EMPLOYMENT LAW
ADVISERS
www.klng.com
Winter 2006
On Notice
Majrowski – a new claim for
employees
The House of Lords has given a
significant new string to the bow of
litigious employees by deciding that
the Protection from Harassment Act
1997 (the Act) applies in the
employment field.
The House of Lords decided in
Majrowski v Guy's and St Thomas'
NHS Trust that an employer can be
vicariously liable under the Act for
harassment committed by an employee
in the course of their employment.
This considerably widens the scope for
employees to make claims against their
employers where a fellow employee
has pursued a course of conduct that
causes the employee alarm or distress
and does not require the claimant to
show that such conduct was on the
grounds of race, sex or any other of the
grounds protected by discrimination
legislation.
The Act states, at section 1:
"(1) A person must not pursue a course
of conduct –
(a) which amounts to harassment of
another; and
(b) which he knows or ought to know
amounts to harassment of the other.
(2) For the purposes of this section, the
person whose course of conduct is in
question ought to know that it amounts
to harassment of another if a reasonable
person in possession of the same
information would think the course of
conduct amounted to harassment of the
other."
According to section 7, "references to
harassing a person include alarming the
person or causing the person distress."
Section 3 states:
"(1) An actual or apprehended breach of
section 1 may be the subject of a claim
in civil proceedings by the person who
is or may be the victim of the course of
conduct in question.
(2) On such a claim damages may be
Welcome to the Winter edition
We are delighted to announce that the
London Employment Group has been
joined by a new partner, Noel Deans,
who was previously at Speechly
Bircham. Noel advises employers in
various industry sectors (including
financial services, media and
publishing, recruitment and
technology) on a wide range of
employment law issues. We hope that
you will have the opportunity to meet
Noel during the course of 2007 but
until then, on behalf of all of the
Group, best wishes for the holiday
season and for a prosperous (and
tribunal free) 2007!
Contents
Majrowski - a new claim for
employees
1
Eavesdropping - the handbook trap 3
The Cadman case
5
Be On Notice...
6
Legislation Update
7
Update - sick pay for disabled
employees
8
Who to contact
8
On Notice
awarded for (among other things) any
anxiety caused by the harassment and
any financial loss resulting from the
harassment."
The Act was introduced to protect
individuals against stalking. However,
the scope of the Act has been
expanded by subsequent cases and it
now applies to employment.
The facts of the case are that, the
claimant, Mr Majrowski, brought a
county court action against Guy's and
St Thomas' NHS Trust (the Trust)
under section 3 of the Act. He alleged
that his departmental manager had
bullied, intimidated and harassed him
in the course of her employment with
the Trust. Mr Majrowski did not make
any other claims against the Trust or
the manager.
The trial judge struck out the claim at
the first stage and decided that
Parliament had not intended to create
an additional level of liability in
employment law and that an employer
could not be vicariously liable under
the Act.
This decision was appealed all the way
to the House of Lords which decided
that, in principle, an employer can be
vicariously liable for an employee's
breach of statutory duty under the Act.
The practical impact of this decision is
significant. Employees who suffer
bullying or harassment are generally
faced with the prospect of resigning
and bringing claims for constructive
dismissal (based on the employer's
breach of the implied term of mutual
trust and confidence) or claims for
harassment under the discrimination
legislation. In more extreme cases
involving personal injury, a claim can
be brought in the civil courts, based on
2
WINTER 2006
either negligence or breach of a
statutory duty such as the duty to
provide a safe place and system of work
under the Health and Safety At Work
etc Act 1974. The Majrowski decision
provides an alternative cause of action
for employees experiencing harassment
in the workplace.
There are several advantages to a
claimant in bringing a claim under the
Act, for example:
n
Claimants need only prove that they
have experienced "anxiety" or
"distress" as a result of the
harassment. This is a significantly
lower hurdle than establishing a
recognisable psychiatric condition to
establish personal injury under
common law and will be much easier
to prove;
n
There is no need to show that the
conduct is discriminatory in nature;
n
Employers will not be able to rely
on the statutory "reasonable steps"
defence available under the
discrimination legislation to argue
that they took all reasonable steps to
prevent the conduct from taking
place; and
n
The six-year limitation period is
considerably longer than the three
months generally allowed under the
discrimination legislation and,
indeed, Mr Majrowski brought his
claim some four years after the
harassment occurred. Employers
may not keep all the documents and
other evidence that they need to
defend such a claim for this period of
time.
However, a disadvantage to claimants
under the Act is that they need to show
a "course of conduct", whereas a single
incident will suffice to show
harassment under the discrimination
legislation.
Furthermore, employment tribunals do
not have jurisdiction to hear claims
under the Act, so they must be brought
in a county court or the High Court.
This may act as a deterrent, given that
litigation in the civil courts tends to be
slower, more expensive and carries
severe costs sanctions for those who are
unsuccessful.
www.klng.com
Eavesdropping - the handbook trap
Lisa Goodyear takes a call from a HR
Manager.
HR: Our staff handbook contains the
company's enhanced sick pay scheme.
We would like to revise the scheme to
something more in line with the
statutory sick pay requirements. Do
we need to seek the employees'
consent before seeking to introduce a
new policy?
LG: This will depend on whether the
enhanced sick pay scheme has
contractual status. In the
circumstances described, this can
happen in one of two ways:
(1) On the construction of the policy
itself and the context in which it
appears; or (2) through custom and
practice. Looking at (1), how is the
sick pay scheme referred to in the
documentation?
HR: The contract of employment refers
the employee to the staff handbook
for details of the sick pay scheme.
The staff handbook states that it
forms part of the employee's contract
of employment (when read together
with the employee's contract of
employment). The contents of the
staff handbook are in no particular
order and the sick pay scheme states
that employees are entitled to an
aggregate of 6 months' sick pay in any
52 week period.
LG: This is very similar to the recent
Court of Appeal case of Keely ("K") v
Fosroc International Limited ("FIL")
[2006]. The case considered whether
a provision contained in the staff
handbook conferred on the employee
an enforceable contractual right.
Although the case was concerned with
an enhanced redundancy provision,
some parallels can be drawn.
The redundancy terms were in a
section of the staff handbook headed
"Employee Benefits and Rights" and
the handbook was expressly referred
to in the written statement of
employment terms as being
incorporated by reference. The
redundancy provision itself said:
"Those employees with two or more
years' continuous service are entitled
to receive an enhanced redundancy
payment from the company, which is
paid free of tax to a limit of £30,000.
Details will be discussed during both
collective and individual
consultations."
The section was silent as to how the
enhanced redundancy pay should be
calculated. The "Employee Benefits
and Rights" section also included
details of employees' rights relating to
parental leave, paternity leave,
pregnancy and maternity rights,
retirement, special leave and trade
union membership.
K did not receive an enhanced
redundancy payment when he was
made redundant. He subsequently
issued breach of contract proceedings
against FIL in the High Court,
arguing that the enhanced
redundancy payment provision was
either an express term of his contract,
or had become an implied term
established by custom and practice.
The Judge in the High Court ("HC")
deemed that the redundancy policy
was not contractual, and therefore, K
WINTER 2006
3
On Notice
continued from page 3 (Eavesdropping)
could not claim that he was entitled to
the enhanced redundancy pay.
However, on appeal, the Court of
Appeal ("CA") overturned the HC's
decision. It held that the enhanced
redundancy provision was contractual.
The CA acknowledged that where a
contract of employment expressly
incorporates another document such
as a staff handbook, it does not
necessarily follow that all the
provisions in that handbook would be
terms of the contract. It was necessary
to consider the words incorporating
the document and the words used in
relation to the policy/benefit itself to
determine whether the provisions
were contractual. In the present case,
a key factor was that the redundancy
section stated that employees would
be "entitled to ….." and the Court
ruled that this was enough to show
that this section of the handbook did
have contractual status and was not
contradicted by any other provision in
the contract. The fact that a staff
handbook is presented as a collection
of "policies" does not preclude their
having contractual effect if, by their
very nature and language, they are
appropriate to be contractual terms.
The CA also determined that as the
enhanced redundancy payment could
be determined from time to time and
on a case by case basis, this was
sufficiently certain to create an
enforceable contractual right.
In your case, the employees may have
a contractual entitlement to receive
the enhanced sick pay in accordance
with the scheme set out in the staff
handbook. This does not mean that
you cannot change the terms of the
scheme, however, you will need the
employees' consent to do so and may
need to offer some kind of
inducement (financial or otherwise) to
obtain this as the change is clearly to
4
WINTER 2006
their detriment. You should consult
fully with employees before
introducing any such change. In the
absence of their consent if you impose
the change, you could be looking at a
claim for breach of contract, unlawful
deductions from wages or even
constructive or unfair dismissal.
HR: How can I make sure going forward
that employment terms in our
handbook do not have contractual
effect?
LG: As a starting point it would be
sensible to have all of the contractual
terms and conditions in the contract
of employment and all of the policies
and procedures in the staff
handbook. However, in some cases
there may be some overlap and some
employers find that the contract of
employment becomes unwieldy.
If the handbook is to contain a
mixture of policies and procedures
and contractual terms, then it is
advisable for these to be contained
within different sections of the
handbook and for the handbook to
expressly state, for example, that Part
I has contractual status and Part II
contains the company's rules and
procedures. If you wish to include
terms which are intended to have
contractual status in the staff
handbook, then the handbook should
state unequivocally which terms are
intended to be contractually binding
and which are not.
If you intend to provide any
discretionary enhanced benefits, such
as enhanced redundancy or sick pay,
the handbook should specifically state
that the benefits are intended to be
discretionary and not contractual.
Conversely, where employers are
obliged to refer to certain policies and
procedures in the individual contract
of employment by virtue of the
Employment Rights Act 1996, such as
the applicable disciplinary and
grievance procedures, the contract
should expressly state that these
procedures do not have contractual
status. Otherwise, there is a danger
that should the employer neglect to
follow the procedure to the letter the
employee may have a claim for breach
of contract and as of yet statute has
not afforded such procedures
contractual status.
www.klng.com
The Cadman Case length of service a pay criteria?
The European Court of Justice (ECJ)
handed down judgement in Cadman v
Health and Safety Executive (HSE), an
equal pay test case, on 3 October 2006.
It was held that, as a general rule,
employers can use length of service as a
criterion in assessing pay without having
to provide specific justification for doing
so. However, where a worker raises
'serious doubts' that length of service is
an appropriate criterion then specific
justification will be required.
Cadman v HSE
Mrs Cadman had been employed by the
HSE for nearly five years. She claimed
that her pay should be equal to that of
her four male colleagues. The reason for
the difference in pay was because all four
colleagues had longer service than she
did. Mrs Cadman claimed that the use of
length of service to determine pay
indirectly discriminated against women as
they are more likely to take career breaks
to undertake child caring responsibilities.
ECJ judgment in
Cadman
The ECJ confirmed the existing law
stated in Danfoss (1989). Rewarding
length of service is legitimate and does
not have to be justified as length of
service goes hand in hand with
experience and, in general, experience
enables a worker to better perform their
duties. This is the case even where
reliance on length of service results in
unequal pay between men and women.
However, where an employee has
evidence that raises "serious doubts"
about the appropriateness of using length
of service as a pay criterion then the
employer will have to justify its use.
Furthermore, it was held that where a job
classification system is in place, based on
an evaluation of the work to be carried
out, and is used for determining pay,
there is no need for the employer to show
that an individual worker had acquired
experience during the relevant period
which has enabled him or her to perform
his duties better.
Consequences of the
judgment
The decision is good news for employers
who use length of service to determine
pay and also for those who rely on
professional job evaluation systems.
However, the ECJ has given no guidance
about what might amount to 'serious
doubts'. We expect to see employees
challenging pay scales based on length of
service in jobs which can effectively be
mastered in a short time (e.g.
unskilled/semi-skilled jobs). In these
cases use of length of service criterion
will need to be justified in detail as long
service will not necessarily reflect
experience. In professional, managerial
or skilled jobs, experience may enable
the worker to perform better, but it may
only apply for a certain length of time.
Comment
There has been a great deal of press
coverage about this case. It is worth
highlighting that the decision does not
disadvantage women who take maternity
leave, as some have suggested. Maternity
leave is included in determining length of
service as the contract of employment
remains in force during the maternity
leave period. However, women who take
a career break will usually be affected as
this will terminate the contract of
employment. Also, the ECJ's decision did
not consider the impact of the new age
discrimination legislation. The use of a
length of service criterion may be
indirectly discriminatory on the grounds
of age as the criterion is more likely to
benefit older workers than younger
workers. The Age Regulations
themselves provide an exemption for
length of service of up to five years, but
beyond that it must be justified. In order
to justify a length of service criteria
employers will need to show that using
length of service encourages loyalty or
motivation or rewards experience. This
case may make proving this easier.
WINTER 2006
5
On Notice
Be On Notice that...
making "unwarranted demands for
money" in connection with a race
discrimination complaint. The
employees sought to bring a
victimisation claim and wanted to refer
to the fact that it was the employer who
suggested a financial settlement at a
"without prejudice" meeting. He was
allowed to do so. This shows that
employers must take care during
conversations believed to be "without
prejudice". If there is any doubt that
there is a genuine dispute or if they
believe that allegations of discrimination
might arise, advice should be taken first.
Holiday and long-term
sickness
"Off the record?"
The without prejudice rule is used
widely by both employers and
employees to negotiate a commercial
settlement and so avoid the financial
cost, waste of management time and bad
publicity that litigation can bring. If the
without prejudice rule applies any such
discussions between the parties are
inadmissible in evidence. However,
employers cannot use this with
impunity. Discussions held by
employers with employees and stated to
be "off the record" and "without
prejudice" may not always be regarded
by the courts as such.
The employer cannot just tell the
employee that discussions are "without
prejudice" unless the discussions are a
genuine attempt to resolve an existing
dispute between the parties. It is not
always clear, however, when there is an
existing dispute. Furthermore, the
without prejudice rule can be set aside
where it is not in the public interest and
where it would operate as a cloak for
6
WINTER 2006
perjury, blackmail or other
"unambiguous impropriety." The
following cases demonstrate the Courts'
willingness to set this aside in
discrimination claims.
In BNP Paribas v Mezzotero [2004] the
Employment Appeal Tribunal ("EAT")
held that it was in the public interest
that allegations of unlawful
discrimination in the workplace are
heard by a tribunal. Discriminatory
comments that were made in the course
of "without prejudice" discussions could
be referred to by an employee in support
of her sex discrimination claim. "M" had
been invited to a "without prejudice"
meeting and offered a financial
settlement not to return from maternity
leave.
Last month the EAT in Brunel
University & another v Vaseghi &
another [2006] held that comments
made in a "without prejudice" meeting
were admissible. The employer had
publicly accused the employees of
In April 2005, the Court of Appeal in
Commissioners for the Inland Revenue
v Ainsworth, held that the right to four
weeks' statutory paid holiday under the
Working Time Regulations 1998 does
not accrue whilst an employee is on
long-term sick-leave - at least where the
employee has been absent for the entire
holiday year. The employees appealed
to the House of Lords, who last week
referred the issue to the European Court
of Justice. So watch this space!
Tribunal Award Limits Annual Increases
The Employment Rights (Increase of
Limits) Order 2006 has been laid before
Parliament, containing the increase in
limits to tribunal awards which come
into force on 1st February 2007. The
key increases are as follows:
n
compensatory award for unfair
dismissal - £60,600 (from £58,400)
n
a week's pay (for basic award,
redundancy payments etc.) - £310
(from £290)
www.klng.com
#
The following provisions made under
the Act or related regulations came into
force on 1 October 2006 and apply to
women whose expected week of
childbirth (EWC) (or date of adoption)
falls on or after 1 April 2007:
n
#
n
The removal of the small employers'
exemption. Employers with five or
less employees are currently
exempted from a finding of automatic
unfair dismissal where they do not
allow an employee returning from
additional maternity leave (AML) or
additional adoption leave (AAL) to
return to the same or a similar job.
The removal of the qualifying period
for AML. Pregnant employees whose
EWC falls before 1 April 2007 are
entitled to six months' ordinary
maternity leave (OML) but only
employees with 26 weeks' service at
the start of the 14th week before the
EWC qualify for a further six months'
AML. Now all pregnant employees
(whose EWC is on or after 1 April
2007) will qualify for 12 months'
maternity leave, regardless of their
length of service.
An increase in the period of notice
that an employee has to give to their
employer when returning early from
n
Provision for the SMP period or MA
period to start on any day of the week,
concurrently with OML. Previously,
OML could start on any day of the
week but the SMP and MA periods
were measured in complete weeks
from Sunday to Saturday, starting on
the Sunday after the employee stops
working.
n
The introduction of "Keeping in
Touch" days (KIT days). Where both
parties agree, those on maternity or
adoption leave can return to work for
up to 10 days during their leave
without losing their right to leave or
SMP/SAP. Women in receipt of MA
Provisions coming into
force on 6 April 2007
The right for those who care for adults
(that is, those over the age of 18) to
request flexible working will come into
force on 6 April 2007. At present only
parents of children under the age of six
can request flexible working.
The DTI has now announced the
definition of "carer" that will be used in
the final regulations. A "carer" will be an
employee who is or expects to be caring
for an adult who:
n
Is married to, or the partner of the
employee;
n
Is a near relative of the employee; or
n
Falls into neither category but lives at
the same address as the employee.
#
n
The extension of the period of
statutory maternity pay (SMP),
maternity allowance (MA) and
statutory adoption pay (SAP) from 26
weeks to 39 weeks.
#
n
will also be able to work for their
employer for up to 10 days during
their MA period without losing any
MA. The wages which the employer
has to pay to the employee for
working a KIT day is to be agreed
between them. Employees who
undertake, consider undertaking, or
refuse to undertake such work will be
protected from detriment or dismissal
on those grounds. Employers will also
be entitled to make "reasonable
contact" with employees while they
are on maternity leave.
AML or AAL from 28 days to eight
weeks.
The "near relative" definition includes
parents, parents-in-law, adult children,
adopted adult children, siblings
(including those who are in-laws),
uncles, aunts, grandparents or steprelatives.
#
Provisions currently in
force
#
#
# Update
Legislation
Work and Families Act 2006 (the Act)
WINTER 2006
7
On Notice
Update - sick pay for disabled employees
In the recent case of O'Hanlon v
Commissioners of HM Revenue and
Customs [2006] the Employment
Appeal Tribunal (EAT) examined
whether it is reasonable to expect an
employer to offer enhanced sick pay to a
disabled employee over and above that
to which a non-disabled employee is
entitled.
Facts
Mrs O'Hanlon suffered from clinical
depression which constituted a disability
within the meaning of the Disability
Discrimination Act 1995 (DDA).
Mrs O'Hanlon's sickness absence (365
days over a 4 year period - 320 of which
related to her disability) exceeded the
terms of HMRC's sick pay scheme
(which was subject to an overriding
maximum of 12 months' paid sickness
leave in any 4 year period).
Mrs O'Hanlon brought a claim under the
DDA claiming that failure to pay her for
all of her disability related sickness was
either 1) a failure to make a reasonable
adjustment to compensate for her
disability; or 2) was unjustified disability
related discrimination. The
employment tribunal held that Mrs
O'Hanlon was substantially
disadvantaged, but that HMRC had
taken all reasonable steps to alleviate
the disadvantage, including doing all
they could to help Mrs O'Hanlon back
to work. Mrs O'Hanlon appealed to the
EAT.
Decision
The EAT held that an employer would
only very rarely be obliged, as a
reasonable adjustment under the DDA,
to give more sick pay to a disabled
person than it would otherwise give to a
non-disabled person on sick leave. The
EAT commented that the purpose of
the DDA is to enable disabled persons
to play a full part in the world of work,
not to "treat them as objects of charity"
(which may in some cases act as a
disincentive to return to work).
A disabled employee will therefore find
it difficult to claim full pay during sick
leave (once any contractual entitlement
has been exhausted) unless they can
show that their absence was caused by
the employer's failure to make
reasonable adjustments that would have
allowed the employee to stay in work.
In the earlier case of Nottingham
County Council v Meikle [2004] the
employer had failed to make reasonable
adjustments to Ms Meikle's working
arrangements to take account of her
impaired vision which resulted in her
Who to Contact
For further information please contact:
Paul Callegari
pcallegari@klng.com
Noel Deans
ndeans@klng.com
Jackie Cuneen
jcuneen@klng.com
Lisa Goodyear
lgoodyear@klng.com
taking sickness absence. As a result, the
court held that the loss of pay in that
particular case was not justified. If the
employer had complied with its duty to
make reasonable adjustments, Ms
Meikle would not have been absent and
would have remained on her full salary.
In contrast, in the O'Hanlon case, the
EAT held that the HMRC had made all
reasonable adjustments to alleviate Mrs
O'Hanlon's disadvantage (HMRC had
made a number of adjustments to Mrs
O'Hanlon's working arrangements
including reducing her hours and
relocating her to reduce her commute).
Comment
It is key in this case that the employer
had done all it could to facilitate the
employee's return to work. Had the
employer failed to make any such
reasonable adjustments then it may have
been held to have contributed to her
absence and, therefore, been liable for
her loss of pay on the expiration of the
enhanced sick pay scheme.
Accordingly, employers should liaise
closely with their employees and
medical advisers to ensure that they are
taking all reasonable steps to provide the
employee with any reasonable assistance
that he or she may require to ensure a
swift return to work.
Kirkpatrick & Lockhart
Nicholson Graham LLP
T: +44 (0)20 7360 8194
T: +44 (0)20 7360 8187
T: +44 (0)20 7360 8184
T: +44 (0)20 7360 8256
110 Cannon Street
London EC4N 6AR
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WINTER 2006
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