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

NP Paribas v Mezzotero, EAT
A worrying limitation on what counts as ‘without prejudice’ discussions

* * * * The applicant raised a grievance alleging sex discrimination on her return from maternity leave, namely not being allowed to return to her previous job, was given less favourable terms and conditions and was excluded from meetings and humiliated.

During the grievance process, she was asked to attend a meeting – which the employer said was ‘without prejudice’ – at which she was informed that her position was not viable and offered a termination package.

She rejected the offer and ultimately brought a tribunal complaint of sex discrimination and victimisation. Her complaint of victimisation included what had happened at the ‘without prejudice’ meeting, since the bank’s response to her grievance was to raise, without reason, terminating her employment.

The bank argued that the conversation was protected by the ‘without prejudice’ rule. But the tribunal and the EAT ruled that the applicant could refer to the meeting at the tribunal hearing.

Key points

It is extremely common practice for employers to seek to resolve problems in the workplace through ‘without prejudice’ discussions. The whole purpose of the ‘without prejudice’ rule is to allow free negotiations, without either party fearing that the fact or detail of those negotiations will be used against them in legal proceedings.

However this case illustrates that employers will not always be able to rely on this protection and indeed, causes confusion about precisely when that protection will be available.

Crucially, the EAT ruled that the offer did not relate to any dispute and so could not be ‘without prejudice’. The grievance was not about termination of employment and as the bank was offering to investigate the complaint even if the offer was accepted, it were deemed not to be offering to resolve the grievance.

More worrying for employers was the EAT’s view that a grievance does not automatically create a dispute and its policy decision that the applicant should be prevented from raising an allegation of victimisation about what had happened at the meeting.

Her claim was that the employer responded to a discrimination complaint by suggesting her employment should end. Given the difficulty of proving discrimination, it would be extremely prejudicial to the applicant if she could not rely on the meeting as a basis for finding, or inferring, discriminatory treatment.

What you should do

– Consider very carefully precisely when to enter into ‘without prejudice’ negotiations, particularly where allegations of discrimination have been made

– Make sure that any ‘without prejudice’ offer made refers to an existing dispute

– Be careful about making ‘without prejudice’ offers as an alternative to formal disciplinary procedures – you may find it hard to argue that there is any current dispute.

Omilaju v London Borough of Walton Forrest, EAT
Constructive dismissal and the last straw

* * * * Omilaju brought a number of tribunal claims against the London Borough of Walton Forest. The council refused him paid leave to attend the tribunal hearing. He resigned, claiming constructive dismissal.

The constructive dismissal claim was based on the ‘last straw’ argument, ie that the council had committed a series of actions which, when taken together, amounted to a repudiatory breach of contract.

The failure to allow paid leave to attend the tribunal was alleged to be the last in that series of events. The tribunal ruled that, while there may have been earlier breaches of contract by the council, Omilaju had resigned in response to the denial of paid leave. It ruled that the council was entitled to refuse pay under the employment contract.

As the alleged ‘last straw’ was not a breach of contract, it rejected Omilaju’s constructive dismissal claim.

Key points

The EAT overturned this decision, following previous Court of Appeal case law emphasising that the ‘last straw’ need not of itself be a breach of contract. The tribunal should have considered the cumulative impact of the council’s actions and decided whether, taken overall, they amounted to a fundamental breach.

However, given the finding that the council acted reasonably in refusing paid leave, the EAT gave leave to appeal to the Court of Appeal on whether there can be a constructive dismissal can arise where, whatever has previously occurred, the final act precipitating resignation is ‘reasonable conduct’ by the employer.

What you should do

– Remember that constructive dismissal claims can be based on a series of events that, taken together, amounts to a breach of contract

– Be especially vigilant for potential breaches of the implied duty of trust and confidence – this provides a very flexible weapon for employees.

– Even if you are acting in accordance with your contractual rights, ask yourself whether you are behaving reasonably.

William Grant & Sons Ltd v Devlin, EAT
Expired warnings should be ignored

* * * Devlin was dismissed after touching a colleague on her breast. He had received a final written warning (said to run for 12 months) three years earlier for a similar offence. A tribunal concluded that Devlin’s conduct could normally be categorised as gross misconduct, but mitigating factors made the dismissal unreasonable and therefore unfair. The EAT agreed.

Key points

The EAT ruled that the employer had acted unreasonably in taking the expired final written warning into account. The applicant’s length of service should have been considered and, when viewed in the context of his apparent friendship with the colleague and her own view that she did not wish Devlin to be dismissed, the tribunal had correctly concluded that the employer’s response was disproportionate.

A final written warning that is given a time limit, becomes null and void at the expiry of that time limit and should not be used for any purpose.

What you should do

– Ensure that spent disciplinary warnings are disregarded entirely and removed from personnel files

– Consider whether your disciplinary procedure allows you to tailor the length of a warning to the seriousness of the offence.

T&G (Scotland) v Quinetiq and Others, EAT
Acquired Rights Directive only requires consultation on measures connected with a transfer

* * * The first contractor was engaged by the Ministry of Defence (MoD) to carry out functions at a firing range facility in Scotland.

The contractor took over a second contract to provide similar services at the same site and, accepting that TUPE applied, took on the second contractor’s employees.

As the MoD was closing the firing range facility, the first contractor would have to make all of its staff, including those who transferred, redundant. It did not consult with the transferring staff about that redundancy situation.

Key points

The employees argued that the contractor had failed in its duty to consult under Regulation 10 of TUPE and/or the Acquired Rights Directive.

The employees tried to rely on the directive because of its apparently wider scope. While the TUPE regulations require consultation on measures taken ‘in connection with the transfer’, the directive appears wider, requiring consultation if the employer ‘envisages taking measures in relation to its employees’.

The EAT ruled that the directive was not directly enforceable against the contractor, as it was not an emanation of the State. Nevertheless, the EAT ruled that the directive had to be interpreted as limiting consultation to measures connected with the transfer. Here the redundancy was not connected with the transfer and so the employer had no obligation to consult.

What you should do

– Remember that failure to consult over transfer-connected measures can lead to a protective award of up to 13 weeks’ pay per employee

– Recognise the importance of good communication with employees over organisational change or redundancy issues, even if there is no legal obligation to consult.

Case of the month by Chris Mordue
Injury to feelings award in unfair dismissal case

Barber v Somerset County Council, House of Lords
Definitive ruling on employer’s liability in stress claims

* * * * * Barber, a teacher, suffered a mental breakdown in November 1996, caused by an excessive workload. He had taken on further responsibilities after a restructuring.  

He first complained of a work overload in spring 1996, but did not say that he had consulted his doctor about work-related stress. A sick note in May 1996 for stress and depression was the first indication to the school of any ill-health.

Its response was largely unsympathetic. No real efforts were made to ease the work pressures. Barber’s condition improved during the summer holidays, but the workload problem continued. After a breakdown at work he retired on health grounds.

This case was the only appeal from the four cases considered by the Court of Appeal in the landmark ruling of Sutherland v Hatton in February 2002. The Lords overturned the Court of Appeal’s ruling that Barber’s stress claim should fail.

The Lords ruled that the council should have foreseen a risk of harm to Barber’s health as a result of the work pressures and failed to take steps to alleviate the problem.  

In particular, the sick note, taken with Barber’s previously good absence record, should have alerted senior management to the fact that something needed to be done.  

They should have investigated the problem and considered a solution instead of brushing Barber off unsympathetically.  

When Barber returned to work, the council should have proactively made sympathetic enquiries and reduced his workload to ease his return. The Lords thought that even a small reduction in duties, coupled with a feeling that the senior management team was on his side, might have made a real difference.  

Barber’s condition should have been monitored and if it did not improve, more drastic action should have been considered. The council was liable despite Barber’s failure to make any further complaint when he returned from the summer holidays.

The duty of care had been triggered in the previous term and the council had failed to take steps to prevent Barber’s illness.

Key points

In Sutherland v Hatton, the Court of Appeal provided clear and useful guidance on the principles governing an employer’s liability for stress-related illness. On the whole, the Lords agreed with this guidance, but stressed that each case depends on its own facts.

The Court of Appeal had been correct to stress that foreseeability of harm to health was crucial to liability. However, the Lords considered that “the overall test is still the conduct of the reasonable and prudent employer, taking positive thought for the safety of its  workers in the light of what it knows or ought to knowÉ. it must weigh up the risk in terms of the likelihood of injury occurring and the potential consequences if it does, and it must balance against this the probable effectiveness of the precautions that could be taken to meet it and the expense and inconvenience they involve”.

The crucial point arising from this case is that employers receiving medical certificates indicating work-related stress should take the initiative in investigating what can be done to resolve the problem.

What you should do

– React promptly to medical notes or employee complaints indicating work-related stress. It may be easier to resolve problems if action is taken early

– Remember that the employer’s obligation is to take reasonable steps to alleviate the causes of stress

– Don’t forget that employers can be liable for the causes of stress, for example bullying and harassment

– Adopt a stress policy, giving clear guidance on how concerns about work-related stress should be raised

– Be vigilant to the classic causes of stress – poor work relationships, restructurings, job uncertainty and increased workloads.

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