Canter Levin & Berg Employment Solutions Canter Levin & Berg Employment Solutions
November 2013

Welcome to this month's newsletter in which I have included the usual round-up of important employment law cases, this time with a focus on discrimination with two cases dealing with age discrimination and another with disability discrimination. I have also included a summary of an important case in which a security company providing services for Morrisons thought that their employee was on a zero hours contract, but it turned out that he was employed on a contract for 48 hours a week and a reduction in his hours led to constructive unfair dismissal.

I have also included details of two cases concerning restrictive covenants and what restrictions might be considered reasonable. For those interested in such matters the judgment in Croesus Financial Services Limited v Matthew & David Bradshaw is well worth a read since it covers all the main principles applicable in such cases as well as providing a salutary reminder that damages will only be recoverable to the extent that genuine losses can be shown to have resulted from the infringing activity.

I should also mention the evidence that is emerging from the Employment Tribunals Service that there has been a sudden and dramatic fall in the number of new claims presented since fees became payable.

It seems odd that those who have just lost their jobs and might therefore be expected to be least able to pay court fees are now required to make significant payments in order to present and proceed with claims. It seems contrary to the ethos of tribunals and even employers (many if not most) can recognise the inequity as well as the potential denial of access to justice for those with perfectly genuine and reasonable claims. Instead of suspending the fees pending the outcome of judicial review proceedings the Government has said that they will be refunded if they turn out to be unlawful. That provides precious little comfort for those who are caught in between and are subject to strict time limits. Since the Government claims to be very keen on impact assessments, perhaps this is one real impact that should not be ignored.

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Regards

Martin Malone

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This month's news round-up:

1. McCririck age discrimination claim fails

John_McCririck

On 13 November the Central London Employment Tribunal handed down its reserved decision in the case of McCririck v Channel 4 Television Corporation and IMG Media Limited. Given the celebrity status of the Claimant the case attracted a good deal of attention. IMG took over the contract to broadcast all terrestrial coverage of horse racing commencing 1 January 2013. In doing so it displaced the incumbent, Highflyer, for whom McCririck had worked since 1996 and previously with Channel 4 since 1984. As part of its pitch for the contract IMG said that they wanted to introduce a more analytical and journalistic approach to coverage. However IMG management, and former BBC employee Carl Hicks in particular, took the view that Mr McCririck did not fit the brief. Ultimately the Tribunal agreed and held in its judgment:

Mr McCririck was dismissed because of his persona emanating from his appearances from celebrity television shows, and the associated press articles resulting from them, together with his appearances as a broadcaster on Channel 4 Racing where, as he accepted, his style of dress, attitudes, opinions and tic tac gestures were not in keeping with the new aims, and his opinions seen as arrogant and confrontational...

All the evidence is that Mr McCririck's pantomime persona, as demonstrated on the celebrity television appearances, and his persona when appearing on Channel 4 Racing, together with his self-described bigoted and male chauvinist views were clearly unpalatable to a wider potential audience. The tribunal is satisfied that the respondent had the legitimate aim of attracting a wider audience to horseracing.

However Mr McCririck claimed in evidence that, particularly in his appearances elsewhere, such as on Celebrity Big Brother, he was adopting a "pantomime persona" that was positively encouraged by Channel 4 executives so that, in effect, they could not have it both ways.

The judgment provides an extraordinary insight into the details of a tender for a significant television sports contract. Much of the narrative is of great interest to a racing fan such as me. From a legal perspective the detail is light on the application of the law to the facts. It is noteworthy that, although barely noted in mainstream reporting, since all those whose contracts were not renewed were over 50, the onus shifted from Mr McCririck to Channel 4 and IMG. Instead of the claimant establishing that there was age discrimination, the respondents had to show that there was not. An unsatisfactory aspect of the decision is that there is no analysis of this aspect and it seems to be assumed that there was age discrimination. However, that discrimination was justified because the approach adopted was a proportionate means of achieving a legitimate aim, namely extending the appeal of horseracing to a wider audience.

Although there may well be decent grounds for an appeal, it seems that Mr McCririck has decided against this option:

This is an historic setback for all employees in their 30s to their 70s.

After such a landmark judicial verdict, my failed legal action ensures that anonymous suits and skirts, who control the media, numerous other businesses and the public sector, will now enjoy complete freedom to replace older employees whatever their unimpaired ability and merit.

I have let them all down along with my wife, The Booby, my legal team, friends, colleagues and countless members of the public who supported me throughout. My grateful thanks and apologies to every one of them.

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2. we are above the law - or are we?

Lebanese_Embassy

Under the State Immunity Act 1978 ("the SIA"), sovereign states are not generally subject to the jurisdiction of UK courts and tribunals. The point is well demonstrated by the extraordinary extent to which the London Congestion Charge is ignored by diplomats. Disputes relating to contracts of employment, and related statutory rights, are carved out from that general immunity, subject to some exceptions. The upshot of those exceptions is that nationals of the sovereign state, and non UK nationals and residents employed in the UK by a sovereign state (for example embassy staff) cannot, under the 1978 Act, make unfair dismissal claims, discrimination claims or wages claims.

Thus it was that two Moroccans, one a cook working in the Sudanese embassy and the other a domestic worker in the Libyan embassy both had their claims (ranging from unlawful deductions to unfair dismissal) rejected by Employment Tribunals. Both appealed to the Employment Appeal Tribunal in Janah v Libya, arguing that they had been denied their right to a fair trial of their cases under the European Convention on Human Rights and analogous provisions of the EU Charter.

Under the Human Rights Act 1998, UK courts are obliged to read domestic legislation in a way compatible with rights under the Convention. Although accepting that there had been a breach of the right to a fair trial, this was not something the Employment Appeal Tribunal was prepared to do in a case where the SIA set out to restrict access to the court in defined circumstances. To read words into the SIA to reverse that intention would cross the critical line between interpretation and legislation.

The essential principle and scope of the Act is that it intends to restrict a right of access to the court in a situation in which that would otherwise be available. That is the inevitable effect of granting immunity from proceedings. Lord Rodger observed...that however powerful the obligation in sub-section 3 (1) of the HRA might be it did not allow the courts to change the substance of a provision completely, "to change a provision from one where Parliament says that X is to happen into one saying that X is not to happen". Where Parliament has set out a clear list of those in respect of whom a plea of immunity will fail, and those in respect of whom it will succeed, it would in my view cross the critical line between interpretation and legislation to alter the list by removing one category from the "yes" camp, so as to place it in the "no" camp. Given that the overall approach is deliberately to limit access to justice in certain cases, there seems to me to be no proper interpretative scope for altering the criteria defined.

The EU Charter sets out general and fundamental principles, and domestic courts are required to disapply rules of domestic law which are incompatible with these, even in a dispute between private litigants.

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3. is it a contract of employment or not?

Starcross_Farm

What are the essential characteristics of a contract of employment? This much discussed topic has been the subject of a great deal of judicial scrutiny in recent decades. Various tests such as "master and servant" and the "control test", as well as characteristics such as "mutuality of obligation" and the "requirement for personal service" have jostled for supremacy and the topic continues to keep the courts busy.

One of the latest such cases, Troutbeck SA v White & Anor concerned a situation in which an employer had little day to day control over their employees' work. Although many might regard this as a failure of one of the key tests the Court of Appeal found that the lack of control was no obstacle to there being an employment relationship. Troutbeck employed a couple to look after a small farm in Surrey which it had bought as an investment, and as a holiday retreat for its Nigerian owners. The parties entered into a written agreement which described the parties as employer and employee, provided that the couple (who also had other jobs) should live on site and set out what they would be paid. No tax or NI contributions were ever deducted from their pay. However, those familiar with employment law know that the definition of "an employee" for tax purposes does not necessarily correlate with being an employee for employment law purposes. The couple were very much left to decide for themselves how to go about running the farm. In due course Troutbeck decided to sell, and served notice. The couple claimed unfair dismissal and unpaid wages. Troutbeck denied that there was an employment contract.

The Employment Tribunal dealing with the case decided that the lack of day to day control meant there could not be a contract of employment. Both the Employment Appeal Tribunal and Court of Appeal found this to be wrong in principle. Sir John Mummery, who delivered the lead judgment in the Court of Appeal, asked the pertinent question of Troutbeck - if it is not a contract of employment then what is it? It was contended that it was a "commercial contract". Remuneration was described as a "personal allowance" and in addition to describing the respondents as "employees" the document itself was described as "an employment agreement. While there was a low level of control, it was not completely absent and the Tribunal should have looked at all the facts in the round.

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4. the perennial post termination covenants question - what is reasonable?

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In Coppage & Anor v Safety Net Security Ltd the Court of Appeal looked at the reasonableness of a six month non solicitation covenant entered into by Mr Coppage, a director of a security company which supplied door supervisors and other security staff. The covenant was expressed so that it would cover anyone who had been a customer of the company at any time during the director's period of employment. He said that was unreasonable. The Court of Appeal did not agree. The reasonableness of restrictive covenants is highly fact sensitive. Taking into account all the circumstances, including the short length of the restriction, the fact that it was a non-solicitation clause rather than a non-compete clause, and the fact that Mr Coppage had been the "face" of the company and so able to influence the customers, the judge's original decision had been right.

Having reached this conclusion, the Court did not feel it necessary to rule on a second appeal based on the extent of a director's fiduciary duty where solicitation took place after resignation, and declined to interfere with the finding that damages be set at £50,000. Although the evidence on loss had been limited, the first instance court had made a reasonable assessment on the information provided.

No general conclusions can be drawn about the validity of covenants covering long standing or even ex customers from this case. One does also suspect that the palpable unreliability of the evidence adduced on behalf of Mr Coppage did his case no good at all.

In another situation, it might be reasonable to seek to protect such a wide customer base. Here the customer base was a stable one – in a business where customers come and go more frequently, a restriction to the customer base for the last year or so might well be necessary to meet the test of reasonableness. For example, in Croesus Financial Services Limited v Matthew & David Bradshaw Mrs Justice Simler, sitting in the High Court, considered whether a restriction period of 12 months was appropriate relating to soliciting and dealing with former clients and the misuse of the Company's information.

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5. what is normal?

money

Guarantee payments are fairly rarely encountered in practice, but in times of economic hardship they are likely to be encountered more frequently. Abercrombie & Others v AGA Rangemaster Ltd is, according to the Court itself, probably the first case of its kind to reach the Court of Appeal.

Guarantee payments are payments that an employer is required by statute to make to employees who have been laid off or placed on short time work because of a downturn in business. Sections 28 to 34 of Part III of the Employment Rights Act set out the details. the maximum payable is £24.20 a day for five days in any 3-month period, i.e. a maximum of £121. In practice many employment contracts provide for payment to be made even if there is no work available to be done in which case, as long as the contractual entitlement at least matches the statutory requirement, the contractual provisions prevail.

In this case the Court upheld the right of hourly paid employees to claim guarantee payments for workless days while they were working a four-day week, Mondays to Thursdays, under a temporary agreement reached via their union, the GMB. The agreement had been reached to address a shortage of work during 2009. When, during the currency of the agreement, things took a turn for the better, the employer did not, as it could have done, cancel the agreement early but instead let it be known that anyone who wanted to could go back to 5 day working early – some did, but not all.

The GMB, on behalf of its members, contended that they could claim guarantee payments for Fridays, because they had not been provided with work on a day on which they would normally be required to work – the agreement had set up what was, in the words of counsel for the employees the "new normal". The employer's case was that the workers were not "normally required" to work on Fridays while the agreement was in force. The Court of Appeal found in favour of the employees, pointing out that whether or not someone was "normally" required to work on a particular day in accordance with their contract of employment did not mean quite the same thing as asking whether he is in fact required by his contract of employment to work on that particular day.

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6. is reward for long service age discriminatory?

DWP

Lockwood v Department of Work and Pensions & Anor is an illustration of how a directly discriminatory redundancy scheme can be justified. Under the Civil Service Compensation Scheme, introduced in 1987, redundancy payments are weighted in favour of older workers. Specifically, workers taking voluntary redundancy were entitled to one month's pay for each year of service, plus the lesser of:

  • (i) one month's pay for each year of service given after 5 years of service;
  • (ii) one month's pay for each year of service given after the employee's 30th birthday, plus
  • (iii) one month's pay for each year of service after the age of 35

Romilly Lockwood, aged 26 at the time of her redundancy, made a claim of age discrimination. In the Employment Tribunal it was held that the scheme was not age discrimination, and that if it was, it would be justified, and the Employment Appeal Tribunal upheld that conclusion. She appealed to the Court of Appeal.

The Court of Appeal considered two issues – was the Employment Tribunal right that there had been no age discrimination – and if they were wrong about that, were they right in their alternative conclusion that such discrimination was justified?

The Employment Tribunal had been mistaken in finding that because a 26 year old would have less need for a redundancy payment than an older worker she had not suffered less favourable treatment.

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7. paying for private medical treatment - thin end of the wedge?

croft-vets2

Mrs Butcher started work for the veterinary practice Croft Vets in 1996. Over time the practice expanded and she was promoted to finance and reception manager. In the period from 2007 to 2010 the practice opened a new hospital and acquired new phone and IT systems, both of which suffered the inevitable teething troubles, all of which Mrs Butcher had to manage on top of her existing responsibilities. Unsurprisingly, she was observed sitting in her office staring out of the window in tears shortly after returning to the office, following a week off, during which she had moved house. A few days later in May 2010 she went off sick with depression, never to return.

Her employer's initial response was to offer the choice between support to carry on with her existing workload or taking a lesser job at lower pay. After a few weeks, they asked her to see a consultant psychiatrist "to allow us to consider whether there are any steps we can take now to facilitate your return to work".

The psychiatrist reported back on 19 August that work related stress had triggered a severe depressive episode with marked anxiety. He recommended that as well as antidepressant medication she should have six further psychiatric sessions including CBT to help her recover. He gave an indication that the cost would not exceed £750. There ensued some correspondence between employer and psychiatrist which confirmed the diagnosis, and discussed how long she might remain unwell. No steps were taken to implement the psychiatric recommendations. In November 2010 Mrs Butcher resigned. She alleged that that her employers had caused her breakdown, questioned the psychiatrist's diagnosis, and ignored his recommendations, all of which meant that she had suffered disability discrimination. The final view of the psychiatrist, (given after her resignation) was that given specialist help, while it was difficult to predict how long she would be unwell, the average period for recovery would be a year, but that given the severity of the issues at work, there was only a 50/50 chance of her being able to return at all.

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8. beware of the reality - just because you say it's a zero hours contract doesn't necessarily mean that it is

morrisons

In a blog post last August I asked the question "what are zero hours contracts and how do they work in practice?". I pointed out that there is no formal legal definition of a zero hours contract and it is therefore merely a description of a type of working arrangement that has become more popular in recent years.

Until the last few days everyone seemed to agree that zero hour contracts are "a bad thing". But as some have pointed out, they are not such a well-defined concept as to be readily regulated. Borrer v Cardinal Security Ltd demonstrates that employers who want to use zero hour contracts may find that they do not always get what they want.

Mr Borrer was employed by Cardinal Security for over four years. For most of that time he was a security guard at a Morrisons store in Brighton. His contract was not specific about his hours – "your working hours will be specified by your line manager", and he rang or texted each week to see what those would be for the next week. In practice he consistently worked about 48 hours a week.

For reasons not made clear in the judgment of the Employment Appeal Tribunal, Mr Borrer was moved to Morrisons in Seaford – but the manager there was not happy with him. He was given a couple of weeks' paid leave, and then offered two or three days a week at another shop. In response to that he resigned in these terms:

As far as you and the company are concerned, employment rights do not exist. I absolutely reject your statement that I was on a zero hours contract. I worked the same hours since I have been with you. Given the way you have behaved, I therefore have no alternative but to resign.

The Employment Tribunal took the view that the agreement was a "no work, no pay" arrangement. Although Mr Borrer would be entitled, for example, to minimum notice of termination, that was not much use to him if he was not entitled to any pay.

He appealed to the Employment Appeal Tribunal, which took a different view.

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