UK: Employment Essentials: March 2017's Top 5

Gowling WLG's employment, labour & equalities experts bring you the latest top five employment law developments that may affect your business - what they are, and what you can do about them.

  1. The controversy over headscarves

It was difficult not to be aware of the Court of Justice of the European Union's (CJEU) first judgments on religious discrimination. Press reports appeared on just about every news outlet, with some boldly stating 'Court holds employer headscarf ban not discriminatory'. This rather simplistic statement is not only too simple but actually misleading.

Yes, the CJEU in the cases of Achbita v G4S Secure Solutions and Bougnaoui v Micropole Univers, found the prohibition on wearing an Islamic headscarf, which arises from an internal rule of a private undertaking prohibiting the visible wearing of any political, philosophical or religious sign in the workplace, does not constitute direct religious discrimination. BUT, such a prohibition may constitute indirect religious discrimination unless it is objectively justified by a legitimate aim.

If there is no such internal rule and the employer relies on a customer's objections to being served by an employee who wears an Islamic headscarf as a reason to dismiss that employee, such treatment is discriminatory and cannot be defended on the basis of a 'genuine and determining occupational requirement'.

In the case of Ms Achbita, she was employed by G4S as a receptionist in 2003. G4S employees in Belgium are not allowed to wear any religious, political or philosophical symbols while on duty. Initially, this prohibition was an unwritten company rule, but in June 2006 G4S decided it was to be included in the G4S employee code of conduct. In April 2006, Ms Achbita announced that, in future, she intended to wear a headscarf during working hours for religious reasons. She had previously worn her headscarf outside working hours. On 12 June 2006, Ms Achbita was dismissed, owing to her refusal to abide by the company's dress code by removing the headscarf.

It is not surprising that the CJEU concluded that the case did not meet the criteria for direct discrimination but was capable of constituting indirect discrimination. The interesting comments relate to justification.

The first question is was there a legitimate aim? The legitimate aim of G4S in wishing to show ideological and religious neutrality to its customers was accepted fairly easily by the Court. The Court held that "an employer's wish to protect an image of neutrality towards customers relates to the freedom to conduct business...and [is], in principle, legitimate, notably where the employer involves in its pursuit of that aim only those workers who are required to come into contact with the employer's customers."

The second, more tricky, question of proportionality must then be considered. Was it appropriate and necessary for the employer to impose this policy. The considerations which the national court will have to consider are the size of the headscarf, what the employer does, what role the employee has within that business and also whether the business could achieve its legitimate aim in a less discriminatory way.

The decision builds on the conclusion of the European Court of Human Rights (EctHR) in Eweida v British Airways on legitimate aim, namely BA's right to uphold its corporate image. However, it should also be borne in mind that the EctHR found in Eweida that, despite there being a legitimate aim, BA's policy was not objectively justified. Employers should not take this decision as permission to ban headscarves as ultimately the arguments about whether such a measure would be appropriate and necessary are finely balanced depending on the facts of each case.

In practice is there anything now that employers should be doing proactively to deal with these cases?

These cases are a good trigger for businesses to consider their dress codes in light of their ethos, their client base, and what are staff doing? If you have staff who are working lifting, there are health and safety concerns. If they are lifting people in hospitals or care homes, if they are working on construction sites you can see there may be a safety element (Chaplin v Royal Devon and Exeter NHS Foundation Trust). Equally, if they are working in a teaching environment or there is a need to communicate using facial communication, as well as vocal communication, you can see how it may be easier to justify having limits on any items that obscure the face (Azmi v Kirklees Metropolitan Borough Council) but that is not the case, of course, with a headscarf.

For more, see our podcast ' Dress codes and religious discrimination in the workplace - Understanding the issues' and blog post ' The headscarf rulings - some more personal reflections'

  1. Disability discrimination: guidance long term absence dismissal

In O'Brien v Bolton St Catherine's Academy, the Court of Appeal confirmed that it was open to the Tribunal to hold that it was disproportionate/unreasonable for the school to disregard fresh evidence presented at the internal appeal hearing about when a teacher might be fit to return without at least a further assessment by its own occupational health advisers, even where the fresh evidence was, at best, "not entirely satisfactory".

In this case, a senior ICT teacher was assaulted by a pupil at school in March 2011. Although she was not seriously injured, she was unhappy with the school's response and after some further incidents she went off sick in December 2011 with stress at work (subsequently also diagnosed as anxiety, depression and post-traumatic stress disorder). The school decided to dismiss the teacher in January 2013 after she had been off sick for over 12 months and had no fixed date of return. She lodged an internal appeal.

At the internal appeal in April 2013 she produced some questionable evidence that she was now fit to return to work. As the appeal panel was not satisfied that this fresh evidence really established that she was fit for work, it rejected her appeal and confirmed the dismissal.

Mrs O'Brien won her claim of ordinary unfair dismissal. The tribunal found her dismissal was disproportionate, essentially because (a) the school had adduced no satisfactory evidence about the adverse impact which her continuing absence was having on the running of the school and (b) that in the absence of such evidence, it was reasonable to wait "a little longer" to see if she would be able to return to work, particularly in the light of the "encouraging evidence" available at the internal appeal hearing.

This decision was overturned by the Employment Appeal Tribunal (EAT). The EAT considered that the tribunal should have used its experience and common sense that long-term absence of a senior employee with teaching and leadership roles was bound to have an adverse impact on the school, including the additional expense of paying for cover. In addition, the so-called "encouraging evidence" available at the internal appeal hearing as to when she could return was at best highly questionable. Mrs O'Brien in turn appealed to the Court of Appeal.

The Court of Appeal allowed Mrs O'Brien's appeal by majority. It did agree with the EAT's view that the tribunal's criticism of the absence of any detailed evidence of the impact of the claimant's absence was contrary to common sense. Nevertheless, at the time of the internal appeal, she had produced some evidence that she was fit to return to work. Acknowledging the facts of this case were "near the borderline" as the evidence produced was "not entirely satisfactory" (the dissenting judge referred to the new evidence as "demonstrably half-baked" and "entirely unsatisfactory"!), nevertheless, the Court of Appeal, held it was open to the Tribunal to hold that it was disproportionate/unreasonable for the school to disregard evidence about when Mrs O'Brien might be fit to return without at least a further assessment by its own occupational health advisers.

Employers should be aware that where an employee has been off sick for a long time, even questionable evidence that the employee will be able to return to work soon should be fully investigated before making the decision to dismiss.

This judgment is an interesting example of a case involving a long-term sickness dismissal in which both unfair dismissal and discrimination arising from a disability were claimed. On the two relevant statutory tests of reasonableness (unfair dismissal) and proportionality (discrimination), the Court of Appeal noted that although the language in which the two tests is expressed is different, it would be a pity if there was any 'real distinction' between them and there is no reason why different standards should apply.

  1. TUPE: Determining the principal purpose of an organised grouping

Service provision changes (SPC) were intended to make life simpler for those dealing with TUPE transfers. To establish a SPC transfer there must be an "organised grouping of employees situated in Great Britain that has as its principal purpose the carrying out of the relevant activities on behalf of the client". A question mark often arises where the outgoing contractor received the majority of its work from one major client.

Back in 2012 in Eddie Stobart Ltd v Moreman and others, the EAT held that, to constitute an "organised grouping", it is not enough that employees carry out the majority of their work for a particular client. Rather, employees must be organised by reference to the requirements of the client and be identifiable as members of that client's team. Chance or happenstance is irrelevant when considering whether the group of employees is dedicated to a particular client. A stream of cases then flowed confirming this principle.

We now have guidance on the "as its principal purpose" part of the definition. In Tees Esk & Wear Valleys NHS Foundation Trust v Harland 7 ors (1) and Danshell Healthcare Ltd (2), a team of 11 employees were designated to the care of a severely disabled patient who required four to one care. As the patient's condition dramatically improved, his care needs reduced to one to one. Those assigned to his care increasingly also carried out caring duties for other patients. When his care was transferred to a new care provider did all 11 members of the "organised grouping" transfer to the new provider?

The EAT said no. Determination of "principal purpose" requires the tribunal to answer the question: what did the organised grouping have as its principal purpose immediately before the service provision change? If the grouping comprises far too many employees than would be necessary for the activities in question, that might suggest either that not all the staff concerned were in fact assigned to it or that the real purpose behind the organisation of the group was other than the carrying out of the relevant activities for the client.

It is not simply the carrying out of the activities that means that the existence of the organised grouping meets the relevant condition; the carrying out of those activities has to be the principal purpose of that grouping, whether or not it is in fact carrying them out at any particular time. The principal purpose may change over time: the intended purpose at the time the "organised grouping" was formed was irrelevant, it is the principal purpose immediately before the transfer that counts.

  1. A changing industrial relations landscape

We began this month with the majority of the provisions of the controversial Trade Union Act 2016 coming into force (see last month's Employment Essentials and our podcast on the new rules and pitfalls for trade unions and industrial action). Despite the new tougher measures coming into force, a number of recent cases show that unions are still making their presence felt and are prepared to resort to legal challenges where they feel their collective bargaining rights are being undermined. See our alert ' The fall and rise of union power?' for more.

  1. Annual increases to rates and limits

Finally, here are the increases to rates and limits that are set to come into effect in April.

1 April: The National Minimum Wage:

  • Workers aged 25+ (Living wage) increases to £7.50 (currently £7.20)
  • Workers aged 21 to 24 increases to £7.05 (currently £6.95)
  • Workers aged 18 to 20 increases to £5.60 (currently £5.55)
  • Workers aged 16 to 17 increases to £4.05 (currently £4.00)

2 April: Statutory maternity, paternity, adoption and shared parental pay:

  • Increases to £140.98 per week (currently £139.58)

6 April: Statutory Sick Pay:

  • Increases to £89.35 per week (currently £88.45)

6 April: Tribunal compensation rates:

  • Limit on a week's pay £489 (currently £479)
  • Unfair dismissal basic award or statutory redundancy pay max £14,670 (currently £14,370)
  • Unfair dismissal compensatory award maximum is the lower of £80,541 (currently £78,962) or 52 weeks' pay

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