Newsletter September 2013


Welcome to this month's newsletter - no real headliner this month, just a variety of cases covering disability discrimination, TUPE, redundancy ...... and some good old managerial incompetence.

Darryl Evans
T: +44 (0)7771 725341

Redundancy policy - is it contractual?

In Shumba & others v Park Cakes Ltd (2013 EWCA Civ 974), the Court of Appeal gave some useful guidance on a question I am frequently asked: does the custom and practice of making enhanced redundancy payments to departing staff create an implied contractual right for those who follow?

The Court of Appeal said the factors to be considered include:

  • on how many occasions and over what period have the enhanced payments been made?
  • have they always been on the same terms?
  • to what extent have they been publicised?
  • how have they been described (e.g. as "ex gratia" payments)?
  • what does the employment contract expressly state?
  • does the employer's conduct, viewed objectively, convey an intention to be bound?

So the message is that if an employer always pays enhanced redundancy payments according to a set formula and the employees all know about it, then even if the enhanced scheme is stated to be discretionary it may have become contractual. Better to vary the formula, not publicise and each time
you do pay, make it clear it is ex gratia with no obligation.

Fit notes

New guidance has been issued by the Government for employers, GPs and employees to ensure that fit notes are being used to their full potential. The aim is to encourage GPs and their patients to make better use of the possibility held out by the fit note that the employee could return to work, albeit with some restrictions or reasonable adjustments. The guidance is available at:

Zero-hours contracts

The Government plans launch a consultation on tackling abuse of zero-hours contracts. This follows a BIS review, which highlighted the following key areas of concern:

  • exclusivity clauses, which stop workers from working for another company
  • lack of transparency, in that zero hours contracts do not fall within any legal definition so staff do not realise that they have no right to paid work
  • uncertainty of earnings
  • inequality of bargaining power: a concern that employees feel unable to reject work, even if offered at short notice and at unsuitable times

There has been a lot of publicity about these contracts' in recent weeks and the reference here to them not falling within any legal definition is spot on. Broadly, the term refers to an arrangement in which the employee is 'on-call' to work but has no guarantee of any work (or therefore pay).

However, there are many variations, from people who are employed to casuals with no protection at all. It is this diversity which is going to make any attempted regulation difficult.

Successful internal appeal remedied sex discrimination

The EAT has held that an employee had not suffered indirect sex discrimination where her flexible working request, at first refused, was subsequently allowed on appeal.

The employee had not suffered any detriment as a result of the flexible working request being rejected at first, as this decision was made while she was still on maternity leave and was subject to an appeal. Upon appeal, the employer granted her request to work part-time (on a three month trial basis) to begin on her return from maternity leave.

The EAT held that an agreed internal appeal process formed part and parcel of the employer's decision making process. To this extent the employee's claim of indirect sex discrimination based on the employer's initial decision, which was conditional upon an appeal and subsequently revoked, could not be upheld. (Little v Richmond Pharmacology Ltd UKEAT/0490/12.)

Managing sickness absences for disabled employees

The case of HMRC v Whiteley (UKEAT/0581/12) addressed the difficult question of how long an employer should allow a disabled employee to be away from work before starting procedures which could lead to dismissal.

The Employment Appeals Tribunal (EAT) said that, in principle, there are at least two potentially acceptable approaches in determining what allowances to make for the disability as compared with other ordinary ailments. It could either:

  • look in detail and with care and, if necessary, with expert evidence at the periods of absence under review and attempt to analyse with precision what was attributable to disability and what was not, or
  • ask and answer with proper information the question: what sort of periods of absence would someone suffering from the disability reasonably be expected to have over the course of an average year due to his or her disability?

The EAT recognised that the second approach will be more attractive to most employers.

This case does not sit too easily with the case of Bray v London Borough of Camden, which held that it was not necessary for employers always to discount disability-related absences in absence management systems. It's a very difficult and delicate area.

Incompetence in discrimination claims

There have been some cases, understandably not many, where the employer has deployed the defence of 'managerial incompetence' to avert a discrimination claim. Osoba v Chief Constable of the Hertfordshire Constabulary (UKEAT/0055/13) is a pleasing example.

Mr Osoba was selected for redundancy as the result of an exercise which was described as "shambolic and lacking in competence". He alleged that his selection was tainted by age discrimination, partly because there were so many mistakes made in the redundancy procedure. In response the dismissing manager's explanation for the shambles was she had done her best to follow the policy but had made mistakes in the process.

The EAT decided that "there may simply be cases where there is nothing more to say, no further explanation than: Well, I got it wrong and I take responsibility for that".

As I have often advised, unfairness, deriving from incompetence or not, may not be discriminatory.

TUPE: service provision change

As my regular readers will know, under TUPE's service provision change rules, when work done by a contractor transfers to another contractor, TUPE will transfer the employees engaged in that work to the new contractor, provided the work remains largely the same.

The question posed in the case of Lorne Stewart plc v Hyde and others (UKEAT/0408/12) was whether work which was anticipated and regularly provided, but not contractually guaranteed, could be part of a service provision change. Answer: yes.

Carillion provided services to Cornwall County Council, repairing and installing central heating and boilers. It also carried out higher value work on a regular basis which was outside the main contract and was not guaranteed. Lorne Stewart took over the contract, but argued that the two employees who carried out these extra services did not transfer, as they did not form part of the organised grouping of employees devoted to the contractual work.

The EAT decided that the lack of contractual commitment was not a relevant consideration and that the focus must be on what was happening on a day to day basis. It was clear that the employees were doing work which was going to be carried on by the new contractors and so their employment transferred

The perils of not providing an impartial grievance appeal process

An employer's failure to provide a proper grievance appeal process could amount to a breach of the implied term of trust and confidence and form the basis of a constructive dismissal claim.

So said the EAT in Blackburn v Aldi Stores Ltd UKEAT/0185/12, in which Mr Blackburn, an LGV driver, presented a grievance letter in which he raised issues about health and safety, lack of training and his treatment by the deputy transport manager, who B alleged had sworn at him on more than one occasion. The grievance was only partially upheld by the regional managing director, as he accepted the deputy transport manager's denial that he had sworn at and abused Mr Blackburn.

Mr Blackburn appealed against the decision in a letter to the regional MD, copying it to the group MD. The regional MD dealt with it himself in a meeting that lasted no more than 20 minutes, at the end of which he dismissed the appeal, despite the procedure providing that an employee who wished to appeal must do so to the next level of management.

Mr Blackburn resigned, bringing claims in the employment tribunal including unfair constructive dismissal, for which he relied on a breach of the implied term of trust and confidence, including an assertion that he was effectively denied an appeal.

The EAT considered that a failure to adhere to a grievance procedure is capable of amounting, or at least contributing, to a breach of the implied term of trust and confidence. That was not to say that every breach would do so, but here the right to an appeal in respect of a grievance was important as a feature of both the employer's own grievance procedure and the Acas Code.

Compensation for data breach distress

An individual is entitled to compensation for distress caused by a data controller's contravention of the Data Protection Act 1998.

The Court of Appeal recently awarded a Mr Halliday compensation for distress after he bought a television through a credit arrangement with Creation Consumer Finance Ltd, which then committed numerous data breaches including providing incorrect data about Mr Halliday to a credit referencing agency, which was then made available to third parties for a period of four months.

As consumers we probably all cry 'quite right too'. But do not overlook that the same could apply if you misuse your employees' data. (Halliday v Creation Consumer Finance Ltd (CCF) 2013 EWCA Civ 333.)

Stopping permanent health insurance benefits for older staff

An employment tribunal in Whitham v Capita Insurance Services (ET2505448/12) was faced with a question many employers and advisers face at the moment: can permanent health benefits be stopped at a certain age?

The age in this specific case was 55, which was how old Mr Whitham was at the point when his benefits under a PHI scheme arranged between his employer, Capita, and an insurance provider, stopped.

He had been denied the opportunity to join a more favourable PHI scheme arranged in 2002, which would have entitled him to receive PHI payments until he turned 65, essentially because he was already off work ill.

The employment tribunal decided that Capita had directly discriminated against Mr Whitham because of age and that that discrimination could not this be justified as a proportionate means of achieving a legitimate aim. It added that Mr Whitham had a contractual right to receive his PHI payments until the age of 65 under his contract - a reminder that trying to take away benefits at a certain age raises not only discrimination but also contractual issues.

We wait to see if this is appealed.

The information and any commentary contained in this newsletter are for general information purposes only and do not constitute legal or any other type of professional advice. Darryl Evans and Evans Employment Law Limited do not accept any and, to the extent permitted by law, exclude all, liability to any person for any loss which may arise from relying upon or otherwise using the information contained in this newsletter. If you have a particular query or issue you are strongly advised to obtain specific, personal advice and not to rely on the information or comments in this newsletter.

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