Employment Law Update - July 2008

24 Jul 2008

Contents

EDITORIAL

This month was relatively sparse so far as decisions of moment in the field of employment law were concerned until last week when the House of Lords handed down its decision in London Borough of Lewisham v Malcolm, the effect of which is to reduce significantly the reach of the DDA as previously understood, as well as to cause mayhem in tribunal hearings up and down the land! Tim Found has produced a very helpful summary of the case which is required reading for any employment lawyer, indeed for any lawyer whose practice ever touches on issues of disability discrimination.

After the favourable reception for the new monthly article we continue this month with a fascinating piece by Ian Ridd arising out of the recent EAT decision in Robinson v Tescom Corporation. No doubt every reader has encountered the difficulties involved in advising an employee of what to do in circumstances where the employer has attempted unilaterally to impose a variation to the contract of employment. Ian considers the pitfalls inherent in this situation and elucidates the EAT’s approach to the issue.

James Pretsell

1.7.08

top

CASE LAW UPDATE 

London Borough of Lewisham v Malcolm [2008] UKHL 43

Though this case concerned the application of DDA to a schizophrenic secure tenant evicted by a local authority for breach of his tenancy, the HL decision has much wider ramifications, and in particular in the employment context.

Perhaps most significantly (and not without some misgivings), the HL has overruled the CA decision in Clark v TDG Ltd (t/a Novacold Ltd) as to the correct approach to comparators under the DDA.

Clark v Novacold (which, as Baroness Hale noted in her dissenting judgment on this issue, has stood unchallenged for 9 years and has represented the settled understanding of employment lawyers and tribunals) decided that the correct comparator under the DDA was simply someone to whom the reason for the less favourable treatment did not or would not apply. On the facts of that case - involving dismissal of an employee who proposed to be absent from work for up to a year - the correct comparator was a person able to perform their job. Such a person would not have been dismissed, therefore unlawful discrimination was established unless the dismissal could be justified.

In Malcolm, the majority of the HL has declared this approach to be wrong: identifying the correct comparator involves stripping out the disability but not the reason for the treatment, so there would only be discrimination if a non-disabled person to whom the same reason would apply would be accorded more favourable treatment. In effect, the HL is aligning the approach to comparators under the DDA with the approach under the sex and race discrimination legislation, i.e. a straight like-for-like comparison.

Applying this approach to the facts of Clark, the correct comparator would be a person who would be absent from work for a similar length of time for a reason unconnected with physical disability. Such a person would be likely to be dismissed, therefore no disability discrimination.

A number of their lordships also suggested that in order to establish discrimination, it is necessary to show that the disability played some motivating part in the decision of the alleged discriminator to subject the disabled person to the treatment complained of; otherwise, it cannot be said that the treatment relates to that person's disability.

Yorkshire Housing Limited v Swanson (LTL 12/6/2008)

The EAT considered whether an employer failed to complete the statutory disciplinary procedure (Part 3, Schedule 2, Employment Act 2002) by delaying any one step or action of that procedure. In the instant case there was a delay of 5 months between the date of the disciplinary hearing and the notification of the outcome of that hearing. The ET held that delay was unreasonable and indefensible. The EAT repeatedly remarked that that finding was not disputed.

Part 3 of Schedule 2 incorporates general requirements into the statutory disciplinary procedure. For example, paragraph 12 requires each step and action to be taken without unreasonable delay; paragraph 13 requires that location of meetings must be reasonable, and so on.

Did Parliament intend that non-compliance with the general requirements should mean that the procedure was not completed? Regulation 12 of the Employment Act 2002 (Dispute Resolution) Regulations 2004 states that "If either party fails to comply with a requirement of an applicable statutory procedure, including a general requirement contained in Part 3 of Schedule 2, then, subject to paragraph (2), the non-completion of the procedure shall be attributed to that party…".

The EAT noted that Regulation 12 was brought into force on the same day as the automatically unfair provisions in s.98A Employment Rights Act 1996 perhaps to give "teeth" to the new statutory procedures to be followed by employers.

By the unreasonable delay in notifying the Claimant of the outcome of the disciplinary meeting, the appellant employer failed to complete the statutory dismissal procedure, therefore rendering the Claimant’s dismissal automatically unfair. The case was remitted to determine the level of statutory increase of the compensation to which the Claimant would be entitled.

Khan (& Anor) v Home Office [2008] EWCA Civ 578

The CA confirmed once again (see Igen, Laing v Manchester CC, Madarassy v Nomura) that in discrimination cases, once an employee makes out his case on different treatment, the burden of proof shifts to the employer to provide an adequate explanation. The CA directed that ETs should not divide the hearing into 2 parts in accordance with the process above, but should hear all the evidence and then consider whether the employee made his case out. If so, did the employer discharge the evidential burden by providing an adequate explanation of the different treatment.

top

ARTICLE - VARIATIONS IN THE CONTRACT OF EMPLOYMENT - THE EMPLOYEE’S RESPONSE 

The recent EAT decision of Robinson v Tescom Corporation (UKEAT/0567/07, 3rd March 2008) illustrates the traps into which employees can fall when responding to attempts by their employer unilaterally to impose changes in the contract of employment. This decision should highlight for employees, and their advisers, the importance of a clear understanding of the courses of action open to employees in these circumstances, and the importance of clearly communicating which of them the employee is intending to follow.

Mr Robinson was a Territory Manager, selling his employer’s products in his designated sales territory in the South East of England, known as Area 6. Pursuant to a restructuring plan, the employer proposed that Mr Robinson should take over a much larger territory, covering the whole of the south of England from the Wash to mid-Wales, an area covering his old Area 6, and also Area 3. This was unwelcome to Mr Robinson for a variety of reasons. Following attempts by Mr Robinson unsuccessfully to negotiate a compromise with his employer, on 22nd September 2006 he was informed that with effect from 2nd October 2006 he would be responsible for the extended territory. This prompted a written response from Mr Robinson on the 25th September 2006 in terms:

I will work under the terms of the varied job description .... but under protest. I do not accept the terms and I am treating the change as a breach of contract and dismissal from the original contract.

I retain the right to seek damages from my employer for breach of contract and/or a declaration from the courts that my employer must abide by the original terms of my contract.

Following the implementation of grievance procedures, unsuccessfully from his point of view, Mr Robinson wrote to his employers on 25th October 2006 in terms:

I write to confirm that I still do not accept the new terms and conditions and will continue to work for the company in the role to Territory Manager covering South East England only, known as Area 6 ....’

Thereafter, Mr Robinson refused to work under the new terms, and following a disciplinary meeting, was summarily dismissed on the 2nd November 2006 for failure to follow a management instruction to work to the new terms. His claim to the Employment Tribunal that he had been unfairly dismissed was rejected, on the grounds that he had affirmed the new terms of his contract of employment and so was bound by them. That being so, the Tribunal held that he had been fairly dismissed for failing to follow the instruction to work under the new terms.

Mr Robinson was given permission to appeal to the EAT on the sole ground that the Tribunal had erred in finding that he had affirmed the new terms of his contract of employment. In the event his appeal was dismissed. The EAT agreed with Mr Robinson’s submissions that he had not in fact affirmed the new terms proposed by the employer, because he had rejected them, and had made it clear that he would only work to them under protest. The EAT went on however to hold that, despite Mr Robinson saying that he would work to the new terms under protest, he had in fact, by the terms of his letter of the 25th September 2006 agreed to work to the varied terms until such time as he felt a satisfactory agreement had been reached or was incapable of being reached: see EAT judgment, paragraph 31. Despite having initially agreed to do this, Mr Robinson had then indicated by his letter of the 25th October 2006 that he would refuse to work under the new terms. It was this subsequent refusal to work under the new terms, when he had previously indicated that he would work under them, that was held to be the basis for a fair dismissal.

Mr Robinson had a number of options open to him when his employer sought to impose the new terms on him. The first decision was whether he was going to accept them or not. An employer seeking to impose a variation in the terms of the contract of employment is making an offer to the employee to agree to a variation in the terms of that contract: see Denmark Productions Ltd v Boscobel Productions Ltd [1969] 1 QB 699 at 731. The employee may refuse to accept that offer, in which case there is no variation to the original contract, and the original contract continues in force. The employer in seeking to impose the variations may be guilty of a repudiatory breach of the contract of employment, but even in that event, an acceptance of that wrongful repudiation on the part of the employee is required to bring the contract to an end: the general principle in contract law is that an unaccepted repudiation leaves the contractual obligation of the parties unaffected. This is so also in employment contracts, at least where the repudiation of one party is not directed to outright termination of the contract of employment: see Rigby v Ferodo [1988] ICR 29 at 35B-C.

Mr Robinson could therefore have refused to agree to the proposed variations and have continued to work, or offered to work, according to the terms of the original contract. Had he done so, the employer would have had to decide whether or not to dismiss him, and if it did, to seek to justify that dismissal on the grounds of Mr Robinson’s refusal to accept the new terms as being some other substantial reason for dismissal. Continuing to work under the terms of his original, unvaried contract of employment would not amount to misconduct.

Alternatively Mr Robinson could have resigned from his employment and asserted that he had been constructively dismissed. It was common ground that Mr Robinson did not do this. If Mr Robinson had not wished to resign immediately, he could have preserved the right to resign and to assert constructive dismissal by making it clear to his employer that he was continuing to work under his contract, without prejudice to his right to resign and later to assert that he had been constructively dismissed. This course of action is effective only if the employee does within a reasonable time decide to resign.

Finally, Mr Robinson could have decided to accept the repudiatory breach of his contract of employment but decided not to treat it as bringing the contract to an end. In that event, the contract would have continued, with the variations, and Mr Robinson could have pursued a claim for damages in the County Court for his employer’s breach of contract. As a matter of practicality, this is a course of action seldom favoured in the employment context.

The difficulty for M Robinson was that although it was clear from his letter of the 25th September 2006 that he was not intending to resign with immediate effect, that letter contained jumbled elements of all the other alternatives open to him. The EAT described M Robinson’s position after the letter of the 25th September as having agreed to work under the new terms, under protest, whilst treating his contract as breached, himself as dismissed and retaining the right to claim damages.

Conclusion

The finding that Mr Robinson had agreed to work under the new terms until such time as he felt a satisfactory agreement had been reached or was incapable of being reached is a finding of fact in this particular case. It may appear a somewhat surprising one to extract from the letter of the 25th September 2006. It was however this finding of fact that doomed Mr Robinson’s claim for unfair dismissal to failure; once he had agreed to work under the new term it was misconduct to go back on his word, as the EAT held he had done by his letter of the 25th October 2006. Mr Robinson made the mistake of not stating clearly to his employer either that he was altogether rejecting the proposed variation to his contract or stating that he reserved the right later to resign and claim constructive dismissal. Although Robinson v Tescom Corporation may be seen as a case decided on its own unusual facts, it does illustrate the various responses that are open to employees in the position of Mr Robinson and vividly points out the dangers of not clearly indicating which of them the employee intends to follow.

IAN RIDD

top

 

Employment Law Update is produced by James Pretsell, Farrar’s Building, Temple, London. James asserts his copyright but gives permission for the brief to be copied and further distributed by any recipient on condition that the authorship is acknowledged.

Whilst every care has been taken in producing the Update, no liability is accepted for any errors or omissions. The Update is not a substitute for proper research, merely an aid.

Comments or suggestions about the Update are welcomed. If you know of anyone who would wish to receive a copy of the Update just send the editor an e-mail at jpretsell@farrarsbuilding.co.uk

top

FARRAR’S BUILDING EMPLOYMENT GROUP

  1. Ian Ridd
  2. Andrew Peebles
  3. Georgina Middleton
  4. Shabbir Lakha
  5. Helen Hobhouse
  6. Lee Evans
  1. Huw Davies
  2. James Pretsell
  3. Sarah Tozzi
  4. Andrew Wille
  5. Howard Cohen
  6. Senay Rodger
  1. Guy Watkins
  2. Carwyn Cox
  3. Tom Bourne-Arton
  4. James Plant
  5. Emma Sole
  6. Grant Goodlad
top