January 2022 Bulletin
Section 6(1) of the Equality Act 2010 sets out the statutory definition of disability. A person has a disability if they have a physical or mental impairment which has a substantial and long-term adverse effect on their ability to carry out normal day to day activities. Paragraph 2 of Schedule 1 to the Equality Act deals with recurring conditions. If an impairment stops having a substantial adverse effect, it will be treated as still having that effect if that effect is likely to recur. Likely here means that something ‘could well happen’. The Court of Appeal has looked at recurring conditions recently in a case called Sullivan v Bury Street Capital.
Mr Sullivan was a senior sales executive. In 2013, he suffered paranoid delusions after he broke up with his Ukrainian partner. He believed he was being stalked by a Russian gang with links to his ex-partner. From May 2013, his condition stopped him sleeping, affected his social life and impacted his record keeping at work. By September 2013, the employee’s condition had improved, and he was able to attend important business meetings in New York. Several years passed during which the employee’s performance reviews noted timekeeping problems and a poor attitude to work. His condition deteriorated again in April 2017. On 7 September 2017 he was signed off work. The following day, the employer dismissed him for capability, referring to his poor timekeeping, lack of communication, unauthorised absence and poor record keeping. The employee brought claims for unfair dismissal and disability discrimination.
The employment tribunal upheld his unfair dismissal claim. However, they found that he did not meet the disability definition and so could not bring a discrimination claim. The tribunal decided that there had been a substantial adverse effect from May to September 2013 and then again from April to July 2017. However, in neither case was it likely that the substantial adverse effect would continue for at least twelve months or recur so as to meet the ‘long-term’ test (even though it had, in fact, recurred). In 2013, the substantial adverse effect lasted for 5 months but there was no evidence that it persisted beyond then. The tribunal found that during April to July 2017, the employee had been particularly stressed due to pay talks at work. However, they found that these pay talks would not continue indefinitely and it was likely that the employee’s condition would improve once an agreement on pay had been reached.
The employee appealed to the EAT and lost so he appealed to the Court of Appeal. The Court of Appeal had previously said in the case of McDougall v Richmond Adult Community College that determining whether a substantial adverse effect was likely to recur involved making a prediction about the future based on the evidence that was available at the relevant time. The tribunal could not consider any subsequent events. In this case, that meant that the 2017 recurrence was irrelevant when making an assessment about whether the employee had a disability in 2013. However, what McDougall hadn’t decided was whether the 2013 events were relevant to the likelihood of recurrence when considering the events of 2017. The Court said this was a question of fact and there was no universal answer. In some cases, the fact that a substantial adverse effect had recurred episodically could suggest that a further episode might well happen. However, this wouldn’t always be the case. The tribunal in this case had found that the substantial adverse effect in 2017 had been triggered by pay talks and found that this triggering event was unlikely to recur. The Court found nothing wrong with the tribunal’s approach nor its findings on the facts of the case.
In this case, the tribunal was entitled to find that the 2017 substantial adverse effect was unlikely to recur – because the triggering event was short lived – even though there had been an earlier episode. This shows that decisions on recurring or episodic conditions are fact specific. In practice, employers should be cautious with employees who have previously experienced episodes or flare ups of the same condition. In most cases, an occupational health report or expert medical evidence will be needed to help the employer assess disability status and give advice thereafter about how to accommodate that condition in the workplace.
Augustine v Data Cars
The law sets out the minimum hourly rates that workers must be paid. It isn’t always as simple as simply paying that minimum rate for each hour worked. Some deductions from the worker’s pay, or payments made by the worker, are relevant and will reduce the amount of the total pay for National Minimum Wage purposes. The worker must still be left with at least the NMW after these deductions or payments are taken into account. The EAT has looked at this issue recently in Augustine v Data Cars.
Mr Augustine worked as a taxi driver. Initially he provided his own vehicle, but then he paid to rent a vehicle from an associated company. He paid for insurance, fuel and cleaning costs. He also purchased a branded uniform from the employer so that he could work as a designated ‘gold driver’. His pay was below the NMW once the costs of his uniform and car rental had been taken into account and deducted. Mr Augustine brought claims in the employment tribunal, claiming he was an employee or worker and therefore entitled to the NMW. The employer disputed that his expenses should be deducted, arguing that hiring a car and buying a uniform to be a ‘gold driver’ were optional and not ‘in connection with’ his employment.
The tribunal found the fees, insurance, fuel and cleaning costs should be taken into account and deducted when calculating NMW. These were ‘in connection with’ employment. However, the car hire and uniform hire were optional expenses, not ‘in connection with’ employment and should not be deducted. Mr Augustine was not required to rent a car as he could have used his own vehicle, whether owned or leased. He didn’t have to buy a uniform and be a ‘gold driver’. The employee appealed. The EAT said that both the cost of the car rental and uniform should be deducted for the purposes of calculating the NMW. They reviewed the wording of the NMW Regulations 2015 and said that the statutory test was simply whether the payments were ‘in connection with’ employment. This did not mean the payments needed to be a requirement of the employment, or wholly or exclusively incurred in connection with the employment. The payments for the uniform and car were both ‘in connection with’ his employment and should be deducted for the purposes of the NMW calculation. Mr Augustine was required to wear the uniform as a designated ‘gold driver’ and he plainly wore it in connection with his employment, which is why he paid for it. Equally, it was irrelevant that Mr Augustine could have chosen to use his own car to provide the taxi services. He rented the car to do so and this was connected to his employment.
This decision suggests that any costs incurred by an employee or worker that could be linked to employment should be deducted when calculating NMW, even if the costs are a result of the employee’s own choice. Employers who encourage staff to buy items which are not reimbursed, such as uniform or equipment, should ensure their employees’ rates of pay do not slip below the NMW. That said, this decision appears contrary to HMRC guidance, which suggests that there needs to be some degree of legal or contractual requirement for the worker to incur the cost before it can be categorised as ‘in connection with’ employment. A differently constituted EAT may take this into account in future and make a different decision. In time, HMRC may add further clarification. In the meantime, employers should take note of this decision and err on the side of caution.
Emuemukoro v Croma Vigilant
The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 (the Rules) contains the rules on strike out. Rule 37(1) says that a tribunal can strike out all or part of a claim (ET1) or response (ET3) at any stage of the proceedings, of its own accord or following an application by either party, if:
- It is scandalous or vexatious or has no reasonable prospects of success.
- The way the proceedings have been conducted – by the claimant or respondent or their representatives – has been scandalous, unreasonable or vexatious.
- The claimant or respondent has not complied with the tribunal rules or an order of the tribunal.
- The claim or response has not been actively pursued.
- It is no longer possible to have a fair hearing.
There is a lot of overlap between these reasons for strike out. It may not be possible to have a fair hearing if one party has conducted proceedings in a vexatious way. Similarly, a party may conduct proceedings unreasonably precisely because they are failing to comply with tribunal orders. The EAT has recently looked at strike out in practice, in relation to an employer’s response to a claim.
In Emuemukoro v Croma Vigilant, the employer had not complied with tribunal orders in relation to witness statements and the hearing bundle did not contain all relevant documents. The employment judge struck out the response on the first day of a five-day hearing, saying that a fair trial was no longer possible within that trial window. The judge said the lesser sanction of an adjournment would prejudice the employee. The employer appealed to the EAT saying strike out should only happen if a fair hearing would never be possible, rather than simply not possible within the relevant trial window.
The EAT agreed with the employment tribunal. They said it wasn’t necessary for a fair hearing to not be possible at all. It was enough to justify strike out that a fair trial was not possible in the scheduled trial window due to the party’s conduct. The tribunal was right to consider the delay and hardship already experienced by the employee, and any more delay would not be in the interests of justice. The EAT said that in this case the less drastic response was the strike out.
This case shows the importance of sticking to tribunal orders and ensuring that cases are prepared properly in advance of any hearing. It is tempting to think that tribunal orders are flexible, perhaps because parties often agree short extensions of time between themselves, often without telling the tribunal. This case is an extreme one – few employers will show up to a tribunal hearing without having done their homework. Whichever side of the fence you sit on, the message here is to take all tribunal orders, and the overarching tribunal process more generally, seriously. Failure to do so may result in the tribunal striking out a claim or response and rendering one party a bystander in proceedings with no material influence over the final outcome. Employers can take advantage of strike out powers if an employee falls foul of the rules but must also ensure that their own house is in order.
Eligible employees who are off sick are entitled to statutory sick pay of £96.35 per week for up to 28 weeks. The employee must earn on average £120 or more per week and must be off work for at least 4 days in a row (including non -working days). Medical evidence is usually required for statutory sick pay purposes. Most employers allow employees to self-certify absence of up to 7 days, with a GP note required for longer absences.
For a short period only – for absences between 10 December 2021 and 26 January 2022 – an employee can self-certify their absence for up to 28 days rather than the normal 7 days. Employees will only need a GP fit note if they are off for more than 28 days (including non-working day). This is a short-term measure designed to reduce pressure on GPs at a time where millions of people will be off work with Covid, and doctors are heavily involved in rolling out booster jabs in the race against the Omicron variant.
There may also be a knock-on effect for employers who offer contractual sick pay at more than the SSP rate. Contractual sick pay is often dependent on a GP note after 7 days. A request could still be made to a GP between these dates but would probably attract a fee as a private medical certificate. Such a request would also place an extra burden on GPs whose efforts are rightly being directed elsewhere. Employers should scrutinise contracts and policies which may allow employers to seek supporting medical evidence at an earlier stage and take advice where necessary. It is also possible that the measures could be extended if it is necessary to support the vaccination programme in the new year, so keep an eye out for updates.
London Borough of Hammersmith and Fulham v Keable
For a dismissal to be fair, the reason (or main reason) for the dismissal must be one of the potentially fair reasons under section 98 of the Employment Rights Act 1996. These are capability, conduct, redundancy, statutory illegality, or some other substantial reason (SOSR). The employer must also show that it acted reasonably in all the circumstances, bearing in mind its size and resources, including following a fair procedure. The employment tribunal will decide whether, on the particular facts of the case, the dismissal fell within the band of reasonable responses open to the employer in the circumstances.
In London Borough of Hammersmith and Fulham v Keable, the employee was a public protection and safety officer. His job was not a politically restricted post. The Council had a code of conduct which set out the standards of behaviour expected from employees, including those relating to integrity and working with the media. The Code said employees should ‘avoid any conduct or associations inside or outside of work which may discredit you or the Council’ and ‘do nothing away from work which might damage public confidence in the Council or make you unsuitable for the work you do’. It also included a requirement not to bring the Council’s name into disrepute through the press or media. In March 2018, the employee attended a political rally in his own time wearing nothing which would identify him as a Council employee. He had a discussion with an opposition demonstrator and said that the Zionist movement had collaborated with the Nazis during the holocaust. It was filmed without his consent and put on social media without his knowledge. His employer was alerted, and he was subject to disciplinary proceedings for bringing the council into disrepute. During the disciplinary process, the employee said he had not been anti-Semitic, but had been having a private exchange of political views. He was dismissed for bringing the Council into disrepute because his comments were likely to cause offence. He brought an unfair dismissal claim.
The tribunal said the decision to dismiss was outside the band of reasonable responses. Although the dismissing officer may have had a genuine belief in the employee’s misconduct, he did not have reasonable grounds for that belief. In particular, at no point was the employee given the opportunity to comment on what he thought the average person would think his statements meant. The Council did not have reasonable evidence of what the average person would have thought about his comments. The employee had only been told that his statement that ‘the Zionists collaborated with the Nazis’ was likely to cause offence. Even if a fair procedure had been followed, it was outside the band of reasonable responses for the employer to conclude he should be dismissed for bringing the council into disrepute, even if his statements had caused offence. He had expressed his political views lawfully, in a non-abusive way, away from work, outside work time and had not been involved in publishing the comments. The EAT agreed. The dismissal process had contained significant errors. An employee should always know the full nature of the allegations made against them. The employee here should have been given an opportunity to comment on what he thought the average person would think his statements meant.
Employers must ensure that disciplinary allegations against an employee are both clear and complete. An employee must have the opportunity to properly understand the case they have to meet and to respond to it. This is not only good for the employee, who knows the test they have to meet. It is also vital for an employer to understand exactly what allegations they are pursuing. In this case, the employer’s dismissing officer created his own allegation and researched it after the hearing was over – that denied the employee the opportunity to answer that allegation properly or at all. This case also shows that employers must be cautious about disciplining employees for behaviour outside the workplace, especially when there is no link between the employee’s conduct and their work.
Slade v Biggs
Employers must follow the Acas Code of Practice on Disciplinary and Grievance procedures when dealing with employee grievances or dismissing for misconduct or poor performance. If an employer does not follow the Acas Code, an employment tribunal can increase compensation by up to 25 per cent if it is just and equitable to do so. In Slade v Biggs, the EAT dealt with an appeal by an employer against a 25 per cent uplift in a discrimination claim.
The case involved two employees who both became pregnant around the same time. The employment tribunal found that the employer had found this ‘highly inconvenient’ and decided to engineer their dismissal. They were not paid correctly, and they failed to pay one employee’s statutory maternity pay and insisted she resign. They TUPE transferred both employees to a company that couldn’t afford to pay them. They ignored their grievances. The other employee was accused of misconduct, suspended, and dismissed shortly after she gave birth to a very premature baby who was in intensive care. The termination date was backdated to precede the birth in an attempt to avoid paying maternity pay. The tribunal found that her suspension and dismissal was ‘one of the most egregious acts of discrimination possible’. The tribunal found that the employer had acted vindictively and upheld claims of unfair dismissal, discrimination and TUPE breaches. The employees were awarded injury to feelings, aggravated damages and a 25 per cent uplift in compensation for breaches of the Acas Code. The employer appealed, saying the uplift was too high because it constituted ‘double recovery’ between the injury to feelings and aggravated damages awards.
The EAT upheld the tribunal’s decision. The judgment had shown no obvious double counting. The vindictive and spurious disciplinary process resulted in the injury to feelings award. The vindictive elements – such as the timing of the suspension – were not Acas code breaches. The reasons for the aggravated damages awards were not related to Acas Code breaches either. The value of the Acas uplift in monetary terms was not disproportionate. If there were not cases where the maximum uplift applied, Parliament’s decision on the appropriate range for uplift would not be respected. The law did not say that cases attracting the maximum uplift needed to be exceptional. The EAT gave guidance for the future:
- Is it just and equitable to award an Acas uplift?
- What percentage uplift is just and equitable, possibly equalling 25 per cent but not exceeding it?
- Is there any overlap between the uplift and other awards such as injury to feelings and aggravated damages?
- As a final sense check, is the overall sum after the uplift is applied disproportionate, and if so, what adjustment should be made?
The four-stage test isn’t new law, but it does bring together guidance from case law which will be useful for tribunals in future. This case was extreme, with damning findings of fact by the tribunal about the way the employees were treated. However, care must always be taken in relation to grievance and disciplinary procedures to ensure that the Acas Code is followed. Failing to do so can be very costly.
Gray v University of Plymouth
Section 15 of the Equality Act 2010 deals with discrimination arising from disability. This is where an employee is treated unfavourably because of something arising from their disability. An employer will have a defence if it can show that its actions were a proportionate way of achieving a legitimate business aim.
In Gray v University of Plymouth, the employee worked in the employer’s Information Services department. He was dismissed after two years off sick for reasons relating to his disability. He brought a claim for discrimination arising from disability, saying he had been treated unfavourably by his employer in calling a formal meeting under their absence management policy, stopping his sick pay, dismissing him and rejecting his appeal. The employment tribunal said the employer’s legitimate aim was to ensure the efficient running of the Information Services department as part of its student offer. They said that their actions were a proportionate way of achieving those aims. The tribunal’s judgment said it was ‘obvious’ that keeping the employee’s job open was significantly disruptive. The employee appealed.
The EAT said that section 15 requires the employment tribunal to carry out its own critical evaluation of justification and set that out in the decision. In stating that it was obvious that keeping the employee’s job open would be disruptive, the tribunal had failed to explain why they reached that decision. They hadn’t included any findings about how the employee’s job was being covered, the disruption (if any) caused by his absence, or any additional costs that were being incurred as a result of his absence. Although plenty of evidence had been adduced on this point, the tribunal had not set out its own reasoning. The EAT allowed the appeal and sent the case back to the original tribunal to revisit the issue.
This case shows that the tribunal not only has to undertake that critical evaluation of an employer’s objective justification defence but also set out its reasoning for arriving at that decision. It is also a good reminder for employers about the need to examine the impact and effect of an employee’s absence on the business before moving to dismiss a disabled person. That process could be put under the microscope at a later date, so make sure you get it right.
Stockbrokers at London firm FinCapp have decided to give their employees unlimited holiday entitlement. After a bumper 6 months for workload and profit, the business has decided to introduce the policy to guard against staff burn out. The move will flip the standard holiday policy on its head – instead of a maximum limit, the company will instead introduce a minimum level of holiday for employees. Staff will be required to take a minimum of 4 weeks off per year and a few days per quarter to ensure they get regular breaks.
This policy might seem too good to be true and for many businesses it probably is. Software business CharlieHR had a similar policy and found it actually had the reverse of the intended effect. The business found that the policy made employees anxious rather than relaxed and left them wondering exactly how much holiday was acceptable. There could be other issues too. Staff who are paid in part based on bonus or commission will be discouraged from taking too much holiday for fear that their pay will plummet, or colleagues will muscle in on their best clients. Like the bottomless beer, the reality is that an unlimited holiday policy will never be genuinely unlimited – at some point there will be a tipping point into the unacceptable.
FinCapp are obviously after a culture change. As well as the unlimited holiday policy, the firm also says that employees can have extra time off (which won’t count as holiday) to do those all-important tasks like taking a pet to the vet or getting the boiler fixed. No doubt employees will find this perk invaluable, buying far more goodwill than an hour or two off work will cost the employer. Within a supportive business, where employees and employers trust each other to give and take within appropriate parameters, time off may not be unlimited, but the flexibility it creates could be priceless.