UK: Round-Up of Employment Law Developments: May 2003

Last Updated: 30 May 2003

This article includes short summaries of the following developments:

  • UK statutory claims by employees working abroad – the plot thickens
  • Reduction in number of hours not redundancy
  • Liability for disability discrimination by third parties
  • Discrimination by employment agencies
  • Unfair dismissal - compensation for personal injury/injury to feelings
  • Short summaries of other cases


Our March update reported the EAT case of Lawson v Serco, which held that employees working overseas can bring an unfair dismissal claim here provided their employer is registered or carries on business in England or Wales. This month another EAT reached a rather different conclusion.

In Bryant v The Foreign & Commonwealth Office, B was a civil servant working in Italy for the UK Government. She was employed on local terms and conditions, paid in Italy and her contract was subject to Italian law. She did not argue along the lines of Lawson v Serco (which had yet to be decided), instead claiming that her position as an employee unable to sue her employer abroad due to diplomatic immunity was exceptional and should justify permitting her to bring an unfair dismissal claim in England. The EAT rejected this argument, as it was not possible to construe the legislation to include a wholly new provision in relation to diplomatic staff.

More interestingly for employers with staff overseas, the EAT thought B was correct in not seeking to run the Lawson argument. In the EAT's view, an employee with no connection to England & Wales other than the fact that her employer resides or carries on business here should not be eligible to claim unfair dismissal here. It reasoned that statutes do not ordinarily have extra-territorial effect unless they expressly provide for it, particularly in relation to a statutory right, such as unfair dismissal, which does not arise out of common law or out of a right which is necessarily universally applied in all countries. The EAT did not expand on what degree of connection with England/Wales would be sufficient to permit a claim.

As the EAT could not technically overrule Lawson, it is now open to tribunals to choose which decision they prefer. The EAT is due to consider the issue again in the near future, in Jackson v Ghost Ltd, and we also understand that Lawson and Bryant have been joined for an appeal to the Court of Appeal, so hopefully this will provide some much-needed clarity on this issue in the near future.


The EAT has held that where the number of employees remains the same, but the number of hours or weeks each works is reduced, this is a business reorganisation and not a "redundancy" for statutory purposes.

In Aylward v Glamorgan Holiday Home Ltd, the employer decided to close the holiday home it ran for 10 weeks out of each year, so that it only required its staff 42 weeks per year rather than 52. Some employees refused to accept the change in terms and were dismissed. The EAT upheld the tribunal's decision that this situation did not amount to a "redundancy", as there was no reduction in the number of employees required. The relevant definition of "redundancy" is a reduction in the need "for employees to carry out work of a particular kind", and there have been conflicting views as to whether part-time work can be seen as of a different kind to full-time work. This decision suggests that it cannot, so that a change from one full-time employee to one part-time employee would not be a redundancy situation, as the number of employees remains constant even though their output in terms of hours is reduced. Of course, in any event an employer must still apply a fair procedure in carrying out such a reorganisation but, on the basis of this decision, the employer would not be obliged to make statutory redundancy payments.


The EAT has confirmed that, as for sex and race discrimination, an employer can be liable for disability discrimination by non-employees over whom he has some degree of control.

It is well established that employers can be liable for acts of sex or race discrimination by third parties where the employer could, by the application of good employment practice, have prevented the harassment or reduced the extent of it (Burton v De Vere). It is not necessary for the employee to show that the failure to apply good employment practice was itself on gender/racial grounds. In a case this month, Ree v Redrow Homes, the EAT confirmed that the same applies to acts of disability discrimination. It felt that the Disability Discrimination Act 1995 should be given a purposive construction so that as far as possible the sex, race and disability legislation moved in harmony. The employer's argument, that the different wording of the Disability Discrimination Act 1995 required the employee to show that the failure to apply good practices was for a reason relating to disability, was rejected, although leave to appeal was granted.

Employers therefore need to be alive to the possibility of discrimination from third parties with whom a disabled employee works. Employers should consider instructing managers to be on the look out for such conduct and to deal with it appropriately if it arises; it may also be prudent in some cases to highlight the issue of discrimination with the third parties themselves.


The EAT has held that agency workers have rights not to be discriminated against by their agencies on the grounds of their disability.

The Disability Discrimination Act 1995 applies to protect those who have a contract of service or apprenticeship or a contract "personally to do any work" with an employer (as does the Sex Discrimination Act 1975 and the Race Relations Act 1976). The EAT in Burton v Higham (trading as Ace Appointments) held that agency workers' contracts with their agency fell within the definition of a contract "personally to do any work". The fact that the work was being performed for the client rather than the employer agency was immaterial.

The case highlights the fact that agency workers are entitled to protection from sex, race or disability discrimination by their agency, as well as by the client for whom they work (under the provisions on discrimination against contract workers). This may be particularly significant in relation to disability discrimination, given the duty to make reasonable adjustments. For example, it may well be "reasonable" to require an agency to provide a disabled agency worker with necessary equipment to enable him to work, which he can then take to each job, when it may not be reasonable to require each individual client to provide it.


The EAT has held that tribunals cannot award damages for personal injury or injury to feelings arising out of the fact or manner of a dismissal as compensation for unfair dismissal, notwithstanding obiter comments of the House of Lords.

The transcript of the decision in Dunnachie v Kingston upon Hull City Council is not yet publicly available, but it appears that the EAT has held that the obiter comments of the House of Lords in Johnson v Unisys do not alter the previously established law that employees cannot recover damages for non-economic loss in an unfair dismissal claim. Leave has been given to appeal to the Court of Appeal.

Of course the House of Lords' obiter view on this issue was part of its rationale for refusing to allow employees to recover damages for psychiatric injury or hurt feelings due to the fact or manner of dismissal in a common law action for breach of contract or negligence. Employees can bring common law claims to recover non-economic loss in relation to action short of dismissal, although this inevitably gives rise to difficulties in drawing the line between dismissal and pre-dismissal disciplinary action (an issue that is to be considered by the House of Lords in Eastwood v Magnox later this year). As a result of this latest decision, a change of heart by the House of Lords or Parliamentary intervention will be needed if non-economic loss due to dismissal itself is to be recoverable.

Short summaries of other cases

Essa v Laing – the EAT held that a victim of discrimination can recover damages for all loss caused by an act of discrimination, whether or not that loss is reasonably foreseeable. As a result, loss resulting from a nervous breakdown caused by a single act of discriminatory abuse is recoverable, even though such an extreme reaction could not reasonably have been foreseen. A more detailed discussion of this case and of the different approach applied in awarding damages for stress at common law is available here.

Nelson v Carillion Services Ltd - the Court of Appeal confirmed that the burden of proving disparate impact in equal pay indirect discrimination claims remains with the employee. This is so even though the Equal Pay Act 1970 provides that, if a comparator is paid more than the complainant, it is for the employer to establish that the difference was genuinely due to a factor which is material and not directly or indirectly sexually discriminatory. The Court held that, in relation to indirect discrimination, it is for the complainant to prove disproportionate adverse impact and only then does the burden shift to the employer to establish objective justification.

Croft v Broadstairs & St Peter's Town - the Court of Appeal held that an employer had not breached its duty of care in giving an unfounded disciplinary warning to an employee whom it knew to have been receiving counselling, which lead to her suffering a breakdown. The simple knowledge that an employee had attended counselling did not in itself mean that there was knowledge she was psychiatrically vulnerable. In the absence of knowledge of such vulnerability, employers were entitled to expect ordinary robustness in an employee in disciplinary matters.

Thanet District Council v Websper – the EAT held that, where there was medical evidence that an employee with work-related stress could no longer work in the same division, an employer's implied duty to safeguard an employee's health and safety required it to look for alternative work outside the division. The fact that an employee is not "disabled" within the Disability Discrimination Act 1995, and therefore cannot rely on the statutory "duty to make reasonable adjustments", does not mean that an employer can simply decide not to consider adjustments. A failure to do so could amount to a breach of contract as in this case, and might also found a claim for unfair dismissal.

Landeshauptstadt Kiel v Norbert Jaeger - the Advocate-General of the European Court of Justice has given his opinion that time spent on call at an employer's premises remains working time for the purposes of the Working Time Directive, even where the employee is permitted to sleep during that time. It remains to be seen whether the European Court of Justice will follow this opinion.

Article by Anna Henderson

© Herbert Smith 2003

The content of this article does not constitute legal advice and should not be relied on as such. Specific advice should be sought about your specific circumstances.

For more information on this or other Herbert Smith publications, please email us.

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