UK: HR Headlines - London Employment Newsletter

In this issue:

• Compensation for career long loss only appropriate in exceptional circumstances
• Disciplinaries and right to a fair hearing
• The use of surveillance film in disciplinary proceedings
• Employer negligent in making careless and false statements about a former employee

Compensation for career long loss only appropriate in exceptional circumstances

The Court of Appeal has held that when assessing compensation for a discriminatory dismissal, tribunals should award damages only up to the point when it was at least possible that the claimant would find an equivalent job. Only in rare cases where there is no real prospect of the claimant ever obtaining an equivalent job will it be appropriate for tribunals to award career-long compensation.

Key facts

The Claimant brought a race discrimination claim following his unsuccessful application for a promotion. After the employer received the claim the Claimant was called to a meeting on short notice at which he was summarily dismissed. The Claimant successfully brought claims for unfair dismissal and victimisation. The Tribunal assessed the Claimant's loss by reference to the whole of his future career, applying discounts to reflect its findings about the percentage chances of the Claimant (i) leaving his employment in any event and (ii) finding a job with equivalent remuneration by a certain date. The Tribunal also applied the maximum 50% uplift to the award to reflect the employer's failure to comply with the statutory dispute resolution procedures. On appeal the EAT held that the Tribunal should have applied a sliding scale to reflect the increasing likelihood of the Claimant finding a job with equivalent compensation and substituted a 10% uplift for the 50% uplift. Both parties appealed to the Court of Appeal.

The decision

The Court of Appeal held that the tribunal had been wrong to assess the Claimant's losses by reference to the whole of his future career. The tribunal ought to have awarded compensation for future loss only up to the point where there was a better than 50% chance that he would have obtained an equivalent job. It would only be appropriate to assess losses by reference to the whole of a claimant's future career in those rare cases where there is no real prospect of the claimant ever obtaining an equivalent job. The maximum 50% uplift would only be appropriate in very exceptional cases and was not justified in this instance.

What this means for employers

The case is reassuring for employers as it emphasises the rarity of cases where career-long losses will be an appropriate basis for assessing compensation. In most cases the tribunal will be required to make a finding as to when the claimant would be likely to get an equivalent job and award compensation only up to that point. Although the statutory dispute resolution procedures have now been repealed, the principle relating to uplifts applies equally to the tribunal's discretion to award an uplift of up to 25% where an employer has unreasonably failed to follow the ACAS Code of Practice on Disciplinary and Grievance Procedures.

Wardle v Credit Agricole Corporate and Investment Bank [2011] EWCA Civ 545

Disciplinaries and right to a fair hearing

The European Convention on Human Rights provisions on legal representation at internal hearings will only be engaged where the outcome of the proceedings will have a substantial effect on an employee's right to practise their profession. Damage to professional reputation alone will not be sufficient. It was also held that the disciplinary panel need not comprise outside members in order to be independent and impartial.

Key facts

The Claimant, an NHS surgeon, was required to attend a disciplinary hearing following allegations of misconduct, specifically that he had been rude and abusive to fellow staff. The Claimant relied on Article 6 of ECHR on the basis that the hearing could result in his dismissal and damage his professional reputation. He further argued that the disciplinary panel and proposed appeal panel were not independent and impartial so as to comply with Article 6 because they were predominantly made up of members of the NHS Trust (only one of the three disciplinary panel members was from outside the Trust) which he argued would inevitably lead to bias in favour of the Trust.

The decision

The High Court disagreed. There is no general right to reputation and this is not a case in which the effect of the disciplinary proceedings might be to deprive the Claimant of the right to practise his profession. If upheld, the allegations would not themselves prevent him from getting a job elsewhere. Further, even if Article 6 had been engaged, the court stated that it would not have held that the disciplinary panels needed to comprise people external to the Trust in order to comply with the requirement to be independent and impartial.

What this means for employers

The decision in this case is not surprising and follows a number of other recent cases regarding the right to a fair hearing in the context of disciplinary proceedings. Although these cases relate to public sector workers, there are clear parallels between the reasoning in these cases and allegations of serious regulatory breaches in the private sector.

The High Court's comments that the disciplinary panel need not comprise outside members in order to be independent and impartial may give some comfort to employers, particularly small organisations, who find it difficult to identify senior individuals within the organisation to hear a disciplinary or appeal who are genuinely independent/impartial and not aware of the facts surrounding the proceedings.

R (Puri) v Bradford Teaching Hospitals NHS Foundation Trust [2011] EWHC 970

The use of surveillance film in disciplinary proceedings

Where surveillance film is relied upon as evidence of the fairness of an employee's dismissal, footage should be examined by an expert and any investigation should be fairly and thoroughly undertaken.

Key facts

The Claimant was employed by Caterpillar Logistics Services UK as a Warehouse Operative. After suffering an injury in the course of his employment, the Respondent's occupational health doctor accepted that the Claimant was not fit for work as a result. After being advised by occupational health to go to his own GP, the Claimant's sick note was extended. The Respondent's insurers - being suspicious about the accident – arranged for an investigator to follow the Claimant for several days. The resulting footage showed him driving, carrying a small shopping bag, walking his dog and clearing ice from his car. On his return to work, the Claimant attended a meeting to discuss the incident and was suspended on an allegation of gross misconduct for falsely claiming company sick pay. An investigation hearing was held, followed by a disciplinary meeting at which the opinion of the Claimant's GP was heard, having been formed on the basis of a narrative of the footage. The Claimant was dismissed.

The decision

The Claimant alleged that the dismissal was unfair on the basis that the reason for dismissal was not the true and genuine reason and that the investigation had been one-sided and inadequate. The tribunal upheld the claim for unfair dismissal on several grounds. Firstly, it had been the insurance company which had started the procedure, not the Respondent. Secondly, the charge was established before the Claimant was spoken to about his account of the incident. The letter alleging gross misconduct was pre-prepared and handed to the Claimant on his return to work. Thirdly, it was 'completely incomprehensible' that no medical professional had seen the DVD. The decision had been made solely on lay consideration of the evidence. Finally, the advice of the GP who commented on a narrative of the DVD had been 'cherry-picked' by the Respondent and excluded content whereby the doctor praised the Claimant's work absence record and stated that he was genuinely ill.

What this means for employers

The case did not address whether surveillance footage can be used as evidence for a fair dismissal, but rather concentrated on how it could be used legitimately. The employer should ensure that its occupational health doctor, or at least another medical professional, examines the footage in order to provide a valid medical opinion of its contents before any decision is reached. Any investigation should be conducted fairly without any prior conclusions being drawn.

Pacey v Caterpillar Logistics Services (UK) Ltd ET 3501719/10

Employer negligent in making careless and false statements about a former employee

An employer was liable to a former employee when it negligently made false statements to the employee's current employer that were likely to cause damage to the Claimant.

Key facts

The Claimant had recently started a job at the University of Bath as a director of studies, a role requiring him to liaise with and visit Swindon College, his former employer and the Defendant. Shortly after the Claimant's employment commenced the University of Bath received an email from the Defendant's Human Resources Manager stating that the Defendant would be unable to accept the Claimant on its premises. The email stated that the Defendant had concerns over the safeguarding of its students and that there had been serious staff relationship problems during the Claimant's employment. The email was sent several years after the Claimant left the Defendant's employment and was not a reference. As a result of the email the Claimant was dismissed.

The decision

The Claimant brought a claim for negligent misstatement against the Defendant. At the hearing the Claimant produced strong witness evidence which persuaded the Court that the contents of the email were untrue.

The Claimant argued that this was a reference situation (it being established law that an employer providing a reference owes the employee in question a duty to take reasonable care in its preparation) but the Court disagreed. The Court did find, however, that it was fair, just and reasonable to impose a duty of care on the Defendant. The damage the Claimant suffered was "eminently forseeable" and the sending of the email brought about the requisite degree of proximity between the Claimant and the Defendant, despite six years having elapsed since the Claimant had been employed by the Defendant. The duty of care in negligent misstatement claims is usually owed to the recipient, rather than the subject, of the information. In this case, however, the Court held that the Defendant owed the Claimant a duty of care in respect of the email and that it was liable to him.

Whilst the Court felt that the University of Bath had acted unfairly in dismissing the Claimant without further enquiries, the Claimant had less than one year's service and therefore could not claim unfair dismissal.

What this means for employers

Whilst it is already established that an employer owes a duty to take reasonable care when preparing a reference for a former employee, this case imposes a similar duty for statements made other than in references. Most employers already have guidance and procedures in place to ensure that references are appropriate and this should be extended to cover all communications regarding former employees.

McKie v Swindon College [2011] EWHC 469 (QB)

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