HR Two Minute Monthly: Motivation of decision-makers; Reasonable adjustments and associative discrimination; Constructive dismissal and affirmation; Equal pay audits


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Summary: Our July update includes the Court of Appeal’s confirmation that the duty to make reasonable adjustments does not extend to associative discrimination, EAT decisions on affirmation in constructive unfair dismissal, decision-makers in discrimination cases, and on employment status for an unremunerated shareholder/director. It also includes the recently published draft regulations on equal pay audits and the employment aspects of the Queen’s Speech.

Tribunal should consider motivation of those who influence a decision-maker

The EAT has concluded in Reynolds v CLFIS (UK) Ltd and others that, in discrimination cases, the motivation of all employees who have significantly influenced the alleged discriminatory decision is relevant. The Employment Tribunal was wrong to focus solely on the mental processes of the actual decision-maker.

Tribunal focused on the decision-maker and found against the Claimant

Dr Reynolds was engaged by Canada Life as a consultant in the role of Chief Medical Officer. Her consultancy agreement was terminated in 2010 following an internal presentation to senior managers concerning the CMO role and Dr Reynolds’ alleged shortcomings. Dr Reynolds (who was 77 years old) brought a claim of direct age discrimination.

The Tribunal held that none of the reasons why Dr Reynolds’ engagement was terminated related to her age. There was no link between her performance deficiencies and her age, and Canada Life engaged the services of other medical officers of a similar age to Dr Reynolds. The Tribunal also held that the senior manager who had terminated the consultancy agreement had genuinely believed Dr Reynolds would have been unlikely to adapt to new working requirements and her age had not been a factor in his decision. No consideration was given to the thought processes of other persons who had influenced the decision, specifically those who had prepared the internal presentation.

EAT finds Tribunal wrong to ignore the mental processes of others who had influenced the decision

The EAT found that the Tribunal’s decision was flawed. The Claimant had shifted the burden of proof, so the Respondent had to prove that the termination of the Claimant’s consultancy was in no sense whatsoever on grounds of age. This could not be properly assessed unless the Tribunal considered the mental processes of everyone who had a “significant influence” on the decision.

Implications for employers

It is common for a senior manager to be responsible for a dismissal in circumstances where he or she does not have personal knowledge of the particular employee. In such cases, the decision to dismiss is often based on formal or informal reports prepared by other individuals, for example the employee’s line manager. This case confirms that the thought processes of all those with a significant influence over the dismissal, not just the ultimate decision-maker, will be relevant when the employer has the burden of establishing whether or not direct discrimination took place.

This seems fair and the EAT commented that it is surprising there was no previous authority on the point. However, this potentially extends the number of witnesses who could now be involved in proceedings. Employers will need to scrutinise the motivations of all those involved, not just the ultimate decision-maker, when assessing the merits of claims. Further, senior decision-makers should be encouraged to make sure that any evidence relied on in reaching a decision to dismiss is robust and not tainted by discrimination.

Employee waived right to claim constructive dismissal

The EAT in Cockram v Air Products plc found that an employee who gave substantially longer notice than contractually required following an alleged fundamental breach by his employer had affirmed his contract. The employee was therefore unable to succeed in his claim of constructive unfair dismissal.

Employee resigned claiming breach of contract and giving seven months’ notice

Mr Cockram worked for Air Products plc from August 1988. In May 2012, following an altercation with his line manager, he submitted a grievance. The grievance and subsequent appeal were not upheld. Mr Cockram was unhappy with the outcome and resigned, citing a fundamental breach of trust and confidence. However instead of resigning with immediate effect, Mr Cockram gave notice. His contractual notice period was three months, but he gave seven months’ notice on the basis that he had no other work secured to enable him to leave immediately and needed to work for a reasonable period of time.

When the notice period expired, Mr Cockram brought a claim for constructive unfair dismissal. He also alleged that he had been subjected to detrimental treatment because of protected disclosures and that he had been subjected to unlawful age discrimination.

Employee had affirmed contract and waived right to claim constructive unfair dismissal

While the Employment Rights Act 1996 expressly permits an employee to give notice and still claim constructive unfair dismissal, the EAT confirmed that it is possible for an employee to affirm the contract both before and after notice is given. Affirmation is fact sensitive and notice is a relevant factor when assessing whether an employee has affirmed. In this case, by giving significantly longer than contractual notice for his own benefit, Mr Cockram had affirmed the contract. He had, in effect, waived his employer's breach and could not then use it as the basis of a constructive dismissal claim.

This is a sensible decision and a useful reminder to consider the impact of notice on constructive unfair dismissal claims. In this case, the employee gave considerably more notice than he was legally required to, which had a fundamental impact on his claim. In contrast, where an employee gives contractual notice only, it may not be fatal to a constructive unfair dismissal claim provided he or she makes it clear that they are resigning in response to the employer's fundamental breach of contract. However, affirmation remains a question of fact and a Tribunal will consider all the circumstances, including the length of and reason for any notice worked, when assessing whether an employee has affirmed his or her contract.

No express employment contract where there was no remuneration

The EAT in Ajar-Tec Limited v Stack has held that the Employment Tribunal erred in finding the Claimant was an ‘employee’ or ‘worker’. The individual, who was a director and shareholder, had no formal arrangement in place and neither sought nor received payment for his services.

Employment contracts drafted but not formalised

Mr Stack was one of three shareholders and directors of Ajar-Tec Limited. Mr Martin worked on a full-time, salaried basis under a written contract of employment. Mr Keane was a part-time finance director while Mr Stack described himself as operations director. Neither Mr Keane or Mr Stack had any formal employment arrangements although there had been historical discussions concerning roles and responsibilities and draft employment contracts had been circulated. Crucially, Mr Stack was not paid for the work he did. After several years, Mr Stack left the business in acrimonious circumstances and brought a claim for unfair dismissal and unauthorised deductions from wages.

The Tribunal found that Mr Stack was deploying his skills in the same way as Mr Martin (who received pay for it) and as such there was an ‘express agreement’ that Mr Stack would do work for the company and an implied term that he would be paid for what he did. The Tribunal therefore concluded that Mr Stack was an ‘employee’ and a ‘worker’.

Lack of consideration

The EAT disagreed with the Tribunal’s analysis. Whilst there was an ‘agreement’ in place that Mr Stack perform work for the business, the Tribunal’s reasoning in implying a term concerning remuneration was flawed. It should first have considered whether the arrangement amounted to a binding contract at all, given that there was no consideration. The EAT remitted the case, suggesting it is difficult to see how an express or implied contract could exist on these facts.

This dispute has resulted in protracted litigation and is a salutary reminder of the need to formalise employment relationships. Whilst it may assist Mr Stack that there was historically an intention to enter into an employment relationship, the fact that he never received, requested or argued he was entitled to remuneration may well prove to be fatal to his attempt to establish employment status.

Details of new employment legislation in Queen’s Speech

Initial details of further reform of employment law were announced in the Queen’s Speech on 4 June 2014. The most significant announcement was the Small Business, Enterprise and Employment Bill which has a number of stated objectives including: tackling the abuse of zero hour contracts of employment; introducing tougher penalties for employers who flout the National Minimum Wage Regulations; limiting excessive redundancy payments for highly paid employees in the public sector; and creating more flexibility in childcare regulations to assist working families.

No duty to make reasonable adjustments for employees associated with disabled persons

The EAT has ruled in Hainsworth v Ministry of Defence that there is no obligation on employers to make reasonable adjustments for employees who are not themselves disabled but are associated with (which in this case concerned having caring responsibilities for) a disabled person.

Employee requested transfer to meet her daughter’s educational needs

Ms Hainsworth had a 17-year old daughter with Down’s syndrome. Her daughter wished to undertake training which could not be undertaken in Germany, where Ms Hainsworth was based. Ms Hainsworth consequently requested a transfer to the United Kingdom where such training could be carried out. The Ministry of Defence refused her application.

Ms Hainsworth brought claims including associative disability discrimination. She claimed that the Ministry of Defence had failed to make reasonable adjustments by not changing her work location, where such a change would have enabled her to meet her disabled daughter’s needs.

Duty to make reasonable adjustments not triggered

The concept of "associative discrimination" applies to direct discrimination and harassment claims (following the ECJ decision in Coleman v Attridge Law). The Claimant argued that the same principle should be applied to Article 5 of the Equal Treatment Framework Directive, broadening the duty to make reasonable adjustments so that it also applies to non-disabled employees who are associated with a disabled person.

The Court of Appeal held that an employer has no duty to make reasonable adjustments in cases of associative discrimination. The Directive provides that the purpose of "reasonable accommodations" is to enable “a person with a disability” to have access to, participate in and advance in employment or undergo training. It is therefore limited to disabled employees or prospective employees.

Clarity for employers

This is a helpful case for employers. It gives express confirmation that the duty to make reasonable adjustments is not triggered in relation to a non-disabled employee because they are associated with a disabled person, whether because they have caring responsibilities or otherwise. Employees in this situation can still make a request for flexible working, which employers need to handle appropriately, bearing in mind the extension to the right to request flexible working which took effect on 30 June 2014.

Draft equal pay audit regulations published

The Government has published the draft Equality Act 2010 (Equal Pay Audits) Regulations 2014. The purpose of the regulations is to require Employment Tribunals to order employers to undertake equal pay audits in circumstances where the employer has breached the equal pay provisions in the Equality Act 2010. An equal pay audit would involve the publication of an employer’s gender pay information including any disparities and the reason for these disparities, in addition to the steps the employer intends to take to address the issue.

The provisions are intended to take effect in relation to equal pay claims brought on or after 1 October 2014.

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