Newsletter August 2017


The Supreme Court’s decision to quash the government’s Employment Tribunal Fees regime is a big deal. In this Newsletter I will provide some information about the decision and its potential effects.

Even ignoring this significant development this has been a busy month for cases and news, making a mockery of the so-called “silly season” epithet.

Darryl Evans
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Employment Tribunal fees

The basis for the Supreme Court decision that employment tribunal and EAT fees are unlawful is that, as many people have been saying all along, the fees regime (£250 to start an unfair dismissal claim, for example, and a further £950 for the hearing) was a barrier to access to justice.

Its effect is that all fees paid must be reimbursed by the government, and fees are no longer payable for any future claims, unless and until the government introduces another fees regime which is not considered to be a barrier to justice.

The Court accepted that there were certain legitimate aims to the introduction of fees, such as incentivising earlier settlements and discouraging weak or vexatious claims. However, the fall in the number of claims since the introduction of fees in 2013 was so sharp and sustained as to justify the conclusion that a significant number of potential claimants with arguable claims have been deterred from bringing them. The Court noted that this was not just a bar to the less wealthy but also to those whose claims were of low value and for whom making a claim made no commercial sense with the fees set at the level they were.

The Court did not state that fees should not be payable at all, merely that the fees presently payable were too high. (R (on the application of Unison) v Lord Chancellor (2017UKSC 51).)

Consequences and aftermath

The decision has now placed a significant burden on the already stretched resources of the Employment Tribunals Service.

First, it will need to work out who is eligible for a refund of fees. The general rule in successful cases is that the claimant will have had his/her fees reimbursed by the losing respondent. The claimant should not be entitled to a windfall so the process of repayment is that much more complex.

Then there are the potential claimants who were put off bringing a claim. Some – maybe many - may now try to argue that they should be allowed to bring their claims out of time, as it was not reasonably practicable for them to bring their claims within the normal time limit, because they were impeded by the unlawful fees regime.

To allow some welcome breathing space, the President of the Employment Tribunals issued a stay on all claims or applications relying on the decision, pending decisions from the Ministry of Justice and HM Courts and Tribunals Service. This appeared intended to cover all claims for fees to be reimbursed, claims which were rejected because fees were not paid and new claims not previously launched because fees had to be paid.

Sound sensible? Well, that stay has now been lifted.

The Employment Tribunals Service followed that with an announcement that they are working on a procedure for fees to be repaid, but asking everyone to be patient.

Finally, there is a report that an employment tribunal has allowed a claim to be presented out of time, in light of the Supreme Court decision, when it had previously been rejected because the issue fee was not paid. Note that this suggests the claim was submitted legitimately in time, but for the non-payment of the fee, so this is not an example of a claim being admitted which was never initiated at all because of fees. But expect that issue to come up very soon.

So, as I say, it is a big deal.

Suspension of employees in misconduct cases

In Agoreyo v London Borough of Lambeth (2017 EWHC 2019) the High Court has held that the suspension of a teacher with 15 years of experience amounted to a fundamental breach of contract entitling her to resign and claim that she had been unfairly constructively dismissed.

Two of the teacher’s pupils had serious behavioural issues. Although the school was in the process of putting in place support, the teacher was suspended because she had used a degree of force with the pupils concerned in the interim.

The Court held that although employees can be suspended when there is good reason to do so, suspension is not a neutral act, particularly where it concerns qualified professionals with a vocation, such as the teacher in this case. This is because, as we all know, it is very difficult to come back from a suspension without some reputational damage, even if the allegations are unfounded.

It is therefore important not to suspend automatically an employee accused of misconduct, but to consider why suspension might be appropriate in the particular circumstances of that case. No knee-jerk reactions, please.

Employer pension contributions count towards a week's pay

The Employment Appeals Tribunal (EAT) agreed with an employment tribunal's decision that the calculation of a week's pay under the Employment Rights Act 1996 should include employer pension contributions.

This departs from long-established practice and affects unfair dismissal awards (both basic and compensatory) as well as remedies for matters such as compensation for failure to consult under TUPE or in collective redundancy situations. (University of Sunderland v Drossou UKEAT/0341/16.)

Holiday pay and overtime

In Dudley Metropolitan Borough Council v Willetts (and others) (UKEAT/0334/16) the EAT has, entirely predictably I suggest, held that voluntary overtime, as well as out-of-hours standby payments and call-out payments, must be included in the calculation holiday pay if they were sufficiently regular or recurring. The question was whether the sums were part of ‘normal’ pay, and the fact that the employee did not have to work the overtime, or participate in the on-call rota, if he/she did not wish to was not the point.

Consequently, workers undertaking voluntary overtime over a sufficient period of time on a regular and/or recurring basis are entitled to have these payments included in their pay for of the first four weeks of their annual paid holiday (i.e. the holiday to which they are entitled under the Working Time Directive).

However, we are no nearer being able to ascertain exactly what the terms “sufficient”, “recurring” and “regular” mean. If, though, overtime is genuinely ad hoc, then it probably need not be included when calculating holiday pay.

It may well be that in most cases looking back over a 12 week reference period will produce a sufficiently accurate average overtime figure. However, if overtime is, for example, seasonal, it may well still be regular but a reference period of 12 weeks may not work and one year may be more appropriate. What is clear is that tribunals are treating each case according to its own facts.

Whistleblowing – public or private interest?

To be a “qualifying disclosure” for whistleblowing purposes the following condition must be met: "in the reasonable belief of the worker making the disclosure, [the disclosure] is made in the public interest..."

Mr Nurmoahmed was amongst around 100 employees paid commission at work. He believed Chesterton, his employer, was exaggerating expenses to depress profits and thereby reduce the commission payments. Was his disclosure regarding the commission structure, which directly affected a modest sized sales force, something which could reasonably be believed to be in the 'public interest'?

The Court of Appeal decided that it could. The fact that it was in Mr Nurmoahmed’s private interests did not prevent it being in the public interest as well.

All such cases will be very fact dependent and the Court warned that tribunals should be slow to find that matters affecting just people within a workforce is a 'public interest' disclosure. That said, often the larger the workforce, the more likely there are to be factors tipping a disclosure over the public interest line.

The Court also accepted that Mr Nurmoahmed could rationalise the grounds for his belief after the event. It did not matter that he had not gone through that thought process at the time. (Chesterton Global Limited v Verman, Nurmohamed and others 2017 SWCA Civ 979.)

Whistleblowing – personal liability of directors

In International Petroleum Ltd and others v Osipov and others (UKEAT/0229/16 and UKEAT/0058/17), the EAT has decided that two non-executive directors were personally liable for dismissing Mr Osipov because he had made protected disclosures.

While it is not possible for directors to be liable in unfair dismissal cases, if the claimant also brings a claim that he/she has suffered a detriment, then the person causing the detriment can be personally liable. (Similarly, there is scope for personal liability for managers, decision makers and others in discrimination cases.)

Employees who have been dismissed as a result of their whistleblowing activities may therefore elect to bring an unfair dismissal claim against the employer and an accompanying detriment claim against the dismissing manager. This will be attractive (a) to put added pressure on the respondent employer, and (b) in cases where the respondent employer may not have the funds for payment.

Age limit of 65 pilots not discriminatory

I have three age discrimination cases to report this month.

The first is Fries v Lufthansa CityLine GmbH (2017 EUECJ-190), in which the European Court of Justice (ECJ) decided that the age limit of 65 imposed by Lufthansa on their pilots was not discriminatory. Rather, the limit was held to be a proportionate means of achieving the airline’s legitimate aim of maintaining air safety.

Because of the safety critical aspect of the pilots’ occupation, this does not herald any change to the current position, whereby it is generally going to be very difficult for an employer to justify a specific retirement age.

Use of zero hours contracts for young workers

The ECJ has also decided that an Italian law which permits the use of zero-hours contracts for workers aged 25 or under, with automatic dismissal when the age of 25 is reached, is not unlawful age discrimination.

In the difficult conditions of the Italian labour market, the Italian government had a legitimate aim of facilitating the entry of young people to the labour market and its means of doing so were appropriate and necessary.

There is no equivalent provision in the UK, although the principle of the potential lawfulness of policies aimed at younger workers is worth noting. (Abercrombie & Fitch Italia Srl v Bordonaro (C-143/16 EU:C:2017:566.)

Age related cap on redundancy pay

In my third age discrimination case (BAE Systems (Operations) Ltd v McDowell UKEAT/0318/16/RN), the EAT has held that a generous redundancy scheme operated by BAE amounted to direct age discrimination, because it provided that an employee could not receive more in redundancy pay than they would have earned if they had stayed at work until 65 (the age at which employees could take an occupational pension). This meant that redundancy payments were reduced once an employee was 63½ and that employees aged 65 or over were not eligible for an enhanced redundancy payment at all.

BAE argued that the cap and taper element of the scheme were designed to prevent an employee receiving a windfall redundancy payment, when they would not have continued to work. However, the EAT decided that there was not necessarily going to be a windfall because, following the removal of the default retirement age, employers can no longer assume that individuals will stop working at a particular age.

(If you are keeping score, that’s a final result of Age Discrimination 1 – No Age Discrimination 2.)

Discrimination - burden of proof

Under s136 Equality Act 2010, if there are facts from which a tribunal could decide, in the absence of any other explanation, that an employee had suffered discrimination, then the tribunal must hold that discrimination has occurred.

Until the case of Efobi v Royal Mail Group Ltd (UKEAT/0203/16), the widely understood position was that the burden of proof in establishing those facts was initially on the claimant. Once the claimant had established them, the burden would transfer to the respondent to show that there was another explanation for the treatment of the claimant.

In Efobi the EAT has held that s136 does not, after all, impose any initial burden on a claimant to establish a 'prima facie' case of discrimination. Instead, it requires the tribunal to consider all the evidence, from all sources, at the end of the hearing, so as to decide whether or not there are facts from which it can infer discrimination. If there are such facts, and no explanation from the employer, the tribunal must uphold the complaint.

The unexpected change probably arises because the established rule derived from the old pre-2010 discrimination legislation. It is still surprising, though, that it has taken seven years to establish that the Equality Act 2010 changed things.

In this case Mr Efobi worked as a postman, and on more than 30 occasions he applied unsuccessfully for an IT job with the company. He subsequently complained to an employment tribunal that his applications were rejected because he was a black African, born in Nigeria. The tribunal dismissed his race discrimination claims, holding that he had not proved facts from which it could conclude that there could have been discrimination. The EAT said this was the wrong approach and remitted the case to a differently constituted tribunal for the case to be heard again.

This may sound all rather teccy, but it is actually very important as it could embolden many claimants and reduce the chances of an employer landing an early knock-out blow.

Same-sex partners entitled to equal survivors’ pension benefits

In Walker v Innospec Ltd and others (2017 UKSC 47) the Supreme Court held that Mr walker’s survivor's pension payable to his same-sex spouse should be determined in the same way as it would have been if he were in an opposite-sex marriage. The equalisation should not be limited only to the pension accruing after the Equal Treatment Framework Directive had been implemented.

This decision will have an immediate impact on schemes that have not fully equalised survivor benefits for same-sex partners.

Employer’s vicarious liability for assault

Various claimants v Barclays Bank plc (2017 EWHC 1929) involved 126 people who alleged that they had been assaulted by a doctor undertaking medical examinations on behalf of the bank as part of its recruitment process.

The Court applied a two-stage test to assessing liability: (i) was the relationship one of employment or “akin to employment”, and (ii) did the assaults have a sufficiently close connection to the employment or quasi-employment.

The first test was passed. The assaults had been committed due to activity undertaken by the doctor on behalf of the bank. He was under the bank’s control as it could direct what he did, even if not how he should do it.

On the second test, there was a sufficiently close connection. The assaults were inextricably interwoven with the doctor carrying out his duties.

Finally, it was fair, just and reasonable to impose vicarious liability. This was the claimants’ sole legal recourse, even though this was due to the claim being brought many years after the alleged assaults.

Is stand-by duty "working time"?

Advocate General Sharpston has given her opinion on this issue in the case of Ville de Nivelles v Matzak (C-518/15). As a reminder, this is not a binding view but advises the European Court of Justice, so an Advocate General’s opinion is usually followed.

Her view is that "working time" in the Working Time Directive (2003/88/EC) should not be interpreted so as automatically to include time spent on "stand-by" duty (i.e. when a worker must be readily available to perform duties within a short period of time but need not be present at their workplace). Rather, member states can determine whether, in a particular case, the quality of the time spent on stand-by duty (for example, the worker's ability to devote themselves to their own interests and family) is undermined to such a degree by any restrictions imposed by the employer, so that it should be classified as working time.

The Advocate General cautioned against regarding the requirement to be present at the place determined by the employer and to provide the appropriate services immediately if needed as the "decisive factor". The quality of the time on stand-by duty is of overriding importance, not the proximity to the work place.

Drafting non-compete clauses

The Court of Appeal has set refused to enforce a non-compete restrictive covenant which aimed to prevent the employee from being concerned or interested in any competing business for six months from termination.

The problem? The clause did not contain a carve out allowing the employee to hold a minor shareholding in a competing business for investment purposes only. On its terms the clause stopped the employee from holding one share in a publicly quoted company. That made the restriction too wide, and therefore void. (Tillman v Egon Zehnder Ltd 2017 EWCA Civ 1054.)

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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