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Lou Marshall



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Trends 2012: Employment tribunals


After being “positively outraged” at the way in which the Mid Yorkshire Hospitals NHS Trust behaved, an employment tribunal awarded compensation of £4.5 million in December to Polish-born consultant, Dr Eva Michalak.

The record-breaking award was ordered after Dr Michalak was found to be the victim of prolonged sex and race discrimination at the hands of her colleagues, who mounted a “concerted campaign” to bring her employment to an end because of her ethnic origin and because she took maternity leave. 
The campaign started with secret meetings (even before Dr Michalak went on maternity leave), which included references to her Polish background and connected issues of competency. On returning from maternity leave, Dr Michalak made a request for equal pay, which was refused. 
Following her subsequent allegation of sex discrimination, Dr Michalak’s colleagues started to make complaints about her, which were based on “deliberate falsehoods” and led to her “lengthy and wholly unauthorised” suspension in January 2006. The related disciplinary proceedings did not take place until more than a year later in May 2007, which finally resulted in her dismissal in July 2008.
The tribunal concluded that, as a result of the false allegations and harassment, Dr Michalak had suffered from devastating long-term psychological illness, which affected a permanent change to her personality such that she requires a carer and will never work as a doctor again. 
Unusually, liability was established not only against the Trust but also against three of the 14 named individual respondents, which included the Trust’s medical director (a “self-acknowledged liar”) and its HR director (whose evidence was “wholly untruthful”).
While the tribunal said that it wanted to make specific awards against these respondents on the basis that it “wished them to bear some small part of the compensation payable by reason of their conduct”, it was bound by a previous employment appeals tribunal finding that required liability to be “joint and several”.
Although employers can take comfort in the fact that the large award in this case was made on the basis that:
  1. Dr Michalak suffered, and continues to suffer, from particularly appalling illnesses
  2. the discrimination that caused her illnesses took place over several years
  3. she would have received a relatively high salary and pension entitlement had she been able to continue working
they should also take note that the award was larger than it might have otherwise been due to the tribunal’s acceptance that it was likely Dr Michalak would have gone on working beyond the age of 65. 
The tribunal even pointed out that “the statistics in relation to future retirement ages is likely to demonstrate an increasingly aging group”, a trend that will inevitably have an impact on calculations of loss of future earnings more generally.
Therefore, as we enter 2012, this award, which was made against an already financially struggling Trust, should serve as a reminder that overlooking issues of discrimination, in any economic climate, can come at a hefty price.  
Furthermore, given the circumstances under which the award was made, the Government’s proposed doubling of the qualifying period for those entitled to bring an unfair dismissal claim from one to two years of continuous employment may be less of a comfort to employers than Business Secretary Vince Cable intended.
Due to come into force on 6 April this year, one of the criticisms levelled at the legislation is that disgruntled ex-employees will be more likely to try and find a way of bringing their claim under the heading of discrimination and/or whistleblowing.
This is because such cases:
  1. require no qualifying period
  2. can be more complex and time consuming to defend
  3. do not impose a cap on the amount that a tribunal can award (as was amply demonstrated in the case of Dr Michalak).
Fundamental review
Other measures that are being implemented by the Government this April as part of its “fundamental review” of the tribunal system, with the aim of dissuading employees from bringing unmeritorious claims include:
  1. an increase in maximum deposit orders (which can be made a condition of whether a party is permitted to continue taking part in proceedings should an employment judge consider that all or part of their claim (or response) has little reasonable prospect of success) from £500 to £1,000
  2. a rise in maximum costs orders (an instruction issued by a court or tribunal, which says that one party to a claim should pay part or all of another’s costs) from £10,000 to £20,000. 
While at first glance such measures may appear to represent a deterrent to mischievous employees, the reality is that:
  1. deposit orders will only be made against those who, in the tribunal’s view, can afford to pay them
  2. in 2010/11, costs orders were made in only 0.2% of all claims presented to employment tribunals and were of an average value of £2,830. This situation suggests that the proposed amendments will have less impact than the Government would have employers believe and the costs involved in requesting and justifying such orders may be more prohibitive than the effects of the orders themselves.
There is one proposed amendment, however, that seems likely to provide a genuine benefit to employers. This is the closing of the ‘loophole’ in whistleblowing law that protects complaints made by employees about breaches of their employment contract by categorising them as a “qualifying disclosure”. 
Although the legislation was never intended to cover this situation, all too often employees who are unable to ascribe their employers’ actions to any kind of discrimination cite “qualifying disclosure” in order to expose their employer to the risk of uncapped damages.
The revision would mean, however, that employers are aware of the full extent of their possible financial exposure should they be unsuccessful in defending a claim for unfair dismissal, enabling them to more accurately and effectively weigh up the costs of going down this route.
Irrespective of whether the proposed reforms can ultimately achieve the Government’s stated intentions, the reality is that any reform brings with it the uncertainty of being untested. This scenario, initially at least, leads to additional cost and risk.  
As a result, if employers genuinely wish to make 2012 a better year for employment relations, they would be well advised to ensure that the right steps and measures are put in place to ensure that staff do not take them to an employment tribunal in the first place. 

Lou Marshall is a solicitor at commercial law firm, Fladgate LLP.

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Lou Marshall


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