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Employment Law Newsletter - August 2012


Not so happy holidays

The Schulte and Fraser decisions (both reported in our December 2011 issue), gave rise to understandable optimism that the courts and tribunals would consistently recognise the practical difficulties for employers associated with carrying over leave when sickness intervenes. But hopes have recently been dented. First, in ANGED v FASGA, the ECJ ruled that, even if a worker falls sick after a period of paid annual leave has started, the Working Time Directive requires that the affected period of leave must be restored so that it can be re-taken. Then came NHS Leeds v Larner. Here, the issue was whether a worker who, because of sickness, could not take leave in its 'accrual year' could only carry it over (or, on termination in a later year, be paid in lieu of it) if it had been the subject of a request during the accrual year. The Court of Appeal, overruling Fraser, held that the right to carry over leave in these circumstances is untrammelled – 'procedurally' at least. But, on duration, it seems that Schulte still holds good for the proposition that the right to carry over will be lost after 15 months or so (see our June 2012 issue).


Second bite of the cherry

Is it ever legitimate for an employer, without fresh evidence, to 're-try' an employee for an offence that has already been the subject of disciplinary sanction? According to the EAT in Christou & Ward v Haringey, the answer is 'yes'. The two claimants had been employed in the social services department of the council involved in the 'Baby P' scandal. Initially, their boss, Sharon Shoesmith had assured them that they would not be dismissed for their failings and so, following the disciplinary process, they had been given written warnings. After Ms Shoesmith's departure, an OFSTED inspection and increased coverage of the matter in the media, the new leadership of the council decided that a more substantial reaction was warranted. So, it dismissed the two claimants. The EAT found that approach fair, citing the increased publicity and the different view taken by the new leadership as the justifications. Whether or not one puts this decision down to policy or expediency, it is certainly not one that should be followed by employers (even the EAT acknowledged that the circumstances were exceptional). Apart from anything else, an employer is generally considered to be 'stuck with' the initial decisions of its senior managers.


As many questions as answers

The idea of the so-called 'protected conversation', part of the Enterprise and Regulatory Reform Bill, is that an employer can have discussions with an employee about an 'amicable' termination without the fact or content of those discussions later being used in legal proceedings. It is perhaps helpfully tagged 'statutory without prejudice' to distinguish it from traditional 'without prejudice' protection, which relies on there being some form of dispute already underway. But the new facility might prove to be less valuable than it seems. First, the immunity will only apply to claims of 'general' unfair dismissal ('GUD'), not to ones about 'automatically unfair' reasons or discrimination (even if a GUD claim also features). Secondly, it will fall away if there is 'unambiguous impropriety' in the discussions. Then, quite apart from the 'mechanics' of putting a protected conversation in place, there are the possible consequential problems. Just how does the occurrence of a protected conversation sit with the need to maintain trust and confidence? And, where does the curtain fall when the protected conversation becomes the subject of a grievance? All, or at least much, will hopefully become clear as the Bill progresses. Even so, the protected conversation does not look as if it is a hugely helpful tool, or substitute, for the sound day-to-day management of people.


Loss of trust? Don't be so confident

Trust and confidence is central to the employment relationship. So 'loss of trust and confidence' is, understandably, a basis for bringing that relationship to an end. But a problem occurs with the latter – it can be too readily adopted without a foundation and, therefore, safeguards. In Leach v OFCOM, the Court of Appeal addressed this trend directly, commenting on the tendency to use breach of trust and confidence as a 'convenient label to stick on any situation' of dismissal. On the facts in Leach, the CA found that a breakdown of trust and confidence, caused by the police's disclosure of limited information on the claimant's involvement in child sex abuse in Cambodia, was a 'substantial reason' for dismissal. And, given both the employer's attempts then to secure more detailed information and its holding of a hearing with the claimant, the CA confirmed that the dismissal was fair, even though the process and outcome might not have fully satisfied the 'reasonableness' test for a misconduct/disciplinary dismissal. This echoed the slightly earlier ruling of the EAT, in Tubbenden Primary School v Sylvester, which emphasised the importance of the immediate history preceding a 'trust and confidence' dismissal and talked of a 'clear analogy to a dismissal for conduct'.

Meanwhile, in Jesudason v Alder Hey Children's Foundation Trust, the High Court, in granting an injunction against the Trust, effectively dismissed 'loss of trust and confidence' as a basis for departing from the normal 'conduct and capability' procedure and dismissing an alleged whistleblower because of a supposed breakdown in relationships with his colleagues. Mr Jesudason's whistleblowing claim and the correct process to be followed with him are matters for a subsequent hearing. But this decision again illustrates the reluctance of the courts to accept, without some substance, an employer's proceeding to dismiss by relying on, in the words of Mr Jesudason's counsel: 'the classic break-up line, "it's not you, it's me".'


Challenging stereotypes on redundancy

A general change in terms and conditions has always been within the definition of 'redundancy' for 'collective' consultation with employees' representatives. But, in individual employment law, does a dismissal resulting from such an initiative, rather than from a reduction in headcount, amount to one for 'redundancy' (so that the employee is eligible for a statutory redundancy payment)? According to the EAT in Packman v Fauchon, it often will. Partly because of a downturn in business, Packman decided to reduce Ms Fauchon's hours. She refused to agree to the change and was dismissed. Although it was never part of Packman's plan to eliminate Ms Fauchon's role, the dismissal was found to be for redundancy – its ultimate cause was the reduction in the company's requirement for employees to do 'work of a particular kind' (book-keeping). Of course, there will be situations where a change in terms is not for redundancy – either because it is driven by considerations pertaining to the individual (such as capability) or because, although it is more widespread, it arises from factors other than diminishing workload. But the message of this case is that employers will often be liable for a redundancy payment.


Getting more relaxed about redundancy selection

Much is spoken or written about the need for redundancy selection criteria to be 'objective'. And this shorthand has become so enshrined as to become a mantra, and one which can lead managers to question whether their knowledge and experience of employees is somehow invalid or tainted. So, the rulings of the EAT in Mitchells of Lancaster v Tattersall and Nicholls v Rockwell Automation are welcome. In Mitchell, where a redundancy in the senior management team was effected by considering which specific post could be eliminated with the least disruption or collateral damage to ongoing business, the dismissal was fair. The EAT commented that the key was not whether a criterion was 'subjective' or 'objective', but whether it could be assessed in a 'dispassionate or objective way'. It expressed something close to distaste for selection processes that were confined to hard data and 'box-ticking'. In Nicholls, the EAT confirmed this approach and, further, counselled against a tribunal's detailed examination of an employer's scoring of employees unless there was a serious doubt about the employer's motives.


Whose loss?

In Fox v British Airways, Mr Fox was dismissed and, in accordance with his terms and conditions, the death-in-service benefit to which he had been entitled stopped immediately. He died a few days later. His estate brought a claim of unfair dismissal, which was upheld. The estate sought compensation for the loss of the benefit. The argument against its claim was that the loss, admittedly caused by the (unfair) dismissal, was not 'sustained by [Mr Fox]' himself (as the statutory words suggest is necessary) but by his beneficiaries. The EAT preferred the alternative analysis that, but for the unfair dismissal, Mr Fox would have been in employment and covered by the benefit at the date of his death. On the date it occurred, that unfair dismissal caused him to lose the coverage of the scheme. The fact that the proceeds, by definition, would have gone to his estate was irrelevant.


Umbrella protection for a rainy day

In some sectors, 'zero hours' contracts, with an explicit absence of any obligation on the employer to provide work and an apparent freedom for the workers to work for other employers, are well-known. In these circumstances, is there an over-arching or 'umbrella' contract of employment that extends beyond the specific times when work is done and so allows the individual to accrue continuous service and enforce employment-related rights?

For the care sector, the EAT, in Pulse Healthcare v Carewatch Care & Others, has given an affirmative answer. It held that the reality of the relationship was that the carers were obliged personally to carry out work that was offered. Fundamentally, the nature of the critical care undertaken by Carewatch was very challenging (24-hour cover, spread across shifts involving 15 carers, in the home of a severely disabled client) and it was not credible that it could be provided by ad hoc arrangements of the type that the written agreement sought to portray. This is far from the first decision of this nature. But it is a contemporary one in a very large sector where the practice of 'zero hours' or 'bank' arrangements is commonplace. It demands serious re-appraisal of that practice and consideration of whether it is now necessary for employers to put in place for casual workers safeguards and procedures that are at least analogous to those applied for 'ordinary' employees.

If you would like to discuss this or any other issue facing your organisation please speak to your usual contact at Collinson Grant or Richard Hendry 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.