New rules and guidance for zero hours contracts

On 15 October the Department for Business Innovation and Skills published its Zero Hours Contracts: Guidance for Employers. This web-based resource is fairly brief but usefully covers the main issues. As I have mentioned before the term “zero hours contract” is not legally defined so the Government’s description is helpful:
A zero hours contract is one in which the employer does not guarantee the individual any hours of work. The employer offers the individual work when it arises, and the individual can either accept the work offered, or decide not to take up the offer of work on that occasion.
The guidance confirms that everyone employed on a zero hours contract is entitled to statutory employment rights with no exceptions.

Examples of “appropriate use” are provided including working for new businesses, seasonal work, covering for unexpected staff sickness, working at special events and testing a service. Perhaps more contentiously there is also advice concerning inappropriate use. The guidance states that “they should not be considered as an alternative to proper business planning and should not be used as a permanent arrangement if it is not justifiable”.

It is also indicated that zero hours contracts might not be appropriate if an individual work regular hours for a continuous period, e.g. someone who works 9.00 a.m. to 1.00 p.m. Mondays to Wednesdays for 12 months. It is suggested that better options for such an employee would be a permanent part time contract or a fixed term contract.

The guidance also addresses the issue of exclusivity clauses and in this regard it is unequivocal. It points out that under the Small Business, Enterprise and Employment Act the use of an exclusivity clause on a zero hours contract is prohibited so that, if such a clause is included, “the law states the individual can ignore it”. Attempts at avoidance, such as requiring permission to look for alternative employment, are similarly banned.

In fact these new rules concerning exclusivity clauses are yet to take effect but the Government has published, in draft, the Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015.

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Six year time limit for contract claims does not apply in tribunals

Pursuant to section 5 of the Limitation Act 1980 there is a time limit of six years to bring a breach of contract claim, running from the “the date on which the cause of action accrued”. However, in Grisanti v NBC News Worldwide Inc, an employment tribunal has held that the six year time limit does not apply to breach of contract claims brought in an employment tribunal. In doing so it has declined to follow an earlier decision in which it was held that the six year limit did apply.

Employment Judge Wade, sitting in the Central London Tribunal, was asked to consider the issue at a preliminary hearing on 11 June. The judgment has recently been handed down. Ms Grisanti claims (among other things) that her employer deducted national insurance contributions from her salary between 1996 and 2003. However, when she came to claim her pension in 2015 she was told by HMRC that no payments were made for those seven years. The result is that she is entitled to a greatly reduced pension.

The deductions were calculated correctly and Ms Grisanti does not allege that her employer has kept the money. However, at the time of the hearing it was unclear what had happened to it. However, HMRC had commenced an enquiry.

NBC took the opportunity at the hearing to argue that the claim should be struck out in any event on the basis that the breach of contract claim was out of time, as was a claim under Part II of the Employment Rights Act, commonly referred to as a “Wages Act claim”. It was contended that not only was the claim not brought within three months of termination (as extended by the ACAS early conciliation scheme), it was also subject to section 5 of the Limitation Act 1980 so that it was barred on the basis that more than six years had passed since the cause of action accrued in 2003.

The Employment Tribunals Extension of Jurisdiction Order 1994 allows breach of contract claims to be brought in an employment tribunal. The objective was to avoid duplication of claims in courts and tribunals. NBC submitted that, logically, the time limit of six years must also have been imported otherwise there was the risk of a flood of old claims and claimants would have the right to pursue claims in tribunals that could not be pursued in courts. More particularly a tribunal only has jurisdiction if “the claim is one…which a court in England and Wales would under the law for the time being in force have jurisdiction to hear and determine”. It seems to be a pretty compelling argument, not least because it was successful in the 2012 employment tribunal case of Taylor v Central Manchester University Hospitals NHS Trust.

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Is it appropriate to rely on advice from HR when deciding to dismiss?

The complexity of employment law and the fear of getting things wrong have the effect that many managers feel almost paralysed when dealing with disciplinary matters. They rigidly and unquestioningly follow advice from HR to the letter, asking for detailed guidance at every stage. While obtaining advice from an HR manager is nearly always a good idea, placing too much reliance on such guidance can bring its own dangers, as demonstrated in the case of Ramphal v Department for Transport.

Mr Ramphal joined the Civil Service in 1995. He held various posts and was latterly an Aviation Security Compliance Inspector. His duties involved overseeing transport and industry compliance with relevant rules and requirements. He undertook inspections, both open and covert.

He was required to cover an area extending from Cornwall to Scotland and in order to carry out his work he was entitled to a hire car. He used a credit card provided to him to cover his expenses, including car hire. He was at the office only once a month. As is usual in such circumstances the credit card was to be used only in connection with his job and personal expenditure was prohibited. In February 2012 he was selected at random for an audit of his expenditure for the period of October and November 2011. He was informed that some 50 items were flagged up for investigation. He met his line manager and it was decided that, taking into account his explanations, none of the items required further consideration.

In June 2012 his line manager was instructed to carry out further checks covering the period from October 2011 to May 2012. Four items were highlighted. There were concerns about overall fuel expenditure and the purchase of early morning coffees. A claim which identified the purchase of two meals was explained because it turned out to be a buy one get one free deal. He purchased a meal for himself and treated his mother to the free meal. Another issue concerned a rail fare to the office when he had been called in for a meeting while on annual leave. There were also queries concerning the purchase of a meal (£13.45) and a petrol purchase (£23.58). These were attributed to the mistaken use of the wrong credit card and both were repaid. All the expense claims had been signed off by his line manager. There appeared to be several other “mistaken purchases”, all of which were refunded. The main concern appeared to be apparently excessive petrol consumption and the possible use of hire cars for personal reasons.

Also in June 2012 Mr David Goodchild, Head of Land Security Compliance, was appointed to carry out an investigation to find out whether there was a case to answer. Most queries were addressed satisfactorily in a meeting with the line manager, leaving those referred to above. Mr Goodchild had not previously acted in disciplinary proceedings so he met with HR and familiarised himself with the disciplinary procedures, noting the distinction between misconduct and gross misconduct and the appropriate penalties. He also received guidance about the procedure to be followed.

On 3 August Mr Ramphal was given notice of a disciplinary charge and Mr Goodchild conducted a disciplinary hearing on 13 August. It emerged that Mr Goodchild had extensive contact with HR in the period from March 2012 to March 2013. As a result of this interaction it became clear that, having had emphasised to him the seriousness of the alleged offences, Mr Goodchild moved from concluding that there was no evidence that misuse constituted a deliberate and premeditated attempt to defraud the department to deciding on the balance of probability that he deliberately misused both the credit card and hire cars, resulting in a finding of gross misconduct and a recommendation that he should be dismissed. Favourable comments were removed and replaced with critical comments and misconduct resulting in a final written warning was replaced with gross misconduct and a recommendation to dismiss.

The resulting employment tribunal hearing took place over three days in December 2012. The decision was reserved (the judge was unwell) and was not delivered until December 2013. The employment judge noted that it was not wrong for an investigating officer to seek and receive advice and guidance from HR. The question was whether how far, if at all, the advice and guidance unfairly or improperly influenced the decision Mr Goodchild made to dismiss. The tribunal was particularly concerned about the apparent changes of mind by Mr Goodchild. However, it was concluded that the process was not rendered unfair by the intervention of HR and the decision was ultimately his own. He was anxious to get the decision correct and had therefore obtained extensive advice. There was no doubt that the employer had an honestly held belief in Mr Ramphal’s guilt and there were reasonable grounds for sustaining that belief. The decision was based on as much investigation as was reasonable and was within the band of reasonable responses open to a reasonable employer. The process was reasonable but had it been unreasonable there was a 100% chance that he would in any event have been unfairly dismissed and he was 100% at fault.

His Honour Judge Serota QC, sitting in the Employment Appeal Tribunal, disagreed.

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Victim of caste discrimination awarded £184,000

The Equality Act 2010 does not include specific protection for individuals who are victims of discrimination as a result or associated with their caste. However, it does include provisions for protection from caste discrimination to be added at some time in the future.

Nonetheless a claim based on such discrimination has been brought successfully by Pamela Tirkey against her employers, Mr and Mrs Chandhok, and she has now received compensation amounting to nearly £184,000.

Ms Tirkey was recruited as a cleaner and nanny by Mr and Mrs Chandhok, initially in India and subsequently in the United Kingdom. There is no doubt that her terms of employment were appalling. For example she was paid just 11p an hour. She said that she was treated in a demeaning way and she was more in a state of servility than service. She was required to work 18 hours a day, seven days a week. She was required to sleep on a mattress on the floor, prevented from bringing her bible to the UK, not allowed to contact her family and given a bank account which was controlled by her employers. Her employment ended in November 2012. She brought an employment tribunal claim alleging direct or indirect race discrimination and compensation for discrimination based on religion or belief. Incidentally, the Legal Aid Agency refused funding for representation for 17 months on the basis that the case was “not of sufficient importance or seriousness” and it was “just a claim for money”.

Although the ET1 was very lengthy it made no direct reference to caste discrimination. In May 2013, with the permission of Employment Judge Ward, she amended her claim. Paragraph 53 of the claim initially stated “The Claimant contends that the reason she was treated as complained of was that she is of Indian nationality and/or national origin”. It was amended by adding the word “ethnic” after Indian nationality. This was followed by a new paragraph:
For the avoidance of doubt the Claimant avers that her ethnic and/or national origins includes (sic) but is not limited to her status in the caste system as perceived by the Respondents.  The International Convention on the Elimination of All Forms Racial Discrimination (“ICERD”) prohibits discrimination on the grounds of “descent”:  its principles are adopted by the Race Framework Directives and, it follows, the Equality Act.  Thus s13 EA 2010 must be taken to prohibit caste discrimination.  The Claimant avers that the and/or a reason why she was recruited and treated in the manner alleged was that the Respondents concluded that she was of a lower status to them: this view was tainted by caste considerations.
Ms Tirkey’s family are Adivasi people who are frequently referred to as being of “low caste” although her caste was not expressly pleaded. Although they had not objected to the amendment at the time, Mr and Mrs Chandhok subsequently applied for it to be struck out. Their application was rejected by Employment Judge Sigsworth in January 2014 who stated that “the claim of caste discrimination as set out in the amended statement of claim is not struck out and the claim will proceed to a merits hearing”. That was not strictly correct since there was not an express pleading that there had been caste discrimination; nonetheless its meaning was clear. Mr and Mrs Chandhok appealed to the Employment Appeal Tribunal.

Mr Justice Langstaff was critical of Judge Sigsworth for reading into the ET1 a caste discrimination claim that was not actually there as such. Nonetheless he went on to consider the grounds of appeal. First, it was contended that to allow the claim would amount to “ousting the will of Parliament”. Section 9(5) of the Equality Act (as amended by the Enterprise and Regulatory Reform Act 2013) states that “A Minister of the Crown…(a) must by order amend this section so as to provide for caste to be an aspect of race; (b) may by order amend this Act so as to provide for an exception to a provision of this Act to apply, or not to apply, to caste, or to apply or not to apply, to caste in specified circumstances”. It was initially proposed that there would be a full consultation in 2014 with draft legislation being introduced to Parliament in summer 2015 but this has not happened. Accordingly it was not for a tribunal to anticipate legislation not yet introduced.

Second, judgments which applied a purposive interpretation of the meaning of “ethnic origin” (so as to give effect to what was intended), as in the cases of Jews and Sikhs, were not comparable because Parliament had specifically singled out caste for statutory provision.

Third, the EU Race Directive was not applicable because the case was between individuals and did not involve the State or emanations of the State.

Fourth, the judge as in error to hold that caste could come within the scope of discrimination of the grounds of religion and belief.

Mr Justice Langstaff identified two key questions. First, does the law of discrimination provide a remedy for discrimination in the factual circumstances which the claimant was offering in her claim form to establish in evidence? Second, does the fact that the Equality Act as originally enacted envisaged (but did not implement) the addition of protection from caste discrimination mean that any claim asserting less favourable treatment for “caste reasons” must be precluded until the legislation is amended?

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Is a person on long term sick leave assigned in the event of a TUPE transfer?

Since the TUPE regulations were revised in 2006 there has been an obligation for transferors to disclose details of the workforce to transferees. This normally takes the form of a schedule detailing the employees, their job titles and main duties and any specific contractual rights. Disclosure also extends to detailing those on sick leave and any outstanding grievances or disciplinary matters. Employers also need to be careful to adhere to data protection requirements, as emphasised by the Information Commissioner. This is normally achieved by anonymising the information.

The general view is that the disclosure requirement extends to the entire workforce (in the event of a full transfer), or at least that part of the workforce that is subject to the proposed transfer. The technical definition set out in TUPE is “an organised grouping of employees. If this grouping has as its principal purpose the carrying out of services for a particular client, this is often referred to as a service provision change. But what of employees on long term sick leave? Do they form part of the workforce?

In BT Managed Services Limited v Edwards and Ericsson Limited Mr Edwards was employed by BT Managed Services (BTMS) as a field operations engineer. His employment commenced in 1994 with Orange and he was TUPE transferred to BTMS in July 2009. He worked on a domestic network outsource (DNO) contract providing operational maintenance for Orange and EE mobile phone networks. It was accepted that the team was an organised grouping of employees situated in Great Britain which had as its principal purpose the carrying-out of activities (the DNO contract) on behalf of a client (Orange) and therefore fell within the scope of Regulation 3 of TUPE.

In May 2006 Mr Edwards commenced long term sick leave as the result of a variety of ailments including a cardiac condition which meant that he could not undertake the strenuous work required of members of the team. There were unsuccessful attempts to provide him with less strenuous work and he was regarded as permanently incapacitated from the commencement of his sick leave. He last worked in January 2008 but remained an employee so that he could enjoy the benefits available under the employer’s permanent health (PHI) scheme. Once benefits under the insurance scheme expired BTMS continued to pay him (as an expense of the DNO team).

In December 2012 the DNO contract transferred to Ericsson following a tender exercise and the service provision change took place in June 2013. At the time of the change it was accepted that there was no prospect of Mr Edwards ever returning to work. It was held in the Employment Tribunal that he was not assigned to the grouping transferred pursuant to Regulation 4 of TUPE “because he did not contribute to the economic activity of the grouping”. It is worth noting that Regulation 4 does not include any express requirement that an employee must contribute to the economic activity of the grouping so the decision was based on the Tribunal’s interpretation of the Regulation.

Employment Judge Davies found that Mr Edwards had ceased to be a part of the grouping in 2010.
…it was essentially by default that such contact as there was with him and such steps as required to be taken in relation to him, were done by the same managers; that he continued to have the [operational unit code] for the DNO contract; and that costs associated with his employment were attributed to that contract. However, in view of the other factual circumstances, that did not mean that he was as a matter of fact still assigned to the organised grouping of resources and/or employees.

What seems to me central is the decision made in 2010. as the findings of fact…make clear, an essentially pragmatic decision was taken by Mr Hunt and Mr Gilmour to keep the Claimant permanently absent to continue to receive PHI payments.

…he was not assigned to the grouping. It was not contemplated that he would thereafter provide any work or carry out any of the activities under the DNO contract. What was contemplated was simply that he would remain on the books to continue to receive his PHI payments at no cost to BTMSL.
In the Employment Appeal Tribunal BTMS said that the Tribunal should not have treated the question of where Mr Edwards would have been required to work as one of the criteria to be taken into account in determining whether he was assigned to the grouping. Mr Edwards would have been required to work in the DNO team if he was able to do so so he was assigned and the question of whether he was able to do so was irrelevant.

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Can a limited company be a victim of discrimination?

An important but potentially confusing aspect of English law is the concept of the “legal person”. As well as individuals a limited company is a legal person in the sense that it has its own legal status. It can be a claimant or defendant in proceedings and can enter into contracts, whereas the position with a partnership (a collection of individual persons trading together) is more nebulous.

Perhaps the obvious reaction when considering whether a company can be a victim of discrimination is to say that it cannot since discrimination is specific to a human being who can, for example, suffer injury to feelings. However, as confirmed in the case of EAD Solicitors LLP and others v Abrams the legal answer is not so straightforward.

Mr Garry Abrams was formerly a partner/member in EAD Solicitors LLP, based in Liverpool. Indeed, the firm was previously known as Edwards Abrams Doherty. As he approached retirement Mr Abrams set up a limited company in which he was the sole director. The company replaced him as a member of the LLP. It was, for all intents and purposes, a service company which provided the services of Mr Abrams and was, in return, entitled to share in the profits of the LLP.

There was no obligation requiring personal service and therefore no employment relationship. The LLP objected to the company providing Mr Abrams’ services once he reached the age when, had he been a member of the LLP, he would have retired. There was an ongoing dispute about whether the company remains a member of the LLP notwithstanding the claim and that apparently remains unresolved.

Part 5 of the Equality Act 2010 provides that an LLP (limited liability partnership) must not discriminate against a member as to the terms on which he is a member, by expelling him, or by subjecting him to any other detriment. Section 4 of the Limited Liability Partnership Act 2000 provides that a corporate body may be a member of an LLP. This is therefore the legal basis on which a corporate LLP member does, on the face of it at least, enjoy protection from discrimination. Any such claims must be brought before an employment tribunal (section 120 Equality Act).

In the Employment Tribunal Employment Judge Ryan clearly struggled with the concept of a company being a victim of discrimination because it is so intensely personal. However, he was persuaded by the legal argument that it could. President of the Employment Appeal Tribunal Mr Justice Langstaff agreed.

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More issues concerning employee rights and social media

As we all know social media is an increasingly pervasive aspect of many of our daily lives. As I have previously reported the interaction between the publication of information by individuals on their personal social media platforms and rights at work can create significant problems.

This issue returned for judicial scrutiny once again this month in the Employment Appeal Tribunal decision in the case of British Waterways Board v Smith.

Mr Smith commenced employment with British Waterways Board, trading as Scottish Canals, as a manual worker in April 2005. Staff worked a seven day rota with standby for seven days one week in each five. Mr Smith was one of a team of eight, described by the Employment Tribunal as “not a happy team”. In 2012 and 2013 Mr Smith raised a number of grievances covering health and safety issues and an allegation of bullying and harassment by certain managers and supervisors. After investigation and an occupational health report was obtained a recommendation was made for mediation. Mr Smith did not want to attend mediation but it was nonetheless arranged to take place on 23 May 2013. On arrival with his union representative he was told that the mediation was not going to take place and, instead, he was suspended from work as a result of comments retrieved from his Facebook page.

The information retrieved included derogatory comments about managers and a reference to “being drunk while on standby”. Comments found by the Employment Tribunal to have been posted by Mr Smith are listed in the judgment. I won’t reproduce them here. Suffice to say that they use very strong language and are clearly very derogatory about Mr Smith’s employer and his managers.

Mr Smith admitted that he had posted the comments but said that he had not intended to offend anyone and that he had been “indulging in banter”. He said that it was typical to slag off the person on standby and that he had not in fact been drinking. However he also maintained that his Facebook page had been hacked and he did not know that the settings had been changed from private to public.

A disciplinary investigation report was prepared. It was noted that the posts were in any event public and available to be read. They were therefore likely to damage the reputation of both the employer and Mr Smith’s manager. The reference to being drunk while on duty gave the impression of a risk to public health. It was recommended that there should be a disciplinary hearing. Reference was made to the Company’s disciplinary and email and internet policies, the latter including the following:
The following activities may expose [British Waterways] and its employees, agents and contractors to unwarranted risks and are therefore disallowed…Any action on the internet which might embarrass or discredit [British Waterways] (including defamation of third parties for example, by posting comments on bulletin boards or chat rooms)…
Mr Smith said that despite what was on Facebook he had never been drunk while on standby. The other things he had said were also in jest. He thought that the timing of the allegations provided a convenient way to prevent his grievance from being investigated. He repeated that he thought that his Facebook page had been hacked and the security settings changed. Notwithstanding his mitigation Mr Smith was summarily dismissed from his employment by letter sent on 4 June.

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Government announces consultation on devolving Sunday trading rules

On 5 August the Government commenced a consultation on allowing local areas to set their own Sunday trading rules. Larger shops (over 3000 square feet) have been restricted to a maximum six hours and it is felt that this is out of keeping with on-demand shopping available elsewhere, particularly online. The options under consideration are devolving powers to local areas, perhaps through “metro mayors”, or more widely by devolving the powers to local authorities across England and Wales. It is not proposed to alter the rules applying to Easter Sunday and Christmas Day.

From an employment law perspective this proposal raises the question of protection of workers who do not wish to work on Sundays, for religious or other reasons. Shop workers who commenced their employment before 26 August 1994 cannot be required to work on Sundays unless they have opted in to do so or are employed to work only on Sundays. Other employees have the right to give their employer an opting-out notice which, with effect from three months from the date of the notice being served on the employer, gives the employee the right to opt out of Sunday working. The right is absolute and cannot, such as with requests for flexible working, be refused by the employer on the ground of business needs or otherwise.

There is no requirement for employers to pay a higher rate for working on Sundays, although many choose to do so in order to encourage employees to give up their Sundays and meet staffing requirements.

It is often overlooked that employers who have a requirement for staff to work on Sundays must tell them in writing that they have the right to opt out. The written notice must be provided within two months from the commencement of employment and failure to do so means that an employee only needs to give one month’s notice in order to opt out.

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Woman takes maternity leave is front page news in The Telegraph

Coverage of the announcement that Marks and Spencer’s most senior female employee, Head of Multi-channel, Laura Wade-Gery, is taking maternity leave has shone a light on how rights which are taken for granted by most women cannot be assumed to be so by senior managers. The story merited sufficient significance to feature on the front page of the 19 August edition of the Daily Telegraph

The retailer was required to make a stock exchange announcement about the maternity leave under rules requiring disclosure of absence longer than a typical holiday. The announcement included notification that Ms Wade-Gery will be returning to work in early January after four months’ leave, much earlier than would be typical for maternity leave. Marks and Spencer is known for its enlightened approach to employee rights and was one of the early adopters of offering employees career breaks in addition to statutory leave entitlements.

However the lack of women in very senior appointments generally means that their rights, when balanced against their obligations to their employers and their employers’ shareholders, are less well defined. During her absence cover will be provided by a director of retail and a director of M&S.com, reporting directly to chief executive Marc Bolland.

The Telegraph article highlights that Belinda Earl, M&S style director was the first ever chief executive of a leading public company to go on maternity leave, taking six weeks when she was head of Debenhams in 2001.

The comments below the online version of the article demonstrate that there is still, to put it mildly, a lack of awareness and tolerance of womens’ employment rights.

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Is the denial of a choice of representative a breach of contract?

In 2004 Professor Martin Stevens was appointed to the Chair of Medicine (Diabetes and Metabolism) at Birmingham University.

His duties included leading and co-ordinating a programme of research into the aetiology and management of diabetic neuropathy, foot complications and heart disease complicating diabetes. In addition he led the multidisciplinary diabetic foot service and diabetic neuropathy service across the Heart of England NHS Foundation Trust (HEFT), the organisation from which the University received funds to pay his salary.

Professor Stevens carried out clinical trials for HEFT and the University, in accordance with Good Clinical Practice (GCP). In December 2013 he was himself concerned that there had been breaches of GCP and he reported this. An inspection was carried out and established multiple breaches with the result that Professor Stevens was suspended from any duties associated with research with effect from 20 December 2013. At about the same time the University’s Pro-Vice Chancellor commissioned a management review to determine whether or not any disciplinary action was warranted.

In February 2014 the matter was referred to the General Medical Council, ostensibly on behalf of both HEFT and the University but in fact only on behalf of the University since HEFT was not involved in the disciplinary process.

Following the completion of the management review Professor Stevens was suspended from all duties in July 2014. There were 28 alleged breaches of the University’s Code of Practice for Research, although no allegations that patients were put at risk or inappropriately treated.

Arrangements were made for an “investigation meeting” and Professor Stevens was told that he could be accompanied by a trade union representative or an employee of the University. Professor Stevens was not in a union but was a member of the Medical Protection Society, a medical defence organisation. Professor Stevens wished to be accompanied by Dr Roger Palmer, an MPS representative who had been supporting him since the initial allegations were made in December 2013. The University refused on the basis that Dr Palmer was neither a member of staff nor a union representative. He maintained that he had no friends who were employees and would be suitable to accompany him other than members of staff involved in the trials who might therefore be called as witnesses.

The University contended that it was concerned that by allowing Dr Palmer to accompany Professor Stevens there would be a departure from the terms of the contract of employment and, in particular, the disciplinary procedures agreed between the University and its approved Union in 2008. It did not wish to create a precedent.

Accordingly the matter which had to be determined by Mrs Justice Andrews, sitting in the High Court, was whether Professor Stevens did or did not have a contractual entitlement to be accompanied by Dr Palmer.

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