone hearing denied
A tribunal will not usually refuse an application to postpone a hearing where one of the parties cannot attend due to ill health. However, in Transport for London v O’Cathail, the Court of Appeal explored the circumstances when it would be fair.
Mr O’Cathail worked for TfL for six months before going on long term sick leave until his dismissal two years later. He brought a disability discrimination claim and a hearing was scheduled, which was postponed due to his ill health. Mr O’Cathail then applied to postpone the re-scheduled hearing. His application was refused by the Tribunal for a number of reasons. In particular, the length of time that had elapsed and the fact that the Tribunal could judge TfL’s evidence against Mr O’Cathail’s witness statement without oral evidence. Another factor was that there would be further wasted costs for all parties and the Tribunal if the hearing was postponed again. In light of these reasons (and others), the Tribunal decided to hear the claim in Mr O’Cathail’s absence.
Although this may appear to be good news to employers, both the Tribunal and the Court of Appeal confirmed this was a “very rare case”. It is normally the case that where a party is unable to attend for medical reasons an adjournment will be granted despite the inconvenience.
Former employees can claim protection from retaliation for whistleblowing
In Onyango v Berkeley, Mr Onyango, a solicitor, claimed that as a result of accusing his former employer of acting illegally, he was reported to the Solicitors Regulation Authority for forgery and subject to an investigation by the SRA.
Mr Onyango’s firm claimed that only allegations of unlawful conduct made whilst an employee is working can give someone the protection of the whistle blowing legislation. The Employment Appeal Tribunal disagreed and ruled that disclosures made after termination of employment may be relied upon if it results in detrimental consequences.
As a result of this case, employers need to know that former employees making allegations of illegality and other forms of malpractice are still protected by the law from retaliation. The most probable situations are where a worker alleges that their former employer has refused to provide a reference to a prospective new employer because they blew the whistle. The financial consequences of the employee missing out on a new job could be very significant and therefore these claims could be substantial.
Religious Harassment – context is everything
The Times’ senior sub-editor’s comment “Can anybody tell me what’s happening to the f***ing Pope?” in the context of a busy newsroom with a looming deadline on a story about the Pope, did not amount to religious harassment.
Mr Heafield, a Roman Catholic, claimed that he had been shocked into silence by his line manager’s comment and found it to be offensive, unnecessary and blasphemous and therefore brought a claim for religious harassment.
The EAT stated that whilst the use of an expletive in a sentence about the Pope might be interpreted as disrespectful to a devout Catholic, in reality people are not perfect and use bad language.
When taking into consideration the context in which the statement was made and the fact that in referring to “the Pope” in this context, the editor was talking about the article and not the Pontiff, it was not intended to be anti-Catholic; it was therefore unreasonable for Mr Heafield to feel that his dignity had been violated or that he had been subjected to an adverse environment. On this basis, Mr Heafield’s claim of religious harassment was rejected.
This case (Heafield v Times Newspaper Limited) will provide some comfort to employers, as it reinforces the previous decisions of that it does not wish to encourage a “culture of hypersensitivity” in the workplace.
Final warnings are final
In February 2005, Miss Davies, a high school teacher, was given a final written warning for alleged gross misconduct which was to remain on her record for 24 months. Miss Davies appealed the decision but subsequently dropped it after being advised by her trade union that the Council could potentially increase the sanction from a final warning to dismissal at the rehearing. In 2006, Miss Davies was accused of further misconduct. In deciding to dismiss her, the Council took into account the final written warning on her record.
Miss Davies brought a claim for unfair dismissal arguing that the final written warning was wrongly given and therefore could not be relied upon in the decision to dismiss her. However, the Court of Appeal rejected her appeal and reinforced the essential principle that it is reasonable for an employerto rely on a final warning provided it was issued in good faith and that there were good grounds for imposing it. The warning had not been manifestly inappropriate.
Employer tries to dismiss employee over a disagreement about money
In Handshake Ltd v Summers, the Employment Appeal Tribunal found that a breakdown in trust and confidence between an employer and employee, did not entitle the employer to rely on “some other substantial reason” to dismiss the employee.
In employment law, there are potentially five reasons constituting a fair dismissal. These are (1) conduct; (2) capability; (3) redundancy; (4) illegality; and (5) some other substantial reason. If the employer demonstrates a potentially fair reason, it must then show that it followed a fair procedure and the dismissal was fair in all the circumstances.
Following a dispute between the parties regarding Mr Summers’ entitlement to company shares, his solicitors wrote a letter to Handshake Ltd stating that Mr Summers had “lost all trust and confidence in his employer”. Handshake Ltd subsequently dismissed Mr Summers arguing there had been an irreparable breakdown in the working relationship. Mr Summers brought a claim for unfair dismissal.
The Employment Appeal Tribunal agreed that Mr Summers had been unfairly dismissed and concluded that the real reason for the dismissal was not a loss of trust and confidence but the “power struggle” relating to Mr Summers’s remuneration. This case highlights to employers that “some other substantial reason” cannot be used as a smokescreen to justify a dismissal that does not fit into one of the other fair reasons for dismissal.
How many Easter eggs did you eat?
The NHS has reported that almost 25% of adults in the UK are obese. It will hardly be surprising to hear therefore that questions have arisen as to whether obesity is a disability.
The Employment Appeal Tribunal in, Walker v Sita Information Networking Computing Ltd, found that although obesity is not, in itself, an impairment under disability discrimination law, the physical and mental conditions arising from obesity can qualify as impairments.
Mr Walker weighed over 21 stone and suffered from health problems including bowel problems, chronic fatigue symptoms and depression, which had a significant effect on his day-to-day life. He brought a claim for disability discrimination against his employer. The Employment Appeal Tribunal upheld his claim and said that is not the cause of Mr Walker’s symptoms that should be focused on but the effect. This is the case even where the cause is excluded from the definition of disability. A prime example is liver disease caused by alcoholism.
As an employer, if you have any obese employees and the effect of their obesity is that they qualify as disabled under the Equality Act, you will be under an obligation to consider and, where appropriate, make reasonable adjustments.
ACAS Code is not quite the Holy Grail for dismissal procedures
In Buzolli v Food Partners, the Employment Appeal Tribunal found that an employer’s decision to dismiss was fair even though the dismissal procedure was not fully compliant with the ACAS Code.
Mr Buzolli was a driver for Food Partners Ltd and subject to its disciplinary policy. He was issued with a written warning after failing to attend work due to being under the influence of alcohol. The policy stated that further breaches of misconduct within a 12 month period would result in dismissal. Six months later, Mr Buzolli drove into a bridge causing financial damage. This incident was classed as gross misconduct and following an investigation, Mr Buzolli was dismissed. He brought a claim for unfair dismissal arguing, amongst other complaints, that Food Partners had breached the Acas Code. In particular, that Food Partners had not formally notified Mr Buzolli of the potential consequences of his disciplinary hearing.
The Employment Appeal Tribunal said that even though Food Partners had not followed the Acas Code entirely, Mr Buzolli should have known of the significance of the final warning under the employers’ policy. This judgement should reassure employers that Tribunals are willing to adopt a coherent approach to how disciplinary proceedings are conducted. That said the normal principles of fairness require an employee at risk of dismissal to be told of this in advance of the disciplinary hearing. Employers are well advised to warn of the consequences in disciplinary proceedings.
The Tribunal has confirmed that HRMC cannot recover under-deducted tax from an employee where: (1) the failure to deduct arose from an employer’s failure to apply a PAYE code; and (2) HRMC had not issued a direction transferring liability from the employer to the employee.
Therefore, for self-assessment purposes, an employee is entitled to treat the amount of tax that the employer should have deducted as the amount of tax actually deducted. Employees must remember that it is their responsibility to account for HMRC for tax due under PAYE. If they do not, HMRC may seek recovery from the employer or in certain circumstances may direct that employees pay the under-deducted tax.
Legal advice privilege only for lawyers
In R (Prudential plc and another) v Special Commission of Income Tax and another, the Supreme Court ruled that legal advice privilege is limited to legal advice provided by lawyers and could not be extended to tax-law advice given by qualified tax accountants. This is different to the position on litigation privilege where an accountant’s legal advice to a client could be privileged.
Prudential entered into a series of transactions based on a tax avoidance scheme devised by Pricewaterhouse Coopers. As part of its investigation into the transactions, HMRC requested that Prudential produce all documents in connection with the scheme. Prudential refused to disclose documents relating to legal advice given by PwC to Prudential on the grounds that it was protected by legal advice privilege, even though the documents had been produced by accountants and not lawyers.
The Supreme Court dismissed Prudential’s argument on the basis that, historically, legal advice privilege only applies to lawyers. To extend the principle to other professionals – tax accountants, pension advisers – could create a risk of uncertainty and distort a clear and established principle. The court declared that such a risk was better left to Parliament.
However, two judges strongly disagreed. They argued that where a lawyer and an accountant provide identical tax law advice on the same facts, there can be no principled reason for distinguishing between the advices and allocating privilege disproportionately.
It remains to be seen whether Parliament will address this issue but for the time being, employers should be more cautious on the content of written communications when taking advice from non-lawyers. For employers to be safe in the knowledge that they will not have to disclose legal advice on their affairs – whether it is tax advice from accountants or employment advice from HR professionals – they must speak to a lawyer.
“Christians have no right to refuse to work on Sundays, judge rules” is exactly the type of headline that we want to explain, to avoid any unnecessary panic.
The Employment Appeal Tribunal ruled that Ms Mba, a Christian who was employed as a residential care officer at a children’s home, was not indirectly discriminated against by her employer’s requirement that all care workers work some Sunday shifts.
Ms Mba’s employer objectively justified its requirement that all care workers work on a Sunday in order to ensure that: (i) each shift contained an appropriate mix of gender and seniority; (ii) a cost effective service; (iii) fair treatment of other staff who would otherwise have to work more Sundays in order to cover these shifts; and (iv) the continuity of care.
Furthermore, when assessing whether an employer’s provision, criterion or practice results in indirect religion or belief discrimination, it is necessary to examine the impact it will have on the religious group and not the impact on an individual with that particular religious belief.
The EAT’s judgement makes clear this case is fact specific and is not intended to be used in a broad manner by either employers or employees either to compel or refuse Sunday working.
Unsurprisingly, the more serious an allegation, the more stringent the investigation
Where a serious allegation has been made against an employee’s conduct, an employer is required to undertake a higher level of investigation, prior to any decision to dismiss. Employers should therefore ensure that all evidence which is readily available is thoroughly examined and that any contradictory evidence is scrutinised in order to demonstrate that a fair procedure has been followed.
Mr Stuart, a ground Services Agent at London City Airport, was accused by his employer of attempting to steal goods from a duty free shop and was subsequently dismissed for dishonest conduct. During the disciplinary hearing, contradictory accounts of the incident were presented to the employer. The Employment Appeal Tribunal held that the employer should have made further inquiries and explored all available evidence (including CCTV footage) in order to test Mr Stuart’s explanation of events.
New compensation limits
From 1 February 2013, the Employment Tribunal compensation limits increased.
- The maximum unfair dismissal compensatory award increased from £72,300 to £74,200; and
- The cap on the limit for a week’s pay was raised from £430 to £450 (relevant for calculating the basic award in unfair dismissal claims and statutory redundancy payments). This means that the maximum statutory redundancy payment has now risen to £13,500 and the most any employee can get from a tribunal for an ordinary unfair dismissal case is £87,700.
The Government is also proposing that compensation in unfair dismissal cases should be capped at 12 months of the employee’s salary. Therefore, under the new rules, an employee who earns £30,000 a year would only receive up to £30,000 compensation. There are no plans to change the maximum cap.
Unpaid Parental Leave
From March 2013, employees’ entitlement to unpaid parental leave rose from 13 weeks to 18 weeks per child.
From summer 2013 onwards, the 90 day consultation requirement for redundancies involving 100 or more employees will be reduced to 45 days.
From summer 2013 onwards, submitting a claim to a Tribunal or an appeal to the Employment Appeal Tribunal will be subject to an initial fee followed by a subsequent hearing fee. There will be two levels of claim:
- Level 1 claims – the issue fee is £160 and the hearing fee is £230
- Level 2 claims – the issue fee is £250 and the hearing fee is £950
- Appeals – the issue fee is £400 and the hearing fee is £1,200
Level 1 claims include: unlawful deduction of wages, holiday pay and redundancy payment claims. Level 2 claims include: discrimination, equal pay and unfair dismissal claims.
If an employer loses a case the tribunal may require the employer to reimburse these fees but this is not automatic. This is likely to cause a substantial reduction in the number of smaller claims brought by employees and may encourage employers to be more robust about not paying sums to staff which they do not think are due and which it will now be un-commercial for employees to contest.
Employee Shareholder Scheme
As set out in previous updates, this scheme will see employees forfeiting employment rights (like unfair dismissal) in exchange for £2,000 or more shares in their employer. The biggest obstacle to this scheme is that the granting of shares to staff triggers an income tax and national insurance charge. Seeing as how very few employees would sign up to such an arrangement if they had to pay tax, the Government has announced that income tax and National Insurance contributions will not be paid on the first £2,000 shares acquired by employee shareholders. Normal tax and NIC rules apply to any shares above that level. This scheme will be implemented in September 2013.
The Chancellor's 2013 Budget focuses on "building the most competitive business tax system in the world". For businesses and employers this means:
- A corporation tax cut by 1% to 20% from April 2015
- Abolition of stamp duty on shares traded on AIM and other UK stock exchanges used by smaller companies
- Capital Gains Tax relief for the seed enterprise investment scheme
- Introduction of new employment allowances. There will be a refund on the first £2,000 of employers' National Insurance payments. This means around 450,000 small businesses will pay no employer National Insurance!
- Extension of tax relief on employer loans for season tickets
- The controversial new “employee shareholder” where employees will give up some employment rights in exchange for shares in their employer will be implemented on 1 September 2013
- An increase in the personal allowance for all employees to £10,000 by April 2014
- In addition, last year’s cut in the 50% top rate of tax to 45% came into force on 6 April 2013.
Government’s ‘Enterprise and Regulatory Reform Bill’ amendments
- workers and agents will now be capable of being personally liable if they victimise a worker on the basis that they have made a protected disclosure;
- the requirement that a disclosure be made in ‘good faith’ will be removed but a Tribunal may be able to reduce any award it makes to the worker by up to 25% if they have not acted in good faith; and
- whistleblowing law may be applied to those who face discrimination when attempting to find a new job.
These changes will likely be implemented when the Bill receives Royal Assent (April/May 2013).
- Unfair Dismissal:
- the qualifying period will be removed where the reason for dismissal is related to the employee’s political opinions or affiliation.
This will come into effect two months after the Bill receives Royal Assent and will only apply to dismissals on or after that date.