Working Relations January 2016

Highlights

• The Court of Appeal has made it clear that the duty to make reasonable adjustments can apply to absence management procedures.

Action Points

• Review absence management procedures to consider whether they adequately take into account the duty to make reasonable adjustments (where appropriate).

Key dates to remember

Recent video podcasts

• Employment law changes: highlights from October 2015 - UK - 09 December

Upcoming events

Calls and seminars in the next month which might be of interest include:

International employment calls

Employment lawyers from across our network will discuss specific hot topics from a multi-jurisdictional angle. The calls are intended for HR professionals but may also be of interest to employees in risk and compliance or in-house lawyers.

The first call covered Business transfers/TUPE - 18 November - recording here

• 19 January 2016 - 16:00 (UK time) - Collective redundancies
• 15 March 2016 - 16:00 (UK time) - Business Protection
• 19 May 2016 - 16:00 (UK time) - Workers representation

Further information is available here.

Details of more breakfast briefings, conferences and telephone conference calls covering developments in employment law are available here.

General developments

No increase in SMP for 2016-2017

The Department for Work and Pensions is proposing that there will be no increase in the rates of statutory maternity, paternity, adoption and shared parental pay, maternity allowance, and statutory sick pay for 2016 -17. The rates that will remain applicable are available here.

Publications

• Corporate Governance Policy and Voting Guidelines 2015/16 - Pensions and Lifetime Savings Association (PLSA) - 12 December 2015

Statutory Developments

Gender pay transparency

The latest news from the Government is that there will be consultation in "spring" on draft Regulations which will require the publication of information showing whether there are differences in pay of males and females. Further details on the new obligation are available here.

Zero hours contracts - exclusivity clauses

From 11 January 2016, it will be automatically unfair to dismiss a worker or subject them to a detriment because they have failed to comply with an exclusivity clause in a zero hours contract. No qualifying period of employment will apply.

Further details in relation to zero hours contracts is available here.

National Living Wage and penalties for National Minimum Wage

Draft Regulations have been laid before Parliament which, subject to Parliamentary approval, will come into force on 01 April 2016 and:

• introduce the new National Living Wage rate of £7.20 an hour for workers aged 25 and over
• increase the financial penalty for those who underpay the NMW from 100% to 200% of the underpayment due to each worker.

Whistleblowing - reporting by prescribed persons

The provisions in the Small Business, Enterprise and Employment Act 2015 which give the Secretary of State the power to make regulations requiring prescribed persons to produce annual reports of the whistleblowing disclosures made to them by workers came into force on 01 January 2016.

There has already been consultation on how this reporting requirement should be implemented in practice and the response to that consultation contains a draft outline of Regulations that could be made under the power in the Act. The final version of the Regulations is awaited.

Further detail is available here.

Recovery of public sector exit payments

The Government has released a further consultation on draft regulations which allow for the recovery of exit payments when a high earner returns to the public sector shortly after exit. The consultation closes on 25 January 2016. The regulations will then go through Parliamentary scrutiny with the intention that the policy will take effect from April 2016.

A number of changes have been made to elements of the policy since the last consultation. Further details are available here.

Recent Cases

Absence management policies - duty to make reasonable adjustments applies

Griffiths v Secretary of State for Work & Pensions - Court of Appeal

The duty to make reasonable adjustments applies to absence management policies. Employers should, therefore, review absence management procedures to consider whether they adequately take into account the duty to make reasonable adjustments (where appropriate).

The Court of Appeal held that two assumptions made by the EAT in Royal Bank of Scotland v Ashton (which held that the duty did not arise) were incorrect.

The Court held that the appropriate formulation of the relevant provision, criteria and practice (PCP) is:

“the employee must maintain a certain level of attendance at work in order not to be subject to the risk of disciplinary sanctions”.

Breach of this provision may end in warnings and ultimately dismissal. Once the PCP is formulated in that way, it is clear that a disabled employee whose disability increases the likelihood of absence from work on ill health grounds, is disadvantaged in more than a minor or trivial way.

Both the tribunal and the EAT were wrong to hold that the duty to make reasonable adjustments was not engaged simply because the policy applied equally to everyone. The duty arises once there is evidence that the arrangements placed the disabled person at a substantial disadvantage because of her disability. This was clearly the case here.

On the facts, however, the tribunal was entitled to find that neither extending the point at which disciplinary action could be taken under an absence management policy nor disregarding periods of sickness absence were steps that it was reasonable for the employer to take.

Employee competition - settlement with one of joint defendants

Vanden Recycling Ltd v Tumulty and others - High Court

If a tortious claim against several joint defendants is settled with one of those joint defendants, the claim cannot continue against the other tortfeasor(s) jointly liable for the same damage. This principle applies in the context of employee competition litigation (in this case where an individual was sued for breach of contract and two companies for inducing the breach).

Instruction not to speak native language not discrimination

Kelly v Covance Laboratories Ltd - Employment Appeal Tribunal

An instruction to an individual not to speak Russian (her native language) in the workplace did not amount to direct race discrimination and/or harassment related to her race (national origins).

In this case, the tribunal had found that:

1. the same instruction had been given to the Claimant’s named comparators (even if not actually passed on), and
2. would have been given to “some other employee speaking some language other than English in circumstances that gave [the employer] cause for concern”.

In addition, the tribunal had accepted that there was an explanation other than race in this case. This was a permissible conclusion given its findings of fact that:

• the employer considered it important that conversations within the workplace should be capable of being understood by English-speaking managers

• the Respondent was involved in animal testing which had previously made it the subject of attention from animal rights activists, including violent assaults on its employees, and

• the Claimant had shown unusual behaviour for an employee embarking upon a new career, which had led the Respondent to wonder whether she was an animal rights infiltrator.

Implied terms - classic test restored

Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Limited & anor - Supreme Court

The Supreme Court has endorsed the classic test in relation to implied terms, highlighting the statement in BP Refinery (Westernport) Pty Ltd v Hastings (1977) 52 ALJR 20 in which it was said that “[F]or a term to be implied, the following conditions (which may overlap) must be satisfied:

1. it must be reasonable and equitable
2. it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it
3. it must be so obvious that ‘it goes without saying’
4. it must be capable of clear expression
5. it must not contradict any express term of the contract”.

Giving the lead judgment, Lord Neuberger did not attempt to reformulate this text but did add to it:

• Inferring the actual intention of the parties is not essential. ‘If one approaches the question by reference to what the parties would have agreed, one is not strictly concerned with the hypothetical answer of the actual parties, but with that of notional reasonable people in the position of the parties at the time at which they were contracting’.

• "[a] term should not be implied into a detailed commercial contract merely because it appears fair or merely because one considers that the parties would have agreed it if it had been suggested to them. Those are necessary but not sufficient grounds for including a term".

• "[i]t is questionable…whether reasonableness and equitableness, will usually, if ever, add anything: if a term satisfies the other requirements, it is hard to think that it would not be reasonable and equitable".

• Business necessity and obviousness, can be alternatives in the sense that only one of them needs to be satisfied, although it would be a rare case where only one of those two requirements would be satisfied.

• If the issue is approached by reference to the officious bystander, the utmost care must be taken with respect to the question to be posed by him.

• Necessity for business efficacy involves a value judgment. The test is not one of “absolute necessity”. The best approach may be that a term can only be implied if, without the term, the contract would lack commercial or practical coherence.

The Supreme Court also confirmed that the implication of terms into a contract was not a matter of contractual interpretation and that implication and interpretation were different exercises. They noted that comments made by Lord Hoffmann in Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988 should not be interpreted as a dilution of the traditional tests and that it would be wrong to interpret the decision in Belize as an authority that reasonableness may be a sufficient ground for implying a term.

A more detailed summary is available here.

Length of service criterion not indirect racial or religious discrimination

Naeem v Secretary of State for Justice - Court of Appeal

Prior to 2002, the Prison Service did not employ Muslim chaplains as, before then, the number of Muslim prisoners was not such that there was felt to be a need for employed Muslim chaplains (which was not a discriminatory reason). As the Prison Service’s pay scale contained a length of service criterion, this meant that there were more Christian chaplains with longer length of service and so higher pay.

The Court of Appeal held that this did not amount to indirect religious or racial discrimination.

The PCP was “that within the pay system, in order to be at the top of the relevant pay scale, an individual needs to have been employed for a certain period of time”. The PCP applied equally to Muslim and Christian Chaplains. It did not put Muslim chaplains “at a particular disadvantage”. The shorter average length of service of Muslim chaplains was attributable to a factor that did not operate to the disadvantage of Muslims. When considering whether a claimant can rely on a disparity in the treatment of two groups, the reason for the disparity complained of (in the sense of the factors which caused it to occur) can be considered. Claimants must be able to show why a PCP put the group with a protected characteristic at a disadvantage.

The tribunal’s conclusion that the average shorter length of service of Muslim chaplains was not the result of any discriminatory practice on the part of the Prison Service meant that Muslim chaplains were not put at a particular disadvantage and there was no indirect discrimination.

Negative verbal reference - disability discrimination, burden of proof

Pnaiser v NHS England and Coventry City Council - Employment Appeal Tribunal

Ms Pnaiser claimed that she had a job offer withdrawn after her former employer (Ms Tennant employed by the Council) gave her a negative reference because of disability related absences. Ms Pnaiser brought claims of unlawful disability discrimination.

The EAT held that the tribunal had applied the wrong text by requiring her to show that the only inference that could be drawn was a discriminatory one before it could conclude that the burden shifted to the Respondents. This was an impermissibly high hurdle.

The tribunal should simply have asked whether the fact that the former employer gave a negative reference (which Ms Tennant denied giving), in a conversation where she mentioned Ms Pnaiser’s significant absence, and her knowledge of and concerns about Ms Pnaiser’s history of significant absences were together sufficient to raise a prima facie case against the Council that absence was (consciously or unconsciously) a reason in Ms Tennant’s mind for giving the negative reference, so that the burden shifted.

EU Directives - interpreting national legislation

The Advocate General for Scotland v Barton - Inner House of the Court of Session

The obligation to interpret national legislation to give effect to EU Directives (the Marleasing purposive approach) only applies where it is possible to interpret the legislation in a way which gives effect to the identified policy in a Directive. It does not:

• require a Court to import a meaning which is inconsistent with a fundamental feature of the legislation or is incompatible with the “underlying thrust” of the legislation being construed or require the reading in of words which are inconsistent with the scheme of the legislation
• allow the court to trespass into the field of lawmaking.

A person adversely affected by a state’s failure to legislate on implementation can always bring a Francovich claim against the state.

This is a different approach to that which was taken by the EAT was in Bear Scotland v Fulton in relation to calculation of statutory holiday pay under the Working Time Regulations 1998.

Age discrimination - severance payments excluding those entitled to a pension

Dansk Industri, acting on behalf of Ajos A/S v Estate of Karsten Eigil Rasmussen - AG Opinion

In Ingeniørforeningen i Danmark (C‑499/08), the ECJ held that excluding those entitled to an occupational pension from a severance allowance was age discrimination. In this case, the Advocate General has given an opinion that:

• the previous case (which related to a public sector employer) could apply equally to a private sector employer even though the Directive does not have direct effect, and
• the fact that there is national case-law inconsistent with the Directive does not stop a national court complying with its obligation to interpret national law in conformity with EU law.

Other cases

• Injury to feelings: Another decision in which the EAT has held that the 10% uplift on damages set out in Simmons v Castle [2012] applies in the employment tribunal. Doubt was expressed as to the correctness of De Souza v Vinci Construction UK Ltd (EAT). The Court of Appeal will need to resolve the two lines of conflicting authorities. Appeals are expected to be heard in February 2016 (The Sash Window Workshop Ltd & anor v King) and in December 2016 (Pereira de Souza v Vinci Construction UK Ltd) Beckford v London Borough of Southwark (EAT)