Frontline UK Employment Law Update Edition 17 2022 - Case Updates

1. Ponticelli UK Ltd v Gallagher (12 September 2022)

2. Quinn v Sense Scotland (29 August 2022)

3. Cowie and others v Scottish Fire and Rescue Service (11 August 2022)

4. McClung v Doosan Babcock Ltd and others (23 August 2022) 

5. University of Dundee v Chakraborty (23 September 2022) 

1. Ponticelli UK Ltd v Gallagher (12 September 2022) – (LINK)

In this case, the Employment Appeal Tribunal ("EAT") held that a share incentive plan ("SIP") was covered by Regulation 4(2)(a) of TUPE and therefore an employee who participates in a SIP and whose employment transfers to a new employer under TUPE is entitled to participate in an equivalent plan with the new employer.

The Claimant worked for a third-party company ("TEPUK"), before being transferred to the Respondent under TUPE.

When he worked for TEPUK, he was part of a voluntary SIP in which he agreed to monthly deductions of 5% of his salary to purchase partnership shares in the company. TEPUK provided two matching shares for every partnership share bought with up to 2% of his salary. The Claimant's membership of the SIP ended on 1 May 2020, when his employment transferred to the Respondent pursuant to TUPE. The shares he held were transferred to him in accordance with the rules of the SIP which stated that if the business in which he was employed was sold, his shares would be transferred to him within 90 days from the cessation of his employment.

On 10 June 2020, the Respondent informed the Claimant that he would receive a one-off payment as compensation for the fact that the Respondent would not provide a SIP.

The Claimant argued that the SIP had been provided to him “in connection with” his employment contract and therefore the obligation to provide a SIP was an obligation that transferred to the Respondent pursuant to TUPE and persisted until lawfully terminated.

The Respondent argued that the entitlement to a SIP was not in the employment contract, and corresponding documents to the SIP made it clear that this was separate to the employment contract. They also argued that in a previous case (Chapman), the terms of a stock option scheme provided that the right to exercise the option was triggered by an employee ceasing to be an employee of a group company by reason of redundancy. The Court of Appeal had held in that case that the option was triggered when the employer's business transferred under TUPE as this was akin to redundancy, and the Respondent sought to apply this reasoning to the present case.

The EAT concluded that the plan was only open to the Claimant due to him being an employee of TEPUK, and therefore the obligation to provide a SIP did arise “in connection” with the employment contract and fell within the broader package of the Claimant's benefits. It was also noted that Chapman has been criticised academically, although not yet in the courts, for failing to address the question of whether the benefit in that case was provided “in connection with” the employment contract. Overall, the obligation to provide a SIP did fall within the scope of Regulation 4(2)(a) of TUPE.

This decision confirms that the formulation in regulation 4(2)(a) of TUPE, that rights under or “in connection with” a transferring employee’s contract transfer to a transferee, covers share incentive plans even where these are separate from the contract of employment. This causes particular problems for transferees, who must provide a scheme of “substantial equivalence” to transferring employees. Careful due diligence and planning is needed to understand the rules of the relevant plan and the value of the benefits provided, and to find a workable and attractive solution for transferring employees.

2. Quinn v Sense Scotland (29 August 2022) - (LINK)

In this case, the Employment Tribunal ("ET") held that the Claimant did not have a disability within section 6 of the Equality Act 2010 after she was diagnosed with "Long Covid" because, at the time of her dismissal, the effect of the condition had not lasted 12 months, and it was not likely to last or recur for 12 months.

The Claimant was employed by the Respondent from 9 December 2019 until 27 July 2021 when she was dismissed. The Claimant had tested positive for COVID-19 on 11 July 2021 and self-isolated until returning to work on 19 July 2021.

After the dismissal, the Claimant was declared “unfit for work” from 2 August to 12 September 2021 on the grounds that she had various complications relating to COVID-19. On 12 September 2021, she was declared “unfit for work” again as she was diagnosed with Post-Covid-19 Syndrome (also known as Long Covid). On 23 September 2021, the Claimant started a new job with adjustments for her condition.

The Claimant brought a complaint of direct disability discrimination, claiming she was disabled with Long Covid at the time of her dismissal.

To determine whether the Claimant was disabled at the relevant time, the ET had to determine:

1. whether the Claimant had a physical or mental impairment at the time of her dismissal;
2. whether the impairment had adverse effects on her ability to carry out day to day activities;
3. whether the effect on her day-to-day activities was substantial; and
4. whether the effect would last or was likely to last or recur for 12 months.

The Claimant explained that due to COVID-19, at the time of her dismissal, she was suffering with fatigue, shortness of breath, aches, pain and discomfort, headaches, brain fog and other such symptoms. Therefore, the ET held that she did have a physical impairment.

Further, the Claimant stated that, due to her symptoms, she was struggling to undertake tasks such as shopping and driving and had also stopped exercising and socialising because of this. The ET held that this did constitute “adverse effects on her day-to-day activities” and indeed this effect was substantial.

However, the ET held that the Claimant did not have Long Covid at the time of her dismissal, as she had only had COVID-19 for 2.5 weeks. It was held that although there was a risk she could have developed Long Covid, the substantial majority of people did not develop Long Covid and therefore it cannot be said that the risk could “well happen”. At the time of her dismissal it was not likely that the effect would last or recur for 12 months, therefore her claim failed.

This decision illustrates the time-sensitivity of the question of whether an employee falls within the scope of the disability discrimination protections set out in the Equality Act 2010: the question is whether the employee was disabled at the time of the conduct complained of. Whilst this was a reasonably straightforward determination in this particular case, the issue can be complex to decide, needing both factual and medical evidence.

3. Cowie and others v Scottish Fire and Rescue Service (11 August 2022)  - (LINK)

In this case, the Employment Appeal Tribunal (“EAT”) held that the conditions set by the Respondent for eligibility to take paid special leave to cover COVID-19 related absences did not discriminate against women or people with disabilities.

The Respondent had a special leave policy which allowed employees to take up to five days of paid leave if they could not work due to issues relating to dependants (which included breakdown in childcare). When the COVID-19 pandemic began, this special leave policy was extended for those who were shielding or struggling with childcare commitments during lockdown. The extended policy required employees to take any remaining paid annual leave and time off in lieu ("TOIL") before taking special leave.

A group of employees, through their union, claimed that disabled employees had been treated unfavourably because of something arising in consequence of a disability, contrary to section 15 of the Equality Act (the “EA”) as a result of:

1. having to use their accrued TOIL;
2. being compelled to use annual leave at a time when they did not wish to do so;
3. being compelled to take annual leave while shielding at home; and
4. not being able to utilise re-allocated annual leave as would have been the case if they had been categorised as on sick leave rather than special leave.

Other employees brought a claim of indirect sex discrimination under s19 of the EA on the basis that the following were a provision, criterion or practice ("PCP") which put female employees at a disadvantage when compared to male employees:

1. having to use up TOIL;
2. being prevented from using their accrued TOIL to balance work and family commitments; and
3. being compelled to use their annual leave at a time when they did not wish to do so.

The EAT held that the treatment alleged to amount to disability-related discrimination was intrinsically linked to the entitlement to special leave, therefore the requirement to use TOIL and annual leave could not be considered separately from the extended special leave. There was no general requirement on the Claimants to use TOIL and/or leave at a time of the Respondent’s choosing; rather, the specific requirement to exhaust any accrued TOIL and/or leave arose only when, and to the extent that, the Claimants sought to access special leave. Both the Claimants and Respondent agreed that the right to special leave was favourable therefore, although the policy was subject to conditions for entitlement, those conditions could not be viewed in isolation from the benefit provided and that could not detract from the favourable nature of that treatment. It was held, therefore, that this was not discriminatory because the treatment of affected employees was not “unfavourable”.

Similarly, in relation to the sex discrimination claim, the EAT held that although the PCP complained of was the conditions placed upon the taking of special leave, the entitlement to special leave itself could not be artificially separated from those conditions. The special leave amounted to favourable treatment and did not put the Claimants at a disadvantage.

This decision emphasises the importance of context in analysing whether treatment afforded to disabled employees is unfavourable or puts those with protected characteristics at a disadvantage. In this case, it was not possible to separate the pre-conditions attached to the special leave (which were alleged to be unfavourable) from the benefit itself (which was, overall, favourable).

4. McClung v Doosan Babcock Ltd and others (23 August 2022) - (LINK)

In this case, an Employment Tribunal (“ET”) held that the Claimant’s support for Glasgow Rangers Football Club was not a protected philosophical belief for the purposes of section 10 of the Equality Act 2010 (“EA”).

In coming to a decision, the ET considered what the Claimant’s belief actually entailed. Although the Claimant argued that he cared passionately about the UK (in terms of being a strong Unionist), had allegiance to the Queen and participated in some activities related to the Orange Order, which he considered beliefs that the vast majority of Rangers fans held, the Employment Judge was not persuaded that this was true. The Claimant was indeed a “supporter” of Rangers, meaning “a person who is actively interested in and wishes success for a particular sports team” but it was held that his views regarding Unionism and the Queen were not a pre-requisite of being a Rangers supporter.

Secondly, the Employment Judge considered the five criteria which a philosophical belief must meet to be protected under the EA (the Grainger criteria), which are as follows:

1. the belief must be genuinely held;
2. it must be a belief and not an opinion or viewpoint based on the present state of information available;
3. it must be a belief as to a weighty and substantial aspect of human life and behaviour;
4. it must attain a certain level of cogency, seriousness, cohesion, and importance; and
5. it must be worthy of respect in a democratic society, be not incompatible with human dignity and not conflict with fundamental rights of others.

Whilst the Employment Judge agreed that the belief was indeed genuinely held, he was not convinced that it met the other four criteria.

Regarding the second criterion, the Employment Judge referred to the Explanatory Notes to the EA, which state that “beliefs such as humanism and atheism would be beliefs for the purposes of this provision, but adherence to a particular football team would not be”. He also noted the cases of Grainger and McEleny in which it was held that alliances to political parties did not amount to protected philosophical beliefs.

In regard to criterion three, the Employment Judge considered that the belief had personal importance to the Claimant, but this was subjective and not a related to a substantial aspect of human life.

For criterion four, although the Claimant took his role as a fan very seriously, there was nothing to suggest fans had to behave, or did behave, in a similar way to he did in terms of his behaviour on match days and when Grangers won/lost. The only common factor linking fans would be the fact they wanted their team to do well.

For criterion five, the Employment Judge held that Rangers Football Club does not invoke the same respect in a democratic society as matters such as ethical veganism or the governance of a country, both of which have been the subject of academic research and commentary and have been held to have met this requirement in previous cases.

Overall, it was held that support for Glasgow Rangers Football Club fell short of being a “philosophical belief” for the purposes of the Equality Act therefore the Claimant's claim failed.

5. University of Dundee v Chakraborty (23 September 2022) - (LINK)

In this case, the Employment Appeal Tribunal (“EAT”) held that an investigation report relating to a grievance did not attract legal professional privilege where it was subsequently sent to external legal advisors and amended on their advice.

The Claimant employee had filed a grievance with the Respondent. The Respondent appointed a senior employee to investigate, with support from the Respondent's HR department. That employee conducted an investigation and produced a report.

The Respondent then sent the report to an external firm of solicitors for review. The solicitor proposed amendments which were approved by the Respondent in a meeting. The employee tasked with the investigation made further personal amendments to the report. This amended report was sent to the Claimant and was added to a joint bundle ahead of an Employment Tribunal (“ET”) hearing with a note that it had been amended and reissued following independent legal advice. The original report was not disclosed.

The Claimant applied to the ET for an order requiring the Respondent to produce the original un-amended report. The Respondent resisted, arguing that the original draft was privileged.

The Respondent argued that, although the original report did not attract privilege when it was created (because it had not been created for the purpose of legal advice or litigation), legal advice privilege and litigation privilege retrospectively attached to the report after further amendments were made on the basis that, if the un-amended version of the report was now to be disclosed and compared to the final version which had already been disclosed, it would be possible to infer what legal advice had been given by the solicitor. The Respondent referred to the 1884 case of Lyell v Kennedy, in which the Judge had ruled that “where the selection of documents which a solicitor has copied or assembled betrays the trend of the advice which he is giving the client, the documents are privileged.”

The EAT ruled that Lyell did not support the Respondent’s contention that an original document which was not privileged when it was created should retrospectively acquire the status of privilege by virtue of an amended version of it being created and disclosed.

Although the terms of any advice given by the solicitor about the original document and any amended version of the original document created for the purpose of the litigation would plainly be privileged, the original report was not.

This case is a helpful reminder that the question of whether an investigation report is privileged from disclosure in subsequent legal proceedings depends on the purpose for which it was prepared. Where the report is not being prepared for the sole or dominant purpose of litigation (so as to attract litigation privilege) and is not a confidential communication between client and lawyer for the purposes of obtaining legal advice (so as to attract legal advice privilege), but rather part of a fact finding exercise to assist in determining whether or not an employee’s grievance has merit, it will not become privileged simply because it is later shared with lawyers for their advice.