Whilst the focus for many employers during 2020 has undoubtedly been on Covid and little else, the courts and tribunals have continued to operate and produce some important decisions which employers should know about. There is also some recent and expected legislation which we will cover in future newsletters.
In this article we discuss some recent cases reported during the Covid pandemic which you may have missed and discuss what they mean for employers.
As any HR professional will know, employers must make “reasonable adjustments” to facilitate disabled employees and to help ensure that they are not unfairly disadvantaged by rules and practices which they are less able to comply with. What does a reasonable adjustment look like in practice?
The recent case of Hill shows that employers may need to move a mentally ill employee away from the colleagues whose bullying and harassment allegedly caused her depression and – should this be impracticable – offer her an enhanced severance package.
The Employment Appeal Tribunal held that the bank’s refusal to give a written undertaking to pay a severance payment to the employee in the future, if it was not possible to comply with an employee’s request not to work with certain colleagues, was a failure to make a reasonable adjustment for the purposes of the Equality Act 2010.
Mrs Hill suffered from depression which she said resulted from harassment and bullying from two colleagues at work. Following her return from sickness absence she asked Lloyds, her employer, to give a written confirmation that she would never have to work with either of these colleagues again and if business demands left no practical alternative to doing so she would be offered an enhanced severance package. Lloyds did not agree to the request.
Mrs Hill successfully claimed that this was a failure to make reasonable adjustments, arguing that she was placed at a substantial disadvantage compared to a non-disabled employee because she was in a state of “constant fear, worry and stress” that she might have to work with these colleagues.
The EAT upheld the employment tribunal’s finding that the requested undertaking would have alleviated Mrs Hill’s anxiety, and it was therefore a reasonable adjustment for Lloyds to give. As a general principle, in the interests of retaining a disabled employee who would otherwise leave it can be a reasonable adjustment to provide a severance payment or other benefit as a “backstop” (as the EAT described it):
“We see no reason why reasonable steps should not include the giving of an undertaking to provide a disabled employee with certain benefits if in future certain circumstances arise. The fact this would amount to a special benefit cannot be an objection: giving special benefits is inherent in the whole reasonable adjustments disability discrimination scheme.”
This demonstrates that the scope of what may be a reasonable adjustment is relatively broad, and that the duty of an employer to make reasonable adjustments for a disabled employee may require it to find a creative solution to relationship issues raised by staff members. However, the EAT emphasised that the facts of this case were quite rare: the adjustment sought by the employee here (that she is able to work separately from two colleagues or else can leave with an enhanced severance package) would only be appropriate where the financial benefit was linked to the employer’s motive to keep the employee in work. The facts of this case could nevertheless assist employees to request undertakings from their employers, especially since it is not unusual for employees to suffer anxiety in relation to their work relationships.
Fox Williams represents PGA European Tour (PGA), an organisation operating the three leading men’s professional golf tours in Europe, in an important unfair dismissal case.
An employee who is unfairly dismissed may ask that he is re-engaged by his former employer in employment “comparable to that from which he was dismissed or other suitable employment”, in which case the tribunal can order that the employer hires him into such a role, if it considers it “practicable” for the employer to do so.
Fox Williams represented the employer in its successful appeal, PGA, when the EAT decided that an employer’s genuine belief in an employee’s capability was a relevant consideration when concluding whether it was practicable for an order for re-engagement to be made following an unfair dismissal.
The decision affords a greater degree of flexibility to employers in deciding when an employee is not qualified for a specific alternative role within the organisation and is therefore not suitable for re-engagement. However, the employer must have good commercial reasons for this decision, for example in this case the individual did not speak the required language necessary for the performance of the role.
The employment tribunal ordered re-engagement of Mr Kelly to an alternative role (as Commercial Director, China PGA European Tour) after it was conceded that Mr Kelly’s dismissal was unfair. It was an essential requirement of the role that the employee be fluent in Mandarin and understand Chinese culture. Mr Kelly did not speak Mandarin even at a basic level.
The tribunal decided that the language requirement and any trust and confidence issues arising from PGA’s reservations about Mr Kelly’s capability were not significant to render re-engagement impracticable.
PGA appealed to the EAT against the re-engagement order.
The EAT emphasised the question for the tribunal was whether it was practicable for PGA to re-engage Mr Kelly, not just whether it was possible, and held that an employer’s lack of trust and confidence in an employee’s capability (and not just his conduct) was a relevant factor for the tribunal to take into account when considering the practicability of re-engagement.
The tribunal’s role should have been limited to testing whether PGA’s view was genuine and rational as opposed to imposing its own view on the situation. The EAT found that PGA had genuinely lost trust and confidence in Mr Kelly’s capability and the appeal was upheld.
The claimant has appealed the EAT’s decision to the Court of Appeal.
An employer can use a competitive interview process when considering redundant employees for limited alternative employment roles elsewhere in the business. However, where employees are not consulted or given the right to appeal and are essentially required to apply for their own jobs, rather than scoring against a set of criteria, this will most likely render their dismissals unfair.
In Barratt, the employees were PE teachers who worked at a community secondary school. A restructuring of the school services in the area led to the Council closing the school and replacing it with a new one. The employees were informed that their contracts of employment would be terminated on the closure of the school but that they could apply instead for positions at the new school. They were told that if their applications were unsuccessful, they would be made redundant. The claimant teachers applied unsuccessfully for positions at the new school and were served notice of termination of employment on the basis of redundancy.
The employees brought claims for unfair dismissal on the grounds that there had been no consultation and no opportunity to appeal their dismissals. The Council argued that since the redundancies resulted from the decision to close the school and that the employees were unsuccessful in their applications for new roles, a consultation or appeal would have made no difference. The employment tribunal nevertheless held that the dismissals were unfair. The Council appealed.
The EAT upheld this decision, concluding the dismissals were unfair because of the failure to provide the claimants with a right of appeal, the absence of consultation and because of the manner in which they were required to “apply for their own jobs”.
In light of potential restructurings and redundancies in the coming months, this case serves as an important reminder of the need to follow a fair and reasonable redundancy process.
In deciding whether to implement an application process in relation to alternative roles, employers need to consider whether the relevant roles are the same (or significantly similar to) current roles. If the roles are different, a competitive application process is likely to be fair in the circumstance. Where the roles are the same, or significantly similar, employers should identify a reasonable pool of at risk employees and score those individuals against fair and objective selection criteria with due consultation of the employees, affording them a right to appeal the outcome. This case emphasises that it will generally only be reasonable to interview potentially redundant employees for alternative posts where the positions are genuinely new and cannot be considered the same or substantially similar to the roles that were previously carried out.
While the absence of an appeal process does not render every dismissal unfair, employers should consider offering a right to appeal where there is a selection exercise which involves scoring employees against a set of criteria. Unless an appeal would genuinely make no difference to the outcome and the redundancy process is otherwise fair, this will be the safest course of action.
In Gorman, an employment tribunal found that a hairdresser, who had been purportedly engaged under a consultancy agreement by the hair salon at which she worked, was in fact an employee.
Upon closure of the salon in 2019, Ms Gorman issued a claim for unfair dismissal, sex discrimination, notice pay, holiday pay and redundancy pay.
The tribunal noted that Ms Gorman was 19 when she started work for the salon and that she did not understand (and was unable to negotiate) the terms of the contract entitled “Independent Contract for Services” which she had signed. Although the contract stated that Ms Gorman would be engaged as a “self-employed hairstylist”, the tribunal found that the terms of Ms Gorman’s contract did not reflect the reality of her working arrangements: there was a mutual obligation on the salon to provide work and on the worker to accept it.
This case serves as an important reminder that it is not the underlying contract alone which will be used to determine a person’s employment status but rather the substance of the relationship, assessed against the context in which the underlying contract has been made. Employers should ensure that they have a comprehensive and up to date record of those persons who are engaged as consultants and keep their position under regular review
The claimant was dismissed for incapacity after a long period of sickness absence while a grievance was outstanding. The claimant argued that the employer’s requirement for him to return to work without a fair investigation into the grievance was indirectly discriminatory and a failure to make reasonable adjustments, as it was a provision, criteria or practice (PCP) which put him, as person with a disability for the purposes of the Equality Act 2010, at a substantial disadvantage compared to non-disabled persons.
The employment tribunal did not agree: the employer’s decision could not be described as a PCP, but was instead a single act in the course of dealings with one person. On appeal, the EAT and most recently the Court of Appeal dismissed this argument: although a one-off act in relation to a particular employee may amount to a PCP, it will not fall within scope of that concept unless it can be shown that it is a manifestation of how things generally are or will be done by the employer. If, hypothetically, a similar case arises in the future and there is an indication that the same course of action would be followed again, then the act could be considered a “practice” of the sort required for indirect discrimination. Conversely, no PCP will be established in relation to a one-off act in an individual case where there is no indication that the decision would apply in future to similar cases.
This case provides welcome clarification of when an employer’s conduct can amount to a PCP. The idea that a PCP requires an element of repetition is consistent with earlier case law and is helpful for employers to know that they are not at risk of claims for indirect discrimination or a failure to make reasonable adjustments where there is a single act which affects only an individual employee. However, that can of course amount to direct discrimination if it amounts to detrimental treatment because of a protected characteristic (or, in the case of disability, because of something arising in consequence of that disability which cannot be objectively justified).
This is a public law decision which arose from a judicial review brought by the Independent Workers’ Union of Great Britain (“IWGB”) against the UK Government. The High Court ruled that:
The UK Government may appeal this decision. If it does not (or if the appeal is unsuccessful) the UK will have to introduce legislation extending these protections to all workers. The negotiations over a trade deal between the UK and the EU from 1 January next year (which we will discuss in a future newsletter) may add a further layer of complexity if the UK Government does not wish to change its health and safety legislation to align it with the directive.
Mr Heskett was employed by the Ministry of Justice as a probation officer. He brought a claim against the Government for indirect age discrimination after the MoJ lengthened its pay scale to account for a cap on public sector pay increases. This meant that Mr Heskett would take longer to progress up the pay scale and over the long-term would therefore earn less than longer-serving colleagues, who were typically older than him. The changes therefore impacted him indirectly because of his age.
Because of this impact, it fell to the MoJ to justify the changes on the basis that they were a proportionate means of achieving a legitimate aim. The MoJ sought to do so by reference to the costs savings which result from the change.
However, Mr Heskett argued that this was not sufficient justification. The Court of Appeal agreed: merely costs alone will not be enough of a legitimate aim to justify a course of action (such as the pay scale changes) which would amount to indirect age discrimination. Reducing costs for its own sake can only be a justification which makes indirect discrimination lawful if it is coupled with another aim such as reducing expenditure in order to balance the books.
Whilst it might be surprising that the sole aim of reducing cost is not of itself enough to justify a policy which disproportionately impacts a particular group, this is in line with previous decisions on indirect discrimination, for sound reasons: a business is not entitled to discriminate merely because it is cheaper to do so than to refrain from doing so.
Of course, the Court recognised that financial constraints might oblige a business to reduce its costs, which can be enough for a legitimate aim: “an employer’s need to reduce its expenditure, and specifically its staff costs, in order to balance its books can constitute a legitimate aim for the purpose of a justification defence”.
The key lesson for employers seeking to cut costs is to ensure, so far as possible, that the cuts do not disproportionately impact any particular group of persons holding a particular protected characteristic. If that is not possible, then employers must consider the disparate impact very carefully, including its nature and extent, the reason for the financial pressures on the employer and perhaps most importantly, the possibility that the costs could not be cut in a way which is less detrimental to any particular protected characteristic. Of course, this is a particularly difficult exercise in relation to pay or progression changes which have an effect on age: it is hard to imagine any change which would have an exactly equal impact on all age groups. Employers therefore need to approach any cost-saving measures with regards to employee pay or promotion with great care.
In Taylor, the claimant was employed by Jaguar as an engineer. The claimant informed the respondent employer in 2017 that she was beginning to transition from male to female. After attending the workplace in typically female attire the claimant was subjected to ridicule and harassment and ultimately resigned.
The claimant brought tribunal proceedings against Jaguar in which she complained of discrimination on grounds of gender reassignment and claimed constructive dismissal.
The issue for the tribunal was whether the claimant had the protected characteristic of gender assignment under the Equality Act, which applies when “the person is undergoing or has undergone a process (or part of a process) for the purpose of reassigning the person’s sex by changing the physiological or other attributes of sex”.
Jaguar argued that the claimant fell outside of this protected characteristic because she had at times referred to herself as “non-binary” or “gender fluid”. However, the tribunal held that Ms Taylor was protected under the Equality Act, because she was “on a journey” of transition. This did not require any medical process necessarily, and how she described herself at any given time did not change that position.
This case therefore shows that a person need not intend to undergo any medical treatment in order to have the gender reassignment protected characteristic under the Equality Act.
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