Employment Law Newsletter July 2019
The holiday season is upon us and the next instalment of the Flowers v East of England Ambulance Trust saga has arrived from the Court of Appeal. The case involves voluntary overtime and whether it should be included when calculating holiday pay. European law says that holiday pay should be based on 'normal remuneration'. If pay or hours vary, then an employer must look at the previous 12 weeks and pay the average.
In Flowers, the ambulance workers said that two types of overtime should be included in holiday pay: non-guaranteed overtime (when they were required to stay late at the end of a shift) and voluntary overtime. They brought claims based on what their contracts said as well as the provisions of the Working Time Directive. The employment tribunal said non-guaranteed overtime should be included in holiday pay, but voluntary overtime should not. The Employment Appeal Tribunal disagreed and said both should be included.
The Court of Appeal agreed with the EAT. The employees had a contractual right for holiday pay to include overtime. However, the Court said the situation was the same under the Working Time Directive. Voluntary overtime should be included in holiday pay calculations where the overtime is regular enough to be considered part of normal pay. The fact that the overtime is voluntary is irrelevant. If this weren’t the case, workers might be discouraged from taking annual leave which defeats the purpose of the legislation.
This is not the outcome employers wanted but it does not come as a surprise. The Court noted the policy reasons involved. If voluntary overtime were not included in 'normal remuneration', an employer might get around the law by setting low basic hours topped up by significant 'voluntary' overtime'. The judgment included some debate on a case from the Court of Justice of the European Union (Hein) which seems to contradict this position, so we may not have heard the last on this subject.
Non-disclosure agreements (NDAs) in discrimination cases
Settlement agreements are often used to resolve disputes between employer and employee. They usually contain confidentiality or non-disclosure provisions which stop the employee talking about the dispute in future. The Women and Equalities Committee has published a report on NDAs. The Committee is concerned about the widespread use of confidentiality clauses in settling discrimination cases. They note the imbalance of power between employer and employee. They worry that employers use NDAs instead of tackling discrimination head on.
The Committee makes various suggestions to the government about how to tackle the issue, including:
• Requiring employers to investigate all discrimination complaints even if they are settled;
• Extending the time period for bringing some discrimination claims from 3 to 6 months;
• Increasing the value of injury to feelings awards and introducing punitive compensation to encourage employers into doing more to prevent discrimination;
• Making employers pay for the employee's legal advice on settlement agreements even if they don't then sign it;
• Strengthening corporate governance requirements so companies meet their duty to protect employees from discrimination;
• Appointing board level business (not HR) managers to oversee discrimination policies and the use of NDAs in discrimination cases.
NDAs have received some high-profile bad press on the back of the #MeToo movement. Many of these proposals are sensible. Discrimination is bad for business and steps which call it out will benefit businesses in the long run. However, the report fails to recognise that employers are more likely to try their luck in court if the content of settlements is not confidential. The report also glosses over the advantages to employees of avoiding long and traumatic legal proceedings. Let's hope any government changes are not purely policy driven. They must work in practice too.
Disability discrimination – perceived disability
Perception discrimination is where an employer discriminates against an employee because they think the employee has a protected characteristic, such as a disability. Perception discrimination has been considered by the Court of Appeal for the first time in Chief Constable of Norfolk Police v Coffey. A disability is a physical or mental impairment which has a substantial and long-term negative effect on someone's ability to do normal daily activities. A progressive condition can count as a disability before it meets this test if it is likely to have a substantial adverse effect in future.
Ms Coffey was employed by Wiltshire Police as a police constable. She had mild hearing loss. This did not affect her ability to do normal daily activities, including her job. It was not a disability within the meaning of the Equality Act 2010. She applied for a job with Norfolk police but was turned down because of her hearing loss. Norfolk Police were concerned that she would not be able to do the full job in future. The employee brought a claim for direct disability discrimination, saying she had been discriminated against because of perceived disability (her hearing loss). The employment tribunal and Employment Appeal Tribunal upheld her discrimination claim. Norfolk Police appealed to the Court of Appeal.
The Court of Appeal agreed that the employee had been discriminated against. The duties of a police constable are normal daily activities. The employee was already doing the same job elsewhere. Although her hearing fell just below the national guidelines, those guidelines also said that in borderline cases an 'on the job' assessment should be undertaken. She would likely have passed this test as she was already doing the job elsewhere. The employer perceived that her hearing was a progressive condition that would stop her being able to do the job in future and refused to employ her as a result. The employer had discriminated against the employee because of perceived disability.
In this case, the employer failed to follow its own industry guidelines and came a cropper as a result. There are two important lessons to take from this case. The first is to beware making knee jerk judgements about the workplace impact of impairments. The second is to read and follow your own policies and guidelines.
A protected disclosure is when a worker discloses information which they reasonably believe shows some sort of wrongdoing, such as a crime or breach of a legal obligation. The disclosure must be in the public interest, not for personal gain. A person making a protected disclosure is protected from any detriment or dismissal that stems from making those disclosures. In Simpson v Cantor Fitzgerald Europe, the employee was employed as a bond salesman for less than a year. Colleagues found him confrontational and difficult to work with. He made various complaints, including allegations of malpractice but also niggles about work allocation and colleagues. His colleagues got fed up with his constant complaints, poor attitude and bad timekeeping. HR got involved and he was dismissed.
The employee brought an employment tribunal claim, saying he was dismissed because he had blown the whistle on malpractice. He also claimed unpaid commission. The employment tribunal dismissed his claims. The judge described the alleged whistleblowing as cryptic, speculative, over-general and 'a figment of his imagination'. The tribunal felt the employee was motivated by his commission payments rather than any public interest.
The employee appealed, saying the tribunal had made legal errors. He also said the tribunal should have considered some of the alleged disclosures together, rather than considering each separately. He said the tribunal had distinguished too strictly between information (which can form part of a protected disclosure) and mere allegation or query (which cannot). The Employment Appeal Tribunal disagreed. Communications can be linked to create an overall protected disclosure, but that didn’t apply here. The employee didn't tell the tribunal that any were linked, and none appeared to be linked. The EAT also said that queries and allegation can in theory form part of a protected disclosure, but they must contain facts which point towards the relevant wrongdoing. In the employee's case, they did not.
Employers can take some comfort from this case. The employee did not have the necessary continuous service to bring a straightforward unfair dismissal claim. As many aggrieved employees do, he brought a claim which had no minimum service requirement (such as whistleblowing) to gain leverage against the employer in his commission claim. This case shows that mere allegation, without any factual basis, will not be enough. Neither will steps taken in self-interest, rather than the public interest.
If an employee wins their unfair dismissal claim, a tribunal can order compensation. They also have the power to order reinstatement (to the old job) or reengagement (to a comparable job). A tribunal might not make such an order if it is not 'practicable', for example if the relationship between employer and employee has broken down completely. But what happens when a tribunal orders reengagement but the employer refuses - can the employee force the employer to reengage them?
The Court of Appeal looked at this issue recently in McKenzie v University of Cambridge. The employee was a law lecturer. She was unfairly dismissed and sought reengagement, which the tribunal ordered. The employer refused and paid her compensation instead. The employee brought a claim in the High Court, asking them to force the employer to reengage her. The matter ended up in the Court of Appeal.
The Court of Appeal said that the employee had no right to ask the High Court to force the employer to reengage her. Unfair dismissal claims must be dealt with exclusively in the employment tribunal, not other courts. It was not possible to force an employer to reengage an employee anyway. If an order for reengagement (or reinstatement) is made, but the employer refuses, the remedy is an 'additional award' of between 26 and 52 weeks' pay. The University had already paid the employee that sum, without any need for her to return to the tribunal to enforce that. The matter was therefore closed.
This judgment is good news for employers who are ordered to reinstate or reengage a potentially troublesome employee. An employee cannot insist on that happening, but it might cost the employer extra money. It's worth noting that the additional award replaces the normal compensation for unfair dismissal, so the employee does not benefit from double recovery.
Indirect age discrimination is where a policy that is applied to all employees negatively affects people in a certain age group. An indirectly discriminatory policy can be justified if it is a proportionate means of achieving a legitimate aim. A legitimate aim of saving costs, on its own, is not enough to justify a discriminatory policy.
In Heskett v Secretary of State for Justice, the employee was a probation officer. Due to the financial crisis, the government introduced a policy limiting public sector pay increases. Probation officers' pay scales were changed so that employees received only a single pay increment each year instead of three increments. This meant that younger workers took longer to get to the top of the pay scale and were paid less than their older colleagues.
The employment tribunal found that the policy was indirectly discriminatory against younger employees but could be justified. The employer had legitimate aims: to reward loyalty and experience, retain some incentive, avoid redundancies and preserve accrued rights. The employer wasn't relying on costs alone (which wouldn’t be justified), but about an absence of means because of government funding cuts. The changes to the pay policy were proportionate means of achieving the aim of breaking even.
This case is a public sector case but provides an interesting angle on the 'cost alone' rule. The 'absence of means' principle might not translate so easily into the private sector, where businesses look to operate at a profit rather than break even. Justifying an indirectly discriminatory policy will still depend on whether there is more at stake than simply cost savings. And any cost-driven approach must be proportionate.
Discrimination - compensation
An employment tribunal can award compensation for 'injury to feelings' if an employee wins their discrimination claim. It is designed to compensate an employee for the upset and anxiety that the discrimination caused. The Employment Appeal Tribunal has recently looked at whether this award can be reduced for the employee's contributory negligence.
In First Great Western v Waiyego, the employee brought various discrimination claims against her employer. She won only two of them. One related to a failure to provide a CBT course as a reasonable adjustment for her disability. She was awarded compensation including injury to feelings. The employer appealed to the Employment Appeal Tribunal. The employer said that the compensation should be reduced because the employee 'contributed' to the CBT failure (and therefore the damage) by not providing details of her previous CBT therapist.
The EAT said that reducing compensation for discrimination for contributory negligence would happen rarely, if ever. They said that it would be difficult to apply a principle which dealt with 'fault' to a claim which can occur without fault – some discrimination is unconscious rather than deliberate. If lawmakers had intended for contributory fault to be used in discrimination claims, the concept would have been included in the discrimination legislation (as it is in the unfair dismissal provisions). The EAT felt it was a dangerous game to suppose that a victim of discrimination, for example sexual harassment, might have brought that situation on themselves. If an employee has 'contributed' in some way to the damage they have suffered, that should be dealt with as a failure to mitigate (minimise) loss rather than contributory negligence.
This is a sensible decision. The potential difficulty in cases such as harassment is all too clear. In this case, the EAT also rejected the employee's request to impose an additional penalty on the employer for deliberate and repeated employment law breaches, as well as her claim for aggravated damages. In relation to the latter, it said it lacked enthusiasm for separate awards for aggravated damages. That is good news for employers in theory. However, as the Court of Appeal has approved separate aggravated damages awards in recent years, any real change would need to come from the higher courts.
Is hot-desking bad for business? Many employers now have open plan offices and hot desking to save space and reduce costs. But in a survey by Savills of 11,000 European office workers, hot-desking has come under fire. The report, called What Workers Want, said 45 per cent of those employed by a business which had hot-desking said their office layout was not good for productivity. Although hot desking is becoming more common, it seems employees are struggling to get used to it. Most employees still want their own dedicated desk, across the age groups including younger workers.
In the UK, almost three quarters of those surveyed worked in open plan offices and these people were more likely to say that the design of the office had a negative impact on productivity. The report identifies noise as a major issue. While a return to private offices for all staff is highly unlikely, the report suggests employers look at workplace acoustics when they are designing or fitting out offices.
What can employers do about this? Interestingly, only a third of those surveyed had been asked about their working environment by their current employer. And this might be key. It might be tricky to change the layout of an office, or to allocate individual desks. However, it might be easy to ask someone to use earphones when listening to the radio, or to create a quieter break out space for people who need to concentrate. Asking your employees for feedback might identify issues which are easy to resolve. And happier employees are bound to be more productive.