November 2022 Bulletin
Redundancy is one of the five potentially fair reasons to dismiss an employee. For a redundancy dismissal to be fair, an employer must show that it warned and consulted the employee over the potential redundancy, adopted reasonable selection criteria (including a fair selection pool) and looked for suitable alternative employment. The decision to dismiss must fall within the range of reasonable responses open to the employer in the circumstances. The Employment Appeal Tribunal (EAT) has recently looked at a case where consultation took place too late and rendered the dismissal unfair.
In Mogane v Bradford Teaching Hospitals NHS Foundation Trust, the employee was a band 6 nurse in a research unit which needed to reduce staff to cut costs. The employee and one other band 6 nurse were employed on fixed term contracts. The employer decided to create a selection pool of one – the claimant – because her contract expired earlier. Only then did the employer start consultation on suitable alternative employment. There were no alternative jobs, so the employee was made redundant. She brought an unfair dismissal claim which she lost. The tribunal said that it was reasonable for the employer to base the dismissal decision on contract expiry dates where all relevant employees are on short-term contracts and the employer is struggling financially and needs to reduce staff at that level. The employee appealed.
The EAT agreed with the employee. They accepted that there was a redundancy situation and a need to lose a member of staff. However, the selection process was unfair. In order to be meaningful, consultation should take place at a formative stage, where the employee can still, in principle at least, have an impact on the outcome. In this case, the employer chose a redundancy pool which contained only the employee. The pool immediately identified who was going to be dismissed. The employer only started consultation after that decision was made. Consultation thereafter could not be meaningful. The employee had been unfairly dismissed.
This case shows the importance of meaningful consultation. Consultation must take place at the beginning of a redundancy process before any decisions are taken about who is going to be dismissed and when the employee can still influence the outcome. Whilst redundancy pools of a single employee may sometimes be fair (for example, if the role to be cut is a standalone role), it wasn’t in this case where there were two nurses working at the level where cuts were needed. Employers must take great care when choosing the selection pool and ensure that consultation starts before any decisions are taken about who is going to be made redundant.
Pregnancy and maternity protection
Maternity and Parental Leave Regulations 1999
The government last month confirmed it was backing the Protection from Redundancy (Pregnancy and Family Leave) Bill, giving pregnant women and new parents more protection against redundancy. Currently, the Maternity and Parental Leave Regulations 1999 require employers to offer employees on maternity, parental or adoption leave a suitable alternative vacancy, if one exists, as an alternative to redundancy. Employees on this kind of child-related leave must be treated more favourably than other potentially redundant employees. The new bill allows this protection to be extended to pregnant women (who remain in work, before maternity leave has started) and new parents returning to work after a period of maternity, parental or adoption leave.
The intention of the new policy is to extend the existing redundancy protection over a greater period, starting with the date when an employee tells her employer about her pregnancy and ending 18 months after the birth. This will allow women an extra 6 months of protection, often an additional six months after they return from maternity leave.
This policy stems from a private members bill backed by Dan Jarvis MP, who says the reason for the bill is that tens of thousands of women are ‘pushed out of the workforce each year simply for being pregnant’. The government says that this change will help to shield new parents from discrimination and give them more job security at an ‘important and precious’ time. They also say that it will be beneficial to businesses as well, because it will reduce potentially costly and time-consuming conflict and create better employment relationships. Arguably, it will also ensure that employers retain the vital skills and experience of women and other parents who take time off when they have children.
Bathgate v Technip UK
Settlement agreements are contracts between an employer and employee where the employee agrees not to pursue certain legal claims in return for compensation. They are often used at the end of employment, especially in redundancy situations, to provide the employer with certainty against future litigation. In Bathgate v Technip UK, the EAT has given advice on the kinds of claim that a settlement agreement can legitimately compromise.
The employee was a chief officer working for an onshore and offshore energy company. For most of his 20 years of service he worked on ships outside the UK and EEA and, as such, was not subject to the terms of the Equality Act 2010. However, for the last 6 months of his employment, he worked onshore in Scotland. The employer decided it needed to make redundancies and the employee was selected. He accepted an enhanced redundancy payment and an enhanced pension payment which was governed by a collective agreement. The collective agreement was outdated and said that the enhanced pension would only be paid to employees under the age of 61. The employee was 61 when he signed the agreement. After he had signed the agreement, the employer refused to pay the pension payment but only told the employee just before he was due to receive it. The employee brought an age discrimination claim. The employer said he couldn’t bring the claim because he had agreed to waive future discrimination claims in the settlement agreement.
The EAT disagreed. They said the wording of the Equality Act 2010 refers to settling ‘the particular complaint’ indicating that Parliament was referring to either an actual complaint or facts which might give rise to a particular complaint. The EAT said those words did not cover a potential future discrimination claim. The employee had signed the agreement before he knew about any potential age discrimination claim. It was not in his contemplation at the time he signed the agreement. Even though generic age discrimination claims were referred to in the agreement, that was not enough to cover the particular age discrimination claim that arose after the agreement was signed.
In this case, there were other reasons relating to his offshore work that meant the employee lacked the jurisdiction needed to bring a discrimination claim. However, this case shows that future discrimination claims cannot be settled. Only claims which have arisen, or where the facts that would lead to a potential claim are known, at the time of signing the agreement, can be settled by its terms. Employers must ensure that settlement agreements are tailored to the individual employee. Settlement agreements may not always signal the end of the story if something else happens, or unknown matters come to light, after the agreement is signed.
Whistleblowing – compensation
Jhuti v Royal Mail
The Supreme Court gave its judgment in the case of Jhuti v Royal Mail in late 2019. The facts of the case make for grim reading. The employee made protected disclosures about her line manager’s team. In retaliation, her line manager made up performance issues and facilitated her dismissal by creating unachievable targets and not telling the decision maker at the employee’s capability hearing about the whistleblowing. The Supreme Court agreed that the employee had been unfairly dismissed and the employment tribunal has recently made a decision on remedy.
The employment tribunal awarded the employee the amount of earnings she would have received had she remained in employment until retirement at age 67. The tribunal found that the bullying over several months before the employee’s dismissal had destroyed her life and left her with PTSD, severe depression and had caused the breakdown of close family relationships. She would never work again due to her illness and the stigma caused by years of unemployment following her dismissal. The tribunal left the parties to decide on the precise value of these losses but assumed annual pay increases of 2 per cent and made no Polkey deduction.
The employee was also awarded £55,000 for psychiatric injury. This sum reflected that her depression was moderate but became severe at times. Although she had a predisposition to depression, this had not impacted her ability to work, and her current state of health was entirely due to her treatment by Royal Mail. The tribunal awarded £40,000 for injury to feelings, more than the upper limit in place at the time the discrimination took place (this was for whistleblowing detriment which preceded her dismissal, and for which injury to feelings can be awarded). The tribunal also awarded her aggravated damages of £12,500 for the way the employer had behaved at the remedy hearing. The employer had cross examined the employee on evidence that the original employment tribunal had found as fact, continuing to insist she was a poor performer. This treatment rode roughshod over the tribunal’s findings that the capability procedure had been used to get rid of the employee because of her whistleblowing. Finally the tribunal ordered a 0.5 per cent Acas uplift for delays in the grievance process of around 3 months. They would have award 10 per cent but because of the high value of her career-long compensation, which would have run into hundreds of thousands of pounds, they reduced it to 0.5 per cent so the overall value was proportionate.
There are so many learning points to take from this case. The first is that whistleblowing must be taken very seriously. Trying to cover it up and punish the whistle blower can prove very costly. An employer can never predict the impact of detrimental treatment on an employee. Here, it was extreme and resulted in career-long losses. This case is also a sage reminder of the potential consequences of delay in grievance or disciplinary procedures. An Acas uplift can be very expensive even at low percentages in high value cases. Employer must also tread carefully at remedy hearings – using it to have a second go at challenging established facts can result in rare but costly aggravated damages.
Acas early conciliation
Clark v Sainsburys
Employees are usually required to go through Acas early conciliation before they can lodge employment tribunal claims. Early conciliation makes the parties consider settlement before any costly legal wrangle begins. When early conciliation finishes, Acas will produce an EC Certificate, which contains a unique EC number to be included on any claim form. There is an exception to this rule if another person (B) has started Acas EC in relation to the same dispute and A lodges proceedings on the same form as B. An employment tribunal must reject a claim if it does not contain an EC number or explain why there is an exemption. Problems can arise in mass litigation where a claim form refers to multiple claimants who are not all named in the EC certificate.
This issue arose in Clark v Sainsburys, a collective claim for equal pay. At the time the claims were lodged, Acas dealt with EC certificates in a variety of ways, including ‘M’ numbers (for a multiple claim) and ‘R’ numbers (for individual claimants) in a variety of forms and permutations. An EC certificate might contain an M number (for the multiple claim) along with only one R number – for the lead claimant – but no individual R numbers for the other employees listed in the attached schedule. In Clark v Sainsburys, the tribunal accepted claims if the claim form referred to an EC certificate where the claimant was named. However, they rejected claims for anyone who was not named in the EC certificate referred to on the claim form, even if they were listed on another EC certificate and had therefore complied with the requirement to go through early conciliation. The rejected claimants appealed to the EAT.
The EAT agreed with the employees. Although the rules say that a claim form must list each claimant’s name and address, the rules only require one EC certificate number. The EAT said the Sainsburys employees had all gone through early conciliation so were entitled to rely on the exemption even though they had not sought to do so. The EAT said that a literal interpretation of the rules – as only requiring one EC number – was reasonable. If one claimant started early conciliation and lodged a claim using that certificate, the other employees able to lodge a similar claim on the same form would not need EC numbers because of the exemption. Any claimant who had slipped through the net and not undergone early conciliation could be filtered out and dealt with later. The EAT did say that it would be helpful to set out all the relevant EC numbers on a multiple claim form to avoid argument.
This case takes a potentially useful tool out of the employer’s armoury in collective claims. It was a previously easy ‘win’ to knock out cases where the claim form and Acas EC certificates did not match up. However, this process also resulted in time consuming wrangling over whether claims were to remain in or out, and costly tribunal time litigating jurisdiction issues. That time could now be better spent on the substantive merits of collective claims, or on trying to settle them.
Trentside Manor Care v Raphael
‘Legal advice privilege’ allows a client to give their lawyer confidential information, secure in the knowledge that it will remain confidential. ‘Litigation privilege’ allows an employee who has lodged, or intends to lodge, legal proceedings to speak confidentially to their lawyers about the evidence without having to disclose those discussions to the other side. Legal advice privilege and litigation privilege arise where the dominant purpose of the communication between lawyer and client is for the giving and receiving of advice (legal advice privilege) or litigation (litigation privilege). But what if the people giving the advice are HR advisors rather than lawyers – are those communications privileged too?
In Trentside Manor Care v Raphael, the employee made a flexible working request to reduce her hours from five to four days for disability-related reasons. This was agreed on a trial basis. However, a short time later, she was suspended pending the investigation of misconduct allegations. She was then disciplined and dismissed. The employee brought various claims in the employment tribunal including unfair dismissal and discrimination, saying she had been dismissed for reducing her hours not because of genuine misconduct. To help her prove her case, the employee asked the employer to disclose all correspondence between themselves and their HR providers, Citation, between the date of her flexible working request and the day the employer made the allegations of misconduct. The employer refused, saying the communications were privileged. Citation was not a law firm but had an HR and employment law advice team which was managed by solicitors. However, the individual advisors were not legally qualified.
The tribunal said the advice given by Citation from when the employer made the decision to suspend the employee was covered by litigation privilege. However, documents relating to the earlier period – between the employee’s flexible working request and her suspension – were not covered either by litigation privilege (because the dominant purpose was not litigation) nor legal advice privilege. The employer appealed. The EAT dismissed the employer’s appeal on this point. On the information provided, the tribunal had not been wrong to conclude that the dominant purpose of advice during the earlier period was not the reasonable contemplation of litigation. It was also reasonable to conclude that the advice given by advisors who were not lawyers was not covered by legal advice privilege. Nor was the tribunal wrong to decide that the supervision by qualified lawyers of non-lawyer staff did not on the facts extend privilege to the advice given by the non-lawyers.
This case shows that there has to be a very high level of supervision of non-legally qualified advisors by legally qualified lawyers in order for privilege to be extended to the advice provided. Each case will turn on its own facts and the application of the rules on legal privilege to those facts. Employers must be aware of the rules, and the potential pitfalls, to ensure that those all important off the record conversations remain private.
The All-Party Parliamentary Group on Menopause (APPG) has published a report on policy reform which includes a chapter on menopause in the workplace – the area which attracted the most interest during the inquiry. The report notes that it is not possible to use combined protected characteristics – such as sex, age and disability – in relation to menopause symptoms. Although it acknowledges that there have been successful claims based on existing protected characteristics, such as sex, the path to legal redress may not always be clear to those who feel they have been treated badly due to the symptoms or effect of menopause. The report has made various recommendations to ensure employers have the tools they need to support menopausal women at work. The APPG recommends that the government do the following:
• Coordinate and support an employer led campaign to raise menopause awareness in the workplace and help tackle the taboo which surrounds the issue and its impact at work. The campaign should involve promoting the importance of supporting employees through the menopause, treating it as a core employee health issue, and highlight the positive business case for providing such support.
• Update and promote best practice guidance for employers including menopause policies and supporting interventions. This guidance should include the positive economic and productivity benefits of providing active support for menopausal employees and ensure it can be accessed by employers of all sizes with differing resources at their disposal.
As the report makes clear, women are staying in work for longer than ever before. Women over 50 are the fastest growing group within the workforce as a whole, meaning most women will go through the menopause while they are still working. 77 per cent of women in one report (the Fawcett Society’s report on Menopause and the Workplace) experienced one or more symptoms of menopause that they found very difficult. With those statistics, it makes sense to ensure that women are able to navigate menopause at work in a healthy way, allowing employers to retain their skills in the business and ensure that women of menopausal and post-menopausal age are properly represented in the world of work.
Is producing bad wine a good enough reason to dismiss an employee? The employment tribunal in Medard v Rathfinny Wine Estate seemed to think so. The employee was employed as a Senior Winemaker, a senior post with responsibility for all winemaking in the business. In early 2021, the employer spotted problems with the 2017 vintage which meant it could not be sold. This resulted in losses that year of around £500,000, a third of their annual turnover. An investigation by the Winery Manager concluded that there had been gross negligence at various stages of the mixing/bottling/testing and labelling processes. As often happens in disciplinary cases, the employee claimed allegations of bias and inconsistent treatment and lodged a grievance. He denied gross negligence and said he had simply made a mistake. The employer did not agree and dismissed him. He brought an unfair dismissal claim.
The employment tribunal said the dismissal was fair. The reason for the dismissal was for capability – a serious error of judgment in winemaking – rather than misconduct (which would require a deliberate act or failure to follow an instruction). The normal Burchell test applied. The employer had shown they genuinely believed the employee had been grossly negligent, and there were reasonable grounds for that belief following a reasonable investigation by the Winery Manager. Despite historical relationship issues between the employee and the Winery Manager, there was no evidence of bias in the process. There had been multiple errors resulting in serious cash flow problems. The employee’s role was senior, and he was supposed to be a wine making expert. He had also failed to take responsibility for his mistakes. The dismissal fell within the band of reasonable responses.
As always, there are things to take away from this case. Serious negligence can form the basis for a fair dismissal as well as serious misconduct. Following a fair procedure, and documenting it carefully, is vital to defend an unfair dismissal claim. Despite the immediate cash flow issues and potential reputational damage, there was a silver lining for the employer in this case. The substandard 2017 vintage can be reworked into future wines and losses clawed back. Let’s raise a glass to that.