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Employment law: Case round-up

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Alison Wallace, head of employment practice at Steptoe & Johnson solicitors rounds-up the latest employment case law including the case of a verbal promise to raise an employee’s salary made at a Christmas party.


1. Contractual promise made at Christmas Party
Judge v Crown Leisure Limited
A promise made by an employer at a Christmas party that he would eventually ensure that an employee was placed on roughly the same level of remuneration as other managers was not legally enforceable. The words used had been too vague to amount to a contractual commitment. Employers should not however rely on the case to assume that conversations that took place at social events will have no legal consequences. In this case it was the vague nature of the promise rather than the fact that it was made at a Christmas party that meant it was not contractually enforceable.

2. Constructive dismissal
Milne v The Link Asset & Security Company Limited
The Employment Tribunal held that the suspension of an employee did not automatically involve a fundamental breach of contract by the employer. Mr Milne was a broker and manager. He was suspended prior to a disciplinary hearing. At the disciplinary hearing various issues related to his performance and conduct were raised.

A second meeting was arranged two days later but Mr Milne then resigned. He subsequently brought a claim that he was constructively dismissed and that the dismissal was unfair. The Tribunal criticised the company for an unfair process but held that there was no dismissal. Mr Milne appealed. The Employment Appeal Tribunal (EAT) held that a suspension does not automatically mean that there is a breach of the implied duty of mutual trust and confidence. It is necessary to consider all the surrounding circumstances.

McCabe v Greenwich London Borough of Council
This case deals with the extent to which an employer’s disciplinary procedure is limited by the implied duty of trust and confidence. Employers risk being in breach of the implied duty if they use disciplinary warnings oppressively for relatively minor misconduct or if they discipline employees in front of their colleagues so as to humiliate them. An employer will not breach its implied duty of trust and confidence where it can show that the disciplinary sanction is reasonable having regard to the seriousness of the employee’s offence.

3. Inducing breach of contract
Mainstream Properties Limited v Young
Mr De Winter provided finance for the development of sites in a joint venture with two former employees of Mainstream. Proceedings were brought against the two employees and Mainstream also sought damages against Mr De Winter on the grounds that he induced a breach of the employees’ contracts. Although Mr De Winter’s acts amounted to interference with the employees’ contracts in that he provided finance to enable them to appropriate for themselves an opportunity to develop a site, the claim was unsuccessful.

The tort is one of deliberately inducing breach of contract not carelessly or negligently inducing breach of contract. In the present case, the employers had given an assurance that there was no conflict of interest with Mainstream because they did not wish to develop the site. No specific intention to cause harm had therefore been shown.

4. Breach of contract – change of job duties
Land Securities Trilliun Limited v Thornley
Employers were in fundamental breach of contract when they tried to change the employee’s duties from a hands-on role as an architect to a managerial one.

Notwithstanding the fact the contract of employment contained a flexibility clause requiring the employee to perform any other duties “reasonably required of you”, such a clause did not permit the employers to impose any duties that they wished, but expressly imposed a requirement of reasonableness from the employer.

Once it was found that the duties required by the employers were unreasonably required of the employee the fact that they may have been valid commercial grounds as opposed to a wholly arbitrary basis for the employers requiring the employee to undertake them, cannot in a contract of employment cure the unreasonableness. The employers were therefore in fundamental breach of contract in imposing a new job description on her.

5. Grievance
Thorpe and Soleil Investments v Poat & Lake
This is the first EAT decision concerning the contents of statutory grievance letters under the Employment Act 2002 and the extension of time provisions. Employers must treat a letter as a grievance even though it appears that the employee is merely setting out complaints as part of a resignation letter.

Shergold v Fieldway Medical Central
The Claimant wrote a three page resignation letter setting out the reasons for her resignation. She did not ask for it to be treated as a grievance although her employers invited her to a meeting to discuss the issues she raised before accepting her resignation.

The Employment Tribunal however did not find this amounted to a step one grievance letter but was a resignation letter. The Employment Appeal Tribunal overturned this holding that there is no formality required in a standard grievance letter. All the employee needs to do is set out her complaint in writing. The purpose behind the statutory grievance procedure is to give the parties a chance to settle disputes before litigating.

It is not the intention of the legislation to bar employees from making claims or employers finding themselves liable for automatically unfair dismissal. The fact that the written grievance is set out in the letter of resignation is irrelevant. The grievance letter is not a pleading and it is sufficient that the employer can understand the nature of the complaint being made.

Commotion Limited v Rutty
Mrs Rutty applied in writing for a variation to her working pattern under the flexible working provisions. Her letter did not suggest it was to be regarded as a grievance.

Following the employer’s unreasonable refusal of the request, in circumstances which the Tribunal found was breach of trust and confidence, she resigned and claimed constructive dismissal. She did not send a subsequent grievance letter.

The EAT upheld the Employment Tribunal’s ruling that the original request to vary her contractual working pattern amounted to a step one grievance letter.

6. Payment of wages
Elizabeth Claire Care Management Limited v Francis
Mrs Francis was not paid her salary on the day due. She was depressed as a result of the financial difficulty she was in and took a few days off. When she returned to work after five days’ absence she was dismissed. She claimed she had been unfairly dismissed for asserting a relevant statutory right, namely the right to be paid the wages due to her. Although she did not have 12 months service, the Tribunal upheld her claim. An employer’s failure to pay wages on time constitutes an infringement of relevant statutory rights and she had been dismissed for asserting that right. Failure by an employer to pay any or all of an employee’s wages on time amounts to an unlawful deduction of wages and therefore is a breach of relevant statutory rights.

7. Redundancy consultation
Leicestershire City Council v Unison
Leicestershire City Council were renegotiating terms and conditions for about 2,600 employees. They gave notice of dismissal and offered new jobs on new terms. The time for consultation began, it was held, when the practical decision had been taken by Council’s staff notwithstanding that it needed a formal political vote/decision by the Council to ratify it and not when the Council voted in favour of the decision to dismiss/re-hire. This is consistent with the ECJ decision in Junk v Kuhnel, namely that consultation must take place before the decision to dismiss is taken. An award of 90 days’ pay was made. The fact that the employer had provided information before the technical obligation to consult arose did not mean there must be an automatic reduction from the presumed 90 days’ pay.

8. Collective redundancies
Amicus v Nissan Motor Manufacturing (UK) Limited
The EAT held in this case that consultation with union representatives which commenced several months after the employer had announced its relocation proposal, and which effectively only lasted two weeks, was nonetheless in good time.

9. Unfair dismissal – disciplinary hearing
William Hicks & Partners v Nadal
The EAT upheld a Tribunal’s finding that it had been outside the band of reasonable responses for an employer to decide contrary to medical evidence that an employee was fit to attend a disciplinary hearing, to hold the hearing and then to dismiss her in her absence.

10. Unfair dismissal – some other substantial reason – difficult personality
Perkin v St George’s Healthcare NHS Trust
An employer who dismisses an employee for having a difficult personality may do so fairly, if this constitutes some other substantial reason which justifies dismissal. In an appropriate case an Employment Tribunal may make a finding of 100% contributory fault. The Tribunal in this case held that Mr Perkin had contributed entirely to his dismissal.

11. Retirement age
Payne v Royal Sun Alliance Insurance Group plc
For the purpose of a claim for unfair dismissal an employee’s normal retirement age could not be lower than his contractual retirement age. If the employee was dismissed before his contractual retirement age he was entitled to claim unfair dismissal.

12. Stress at work
Hone v Six Continents Retail
The Court of Appeal held that when deciding whether psychiatric injury is reasonably foreseeable (for the purpose of a stress at work claim) it is proper for the Court to take into account that the employer is breaching the maximum average 48 hour working week (and the rest provisions) contained in the Working Time Regulations 1998.

13. Restrictive covenants
Windsor Recruitment v Silverwood
Windsor Recruitment wanted to impose restrictive covenants on its workforce. It dismissed some employees who refused to accept them. Although there was a good business reason for imposing the covenants, the Tribunal held that the covenants were too wide and therefore unenforceable. The Appeal Tribunal overturned the decision and the previous Appeal authority of Forshaw v Archcraft which was on almost identical facts.

It was held that dismissal for refusal to accept restrictive covenants was capable of being some other substantial reason unless the covenants were in fact a cover or a ruse to dismiss the employee. The consideration of the reasonableness of the covenants comes in not when deciding the reason for the dismissal but when deciding the general fairness issue. Where the proposed covenant is plainly unenforceable and not severable it will make it easier for a Tribunal to conclude there was unfairness. If the covenant was plainly reasonable then whilst the consideration of the procedure is still necessary it will be easier for a Tribunal to conclude that the decision is fair.

14. Compromise agreement – no bar to a new claim
Hilton Hotels v McNaughton
Ms McNaughton signed a Compromise Agreement on the termination of her employment. In exchange for signing away her statutory rights she received a payment exceeding her statutory entitlements. Several months later she read an article in a newspaper about part-time workers pension claims. The majority of the EAT held that her Compromise did not prevent her from bringing in a new claim because at the time of signing the Compromise, she did not know that such a claim existed.

15. Whistleblowing
Melia v Magna Kansei Limited
The Court of Appeal has held that where an employee has been subjected to a detriment for having made a protective disclosure and has then resigned claiming constructive dismissal, compensation in respect of that detriment should be accessed up to the point of dismissal. The Appeal Court overturned the EAT’s ruling that the cut off point for the award in respect of detriment was the point at which the employer’s conduct became so serious as to amount to a repudiatory breach of contract.

16. Disability discrimination – failure to consult before dismissal
Rothwell v Pelikan Hardcopy Limited
The EAT held in this case that an employer’s failure to consult with an individual suffering from Parkinson’s disease about a result medical report before dismissing him was discriminatory under the Disability Discrimination Act 1995 and this rendered the dismissal unfair.

Consultation is particularly important where there is any conflict in the medical evidence. It matters not that the employer had consulted with the employee about his disability in the recent past and had treated him sensitively and appropriately.

Smith v Churchill Stairlifts Plc
A further complex decision on the correct approach to claims under the Disability Discrimination Act dealing with arrangements, comparators and the justification test.

17. Disability discrimination – reasonable adjustments
Southampton City College v Randall
The EAT held that the Disability Discrimination Act 1995 does not, as a matter of law, preclude under the obligation to make reasonable adjustments the creation of a new post for an employee.

18. Disability Discrimination – Constructive Knowledge
Department of Work & Pensions v Hall
The employer was found to have had constructive knowledge of an employee’s disability. The employer was not absolved from its duty to make reasonable adjustments even when the employee did not inform it of the disability. It is important therefore to look behind an employee’s behaviour to ascertain whether there may be a reason for it.

19. Compensation for Sex Discrimination – Injury to feelings award – joint and severe liability
Miles v Gilbank
The Employment Tribunal upheld a Tribunal’s decision to award the maximum injury to feelings award of £25,000 to a pregnant employee, whose manager had subjected her to a vicious campaign of bullying and discrimination that had demonstrated a callous disregard or concern for the life of her unborn child. The Appeal Tribunal also upheld the Tribunal’s decision to make the employer and the manager (who had consciously fostered and encouraged the discriminatory culture) jointly and severally liable for the whole award, including the employee’s lost maternity pay.

20. Annual leave – holiday pay
Apex Masonry Contractors Limited v Everritt
In this case the EAT held that the correct basis for claiming holiday pay outstanding on termination of employment, was under Section 30 of the Working Time Regulations 1998 rather than as a deduction from wages claim under the Employment Rights Act 1996. This affected the time limit for making the holiday pay claim and the method for calculating the award.

21. Workers – employment status
Bacica v Muir
The EAT held that the mere fact that a painter and decorator was required to perform personal services was not conclusive of his work status. In determining whether an individual is a worker an Employment Tribunal should always have regard to whether the person for whom the work is performed is a client or customer of a business carried out by the individual. If this is the case the individual is not a worker and consequently has no entitlement to paid holiday under the Working Time Regulations 1998.

22. Garden leave – interim injunctions
Sendo Holdings plc (In Administration) v Broga
The High Court granted an interim injunction enforcing a garden leave clause for the full six months’ notice period despite the fact the employer was in administration. The administrators of the company were entitled to seek to maximise the assets for creditors by securing a valuable contract with another company, and therefore a protectable interest could be identified.

23. Sick pay – pregnancy
North Western Health Board v McKenna
A sick pay scheme can treat women off work with a pregnancy related illness in the same way as an employee with an illness unrelated to pregnancy. Employers can therefore count pregnancy related absences against sick pay entitlement and can reduce the pay of a pregnant woman off work.

24. Maternity suspension
New Southern Railway Ltd v Quinn
Mrs Quinn was (effectively) demoted from the duty station manager’s post at Brighton station when she announced her pregnancy. Her employer justified the demotion on the basis that it was taking steps to “avoid” physical risks (eg assault) flowing from the duty station manager’s position.

The Employment Tribunal found that this assertion was a sham, and that the employer had simply adopted “an extremely paternalistic and patronising attitude towards her and her condition”. It also found that the risk of assault was small and could easily be reduced further.

Before the EAT, the employer argued that the obligation to “avoid” risks was an absolute obligation under European law, so that if there was any risk of harm, the employer was under an absolute obligation to avoid it – in this case, by demoting her.

The EAT held this argument was wrong. Adopting a purposive approach to the word ‘avoid’, it held that it meant ‘reduce to a low risk’ or ‘reduce the risk as far as possible’, rather than ‘eliminate the risk entirely’.

25. Protection of Harassment Act 1997
First Global Locums Limited v Cosias
Mr Cosias was an employee in a recruitment consultancy. He was aggressive and abusive to members of staff. He had been warned about his behaviour. He attended a meeting to discuss changes to working methods and he became very abusive and threatened to kill one of the employees. The landlord of the offices would not allow him back in the building. The employer decided to dismiss Mr Cosias and did this in a public place, in a local café where he also became abusive. The Company and five of its employees subsequently made a without notice application for an interim injunction for 24 months which was granted under the Protection from Harassment Act 1997. This prevented him coming near the Company premises or the individual employees or doing anything which amounted to harassment.

26. Compensation
Aon Training Ltd and another v Dore
The Court of Appeal ruled that, where a dismissed employee attempts to mitigate his loss by setting up his own business, and the Tribunal is satisfied that mitigation was reasonable in the circumstances, the conventional way to assess compensation requires the Tribunal first to calculate what sum represents loss of remuneration.

It should then consider the costs incurred in mitigating the loss and such a claim, if reasonably incurred, should be added to the loss. From that sum should be deduced the earnings from the new business.

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