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
Nelson v Carillion Services, Court of Appeal, and Barton v Investec
Henderson Crosthwaite Securities Limited, EAT
Two cases on equal pay, emphasising the importance of the new equal pay
questionnaire procedure
* * * * These two cases are at opposite ends of the financial spectrum.
Nelson was a steward employed by a contractor in a hospital to serve meals to
private patients. She claimed equal pay, comparing her rate to the higher rate
paid to another steward who had transferred from a previous contractor with his
terms and conditions protected under TUPE. Nelson was recruited later on
Carillion’s standard terms.
Barton, however, was a City analyst and her claim related to salary, bonus
payments and stock options which were less favourable than those of a male
comparator.
The legal issue common to both cases was where the burden of proof lay in
sex discrimination and equal pay cases, in particular the impact of the new
burden of proof rules introduced into the Sex Discrimination Act in 2001.
In Nelson, the Court of Appeal held that the changes made to the SDA by the
2001 Burden of Proof Regulations were to codify existing law rather than create
any new legal principles. The complainant had to prove facts from which the
tribunal could conclude – in the absence of an adequate explanation from the
employer – that they had been unlawfully discriminated against. In the case of
indirect discrimination, a complainant could only do this by establishing there
was a disproportionate adverse effect on one sex. Nelson had failed to do this,
as the statistical evidence she relied on was unsafe. This places the onus on
the complainant to produce relevant statistics or other evidence.
The Court of Appeal highlighted the usefulness of the new equal pay
questionnaire introduced in April as a means of obtaining that evidence.
Guidance by the EAT in Barton emphasised tribunals must establish the
primary facts and draw appropriate inferences. An employer’s failure to respond
adequately to a questionnaire could also be taken into account. Once the
complainant shows primary facts from which a conclusion of discrimination could
be drawn or inferred, the employer must show the treatment was in no way on the
grounds of sex. The EAT said tribunals should expect employers to be able to
provide cogent evidence on such points.
It is critical for employers to be able to explain their pay structures and
show they are in no way discriminatory. In Barton’s case, there had been
sufficient evidence of sex discrimination to shift the burden of proof to the
employer, but the tribunal had failed to properly analyse the employer’s
argument that City bonus systems need to be secretive, or consider whether
there were objective reasons and a real business need for the pay differences.
What you should do
– Do not ignore equal pay – it is a hot HR issue. The introduction of the
questionnaire process could lead to more claims in this area
– Regularly audit your pay and benefits structures. Identify differences in
pay and examine the reasons for these thoroughly. If you think they can be
justified, ensure evidence of the reasons can be presented in any tribunal case.
– Implement the EOC Code of Practice on equal pay, in particular ensuring
pay structures are transparent.
– Alert managers to the new questionnaire procedure. A failure to respond or
an evasive reply can count heavily against the employer in any tribunal case.
Kvaerner Oil & Gas v Parker & Others, EAT
An illustration of the need to consider redundancy selection pools
carefully
* * * A tribunal held that the applicants’ redundancy dismissals had been
unfair because the employer had used an unreasonably narrow pool from which to
select candidates.
All four employees were employed in the same business unit (FD). At the same
site, their employer had another business unit (MMO). The maintenance work
carried out by the FD unit had reduced, but that carried out by MMO had
continued.
The employer argued the two business units were identifiably separate and so
could be regarded as separate pools for redundancy selection purposes. Its
previous practice had been that groups of workers dedicated to particular kinds
of work would form the relevant redundancy pool if there was a reduction in
that work and therefore its actions were in line with previous custom and
practice.
The EAT upheld the tribunal’s decision that the selection pool was too
narrow. The FD unit had begun to take on maintenance work identical to that of
MMO, and there was evidence the work could interchange between the two units
even though it had been procured under separate contracts. The tribunal had
substituted its own view as to the appropriate pool, but had still asked
whether the selection pool was within the range of reasonable responses. Its
conclusion that it wasn’t was not a perverse decision.
What you should do
– Remember reasonable selection pools are critical to dismissing fairly for
redundancy. If the pool is too narrow, the dismissals will be unfair no matter
how fair the selection process or how well consultation is carried out
– Consult any recognised trade unions on selection pools
– Once you have identified your pool, check there are no employees outside
it who do the same type of work or have interchangeable skills. If they are not
to be included, establish a sound reason why not
– Be alert to what happens in practice. This case does not mean separate
business units cannot be treated as separate pools – the problem was that in
practice, there was little real separation between the business units,
particularly in the allocation of work
– Don’t fall into the "we’ve always done it this way" trap.
Glendale Managed Services v Graham & Others, Court of Appeal
An example of contractual flexibility being controlled by the courts
* * * Glendale’s employment contracts stated that rates of pay would
‘normally’ be in accordance with a national collective agreement and that
employees would be notified of any changes to terms. The employer failed to
honour national pay awards made in 2000 and 2001. The employees brought claims
of unlawful deductions from wages.
The Court of Appeal agreed with the tribunal and EAT that there had been an
unlawful deduction from wages. The reference in the contract to rates of pay
normally being in accordance with the national collective agreement did allow
the employer some flexibility, but the normal position was that the nationally
agreed rate should apply. There was an implied term that the employer had to
inform the employee if it intended to depart from this principle.
What you should do
– Remember implied terms can limit the amount of flexibility and discretion
you have under a contract
– If, under the contract, changes to terms and conditions are made, ensure
these are communicated to the affected employees.
UK Coal Mining v Raby, EAT
Useful guidance from the EAT on the reasonableness of disciplinary
sanctions
* * * * Raby was dismissed for gross misconduct, after being involved in a
fight at work. His opponent was not dismissed. Raby told the investigating
manager he had used physical force first, although only to the extent of
lightly tapping his colleague’s helmet with his own helmet. The applicant also
alleged his colleague had provoked this by using abusive language to him.
The applicant had received a written warning some three or four years
earlier for another act of misconduct. That warning stated it would be retained
on his record for 12 months. The other participant in the fight had an
unblemished disciplinary record. The employer’s disciplinary procedure said a
written warning would be disregarded after one year.
The employer argued it was reasonable to dismiss the applicant but not his
colleague for two reasons: the applicant had admitted he had struck the first
blow, and second, the other participant had a clean disciplinary record.
The tribunal, in a split decision, found the applicant had been unfairly
dismissed. The EAT upheld that finding.
The EAT set out a number of principles to be applied in cases where
different disciplinary sanctions are applied to different employees. The
employer must consider the case of each employee on its own merits including
any mitigation. It was not unfair to dismiss one employee and retain another,
provided there were reasonable grounds for treating the employees differently.
Where two employees who have committed the same offence are treated
differently, the tribunal should ask whether the distinction is within the
range of reasonable responses or was so irrational that no reasonable employer
could have made it.
The EAT agreed with the tribunal’s majority decision that it was not
rational to consider which employee had struck the first blow. The blow itself
– the tap on the helmet – had not been particularly forceful, and the majority
had found on the evidence that both men were equally culpable given the verbal
provocation made to the applicant. The EAT also found both men should have been
treated as having a clean disciplinary record since the applicant’s formal
written warning should have been disregarded entirely.
What you should do
– Balance the need for consistency in disciplinary sanctions against the
need to consider each case on its own merits
– Make sure different treatment can be properly justified
– Don’t adopt a "tariff approach", ie that certain categories of
misconduct automatically lead to dismissal
– Ensure disciplinary records are updated regularly.
Case of the month by Christopher Mordue – More trouble
looming on holiday pay calculations?
Bamsey v Albion Engineering, EAT
EAT gives leave to appeal on whether overtime counts when totting up
holiday pay
* * * * * Bamsey’s contract contained
a basic working week of 39 hours. He could be required to work nine hours’
overtime a week if asked but there was no obligation on the company to provide
this overtime. In practice, Bamsey worked an average of around 60 hours a week,
but he was only paid holiday pay at 39 hours a week.
He argued he should be paid for the hours he actually tended to
work when he was not on holiday.
This argument would not succeed if the Working Time Regulations
1999 (WTR) were interpreted as including the definition of ‘normal hours of
work’ in section 234 of the Employment Rights Act 1996 (used for calculating a
week’s pay for statutory redundancy purposes), under which non-guaranteed
overtime cannot be taken into account. Bamsey’s lawyers argued this working
hours definition was contrary to the purpose of the Working Time Directive
(WTD) and was not in any event incorporated into Regulation 16 of the WTR.
The EAT agreed it defeated the
purpose of the WTD for Bamsey’s holiday pay to be assessed without taking into
account the pay he normally received when working. It was contrary to the
health and safety objective of the directive – a disparity between actual pay
and holiday pay could discourage workers from taking holidays.
However, the EAT said the regulations could not be interpreted
in this ‘purposive’ way – the normal hours of work concept was indirectly
incorporated into Regulation 16. In any event, there would be great practical
difficulties if the applicant’s argument was accepted: employers would be very
uncertain how they should calculate holiday pay where the amount of overtime
varied; it would be impossible to predict what the employee’s holiday pay would
be, and difficult for the employer to provide workers with clear information in
statements of main terms and conditions.
The EAT did, however, give leave to appeal. This case could
present employers with another huge practical headache in relation to holiday
pay, and expose them to significant retrospective claims.
What you should do
– Bear in mind employers in the public sector could face claims
directly under the WTD
– Private sector employers should follow the appeal closely –
the ramifications could be enormous
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– Audit overtime working – are some employees working excessive
overtime? Can some be worked by other employees?
– Remember, the opt-out from the 48-hour working week limit is
under review and could be removed. Prepare to overhaul working patterns that
would breach the regulations if this happens.
