Quarter 3: Employment Case Law Update

For the next installment in our quarterly case law series, we look back at some of the key cases since April 2019 and the lessons which we can learn from them.

Discrimination

There have been some interesting discrimination cases this quarter.

In Baldeh v Churches Housing Association of Dudley and District Ltd, the Employment Appeal Tribunal (EAT) considered whether a dismissal could be discriminatory where the employer did not know about the employee’s disability until the appeal hearing.

Mrs Baldeh, a housing support worker, was dismissed by her employer at the end of a six-month probationary period, following various concerns about her performance that had previously been raised and discussed with her. She appealed against her dismissal and at her appeal hearing she mentioned that she suffered from depression and that this sometimes caused her to behave unusually, to say things "unguarded", and to suffer short-term lapses in memory.

However, her appeal was unsuccessful and Ms Baldeh brought a claim for discrimination arising from disability. Initially, although the Tribunal accepted that her depression amounted to a disability, it rejected her claim partly because the employer had no actual or constructive knowledge of the disability at the time it made the decision to dismiss and partly because there was no evidence that Mrs Baldeh’s ‘blunt’ style of communications with colleagues and managers was anything other than a personality trait rather than a disability.

In any event, the Tribunal held that the dismissal was justified by the legitimate aim of maintaining standards required of individuals working with vulnerable people and maintaining a workforce where staff can work amicably in a pressured environment. Mrs Baldeh successfully appealed to the EAT. In the EAT’s view, it was at least arguable that the employer had actual or constructive knowledge of the disability before it rejected Mrs Baldeh’s appeal against her dismissal. The outcome of an appeal against a dismissal is ’integral to the overall decision to dismiss’. This case is an important reminder to employers that an employee should not be penalised just because they felt unable or unwilling to mention their disability or its symptoms until an appeal hearing.

In Base Childrenswear Ltd v Otshudi UKEAT/0267/18, the EAT provided guidance on interpreting the Vento bands. By way of background, where an employment tribunal finds that an employee has suffered discrimination, harassment or victimisation, it can award a successful claimant compensation for injury to feelings. This compensation is awarded in line with the three bands set out by the Court of Appeal (CA) in Vento v Chief Constable of West Yorkshire Police (No 2).

In that case, the CA stated that the lowest band (which currently enables tribunals to award £900 - £8,800 for injury to feelings) is most appropriate for less serious cases, for example where the act of discrimination is an isolated or one-off occurrence. In the present case, Ms Otshudi successfully claimed that her dismissal, purportedly on the grounds of redundancy, was an act of racial harassment.

She was awarded a significant sum, including £16,000 for injury to feelings (which falls within the middle Vento band). Her former employer appealed to the EAT on a number of grounds, including that the first instance tribunal had placed her injury to feelings award in the wrong Vento band because her dismissal had been held by the tribunal to be a one-off act of harassment. The EAT dismissed this part of the appeal, stating that whilst a tribunal should take into account whether the discrimination is a one-off act or a course of conduct, this in itself is not determinative.

The employment tribunal had correctly focussed on the effect the discriminatory act had on Ms Otshudi and had concluded that it was a serious matter which gave rise to an injury to feelings award in the middle Vento band. This case reminds employers that the Tribunal will focus on the effect the discrimination has had on a claimant when assessing injury to feelings awards.

In Ali v Capita Customer Management Ltd; Hextall v Chief Constable of Leicestershire Police, the CA considered whether it was direct or indirect sex discrimination, or a breach of the equal pay sex equality clause, for two employers to fail to pay two male employee enhanced shared parental pay. The CA held it was not. In particular, the CA found that Mr Ali could not compare himself with a woman on maternity leave.

The court considered that there are numerous important differences between shared parental leave (SPL) and statutory maternity leave. Statutory maternity leave was in part compulsory, could begin before birth and was an immediate entitlement even where there was no child to look after. SPL was entirely optional, could only be taken after birth and with a partner's agreement, was dependent on the mother choosing to give up statutory maternity leave and did require there to be a child to look after.

The court concluded that SPL does not alter the predominant purpose of statutory maternity leave which was not childcare but other matters exclusive to the birth mother resulting from pregnancy and childbirth and not shared by the husband or partner. This decision will be welcomed by employers with enhanced maternity pay policies.

Unfair Dismissal

In Phoenix House Ltd v Stockman, Ms Stockman succeed in claims for unfair dismissal, whistleblowing and victimisation, however a tribunal reduced her compensatory award by 10% to reflect the fact that she had covertly recorded a meeting with HR on her mobile phone.

The tribunal declined to apply a larger reduction to the award as it considered that she had not made the recording to entrap her employer but only because she felt flustered at the time. Phoenix House appealed to the EAT, alleging that it would have dismissed Ms Stockman for gross misconduct had it known about the secret recording, and therefore accordingly her compensation should have been reduced to nil. The EAT dismissed the appeal.

It found that there were a number of reasons that she might have taken the recording (including, for example, to take legal advice) and therefore it couldn’t be said that a covert recording necessarily undermines the trust and confidence between the employer and employee. It also stated that it is a decision for the tribunal as to whether and to what extent it is just and equitable to reduce an award. In these circumstances, the EAT found that the tribunal had made a legitimate assessment of the facts and had reduced the compensation accordingly.

The case affirms the fact that an employee’s secret recordings are likely to be admissible before an employment tribunal if they contain relevant evidence, however the act of covertly recording a meeting may amount to misconduct, depending on the employer’s disciplinary rules and procedure.

Here, the tribunal suggested that more evidence was required to show that Phoenix House would have treated the act of covertly recording a meeting as gross misconduct had it known about it prior to her dismissal (for example, listing it as an example of gross misconduct in its disciplinary procedure).

The CA considered whether an NHS trust’s decision to dismiss a Christian employee for preaching to patients following a management instruction not to do so was unfair in Kuteh v Dartford and Gravesham NHS Trust. Mrs Kuteh was a Christian who worked as a nurse for the Dartford & Gravesham NHS Trust.

She had previously been warned against initiating unwanted religious discussions with patients, however only a few months later three further complaints were raised by patients, with one describing an encounter with her as ‘like a Monty Python skit.’

She was suspended and following an investigation and disciplinary hearing she was dismissed for gross misconduct on the grounds that she had failed to follow a reasonable management direction, she had behaved inappropriately and had acted in breach of the Nursing and Midwifery Council code. Mrs Kuteh unsuccessfully brought a claim of unfair dismissal and her appeal to the EAT was not upheld.

Her appeal to the CA was unanimously dismissed. In doing so, the CA highlighted that the lower tribunal had been entitled to find that a failure to follow a lawful management instruction was capable of amounting to misconduct and that her dismissal for this was not unfair.

Holiday Pay And Working Time

In East of England Ambulance Service NHS Trust v Flowers the Court of Appeal has considered the issue of voluntary overtime and the calculation of holiday pay. Mr Flowers and his fellow claimants sometimes undertook both non-guaranteed and voluntary overtime with their employer, the East of England Ambulance Trust (the ambulance service).

The ambulance service did not include any overtime in the claimants' holiday pay. The claimants brought claims for breach of contract and breach of the Working Time Directive (WTD).

The initial employment tribunal held that the non-guaranteed overtime should be included in the calculation of the claimants' holiday pay both as a matter of contract and under the WTD. However, it rejected the claims to include voluntary overtime.

The EAT allowed the claimants' appeal on the voluntary overtime issue and held that voluntary overtime could be included in the holiday pay calculation. The CA has now endorsed the EAT's decision.

Although this case involved a contractual entitlement to have voluntary overtime taken into account for the purposes of calculating holiday pay, it is still relevant to organisations where voluntary overtime is not contractual but is carried out with sufficient regularity to be taken into account when calculating holiday pay. The key question for employers in such a situation will be how regular does the overtime have to be to count? Further clarity on this from the courts would be welcome.

In Federación de Servicios de Comisiones Obreras (CCOO) v Deutsche Bank SAE the European Court of Justice (ECJ) has held that, in order to comply with the provisions of the working time directive on maximum weekly working time and daily and weekly rest, member states must require employers to set up a system for measuring actual daily working time for individual workers.

In Great Britain, regulation 9 of the working time regulations 1998 requires employers to keep ‘adequate records’ to show compliance with the 48-hour limit on the average week and the protections for night workers. However, it does not specifically require all daily hours of work to be measured and recorded, nor is there any mention of recording daily or weekly rest periods.

Health and Safety Executive (HSE) guidance states that specific records are not required and that employers may be able to rely on records maintained for other purposes, such as pay. The ECJ's judgment raises serious doubt as to whether these record-keeping rules comply with the Directive's requirements. Employers now need to consider the possibility that HSE and the courts may start to apply a more purposive interpretation in future.

Unions

In Kostal UK Ltd v Dunkley, the Court of Appeal looked at the scope of section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 which prohibits employers from inducing their workers to bypass collective bargaining in certain circumstances. Briefly, the facts of this case were that Kostal had a recognition agreement with Unite which provided that formal pay negotiations would take place annually, and that any proposed changes to terms and conditions of employment would be negotiated with Unite.

In October 2015, Unite wrote to Kostal initiating formal pay negotiations for 2016. After a series of meetings between HR and union representatives, the company proposed various changes to terms and conditions but these were rejected in a consultative ballot.

Kostal then posted a notice indicating that it would write to all employees individually to offer the same package. The notice stated that failure to agree to the new terms and conditions would ‘lead to no Christmas Bonus and no pay increase this year’. This was followed up with a letter to all employees on 10 December 2015.

On 29 January 2016, Kostal wrote letters to those employees who had not accepted the pay proposal. These letters stated that the changes would not be implemented without the employees' express agreement, but that ‘you should be aware that in the event that no agreement can be reached … this may lead to the company serving notice on your contract of employment’.

A collective agreement was eventually, however a large group of employees brought claims in the employment tribunal, alleging that their rights under section 145B had been infringed on two occasions, by the letters of 10 December 2015 and 29 January 2016. The employment tribunal found in the employees' favour and the EAT rejected Kostal's appeal.

The EAT also held that, on the facts, the tribunal had been entitled to find that the December and January offers were two distinct unlawful inducements, meaning that a separate award could be made for each. However, the CA has now upheld Kostal’s appeal.

According to the CA, the members of the union were not, in fact, being asked to relinquish, even temporarily, their right to be represented by their union in the collective bargaining process. All that had happened was that the employer had gone directly to the workforce and asked them whether they would agree a particular term on this occasion.

This case is authority that employers will be able to break impasses in collective negotiations by making direct offers to the workforce, on the understanding that it is only intended to resolve the current impasse rather than end collective bargaining.