EMPLOYMENT LAW TRAINING AND EMPLOYMENT LAW CONSULTANCY
Section Three |
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Case Law Update - Significant decisions from the Courts |
This section includes important cases on:
Disability Discrimination "by association"
Disability Discrimination - a new approach
Age Discrimination - claims "stayed"
Age Discrimination - indirect case
Age Discrimination - impact of redundancy schemes
Age Discrimination in recruitment
Religious Discrimination - Dress Code
Religious Discrimination - civil partnerships
Equal Pay - Union agreement and Pay protection
Long term sickness and Annual leave
Transfer of Undertakings (TUPE)
Disability Discrimination "by association"
This is a significant decision by the ECJ .
Ms. Coleman looked after her disabled son, and this led her to having time off work. She alleged unfair treatment, saying she had been harassed, and called "lazy". The employer (solicitors!) apparently suggested she was using her child's disability to her advantage, causing a hostile atmosphere at work.
The Disability Discrimination Act (DDA) does not cover her, as she is not disabled. However it is felt that the DDA should provide such protection, as other forms of discrimination such as Race and Sexual Orientation do already protect people who suffer harassment "by association". The case was therefore referred to the ECJ. They decided Mrs. Coleman was protected.
This decision provides significant protection for staff who have responsibility for looking after a disabled relative. It will require the employer to "make reasonable adjustments" when dealing with the matter.
It is not an altogether surprising decision as other forms of discrimination in the UK, Race, Religion and Sexual Orientation for example already provide protection on the grounds of discrimination "by association".
When enacted in the UK, employers will need to be aware that this will also impact on requests for flexible working involving dependants. The DDA will require "reasonable adjustments" to be considered before any refusal on business grounds.
(Case; Coleman v Attridge Law. ECJ)
New Approach in Disability Discrimination Cases
The House of Lords has recently handed down a judgment overhauling the approach to be taken by the Courts and Tribunals in disability discrimination cases. Under the Disability Discrimination Act, a person discriminates against a disabled person if for a reason which relates to that person's disability he treats him less favourably than he treats or would treat others to whom that reason did not apply. This was not an employment claim, but has implications for employers.
The case involved a schizophrenic who sub-let his council flat during a period when he was not taking medication. It was held that he was not discriminated against for a reason related to his disability when the local authority terminated his tenancy and began possession proceedings. The reason for the local authority seeking possession of the flat was not related to his disability, and nor was he treated less favourably than the appropriate comparator - a person who had sub-let a flat but who did not have a disability. In so holding, the Lords ruled that the employment case Clark v Novacold, which set down the approach to comparators under the DDA, was wrongly decided.
Although this was not an employment case the Lords also confirmed this decision was binding across the entire DDA.
The House of Lords held:
- an employer can only be liable for disability discrimination if they know that the employee is disabled;
- a reason which relates to the disabled person's disability has to be construed narrowly. For example, if an employer dismisses an employee for being off sick for a year, the reason is the absence from work and not< one that relates to the underlying disability itself - which means that the employer would not be liable under the legislation;
- the correct comparator is somebody to whom the underlying reason (in the above example, absence for a year) still applies, but who is not disabled.
Commentators believe that the effect of this decision will be to make it much harder for a claimant to succeed in a claim of disability discrimination.
(Case; London Borough of Lewisham -v- Malcolm. House of Lords)
Bad behaviour at Tribunal
Bad behaviour at, or around, the tribunal can lead to further claims. An Employer met the Claimant (in a lift) on the way to the tribunal and allegedly swore and was generally threatening towards the claimant. Despite no longer being in any employment relationship at this stage, the EAT decided that a further claim of harassment could be added. The EAT felt that the incident was "closely connected with the employment relationship".
(Case; Nicholls v Corin Tech Ltd.)
Age Discrimination - claims "stayed"
Last November the President of Employment tribunals directed that all claims concerning the compulsory retirement of employees at 65 or over, be "stayed" or suspended, pending the outcome of the Heyday challenge to the European Court. This could result in a large number of claims being left in limbo, to the frustration of employees and businesses alike. The Heyday case is challenging whether the Governments decision to bring in a default retirement age at 65 is compliant with the Equal Treatment Directive.
Other age based claims, for example discrimination on recruitment, can proceed - it is only the retirement conditions that are being challenged. The European Court heard the case in early July and a decision is still awaited. A decision is not expected until next year.
Age Discrimination - indirect case
Since the introduction of the Age Discrimination rules in 2006, there has not been the rush of cases predicted by some, but they are starting to come through more regularly. Employers do need to remember that there is a risk of "indirect" discrimination when advertising.
An employer who advertised for candidates 'in the first five years of their career' committed an act of indirect age discrimination by failing to shortlist a 61-year-old woman applicant. It was clear that people of her age were likely to have had far more experience and, accordingly, be put at a disadvantage when compared to other applicants. Furthermore, the employer failed to show that the decision to appoint a cheaper, less experienced employee was objectively justified by considerations of cost.
Whilst cost consideration can be used as a defence by Employers it looks unlikely from case law that this will be allowed unless other factors are also involved.
(Case; Rainbow v Milton Keynes Council. Bedford ET.)
Age Discrimination - impact of redundancy schemes
Two cases have recently been referred to the EAT, both concerning the impact of the Age rules on aspects of the firms redundancy packages. Both cases were referred back to employment tribunal for further deliberation, so the outcome is not clear yet, but the EAT gave some guidance on this balancing act for Employers.
In one case, a Mrs. MacCulloch was made redundant by ICI plc in October 2006. At the time, she was 36 years of age and had been employed by the company for seven years. ICI plc's redundancy policy gave employees entitlement to a severance payment based on a combination of age and length of service. Her payment amounted to 55 per cent of gross annual salary. By contrast, an employee with ten years' service who had reached the age of 50 would receive 175 per cent of gross salary. She claimed that the scheme unlawfully directly and indirectly discriminated against her on the ground of age contrary to the Age Regulations, as she would have been entitled to a higher redundancy payment had she been older and/ or had longer service.
In the other case, a Mr. Loxley took a claim against BAE Systems. Amongst his claims was the fact that his redundancy package was reduced because he was older and could have access to his full pension.
The President of the EAT gave some general guidance before referring these cases back to the tribunals;
- the tribunal had been entitled to accept the employer's objective of rewarding loyalty as the reason for linking (redundancy) payments to length of service. He also approved the tribunal's finding that encouraging turnover and facilitating career progression for other staff are, in principle, capable of being legitimate aims that might be furthered by increasing payments for older workers.
- As regards ICI plc's aim of helping older employees who are particularly vulnerable in the job market, the EAT President thought that it was not necessary for ICI plc to produce evidence that older workers find it harder to obtain work than younger workers. The tribunal had been fully entitled to draw on its own experience in this respect.
- He expressly rejected Loxley's assertion that preventing employees from receiving a windfall cannot be a legitimate aim. Such an aim could be legitimate in relation both to the exclusion of over-60s and the tapering provisions adopted in the present case. Although excluding from a redundancy scheme those entitled to immediate receipt of a pension would not inevitably be justified, he considered that an employee's entitlement to pension benefits would be a 'highly relevant factor' in determining what, if any, redundancy rights he or she ought to receive.
- Finally, he endorsed the tribunal's view that the fact that a scheme has been agreed with trade unions is potentially relevant, stating;
"... any tribunal will rightly attach some significance to the fact that the collective parties have agreed a scheme which they consider to be fair". The President cautioned, however, against 'the risk that the parties will have been influenced, consciously or unconsciously, by traditional assumptions relating to age'.
It will be very interesting to see how these cases are now decided in the light of the EAT Presidents' guidance as there are many redundancy schemes which include similar rules of payment, and a number of other similar cases have been "stayed" pending the outcome here.
In the meantime Employers should consider how they might defend, on business grounds, any challenge to redundancy payments based around age and length of service. Remember that if the redundancy terms broadly "mirror" the Statutory redundancy provisions, this is exempted from the Age Discrimination rules.
Age Discrimination in recruitment
A Northern Ireland Tribunal has held that an employer discriminated against a job applicant on the ground of his age when it decided not to offer him employment. Under all discrimination laws, job seekers are protected against unfair treatment.
A 58 year old man applied for an advertised position for sales staff. Amongst other things the advert asked for "youthful enthusiasm". The candidate had 30 years experience but was rejected in favour of younger applicants after interview. At the interviews, the older man was asked a number of questions related to age and motivation, which the younger candidates admitted had not been put to them. The Tribunal was influenced by this, and by the advert wording.
Employers should be careful over the wording of adverts as words and phrases that were ok not too long ago can now cause problems.
(Case; McCoy v James McGregor and Sons. NIIT)
Tips and Minimum Wage
Tips paid to restaurant and bar staff through a "tronc" system do not count towards the minimum wage says the EAT. This overturned the tribunals' decision that tips could be counted. The EAT said that the tips were not the property of the Employer so could not be used towards calculating the minimum wage.
The DBERR has announced its intention to amend the law to ensure that tips are not used by Employers to offset or top up wages to meet NMW duties.
(Case; HMRC v Annabels Berkeley Square Ltd.)
Religious Discrimination - Two cases on Dress Codes
1. A Muslim lady has won part of her claim against a hairdressing business following a dispute about a headscarf.
She was rejected for employment by the Employer because she wore a headscarf to an interview. Her claim for direct religious discrimination failed (as the Employer claimed they would have turned down a non Muslim applicant who had their head covered by a scarf). However her claim for Indirect Religious discrimination was upheld as the Employer was not able to justify the requirement that the stylists display their hair at work for customers to see. She was awarded £4000 for injury to feelings.
(Case; Noah v Sarah Desrosiers t/a "Wedge")
2. Despite much press criticism at the time, British Airways has successfully defended its dress code against a claim of religious discrimination. The case involved a lady who wore a cross on a chain around her neck. BA's policy was that only items worn because of a mandatory religious requirement would be allowed on staff in customer facing jobs. The Tribunal ruled that as a Christian she had not been any less favourably treated than of a person of another faith, so her claims of Religious discrimination were all turned down. (It has been reported that BA has since modified its dress code allowing staff to wear a faith "symbol".)
(Case; Eweide v British Airways. EAT)
Religious Discrimination - civil partnerships
Only a tribunal decision at this point, but potentially important. A Registrar (of births, marriages) working for Islington London Borough, has won her claim of Religious Discrimination over being disciplined because of her refusal to carry out civil partnership services.
Every case revolves around the facts, and the background to this one is fairly complicated. The Council was criticised for not finding the correct balance between the rights of the lady in question, Mrs. Ladele, (who refused on religious grounds to perform same sex civil partnership ceremonies) and her gay colleagues (who were offended by her decision and took an action under the Sexual Orientation regulations). The Tribunal felt that the Council had disregarded her religious convictions, placing a greater value on the rights of those allegedly upset by her actions.
(Case; Ladele v London Borough of Islington London Central Tribunal)
Equal Pay
There have been two major decisions on Equal Pay recently.
The Court of Appeal has held that a trade union was guilty of indirect sex discrimination in achieving low-level settlements in respect of female members' equal pay claims against a council. The methods used by the union to persuade the female members to settle their claims were not a proportionate means of achieving a legitimate aim. (GMB advised some of its female members to settle their equal pay claims against Middlesbrough Metropolitan Borough Council for approximately 25 per cent of their potential value. It said that this was the best that could be achieved by way of settlement, and emphasised that lengthy legal proceedings could lead to a loss of jobs.)
(Case; GMB v Allen and others Court of Appeal)
The other case involved the widespread practice of negotiating some form of pay "protection" for those adversely affected by salary and grading changes. The complex, ongoing equal pay cases in the North East have resulted in much litigation. The most recent development has seen the Court of Appeal hold that the pay protection arrangements agreed (which were mainly to the benefit of male staff) were sex discrimination and could not be justified. The Councils "red circled" the men's pay rates, a fairly comon practice in these situations, and something a union would push hard for in negotiations. The Court said that pay protection effectively continues the discrimination and would be hard to justify.
The Equality and Human Rights Commission has suggested that these decisions could triple the number of equal pay claims to near 150,000.
(Case; Redcar and Cleveland Borough Council v Bainbridge CA)
Employment Status
The Court of Appeal has now confirmed that an agency worker does not have employee status purely through the passage of time with an end client of the Agency. Earlier cases had suggested that employment status might be implied where the worker stayed for any length of time. This is not so, as a contract of employment should only be implied where it is necessary to do so.
But still take care that you do not treat the Agency worker like one of your employees, as this might still give rise to an implied employment contract over a period of time, bringing rights like unfair dismissal and redundancy pay.
It is not how long the Agency worker stays that is important, it is how they are treated whilst working with you that counts.
(Case; James v London Borough of Greenwich CA]
Voluntary Redundancies
The EAT has confirmed that voluntary redundancies are still classed as a dismissal and have to be taken into consideration in establishing whether collective consultation is triggered.
If an employer is proposing to dismiss 20 or more employees in a 90-day period, this requires consultation with either a recognised trade union, or elected employee representatives. Unions are very keen to see that this is done. The employer in this case had 3 volunteers and selected 17 others for redundancy, but did not consult. The Trade Union took a case to tribunal and the EAT has confirmed that in total 20 employees were involved, so consultation should have taken place. This can prove to be an expensive oversight for any employer, as the sanction is up to 3 months pay for each affected employee.
(Case; Optare Group v TGW Union. EAT)
Long term sickness and Annual leave
The issue of whether annual leave accrues during long term sickness absence has been concerning employers recently. Originally it was decided (at the EAT) that holiday pay did accrue during sickness absence that extended over a year, but the outcome was unsatisfactory and was overturned later by the Court of Appeal. As the problems are created by the Working Time rules, the matter has been referred to the European Court. A preliminary decision by the Advocate General has now been delivered - although it is not binding and the full Court does not always follow this (makes you wonder why they have this stage then!).
The opinion was that holiday entitlement does accumulate during long-term sickness absence. As the main Court does not have to follow this, further guidance will follow the full decision later this year. Do note that whatever the outcome it will only apply to Statutory Holiday rights, not any additional contractual holiday days. In the meantime, any employees dismissed after a long absence may try to claim holiday entitlement. If this results in a tribunal claim being made it will be put on hold until the outcome of this case is known.
(Case; Stringer v HMRC)
Transfer of Undertakings (TUPE)
Since 6 April 2006, when the Transfer of Undertakings (Protection of Employment) Regulations came into force, there have been two different (although not mutually exclusive) kinds of 'relevant transfer'. The first is a 'standard transfer', which occurs where an economic entity changes hands and retains its identity post-transfer. The second is a 'service provision change' (SPC), which can occur when an outsourcing, insourcing or re-tendering exercise takes place. Upon a relevant transfer, the transferee, or incoming employer, takes over the employment contracts of those employed by the transferor immediately before the transfer and assumes all the rights, powers, duties and liabilities which the transferor had under those contracts.
In this case, functions previously performed by the Home Office were transferred to two separate businesses. The Home Office employer dismissed those engaged in the work, who pursued claims for unfair dismissal. The Tribunal attempted to apportion the liabilities between the two new service providers, but the EAT ruled this was not the correct approach.
Where two companies took over a service contract previously performed by one company, liability for the transferring employees passed to the company that took up the activities to which they had been assigned before the transfer, which in this case meant the company that took up the greater part of the outgoing company's activities. An employment tribunal had not been entitled to apportion liabilities for the transferred employees between the two companies on a percentage basis.
(Case; Kimberley Group Housing v Hambley and ors. EAT 2008)
Holiday Pay on termination
Some Employers have an option in their employment contracts that when an employee resigns, or is dismissed, they can be required to take holiday for some (or all!) of the notice period.
In this very recent case, the employer gave Mr Briffa one week's notice of termination of his employment. It required him to take 4 days holiday in his last week to use up his outstanding entitlement. He objected and went to Tribunal arguing that this breached his rights under the Working Time regulations. The EAT ruled that it did not breach his rights. The original tribunal had totally overlooked that the basic requirement in the WT Regs to give notice of holidays can be varied or excluded by a "relevant agreement". In this case there was a contractual term that covered the position and was legally enforceable between the parties. This was a "relevant agreement" and therefore overrode the statutory notice on holiday rights.
(Case: Industry and Commerce Maintenance v Briffa EAT)