Canter Levin & Berg Employment Solutions Canter Levin & Berg Employment Solutions
April 2013

Welcome to our April newsletter.

It is sometimes towards the end of a month that employment news can come thick and fast and this month is a good example. With local elections pending and accusations flying between Conservatives and UKIP, Godfrey Bloom of the latter jumped into the field of employment law with both feet (not for the first time) during a Sunday evening interview on Radio 5 Live when he supported employers who choose not to employ "women of child bearing age" because of the costs involved. When asked whether he would employ someone in this category his answer was that relevant employment protection should be removed. Rather like the current human rights debate, sweeping statements along these lines appear to be attracting significant popular support, as particularly demonstrated by the positions taken by a wide cross-section of national print media. While it is not my place (at least here) to say which approach is correct, it is notable that facts and reasoned analysis appear to play no more than minor parts in a sometimes frenzied whole. In the meantime, access to justice is subject to unprecedented threats on several fronts with pending removal of the choice of criminal lawyer (you could end up with someone from G4S!) and hysteria about a compensation culture characterised by whiplash claims which are, according to the government's own figures, at their lowest for five years. Apparently the government is determined to discourage people from pursuing claims (for sometimes life-changing injuries) by seeking civil redress through due process.

Meanwhile, employers continue to embrace employee rights, as demonstrated by a report for XpertHR which shows that 79% grant between 75% and 100% of flexible working requests, while nearly half report that up to 20% of their staff work flexibly.

Commerzbank has this month suffered a double hit with the news that Latifa Bouabdilla was victimised by the Bank when it found that she was suing her former employer for sex discrimination. According to the tribunal the Bank's actions were "offensive and unfair". Compensation (she is claiming £13m) will be assessed at a hearing in September. The Bank has also lost its appeal against a decision that it was obliged to pay bonuses amounting to £44m notwithstanding the financial crisis.

I'm sure that readers will not be surprised that Blackburn Rovers have been ordered to pay former manager Henning Berg £2.25m. Sacked after 57 days he was entitled to payment for the remaining two and a half years his contract had to run. The somewhat unusual defence raised by the club that it was "out of control" and did not know what its managing director was doing failed to assist as might be expected!

I've said quite enough about George Osborne's baby the employee shareholder scheme so I will confine myself to considering the creature that has emerged (far removed from what was originally intended as the result of what can fairly be described as a mauling by the House of Lords). Described as "a dog's breakfast" by Lord Bilimoria and by Lord Forsyth as having "all the trappings of something that was thought up by someone in the bath", what we have is a scheme which is of no obvious appeal to either employer or employee. For example agreements will be of no effect unless independent legal advice is obtained. This is no quick check over a compromise agreement, taking into account the fundamental sacrifice of employment rights and the tax implications. I can't see that the charge (to the employer) will be any less than £750 plus VAT and, in many cases, a good deal more than that. There is also no certainty of outcome since it will not be clear in many cases that the proposed contract will benefit the employee. There is a requirement to provide "written particulars" and a cooling-off period during which the employee could change his or her mind. Given all the other things that employers have to deal with I cannot believe that such arrangements will be near the top of many employer's task lists.

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March 2013
February 2013
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This month's news round-up:

1. double jeopardy


In Christou(1) Ward(2) v London Borough of Haringey the Court of Appeal upheld what may seem the surprising decision that an employer could revisit an earlier disciplinary decision to give a written warning for misconduct and decide to dismiss the employee after all. It would not be wise, however, to treat this as any kind of general rule as it arose from highly unusual circumstances. The case related to the dismissals of a social worker and team leader working for Haringey who were responsible for the safeguarding of Baby P, who died as a result of neglect and mistreatment by his mother and two men. The social workers were disciplined after the death of the child and each given a written warning – the most serious sanction available under a simplified disciplinary procedure used by the Borough. This was not the only disciplinary procedure the Borough had available to it – there was also a full procedure, which no doubt would have taken longer, but which could lead to dismissal.

The case became notorious after the conviction of the mother and the two men and an inquiry into Haringey’s child protection arrangements was set up at the behest of the Secretary of State for Education at the time, which concluded that the Borough’s arrangements were inadequate. A new Director of Children’s Services was appointed who was prompted by the minister to look into the role of social workers in the whole sorry business. After a further investigation, it was considered that the original disciplinary procedure was “blatantly unsafe, unsound and inadequate“ and five further disciplinary charges were brought. After a new hearing, both were dismissed for gross misconduct.

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2. post termination victimisation not covered by Equality Act 2010


Prior to the Equality Act 2010, it had been recognised for quite a while that acts of victimisation taking place after the end of the employment relationship were unlawful under the preceding legislation (See Rhys Harper v Relaxion Group PLC [2003] UKHL 33). This would cover, for example, refusing to give an employee a reference for discriminatory reasons. However, it seems that the Equality Act doesn’t clearly cover this situation – although it is certain that this is not intentional. Notwithstanding an earlier Employment Tribunal decision which interpreted the Act purposively, and Equality and Human Rights Commission guidance suggesting that post employment victimisation is covered, in Rowstock Ltd v Jessemey, the Employment Appeal Tribunal has made it plain that it would not be right to fill the gap in the legislation judicially, because:

The instant situation is one in which express provision has been made for the post-relationship landscape but subject to an equally express exception in the case of victimisation

Moreover, the section of the Equality Act in question applies not just to employment cases, but to other legal relationships (such as the provision of services and landlord and tenant matters).

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3. if employment regulation is a problem why are we getting more?


The government has published “Employment Law 2013: progress on reform” which notes both that in the UK, “burdens from employment law are low by international standards”, and that there is a perception that employment regulation is a problem (perhaps fuelled by exercises such as the “Red Tape challenge“?), leading to a situation where “fear of getting it wrong still undermines business confidence”. To help to counter this fear (perhaps greater than it needs to be since many employers appear to be under the impression that the ill-fated compulsory dismissal procedures are still in force) ACAS is to develop an online interactive tool for use to help with disciplinary issues.

The first change came into force from 6 April, when the period for collective redundancy consultation was cut from 90 days to 45 days. This is only relevant when 100 or more employees are subject to te same redundancy exercise. For 20 to 99 employees the consultation period remains unchanged (30 days). For fewer than 20 employees the consultation period must be reasonable but no minimum period is specified.

Looking further ahead this year:

  • New settlement agreement arrangements including a new statutory code of practice will come into force at some as yet unspecified point during summer 2013
  • Tribunal reforms have been put back to "summer" from spring 2013. These include new powers to strike out weak cases sooner rather than later, simplifying the procedure needed to withdraw claims and combining prehearing reviews and case management discussions. Fees will be introduced in employment tribunals at the same time, along with the reduced cap on unfair dismissal awards;
  • In the autumn (note the trend for nothing more specific than a season!) there are plans to reform TUPE, as I outlined last month. The introduction of the new “employee owner” status has been put back to autumn 2013 from spring (about which read more in my introduction to this month's newsletter). The proposal has also been tweaked in the recent budget, in which it was announced that the first £2000 worth of shares will be exempt from income tax and national insurance. There is also a requirement for independent advice.

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4. decisions, decisions


Redundancy selection can be a tricky business; faced with having to choose between a number of employees how do you make sure you do so fairly? Well, the standard advice is to establish a set of objective criteria and apply those. And very good advice it is too, but Mental Health Care (UK) Ltd v Biluan & Anor shows that it is possible to go too far in the quest for objectivity.

In this case, 19 redundancies were needed when a ward in a residential home was closed. There were 58 staff in the pool for redundancy selection – the entire staff, in fact. Three criteria were used - disciplinary record, absence record and a competency assessment. The latter was based on a recruitment process involving a written test, an interview and an assessed group discussion. Selection was carried out by a team of HR specialists and healthcare professionals who did not work in the home and had no personal knowledge of the staff at all.

When the result of the selection came out it surprised some, because a number of workers who were known to be good performers were amongst those had not done well. But those who scored lowest were selected, all the same, because the process was felt to be fair and transparent.

The Employment Appeal Tribunal held that the Employment Tribunal had been reasonable in its approach to the matter when concluding that the dismissals were unfair, and had not substituted its own view for that of the employer.

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5. you're out of time, but all's not lost


Employment Tribunals have a limited power to extend the three-months' time limit for bringing unfair dismissal claims where it is “not reasonably practicable” for a claimant to make a claim in time. In the case ofEl -Kholy v Rentokil Initial Facilities Services (UK) Ltd the Employment Appeal Tribunal reminds us that, where the reason the claimant has not presented a claim within the time limit is an error by a professional adviser, he or she cannot rely on that error as making it not reasonably practicable to observe the time limit. In this particular case, the claimant was dismissed on 4 October, and consulted a solicitor on 15 October to help him appeal against dismissal. That appeal was refused on 6 January – by which time the three months had already run out. Proceedings were started a couple of weeks later, after the case had belatedly been passed to an employment specialist.

The practical lesson to be drawn from this case for professional advisors, is not be tempted to await the outcome of internal processes before lodging an ET1. Cynical employers could (and frequently do) draw another conclusion.

Even if the deadline is missed, that is not necessarily the end of the road from the claimant's perspective. Missing deadlines is one of the most frequent causes of professional negligence claims against solicitors and other legal advisers. According to research carried out by Lockton Professions missed deadlines account for 46% of claims made against lawyers in litigation matters (including employment claims).

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6. revisiting old warnings


Last month I commented on the case of Simmonds v Milford Club in which it was thought appropriate to revisit previous warnings if they were “manifestly inappropriate” when considering the fairness of a misconduct dismissal, Davies v Sandwell Metropolitan Borough Council emphasises that this approach is very much the exception to the rule.

In Davies the claimant, a teacher, had been given a final written warning for misconduct during a lesson on static electricity, against which she appealed. That appeal was never concluded after being adjourned at the request of the union official representing the teacher. It thus remained “live”. There was then a second allegation of misconduct and the claimant was dismissed, taking into account the subsisting warning. The dismissal was found to be fair by two different Employment Tribunals, the second of which specifically examined whether the warning had been valid.

The Court of Appeal turned down an appeal by the claimant; she had not shown that the warning was manifestly inappropriate, and although not strictly necessary for the decision, the Court also expressed the view that in appropriate cases it is legitimate to take into account the fact that an appeal against a warning has been abandoned or withdrawn.

The Court also took the opportunity to remark that tribunals should not get bogged down in listening to a mass of irrelevant evidence and should, if the parties do not do so themselves, take control of proceedings to avoid the waste of time and money. As Lord Justice Lewison commented:

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7. can secret recordings be admitted as evidence in employment tribunal claims?


I suspect that, if asked, most people would assume that covert recordings cannot be admitted in evidence, based on general principles of fairness and natural justice. In Vaughan v London Borough Of Lewisham & Ors the Employment Appeal Tribunal considered this question. Ms Vaughan, who had raised a number of claims against Lewisham, made a blanket application that 39 hours of recordings she had covertly made at work should be admitted in evidence. The Employment Judge refused to admit the recordings. She had not been given access to any of the original tapes, or been provided with transcripts, and without knowing the contents of the recordings, she could not form a view on whether they were relevant to the allegations made.

On any reading of the matter Ms Vaughan is a serious litigant who was acting in person before the EAT. She had brought nine claims of which seven were before the EAT. Three were consolidated and dismissed after an employment tribnunal hearing which lasted for 20 days. An appeal to the EAT was rejected and that was in turn the subject of an appeal to the Court of Appeal (unresolved at the time of this EAT appeal).

She was also ordered to pay one third of the respondents' costs in the concluded proceedings, estimated to total £260,000. Three of the remaining claims remain listed for an estimated twenty eight day hearing later this year. It is in the context of these remaining claims that the question of admissibility of covert recordings has arisen.

Ms Vaughan disclosed that she had secretly recorded numerous meetings with colleagues and managers. At a pre hearing review an Employment Judge determined that the recordings should not be allowed as evidence. This decision was appealed, along with the decision to award costs.

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8. temporary real time information reprieve for small businesses


HM Revenue & Customs has announced a concession for employers of fewer than 50 employees allowing them to delay the full implementation of the new "Real Time Information" PAYE reporting scheme until 5 October 2013. Until then, smaller employers may provide the information when they do their usual payroll run, so long as it is not after the 5th of the month.

The grace period was announced in typically last minute fashion on 25 March as follows:

HM Revenue & Customs (HMRC) recognise that some small employers who pay employees weekly, or more frequently, but only process their payroll monthly may need longer to adapt to reporting PAYE information in real time. HMRC have therefore agreed a relaxation of reporting arrangements for small businesses.

Until 5 October 2013, employers with fewer than 50 employees, who find it difficult to report every payment to employees at the time of payment, may send information to HMRC by the date of their regular payroll run but no later than the end of the tax month (5th).

This is a temporary relaxation to give some extra time to small businesses that pay weekly (or more frequently) but who only run their payroll (or use an agent to run their payroll) at the end of the month. This extra time will enable these businesses to adapt their processes or change their arrangements with their payroll service supplier so that they can comply with the new legislation.

From April 2013, employers who choose to take advantage of this relaxation will still need to report their PAYE in real time by the last payday in the month or the end of the tax month (5th) at the latest.

This is not a withdrawal of the requirement to report PAYE in real time. All employers are still required to operate PAYE in real time and we expect most employers to be reporting PAYE in real time from their first payday on or after 6th April.

From 6th October all employers will be required to report PAYE in real time each time they pay their employees. However HMRC will continue to work with employer representatives during the summer to assess and understand the impact of RTI on the smallest businesses and consider whether they can make improvements to real time reporting which will address their concerns without compromising the benefits of RTI or the success of the Department for Work & Pension's Universal Credit.

HMRC recommends that employers and agents move to real time reporting as soon as possible in order to give them time to refine business processes before automated penalties are implemented.

Employers using commercial payroll software will find that their payroll software is designed to submit their PAYE information as part of their integrated payroll processes. So these employers should continue to or start to report "on or before" each payment is made to employees as this will be the easiest and quickest way of operating their payroll.

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9. is obesity a disability in the context of discrimination?


It was a mistake, the Employment Appeal Tribunal held in Walker v Sita Information Networking Computing Ltd, for an Employment Tribunal to say that a claimant was not disabled because there was no identifiable or recognisable pathological or mental cause for his “constellation of symptoms”. The Tribunal had been wrong to concentrate on the fact that there was no physical or mental cause for the impairments suffered – the point to look at was what effect the impairments had on everyday life, except where there was any doubt as to the genuineness of the symptoms.

In this case, the claimant suffered from “functional overlay” accentuated by his obesity – he weighed around 21.5 stones (136.5kg). EAT President Langstaff considered that obesity was not a disability of itself, but it could make it more likely that a claimant would be disabled. On the other hand, because obesity can be reversed by a determined effort to lose weight, it could be that any impairments caused by obesity could be reversed within 12 months – thus meaning that the claimant would not be disabled within the statutory definition, which is:

Section 6 Disability
(1)A person (P) has a disability if-

  • - (a)P has a physical or mental impairment, and
  • - (b)the impairment has a substantial and long-term adverse effect on P's ability to carry out normal day-to-day activities.

As confirmed in the government's guidance to the definition of disability and corresponding Equality Act Guidance

"substantial" is more than minor or trivial - e.g. it takes much longer than it usually would to complete a daily task like getting dressed [and] "long-term" means [likely to last] 12 months or more - e.g. a breathing condition that develops as a result of a lung infection.

So what is "functional overlay". In this case what was described as an abbreviated list included asthma, dyslexia, knee problems, diabetes, high blood pressure, chronic fatigue syndrome, bowel and stomach problems, chemical sensitivity, hearing loss, anxiety and depression, persistent cough, recurrent fungal infections, carpal tunnel syndrome, eye problems and sacro-iliac joint pains. Any reasonable person would regard such a combination as causing a great deal of pain and inconvenience and, in the normal sense of the word (which is what matters in this context) substantial impairment. It does not matter whether the impairment is physical or mental or a combination of the two. Equally it does not matter what has caused the impairment.

Mr Justice Langstaff made it clear that obesity does not of itself and without more render a person disabled. However:

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