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December 2015 Review

the employment law briefing

After a few days to let the dust settle after the Christmas and New Year festivities (alternatively now that I've got round to writing it!) welcome to our review of last month's employment law news

On the day that the preliminary hearing takes place in the Eva Carneiro v Mourinho and Chelsea FC case (which is proceeding notwithstanding false reports in the press that Chelsea had missed the deadline for filing its response) I have reported the unsatisfactory goings on at Sunderland Athletic FC which, as demonstrated by the case of Farnan v Sunderland Athletic Football Club Limited, are not just on the pitch. Unfortunately the case lifts the lid on yet another multi-million pound sports business being run in an at times chaotic manner, interspersed with predictably sexist and unenlightened conduct on the part of senior managers.

There is a particular focus on disability discrimination issues with reports concerning the tricky overlap between dealing with sickness absence as a capacity issue perhaps leading to potentially fair dismissal while trying to avoid disability discrimination and the challenge posed to disabled candidates and employees as a result of the increasing prevalence of online tests and assessments.

Although it is really a restatement of existing law which is that a claimant's duty to mitigate (i.e. keep to a reasonable minimum) his or her losses is not really that high, the decision in Cooper Contracting Limited v Lindsey is notable for setting out specific guidelines when dealing with the issue. First, and probably most importantly, the onus is on the wrongdoer (generally the former employer) to demonstrate a specific failure to mitigate rather than the other way round. It is also important to note that the test is whether the claimant acted unreasonably which, in practice, is likely to be quite a tough one.

In what is currently likely to be a fairly quiet year for employment legislation, undoubtedly the most important forthcoming change is the introduction of the National Living Wage on 1 April 2016. The introductory rate is £7.20 and it applies to all employees over 25, nationwide. For those under 25 National Minimum Wage rates will continue to apply.

This month's news:

  1. Summary dismissal following disclosure of confidential information
  2. Important guidelines concerning the "duty to mitigate"
  3. Online assessments and discrimination
  4. Balancing sickness absence and disability issues
  5. Is an instruction to speak English discriminatory?

Kind regards

Martin Malone

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This month's news round-up:

1. Summary dismissal following disclosure of confidential information


It is generally (and sensibly) thought that summary dismissal without notice should only occur in the most clear cut cases. In Farnan v Sunderland Athletic Football Club Limited the High Court considered the circumstances in which such action might be considered appropriate, as well as shedding light on the somewhat unappealing aspects of the football industry behind the headlines.

Michael Farnon has a background in the sports marketing industry, having had jobs associated with Manchester United, Sheffield United, Jordan F1 and AC Parma. In about June 2010 he met Niall Quinn, then chairman of Sunderland AFC and discussed the Club's sponsorship profile. In August 2011 he took up a post with the Club on a salary of £190,000 plus benefits and a discretionary bonus. There was a contractual notice period of one month and provisions for termination without notice in certain circumstances.

Mr Farnon had been involved in a business called Red Strike Marketing (RSM) in which his wife was a director and the sole shareholder. Since his email account with Sunderland AFC (SAFC) had not been set up he continued to use his RSM email account until September 2013 when the SAFC account was set up and he was asked to use it. Mr Farnan secured shirt sponsorship deals for the Club.

In March 2013 the new owner of SAFC, Ellis Short, sacked manager Martin O'Neill and appointed in his place Paulo di Canio, former manager of Swindon Town FC. Mr di Canio is a controversial character, having previously expressed very right-wing views. His appointment led to the resignation of one of SAFC's directors, David Miliband. This was a crisis period for the Club and created problems for Mr Farnan, particularly in connection with the second shirt deal (with Bidvest) which had not by then been signed. There was a fairly terse exchange of emails between Ms Byrne, the CEO, and Mr Farnan. He felt that he had been ostracised and forwarded one of the emails from Ms Byrne to Mr Miliband. Later that day he contacted colleagues looking for alternative employment and enclosing in support a presentation that he had prepared while working at SAFC.

In April 2013, while attending the Soccerex trade exhibition in Manchester he had what he thought was an off the record conversation with a journalist. The conversation was subsequently reported by Bloomberg. At around the same time Ms Byrne prevented Mr Farnan from attending events in Florence, London and South Africa.

In May 2013 the CEO became concerned that Mr Farnan was sending emails from his SAFC account to his wife. She accessed the account and became upset because she read what she considered to be comments that were personal to her.

Also in May Mr Farnan contacted his lawyer because he felt that things had become unbearable. A further planned trip to Malta was cancelled by Ms Byrne and Mr Farnan consulted his GP about his stress. All this was happening at the same time as a relegation battle for the Club, which it won with the result that the Bidvest shirt sponsorship deal was confirmed.

On 15 May 2013 Mr Farnan went to the office and was met by Ms Byrne and the head of HR, Ms Goulden. Ms Goulden told him that he was being suspended for gross misconduct and he was escorted off the premises. He was suffering from stress and made an appointment to see his GP on 21 May. On 20 May he received a letter and some papers from SAFC, in connection with a disciplinary hearing scheduled for 23 May. He saw his GP the following day and was signed off for 14 days. He asked for an adjournment of the hearing, which was refused, and therefore took place in his absence. The charges were found to be proven and he was summarily dismissed by a letter sent on the same day. An appeal was unsuccessful.

In May 2014 Mr Farnan commenced proceedings claiming wrongful dismissal and unpaid bonus (claimed at £964,300). Shortly before trial SAFC sought to amend its defence by providing updated figures relating to the value of sponsorship deals (allowed) and by introducing a further allegation concerning an allegedly offensive image sent by Mr Farnan from his SAFC email account (also allowed).


2. Important guidelines concerning the "duty to mitigate"


It is often heard that a claimant has a duty to mitigate his or her loss, in other words to take reasonable steps to minimise losses resulting from the wrongdoing in respect of which compensation is claimed. This applies to many areas of law such as commercial contract disputes and accident claims, as well as in the field of employment law.

However, the extent of the duty is often overstated and it is generally the duty of the wrongdoer to demonstrate failure to mitigate. Even if it does so, it does not necessarily follow that it will be taken into account.

The duty to mitigate with reference to loss of earnings in a breach of contract claim was confirmed as long ago as 1912 in the case of British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd. In Wilding v British Telecommunications plc (2002) the Court of Appeal provided general guidance that the onus is on the employer to show that the worker unreasonably refused an offer of re-employment, the test of unreasonableness is an objective one based on all the evidence, when applying the test the attitude of the employer, the circumstances in which an offer may have been made and refused and the way in which the employee was treated should be taken into account and the court or tribunal should not be too stringent in its expectations of the injured party.

That guidance has recently been refined and expanded by the then President of the Employment Appeal Tribunal, Mr Justice Langstaff, in the case of Cooper Contracting Ltd v Lindsey.

Mr Cooper had been self-employed for a number of years before taking a job as a carpenter with Cooper Contracting in March 2011. His employment was terminated after 21 months on 29 December 2013. No reason was given since Coopers took the view that he was self-employed. An employment tribunal disagreed and found that he was unfairly dismissed. When dealing with the assessment of compensation the Employment Judge at the Tribunal observed as follows:

In the course of evidence Mr Lindsey was asked what he had been doing since his dismissal. He told me that he has resumed working as a tradesman on his own account advertising principally on the My-builder website. He was asked whether he had considered taking up another employed post either with a local employer or perhaps on building sites further afield. He and Mrs Lindsey were very clear that working on building sites, whilst being something he had done in the past, would not be suitable now for [health] and family reasons and I accept that there may come a time in a person's working life when some types of work are no longer appropriate. As far as looking for another employed position is concerned, Mr Lindsey's evidence was that he preferred to be his own boss having had the experience of employment with the Respondent. It is very much his own choice, therefore, to continue with the financial ups and downs of self employment as a jobbing tradesman.

He continued:

The conclusions that I have reached are these. Firstly, I find that it was reasonable for the Claimant to resume his previous life as a self-employed tradesman upon his dismissal: that is what he knew and where his recent experience lay. I find that it has been reasonable for him for continue in that way to the present date. I am satisfied however that there are other opportunities out there for employed work with higher remuneration if the Claimant wished to look for them but the Claimant has plainly decided that self-employment is the path he prefers for the future. Whilst I am satisfied that his past losses to date ought to be reflected in the compensatory award I think the fact that he is unwilling to consider alternatives in the future makes it just and equitable for there to be a more limited award of future compensation than might otherwise be justified on a strict analysis of the figures. I have therefore determined that as far as loss of earnings is concerned the Claimant should recover his loss of earnings to date and that I should assess future loss of earnings over a period of three months. Thereafter, whilst I am sure there will be a continuing loss of earnings, it will reflect the Claimant's desire to be his own boss rather than his value on the employed market for tradesmen.

I should point out that three months' future loss is at the very lowest end of what might be expected with awards equating to between 12 and 36 months being far more common.

On appeal Mr Justice Langstaff was critical of the approach to mitigation often taken in tribunals:

As to mitigation, it seems to me there are very considerable dangers in an approach that suggests that the duty to mitigate is a duty to take all reasonable steps to lessen the loss. This may divert focus away from the legal principles that apply to mitigation and demand too much because it may seem to lead to a conclusion that if a Respondent can show one reasonable step that was not taken the Respondent will succeed. Recent experience in this Tribunal shows that the principles by reference to which an assertion of failure to mitigate loss is advanced are too often mis-stated, misunderstood or misapplied. In part this may be because when applying those principles a court may express it in shorthand appropriate to the argument before it and in context of the particular facts but which when applied as a precedent can easily lead to error if too casually extrapolated to those other cases.

He went on to consider the relevant cases and then, very helpfully, distilled the main principles as follows:


3. Online assessments and discrimination


There is an increasing tendency for employers to use online services in order to carry out HR related functions, including assessments, job interviews and appraisals. This can be daunting even for the most confident and well-equipped candidates and employees. I have recently witnessed such a process in action, with an international employer using an American Company to carry out initial interviews on a system similar to Skype but with time limits for replies in the style of a TV quiz show.

While this may be something that many candidates and employees will just have to get on with, it has the capacity to present fairly obvious problems for those who are disabled or have other protected characteristics within the meaning of the relevant sections of the Equality Act 2010. As an aside, it also seems to provide almost the polar opposite of providing fair opportunities by anonymising applications for employment.

The issue of discrimination and online assessments was to the fore in the recent Employment Appeal Tribunal case of Muzi-Mabaso v Commissioners for HMRC. Mr Muzi-Mabaso joined HMRC as a Grade AA employee in September 2004. As was known to the employer he suffered from depression and was a disabled person for the purposes of the Equality Act 2010, thereby obliging the employer to make reasonable adjustments where necessary to take into account the effects of the disability.

In 2010 Mr Muzi-Mabaso was temporarily promoted to Grade Band O and undertook training over two years with a view to possible promotion to Grade HO. He did not pass the required module and therefore reverted to Grade AA with effect from 28 November 2011. However there was little available work for Grade AA employees. Mr Muzi-Mabaso was on sick leave from 14 November 2011 to 22 April 2012, having been certified as suffering from stress and depression. Efforts were made to find a post for him but he was told that promotion opportunities could arise only as a result of open competition. Shortly before he returned from sickness absence he was place in a redeployment pool. After six months in the pool, if a job had not been found, an employee would be deemed surplus, thereby opening the possibility of redundancy.

In April 2012 Mr Muzi-Mabaso brought to the employer's attention his phobia of the job application process. He said that going through the process was very stressful for him and therefore put him at a disadvantage by reason of his disability. He submitted an application for a Grade O vacancy. However, he said that he could not complete the online test as part of the process because he was too stressed due to his disabilities, specifically his frame of mind and phobias.

An offer was made for his manager to sit in with him and talk him through the questions. He was also offered a private room with a computer and extra time to complete the form. There was also a discussion about doing a paper test. However all these options were rejected by him. His application was kept open pending further medical reports. The employer took the view that excepting him from the online process was not a reasonable adjustment, not least because of the high number of applicants, many of whom needed reasonable adjustments for medical reasons.

Mr Muzi-Mabaso brought two claims before the Employment Tribunal: indirect disability discrimination on the basis that he was part of a disadvantaged group and direct disability discrimination on the basis of alleged failure to make reasonable adjustments in his case. Both claims failed and a costs order of £5000 was made in favour of HMRC.

On appeal it was held that Mr Muzi-Mabaso had not suffered any particular disadvantage by being placed in the redeployment pool. The main issue was the online test and Her Honour Judge Eady QC had trouble with the Employment Tribunal's reasoning in concluding that Mr Muzi-Mabaso was not placed at a substantial disadvantage in this regard.


4. Balancing sickness absence and disability issues


Ever since the enactment of the Disability Discrimination Act 1995, now subsumed within the Equality Act 2010, there has been an uncomfortable overlap between dealing with ill-health incapacity as a potentially fair reason for dismissal and dealing with protection from disability discrimination. For example, the same facts might justify a fair termination of employment in the context of the usual grounds for dismissal but could also establish a valid claim for disability discrimination, which would constitute an automatically unfair dismissal.

The issue was most recently visited by the Court of Appeal in the case of Griffiths v DWP which is of particular significance for employers who want to take steps to minimise risks in this regard. Ms Griffiths was employed by the DWP from September 1976. In 2009 she began suffering from post viral fatigue and fibromyalgia. This meant that she was disabled within the meaning of the legislation. In 2011, following an absence of 66 days, she was issued with a formal written improvement warning. As a result she raised a grievance, contending that the employer should have made adjustments, first by discounting the circumstances leading to the warning because they were connected with her disability and, second, that the relevant policy should be modified so that she could have longer periods of sickness absence before facing sanctions than would be permitted for non-disabled employees. Both her grievance and the appeal were rejected.

As a result she presented a complaint of disability discrimination to an employment tribunal. Her claim was dismissed on the basis that no duty to make either adjustment had arisen and in any event it was not reasonable for the employer to be expected to make either of them. An appeal to Mr Recorder Luba QC in the Employment Appeal Tribunal was similarly unsuccessful.

The questions on appeal to the Court of Appeal were:

  1. Was the majority of the Employment Tribunal right to conclude that there was no substantial disadvantage so as to engage the duty to make reasonable adjustments?
  2. Was the EAT right to conclude that the proposed amendments were not steps within the meaning of the Equality Act?
  3. If there was a duty and the proposed adjustments did constitute potential steps which might be taken did the Employment Tribunal misunderstand the claim in terms of reasonable adjustments?
  4. If the Employment Tribunal did understand the claim was it entitled to find that it was not reasonable to expect the employer to make either of the proposed adjustments?

Having considered the relevant authorities at length Lord Justice Elias concluded that both the majority in the Employment Tribunal and the EAT were wrong to hold that there was not a substantial disadvantage sufficient to engage the duty to make reasonable adjustments. As he observed:

In my judgment, the appropriate formulation of the relevant [provision, criterion or practice] in a case of this kind was in essence how the ET framed it in this case: the employee must maintain a certain level of attendance at work in order not to be subject to the risk of disciplinary sanctions. That is the provision breach of which may end in warnings and ultimately dismissal. Once the relevant PCP is formulated in that way, in my judgment it is clear that the minority member was right to say that a disabled employee whose disability increases the likelihood of absence from work on ill health grounds, is disadvantaged in more than a minor or trivial way. Whilst it is no doubt true that both disabled and able bodied alike will, to a greater or lesser extent, suffer stress and anxiety if they are ill in circumstances which may lead to disciplinary sanctions, the risk of this occurring is obviously greater for that group of disabled workers whose disability results in more frequent, and perhaps longer, absences. They will find it more difficult to comply with the requirement relating to absenteeism and therefore will be disadvantaged by it.


5. Is an instruction to speak English discriminatory?

In recent years there has been a much-increased tendency for foreign workers and non-nationals to gravitate to particular types of work and workplaces. Admittedly limited analysis suggests that migrants from the European Union tended initially mainly to take factory jobs, seasonal farm work and cleaning jobs. More recently there has been a notable diversification into retail and hotel and catering work. For non-European migrants, typical jobs include doctors, chefs, nurses, IT professionals and scientists. This is no great surprise taking into account the requirement for higher professional and academic qualifications for workers arriving from outside the EU.

One consequence of the gravitation to particular work types is that it is often the case that workforces can include particularly high representation from one nationality or ethnic group. For example I expect that many of you will have heard hotel staff speaking to each other in a foreign language (often eastern European). This can present particular problems for employers since it has the capacity to encourage cliques and it is likely to be much more difficult to manage if a manager does not speak the same language as that routinely used by those being managed. There is also the risk of those who are not in the main language group being marginalised, albeit not in a way that is likely to be capable of protection under discrimination law as it stands if, say, the minority language in use is English.

One way in which employers have tried to address the problem is by requiring only English to be spoken by all staff at all times when on duty. There have been press reports about such requirements and the frequently expressed view that such a rule might be seen as indirectly discriminatory since it would be more difficult (and in certain circumstances impossible) for those for whom English is not their native language to comply.

The issue has now been considered by the Employment Appeal Tribunal in the case of Kelly v Covance Laboratories Limited. Mrs Anna Kelly is of Russian national origin and commenced employment with Covance as a contract analyst working in a testing laboratory in Harrogate in February 2014. The work duties included animal testing and therefore attracted the attention of the animal rights movement. In the first few weeks of her employment Mrs Kelly exhibited odd behaviour which suggested that she might be an animal rights infiltrator (there had been recent examples of such infiltration at the time). Examples of her odd behaviour included frequently using her mobile phone in work, often disappearing into the bathroom with her phone for excessive periods and speaking on her phone in Russian.

As a result, in early March 2014, she was instructed by her employer not to speak in Russian when at work. She objected, pointing out that two Ukrainian employees frequently spoke in Russian when at work (although this was not enforced). As a result they were also instructed not to do so. Other issues concerning conduct and performance were raised with her but she appeared to respond positively to these. However, problems continued and at her two months' probationary appraisal she was told that she would be moved into a formal capability process. She raised a grievance against her manager, including allegations of race discrimination. The grievance was investigated and rejected and an appeal was unsuccessful, following which she was asked to attend a formal capability meeting in mid May. Prior to the meeting she contacted ACAS and, in turn, an ACAS officer contacted the employer. This prompted the employer to make further enquiries about her and a Google search disclosed that in October 2013 she had been convicted of benefit fraud in the Crown Court and was given a suspended prison sentence. She was asked at the meeting on 16 May why this had not been disclosed. On 20 May she handed in her resignation but subsequently brought Employment Tribunal proceedings including allegations of discrimination based on national origin, race and sex.

The Employment Tribunal was clear in its rejection of the complaint concerning the instruction to speak English. As reported in the EAT judgment:

...there was no reason to believe that another employee, of a different national origin to the Claimant but seeking to speak a language other than English in the workplace, would have been treated any differently. The Claimant relied on the fact that her two Russian speaking Ukrainian colleagues had not been subjected to the same instruction, but the ET found that Mr Simpson had told their line managers to impose a similar prohibition on them, albeit that instruction had not been carried out. The ET observed:

"47. . it would be a very strange thing if Mr Simpson were to discriminate against a Russian national in relation to the use of that language and treat a Ukrainian national more favourably in that regard. ."

With reference to national origins while Russian was her mother tongue the test was a subjective one as to why a person acted as they did. In this case the instruction was given not because she was a Russian national but because of the suspicions that the manager had about her. Accordingly the conduct did not "relate to" her national origins. Mrs Kelly appealed to the EAT.


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