Canter Levin & Berg Employment Solutions

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April 2015

the employment law briefing

Welcome to our April newsletter. It's a mixed bag this month as you can see from the list below.

With the general election pending it is worth noting that if there is anything other than an outright majority for the Conservatives (currently 7/1 against as opposed to 1/10 on no overall majority) it is likely that there will be significant changes to employment law, as I outlined several months ago. As demonstrated in the last Parliament a coalition does not necessarily prevent fundamental changes such as the introduction of employment tribunal fees. I have discussed this topic in one of this month's articles since it is liable to change whichever party or parties form a government and is in any event subject to further judicial scrutiny at a hearing in June.

Hot off the press the European Court has today ruled against former Woolworth and Ethel Austin workers in connection with collective consultations during redundancy exercises. The question was what was meant by "an establishment"? Most had thought that it meant redundancies at a particular location but the Employment Appeal tribunal took the view that the words "at one establishment" should be treated as deleted from the legislation so the the requirement encompassed the whole entity. The Court of Appeal referred the question to the European Court and we now know that this approach is wrong. If redundancies are carried out at multiple locations but less than 20 jobs are proposed to go at any one location, there is no need for collective consultation. Many will regard this as a sensible decision restoring the common sense interpretation of the legislation.

You may have noticed slight changes to the format of the newsletter. This is as part of a transition to a more mobile-friendly layout which is also coming to our website in the next few weeks. If you have any problem in reading the email version you can view the newsletter online here.

This month's news:

  1. liability for work related stress
  2. the future of employment tribunal fees
  3. applying for fee remission
  4. ordered to pay costs despite inability to do so
  5. death benefits and the improbability of suicide

Kind regards

Martin Malone

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This month's news round-up:

1. liability for work related stress


The words "work related stress" strike fear into the hearts of many employers. There is a widely held perception that all an employee needs to do is raise the complaint or go off sick with a note referring to "work related" stress or anxiety for the employer to be in a whole world of trouble. It is also widely believed that GPs are far too willing to record a diagnosis of work related stress or anxiety just because it is mentioned by the patient.

However, Government guidance issued in 2013 to coincide with the launch of fit notes states that if "work related stress" or stress arising from personal problems does not amount to a "mental illness", the GP is to regard the patient as fit for work and so no fit note is required. So getting signed off for work related stress is not, or at least should not be, as easy as is widely thought.

Similarly, bringing a claim for damages resulting from work related stress is far from straightforward, as confirmed in the recent High Court case of Easton -v- B&Q plc. In 2004 Mr Easton joined B & Q as a unit manager. In 2007 he moved to head office and in 2008 he was appointed as manager of the store in Romford. The store performed well and by 2010 Mr Easton was earning about £105,000 p.a. However, in May 2010 he was diagnosed as suffering from depression. Apart from two failed attempts at returning to work in 2010 and 2012 he did not work again for B&Q. B&Q accepted that he suffered from a psychiatric illness that was at least in substantial measure caused by occupational stress. However they denied breach of any relevant duty of care to Mr Easton and that his illness was foreseeable.

Mr Easton was a high achiever and recognised as such. He therefore expected to be promoted from his job as store manager. He felt that he was overlooked for promotion and cited this as one of the causes of his depression. This contention was supported with medical evidence. He maintained that he had been promised that he would be promoted. Witnesses for B&Q felt that he had read too much into the praise he received for his management of the Romford store. In appraisals he was identified as having "further potential" and "may make next level". Mr Justice William Davis found that Mr Easton had convinced himself that a promotion was on the cards. However there was no "clear promise" of promotion or any similar representation. In 2010 circumstances at work including long working hours (up to 14 hours a day), problems with the introduction of a campaign targeted at trade customers and disruptive construction work at the store took a toll on Mr Easton. By May he had developed the depression which was the basis of his claim. He went off work from 2 May with a diagnosis of depression caused by work related stress.

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2. the future of employment tribunal fees


According to the bookies (at the time of writing) Ed Miliband is an average 4/7 (i.e. clear odds on) to become the next Prime Minister. (For those who are interested David Cameron is 5/4 against and it's any price the rest.) Bookies are rarely wrong in such matters. After a lot of fairly non-committal talk about reform of the system Labour finally confirmed on 1 April that, if elected, it will abolish tribunal fees altogether.

However no-one thinks that either of the main parties will win an outright majority so what of those that might support a Labour-led government, whether by coalition or informal arrangement? Unsurprisingly, the SNP which is identified as a staunch supporter of workers' rights is committed to the elimination of tribunal fees. The Liberal Democrats are in a rather odd position since, as a coalition partner, they supported the introduction of employment tribunal fees but they now seem to be directly opposed to them. It is clear that Vince Cable takes the view that he was misled by Justice Secretary Chris Grayling. In February he said:

The quid pro quo of my party supporting the Conservative proposal to introduce employment tribunal fees was that we should conduct a rigorous review within a year of their introduction, to determine whether there had been any unwanted consequences and to ensure no one was deterred from legitimate access to justice.

Despite much prompting from my officials and Jo Swinson [Liberal Democrat minister for employment relations], including at cabinet, 18 months have now passed and nothing has happened. I am concerned that we appear as a government to have reneged on our public commitment to conduct this review. [Mr Grayling] gave assurances during parliamentary debates that the Ministry of Justice would monitor the impact of the proposals on women and other vulnerable groups and that the reviews would take place regularly and on an ongoing basis. This is not happening either.

This review now needs to be progressed as a matter of urgency . I have instructed my officials to initiate a review of employment tribunal fees based on all the publicly available data and research on the impact of fees in employment tribunals.

But now it seems that they have gone further. Jo Swinson has indicated that the Liberal Democrats will seek to undertake a major review of the entire employment tribunal system which could see them being replaced with entirely new labour courts. Significantly, Labour seems to be thinking along the same lines.

If the Conservatives get in then it is fairly clear that the status quo will remain. Their manifesto makes clear that they have no plans to change existing employment law and related procedures. If UKIP have a say then their much watered-down proposals include extending the two-year qualifying limit for unfair dismissal to all claims including discrimination. Of course many have observed that the rationale for effectively allowing discrimination for two years, whether based on race, sex, disability or otherwise, is far from clear, particularly taking into account that many such claims are based on single incidents.

As I have mentioned before, this is not an issue that is divided clearly between employers and employees.

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3. applying for fee remission


While we have employment tribunal fees one of the practical issues which has undoubtedly presented problems has been the procedure for applying for fee remissions. Back in July 2013 I highlighted the problems that have beset the fee remission procedure in the county courts and wondered whether the same problems would arise in employment tribunals. However, whereas the problem in the county courts has been a slack procedure, quite the opposite has been apparent in the employment tribunals. The application procedure for fee remission has been rigorously applied and the online procedure requires payment of the fee or a remission application. The remission application form is incorporated within 31 pages of detailed guidance which confirms, critically, that the application must be supported by evidence such as a letter from a Job Centre Plus or the DWP or evidence of income such as three months' bank statements. What if there is a delay in obtaining that evidence, particularly taking into account the strict three months' time limit for most employment tribunal applications?

Rule 11(1) of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2013 provides that "The Tribunal shall reject a claim if it is not accompanied by a Tribunal fee or a remission application".

As pointed out by Mr Justice Langstaff in the recent Employment Appeal Tribunal case of Deangate Limited -v- Hatley, Patterson and Kurtz "shall" is mandatory and there is therefore no room for the exercise of discretion. Deangate's former employees submitted their applications online one day before the expiry of the time limit for claiming. However the applications were not "accompanied" by the fees or remission applications. Accordingly the employer contended that they should have been rejected. Had they been resubmitted each with the fee or a remission application they would have been out of time so that the tribunal would have no jurisdiction to deal with them.

However, the claims were accepted. Deangate Ltd complained and the matter was heard by Employment Judge Ferguson sitting in Colchester. She found that the claims had in fact been accompanied by remission applications or, in the alternative, pursuant to Rule 6 of the Rules of Procedure she had the power to correct any "irregularities and non-compliance with the Rules". Each of the claimants had written in the section headed "Additional information" in the claim form " "I have sent my application for fee remission by post". The claim forms were submitted online on 13 February 2014 and the fee remission applications were sent by special delivery on 18 February, arriving on 19 February. The judge noted that the applications could not be submitted online because original documentation was required. The judge took the view that "it is a permissible interpretation of Rule 11 to treat remission applications made in this way as "accompanying" a claim form submitted earlier online".

There is a common sense problem here concerning the meaning of "accompanied". When first considered in the Employment Appeal Tribunal it was put this way:

This appeal throws up the meaning of "accompanied" in Rule 11(1). It is an ordinary English word; and it is not immediately obvious that a fee payment or application for remission made 6 or 7 days later "accompanies" an application made 6 or 7 days earlier. An analogy might be the 11 year old who turns up to the cinema alone, to see a film with a certificate which requires him to be "accompanied" by an adult if under 12 and asks to be let in on the basis his Dad will turn up two to three hours later. If similarly entry to the ET system has in law to be denied unless and until accompanied, by the time the fee application for remission can be matched with the ET1, the latter may be too late; the question is thus jurisdiction, since the ET has no discretion but to reject an unaccompanied ET1, and it was plainly reasonably practicable to put the ET1 in on time since (but for the fee payment) that was done. Rule 6 may not provide the escape route from these consequences which the Judge thought, though this is arguable: can an absence of jurisdiction be waived in the way suggested?

Since many claims had been accepted in the same way the Secretary of State for Justice intervened in the appeal.

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4. ordered to pay costs despite inability to do so


It is a central maxim of international jurisprudence that, other than in the most exceptional circumstances, a judgment or order should not be made if it cannot be complied with by the person against whom it is made. This is why, for example, individuals who may owe thousands of pounds are often ordered to make nominal payments of, say, £1 or £5 per month, simply because they cannot afford any more.

The rationale is that to do otherwise is to undermine the authority of the court. If a court makes an order that it knows cannot be complied with it is effectively forcing a contempt of court since the element of choice does not exist. Contempt of court, according to its definition, entails disobedience or disrespect to a court in a form which opposes or defies authority, justice and the dignity of the court. It is therefore pretty clear why a court would not generally wish to bring about a contempt of court which does not involve any exercise of choice on the part of the contemnor.

Against this background the decision of the Employment Appeal Tribunal in the case of Mrs D M Chadburn -v- Doncaster and Bassetlaw Hospital NHS Foundation Trust and Mann makes interesting reading. In general costs are not awarded in employment tribunal proceedings unless a party has behaved unreasonably. Consequently there is a punitive element in such an award (even though some protest otherwise), reflecting the tribunal's disapproval of a party's behaviour.

Mrs Chadburn made a number of discrimination claims against her former employer. The tribunal rejected her claims and, significantly, found that she had made up allegations of race discrimination as a means of giving the tribunal jurisdiction over her complaints of harassment. The tribunal took the view, understandably, that this was unreasonable behaviour and went on to award costs against her in the sum of £10,000, thought to be under a third of the actual costs incurred by the respondents.

Mrs Chadburn's appeal against the costs award was initially rejected. However, following a hearing in July 2014, it was allowed to proceed on the basis that it was suggested that the tribunal did not take into account the full evidence concerning the claimant's current means, so it was arguable that the costs award was made on a false basis.

Further evidence was introduced suggesting that the claimant's debts were not £600 as had been thought but were nearer to £4,285. However an application for reconsideration of the award was refused. The appeal was therefore made against both the initial costs judgment and the refusal to reconsider it. Mr Justice Simler was robust in his rejection of the appeal. He referred to Rule 84 of the Rules of Procedure which provides that the means of a paying party may be taken into account when considering whether or not to make an order and, if an order is made, when deciding how much to award. However there is no obligation to do so. Taking into account relevant case law (Arrowsmith -v- Nottingham Trent University) there must (my emphasis) be "a realistic prospect that the Appellant might at some point in the future be able to afford to pay". As I go on to indicate, that prospect in this case was based on what can only be regarded as speculation.

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5. death benefits and the improbability of suicide


The decision of the Supreme Court in the case Braganza -v- BP Shipping and another concerns the difficult topic of entitlement to death benefits in the event that an employer considers that an employee has committed suicide.

It is well known that life insurance policies often include "suicide clauses", sometimes applying an exclusion for a period of time after taking out the policy, e.g. two years. One practical problem with this is that when one policy is replaced with another the exclusion period tends to start over again. Another issue is that claims can be resisted on the basis of non-disclosure of mental health problems or medical including psychiatric conditions.

The same issue can arise with death in service benefits. Mr Braganza worked as a chief engineer on BP's oil tanker the British Unity. Between the hours of 1.00 a.m. and 7.00 a.m. on 11 May 2009 and while the ship was in the mid-North Atlantic Mr Braganza disappeared. No-one knows what happened to him but the employer formed the opinion that he had committed suicide by throwing himself overboard.

His contract included an entitlement to death benefits payable to his widow but also included the following exclusion:

For the avoidance of doubt compensation for death, accidental injury or illness shall not be payable if, in the opinion of the Company or its insurers, the death, accidental injury or illness resulted from amongst other things, the Officer's wilful act, default or misconduct whether at sea or ashore .

On this basis entitlement to death benefits was denied. Therefore, the question for the court was not to decide what happened to Mr Braganza but to decide whether or not the employer was entitled to form the opinion which it did.

On arrival in New York an investigation was carried out as is the usual procedure in such circumstances. Crew were interviewed under caution and it was concluded that Mr Braganza was lost overboard, presumed drowned, but no finding was made concerning the reason for his presumed drowning. BP then set up its own enquiry, dealing with health and safety issues. Although not specifically charged with identifying the cause of death the possibilities were narrowed down to an accidental fall from the vessel or suicide. The final version of the report concluded that "having regard for all the evidence the investigation team considers the most likely scenario to be that the C/E jumped overboard intentionally and therefore took his own life".

On 13 November 2009 Mrs Braganza was notified, via her solicitors, that the claim for death in service benefits was rejected since, on the basis of the team's report there had been a "wilful act" by Mr Braganza, thereby triggering the exclusion clause.

Mrs Braganza brought a claim for $230,265 death in service benefits and $1.325m damages for negligence.

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