dismissal by employer European Court decisions TUPE

Can there still be a TUPE transfer after a gap of five months?

The European Court (CJEU) decision in Jorge Siguenza v Ayuntamiento de Valladolid concerns the potential application of a transfer of undertaking (TUPE transfer in the UK) in a case in which there is a long gap between one undertaking ceasing its activities and another commencing. Mr Siguenza was employed as a music teacher at the Municipal Music School of Valladolid in Spain from November 1996. From 1997 to 2013 management of the school was provided by a contractor, Musicos y Escuela, on behalf of the local authority. In 2012-13, owing to a reduction in the number of pupils, the authority refused to pay the sums claimed under the contract by Musicos y Escuela, which therefore sought the termination of the contract and claimed damages. In response, in August 2013, the authority terminated the contract, alleging wrongful conduct by Musicos y Escuela because it had ceased its activities before the end of the contractual end date. In a series of judgments delivered in 2014 and 2015 the Tribunal Superior determined that the authority had breached the contract because it was committed to providing guaranteed payments irrespective of the number of students, so that failure to make those payments in full had caused the breach of contract.

In the meantime, in March 2013, Musicos y Escuela started consultations with a view to the dismissal of all its staff. Mr Siguenza and his fellow employees were dismissed on 4 April and the company was declared insolvent on 30 July.

In August 2013 the authority assigned the management of the school to In-pulso Musical and provided it with the use of the premises, instruments and equipment necessary for it to carry out its duties. In-pulso Musical commenced its management of the school in September 2013 for the 2013-14 school year and was awarded further contracts for 2014-15 and 2015-16.

Unfair dismissal claims by the former employees failed but Mr Siguenza brought a further claim before the social court. His claim was dismissed on the basis of res judicata (the matter had already been determined by the other court) and he appealed to the high court. In doing so, he contended that there had been a transfer of undertaking from Musicos y Escuela to In-pulso Musical so that his contract of employment should have been preserved. It was this aspect of his claim that was transferred to the CJEU.

The European Court determined that:

  1. There was a relevant transfer. It was significant that the resources to enable the services to be performed had been provided to the new employer and that the services were very similar (if not identical). The material resources, such as musical instruments, facilities and premises, were essential to the economic activity relating to the management of a school of music. It did not matter that the resources remained in the ownership of the authority. A “temporary suspension” of a few months was insufficient to prevent there from being a relevant transfer.
  2. The dismissal did take place for “economic, technical or organisational reasons entailing changes in the workforce”. Although the employees had their contracts terminated prior to the transfer, they should nonetheless be regarded as having still been employed by the undertaking on the date of the transfer so that the employer’s obligations towards them were automatically transferred from the transferor to the transferee.
  3. The court did not have sufficient information to determine whether the principle of res judicata applied so it declined to rule on that point.

I don’t know how many times I have been asked by a client how much time should be allowed to pass in order to avoid a potential TUPE claim. As this case demonstrates, the answer is that there is no time limit. Rather, each case must be considered based on its own particular facts and the application of this complex area of law. As ever, my recommendation is that you should contact us for advice whenever there is a possibility that TUPE might be engaged.

disability discrimination Employment Appeal Tribunal employment law grievances

Legal professional privilege can be lost if what is being discussed is “iniquitous”

President TrumpMost people are familiar with the idea that legal advice is “privileged” from disclosure, i.e. that is remains private between the client and his or her legal advisers. In the United States that has become a hot issue concerning President Trump and those around him, not least his longstanding personal attorney and recent convict, Michael Cohen.

Nearer to home, the issue has been considered by the Employment Appeal Tribunal in the case of X v Y Limited.

“X” was employed by “Y” as a lawyer from January 1990 until his dismissal on 31 January 2017. X suffers from type 2 diabetes and obstructive sleep apnoea. Records showed that there were concerns about X’s performance at work from 2011. X complained that measures taken by his employer amounted to disability discrimination and/or failure to make reasonable adjustments. He raised a grievance in March 2016 and an outcome letter was issued in June 2016.

In the meantime Y announced a voluntary redundancy process. Having been unsuccessful in applying for certain roles, X was placed in a “redundancy consultation process”.

At his employment tribunal hearing the employment judge accepted that, in May 2016, X overheard a conversation at the Old Bank of England pub in Fleet Street. The conversation was the subject of a claim of legal professional privilege. X said that a group of professionally dressed people including two women in their 30s or 40s came into the pub. One mentioned a disability discrimination complaint by a senior lawyer at Y. She said that there was a good opportunity to manage X out by severance or redundancy because there was a big reorganisation under way.

In his claim X relied on the conversation to interpret an email that he was sent anonymously in late October 2016. The email had been sent by “A”, a senior lawyer, to “B”, a lawyer who had been assigned to Y. The content of the email was not read out in court at the initial tribunal hearing. X maintained that the email contained advice on how to commit unlawful victimisation by using the redundancy/restructuring programme “as a cloak to dismiss” X. Y maintained that the email was legally professionally privileged.

Y terminated the employment of X, ostensibly by reason of redundancy, by three months’ notice ending on 31 January 2017.

In the employment tribunal, Employment Judge Tsamados decided that the email “did not disclose a strong prima facie case of iniquity”. Legal professional privilege can be lost if what is being discussed in “iniquitous”, i.e. (according to the Employment Appeal Tribunal):

“…beyond conduct which merely amounts to a civil wrong; he has indulged in sharp practice, something of an underhand nature where the circumstances required good faith, something which commercial men would say was a fraud or which the law treats as entirely contrary to public policy.”

On appeal Mrs Justice Slade noted that Judge Tsamados did not take into account the conversation in the pub. She concluded that it was right not to do so because it was not authorised by Y and could not therefore assist in determining its position and because there was no contemporaneous note taken.

However, as far as the email was concerned, there were relevant background factors to be taken into account. X had lodged an ET1 alleging disability discrimination and had raised a grievance. X’s case was that the meaning of the email was that redundancy could be used as a guise under which to dismiss him for other reasons. Reference was made to the fact that Y had ongoing concerns about X’s performance at work. It was appropriate to take into account these external factors.

The email, after setting out the background to the redundancy process, referred to “the individual” and how to deal with him. It was reasonable to assume that references to “the individual” were to X. The key question was whether the advice simply pointed out the risk of claims if X was selected for redundancy or whether it went further and advised that redundancy could be used as a cloak for dismissing X. If X had been dismissed as part of a proper application of a redundancy procedure then there would have been no need to go further and say “there is at least a wider reorganisation and process at play that we could put this in the context of”.

Mrs Justice Slade judged that the email was “to be interpreted as recording legal advice that the genuine redundancy exercise could be used as a cloak to dismiss [X] to avoid his continuing complaints and difficulties with his employment which were said by him to be related to his disability”.

Accordingly Judge Tsamados had erred in his interpretation of the email. Having considered numerous authorities, she concluded that “In my judgment the advice recorded in the email crosses the high bar of a strong prima facie case of iniquity”. Accordingly, X’s appeal succeeded on both counts and his claim was restored to include the matters raised in the email.

The case is a handy reminder that, as President Trump has found in a different jurisdiction, it is foolhardy to think that all conversations with a lawyer are automatically privileged. I cannot count the number of conversations I’ve had with clients in which they have blithely set out their plans, knowing them to be unlawful or with an unlawful objective, only to be told that they should be very careful what they say or write, because it might come back to hurt them. As for the conversation in the pub, I think that the lawyers were very lucky not to have their conversation used. One of the most notorious examples is overheard conversations on trains when lawyers are unfortunately renowned for discussing their cases in thoroughly inappropriate detail. As they said in the second world war, loose talk costs lives. In this context, loose talk about inappropriate behaviour is not protected and could prove to be very costly.


ACAS breach of contract pay and benefits pay reductions unfair dismissal

Can an employer impose a pay cut on financial grounds?

A recent case in the Liverpool Employment Tribunals has highlighted the risk for employers in unilaterally imposing pay cuts on employees in response to a downturn in business.

Mr Decker was a branch manager for a recruitment agency, Extra Personnel Logistics, specialising in driver recruitment for the logistics industry in Merseyside. He commenced employment in December 2008. On commencing his employment he worked 40 hours a week flexibly between 7.00 a.m. and 7.00 p.m. Monday to Friday. In July 2015 it was agreed that his working hours would be reduced to 32 per week. It was also agreed that he would be released from on call duties, other than covering holidays and emergencies.

On 20 February 2017 he was asked by the managing director, Brad Richardson, to reduce his working days from four to two (32 to 16 hours), equating to a loss of £205.95 per week. The following day Mr Richardson wrote to him, confirming the reduction to Mondays and Tuesdays only. He gave the reasons as the loss of two contracts and the industry market being quiet. The letter also informed him that the consultation period for the contract would run until 6 March, following which a meeting would take place the following day. Mr Richardson also referred to an offer of six additional hours doing sales which, although it had been declined by Mr Decker, would remain open for discussion.

On 3 March Mr Decker wrote to Mr Richardson to inform him that, due to his financial circumstances, he could not afford any reduction in his existing working hours and that he was willing to discuss matters further at the meeting on 7 March.

At the meeting Mr Richardson said that, as a result of the resignation of Mr Decker’s daughter in law (who had also been offered a reduction in working hours), he could offer a further eight hours per week. However, that was subject to him resuming on call work. Mr Decker said that he would accept the reduction from 32 to 24 hours if his day rate was increased from £102.97 to £110.00, on the basis that this would assist the employer in achieving its cost-cutting objective.

No agreement was reached at the meeting and on 19 May Mr Richardson asked Mr Decker which three days would be best for him. He replied, requesting Mondays to Wednesdays and pointing out that he would need a new contract recording the new daily rate of £110.00, working days specified as 8.00 a.m. to 4.00 p.m. and a 90 days’ notice period for any changes or reductions in hours. Mr Richardson replied, saying that he would “have this for him” on Monday, which was 22 May. However this did not happen and on 30 May he emailed Mr Decker with a new contract which did not include any of the things that Mr Decker had requested. It also included a requirement for 24 hour on call duties with n entitlement to additional pay.

On 1 June Mr Richardson emailed Mr Decker to say that the company could not afford the pay rise and asked him to sign the new contract. He said that there was ‘nothing else now to discuss” and the new contract would start from 5 June.

Mr Decker replied, pointing out that he had not agreed the new terms, that he had to leave because he could not afford to continue working for the company and asking for his notice period to be paid at his current salary. He provided a letter of resignation to Mr Richardson which was acknowledged the same day. Mr Decker’s employment duly terminated on 5 July.

The tribunal found that, based on the facts, the employer had fundamentally breached Mr Decker’s contract of employment, entitling him to claim constructive unfair dismissal. There had also been a failure to adhere to the ACAS Code of Practice on Disciplinary and Grievance Procedures, since there had not been a formal meeting following Mr Decker’s complaints which constituted a grievance. Instead, the employer had attempted (unsuccessfully) to deal with the matter by way of informal discussions. Mr Decker was entitled to a basic award of £4942.42 and a compensatory award of £11,882.20.

There is a common misconception that employers can impose pay cuts if they have a sound business reason for doing so, such as a downturn in income. Any attempt at reducing pay runs the risk of a fundamental breach of contract and consequent unfair dismissal. Consequently, employers should attempt to deal with the matter by negotiation and consent. If consent is not forthcoming it is essential to tread very carefully before taking matters further. Please do not hesitate to contact us if you would like to obtain advice about this or any other employment matters.

employment law recruitment

You leave this court without the slightest stain on your character, except…

disclosure and barringCRB checks, DBS checks or ECRCs, whatever they are called, criminal record checks have become an integral part of many employment and recruitment procedures.

The object is laudable: to protect children and vulnerable people from coming into contact from those who are unsuitable to be among them. However, a decision of the Supreme Court at the end of July has exposed an interesting aspect of enhanced checks that many people did not realise and which raises interesting questions concerning our justice system and how mere involvement in a criminal process without any finding of wrongdoing can still result in a disclosure which can call into question the suitability of the individual concerned.

The case concerned someone known as “AR” (he cannot be named for legal reasons), a qualified teacher who was found not guilty of rape in 2011 after a Crown Court trial.

Although he was found not guilty, details of the allegation and the verdict were included in his criminal records certificate. Following hearings on 21 November 2017 and 23 April 2018, Lord Carnwath delivered the judgment of the Supreme Court on 30 July. The respondents were the Chief Constable of Manchester Police and the Home Secretary.

In a report into the operation of the criminal records legislation, its author Sunita Mason pointed out that there was:

“…a degree of dissatisfaction with a system that has evolved with the laudable aim of protecting vulnerable people but is now viewed by some as intrusive and an unnecessary bar to employment. There is also concern that some people may be treated as ‘guilty until proven innocent'”

As a result of her report there were amendments to the legislation including a right to request a review. Under the current legislation, there are three forms of certificates. A criminal conviction certificate (CCC) provides details of every conviction held in central records but not including spent convictions. They are available to any applicant over 16 on payment of a fee. Criminal record certificates (CRCs) also include spent convictions and cautions. An application for a CRC must be signed by a “registered person”. They are generally used in connection with applications for employment which involves working with children or vulnerable adults.

The third type of certificate is an enhanced criminal record certificate (ECRC). In addition to the other disclosures, these can include details of “every relevant matter” held in central records concerning the individual which, in the opinion of the chief officer of every relevant police force, might be relevant and ought to be included. Thus, the ECRC may include information beyond the factual record and which has been included as the result of the exercise of one or more opinions. It is therefore subject to the exercise of discretion. ECRCs may be obtained in connection with work involving children and/or vulnerable adults, as well as in connection with applications involving national security and when applying for a taxi driver’s licence.

In 2011 AR, a married man with children, of previous good character and a teacher, was acquitted of rape. At the relevant time he had been working as a taxi driver. It was alleged that at about 1.00 a.m. on 4 November 2009, he raped a 17-year-old female passenger. His defence claimed that there was no sexual contact and there was no scientific evidence to support or undermine the allegation.

In March 2011, an ECRC (obtained in connection with an application for a job as a lecturer) included the following:

“On 4/11/09 police were informed of an allegation of rape. A
17 year old female alleged that whilst she had been intoxicated
and travelling in a taxi, the driver had conveyed her to a
secluded location where he forcibly had sex with her without
her consent.

“AR was identified as the driver and was arrested. Upon
interview he stated that the female had been a passenger in his
taxi, but denied having sex with her, claiming that she had
made sexual advances towards him which he had rejected.
Following consideration by the Crown Prosecution Service, he
was charged with the rape of a female aged 16 years or over, and
appeared before Bolton Crown Court on 21/01/11 where he
was found not guilty and the case was discharged.”

AR objected to the inclusion of this information, pointing out that there was no conviction, that disclosure was very prejudicial to him and that it was “wrong, unfair and grossly prejudicial [that] I should have to defend myself every time I apply for employment after the jury have ruled that I am an innocent man”.

AR applied for judicial review, relying among other things on Article 6 of the European Convention on Human Rights (right to a fair trial and presumption of innocence). His application failed and he was also unsuccessful in the Court of Appeal on the basis that the issue of the certificate “did not undermine the appellant’s acquittal”.

In the Supreme Court, Lord Carnwath pointed out that the information about the charge and acquittal was in no way secret. It was a matter of public record and could have come to the prospective employer’s attention by other means.If so, a reasonable employer would want to make further enquiries concerning the suitability of the prospective employee. As a result, the appeal was dismissed.

However, Lord Carnwath added a postscript to his judgment. He said that he had general concerns about the operation of the ECRC procedure. For example, “soft information”, such as that concerning an acquittal, “might be said to imply no more than that the charge has not been proved beyond reasonable doubt. In principle, it leaves open the possibility that the allegation was true, and the risks associated with that”.

So, how is an ECRC likely to be treated by employer? Lord Carnwath was concerned about what happens in practice. “We have been shown reports which emphasise the importance of not excluding the convicted from consideration for employment, but they say nothing about the acquitted, who surely deserve greater protection from unfair stigmatisation”. He went on to point out that there appears to be no guidance for employers as to how to deal with such information. The nub of the problem is this:

“Even if the ECRC is expressed in entirely neutral terms, there must be a danger that the employer will infer that the disclosure would not have been made unless the chief officer had formed a view of likely guilt.”

The recent news coverage strongly suggests that many people were unaware that the expression of opinions of senior police officers rather than just hard facts can be included in such reports. The obvious problem is one of perception since it is easy to think of many situations in which the police take the view that someone has committed a crime, only for that person to be acquitted at trial. It is a trait of human nature that there is a reluctance to admit mistakes and cases such as that involving AR will necessarily have involved a decision by the police to forward the matter to the CPS with a view to prosecution.

Whether this state of affairs is right or not, it is permitted as the law stands. The worry is that far too many people, including prospective employers will take the view that there is no smoke without fire and that they must have been provided with the information for a reason, i.e. that the individual was acquitted but…

contract terms contracts of employment employment status Supreme Court

Pimlico Plumbers and other employment status news

Pimlico PlumbersLate last month the Supreme Court delivered its long-awaited if not altogether surprising decision in Pimlico Plumbers v Smith. It upheld the decisions of the lower courts that Mr Smith should properly be classified as a worker, with attendant rights (including discrimination rights and holiday pay), rather than being self-employed.

Gary Smith worked for Pimlico Plumbers for six years (from 2005-2011). Although he was VAT registered and paid self-employed tax, from an employment law perspective, he was nonetheless entitled to workers’ rights.

The judgment was unanimous and the lead judgment was provided by Lord Wilson. Having considered the history of the law concerning the status of workers (dating back to 1875), he considered the written agreements between Pimlico and Mr Smith (the original dated 2005 and a replacement issued in 2009), both of which he thought were confusing. However, he noted the extent of control exercised over Mr Smith including the right to dismiss him for gross misconduct, how he should provide his services, an obligation to provide advance notification of absences and the supply of tools. The second agreement included an obligation to wear Pimlico’s uniform, a minimum 40 hours’ working week, advance notice of annual leave and provision for warnings and dismissal.

He also noted that there was no provision for Mr Smith to appoint a substitute to do his work (other than by another Pimlico operative). Having considered relevant authorities, he concluded that “the dominant feature of Mr Smith’s contracts with Pimlico was an obligation of personal performance”.

There was an “umbrella contract” between Mr Smith and Pimlico whereby, if work was available to be done by him, he would be expected to do it. Nonetheless, Mr Smith correctly presented himself as self-employed for tax purposes.

In summary,

…there were features of the contract which strongly militated against its recognition of Pimlico as a client or customer of Mr Smith. Its tight control over him was reflected in its requirements that he should wear the branded Pimlico uniform; drive its branded van, to which Pimlico applied a tracker; carry its identity card; and closely follow the administrative instructions of its control room. the severe terms as to when and how much it was obliged to pay him, on which it relied, betrayed a grip on his economy inconsistent with his being a truly independent contractor.

Pimlico’s appeal was accordingly dismissed.

Meanwhile, the Independent Workers Union of Great Britain has won the first stage of a High Court challenge in which it seeks to overturn a ruling last November by the Central Arbitration Committee that, because riders were able to pas on jobs to a substitute or to abandon a job, they were not obliged to provide a personal service and could not therefore be classified as workers. Deliveroo is also facing a parliamentary inquiry into the pay and conditions of its couriers. Chairman of the work and pensions committee, Frank Field, said:

The weight of the evidence I’ve seen shows that bogus self-employment is being peddled by those who benefit so handsomely from the gig economy, to avoid the obligations they have to their workforce. I now wish to see if this is a partial view or whether it, sadly, represents what is going on in yet another company operating in the gig economy.

The scope of the committee’s inquiry will also include Hermes, Uber, DPD and Parcelforce. In the case of Hermes, an employment tribunal in Leeds has found that 65 couriers were entitled to be treated as workers rather than as independent contractors. Although not binding on other courts and tribunals, some 14,500 Hermes couriers are engaged under the same contracts.

As I have observed previously, there is no doubt that courts and tribunals are readily finding that gig economy contractors are, in many cases, properly classified as workers with the attendant rights. Therefore, in order to avoid potentially very expensive back pay claims, it is vital for those operating in this sector to review their contracts.


dismissal by employer Employment Appeal Tribunal employment law gross misconduct misconduct unfair dismissal

Is it fair to dismiss for action which falls short of gross misconduct?

It is well known that dismissal can result from a single matter which is usually found to amount to gross misconduct, or as the result of more than one event, with the prior matters resulting in written warnings and/or a final written warning. Indeed, most disciplinary procedures outline this process and generally include examples of what will normally be treated as gross misconduct.

However, in Quintiles Commercial UK v Barongo the question for the Employment Appeal Tribunal (EAT) was whether it was fair for Quintiles to dismiss Mr Barongo for conduct which was initially classified as gross misconduct but subsequently downgraded to serious misconduct.

Quintiles supplies staff for pharmaceutical companies. Mr Barongo started working for them in October 2012 and was latterly engaged to sell drugs for Astra Zeneca. On 5 January 2016 he was dismissed on notice on two grounds. First, he had failed complete Astra Zeneca’s compliance training course by the deadline of 3 November 2015 and, second, for failing to attend their compulsory training course on 19 November 2015. Mr Barongo did not deny the allegations and he also accepted that they amounted to misconduct on his part. However, he contended that he had been dealing with other matters. He said that he had not intentionally failed to engage with the training but he had chosen to prioritise other matters. This had been at a time when he was on a performance improvement plan.

There was a disciplinary hearing conducted with his line manager which took place by telephone. As the EAT pointed out, conducting the hearing by phone might not have been best practice but it was not in itself unfair. His line manager concluded that the duty of trust and confidence which ought to exist between employer and employee had been broken and, as a result, Mr Barongo was dismissed on notice, for gross misconduct.

He appealed against the decision and the appeal was heard by one of the employer’s directors, Mr Athey, who took the view that there had been a breach of the duty of trust and confidence, but that it amounted to serious rather than gross misconduct.

Mr Barongo submitted a claim of unfair dismissal to the Employment Tribunal. The Tribunal took the view that the downgrading of the misconduct from gross to serious was highly significant:

“Once the misconduct is characterised as serious and not gross, it means that warnings are to apply. This Claimant had no previous live warnings on his file. That meant he came as someone with a clean record into this disciplinary hearing. If the Respondent had believed and reasonably so that his misconduct had been gross, then that could furnish a reason for not applying warnings. However, the characterisation of the misconduct as serious on appeal means that the failure to issue a warning renders the dismissal unfair. Serious misconduct would have entitled any sort of warning including a final written warning but the express rejection of gross misconduct renders this dismissal unfair. …”


“…the misconduct was not reasonably characterised as gross rather than serious; and indeed, the Respondent on appeal characterising it as serious rather than gross means that a warning was the only reasonable response, and dismissal was outside it, within the terms of the Respondent’s policy and general unfair dismissal law, the Claimant having a clean record.”

As a result:

“The particular issue in the case is whether dismissal was a sanction open to a reasonable employer. As soon as the appeal officer, rightly in my judgment, characterised the matter as serious misconduct and expressly not as gross misconduct, the Respondent could only reasonably be in warnings territory given that the Claimant had a clean disciplinary record. This was so under its own policy and under the general law of unfair dismissal.”

That said, the Tribunal felt the Mr Barongo’s conduct had contributed to his dismissal. As a result it ordered that his compensation should be reduced by one-third.

The employer appealed against the judgment.

The EAT began, undoubtedly correctly, by pointing out that there is no distinction between gross misconduct and other types of misconduct in the relevant legislation. Section 98(2)(b) of the Employment Rights Act 1996 states that a dismissal is capable of being fair if it “relates to the conduct of the employee”. There is no classification of that conduct. Rather, section 98(4) provides that an employment should focus on the particular circumstances of the case. Therefore there was no breach of the relevant provisions of the Act merely by dismissing for serious misconduct.

On the other hand, the ACAS Code of Practice, to which employers and tribunals must have regard, does identify gross misconduct as conduct so serious in itself, or having such serious consequences, as to justify summary dismissal for a first offence. However, in this case, the dismissal was not summary but on notice. As often happens in cases resulting in successful appeal, the Tribunal had fallen into the trap of focusing on what it considered was a reasonable sanction rather than whether the sanction applied fell outside the range of reasonable responses available to the employer.

The EAT acknowledged that, in most cases, a dismissal without prior warnings for something less than gross misconduct will probably fall outside the band of reasonable responses available to a employer. However, there is no rule in the legislation which says that this will always be the case. The Employment Tribunal had “unduly restricted its view of what was relevant, by adopting an impermissibly rigid view that, where the conduct in issue fell short of gross misconduct, dismissal could only be the appropriate sanction if there were other warnings in place”.

Her Honour Judge Eady QC summarised her decision as follows:

“…in my judgment the ET’s approach in this case was flawed: it unduly limited the potential range of reasonable responses by applying a general rule as to when dismissal might be fair in cases of conduct falling short of gross misconduct, when no such rule is laid down by section 98(4). Further, or alternatively, it fell into the substitution trap, imposing its own view as to the appropriate sanction rather than conducting an assessment of the Respondent’s decision against the band of reasonable responses test. In either event, the conclusion is rendered unsafe and the appeal must be allowed.”

As a result the matter was remitted for further consideration by a differently constituted employment tribunal.

I should emphasise that this is an unusual case and should in no way be seen as a green light for employers to routinely dismiss employees without prior warnings for conduct which is seen as falling short of gross misconduct. As ever, if you are contemplating the dismissal of an employee you should contact us for advice before taking any disciplinary steps, with a view to avoiding potentially expensive and time-consuming consequences.

dismissal by employer employment law procedure Supreme Court unfair dismissal

How to deal with convictions for sexual offences committed by a person associated with the employee

playgroundJudgments of the Supreme Court concerning employment law issues are fairly infrequent and usually worthy of attention. That is certainly so in the recent case of Reilly v Sandwell Metropolitan Borough Council which concerned an individual convicted of the surprisingly common offence of downloading indecent images of children.

Ms Reilly was the deputy head teacher of a primary school. She was in a close but not sexual relationship with a Mr Selwood and they did not live together. In 2003 they bought a property in joint names as an investment and Mr Selwood lived there, although he did not make any payments to Ms Reilly. Ms Reilly did not live there but she occasionally stayed overnight, including on 24 February 2009 when, the following morning, she awoke to the arrival of the police who searched the property and arrested Mr Selwood on suspicion of having downloaded indecent images of children. In September Ms Reilly was promoted to the post of head teacher at the school and in February 2010 Mr Selwood was convicted of making indecent images of children by downloading. On a scale of 1-5, the images ranged from level 1 to level 4. He was sentenced to a three year community order, made the subject of a sexual offences prevention order (which included a ban on him having unsupervised access to minors) and he was required to take part in a sex offenders’ programme.

Ms Reilly was immediately aware of the conviction and sentence but chose not to disclose them to the school governors or the local authority. In June 2010 the authority became aware of the conviction and she was suspended on full pay. She was required to attend a disciplinary hearing, the allegation being that, in failing to disclose her relationship with a man convicted of sexual offences concerning children, she had committed a serious breach of an implied term of her contract of employment, sufficient to warrant dismissal for gross misconduct. Following a hearing in May 2011 she was summarily dismissed. The panel was particularly concerned that Ms Reilly continued to refuse to accept that her continued association with Mr Selwood might pose a risk to children at the school. Her appeal against her dismissal failed.

In August 2011 she presented a complaint of unfair dismissal in the employment tribunal. There was a four day hearing in September 2012. The tribunal decided that her claim was unsuccessful, based on the following findings:

  1. The reason for dismissal was that she failed to disclose a relationship with a convicted sex offender.
  2. The local authority genuinely believed that the non-disclosure amounted to misconduct.
  3. There were reasonable grounds for the local authority to hold that belief (it was “obvious” that it was “a matter of misconduct”)
  4. Notwithstanding an otherwise exemplary record, dismissal was within the range of reasonable responses available to the authority.

Those of you who are familiar with dealing with employment and related HR issues will immediately recognise the approach adopted by the tribunal, which is frequently referred to as “the test in BHS v Burchell”.

On the face of it, all was not lost for Ms Reilly because the tribunal went on to conclude that the appeal was so badly handled that the dismissal was procedurally unfair. However, applying the test in Polkey v A E Dayton Services (what was the likely outcome if the process had been correct), the tribunal decided that there was a 90% chance that the appeal would still have been dismissed. As a result, her compensation was reduced by 90%.

However, that was not the end of the matter in the tribunal, which went on to consider to what extent, if any, Ms Reilly had contributed to her dismissal by blameworthy conduct. It decided that she had done so, to the extent of 100%.

So, in summary, save in respect of a procedural defect, the dismissal was found to be fair. Her appeals to the Employment Appeal Tribunal in 2014 and to the Court of Appeal in 2016  were both unsuccessful.

In his lead judgment in the Supreme Court, Lord Wilson considered the famous guidance in BHS v Burchell, described by Lord Justice Elias as the “classic formulation of the employer’s obligation in misconduct cases”. He also referred to the requirement under section 98(4) of the Employment Act 1996:

“…the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer) —

(a) depends on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and

(b) shall be determined in accordance with equity and the substantial merits of the case.”

Burchell and section 98(4) have been for many years the bread and butter of deliberations in unfair dismissal cases when considering whether or not the employer acted reasonably.

It had emerged in evidence at the tribunal that Ms Reilly had made enquiries of several people concerning whether or not she should disclose Mr Selwood’s conviction to the governors of the school, including a police officer, probation officers and officers of other local authorities, all of whom had replied that she was not under a duty to disclose. However, Lord Wilson disagreed:

“The objective decision-makers on the panel, all school governors, ruled that the case fell on the side of the line which required disclosure. Mr Selwood was the subject of a serious, recent conviction. The basis of his sentence was that he represented a danger to children. His relationship with the head of the school created, to put it at its lowest, a potential risk to the children. The risk required assessment. It was not for Ms Reilly to conduct the assessment; it was a function of the governors. As head teacher, she represented, as Ms Hannett on behalf of Sandwell submits, the eyes and ears of the governors in the school. Had she disclosed her relationship to them, it is highly unlikely that she would have been dismissed, still less that the tribunal would have upheld any dismissal as fair. Far more likely would have been the extraction by the governors of promises by Ms Reilly that she would not allow Mr Selwood to enter the school premises and perhaps, for example, that outside the school she would not leave information about pupils, for example stored electronically, in places where he might be able to gain access to it.”

It followed that the tribunal was entitled to conclude that Ms Reilly’s non-disclosure amounted to a breach of duty which merited her dismissal.

Supreme Court President, Lady Hale, raised two general points of interest arising from the case. The first is whether a dismissal based on an employee’s “conduct” can ever be fair if that conduct is not in breach of the employee’s contract of employment. In other words, can there be “conduct” (sufficient to dismiss) which is not contractual misconduct. Intriguingly, she also referred to the question of whether the guidance in BHS v Burchell when deciding the fairness of a conduct dismissal was correct. In doing so she has raised the possibility that, after all these years, it might not be the right approach. However, we will have to wait and see because the point was not expressly raised during the appeal and she therefore declined to express an opinion on the matter.

data protection Data Protection Act

New GDPR compliant data protection

GDPRAs I mentioned to readers of our monthly newsletter, like many organisations, we have been preparing for the implementation of the General Data Protection Regulation on 25 May 2018. As you may know, there is no transition period so the new rules concerning data protection will be in full force and effect from day one.

At Canter Levin & Berg we introduced our new data protection policy last week and we have recently published our template GDPR compliant data protection policy, with associated documents and guidance notes, in the subscription section of this website. The policy is intended to be straightforward and easy for all readers and users to understand.

As usual we have accompanied the policy with detailed background and guidance notes which are intended to demystify the compliance process for SMEs. We have explained the background to GDPR, provided a commentary on what the Information Commissioner says about preparing for GDPR and summarised the main areas that need to be considered.

We have provided a clause by clause summary of the policy so that our users have all that they need to adapt the policy for implementation in their organisations.

Of course, subscribers who have access to our employment lawyers can have them prepare a suitably adapted policy, as well as receiving advice about how to implement the changes.

In addition to the main policy, subscribers have access to a template information asset register and, as a bonus, a GDPR compliant template website privacy statement.

If you are a full subscriber, please contact us and we will help you through the process with a minimum of fuss.

If you are a web access only subscriber, you can access the policy, guidance notes and associated documents here:

Subscription Zone – Data Protection Policy (GDPR compliant)

If you are not a subscriber, please do not hesitate to contact us for more information by using our enquiry form or by contacting one of our lawyers:

Tom – 0151 239 1040

Louisa – 0151 239 1010

Martin – 0151 239 1003

Our direct access lawyer provided services, including full access to our suite of GDPR data protection resources, start from as little as £99 per month.

breach of contract damages wrongful dismissal

The stakes are high when the wrongful dismissal claimant is the former boss of The AA

In June 2014, when The AA was taken public in what was described as a management buy-in, chartered accountant Bob McKenzie was appointed as its chief executive on a base salary of £750,000 and a package, with various benefits, worth some £1.2m per year.

On 1 August 2017 he was sacked for gross misconduct after he was reported to have to have got into a hotel bar fight with one of the Company’s senior managers. He was reported to have engaged in “a sustained and violent attack” on the manager which was captured on the hotel’s CCTV. Days after the incident he was removed from the board. As a result of being dismissed for gross misconduct, thereby disqualifying himself from any further contractual benefits, he stood to lose what was estimated at the time to be about £100m in share awards. Following his dismissal Mr McKenzie admitted himself to hospital suffering from work related stress.

He was known as strong boardroom performer, driven by financial returns. In an interview with The Sunday Telegraph in 2016 he said of his employment prior to joining The AA:

“Work hard and play hard: you were given targets and you met them or else you parted company.”

Shortly following his appointment, chief executive Chris Jansen left abruptly, followed finance director Andy Boland. Mr McKenzie assumed the (much criticised) dual role of chairman and chief executive, assuming greater power in 2015 by absorbing the duties of executive director Nick Hewitt, architect of the business plan that led to the float, who also left abruptly.

Mr McKenzie instructed top City firm Bird and Bird and in January 2018 The AA declared that it was “astonished” that Mr McKenzie had commenced an unfair dismissal claim in the employment tribunal, with the intention of bringing a wrongful dismissal claim for “tens of millions of pounds” in the High Court.

Fast forward to March 2018 and the High Court wrongful dismissal claim has been filed and its contents (perhaps conveniently) leaked. In his evidence Mr McKenzie has claimed that The AA did not care about his mental health. However, he admitted to having punched Mike Lloyd, Head of AA Insurance, saying that he was deeply ashamed by what he had done. The row had started because Mr McKenzie opposed a plan (now abandoned) to merge with Hastings Insurance and claimed that he had been “kept in the dark” about negotiations with the other insurer. Mr McKenzie said in evidence that the incident followed months of stress when he was regularly working ten hours a day, six days a week. In a medical report submitted on his behalf, it was noted that he had taken three Diazepam tablets on the day of the attack, plus two bottles of beer at lunch and two to four glasses of wine in the evening. The pleadings also disclose that a clinical psychologist, who saw Mr McKenzie four days after the incident reported that he had been suffering months of:

…raised anxiety, sleep disturbance, concentration loss, forgetfulness, increased emotionality (sic) and reduced emotional self-regulation with irritability and outburst of anger”.

He continued:

“These symptoms could be the consequence of a progressive neurological illness but the symptoms could also be the consequence of a toxic combination of extremely high stress levels over the last few years including feeling completely undermined by his executive colleagues and taking on unreasonable levels of responsibility…Bob needs to be treated by the company as if he has had a heart attack and be signed off work for approximately six months.”

He claims that his dismissal was a device to be able to classify him as a “bad leaver”, thereby entitling the company to acquire his “management value participation shares”, estimated in the claim to be worth between £85m and £220m.

Earlier this month The Daily Telegraph published an article (with no indication of its source), alleging that Mr McKenzie was involved in a street brawl in 2016 during which he punched a woman, Catherine Dodkin, in the mouth, with her suffering a split lip. Mr McKenzie broke his leg in the incident but it is claimed that he concealed the details from The AA, claiming that he had tripped on the pavement. Mss Dodkin is reported to have said that she is willing to give evidence on behalf of The AA at the forthcoming trial. In response, according to The Times, Mr McKenzie has instructed Rosenblatt Solicitors to pursue proceedings for assault against Ms Dodkin. He maintains that Ms Dodkin scratched at his wife, pulled out his hearing aid and threw it down the road and then made a lunge for his wife when he attempted to restrain her.

All very unedifying but it has the makings of a fiercely contested trial in which the stakes are very high indeed. Of course, the case is noteworthy because of the post that was held by the claimant and the value of the damages claim. However, scaled down, it is ultimately just like many a claim and counterclaim relating to alleged wrongful dismissal. I think it is fair to say that, as matters stand, the prospects for settlement are not high so I expect that I will be reporting the trial and its outcome, probably later this year.

contract terms contracts of employment employment status

DPD relaxes onerous terms imposed on its delivery drivers

A year ago I wrote about the onerous terms imposed on DPD couriers, which had come to the attention of the Work and Pensions Select Committee:

“Meanwhile, it has emerged that DPD, which deliver parcels for Marks & Spencer, John Lewis and River Island, fines their couriers £150 per day if they cannot find cover when they are ill. This has resulted in drivers being forced to work when they are sick. The fine, which is described as “liquidated damages”, means that couriers who earn on average £200 a day, lose £350 if they cannot work through illness and are unable to find a substitute.”

Chair of the Committee (and my MP) Frank Field, commented at the time:

“The gig economy is producing wave after wave of evidence on the grim reality of life at the bottom of Britain’s labour market…A group of companies now controls the working lives of an unknown number of people, and yet evades its own responsibilities as employers and taxpayers by labelling those people as self-employed… This move [by DPD] makes the rest of the gig economy look as though it operates in the Garden of Eden.”

In February 2018 The Guardian reported the sad story of Don Lane, a DPD courier, who was fined £150 for attending a medical appointment to treat his diabetes and who, at age 53, subsequently collapsed and died for reasons connected with the disease. His widow, Ruth, disclosed that he had missed medical appointments because he felt under pressure to cover his round. He had collapsed twice, including once into a diabetic coma, while at the wheel of his DPD van. His fine was imposed when he went to see a specialist about eye damage caused by his diabetes. He collapsed in late December, having worked through illness during the Christmas rush and died in the Royal Bournemouth Hospital on 4 January.

The matter was raised in Parliament and there was condemnation of DPD across the political spectrum, including business secretary Greg Clark, who described Mr Lane’s death as “a terrible tragedy”.

In March 2018 DPD announced significant changes to the working conditions of its drivers. The company announced that it will be offering all of its 6000 drivers sickness and holiday pay and it is abolishing its £150 fines for missing work.

In a manner similar to the fixed hours experiment run by McDonalds last July, DPD is giving its drivers the choice to be classed as workers (with paid holidays, sick pay, access to a pension scheme while retaining payment per delivery), to be fully fledged employees with all the usual employment benefits and payment by the hour, or to remain as self-employed franchisees. Unsurprisingly, those who opt for full employment will be paid less to offset the cost of the benefits being made available.

This is all very well but is it right that the parties can pick and choose the nature of the business relationship between them? Well, of course, the answer is no. Establishing the legal status of employees, workers and the self-employed has generated a great deal of litigation and continues to do so, on the basis that, in the same way that it is not open to employers or, for that matter, employees to “opt out” of TUPE when all or part of a business is transferred, it is not in the gift of an employer to choose to confer employment status for some and not others who are, in effect, carrying out exactly the same work. I anticipate that the decision of the Supreme Court in the Pimlico Plumbers case will go a long way to resolving the current anomalies and the signs are that there will be a presumption of worker (if not employee) status in nearly all such arrangements.