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Employment Law Round Up : Recent Case Decisions

In addition to changes to UK employment legislation, decisions made across various courts and authorities also determine how existing legislation will be decided in future employment disputes.

Here is a summary of recent cases across various courts and authoriteis:

European Court of Justice

Advocate General delivers opinion on objective justification in equal pay claims

The Advocate General has given his opinion on how to approach objective justification in the context of a difference in pay between two different groups of employees, one predominantly male and one female, which has arisen as a result of redeployment under a collective agreement. He also considered whether maintaining good industrial relations could be taken into account when considering objective justification. He concluded that it could not, on its own, constitute such justification. (Kenny and others v Minister for Justice, Equality and Law Reform, Minister for Finance, Commissioner of An Garda Síochána C-427/11.)

Age and pension related reduction in redundancy pay was disability but not age discrimination

The ECJ has held that a provision in a redundancy policy, which reduced compensation for workers aged over 54 by taking into account the earliest date from which they could receive a state pension, was not unlawful age discrimination under the Equal Treatment Framework Directive (2000/78/EC). The ECJ found that the difference in treatment on grounds of age was justified by a legitimate objective of protecting younger workers and facilitating their reintegration into employment, whilst taking into account the need to achieve a fair distribution of limited financial resources given that older workers could receive replacement income from the state pension. Further, the provision did not go beyond what was appropriate and necessary to achieve the objective.

However, the ECJ found that the provision gave rise to indirect disability discrimination under Article 2(2) of the Directive. It adversely affected severely disabled workers, who received less redundancy compensation than non-disabled workers because they were entitled to a state pension at a younger age. Further, this could not be objectively justified. Among other things, it disregarded the greater difficulties that severely disabled people face in finding new employment, which tend to be exacerbated as they approach retirement age. (Odar v Baxter Deutschland GmbH C-152/11.)

Supreme Court

Supreme Court confirms volunteer without contract has no protection under discrimination law

The Supreme Court has upheld the Court of Appeal's decision that a Citizens Advice Bureau volunteer, who had no contract, was not covered by the Disability Discrimination Act 1995 or the Equal Treatment Framework Directive (2000/78/EC). The volunteer was not "in employment" within the definition in the DDA and it was not the intention of the draftsmen of the Framework Directive to provide protection to volunteers in her position.

The court declined to make a reference to the ECJ as the interpretation of the Framework Directive in this respect was not open to reasonable doubt. (X v Mid Sussex Citizens Advice Bureau and others [2012] UKSC 59.)

Geys: employee must accept employer's repudiation for contract to be terminated

A majority of the Supreme Court has restored the High Court's decision that an employee was employed until the date on which he was deemed to have received unequivocal communication of his employer's decision to exercise its contractual right to summarily dismiss him by making a payment in lieu of notice (PILON).

The majority held that where an employer repudiates an employee's contract, the contract only ends if and when the employee elects to accept the repudiation (as previously held by the majority of the Court of Appeal in Gunton v Richmond-upon-Thames LBC [1980] ICR 755). The majority also held that where an employer decides to exercise a contractual right to terminate an employee's employment by making a PILON, the employer needs to make it clear to the employee both that it is making a PILON and that it is doing so in exercise of its contractual right to summarily terminate the employee's employment. (Geys v Société Générale, London Branch [2012] UKSC 63.)

Court of Appeal

Court of Appeal gives guidance on legal status of lists of issues

The Court of Appeal has held that an employee was not prevented from raising an issue at the substantive tribunal hearing, despite the fact that it had not been included in a list of issues. Although it upheld the EAT's decision, the court held that it had been wrong to find that the tribunal had exercised its case management powers under rule 10 of the ET Rules and restricted the issues to be determined to those recorded on the list. The list of issues formed part of the reasons for the order produced following a pre-hearing review and was not the order itself.

The court went on to clarify how lists of issues should be used, confirming that although they will be followed by tribunals as a general rule, a tribunal is not bound to do so if it considers it inappropriate in the circumstances. (Parekh v London Borough of Brent [2012] EWCA Civ 1630.)

Pay protection arrangement objectively justified under equal pay law

The Court of Appeal has, by a majority, dismissed equal pay claims arising out of an employer's policy of protecting employees' pay by preserving their existing pay points after their roles had been downgraded in a restructure. Although the policy had been applied consistently to men and women, the effect was to benefit the male comparators more than the female claimants. This was because before the restructure, which amalgamated a senior role and a junior role into one, the men had performed the more senior roles and reached a higher point on the employer's pay scale.

The court found that, notwithstanding the lack of historic discrimination, the obvious disparate adverse impact that the pay protection policy had on women was itself evidence of the taint of sex. However, the indirect discrimination was objectively justified because the pay protection policy was a proportionate means of achieving a legitimate aim. Preventing the claimants and the comparators from suffering a reduction in pay, and avoiding a loss of skills and experience, were plainly legitimate aims. If the employer had, as the tribunal had suggested, made the (more senior) men redundant to avoid equal pay difficulties, this would have amounted to direct sex discrimination against those men. Freezing the pay of those on higher pay points, to allow those on lower pay points to catch up, would not have solved the problem because there would still have been a pay differential in the short to medium term. Once these alternatives had been rejected as unworkable, there was no other means of achieving the legitimate aims. (Haq and others v Audit Commission [2012] EWCA Civ 1621.)

Claims against employee for breach of copyright and misuse of confidential information covered by Articles 18 to 21 of Brussels Regulation

The Court of Appeal has held that claims against an employee for breach of copyright and misuse of confidential information are covered by section 5 of the Brussels Regulation (Articles 18-21). Section 5 deals with "matters relating to individual contracts of employment" and requires (among other things) claims against an employee to be brought in the courts of the employee's domicile.

Consequently, the employee could only be sued in Poland where he was domiciled. He could not be sued in England as a co-defendant pursuant to Article 6.1. This judgment gives a broad application to the employment provisions in section 5 of the Brussels Regulation. As a result, the jurisdictional protection they give to employees is now more widely available. (Alfa Laval Tumba AB and another v Separator Spares International Ltd and others [2012] EWCA Civ 1569.)

Dismissal following employee's "little Sikh club" comment was not victimisation

The Court of Appeal has held that a Muslim employee, dismissed for complaining that her employer's business was a "little Sikh club", was not victimised contrary to the Employment Equality (Religion or Belief) Regulations 2003. She was dismissed because her employer believed that she had made an offensive racist comment, not because she had done a protected act. (Pasab Ltd t/a Jhoots Pharmacy and another v Woods [2012] EWCA Civ 1578.)

Freedom of insured to choose lawyer not contravened by insurer restricting indemnity for legal fees to prescribed rates

The Court of Appeal has set aside a High Court decision, holding that insurers providing legal expenses insurance (LEI) cover can restrict an insured's indemnity to the prescribed rates of remuneration it has agreed to pay its panel firms. The court considered that this would not breach the rights of those insured to the freedom to choose their own lawyer.

The decision leaves employees using LEI to fund their legal costs with the choice of either using one of their insurer's panel firms at no extra cost to themselves, or choosing their own solicitor, but having to pay the difference between their solicitor's fees and the fees the insurer would have paid a panel firm. (Brown-Quinn and another v Equity Syndicate Management Ltd and another [2012] EWCA Civ 1633.)

High Court

Claimant failed to beat offer but costs order against him would have been "unjust" under CPR 36.14(2)

The claimant had successfully sued his employer following a finding of gross misconduct against him, and his demotion, as a consequence of remarks he had made about gay marriage on Facebook. However, the claimant had recovered only £100 damages and had failed to beat the defendant's Part 36 offer. The question before Briggs J was whether the usual Part 36 costs consequences should follow, or whether, in the circumstances, it would be "unjust" under CPR 36.14(4) for the claimant to bear the costs.

It was held that each party should bear its own costs. Because of the issues involved, "this was, unusually, a case properly taken to trial, by both parties." In addition, the case was not about money and the reality was that the claimant had been the successful party. Accordingly, the claimant had overcome the "formidable obstacle" of demonstrating that it would be unjust for the usual costs consequences of his failing to beat the Part 36 offer, to follow. (Smith v Trafford Housing Trust [2012] EWHC 3320 (Ch).)

High Court considers an employee's duty of fidelity during garden leave and the application of the penalty doctrine

The High Court has rejected a former employee's claim for a deferred incentive award because the award was unvested on termination and he was not a "good leaver". Under the terms of a compromise agreement, the employee would be treated as a good leaver (and therefore keep the award under its original terms), provided that he complied with his obligations under his employment contract and the compromise agreement (including while on garden leave). The High Court held that, in assisting a rival to set up in competition with his employer, disclosing confidential business information to the competitor and helping to recruit one of his colleagues to work for them, the employee was in repudiatory breach of contract and, therefore, not entitled to the unvested award. In reaching its decision, the court reviewed the authorities on the scope of the duty of fidelity and concluded that the duty was not reduced during the employee's garden leave.

The court also found that the clause in the compromise agreement which gave the employee "good leaver" status (and prevented forfeiture of the award) provided he complied with various obligations could not be a penalty. The clause did not forfeit a benefit, it conferred a conditional benefit (as did the award itself, until vested), which never accrued because the employee failed to satisfy the condition (namely, compliance with his obligations). In any case the penalty doctrine did not apply to a clause forfeiting contingent rights. Even if the doctrine did apply, the relevant clause was not a penalty. The possibility of the award not vesting was just one element of a bundle of rights and obligations which, viewed as a whole, was commercially justifiable (and therefore not penal) in any event. (Imam-Sadeque v Bluebay Asset Management (Services) Ltd [2012] EWHC 3511 (QB).)

Employment Appeal Tribunal

Employer not liable for refusing to employ candidates put forward by union official

The EAT has dismissed the appeal of three trade union members who claimed that they had been refused employment on the grounds of their union membership. They had brought claims in the employment tribunal under both section 137(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 and regulation 3 of the Employment Relations Act 1999 (Blacklists) Regulations 2010.

The EAT accepted that the relevant manager's decision not to employ the claimants was not due to their union membership or activities, but was instead motivated by defiance in that he did not like being told by the union official who he must employ. The EAT also found that any "mental list" created by the manager was not used for the purposes of discrimination within the meaning of the Blacklists Regulations. (Miller and others v Interserve Industrial Services Ltd UKEAT/0244/12.)

Redundancy dismissal after maternity leave was not discriminatory but might have been automatically unfair

The EAT has overturned a tribunal's decision that a part-time marketing manager, who was told at the end of her maternity leave that she was redundant, was discriminated against on the ground of maternity leave and automatically unfairly dismissed. On the tribunal's findings, it had become apparent to the employer that her work could be carried out by the other three members of the marketing team who covered her work during her maternity leave. In these circumstances, the tribunal should have concluded that the reason for dismissal was redundancy, not maternity leave. On this basis, the EAT rejected the employee's maternity discrimination claim.

Further, the EAT held that the tribunal had erred in failing to consider the three-stage automatically unfair dismissal test contained in regulation 20(2) of the Maternity and Parental Leave Regulations 1999. The EAT accepted that two of the three elements of this test were satisfied: the reason or principal reason for the employee's dismissal was redundancy, and the reason for her redundancy selection was connected with the fact that she had taken maternity leave. However, the EAT was unable to answer the third question of whether the employee's three colleagues held "positions similar" to hers. It remitted this issue for the same tribunal to determine. (SG Petch Ltd v English-Stewart UKEAT/0213/12.)

Employment Tribunal

Conversations about retirement were not discriminatory

An employment tribunal has dismissed claims of unfair dismissal and age discrimination, despite several age-related comments having been made to the claimant during the course of her employment, including comments about her retirement plans. These were found to be reasonable in the context of succession planning, and the management of that process, and did not constitute age discrimination. (Quick v Cornwall Council and another ET/1701914/11.)

For more information on these regulations, including the difficulties that employers may face following their implementation, please contact us via our website or call us on 0141 611 9785

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