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October 2011 Updates

Osborne announces employment law reforms

Chancellor George Osborne has announced two important changes, which are intended to reduce the number of Employment Tribunal claims and boost the economy.

Firstly, the qualifying period for unfair dismissal will be increased from one year to two years with effect from 1 April 2012.

Secondly, fees will be introduced for Tribunal claims. From the information currently available, it appears the following fee structure will apply:

  • An initial fee of £250 when lodging an ET1 claim form.
  • A further fee of £1,000, payable by the Claimant, when the hearing is listed.
  • Higher fees if the claim is for over £30,000.
  • The fee to be refunded if the Claimant wins, and forfeited if they lose.
  • Fees to be waived for those with no money. An important point to note is that, if the test for a fee-waiver is simply being on income support, then most ex-employees will automatically qualify for the waiver (but those still in a job will not).

Disability discrimination and reasonable adjustments

Is it direct discrimination for an employer to refuse to spend on reasonable adjustments a sum similar to what it would spend on financial assistance for an employee with children? Does an employer in these circumstances fail in a duty to make reasonable adjustments? Not necessarily so, according to the Employment Appeal Tribunal in Cordell v FCO.

The Claimant was a Foreign and Commonwealth Office (FCO) employee who, being profoundly deaf, required the support of lip speakers. An offer of a post in Astana was withdrawn when it was estimated that the cost of that support would be over £300,000 per annum. The Claimant argued that the Respondent was willing to pay school fees up to £25,000 per child per annum for other staff in similar posts. She complained of direct discrimination and a failure to make reasonable adjustments. She failed at her initial hearing and on appeal.

The Employment Appeal Tribunal held that there was no direct discrimination and that the job was withdrawn because of cost, not because of the Claimant's disability. The Tribunal's consideration of the cost of lip speakers in the context of the Respondent's total budget for reasonable adjustments and the total cost of embassy staff was legitimate. They also found that what the Respondent was prepared to contribute towards school fees was relevant but not a determinative factor.

Transfer of Undertakings Protection of Employment (TUPE)
and variation of contract

When is an agreed variation of the employment contract following a TUPE transfer effective? When the transfer is not the sole or principal reason for the variation, says the Employment Appeal Tribunal in Smith v Trustees of Brooklands College.

The Claimants were employed as teaching assistants by Spelthorne College. They enjoyed unusual employment terms, in that they were paid as full time employees when they only worked part time. The College was transferred, under TUPE, to the Respondent.

After the transfer, the Respondent realised the Claimants were on terms that did not match the rest of the sector. It sought to bring the contracts into line. The Claimants reluctantly agreed to a detrimental adjustment to achieve this. Subsequently, they claimed the variation in pay was ineffective under TUPE. They argued that the variation of the employment contracts was void, as the sole or principal reason for the change was the transfer itself.

The Claimants argued that "but for" the TUPE transfer, the variation would not have taken place. The Employment Appeal Tribunal decided that this was not the relevant test. The test was what was the reason for the change? This was a clear question of fact and it decided that the finding of the Employment Judge (that the variation was not by reason of the transfer) would not be overturned. The Employment Appeal Tribunal decided that the Employment Judge had correctly had regard to what was in the employer's mind (i.e. the need to correct an obvious error in pay).

Overlapping Employment Tribunal and High Court claims

The Employment Appeal Tribunal has decided in Paymentshield v Halstead that Employment Tribunal proceedings should be stayed when there are threatened High Court proceedings arising from the same facts, even if those proceedings have not yet been issued.

The Claimant brought Employment Tribunal proceedings. His solicitors then sent a letter threatening High Court proceedings and attaching draft particulars of claim. The Respondent sought a stay of the Tribunal proceedings. The Claimant at first agreed but then applied for the Tribunal proceedings to be reinstated, as he wanted to fund the High Court case from the proceeds of the Tribunal case. Two Employment Judges agreed with him on the basis that the High Court proceedings had not been issued. The employer appealed.

The Employment Appeal Tribunal considered the stay should be granted. There were complex issues, some of which overlapped and there was concern that the High Court might be restricted by an Employment Tribunal's findings of fact. It also decided that there was a strong indication of the Claimant's intention to claim relief in the High Court.

Mitigation of loss

The Employment Appeal Tribunal has decided in Debique v Ministry of Defence that the duty to mitigate your loss does oblige a Claimant to consider an offer of new employment with the employer with whom there has been a dispute.

The Claimant worked for the British Army. After the birth of her daughter, and being a single parent, she found it difficult to combine motherhood with her responsibilities as a serving soldier. After a dispute, the Claimant handed in her notice and left. She succeeded in her claim for unlawful indirect sex and race discrimination.

At a remedies hearing before the Employment Tribunal, she was awarded £15,000 for injury to feelings but nothing for loss of earnings, on the basis that she had failed to mitigate her loss. She had refused an offer, made by her employer during her period of notice, of a posting which would have provided stability and which would have addressed her childcare difficulties.

The Employment Appeal Tribunal held that, whether the Claimant's refusal to accept the offer made to her was an unreasonable failure to mitigate her loss, was a question of fact for the Tribunal. It found that the Tribunal had correctly applied the relevant tests and considerations and that it would not overturn its decision.

Re-engagement and alternative vacancies

The Employment Appeal Tribunal has decided in King v Royal Bank of Canada that finding that a dismissal was genuinely on the grounds of redundancy does not remove the need to explain the remedies of reinstatement or re-engagement.

The Claimant was dismissed by reason of redundancy. The Tribunal found that the dismissal was automatically unfair because there was a complete failure to follow the statutory disciplinary and dismissal procedure (since repealed). However, the Tribunal concluded that there was a real redundancy situation and, as there was no suitable alternative job for the Claimant, the dismissal was not substantially unfair.

The Tribunal awarded compensation for financial loss but overlooked the issue of reinstatement and of re-engagement. The Claimant asked for reinstatement in her claim form and confirmed in her statement that she was seeking re-engagement.

The Claimant appealed the decision. She was not legally represented at the time and re-employment was not raised as an issue in her Notice of Appeal. The question of re-employment was only raised at a preliminary hearing by Counsel and permission to amend was granted. The Respondent applied to vary or discharge the proposed amended grounds.

The Employment Appeal Tribunal held that the Tribunal's failure to deal with the remedies of reinstatement and re-engagement constituted a "striking omission" and concluded that it "was and is right to grant permission to amend" on the basis that any prejudice to the Claimant would far outweigh any prejudice that the Respondent would suffer.

The Employment Appeal Tribunal also held that the Tribunal wrongly restricted itself to considering only vacancies at the time of the Claimant's dismissal. The situation with regard to possible vacancies may have changed between the date of dismissal and the period during which the Respondent ought to have followed a fair procedure.

Overlap of conduct and capability reasons

If a dismissal letter gives misconduct as the reason for dismissal but the Employment Tribunal response form pleads "incapability", does the wrong label in the response form prevent a Tribunal from dealing with the claim on the basis of misconduct?

Not if there is no prejudice to the Claimant, says the Employment Appeal Tribunal in Screene v Seatwave.

The Claimant was a financial controller for an events ticketing business. It was the victim of a fraud when approximately €1.7m was lost from its German bank account. The Respondent took the view that the Claimant was grossly negligent in failing to spot this and summarily dismissed him. The Employment Tribunal found that the serious negligence in the Claimant's failings amounted to gross misconduct and that the dismissal was fair.

On appeal, it was argued that the Tribunal should not have departed from the employer's reason of capability as pleaded in the response form. It was argued that the Tribunal had substituted its own reason for dismissal (conduct) in place of the Respondent's pleaded reason (capability) and had failed to direct itself to the relevant law in relation to capability.

The Employment Appeal Tribunal disagreed. It stated that a Tribunal was entitled to make its decision on the basis of what it considered to be the real reason for dismissal, provided the Claimant was not thereby prejudiced. There was no such prejudice in the present case. At all times, the dismissal had been grounded on the same facts, the Tribunal plainly conducted the case on the basis of misconduct, and the Claimant had acknowledged that he had been summarily dismissed by reason of gross misconduct.

Illegality and immigration restrictions

The Employment Appeal Tribunal has decided in Okuoimose v City Facilities that an employer cannot lawfully withhold wages just because it has a reasonable belief that a contract is illegal. The question is whether the contract is illegal, not whether it is thought to be illegal.

The Claimant was a member, by marriage, of the family of a European Economic Area national. Under the relevant immigration regulations, she was entitled to live and work in the UK. However, a Home Office stamp in her passport had expired. She was then suspended without pay for a period of time until a letter confirming the situation was provided by the UK Border Agency. The Claimant made a claim for unlawful deductions from her wages over the suspension period. The Employment Judge held that the contract was illegal and unenforceable during that time.

The Employment Appeal Tribunal overturned this decision. It found that the Claimant was entitled to work in the UK at all times and this was not affected by her failing to obtain a new stamp in her passport. It was, therefore, irrelevant whether the employer was behaving reasonably, or thought it was behaving reasonably.

Lists of Issues

A List of Issues for an Employment Tribunal hearing should not be drawn up in the way that it was in Price v (1) Surrey County Council and (2) Governing Body of Wood Street School says the Employment Appeal Tribunal.

The lay-represented Claimant was constructively dismissed but failed in her whistleblowing case. The Employment Appeal Tribunal made observations about the List of Issues drawn up for the Employment Tribunal hearing.

The Employment Appeal Tribunal suggested that Lists of Issues should distinguish between the central issues and the key factual allegations. In this instance, The Employment Appeal Tribunal noted a failure to discriminate between significant factual issues and those found by the Employment Tribunal to be "utterly trivial".

Giving guidance on drafting and using a List of Issues, the Employment Appeal Tribunal stated that "even where lists of issues have been agreed between the parties, they should not be accepted uncritically by Employment Judges at the case management stage. They have their own duty to ensure that the case is clearly and efficiently presented. Equally, the Tribunal which hears the case is not required slavishly to follow the list presented to it".

Costs and a "campaign beyond the proceedings"

According to Iteshi v OFWAT, pre-trial publicity will affect the likelihood of an award of costs being made against a Claimant in the Employment Appeal Tribunal.

The Claimant had sent a letter to his MP, copied to the Employment Appeal Tribunal, in which he made unsubstantiated allegations of fraud and conspiracy with the Government between judges. This was deemed to be part of a campaign to expose and discredit the Employment Tribunals and Employment Appeal Tribunal. It was described as "disgraceful" and an abuse of process.

The Claimant was also heavily criticised on the grounds that his claim was misconceived and unreasonably conducted.

Even though the Respondent had not issued a costs warning in advance, its skeleton argument was said to be sufficient warning of the way in which matters could proceed, given that the Claimant had a legal background. Costs of £750 were awarded.


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