Employment Law Bulletin

March 2010

NEWS

Tribunal in Sheffield applies Stringer

An employee on long term sick from 1st January 2004 until his resignation in April 2006 has been successful in his claim for unlawful deductions with regards to his holiday pay accrued during his period of sickness absence.

The case of Rawlings v The Direct Garage Door Company Limited had previously been stayed pending the judgement of the House of Lords in Stringer and ors v HMRC. The judgement in the case of Stringer established that a claim for unpaid holiday could be brought as a claim for unlawful deductions under the Employment Rights Act 1996 and thus employees can claim holiday pay going back over a number of years.

The employee in the case of Rawlings had been paid by his employer for holidays which accrued in the 2004 holiday year but not for the holidays in 2005 and 2006 to the date of his resignation. In the light of the decision in Stringer, the tribunal awarded the holiday pay for these years which it found had been unlawfully deducted.

Additional Paternity Regulations Approved

The Additional Paternity Leave Regulations 2010 have now been approved by the House of Lords. These regulations are to come into effect on the 6th April 2010 and provide a maximum of 26 weeks’ and a minimum of 2 weeks’ additional paternity leave which is to start not less than 20 weeks after the birth (or placement for adoption) and end not more than 12 months after these dates, provided the mother has returned to work.

If taken during the 39 week maternity pay period, the additional paternity leave will be paid on the same basis as statutory maternity leave during this time. The provisions of the regulations also set out the notice that the father is required to give to apply for additional paternity leave and this notice must be given not less than 8 weeks before the start date.

Whilst the regulations come into effect on 6 April 2010, they will apply only to parents of children with an expected week of childbirth beginning on or after 3 April 2011, and who have completed 26 weeks’ employment ending 15 weeks before the expected week of childbirth.

Budget Announcement

The 2010 Budget has announced that the adult rate of the national minimum wage is set to rise to £5.93 per hour in October 2010. This is a rise of 2.2% from the current level of £5.80 per hour.

The Government has also announced the extension of the Young Person’s Guarantee for a year after March 2011. The Government guarantees through this scheme that all young people (aged 18 to 24) out of work for six months will receive access to an internship, training or help to become self-employed.

CASES

Court of Appeal Rules on Constructive Dismissal

The decision of the Court of Appeal in the case of Buckland v Bournemouth University Higher Education Corporation [2010] EWCA Civ 121 has provided guidance in the area of constructive dismissal.

The Court of Appeal in this case was required to determine the following issues:-

1. Whether the “range of reasonable responses” test applies to determine whether a fundamental breach of contract has been committed; and
2. whether a fundamental breach could be cured while the employee decides whether to accept the breach.

In this case the Claimant, Professor Buckland, had marked students’ exam papers and failed 14 of the 16 re-sits. The results were endorsed by a second marker and further were checked and confirmed by the Board of Examiners. However, the papers were subsequently remarked against which the Claimant protested. A report into this issue was commissioned in October 2006 and the report’s findings were finalised in January 2007. Despite the apparent findings in the report, which is said to have vindicated the Claimant, Professor Buckland resigned in February 2007 with effect from July that year.

The tribunal at first instance held that the University had destroyed the relationship of trust and confidence and went on to consider whether the report had cured that breach. The tribunal decided that it had not. The Employment Appeal Tribunal (EAT) subsequently held that there had indeed been a fundamental breach and considered that the report, regarded objectively, had cured that breach.

In considering the two issues outlined above, the Court of Appeal held that, whilst “reasonableness is one of the tools in the Employment Tribunal’s factual analysis kit in deciding whether there had been a fundamental breach…it cannot be a legal requirement”. The Court of Appeal highlighted that, should an employee establish that they had been a constructively dismissed, the range of reasonable responses test would apply in determining the question of whether the employer had “acted reasonably in treating it as a sufficient reason for dismissing the employee”.

In determining whether a fundamental breach could be cured before the employee accepts the breach, the Court of Appeal drew a distinction between anticipatory and completed breaches, the latter of which “even if it can be compensated for, cannot be undone”. The Court of Appeal found no justification for the extension of this principle for employment contracts.

The Court of Appeal also considered how long an employee would have before losing the option to terminate their contract. Sedley LJ outlined that he expected the employee to make their position clear at the outset and did not expect the contract to continue very long before accepting the breach. Jacob LJ, however, in a somewhat more sympathetic approach, highlighted the pressure on an employee and the risk that “they have no job and the uncomfortable prospect of having to claim damages and unfair dismissal. If he or she stays there is a risk that they will be taken to have affirmed. Ideally a wronged employee who stays on for a bit while he or she considers their position would say so expressly. But even that would be difficult and not realistic to suppose it will happen very often”.

The case provides useful guidance on the law of constructive dismissal in an area which has been unclear for some considerable time. The issue, however, of how long before an employee takes to affirm the contract will ultimately depend upon the facts of each case but may, in some circumstances (as this case established) be a fairly lengthy period.

Special Circumstances under TULRCA Considered

The EAT in the case of Shanahan Engineering Limited v Unite the Union UKEAT/0411/09 has considered the provisions of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) in regards to consultation in a redundancy situation.

Section 188 TULRCA sets out an employer’s duty to consult where it is proposing to dismiss as redundant twenty or more employees at one establishment within a period of 90 days or less. Section 188(7) TULRCA provides a “special circumstances” exception to this duty. The protective award for breach of the duty to consult is set out in section 189.

In this case Shanahan, a construction contractor, was employing some 145 employees to work on a power station constructed by Alstom. The contract between these parties allowed Alstom to instruct work to stop or not to start.

Difficulties were encountered and voiced at a meeting on 28th April 2010. A further meeting took place on 30th April 2010 to discuss alternative proposals to resolve the difficulties. On accepting one such proposal, Alstom specified how work would continue which would result in an immediate reduction of employees. On 1st May the number and selection of employees was determined and the selected employees’ employment was terminated with effect from 2nd May 2010 with a week’s payment in lieu of notice.

The tribunal held that the circumstances were such that Shanahan had been relieved of the duty to start consultation at least 30 days before the dismissal took effect. However, it found that some consultation would have been possible. It noted that whilst consultation should start at least 30 days beforehand, it was not a requirement that consultation should last the full 30 days. As a consequence, the tribunal made a protective award for the full 90 days. On appeal to the EAT, Shanahan argued that in the circumstances, it had not been reasonably practicable to consult and that the tribunal ought to have found mitigating circumstances and have reduced the protective award made.

The EAT outlined the three stages the tribunal must consider when determining whether the special circumstances exception had been made out. Firstly, the tribunal should consider that there were special circumstances. Secondly, did the circumstances mean that consultation under Section 188 was not reasonably practicable? Thirdly, if so, did the employer do as much as it could to comply?

In the circumstances, the EAT highlighted that the tribunal had indeed found that special circumstances existed but noted that consultation still should have been undertaken. The EAT found that there had been no error in law in reaching this conclusion.

However, in regards to the protective award, the EAT indicated that the circumstances faced by Shanahan could justify a lesser protected period. Whilst the EAT made it clear that the protective period is not linked to the length of time over which consultation should have taken place, the EAT highlighted that the short period of time over which consultation could have taken place and the pre-agreed redundancy selection procedure were relevant factors and that the tribunal should take into account all of the circumstances to establish what is just and equitable. The case was, therefore, remitted to the tribunal to reconsider the protective award.

Racial Motivation in Discrimination Case (Considered by EAT)

The EAT has this month considered the burden of proof in a claim of race discrimination in the case of The Commissioner of Police of Metropolis v Osinaike UKEAT/03735/09. Ms Osinaike was employed by the Metropolitan Police as a dedicated detention officer at Walworth Police Station. Ms Osinaike brought claims against the Metropolitan Police in which she made a number of allegations of sex and race discrimination. All but one of these claims were unsuccessful. As part of the successful claim, Ms Osinaike alleged that she had been told by the Senior Management Team that she needed to see a psychiatrist. This was alleged to have been an act of harassment under the Race Relations Act 1976.

The tribunal outlined that the issues to be considered in determining this issue were i) whether the Claimant had been told this, ii) if so, whether this was unwanted conduct which had been on purpose violating her dignity or creating an intimidating, hostile, degrading or offensive environment for her or could it be reasonably seen as having that effect; iii) could it be concluded that this was an act of harassment on the grounds of race, ethnic or national origin, and iv) if so, could it be proven by the Respondent that there was no such reason for the act.

In determining this issue, the tribunal stated that it “considered that it could conclude from the primary facts that if the Claimant had been white, the Respondent would have readily understood the difficulties of her continued placement…and addressed those matters as opposed to seeing her as irrational and in needs of psychiatric intervention. The Claimant was apparently not expected to respond to major stresses… in a way that would be expected for a normal person…The burden of proof that they had not racially discriminated against the Claimant in this respect was passed to the Respondent”. The tribunal found that the Metropolitan Police had not discharged this burden and thus failed to prove that there was no racially motivated reason for the act.

The Metropolitan Police appealed against this aspect of the tribunal’s decision. Of the various grounds of appeal raised, the ground which ultimately proved successful was on the basis that the test as to whether the Claimant had proved that the act was done on the grounds of her race was misapplied and/or misconstrued. The EAT outlined that the Claimant, Ms Osinaike was required to prove, on the balance of probabilities:-

a) that she had been treated less favourably or harassed; and
b) that this was done on racial grounds.

It was submitted on behalf of the Metropolitan Police that simply proving that conduct was unreasonable or unfair was not on its own enough to transfer the burden of proof. The tribunal had been satisfied that the Claimant had established a prima facie case of harassment but it was asserted on appeal that, of the indications on which the tribunal had relied in this decision, none alone “could properly constitute facts on which the Tribunal could properly draw an inference of race discrimination”. There had been no evidence on which the tribunal could conclude that Ms Osinaike would not have been referred to a psychiatrist if she had been white. The EAT upheld this aspect of appeal and confirmed that the tribunal had erred in law in concluding that the act of harassment was on the grounds of race in order to transfer to burden of proof to the Respondent.

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