Case roundup

North v Lionel Leventhal Limited
Redundancy and ‘bumping’

Lionel Leventhal Limited is a publishing business. Mr North was first employed on 17 March 1997, and by 2001, he had progressed to the rank of senior editor. In 2003, the company encountered serious financial difficulties. At that time, it employed 12 full-time staff and two part-time secretaries.

It was decided that the best way to save money was to make a staff member redundant, and the prime candidate was North, because he was the most expensive employee, in a role the company could easily manage without.

Leventhal and Wray met with North and advised him that they did not consider the company needed a senior editor. They asked North for his views and reconvened another meeting. North brought a list of 11 suggestions for cost cutting to that meeting. These were discussed, but subsequently, Leventhal and Wray concluded that they were not capable of producing the required savings quickly enough. They did not consider making any other member of staff redundant.

Leventhal saw North the following day and told him his employment would be terminated, and he would be given his two months’ contractual notice, together with statutory redundancy pay.

At no time did North suggest, or the company consider, making a subordinate editor redundant, and offering the claimant that job, with less pay.
The Employment Appeal Tribunal (EAT) held that the redundancy dismissal was unfair, because the employer had failed to consider ‘bumping’ (even though the other job was a subordinate role with less pay, and the redundant employee had not suggested he would have considered this option).

Whether it is unfair or not to dismiss for redundancy without considering alternative and subordinate employment is a matter of fact for the tribunal. In this case, the tribunal concluded that North was not given the opportunity to say whether he would have accepted the subordinate position, and the subordinate employee was not approached to see whether he was interested in voluntary redundancy.

In redundancy cases, ‘bumping’ is offering an ‘at risk’ employee someone else’s job, and making that other person redundant instead.
This decision does not mean that bumping must always be considered for a redundancy dismissal to be fair; only that the tribunal was entitled to reach that decision in the particular circumstances of this case.

What you should do

  • You should always assess whether it is appropriate to consider bumping in a particular case. Relevant factors, such as the existence of other vacancies, how different the two jobs are, the difference in pay, the relative length of service of the two employees and the qualifications of the original employee at risk. Another factor could be the willingness of the other employee to accept voluntary redundancy or another vacancy
  • In most circumstances, it would be appropriate for an employer to ask employees at risk of redundancy whether they wished to be considered for bumping. If the answer was yes, the employer could consider offering voluntary redundancy to those not at risk of redundancy in roles suitable for bumping, in case an appropriate volunteer came forward
  • The employer would not have to accept the offer if it decided not to pursue it. This procedure should, of course, be properly documented, so that there is a paper trail.

Hoyland v Asda Stores
Bonuses on maternity leave

Ms Hoyland was employed by Asda at its Dumbarton store as customer services and events co-ordinator. In 2002, she did not attend work for 183 days, which included 18 weeks of ordinary maternity leave and eight weeks of additional maternity leave. During her maternity leave, she received statutory maternity pay and company maternity pay.

During 2002, Asda operated a bonus scheme, the purpose of which was to reward employees for their work and continued contribution to the financial performance of the business during the calendar year.

Employees in stores where profits were above target were entitled to receive an additional bonus, equivalent to 20% of the full bonus under the scheme. Those in Asda’s employment on 21 February 2003, who had accumulated at least six months’ continuous service on 31 December 2002, were entitled to a bonus payment. This payment was pro-rated to reflect part-time employment and absences of eight consecutive weeks or more during the year. Maternity leave was treated as absence for the purposes of calculating bonus payments.

Bonus payments were made by Asda on 21 February 2003. Full-time employees at the Dumbarton store were entitled to a maximum bonus of 300 each. The pro-rata equivalent based on Hoyland’s hours of work was 189.47. However, that payment was reduced to reflect her 183 days absence during 2002, resulting in a payment of 94.48.

Hoyland, who had been unaware that her payment would be reduced to reflect absence from work on maternity leave, was upset, and raised her concerns with management. On 23 April 2003, having not received a satisfactory justification, she brought a claim.

The tribunal found that the bonus was ‘pay’ within the meaning of Article 141 of the European Community Treaty. It was found that the bonus was designed to reward attendance at work that contributed to the overall performance of the business during the bonus year. While unrelated to individual productivity, it was paid in recognition of work undertaken by employees as a whole.

The tribunal also held that when calculating a bonus, it was contrary to Article 141 to exclude the two-week maternity period during which an employee is not permitted to work under domestic law (‘compulsory maternity leave’). However, the tribunal rejected an argument by the claimant that it was possible to expand this to cover ordinary maternity leave. The decision in respect of the period of ordinary maternity leave was appealed.

The EAT upheld the tribunal’s decision that Asda was entitled to make a pro-rata reduction in the bonus paid to reflect periods when Hoyland was absent on ordinary maternity leave. However, it confirmed that the bonus must be paid in respect of the two-week period of compulsory maternity leave provided for under the Pregnant Workers Directive.

A worker who takes maternity leave during a bonus year must be paid the bonus in respect of the periods when she is at work, and the fortnight of compulsory maternity leave. But a proportionate reduction to reflect absence on ordinary maternity leave is permitted. The reduction is permissible where the bonus is based on attendance.
The position is likely to be different where the bonus is based on individual performance/targets.

What you should do

Review bonus schemes.

Igen (formerly Leeds Careers Guidance) and others v Wong; Chamberlin Solicitors v Emokpae; Webster v Brunel University
Guidance on the shift in the burden of proof

A number of decisions regarding the shift in the burden of proof in discrimination cases have been heard in the Court of Appeal.
The court stated that, when considering discrimination cases, a tribunal had to conduct a two-stage exercise:

  • The claimant had to prove discrimination (ie, facts from which the tribunal could conclude that, in the absence of an adequate explanation, the respondent had committed an unlawful act of discrimination); then
  • The respondent had to prove they did not commit the unlawful act.

The decision makes it clear that to succeed in relation to the first stage of the test, a claimant must prove on the balance of probabilities facts which, in the absence of an adequate explanation, would be discrimination.

In assessing this first stage, the court stated that it is important to bear in mind that it is unusual to find direct evidence of discrimination. It is also important to consider what inferences could be drawn from the facts. For example, inferences could be drawn from an evasive or equivocal reply to a race relations or sex discrimination questionnaire, or a failure to comply with a relevant code of practice. Once a claimant had passed this first stage of the test, the tribunal should go on to consider the second stage.

This stage – ie once the burden of proof has shifted to the respondent – involves the respondent proving on the balance of probabilities that the treatment was in no way whatsoever on the ground of sex or race or disability. Therefore, it is not enough for the respondent to provide an explanation for the facts; they must show that sex, race or disability were not grounds for the treatment in question.

In discrimination cases, a tribunal should apply a two-stage test.

The first stage of the test involves the claimant proving facts on the balance of probabilities which, in the absence of an adequate explanation, would amount to discrimination. Once this first stage of the test is passed, the burden of proof will pass on to the respondent.

To defend a claim of discrimination, once the first stage of the test has been passed and the burden of proof has shifted to a respondent, the respondent must show, on the balance of probabilities, that the treatment was not on the ground of factors such as sex, race or disability. It is not enough for the respondent to provide an explanation for the facts; they must show that sex, race or disability were not grounds for the treatment in question.

What you should do

  • Ensure that if you receive a sex discrimination or race-relations questionnaire, that you answer all questions raised as fully as possible
  • Where you are unable to provide a full response, ensure you provide full explanations for why you cannot provide the requested information
  • Ensure managers and HR professionals are trained in accordance with the relevant codes of practice (for example, equal opportunities and disability discrimination)
  • Keep records of your reasons for key decisions, particularly if the decision is likely to be contentious, and ensure that you have good business reasons, wholly unrelated to sex, race or disability, for introducing any changes.

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