Canter Levin & Berg Employment Solutions Canter Levin & Berg Employment Solutions
February 2013

Welcome to our February round up of employment law news.

Although whistleblowing is a well-known issue for those dealing with employment law, there has been a rash of cases in the last few weeks which suggest that much still needs to be done in order to provide adequate protection. Poor employers have tended to regard whistleblowing as being the preserve of troublemakers and even a ground for suspecting that the whistleblower has breached his or her duty of faithful service. However the Public Interest Disclosure Act includes protection not only for whistleblowers who raise genuine concerns but also for employers since a disclosure of information must be based on the reasonable belief of the whistleblower and made in good faith. If these conditions are not met then there is no protection. Consequently whistleblowers must still think very carefully before acting.

We also have news about the government's myriad proposals for employment law reform. Based on past experience it will be interesting to see just how any of these finally materialise. It's also interesting to consider how so many changes can be reconciled with the government's commitment to cut red tape. As I've often pointed out it's a tall order for most SME employers to keep up to speed with employment law changes. That's why our employment law service is ideally suited to those who want to focus on their core business activities while at the same time ensuring that their employment law arrangements are fully up to date and taken care of.

As promised last month I've also included guidance for employers concerning the recent decision of the European Court of Human Rights dealing with religious observance at work and its practical effects, along with cases considering incapacity and misconduct dismissals, reinstatement and legal professional privilege.

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This month's news round-up:

1. new tribunal limits...for the moment


As I reported last December, the Government has proceeded with its annual uprating of maximum tribunal awards notwithstanding plans to limit compensation for unfair dismissal.

The main new compensation maximum limits where the "appropriate date" (for example date of dismissal) is on or after 1 February 2013 and as they now stand are set out below.

  • - new limit on a week's pay taken into account for various purposes (e.g. redundancy): £450;
  • - maximum unfair dismissal basic award (and statutory redundancy pay): £13,500 (30 x a week's pay);
  • - maximum unfair dismissal compensatory award: £74,200;
  • - discrimination cases - no limit;
  • - additional award: £23,400 (52 x a week's pay);
  • - protective award: 90 days' pay;

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2. religion in the workplace - unsurprisingly a lack of clarity from the ECHR but some pointers for employers


Last month I reported the decision of the Employment Appeal Tribunal in the case of Celestine Mba v London Borough of Merton and, as promised, I am now returning to the issue of religious observance in the context of employment law.

The decision of the European Court of Human Rights (ECHR) in the combined cases of Eweida, Chaplin, Ladele, and McFarlane has unsurprisingly attracted a good deal of attention, and it seems certain to have a big impact. All of the cases centred around the right to manifest a religious belief, and whether UK law protected that right sufficiently. Two of the cases concerned how far an employer has to accommodate an employee’s wish to wear a necklace with a crucifix pendant at work, and the others concerned a relationship counsellor and a registrar respectively, who did not want to perform those parts of their jobs which conflicted with their views on same sex relationships, which in turn were based on their Christian beliefs.

In the cases relating to the wearing of crosses one failed, the ECHR taking the view that the employing health authority’s health and safety concerns justified their “no crosses” rule. The other succeeded because British Airways’ wish for corporate uniformity did not justify a rule which hampered an employee’s freedom of expression. Neither of the cases in which an employee wished to opt out of duties they regarded as inconsistent with their religious beliefs succeeded. In these cases there was a need to balance the right to manifest a religious belief which entailed disapproval of homosexuality and the right not to suffer discrimination on the ground of sexual orientation – within which there is a fairly broad margin. In the case of the registrar, the employer’s legitimate aim of providing a non-discriminatory service justified their decision to insist that all registrars conduct civil partnership ceremonies. Another factor to weigh in the balance was the question of choice – the relationship counsellor had gone into the job knowing what the duties entailed and that he could be required to perform duties he regarded as inconsistent with his beliefs, namely offering psychosexual counselling to same sex couples.

However, the tricky overlap between religion and employment law remains.

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3. employment law reform steps up a gear


The government is firming up on some of the many proposals to change employment law mooted in recent months, so we have a rash of consultation papers to digest and implementation dates to look forward to. (What happened to only introducing changes in April and October, to give employers a bit of a chance to keep up, by the way?) It seems that fees for bringing tribunal cases will come into force in July. Fees will be charged both to start a claim and before a hearing can be listed, and will range between £160 to start a simple low value claim, (for example about unlawful deductions) and £950 for a hearing in a more complex claim.

As well as there being an overall cap on unfair dismissal awards (increased to £74,200 from 1 February) there will be a secondary cap at 12 months' pay - again to come into force this summer (Ending the employment relationship: government response to consultation). This will not stop any “fat cats” (remember them?) enforcing their contracts in the ordinary courts, but will affect those on low earnings with poor job prospects – perhaps because they lack qualifications or are nearing retirement age - always assuming they have been able to fund bringing a tribunal claim.

The plan to introduce a new “employee-owner” status ploughs inexorably on, despite a marked lack of enthusiasm from business. The Law Society has also weighed in with criticism, pointing out that such arrangements "will only add to red tape for small businesses and create confusion about worker's rights". In a letter to the House of Lords Law Society president Lucy Scott-Moncrief said:

There is potential for costly satellite litigation on a range of complex issues which are likely to arise at the outset and upon termination of an employee's contract.

For example, if an employer buys back forfeit shares when an employee leaves, satellite litigation could ensue on the question of market value. This runs counter to the government's stated aim of supporting small and medium-sized enterprises through simpler regulation.

She also pointed out that restrictions on an employee shareholder's access to maternity rights and flexible working are "entirely incongruent" with the government's stated commitment to family friendly policies.

Consultation has started on implementation of a compulsory early conciliation scheme (Early conciliation: a consultation on proposals for implementation), whereby claimants will have to refer themselves to ACAS for early conciliation and will not be able to lodge a claim unless they have done so.

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4. beware incapacity dismissals and judging what are day to day activities


Aderemi v London and South Eastern Railway Ltd gives some useful pointers about what sort of disability will be a protected characteristic under the Equality Act 2010.

  • - While an inability to carry out all your work duties does not equate to an inability to carry out day to day activities, it should not be assumed from this that a work activity is not a day to day activity;
  • - Tribunals should concentrate on what the employee cannot do, not what he can do, when looking at whether there is a substantial impact on day to day activities;
  • - When looking at what is substantial or not, it is wrong to think that there is a sliding scale with ”trivial” at one end and “substantial“ at the other – if an effect is not trivial, it is substantial

In this particular case, Mr Aderemi was a station assistant who developed a bad back and was unable to stand for long periods, bend, or lift. This gave him problems carrying out his main duties including checking tickets. His employer dismissed him on the ground of lack of capability. An employment tribunal found that he was not disabled, so his dismissal was not unlawful discrimination, nor was it unfair. In the Employment Appeal Tribunal Mr Justice Langstaff (President) took the view that the tribunal had been unduly restrictive in its approach to what amounted to a day to day activity. As he pointed out:

If the problem is put simply, as being on one’s feet in a job for lengthy periods of time, then it is not difficult to think of very many jobs which would fit that description.

In other words, the ability to stand for longer than half an hour at a time is so commonplace a part of people’s working lives that is falls within the scope of “day to day activity”.

The EAT ordered that both the discrimination finding and the finding that the dismissal was fair were to be reconsidered, pointing out that the decision as to disability could have a knock on effect on the fairness of the dismissal, especially if the disability was caused by the employee’s work.

The case highlights the potentially awkward overlap between potentially fair dismissal on the ground of incapacity and disability discrimination.

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5. insufficient investigation made dismissal unfair

London City Airport

Employers should take care to investigate allegations of dishonesty involving breach of trust particularly carefully, suggests the Employment Appeal Tribunal in Stuart v London City Airport.

Mr Stuart was one of 430 ground services employees at London City Airport who was dismissed for gross misconduct. It was alleged that he had gone to a duty free shop in the airport and taken goods without paying for them. His version of events was that a friend had beckoned him over for a chat while he was in the queue to pay for items, and he had not been aware of crossing the threshold of the shop, whereas one witness suggested that he had in fact tried to conceal the goods in his jacket. That witness was not present at any disciplinary hearing or appeal hearing, so her evidence could not be challenged, and the employer did not obtain evidence from other sources suggested by the other employee such as available CCTV, or likely witnesses including the friend or shop assistant manning the till, which could have confirmed or disproved the truth of the allegation of an attempt to hide items.

Since the conduct and scope of disciplinary proceedings is a common concern for many employers, it is worth spending a little time in considering the views of the EAT about what did happen and, more significantly, what should have happened. The facts are outlined in the decision as follows:

On the evening of 21 December 2009 the Claimant entered Nuance, the duty free shop, to buy some Christmas presents. He chose some items which he stated that he held at all times in his hands; he accepted that he did not use a basket. He first went to pay for them at an un-manned till point, where he queued with another customer before a member of staff told him to go and pay at another till point because that one was closed. He moved over to a different till and began to queue again. During the whole of this period he stated that the items he had chosen were clearly visible in his hands.

What then happened was that he was beckoned over to a seating area immediately outside the shop by another Nuance staff member called Lynette, where she had a conversation with him about the snowy conditions at the airport that day. The Claimant then realised that he was due back from his break shortly and he moved to a refrigerated counter nearby to buy a drink. He still held in his hands the items for which he intended to pay. However, while he was selecting a drink, a police officer came to speak to him, on the basis that he was suspected of dishonestly removing goods from Nuance without paying for them.

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6. the chance a dismissal might have been fair is no bar to reinstatement


Reinstatement and re-engagement are remedies a tribunal must consider whenever a claimant indicates a desire for either of them. Arriva London Ltd v Eleftheriou deals with the matter of when a tribunal finds that a dismissal is unfair, but on the facts there is a chance that the claimant would have been dismissed fairly had a fair procedure been followed. Can a tribunal order reinstatement in such a situation?

Mr Eleftheriou was dismissed from his job as a bus driver in May 2010 while he was waiting for surgery following an injury that prevented him from driving. He had been off sick since January that year. His employer, Arriva, did not seek any medical opinion as to when he would be fit for work before deciding on dismissal. His unfair dismissal case was heard in February 2012, by which time he was fully recovered and was working as a driver for a different company, at a significantly lower salary. The dismissal was found to be unfair, because of the employer’s failure to consider medical evidence before making a decision.

He asked for reinstatement, which the Tribunal granted. It then went on to work out the loss suffered by Mr Eleftheriou between dismissal and the reinstatement order. Then it deducted 60% from that amount, on the basis that there was a 60% chance he could have been fairly dismissed if Arriva had sought medical evidence at the point when they were considering dismissal

Arriva argued that these two orders were inconsistent – it was unfair to order reinstatement where there was a 60% chance there could have been a fair dismissal. The Employment Appeal Tribunal rejected this suggestion. A tribunal is obliged to consider reinstatement and re-engagement before going on to look at compensation. While certain factors which could lead to a deduction in compensation, such as misconduct by the employee, are relevant to the question of reinstatement, the employer's own procedural failings were not of this nature, and the Tribunal was correct to look at reinstatement without taking them into account. Moreover the fact that Mr Eleftheriou had found a job was no bar to the Tribunal’s power to order reinstatement.

The EAT also held that the Tribunal had misread the provisions regarding compensation for loss between dismissal and reinstatement, and no percentage deduction should have been made. The employee was therefore entitled to full loss of earnings for his period of unemployment, and then the difference between his old and new salary up to the date of reinstatement.

Reinstatement seems likely to become an increasingly popular remedy for claimants, in a climate where the job market is tough and new jobs, where they can be found, are often at lower wages – even more so if the compensatory award is to be capped at a much lower level.

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7. disciplinary sanctions - a caveat


Demotion and/or redeployment are relatively rare as potential outcomes of disciplinary procedures, not least because it would be a risky strategy to impose them without an express contractual power. Piper v Maidstone & Tunbridge NHS Trust demonstrates a pitfall for employers who do include these penalties in their disciplinary procedures.

Reverend Piper was Head Chaplain of Maidstone & Tunbridge Wells NHS Trust, until he was dismissed for gross misconduct following an incident involving his manager (no more details are given by the Employment Appeal Tribunal in their judgment as to what this incident involved). He appealed internally against his dismissal, successfully to the extent that the employer sought to substitute a final written warning plus demotion by a grade and a transfer, relying on a provision in the disciplinary procedure (which was also a part of his contact of employment) which allowed for these sanctions:

Action Short of Dismissal
There may occasionally be exceptional circumstances where management take the view that whilst dismissal may be warranted, organisational and employee circumstance may best be served by action short of dismissal itself. In these circumstances, one of the following sanctions may be considered as an alternative to dismissal only. These sanctions will normally be applied on a substantive basis. If the employee does not agree with this course of action, dismissal is the only alternative [my emphasis].
  • - Demotion without pay protection
  • - Disciplinary transfer to another post within the organisation - without pay protection or excess mileage payments
The Trust cannot create posts to accommodate demotions or transfers and consideration of such a course of action will only be possible where a vacancy exists. Any of the above sanctions will be accompanied by a final written warning.

The reverend gentleman did not agree to that course of action.

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8. legal advice privilege only covers advice from legally qualified advisers


Another new Supreme Court decision (Prudential plc & Anor, R (on the application of) v Special Commissioner of Income Tax & Anor) looks at the extent of legal advice privilege, and in particular whether parties to disputes can be ordered to disclose legal advice from advisers such as accountants.

The advice in question in this case related to a tax avoidance scheme devised by PricewaterhouseCoopers which was taken up by the Prudential group of companies. HMRC sought disclosure of documents relating to the scheme from Prudential, who refused, claiming that the documents were covered by legal advice privilege, and so did not have to be disclosed. The point was considered by a Special Tax Commissioner, who ordered disclosure, and then by the Administrative Court and the Court of Appeal, both of which considered that the documents were not privileged. Prudential then took the case to the Supreme Court, who, by a majority, agreed. While there was some logic in the argument that legal advice given by non lawyers should be protected in the same way as legal advice given by legally qualified advisers, the limitation was an historical one they were not prepared to depart from:

If we were to allow this appeal, we would therefore be extending [legal advice privilege] beyond what are currently, and have for a long time been understood to be, its limits. Indeed, we would be extending it considerably, as the issue cannot simply be treated as limited to the question whether tax advice given by expert accountants is covered by [legal advice privilege]. While that is the specific question between the parties, it is just a subset, no doubt an important subset, of a much larger set. To concentrate on tax advice given by accountants would be wrong, because it would ineluctably follow from our accepting Prudential's argument that legal advice given by some other professional people would also be covered

This decision is a particularly significant one for employment law, where there are many providers of employment law advice who are not legally qualified.

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9. whistleblowing update


Whistleblowing has been well and truly in the news this month and on 26 February the government announced a strengthening of the protection provided to those who make disclosures. The Enterprise and Regulatory Reform Bill is to be amended to include protection for employees who suffer bullying or harassment from co-workers. At present the only protection available is in respect of action taken by the employer.

The protection will make employers vicariously liable for the acts of co-workers, in much the same way as the protection which already exists in the event of discrimination. The employer will therefore be held liable for the actions of co-workers unless it is able to show that it took all reasonable steps to prevent the detrimental treatment of the whistleblower by the co-worker or workers.

Employment Relations Minister Jo Swinson (who, as a result of recent news concerning Lord Rennard no doubt has this very much in mind at the moment!) said:

The protection offered by whistleblowing legislation is strong but there are always ways to improve it. This amendment takes into account recent events and will place whistleblowers, who are making a difficult decision, in a better position. They will now have a specific employment protection in place and be able to have the full force of a tribunal behind them if they suffer any detriment, bullying or harassment from a co-worker.

The change will not impact on good employers who see that it as their responsibility to make sure their staff have a good working environment.

Examples of whistleblowing issues in the news this month include:

  • - A health services manager who says that he was gagged by the NHS and prevented from speaking out about patient safety concerns (BBC News; Mail Online)
  • - A gas market whistleblower who was sacked after accusing utility companies of price fixing (Guardian Online)
  • - A BBC whistleblower who says that he was threatened with prison for contacting the media (Guardian Online)
  • - A Lord Rennard accuser dismissed with gagging clause after telling her employer she was pregnant (Daily Telegraph)

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