Employment Case Law

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Dismissal of Fixed Term Employees and Collective Consultation
The Question Of Employment Status – Employed or Self Employed?
Royal Bank of Scotland .v. Ahston
Medhin .v. Compass Group
Tameside Hospital .v. Mylott
Gisda Syf .v. Barratt
Lisboa .v. Realpubs Ltd and Others
Ezsias .v. North Glamorgan NHS Trust

Dismissal of Fixed Term Employees and Collective Consultation

The recent decision by the Employment Appeal Tribunal (EAT) in the case of University of Stirling v University and College Union (UCU), is an important one for employers who regularly make use of fixed term contracts and who are faced with the prospect of making redundancies.

The issue before the EAT was essentially whether the expiry and non-renewal of a fixed term contract, fell within the definition of a ‘redundancy dismissal’ for the purposes of including those fixed term employees in collective redundancy consultation.

Briefly, the facts of the case are as follows:

The university habitually made use of fixed term contracts for employees working on specific projects linked to funding and to cover temporary absence. Due to funding cuts, the university had a substantially smaller budget for the following academic year and put in place a number of money saving measures. Focus inevitably fell on job losses, the wage bill being the highest annual expenditure for most organisations. The university proposed to reduce staffing levels in three ways:

Voluntary redundancies
Expiry and non-renewal of fixed term contracts
Compulsory redundancy

Nothing particularly unusual so far, the interesting aspect of this case however, is the way the university conducted the redundancy exercise, in particular, their approach to collective consultation.

In essence, while they did collectively consult with the UCU regarding the proposed redundancies to permanent staff, they took the view that the non-renewal of a fixed term contract did not fall within the definition of ‘redundancy’ in terms of Section 195 of TULR(C)A (i.e. a dismissal that is for a reason ‘not related to the individual concerned’) and there was therefore no obligation to collectively consult in respect of those employees.

The UCU, not surprisingly, brought four test cases at the employment tribunal, alleging the expiry and non-renewal of a fixed term contract did fall within the Section 195 definition of redundancy and that the university had failed to comply with its duty to collectively consult in respect of these employees. The tribunal agreed with the UCU and found that the employees were dismissed as redundant within the meaning of Section 195. The University appealed the decision to the EAT.

The EAT overturned the Tribunal’s decision and held that in this case, the employer was not under a duty to collectively consult with the employees whose contracts were expiring. The EAT stopped short of saying that the expiry and non-renewal of a fixed term contract will never be a redundancy dismissal for the purpose of collective consultation however, the key distinction being whether a business decision, as opposed to a reason related to the individual employee, was the reason for the non-renewal of the contract.

Comment:

The University was able to evidence that the non-renewal of the fixed term contracts had been for reasons related to the individual employees (i.e. one employee was maternity cover and the permanent employee returned to work; another was working on a specific project where that project had come to an end, one was covering sickness absence/a career break etc. where the absent employee returns to work), the University hadn’t simply made a sweeping business decision not to renew all fixed term contracts. Had it done so, it is likely that the EAT’s decision would have been different.

Although this is a great decision for employers, a couple of cautionary points to note:

This is the first time the EAT has ruled on the issue and the decision is certain to be appealed. We can therefore expect further developments in this area of law.
The decision only relates to the definition of redundancy in the context of collective consultation. i.e. the expiry and non-renewal of a fixed term contract is still potentially a redundancy dismissal for the purpose of unfair dismissal so following a fair procedure and engaging in individual consultation with that employee is still required.

The Question Of Employment Status – Employed or Self Employed?

The recent decision of the Employment Appeal Tribunal (EAT) in the case of Quashie v Stringfellows Restaurants Ltd. is an important one for employers as it deals with the issue of employment status, something that always seems to cause problems. The case itself concerned the status of a lapdancer: was she an employee or self-employed?

The EAT held that Ms Quashie was an employee which means her unfair dismissal claim against the nightclub will now be heard by the Tribunal and if unsuccessful in defending the claim, the nightclub will have to pay compensation to Ms Quashie.

Points to note:

On the face of it this may appear a surprising decision, especially as it is generally accepted in the industry that dancers are self-employed. The question of employment status however can be difficult to determine, and on further consideration, it is actually more surprising that Ms Quashie is the first dancer to bring a claim of this type.

In order to determine employment status, the first thing to look at is any contractual documents that exist. It cannot be stressed enough however that any label contained in those documents is only one factor to be taken into account. Just because a document states a person is self-employed does not necessarily mean they are. The Stringfellows case is a perfect illustration of this - Ms Quashie had signed an agreement that clearly stated she was self-employed.

In addition to any contractual documents that exist, a Tribunal will also look at how the relationship actually works in practice and in particular, at the following three core elements:

Personal Service - The contract must impose an obligation on an individual to provide work personally.
Mutuality of Obligation - Some legal obligation towards each other which is a continuing overriding arrangement. Put simply this relates to the wage/work bargain i.e. is the individual obliged to work and is the business obliged to pay the individual for that work on an on-going basis.
Control - There must be some form of control over the employee by the employer. i.e. the ultimate authority over the employee in the performance of their work resides in the employer.

If all three elements are present then employment status is established albeit that a Tribunal will also consider facts such as how the individual was paid, whether they provided their own equipment, whether they were subject to disciplinary or grievance procedures, whether they were paid for sick pay and holiday pay, whether they were provided with other benefits and whether they had a degree of financial risk or level of responsibility within the business.

Royal Bank of Scotland .v. Ahston

Miss Ashton had frequent intermittent absences from work due to recurring migraines. RBS made a number of adjustments including adapting her work station and changing her hours of work. This case however, involved the application of RBS’s sickness absence policy which used “trigger points” which if reached could lead to disciplinary action and sick pay being stopped.

RBS applied their policy flexibly extending the period over which Miss Ashton was not disciplined and continue to receive sick pay, when, compared with their non-disabled employees. Eventually RBS issued a disciplinary warning to her and withheld sick pay for the 12 month duration of the warning. Miss Ashton claimed that these actions amounted to a failure to make reasonable adjustments and discrimination under the Disability Discrimination Act (DDA) 1995.

The Employment Appeal Tribunal (EAT) dismissed her claims. It emphasised that, in relation to the duty to make reasonable adjustments, the objective test required identification of the disadvantage suffered by the employee and then consideration as to how each of the possible adjustments would be effective to remedy that disadvantage. It held that the way RBS had relaxed its sickness absence policy, by flexing Miss Ashton’s trigger points for disciplinary action and the consequential withholding of sick pay, meant that she had been more favourable treated than a non-disabled employee. RBS therefore, had not failed to make reasonable adjustments and Miss Ashton’s claim failed.

Points to note:

This case reminds employers that the DDA is concerned with outcomes and the focus is on whether the proposed adjustments will be effective to remedy the disadvantage suffered by the disabled employee
Where an employer adapts their sickness absence policy, for example by being more lenient about the number or duration of sickness absences that trigger a sanction, it will be difficult for a disabled employee to show that they have been disadvantaged by the policy
The EAT confirmed that only in exceptional circumstances will stopping sick pay in accordance with a sickness absence policy amount to a failure to make a reasonable adjustment, and The EAT stressed that this case was decided under the DDA and that it should not be assumed that the same reasoning will apply to any decision based on the new Equality Act 2010.

Medhin .v. Compass Group

Mr Medhin worked for Restaurant Associates as a café assistant. The Company introduced a new policy regarding staff meal allowances.

The policy referred to specific excluded items which staff were not allowed to take. In the breakfast and lunch section of the policy it stated that employees were not entitled to take cakes. Neither sections mentioned muffins.

Mr Medhin was informed of the new policy by his line manager. There was evidence that staff were unsure and confused by what exactly was excluded by the new policy - Mr Medhin indicated that he felt muffins were breakfast items and that he was therefore entitled to take them.

The company believed that this potentially amounted to theft and therefore instigated a disciplinary hearing. Four times the disciplinary meeting was arranged, but Mr Medhin missed two meetings due to illness and one due to a family emergency. At the fourth meeting Mr Medhin was again absent due to ill-health and Mr Deamer decided to dismiss Mr Medhin in his absence.

Mr Deamer based his decision on the fact that Mr Medhin had admitted to theft of the muffin. However this was not the case. Mr Medin had admitted consumption of the muffin but there was a dispute as to whether this was permitted in terms of the new policy. Further, Mr Deamer took into account of what he considered to be Mr Medhin’s evasive attitude in avoiding attending any of the disciplinary hearings and concluded that this was evidence of guilt. There was no evidence to support the finding that the absences were not genuine.

Points to note:

Employers should take care to ensure that the terms of all policies and procedures are completely clear and unambiguous
Employers should avoid holding disciplinary hearings in an employee’s absence unless there are very good grounds to do so; this might include if the employee was to blame for not attending previous dates or simply failed to turn up without explanation, and finally
If the person hearing the appeal considers that the original disciplinary decision was flawed in any way, he should conduct the appeal by way of a re-hearing rather than merely a review of the decision.

Tameside Hospital .v. Mylott

Mr Mylott was off sick with stress which resulted in an exacerbation of a previous mental health issue. It was accepted that Mr Mylott had a disability under the DDA. He subsequently raised a grievance claiming that he had been subjected to bullying and harassment. His grievance was not upheld.

After numerous meetings Mr Mylott was dismissed on the grounds that he could not give an indication of when he might return to work. Mr Mylott appealed against the decision not to uphold his grievance and also appealed against the decision to dismiss him – both of which were later dismissed.

The tribunal found that Mr Mylott’s dismissal was unfair for a number of reasons including the failure by the Hospital to consider the possibility of allowing the claimant to take ill-health retirement and further breaches of the employers duty to make reasonable adjustments under s.4A of the Disability Discrimination Act 1995.

The EAT upheld the decision that Mr Mylott was unfairly dismissed. However, they found that s.4A of the DDA 1995 did not give rise to a duty on the employer to facilitate an application for ill-health retirement, and therefore this was not a reasonable adjustment expected to be made by the employer in relation to a disabled employee.

Points to note:

The duty to make reasonable adjustments does not extend to enabling a disabled employee to leave employment on favourable terms
Consequently in this case there is no duty on an employer of a disabled person to take steps to facilitate an application for ill-health early retirement
However, employers should note that this case was decided before the new Equality Act 2010 came into force
An employer that dismisses an employee because of absence arising from a disability will now have to show that the dismissal was a proportionate means of achieving a legitimate aim
In the circumstances of this case that might be difficult, as the Tribunal was critical of the failure to follow occupational health advice.

Gisda Syf .v. Barratt

Ms Barratt was dismissed on the grounds of gross misconduct by letter sent to her home address by recorded delivery. The letter was signed for by Ms Barratt’s boyfriend’s son on the 30th of November 2006.

Ms Barratt had been expecting a letter from her employer but had been away for a few days visiting her sister who had just given birth. The letter had been unopened and left for her upon her return home. She subsequently read the letter on the 4th of December 2006.

She then filed her unfair dismissal claim on the 2nd of March 2007. The question that the tribunal had to answer was whether or not the effective date of termination was the 30th of November when the letter was delivered or the 4th of December when the letter was read by Ms Barratt.

There is only a three month time limit for raising claim of unfair dismissal and if the former date was adjudged to correct then Ms Barratt’s claim would have been out of time and therefore time-barred.

The Supreme Court held that time-limit legislation should be interpreted in a way that is favourable to an employee and that strict statutory rules concerning the specific date of termination should not prevent employees from bringing valid claims.

Points to note:

Where communication of dismissal is by post there is room for ambiguity as to the effective date of termination (EDT) and it will generally be the employer who bears the risk of this rather than the employee
Where possible employers should communicate a dismissal in a manner that does not leave room for doubt as to the EDT
The obvious way to achieve this is for the dismissal to be carried out face-to-face
It is then best practice (and recommended by the Guidance to the ACAS code on Discipline and Grievance at Work) to confirm in writing.

Lisboa .v. Realpubs Ltd and Others

Mr Lisboa, an openly gay man, was appointed to the position of assistant manager at the formerly gay pub. A number of measures were taken to implement the company’s objective of broadening the pub’s appeal following its reopening as a “gastropub”. This included requesting that a sign be placed outside indicating that it was no longer a gay pub. Mr Lisboa objected to this stating that he felt it was inappropriate and that an alternative notice should be used (which was accepted by the Company).

Realpubs also encouraged staff to seat customers who did not appear to be gay in areas that could be easily seen by the passing public. There was also a reorganisation of staff, in keeping with the company’s policy that there should be a better balance between the sexes. As a result 5 male members left within the first month after reopening.

Mr Lisboa objected to these measures on the basis that they made the pub less welcoming to gay people and after only a few weeks resigned claiming constructive dismissal and direct discrimination on the grounds of sexual orientation. He said he felt unable to work for the company and what they represented and wanted nothing to do with the kind of business that they were trying to build. His discrimination claim was that firstly discriminatory comments were made to him directly and secondly that he was being asked to discriminate against the company’s gay customers.

Only his claim in relation to the discriminatory comments made to him directly was upheld by the Employment Appea Tribunal so Mr Lisboa appealed the remainder of the decision.

The EAT held that the way in which the employer had gone about rebranding the pub as a ‘gastropub’ aimed at a wider clientele amounted to unlawful discrimination on the grounds of sexual orientation against Mr Lisboa who felt uncomfortable with the employers methods.

The EAT held that in the process of widening the appeal of the pub, Realpubs had implemented its policy in a way that meant previous gay clientele were treated less favourably than straight customers. The alteration of the staff gender balance and the showcasing of families at the front of the pub was “plainly and unarguably” treating gay customers less fairly on the grounds of sexual orientation.

Further the EAT held that the rebranding policy did discriminate against gay customers and that this was enough for Mr Lisboa to resign and claim constructive dismissal.

Points to note:

It is well established that if a business operates a discriminatory policy towards customers and potential customers, it risks discriminating against its employees
However, until relatively recently (2007), a policy of preferring straight customers over gay customers would not have been unlawful as against the customers themselves
Whilst this case shows that the Courts are prepared to recognise that targeting your business and creating a brand can be a lawful activity,
Employers should note that even if a policy is not discriminatory (in this case laudable aim of widening diversity among the clientele) – the way in which it is implemented may amount to unlawful discrimination
Employers should, therefore, look at the practical effects of any policy in the round to ensure that it is non-discriminatory in its application.

Ezsias .v. North Glamorgan NHS Trust

The EAT has upheld an employer’s decision to dismiss for SOSR (Some Other Substantial Reason) where there had been a breakdown of the working relationships between the employee and his colleagues.

Mr Ezsias was a consultant surgeon employed by North Glamorgan NHS Trust. He raised a number of concerns about clinical issues involving his colleagues doing so in a very blunt and antagonistic way. The Trust investigated his complaints and concluded that the break down of relationships was largely due to Mr Ezsias’ behaviour.

Following the investigation the Trust dismissed Mr Ezsias on the basis of a breakdown of trust and confidence between him and his colleagues. Mr Ezsias claimed the dismissal was unfair saying that he had been dismissed because of his ‘whistle blowing’ – having made what he considered to protected disclosure in relation to colleagues and clinical practices.

His claim was unsuccessful. Both the Tribunal and the EAT found that Mr Ezsias’ ‘ disclosures’ had not been made in good faith – essential to succeed in any whistle blowing case. The EAT found that his conduct had been primarily responsible for the breakdown of working relationships, it was the fact of the breakdown, rather than the reason behind it which led to his dismissal. His dismissal was for SOSR, one of the potentially fair reasons for dismissal. The dismissal was not for misconduct – hence the contractual disciplinary procedures did not apply.

Points to Note:

Employers should be aware that potentially ‘protected disclosures’ made by employees do not need to be true or accurate for the employee to be protected. Simply they must be made in good faith (i.e. that is not malicious)
His dismissal was for SOSR (Some Other Substantial Reason) which was the irreparable breakdown of the working relationships within the department and was not related to the disclosures. Therefore, Employers should be careful to clearly define on what grounds a dismissal is taking place
However, this case does give an employer the option of using SOSR as oppose to Conduct when dismissing employees for breakdown of relationships. The advantage is that it will not be necessary for the employer to go through a lengthy disciplinary procedure before dismissing
However, a word of caution, in any dismissal, following a fair procedure is essential if the dismissal is to be found to be fair.