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Employment Case Law Update November 2020

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A number of key employment law cases of significance for employers have recently been decided.

Unfair dismissal

Chemcem Scotland Ltd v Ure UKEATS/0036/19/SS

In Chemcem Scotland Ltd v Ure, the Employment Appeal Tribunal upheld the decision of the first tier in finding that the acceptance of a repudiatory breach does not have to be expressly communicated and that on the facts of this case, the act of refusing to return to work was sufficient for the employee to claim constructive unfair dismissal.

The claimant was the daughter of one of the respondent’s directors. During the employee’s maternity leave, the two had communicated about matters affecting her employment. The employee then failed to return to work after maternity leave, claiming constructive dismissal on the grounds of a series of repudiatory breaches on the part of the employer.

Chemcem disputed the claim on the basis that the claimant had failed to explicitly communicate her acceptance of the respondent’s repudiatory acts.

Both the employment tribunal and appeal tribunal found in favour of the claimant. Both judgments held that an action, such as failing to return to work, can in itself amount to an acceptance of a breach, depending on the circumstances. No express communication is required, particularly where it is clear from the employee’s action that they intend their employment to be terminated.

The test for constructive dismissal claims remains objective as to whether or not there has been a repudiatory breach. Regardless of the employer’s intention, the facts will be considered on a case-by-case basis to determine if the breach was sufficiently serious as to amount to a repudiatory breach.

 

Indirect discrimination and pay

Heskett v SoS for Justice [2020] EWCA Civ 1487 

While cost alone cannot be relied on to justify discrimination, the ‘cost-plus’ approach can in certain circumstances offer employers more leeway to justify discriminatory action.

In Heskett v SoS for Justice, the Court of Appeal considered whether ‘absence of means’ fell within the scope of cost-plus.

The claimant was a parole officer who challenged a change in their employer’s pay progression policy, which had been a direct result of a government pay freeze, as discriminatory against younger employees.

The Employment Tribunal found the respondent’s pay progression policy was prima facie discriminatory, but did not constitute age discrimination as the respondent had shown that it was a proportionate means of achieving a legitimate aim within s 19(2)(d) Equality Act 2010.

The claimant appealed on several grounds including that the reason for implementation of the policy was cost alone and therefore could not act as lawful justification for the action.

The Employment Appeal Tribunal found that the respondent had been compelled, through no fault or choice of its own, to take the action due to central government policy. On the facts, a distinction could be made between an absence of means and the respondent seeking to rely on costs as justification. The appeal was dismissed on all grounds.

The claimant further appealed to the Court of Appeal.

The Court of Appeal agreed with the findings of the EAT. While cost alone cannot amount to a legitimate aim justifying discriminatory treatment, the CoA accepted the principle of cost-plus justification, particularly where absence of means results in an employer’s need to reduce expenditure, and specifically staff costs, and can constitute a legitimate aim for the purpose of a justification defence.

 

Vicarious liability

Chell v Tarmac Cement & Lime Ltd 

In Chell v Tarmac Cement & Lime Ltd, the High Court considered whether an employer was liable for personal injury caused (albeit unintentionally) to a third party after an employee’s practical joke went wrong.

The claimant was a site contractor who brought a personal injury claim against Tarmac Cement after an employee hit two pellet targets with a hammer close to his ear, causing a loud explosion and causing him to suffer a perforated eardrum, noise-induced hearing loss and tinnitus. The employee was subsequently dismissed. The practical joke was alleged by the claimant to have been part of wider tensions between contractors and employees.

The claimant asserted the employer was directly and vicariously liable for the employee’s actions on the basis that the respondent should have risk assessed for the foreseeable risk of injury arising from the tensions between the two groups, and that the respondent was responsible for the actions of the employee.

The High Court held that although the incident happened in the workplace, the employee’s actions were unconnected with any instruction given to him in connection with his work and did not advance the purpose of his employer in any way. It found the employer was not liable, directly or vicariously, as the joke was outside the ordinary course of his employment. The employer was not therefore vicariously liable for his actions.

The decision, following the Supreme Court’s decision in Morrison Supermarkets plc v Various Claimants, offers welcome clarification for employers as to the scope of vicarious liability in respect of employee’s acting on a frolic of their own.

 

Genuine redundancy situation

Jones v BT Facilities Services 

In Jones v BT Facilities Services, the claimant, who had been made redundant, claimed unfair dismissal on the basis that his redundancy was not genuine.

The claimant was one of seven customer improvement coaches. The employer, BT Facilities Services, took the decision to replace all seven CIC roles with eight Customer Improvement/Customer Experience Lead roles.

All of the Customer Improvement Coaches were notified they were at risk of redundancy and that they could apply for one of the new roles.

The claimant applied for the Head of the Team role and the Lead roles and was unsuccessful.

He was subsequently made redundant and brought a claim for unfair dismissal because the redundancy was not genuine and instead designed to ‘get rid of’ unwanted employees.

The case has been referred back to the first tier tribunal by the EAT to reconsider this point in more detail.

Although the decision is outstanding, with redundancies and restructurings currently commonplace, the case highlights the importance considering where jobs are being made redundant and replaced by others, it is important to consider if the jobs are broadly similar. If they are similar, they are likely to be suitable alternative employment, and those being made redundant should be given a trial period of at least four weeks in a new job.

 

National minimum wage & training costs

Commissioners for HMRC v Ant Marketing 

This case confirms that when calculating whether the national minimum wage (NMW) has been paid, deductions for the cost of training can count as expenditure ‘in connection with employment’, and so may be treated as ‘reductions’.

Mandatory training will generally be more likely to be considered as being ‘in connection with employment’ and therefore as a reduction for NMW purposes. Optional training deductions may also be treated as a reduction, depending on the circumstances.

If, after training costs are deducted, the employee’s pay falls below the NMW, the worker can take action against the breach by claiming for breach of contract or for unlawful deduction from wages. In addition, HMRC can enforce the worker’s entitlement by issuing a Notice of Underpayment, and/or the employer may be guilty of a criminal offence if it has refused or willfully neglected to pay the worker their entitlement.

 

Need assistance?

If you have a question about employment case law and the impact of tribunal and court decisions on your business, DavidsonMorris’ experienced employment lawyers can help. Working closely with our specialist human resource colleagues, we offer a holistic advisory and support service for employers encompassing both the legal and people risks of workforce management. Speak to our experts today for advice.

Last updated: 29 November 2020

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