Case round up

Our resident experts at Pinsents bring you a comprehensive update on all the
latest decisions that could affect your organisation, and advice on what to do
about them

Lennon v Commissioner of Police of the Metropolis, Court of Appeal
Employer liable for negligent advice of co-employee

* * * * Lennon transferred from the Metropolitan Police Service (MPS) to the
Royal Ulster Constabulary (RUC). When he asked a personnel officer whether
taking time off before starting at the RUC would affect his allowances, he was
told that there would be no effect. Some months after the transfer, Lennon
discovered that the period of time between his jobs was treated as a gap in
service and that his housing benefits were adversely affected. Had he made a
written application for unpaid leave, the problem would not have arisen. The
Court of Appeal held that it was fair, just and reasonable that the
Commissioner should be held to owe a duty of care to Lennon to arrange and
organise the transfer, including the giving of advice, so as to ensure that he
did not lose his allowances.

Key points

The Court found that the personnel officer had assumed responsibility for
the transfer procedure and Lennon was entitled to rely on this being handled
with due skill and care. In particular, the personnel officer either had, or
had access to, specialist knowledge regarding the impact of transfers and
allowances. Lennon had not been advised to take legal advice or to speak to his
trade union and had been led to believe that the transfer could be left in the
hands of the personnel officer who knew, or ought to have known, that Lennon
would rely on her advice. The Police Personnel Manual did not warn that
allowances would be affected by gaps in service. The MPS was liable in
negligence for the economic loss of the cessation of Lennon’s housing
allowance, which amounted to £44,000.

What you should do

– Beware of staff making assurances that they will deal with something that
may be outside their area of expertise. Ensure you have job descriptions and
detailed procedures in place so all staff know their remit of responsibility.

– Be wary when dealing with matters for junior employees. If a very junior
member of staff suffers economic loss due to a failure by another member of
staff, it is likely that a court would find in their favour on the basis that
the employer has assumed responsibility for him or her.

– Consider advising employees to take advice from their trade unions

Lane Group Plc v Farmiloe, EAT
Health and safety requirements and disability discrimination

* * * * Mr Farmiloe suffered from the skin condition psoriasis and was
limited in the type of footwear that was suitable for him. In 1996, following a
risk assessment, Lane Group adopted a policy that all people working in its
warehouse were required to wear safety footwear. As this protective footwear
exacerbated Farmiloe’s condition, he was permitted to wear his own shoes.

In 2001, a health and safety officer carried out a routine health and safety
investigation and objected to the footwear exception made for Farmiloe,
remarking: "You cannot opt out of health and safety." On her
recommendation, Lane Group conducted a medical assessment of Farmiloe to ensure
he had appropriate footwear that was compliant with its health and safety
policy, while not exacerbating his medical condition. Pending an examination by
the occupational health expert, he was suspended on full pay.

The assessment determined that Farmiloe required slip-on shoes that could be
slipped off in order to allow fresh air to ventilate his feet and protective
shoes made of sufficiently thin fabric to keep his feet free from sweating. It
was decided that if the matter could not be resolved, alternative employment
should be sought for Farmiloe in areas where protective footwear was not
required.

Between October 2001 and February 2002, Lane Group made a number of attempts
to obtain suitable protective footwear for Farmiloe, including the production
of a bespoke pair of shoes. However, these were unsuitable. There was also no
alternative position available in the organisation not requiring the wearing of
personal protective equipment. Farmiloe was dismissed. His complaint of
disability discrimination failed in the EAT.

Key points

Farmiloe alleged that Lane Group failed to make adjustments to its stringent
health and safety policy and should have approached the council to obtain an
exception in special circumstances such as these.

The EAT held that health and safety legislation takes precedence over the
protection against disability discrimination provided that all reasonable steps
have been taken to accommodate the particular needs of the individual worker.
In this case, the employer had done all it could to accommodate the employee’s
disability, including medical assessments and the attempt to make bespoke footwear,
which was undertaken at the expense of the company.

What you should do

– Be aware that employees cannot accept risks (eg by refusing to wear
protective clothing) if this would breach health and safety legislation.

– Where an employee’s medical condition prevents the wearing of safety
equipment, you should conduct a full risk assessment, including consideration
of alternative employment and specialist equipment, to comply with health and
safety legislation. Ultimately, if it is not possible to accommodate the
employee’s condition and comply with health and safety legislation, you can
dismiss.

Hardy v Polk (Leeds) Limited, EAT
Duty to mitigate applies to notice pay

* * * * Ms Hardy worked for Polk (Leeds) Limited for seven years until she
gave eight weeks’ notice after accepting a post with a competitor at a higher
salary. When she refused to sign a confidentiality agreement, Polk summarily
dismissed her. She started her new job earlier than she intended, but for a
four-week period she had no earnings from either Polk or her new employer.

When Hardy claimed for unfair dismissal, Polk conceded liability. The
tribunal rejected Hardy’s argument that she should be compensated for the full
seven weeks of her statutory minimum notice period, even though she was only
out of work for four weeks. This was upheld by the EAT.

Key points

The EAT confirmed in this case that a compensatory award for unfair
dismissal is subject to the duty to mitigate and cannot be used to penalise the
employer. This applies equally to loss during the notice period. Unfair
dismissal compensation is designed to compensate the employee for loss. The
duty to mitigate means that an employee must take reasonable steps to obtain
alternative employment. If the employee suffers no loss, he or she recovers
nothing over and above the basic award for unfair dismissal to which they are
entitled in any event.

What you should do

– Remember that where an employee starts alternative employment at the same
or a higher salary in the course of the notice period, you may be entitled to
take that into account and pay less notice pay. This could be relevant in
settlement negotiations

– However, beware that if there is a payment in-lieu of notice clause in the
contract of employment that is expressed as non-discretionary (that is, the
employer does not have a choice as to whether it will exercise it or not), then
the employee should be paid his or her full notice money.

Redrow Homes (Yorkshire) Limited v Wright, Court of Appeal
Definition of worker under the Working Time Regulations

* * * The Court of Appeal was reviewing two cases in which the applicants
worked as bricklayers for approximately six months on two of Redrow’s sites.
Both were engaged on Redrow’s standard terms. They were paid weekly into their
bank accounts. Redrow provided bricks, forklift trucks and drivers and
scaffolding, although the applicants provided their own hand tools. Subject to
complying with Redrow’s building programme, they could regulate their hours and
work to suit themselves. The applicants did not work under a contract of
employment, nor were they clients or customers of Redrow. The applicants argued
that they had contracts to perform work personally. Redrow argued that they
were not workers as they were not obliged to do the work themselves and relied
on a contractual term that the contractor must supply sufficient labour to
maintain the rate of progress laid down by Redrow.

The Court of Appeal dismissed the appeal by Redrow Homes against the
Employment Appeal Tribunal’s decision that the applicants were workers.

Key points

Relevant considerations were:

– Although stated in the terms and conditions, Redrow did not seek to
enforce a condition that the applicants deposit a current health and safety policy
and relevant VAT registration details with Redrow

– Although Redrow claimed that the work could have been done by anyone, it
was found that the items of work specified were not beyond the capacity of the
men to do it themselves.

– Each individual doing the work was paid directly for the work.

– Reasonable people, in the position of these parties and having all the
background knowledge that would reasonably have been available to them at the
time of the contract, would not have decided that a condition that stated that
a competent foreman or charge hand should be on hand at all times was intended
to apply.

The Court of Appeal held that the applicants were workers as there was a
"mutuality of obligation" or a requirement for "personal
provision of services". It upheld the tribunal’s decision that it was the
"intention and understanding of the parties that all the applicants would
undertake to work personally".

What you should do

– Employers should be aware that even if the terms and conditions of individuals
refer to self-employment, it is reasonable on the facts to deduce that there is
a mutuality of obligations or a personal provision of services then the
individuals will be held to be workers.

Case of the month by Pam Sidhu
Collective agreements can prevent redundancy dismissal

Kaur v MG Rover Group Limited, 2004 High Court
Collective agreement prevented redundancy dismissal

* * * * * Mrs Kaur’s contract of employment stated that her employment was
subject to the terms and collective agreements made from time to time with the
recognised trade unions.

Two such collective agreements had been agreed, in 1992 and 1997. The 1992
agreement stated that future decreases in manpower would be achieved through
redeployment, natural wastage, voluntary severance or early retirement. The
1997 agreement repeated this principle, adding "there will be no
compulsory redundancy".

In 2003, Kaur was one of approximately 100 employees threatened with
compulsory redundancy. She successfully brought High Court proceedings seeking
a declaration that she had a contractual right not to be made redundant given
the statements in the collective agreements.

Key points

The employers argued that the job security clauses in the agreement were
merely general principles and not appropriate for incorporation into individual
contracts and that, in any event, the notice provision in the employment
contract allowed them to terminate for any reason on notice.

The Court held that the 1992 agreement was not incorporated into the
employee’s contract and essentially contained statements of policy that were
not apt for incorporation into individual contracts. However, the specific
statement in the 1997 agreement that "there will be no compulsory
redundancy" changed that position, particularly as it was not only more
specific but also part of an overall deal requiring staff changes such as flexible
working, a level of de-manning and the avoidance of industrial action. Those
specific elements of the agreement could have contractual effect.

The court also ruled a contractual right not to be dismissed on specific
grounds is not overridden by a general power to terminate.

Accordingly, the Court declared that Kaur had a contractual right not to be
made redundant.

This case dramatically illustrates the problems that can arise where the
employment relationship is regulated by collective agreements.

What you should do

– Be careful about the content of statements in collective agreements as
these could be incorporated into the contract of employment.

– Make clear in the contract of employment that only specified clauses of a
collective or other agreement apply and no others. This could help to avoid
other clauses – particularly those in aspirational language – being unwittingly
incorporated.

– Review your existing collective agreements to identify problems.
Renegotiate them if necessary to eliminate or minimise the risk.

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