HR Two minute monthly: Holiday pay; caste discrimination; jurisdiction; unfair dismissal and social media

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Summary: Our January update includes Court of Appeal decisions on jurisdiction and unfair dismissal; a further case on holiday pay and news of new legislation following the Bear Scotland decision; and a useful decision on time limits for bringing a whistleblowing claim.

Two cases consider whether a second hearing on the same facts is an abuse of process

The legal doctrine of res judicata prevents claimants from re-litigating issues which have already been determined in earlier proceedings. “Determined” in this context extends to putting forward a case and then declining to proceed (for example because the case settles or is withdrawn). Two cases this month consider the scope of this doctrine in an employment law context.

Example One - Discrimination claim struck out for lack of jurisdiction

In Nayif v High Commission of Brunei Darussalam the claimant brought discrimination proceedings in the Employment Tribunal. When his claim was struck out on the grounds that it was out of time, he brought a personal injury claim in the High Court. The High Court held that he was not permitted to do so. The Court of Appeal, however, disagreed. In Mr Nayif’s case, there was no adjudication on the issues and he did not act in any way which suggested he had chosen not to have the matter determined: the Tribunal had struck out his claim on purely technical grounds. His personal injury action was therefore allowed to proceed.

Example Two – Whistleblowing claim following four previous Tribunal claims

In James v Public Health Wales NHS Trust the claimant brought whistleblowing and unfair dismissal claims. This was the culmination of a long running dispute with her employer: she had previously brought four other claims (which related to unlawful deductions and a failure to provide a pay statement). The Tribunal struck out her whistleblowing claim on the basis that she could have raised the detriment issues with one of the earlier claims and it was therefore an abuse of process to bring the claim at this stage.

The EAT remitted the issue to a fresh Tribunal on a number of grounds:

  • there is a public interest in avoiding litigation, so the claimant should not be penalised for first seeking to use the internal grievance process. The claimant’s reasons for not pursuing the claim at an earlier stage should therefore have been considered;
  • the claimant was not going over old ground in bringing the whistleblowing claim. The EAT made specific reference to the difference between a “straightforward” unlawful deductions claim and a “complex” whistleblowing claim.
  • the Tribunal had failed to consider whether there was evidence that the proceedings amounted to unjust harassment of the respondent. In most cases, this will be necessary to establish abuse of process. Examples of unjust harassment include the requirement to deal with the same issues twice, cost and stress on witnesses. In this case, the EAT particularly noted that the Tribunal would consider the same evidence in relation to the unfair dismissal claim, which had been permitted to proceed.

Lessons for employers

Employers often run arguments which rely on the doctrine of res judicata where an employee proves to be a serial litigant or where there is a long running dispute between the parties. These cases provide a warning for employers that the doctrine will not be applied without a proper consideration of the circumstances. Where a claim has been struck out on purely procedural grounds or where the dispute is ongoing and complex, the Courts and Tribunals are likely to allow claims to proceed.


Holiday Pay – EAT considers claim for holiday on termination where a worker was denied right to paid annual leave

The EAT has considered yet another aspect of the problematic holiday provisions of the Working Time Regulations. In The Sash Window Workshop Ltd & Anor v King, a self employed salesman was dismissed at age 65 in circumstances which the Tribunal found amounted to age discrimination. During his engagement, he was not entitled to paid annual leave but the Tribunal also found that he was a worker for the purposes of the Working Time Regulations 1998 (“WTR”) and made findings in his favour in relation to three types of holiday pay claim.

EAT considers right to payments for accrued but untaken holiday

The main point of appeal related to payments for holiday Mr King had accrued and not taken during the years prior to the final year of his engagement. The Tribunal extended the principle from NHS Leeds v Larner, which held that the WTR must be interpreted to allow a worker who was unable or unwilling to take holiday during a period of sickness absence to carry the leave over. It held that Mr King was unable to take paid annual leave (because it was not granted to him) and the same principle should apply.

The EAT disagreed and remitted this element of the claim. The Tribunal had considered the right to be paid for annual leave without first addressing the right to take leave. Mr King had in fact taken annual leave, and in some years he had taken his full entitlement. This led to a number of problems with the Tribunal’s decision. First, he had been paid for the period in question. Second, compensation where the right to take leave is breached is not the payment of holiday pay, but such compensation as is just and equitable. The EAT found that a claim for this type of compensation was not an award of “wages” so could not be brought as an unlawful deduction claim. Finally, the EAT found that in accordance with the Bear Scotland decision, the Claimant could not establish a series of deductions to claim for historic holiday pay.

Does this decision widen the rights of workers?

Although the case was remitted, the EAT, on a first reading, does appear to accept that the principle from Larner could apply more widely. This means that where a worker is unable to take annual leave for reasons beyond their control, they may be entitled to carry that leave over. However, the EAT’s reasoning makes it clear that this will only be triggered in limited circumstances. It seems that the worker will need to have been prevented, as a matter of fact, from taking the leave. An assumption that leave would not have been granted (as made in this case) is insufficient. Further, compensation will be limited to what is just and equitable, bearing in mind that the worker will have continued working and been paid and that double recovery will not be possible.


Time Limits And Whistleblowing

When does the time limit for bringing a detriment claim run? In discrimination cases, case law confirms that it runs from the date the detriment arises, not the date it is communicated to the employee. The EAT has considered whether the same applies to detriment claims under the Employment Rights Act 1996 where the detriment relates to whistleblowing.

EAT upholds “counter-intuitive” legal position

In McKinney v London Borough of Newham, the claimant appealed the Tribunal’s decision to strike out his whistleblowing detriment claim. The detriment related to the rejection of a grievance. If the time limit ran from the date the decision was taken, he was out of time. If it ran from the date the decision was communicated to him, he was in time.

With obvious reservations, the EAT agreed with the Tribunal. There is no material difference between the detriment provisions for discrimination and whistleblowing. Therefore the clear authorities on the point under discrimination law apply to whistleblowing. That meant that the time for bringing a claim began to run even though the employee was not aware that a detriment had been suffered.

Escape clause?

In all time limit cases, there is a discretion for the Tribunal to extend time. It had declined to do so in this case and that finding was not under appeal to the EAT. Given the EAT’s clear misgivings about a time limit starting to run before the claimant has knowledge of the triggering event, it might seem that this discretion gives Tribunals a way of resolving any injustice.

However, unlike the time limit itself, this discretion is not materially the same in discrimination and whistleblowing cases. In the former, the Tribunal may extend time where it is just and equitable to do so. In whistleblowing cases, however, (as with unfair dismissal claims) the Tribunal may only extend time where it was not reasonably practicable for the employee to have presented the claim in time. There is significant case law in this area which demonstrates that this latter test is strictly applied. For example, an employee’s ignorance of the law, in most cases, is not sufficient and nor is the failure of electronic communications meaning that a claim form cannot be submitted in time. In the latter case, Tribunals are clear that there is a three month period for filing, so it is the claimant’s fault if they choose to leave it until the last minute to file. By analogy, an employee like Mr McKinney, who files a claim at the last minute and makes a mistake about the correct final date, may find that the Tribunals will not exercise the discretion to extend time in their case.


Holiday Pay – The Government Takes Action

Following the Bear Scotland decision, the Government has announced that it will be legislating to introduce a two-year limitation period on unlawful deductions claims for holiday pay. Please select the link for more information on this development. This action follows news that Unite, the union involved in several of the cases heard by the EAT, has decided not to appeal the decision. This is good news for employers who were concerned about significant legacy liability for underpaid holiday pay.


Dismissal for non-work related social media use

The use of social media platforms such as Twitter is increasingly leading to problems in the workplace. In Game Retail Limited v Laws, the EAT was asked to consider a finding that a misconduct dismissal for offensive tweets made on a personal Twitter account was unfair.

Mr Laws worked as a risk and loss prevention officer. He had responsibility for 100 stores and followed them on his personal Twitter account. A number of stores followed him back. There was nothing on his profile which linked him to his employer. However, it came to the employer’s attention that he had sent a number of offensive tweets. None were work related, but they contained offensive language about issues such as football and the NHS.

Tribunal’s finding not upheld by EAT

The Tribunal found that the dismissal was unfair. The EAT concluded that, in doing so, it had substituted its own opinion and it remitted the case as it held it could be decided either way on the evidence. While the main legal issue for the appeal was the application of the band of reasonable responses test, the social media issues are interesting. In reaching its finding, the EAT concluded that use of social media in a purely personal context with no clear workplace policy on the issue was still capable of amounting to gross misconduct. This is contrary to the High Court’s finding in Smith v Trafford Housing Trust, where private use of Facebook was found not to be misconduct, even where the employee had identified his role with the employer on this profile.

Social Media Issues Are Fact Specific

The EAT declined to give general guidance on dismissals for misuse of social media. It said that the issues are fact sensitive and laying down guidelines risked an inappropriate “tick box” approach being taken. However, it did list principles which it felt were of general application and should “obviously” be considered. These included the existence of a social media policy, the seriousness of the misuse, previous warnings and actual or potential damage to customer relationships.

The final outcome of this case remains to be seen. However, one factor focused on by the Tribunal was the public nature of Twitter. In the Smith case, the employee had used security settings so that access to his Facebook account was limited. By contrast, it was noted that Mr Laws had not sought to restrict access to his Twitter feed. To a degree, at least, this is due to the different nature of Twitter, where in most cases, tweets are publically accessible. For this reason, it may be harder in future for employees to argue that “personal” statements on Twitter (as opposed to on Facebook) are not capable of amounting to gross misconduct, should they come to the employer’s attention.


Does the label placed on a dismissal matter?

In Brito-Babapulle v Ealing Hospital NHS Trust, an employee was dismissed for gross misconduct when she continued to see private patients whilst off sick. Her unfair dismissal and disability discrimination claims failed in the Tribunal. On appeal to the EAT she argued that the finding of gross misconduct was unsafe because the employer had referred to the conduct as “fraud” but the Tribunal did not address this as the reason for dismissal. The EAT upheld the Tribunal’s decision.

Individual must know the case against them

The Court of Appeal has now agreed with the EAT. While an employee is entitled to know what the allegation against him or her is, there was no doubt about that in this case. The use of the “fraud” label, while unfortunate, did not materially impact on the finding of gross misconduct.

Will it always be fair to dismiss for gross misconduct?

No. A further issue in this case, which is to be re-heard by the Tribunal, is whether dismissal was within the band of reasonable responses in this case. The Tribunal had found that, once gross misconduct is established, it will always be a reasonable response to dismiss. The EAT held this was not the case and the point was not appealed. The principle remains that, once a finding of gross misconduct is made, the Tribunal must then go on to consider whether dismissal was a reasonable sanction. In most cases it will be but this point must still be addressed.


Service Provision Change – factors to consider when assessing who is assigned to an organised grouping of employees

For TUPE to apply to a service provision change, there must be an organised grouping of employees. If so, those employees assigned to the organised grouping transfer under TUPE. One of the issues before the EAT in London Borough of Hillingdon v Gormanley and others was whether 3 managerial employees were assigned to an identified grouping of employees.

Three key EAT findings

The EAT overturned all of the findings of the Tribunal in this case. While parts of the judgment are fact specific, there are three key points for employers to bear in mind. First, even where a service provider has only one client, it cannot be assumed that managerial staff are assigned to the organised grouping. The Tribunal is required to consider the overall structure of the business, the terms of the individuals’ contracts and how the arrangements would work when there was more than one client.

The second point relates to potential reductions in compensation on the basis that the individuals would have been dismissed anyway (“Polkey” reductions). In assessing this, the Tribunal must consider what would have happened if the individuals had not been unfairly dismissed, not what would have happened if the client had not cancelled its contract with the service provider. The EAT confirmed that there should only be a finding that the employment would have continued indefinitely where the evidence that the employment might have terminated earlier was “so scant” that it could be ignored.

Finally, the EAT found that since the Respondent had succeeded on all elements of the appeal, it was appropriate to grant costs for the fees paid for the appeal. This resulted in an award of £1,600, for which all three claimants were jointly and severally liable.


EAT allows caste discrimination claim under “ethnic origin”

There has been an ongoing debate as to whether caste discrimination is covered by the Equality Act 2010 (EA). The EA contains a specific provision requiring the Government to introduce legislation to prevent caste discrimination but this has not yet been enacted.

In Chandhok and Anor v Tirkey, the Claimant worked for the Respondents as a nanny. Both parties were of Indian origin, but the Claimant was of a lower caste. When her employment came to an end, she brought a number of claims including race discrimination and discrimination on grounds of religion or belief. By way of an amendment, she alleged that her race claim included discrimination on the grounds of her caste. The Respondents applied for this element of the claim to be struck out.

Ethnic origin potentially covers caste

The EAT, agreeing with the Tribunal, refused to strike out the caste discrimination issue. Although the EA provides for the introduction of specific legislation to cover caste discrimination, this requirement does not change the existing interpretation of the concepts of race which have already been enacted. Case law on the term “ethnic origin” confirms that it is broad enough to cover issues of descent if they are related to ethnicity. This could cover at least some forms of caste discrimination, depending on the circumstances. Accordingly, it was not appropriate to strike the claim out.

Broader implications?

In its judgment, the EAT made it clear that this was not a free standing caste discrimination claim. Rather, it is confirmation that ethnic origin may, in certain factual situations, cover discrimination which arises on the basis of caste.

Perhaps of more interest, given that specific legislation on caste discrimination has been promised this summer, are the EAT’s comments on strike outs in general. It restates the principle that strike outs in a discrimination claim should be granted sparingly and with caution. While not a blanket ban, it suggests strike outs are only likely to be appropriate where the claim is out of time, the claims have been made so repetitively that they become an abuse of process (although see discussion of Nayif and James above) or where the case as pleaded does no more than indicate a possibility of discrimination.

A strict adherence to this principle is bad news for employers, given that discrimination is often raised by claimants for tactical reasons (for example to increase the value of a claim or increase reputational risk for the employer). If the Tribunals now allow all but the most clearly unmerited of discrimination claims to progress to a full hearing, it will add to the cost of litigation and makes it harder for parties to settle claims.


Whistleblowing rights have the same territorial scope as ordinary unfair dismissal

The EAT in Smania v Standard Chartered Bank has clarified that an individual’s right to claim whistleblowing is subject to the same territorial scope limitations as a claim for ordinary unfair dismissal - namely whether the employment had a sufficiently strong connection with Great Britain and with British employment law. The EAT rejected arguments that a looser test should apply to whistleblowing claims because of the public interest in airing issues of malpractice in whistleblowing allegations.

In this case, the employee, who is Italian, lived, worked and paid tax in Singapore. His employment contract was subject to Singaporean law. After making allegations of financial malpractice, he was dismissed. His only connection with the UK was that the Bank had its headquarters in Great Britain - the Singapore operation was a branch of the Bank, not a separate legal entity. Given these facts, the claimant clearly didn’t satisfy the territorial scope test to claim whistleblowing in the UK Employment Tribunal.


No implied obligation to return confidential documents post-termination

In Eurasian Natural Resources Corporation Limited v Judge, the High Court held that there was no implied term in a non-executive director’s letter of appointment that he deliver up confidential documents after termination of his directorship. The director’s letter of appointment required him to keep information confidential during and following termination of appointment, but didn’t expressly require him to return company documents that he had in his possession following termination. The High Court said it wasn’t necessary to imply such a term to give business efficiency to the contract or to reflect the intentions of the parties.

This case highlights the importance to employers of ensuring that their contracts of employment and terms of engagement with other types of staff include appropriate wording requiring delivery up to the employer of all documents and other company property at the employer’s request, and in any event on termination of the engagement.


Final shared parental leave regulations and other family friendly rights changes

The final versions of the Shared Parental Leave (SPL) Regulations are now on the statute books, as are other family friendly right changes such as the extension of existing unpaid parental leave to parents of children aged between five and 18, and the new right of surrogate parents to adopt.

Employers are now in the process of putting together their policies in preparation for the new regime, and are facing a number of questions about the difficult issues SPL throws up. To help work through these issues you are welcome to come to our SPL Surgery on Wednesday morning, 21st January 2015. Please select the link if you would like to attend.

BIS has produced a helpful online calculator to help prospective parents work out what their maternity, paternity and shared parental leave and pay entitlements are. You can access it by clicking here.


Tribunal statistics show continued decline in employment Tribunal claims

The Ministry of Justice has published Tribunal statistics for the July to September 2014 period. There were 61% fewer claims than in the same period of 2013, although the number of claims was 12% higher than the previous quarter.

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