Public Sector Pensions – Disadvantaged Judges Triumph in ‘Ageism’ Test Case

In a test case of importance to all public sector employees, a tribunal has ruled that transitional provisions put in place to prepare the way for full adoption of a new judicial pension scheme fell foul of the ban on age discrimination.

The scheme was introduced in response to a report of the Public Services Pension Commission which recommended wholesale public sector pension reform. The scheme was considerably less valuable to its members than its predecessor had been, both in terms of benefits received and the tax treatment of such benefits.

The transitional arrangements gave full protection against such disadvantages to judges who were members of the earlier scheme prior to 1 April 2012 and who were born on or before 1 April 1957. However, judges born between that date and 1 September 1957 were only entitled to protection on a tapering basis and those born after 1 September 1960 received no protection at all.

In those circumstances, a group of judges, including some members of the High Court bench, who fell within the disadvantaged group launched Employment Tribunal (ET) proceedings against the Lord Chancellor and the Secretary of State for Justice, alleging age discrimination.

In ruling on the matter, the ET noted the need to maintain public sector pensions at affordable levels and that it was for the Government to determine policy objectives and the appropriate allocation of resources. However, in upholding the judges’ complaints, it found that the Government had neither established that the differential treatment was in pursuit of a legitimate aim nor that the discriminatory means adopted were objectively justified.

The ET noted that the disadvantaged group was defined by the age of those within it and that the Government had failed to advance any rational explanation for the discriminatory treatment. The pursuit of consistency in the approach to pension reform across the public sector was not capable of justifying what was a clear derogation from the principle of non-discrimination.

In ruling on the Government’s challenge to that ruling, the Employment Appeal Tribunal (EAT) found that, in concluding that the discriminatory treatment was not in pursuit of a legitimate aim, the ET had misunderstood or misapplied the facts of the case. In dismissing the appeal, however, the EAT ruled that the extremely severe impact of the transitional provisions on judges within the disadvantaged group far outweighed the public benefit of instituting pension reform consistently across the public sector. The unequal treatment of the affected judges was thus not a proportionate means of achieving a legitimate aim.

Employers Can Always Recruit the Best Candidate? Oh No, They Can’t!

At first blush, it might appear obvious that employers are entitled to take on the best candidate for a job. However, as one case concerning a highly qualified medical practice manager showed, immigration law requires that suitable, EU-resident, candidates must be preferred to those from overseas.

The case concerned an Indian national with a first-class degree and an MBA who was recruited as the practice’s business development manager. The practice, which praised her excellent presentation, enthusiasm and great ideas, selected her from a list of 40 candidates. However, following an investigation, the UK visas and immigration section of the Home Office was not satisfied that a genuine effort had been made to recruit an EU resident instead of her and the practice was refused a licence to sponsor overseas workers entering the UK.

In ruling on the practice’s judicial review challenge to that decision, the High Court identified a number of flaws in the Home Office’s approach. The recruitment exercise had not been a charade, the post had been properly advertised, interviews had been carried out and the practice had been entitled to stipulate that the successful candidate should have an MBA qualification.

In rejecting the practice’s case, however, the Court noted that the effect of the residential labour market test applied by the Home Office is that a worker who is settled within the EU, and who is suitable for an advertised post, should be recruited in preference to a non-settled worker, even if the latter is considered to be the better candidate.

It appeared that, on receipt of 40 applications, the practice had proceeded to create a shortlist of five. There was nothing in principle objectionable about that but, having found that the overseas worker was the best, indeed the only suitable, candidate amongst the top five, the practice was not entitled to move directly to appoint her without considering the suitability of settled workers who had not been shortlisted. In those circumstances, the Home Office’s view that the practice had not made a genuine attempt to recruit from the residential labour market was not irrational.

The Government Responds to the Taylor Review of Employment Practices

In July 2017, Matthew Taylor, Chief Executive of the Royal Society for the Encouragement of Arts, Manufactures and Commerce and a former policy chief under Tony Blair, issued his report, commissioned by the Government, on how employment practices need to change in order to keep pace with modern business needs.

The Review, entitled ‘Good Work’, considered a range of issues, including the implications of new forms of work, the rise of digital platforms and the impact of new working models on employee and worker rights, responsibilities, freedoms and obligations. 

The Government has now published its response to the Review, setting out a plan of action for taking forward the recommendations, and launched four consultations on key areas covered. These are:

Former LLP Member Strikes Important Blow in Whistleblowing Case

In an important decision for limited liability partnerships, the former managing partner of a law firm who claimed that he was persecuted for whistleblowing had his hopes of winning £3.4 million in compensation boosted by the Court of Appeal.

The man had prepared a report after the firm’s board received a complaint of bullying against its senior partner. Before he could submit it, however, his resignation from his positions as managing partner and compliance officer was demanded. The board subsequently voted to remove him from those posts.

The man’s response was to give one month’s notice of his departure on the basis that the firm, a limited liability partnership, had repudiated his membership agreement. He said that the firm’s conduct towards him had rendered his continued membership intolerable. The firm, however, refused to accept that it was in repudiatory breach and informed him that he was expected to return to work. He did not do so and was ultimately expelled from the firm.

He lodged a complaint with an Employment Tribunal (ET) under the Employment Rights Act 1996, claiming that his membership had been constructively terminated and that he had been subjected to detriment as a result of making a protected disclosure. Following a preliminary hearing, the ET struck out that part of his claim that related to the termination of his membership and losses – primarily loss of earnings – that were said to have arisen from that termination.

That ruling was, however, subsequently overturned by the Employment Appeal Tribunal (EAT), enabling him to proceed with his claim in respect of post-termination losses. That was despite the man’s acceptance before the EAT that his claim that his membership of the firm had been terminated by his acceptance of an alleged repudiatory breach had been appropriately struck out.

In dismissing the firm’s challenge to the EAT’s ruling, the Court found that the man could claim compensation for post-termination losses even if he had been lawfully expelled as a member, provided that such losses were attributable to the earlier unlawful detrimental treatment. If all the facts were assumed to be true, in the man’s favour, his claim in respect of post-termination losses should not have been struck out.

Are ‘Casual’ Staff Entitled to Workers’ Rights? Tribunal Gives Guidance

Are so called ‘casual’ staff entitled to the panoply of rights afforded to ‘workers’ by the Employment Rights Act 1996? A tribunal grappled with that vital issue in a case concerning a pipe fitter who found a temporary job through a recruitment agency.

Construction siteThe man began working on a building site after answering an advertisement placed by the agency. After he complained to an Employment Tribunal (ET) that unlawful deductions had been made from his wages, an issue arose as to whether he was a worker for the agency, within the meaning of the Act.

The ET found that he did not meet the statutory definition on the basis that there was no contract between him and the agency and that the agency had not intended to enter into legal relations with him. His working arrangements had been nothing if not casual. The ET noted that he had been paid directly by the site contractor and rejected arguments that the agency’s arrangement with him was a sham.

In upholding the man’s challenge to that decision, the Employment Appeal Tribunal (EAT) found that the ET had made an error of law. On the basis of correspondence between him and the agency, there clearly was some kind of agreement between them. The agency had advertised the position and had sent the man a text confirming the location where he would work, the name of the site contractor and details as to who he could contact for payment purposes.

The context was a commercial one of an individual seeking work for which he would expect to be remunerated. The man would also have envisaged that, if he was not paid for work done, he would have some legal recourse. In those circumstances, the ET was wrong to find that there was no intention to create legal relations. The case was remitted to a differently constituted ET for consideration of whether the man was a worker for the agency, for the site contractor, or for both.

Standing up for Your Rights is One Thing, Intransigence is Another

You are entitled to stand up for your rights in your workplace but, without specialist legal advice, it is only too easy to overstep the mark into intransigence. The point could hardly have been more clearly made than by the case of a senior manager who simply refused to work unless his employer yielded to his point of view.

The man, who was paid £90,000 a year as senior vice president of a management services company, had to take almost a year off work due to a back condition. On his return to work, his employer took the view that he needed to get up to speed after such a long absence and placed him on restricted duties.

He, however, insisted that he be permitted to resume his role in full and refused to work at all unless his employer agreed to this. The employer took the view that his stance was unacceptable and, following a disciplinary process, he was summarily dismissed for gross misconduct.

After he launched proceedings, an Employment Tribunal (ET) upheld his disability discrimination claim on the limited basis that he had effectively been demoted on his return to work and that the employer had wrongly failed to give him any clear indication as to when he could resume his full duties.

The ET also found that his dismissal was procedurally unfair, in that the disciplinary hearing had been conducted with unnecessary haste and the appeal procedure was perfunctory. However, it went on to rule that his refusal to return to work on the limited basis proposed by the employer constituted gross misconduct that would have justified his dismissal had a fair procedure been adopted. The ET’s ruling was subsequently confirmed by the Employment Appeal Tribunal.

In dismissing his challenge to that decision, the Court of Appeal found that his justified belief that he should have been allowed to return to his old role immediately was not sufficient reason for him to refuse to do any work at all. He was fit to work and was receiving full pay at the time, but had refused to work unless his employer yielded to his position on an issue that was genuinely in dispute. Even though he was right on that issue, the ET was entitled to find that his refusal was unacceptable.

Railway Signalman Triumphs in Rest Breaks Dispute

Railway Line 2Since the advent of the Working Time Regulations 1998 (WTR), those who work shifts of six hours or more have been legally entitled to take a continuous 20-minute rest break. There are, however, a number of exceptions to the rule and one of them – relating to railway workers – came under analysis in a guideline case.

The case concerned a railway signalman who worked eight-hour shifts at various signal boxes. Train traffic was sporadic and, although he worked alone, he was able to take short breaks that together amounted to well over 20 minutes during each shift. He was not, however, guaranteed continuous 20-minute breaks and his employer required him to remain on call at all times and to take breaks as they naturally occurred in the course of his working day.

It was accepted that Regulation 12 of the WTR – which enshrines the right to uninterrupted rest breaks of not less than 20 minutes – did not apply to him. That was because Regulation 21(f) excludes railway workers whose activities are linked to transport timetables and to ensuring the continuity and regularity of train traffic. By Regulation 24, however, his employer was required, wherever possible, to allow him to take equivalent periods of compensatory rest. In rejecting his complaint, an Employment Tribunal found that the employer had met that obligation.

In upholding his challenge to that ruling, the Employment Appeal Tribunal noted that, so far as possible, compensatory rest must comprise a break from work of at least 20 minutes. It would be possible to afford the man such continuous breaks by laying on appropriate personnel to relieve him and, in those circumstances, the employer had breached its obligations under Regulation 24. The case was remitted to the ET to consider the question of remedies.

Winning Compensation Is One Thing, Enforcing Payment Is Another!

Winning compensation is one thing, but enforcing its payment is another. That point could hardly have been more powerfully made than by a case in which a domestic servant who was awarded almost £270,000 by an Employment Tribunal (ET) ended up without a penny.

In what was believed to be the first successful ‘caste discrimination’ case brought before an ET, the Indian woman successfully complained that the couple for whom she worked had paid her far below the National Minimum Wage. The ET also found that she had been unfairly dismissed and discriminated against on grounds of her religion and race. She was awarded total compensation of £266,536.

A firm of solicitors commendably agreed to act free of charge in pursuing the couple for payment of the award. However, they ultimately only succeeded in recovering £35,702, roughly 13 per cent of the amount due. The Legal Aid Agency (LAA) had funded the woman’s case and elected to exercise its statutory charge over the sum recovered. The end result was that the woman received nothing.

In ruling on the woman’s judicial review challenge to the LAA’s decision, the High Court acknowledged that her position was extremely unfortunate. The findings of the ET were wholly consistent with her claim that she was a victim of trafficking and had been held in servitude by the couple. In dismissing her case, however, the Court rejected arguments that the application of the statutory charge breached her human rights or European rules designed to combat human trafficking.

Unfair Dismissal and Ulterior Motives – Tribunal Fell Into Substitution Trap

Determining the true reason for an employee’s dismissal is one of the hardest tasks undertaken by Employment Tribunals (ETs). That was certainly so in one case in which a school’s headteacher was accused of having an ulterior motive for dispensing with the services of its veteran maintenance manager.

Concerns had been raised that a right of way across the school’s land was being used by sportsmen carrying firearms who shot clay pigeons on a neighbouring site. The school had a strict policy against unknown visitors and, following a disciplinary process, the manager was dismissed on the basis that he had failed to inform the school of the problem and the potential child protection and safeguarding issues that it posed.

In upholding his unfair dismissal claim, and awarding him £39,854.23 in damages, an ET noted that the headteacher had previously issued him with a final written warning in respect of performance concerns, notwithstanding his 20 years of unblemished service. That and the headteacher’s hostility towards him was the real reason for his dismissal. The headteacher had not been sufficiently impartial; the investigation had been inadequate and dismissal fell outside the range of reasonable responses.

In upholding the school’s challenge to that decision, however, the Employment Appeal Tribunal (EAT) ruled that the ET’s conclusions were not supported by its findings of fact. It had not found the head teacher’s account of what was in her mind to be untruthful and had failed adequately to explain its conclusion that she had an ulterior motive. When considering the fairness of the disciplinary process and the sanction imposed, the ET had also fallen into the trap of substituting its own views for those of the head teacher. The case was remitted for a fresh hearing before a differently constituted ET.

Equal Pay Claims and Employer Insolvency – Guidance Ruling

In an important decision, the Employment Appeal Tribunal (EAT) has ruled that equal pay claims being pursued by catering workers did amount to claims for ‘arrears of pay’ and ‘debts’ that transferred from one employer to another when there was a relevant transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) after the company they worked for went into administration (Graysons Restaurants Limited v Jones and Others).

The case concerned a number of school cooks and catering assistants who had originally worked for Liverpool City Council, against which equal pay claims were commenced in 2007. The women’s employment had twice transferred by virtue of TUPE to private sector companies, the latter of which became insolvent in 2009. At that point, another catering company purchased the insolvent company’s assets and took over the women’s employment contracts.

It was common ground that the women had been doing work rated equivalent to, but had been paid less than, their male comparators. There was therefore a presumption of equal pay, but material factor defences were being pursued in all cases and liability had not been finally determined or quantified.

Firstly, the EAT held that the women’s equal pay claims were capable of being claims for arrears of pay within Section 184(1) of the Employment Rights Act 1996 (ERA) and therefore debts within the meaning of Section 182 ERA. In the EAT’s view, on the date that their former employer became insolvent the women were legally entitled to receive pay for work already done, at the same rate of pay as male comparators doing equivalent work. They were in exactly the same position as any suppliers of goods who were unpaid at the date of insolvency.

Secondly, the EAT held that any liability in excess of the eight weeks of arrears of equal pay payable under Part XII ERA by the Secretary of State had not been extinguished and had transferred to the catering company.

If you are seeking to acquire a business in administration, contact us for advice.