Employment Review - December 2009
In this month’s review we look at recent cases relating to the level of compensation in discrimination cases and the obligation to inform and consult under TUPE. We also consider two recent decisions concerning Tribunal hearings involving a biased employment judge and an employer forging documents.
Matt McBride
A dismissing employer can be liable for “stigma” compensation where other employers are unwilling to employ the dismissed employee because he brought discrimination proceedings.
Mr Chagger, who was Asian, worked for Abbey National and was selected for redundancy from a pool of two. The other employee in the pool was a white woman. The Employment Tribunal found that he had been unfairly scored because he was Asian and awarded compensation in excess of £2.7 million. This was calculated on the basis that despite making extensive efforts to mitigate his loss, he would never again be able to obtain employment in the financial services industry.
Two important aspects of the Tribunal’s decision were:-
* When considering the level of compensation, it did not believe it was required to consider whether Abbey would have selected Mr Chagger for redundancy if it had not discriminated against him
* Mr Chagger should not be compensated for any “stigma” he had suffered in the job market as a consequence of taking legal proceedings against Abbey.
In relation to the first of these issues, the Court of Appeal disagreed with the Tribunal and held that it is necessary for a Tribunal to consider what would have occurred had there been no unlawful discrimination. If there was a chance that dismissal would have occurred in the absence of discrimination this must be factored into the calculation of loss.
In this case, there was clearly a potential that Mr Chagger would have been dismissed even if the redundancy selection had taken place on a non discriminatory basis since he was one of only two candidates in the selection pool. The Tribunal should therefore have reduced compensation to reflect the chance that he may have been dismissed in any
event.
In relation to the issue of “stigma” damages, the Court of Appeal held that it was right to hold a discriminating employer liable for financial loss suffered by the employee due to the stigma attached to bringing a discrimination claim.
However, it stated that Tribunals should take a sensible and robust approach, compensating for stigma loss only where the employee can adduce compelling evidence that they have been prejudiced in the labour market by virtue of bringing proceedings.
What does this mean for Employers?
As mentioned by the Court of Appeal, “stigma” damages are already a fact in discrimination cases in the sense that the Tribunal will consider for how long an employee is likely to be out of work and part of that consideration will involve any stigma attached to the fact that the employee has raised a discrimination claim.
The case does however highlight the potentially significant compensation available to an employee who is subject to discrimination and can successfully argue that due to bringing a discrimination claim, “I will never work in this industry again”.
Da’Bell v NSPCC
This case formalises the inflationary increases in the Vento bands of discrimination awards.
Employers should be familiar with the case of Vento v Chief Constable of West Yorkshire Police which set out the bands of award for injury to feelings in discrimination cases.
Since the Vento decision was made in 2002, we have found that tribunals have recently been applying informal increases to the bands to reflect inflation.
This position has now been clarified by the Da’Bell case. The bands for injury to feelings award in discrimination cases are now therefore:
*Lower band £500 - £6,000
(increased from £5000)
*Middle band £6,000 - £18,000
(increased from £15,000)
*Higher band £18,000 - £30,000
(increased from £25,000)
Cable Realisations Limited v GMB Northern
In this case, the EAT explored the link between the obligation to provide information to appropriate representatives under TUPE and the obligation to consult.
On 15 August 2007 Cable Realisations (”Cable”) received a “measures letter” from its potential purchaser advising that the purchaser envisaged taking no measures in relation to transferring employees. On the same day Cable provided the GMB union with the information required by Regulation 13(2) of TUPE and met with Union representatives. At a further meeting on 17 August 2007 the company answered the Union’s questions
arising from that information.
Cable’s annual two week shut down took place between 20 and 31 August 2007 and the business was sold on 3 September 2007.
The GMB brought claims on behalf of its members that Cable had failed to comply with its obligations to inform and consult under TUPE.
The Tribunal held that Cable had breached Regulation 13(2) of TUPE by failing to provide the necessary information to the Union long enough before the transfer on 3 September 2007.
In the light of the annual shut down, during which the vast majority of union members were not at work, there had been insufficient time between 15 August and 3 September to consult.
The Tribunal awarded 3 weeks pay to each of the Union’s affected members.
Regulation 13(2) of TUPE requires the employer to provide certain information to appropriate representatives of the affected employees. This information must be provided “long enough before a relevant transfer to enable the employer to consult with appropriate representatives”.
Regulation 13(6) states that an employer who envisages that he will take measures in relation to affected employers should consult with appropriate representatives of that employer with a view to seeking their agreement to the intended measures.
The essence of the Tribunal’s decision was that whilst it acknowledged that there was no requirement to undergo a mandatory consultation with the union (because no measures were anticipated), the information should have been provided long enough before the transfer to enable voluntary consultation to take place about matters other than measures. Due to the shutdown, this was not possible, hence the protective award of 3 weeks pay per employee.
The EAT upheld the award of 3 weeks pay per employee.
The maximum protective award under TUPE is 13 weeks pay per affected employee and case law has suggested that this award is penal rather than compensatory and should therefore be applied save in exceptional circumstances. Here since some information was provided, and there was no mandatory consultation required, but there had nevertheless been a failure to allow time for voluntary consultation an award of 3 weeks pay was, in the EAT’s own words “like baby bear’s porridge, just right”.
What does this mean for employers?
Employers who fail to comply with their information and consultation obligations under TUPE remain exposed to significant financial awards and the possibility of an award of 13 weeks pay per affected employee. The Cable Realisations case suggests that Tribunals are prepared to make a lower award where there has been some, albeit insufficient, compliance with the Regulations.
It is important to note that even if no measures are anticipated within the strict meaning of the term, information should be provided long enough before the transfer to enable some form of consultation to take place with appropriate representatives.
RG Bespoke Joinery Limited v Mr Dobson - the test for bias
In this case, the respondent to the original proceedings, RG Bespoke Joinery Limited, successfully appealed against a finding against them on the basis of bias on the part of the Employment Judge. The particular allegation was that the Employment Judge had indicated at the outset of the proceedings that the employer’s lack of legal representation put him at something of a disadvantage. The employer also complained of being constantly interrupted by the Employment Judge.
The case reminds us of the test for bias which is asking whether “the fair minded and informed observer, having considered the facts, would conclude that there was a real possibility that the Tribunal was biased”. The Scottish EAT held that in this case, whilst the neutral observer would not definitely have concluded that there was bias, the observer would have concluded that there was a real possibility that the Tribunal was biased and the Tribunal’s decision was therefore overturned.
This case is therefore a reminder that a participant in Tribunal proceedings who feels that a Tribunal did not give him a fair hearing, does not have to show that the judge was biased, but whether the fair minded and informed observer will conclude that there was a real possibility the Tribunal was biased.
A cautionary tale for all participants in employment tribunal proceedings.
Susan Moffatt was dismissed by her employer, a car hire firm and claimed £1,750 in compensation. She claimed she had been paid her wages in cash and had never been given any contract of employment.
At the employment tribunal, her employer, Mr Robinson, produced a contract of employment and a letter of warning he alleged had been signed by Miss Moffatt.
Miss Moffatt denied seeing the items and later produced copies of her signature which differed from those on the documents. The documents produced by Mr Robinson were found to be forgeries.
A later Tribunal found in Miss Moffatt’s favour and she was awarded £29,500.
The Tribunal asked the police to contact Mr Robinson, who was eventually jailed for 4 months for perverting the course of justice.
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.
David Potter
Cumberland Court,
80 Mount Street,
Nottingham NG1 6HH
Tel: 0115 936 9389
Fax: 0115 859 9617
david.potter@freethcartwright.co.uk
Joanne Kay
Floor 2, West Point,
Cardinal Square,
10 Nottingham Road,
Derby DE1 3QT
Tel: 0845 634 1724
Fax: 0115 859 9617
joanne.kay@freethcartwright.co.uk
Julian Middleton
One Colton Square,
Leicester LE1 1QH
Tel: 0845 634 2598
Fax: 0845 634 2595
julian.middleton@freethcartwright.co.uk
Pat Jones
St James Building,
61-95 Oxford Street,
Manchester M1 6FQ
Tel: 0845 634 2561
Fax: 0845 634 2541
pat.jones@freethcartwright.co.uk
Vanessa DiCuffa
3rd Floor, 75 Colmore Row
Birmingham B3 2AP
Tel: 0845 634 2584
Fax: 0845 634 2576
vanessa.dicuffa@freethcartwright.co.uk
Banking & Finance / Business Services / Corporate Finance / Construction / Employment / Public Sector /Real Estate / Services for Individuals / Taxation
Offices in: Birmingham, Derby, Leicester , Manchester and Nottingham