Employment Law Bulletin

February 2010

NEWS

Dr John McMullen flew the flag at the key employment and industrial relations conference this year for the international employment law community. He was an invited speaker at the International Bar Association’s annual employment and industrial relations conference: The New World Economy: Key Labour, Employment and HR Challenges Faced by Businesses with a Global Workforce, in New Delhi, India on 18th - 19th February 2010.

John was the only UK lawyer practising outside the city of London to be invited to speak at the conference, which attracted delegates from 30 countries.

John’s subject was outsourcing to India, China and other Asian countries and the implications for UK businesses considering this business option.

John was the only UK lawyer practising outside the city of London to be invited to speak at the conference, which attracted delegates from 30 countries.

John’s subject was outsourcing to India, China and other Asian countries and the implications for UK businesses considering this business option.

John’s session tackled the advantages, legal risks and obstacles to outsourcing, contracting out and use of alternative workforces in offshore locations. Particular questions were whether there are employment and HR implications for UK based employees whose jobs are being outsourced, what the employer can do to assuage concerns of employees and steps that an employer can take to ensure a smooth transition of the business to be outsourced. Outsourcing to locations, particularly in the Indian subcontinent is now a given for many organisations ranging from text transcription, call and helpline centres to business process outsourcing. John regularly advises on the components of the outsourcing agreement and what clients in the UK can expect from offshore supplied labour.

Participation in the conference puts Short Richardson & Forth’s name well to the fore as one of the UK’s leading employment law teams.

CASES AND OTHER DEVELOPMENTS

Tribunals give effect to Pereda

The European Court of Justice (ECJ) in the case of Pereda v Madrid Movilidad SA held that where a worker is on sick leave during a period designated as annual leave, the worker is entitled, under the Working Time Directive, to reschedule the holiday for a later date and, if necessary, reschedule the holiday in the next leave year. However, workers in the private sector do not derive rights directly from the Directive and instead, their rights are set out in the Working Time Regulations 1998 (WTR) which specifically prevent statutory holiday being carried over. How tribunals would deal with this issue has been the subject of much debate.

The employment tribunal in the case of Shah v First West Yorkshire Limited has now held that the WTR could be interpreted by reading in wording which would allow holiday to be carried over into the next leave year where it coincides with a period of sick leave.

The tribunal added to the wording of regulation 13(9) of the WTR which states that holiday may only be taken in the leave year in respect of which it is due, words to the effect that “save where a worker has been prevented by illness from taking a period of holiday leave, and returns from sick leave, covering that period of holiday leave, with insufficient time to take that holiday within the relevant leave year; in which case, they must be given the opportunity of taking that holiday leave in the following leave year”.

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Eweida v British Airways plc [2010] EWCA Civ 80

Ms Eweida had claimed discrimination on the grounds of her religion after British Airways insisted she conceal the cross on her necklace in line with its uniform policy. The Court of Appeal upheld the EAT’s ruling that British Airways’ actions did not constitute indirect discrimination. It had upheld the original tribunal’s decision that Ms Eweida’s claim failed after it found that she was the only person who had felt disadvantaged by British Airways’ policy.

The Court of Appeal rejected the argument that an indirect discrimination claim can be based upon disadvantage to an individual, confirming that it is necessary to show evidence of disadvantage to a group, not just the employee bringing the claim. Even if the Claimant’s argument had succeeded, the Court concluded that any disadvantage suffered by Ms Eweida alone could be justified as a proportionate means of achieving a legitimate aim and her indirect discrimination claim would still have failed.

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Gibson and others v Sheffield County Council [2010] EWCA Civ 63

This case considered the potential sex discrimination relating to a difference in pay between groups of predominantly male street cleaners and gardeners, and groups of predominantly female carers carrying out work "rated-as-equivalent". The Court of Appeal found that the difference in pay was tainted by sex discrimination and that the employer, Sheffield County Council, was therefore required to provide objective justification for this.

This decision overturned the decisions reached by the tribunal and the EAT. In reaching its decision, the Court of Appeal concluded that the decision in Armstrong v Newcastle Upon Tyne NHS Hospital Trust [2005] EWCA Civ 1608 was correctly decided but would have limited practical application. The Court of Appeal had held in this case that, where the figures suggest a disparate impact on women, an employer may be able to adduce evidence to indicate that the difference in pay is not tainted by sex discrimination rather than simply having to demonstrate that it can be objectively justified.

The case has now been remitted to the tribunal to determine whether the pay difference can be objectively justified.

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The Introduction of Fit Notes

GP sick notes are set to be replaced with effect from 6 April 2010. In their place, new regulations will introduce the new fitness for work statement (known as a ‘fit note’). Doctors will be able to set out in the fit note not only if an employee is not fit for work but also whether an employee ‘may be fit for work’ and suggest temporary changes that may be accommodated to facilitate the employee’s return.

It is anticipated that the new fit note will benefit the British economy by an estimated £240 million over a ten year period and, whilst it is envisaged that simple, practical adjustments to allow an employee to return to work earlier will benefit employers and employees alike, whether the recommendations will in fact be simple and practical for an employer to implement will remain to be seen.

Guidance on the new fit notes has been published by the Department of Work and Pensions and is available at www.dwp.gov.uk/fitnote/.

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Changing Terms and Conditions

The Employment Appeal Tribunal (EAT) in the case of Bateman and others v Asda Stores Ltd [2010] UK EAT 0221/09 has considered a general contractual power to vary terms and conditions of employment and whether this was effective in negating the need to obtain all employees’ express consent in order to impose a change.

Asda sought to bring its pay structure in line across all its employees and thus introduce a new pay structure for 18,000 employees. Following the conclusion of the consultation with the employees, approximately 9,300 agreed to transfer to the new regime. Asda consequently sought to rely on a term in the employee handbook to impose unilaterally the new regime on those who had not consented. The handbook stated that “the Company reserves the right to renew, revise, amend or replace the content of this handbook, and introduce new policies from time to time to reflect the changing needs of the business and to comply with new legislation…” The handbook also went on to set out the pay structure.

The Tribunal in the first instance referred to the principle established by the court of appeal in Wandsworth London Borough Council v D’Silva [1998] IRLR193 that one party to contract can reserve the ability to change a particular aspect of the contract unilaterally by notifying the other party of their position. However, it is necessary for the wording to be clear in order to achieve this aim. The Tribunal, therefore, held that “[Asda] acted in this case in pursuance of a clear and unambiguous power to vary contractual terms…there is no contention that [Asda] acted capriciously, arbitrarily or in any way which breached mutual trust and confidence in imposing [the new regime].”

It was argued on appeal, inter alia, that the Tribunal had failed to consider the background of the employees in construing the contract and that the duty to maintain trust and confidence required Asda to explain to the employees what the provisions of the handbook meant. The EAT did not accept these arguments on the basis that the Claimant had not adduced evidence that the employees had not intended or expected the affect of the clause to allow Asda to impose changes unilaterally, and it had in fact been conceded that there had been no breach in the duty of trust and confidence. The EAT, in looking at the wording, upheld the Tribunal’s reasoning and conclusioned that the provisions in question in the handbook authorised the unilateral imposition of the new regime without requiring consent.

With many employers looking to make changes to the terms and conditions of employment, this case highlights the importance of clear and unambiguous wording in the contract to effect such change, and also the importance of carrying out consultation with the employees in order to maintain mutual trust and confidence.

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Disability-related explanation for misconduct

The question of whether a disability-related explanation for misconduct can be said to have made a dismissal discriminatory had been addressed by the EAT in the case of The City of Edinburgh Council v Dickson UK EATS/0038/09.

Mr Dickson, who was employed by the Council as a Community Learning and Development Worker, had been observed by witnesses watching pornographic material on the internet in the computer suite. Mr Dickson suffered from type 1 diabetes and, when disciplinary proceedings were commenced, he sought to explain his alleged behaviour by asserting that he had been suffering a hypoglycaemic episode which caused him to act out of character and consequently he could not recall his actions. This explanation was rejected by the Council and Mr Dickson was subsequently dismissed. Mr Dickson brought claims of unfair dismissal and disability discrimination against his former employer. The Tribunal upheld both claims brought by Mr Dickson. In respect of the unfair dismissal aspect of the claim, the Tribunal found that, although the Council genuinely believed Mr Dickson was guilty of the conduct alleged, the Council did not have reasonable grounds for that belief. The Tribunal asserted that the plausible answer for the behaviour put forward by Mr Dickson should have been considered but was not. The Tribunal also found that inadequate investigations had been carried out by the Council.

The EAT, on appeal, upheld this aspect of the Tribunal’s decision. The EAT said that, had the Council engaged with the defence but considered it should be rejected, that would have been a decision open to the Council to make. However, the EAT held that the Council had not fully explored the information available and suggested that “the fair course in such circumstances would have been to take advice” and that “scepticism is one thing and a refusal seriously to consider the explanation proffered is another”. The Tribunal had also held that, had the explanation been more fully explored, the Council would not have dismissed Mr Dickson. The EAT found that the Tribunal was entitled to make this conclusion and, whilst not inevitable, it was not perverse.

In relation to the claim of direct disability discrimination and disability-related discrimination, the Tribunal upheld the claim of direct discrimination and stated that, if it were wrong in this regard, it would have upheld the disability-related discrimination claim. The EAT, however, noted that, as a consequence of the House of Lords’ decision in London Borough Lewisham v Malcolm [2008] IRLR 700, and the consequential narrowing of the definition of disability-related discrimination, such claims “stand or fall together”.

In considering both the direct discrimination and disability-related discrimination claims, the EAT highlighted that it is necessary to establish what was influencing the mind of the decision-taker. The EAT held that there was no reason to find that the fact that Mr Dickson was diabetic influenced the thinking and approach adopted by the Council. Whilst the explanation put forward by Mr Dickson was based on his disability, this did not mean that its rejection was based on the grounds of that disability.

Whilst the appeals relating to unfair dismissal were dismissed, the appeal relating to disability discrimination succeeded.

The approach adopted by the EAT in this case is in line with authority from the Court of Appeal and sets out again the approach that should be taken in relation to such claims.