Reed Smith Newsletters

Welcome to our monthly newsletter, with a summary of the latest news and developments in UK employment law.

Case law updates

Compensation – uplifts: The Employment Appeal Tribunal (EAT) has upheld a tribunal’s decision to award the maximum 25 per cent uplift on compensation, including on the awards for injury to feelings and aggravated damages, following an employer’s failure to follow the Acas Code on Discipline and Grievance (Acas Code), dismissing an appeal that the uplift was erroneous, included double-counting, and was disproportionate. Of course, not all breaches of the Acas Code will warrant the maximum, or any, uplift, and disproportionate amounts can be scaled down, but this case (which involved the dismissal of two pregnant employees in circumstances where there was found to have been a spurious TUPE transfer and a vindictive and sham disciplinary process) acts as a reminder of the tribunal’s wide discretionary powers to increase compensation where it is just and equitable to do so. The EAT also provided guidance on how tribunals approach the issue of an uplift for breach of the Acas Code: (1) Is the case such as to make it just and equitable to award any Acas uplift? (2) If so, what does the tribunal consider a just and equitable percentage, not exceeding although possibly equalling, 25 per cent? (3) Does the uplift overlap, or potentially overlap, with other general awards, such as injury to feelings and, if so, what is the appropriate adjustment, if any, to the percentage of those awards in order to avoid double-counting? and (4) Applying a ‘final sense-check’, is the sum of money represented by the application of the percentage uplift arrived at disproportionate in absolute terms and, if so, what further adjustment needs to be made? (Slade Baronet & anor v. Biggs & others)

Disciplinary procedure: In a recent Court of Appeal judgment, it was suggested that it is implied into every employment contract that a disciplinary process be carried out fairly, and that this is a separate implied term to mutual trust and confidence between employer and employee. Although the comment was made obiter (meaning it was the judge’s general comment or observation rather than an issue for determination) and so not binding, it is a point which may now be argued substantively, and employers should ensure that disciplinary procedures are carried out fairly and reasonably to avoid arguments of breach of contract. (Burn v. Alder Hey Children’s NHS Foundation Trust)

Employment status: The EAT has upheld a decision that, on the facts, a director and 40 per cent shareholder was neither an employee nor a worker of the business despite being in receipt of a salary. While the EAT was clear that working director-shareholders could be classed as employees or workers, the usual tests on status apply. (Rainford v. Dorset Acquatics)

Equal pay: At a preliminary hearing, the tribunal has concluded that retail workers at two supermarkets, Morrisons and Safeway, could compare themselves to logistics staff in regional distribution centres for equal pay purposes. It is yet to be determined whether the respective roles are considered to be ‘work of equal value’.

Flexible working: Under the statutory flexible working procedure, all requests must be dealt with (including any appeals) within three months unless it is mutually agreed that the decision period be extended. Overturning a tribunal judgment, the EAT has held that merely agreeing to attend an appeal hearing after the three-month deadline does not necessarily imply that the decision period has been extended; there must be clear agreement to the extension. A failure to follow the prescribed timescales can lead to an award of compensation of up to eight weeks’ pay (a week’s pay being capped at the statutory amount in place at the time), meaning that employers should get explicit consent to an extension of time if it is needed, although it is good practice for requests to be dealt with promptly. (Walsh v. Network Rail Infrastructure)

Misconduct dismissals – hearsay evidence: When assessing potential misconduct as part of a disciplinary process, hearsay evidence in the form of written statements from eyewitnesses should still be given due consideration, even where the credibility of those eyewitnesses has not been tested through the witnesses giving oral evidence at the disciplinary hearing. In this case, an employee was summarily dismissed for smoking in his work lorry, contrary to company policy and criminal laws. He denied smoking, and an investigation found no evidence of him smoking in the vehicle, but two eyewitnesses gave written statements alleging they had observed him smoking while driving, and it was these statements (known as hearsay evidence because the individuals had not given their evidence orally at the disciplinary hearing) that was used as the basis for the summary dismissal. In the subsequent unfair dismissal claim, the tribunal concluded that there was insufficient evidence that the claimant had been smoking as it was not possible to evaluate the eyewitnesses credibility against that of the claimant. However, the EAT disagreed; the eyewitness statements had been admitted as hearsay, and oral testimony does not necessarily ‘trump’ that. This acts as a useful reminder for employers that the strict rules of evidence that apply in other legal contexts such as criminal law (which generally prohibits reliance on hearsay evidence) do not apply to employers when making a decision in as part of a disciplinary process. The employer was entitled to rely on hearsay evidence that the employee had committed misconduct. The EAT held that all evidence should be weighed up when forming a reasonable belief of misconduct. (Hovis v. Louton)

Race discrimination: A claimant succeeded with her direct race discrimination claim when her casino employer accommodated a customer’s request not to be served by Black staff. The casino had a policy on unacceptable client behaviour, but as it had failed to implement the policy on this occasion, it was unable to make out a defence that it had taken all reasonable steps to avoid discriminatory behaviour. This acts as a cautionary tale that simply having policies seeking to prevent discrimination and harassment are not sufficient – employers must follow them. (Tesfagiorgis v. Aspinals Club)

Unfair dismissal: Upholding the tribunal’s decision, the EAT has found that an employer acted reasonably and that it was not unfair to dismiss an employee for gross misconduct for raising multiple grievances which he neither progressed nor withdrew. Employers should act cautiously when balancing potential dismissal actions where live grievances exist, although they will be reassured by this decision that vexatious and frivolous behaviour can lead to a fair dismissal. Employers may not always be able to rely on misconduct as the potentially fair reason for dismissal, and should consider using the “some other substantial reason” justification instead or in the alternative. (Hope v. British Medical Association)

To read the full newsletter, please download the PDF version.