HR Two Minute Monthly: Obesity as a disability; age discrimination; shared parental leave update

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Summary: Our August update includes developments in EU case law; whether obesity can be a disability, age discrimination cases on a rare example of a lawful retirement age and on discriminatory pay schemes, and an EAT decision about the leeway given to sick employees to resign& claim constructive dismissal. It also reports on developments in shared parental leave and family friendly rights and highlight the EHRC's Inquiry into FTSE 350 Board appointments.

Obesity can be a disability for discrimination purposes

In Karsten Kaltoft v Kommunernes Landsforening the Advocate General gave his Opinion that obesity can be a disability if the effects of obesity hinder the individual from full and effective participation in professional life.

Being obese is not itself a protected characteristic

The Advocate General said that obesity is not a standalone protected characteristic under discrimination law. However, it can amount to a disability, which EU law defines as being a long term affliction (either physical or mental) which prevents an individual from being able to participate fully and effectively in professional life.

Severe obesity can be a disability

There are different grades of obesity. Mere obesity is insufficient to qualify as a disability, but someone with severe, extreme or morbid obesity can suffer problems with mobility, endurance and mood. These impairments arising from obesity can satisfy the disability test.

UK case law agrees with this approach

The ECJ, which typically follows the Advocate General’s Opinion, will deliver its judgment in this case in due course. In the meantime, the Advocate General’s analysis reflects the approach taken by UK case law on this issue.


Court of Appeal confirms that poorly drafted restrictive covenants cannot be rewritten

The Court of Appeal in Prophet v Huggett has overturned the High Court’s decision to rewrite the wording of a non-compete covenant which, as originally drafted, gave the employer no protection.

Restrictive covenants must be carefully drafted

Restrictive covenants are void unless they protect a legitimate business interest of the employer and go no further than is reasonable. A court will not rewrite a restrictive covenant which is too broadly drafted or which does not give the employer the protection it is seeking.

High Court adds words to a non-compete covenant which otherwise offered no protection at all

This case concerned the drafting of a non-compete covenant which prevented the employee from working at a competitor company in connection with the products that he was involved with at Prophet. The only products he had been involved with were particular to Prophet. This therefore made the covenant useless, as the employee would never be involved with Prophet-specific products after leaving Prophet.

The High Court held that it was appropriate to rewrite the covenant to make it a commercially sensible provision that gave protection to Prophet. The employee appealed to the Court of Appeal.

Court of Appeal says the covenant cannot be rewritten

The Court of Appeal reversed the High Court’s decision. There was no scope to rewrite the covenant in this particular case. Where a clause is ambiguous, the court may interpret it in a commercially sensible way. However, the clause here was very clearly drafted. It was just that the draftsman had not thought through the practical effect of the wording chosen - the clause as drafted gave the employer no protection.

This case is a useful reminder that employers need to give careful thought to the drafting of their restrictive covenants, to increase the prospect of their enforceability.


Mandatory retirement age of 65 was objectively justified

The EAT in Seldon v Clarkson Wright & Jakes has upheld the Employment Tribunal’s decision that the firm’s retirement age of 65 for partners was, in that particular context, objectively justified.

Employment Tribunal says retirement age of 65 was lawful

This decision is the latest instalment in the longstanding litigation by Mr Seldon against Clarkson, Wright & Jakes. Mr Seldon was a partner at the firm. When he reached the firm’s mandatory retirement age he was forced to retire. He argued that the mandatory retirement rule was discriminatory. The firm argued that it was objectively justified.

The case went all the way to the Supreme Court, which decided that the firm had legitimate aims for applying a rule requiring retirement from the partnership at a fixed age. These legitimate aims included the retention of associate solicitors, and workforce planning. The Supreme Court sent the case back to the Employment Tribunal to decide whether the age of 65 was reasonably necessary to achieve the legitimate aims. The Employment Tribunal decided that the age of 65 was reasonably necessary to achieve those aims.

EAT agrees with Employment Tribunal

The EAT has now upheld the Employment Tribunal’s decision. The fact that the retirement age could have been set a year later did not mean that it was wrong to fix it at 65, which fell within a narrow range identified as proportionate (64-66). It was also appropriate to take into account other considerations such as the state pension age, and the default retirement age for employees that existed at that time, in setting it at that point within the range.

Justifying a mandatory retirement age is very difficult

Despite Clarkson Wright & Jakes’ success in this particular case, it will usually be very difficult for an employer to justify having a mandatory retirement age. Much will depend on the nature of the business and the circumstances of the case.


Pay scheme was age discriminatory but transitional pay protection arrangements were justified

In Specht v. Land Berlin, the ECJ said that a German collective agreement which set civil servants’ pay by reference to their age on recruitment was age discriminatory. Whilst changing the pay arrangements to correct this issue the employer included discriminatory transitional pay protection arrangements, which the ECJ held could be justified in the particular circumstances.

Pay arrangement based on age on recruitment was discriminatory

The employer originally set basic pay by reference to the employee’s age on recruitment. It argued that whilst this was directly age discriminatory, it could be justified as it rewarded the employees’ previous work experience. The ECJ agreed that rewarding experience can be a legitimate aim, but said that setting pay by reference to a person’s age went beyond what was necessary to achieve that aim. Setting pay by reference to length of service, on the other hand, would have been proportionate.

Transitional pay protection arrangements were justified

The employer introduced a new pay scheme to fix these issues. However, it included a transitional pay period which perpetuated the original age discriminatory pay arrangements. The ECJ said that in this case the transitional pay arrangements could be justified because of the extreme financial burdens and administrative difficulties the employer would otherwise face.

This case is a helpful reminder that transitional pay protection arrangements may be objectively justified. Employers should bear in mind, however, that member states, like the German Government in this case, are given much more leeway than private employers when claiming objective justification. In particular, the ECJ highlighted that as a general rule you cannot objectively justify discrimination by pointing to the cost and administrative burden involved in fixing the problem.


Employer bound by rates of pay set out in HR consultant’s letter to staff

The EAT in Hershaw and others v Sheffield City Council has held that a letter sent by an HR consultant to employees setting out the outcome of their grievance about pay could be contractually binding on the employer. However, it sent the case back to the Employment Tribunal to decide whether the employees should have realised that the HR consultant had made a mistake in increasing their pay by so much. If so, the pay increases would be ineffective.

Grievance raised by employees regarding their pay

The employees in this case were market patrol officers for the Council. They raised a grievance about their pay, which was dealt with by an HR consultant. The consultant investigated the issue and wrote an outcome letter to them saying that their pay would increase from grade 3 to grade 5. This was a mistake as, in actual fact, the intended effect of the grievance outcome was to increase pay only to grade 4. When the employees did not receive grade 5 pay, they claimed unlawful deduction from wages. The Employment Tribunal dismissed their claims and they appealed to the EAT.

Letter from HR consultant had contractual effect

The EAT concluded that the letter increasing the employees’ pay did have contractual effect. Even though the HR consultant did not have actual authority to make a decision about the employees’ pay, she had ostensible authority, which was sufficient to form a binding contract.

Mistake renders the pay increase ineffective?

The HR consultant’s letter increased the employees’ pay by more than they had been asking for. Under the contractual doctrine of mistake, if the employees should have realised that the pay rise to grade 5 was a mistake, then the increase in pay would be ineffective. This issue was sent back to the Employment Tribunal to consider.

Aside from being a rare example of the doctrine of mistake being argued in an employment context, this case is a cautionary reminder that communications from people who have ostensible authority to act on the employer’s behalf can bind the employer, even if they do not have actual authority to do so.


Delayed resignation by off-sick employee was not fatal to constructive dismissal claim

The EAT in Chindove v William Morrisons Supermarket plc has said that an off-sick employee’s delay in resigning does not necessarily preclude them from making a constructive dismissal claim.

Tribunal said that a 6 week wait before resigning was too long

Under constructive dismissal law, employees cannot delay too long in deciding to resign in response to an employer’s fundamental breach of contract, otherwise they are treated as having instead decided to affirm their employment contracts and continue in employment.

The employee in this case suffered various incidents of racial harassment and discrimination. His grievances weren’t properly dealt with. He resigned 6 weeks later whilst on sick leave. The Employment Tribunal said that the resignation was made too late for the employee to claim constructive dismissal.

EAT disagrees: off-sick employees may legitimately take longer to resign

The EAT said that the issue is essentially one of conduct rather than just looking at the passage of time before the resignation. An employee has to demonstrate by his conduct that he has decided to continue in employment, rather than claim constructive dismissal by accepting the employer’s breach. In the usual case, where an employee is at work, by continuing to work for a time longer than the time within which he might reasonably be expected to exercise his right to resign, he is demonstrating by his conduct that he does not wish to resign. However, it may take longer for an off-sick employee who is not actively working to reach a decision about whether to resign or affirm the contract.

Employers should bear in mind that whether an employee has delayed too long to claim constructive dismissal is fact specific. As this case makes clear, an off-sick employee will typically have more leeway in the amount of time they can take before choosing to resign.


Shared parental leave rights take another step closer

The Government has put three sets of revised draft Regulations relating to Shared Parental Leave and Pay before Parliament. If approved, they will implement the new system of Shared Parental Leave and Pay in relation to babies due on or after 5 April 2015 and children placed for adoption on or after 5 April 2015.

Separately, draft Paternity and Adoption Leave (Amendment) Regulations 2014 have been published. The changes brought about by these draft regulations in part relate to the introduction of Shared Parental Leave but also amend other existing adoption and paternity leave rights.

Read the full guide for Shared Parental Leave and Paternity and Adoption Leave.

BIS has published some basic guidance for employers on issues they need to bear in mind, such as eligibility and record keeping. Acas has also published some general guidance on how the new regime will operate.


EHRC Inquiry into Board Appointments

The Equality and Human Rights Commission (EHRC) has launched an inquiry into the recruitment and appointment practices of the top 350 listed companies at board level in the context of equality law. The aims of the inquiry are to look at how FTSE 350 companies and their agents make decisions about the appointment of board directors, and examine whether those recruitment practices are transparent, fair and result in selection based on merit. The EHRC plans to publish its findings, including recommendations for future action, in spring 2015.

The EHRC has also published ‘Appointments to Boards and Equality Law’, a guide setting out the legal framework within which appointments to boards must be made. The guide is intended to help companies, nomination committees, search firms and recruitment agencies understand what steps are permitted in order to increase the representation of women at board level.


Government crackdown on zero hours contracts abuses

The Government has published its response to its consultation on zero hours contracts, together with enabling legislation in the form of the Small Business, Enterprise and Employment Bill 2014 - 2015. The Bill includes provisions to ban exclusivity terms which prohibit workers from working for another employer, or from doing so without their employer's consent. The Government is also looking to develop by the end of 2014 a code of conduct aimed at employers who wish to use zero hours contracts.

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