Employment Law Advisors
noticeboard
Winter 2003
contents
Unfair Dismissal
Round Up
1
Eavesdropping
2
Discrimination on the
grounds of religion or belief
5
How we can help
8
Welcome to the
Winter edition....
We hope that you like the new
style of Noticeboard.
We have a few personnel issues
of our own to tell you about
since our last issue: as many of
Unfair Dismissal Round Up
Statutory disciplinary and grievance procedures
you will know, Jane Liddington
left the firm in August and we
wish her every success in her
new ventures, which will include
dispensing justice at the Croydon
Employment Tribunal!
Paul Callegari has taken over the
day to day running of the
Employment Group and we are
pleased to announce that Paul
has recently been joined by
Jackie Cuneen, a senior
employment specialist who was
previously at CMS Cameron
McKenna.
www.ngj.co.uk
Employment disputes are a costly
business in both human and financial
terms. They are stressful, disruptive
and expensive for employees and
employers alike. The Government's
attempt at reducing this cost is the
introduction of statutory minimum
dismissal and disciplinary and
grievance procedures.
The new procedures are set out in
the Employment Act 2002 (EA) and
will apply to all employers and
employees from October 2004. The
thinking behind the procedures is
that they will create strong incentives
for the employer and the employee
to resolve problems through dialogue
before resorting to legal action.
There is an assumption that many
Tribunal claims are brought by
employees as a knee jerk reaction to
what they perceive to be unfair
treatment, and if the parties are
required to get together and discuss
matters at an earlier stage, the heat
will be taken out of the situation and
a Tribunal claim will be avoided. The
question is, will the procedures
work?
noticeboard
Eavesdropping
What do the procedures involve?
Jackie Cuneen takes a call from a HR
manager whose company is about to
embark on a redundancy programme
The procedures are still only in draft
form but in broad terms employers
and employees will have to follow a
three step standard procedure:
JC
HR
How are things?
Not so good. Sales are down and
the Company is currently
considering closing down one of
its offices and making the staff
there redundant. I have been
through this process before, but
am concerned about one
particular employee who will be
affected by this.
He has been on long term sick
leave for 6 months suffering from
stress. He is currently receiving
half pay under the Company's
sick pay scheme, but this
entitlement will be exhausted
soon. He's unlikely to return to
work in the near future and has
applied for cover under the
Company's permanent health
insurance (PHI) scheme. We have
not yet heard whether his
application has been successful. I
read something recently which
said that employers could not
dismiss employees on PHI. Is this
true?
JC
Not necessarily. What does the
contract/employee handbook say
about PHI? Does the employee
have to remain in your
employment to benefit from the
scheme?
HR
I'm not sure what the contract
says, but the scheme rules say
that he has to be an employee to
benefit.
JC
Okay. The basic legal position is
2
inform the employee in writing;
hold a meeting;
allow an appeal to take place.
If employment has terminated there
is a two step procedure:
inform the employee in writing;
hear an appeal.
Failure to follow the procedures will
expose the employer to an automatic
unfair dismissal claim where the
employee has one year's continuous
service. Any compensation for
dismissal may also be adjusted (up or
down) between 10 and 50%
depending on who is to blame for
the failure to follow the procedure.
Dismissal is already a procedural
minefield as the case reports below
will illustrate. There has been a
general recognition, not least by the
Government, that the proposed
statutory overlay is complex and
confusing and does not sit well with
existing legislation and Tribunal
procedure. Indeed, the Government
has acknowledged that going
through the relevant minimum
procedure will not necessarily be
sufficient to ensure that a dismissal is
fair and that employers should still
follow the Acas Code of Practice on
Disciplinary and Grievance
Procedures. The Code is to be
updated in October 2004 after
public consultation early next year
and hopefully this will give
employers some practical guidance.
The Government consultation on the
draft disciplinary and guidance
procedures closed on 29 October
2003. We will be providing a more
detailed analysis of the procedures
and their practical impact once they
have been finalised.
Winter 2003
To be accompanied or not to be accompanied?
The first stage of any disciplinary
procedure is usually for the employer
to take the employee aside and have
a quiet word in the hope that
matters can be resolved informally,
the formal disciplinary procedure will
not have to be activated and both
parties can get back to work. There
is no need then for the employee to
be accompanied during any such
discussion. Is there?
The EAT in the recent case of London
Underground Ltd v Ferenc-Batchelor;
Harding v London Underground Ltd
(2003) decided that the statutory
right to be accompanied under the
Employment Relations Act 1999
(ERA) does arise if an informal oral
warning becomes a "formal
warning". That is, if the warning
that where an employee is
entitled to PHI, and his
entitlement is subject to
remaining an employee during his
incapacity, then the Courts will
imply a term into his contract to
the effect that the employer
should not dismiss him solely as a
means of depriving him of PHI. If
the employer does dismiss then
the employee could claim
damages for breach of contract
for the loss of the PHI which
could be very expensive for the
employer.
forms part of the employee's
disciplinary record. This is not to be
confused with the employer simply
recording what has happened for
management purposes, and refers to
the formalising of the warning:
placing it on the employee's record
and attaching a timescale to it. A
genuinely informal warning should
be just that - "informal", and should
play no part in any future disciplinary
proceedings should they be initiated.
In the Ferenc-Batchelor case,
however, the EAT decided that no
right to be accompanied arose where
the potential outcome of the hearing
was the imposition of training,
coaching or counselling as these
were not disciplinary sanctions.
HR
So, we can't dismiss him then?
JC
You can dismiss him, but whether
the dismissal is lawful will
depend on the reason for his
dismissal. There is nothing to
prevent an employer from
dismissing an employee for good
cause. For example, an employer
can dismiss an employee for gross
misconduct or more generally a
repudiatory breach of the
contract. More importantly, in
your case you can dismiss an
employee for redundancy while
he is off sick even if the dismissal
has the effect of terminating his
entitlement to both company sick
pay and PHI, provided that the
redundancy is genuine.
HR
So there is no exposure to the
Company if he's made
redundant?
JC
You still need to check the
contract/handbook or any other
correspondence relating to the
employee's PHI entitlement to
make sure that the employee's
contractual entitlement is no
greater than the PHI rules
Can bullies cross examine their victims?
Will a dismissal be unfair if the
employer does not give the
employee the opportunity to cross
examine those who have made
allegations against him or her? The
EAT in Santamera v Express Cargo
Forwarding (t/a IEC Ltd) (2003), a
case in which the employee was
dismissed for bullying colleagues,
ruled that there was no rule which
required an employer, when
dismissing an employee for
misconduct, to arrange a hearing
which gives the employee the
opportunity to cross examine the
complainants.
However, in Ulsterbus v Henderson
(1989), the Northern Ireland Court of
Appeal had previously taken a
different view. They decided that
whether or not a dismissal would be
found to be unfair in such
circumstances depended on the
particular facts of the case. The
deciding factor was the overall
"reasonableness" of the dismissal. In
some cases, therefore, a dismissal
may be unfair if cross examination is
not allowed. It is our view that this
is the safer way to proceed.
“the deciding factor was the
overall “reasonableness” of
the dismissal”
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provide.
HR
What do you mean?
JC
Well, there have been cases
where the contract/handbook and
the PHI rules have actually said
different things. For example, in
one case, the employer's
insurance policy said that PHI
cover terminated upon the
employee ceasing to be an
employee. However, the
employee was never made aware
of this and the contract in fact
contradicted this. The result was
that the employer was found to
have a contractual obligation to
continue the cover
notwithstanding the fact that the
insurers would not pay out. The
contract should expressly state
that any insurance cover is subject
to the rules of the scheme.
HR
I'll check that. Is there anything
else?
JC
Yes, in any dismissal situation
where the employee is on long
term sick leave, you should be
aware of any obligations that you
might have under the Disability
Discrimination Act 1995 - the
employee in question may be
suffering from a "disability"
within the meaning of the Act.
Also, if the employee has one
year's service or more then you
need to make sure that the
dismissal is fair and that a fair
procedure is followed to avoid
exposure to an unfair dismissal
claim. For redundancy, this will
involve consultation and a search
for alternative employment.
HR
4
Thanks very much.
Can an employee with under one year's service claim
compensation for unfair dismissal?
Employees ordinarily need one year's
service to bring a claim for unfair
dismissal (unless the dismissal is
unfair for an automatically unfair
reason, such as pregnancy). Provided
that dismissal takes place before the
year is out there should be no
exposure for unfair dismissal. Right?
Wrong. There have been a string of
cases where employees have tried to
circumvent this statutory requirement
by relying on their contractual rights,
most recently Virgin Net v Harper
(2003).
H was entitled to three months'
notice under her contract. However,
she was dismissed without notice
before she had reached one year's
service. If she had been allowed to
work her notice this would have
taken her over the one year
threshold and she would have
acquired the right to claim unfair
dismissal. H brought a claim for
breach of contract and part of her
claim included damages for "loss of
a chance" to claim unfair dismissal.
The Tribunal decided in her favour
following an earlier decision by the
EAT in Raspin v United News Shops
Limited (1999). In that case, R was
wrongfully dismissed shortly before
acquiring a year's service. He
successfully sued for damages for
breach of contract to include loss of
unfair dismissal compensation on the
basis that, had his employer followed
its contractual disciplinary procedure,
he would have acquired one year's
service and so been able to claim
unfair dismissal.
However, the EAT in the present case
decided, following the recent House
of Lords decision in Johnson v Unisys
(2001), that it was not possible to
recover damages for breach of
contract arising from the fact of or
manner of dismissal. The EAT
thought that a common law action
for breach of contract could not
have been intended by parliament to
circumvent the restrictions imposed
on compensation for unfair dismissal.
Therefore H was not entitled to
compensation for unfair dismissal.
Winter 2003
Points to note
Unfair dismissal
The Harper decision is good news in
that employers' exposure to claims
for unfair dismissal compensation
from employees with under one
year's service is reduced. The worst
case scenario is that employees can
claim their entitlement to salary and
benefits for their notice period.
Employees cannot add on their
contractual notice to get over the
one year hurdle.
Statutory notice
Employers should be aware that
under the Employment Rights Act
1996, where an employee is
dismissed without receiving their
statutory notice entitlement of one
week, the date of dismissal will be
artificially extended and will be when
that notice would have expired. This
means that employees with just
under one year's service could still
claim unfair dismissal. Employers
should make sure then that they take
this into account when deciding
whether or not to dismiss an
employee who is approaching one
year's service.
Payment in lieu of notice
One further point to note is that H's
contract of employment did not
contain a payment in lieu of notice
clause. If there had been such a
clause then the employer would not
have faced a claim for breach of
contract in the first place as it could
have lawfully terminated H's contract
by exercising that clause with
immediate effect.
Disciplinary procedures
Finally, employers may still face
exposure where there is a contractual
disciplinary procedure (as in the
Raspin case) and the employer fails to
follow this before dismissing.
Employers should, therefore, make
sure that the contract states that any
disciplinary procedures do not have
contractual effect. This may be
beyond employers' control if the
Government makes the new statutory
dispute resolution policies contractual
as envisaged by the Employment Act
2002. If so, employers should make
sure that these procedures are
activated as soon as a disciplinary
issue arises as any delay could mean
that the employee inadvertently
acquires one year's service and unfair
dismissal rights.
Discrimination on the grounds of religion or belief
Background
On 2 December 2003 new legislation
will come into force which will
outlaw discrimination against
workers on the grounds of religion
or belief. Until now, workers in
Great Britain have had no
comprehensive legal framework to
protect them against religious
discrimination and have had to rely
on statutes (such as the Race
Relations Act 1976) that were not
necessarily drafted with religious or
belief discrimination in mind. The
new law will potentially have huge
practical consequences.
The Employment Equality (Religion or
Belief) Regulations 2003 (the
Regulations) will make discrimination
on the grounds of religion or belief
unlawful. As with other types of
discrimination it will be unlawful to
discriminate directly or indirectly,
harass or victimise someone, or
discriminate against someone after
the termination of the working
relationship. There are limited
exceptions, where either being of a
particular religion or belief is a
genuine occupational requirement
for a particular job or the employer
has an ethos based on a particular
religion or belief. Further
exemptions on the grounds of
national security or positive
discrimination will also apply.
“it will be unlawful to
discriminate directly or
indirectly, harass or
victimise someone, or
discriminate against
someone after the
termination of the working
relationship.”
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What is covered?
Who is covered?
The Regulations make it unlawful to
do any of the following on the
grounds of religion or belief:-
Protection under the Regulations will
be given to job applicants and to
those already in employment.
"Employment" is widely defined,
and extends to contract workers
(such as agency temps) and some
self-employed people.
To discriminate directly (meaning
to treat someone less favourably
simply because of their religion or
belief);
To discriminate indirectly. Indirect
discrimination occurs where a
criterion, provision or practice is
put into place which
disadvantages people of a
particular religion, without
justification; or
To subject an individual to
harassment. Harassment is
defined by the Regulations as
"any unwanted conduct which
has the purpose or effect of
violating another's dignity or of
creating an intimidating, hostile,
degrading, humiliating or
offensive environment".
Direct and indirect discrimination are
familiar concepts. The Regulations
are notable, however, for the
introduction of a statutory definition
of harassment. An important point
to note is that it is not necessary for
dignity to be violated and for an
intimidating environment to be
created: one of the two is sufficient.
Perhaps more controversial is the
overriding requirement that for
conduct to constitute harassment,
the test must be objectively met. In
other words, the intention of the
alleged harasser is irrelevant.
Employers will be hoping that the
overriding test of reasonableness will
prevent employers from being held
liable for claims brought by
excessively sensitive individuals.
6
Definition of religion or
belief
The Regulations define religion or
belief as "any religion, religious
belief, or similar philosophical
belief." While often it may be
obvious what is or is not a religion
or belief, the DTI's Explanatory
Notes to the Regulations suggest a
number of indicative factors which
may be considered by Tribunals:
whether there is collective worship,
a clear belief system, or a profound
belief affecting way of life or view of
the world. While groups such as
Rastafarians, druids, and cults may
be covered, arguably the only way a
non-believer will be protected
against direct and indirect
discrimination is if he is an atheist,
which may constitute a "similar
philosophical belief" under the
Regulations.
“ The Regulations are
notable for the introduction
of a statutory definition of
harassment.”
Liability under the
Regulations and Remedies
Anything done by a person in the
course of his employment will be
treated as being done by the
employer as well as by him or her,
irrespective of whether the employer
knew or approved of the individual's
actions. Employers will have to
show that they took such steps as
were reasonably practicable to
prevent the employee from doing
the offending act and that they had
appropriate HR policies and training
in place.
Remedies available to a Tribunal
include making a declaration,
recommending that the employer
takes steps to ensure the particular
form of discrimination does not
recur and awarding damages by way
of compensation. Note that
employees who commit
discriminatory acts will also be
personally liable for discrimination.
In common with other types of
discrimination, an employee does
not need any qualifying period of
service before being able to bring a
claim and questionnaires may be
used by individuals to gain more
information from employers.
Procedurally, once the individual has
established facts from which a
Tribunal could conclude that an act
of discrimination has been
committed, the onus passes to the
employer to show otherwise.
Winter 2003
Defences open to employers
Indirect discrimination can be
justified. Direct discrimination
cannot. In addition, discrimination
may be lawful where being of a
particular religion or belief is a
genuine occupational requirement
(GOR) for a position. Two types of
GOR - the general and the religious
organisations ethos GOR - may be
used as a defence to claims of direct
and indirect discrimination.
Essentially, a general GOR will apply
where being of a particular religion
or belief is a genuine, determining
and proportionate occupational
requirement and that requirement is
not met by the person to whom the
requirement is applied. A religious
organisation’s ethos GOR, on the
other hand, may apply in an
organisation such as a church or
denominational school founded on a
certain religion or belief. In this case,
the need for a particular religion or
belief need not be a determining
factor, as long as it is applied
proportionately. For example, while
a Catholic school may be able to
justify requiring Catholic religious
education teachers, it may not be
possible to justify a similar
requirement for geography teachers.
Guidance and Implementation in the workplace
Some common areas where
employers may be required to
accommodate religious observance
and practice include dress codes,
recruitment and job applications,
break policies, flexible scheduling and
rescheduling and religious leave.
Employers are not required by the
Regulations to provide time and
facilities for religious or belief
observance in the workplace.
Nevertheless, employers would be
well advised to consider now whether
their policies, rules and procedures
indirectly discriminate against workers
of particular religions or beliefs and, if
so, whether reasonable changes
might be made.
dress codes
Dress codes which do not allow
staff to wear clothing required by
their religion may fall foul of the
Regulations. Health and safety
considerations may be a factor in
deciding how far to accommodate
the needs of employees, although
employers may be required to
investigate whether health and
safety equipment can be modified
to allow employees to continue
wearing their religious dress safely.
recruitment and job
applications
If a GOR applies to a position this
should be highlighted in all
advertisements and materials sent
to potential applicants and be
reiterated throughout the
interview process. In application
forms and interviews questions
should not be asked which require
applicants to reveal their religious
affiliation, places of worship or
customs observed, either directly
or otherwise since unsuccessful
candidates may point to these
questions as evidence that religion
played a part in the decision not
to offer the job.
break policies, flexible
scheduling and rescheduling
The introduction of a flexible work
schedule may help employers
avoid problems. Flexibility could
be introduced into areas such as
arrival and departure times,
flexible work breaks, use of lunch
time in exchange for an early
departure, staggered working
hours and permitting employees
to make up time lost due to the
observance of religious practices.
However, employers should still
bear in mind the requirements of
the Working Time Regulations
1998 in relation to rest breaks and
holidays and also the maximum
length of the working day and
week.
religious leave
Employees may request holiday for
certain festivals or ceremonies.
Difficulties may arise where several
employees belonging to the same
religion each request holiday as
the business may not be able to
cope without such a high level of
absences on one day. Employers
should encourage staff to make
these requests as early as possible
in the leave year so that staffing
arrangements can be considered
in plenty of time. The ability of an
employer to justify refusing the
request will very much depend on
the size and administrative
resources of the company, the
work done by the employee and
the number of employees who
had requested leave for the same
period.
7
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Conclusion
Employers should consider now what
impact the Regulations will have. If
information regarding religious
preferences is not routinely recorded,
employers may wish to obtain this
information (which will be "sensitive
personal data" under the Data
Protection Act 1998) and to consider
how current working practices could
be caught by the Regulations.
Employers should circulate guidance
to managers and staff and train
management so that they are
familiar with the new Regulations.
Religious discrimination should now
form part of all equal opportunities
policies and training. Employers
should ensure that policies are
enforced and that those acting in
breach are fairly and consistently
disciplined.
In all cases, the ability of the
employer to justify its conduct will
turn on what is reasonable and
practicable given the employer's
resources. Clearly an organisation
with thousands of employees and
substantial premises will be able to
accommodate the requirements of
its workforce far more easily than a
small business with only a handful of
staff. Nevertheless, the same criteria
apply in both cases and employers at
either end of the spectrum must
evaluate their policies and practices
to ensure that what has been
acceptable until now will continue to
be so under the new regime.
How we can help
The Employment Group are helping
businesses to get to grips with the
new legislation. We are drafting or
reviewing equal opportunities
policies and advising on how specific
workplace practices could cause
problems for employers once the
Regulations come into force. We are
also able to provide management
training on how to cope with the
Regulations, how to anticipate
problems and what to do when
problems arise. If you are interested
in any of these services please
contact Paul or Jackie who can
advise you on what action would be
best for your business.
Nicholson Graham & Jones
110 Cannon Street, London EC4N 6AR
020 7648 9000
Internationally a member of GlobaLex
The contents of these notes have been
gathered from various sources. You
should take advice before acting on any
material covered in noticeboard.
© Nicholson Graham & Jones 2003
8
Paul Callegari
email: paul.callegari@ngj.co.uk
tel: 020 7360 8194
Jackie Cuneen
email: jackie.cuneen@ngj.co.uk
tel: 020 7360 8184