Employment Review - May/June
It is well established law that in order for an employee to be entitled to resign their employment and claim constructive dismissal the employer must have committed a ‘repudiatory’ breach of contract. However, the circumstances as to what might constitute a repudiatory breach of contract have always been more complex. A repudiatory breach of contract does not necessarily have to be one isolated incident and can be a series of incidents over time.The government’s policy of aiming, insofar as possible, to introduce new employment legislation only twice yearly means that we have not seen a wealth of new legislation in May but this is more than made up for by the copious amount of case law.
The Employment Appeal Tribunal (the EAT) has been considering whether belief in climate change can be a philosophical belief; what evidence is required in applying for an extension of time in the ironically entitled Accurist Watches v Wadher case; in North Tyneside Primary Care Trust v Ms Aynsley we hear the refreshingly frank and honest comments by the President of the EAT about certain parts of the, thankfully, outgoing Employment Tribunal rules of procedure; there are two interesting constructive dismissal cases, a lesson in lying (or should we say not lying) at Tribunal and we look at the government’s announcement providing details of its new ‘fit note’ to replace the old sick note.
Whilst many of the cases featured in this month’s review are at EAT level, we also report on the important Rolls Royce case in the Court of Appeal addressing whether the use of length of service as a criterion in redundancy selection is unlawful age discrimination.
The time sponsored by….
A procedural pigs’ breakfast
A range of reasonable reponses test in constructive dismissal?
Constructive dismissal - The last straw
Going underground
Part time
The truth, the whole truth and nothing but the truth
Tupe transers and paying the price for the behaviour of a former employer
It’s all part of the service
‘On the fiddle’ or ‘fit as a fiddle’?
Belief in climate change can be a philosophical belief
Using length of service in redundancy selection criteria
New national minimum wage rates
The time sponsored by….
In the aptly named Accurist Watches v Wadher the EAT considered whether to allow a claim for age discrimination which had been presented five weeks out of time. In making the application for an extension of time in which to submit the claim, the Claimant had not given any oral evidence about the reason for the delay. He had relied on medical reports and other documents.
The EAT concluded that it was not necessary for the Claimant to give oral evidence and that the Judge in the Employment Tribunal was entitled to find that it was just and equitable to extend the time limit even though there were certain deficiencies in the materials before him.
A procedural pigs’ breakfast
In North Tyneside Primary Care Trust v Ms Aynsley and Others the Employment Tribunal had made an Unless Order against the Trust. The Order had required the Trust to disclose various information about comparator groups by 20 May 2008. The relevant information was not disclosed within time and the Employment Judge therefore struck out the Trust from the proceedings. A review hearing was due to take place in the same matter on 16 July 2008 by which time the Trust had complied with the disclosure requirements. However, the Employment Tribunal refused to review its original decision, stating it could not do so under the relevant rules.
The EAT decided that the decision to review the earlier strike out could be reconsidered under the Employment Tribunal Rules. The President of the EAT stated that the breach of the Unless Order was only one matter which had been considered in deciding whether to strike out the Respondent from the proceedings. The Employment Judge in the original Employment Tribunal proceedings had overstated the amount of non-compliance. In addition to that reasonable explanations have been provided for gaps in providing information. As a result, the Tribunal judgment striking out the Respondent was set aside.
The case is most notable for the President’s comments about the outgoing Employment Tribunal procedural rules in which he described this aspect of those rules as a ‘procedural pigs’ breakfast’.
A range of reasonable reponses test in constructive dismissal?
In another EAT case, Bournemouth University Higher Education Corporation v Buckland, the EAT considered an argument as to whether the seminal ‘range of reasonable responses test’ should be used in looking at whether an employee has been constructively dismissed.
The range of reasonable responses test is one of the foundations of any Employment Tribunal decision in a claim of unfair dismissal.
Both the Court of Appeal and House of Lords have previously clarified that this test does not apply in constructive dismissal claims which, by their very nature involving resignation of employees, require a different analysis of why the employee resigned their employment and whether that dismissal was unfair. In the Bournemouth University case, the EAT has provided further guidance on the correct approach in looking at whether there has been a constructive dismissal. It made it clear that the range of reasonable responses test should not be used in considering whether an employee has been constructively dismissed.
The EAT’s decision provides useful guidance on the correct approach in considering whether there has been a constructive dismissal and, notably, whether an employer which has breached the implied duty of trust and confidence can cure that breach.
Professor Buckland resigned his employment from the University after his marks were overturned without his knowledge.
The Employment Tribunal held that the University’s actions were a breach of the implied duty of trust and confidence. It also held that the University had not cured the breach by way of the grievance process.
The University appealed to the EAT which did not accept the University’s argument that a range of reasonable responses approach should be used when looking at whether the employee had, effectively, been dismissed through the University’s actions. The EAT did go on to decide, however, that the Employment Tribunal had been incorrect in deciding that the grievance process had not cured any breach of the implied terms.
This is a particularly interesting case from a practical point of view because it makes clear that even when there has been a serious breach of contract an employer can, through the use of a grievance process properly conducted, rectify any such breach and therefore defeat a claim.
Employers should ensure that those who conduct grievance processes within the organisation are aware that this is an opportunity to avert claims. The procedures are often seen as a tick box exercise.
Constructive dismissal - The last straw
The Employment Appeal Tribunal has confirmed that it is essential for a Tribunal, in considering a constructive dismissal claim, to identify the ‘final straw’ when considering whether a Claimant is entitled to resign his employment and claim constructive dismissal.
It is well established law that in order for an employee to be entitled to resign their employment and claim constructive dismissal the employer must have committed a ‘repudiatory’ breach of contract. However, the circumstances as to what might constitute a repudiatory breach of contract have always been more complex. A repudiatory breach of contract does not necessarily have to be one isolated incident and can be a series of incidents over time.
In Wishaw and District Housing Association Limited v Moncrieff the EAT clarified that where a Claimant is relying on the doctrine of final straw in leaving his employment and claiming constructive dismissal, the Employment Tribunal must clearly identify what the final straw was.
In the Wishaw case the EAT held that a letter from the Respondent threatening to consider possibly dismissing the Claimant because of his long term absence and a letter from the Respondent’s representative offering to deal with the Claimant’s grievance internally, when he had been offered external mediation before that, could not objectively constitute a last straw event entitling the Claimant to resign and claim constructive dismissal.
The practical issue arising from this case both for employers and employees is that in bringing or defending a constructive dismissal claim at Employment Tribunal, it is essential that the Claimant, if relying on a series of incidents, establishes the incident which finally caused him to leave his employment and bring a claim.
In Carter v London Underground Limited the Claimant brought his disability discrimination claim a year out of time, an exceptionally late claim in any circumstances.
However, the EAT was keen to make clear that, whilst the delay was substantial, the particular circumstances involved were such that it might be possible even with such a delay, for a claim to be accepted on the basis that it would be just and equitable to do so.
In this particular case the Claimant had suffered very severe depression which had a serious impact on his ability to make decisions about legal proceedings. The EAT also stated that a relevant consideration here was that the discriminatory act in question had played an important part in the Claimant’s mental deterioration. In addition to that, the Respondent could not show any serious evidence that the delay had prejudiced it.
In another EAT case, Carl v The University of Sheffield, the EAT decision gave rise to two important issues in claims by part time workers.
Where a Claimant wants to establish that there has been unlawful less favourable treatment of him than of a full time worker, he must be able to point to a real comparator who amounts to a comparable full time worker.
On a second and important point, the EAT stated that it was not necessary to show that any less favourable treatment was only on the grounds of part time status. It was held that part time working must be the effective and predominant cause of the less favourable treatment but it did not have to be the only cause.
The truth, the whole truth and nothing but the truth
In another EAT decision, in the case of Daleside Nursing Home v Mathew the EAT provided clear authority that where the main allegation in a discrimination claim is a lie, it would be perverse for the tribunal to conclude that such a lie does not constitute unreasonable behaviour when considering whether to make a costs order.
Ms Mathew alleged that she had been called a ‘black bitch’ by her manager. After hearing the evidence the Employment Tribunal did not believe this to be true. The discrimination claim failed but the Tribunal did not make a costs order. The basis for the Tribunal’s decision in not awarding costs against the Claimant was that it decided that the Claimant had a genuine belief in her claim generally for discrimination and she had not, therefore, acted unreasonably.
The EAT, overturning that decision, held that the finding of fact made by the original Tribunal that the Claimant had lied about such a serious allegation was sufficient to justify a further finding that the Claimant had acted unreasonably in bringing and conducting the proceedings. The EAT concluded that it was wrong in law to reject the claim for costs.
Tupe transers and paying the price for the behaviour of a former employer
In Rank Nemo (DMS) Limited v Coutinho the Court of Appeal held that an ex-employee could bring a claim for victimisation against an employer who failed to pay an award of £72,000 for race discrimination and unfair dismissal.
The case establishes that where an employer fails to pay a tribunal award this may give rise to a separate claim of victimisation by the employee who was successful in obtaining an Employment Tribunal decision against the employer.
An interesting side issue in this case is that Mr Coutinho brought a claim for race discrimination and unfair dismissal after his employment was supposed to transfer from his original employer to a new employer under the TUPE Regulations. A decision was made that the new employer, despite never employing Mr Coutinho in practice, should pay an award of £72,500 for race discrimination and TUPE unfair dismissal following the dismissal by the predecessor company.
This is a salutory lesson to employers that they should carry out a detailed investigation of employees they may be taking on where they acquire a business or a new contract. It is also a reminder that the risks and liabilities relating to employees in these circumstances can be significant.
The government has stated that it will legislate, from 1 October 2009, to prevent tips being used as part of an employee’s wage for the purpose of calculating the national minimum wage.
Currently the National Minimum Wage Regulations 1999 provide that service charges, tips, gratuities and cover charges that are not paid to workers through the payroll system do not count towards the national minimum wage. However, when such payments are collected by the employer and paid through payroll, they do count towards the national minimum wage.
The government has stated that it will introduce this new legislation to keep interpretation as simple as possible and to ensure that there is clarity for the consumer. All the different forms of tip, however paid, will not now form part of an employee’s wages in deciding whether they are currently paid the national minimum wage.
‘On the fiddle’ or ‘fit as a fiddle’?
The Department for Work and Pensions has entered into a consultation process about the design of a new medical ‘fit note’ which will replace the current sick note. The idea is to help more people stay in work rather than drifting into long term sickness and was unveiled on 28 May 2009 along with a 12 week consultation on the design of the note.
Lord Bill McKenzie, the Work and Pensions minister, has hailed this as a response to employers who report that managing sickness absence is a significant challenge compounded by a sick note system that makes sickness absence a black and white issue rather than an employee either being unfit for work or not.
The new note has been developed with the support of health care professionals, employer representatives and trade unions and will roll out across Great Britain in the spring of 2010.
The stated goal is that under the new system sick notes will be computer generated in GP surgeries and replace the current handwritten version.
The concept behind the new ‘fit note’ is that it will enable people to get the best possible advice about staying in work and, if they can’t work, what the employer can do to help them to return to work as soon as possible. The example given by the Department for Work and Pensions is that if an employee has a problem with mobility, suggesting a job where they can work sitting down rather than standing up would be a possible solution to allow them back into work more quickly.
Whilst this looks like a subtle change of emphasis and not particularly ground breaking, nevertheless it is to be hoped that it might provide an easier transition back to work for employees who are off work, in particular those on long term sick, with the associated benefits to employers.
Belief in climate change can be a philosophical belief
The case of Nicholson v Grainger Plc and Others, whilst an Employment Tribunal decision and therefore subject to appeal to the EAT, is nevertheless important.
Mr Nicholson was dismissed from his position as head of sustainability on 31 July 2008 for redundancy. Mr Nicholson then lodged several claims including one asserting that he had been dismissed because of his belief in climate change. He stressed that his views were not just an opinion, his philosophical belief affected almost every aspect of his life including his choice of home, how he travelled and what he ate.
Having regard to case law before the European Court of Rights, where that court had stated that for a belief to qualify for protection it must have sufficient cogency, seriousness, cohesion and importance as well as being worthy of respect in a civilised society, the Tribunal found that Mr Nicholson’s beliefs about climate change did amount to a philosophical belief within the Employment Equality (Religion or Belief) Regulations 2003.
The employer in this case has stated that it will appeal the decision. Even if the EAT upholds the decision that Mr Nicholson’s beliefs fall within the regulations he would still have to show that the reason for his dismissal related to his beliefs. The Employment Judge in this case has stated that there are unlikely to be many cases where this could easily be shown. The same Judge also emphasised that a decision in favour of Mr Nicholson should not be seen as the ‘thin end of a wedge of similarly based complaints’.
Using length of service in redundancy selection criteria
In an important decision for all employers the Court of Appeal has upheld the EAT decision in Rolls Royce Plc v Unite the Union that the inclusion of a length of service criteria in a redundancy selection policy was a ‘proportionate means of achieving a legitimate aim’, making it potentially lawful to use this criteria in a redundancy process.
The Court of Appeal held that the legitimate aim was to reward loyalty and create a stable work force in the context of a fair redundancy selection process.
Again of particular practical importance is that the Court of Appeal stated that in this case it was proportionate to use length of service as a criterion because it was just one of many criteria used and was not determinative of the selection.
On the one hand this case removes the argument about whether the use of length of service is lawfully possible but at the same time it should be read in context. The use of such a criterion will only be acceptable if the other circumstances and, specifically criteria, make the selection process fair overall.
The Court of Appeal also gave its views on the separate issue of whether the use of length of service criteria could fall under the heading of being a ‘benefit’ within the Employment Equality (Age) Regulations 2006. The Court’s view was that the use of such a criterion could be a benefit. This has implications for employers in that it will assist in defending the use of the criteria. However, it should be noted that this was a view expressed by the Court of Appeal and not the main thrust of its decision. It is not, therefore, binding but it does give another line of argument for an employer in defending the use of length of service in a redundancy selection process.
The outcome of this case is good news for employers in that length of service can be used as a criteria in redundancy selection. However, as always, it should not be assumed that using length of service will automatically be seen as fair. Courts and tribunals will look at the circumstances as a whole and may well expect to see other criteria used alongside length of service to establish the correct balance and therefore fairness.
New National minimum wage rates
As from October 2009 the new rates for the national minimum wage are as follows:
• For workers aged 16 & 17 the minimum wage increases from £3.53 to £3.57.
• For workers aged 18-21 the minimum wage rises from £4.77 to £4.83.
• For workers aged 22 and over the minimum wage will rise from £5.73 per hour to £5.80 per hour.
The government has also announced that the adult rate will be extended to 21 year olds from October 2009 following a recommendation by the Low Pay Commission.
The rise in the national minimum wage comes despite business groups pushing for it to remain at current levels in view of the current economic climate. The Low Pay Commission has emphasised in its annual report that this year’s increase is smaller and does take into account prevailing economic conditions. Notably, the minimum wage had previously been rising faster than average earnings but that is not now the case.
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This update is only a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist advice should be sought from a member of the Freeth Cartwright Employment Team in relation to any queries that may arise.
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