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Employers Update - September 2012

Welcome to the September edition of Employ!

We hope that you have all been enjoying the Summer of sports and for those of you who are not so sporty, that you have enjoyed a few of the rays of sunshine that have managed to break through the clouds from time to time.

This month’s Employ! brings you a round up of some recent cases. The first case is a reminder of the burden of proof in discrimination cases; consideration is then given to a recent case of constructive dismissal; we then highlight a number of recent cases dealing with contractual issues before another recent redundancy case. Finally, we share with you a thought-provoking question and answer regarding reference requests for employees you are keen to move on!

We look forward to seeing as many of you as possible for our Lancashire event on 6 September 2012 on the hot topic of "Retirement and Pension Auto-Enrolment". For those of you who have not yet had an opportunity to book, registration forms and full details can be accessed via the HR Exchange website or, if you prefer, please call.


Will Clayton
Head of Employment

Key Employment Team Contacts:

Will Clayton Elaine Hurn Emma Swan
Will Clayton
Head of Employment
Email Will
0844 8000 263
  Elaine Hurn

Email Elaine
0844 8000 263
  Emma Swan
Senior Associate

Email Emma
0844 8000 263



In This Edition:

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Discrimination Burden of Proof

The Supreme Court has held that Tribunals may draw inferences of discrimination by considering how an employee was treated compared to others. It is to be noted that even if the situations compared are not precisely the same, such inferences may justify shifting the burden of proof to the employer.

In this particular case, the employee (Mrs Hewage) was a Dentist at the Aberdeen Royal Infirmary. She said she had been bullied and harassed because she was a Sri Lankan woman. The Tribunal agreed, in part because of the Infirmary’s treatment of two white men: Professor Forrester and Mr Larmour. Professor Forrester also had issues with the individual who had bullied Mrs Hewage but their roles were altered so they did not meet. Mr Larmour replaced Mrs Hewage. He received the co-operation and assistance that she did not.

What do I need to know?
Mrs Hewage’s circumstances were not exactly the same as either comparator but there was sufficient similarity, given the stark difference in treatment, to justify the Tribunal’s inference of discrimination. It was then for the employer to prove they had not discriminated, which they failed to do.

In order to discharge the burden of proof once it has moved to the employer, it is necessary for the employer to prove, on the balance of probabilities, that the treatment was in no sense whatsoever on the grounds of sex.

It is important for employers to have clear equal opportunities policies and procedures and to ensure that if concerns are raised by an employee, they are dealt with promptly and consistently under any such policies and procedures or any grievance policy. All steps taken should be documented carefully and decisions taken explained fully with particular attention to any misinterpretation that may be conceived by an employee.

Constructive Dismissal

A recent case has been decided by the EAT to the effect that if an employer upholds an employee’s grievance about treatment by his immediate Manager, this can then prevent the employee relying on the treatment to show a breach of the implied term of trust and confidence, so as to resign and claim constructive unfair dismissal.

In this case, the employee worked as a Head Chef and raised a grievance about how he was being treated by his immediate Manager. This was upheld by more senior Managers, who took steps to rectify the situation.

The EAT found that although the immediate Manager had behaved badly towards the employee, this did not by itself amount to a breach of the implied term of trust and confidence. The actions of the more senior Managers had prevented the matter escalating into a state of affairs that would have justified the employee leaving and claiming he was constructively dismissed.

What do I need to know?
There is a distinction between preventing matters escalating into a breach of the implied term of mutual trust and confidence and trying to cure a breach which has already taken place. What is of critical importance is that any concerns raised by an employee are dealt with promptly and, as with the case reported above, are dealt with consistently in line with any grievance policy and procedure in place. If grievances against other employees are upheld, then it is important for an employer to then consider taking any appropriate or necessary action against those employees so as to prevent further matters arising that could entitle the employee who raised the initial grievance to allege a breach of the implied duty of trust and confidence.

Unpaid Work Scheme Does Not Breach Human Rights

Turning to a potential breach of an express term of an employee’s contract, in this particular case the EAT held that an employer can commit a fundamental breach of contract by intentionally failing to pay an employee the full amount of pay properly due, even if making an honest mistake as to how much pay is due.

Here, the employee was off sick with stress and depression. The employer, a school, decided to pay only half pay, rather than full contractual sick pay, on the basis of a mistaken interpretation of a collective agreement in place covering sick pay, thinking that it covered physical but not mental injuries.

At the Tribunal, the employee won a wages claim for sick pay but lost a constructive dismissal claim, as the Tribunal found that whilst the school was in breach of contract by not paying full sick pay, it was not in fundamental breach of contract. However, the EAT overturned the Tribunal’s judgment, stating that a finding of a fundamental breach was inevitable on the facts; the school had a "settled intention" not to pay the full contractual sick pay due. The school had acted on its view of the contract, rather than simply asserting it.

The EAT cited previous case law that repudiation might not occur when a party is acting under a genuine but mistaken belief as to the terms of a contract, but noted that it may not be a fundamental breach of contract for an employer to reduce pay by a material extent if its approach arose from an error or simple mistake.

What do I need to know?
It is very important that before deciding not to pay an employee, whether regarding sick leave, holiday leave or otherwise, the contractual terms are carefully checked before seeking to rely on them in not paying an individual. Money matters!

Mutuality of Obligation

Can a person working under a succession of individual contracts be an employee? Yes, says the EAT, reversing a Tribunal decision that had held that there was no contract because there was no "mutuality of obligation".

In this case, the Claimant worked on an "assignment by assignment" basis for the Respondent from 2 February 2005 until 5 November 2010. He claimed that each individual assignment was a contract of employment so giving him sufficient continuity of service to bring a claim for unfair dismissal. The Respondent’s case was that even though the Claimant was a worker for the purposes of employment legislation, he was not an employee.

The Tribunal Judge had held that the assignments did not amount to separate contracts of employment because any assignment could be terminated on either side without it being completed and there was "no mutuality of obligation" and hence no contract.

The EAT, relying mainly on previous case law, held that there was a contract in place and sufficient mutuality whilst the Claimant was actually undertaking an assignment for the Respondent. Contrary to the Tribunal’s decision, the fact that the assignment could be brought to an end did not mean that there was no contract in existence whilst the assignment was continuing.

What do I need to know?
The EAT was influenced by the fact that the Respondent’s own handbook referred to the assignments as being contracts. This was a salutary lesson for the Respondent that a written agreement, contract or document will be analysed carefully (as well as consideration given to the practical day to day workings of the relationship) and it is very important that all such documentation reflects the intentions of the employer and the realities of the situation.

Umbrella Contracts / Continuity of Employment

The EAT has recently considered the position where individuals are employed by a contractor and were engaged under a zero hours contract, and whether it was open to a Tribunal to find they were employed under a global contract of employment, with continuity preserved throughout.

The EAT decided it was open to a Tribunal to reach this finding.

In this case, carers were employed by Carewatch Care Services Limited, a company contracted to a Primary Care Trust ("PCT") to provide care for a severely disabled individual. The contract was tendered and taken over by Pulse Healthcare. The carers asserted that they had rights under the Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE") against the new contractor, but as a preliminary point it had to be established that the carers were employees and for the purposes of any claims they might wish to make, whether they had continuous service.

The carers were given a zero hours contract. It stated there was no obligation to provide work and the employees were ostensibly free to work for another employer. The Tribunal found that the contract given to the carers did not reflect the true agreement between the parties. In practice, they performed services, were obliged to carry out the work offered and had to do it personally. Finally, the argument that these were individual discrete contracts as opposed to a global umbrella arrangement did not stack up. Carewatch was providing a critical care package "of a most challenging kind". The Tribunal described it as "fanciful" to suppose that the employer relied only on ad hoc arrangements in the provision of such a service. Therefore, the Judge was entitled to hold that the Claimants were employed by Carewatch under global contracts of employment with full continuity.

What do I need to know?
Again, it is of utmost importance that a business’ needs are considered carefully before putting contractual arrangements into place and it is equally important to make sure that those contractual arrangements reflect the reality of the working relationship.

"Pool of One" in Redundancy Selection

The EAT has considered the question of whether the "range of reasonable responses" test applies to the decision to use a "pool" of one in a redundancy selection exercise. They found that yes, it does.

In this case, the Appellant golf club dismissed the Claimant, its sole bar steward, for redundancy. The Employment Tribunal found the dismissal unfair, noting that the club had not considered any sort of selection pool.

The EAT overturned the finding of unfair dismissal, holding that the Employment Tribunal had not applied the "range of reasonable responses" test to the question of whether it was reasonable for the club to focus on the Claimant alone as the person at risk of redundancy, indicating that the Tribunal ought to have asked itself whether it was reasonable for the club not to have considered selection from a wider range of employees than just the Claimant.

The EAT also held that the Employment Tribunal’s findings and consultation were linked to the "pool" issue and remitted the case for re-hearing in a fresh Tribunal.

What do I need to know?
Employers may take some comfort from the finding that in some straight-forward redundancy situations, where a decision is made to eliminate a single role, an employer may act reasonably even if it does not apply its mind to the question of establishing a selection pool. However, in most cases, it would still be prudent at least to consider whether a selection pool is appropriate.

What to Expect in Employment Law – Autumn 2012

Many of the Government’s plans to reform employment law should progress in the next few months. Consultations are expected to be launched on Mr Justice Underhill’s proposals to reform the Employment Tribunal Rules and on changing the use and style of settlement agreements. The Government will confirm whether it intends to introduce a new system of flexible parental leave and flexible working in its response to the "Modern Workplace Consultation". Parts of the Protection of Freedoms Act 2012 came into force in September 2012 and the Enterprise & Regulatory Reform Bill 2012-2013 will move onto the Report stage in the House of Commons.

Your Questions Answered

Q: We have an employee who we have been performance managing for some time. This has been due to her general inadequate performance in the role and various other issues such as lateness. She has now handed in her notice, and her prospective employer has asked us for a reference. In particular, they have asked us to comment on her suitability for the new role with this prospective company. Given our problems with this employee, we are unsure how to deal with this request. What are the key things we should bear in mind?

A: There is no general duty on you as an employer to write a reference for one of your employees. Nevertheless, a refusal to provide the reference may present you with certain problems, particularly if this represents a departure from consistent prior practice, or from company policy. If you do refuse to give a reference, you should make sure that the refusal does not appear discriminatory, as a claim may be brought in this respect.

If you do decide to supply a reference, take care as to what is included as you will be under a duty both to the prospective employer and to the ex-employee to show proper care in its preparation, and may be liable to them if you fail to do this.

For example, presenting an ex-employee as someone of greater ability than they actually are, may enable the prospective employer to bring a claim against you for negligent misstatement.

Conversely, if you choose to detail the issues which have arisen concerning your employee in the reference, she may be able to start proceedings against you, alleging that the statements which it contains are inaccurate and/or untrue. However, if the performance management process which you have undertaken with her involved documented meetings at which your concerns were addresses, it is likely that you would have evidence at your disposal to defend any such claims. Care should be taken to ensure that you are not overly disparaging, as insupportable claims would leave you vulnerable.

A more practical option in this scenario, and one widely chosen by employers, is to only provide factual references, simply giving the dates the employee worked at the company and the role(s) she carried out.

Copyright 2006 - 2012 Taylors Solicitors

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