Frontline UK Employment Law Update Edition 6 2020 - Case updates

1. Hill v Lloyds Bank plc UKEAT/0173/19

2. R (Adiatu) v HM Treasury [2020] EWHC 1554

3. Department of Work and Pensions v Boyers UKEAT/0282/19

4. Econ Engineering Ltd v Dixon and others [2020] UKEAT/285/19

5. Angard Staffing Solutions Ltd and anor v Kocur and ors

6. Varnish v British Cycling Federation t/a British Cycling

 

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1. Hill v Lloyds Bank plc UKEAT/0173/19  (LINK)

In this case, the Employment Appeal Tribunal ("EAT") confirmed that it would have been a reasonable adjustment for the employer to give an undertaking to a disabled employee (who claimed to have been bullied/harassed by two colleagues) that she would not be required to work with the individuals going forward and that, if there was no alternative, it would offer her a severance package equivalent to her entitlement on redundancy.

Ms. Hill had been employed by Lloyds Bank (the “Bank”) for over 30 years. She went on sick leave between July 2016 and October 2017 for stress, which she claimed was caused by bullying and harassment by two colleagues. Ms. Hill further claimed that the prospect of working with the employees upon return from sick leave left her feeling physically sick and exhausted, and sought an undertaking from the Bank that it would not rearrange roles or duties in a way that would require her to work with either individual. In the event that there was no practical alternative, Ms. Hill further sought an undertaking that the Bank would offer her a severance package equivalent to the amount she would have received on redundancy. 

Whilst the Bank confirmed that it would try and ensure that Ms. Hill would not have to work alongside the individuals, it refused to give an absolute guarantee. The Bank also stated that it would not be possible to offer a redundancy or severance package if this scenario arose, given that her role would not actually be redundant. 

Ms. Hill claimed that the Bank had failed to make reasonable adjustments to eliminate a substantial disadvantage suffered by her because of her disability. The parties accepted that Ms. Hill was disabled by reason of her reactive depression, and Ms. Hill argued that she was placed at a substantial disadvantage compared to a non-disabled person in that she was in a state of "constant fear, worry and stress" regarding the prospect of working with the two individuals. 

The Bank argued that committing to a severance payment on termination of Ms Hill's employment would not be a reasonable adjustment as the purpose of such adjustments is to keep an employee in work rather than make provision for her to leave.  However the EAT held that the undertaking would have alleviated Ms. Hill’s fear and assisted in keeping her in work, which is the fundamental purpose of a reasonable adjustment. Further, the fact that any severance payment would amount to a special benefit could not be an objection: the granting of special benefits is inherent in the reasonable adjustments process.  It is notable that the adjustment argued for was held to be reasonable, notwithstanding that Ms. Hill's complaint of bullying and harassment against her two colleagues had not, in fact, been upheld by the Bank.

This case underlines the need for employers to give careful consideration to adjustments requested by disabled employees to facilitate their return to work or retention in employment.  Where a particular adjustment is refused, the employer must ensure that it has cogent reasons for determining that the adjustment is not reasonable.      

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2. R (Adiatu) v HM Treasury [2020] EWHC 1554 (LINK)

In this case, the claimant gig economy workers sought to challenge the government's decision to exclude "limb (b) workers" from financial support during the COVID-19 pandemic, namely in relation to the availability of statutory sick pay ("SSP") and eligibility for the Coronavirus Job Retention Scheme ("CJRS"). The High Court dismissed the challenge, rejecting the claims that the decisions were in breach of the public sector equality duty ("PSED") and noting the unprecedented circumstances and urgent response required in response to the pandemic. 

"Limb (b) workers" are workers who provide personal services to their "employer" but do not qualify as employees. They are often treated as self-employed for tax purposes and are not therefore on an employer's PAYE scheme. The CJRS only covers those on a PAYE payroll. SSP is only available to employees earning above the Lower Earnings Limit for National Insurance contributions.    

The Court noted that the CJRS did not exclude limb (b) workers as such, but instead excluded anyone not within the PAYE system. It held that the government’s decision to confine the CJRS to individuals within the PAYE system was justified, noting that the CJRS was a taxpayer funded programme created in urgent circumstances. Similarly, the Court held that the decision to exclude limb (b) workers from eligibility had a reasonable foundation, as the additional costs for employers and the government (in addition to the risk of fraud) of including them would have been significant. 

The claimants also argued that Black, Asian and Minority Ethnic ("BAME") workers were more likely to be low paid and unable to qualify for SSP (and were therefore placed at a particular disadvantage when compared to non-BAME workers) and thus the threshold earnings requirement for SSP was indirectly discriminatory.  This was also rejected. The Court held that the rate of SSP was not a provision, criterion or practice which placed those with certain protected characteristics at a particular disadvantage.  It also held that the government’s decision not to extend SSP to limb (b) workers could not validly be criticised as not being a proportionate means of achieving a legitimate aim. 

Finally, whilst public authorities have to have regard to the equality implications of intended measures, the Court held that they are not required to have regard to the implications of steps that it was not taking. Therefore, the Court held that the government was not in breach of the PSED by failing to conduct an equalities impact assessment on the effects of not extending the CJRS and/or SSP to all limb (b) workers.

This case underlines that the distinction between employees and limb (b) workers is a significant one, in terms of the legal rights and benefits afforded to the two groups.  Three years on from the publication of the Taylor Review's recommendations for improving the rights of low paid workers and clarifying their status, this remains an area of considerable uncertainty and controversy. 

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In this case, the Employment Appeal Tribunal ("EAT") held that an Employment Tribunal ("ET") had erred by focusing too much on the process followed by Department of Work and Pensions ("DWP") when considering if discrimination arising from a disability was objectively justified. 

The claimant was on long-term sickness absence because she was suffering from migraines and stress induced panic attacks, which she said were exacerbated by being bullied and harassed by a colleague. After about a year’s absence on sick leave and an unsuccessful trial at an alternative work site, the DWP decided that it was unlikely she would be able to return to work in the forseeable future and terminated her employment on the grounds of capability. 

The claimant brought claims for unfair dismissal and disability discrimination, both of which were upheld in the ET. As regards the disability discrimination claim, there was no dispute that the claimant was disabled, or that her dismissal was unfavourable treatment because of something arising in consequence of her disability. The question was whether the dismissal could be justified as a proportionate means of achieving certain legitimate aims identified by the DWP: (i) protecting scarce public resources; and/or (ii) reducing the strain on other employees caused by the claimant's absence. The ET held that dismissal was not proportionate and identified a number of internal procedural failings leading to this conclusion, such as: 

- the DWP did not have any up-to-date medical evidence for the claimant at the time of dismissal;
- there were several elements of the work trial which were carried out unreasonably in relation to IT and training; and
- the DWP did not follow its own attendance procedures. 

The DWP appealed to the EAT on the basis that the ET had concentrated too much on DWP's internal procedures and, in turn, failed to adequately consider the DWP's legitimate aims. The EAT upheld the appeal, confirming that the ET were required to consider the issue  of proportionality by balancing the DWP's legitimate aims against the discriminatory effect of the dismissal, and there was no evidence that the ET had done this. The fact that the dismissal was found to be unfair did not automatically mean that the dismissal was not justified for disability discrimination purposes.  The claim has been remitted to the same ET for it to reconsider the issue. 

Employers must take great care in approaching capability dismissals where the employee is absent, and the reason for the absence is a disability.  As well as the risk of an unfair dismissal, the dismissal will amount to discrimination because of something (the absence / incapability) arising in consequence of the disability unless it can be shown to be a proportionate means of achieving a legitimate aim.  The relevant aims should be clearly identified and balanced against the discriminatory effect of the dismissal on the individual when deciding whether there is a justification defence.  The duty to make reasonable adjustments must also be complied with – if not, it will be far more difficult to justify the dismissal.    

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4. Econ Engineering Ltd v Dixon and others [2020] UKEAT/285/19 (LINK)

In this case, the Employment Appeal Tribunal ("EAT") found that whilst length of service is a valid consideration when deciding whether a dismissal is unfair, it is not a relevant factor when assessing whether a summary dismissal is in breach of contract (a "wrongful dismissal").

Mr Cameron had worked for East Coast Mainline Company (the "Company") for nearly 35 years. At the time of the incident in question he was a shunter, responsible for safely moving trains between platforms. In 2015, whilst working a night shift, he authorised the movement of a train which resulted in a driver, who was standing between the moving train and his own, being "brushed" by the moving train. The Company deemed the incident a serious safety incident as Mr Cameron had failed to carry out adequate safety checks. The Company dismissed him for gross misconduct and he brought claims for unfair dismissal, discrimination and wrongful dismissal in the employment tribunal.

The tribunal dismissed Mr Cameron's claims of unfair dismissal and discrimination but upheld his wrongful dismissal claim. It placed weight on the Mr Cameron's long service and concluded that, in the circumstances, his conduct was not so serious as to justify dismissing him without notice.

On appeal, EAT held that the tribunal had been wrong to take into account Mr Cameron's length of service when determining whether his dismissal without notice was in breach of contract. The EAT stated that length of service should have no bearing on the question of whether an employee's misconduct was so serious as to justify dismissal without notice.

This decision offers useful clarity to employers considering whether summary dismissal is appropriate in a case of misconduct, and confirms that the key issue is whether the conduct is serious enough to justify dismissal without notice. Extraneous factors such as an employee's length of service are not relevant.

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5. Angard Staffing Solutions Ltd and anor v Kocur and ors (LINK)

In this case, the Employment Appeal Tribunal ("EAT") held that Regulation 4(4) of TUPE, which deems any purported variation of a contract void if the sole or principal reason is the transfer (unless certain specific exceptions apply), applies to variations which are beneficial to the employee as well as those that are detrimental.

The four claimants were the only directors and employees of an estate management company, LPAM Limited ("LPAM"). LPAM had a sole client. The client served 12 months' notice of termination on LPAM, with AAM Limited ("AAM"), a separate estate management company, taking over the contract following the expiry of the notice period. The change of service provision from LPAM to AAM constituted a relevant transfer for the purposes of TUPE. Two months before the transfer took place, the four claimants had varied their own employment contracts to their advantage, including adding a guaranteed annual bonus of 50 per cent of their salary, a termination payment calculated by reference to their length of service as directors, and a 24-month notice period. The transfer went ahead and the four claimants became employees of AAM, but were dismissed soon after the transfer. The claimants brought various tribunal claims based on the terms of the varied contracts.

The tribunal dismissed the claimants' claims, finding that the changes made to their contracts before the transfer were void under Regulation 4(4) because the impending transfer had been the reason for the variation. The claimants appealed the decision to the EAT on the basis that only changes that were detrimental to them were void under Regulation 4(4). They did so in reliance on previous Court of Appeal case law in which it had been held that a transferee could not rely on TUPE to avoid being bound by new, more favourable, terms it had agreed with the employees. The EAT agreed with the tribunal that the reference ‘any purported variation’ in Regulation 4(4) should be construed to cover all variations, whether or not adverse to the employee. They distinguished this case from the earlier case law on the basis that (inter alia) the relevant transfers in those cases had been governed by the 1981 TUPE Regulations, which contained no equivalent to Regulation 4(4).

The restriction on agreeing binding contractual changes in the context of a TUPE transfer continues to be a tricky issue for transferees on business sales and service provision changes. This decision at least provides helpful clarity on the enforceability of such changes, confirming that tactical pre-transfer changes to terms and conditions will not be binding on a transferee.

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6. Varnish v British Cycling Federation t/a British Cycling (LINK)

In a highly fact-specific judgment, the Employment Appeal Tribunal ("EAT") has held that professional cyclist Jess Varnish  was neither an employee for the purposes of the  Employment Rights Act 1996 ("ERA") nor a "worker" for the purposes of the Equality Act 2010 ("EA"), confirming the earlier decision of the Employment Tribunal ("ET"). 

The cyclist brought claims in the ET for unfair dismissal and sex discrimination against British Cycling after not being selected by Team GB for the 2016 Olympics. In order to succeed in the unfair dismissal claim she had to demonstrate that she was an employee of British Cycling, UK Sport or, alternatively, both organisations together for the purposes of ERA. To succeed in the discrimination claim she had to show that she was an employee or employed under a contract "to do work personally" for the purposes of the EA.  In the EA, a "worker" is defined as an employee, or an individual who provides services under a contract whereby she undertakes to do or perform personally any work or services for another party, in circumstances where that other party is not a client or customer of a profession or business undertaking carried on by the individual.

The ET found that Ms. Varnish was not an employee or worker of British Cycling or UK Sport, primarily on the grounds that the only agreements in place between them were an "Athlete Agreement" with British Cycling, and funding "Terms and Conditions" with UK Sport. Both agreements explicitly stated that they were not a contract of employment, and they were both held to be an accurate reflection of the reality of the relationships. The ET held that British Cycling was in fact providing services to Ms. Varnish. The Employment Judge explained that neither "employee" status nor "worker" status could be attributed because Ms Varnish received no remuneration (the ET held she received benefits, rather than remuneration, from British Cycling), did not personally perform work provided by the organisations, nor was she under an obligation to use or accept the entirety of the equipment, training support and other sports-related services provided to her (i.e. there was no mutuality of obligation). 

Ms Varnish appealed to the EAT solely on the ERA question arguing that the ET had erred in law in finding that there was no mutuality of obligation. The EAT dismissed Ms Varnish's appeal, holding that the ET had applied the correct test, namely whether or not there was an agreement to undertake some minimum, or at least some reasonable amount of work in return for being given that work, or pay, when coming to its conclusion on whether mutuality of obligation existed.

Given that British Cycling's relationship with Ms Varnish is typical of the relationships between athletes and their governing bodies, this EAT decision had the potential to open the floodgates as to the employment rights of athletes. The affirmation of the ET's decision means that those gates remain closed, at least for the time being.