September 2021 Bulletin

Welcome

The European Court of Justice cast its judgment in two German cases where Muslim employees were banned from wearing headscarves in the workplace. Although the judgment isn’t binding in the UK, courts and tribunals may take the decision  into account when deciding whether employer dress codes are directly or indirectly discriminatory under the Equality Act 2010. An indirectly discriminatory dress code – for example, one which bans religious or philosophical symbols and negatively impacts Muslim employees who aren’t allowed to wear a headscarf – can potentially be justified if the policy is a legitimate business aim and the employer’s means of achieving that aim are proportionate and necessary. Direct discrimination happens when someone is treated less favourably because of a protected characteristic.

In IX v WABE, both employees were Muslim and wore head scarves. WABE ran secular children’s day care centres. They introduced a policy of political and religious neutrality to guarantee the children’s free development regarding religion and belief. That policy included a ban on all religious or philosophical signs including the headscarf, Christian crosses and the Jewish kippah. Only employees who worked at head office were exempt because they had no contact with parents or children. In the second case, MH Müller Handels v MJ, Muller instructed the employee to attend work without any conspicuous or large scale political or religious signs, including her headscarf, to maintain neutrality in a workplace which had previously experienced conflict arising out of employees’ religious and cultural differences.

The CJEU said that the ban on any visible sign of religious, philosophical or religious belief was not directly discriminatory, as long as it is applied to everyone in the same way, because every person might have a religious or philosophical belief. WABE applied its rule to Christian crosses in the same way as Muslim head scarves, and this was not directly discriminatory. However, because WABE’s rule applied almost exclusively to female workers who wore the Islamic head scarf, it was indirectly discriminatory. In order to justify the policy as a legitimate aim, an employer must show a genuine need for it in terms of the rights and wishes of customers and users – in this case the parents’ rights and wishes in terms of their children’s care. Such a policy must also be applied consistently (as it was here between religions) and limited to what is strictly necessary (here it did not apply to employees who did not have contact with parents or children). However, the CJEU said that a ban only on large or conspicuous signs was likely to be directly discriminatory because it was likely to be seen as targeting certain religions like Islam which have conspicuous religions signs such as the hijab. Direct discrimination cannot be justified. If such a policy were not directly discriminatory, it would still be indirectly discriminatory unless objectively justified. Muller’s aim of avoiding social conflict may constitute a legitimate aim but limiting the policy only to large sized signs undermined the aim of neutrality being pursued. The CJEU concluded that indirect discrimination can only be justified if the ban covers all visible signs of religious belief, not just large or conspicuous ones.

This case is useful clarification that a dress code which bans religious, philosophical or political signs will only be objectively justified if the employer can show a genuine need for it, applies it consistently to all visible signs, and only applies it to those workers necessary to meet the need (in the WABE case, only those employees who would come into contact with parents and children, not those who worked remotely from childcare sites). What isn’t clear, is how this judgment fits with the decision of the European Court of Human Rights in Eweida v British Airways – where BA’s blanket ban on jewellery violated the employee’s right to wear a discrete cross under Article 9 of the ECHR (freedom of religion and belief). In addition, the EHRC’s advice in ‘Religion or belief: dress codes and religious symbols’ says that a policy of neutrality is unlikely to amount to a legitimate aim in the UK. We will have to wait for future employment tribunal judgments to see just how influential this CJEU decision will be.

Constructive dismissal and harassment

Timothy James Consulting v Wilton

Harassment is where someone engages in unwanted conduct in relation to a protected characteristic (such as race or sex) which has the purpose or effect of either violating another person’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment (section 26 Equality Act 2010). Section 39 of the Equality Act 2010 says that employers must not discriminate or victimise employees by dismissing them, including constructive dismissals. However, the terms in section 40 relating to harassment do not refer to constructive dismissal. In Timothy James Consulting v Wilton, the EAT held that a constructive dismissal could not amount to harassment precisely because of the differences between sections 39 and 40. The EAT has now revisited this issue in Driscoll v V & P Global.

The employee claimed that she had been harassed during her employment which eventually led her to resign. She claimed that her constructive dismissal was also an act of harassment. That harassment claim was struck out  by the employment tribunal because it was bound by Wilton. The employee appealed.

The EAT looked at the European law which underpins the Equality Act 2010 and said it was clear that the intention was for harassment provisions to also cover dismissals. The term must be construed widely and there was no good reason to exclude constructive dismissals from that remit. The EAT said that the fact of whether there is a dismissal cannot depend on whether an employee is told to get out or is driven out instead. Wilton was wrong. Where an employee resigns in response to harassment which is repudiatory conduct, the constructive dismissal itself is capable of being ‘unwanted conduct’ too.

This case clears up a legislative anomaly which stemmed from the historical treatment of harassment as acts of discrimination or victimisation before the statutory definition of harassment was added to the statute books in 2005. It is now clear that constructive dismissal can be an act of harassment as well as other forms of discrimination.

Burden of proof – discrimination

Royal Mail Group v Efobi

The wording which sets out the burden of proof rules in a discrimination case changed when the Equality Act 2010 brought all the laws on discrimination together in one place. The discrimination legislation previously said that if the employee proves facts which, in the absence of a reasonable explanation, the tribunal could conclude was discrimination, the burden of proof shifts to the employer who must then show that there is another, non-discriminatory explanation for their treatment of the employee. If the employee didn’t prove those facts then the claim failed. This was often referred to as the employee showing a ‘prima facie’ case. In reality, tribunals would hear all the evidence, including the employers, before deciding about whether the burden of proof shifted to the employer to explain their behaviour, not least because the employer’s evidence may completely contradict the employee’s.  The Equality Act 2010 wording is slightly different – it says where there are facts rather than where the employee proves facts, which has caused confusion and some people to think that the rules have changed. The Supreme Court has now clarified the position in Royal Mail Group v Efobi.

The employee was Black African and born in Nigeria. He had computer qualifications from two universities. He worked as a postman but sought promotion to management or IT roles which used his qualifications. He applied for over 30 jobs but didn’t get any of them. He brought a claim for race discrimination. The tribunal dismissed his direct discrimination claim, saying he had not got over the initial hurdle of proving facts which pointed to discrimination. He appealed to the EAT which said the employment tribunal had interpreted the burden of proof rules incorrectly. The EAT said the new wording meant the rules had changed – there was now no requirement for the employee to prove a prima facie case. The tribunal should hear all the evidence and decide whether the facts supported discrimination, in the absence of another explanation. The EAT also said that the employer’s failure to call any of the individuals who decided on the employee’s job applications was capable of supporting that prima facie case. The employer appealed to the Court of Appeal. The Court of Appeal said the tribunal had not applied the test wrongly and that the tribunal had had enough evidence to support its decision that the employee had not proven facts which shifted the burden of proof to the employer.

The Supreme Court said the new wording in the Equality Act 2010 had not changed the legal test. Case law showed that the tribunals had never been limited only to hearing employee evidence and could hear all relevant evidence before deciding whether the burden shifted to the employer to explain themselves. In fact, the only thing to be ignored at this stage was the employer’s explanation for the treatment. The new wording simply confirmed that well established position, rather than changing the law. The employee still bears the burden for proving facts at the first stage, but the tribunal must also consider any facts from the employer which may undermine that evidence.

This case provides welcome confirmation at the highest level that the law has not changed. The employee is still required to prove facts that support their allegations – assertions or allegations on their own will not be enough.

Worker Status

In July 2021, the Labour Party revealed its plans for a single definition of worker to establish a whole suite of day 1 rights, and which would apply to all categories of worker and employee apart from the genuinely self-employed. The plan is aimed at ending insecure employment which has been the subject of much litigation in recent years with high profile companies such as Uber and Deliveroo in the gig economy.

The new single worker status would attract employment rights such as statutory sick pay, the national minimum wage (likely £10 per hour), holiday pay, paid parental leave and protection from unfair dismissal, all from the first day of employment. Labour have also said there would be an automatic right to flexible working from day 1, with employers being subject to a legal responsibility to accommodate flexible working  – including flexible hours, compressed hours, and flexibility around school run and childcare during school holidays – unless they can show it is not workable.

The proposals have been welcomed by some, saying they would put an end to the zero-rights model of employment that has sprung up with the advent of the gig economy. Others are worried about practicalities, the cost of the extra rights in the pockets of cash strapped businesses in a post-pandemic era, and practical questions such as how to deal with tax implications for some gig economy workers who still pay tax on a self-employed basis. The finer detail remains to be clarified.

The proposals would be a major shake-up in employment law, but Labour would need to get voted in first. Although they have closed the gap significantly since March 2020, they remain behind the Conservative party in the polls. Even if they are elected and the proposals get pushed through, it could be many years before any change on the statute books. Plenty of time to iron out the finer detail.

Discrimination – compensation

Secretary of State for Justice v Plaistow

There is no upper limit on the amount of compensation that an employment tribunal can award in discrimination cases. Compensation is awarded based on the employee’s losses and what is just and equitable based on what happened. Compensation aims to put the employee in the position they would have been in had the discrimination not occurred. Career long loss is rare but in Secretary of State for Justice v Plaistow, the EAT has looked recently at one such case, where discrimination turned out to be very costly indeed.

The employee had been a prison officer since 2003. He moved to a new prison in 2014 and was subject to discrimination/harassment based on his sexual orientation or perceived sexual orientation. He raised grievances which were not addressed and eventually complained to his MP and requested a transfer. He was then victimised as a result of his complaints, with allegations of gross misconduct raised against him. His employment was terminated in 2016 when he was 38. He brought discrimination claims which he won. The tribunal described his treatment as a ‘campaign’ of direct discrimination and harassment. In relation to future losses, the diagnoses of PTSD, depression, paranoia and functional impairment were not disputed. However, the experts did not agree about his prognosis. The employee’s medical evidence said these conditions would last for life. The employer’s medical evidence said there was not enough evidence to say the condition was permanent. The tribunal decided that the employee would not be able to return to work before retirement age. They discounted the award by 5 per cent to account for the risk the employee would have left the prison service anyway or would go on to secure work before retirement age. They also awarded a 20 per cent uplift for failing to follow the Acas code of practice in relation to his dismissal. The employer appealed the decision on life-long losses, the 5 per cent discount and Acas uplift.

The EAT said the tribunal had followed the right legal process when deciding on life-long losses. The issue here was about prognosis not diagnosis, and the evidence on that issue was in dispute. The tribunal had resolved the dispute by deciding it preferred the employee’s evidence on the point. This was a rare case where career long losses were appropriate. On the 5 per cent discount, the tribunal had considered evidence about high retention rates in the prison service as well as the employee’s own evidence and found that he would have been highly unlikely to leave of his own accord. However it allowed an appeal on this point as the tribunal had not considered the more general uncertainties about future losses, such as early death, disability or other uncertainties. It also allowed the appeal on the 20 per cent uplift, because there wasn’t enough evidence that the tribunal had considered the totality of the award (over £2 million) when making it. The EAT sent the case back to the tribunal to consider these issues again.

Career long losses will be rare in discrimination cases. Assessments of loss in discrimination cases are based on the evidence. In cases where evidence is in dispute, tribunals are entitled to choose between two possible versions. This happens all the time in tribunals, where the panel must decide between two conflicting versions of workplace events. The severity and duration of the ‘campaign’ of discrimination was also relevant in this case. The decision is also a sage reminder of the importance of following the Acas code of practice, to ensure grievances are properly addressed and dismissals dealt with fairly. Although the EAT allowed the appeal on the Acas uplift, it was due to a technical issue about the tribunal’s methodology. There is no suggestion  that the 20 per cent uplift was wrong in high value cases like this. The lack of an upper limit on compensation means that Acas Code failings can be devastatingly expensive for employers.

Disability discrimination – reasonable adjustments

Aleem v E-Act Academy Trust Limited

The duty to make reasonable adjustments is triggered if an employee meets the definition of disability contained in the Equality Act 2010. The employee must have a physical or mental impairment which has a substantial and long-term adverse effect on their ability to do normal day to day activities. There is a common misconception that disabled employees can ask for any changes they like and say they are ‘reasonable adjustments’. The reality is somewhat different. The duty to make reasonable adjustments only arises in specific circumstances, and the requirement is to make ‘reasonable’ – rather than any – adjustments.  In the recent case of Aleem v E-Act Academy Trust Limited, the EAT has looked at whether permanent pay protection is a reasonable adjustment when the employee can  no longer do the job for which they were originally employed.

The employee was a science teacher who had mental health problems which amounted to a disability and resulted in significant sickness absence. She was no longer able to do her teaching job. She was offered an alternative role of cover supervisor, at lower pay, but her pay was protected at the teacher’s level for three months while she tried it out and to allow a grievance process to conclude. The employee had agreed to the new job at the lower rate of pay. When her pay was reduced she brought a discrimination claim saying she should be permanently paid at the higher salary as a reasonable adjustment.

The employment tribunal did not agree. Whilst the duty to make reasonable adjustments arose, paying her at the teacher’s higher salary for doing another job was not a reasonable adjustment, especially given that the employer was public sector and in financial difficulties. The temporary pay protection was a reasonable adjustment. The EAT agreed that protecting the employee’s pay temporarily to support her return to work had been a reasonable adjustment. Once her return to work had been achieved, those considerations no longer applied. In deciding that permanent pay protection was not a reasonable adjustment, it was relevant that the employer was providing state education, was in financial difficulties and had problems recruiting science teachers which had resulted in educational standards dipping at the school. The cost was relevant too as the requested pay protection until the employee’s retirement ran to six figures.

This case appears to go against a previous EAT decision  – G4S Cash Solutions v Powell – where it was suggested that maintaining pay while moving an employee to a new role could be a reasonable adjustment. The facts were different in Powell though, because the employee in that case had been told his pay would be protected when he returned to work in a new role. In Aleem, the employee accepted the new job knowing that her pay would be reduced to the level of the new role after a probationary period and the conclusion of her grievance. This case also shows that many factors are relevant to what is reasonable in terms of adjustments, including the cost of adjustments,  the employer’s financial resources and the practicability of the adjustment including any disruption it might cause to the business. One size does not fit all here because what is reasonable will be different in each case.

Unfair dismissal – final written warnings

Fallahi v TWI

Poor performance – or capability – is one of the five potentially fair reasons for dismissing an employee. Having a potentially fair reason is not enough – a dismissal won’t be fair unless the decision to dismiss was reasonable overall, including a fair procedure. Many capability procedures involve the issue of warnings in relation to the required improvement and timescale within which to improve. In Fallahi v TWI, the EAT has looked at whether an employment tribunal can look at the fairness of a final written warning which preceded the dismissal, as well as the dismissal itself.

Mr Fallahi was a senior project leader in technology whose employer raised issues about his performance regularly throughout his first two years of employment. An informal performance management process started on 26 January 2016. Objectives were set and specific targets scheduled for June and October 2016 and January 2017. Weekly meetings took place. In May 2016, his manager became frustrated with the lack of progress and invited him to a capability meeting where he was given a final written warning which the employee did not appeal. A further three-month review was set. After two months the employer was still not happy with the employee’s progress – after two thirds of the review period he was nowhere near meeting two thirds of his objectives. The employee was offered a month’s pay to leave or the option to return and complete the third month of review. He decided to leave, collected his belongings and left but no settlement was concluded. When asked to return to work he went off sick leave. He was invited to performance management and capability hearings but did not attend because of sickness, despite Occupational Health saying he was fit to attend. He was dismissed for capability in November 2016. The employee claimed unfair dismissal, saying the employer hadn’t properly followed its own procedures and the final written warning had been unfair.

The employment tribunal said the decision to dismiss was reasonable. Even if it had been procedurally unfair, a fair process would inevitably have led to his dismissal. The tribunal was not prepared to go behind the final written warning because it was not ‘manifestly inappropriate’. The employee appealed. The EAT agreed that the dismissal was fair. A tribunal must judge the overall reasonableness of the dismissal, not the final written warning. The warning was just one relevant factor among many in the process which led up to his dismissal. The long-term underperformance and the lack of improvement was far more relevant than the final written warning. On the facts found by the tribunal, the employer’s ability under its own procedures to move to a final written warning were in this case justified. The warning was not manifestly inappropriate and within the range of reasonable responses open to the employer at the time.

The facts of this case may sound all too familiar to some employers. This case shows just how difficult managing poor performance can be. Following your own procedures is vital, at every stage of the process, and avoids arguments being played out in the courts. This judgment also shows that a tribunal will only go behind a final written warning if it is manifestly inappropriate. The focus in an unfair dismissal case is on the dismissal, with any warnings being individual factors in the overall process followed.

And finally…

Do you talk about menopause enough in your office? If you employ women aged between 45 and 55, and the issue doesn’t really come up, then the answer is no. Recent statistics from the employment tribunal show that more women are citing menopause in employment tribunal claims for unfair dismissal and sex discrimination than ever before. Menopause can also be a disability if it meets the legal test – if symptoms are long lasting and have a substantial adverse effect on an employee’s ability to day-to-day activities – meaning reasonable adjustments must be made. In 2018, there were five employment tribunal cases which cited menopause; in the first half of 2021 there were 10. These figures are still small but remember when equal pay cases could be measured in single figures? And look how that kind of litigation snowballed.

Employers shouldn’t wait for the appeal courts to give guidance on this issue. Menopause can cause a wide range of debilitating and unpleasant symptoms. These symptoms can have a huge impact on employee performance and attendance, so help and support is good for both staff and business. Menopause policies can help to break the taboo and make it easier for employees to talk about the issue at work. A good policy will:

• Give information about what the menopause is and the different ways it can affect women.
• Encourage open conversations on the issue in the workplace.
• Set out the importance of workplace risk assessments to support the health and wellbeing of women going through the menopause.
• Propose specific support and adjustments for common symptoms to help guide managers and employees.
• Act as a prompt for training and education for managers and a guide for what to do when an employee seeks help.

These policies aren’t rocket science. They are a conversation starter and a helpful guide for everyone to follow. Menopause is something which happens to half the population which means it could happen to half of your workers. We need to stop being squeamish and start talking about it.

 

About David Parry

David graduated with a Law with French degree from Leicester and Strasbourg Universities. He qualified as a solicitor in 1989 and has specialised in employment law ever since, first at Cole & Cole (now Morgan Cole) then at Mallam Lewis & Taylor who merged with Darbys in 1999. David became a partner in 1995. Until 2013, David was the Head of the Employment Team at Darbys that became one of the best-regarded in Oxford and the Thames Valley. Contact David now

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