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
Harper v Virgin Net Limited, Court of Appeal
No damages for lost opportunity to claim unfair dismissal
* * * Harper was dismissed 33 days short of one year’s continuous
employment. Her statutory notice period was one week and her contract included
a three-month notice period.
Harper successfully claimed wrongful dismissal. The tribunal awarded her
damages for the contractual notice period she had not received and for the lost
opportunity to claim unfair dismissal. Had she been given contractual notice
she would have been able to make such a claim. The tribunal ruled that her
dismissal would have been clearly unfair and awarded a full compensatory award.
Both the EAT and the Court of Appeal ruled that this approach was wrong.
The Court of Appeal ruled that Harper had not lost the opportunity to claim
compensation for unfair dismissal as she never had the right to make such a claim.
Her statutory entitlement was to one week’s notice and had she received this
she would still have fallen short of the qualifying service to claim unfair
dismissal. To allow employees to effectively access statutory rights via a
claim for contractual damages would expose courts and tribunals to chaos.
What you should do
– Include a payment in-lieu of notice clause in contracts to allow you to
bring the contract to an immediate end. This provides greater flexibility when
– Remember that if you fail to provide statutory minimum notice this will be
added to the employee’s length of service.
Ramsey v Walkers Snack Food, EAT
Use of anonymous statements was fair
* * * Ramsey and two employees were dismissed on suspicion of stealing money
inserted into crisp packets as part of a sales promotion. Management invited
witnesses able to identify those involved in the theft to come forward on an
anonymous basis. The informants expressed a desire to remain anonymous. The
applicants were dismissed for gross misconduct, primarily on the basis of
anonymous written statements.
The applicants claimed unfair dismissal, arguing that the manner in which
the statements were taken, their lack of detail, and the inability to question
witnesses, rendered the whole disciplinary process unfair. Previous case law
guidance on the use of anonymous statements had not been followed. The tribunal
and the EAT held that in the specific circumstances of this case, the
dismissals had been fair.
The EAT concluded that the tribunal’s ruling that the arrangements for
anonymity were not unreasonable. Walkers genuinely and reasonably believed that
no information would be provided other than on a confidential basis. The
informants would not sign any statement unless it was edited in such a way as
to remove any risk of identification. Informants were not willing to be exposed
to further questioning by managers during the investigatory and disciplinary
process and refused to answer questions raised by the accused employees.
What you should do
– Remember that using anonymous statements is undesirable and is legitimate
only in exceptional cases
– Ordinarily investigators should meet with informants and take detailed statements
to be anonymised later. They should explore carefully the evidence given, look
for corroboration and investigate why the informant desires anonymity
– Managers hearing disciplinary cases should also meet informants to weigh
up their evidence
– Remember that these standards can only be departed from in exceptional
Collins v Royal National Theatre Board, Court of Appeal
Failures to make reasonable adjustments unlikely to be justified
* * * Collins, a carpenter’s labourer, injured his right hand at work. He
refused surgery on the advice of his GP. His employer set him some controlled
tasks to assess his capability and determined that he could not work
efficiently or safely with his injury. Collins was dismissed as there was no
other job that he could do. Collins successfully claimed disability
discrimination, in particular a breach of the duty to make reasonable
adjustments. There had been insufficient attempts to see what adjustments could
have been made to accommodate his disability.
The issue in the Court of Appeal was a technical but important point – can
an employer’s failure to make adjustments to accommodate a disabled employee be
unreasonable but justified?
The DDA prevents two forms of discrimination – less favourable treatment and
a failure to make reasonable adjustments. Both forms of discrimination are
permitted when an employer can show justification. For less favourable
treatment, the justification test is easily satisfied. The employer must show
that the treatment concerned was taken on grounds that were ‘material and
substantial’. If the employer can show that its action was taken on a
considered basis and fell within the range of reasonable responses to the known
facts, the treatment will be justified. The justification defence in reasonable
adjustment cases is expressed with the same words. The difficulty is that if
the same text is applied in less favourable treatment cases, the duty to make
reasonable adjustments is easily bypassed.
Tribunals must assess whether this duty has been complied with by
establishing what is reasonable for the employer to do on the facts of the
case. An employer found to have breached the duty will be found to have behaved
unreasonably. The Court of Appeal ruled that any issue considered by the tribunal
when deciding if the employer’s conduct was unreasonable cannot then be taken
into account as justification. In short, justification has to be based on
something other than the conduct that has been found to be unreasonable.
This decision makes justification of a failure to make reasonable
adjustments exceptionally difficult. From 1 October 2004, the justification
defence will be repealed in such cases, so that the issue will be whether the
employer has failed to take reasonable steps to prevent the disability
resulting in a substantial disadvantage.
What you should do
– If a medical condition affects an employee’s ability to do their job,
explore all possible adjustments or accommodation that could be made
– Ensure you obtain medical advice to assist your assessment
– Take the medical position into account when timing your assessment. Here
the employer’s assessment was carried out soon after the injury when the
effects had not settled down.
Crossley v Faithful and Gould Holdings Limited, Court of Appeal
No duty on employer to protect employee’s financial well-being
* * * Crossley was on long-term sick leave and unable to return to work.
Under his contract he was a member of the company’s disability insurance
scheme. He submitted a claim under the scheme but resigned and took early
retirement. As a result, he lost his entitlement under the scheme. Crossley
argued that his employer had breached an implied term of his contract to take
reasonable care of his economic well-being by failing to warn him that his
letter of resignation would result in his loss of the disability benefits. He
claimed damages for the lost benefits under the scheme.
Rejecting Crossley’s claim, the Court of Appeal ruled that no such term
could be implied into the contract of employment. It would place an unfair and
unreasonable burden on employers. The company was entitled to assume that
Crossley would have realised the implications of his actions or had the means
to find out what they were.
What you should do
– Ensure the terms of insurance schemes are clearly communicated and
available to employees
– Remember that the position in this case would be different had the
dismissal occurred on the employer’s initiative.
Case of the month by Linda Jones
Agency workers are employed by agency’s client
Brook Street Bureau v Dacas, Court of Appeal
Court of Appeal suggests that agency workers are employed by the
* * * * * Mrs Dacas was an agency worker supplied by an employment agency to
work for Wandsworth Council as a cleaner. The council became dissatisfied with
her performance and the agency terminated her assignment. Dacas claimed unfair
dismissal against the council and the agency. To succeed, she had to show that
one of the two respondents had been her employer.
An employment tribunal ruled that the council had no direct contract with
her and so was not the employer. The contract between Dacas and the employment
agency was not a contract of employment as it lacked the necessary mutuality of
obligation and the agency had no direct control over the work carried out.
Dacas appealed the decision relating to her claim against the employment
agency, but not the finding in relation to the council. The Court of Appeal
concluded that the tribunal correctly found that no employment relationship
existed with the agency. However, two of the three judges expressed the view
that, on the facts, the council was the true employer.
Numerous cases have examined the employment status of agency staff, but
these have essentially been concerned with the relationship between agency and
worker. In some cases, an employment relationship between agency and worker has
been established and so indicated that the risk of employment liabilities lay
squarely with the agency.
This case shatters those assumptions. First, the Court of Appeal rejected
the possibility of an employment contract between Dacas and the agency,
accepting the arguments that the agency is not obliged to provide work and the
worker is not obliged to do any work offered and it is the client who has
day-to-day control over the worker.
Second, the Court of Appeal ruled that the absence of a written and express
contract between worker and end-user is not the determining factor as far as a
claim against the end-user is concerned. Tribunals should examine whether there
is an implied contract and whether that contract is a contract of employment.
The end user’s day-to-day control over the work carried out will increase the
risk of employment status being established by this route.
There is now a real danger that those using agency staff are exposed to a
range of employment liabilities, in particular claims for unfair dismissal. The
end-user will follow no procedure to terminate an assignment, on the assumption
that doing so is unnecessary and that following any procedure could indicate
the existence of an employment relationship. This approach will result in
unfair dismissal if the end-user is the employer. That position will be
exacerbated under the new dismissal procedures introduced with effect from 1
October 2004 where a failure to follow the statutory procedure will result in
automatic unfair dismissal and increased compensation.
What you should do
– If you use agency workers, you should review your arrangements,
particularly for terminating assignments
– Review your contractual arrangements with agencies to reduce risk, for
example through indemnities
– Where agency staff have worked with you for more than a year, they may be
able to claim unfair dismissal. Consider whether you need to use agency staff
for such long periods.