UK: Employment Briefing - July 2010

Last Updated: 30 September 2010
Article by Brian Gegg, Jesper Christensen and Marc Meryon

Originally published in July 2010

Unlimited Loss of Earnings Following Breach of Disciplinary Procedure

In Edwards v Chesterfield Royal Hospital NHS Foundation Trust the Court of Appeal overturned an EAT's decision that damages were limited to notice and a notional period for a disciplinary process where a contractual procedure was not adhered to.

Mr Edwards was a consultant trauma and orthopaedic surgeon who faced charges of professional and personal misconduct. Under the terms of the Trust's contractual disciplinary procedure the Trust was obliged:

  • To appoint a person with legal qualifications to chair the panel;
  • To appoint as a member of the panel a clinician of the same medical discipline as Mr Edwards;
  • To allow Mr Edwards to be legally represented at the hearing.

Mr Edwards alleged that by failing to observe these contractual requirements the Trust reached a decision (that he was guilty of gross personal and professional misconduct) that it would not have reached had it carried out a proper procedure. He alleged that as a result of those breaches in procedure, the findings against him meant that he would not gain work in his field of expertise again leading to losses of around £3.8 million up to the date of retirement.

The Court of Appeal were asked to consider whether in principle Mr Edwards could pursue such a claim or whether his claim was limited to damages for his notice period and a notional period to compensate him for the time it would have taken to properly go through the disciplinary procedure (the 'Gunton' extension).

The Trust argued that, in line with the decision in Johnson v Unisys Ltd, an employee could not bring a claim for breach of the implied term of trust and confidence for the manner of dismissal. Such a claim should be pursued as an unfair dismissal claim. The Court of Appeal distinguished Johnson by pointing out that that case dealt with implied terms. In Mr Edwards' case, there was an actual breach of a contractual term. If the findings of misconduct resulted from the Trust's breach of contract (failing to properly follow the contractual disciplinary procedure) then the Court of Appeal could see no reason why Mr Edwards could not recover his loss flowing from that breach (subject always to usual contractual principle such as mitigation).

This case should ring alarm bells for employers with detailed disciplinary procedures, particularly where a dismissal resulting from a flawed procedure may significantly affect or prejudice an employee's chances of securing future employment. The individual will of course have to show that properly observing the procedure would be likely to have led to a different outcome (ie that he was not guilty of misconduct) and that the failure to secure other employment resulted from the findings against him.

Inflating a Woman's Redundancy Score when on Maternity Leave was Discriminatory

An employment tribunal has held that the artificial inflation of a woman's score in a redundancy exercise, when she was on maternity leave was discriminatory against a male comparator.

In De Belin v Eversheds Legal Services Ltd, Eversheds decided that redundancies were necessary in their Leeds real estate office. Two associates, Mr De Belin and Ms Reinholz were identified as at risk of redundancy. Both were scored against five redundancy criteria, one of these being 'lock up'. Lock up measures the period of time between the undertaking of a piece of work and receipt of payment. Mr De Belin's lock up for the relevant period gave him 0.5 points. Ms Reinhold was on maternity leave at the relevant time and so no lock up figure was available for her. Eversheds decided to allocate Ms Reinholz the maximum score of 2 for lock up because, they reasoned, to give a different score would be unfair since she was not at work to influence it. This meant that Mr De Belin's total score was 27 and Ms Reinholz's score was 27.5. Mr De Belin, having a lower score than Ms Reinholz, was selected for redundancy.

Mr De Belin's internal appeals failed and he brought a claim for direct discrimination and unfair dismissal. Eversheds argued that Ms Reinholz, being on maternity leave, was entitled to 'special treatment' (section 2(2) Sex Discrimination Act 1975). The tribunal disagreed, finding that Eversheds' inflation of Ms Reinhold's scores overstepped the limits of what was necessary to promote equality of opportunity (as the ECJ in Kalanke decided). The tribunal found that Mr De Belin was entitled to use Ms Reinholz as a comparator and that Eversheds could easily have used different criteria, or applied a different reference period, when making their selection for redundancy. Importantly, the tribunal held that section 2(2) could not be read in such a way as to give women blanket special treatment.

Eversheds are appealing the decision so an EAT decision may shed further light on the interpretation of 'special treatment'.

Without Prejudice Rule Kept in Check

The EAT in Woodward v Santander UK Plc considered the ambit of the without prejudice rule in settlement negotiations.

The without prejudice rule provides that communications which form part of negotiations with a view to reaching a settlement are protected from disclosure. The exceptions to this rule are narrowly defined, namely where there has been perjury, blackmail or other 'unambiguous impropriety'. Ms Woodward claimed that the 'unambiguous impropriety' exception applied where she had repeatedly failed to secure alternative employment after reaching terms of settlement with Santander. She sought to rely on discussions about securing a reference which took place during without prejudice negotiations.

The EAT, upholding the tribunal's decision, found that the without prejudice rule was engaged and that the exception to the rule did not apply on the facts of this case. The EAT underlined that the exception should be interpreted narrowly otherwise a party could comb through the correspondence or discussions to point to equivocal words or actions in support of an inference of discrimination.

12 Month Non Solicitation Clause Too Long

The High Court has ruled in Associated Foreign Exchange Ltd v International Foreign Exchange (UK) Ltd that Mr Abbassi, an account executive who had worked for AFEX and moved to a competitor, IFX , was not bound by a 12 month non solicitation of customers or potential customers clause. The High Court, considering the enforceability of such a clause, took into account Mr Abbassi's lack of seniority and contractual terms, concluding that he was not a key or very senior employee. Further, there was already a six month non-dealing clause in Mr Abbassi's contract of employment preventing Mr Abbassi from dealing with (as opposed to soliciting) customers, and the Court ruled that this offered sufficient protection to AFEX. The Court also noted that foreign currency exchange customers were not particularly loyal and that a period of six months would have offered sufficient protection.

The High Court also found that, even if it had ruled that the 12 month period was enforceable, it would not have extended the protection to potential customers. It pointed out that such protection would only be appropriate where building up a relationship with potential customers was a lengthy and difficult process.

This case underlines the importance of drafting post termination restraints with close regard to the status and type of employee and the nature and cycles of the business. Blanket restrictive covenants are increasingly unlikely to be upheld in court where little thought has gone into tailoring the covenant to suit the circumstances of the employee and the business.

Court of Appeal Overturns High Court in BA Strike Injunction

The Court of Appeal's decision in Unite the Union v British Airways plc, overturning the High Court's ruling that BA had an arguable case that Unite had failed to take reasonable steps to inform its members of the strike ballot result, has now been published.

Under section 231 of the Trade Union and Labour Relations (Consolidation) Act 1992 a trade union must take reasonably necessary steps to ensure that all persons entitled to vote in the strike ballot are informed of certain specified information. If the union fails to satisfy this requirement it loses its immunity against liability in tort (the tort being that of inducing employees to breach their contracts).

Following an earlier unsuccessful ballot, Unite balloted its members in February 2010 to strike in relation to an industrial dispute with BA. A strike took place in March and further talks broke down. Unite announced further strikes under the auspices of the February ballot and BA sought an injunction in the High Court to stop the strikes, arguing that Unite had not complied with section 231. Unite argued that it had taken all steps reasonably necessary to ensure that those entitled to vote in the ballot were informed of the number of votes cast/ individuals answering 'yes' or 'no'/ spoiled voting papers.

The Court of Appeal underlined that it is the Union, not the employers, which must make broad factual judgments about how to comply with s.231 and thereafter for the court to make an objective valuation of the steps taken and the process by which the Union has sought to comply with its obligations and to decide whether or not it has done so. Lord Judge held that if the result of a ballot itself is unaffected by accidental, small scale failures in the process, it is difficult to see why minor failures about the provision of information about the results to Union members should undermine the entire process. Different considerations arise in the context of information to be supplied to the employers.

Further, nothing in s.231 prescribes the method of compliance. Lord Judge concluded that, subject always to reasonableness, the union is not required to prove that literally every eligible member was personally sent his or her own individual report. In his judgment, if the case went to trial, the high probability is that BA would have been able to establish that the s.231 process could have been better but there is a high probability that the union would establish that the process was sufficient.

The court rightly refused to get involved in the merits or otherwise of the BA dispute – these were not of concern in establishing whether Unite had complied with s.231. It is notable however that the majority of the Court of Appeal was reluctant to injunct a strike on a technicality. Lord Judge further commented 'we must all hope for a speedy and fair resolution of this dispute. It must be resolved by negotiation. Legal processes do not constitute mediation'.

And Finally...

Equality Act – Implementation Dates

There is some confusion over the implementation dates for the Equality Act. At the time of writing the Government Equalities Office had removed the implementation dates from the website and a spokeswoman indicated that the dates for implementation may be put back. However, a recent release from the GEO about consultation on questionnaires refers to the bulk of the Act coming into force later this year (as expected). Watch this space...

Fake Fit Notes

Employers, beware! Fake fit notes are circulating for as little as £10. A website has been selling authentic looking replicas and are even selling on a 'buy one, get one free' basis.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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