Employment Law Update

Welcome to the latest issue of the Steptoe & Johnson Employment Law Update. This update is now published monthly to respond to the ever increasing growth in employment legislation and case law.

The Employment Law Updates are aimed at providing information on recent developments in UK employment law. It is our desire to provide you with not only an update of the law, but also a practical insight in managing workplace issues on a proactive basis.

To achieve our objectives and to continuously improve the Updates, it is important that we receive feedback from you. With a view to this, please e-mail any comments or suggestions which you may have relating to the Updates to employmentgroup@steptoe.com.We look forward to hearing from you. 

1. Information and Consultation

The Information and Consultation of Employees Regulations 2004 are set to apply to undertakings of 100 or more employees on 6 April 2007. The aim of the Regulations is to promote dialogue between management and the workforce so that those most affected by major decisions have a voice and are actively involved in the decision-making process. In April 2008, employers employing 50 or more employees will also be included in the Regulations. Steps should be taken by employers to ensure they meet their obligations by means of existing agreements on information and consultation.

Amicus v Macmillan Publishers Ltd IC/8 (2006)

The Central Arbitration Committee has ruled against Macmillan Publishers for failing to respond properly to an employee request for information and consultation. Indeed the CAC was highly critical of the employer and the case is a salutary lesson in how not to respond to a request under the ICE Regulations 2004.

2. Expired Disciplinary Warnings

Airbus UK Limited v Webb UK EAT/0453/06/DA

In this case the EAT held that expired disciplinary warnings had to be ignored when deciding which disciplinary sanction to give an employee. The Court had to decide whether an expired warning must be treated for all purposes as if it had never occurred or not. If it is considered and is decisive of the decision to dismiss, that dismissal is inevitably unfair. Mr Webb was caught allegedly watching television when he should have been working. More than a year earlier he had been warned about washing his car when he should have been working. He was dismissed and succeeded in claiming unfair dismissal as the Company relied on the previous warning.

3. Industrial Deafness

Ali v Courtaulds Textiles Limited BLD 280 599 592

Seven test cases for industrial deafness were dismissed by the Judge at Nottingham County Court recently. The Claimants had been employed in the textile industry and alleged they had suffered noise induced hearing loss from working in an environment of in excess of 75 decibels. The current legal threshold is 90 decibels. According to Health and Safety Executive Guidelines, average levels of about 78-85 decibels amounts to noise levels on a busy street. The Judge dismissed the employees' claims on the grounds that the risk of damage to hearing below 85 decibels was so small that there could be no employer's liability for breach of duty for exposing employees to such levels. This is the first time that any court has made a definitive ruling on the point. If the Court had found in favour of the Claimants, the case would have opened the floodgates for claims by thousands of other claimants, particularly those working in the industrial, leisure and other sectors.

4. Redundancy and the Statutory Dismissal Procedures

Wareing v Stone Cladding International Ltd BLD 2002 070679

The employee was a site manager and when his project fell behind the client of the main contractor brought in his own workforce to finish the project. The employee was dismissed and brought a claim for unfair dismissal. The Tribunal found that the reason for the dismissal was redundancy and ruled that the employer should have written a letter to him warning him that dismissal was being contemplated and to invite him to a meeting to discuss this before any decision was made. However, the Tribunal decided the dismissal had not been unfair because what would have otherwise been an automatically unfair dismissal by reason of a failure to comply with the statutory procedure would not be so if the employer established that he would still have dismissed the employee in any event. The employee appealed and the appeal was allowed. It was common ground that step 1 of the standard procedure was not complied with. Thus, the Tribunal should have concluded that the employee was automatically unfairly dismissed by his employer. He was entitled, therefore, to compensation.

Loosley v Social Action for Health UK EAT/0378/06DA

The Tribunal found that the employer had not followed a fair procedure in failing to consider the employee for a job that would have been suitable alternative employment in place of redundancy. The employer was influenced by a third party which preferred another employee for the role. The third party was funding that role. On the basis that the employer would still have dismissed the employee had he followed a fair procedure, the Tribunal held the dismissal was fair. The Employee Appeal Tribunal upheld that decision.

5. Who is a Worker?

James v Redcats (Brands) Limited UK EAT/0475/06/DM

The EAT in this case provided a lengthy analysis of the meaning of the word 'worker'. Although the decision is in the context of the Minimum Wage Legislation, it is important for other areas of employment law. The Court found that the essential question is whether the obligation for personal service is the dominant feature of the contractual relationship or not. If it is then the contract lies in the employment field. The case also considered issues relating to mutuality of obligation. Mrs James worked as a courier, providing her own vehicle, to deliver packages for mail order companies. The case was remitted for further consideration by a fresh Tribunal as to whether she was a worker or not.

6. Restrictive Covenants

Thomas v Farr PLC 2007 EWCA Civ 118

A twelve month post termination non-compete restrictive covenant for the Managing Director of an Insurance Broker was upheld in this case. The Court, in a judgment considering many of the authorities on such covenants, upheld the enforceability of the clause. Because of his role, as Managing Director, it would be difficult to police his activities and therefore upholding a reasonable non-compete of twelve months was acceptable and not against public policy.

7. Disability Discrimination

Hay v Surrey County Council BLD 1902070630

This case concerned a 43 year old Mobile Library Manager who had problems with her left knee. The local authority made efforts to re-deploy her but she declined a new role. The Court considered the authority's duty to make reasonable adjustments when she brought a claim for unfair dismissal and disability discrimination. The Court of Appeal held that if the employer had carefully considered the employee's work in light of professional advice then they needed to do no more. A 'formal' risk assessment, which had not been carried out, would have added nothing because it would have had to be on the basis of that advice. It was therefore wrong of the Tribunal to demand that the authority should have taken steps to enable the employee to continue in a job for which she was medically unfit.

Folet v Waltham Forest UK EAT/0116/06/DM

The EAT has handed down this decision confirming that it will not normally be incumbent on employers to pay salary to those on long-term sick, who qualify as disabled as a reasonable adjustment under the DDA 1995. Reaffirming its earlier decision in O'Hanlon the EAT held that such an adjustment was not reasonable because it would not help the employee return to work.

Working with Cancer

The CIPD, in association with Working with Cancer charity, has produced a booklet entitled 'Cancer and working: guidelines for employers, HR and line managers'. It contains guidelines on best practice for employers dealing with employees suffering from cancer, together with information on adjustments that can be made. Complimentary copies are available on request.

8. Minimum Wage

Leisure Employment Services v HMRC 2007 EWCA Civ 92

The Court of Appeal has held in this case that a deduction from wages of £3 per week in respect of a payment for gas and electricity was part of the provision of living accommodation in respect of which the employer had already taken advantage of the maximum allowance and, in the alternative, that the deduction was for the employee's own use and benefit. Accordingly, the employer could not count the £3 per week towards the employee's wages. This in turn meant the employer was in breach of the National Minimum Wage legislation.

9. Managed Service Companies

HMRC v HM Treasury

HMRC and HM Treasury have published draft legislation which will make certain third parties liable for the unpaid PAYE debts of the managed service companies (MSC) from April 2007. Those that may be caught include anyone who has encouraged, facilitated or been involved in the MSC arrangements. This could include employment businesses, end-user clients and the individual worker whose services are provided via the MSC.

10. Data Protection Act

Requests

The Information Commissioner's Office has published a Good Practice Note in the form of a checklist for small and medium sized organisations when processing requests for information under the Data Protection Act 1998. This note includes practical guidance on matters such as when a request should be dealt with in the normal course of business rather than a formal subject access request under the Act how and when the identity of a request should be verified and the circumstances in which an organisation may not be obliged to supply information under the Act. Complimentary copies of the Note are available on request.

Breaches

The Lord Chancellor has announced that the Government will amend the Data Protection Act 1998 to introduce custodial penalties of up to tow years' imprisonment for people and organisations found guilty of breaching s.55 of the Act. S.55 makes it a criminal offence to obtain or disclose or procure the disclosure of personal data from Data Controllers without their consent. It is also an offence to sell personal data that are illegally obtained.

11. Statutory Grievance Procedure

Odoemelam v Whittington Hospital NHS Trust UK EAT /0016/06/DM

The Employment Appeal Tribunal held in this case that an employee does not need to raise a grievance against a fellow employee in accordance with the statutory grievance procedures in order for a Tribunal claim against that employee to proceed. Thus, an employee does not need to set out the grievance in writing and then wait 28 days before proceeding.

12. St Andrews' Day

The Scottish Parliament has passed an act making St Andrews' Day, November 30, a Bank Holiday. Provision has also been made for the Bank Holiday to be carried over to the following Monday if November 30 should fall on a weekend. It is uncertain what effect the new St Andrews' Day Bank Holiday will have when the new working time regulations increase the statutory entitlement to paid holiday from 4 weeks to 4.8 weeks from 1 October 2007, and from 4.8 weeks to 5.6 weeks on 1 October 2008, subject to a maximum statutory entitlement of 28 days.

13. Appeals and the Statutory Dismissal Procedures

Khan and another v the Home Office BLD 0602070474

The employees had been employed as interpreters at an airport terminal since 1979. There was a history of sick leave, special leave, alternative work offers and then termination on the grounds of redundancy. The employees brought claims that they had been unfairly dismissed and submitted that their dismissals were automatically unfair pursuant to section 98A(1) on the grounds that the employer had failed to comply with the statutory procedure. Step 3 of the procedure requires that there be no unreasonable delay in the hearing for appeal where there was a delay of three months with nothing happening in an internal appeal this was unreasonable absent an explanation and the Court held the dismissals were automatically unfair.

14. TUPE

Computershare Investor Services PLC v Jackson UK EAT/0503/06

This Employment Appeal case held that an employee who, following a transfer, joined the transferee's benefit scheme which calculated benefits on the basis of length of service, was entitled to benefits on the basis of her service only since the date of the transfer, not her full period of continuous employment. TUPE could not be used to create rights that did not exist prior to the transfer. The start date of her period of continuous employment was for statutory purposes and did not apply to service for all purposes.

15. Pensions

The Pensions Regulator has issued guidance dealing with inducement offers that employer may make to members of defined benefit schemes to transfer their accrued benefits into money purchase schemes. Typically, these offers take the form of enhanced transfer values or cash incentives or both. The Regulator advises that employers and pension trustees must give scheme members full and proper advice so that they understand the implications of transferring out of the scheme. The guidance also contains a checklist of points that offers should cover. Complimentary copies are available on request.

16. When is a contract not a contract?

Ministry of Defence Dental Services v Kettle UK EAT/0308/06LA

This is a useful decision summarising the position where a Tribunal is entitled to look outside the terms of written documentation to determine the terms of a contract of employment. The case concerned Dr Kettle who was a specialist orthodontist consultant. The job advertised was for a salaried part-time employment in a clinic but the contract documentation produced to her as the successful candidate was suitable for an independent contractor. The Tribunal had to consider whether she was an employee or not where the contractual documentation did not match the offer. The conclusion of the Tribunal was that she was an employee.

17. Government Schemes to Promote Work Life Balance

The Government has launched a new scheme to reduce the gender pay gap and promote a better work life balance. The schemes introduced include on-line job share registers, projects to retain women at senior management level, flexible working intranet sites, and parent support groups. A new Quality Part-Time Work Fund is available to employers to finance consultants to provide advice when creating and retaining more part-time jobs for women at senior level.

18. Strike Out of Claim

Essombe v Nandos Chickenland Limited BLD 01030070849

The Employment Tribunal struck out Mr Essombe's case although this was a draconian order, where he refused to comply with an order to disclose relevant tape recordings which he had made at the Disciplinary Hearing. The Tribunal regarded the tapes as crucial in order to have before it the best evidence of what was said at the meeting. As Mr Essombe had directly and consciously refused to comply with this disclosure order the claim would struck out. No lesser sanction would maintain fairness between the parties as a fair hearing had not been possible.

19. Religious Discrimination

Glasgow City Council v McNab UK EATS/0037/06/MT

The EAT upheld a Tribunal's decision that an atheist teacher employed by a Catholic school maintained by the Council had suffered direct discrimination when he was refused an interview for the post of Principal Teacher of Pastoral Care. The Tribunal had been entitled to conclude that the post was not on the list of posts for which a Roman Catholic Church required a teacher to be Catholic and therefore the Council should not have presumed that the church would not have approved the appointment. There was no genuine occupational requirement. A local authority has no religious ethos and therefore cannot take advantage of the genuine occupational requirement in the Employment Equality (Religion or Belief) Regulations 2003 even in respect of employment in a religious school.

20. Age

The TUC and CIPD have issued a guidance on "Managing Age - A Guide to Good Employment Practice". Complimentary copies are available on request.

21. Minimum Wage Rise

The National minimum wage will rise to £5.52 an hour from October. Increases will also be made for wages for 18 to 21 year olds from £4.45 to £4.60 and from £3.30 to £3.40 for 16 to 18 year olds.

22. Human Rights

ASLEF v the United Kingdom 1102/05

The Employment Tribunal upheld an appeal by Aslef that an expulsion of someone who was a member of the BNP was not a breach of his human rights. Expulsion for being a member of a political party is unlawful but expulsion for conduct which consists of activities undertaken by an individual as a member of a political party is not. Unions may not wish to have members with extreme political views but they can only expel them for their activities rather than simply their membership of a political party.

23. Whistleblowing

Babula v Watham Forest 2007 AER

The Court of Appeal has now held that it is sufficient if an employee reasonably believes that a criminal offence or legal obligation exists.  It does not actually need to exist. In deciding the meaning of "reasonable belief" the Court decided the words did not introduce an additional requirement for the employee to be right. Consequently the test of "reasonable belief" was a subjective one. Applying this the Court decided that Mr Babula's belief that the information he was disclosing was "plainly reasonable" even though it turned out to be wrong.

Kuzel v Roche Products Limited UK EAT /0516/06/CEA

This is an interesting EAT decision dealing with the burden of proof in whistleblowing cases. Does the employee have to prove the reason for the dismissal is that he or she made a protected disclosure or is it for the employer to disprove that? His Honour Judge Peter Clarke held that the correct approach is as follows:

1. Has the employee shown that there is a real issue as to whether the reason put forward by the employer was not the true reason for the dismissal? Has he or she raised some doubt as to that reason by advancing a whistleblowing reason?

2. If so, has the employer proved his reason for the dismissal?

3. If not, has the employer disproved that the whistleblowing reason advanced by the employee?

4. If not then the dismissal is for a whistleblowing reason.

In answering these questions it follows that a failure by the employer to prove the potentially fair reason relied on does not automatically result in a finding of unfair dismissal under Section 103. However, rejection of the employer's reason coupled with the employee having raised a prima facie case that the reason is a whistleblowing reason entitles the Tribunal to infer that the whistleblowing reason in the true reason for the dismissal but it remains open for the employer to satisfy the Tribunal that the making of the protected disclosure was not the principal reason for the dismissal even if the real reason was found by the Tribunal is not that which was advanced by the employer. It is not at any stage for the employee to prove the whistleblowing reason.

24. TUPE

Hynd v Armstrong 2007 CS1H16

The Court of Session held in this case that a transferor could not, in dismissing an employee as redundant prior to the transfer, rely on the transferee's reduced need for employees to establish that the dismissal was for an economic, technical or organisational reason entailing changes in the workforce (an ETO reason under Regulation 8(2) of TUPE 1981). In deciding to dismiss, the employer transferor should only have taken into account its own requirements for employees and not the fact that its employees may have been surplus to the requirements of the transferee. Since the dismissal had been by reason of the transfer or a reason connected with it, it was automatically unfair. Mr Hynd could have been dismissed fairly after the transfer on the grounds of redundancy and the unfair dismissal could then have been avoided.