UK: Employment Law Bulletin - June 2011

Last Updated: 23 August 2011
Article by Thomas Eggar's Employment Team


The tabloids proclaimed their outrage last month when the Court of Appeal held that Haringey Council had not been entitled to dismiss Sharon Shoesmith, and stated that compensation would be payable to her (unless a settlement is reached). Sharon Shoesmith was dismissed as Director of Children's Services in Haringey following the furore after the death of 'Baby P'.

The Court of Appeal said that because Haringey was a public sector employer, and because Sharon Shoesmith was in the unusual position of holding her post under a statute as well as under an employment contract, it was able to decide whether Haringey's decision process was reasonable or not. It accepted that her dismissal had been procedurally flawed, because she was given no opportunity to comment on the allegations against her. Whilst the newspapers have disagreed with the decision, it is unlikely to affect private sector employers or, indeed, the vast majority of public sector employees. From a legal point of view, it is a storm in a teacup.

Perhaps unusually, the courts have handed down two pro-employer decisions – the first ensuring that tribunals use common sense when making awards for future losses, the second making it clear that employers have a wide discretion when selecting employees for redundancy. We discuss both cases below.

Flexible, family friendly employment?

In line with the government's other proposals for the reform of employment tribunals and the resolution of workplace disputes, the Department for Business, Industry and Skills has launched a new consultation called 'Consultation on Modern Workplaces'. The proposals include:

  • an extension in the ability to request flexible working - this would extend the right to request flexible working to all employees, not just those with children under 17 (or 18 for parents of disabled children); it would allow employers to prioritise competing requests; allow more temporary changes to terms and conditions as well as permitting more than one request in a 12 month period. This will not be a right to work flexibly - requests could still be turned down by employers.
  • Flexible parental leave to be introduced in April 2015 - this would keep 18 weeks' maternity leave for mothers to be taken in a continuous block around the time of the birth and would retain the current statutory maternity pay and maternity allowance arrangements and two week's paternity pay and leave. The remaining maternity leave would be reclassified as 'parental leave' and could be taken by either parent or both. There is also a proposal to allow employers and employees to agree for parental leave to be taken in blocks, or on a part-time basis. The government seeks employers' views on extending the age limit for taking unpaid parental leave beyond the existing limit of the child's fifth birthday and giving fathers the right to unpaid leave to attend antenatal appointments.
  • An amendment to the Working Time Regulations to comply with European law - this will require annual leave to be carried over in situations where annual leave has not been taken because of sick/maternity/parental leave and where the leave cannot be rescheduled in the current leave year. The proposal limits carried-over holiday for sickness absence to the four weeks' compulsory paid leave under European holiday laws (i.e. the employee would not be able to carry over the extra 1.6 weeks they receive, above the European entitlement, under the UK holiday laws). The government is also considering proposals to allow employers to 'buy out' that extra 1.6 weeks or to require employees to defer that leave until the first six months of the following leave year if this can be justified in terms of business need.
  • Equal pay - in situations where an employer is found by an employment tribunal to have discriminated against women in contractual or non contractual pay cases the tribunal would have the power to order the employer to carry out an equal pay audit.

See the consultation here. The consultation runs until 8 August 2011. We will keep you informed of its outcome.

Compensation for future losses

This is the first of the two cases this month which help employers. In Wardle v Credit Agricole Corporate and Investment, the Court of Appeal stated that if a tribunal finds that there is a probability that an employee will find a job equivalent to the one he has lost by a certain date, losses after that date should not be taken into account when calculating future losses. It found that the employment tribunal had been wrong to conclude that it had to award compensation up to the point when it could be sure that Mr Wardle, the employee, would find another job on the same terms.

In this case, the tribunal had found that Mr Wardle had a 70% chance of returning to an equivalent role by the end of 2011. The Court of Appeal found that the compensation should have ceased at that stage.

The court recognised that as such the tribunal's predictions could be inaccurate but that it was the best that could be done to achieve finality.

Tribunal cannot divide liability for damages in discrimination cases

The Employment Appeal Tribunal has handed down judgment in London Borough of Hackney v Sivanandan & Others. The question for the EAT was whether tribunals can divide liability for damages where more than one party has been found liable for an act of discrimination.

The EAT decided that tribunals have no power to divide liability between respondents.

In this case, the claimant had brought a race discrimination claim against a number of respondents including: a company which had not shortlisted her for a job; the London Borough of Hackney, which funded it; the company's director; and its executive committee. An employment tribunal upheld the claims and found that the claimant had been victimised by all of the respondents, either because they had aided the discrimination or because they were responsible for the potential employer.

When deciding compensation, it decided that the total amount (over Ł421,000) could be collected from any one of the respondents or from any of them in different amounts until the total debt was paid. Hackney (which had the biggest pockets) appealed to the EAT on the ground that the tribunal should have divided the amount of compensation amongst the respondents. The EAT rejected the appeal and stated that there cannot be a division of compensation; all the respondents were liable to the claimant for the full amount (provided she did not receive the full amount more than once).

Can a person working illegally bring a race discrimination claim?

The EAT has given judgment in a case with unusual facts which has restated the law relating to illegality in the employment context. The case of Allen v Hounga is authority for the proposition that where an illegal immigrant's claim is not inextricably bound up or linked with illegal conduct, it can proceed before the employment tribunal.

Miss Hounga was employed as a domestic servant by Mrs Allen. She was brought over from Nigeria by Mrs Allen to live and work in the Allen family home. She had acted dishonestly in order to acquire a visa and she stayed in the UK illegally after the expiry of her visa. Whilst employed, she was the victim of serious physical abuse by Mrs Allen and was dismissed in traumatic circumstances. The Employment Tribunal found that since she had known she had no right to work, she could not bring her complaints relating to her contract of employment (unfair dismissal, breach of contract, unpaid wages) as the contract was illegal but that her complaint of race discrimination could be heard and was successful.

When the matter came before the EAT, the EAT confirmed the decision of the employment tribunal. It found that both parties had known of the illegality and that therefore the contract of employment was illegal. It refused to find that if an employee does not have the legal right to work in the UK he or she cannot bring a discrimination claim. In this case, Mrs Allen's behaviour in dismissing the Miss Hounga was not linked to the illegal conduct and it was therefore not affected by the illegality.

Guidance on agency workers published

BIS has published its final guidance on the Agency Workers Regulations 2010, which come into force on 1 October 2011.

As we reported previously, the Regulations will mean that agency workers will have the same rights to basic employment and working conditions (e.g. pay, rest breaks, duration of working time) as those recruited directly by the hirer, provided that have worked for 12 weeks.

The guidance can be found here. This is an important area where you need to review your working practices, as these changes are going to be well publicised later this year and agency workers will have little disincentive to bring a claim.

Justifying indirect discrimination on the grounds of cost

In cases of indirect discrimination, when deciding whether a discriminatory practice can be justified, tribunals balance the effects of the discriminatory practice on the worker with the employer's legitimate business needs.

In Cherfi v G4S Security, the Employment Appeal Tribunal upheld the decision of the employment tribunal that the practice of not allowing a security guard employed at a site to leave the site to attend Friday prayers at a local mosque was properly justified. The client owner of the site required a specific number of security guards to be on site during operating hours and allowing Mr Cherfi to leave would have been a breach of the employer's contract with the owner of the site.

Significantly, the EAT said that although it was not the case here, it might be possible for indirect discrimination to be justified on the grounds of cost alone. Whether cost can justify indirect discrimination is a grey area which the European Court of Justice is due to give a (hopefully) definitive ruling on, probably next year.

The contents of this article are intended as guidelines for clients and other readers. It is not a substitute for considered advice on specific issues. Consequently, we cannot accept any responsibility for this information or for any errors or omissions.

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