Mills & Reeve: HR Law Live

Top ten employment law topics for 2019

To mark the start of 2019, we have put together our review of the past year. We have selected the topics that we think have most engaged employment lawyers and human resources practitioners over the past 12 months and will continue to be significant in the year ahead.

The review starts with an explanation of the new immigration arrangements that are likely to apply post-Brexit, though many details are still unclear. Other topics covered include #MeToo, the gig economy and the implications of the latest case law on the interpretation of employment contracts.

Award of ill-health pension could not be unfavourable treatment because of disability

The Supreme Court has dismissed Andrew Williams’ disability-related challenge to the way his early retirement pension had been calculated by Swansea University’s pension scheme.

Mr Williams complained that the enhanced element of his ill-health early retirement pension had been calculated based on his part-time salary. He argued that it should have been based on his full time salary, because it was only because of his disability that he was not able to work full-time immediately prior to his retirement at the age of 38 on health grounds. This, he said, was a case of unfavourable treatment because of “something arising in consequence of his disability”.

His argument convinced the employment tribunal, but the Employment Appeal Tribunal allowed the employer’s appeal. Mr Williams' further appeal to the Court of Appeal was dismissed, and the Supreme Court has now endorsed the Court of Appeal’s approach.

The argument that won out was based on the fact that the award of an early retirement pension on grounds of ill-health could not be described as unfavourable treatment towards a disabled person: a person who was not disabled would not be eligible for such a pension. It followed that it could not become unfavourable treatment because of the way it was calculated. In other words the fact that a full time worker who had become disabled because of a sudden illness like a heart attack would have been granted a better ill-health pension was beside the point: it was not sufficient to make what would otherwise be described as favourable treatment unfavourable.

This decision will come as a relief to pension fund trustees and employers, but it does illustrate the importance of context in interpreting the wording of the Equality Act. In these particular circumstances our higher courts clearly thought it a bridge too far to complain that what was by all accounts a generous ill-health pension could have been even better. But it does not necessarily read across into other contentious areas of disability discrimination – for example the issue of whether disabled people should be given more generous sick pay than non-disabled people, or people with different disabilities.

Where there is uncertainty, it is probably better to assume that the relevant provisions of the Equality Act are engaged, and be prepared to justify any treatment that could be regarded as unfavourable. As other recent cases have demonstrated, assuming that the Equality Act is not engaged at all when making a decision that affects a disabled worker can be a high-risk approach.

Four lessons from the “gay cake” case

The Supreme Court has now ruled that it was not discrimination “on grounds of” sexual orientation for a Christian-owned bakery in Belfast to refuse to supply a cake iced with a message in support of gay marriage. As the Supreme Court put it: “The objection was to the message, not the messenger”. In reaching this decision, it overturned the ruling of the Northern Ireland Court of Appeal, which in turn had upheld the decision of the district judge at first instance.

This facts of this unique case may seem a long way away from the kind of equality issues the HR departments across Britain regularly grapple with. However, whatever view one takes of the final outcome (which has certainly been controversial) there are some important general lessons to derive from this litigation.

Equality is not just an employment-related issue: Broadly speaking there is one definition of discrimination which applies across all equality strands, and in all the main areas of the UK’s economic life including employment, education and the supply of goods and services. That means that leading cases from the goods and services field can be equally relevant in the employment world. Although Northern Ireland does not have an Equality Act which brings together its equality legislation under one roof, the definition of sexual orientation discrimination with which the courts have been grappling in the gay cake case is not materially different from the corresponding provisions which apply across the rest of the UK. 

Context is all: Although for practical purposes there is a unified definition of discrimination, the circumstances in which it is applied are necessarily very different, given the wide range of the legislation and the diverse communities in which it operates. As the Court of Appeal pointed out, the dispute arose in a part of the UK where there is a particularly strong faith community, many of whom were opposed to the decriminalisation of homosexuality, which did not happen until 1985 in Northern Ireland. There is still no provision for same sex marriage there, unlike in the remainder of the British Isles. In addition, the exact circumstances in which the bakery refused to supply the cake were important. It was not the case that the refusal to supply would necessarily have been lawful: it was significant that there was no finding that the refusal to supply the cake was because the claimant was gay, thought to be gay, or associated with gay people. Otherwise the outcome would have been different.

Religious belief is not a trump card: Had the refusal to supply the cake been a case of associative direct discrimination, the religious beliefs of the bakery owners would not have provided a defence. In cases of direct discrimination, there is no general right of “conscientious objection” on religious grounds from the requirements of equality legislation (though there are limited exemptions where employment is for the purposes of an organised religion).

Stick to what you know best: Four years of stressful litigation (not to mention a very large legal bill on both sides) could have been avoided if the bakery had narrowed its range of celebration cakes. That way it could have avoided straying in the world of cake-top publishing, an environment where it appears not to have thought carefully enough about the equality framework under which it had to operate.

Charles Pigott, Professional Support Lawyer

The menopause at work: how employers can get things wrong

The publication of our briefing, arguing for a more open workplace culture when it comes to the menopause, coincided with press reports of a Scottish court officer with particularly severe menopausal symptoms, who has been reinstated following an unfair and discriminatory dismissal. We have now tracked down the full decision which explains in considerable detail where things went wrong.

The case revolved around a water jug used by the claimant while she was sitting in court. On her return from a break she discovered that the water in it had been consumed. She was taking soluble medication at the time and in the pressure of the moment mistakenly believed that she had added her medication to the water. She subsequently realised her error, but not before she had told two male court users that they had taken her medication by drinking the water in the jug. Unsurprisingly they did not react favourably.

A disciplinary investigation followed. The investigating officer, despite knowing about her medical condition, reached the conclusion that the claimant had deliberately lied to the court users about the medication being in the water, and she was dismissed for misconduct. Bearing in mind the claimant’s menopausal symptoms, which the tribunal concluded had caused her to become “confused and forgetful”, it decided that the employer had had no reasonable basis for believing that she had been dishonest. It also found that she had been discriminated against because of “something arising from her disability”. In this case the “something” was the forgetfulness arising from her menopausal symptoms, which her employer had previously agreed were sufficiently severe to mean that she was a disabled person.

This was not a case where lack of openness about the menopause was a problem. Indeed the employer had already made a number of adjustments to accommodate her physical symptoms. Rather, the root of the problem was a lack of understanding by those involved in the disciplinary investigation that menopausal symptoms are not just physical, but can also be psychological. That is not to say that some kind of warning might not have been appropriate. However, the tribunal was clear that her dismissal was not only unfair, but a disproportionate sanction with regard to her employer’s obligations under the Equality Act.

Jog Hundle, Partner

Dismissal of teacher for error of judgement was discriminatory

A school has been found to be in breach of the Equality Act when dismissing an English teacher because of an error of judgement that it thought was unconnected with his disability. The Court of Appeal has explained that as long as an employer is aware that a worker is disabled, it can be liable for discrimination even if it does not realise that there was a causal connection between the disability and the conduct which triggered the disciplinary action. However it remains open for the employer to justify its actions as a proportionate means of achieving a legitimate aim.

In this case Mr Grosset had cystic fibrosis, which meant that he had to follow a time-consuming exercise regime each day to clear his lungs. While this did not impair his abilities as a teacher, it meant that he was less able to absorb unplanned increases in his workload than someone without this condition. 

The appointment of a new head teacher led to a major change to the curriculum he was teaching. He began to suffer from stress due his difficulties managing an increased workload and his lung capacity reduced significantly. After an unsuccessful request for adjustments he was signed off work with stress. 

During Mr Grosset’s absence on sick leave the school discovered that he had shown an 18-rated film to his 15 and 16 year old students. This led to his dismissal for gross misconduct. Mr Grosset argued that this was an uncharacteristic error of judgement due to the stress he had been under, which was in turn directly linked to his disability.

While the employment tribunal dismissed Mr Grosset’s claim for unfair dismissal, it upheld his claim for discrimination “because of something arising in consequence of” his disability. It decided that there was a sufficiently close link between the error of judgement which led to his dismissal and his disability: it had arisen in consequence of his disability. It also dismissed the school’s argument that its actions were justified. While it was clearly entitled to safeguard its pupils, it considered that dismissing Mr Grosset in these particular circumstances was disproportionate.

On appeal the school argued that it should not be liable under these provisions unless it was aware of the link between the error of judgement and the claimant’s disability. The Court of Appeal disagreed. To hold otherwise would significantly narrow the scope of the protection given to disabled people. The relevant provisions had been inserted into the Equality Act 2010 to counteract the effect of a narrower interpretation given by the House of Lords to the corresponding provisions in the Disability Discrimination Act 1995.

This decision is a reminder that employers need to be particularly careful when disciplining disabled workers, or subjecting them to any other kind of unfavourable treatment. They need to be aware of the possibility that the trigger for the disciplinary action may be something arising in consequence of their disability, and be prepared to justify their actions as a proportionate means of achieving a legitimate aim.

What is proportionate is a matter for the employment tribunal to assess on an objective basis. That makes it different from the reasonableness an employer needs to demonstrate when defending unfair dismissal claims, which the tribunal is required to assess by reference to a “band of reasonable responses” – an approach which gives an employer much more latitude.

Could employers’ arrangements for parental pay be indirectly discriminatory?

Last month we had a clear ruling from the Employment Appeal Tribunal that failing to pay men on shared parental leave the same as women on maternity leave was not direct sex discrimination. Now have we have a second decision on similar facts which confirms this position, but raises the possibility that such arrangements could be indirectly discriminatory against men.

The argument is that while such arrangements are not directly discriminatory against men (in part because they also apply to women taking SPL) they nonetheless put men at a “particular” disadvantage. It is suggested that this is because, unlike at least some women, they do not have the option of claiming maternity leave as the birth mother. 

The EAT has decided that this issue was not properly addressed at the employment tribunal, so it has been remitted for reconsideration by a newly constituted tribunal. Among other things, it will need to decide whether there is sufficient evidence that the arrangements do indeed put men at a particular disadvantage, bearing in mind that some women who are not birth mothers are also eligible for SPL. If the claimant wins on this point, the employer will still be able to argue that the arrangements can be justified as a proportionate means of achieving a legitimate aim.

Although the employment tribunal’s decision on this point will not bind other tribunals, it is likely to provide useful guidance to employers, particularly now that the EAT has intervened to formulate the questions it will need to address.

Failing to enhance statutory shared parental pay was not discriminatory

The EAT has overturned an employment tribunal’s decision that failure to provide a period of full pay to a man taking shared parental leave amounted to sex discrimination. The EAT said that it was not possible to make a comparison for these purposes between a man on shared parental leave and a woman during the first six months of her maternity leave, so it was lawful to treat Mr Ali differently.

The mother of Mr Ali’s child had ended her maternity leave two weeks after the birth, and transferred the balance of her maternity leave to him under the statutory shared parental leave scheme. His employer provided 14 weeks’ basic pay for women on maternity leave. He argued that he should have the same entitlement while on shared parental leave, since failure to match a mother’s entitlement in these circumstances amounted to unlawful sex discrimination.

His argument succeeded before the employment tribunal, but failed to convince the EAT.  The EAT said that the purpose of maternity leave and pay was primarily to protect the health of the mother. This contrasted with adoption and shared parental leave, where the primary purpose was care of a child. So to evaluate whether denying the father enhanced pay was discriminatory, the appropriate comparator was a women taking shared parental leave, not a mother taking maternity leave. Since a woman taking shared parental leave would not be entitled to enhanced pay either, Mr Ali’s claim of direct sex discrimination failed.

While this decision will come as a relief to employers, three points are worth adding:

• Firstly, this decision is about the arrangements made to support women during ordinary maternity leave. It is possible that tribunals would take an different approach in relation to additional maternity leave, where is arguable that the purpose of the leave is different.
• Secondly, while this decision confirms that there is no legal compulsion to do this, a strong business case can still be made for enhancing statutory shared parental pay and adoption pay.
• Finally, the EAT heard another appeal on a similar point earlier this year (Hextall v Chief Constable of Leicestershire Police) and we are still waiting for the decision to be published. We are assuming the EAT will take the same approach in this later case!

Disability: how much can an employer be expected to know?

The Court of Appeal has ruled on the extent of an employer’s obligation to find out whether a worker is a disabled person. This is an important issue, because an employer can be liable for failure to make reasonable adjustments (despite not knowing about a claimant’s disability) if it could “reasonably be expected to know” that he or she was a disabled person at the relevant time.

In this latest decision the Court of Appeal has endorsed the employment tribunal’s assessment that the claimant’s employer did not know the claimant was disabled and “did all they could reasonably be expected to have done to find out about the nature of the health problem” she was experiencing. That meant that the employer could not be made liable for failure to make adjustments, even though it emerged at the employment tribunal that the claimant had in fact been disabled in the lead up to her dismissal for poor attendance.

The Court of Appeal agreed that the employer had gone to considerable lengths to establish the medical position. Following correspondence with the claimant’s GP it had made a referral to occupational health consultants. On receipt of the initial report it went back with further questions, which resulted in a second report. After another period of absence there were further communications with the OH consultants as well as correspondence with the GP before the final disciplinary hearing took place.

The Court of Appeal supported the ET’s assessment that the employers had been entitled to conclude that it was not likely that the health problems the claimant was experiencing would last as long as 12 months. In addition, many of the absences were due to bouts of flu, or “very generalised references” to stress and anxiety, which “would not ordinarily lead an employee to think an employee is disabled”.

Although there was some criticism levelled at the OH consultants by the ET, the Court of Appeal agreed it had been reasonable to rely on their advice. It was not a case like Gallop v Newport City Council a few years ago, where the Court of Appeal had said that it was not necessarily reasonable to take an OH report at face value.  While an employer should not follow any expert evidence blindly, it is entitled to attach “great weight to the informed and reasoned opinion of an occupational health consultant”.

This decision is therefore reassuring to employers, who had been concerned about the impact of Gallop on their ability to rely on expert advice. However, it is worth emphasising that it is up to the tribunal to assess what an employer can reasonably be expected to know, and such a decision is not easy to overturn on appeal. In this case one reason why the employer failed to uncover the claimant’s disability was because she refused to allow the OH consultant access to her GP records. That may have contributed to the tribunal's assessment that there was a limit to the enquiries the employer could reasonably be expected to have made.

Four key employment law developments arriving in April

There will be a number of changes happening next month which will be of interest to employment practitioners.  Here are our top four:

• National Minimum Wage: The new rates will take effect on 1 April. The National Living Wage (the rate for workers aged 25+) rises from £7.50 to £7.83 per hour. The rate for workers aged 21-24 increases from £7.05 to £7.38. Similar rises will be applied to the other rates. See here for more details.
• Gender pay reporting: The deadline for uploading the first year’s figures expires on 4 April (30 March for employers subject to the public sector equality duties). Our gender pay reporting briefing has more information.
• Employment tribunal limits: The new limits apply where the “relevant date” (eg the effective date of termination) falls on or after 6 April. The limit on a week’s pay rises to £508 and the maximum compensatory award for unfair dismissal goes up to £83,682. All the new limits are set out in the 2018 Increase of Limits Order.
• Taxation of termination payments: For dismissals taking effect on or after 6 April, the way termination payments are taxed will change if the employee does not work their full contractual notice period. In that case, an amount equivalent to what the employee would have earned during the unworked portion of their notice period will be subject to income tax and national insurance contributions, even if the total termination payment is below £30,000. Normally this extra charge to tax will be off-set if a fully taxed payment in lieu of notice is made. There are however some complications, since the notional “post-employment income” will not necessarily be calculated in the same way as a payment in lieu of notice covering the same period.

EAT says discrimination because of perceived disability is unlawful

The Employment Appeal Tribunal has now confirmed that it is possible to discriminate against an employee because of a perception that they are disabled, even though they do not in fact satisfy the statutory definition of a disabled person.

Since the enactment of the Equality Act 2010, direct discrimination because of a perceived disability has always been regarded as a theoretical possibility, but until now no practical examples of this happening have surfaced, at least at appellate level.

The case involved a serving police officer who had experienced a degree of hearing loss which was not severe enough to affect her day to day activities, though it was just outside the medical standards laid down for new police recruits. Her application for a transfer from Wiltshire to Norfolk Constabulary was refused. 

The decision maker explained she had rejected the applicant because she was worried that her hearing might deteriorate. Although she understood the applicant was currently able to do her job, there was a concern that she might have to be placed on restricted duties at some point in the future. 

In fact the medical evidence showed that the claimant's hearing had been stable for the past few years, and accordingly she did not satisfy the statutory definition of a disabled person. However, the EAT said that the employment tribunal had been entitled to come to the view that the decision maker perceived her to be a disabled person. That was because the statutory definition extends not only to people with a medical condition that currently has a substantially adverse effect on their ability to perform ordinary day to day activities, but also to people with a progressive condition. That is defined as a condition which already has some adverse effect, and which is likely to have a substantial adverse effect in the future.

While this is an unusual case, it serves as a salutary reminder that acting on erroneous assumptions about how a medical condition may progress in the future can amount to direct discrimination because of disability. In these circumstances, it does not matter if the employee is not is fact disabled, if the effect of the assumption is to perceive him or her as such. Based on the current law, the same is not true of other types of disability discrimination – ie discrimination arising from disability or the failure to make reasonable adjustments – where the employee must satisfy the statutory definition of disability in order to qualify for legal protection.