Key employment law cases: September 2020

Equal pay: material factor needs to explain but not justify difference in pay

Walker v Co-operative Group and another - Court of Appeal (14 August 2020)

The Court of Appeal held that an employment tribunal used the wrong test when determining whether the Co-op could establish the material factor defence: the test is not whether the difference in pay is justified but whether the reason for the difference is causative and material.

In February 2014, the female Claimant was promoted to the executive team of the Co-op as Group Chief HR Officer. The members of the executive team were put into different remuneration tiers, with the Claimant in tier 4 of 4 and earning less than other male executives. In short, the Co-op argued that there were four material factors taken into account when determining pay:

• whether the role was vital to the survival of Co-op and the Claimant's role was important but not vital;
• executive experience and the Claimant was unproven at that level;
• flight risk and there was concern that her comparators might follow the former CEO who had recently left; and
• market forces and the Claimant's salary exceeded the market rate.

In the first instance, the tribunal took the view that the explanations for the pay difference applied at the point when the Claimant was appointed to the role, but were "historical" and "no longer material" when an evaluation was carried out 12 months later. On that basis, the tribunal concluded that the pay difference could not be justified and the material factor defence failed. However, the Court of Appeal held this approach to be unsatisfactory because it failed to determine the point at which the Claimant was doing equal work and the essential starting point for her claim. It also overlooked the fact that there was at least one material factor which remained causative of the difference in pay between each comparator.

Unfair dismissal: dismissal without following procedure can be fair

Gallacher v Abellio Scotrail Ltd - Employment Appeal Tribunal (4 February 2020)

The EAT has ruled that this was one of the rare cases where it was open to the Tribunal to conclude that dismissal without procedure was within the reasonable band of responses.

Over the course of several years, there was a breakdown of relations between the Claimant and her manager caused by issues including a requested salary increase and a requirement for on-call working. There was also a period of sickness absence. Those issues were discussed with the Claimant in at least two meetings. The Respondent's business entered a difficult period (due to suffering losses) and the Claimant's working relationship with her manager was critical at this time. Her manager did not feel the situation was recoverable and an immediate change required. At a pre-arranged appraisal, the Claimant was informed that she was being exited from the business due to a lack of trust.

Upholding the decision of the tribunal, the EAT held that the dismissal for "some other substantial reason" was not unfair and that there had been no discriminatory treatment (this was straightforward as the Respondent did not know of her disability). The EAT emphasised that, in most cases, failure to carry out a procedure would lead to the conclusion that dismissal was outside the band of reasonable responses. However, this was not the case here where following procedures could reasonably be considered futile. It was not a matter of conduct or performance, but essentially personality clash. The evidence showed that any procedure would have served no useful purpose and would actually have worsened the situation. The Claimant recognised the breakdown in relations herself and was not inclined to repair it.

Employers would be well-advised to treat this decision with some caution due to its fact-specific nature and to consider alternative lower-risk strategies.

Anonymity orders: Tribunal should have taken initiative to make anonymity order

X v Y - Employment Appeal Tribunal (7 October 2019)

In this appeal, the EAT has ruled that an Employment Judge should have considered of his own volition whether an anonymity order should have been made due to the sensitive issues of the case.

The Claimant, represented by his father, brought claims for unpaid wages and holiday pay. The claims were originally out of time, but when determining whether they should be allowed to proceed, the tribunal took into account certain mental health issues associated with his transgender status and other trauma put forward by his father. His transsexual status and mental health issues were therefore referenced in the judgment. After the judgment was sent to the parties, the Claimant was distressed and wrote to the tribunal asking for the sensitive material to be redacted to protect his privacy, but the tribunal declined to do so. No application under rule 50 of the ET Rules had been made at the hearing. The Claimant appealed.

The EAT allowed the appeal and made an anonymity order in relation to the proceedings. It said that this was one of the rare cases where it is incumbent on the tribunal to consider of its own volition to make an anonymity order under rule 50 even if the affected party does not ask for one (which was understandable because they were not legally represented). The Judge was aware of the Claimant's fragile mental health and that publication of his transgender status could give rise to difficulties. However, it would not be (and rarely ever be) appropriate to redact passages of the judgment: anonymisation is the less drastic remedy to protect Article 8 privacy rights.

The EAT did emphasise that each case depends on its facts and that there is no definite rule or principle of law that a judgment should be anonymised when it refers to transsexual status or mental health issues.

Employment status: cycle couriers still workers even after change of terms

Mr S O'Eachtiarna and others v City Sprint (UK) Ltd - Employment Tribunal (24 July 2020)

An employment tribunal has ruled that, despite new contractual terms, cycle couriers providing their services to CitySprint are still deemed to be workers under the Employment Rights Act 1996.

Five cycle couriers brought claims against Citysprint for holiday pay on the basis that they had worker status. Back in January 2017, the tribunal previously ruled that a courier (Dewhurst) for Citysprint was a worker. Following that ruling, couriers were engaged on new contractual terms in November 2017. Those new terms included a substitution clause allowing them to send a substitute in their place (if they paid them themselves). The new terms also included a rolled-up holiday pay clause stating that fees paid would be deemed to include holiday pay (at the minimum statutory rate) if they became entitled to it.

Looking at the reality of the relationship, the tribunal held that the couriers were still workers. The right of substitution was theoretical only and had never been exercised. Personal performance was still a dominant feature of the contract. As per the definition, Citysprint was not a client or customer of a profession or undertaking: even if they undertook other work, the couriers did not provide their services to any other courier company. Accordingly, as workers, the couriers were entitled to holiday pay. The holiday pay clause was not sufficiently transparent to constitute a valid rolled-up holiday pay clause because no specific sum or calculation mechanism had been identified.

For more key employment law updates from us:

• read our Insights on key developments over the last month
• stay Ahead of the Curve with our summaries covering the key aspects of employment law under review by the government
• scroll through our key dates timeline showing recent and anticipated changes to employment law, and
• attend our upcoming events or catch up on training.