It's a trap!

Employment Law Newsletter - April 2016


In this issue ...

  Book your place   And who needs facts?  
  Overstepping the mark   Another reminder to renew your vows  
  A slice of TUPE   No knowledge transfer  
  Who needs facts?   Don't give away an easy penalty  
  Over the top  

Book your place

You may well have received an invitation by e-mail recently anyway, but, just in case you were overlooked (sorry!) or you missed it, do make sure you sign up for one of Collinson Grant's annual employment law update sessions.

They will be in Manchester on Tuesday 7th June (at the Inner Circle Meeting Room, Manchester Central Library, St Peter's Square) and London on Thursday 9th June (at the Novotel London City South, Southwark Bridge Road). Registration is from 9.15am, with 'proceedings proper' commencing at 9.45am and running through to about 4.30pm (with breaks for refreshment, including a buffet lunch). And one really good thing is that it's free.

So follow the link or, if this proves difficult, contact Angela Ambrose or Jo Hale, both of whom can also be reached on 0161 703 5600.


Overstepping the mark

Other than where there is clear medical advice to that effect, employees on sick leave are not immune from all contact by their employer. It is legitimate for an employer to seek and communicate certain information pertaining to the workplace, department or job – indeed, there are instances when a failure to keep an absent employee updated on plans or developments could be criticised or even create legal difficulties.

However, legitimacy has bounds. An imperative for daily or more frequent contact, for example, would be unusual. And, of course, content has to be appropriate. In Private Medicine Intermediaries v Hodkinson, the employer went too far.

Hodkinson was absent with depression and anxiety which, according to her fit note, were attributable to bullying and intimidation by two managers. The chief executive officer (CEO) wrote to her to ask if she wished to raise a grievance and attend a meeting. Despite her response that she was too upset to communicate effectively, the CEO sent her another letter suggesting a meeting before the end of the month at a 'flexible' location and saying that he had spoken to the two accused managers to find out what had gone wrong and that he wanted to discuss with Hodkinson six issues, which he listed. In response, she resigned and said she had been constructively dismissed.

The EAT agreed. While it did not think the employer (PMI) was deliberately seeking to drive her out, it found that the CEO should have realised that his second letter, raising issues of detail that did not demand urgent resolution or which were already resolved, would cause serious distress to Hodkinson in her condition. Therefore, he had breached the implied duty of trust and confidence.

Although this ruling commends caution on the part of employers, it does not mean 'all bets are off' on contentious subjects, even with those said to be absent due to work-related depression, stress or anxiety. The key to the decision here was that the matters raised by PMI, such as they were, could have waited. Some issues will not bear a delay in communication, at least in outline. For example, if there is a serious disciplinary allegation that will need to be confronted on the employee's return (which might be some time away), it would be foolhardy - and legally difficult - for an employer to remain silent until that point and then produce the disciplinary charge like a rabbit from a hat. So, some intimation that, on return, the allegation will need to be investigated and considered is appropriate. And, of course, to the extent that an absent employee presents a complaint or grievance about his/her supposed treatment, it is proper for the employer to enter into dialogue in an attempt to clarify and resolve the concern.


A slice of TUPE

Under the original part of TUPE, a transfer of undertaking can only happen if the transfer involves an 'economic entity' with functional autonomy. That's what the governing EU Directive requires, so it's what TUPE itself specifies. But, the 'new' part of TUPE, covering 'service provision changes' (SPC) is not based on EU law – the UK chose to insert it. So, the same stricture does not apply.

In Arch Initiatives v Greater Manchester West Mental Health NHS Foundation Trust, the EAT held that there was an SPC when the Trust split its service into two separate functions – case management and intervention delivery – and awarded them to separate contractors. The EAT rejected Arch's argument that, while it is possible to have more than one transferee when all service functions will be replicated by each (on a reduced volume basis), it is not possible to split down the original service by separate function.

Does this add to your understanding of the scope of SPCs under TUPE? Perhaps not, but it is useful confirmation for some and, in any event, an explanation of why old and new TUPE concepts differ.


Who needs facts?

In Kilraine v London Borough of Wandsworth, the EAT has issued a warning about being too literal or absolute in distinguishing between 'information' and an 'allegation' in whistleblowing cases.

The distinction was first made by the EAT in Cavendish Munro v Geldud. We featured that ruling in our June 2010 issue (if you ever had and still have it!) and predicted that it was fraught with difficulty and so would be subject to severe limitation in the future if it was not actually overturned.

Well, it's taken six years, but the EAT in Kilraine has provided that limitation. Its basic point is that the concepts of informing and alleging are intertwined and susceptible to change – so, for instance, an allegation can contain elements of information or an allegation will, on being substantiated, become information. Therefore, tribunals and, by extension, employers are best-advised to treat the vast majority of employees' expressions of concern or complaints about treatment as capable of falling within the whistleblowing protections.


And who needs facts?

The illegality of continued employment is one of the listed reasons for a 'potentially fair' dismissal. But, if an employer seeks to rely on it to defend a claim of unfair dismissal, it must be able to show that the illegality in question was a fact and not simply something in which there was a reasonable (but mistaken) belief.

However, where an employer does act on its erroneous belief that it would be illegal to keep an individual in employment, there is still hope. In Nayak v Royal Mail Group, after seeking to verify Nayak's ongoing immigration/visa status over a lengthy period (during which Nayak failed to co-operate fully), Royal Mail concluded that it could no longer be sure that he was entitled to work in the UK. So he was dismissed.

The EAT decided the dismissal was fair, not on the grounds of illegality per se but for 'some other substantial reason' – the catch-all in the list of potentially fair reasons for dismissal. Here, the key is the existence of reasonable belief in a state of affairs. Royal Mail passed that test and, as the procedure adopted was also reasonable, Nayak was unsuccessful in his unfair dismissal claim.


Another reminder to renew your vows

In the October 2012 newsletter (again, you might need to head up to the attic for that one), we reported Patsystems v Neilly. This case emphasised that, if a post-termination restraint is initially invalid because it is excessive for the employee's status, it will not be reinvigorated by subsequent promotion to a role more deserving of control, even when that is accompanied by an 'all other terms and conditions in my original contract remain valid' acknowledgement. A more deliberate and considered assumption or affirmation of the restraint is necessary at that time.

That principle has been confirmed and applied by the High Court (HC) in Bartholomews Agri Food v Thornton. The restriction, about not working with any of the employer's customers for six months, was clearly unreasonable when first imposed at the time Thornton joined to work as a trainee (and had no experience of or contact with customers). While he had been later promoted to a more senior position to which, it could be argued, the restraint was appropriate, its simple continuation without further discussion or consideration was not enough to make it enforceable.

So, actively review the content of any post-termination restraints as your employees make significant progressions in their careers.

The HC also found that the restraint would have been unenforceable because its terms sought to stop Thornton from working with any of Bartholomews' customers rather than those he had come into contact with (which constituted less than 5% of the total customer base).

And, relying on public policy, it ruled that 'buying' a restraint that was otherwise invalid could not save it (in Thornton, this was sought to be achieved by a clause in the employment contract providing for full pay during the six months covered by the restraint). Remember that point if and when you elect to pay an identifiable (and probably minimal) sum under a settlement agreement in return for a departing employee's agreement to a restriction on competition – ultimately, it is the content of that restriction and not the payment of money that will determine its enforceability.


No knowledge transfer

In Gallop v Newport City Council, the EAT has ruled that, in a direct disability discrimination claim, one employee's or agent's actual or constructive knowledge of a claimant's disability cannot be imputed to other parts of the employer's organisation. So, the fact that Newport's occupational health department (OHD) had sufficient knowledge to conclude that Gallop was suffering from clinical depression was irrelevant in determining the motivation of the manager who dismissed him for bullying having been told by the OHD that Gallop simply had stress-related problems. The manager could not be said to have acted on the basis of the protected characteristic of disability.

This might run to appeal, not least because the Code issued by the Equality and Human Rights Commission takes a contrary view of the imputation of knowledge within an employer's organisation.


Don't give away an easy penalty

We are now in the land of financial penalties for unpaid tribunal awards and settlements. You may be in the happy position of having few tribunal claims or employment disputes to deal with. And you may be confident of 'winning' any that come your way. If so, you can probably disregard this piece. For everybody else, just be careful – in essence, you have 42 days from the decision awarding compensation or the payment date specified in an agreement to pay up before the machinery starts to grind.


Over the top

From time to time, we have featured cases (for example, see the Power case in that dusty January 2011 issue you still hold) about the borderline between an employee's simple manifestation of religious belief, adverse employer reaction to which would be unlawful discrimination, and something more. The latest in this line is Wasteney v East London NHS Trust.

Wasteney, a Christian, was the subject of a complaint by a Muslim subordinate about 'religious grooming' – pushing her to pray together, laying on of hands, giving her a book about converting to Christianity and inviting her to various Church events. Following an investigation, Wasteney's employer issued her with a formal warning. She responded by bringing claims for religious discrimination and harassment.

The EAT rejected them. The disciplinary sanction was not for holding and exhibiting religious beliefs but for improperly foisting them on a subordinate in a non-consensual context.


If you would like to discuss this or any other issue facing your organisation please speak to your usual contact at Collinson Grant or Jo Hale on 0161 703 5600

Although care has been taken in the preparation of this Newsletter, Collinson Grant cannot accept responsibility for errors, omissions or advice given. Readers should note that only Acts of Parliament and Statutory Instruments have the force of law and only the courts can authoritatively interpret the law.