Employment Update - July 2009

CASE LAW

Effective date of termination was when employee read dismissal letter

In the case of Gisda Cyf v Barratt [2009] EWCA Civ 648 the Court of Appeal uphel Tribunal and EAT decisions that the "effective date of termination" was the date on which the employee read the letter informing her of her dismissal. It was not the date on which the letter was delivered, as it was not considered fair that a person could be dismissed, and time begin to run against them, before they actually knew their fate.

Background

Section 97(1) Employment Rights Act 1996 (ERA) defines the effective date of termination (EDT) in relation to an employee whose contract is terminated by notice as follows; "whether given by his employer or by the employee, [it] means the date on which the notice expires". It is important to establish the EDT in order to determine when the time limit within which an employee can bring a claim for unfair dismissal. An employee has 3 months from the EDT in which to bring a claim.

Facts

Miss Barrett attended a disciplinary hearing on Tuesday 28 November. She was sent home and told to expect a letter concerning her possible dismissal on Thursday. The letter arrived, by recorded delivery on the Thursday but Miss Barrett was away, and it was signed for by someone else. She returned home on Sunday night, but did not look at the letter until the following Monday 4 December.

On bringing her claim for unfair dismissal a preliminary issue arose as to whether she was out of time to bring the claim. Her claim would only be in time if the EDT was when she opened and read the letter of dismissal. If the EDT was when the letter was delivered then her claim would be out of time.

Decision

The Tribunal accepted that the claim had been brought in time. Brown v Southall and Knight [1980] ICR 617 was relied on, which states that the decision to terminate employment is effective when communicated. If Miss Barrett had gone away deliberately to avoid receipt of the letter, or avoided opening the letter then she may not have been able to rely on this, but that was not the case.

The EAT and Court of Appeal both upheld the decision stating that dismissal is effective when communicated. However, there was one dissenting judgment from Lord Justice Lloyd who considered that the EDT should have been on the date that the letter was delivered. He indicated that he thought it undesirable for the employer to be subject to any degree of uncertainty as to whether the contract was still subsisting. Fortunately for Miss Barrett however, the weight of existing authority meant that he was alone in this conclusion.

DDA definition of "likely" should be interpreted as "could well happen"

In SCA Packaging Limited v Boyle [2009] UKHL 37 the House of Lords upheld a decision made by the Northern Ireland Court of Appeal that the word "likely" in Schedule 1 of the Disability Discrimination Act 1995 (DDA) means "could well happen". This means that when proving that the impairment is 'likely to have a substantial effect on the ability of the person concerned to carry out normal day-to-day activities', the burden on the employee is reduced. Previously the employee had to prove that it was 'more probable than not'.

Background

In order to gain protection under the DDA an individual must satisfy the definition of disability under the Act. The definition, contained in section 1(1) is supplemented by Schedule 1 which provides additional provisions, and in which the word 'likely appears on four occasions. In this case the court were concerned with Paragraph 6(1) which states; "an impairment which would be likely to have a substantial adverse effect on the ability of the person concerned to carry out normal day-to-day activities [ . . . ]"

The Guidance which must be taken into account by a Tribunal when determining whether a person is disabled for the purposes of the DDA states; "It is likely that an event will happen if it is more probable than not that it will happen".

Facts

The Claimant had a history of problems caused by vocal nodes. In January 1992 she was advised to rest her voice, and was given four months off work. Following this she was placed under a strict management regime to conserve her voice. Among other things this involved avoiding passive smoking and moving away from background noise. In August 1992 she had an operation to remove the vocal nodes and they did not return. The Claimant believed this was because of her strict adherence to the regime.

In September 2000 her employer took down the partition separating the Claimant's office from the stock control room. She complained that the increase noise levels would affect her health, but the change was not amended.

In October 2001 a claim was brought that the employer had failed to comply with its duties under the DDA. After being made redundant in May 2002, a further claim was brought under the DDA concerning the circumstances of her dismissal.

Decision

At the preliminary hearing the Tribunal held that the Claimant was disabled for the purposes of the DDA. The Respondent appealed but was unsuccessful. The Northern Ireland Court of Appeal discussed the meaning of "likely to have a substantial effect", it concluded that "likely" in this context, meant "could well happen".

This was upheld on appeal to the House of Lords. The decision in Latchman v Reed Business Information Limited [2002] ICR 1453 which had indicated that "likely" meant "more probable than not" was therefore overruled.

Although it was acknowledged that the Guidance should be taken seriously, Baroness Hale said that questions of statutory construction were for the courts, rather than departmental guidance, to decide.

Comment

Although the House of Lords focused only on specific paragraphs the conclusions it reached will almost certainly be applied to the other paragraphs containing "likely" within the DDA. This means that it should be much easier for Claimant's to establish that they are entitled to protection under the DDA.

The case concerned an employee whose impairment was concealed because of the measures she took to control it. She was nevertheless classed as disabled and entitled to protection under the DDA. This should act as a warning to employers that when an employee raises health-related issues they should be taken seriously, regardless of the fact that they may not be apparent.

Establishing that something is "more probable than not" would mean that there has to be a chance greater than 50%, whereas "could well happen" indicates a significantly lower percentage would need to be achieved.

Equal pay claim must be brought within 6 months of TUPE transfer

In Gutridge and others v Sodexo Ltd and another [2009] EWCA Civ 729, the Court of Appeal upheld a decision of the EAT that an equal pay claim in respect of a period pre-dating a TUPE transfer had to be brought against the transferee within 6 months of the transfer date. It also held that, if the claim was successful, the transferee would have continuing liability to pay the Claimant the same as his or her comparator after the Transfer, even when the comparator did not transfer.

Background

Section 1 Equal Pay Act 1970 provides for equal pay between men and women. Section 2(4) and 2ZA provides that the claim must be brought on or before the 'qualifying date'. This is the date falling six months after the termination of employment to which the claim relates.

Under TUPE the transfer of some or all of a business means that the employees of the seller transfer with the business to become employees of the buyer. Their continuity of service and terms of employment remain the same, but the duties and liabilities of the seller as their employer pass to the buyer.

Facts

The Claimants were employed by North Tees and Hartlepool NHS Trust. In July 2001 they transferred under TUPE to Sodexo Ltd. In December 2006 the Claimants made claims for equal pay and sought to recover pay going back six years, using comparators who worked for the Trust, but who had not transferred. Their claims covered periods during which they were employed by the Trust and Sodexo.

Decision

The Tribunal found that the equality clause would have had the effect of substituting more favourable terms into the Claimant's contracts while still employed by the Trust. These terms transferred to Sodexo under TUPE, who continued to be in breach. The Employment was held to be with Sodexo and so the time limit ran until six months from the date of termination of their employment, which had not occurred.

Sodexo appealed on the grounds that the employment was with the Trust and since the claims had been made over 6 months after the date of the Transfer, they were out of time. They also alleged that because the comparators had not transferred, they had no liability under the equality clause after the Transfer. The appeal was upheld on the first point but not the second.

The decision of the EAT was upheld. The employment for the purposes of the time limit was the employment with the transferor, but since liability passes to Sodexo the case must be brought against them.

Comment

The case represents an exception to the general principle that employee's rights should not be prejudiced following a TUPE transfer. This means that employees who are contracted out in positions which used to be done by local authorities will quickly lose their rights to equal pay claims.

LEGISLATION

Equality Bill completes Committee stage

The Equality Bill 2008-09, which is intended to consolidate all discrimination and equality legislation into a single statute, completed its committee stage in the House of Commons on 7 July 2009. Relatively few amendments were made to the Bill, the most notable being the introduction of a new clause dealing with multiple discrimination, and changes to the definition of pregnancy and maternity discrimination.

Background

The Equality Bill was first introduced in the House of Commons on 24 April 2009, it received a second reading in May, and has now progressed through the Committee Stage. The Bill aims to consolidate and simplify the existing law on discrimination and equality. For more information about the content of the Bill generally, please see the information provided in our April 2009 Employment Update.

Amendments to the Bill

The most significant amendment was the insertion of a clause dealing with "multiple discrimination". This will enable direct discrimination claims to be brought in relation to a combination of any two of the following protected characteristics: age, disability, gender reassignment, race, religion or belief, sex and sexual orientation. The amendment which would permit claims for direct discrimination and harassment on multiple grounds was considered "unduly complex".

The provisions prohibiting an employer treating a woman less favourably for a reason related to pregnancy or maternity have been redrafted to use the word 'unfavourable' treatment (rather than less favourable). This is considered to be a "more transparent and accurate reflection of current EU law".

Other amendments which were put forward and debated include increased protection for paternity and a widened the definition of gender reassignment. New clauses which would make it unlawful to make 'prohibited pre-employment inquiries' were also proposed. The latter was in response to submissions from the disability lobby that disabled people suffer discrimination at the recruitment stage. The Solicitor General acknowledged that this was something the Government would consider further and indicated that a clause would be introduced at the Report stage.

Comment

The amendments that were made do not come as any surprise. It is interesting however, that the Government will be looking again at discrimination provisions, despite the work already undertaken on this when the Bill was first drafted.

The Bill progresses to the Report Stage, although this is likely to take place after the summer Parliamentary Recess. Following this it should proceed to the House of Lords in the Autumn.

New BIS Guidance on TUPE

The Department for Business Innovation & Skills (BIS) has published "Employment Rights on the transfer of an undertaking (June 2009)," a new guide, about TUPE. This replaces the March 2007 version and reflects the changes to the disciplinary and grievance employee liability information which have arisen following the repeal of the statutory dispute resolution procedures. Please click on the link to view the Guide, http://www.berr.gov.uk/files/file20761.pdf

OTHER NEWS

Pre-judgment interest in discrimination cases reduced

Unlike most employment tribunal awards, compensation in discrimination cases can include interest on the claimant's losses up to the date of judgment. The rate payable in England and Wales is set by the Lord Chancellor under Regulation 27(1) Court Funds Rules 1987.

The rate has already gone down a number of times this year. In February it was reduced from 6% to 3%. From 1 July 2009 it has been further reduced to 0.5%. The reduction reflects the rate set by the Bank of England.

Lesbian Couple win compensation over work taunts

Two saleswomen were taunted about their relationship with one another and subjected to crude insults; one colleague called their sexuality "disgusting". Their complaints fell on deaf ears, their boss telling them to stop complaining because "lesbians never had and never would suffer in the way that Jews had".

Following her complaint, one of the women was fired over the phone, and the other resigned shortly after. Both women were successful in their claims for unfair dismissal and discrimination on the grounds of sexual orientation, winning £22,000 compensation between them.

The Judge held that it was not surprising that the Claimants felt there had been a violation of their dignity, and that the Company's conduct thereafter had the position.

CBI urges adoption of alternative to job losses

The CB is urging the Government to adopt an 'alternative to redundancy' scheme, which it claims will stem rising unemployment. The plan is aimed at companies who have held off making redundancies, but are starting to run out of money to pay wages.

The proposal is that staff would not work for up to six months while being paid a weekly allowance, equivalent to double to the Jobseekers Allowance of £64.30. This sum would be co-funded by employers and the Government. Employees would be able to continue looking for work, and the employer could take them back if things improved. If business did not pick up, the staff could be made redundant after six months, and would not have lost any rights to redundancy pay.

The CBI argues that there would be no extra cost to the Government, but the TUC General Secretary, Brendan Barber argued that it was an "inflexible and underfunded scheme" which was "not fit for purpose".

Government to review retirement age in 2010

The Government has launched a strategy document, "Building a society for all ages" which announces, amongst other things, that the review of the default retirement age, previously scheduled for 2011, will be moved forward to 2010.

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