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Employees reinstated to old contract after refusing to agree to new contract terms

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In Hazel v Manchester College, the Court of Appeal found that two employees who were dismissed for failing to agree to take a pay cut following a TUPE transfer were unfairly dismissed and entitled to reinstatement to their old terms.

Mrs Hazel and Mrs Huggins’ employment transferred under TUPE to Manchester College in 2009. In 2010, as a result of economic difficulties, the College proposed both: (i) redundancies; and (ii) pay cuts. Mrs Hazel and Mrs Huggins were offered alternative contracts but they refused due to the pay cut. The College then terminated their old contracts and offered employment on new contracts, which they accepted but brought unfair dismissal claims in relation to the termination of their old contracts.

The Court of Appeal confirmed that whilst dismissals for redundancy after a transfer may be fair, here the sole or principal reason for Mrs Hazel and Mrs Huggins dismissal was because they refused to sign the new terms (i.e. by reason of the transfer), therefore it was automatically unfair. As they could not be re-instated to their old positions, they kept their new roles but on their old salaries.

Orders for reinstatement and reengagement for unfair dismissal are rarely sought and even more rarely granted. However, although the employer in this case claimed it was impracticable for it to have to employ two sets of workers to do the same job on different terms, the Tribunal disagreed. It was confident that the College could handle the HR fallout.

This could be a significant spur for more employees to seek these orders that have the benefit of potentially leading to uncapped compensation.

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Employee inadvertently works for free

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The Employment Appeal Tribunal has found that an employee who was not paid on termination of his employment for extra hours worked under a flexi-hours scheme did not suffer an unlawful deduction from wages.

Mr Paterson worked for Vision Events. He participated in a flexi-hours scheme which allowed him to take time off in lieu if he worked more than his contractual 45 hour week. In 2012, he was made redundant and sought payment from Vision for approximately 5 months worth of accrued hours of flexi time. Vision offered to pay 50% of the hours, which Mr Paterson refused. He subsequently brought an unlawful deduction from wages claim. The EAT found that:

1. in the absence of an express term in Mr Paterson’s contract for payment out of accrued flexi-hours, they were forfeited on termination of employment;
2. it was not necessary to imply a term in the contract because the term was not essential to make the contract workable;
3. it was not in the contemplation of the parties that the additional hours would be paid if the employee had not been able to take them off in lieu, therefore a term should not be implied simply to make the contract fair; and
4. the fact that Vision offered to pay 50% of the hours did not mean that such a term should be implied in the contract.

This decision is likely to be appealed, as it seems obvious that a reasonable person watching the parties make the contract would have considered it to be the parties’ intention that an employee be paid for working the additional hours if, through no fault of his own, he was unable to take time off in lieu.

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Caste discrimination covered by existing legislation

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In Tirkey v Chandok, it was found that a claim for caste discrimination could be brought in a Tribunal under the Equality Act 2010.

Ms Tirkey was employed by the Chandoks as a servant. She is part of the Adivasi caste, which is known as a servant caste. The caste system divides people into separate groups based on birth, marriage and occupation. Ms Tirkey alleged that she was required to work seven days a week from 6am to 12.30am, sleep on the floor on a piece of foam, and in four years was paid £3,140. She brought a caste discrimination claim against the Chandoks arguing that she was treated like this because the Chandoks considered her to be of a lower status than them. The Chandoks applied to strike out the claim on the grounds that there was no legislation outlawing caste discrimination.

The Tribunal allowed Ms Tirkey’s caste discrimination claim to proceed on the basis that it could be covered under the head of ‘race discrimination’. The definition of ‘race’ in the Equality Act is wide and includes ‘colour, nationality, ethnic or national origin’. As such, there is scope for arguing caste could also be included under this heading.

Unless this case is overturned, employers should note that there is a new type of discrimination that they could be liable for should any worker subject another worker to caste discrimination. To safeguard against any claim for vicarious liability, the same rules apply: that employers take reasonable steps to prevent such acts or omissions from occurring. This starts with having an equality and diversity policy and ensuring managers receive diversity training.

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Separate emails but read as one can amount to a qualifying disclosure

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For an employee to bring a whistleblowing claim, they first need to show that they have made a qualifying disclosure. In simple terms this means that an employee has made an allegation to their employer which shows that malpractice has taken or will take place or an employee’s health and safety is at risk.

In Norbrook Laboratories (GB) Ltd v Shaw, the EAT held that three separate emails, which raised concerns about driving in snowy conditions, when read as a whole did amount to a qualifying disclosure.

Mr Shaw was employed as a manager for Norbrook Laboratories. His duties included managing a team of staff who drove around the UK to win sales. During the winter of 2010, heavy snowfall affected his team’s ability to travel to appointments. As manager, Mr Shaw sent two emails to the company’s health and safety manager. The first one asked whether there was a policy for driving in snowy conditions and whether a risk assessment had been carried out. The second asked for guidance, as the driving conditions were dangerous and pressure was being placed on the team to continue performing duties. The third email was sent to HR, but referenced the two previous emails, asking whether his team would still be paid if they didn’t drive and he repeated his previous requests for guidance.

The Tribunal held that on their own, the emails did not amount to a qualifying disclosure but when read as a whole, it was enough to show that an individual’s health and safety was endangered. Although it has already been established that separate correspondence can amount to a protective disclosure, this case confirms that each correspondence does not have to be to the same person, so long as reference is made to previous communications.

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Correspondence including a draft settlement agreement marked “without prejudice” are inadmissible as evidence

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Where an employee or employer makes a statement (either in writing or orally) which attempts to settle a dispute this will be deemed to be “without prejudice” or as lawyers refer to it – “WP”. When a WP statement is made, this ordinarily means that it is off the record and is inadmissible as evidence before a court or tribunal.

In Portnykh v Nomura plc, the Employment Tribunal at a pre-hearing review held that even though the settlement agreement and correspondence was marked without prejudice, it was admissible evidence. The Tribunal said that the benchmark had not been satisfied which entitled the documents to benefit from the WP rule, namely: (i) there was no dispute in existence between the parties at that time; and (ii) pursuant to the terms of the settlement agreement the parties had agreed that the reason for dismissal would be redundancy. However, when negotiations broke down, Mr Portnykh subsequently brought a whistleblowing claim. The Employment Tribunal determined that to exclude this correspondence would create a false impression of events at the hearing and would amount to an abuse of the without prejudice rule.

The Employment Appeal Tribunal, however, overturned this decision and stated that the correspondence was without prejudice and therefore was inadmissible as evidence. It is not necessary for actual proceedings to exist in order for the without prejudice rule to apply. Also, without prejudice statements are only admissible in circumstances where the exclusion of it would provide an opportunity for perjury or blackmail. The disapplication of the general WP rule does not apply in situations where a party would simply be placed at a disadvantage.

This case confirms that statements and documents made in respect of negotiating settlement agreements which are marked “WP” are almost always inadmissible as evidence. Indeed, even if a document is not marked “WP”, in its context it could still benefit from the WP rule. However, it is always sensible to mark all statements “WP” when engaging in negotiations, so as to ensure that the rule applies.

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Employers’ liability for its agents in discrimination claims

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In discrimination cases, employers are responsible for the actions of both employees and their agents. But who is an employer’s agent?

In Kemeh v MoD, the Court of Appeal held that the common law test applies when working out whether someone is an agent for the purposes of discrimination law. The question therefore is ‘Was there a fiduciary relationship which exists between two people where both expressly or impliedly consent for one to act on behalf of the other?’ This is likely to be a very limited group of people.

Mr Kemeh, a black man, worked as an army chef for the MoD, and brought a claim for race discrimination against the MoD based on two incidents:

• The MoD contracted out its catering to Serco who sub-contracted to Sodexho. Ms Ausher worked as a butcher for Sodexho. When Mr Kemeh ordered meat from Ms Ausher, he was asked ‘Why should I trust you…you are black.’
• Mr Kemeh was told by his manager, Sgt Simmons, to ‘Shut up you dumb black bastard’.

The Court of Appeal found that:

• Ms Ausher was not the MoD’s agent. There was no evidence that the MoD consented either expressly or impliedly to Sodexho or its employees acting as its agent; therefore the MoD were not liable for her discriminatory comment.
• The MoD accepted liability for Sgt Simmons comment and Mr Kemeh was awarded £6,000 for injury to feelings. This was reduced from an earlier award of £12,000 because it was held to be too high an award for a one off comment.

Going forward, whilst employers should make sure that anyone working under their control complies with their equality policies they should do so in a way which seeks to avoid an agency relationship.

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Employer not liable for employee’s physical attack on customer

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In Mohamud v WM Morrison, the Court of Appeal found that an employer was not vicariously liable for its employee’s physical assault on a customer because there was not a sufficiently close connection between the employee’s actions and his employment.

Mr Mohamud, a Somali, visited Morrison’s supermarket where he was both verbally abused and physically assaulted by K, a Morrison’s employee. Following this, Mr Mohamud brought a claim against Morrisons. The Court of Appeal found Morrisons not liable because there was not a sufficiently close connection between the wrongdoing and K’s employment. The fact that K’s employment provided the opportunity and setting for the incident was not sufficient enough to prove liability on the part of Morrisons.

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Tribunal News

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In the last month, a number of new issues have been clarified.

Unison Challenge

The High Court dismissed Unison’s challenge to the introduction of fees for Claimants bringing cases in the Employment Tribunal although the reasons given by the Court leave open the possibility of a further challenge in the future. The primary reason the case was rejected was because as fees are so new there is no substantial evidence that the fees are unlawful and therefore should be overturned. The Court said that in the event that future statistics show that the EU ‘principle of effectiveness’ (i.e. the ability to bring a claim has been rendered almost impossible in practice) is infringed, the Chancellor will be under a duty to reconsider Tribunal fees. In the meantime, Unison has confirmed that it will appeal this decision.

Recovery of fees

The Employment Appeal Tribunal has held that employees who win their claims should generally expect to recover Tribunal fees from their employers. In Portnykh v Nomura International, the Employment Appeal Tribunal ordered an employer to pay the employee’s appeal fees. In making this decision, the EAT took into account the fact that the employer had lost the appeal and that it had the ability to pay. This was the case even though it was reasonable for the employer to defend the appeal and despite the employee conducting the litigation unhelpfully.

Employer penalties

Tribunals have new powers to impose financial penalties on employers, payable to the Government for failure to comply with Employment law. This applies to claims decided on or after 6 April 2014.

Mandatory early ACAS reconciliation

From 6 May 2014, claimants who wish to bring a claim against their employer must contact Acas to engage in pre-claim conciliation, with the aim to resolve the dispute without litigation. Acas will offer conciliation services to try to settle the matter. If conciliation is refused by either party or fails, Acas will issue a certificate allowing a claim to be submitted to the Tribunal.

In terms of limitation, employees have three months from the cause of action to submit a claim form. However, entering into early conciliation will ‘stop the clock’ on the limitation period. Time will only start to run again when the certificate is issued by Acas.

There has been some debate on the potential consequences of this new rule. Whilst it may encourage some settlement pre-action, particularly by litigants in person who wish to avoid paying the costs of issuing their claim form and employers who want to resolve situations outside of costly legal proceedings, others consider it to be nothing more than an administrative hurdle.

Changes to rehabilitation periods

The Government has announced that from 10 March 2014 the periods during which certain convictions need to be disclosed to new employers will be reduced. Under current legislation, convictions are ‘spent’ after a specific rehabilitation period following which an offender does not have to reveal convictions unless the occupation is “excluded” (e.g. where it involves working with children). This means there are now some offences which previously had a rehabilitation period of 7 years that now have a rehabilitation period of 2.5 years from the end of the sentence.

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