Read on for our monthly digest for employers on upcoming employment law changes and key, recent employment tribunal cases.
Holiday Pay
Deksne v Ambitions Ltd [2024] EAT 171
In the case of Deksne v Ambitions Ltd, the claimant alleged unlawful deductions from wages due to incorrect holiday pay calculations made by the employer. Initially, the Employment Tribunal dismissed the claim, ruling that the deductions were not part of a ‘series’ and were therefore out of time. This decision was influenced by the precedent set in Bear Scotland v Fulton. Gaps exceeding three months between some of the underpayments were deemed to break the series of deductions, rendering the claims ineligible.
Subsequently, the Supreme Court decision in Chief Constable of the Police Service of Northern Ireland v Agnewoverturned the principle that a three-month gap between underpayments interrupted the series, creating a significant shift in legal interpretation.
The Employment Appeal Tribunal (EAT) overturned the original tribunal ruling, holding that whether deductions of wages constitute a series is a matter of fact and must be determined by considering all relevant circumstances. Factors such as the similarities, differences, frequency, size and impact of the deductions, alongside their underlying causes and any links between them, should inform the assessment. The tribunal erred by overly relying on the three-month gap between some deductions.
The EAT found that all of the claimant’s holiday pay underpayments, arising from the same calculation error, formed a continuous series of deductions. Applying the two-year backstop under section 23(4A) of the Employment Rights Act 1996, the EAT substituted a finding of unlawful deductions from wages. The decision was reached in line with the precedent set in Jafri v Lincoln College, where the EAT is empowered to substitute its decision if no other outcome is possible.
Employer Takeaways
This ruling highlights the expanded scope for claims related to holiday pay underpayments following the Agnew decision. A three-month gap between underpayments can no longer be relied on by employers to argue that a series of deductions has been broken. Instead, tribunals must consider the broader context and factual links between deductions.
UK employers should review holiday pay calculations to ensure compliance and avoid systemic underpayments, address historical errors promptly – as claims may now span up to two years if linked as part of a series – and maintain payroll systems and documentation to minimise the risk of litigation.
Victimisation & Harassment
Carozzi v University of Hertfordshire
The claimant, employed in a marketing role by the respondent, alleged direct religious and race discrimination, harassment and victimisation under the Equality Act 2010 (EqA). Key claims involved race harassment linked to remarks about the claimant’s Brazilian accent and victimisation based on the refusal to share meeting notes after the claimant raised concerns about potential race discrimination.
The tribunal initially dismissed all claims. The claimant appealed on three grounds, two of which were upheld by the EAT: namely, that the tribunal had misapplied the requirement that harassment must be “related to” a protected characteristic and it had erred in its test for victimisation.
The EAT held that the tribunal misapplied the legal test under section 26 of the EqA. It clarified that for harassment to occur, the conduct must be “related to” a protected characteristic, but it does not have to be “because of” the characteristic. The EAT provided an example: conduct can relate to a protected characteristic even if the person responsible is unaware of the link (e.g., using a word with offensive connotations to a protected group). The protected characteristic need not motivate the conduct; it is sufficient that the behaviour is related to it and has the purpose or effect of violating dignity or creating a hostile environment. The EAT also recognised that comments about a person’s accent could relate to their race if the accent is part of their ethnic identity. The claimant’s appeal on this ground was upheld.
The EAT ruled that the tribunal erred in dismissing the victimisation claim. It held that the correct test is whether the refusal to share the notes was, to a material degree, influenced by the Claimant’s potential discrimination complaint. The tribunal incorrectly reasoned that the Respondent’s behaviour was lawful because it would have acted similarly for any other legal claim. The EAT also noted that the refusal could constitute a detriment if the Claimant could reasonably view it as disadvantageous.
The victimisation claim was remitted to a new tribunal for reconsideration.
Employer Takeaways
This case broadens the interpretation of harassment under the EqA. Employers must recognise that conduct can constitute harassment even if it is not intentionally linked to a protected characteristic. Comments about attributes such as accents, which are closely tied to a person’s ethnic or racial identity, can be considered harassment if they have the effect of violating dignity or creating a hostile environment.
Employers should ensure employees are trained to avoid making remarks that could inadvertently relate to protected characteristics. A focus on the impact of behaviour, rather than the intent of the individual, is key in preventing harassment claims.
The case highlights that withholding information from employees considering discrimination claims could amount to victimisation if influenced by the potential claim. Employers must ensure decisions to withhold information are made with legitimate, non-discriminatory reasons and avoid actions that employees might reasonably perceive as disadvantageous or retaliatory.
Pre-Termination Discussions & Protected Conversations
Gallagher v McKinnon Auto and Tyres
Mr Gallagher, a branch manager at McKinnon Auto and Tyres Ltd, brought a claim for unfair dismissal after his role was terminated due to redundancy. Before his dismissal, the employer held a meeting with him, described as “off the record,” where he was offered a settlement agreement. Gallagher sought to introduce evidence of this pre-termination negotiation in his claim. The Employment Tribunal (ET) ruled that the discussions were inadmissible under section 111A of the Employment Rights Act 1996 (ERA), which protects pre-termination negotiations in unfair dismissal claims unless improper behaviour occurred. Gallagher appealed the decision to the Employment Appeal Tribunal (EAT).
The ET found that the discussions in question were protected under section 111A and did not involve improper behaviour. The meeting, though described as a “return-to-work” discussion, was instead used to propose a settlement offer. The ET found this lack of transparency insufficient to constitute improper behaviour. The meeting was conducted in a calm and measured manner, with no aggressive or inappropriate behaviour by the employer.
Gallagher was offered £10,000 and given 48 hours to consider the terms. The ET determined this timeline, while brief, was not unreasonable and did not breach Acas guidelines, which are advisory rather than binding.
The employer’s statement that Gallagher’s role was redundant was part of initiating the redundancy process, not an inevitable threat of dismissal.
The ET concluded that there was no undue pressure or impropriety, rendering the settlement discussions inadmissible in Gallagher’s unfair dismissal claim.
The EAT upheld the ET’s ruling. The EAT agreed that the meeting and subsequent offer were conducted appropriately and did not meet the threshold for improper behaviour. While the meeting’s purpose shifted, this alone did not constitute improper conduct. The timeline for considering the offer was deemed reasonable given the circumstances and did not amount to undue pressure. The employer’s comments about redundancy reflected a legitimate process rather than coercion to accept the settlement.
The EAT noted that claims of improper behaviour require strong evidence, especially in redundancy situations. The cumulative factors raised by Gallagher did not demonstrate undue pressure or a lack of fairness.
Employer Takeaways
This case highlights key considerations for employers when engaging in pre-termination discussions. Section 111A ERA provides confidentiality for severance discussions unless improper behaviour is present. Employers should ensure discussions are conducted calmly and fairly to maintain this protection.
While Acas guidance advises against undue pressure in settlement discussions, redundancy processes differ from disciplinary situations. Employers must be clear about the context and avoid presenting redundancy as inevitable. Transparency about the purpose of meetings is advisable, though not legally required to invalidate discussions. Providing reasonable time for employees to consider offers (e.g., at least 48 hours) and access advice can help avoid claims of impropriety. Employers should document meetings and offers to demonstrate compliance with legal and procedural standards.
The decision also reaffirms the importance of maintaining fairness and professionalism in redundancy and settlement negotiations, protecting employers from the risk of inadmissible evidence in tribunal proceedings.
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Author
Founder and Managing Director Anne Morris is a fully qualified solicitor and trusted adviser to large corporates through to SMEs, providing strategic immigration and global mobility advice to support employers with UK operations to meet their workforce needs through corporate immigration.
She is a recognised by Legal 500 and Chambers as a legal expert and delivers Board-level advice on business migration and compliance risk management as well as overseeing the firm’s development of new client propositions and delivery of cost and time efficient processing of applications.
Anne is an active public speaker, immigration commentator, and immigration policy contributor and regularly hosts training sessions for employers and HR professionals
