Newsletter March 2015


The opinion of the Advocate General in the case known as the Woolworths case, regarding the meaning of 'establishment' for the purposes of the collective redundancy consultation, is last month's most eye-catching development. That affects only employers dismissing 20 or more employees at one time. For those having to deal with the normal day to day management of staff there is still plenty to digest, covering such matters as sickness, age discrimination and the effect of vaping in the workplace.

Darryl Evans
T: +44 (0)7771 725341

Annual limits increase

The limits affecting the calculation of statutory redundancy payments and unfair dismissal compensation are set for their annual increases. For dismissals where the effective date of termination falls on or after 6th April 2015:

  • a week's pay (used in calculating both the basic award in unfair dismissal cases and statutory redundancy payments) will be capped at £475 (up from £464)

  • the maximum compensatory award for unfair dismissal will be £78,335 (instead of £76,564), although remember that since July 2013 there has also been a separate cap of one year's pay on 'ordinary' unfair dismissal compensatory awards

Please note also that:

  • as of 5 April 2015, statutory maternity, adoption, paternity, additional paternity and shared parental pay will increase to £139.58 a week

  • from 6 April 2015, the weekly rate of statutory sick pay will increase to £88.45

The Woolworths case: 'establishment' means a local employment unit says the Advocate General

The Advocate General of the European Court has given his opinion on the meaning of 'establishment' for the purposes of determining when redundancy consultation at a representative level is needed. By way of reminder, the Advocate-General is an adviser to the Court so this is not a legal decision, just a guiding opinion. The Court does not need to follow it, although it normally does.

The case concerned the closure of Woolworth stores at which fewer than 20 employees worked. The obligation to consult representatives of affected staff (usually referred to as collective consultation) arises if 20 or more people are dismissed within a 90 days period 'at one establishment'. Across all Woolworth stores clearly that threshold was exceeded. But if a single store could be regarded an 'establishment' then for many employees collective consultation was not required and they would not be entitled to compensation when the employer did not undertake it.

The Advocate-General's view is that the word 'establishment' means the local employment unit to which the workers made redundant are assigned to carry out their duties. There is no need to aggregate all dismissals in all of an employer's establishments to determine whether the threshold of 20 is met. What constitutes an establishment in a given case requires a factual assessment, but it could mean that in the Woolworths case each shop was capable of being a separate establishment in which case no collective consultation was required at shops with less than 20 redundancies. (USDAW and another v WW Realisation 1 Ltd (in liquidation) and others (C-80/14), Lyttle and others v Bluebird UK Bidco 2 Ltd (C-182/13) and Cañas v Nexea Gestión Documental SA Fondo de Garantía Salarial (C-392/13).)

Beware - binding settlement agreement created by email exchange

Bieber [not that one] and others v Teather Limited (in liquidation) (2014 EWHC 4205) is a stark reminder to lawyers and clients alike about taking care in any settlement discussions.

Shortly before the trial in this case, the defendant sent a settlement offer to the claimants setting out solely the sum to be paid to the claimants. The claimants accepted by email and indicated that they would be circulating a draft consent order. The defendant replied 'Noted, with thanks'. On receipt of the draft consent order, the defendant sent a long-form settlement agreement to the claimants which included, amongst other things, an indemnity in the event of third party claims. The claimants refused to sign it.

The judge found that objectively, and considering the whole course of negotiations, the parties had intended to reach a final and binding settlement on the exchange of emails, without the need to agree further terms.

This situation could equally well arise in settlement discussions with an employee who is in the process of leaving employment. If the financial offer is not delivered by handing over the whole settlement agreement, it should clearly be made 'subject to contract' or 'subject to the agreement and execution of a formal settlement agreement'.

Fraudulent mileage claims leads to fair dismissal

In Shrestha v Genesis Housing Association Ltd (2015 EWCA Civ 94), the Court of Appeal held that an employee was fairly dismissed after an investigation established that he had claimed expenses for mileage in excess of that recommended for the relevant journeys by the AA.

The employee claimed that the employer should have investigated every defence he offered to the list of journeys in respect of which he was alleged to have over-claimed, including his explanations of road works, one way systems and parking difficulties adding to journey times and distances. However the Court of Appeal said that it was reasonable for the employer to rely on its investigation into a few of the journeys, from which it was clear that there was no justification for the employee's defences.

This case is a useful reminder for employers that 'reasonable' investigation is required, not one which leaves no stone unturned.

Summary dismissal long after breach

Mr Williams, a senior employee at Leeds United Football Club, had been made redundant and had just started serving 12 months' notice. The Club wanted, however, to avoid the substantial costs of the notice period so it arranged for private investigators to look back at his (and other departing colleagues') old emails. They found one containing obscene and pornographic material sent by Mr Williams to a junior female employee and two friends at other football clubs. The Club dismissed him one week into his notice period and refused to pay him the rest of his notice pay, some £200,000.

The High Court decided that the sending of the email, even though it was five years earlier, was a breach of the duty of trust and confidence and could have amounted to harassment of the female employee. The expiry of such a long period did not make any difference to the Club's ability to rely on it to support dismissal as it was not aware of the email until the investigators found it. Neither did the fact that the employer's motive was simply to avoid the large notice payment - a breach was a breach. (Williams v Leeds United Football Club (2015 EWHC 376).)

Varying an employment contract - cases 1 and 2 - relying on a contractual right

In a previous Newsletter I commented on the courts' inclination to find ways of stopping an employer from being able to make unilateral changes to employees' contracts. Two further cases bear that out.

In Hart v St Mary's School (Colchester) Ltd (UKEAT/0305/14) the Employment Appeals Tribunal (EAT) held that the school committed a repudiatory breach of contract when it imposed a change to a teacher's working hours that required her to spread them over five days instead of three. The school relied on a contractual provision that the teacher had to work at such times as necessary, in the reasonable opinion of the Head, for the proper performance of her duties. A further clause stated that, for part-time staff, working hours may be 'subject to variation, depending upon the requirements of the school timetable'. The EAT considered that the variation clause was not sufficiently clear or unambiguous to allow for unilateral variation.

Similarly, in Norman and others v National Audit Office (UKEAT/0276/14) the EAT again overruled an Employment Tribunal decision that the National Audit Office was entitled to rely on a general right to vary clause in employee contracts to reduce the employees' entitlements without their consent.

Varying an employment contract - case 3 - age discrimination

Harmonisation of terms of employment following a TUPE transfer is a common situation and one which led to a claim for age discrimination in the case of Braithwaite and others v HCL Insurance BPO Services Ltd (UKEAT/0152/14 and UKEAT/0153/14).

The new employer was incurring substantial losses and sought to introduce changes to employees' terms and conditions as a result of which they would lose the contractual right to private health insurance, carer days and enhanced redundancy pay and their working hours and annual leave would change. This put workers in the age band 38-64 at a particular disadvantage because it was they who had built up greater entitlements through longer service.

A key question was whether this discriminatory effect could be justified (the technical requirement being 'a proportionate means of achieving a legitimate aim'). The Employment Tribunal accepted as a legitimate aim the employer's intention to reduce staff costs to ensure the business's future viability and to have in place market-competitive, non-discriminatory terms and conditions. The Tribunal then considered the alternative options available to the employer before concluding that none of them would have achieved the necessary cost savings nor addressed the anomalies in terms and conditions. In doing so it undertook a balancing exercise between the needs of the employer and the discriminatory effect on the employees. The EAT supported the tribunal's approach and on that basis the employer's actions were objectively justified, so there was no unlawful discrimination.

Disability discrimination in bonus scheme

In Land Registry v Houghton and others (UKEAT/0149/14) the EAT decided that a bonus scheme that excluded employees who had received a sickness absence warning during the relevant financial year amounted to disability discrimination. The scheme resulted in unfavourable treatment arising from disability as exclusion was automatic, even for disability-related absences.

As to whether the discrimination could be objectively justified, the EAT thought not, pointing to the fact that managers had no discretion under the scheme to waive absence warnings in contrast to their right to waive a conduct warning. Another factor was that three of the claimants had improved their absence records after receiving warnings, but that could not be taken into account under the scheme.

The case is not, therefore, saying that all disability-related absences must be discounted in such schemes. However, the inflexible nature of the scheme as regards absences meant that the treatment of those absences for disabled employees could not be justified.

Effect of vaping in the workplace

I do not normally report Employment Tribunal cases because they are of no binding effect, but I want to make an exception for Insley v Accent Catering (ET/3200687/2014). The claim was brought by a school catering assistant who complained that she had been constructively dismissed when she was invited to a disciplinary hearing for her use of an e-cigarette in front of pupils.

Her claim was dismissed, but the Tribunal indicated that had they been hearing an unfair dismissal claim, their decision might have been different, as the smoking of e-cigarettes did not fall within the school's smoking policy, nor within the legislation banning smoking in the workplace.

It is a good time to look at your non-smoking policy and decide how to approach the issue of e-cigarettes.

TUPE: organised grouping of one employee

In Rynda (UK) Ltd v Rhijnsburger (2015 EWCA Civ 75) the employee's role was to manage Dutch properties in a fund to which her employer provided asset management services. She had no other duties and was the only employee who carried out this task. Rynda (UK) Ltd took over provision of these services from her employer. Did she transfer under TUPE?

For that, under the service provision change rules in TUPE, she needed to be assigned to an organised grouping of employees whose principal purpose was the provision of the services. The Court of Appeal concluded that she was as she was responsible for all the Dutch properties and so TUPE did apply to transfer her employment. The fact that she had devoted time to other properties in the past did not affect the analysis. Neither did the fact that she was a single employee - she could be an organised grouping on her own.

Unpaid shareholder and director found to be an employee

The Court of Appeal has no doubt delighted one Employment Judge by supporting his decision in the Employment Tribunal's decision and reversing the EAT's contrary view. The question was whether a director and shareholder of a company who performed part-time work for a company (80% of his working time, in fact) without pay for over three years was both an employee and a worker. The Tribunal and the Court of Appeal (although not the EAT) said yes.

There was a contract created between company and individual even though nothing was expressly agreed about pay. The Tribunal could legitimately imply a term that the individual would be paid a reasonable rate from a reasonable starting date in order to give business reality to the arrangements. (Stack v Ajar-Tec Ltd (2015) EWCA Civ 46.)

Fit for work

The Fit for Work advice service has now been launched in order to provide a free quasi occupational health support service, mainly aimed at SMEs. It is starting with the advice service, which is available for employers, employees and GPs via its website ( and telephone (0800 032 6235).

In addition to the advice service, there will be a phased roll out of the referral service over the next few months with full implementation planned for the end of May 2015.

Referrals will be to an occupational health professional, usually by a GP, but employers may be able to refer an employee if, after 4 weeks' absence, they have not been referred by their GP. The OH advisor will then try to agree a return to work plan with the employee and the employer. As is generally the case for sickness absences, using the service proactively is likely to be helpful, rather than waiting for the GP or the employee to make the first move.

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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