Hannah Lynn elected to the ELA Management Committee

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Congratulations to BDBF Associate, Hannah Lynn, who has been elected to the ELA Management Committee 2022-2024 as the Junior Lawyer Representative. In addition to representing the views of junior lawyers on ManCo she will chair the ELA Junior Committee. ELA provides a great opportunity for members of the employment law profession to learn, network and develop their careers. Congratulations to Hannah and the new ManCo.

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Whistleblowers beware: It ain’t what you do, it’s the way that you do it

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In Kong v Gulf International Bank (UK) Ltd the Court of Appeal decided that the dismissal of a whistleblower for conduct closely related to her whistleblowing disclosure was not automatically unfair.

What happened in this case?

Ms Kong was the Head of Financial Audit at Gulf International Bank (UK) Ltd. Her job was to carry out risk-based audits of all of the Bank’s business activities. She reported to Mr Mohamed, the Group Chief Auditor, who was based in Bahrain.

Ms Kong prepared a draft audit report in which she was critical of the use of a particular legal template governing one of the Bank’s new financial products. Ms Kong felt it was unsuitable and did not contain sufficient safeguards. Ms Kong sent this report to Ms Harding, the Bank’s Head of Legal, and others. It was accepted that the concerns raised amounted to whistleblowing.

Ms Harding was unhappy with the concerns raised by Ms Kong and confronted her about it. She entered Ms Kong’s office without an appointment and without knocking. She was agitated and began discussing the legal template issue. In the course of the discussion, Ms Kong questioned Ms Harding’s legal knowledge regarding the right type of agreement to be used. Ms Harding became upset and left, slamming the door on her way out.

After the meeting, Ms Kong sent an email to Mr Mohamed raising her concerns about the legal template and the fact that Ms Harding had not responded to those concerns but, instead, had become agitated towards her. In the meantime, Ms Harding complained to the Head of HR and the CEO, alleging that Ms Kong had impugned her professional integrity. Ms Harding gave the impression that she couldn’t work with Ms Kong anymore and she sought to limit interactions with her from this point onwards.

The CEO and Head of HR decided to dismiss Ms Kong. They prepared a document setting out their concerns. This included the incident with Ms Harding, plus nine other incidents, which, they said demonstrated that Ms Kong“had little emotional intelligence when dealing with colleagues”, was “dogmatic in her approach” and that her “ability to listen and build relationships with colleagues is limited”.

On 3 December 2018, the CEO, Head of HR and Mr Mohamed told Ms Kong that she was to be dismissed because her behaviour, manner and approach had resulted in colleagues not wanting to work with her. The dismissal letter referred to her questioning of Ms Harding and said that this fell “well short of the standard of professional behaviour expected” and was contrary to the principles of treating colleagues with dignity and respect. The letter went on to say that the dismissal was not connected to the initial concerns she had raised. Indeed, these concerns were reflected in the final version of the audit report.

Ms Kong brought a claim alleging she had been subjected to detriment and automatically unfairly dismissed because she had made whistleblowing disclosures.

What was decided?

Employment Tribunal:

On the detriment claim, the Employment Tribunal accepted that Ms Harding had treated Ms Kong detrimentally and this treatment had been influenced by the whistleblowing disclosures. However, the claim failed because it was out of time.

On the dismissal claim, the Tribunal accepted that Ms Harding’s complaint about Ms Kong had been motivated by the whistleblowing disclosures and that this complaint was the principal cause of the dismissal. However, Ms Harding did not take the decision to dismiss. The dismissal decision makers had decided to dismiss, primarily, because Ms Kong had questioned Ms Harding’s professional integrity, rather than because of the whistleblowing disclosures. The Tribunal concluded that this conduct was genuinely separable from the disclosures. The Tribunal also went on to consider whether it was possible to attribute Ms Harding’s motives to the Bank but decided that it was not. Therefore, the Tribunal dismissed the claim.

Ms Kong appealed the Tribunal’s decision on the dismissal claim to the Employment Appeal Tribunal (EAT).

EAT

The EAT upheld the Tribunal’s decision. They agreed that it was right not to attribute Ms Harding’s motives to the Bank and the focus should be on the motives of the dismissal decision makers only. Ms Kong argued that dismissing her for questioning Ms Harding was, in effect, dismissing her because of the whistleblowing disclosures as the two were inseparable. However, the EAT disagreed. They said that Ms Kong’s concern that the Bank was in danger of breaching regulatory requirements by using a legal agreement which was unsuitable for a new financial product was separable from how that state of affairs had come about, who was responsible for it and whether they deserved criticism in that regard.

The EAT dismissed the appeal and Ms Kong appealed to the Court of Appeal.

Court of Appeal

Ms Kong argued that it wasn’t open to the Tribunal to separate her conduct in making the disclosures from the disclosures themselves.

The Court of Appeal did not agree. It said that, in principle, there can be a distinction between the whistleblowing disclosure itself and the conduct associated with making the disclosure. The role of the Tribunal is to identify the reason or reasons that operated on the mind of the decision maker when deciding to dismiss. Tribunals should be able to identify a feature of the conduct relied upon by the decision maker that is genuinely separable from the whistleblowing disclosure.

Provided they can do this, the principal reason for the dismissal will be the conduct, not the whistleblowing disclosure. Importantly, the Court said there is no objective standard against which such conduct should be assessed. Nor does the conduct in question have to reach a particular standard of unreasonableness in order to be separable.

In this case, the Tribunal had not erred in deciding that Ms Kong’s conduct was the reason for her dismissal.

What does this mean for employers?

Ultimately, this is a helpful decision for employers as it suggests that the separability principle can be drawn quite widely. Whistleblowers often deliver unwanted messages that some will not like. It is not unusual for difficult conversations to follow, especially with those at the heart of the concern itself. And often such conversations will not be instigated by the whistleblower. Indeed, in this case, it was Ms Harding who confronted Ms Kong.

Employers should nevertheless be careful not to view this decision as giving them carte blanche to dismiss a whistleblower just because they have ruffled someone’s feathers. It is worth remembering that in this case there was reference to other incidents that the decision-makers had factored in when deciding to dismiss. The Courts will continue to pay close attention to an employer’s reasons for dismissal to ensure that the real reason is not, in fact, the disclosure itself.

The decision may be appealed to the Supreme Court. Watch this space.

Kong v Gulf International Bank (UK) Ltd

BDBF is a law firm based at Bank in the City of London specialising in employment law. If you would like to discuss any issues relating to the content of this article, please contact Principal Knowledge Lawyer Amanda Steadman (amandasteadman@bdbf.co.uk) or your usual BDBF contact.

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Worker who lost her role after she expressed gender critical beliefs on Twitter succeeds in direct discrimination and victimisation claims against employer

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An Employment Tribunal has ruled that an employer discriminated against and victimised a worker who lost her role after she had made straightforward statements of her gender critical beliefs on Twitter and in the workplace.

What happened in this case?

Ms Forstater was a visiting fellow of CGD Europe and also worked on specific projects for them on a consultancy basis. CGD Europe is linked to the Centre for Global Development based in the US.

Ms Forstater believes that:

Being male or female is a biological fact which is not capable of being changed and is not a feeling or identity. As a result, in her view, a trans woman is not really a woman and a trans man in not really a man.
A person can identify as another sex, ask people to refer to them by their identified sex and change their legal sex, but this does not, in fact, change their actual sex.

In late 2018, Ms Forstater began expressing her beliefs on her personal Twitter account. Colleagues from the Centre for Global Development in the US saw her tweets and raised concerns that they were transphobic and offensive. The matter was investigated.

Ms Forstater maintained that her statements were factually correct, but she said that out of courtesy she would respect a person’s preferred pronouns. She agreed to avoid discussing her views at work unless there was a particular need to do so. She also added a disclaimer to her Twitter account to make it clear that her views were her own and not those of CGD Europe. Nevertheless, the decision was taken not to renew Ms Forstater’s visiting fellowship, to end her consultancy work and not to offer her a contract of employment.

Ms Forstater claimed that she had suffered discrimination, victimisation, and harassment because of her philosophical beliefs. In June 2021 the Employment Appeal Tribunal decided that Ms Forstater’s beliefs qualified as protected philosophical beliefs under the Equality Act 2010. Having surmounted that hurdle, the case returned to the Employment Tribunal to decide whether she had, in fact, been discriminated against because of those beliefs.

What was decided?

The Tribunal decided that the way in in which Ms Forstater had manifested her beliefs had significantly influenced CGD Europe’s decision not to renew her fellowship or offer her a contract of employment. However, it could not be said that Ms Forstater’s tweets, or the other ways in which she manifested her beliefs, were objectively offensive or unreasonable. Rather, they were simple assertions of her belief and not unreasonable, particularly given the tone of the wider public debate on the issue. Therefore, CGD Europe’s actions were found to be directly discriminatory. Because Ms Forstater succeeded in this claim, it was not necessary to consider her complaints of harassment and indirect discrimination arising out of the same facts.

The Tribunal also decided that CGD Europe’s decision to remove Ms Forstater’s profile from their website after The Sunday Times had published an article about her legal case was an act of victimisation. Ms Forstater had also argued that the withdrawal of an offer of consultancy work was an act of victimisation. However, the Tribunal found that CGD Europe had not, in fact, withdrawn an offer of consultancy work and so this part of the claim failed.

What does this mean for employers?

This decision underlines that where a belief is protected, the expression or manifestation of that belief is also protected – to a point. The key question will be how the belief is expressed or manifested. Where the belief is expressed in a straightforward and objectively reasonable way, the worker will be protected from detrimental treatment. Interestingly, where the wider debate on the belief in question is polarised, the worker may be afforded greater latitude in exactly how they express themselves. Here, the “common currency” of the debate about trans rights meant that the use of mockery and satire was acceptable.

The difficulty for employers will be understanding when a worker’s behaviour tips over into being an unacceptable way of expressing their protected belief. Where the behaviour causes another worker to feel harassed it is likely to be on the wrong side of the line, for example “misgendering” a trans worker (i.e. using pronouns different to those that relate to the gender that the person concerned identifies as being). Indeed, in the recent case of Mackereth v DWP a doctor’s refusal to use vulnerable service users’ chosen pronouns was sufficient grounds for dismissal and was held not to be discriminatory.

What practical steps can employers take to manage this clash of rights?

Update relevant polices to reflect the fact that those holding gender critical beliefs and trans workers are protected from discrimination.
Set out the standards of behaviour expected from staff, including the need to treat colleagues with dignity and respect. Give examples of what is and is not acceptable. Explain that disciplinary action will follow where staff fail to meet such standards, up to and including dismissal.
Ensure that such policies are actually communicated and read by staff. Consider asking staff to provide a written acknowledgement that they have read and understood them.
Deliver equality training to staff, ensuring that it is thoughtful and forcefully presented and refreshed at regular intervals.
Respond quickly and effectively to complaints of discrimination or harassment.

Forstater v CGD Europe and others

Supreme Court decision on the paid holiday entitlement of part-year workers

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The Supreme Court has ruled that permanent part-year workers are entitled to 5.6 weeks’ holiday per year, regardless of how many weeks they actually work. Further, if they work irregular hours, their holiday pay must be calculated as an average of pay earned over a reference period – any other method of calculation is not permitted.

What happened in this case?

Mrs Brazel was employed by the Harpur Trust as a visiting music teacher. She had a permanent “zero hours” employment contract. She only worked during term-time (which amounted to between 32 to 35 weeks per year) when she would typically work between 10 to 15 hours per week. She was paid an hourly rate for her work and was paid monthly in arrears. During the school holidays she remained employed by the Trust but received no pay as she had performed no work.

Mrs Brazel was entitled to 5.6 weeks’ paid holiday per year. The Trust required her to take holiday outside of term time when schools were closed during April, August, and December. Relying upon Acas guidance, the Trust calculated her holiday pay by multiplying her earnings for the previous term by 12.07% (this multiplier was obtained as follows: 5.6 weeks / (52 weeks – 5.6 weeks)). The end result was that she received less than 5.6 weeks’ worth of holiday and holiday pay.

Mrs Brazel said this method of calculating her holiday pay was incorrect and resulted in an underpayment. She said that the law required the Trust to calculate it by reference to her average earnings over a reference period of the preceding 12 weeks, which would have given her a higher amount of holiday pay. This method of calculation is more time-consuming since it requires the employer to look back over the previous 12 weeks’ earnings (discounting any weeks where no pay was received and looking back to earlier weeks if necessary).

The Employment Tribunal rejected Ms Brazel’s claim, concluding that where a worker worked for fewer than 46.4 weeks per year, it was permissible to base holiday pay on 12.07% of hours worked. However, the Employment Appeal Tribunal overturned this decision, agreeing with Mrs Brazel that the correct method was to base holiday pay on an average of the hours worked in the previous 12 weeks. The Court of Appeal agreed with the EAT. The Trust appealed to the Supreme Court.

What was decided?

The Trust argued that the paid annual leave entitlement for those who work only part of the year should be pro-rated to reflect to reflect the amount of work actually performed.

The Supreme Court dismissed the Trust’s appeal. It held that all workers – including part-year workers – are entitled to 5.6 weeks’ paid holiday per year (and this entitlement applies from the beginning of each leave year rather than accruing throughout the year). Therefore, a worker who works for 35 weeks per year is entitled to the same amount of paid holiday as a worker who works for 52 weeks per year. The working time legislation does not permit the pro-rating of the annual leave entitlement, apart from when a worker starts or leaves employment part-way through the leave year.

The Court also held that holiday pay for workers without normal working hours had to be calculated by averaging pay over a reference period. In Ms Brazel’s case the relevant reference period was 12 weeks, but this has since been increased to 52 weeks. Any weeks in the reference period where no pay was received are discounted and the employer should look back to earlier weeks if necessary (and if the worker has been employed for fewer than 52 weeks, the averaging should be based on the number of complete weeks that the worker has been employed). The reference period method was the one adopted by Government and no other method of calculation, including the 12.07% method, was permissible. In the case of part year workers, this may mean counting back further than the reference period in order to discount any weeks not actually worked.

The Court acknowledged that the end result was that part-year workers would have a more favourable holiday entitlement than full-year workers.

What does it mean for employers?

This decision means that holiday pay for permanent part-year workers is 5.6 weeks’ paid holiday per year, no matter how many weeks they actually work per year. This means that they will get proportionately more paid holiday than those who work throughout the whole year. A failure to provide this would entitle a worker to bring a claim for unlawful deductions from wages (which can cover deductions going back for up to two years).

The decision also means that holiday pay for workers with irregular hours must always be calculated by reference to an average of hours worked in previous weeks. In Mrs Brazel’s case, the averaging had to be conducted over a 12-week period as this was the reference period in force at the time. On 6 April 2020, the reference period was changed from 12 to 52 weeks, which should result in fairer outcomes all round, as such workers will not benefit from the fact that they have taken holiday after a period of more work (and, equally, they will not be disadvantaged for taking holiday after a period of little or no work).

Although this decision is of most relevance to employers within the education sector, it is relevant to any employer who has workers engaged on flexible working arrangements which mean that they are employed for the whole year but have periods of no work. It is also relevant to all employers who have workers who work irregular hours, since it underlines the correct method of calculating holiday pay.

Harpur Trust v Brazel

Menopause reforms: Government ducks major change

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In July 2021, the Minister for Employment asked members of a “Roundtable of Older Workers” to look at the issue of menopause and employment in light of the impact that menopause can have on women’s working lives. The Roundtable members published their report on 25 November 2021 (the Report). The Report set out recommendations for Government, employers and wider societal and financial change. On 18 July 2022, the Government published its response to those recommendations (the Response). In this briefing we discuss the recommendations of most interest to employers.

Enact the dual discrimination provisions of the Equality Act 2010

The Report recommended that the Government enact the dual discrimination provisions set out in the Equality Act 2010. These provisions would entitle a worker to complain of discrimination arising out of the combination of two protected characteristics, rather than one as is presently the case. This change would help menopausal workers who have typically found it difficult to succeed with complaints based on a single protected characteristic (e.g. disability, age or sex).

However, the Government has declined to enact these provisions. In its view, the existing scheme provides sufficient protection and further changes are not needed. The Response states that “this is borne out by recent cases which show that employees have scope within the Act to challenge discriminatory treatment – claiming under one or more the three relevant characteristics”. This statement is somewhat surprising given that there have been so few menopause-related claims in the last five years (62 out of over 90,000) and even fewer successful claims (seven out of 62).

Launch a collaborative and Government-backed employer-led campaign

The Report recommended the launch of an employer-led campaign covering:

the importance of open conversations about the menopause in the workplace;
the importance of training line managers;
the importance of awareness-raising and action to combat bias and harassment;
the need for workplace adjustments;
the value of support groups and specialist support;
sick leave and performance management procedures;
flexible working rights; and
returner programmes to include and highlight post-menopausal opportunities.

The Government’s Response agrees that employers play a critical role in the effectiveness of menopause communications. Therefore, the Government supports this recommendation and has committed to appointing “Menopause Employment Champions” to work with business to spearhead a campaign outlining the benefits of recruiting and retaining menopausal workers.

The Government will also use its existing links and partnerships with business to increase the reach of menopause communications. It will also encourage the development of support within organisations by providing links to advice, guidance and case studies.

Larger employers to put in place workplace awareness, training and support via Employee Assistance Programmes

The Report recommended that large employers put in place workplace awareness, training and support via Employee Assistance Programmes (EAP) (or via a “menopause champion” where there is no EAP).

The Government’s Response says that it will encourage larger employers to ensure that menopause forms part of the EAP offering. Beyond this, it says that the Government is exploring options for additional support for women’s reproductive health issues within the workplace, including menopause.

What does this mean for employers?

These commitments do not compel employers to make any changes for menopausal workers and nor do they offer such workers any greater form of legal protection. However, the emphasis on raising awareness through better communications, offering training and providing support all contribute to the growing momentum around menopause as a workplace issue.

The Response is not the end of the matter. We are awaiting the recommendations of inquiries conducted by the Women and Equalities Committee and the All-Party Parliamentary Group on Menopause. That said, given the Government’s Response to this Report it seems unlikely that there will be changes to the law any time soon.

However, the focus on this issue, and the pressure to improve the position for menopausal workers, is unlikely to go away. Employers who wish to be considered employers of choice should take steps to support workers now, rather than wait to be forced to do so. If you would like to know more about how your business can support menopausal workers, please join our lunchtime webinar on this topic 7 September 2022. You can find out more about the webinar, and how to register, here.

What to do with your workers in a heatwave?

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The 40-degree heatwave may be over for now, but as global warming causes temperatures to rise, meteorologists predict warmer temperatures will be a regular event in the UK. What does this mean for the workplace?

What is the law currently on temperature at work?

At the moment, employers must make sure indoor workplaces remain at a reasonable temperature and manage the risk of working outdoors in hot environments, for the “thermal comfort” (whether someone feels too hot or cold) of its employees. However, there is currently no maximum temperature beyond which it is not legal for workers to work in.

What is a “reasonable” temperature will vary depending on the nature of the individual workplace. For example, some outdoor workers may need to have their working hours varied so that they can work in cooler temperatures, and office staff may need to work from home or have the air conditioning regularly checked.

What should employers do?

If employees have to come into work, then you should think about what common sense alterations you could do to make the environment more comfortable for them. For example:

using fans;
regulating the air conditioning;
closing blinds/curtains if possible;
providing access to cold water;
relaxing any dress code;
changing working hours; and/or
allowing flexibility in travelling.

Indeed, if there are potential health and safety risks at the workplace or in travelling to the workplace then working from home should be considered although for many staff it may be overall more comfortable to work in an air-conditioned workplace than to work from home.

Legal issues for employers

Some of these alterations could potentially be viewed as a reasonable adjustment for a disabled employee. A failure to make a reasonable adjustment will be discriminatory.

Employers should also be keeping an eye on workers who are more susceptible to heat stress, such as pregnant and menopausal workers. As above, it could be discriminatory if alterations are not made to how they work during a heatwave.

It is also important for employers to note that if the temperature presents a health and safety risk, then, in certain circumstances, an employee may be entitled to stay away from (or leave) the workplace.

Employers are under a duty to make a suitable assessment of risks to the health and safety of their employees. It would be wise to review any assessment before a heatwave to ensure you are equipped in such circumstances. This should assist in helping to mitigate any potential legal claim.

Is there going to be a change in the law in the future?

A number of MPs have recently backed a call for a maximum workplace temperature via an early day motion, and the GMB union and the TUC have also called for a maximum workplace temperature to be set to protect the health and safety of workers in heatwaves.

Despite this, there does not appear to be an appetite from the Health and Safety Executive to regulate this more formally. They say there is no maximum temperature because workplaces with hot processes (such as bakeries, glass works or foundries) would not be able to comply with such requirements.

As temperatures are only set to rise in the coming years, it looks like this is going to become a hot topic, with the possibility of stricter regulation in future.

BDBF is a law firm based at Bank in the City of London specialising in employment law. If you would like to discuss any issues relating to the content of this article, please contact Associate Hannah Lynn, Principal Knowledge Lawyer Amanda Steadman (amandasteadman@bdbf.co.uk) or your usual BDBF contact.

Menopause at work: What employers need to know – Lunchtime Webinar

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Menopause has long been a taboo subject, not talked about at home let alone in the workplace. However, in recent years it has started to come out of the shadows. An array of high-profile women have talked about their experiences and we’ve seen interest from Parliament, with the prospect that further legal protections will be introduced.

In advance of World Menopause Day on 18 October 2022, our lunchtime webinar will explain steps employers can take to support staff going through the menopause. Our expert team will discuss the following issues:

What is the menopause and what are the symptoms?
Who is affected by the menopause?
Should menopause be viewed as a workplace issue?
What types of workplace problems may arise?
What legal protections do menopausal workers currently have?
What can we learn from recent Employment Tribunal disputes about the menopause?
Is the law in this area going to change? What should good employers be doing now to support menopausal workers?
What sorts of things should go into a workplace Menopause Policy?

Event Details

Date: Wednesday, 7 September 2022
Time: 12.00pm – 12.50pm

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BDBF Partners Ranked in Who’s Who Legal 2022

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We are pleased to announce that BDBF Partners, Gareth Brahams, Claire Dawson and Paula Chan have been recognised as Global Leaders in the Labour & Employment field in 2022’s Who’s Who Legal, with Gareth Brahams and Claire Dawson also selected as Thought Leaders.

BDBF’s team of employment lawyers is top ranked by the leading legal directories and we’re delighted to see our lawyers recognised by Who’s Who Legal.

Congratulations to our fellow leading employment law practitioners who have also been ranked, and thank you to our peers across the employment law network for their feedback.

Hidden Disabilities – The Knowledge Requirement

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BDBF Senior Associate, Clare Brereton has recorded a webinar for MBL covering ‘Hidden Disabilities’ – Exploring the Knowledge Requirement in Disability Discrimination Claims. The webinar will be streamed at 12:30pm on Thursday 28 July 2022.

Register here now and the recording will be available to view for 90 days.

ELA Webinars: Remedies in the Employment Tribunal – The Technical and the Tactical 13 & 20 September 2022

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BDBF Senior Associate, Clare Brereton, will be participating in a two-part speaking slot for the Employment Lawyers Association (ELA) on 13 and 20 September 2022. In the first webinar, with Alice Scott of Pump Court Chambers, Remedies Calculations: The Technical, they will explore the ET rules on remedy.

The second session, Remedies Calculations: The Tactical, will cover when remedy should be considered and the available remedies, as well as addressing enforcement.

Register here.

Withholding company sick pay from employee suspected of malingering was a fundamental breach of contract

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In Singh v Metroline West Limited the Employment Appeal Tribunal decided that an employer had committed a fundamental breach of contract when it withheld company sick pay from an employee suspected of malingering.

What happened in this case?

Mr Singh was a bus driver for Metroline. On 24 January 2017, he was invited to a disciplinary meeting. The next day, he went off sick. His absence was certified by a Fit Note. He was also assessed by an occupational health advisor, who did not report that the illness was false. Although Metroline offered company sick pay, it decided only to pay statutory sick pay because it believed that Mr Singh had gone off sick simply to avoid the disciplinary meeting.

On 15 March 2017, Mr Singh resigned claiming constructive dismissal. He said that the company had seriously breached his contract of employment by failing to pay company sick pay. He brought various claims against Metroline in the Employment Tribunal. Although he succeeded in a claim for unlawful deduction from wages in respect of the failure to pay company sick pay, he failed in the related constructive dismissal claim (being the more valuable of the two claims since it covered losses flowing from the dismissal).

The Employment Tribunal looked at the relevant documentation and noted that the employment contract and the associated “Drivers’ Handbook” both provided for the withholding of company sick pay where sickness absence was not genuine. However, this was only permissible where a “thorough investigation” had shown this to be the case. That had not happened here. Metroline’s Disciplinary Policy did provide for suspension without pay where the company had simply “deemed” an employee to have reported sick to avoid a disciplinary process. However, Metroline had not suspended Mr Singh.

The Tribunal concluded that Metroline had breached Mr Singh’s employment contract. However, they decided that it was not a fundamental breach. They found that the decision to withhold company sick pay pending the disciplinary meeting did not reveal an intention no longer to be bound by the employment relationship. Rather, they were encouraging the continuance of the relationship by having Mr Singh engage in the disciplinary process. Since there was no fundamental breach, the constructive dismissal claim failed. Mr Singh appealed to the Employment Appeal Tribunal.

What did the EAT decide?

The EAT decided that the Tribunal had got it wrong in deciding that the breach of contract was not fundamental. The Tribunal’s view seems to have been that in order for there to have been a fundamental breach the employer had to intend no longer to be bound by the terms of the contract in a way which meant that it no longer wished to continue the employment relationship at all.

The EAT said this was an error in law. In fact, what is required is an intention no longer to comply with the terms of the contract that is so serious as to go to the root of the employment contract. They gave the example of employer who wanted to keep its staff but pay them less. If the employer decided unilaterally to cut pay this would be a fundamental breach of contract, regardless of the desire to maintain the employment relationship.

The EAT also noted that the Tribunal had not considered two important cases of relevance. Firstly, in Cantor Fitzgerald v Callaghan it was decided that whether non-payment of wages amounts to a fundamental breach may depend on whether the non-payment was deliberate. Secondly, in Roberts v Governing Body of Whitecross Schoolit was decided that a mistaken belief that there was a contractual power to reduce pay did not prevent there being a fundamental breach of contract. In this case, this meant that there was only one possible answer: Metroline had committed a fundamental breach of Mr Singh’s employment contract.

What does this mean for employers?

This case highlights the perils for an employer of jumping the gun. If the employer had paused to gather evidence to substantiate its belief that Mr Singh was malingering, it would either have been able to withhold sick pay in accordance with its own terms, or potentially have moved to dismiss summarily on the grounds of dishonesty. Alternatively, if the imperative was simply to cut pay as quickly as possible, it could have relied on the provisions entitling suspension without pay. Unfortunately for the company, their hair trigger response landed them with a constructive dismissal claim. The decision also underlines that a fundamental breach of contract is the basis for a constructive dismissal claim; the employer’s wider intentions are not relevant.

Employers who find themselves in this situation should also remember that it may still be possible to proceed with a disciplinary hearing, despite the fact that the employee has gone off sick. Disciplinary hearings can be modified to try to secure the sick employee’s participation in the process. Examples of modifications include: where and how the hearing is held; who is allowed to accompany the employee; the role that any companion takes in the hearing; the structure and timing of the hearing; and the making of written submissions in addition to, or instead of, attending the hearing in person. In rare cases it may even be necessary to proceed with a disciplinary hearing without the employee present. However, you should seek legal advice before proceeding down this route.

Singh v Metroline West Ltd

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Acas Code applied to discriminatory sham redundancy dismissal

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In the recent case of Coulson v Rentplus Ltd, the Employment Appeal Tribunal upheld a decision that the Acas Code of Practice on Disciplinary and Grievance Procedures applied to a sham redundancy dismissal that was tainted by discrimination. The Code had been completely disregarded, meaning that a maximum 25% uplift to the compensation was justified.

What happened in this case?

Ms Coulson was employed by Rentplus from 2015 as its Director of Partnerships. In Spring 2017, Mr Collins was appointed as a consultant, with a view to him taking over as CEO later in the year. Around this time, a decision was taken to dismiss Ms Coulson, albeit not immediately. Mr Collins duly took over as CEO in the Autumn and, from that point onwards, Ms Coulson said she felt that she was being “frozen out”.

In early 2018, Rentplus embarked on what they badged as a redundancy exercise, despite the fact that the number of job roles were due to increase. Ms Coulson attended redundancy consultation meetings in April and May 2018. She also submitted a grievance alleging that she had been marginalised by Mr Collins, and that her role was not genuinely redundant. Her grievance (and subsequent appeal) was rejected, and Ms Coulson was eventually dismissed by reason of redundancy.

She brought claims for unfair dismissal and direct sex discrimination. The Employment Tribunal decided that the dismissal was unfair on the basis that the decision to dismiss had been taken in Spring 2017, meaning the redundancy consultation process was a “total sham”. The Tribunal also said the dismissal was tainted by sex discrimination. Separately, the Tribunal found the grievance process to be just as much of a sham as the redundancy process.

When awarding compensation for the unfair dismissal, the Tribunal awarded an uplift of 25% due to the company’s “egregious failures” to comply with the Acas Code of Practice on Disciplinary and Grievance Procedures (the Code). However, this issue was only dealt with very briefly in the judgment.

Rentplus appealed, arguing that the Tribunal had been wrong to say the Code applied where the reason for dismissal was either redundancy or sex discrimination. Further, even if the Code did apply, the Tribunal had not identified the failings for which the uplift was being made and did not explain the basis on which it had determined the amount of the uplift.

What did the EAT decide?

The EAT noted that the Tribunal’s decision on the uplift would have benefited from a more detailed approach. However, the EAT was prepared to look at the judgment overall and consider whether, on a fair reading, the Tribunal judge had considered the four key issues.

Is the claim one which raises a matter to which the Code applies?

The EAT noted the Code applies to “disciplinary situations”. This means that there is an issue of potential misconduct or poor performance to be addressed, regardless of how it is badged by the employer. The EAT highlighted that employers cannot sidestep the Code by dressing up a dismissal that flows from one of these things by pretending it is something else, for example, a redundancy. It was also noted that a finding of discrimination does not preclude the application of the Code. For example, if an employer dismisses for perceived poor performance, which is partly a result of discriminatory assumptions, there will still be a disciplinary situation and the Code will apply.

In Ms Coulson’s case, redundancy had been rejected as the true reason for dismissal. She had been dismissed because there was a belief that there were problems with her capability and/or conduct and that belief was tainted by sex discrimination. As such, this was a disciplinary situation to which the Code applied.

If yes, has there been a failure to comply with the Code in relation to that matter?

The EAT drew a distinction between employers who attempt to comply with the Code but fall short, and those who act in bad faith and pretend to apply the letter of the Code but have already made their decision. In the former scenario, it may not be appropriate to award an uplift, whereas it may be appropriate to do so in the latter. In Ms Coulson’s case, it was clear that the Tribunal had concluded that the dismissal process was a sham, the dismissal was pre-determined and there had been a total failure to comply with the Code.

If yes, was the failure to comply with the Code unreasonable?

The EAT noted that in order for an uplift to apply, it is not enough that there has been a failure to comply with the Code, the failure must also be unreasonable. In Ms Coulson’s case the Tribunal had said the breaches were “egregious”. Therefore, it was clear that the failures in this case went beyond being merely unreasonable.

If yes, is it just and equitable to award an uplift because of the failure to comply with the Code and, if so, by what percentage?

The EAT noted that Tribunals must apply the four-stage test set out in the case of Slade v Briggs to decide whether it is right to award an uplift and, if so, by how much. Generally, Tribunals should identify the failings for which the uplift is being made by reference to the relevant parts of the Code. However, in Ms Coulson’s case, the Tribunal had said the dismissal process was a “complete sham” and Rentplus had acted in bad faith such that there was a total failure to apply the Code. Therefore, they had been entitled to award a 25% uplift.

What does this mean for employers?

This decision reminds us that the question of whether the Code applies is one of substance and not form. The key question you should ask is: do we consider the employee to be culpable for something that we wish to address in a formal process? If yes, the chances are that the Code will apply. Given the risk of an uplift, the safest course of action will be to observe the principles set out in the Code.

The decision also tells us that even if discrimination is present, there may still be a “disciplinary situation” meaning the Code applies. This is important because where action is tainted by discrimination, the usual cap on compensation is lifted. This means that the uplift for breaching the Code may be applied to a higher sum than would have otherwise been the case. Indeed, in one recent discrimination case, a 20% uplift of over £317,000 was awarded, because the overall compensation was so high.

Rentplus UK Ltd v Coulson