HR Two Minute Monthly: Maternity and redundancy; disability discrimination; injunctions

Article

Posted by , on

Summary: Our December update includes a rare decision on the right of someone on maternity leave to be given priority for suitable alternative employment in a redundancy situation, an EAT decision highlighting the importance of culpability when someone with a mental impairment is dismissed for gross misconduct, and a Court of Appeal decision approving an injunction preventing someone who resigned in breach of contract from starting work for a competitor.

Maternity and redundancy – when does the right to be given priority for a suitable alternative role arise?

When a woman on maternity leave is made redundant, she is entitled to be offered a suitable alternative role in preference to other employees, even if she is not the best candidate. In Sefton Borough Council v Wainwright, the EAT considered at what stage in a restructuring exercise this right arises.

Two employees, one role

As part of a broader restructuring exercise, the Respondent decided to cut two management positions and replace them with one, combined role. Both incumbent employees were at risk of redundancy, including Mrs Wainwright, who was on maternity leave. The Respondent carried out an interview process and she was unsuccessful. She argued that this breached her right to be offered a suitable alternative role in preference to others, and amounted to automatic unfair dismissal and discrimination on grounds of pregnancy. The Council argued that the right did not apply until the decision had been taken that Mrs Wainwright did not have a role in the restructured organisation, so it did not apply to the combined role.

The right arises when the employee's role is identified as redundant

Both the Tribunal and the EAT found that the right did apply to the restructured post. Mrs Wainwright was “redundant” at the point the Council decided her role was to be removed. The new role was therefore a suitable alternative one and she had an absolute right to it, not the right to be considered for it in a competitive interview. The EAT did confirm that the right is to be offered a suitable role, so had the Council offered her a different, suitable role, it would have complied with its obligation. However, it did not do so.

The Tribunal had also found that this amounted to discrimination on grounds of pregnancy and maternity. The Council’s appeal on this point was successful; the EAT held that the employer's failure to comply with its obligation to offer an suitable alternative role was not in itself discriminatory treatment. Consideration needed to be given to the reason why Mrs Wainwright was treated in the way she was. The EAT therefore remitted the case on this point.

Does this mean an employee on maternity leave cannot be selected in a redundancy pooling situation?

The application of the right to be offered suitable alternative employment over and above others is often difficult for employers. One common issue is whether, when selecting an employee for redundancy from a pool, the employer cannot select the employee on maternity leave at all. That is not the case and Sefton does not change that. But employers do need to draw a distinction between selection from a pool (for example where 3 out of 5 existing positions are redundant and no new posts are created) and a restructuring (where all 5 positions are redundant and are replaced by 2 newly created posts). In the former case, an employee on maternity leave does not have the right to one of the two remaining positions if her scoring places her at risk. In the latter example, all 5 employees are redundant and she has the right to be offered one of the new posts provided it is suitable, even if the employer feels she is not the best candidate.


The importance of culpability - discrimination, dismissal and mental illness

What is the impact of a mental impairment when an employee admits an act which appears to amount to gross misconduct? In Burdett v Aviva Employment Services Limited, an employee who suffered from a paranoid schizophrenic illness committed a number of sexual assaults, including assaults on two female colleagues, when he stopped taking his medication without medical advice. He admitted the acts and that he had made a serious error of judgment when stopping his medication. Aviva dismissed him for gross misconduct.

The Tribunal found that the dismissal was fair and that it did not amount to discrimination arising from disability. The EAT did not agree.

Gross misconduct requires culpability

While the acts committed by the Claimant were undoubtedly serious, the EAT confirmed that for an act to amount to gross misconduct, there must be a degree of culpability. This means it must be either deliberate wrongdoing or gross negligence on the part of the employee. The Tribunal failed to consider whether, taking into account the Claimant’s disability, the requirement for culpability was made out. Further, even if it was, it was still necessary for the Tribunal to consider whether dismissal fell within the band of reasonable responses. Here, the Tribunal appeared to have concluded that dismissal was always a reasonable response to gross misconduct. It failed to consider the mitigating factors, for example the reason why the Claimant stopped taking his medication. The EAT overturned the Tribunal's decision on this issue.

The EAT also overturned the finding that the dismissal did not amount to discrimination arising from disability. The key issue here was whether the employer could demonstrate that its actions in deciding to dismiss were a proportionate means of achieving a legitimate aim. The Tribunal failed adequately to carry out this balancing exercise, in particular by failing to consider the impact of the dismissal on the Claimant and the alternatives to dismissal that could have been adopted by Aviva to achieve its aim of ensuring the safety of its employees. The EAT gave the parties the option of addressing these issues on paper or having a further hearing, so the final outcome is not yet known.

Assumptions are dangerous

The first point to take away from this decision is that an employee must be culpable in order to commit gross misconduct. In cases where disability may affect the employee’s state of mind, employers should give careful consideration to this before reaching a finding in disciplinary proceedings.

A second, broader issue is the importance of avoiding assumptions. Even where an individual has admitted extremely serious acts, it is not safe to assume that this will always amount to gross misconduct and, even where it does, that dismissal will always be a reasonable response. Likewise, in order to justify discrimination, an employer should not assume that dismissal is the only answer, but should balance the needs of the individual as well as the needs of the workforce as a whole and explore whether there are alternatives which have a less discriminatory affect. It may be that, following this analysis, the employer still decides that dismissal is appropriate. However, the EAT in Burdett makes it clear that without this thought process, employers risk findings of unfair dismissal and disability discrimination.


Harassment, TUPE and time limits

Vernon v Azure Support Services Ltd and others is an EAT decision with particular implications for outsourcing businesses. It considers the time limit for bringing a harassment claim in the context of an outsourcing where one employee transferred under TUPE but the other did not.

Victim transferred but perpetrator did not

Ms Vernon worked for an operating company of Port Vale Football club. The area of the business she worked in was outsourced to Azure. She was later dismissed for having a personal relationship with one of the players following rumours about her conduct and she brought a number of tribunal claims. One allegation was that she had been harassed by another manager both before and after the transfer. He did not transfer to Azure.

Time limit does not run from the transfer date

In this case, the harassment continued after the transfer as the two individuals continued to work together, even though they were no longer working for the same employer. The EAT held that the time limit for bringing the claim therefore ran from the last act of harassment, not the date of the transfer.

Azure had argued that the time limit ran from the date of the transfer. This is the case for an equal pay claim (Gutridge and Ors v Sodexho [2009]). However, the time limit for equal pay purposes is calculated from the “termination of the employment” whereas the time limit for harassment under the Equality Act 2010 is calculated from the end of the period of conduct complained of.

Incoming Service Providers should take note of pre-existing workplace issues

In an outsourcing situation, it is relatively common for transferred employees to continue to work with old colleagues post-transfer. Employers who take on staff in these circumstances therefore need to be alert to ongoing relationship problems within the workforce as a whole, not just amongst their own employees.


Injunctions – Court of Appeal upholds High Court decision

In September, we reported on the High Court decision in Sunrise Brokers LLP v Rodgers. The case considered the options open to an employer where an employee resigned without notice in breach of contract. The High Court granted an injunction which upheld the employee’s remaining notice period of six months and then enforced four months of his non-compete restriction. The employer was not required to pay the employee, as he had refused to provide his services. Please select the link for our analysis of the High Court decision. The employee appealed to the Court of Appeal.

Upholding the contract did not amount to compelling the employee to work

Mr Rodgers appealed on two grounds. First, upholding the contract without the customary undertaking from the employer that he would be paid had the effect of compelling him to work, which is contrary to fundamental principles of English law. However, the Court of Appeal confirmed that there must be more than a degree of financial hardship; the employee must actually be under such financial or other pressure that he is compelled to work for the employer. There was no evidence that this was the case for Mr Rodgers. Second, Mr Rodgers argued that the total period of ten months was too long. This argument was also unsuccessful.

Does this decision have broader implications?

This case has unusual facts, in that Mr Rodgers had refused to work and Sunrise had affirmed the contract. Had he been on garden leave, Sunrise would have been required to pay him. However, in circumstances where an employee purports to resign in breach of contract, in light of the decision in Societe Generale v Geys, it is open to both parties, not just the employee, to affirm an employment contract where one party is in breach. This case demonstrates the potential tactical advantage to an employer in doing so.


Individual engaged through a limited company not “in employment” under the Equality Act 2010

In Halawi v WDFG UK Limited, the Court of Appeal considered whether the provision of services via a personal services company was covered by the limb of the employment test in the Equality Act 2010 which protects individuals “working under a contract personally to do work”.

Implication of complex structure

The structure in place in the case was unusually complex. The Claimant was engaged by C, via her own personal services company. C provided services to S, a beauty company and the Claimant worked as a beauty consultant selling S’s products. The Claimant was engaged to work at Heathrow Airport, in an outlet managed by a further company, WDF. The Claimant required an airside pass to work in the outlet and was effectively dismissed when WDF withdrew it. Before the Court of Appeal, the issue was whether the Claimant was an employee of WDF for the purposes of the Equality Act.

Key factors were subordination and personal work

The Court of Appeal confirmed that the Claimant was not employed for the purposes of the Equality Act. While it expressed some concerns that the “complex” nature of the arrangement left her unprotected, it was clear that EU equality protection (which underpins the Equality Act) did not cover the Claimant’s circumstances. The Court of Appeal identified two key criteria which must be present to establish an employment relationship under EU principles. The first is that there must be a requirement to perform the services personally. The second is that the individual must be subordinate to the “employer”. In the Claimant’s case, neither of these criteria were fulfilled: there was a right of substitution which had been used (albeit infrequently) and WDF exercised no control over the Claimant beyond its control of the premises. There was therefore no subordination.

Does this mean that an individual engaged through a personal services company will never be protected under the Equality Act 2010?

No. The Court of Appeal expressed concern that the Claimant in this case was unprotected and it is clear that this is a decision made on the specific facts. The key issue for any individual who is not employed or engaged as a worker in the traditional sense is whether their relationship satisfies the personal service and subordination criteria set out above. If it does, they may be protected even if they provide this services via a personal services company.


Can an Employment Tribunal carry out its own investigations?

In East of England Ambulance Service NHS Trust v Sanders, the EAT was asked to consider whether a Tribunal had acted inappropriately in conducting its own internet research when considering evidence on a preliminary issue of disability. Having done so, the Tribunal informed the parties and asked the Claimant leading questions on its contents, which suggested an attempt to find evidence which favoured the Claimant. The Respondent applied for the Tribunal to recuse itself, but it refused. The Respondent subsequently claimed that the Tribunal’s general attitude was biased against it.

The EAT upheld the appeal. A Tribunal’s role is to adjudicate, not to take on a pro-active, inquisitorial role. In conducting its own research and then leading the Claimant in questions about it, it overstepped the mark. The EAT also agreed that, following these events, the Tribunal’s attitude to the Respondent did appear hostile.

In cases like this where a Claimant is unrepresented and the case concerns difficult legal issues, it is common for the Tribunal to go some way to helping the Claimant put forward their case. This decision makes it clear that, while there is a degree of flexibility, appeals on grounds of procedural irregularity and bias can succeed if the Tribunal crosses the line.


Dismissal for capability was fair when there was no reasonable adjustment available

The duty to make reasonable adjustments for disabled employees fetters an employer’s ability to dismiss for capability. In Dyer v London Ambulance NHS Trust, an employee suffered life threatening reactions to perfume and aerosol sprays. Following extensive medical advice, the employer decided that no reasonable adjustment could be made that would guarantee her health and safety. In particular, it concluded that a ban on the use of these products was unworkable given that her place of work was open to the public (it was in fact that the busiest 999 control room in the UK). It therefore dismissed for capability.

Employer is entitled to dismiss even if the employee is willing to take the risk

On appeal to the EAT, the employee argued that a workplace ban would have been a reasonable adjustment as she was prepared to take the risk of an incident arising in those circumstances. The EAT disagreed. There was old case law which said that an employer was not required to dismiss on health and safety grounds if the employee was willing to work. However, these cases were personal injury cases and pre-dated both unfair dismissal and disability discrimination protection. Here, the EAT concluded that there was no duty to dismiss, but that the employer was entitled to do so, having concluded that there was no reasonable adjustment that could sensibly be made.

Does this lower the threshold for dismissals in a disability discrimination situation?

No. The EAT in this case expressly stated that it will be a “relatively rare” case where no reasonable adjustment can sensibly be made. It also stressed that the key issue is the reasonableness of the adjustment itself, which must be judged objectively, not the employer’s approach to the adjustment or the employee’s desire to remain in employment.


Imposing a maximum recruitment age of 30 was direct discrimination

The ECJ in Pervez v. Ayuntamiento de Oviedo has said that a law setting a maximum recruitment age of 30 for police officers in a particular region of Spain was direct age discrimination.

The Spanish Government argued that whilst the rule was directly discriminatory, they could objectively justify it. Their legitimate aims for setting the maximum recruitment age were to ensure a reasonable period of employment before staff retired, and also to satisfy the training requirements of the police role. However, they gave no evidence that the recruitment age limit was a proportionate means of achieving those aims. As a result, they couldn't justify having the maximum recruitment age. In this regard it was also notable that different police forces in Spain either had a higher maximum recruitment age, or no recruitment age at all, again suggesting that setting a maximum recruitment age of 30 wasn't proportionate.

This case is a timely reminder to employers that it is usually very hard to justify direct age discrimination. It highlights that employers need to have robust evidence supporting the reasons why they are discriminating on grounds of age, otherwise the treatment is unlikely to be a proportionate means of achieving those aims.


UK Government drops ‘bankers’ bonus cap’ legal challenge after adverse Advocate General’s opinion

The Advocate General’s opinion in UK v. European Parliament and Council of the EU rejected all of the UK’s arguments that various remuneration provisions in the CRD IV Directive and related legislation, which regulate pay in the financial services sector, were unlawful.

Requiring a maximum ratio of fixed to variable salary is not a ‘bonus cap’

The UK Government’s principal argument was that the legislation had been enacted using a power which did not allow the EU to regulate the level of workers’ pay. However, the Advocate General said the having a 1:1 fixed to variable remuneration ratio (or 1:2, with shareholder approval) doesn’t act as a cap on variable pay because employers can set the level of fixed remuneration to whatever they think appropriate.

UK Government decides not to pursue the claim further

Following publication of the Advocate General’s opinion, the UK Government announced that it is no longer pursuing the case. The Chancellor of the Exchequer expressed concerns that the maximum ratio may have the perverse effect of pushing up overall pay by increasing the fixed element of remuneration, and he suggested that the Financial Stability Board investigate clawback mechanisms for fixed pay.


Only a quarter of Acas early conciliation referrals go on to become tribunal claims

Acas has published more detailed statistics covering the first few months of the early conciliation regime. During the first quarter that the regime was in place, only 24% of early conciliation referrals to Acas went on to become formal employment tribunal claims, and a further 18% of early conciliation referrals resulted in settlement.

 

Stay informed

Sign up to receive email alerts from our award winning Expert Insights team

Sign up now

See more insights by category

This site uses cookies to help us improve our services and your browsing experience. For further information about cookies, including about how to change your browser settings to no longer accept cookies, please view our privacy policy.