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One consequence of the outcome of the General Election is that we now have a
better sense of the changes to employment laws which lie ahead in the medium
term. The Queen's Speech itself was not especially exciting and I have been
amusing myself more by contemplating what seismic changes there could be to
the employment law landscape if UK withdrew from Europe (I must get out
more).
More immediately, though, this month's headline is the first attack on
zero-hours contracts, as described in my first item below.
Darryl Evans
T: +44 (0)7771 725341
E: dfe@evansemployment.co.uk
From 26 May 2015 any provision of a zero-hours contract which prohibits the
worker from doing work or performing services under a contract or other
arrangement with another employer, or prohibits him or her from doing so
without the employer's consent, is unenforceable.
There is recognition that employers might find ways around this rule by
imposing other restrictions or penalties on employees who take other work,
without absolutely prohibiting it but the new legislation does not address
this potential to avoid the restrictions. Neither does it give the employee
any right to make a claim should they suffer any detriment arising from
their wish to work for another employer.
In another immediate measure following its election win, the Government has
increased the maximum financial penalty for underpayment of the national
minimum wage to £20,000 per worker.
In CLFIS (UK) Ltd v Reynolds (2015 EWCA Civ 439) the question in issue was
whether a decision to end a consultant's contract was discriminatory on
account of age when the manager who made the decision was shown to have been
aware of the discriminatory views of other managers, but showed no
discriminatory motive himself.
Ms Reynolds worked as a medical officer under a consultancy agreement. The
General Manager decided to end her consultancy following various performance
issues having been drawn to his attention by the Managing Director. Ms
Reynolds was 73 at the time and difficulty lay in the fact that some of the
input of the Managing Director was tainted by age factors. For example, he
complained that she did not use email.
The employment tribunal found that it was the General Manager's decision
alone to end the contract on the basis that Ms Reynolds was not providing
the service required, according to his view of her performance over a long
period. It accepted the company's argument that this was a
non-discriminatory explanation for its decision: dissatisfaction with
performance and a genuine belief that she was incapable of change. There was
no unlawful discrimination.
The Employment Appeals Tribunal (EAT) overturned the decision of the
tribunal, but, no doubt to the delight of the Employment Judge, the Court of
Appeal reversed that and restored the tribunal's original finding. This had
not been a joint decision, but the General Manager's alone. The tribunal was
entitled to conclude on the facts that his decision had not been influenced
by the discriminatory views of others who had clearly not been party to the
decision.
Jinadu v Dockland Buses (UKEAT/0434/14) dealt with a problem which comes up
often: how should an employer handle a disciplinary procedure if in the
course of it the employee raises a grievance?
Ms Jinadu was a bus driver who was put into a disciplinary process as a
result of poor driving. In the course of that process she made some
allegations about some of the managers involved. Despite these, the
disciplinary process continued and she was dismissed.
Ms Jinadu argued that the decision not to put the disciplinary process on
hold so that the grievance could be heard rendered the dismissal unfair.
The EAT flatly rejected this argument and did not overturn the tribunal's
finding of a fair dismissal.
Standard advice in this situation is to sort out the grievance before
reaching a disciplinary decision, and that may well remain the right thing
to do in most cases. But at least we know that deciding not to do that is
not necessarily fatal.
A related question is whether you need to hold a separate grievance process,
or to deal with the grievance within the framework of the disciplinary
process. The answer generally depends on the complaints made in the
grievance. If they are intrinsically related to the subject of the
disciplinary process, then they can likely best be dealt with all together.
However, if the grievance is alleging, for example, that the disciplining
manager is likely to be biased, then that should probably be dealt with by a
separate grievance process.
The Royal Borough of Greenwich faced an allegation by one of its employees,
Mr Barton, that it was in breach of its data protection obligations. It
instructed Mr Barton not to contact the Information Commissioner's Office
(ICO) about the alleged breaches, but he did so anyway and as a result he
was dismissed.
Mr Barton claimed that his communications with the ICO constituted one or
more protected disclosures, and that therefore he was dismissed for making
those - i.e. as a whistle-blower.
The EAT disagreed. Although one of the communications was a qualifying
disclosure, it was not protected. The reason for the employee's dismissal
was in fact his misconduct.
This was a fine line decision which could very well have gone the other way.
The EAT declined to decide whether the Borough's prohibition on contacting
the ICO was lawful, as the employee had not pleaded the point. That said,
it considered that the lawfulness of the instruction was relevant, but not
decisive, as to whether the employer had acted reasonably. This is possibly
not a decision to rely on, though, if you face a similar situation. (Barton
v Royal Borough of Greenwich UKEAT/0041/14.)
You all know by now that I enjoy a good TUPE case (as I said, I must get out
more) - they have a delightful habit of throwing up new angles. Here's
another.
The question in NHS Direct NHS Trust v Gunn UKEAT/0128/14 came down to this:
does the TUPE transfer of a contract of employment amount to an offer of
employment?
The reason this was relevant was because Ms Gunn, who was disabled, worked
8.5 hours a week for Shropshire Doctors. The service was due to transfer to
NHS Direct, which informed her that she would have to work at least 15
hours. She could not manage this, so asked for 10 hours. This was rejected.
She objected to the transfer and was redeployed by Shropshire Doctors.
Nonetheless, she complained that she had been discriminated against by NHS
Direct for its failure to make reasonable adjustments.
NHS Direct said she had no right to claim as she was neither their employee
nor an applicant.
The tribunal ignored TUPE and said that NHS Direct had made her an offer of
new terms. Hence, she was an applicant. NHS Direct appealed and the EAT
rejected the appeal but for an entirely different reason. The transfer under
TUPE was not an offer of employment so she was not an applicant. However, it
transpired that as part of the process NHS Direct had also made an "offer of
suitable alternative employment" to Ms Gunn: hurrah! It found a way of
allowing her claim through.
So the law seems to be that a transfer under TUPE is not an offer of
employment and normally the transferee will not be liable for claims by
employees who opt-out, except in unusual circumstances such as these.
The Tax Chamber of the First-Tier Tribunal has held that a £600,000 payment
received by a former bank employee in settlement of claims of race
discrimination, among other things, was not chargeable to tax on earnings
from employment. The payment was not made in return for the employee's
services and so could not be considered 'earnings' for the purpose of S.62
of the Income (Tax Earnings and Pensions) Act 2003.
It is worth summarising the facts upon which this decision is based as they
are by no means unique. The employee raised a grievance in November 2007
about discretionary bonuses he had received over several years. He alleged
that the bank was in breach of contract and that he was paid lower bonuses
than other employees because of his race.
He was not happy with the grievance outcome and took matters to the next
stage by serving a discrimination questionnaire. At this point he was told
that he was to be made redundant. He was offered terms (under a compromise
agreement) under which he was paid a statutory redundancy payment of £1,650,
an ex-gratia redundancy payment of £48,898, and £600,000 in settlement of
all outstanding and potential claims.
HMRC wanted a detailed breakdown of what the £600,000 represented for tax
purposes. The bank responded that it had decided that the employee's claims
'held certain merit' and that, while it did not accept that there was any
evidence of discrimination, it recognised the risk that, in litigation, the
employee might have been successful in asserting some right to higher bonus
payments.
HMRC, as one might expect, took the view that this meant that the payment
fell to be taxed as earnings from employment - in effect it was more bonus.
The employee appealed, arguing that the sum in fact represented compensation
in respect of his threatened race discrimination claim.
The Tax Chamber of the FTT supported the employee. The fact that 'earnings
are involved' was not enough to make the payment taxable as earnings. The
payment would not be received in return for services but because he was the
victim of discrimination. It also agreed with the employee that payment for
settling a claim should be treated in the same way as an award for a
successful claim and, given that there had been a settlement, the question
of how likely it was that the claim would succeed was not relevant.
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