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EAT held employer’s discretion over pool for selection was very wide but dismissal was unlawful because the employer did not follow its own processes

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Mr Badmos was a regional development manager for Family Mosaic Housing Association. This employer employed five regional development managers, three of which were new business managers and two were delivery managers. Mr Badmos was a delivery manager. In 2009, the Housing Association decided to reduce the number of regional development managers from five to four, eliminating one new business manager. Both sets of managers were treated as having interchangeable skills and so Mr Badmos’ role could be made redundant, despite the fact that his role as delivery manager was not being cut.

Initially, the Housing Association wanted to reduce the number of regional development managers by two, but this was later reduced to one. It was also initially said that all of the regional development managers would have to apply for the new posts but the association later changed their minds on this. It was instead decided that the regional development managers would give an indication of which of the four remaining roles they would like to take on. It was inevitable that more preferences than posts would be received and so it was decided that a selection process would take place to allocate the oversubscribed roles.

When the three new business managers were asked which post they would prefer, two stated that they would like to remain in their existing role, however, the third, did not express any preference. The two delivery managers both expressed a preference to remain in their current roles. It was therefore decided that the third new business manager would be pooled with the two delivery managers and this would become the pool for redundancy selection.

The Housing Association then held interviews with the three employees and scored them according to various criteria. The Housing Association had indicated that the selection process would consist of an application form, interview, work based tasks and psychometric testing. However, the Housing Association did not have regard to the application form and no psychometric testing took place. On the interview notes it was seen that the interviewing manager had written a number of negative comments regarding Mr Badmos, and that the same manager had written very positive comments regarding the new business manager who was also being interviewed.

Mr Badmos was selected for redundancy. After unsuccessfully appealing this dismissal, Mr Badmos made a claim for unfair dismissal and race discrimination.

The EAT upheld the principle that as long as it can be shown that an employer has applied his mind to the choice of pool, then it will be very difficult for an employee to challenge this pool. Hence, even though the route to formation of the pool was tortuous and a strange choice was made, this did not make the dismissal unfair. The employer lost because of its failure to see through its processes on the selection process such as having regard to the application form and psychometric testing and the prejudice shown the interview notes.

Family Mosaic Housing Association v Badmos UKEAT/0042/13

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Disclaimers at end of references work

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In this complicated case concerning the giving of references in the public sector, the High Court has made a determination of an important point of principle of general application, namely that a disclaimer at the end of a reference purporting to absolve the giver of the reference from legal liability with respect to the recipient is effective. For some years, this had been in doubt.

It was always good practice to put disclaimers on the end of references. Now they have been held to work, this should be a universal approach.

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Disclosure of all convictions and cautions is a breach of Article 8 rights to respect for private life

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The Supreme Court has held that that the blanket requirement to disclose all convictions and cautions for the purpose of criminal records checks without regard to their relevance was not compatible with the right to respect for private life under Article 8 of the European Convention of Human Rights.

T had received two warnings at the age of 11 from the police in respect of bicycle thefts. These convictions had been spent in accordance with the Rehabilitation of Offenders Act, which provides that after a certain period of time certain offences do not need to be disclosed. T applied for two jobs which involved working with children but was not offered the job after criminal record checks revealed his spent convictions. Similarly, JB had received one caution as a child for a petty theft. JB applied for a job in the care sector but was refused the job because her criminal record (consisting of a spent caution) made her an inappropriate candidate.

T and JB issued proceedings, arguing that the disclosure of their criminal records was incompatible with their right to respect for private life under article 8 of the European Convention of Human Rights.

The Human Rights Act provides that it will not be lawful for public authorities to act in a way that is incompatible with the convention. One of the remedies under the Human Rights Act is for national courts to make a ‘declaration of incompatibility’ which, if not rectified, would result in a referral to the European Court of Human Rights.

The Supreme Court held that the disclosure of the cautions went further than was necessary to achieve the objective of protecting employers and vulnerable persons and did not strike a fair balance between T and JB’s rights and the interests of the community. The Supreme Court found that it could not find any relationship between the minor offences of T and JB and the government’s aim to protect children, in the case of T, or vulnerable adults, in the case of JB.

Since this judgment, the government has introduced two new orders which aim to rectify this incompatibility.

R (on the application of T and others) v Secretary of State for the Home Department and another [2014] UKSC 35

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There is no requirement for employers to make reasonable adjustments for non-disabled employees who care for disabled people

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A decision by the Court of Appeal confirmed that an employer was not under an obligation to make reasonable adjustments for a non-disabled employee whose daughter had Down’s syndrome. The Court of Appeal held that although employers are under a duty to make reasonable adjustments for their employees who have disabilities, they are not under an obligation to make reasonable adjustments for an employee who does not have a disability but is associated with someone who does.

The claimant, Ms. Hainsworth, was an employee of the Ministry of Defence based in Germany. As part of her employment package, the MoD provided facilities to educate the children of its employees who were not based in the UK. The claimant’s daughter had Down’s syndrome and the schools provided by the MoD were not suitable for her needs. In 2011, the claimant made an application to be transferred to the UK in order that she could better meet her daughter’s needs. This request was rejected by the MoD.

Ms. Hainsworth made a claim to the Court of Appeal, arguing that the law required the MoD to make a reasonable adjustment for an employee associated with a disabled person. Employers are required to make reasonable adjustments for disabled workers.

The Court of Appeal held that the MoD and employers generally were not obliged to make reasonable adjustments for employees who are associated with disabled people (although they did say that it would be good practice for the employer to do what it could to assist).

Hainsworth v Ministry of Defence [2014] EWCA Civ 763

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Estates entitled to holiday pay for deceased workers

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The Court of Justice of the European Union (CJEU) has held that the estates of deceased workers are entitled to payments for any accrued but untaken statutory annual leave entitlement at the time of their death and that such payments are ‘essential to ensure the effectiveness of the entitlement to paid annual leave’.

Mr Bollacke had been employed by K Klaas & Kock B.V. and Co KG (‘K&K’) since 1998. During his employment he had accrued but not taken 140.5 days of annual leave. In 2009, he became seriously ill and, unfortunately, died in November 2010. Mr Bollacke’s wife sought payment of his accrued but untaken annual leave from K&K to Mr Bollacke’s estate but K&K refused.

The case was referred to the CJEU who held that the Working Time Directive (which states that EU workers must be entitled to at least four weeks’ paid holiday each year), prevents national legislation providing that workers entitlement to paid annual leave is lost when they die. It said that rights to paid holiday were particularly important under EU law and that member states could not derogate from it.

Bollacke v K + K Klaas & Kock B.V. and Co KG C-118/13

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Party refusing to mediate ordered to pay indemnity costs

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The defendants in a case refused to mediate a dispute until judgment was due to be given after a 4 day trial. The defendant was ordered to pay the claimant’s costs on an indemnity basis (i.e. a more extensive basis than the standard basis) because the defendants had unreasonably failed to mediate.

The letter from the claimant setting out the case indicated that the claimant would be prepared to consider mediation. The defendant’s conduct throughout the case made it clear that they did not want to mediate or settle. The case then went to a four day trial.

Before judgment on the case was given, the defendants accepted an offer and agreed to pay the claimant £10,000. Under the same offer, the defendants also agreed to pay all of the claimant’s costs on the standard basis. A payment of costs on the ‘standard basis’ means that courts will only allow the payment of costs which have been reasonably incurred and are proportionate to the dispute. The alternative is that costs are paid on an ‘indemnity basis’. This means there is a presumption in favour of the party claiming costs that the costs incurred are proportionate. In effect, it puts the onus on the paying party to establish that the costs claimed were unreasonable.

The High Court took the view that the defendants should pay costs on an indemnity basis as they had been unreasonable in refusing mediation. The judge held that the defendants’ decision consistently to refuse mediation because they were confident in their position and the parties were too far apart to mediate was incorrect because, amongst other reasons: (i) the case being a dispute over facts, was a classic case for mediation; and (ii) the parties could not know this before they attempted mediation.

In earlier cases, Courts have refused to award a successful party to litigation costs because they have refused to mediate. Win or lose, litigants are likely to be punished if they refuse to mediate.

Garritt-Crithchley and others v Ronnan and another [2014] EWHC 1774 (Ch)

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Employment Tribunal holds that tribunals should consider the mental processes of those influencing decision makers

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The Employment Appeal Tribunal (‘EAT’) held that when considering whether a dismissal was discriminatory on the grounds of age, tribunals should consider the mental processes of those influencing the decision makers, as well as the decision makers themselves.

The claimant, Dr Reynolds, aged 77, worked as the Chief Medical Officer on a consultancy basis for Canada Life for over 20 years. A presentation was made by other employees at the respondent which highlighted deficiencies in the services performed by the claimant and following this presentation, the UK General Manager of the respondent decided to terminate her consultancy agreement. Dr Reynolds brought a claim arguing that she had been directly discriminated against because of her age.

Canada Life called the decision maker, the UK General Manager, to give evidence. The Tribunal was satisfied that he was not himself age prejudiced. However, he had clearly been influenced by others who had not given any evidence.

The EAT held that as the views of others played a significant role in the decision of the General Manager to dismiss the claimant, Canada Life had not discharged the burden of proof on an employer to show that discrimination played no part.

The upshot is that when defending a discrimination complaint, an employer must examine the motives both of the decision maker and those that influenced him or her. If either have been influenced by unlawful prejudice or the employer fails to put forward evidence both from the decision makers and the influencers, the employer will be exposed.

Reynolds v CLFIS (UK) Ltd and others UKEAT/0484/13

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Employee claiming constructive dismissal affirms contract by giving extra notice

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An employee who tried to claim constructive dismissal was held by the Employment Appeal Tribunal (‘EAT’) to have affirmed his contract, rendering him unable to claim constructive dismissal, by giving more than his contractual notice.

Mr Cockram was employed in a senior position at his employer, Air Products plc. His contract required that he give three months’ notice if he wished to terminate his employment. Mr Cockram had raised a grievance with his employer, in relation to a telephone meeting. Unhappy with the outcome of this grievance, he resigned in a letter dated 25 July 2012. His letter of resignation made it clear that he considered that the comments made in this meeting and the subsequent conduct of his employer to be a fundamental breach of contract and said that his resignation would take effect on 28 February 2013, seven months later.

Air Products argued that by giving a significantly longer notice period than was required in his employment contract, Mr Cockram had waived any breach by his employer. The EAT held that there was a finding that Mr Cockram had affirmed the contract by working for seven months after his resignation. The EAT stressed that it should be borne in mind that deciding whether or not an employee has affirmed a contract is a fact-sensitive matter and the tribunal will take into account the length of notice and why this length of notice was given.

Cockram v Air Products plc UKEAT/0038/14

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Judicial review challenge to tribunal fees brought by Unison dismissed but leave to appeal given

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A challenge brought by Unison to the introduction of fees in Tribunals and Employment Appeal Tribunals has been dismissed by the High Court. The High Court considered that the case had been brought prematurely and that further evidence would be needed before it could be convinced that the fees regime should be overturned. Leave to the court of Appeal has now been granted.

The Government introduced fees in employment tribunals from 29 July 2013. Fees vary from £160 for issuing a claim and £230 for a hearing for the few claims categorised as Type A to £250 for issuing a claim and £950 for a hearing for the majority of claims which are categorised as Type B. Since the introduction of these fees, statistics from the Ministry of Justice from October to December 2013 indicated that claims made to the Tribunal had dropped by 79%.

Unison challenged the introduction of fees on the basis that: (i) they breached the EU principle of effectiveness because it made it difficult for claimants to access rights conferred by EU law; (ii) they breached the EU principle of equivalence because the exercise of EU rights were less favourable than similar domestic actions; (iii) they breached the public sector duty of equality because the Lord Chancellor ought to have had regard for the need to prevent discrimination; and (iv) those with protected characteristics were being indirectly discriminated against because their claims fell into Type B and they therefore had to pay higher fees.

After considering point (i), the High Court held that the principle of effectiveness was not breached because those on limited means could save money to pay the fees and the mere fact that this imposed a burden was not sufficient. It found that Unison did not have sufficient evidence at this stage to bring the claim but that in due course evidence of a dramatic fall in claims could be powerful in demonstrating that the principle of effectiveness was being breached.

In relation to point (ii), the High Court held that there had been no breach of the principle of equivalence and, using a comparison to the County Courts held that there was less of a disincentive for litigants in the employment tribunal because they did not face potential liability for costs. In relation to point (iii), it found that the impact of fees had been fully considered and that Unison had failed to establish that those with protected characteristics had been affected worse but that the Lord Chancellor would be under an obligation to continue to assess the impact of the fee regime. Finally, in relation to point (iv), the High Court confessed that it was unable to grapple with the complicated detail of the statistics provided by Unison.

This decision is not the end of the matter. Given the High Court’s comments on (i), that it was not satisfied on the sufficiency of the statistics presented thus far, and its comments on (iii), that the Lord Chancellor would be obliged to keep this under review, further tribunal statistics will be key to this case. Since it was heard, new tribunal statistics have been released by the Ministry of Justice which demonstrate that the number of tribunal applications between January and March 2014 fell by 58.4% as compared with the same period in 2013.

Leave has now been granted Unison to appeal this decision to the Court of Appeal. It seems to us that the appeal may well succeed.

R (Unison) v Lord Chancellor and another [2014] EWHC 218 (Admin)

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Commission should be included in statutory holiday pay

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In a recent case, the Court of Justice of the European Union (CJEU) held that statutory holiday pay should include commission if this is received by the worker. The CJEU held that if commission were not paid, then the worker would be put at a financial disadvantage when taking statutory annual leave which was against the purposes of the Working Time Directive.

Mr Lock was an internal energy sales consultant at British Gas. He earned a basic salary which was approximately 40% of his total income. Commission on sales made up approximately 60% of his income. The commission element of Mr Lock’s salary was always paid some months after it had been earned. Mr Lock went on annual leave for two weeks between 19 December 2011 and 3 January 2012 and received his salary and commission as normal whilst on holiday. However, some months after this, he suffered a dip in pay as he had not generated commission whilst on holiday. Mr Lock argued that this breached the Working Time Regulations.

The matter was referred to the CJEU who found that workers should receive their ‘normal remuneration’ whilst on annual leave; Mr Lock had incurred a financial disadvantage some weeks after his holiday; if holiday pay is reduced, it is likely to deter individuals from taking annual leave; and commission payments were linked to the performance of Mr Lock’s tasks and therefore should be taken into account when determining his statutory holiday pay.

When this matter is remitted to the Tribunal, it will decide whether the UK Legislation can be interpreted in line with the European Court’s decision. The CJEU did not offer any guidance as to how the commission payment should be calculated, although the usual reference period under the legislation is 12 weeks.

This case could have big implications for employers who make commission based payments.

Lock v British Gas Trading Limited C-539/12

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