PREVIOUS SPEAKERS:
Michael Rubenstein
ILS, 15 January 2004
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to list of speakers Title: "Key cases for 2004"
Edited text of a lecture by Michael Rubenstein to the Industrial Law Society
1. I would like to thank friends and colleagues for their help in compiling information that forms the basis for this lecture. This continues to be an exciting time to be involved in employment law. Case law is coming thick and fast. Indeed, I have updated the talk I gave in Leeds on Monday to take account of two decisions this week, and one further case I was informed about. In this talk, what I propose to do is to flag up my predictions for some of the key cases you will be hearing about in 2004. These cases fall into three categories. Decisions which were issued towards the end of 2003 or so far in 2004, but which have yet to be reported. Cases which were argued during 2003 or so far in 2004 but in which a judgment has yet to be issued. And cases which will be argued during 2004.
2. Let’s start with transfer of undertakings. When does a transaction amount to a TUPE transfer? I began my lecture in 2002 by saying that "sometime this year we will have new legislation on TUPE. This will set out a new definition of a relevant transfer." Curiously enough, I began my lecture in 2003 with the very same words. And here we are in 2004. When I gave this talk in Leeds in Monday, I said that we expected new TUPE Regulations to take effect in October of 2004. Yesterday, the Government issued its "Statement of forthcoming employment regulations in 2004", in line with the new practice of making changes only with effect from April 6 and October 1. For TUPE, it says: "1 October (probable)....Note: It is possible that the commencement of the regulations may not take place until 2005." So sometime, probably in my lifetime, but almost certainly in yours, there will be new TUPE regulations forthcoming from the DTI. But the earliest they will take effect is October this year and they will not be retrospective. Meanwhile, the case law on what is and what is not a relevant transfer continues to develop.
2. No single employment law issue has generated more high-level judicial controversy than that of whether there is a transfer of an undertaking when services are contracted out or there is a change of a service contractor. The general principle laid down by the European Court of Justice in the Suzen decision is that the transfer of a service contract is not a transfer of a part of a business within Directive 77/187 "if there is no concomitant transfer of significant tangible or intangible assets or the taking over by the new employer of a major part of the workforce, in terms of their numbers and skills, assigned by his predecessor to the performance of the contract." Suzen thus drew a distinction between "asset reliant" businesses and "labour intensive" businesses, a distinction which is central to the ECJ’s decision in Abler v Sodexho MM Catering Gesellschaft, reported in the February IRLR. This case concerned a catering contract at a hospital in Vienna. It was the contractor’s responsibility to draw up menus, purchase, store, produce, portion and transport meals to various hospital departments, serve meals in the dining room, wash the crockery and clean the premises used. However, the premises themselves, as well as water, energy and equipment were provided by the management authority for the hospital. The contract was transferred from Sanrest to Sodexho following a re-tender. Sodhexo thus took over the premises and equipment. However, it refused to take on any of the catering staff. Did that defeat a claim that there was a transfer of an undertaking? On the reasoning of the ECJ, in such circumstances, this depended on whether the catering activity was properly to be categorised as asset-reliant or labour-intensive. The Court’s conclusion, somewhat surprisingly, is that the catering contract was asset-reliant: catering "cannot be regarded as an activity based essentially on manpower since it requires a significant amount of equipment." The transfer of the premises and the equipment provided by the hospital, which was indispensable for the preparation and distribution of meals, was sufficient, in the circumstances, to make this a transfer of an economic entity. It did not matter, for this purpose, according to the ECJ, that the assets taken over did not belong to the outgoing contractor, but were provided by the hospital instead, since the Directive applies where there is a change in the person responsible for carrying on the business "regardless of whether ownership of the tangible assets is transferred." Nor was the transfer defeated by the refusal of the new contractors to take on the staff. The Court says: "As the United Kingdom and the Commission rightly point out, any other conclusion would run counter to the principal objective of Directive 77/187, which is to ensure the continuity, even against the wishes of the transferee, of the employment contracts of the employees of the transferor." At first impression, therefore, this decision draws a bright line between asset-reliant and labour-intensive businesses. The problem is that it is by no means clear at the moment which businesses will fall on which side of this line. Some of you may recall the problem I posed some years ago in the IRLR Highlights as to TUPE and the garden contractors at my home in leafy Surrey. We provide the contractor with some rather expensive equipment like a sit-on mower and they send in a small team to cut the lawn, trim the hedges and undertake other gardening jobs. The analysis of whether TUPE could apply if we changed the garden contractors for this modest economic entity seems to have varied over the years. After Abler, it is once more uncertain.
3. Given the inconsistencies in the ECJ case law, it is not surprising that our own courts have found it difficult to loyally follow it. Indeed, as you will know they have taken a somewhat more permissive approach to what is a TUPE transfer. The Court of Appeal has considered this issue on three opportunities and, on each occasion, to the surprise of some, they have held that there can be a TUPE transfer where there is a change in service contractor, notwithstanding that there was no transfer of significant assets and none of the relevant employees were taken on by the new employers. The House of Lords will have its first opportunity to consider this issue when it hears the appeal in RCO Support Services v Unison, which is scheduled for 8-10 June.
4. Meanwhile, later this month, the EAT will be hearing Atos v Compaq, a case which raises in stark terms whether there is a TUPE transfer where the putative transferee deliberately decides not to engage the putative transferor’s staff so as to prevent a transfer arising. Another case before the EAT, Astle v SGI, appears to raise much the same issue.
5. Case law under the Acquired Rights Directive distinguishes between insolvency situations in which it is intended to carry on the business and compulsory liquidation. In the Abels case in 1985, the ECJ held that the Directive does not apply to the transfer of an undertaking which occurs in the context of insolvency proceedings instituted with a view to the liquidation of the assets of the transferor under the supervision of the competent judicial authority. Quite how this affects TUPE has not been litigated. Until the recent decision of the EAT in Perth & Kinross Council v Donaldson that is. In this case, Lord Johnston in Scotland holds that TUPE does not apply to a case of irretrievable insolvency and cessation of business. The decision is reported in the February IRLR.
6. The House of Lords has referred Celtec v Astley to the European Court. This was the case about the time of transfer. The Court of Appeal overruled the EAT and held that the wording of the Directive is sufficiently wide in its terms to embrace a transfer of an undertaking which takes place over a period – three years in this case - and that the Directive does not imply that the transfer must take place at a particular moment in time. The ECJ is asked to decide whether this is correct.
7. Dowling v Ilic Haulage is a case currently before the EAT about the effect of an interim relief continuation order where there is a transfer of an undertaking. The order was made against Ilic, who subsequently sold the business to Berkeley Logistics. They were able to obtain a declaration from an employment tribunal that the continuation order did not transfer to them under TUPE on various grounds but remained an obligation of the transferor business, including that the contract was only continued by statute, that it was made against a specific party, and that the applicant had been dismissed and regardless of the continuation order could not be regarded as employed immediately before the transfer.
8. The Trade Union and Labour Relations (Consolidation) Act lays down that consultations in advance of large-scale redundancies must begin at least 90 days before the first of the dismissals takes effect. The Directive does not lay down any minimum period for consultation. In Junk v Kuhnel, the European Court is asked to decide whether, in fact, the Directive requires consultation to run backwards from the time notices of dismissal are issued rather than from when the first notice of dismissal expires. If that is the case, the questions before the Court go on to ask "does the Directive require that both the consultation procedure under Article 2 of the Directive and the notification procedure under Articles 3 and 4 thereof must have been concluded before the notices of dismissal are announced?"
9. This week, we had the first of three decisions from the European Court on disclosure of information to European Works Councils, the Kuhne & Nagel case. The case law in this area is, of course, bound to be influential on the regulations relating to national-level information and consultation, which we expect later this year. The ECJ has taken a consistently liberal view as to the information which must be provided by management to members of European Works Councils. In Kuhne & Nagel, this trend is continued. The case was one where the central management was located outside the EU. and failed to provide the information requested. In such a case, according to the ECJ, the responsibility for providing the information to employees’ representatives must be assumed by the local management in the country, and other undertakings in the group which are located in the EU are also under an obligation to assist. Of the three European Works Council cases, perhaps the most interesting is the most recent one, Grongaard and Bang, which raises a series of questions about disclosure of share-sensitive information by employee-elected board members to the general secretary and other officials of the employee’s trade union.
10. Beaumont v Amicus is a trade union claim arising out of the public criticisms made by Mr Beaumont of Roger Lyons and his expenses claims when he was General Secretary of MSF. Those interested in learning more can look at Mr Beaumont’s web site. The union purported to expel Mr Beaumont from membership but subsequently retracted that decision and re-admitted him. Meanwhile, he had made a complaint to the ET of unjustifiable discipline. Ultimately the union conceded the ET claim. He has now applied to the EAT on the basis that the union was obliged under s.67(2)(b) of TULR(C)A to retract the disciplinary allegations that led to the expulsion. The union says that re-admitting him to membership effectively cancels out the discipline and s 67(2)(b) doesn't arise. The EAT will have to decide what this provision really means.
11. Crossley v Faithful & Gould (Holdings) Ltd is an interesting breach of contract claim, in which the High Court held that there is no implied duty to exercise reasonable care for an employee’s economic well being. The judge took a fairly narrow view of the Scally decision. The case is to be heard in the Court of Appeal on 24 February.
12. Meikle v Nottinghamshire County Council is a constructive dismissal and DDA case which raises interesting issues as to whether there has been a breach of the implied term of trust and confidence. The applicant resigned from her post as a teacher claiming constructive dismissal, but in her unfair dismissal originating application she asked for re-engagement, and she successfully reapplied for a teaching post with the authority. The employment tribunal found that this showed that the relationship of trust and confidence still subsisted, but the EAT held that this was wrong in law and that whether there is a breach of the implied term is to be measured objectively. That is to say, it is not necessary for the employee to actually lose confidence in order for there to be a breach of the trust and confidence term. This case is going to the Court of Appeal on this point, as well as on issues relating to the scope of the exclusion of sickness benefit from the DDA duty of reasonable adjustment
13. Horkulak v Cantor Fitzgerald International is the highly-publicised decision in which a senior managing director of a City money broking firm successfully claimed that the managing director’s use of foul and abusive language was in breach of the implied contractual term of trust and confidence. He was awarded £910,000 for wrongful dismissal. The Court of Appeal refused Cantor Fitzgerald permission to appeal on liability, but granted permission to appeal on issues of quantum.
14. R v Hampshire Fire Authority ex parte Kearney is an interesting case arising out the Firemen’s Disciplinary Regulations. These provide for an appeal against dismissal to the Secretary of State. The applicants here successfully appealed some two years ago against their dismissal, but the fire authority has refused to reinstate them. They have now brought judicial review proceedings in the Administrative Court against the employers, and the main issue of interest is whether they will be able to obtain a remedy of specific performance, requiring the employers to employ the dismissed employees.
15. 2004 may see a resolution of the controversial question of whether a common law claim for damages resulting from breach of the implied term of mutual trust and confidence is precluded by the decision of the House of Lords in Johnson v Unisys if the employee is dismissed. The decisions of the Court of Appeal on this issue are by no means easy to reconcile. One of the cases, Eastwood v Magnox, is due to be heard by the House of Lords in mid-February.
16. If an employee cannot recover damages at common law for psychiatric damages arising out of the manner or fact of dismissal, are such damages obtainable from an employment tribunal in an unfair dismissal claim? In Dunnachie v Kingston Upon Hull City Council, the EAT said that they are not. These cases create the anomaly that the person who is dismissed – or resigns and claims constructive dismissal – because they have been so badly treated can claim no damages for psychiatric injury, whereas someone who remains at work may receive compensation. The Court of Appeal heard the appeal in Dunnachie at the end of last year and judgment is awaited.
17. As mentioned, the particular cause of action in both Dunnachie and Eastwood was a claim for damages for psychiatric injury. Workplace stress is, of course, one of the real growth areas for litigation. In Sutherland v Hatton, the Court of Appeal laid down important guidelines restricting the circumstances in which employers can be found liable for psychiatric illness caused by workplace stress. The Court of Appeal ruled that a claimant must establish not simply that it was reasonably foreseeable that overwork would lead to stress but that it would lead to a breakdown in the stressed employee’s health. The Court of Appeal also said that an employee who returns to work after being off for stress-related sickness is usually implying that he believes himself fit to return to his previous work, and the employer is usually entitled to take that at its face value. It is hard to reconcile this emphasis on the employee taking the initiative with the duty on employers to carry out risk assessments, derived from EU health and safety law. This will be one of the main grounds for appeal when the House of Lords hears the case, now under the name of Barber v Somerset County Council, beginning on February 18. Another issue in the case is whether damages for psychiatric injury should be apportioned.
18. The dispute over the territorial jurisdiction of employment tribunals to hear complaints under the Employment Rights Act, including unfair dismissal claims, will move to the Court of Appeal this year. Judgment is expected at the end of the month or in early February from the Court of Appeal in Lawson v Serco Ltd, in which the EAT appeared to hold that a claim could be brought in a British tribunal by any employee in the world, so long as the employer carries on business or resides in England, Wales or Scotland. Jackson v Ghost Ltd, which takes a different approach, has also been appealed.
19. The Court of Appeal’s decision in Wall v British Compressed Air Society is reported in the February IRLR. This upholds, by a majority, the EAT’s decision that an employee who holds a unique position in an undertaking can have a "normal retiring age" for the purposes of the right to claim unfair dismissal.
20. Dennis Wise v Leicester City FC will be heard by the EAT on 9 February. The issue here is what happens when an unfair disciplinary hearing is cured by a fair appeal, but then the fair appeal is overturned by a third-tier review appeal.
21. In X v Y, the EAT held that in an appropriate case, the test of fairness for unfair dismissal purposes must be interpreted, so far as is possible, compatibly with European Convention rights. This was the case in which a development officer for a charity working with young offenders was arrested for gross indecency with another man in a public toilet. He failed to disclose this to his employers, and was dismissed when it came to light. He argued that his right to private life under the Convention was engaged, but the EAT held that the sexual act took place in public and therefore did not fall within the scope of protection of Article 8. An appeal, raising the general issue of the proper test of fairness where Convention rights are engaged, is to be heard by the Court of Appeal in March.
22. Similar issues arose in Pay v Lancashire Probation Service, Judge Jeremy McMullen’s foray into the world of BDSM which, as he explains, stands for bondage, domination and sado-masochism. The case involved an unfair dismissal complaint by a probation officer working with sex offenders who was dismissed after his employers discovered that he was involved in activities which included performing in fetish clubs and merchandising BDSM products. The main issue is whether dismissal on this ground constituted an infringement of the employee’s Convention rights to respect for his private life and to freedom of expression. The EAT holds that the activities were not private and that the interference with freedom of expression was justified. In so doing, however, the EAT takes the principle set out in X v Y somewhat further by holding that, having regard to the interpretative obligation on tribunals and courts set out in the Human Rights Act, a public authority employer will not act reasonably under s.98(4) of the Employment Rights Act if it violates an employee’s Convention rights and that a tribunal should interpret the words "reasonably or unreasonably" in the test of unfair dismissal as including "having regard to the applicant’s Convention rights". There is also an intriguing remark by the EAT that "in a case involving misconduct, the rules on unfair dismissal clarified by the Court of Appeal in Foley v Post Office need to be considered in the light of Convention Rights." I will come back to that in a moment.
23. Copsey v WBB Devon Clays is an unfair dismissal case in which the applicant was dismissed for refusing to work on a Sunday. The case is backed by the Keep Sunday Special Campaign and also raises the question of the interpretative obligation on tribunals as a result of the Human Rights Act, here in a case involving a private employer. Judgment is awaited from the EAT.
24. Foley v Post Office, of course, is the case which reaffirmed the range of reasonable responses test for unfair dismissal. In Aziz v UK, a doctor has brought a case before the European Court of Human Rights, seeking to challenge the range of reasonable responses test as being a breach of the right to a fair trial under Article 6, in that it does not allow an employment tribunal sufficient leeway to intervene.
25. A human rights claim also underlies Soteriou v Ultrachem Ltd. In this case, the tribunal would not hear the applicant’s unfair dismissal claim on grounds of illegality when it was found that he had committed a fraud on the Revenue by claiming to be self-employed prior to his "dismissal", when in law he was actually an employee. Meanwhile, he had brought a High Court claim for damages for breach of contract, expressly excluded from his ET claim. The employers are attempting to get the claim struck out, but he is contending that the doctrine of illegality cannot stand in the light of his right to a fair hearing under the Convention. He also argues that the doctrine infringes his right to property (in the claim) under Article 1 of the First Protocol. Judgment is awaited.
26. ASLEF v Lee is an important case concerning the expulsion from union membership of an activist in the British National Party. An employment tribunal held that this was an unlawful expulsion contrary to s.174 of the Trade Union and Labour Relations (Consolidation) Act, which allows a union to expel a member for conduct, but defines "conduct" as not including being "a member of a political party". The case is being appealed to the EAT on grounds that this is incompatible with the right to associate under Article 11 of the Convention. It is argued that the corollary of the right to associate is a right to disassociate: that an association cannot be compelled to admit an individual.
27. A whistleblowing case to watch out for is Street v Derbyshire Unemployed Workers Centre. This concerns the meaning of a disclosure in the public interest made in "good faith". The EAT rejected a contention that "good faith" merely requires the applicant to believe the material is true and said if the disclosure was made to "advance a grudge", the requisite good faith was lacking. The Court of Appeal has given leave to appeal on the meaning of "good faith".
28. Judgment from the Court of Appeal is awaited in Dacas v Brook Street Bureau. This is an important case on the status of agency workers. Ms Dacas signed a temporary worker’s agreement which made it clear that its provisions "shall not give rise to a contract of employment between Brook Street and the temporary worker, or the temporary worker and the client." Ms Dacas was then assigned to a local authority hostel, where she worked for six years as a cleaner until she was dismissed by the agency following an altercation at work. The EAT held that, despite the agreement, there was a contract of employment as between the agency and the applicant in respect of the particular assignment. The Court of Appeal somewhat unusually at its own instigation joined the local authority client to the proceedings, suggesting that it intends to issue a decision giving general guidance.
29. Marshalls Clay Products v Caulfield is the major test case on whether "rolled-up" holiday pay contravenes the Working Time Regulations. The EAT held that it does not contravene the Regulations to have contracts providing for a basic wage topped up by a specific sum or percentage in respect of holiday pay, even where the holiday pay is not specifically allocated to any particular period and is not paid at the time of the leave. This was a rather different approach than that taken by the Scottish Court of Session in MPB Structures Ltd v Munro. So this case may answer the long-running constitutional puzzle of whether the EAT, when it sits in England, as a British court, is bound by a decision of the Inner House of the Court of Session on appeal from the EAT when in sits in Scotland. The Court of Appeal is due to hear an appeal in this case on 26 January.
30. Bamsey v Albion Engineering Ltd is a case on how you calculate normal working hours for the purposes of the Working Time Regulations in the context of holiday pay and, in particular, whether the definition in s.234 of the Employment Rights Act of "normal working hours" applies. The EAT held that s.234 is incorporated into the Working Time Regulations. The case has been argued in the Court of Appeal and judgment is awaited.
31. The EAT will be hearing Commissioners of Inland Revenue v Ainsworth in February. This case will challenge two existing authorities: Kigass Aero Components v Brown, that a worker on long-term sick leave can claim four weeks’ holiday pay under the Working Time Regulations even where they have been absent from work throughout the leave year in question; and List Design Group Ltd v Douglas, which held that the right to receive a payment in lieu of annual leave can be claimed as wages under s.13 of the Employment Rights Act.
32. In Davies v London Borough of Harrow, the EAT will be hearing an appeal against an employment tribunal decision in favour of residential wardens that time spent at premises at night (including when sleeping) is "working time" for the purpose of the National Minimum Wage. The tribunal also found that it was working time under the Working Time Regulations, but there is no appeal against that.
33. Many of the new EU Directives adopt an extended definition of employment. One of these is the Part-time Workers Directive, which covers "part-time workers who have an employment contract or employment relationship as defined by the law, collective agreement or practice in force in each Member State." The Austrian reference, Wippel v Peek & Cloppenberg, raises interesting questions as to whether the Directive – as well as Article 141 and the Equal Pay Directive – extends to cover those with a "casual" employment relationships, such as in this case where the applicant entered into an agreement to carry out work on approximately three days a week and two Saturdays in each month, but without any binding commitment to do so. Under UK law, such a lack of mutual obligation might negate the existence of a contract of employment or a contract for services, so as to fall outside the protection of employment legislation. It will be interesting to see how the ECJ approaches the issue as a matter of European law.
34. Speaking of part-time workers, Matthews v Kent & Medway Towns Fire Authority, the first reported EAT decision on the Part-time Workers Regulations 2000, is due to be heard by the Court of Appeal starting on 30 March. This is a test case brought by retained fire fighters alleging that they have been less favourably treated than whole-time fire fighters, especially as regards their exclusion from the Firemen’s Pension Scheme. The EAT held that the claim fell at the first statutory hurdle because the retained fire fighters were not employed "under the same type of contract" doing broadly similar work .as their whole-time colleagues. The appeal raises the issue of what approach should be taken to this question, and whether tribunals are limited to considering the specific allegations of less favourable treatment raised in the application or are able to compare the overall packages.
35. Webley v Department for Work and Pensions is an EAT appeal under the Fixed Term Employees Regulations. An employment tribunal found that the Regulations are not contravened by the DWP’s policy of employing staff on temporary contracts for no more than 51 weeks. This results in the contracts of workers at Job Centres not being renewed and instead new staff are employed on 51-week contracts to replace them. On appeal, it is being argued that the reason for dismissal is because they are fixed-term employees and that the limitation on employment to 51 weeks is less favourable treatment than that accorded to comparable full-time employees.
36. The Working Time Directive and Regulations provide for minimum paid annual leave of four weeks. We are still awaiting the decision in Merino Gomez v Continental Industrias, a Spanish reference to the European Court of Justice. If there is an annual shutdown agreed via a collective agreement and a woman is on maternity leave at the relevant time, is she entitled to holiday in lieu when she is not on maternity leave? The ECJ’s decisions in Gillespie and Boyle would suggest that there is no such right, but this important point has not been directly ruled upon by the European Court. The Advocate General’s Opinion has now been published. He suggests that in such a case a woman must be allowed to take her holiday at a different time, when she is not on her maternity leave.
37. Alabaster v Woolwich plc is a UK reference to the ECJ concerning the effect, if any, on the calculation of statutory maternity pay of a pay increase granted to a woman before the start of her maternity leave, when the increase has not been backdated to the relevant reference period for calculating smp under the regulations. An amendment to the regulations in 1996 purporting to give effect to the ECJ’s decision in the Gillespie case provides only for pay increases to be taken into account where they have been backdated to the calculation period. Both the employment tribunal and the EAT held that this does not correctly implement Article 141 as it was interpreted in Gillespie. This is also the view of the Advocate General, whose Opinion has now been issued. However, the Advocate General suggests that the Court should not uphold the decision in Gillespie, on the basis that women on maternity leave are in a special position, which is now governed by the Pregnant Workers Directive and that Gillespie no longer accords with current case law.
38. Turning now to discrimination and dealing first with the DDA, the definition of disability covers an impairment which has ceased to have a substantial adverse effect on a person’s ability to carry out normal day-to-day activities, "if that effect is likely to recur". Swift v Chief Constable of Wiltshire Police is a test case on the meaning of "recurring effect". The particular issue in question revolves around what is it that needs to recur in order to fall within the definition: is it the impairment that must recur or is it sufficient for it to be an effect of the impairment? There are also issues as to whether there is any time limit on the future likelihood of recurrence and whether there is any minimum time period during which the symptoms must recur. Judgment is awaited from the EAT.
39. Archibald v Fife Council is a decision of the Inner House of the Court of Session that will be reported in the March IRLR. This case involves a road sweeper who had an operation that left her unable to walk. She claimed it would be a reasonable adjustment for the employers to offer her alternative employment. In the course of dismissing her appeal, the Court of Session essentially holds that there is no duty of reasonable adjustment where the job requires someone who is able-bodied and the job holder becomes disabled. The Act provides that the duty of reasonable adjustment applies where "any arrangements made by...an employer...place the disabled person concerned at a substantial disadvantage in comparison with persons who are not disabled...." According to the majority of the Court of Session, where an employee loses their capacity to do the job as a result of some accident occurring away from work, it is not the "arrangements" made by or on behalf of the employer that place the employee at a disadvantage but the accident that has disabled the person that has that effect. This case is expected to go to the House of Lords.
40. Collins v National Theatre is a Court of Appeal case that was argued in December on the extent to which it is permissible to justify a breach of a duty of reasonable adjustment under s.6. The EAT found that even where an employer is found not to have satisfied the reasonable adjustment test, they do not act unlawfully if they can satisfy the low threshold for justification set by Jones v Post Office. This will be academic from 1 October when the possibility of justifying reasonable adjustments will be removed, but the Court of Appeal’s decision may revisit the justification defence generally. Judgment is awaited.
41. Like Collins, Law v Pace Microtechnology also focuses on justification for failure to make a reasonable adjustment and will be heard by the Court of Appeal in April. This appeal also raises the status of the DRC’s Employment Code of Practice and whether it should be given any weight by tribunals on issues relating to construction of the statute.
42. Lane Group v Farmiloe and North Somerset Council, which was heard by the EAT in November, raises an issue as to the relationship between health and safety obligations and reasonable adjustments. The employee could not wear safety shoes in the employer’s warehouse as required by the Personal Protective Equipment Regulations because of a skin complaint. The local authority, in their health and safety function, said they would take action against the employer if he did not wear safety shoes. The tribunal said that the employers discriminated against the applicant on grounds of disability and were aided by the council. The tribunal said that, as a reasonable adjustment, the employers should have carried out a balancing exercise weighing the employee losing his job against the risk of being injured because of not wearing safety shoes. On appeal, it was argued that health and safety legislation imposes a strict liability and it cannot be a reasonable adjustment to breach that duty.
43. Wilson-Wright v East Midlands Ambulance Service NHS Trust (No.2) is one of a number of cases due to be heard by the EAT in June which are concerned with the extent to which duties under the DDA, such as the duty to make reasonable adjustments, apply following termination of employment. In this particular case, the applicant claims that he should have been considered for jobs which became available after he had been dismissed but during a period when he was appealing against his dismissal.
44. The European Court gave its decision in Allonby v Accrington & Rossendale College on Tuesday. Like Lawrence v Regent Office Care, this case raises issues as to the circumstances in which Article 141 permits a comparator who is not in the same direct employment. However, there are some important factual differences between the two cases. Allonby arose out the dismissal of a number of hourly-paid lecturers employed by the college, and the college’s decision to engage hourly-paid lecturers only through ELS, which took on lecturers as self-employed persons. It was conceded that the applicant worked in the same establishment as her comparator, who remained employed by her former employer, and the work done by both the applicant and her comparator was for the benefit of the same employer. However, the Court comes to the same conclusion as in Lawrence on the same employment point: "where the differences identified in the pay conditions of workers performing equal work or work of equal value cannot be attributed to a single source, there is no body which is responsible for the inequality and which could restore equal treatment. Such a situation does not come within the scope of Article 141(1) EC." However, the applicant was more successful in her claim for access to the Teachers Superannuation Scheme, notwithstanding that the scheme rules restrict membership to employees with a contract of employment. The Court holds that the right to equal pay under Article 141 extends to all "workers". It says that "worker" for this purpose cannot be defined by reference to national legislation, but has a Community meaning: "a person who, for a certain period of time, performs services for and under the direction of another person in return for which he receives remuneration." A worker is distinguished by the European Court from "independent providers of services who are not in a relationship of subordination with the person who receives the services." The ECJ went on to hold that if the claimant was a "worker" within the meaning of that principle, she would be entitled to claim against the Secretary of State, relying on statistical evidence that the rule had a discriminatory impact on women.
45. Robertson v DEFRA was decided by the EAT in December. It holds that an equal pay claim cannot be brought under Article 141 by civil servants in one Government department using comparators in a different Government department. The EAT held that the fact that the Crown is the employer for both departments is not sufficient for the purposes of Article 141. Applying the Lawrence decision, it held that there must be an element of control, and that control is lost when the Prime Minister, in his capacity as Minister for the Civil Service, delegates authority for terms and conditions of employment to the Departments. That makes each individual department the "service" for the purposes of Article 141. This raises general concerns that an employer can avoid equal pay obligations in geographically distinct units. Permission to appeal was given and an appeal is being lodged to the Court of Appeal, though its chances are likely to depend in part upon Allonby.
46. The EAT’s decision in Preston v Wolverhampton Healthcare NHS Trust (No.3) is the latest installment in the long-running saga of the pension rights of part-time workers. The case is reported in the February IRLR. It provides answers to several questions in the test cases, such as: Does time begin to run in a pensions claim against a TUPE transferor from the date of transfer, or does time not run until the end of an employee’s employment with the transferee? Answer: Time does not run until the end of an employee’s employment with the transferee. When does a ‘stable employment relationship’ arise? Answer: It depends in part upon the intention of the parties. Is there a breach of the Equal Pay Act where scheme membership is compulsory for full-time staff but part-time staff are excluded? Answer: Yes. Is there a breach of the Equal Pay Act where scheme membership is compulsory for full-time staff and optional for part-time staff? Answer: No. Is there a breach of the Equal Pay Act where an employer has failed to inform staff of the removal of a barrier to scheme membership? Answer: No, but there may be a breach of an implied duty to inform, as set out the Scally case. Some of these issues will be going to the Court of Appeal.
47. Cadman v Health & Safety Executive is the controversial equal pay decision of the EAT on use of service-based pay scales. The EAT held that because of the European Court’s decision in the Danfoss case in 1989, use of the factor of length of service does not need to be specifically justified in a case where the employer is distinguishing between full-time workers. The case will be heard by the Court of Appeal in July and the appellant will be seeking a reference to the ECJ if the appeal is not allowed
48. Lucas v Ministry of Defence is one of a group of cases about the jurisdiction of employment tribunals in discrimination cases. The issue is whether the act of discrimination has to take place in Great Britain for a British tribunal to have jurisdiction. There are three appeals: one where the sex discrimination took place in Northern Ireland, where the MoD says that the Northern Ireland tribunal has jurisdiction; a claim of race discrimination, which took place in Germany, and it is suggested only a German court has jurisdiction; and a race claim from the Sovereign Base area of Cyprus, where no discrimination legislation at all is currently in force. The appeals will be heard by the EAT in April.
49. Despite having produced one of the longest ever EAT decisions during 2003, Kamlesh Bahl v The Law Society is not over yet. The EAT gave Kamlesh permission to appeal and the hearing is expected sometime in 2004.
50. Patterson v Legal Services Commission is a Court of Appeal decision in the February IRLR that upholds an EAT finding that, in granting a legal aid franchise, the Legal Services Commission confers an "authorisation or qualification" such that a sole principal in a firm of solicitors could sue for race discrimination as regards the award of a franchise. Perhaps the most interesting aspect of the decision are the observations of the Court of Appeal that the position of partners, in the case of an application by a partnership, is no different in principle from that of a sole principal. The application would be to confer the authorisation on the partners jointly and severally, whatever the size of the partnership, and it is unlawful to discriminate against each applicant in such a case. This might be of potential importance in other areas, such as where lists of approved legal contractors are drawn up.
51. Department for Work and Pensions v Thompson raises that vital issue of State, whether it is sex discrimination for Jobcentre Plus to require a man to wear a tie at work, given that women are not required to wear a tie. The employment tribunal said it was. The EAT has now said that it was not. According to the EAT, the tie requirement could only be regarded as less favourable treatment if the overall dress code imposed by the employers resulted in men being treated less favourably than women. The applicant is seeking leave to go to the Court of Appeal.
52. The Rutherford case challenging the statutory exclusion of men over age 65 from the right to claim unfair dismissal and a redundancy payment will be heard by the Court of Appeal on 24 March. The EAT held that the exclusion of employees age 65 and over from the statutory right not to be unfairly dismissed and the right to receive a redundancy payment does not have a disparate impact on men and that, in any event, the Secretary of State met the test of justifying the statutory exclusions. Some commentators felt that neither limb of the EAT’s reasoning was especially convincing.
53. The European Court gave its decision in Schonheit v City of Frankfurt am Main on 23 October. The case concerned indirect discrimination in the German law on pensions for civil servants. This decision is noteworthy because the ECJ sets out the general principle relating to indirect discrimination that "a difference in treatment between men and women may be justified...by reasons other than those put forward when the measure introducing the differential treatment was adopted." According to the Court, in establishing an objective justification, a party is "not bound in that respect by the intention expressed when the measure was adopted." The decision will be reported in due course in IRLR.
54. Essa v Laing Ltd is about compensation for unlawful discrimination. The EAT held that unlike the common law test of negligence, whereby the employer is only responsible for loss which is reasonably foreseeable, compensation for unlawful discrimination is not limited to cases of reasonably foreseeable harm. The EAT ruled that an applicant who has been the victim of unlawful discrimination is entitled to compensation where they can show a direct causal link between the act of discrimination and their loss. This is especially important in the case of psychiatric damage. During the Court of Appeal hearing in October, all three equality commissions jointly intervened to support the EAT’s decision, the first time this has taken place and probably a harbinger of things to come. Judgment is expected very soon.
55. One of the largest discrimination compensation award ever was in Chaudhary v British Medical Association, where the total originally awarded was £761,867. This case has bounced around the courts for the past few years, but judgment is now awaited from the EAT on a matter of principle as to how awards for compensation should be calculated in a case where indirect discrimination has been found.
56. Jarman and London Borough of Hackney v Stenning is an appeal against a discrimination award of £239,000. The main point of principle before the EAT is whether an employment tribunal has jurisdiction to apportion damages between individual respondents or whether respondents are simply jointly and severally liable to pay.
57. Sinclair Roche & Temperley v Heard and Fellows is the case of the two female junior equity partners in this firm who were found to have been discriminated against on grounds of sex in that they were not made senior equity partners. Four named individuals were found to have aided the firm’s unlawful discrimination and compensation in the millions has been suggested as appropriate. An appeal to the EAT will be heard at a preliminary hearing on 29 January, and the case appears to raise several points of interest, including the interface between the Sex Discrimination Act and partnership law, and the approach to liability of individual respondents.
58. Transsexuals form a very small proportion of the overall population, but a disproportionate part of the law reports. A v Chief Constable of the West Yorkshire Police reaches the House of Lords on 8 March. This is the sex discrimination case in which the Court of Appeal ruled that in light of the decision of the European Court of Human Rights in Goodwin v United Kingdom, a post-operative male to female transsexual is normally entitled to be regarded as female for employment law purposes. The case raises some interesting points on the relationship between Strasbourg case law and EU law.
59. KB v National Health Service Pensions Agency is a decision of the European Court of Justice handed down on 7 January. This case used Article 141 to challenge the exclusion by the NHS pension scheme of a female nurse’s female-to-male transsexual partner from the right to a survivor’s pension because they are not legally married. The UK Government defended the case on the basis that both male and female workers with partners to whom they are not married are unable to benefit from the survivor's benefits provided for by the NHS Pension Scheme. That is true whatever the reason for the parties not being married. The UK Government referred to the Grant decision. The European Court agreed that the decision to restrict certain benefits to married couples while excluding all persons who live together without being married is not discrimination on grounds of sex. But the Court goes on to say: "However, in a situation such as that before the national court, there is inequality of treatment which, although it does not directly undermine enjoyment of a right protected by Community law, affects one of the conditions for the grant of that right. In the United Kingdom, by comparison with a heterosexual couple where neither partner's identity is the result of gender reassignment surgery and the couple are therefore able to marry and, as the case may be, have the benefit of a survivor's pension which forms part of the pay of one of them, a couple such as K.B. and R. are quite unable to satisfy the marriage requirement, as laid down by the NHS Pension Scheme for the purpose of the award of a survivor's pension.... The fact that it is impossible for them to marry is due to the fact...that the Matrimonial Causes Act 1973 deems a marriage void if the parties are not respectively male and female.... The European Court of Human Rights has held that the fact that it is impossible for a transsexual to marry a person of the sex to which he or she belonged prior to gender reassignment surgery... was a breach of their right to marry under Article 12 of the ECHR." This leads the ECJ to conclude that "Legislation, such as that at issue in the main proceedings, which, in breach of the ECHR, prevents a couple such as K.B. and R. from fulfilling the marriage requirement which must be met for one of them to be able to benefit from part of the pay of the other must be regarded as being, in principle, incompatible with the requirements of Article 141 EC." This decision will be reported in the March IRLR. At first reading, it is hard to meaningfully distinguish the rights under EU law as interpreted in this case of transsexuals to survivor’s pensions from the position of gay couples.
60. Why is that relevant? Regulation 25 of the Sexual Orientation Regulations excludes from the right not to be discriminated against on grounds of sexual orientation "access to a benefit by reference to marital status". The Government’s explanatory memorandum says: "This means that rules based on marriage cannot be challenged as indirectly discriminatory by reason of the fact that it is unlawful for same sex partners to marry in the UK." This is one of the two aspects of the new Regulations that is the subject of a judicial review challenge by a group of trade unions, including Unison and Amicus, co-ordinated by the TUC. The KB decision looks like it greatly increases the chances for success of that part of the application. The other element of this judicial review is a challenge to reg.7(3), which allows for sexual orientation discrimination where someone works for an organised religion. The Regulations allow an employer to apply a requirement related to sexual orientation –
"(i) so as to comply with the doctrines of the religion or
(ii) because of the nature of the employment and the context
in which it is carried out, so as to avoid conflicting with the strongly held religious convictions of a significant number of the religion’s followers". In those circumstances, the Regulations allow discrimination where either the individual does not meet that requirement relating to sexual orientation or "the employer is not satisfied, and in all the circumstances it is reasonable for him not to be satisfied, that that person meets it." In practice: "I can’t employ someone who is gay because most of our members consider homosexuality an abomination and I assumed you were gay because you wore a pink shirt to the interview". The regulation is being challenged as going beyond the permissible scope of the Directive and as being incompatible with the European Human Rights Convention. The application is likely to be heard around March. That is the only entry this year we have for the new regulations on sexual orientation and religious belief, but one prediction I can make with confidence is that this new legislation will generate a great deal more case law in the years to come.