The employment appeal tribunal limits compensation after accepting the
employer’s argument that a proper procedure would still have resulted in
dismissal
Compensatory award not too low
Oderinde v Datapact Ltd
EAT, unreported January 2002
Oderinde was accused of stealing software from Datapact after she was seen
acting suspiciously on a CCTV video recording. She was summoned to an interview
with two hours’ notice and not given a chance to see the video or any
statements given to the company during its investigation. Following her
dismissal, she brought a successful unfair dismissal claim but the tribunal
awarded her only six weeks’ pay (about £1,800) on the basis she would have been
dismissed fairly at the end of that time.
She appealed. The EAT held that where a person had been unfairly dismissed
following an unsatisfactory disciplinary procedure, if the employer could show
that following a proper procedure would have resulted in the same outcome, this
would limit the amount of compensation payable. While such evidence from the
employer would necessitate extremely close scrutiny (because of the likelihood
that it would be self-serving) it was not impossible for such evidence to be
given and accepted. The appeal was dismissed.
Key points
– It is open to an employer defending an unfair dismissal claim to give
evidence to show that the outcome would have been the same if a proper
procedure had been adopted and that the ensuing dismissal would have been fair.
This will not be a complete defence but might lead to a much lower compensatory
award.
– Until the case of Polkey v AE Dayton Services Ltd [1988] ICR 142, it was
thought that an employment tribunal could find a dismissal fair if the result
would have been the same had a correct procedure been followed.
– The Government has proposed to reintroduce this pre-Polkey "no
difference" defence for unfair dismissal in its Employment Bill.
Two-year restrictive covenant excessive
Barry Allsuch & Co v Harris
High Court, IRLB 680
Harris was employed by Barry Allsuch estate agents from 1998 as a sales
manager in its Radlett and Elstree office. In October 2000 he was dismissed and
in February 2001 it was discovered he was working for a rival firm in the same
town.
His former contract of employment contained a restrictive covenant to the
effect that he could not work in any estate agents in the Radlett area for a
period of two years. Barry Allsuch sought an injunction to restrain him from
continuing in his new post.
The Court accepted that Allsuch relied on trade connections and it was not
necessary to prove they were exclusive or long-established. Covenants have to
protect legitimate business interests but should extend no further than is
reasonably necessary, otherwise they will be void for illegality. Harris had
been employed for two years and five months, albeit as a manager, but only
about 5 per cent of Barry Allsuch’s customers re-entered the housing market within
a two-year period. The Court observed that non-competition covenants imposed by
other estate agents were for a maximum period of six months. Although not
conclusive, this was evidence of what is usual in the trade. Taking all
relevant factors into account, a restricted period of two years was
unreasonably long and the injunction was refused.
Key points
– Employers should take great care when drafting non-competition covenants
to ensure they last no longer than is absolutely necessary to protect trade.
– Covenants have to protect legitimate business interests but the courts
will not allow them to extend further or for longer than is reasonably
necessary.
– If the courts find them unreasonable, they will be unenforceable.
Two weeks’ pay for failure to consult inappropriate
Elkouil v Coney Island Ltd
EAT, unreported December 2001
Elkouil was made redundant after his duties were gradually transferred
elsewhere. The tribunal found he was genuinely redundant, but awarded him two
weeks’ pay for lack of consultation.
Elkouil appealed to the EAT on the basis that his employers were aware of
the risk of redundancy seven months in advance of the dismissal and should have
warned him. The EAT rejected the argument that an employer has two separate
duties, first to warn and then to consult. Warnings are part of the
consultation process. However, the tribunal allowed itself to be forced into a
straitjacket by what has become a conventional method of expressing
compensation payable for non-consultation in redundancy cases, namely two
weeks’ pay. This was inappropriate in Elkouil’s case.
Based on the specific facts, Coney Island had known at least 10 weeks in
advance that Elkouil would be made redundant and he therefore lost the chance
of looking for alternative employment during that period. The EAT substituted
an award of 10 weeks’ pay.
Key points
– Compensation for failure to warn and consult under section 123 of the
Employment Rights Act 1996 is what the tribunal considers "just and
equitable" in all the circumstances having regard to the loss sustained as
a result of the dismissal in so far as that loss was attributable to action (or
omission) by the employer.
– If there was a lack of warning or consultation but the employer
successfully argues dismissal would still have taken place, the tribunal may
well consider it just and equitable to limit the award to the period during
which consultation should have taken place or the period after a warning should
have been given. While this could be as low as one or two weeks’ pay, employers
should not be lulled into thinking this will always be the case. The tribunal
will look at the particular facts of the case to decide what is just and
equitable.
No discrimination in appointing personal acquaintances
Coker and Osamor v Lord Chancellor and another
Court of Appeal [2002] IRLR 31
The Court of Appeal has upheld the EAT’s decision that the Lord Chancellor
was not in breach of the Sex Discrimination or Race Relations Acts when he
appointed a person personally known to him, Garry Hart, as his special adviser,
without advertising the post. The case turned on whether it could be said that
the application of a requirement that an applicant should be personally known
to the Lord Chancellor could be said to have a disproportionate effect on
persons of one sex or racial group and therefore be indirect discrimination.
The Court said the test for indirect discrimination focused on the effect of
the requirement in question on the pool of potential candidates. There could
only be a discriminatory effect if a significant proportion of the pool was
able to satisfy the condition. It followed, said the Court, that where the
requirement excluded almost the whole pool, it could not constitute indirect
discrimination.
Key points
– While employment tribunals are usually anxious to prevent employers
relying on technicalities to avoid liability for mistreating their staff, this
case shows the ‘technical ruse’ is alive and well.
– Making an appointment from within a circle of family, friends and personal
acquaintances is unlikely to constitute indirect discrimination, because the
people known to the employer are likely to represent a tiny proportion of those
who would otherwise be qualified to fill the post. The requirement of personal
knowledge "will exclude the vast proportion of the pool, be they men,
women, white or another racial group."
However, employers should still avoid conducting recruitment exercises by
word of mouth, personal recommendation or other informal methods, as these may
well constitute indirect sex or race discrimination.
Condition for part-time working discriminatory
Chief Constable for Avon & Somerset Constabulary v Chew
AT, IDS Brief 701
In August 1994 the Avon & Somerset Constabulary introduced a part-time
working policy and officers wishing to work part-time had to conform with
specified regional and departmental shift patterns. Chew’s request for
part-time working was turned down as she was unable to comply with the policy
requirements and shift patterns because of looking after her two children.
She brought a claim of indirect sex discrimination on the basis that the
need to comply with the shift patterns was a condition with which fewer women
than men could comply. Of the 3,000 officers in that constabulary to whom the
condition applied, 435 were women and of the 11 officers who could not comply,
all but one were women.
Statistically, however, this was a percentage difference between men and
women of just 2.26 per cent. Nevertheless, the tribunal adopted a flexible
approach and specifically took into account the fact that the majority of
officers who could not comply with the condition were women with childcare
responsibilities. Chew’s claim was allowed.
On appeal, the EAT accepted the percentage difference of 2.26 per cent did
not, on the face of it, amount to a sufficiently disparate effect. However, the
tribunal was correct to adopt a flexible approach and to have regard to factors
other than the percentage difference.
Key points
– Employers are likely to be found in breach of the Sex Discrimination Act
1975 if they fail to consider seriously requests by women for flexible – or in
this case, regular – working patterns.
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– Indirect discrimination can occur when any provision, criterion or
practice subjects a disproportionate number of one sex to the detriment of the
other. The tribunal will not base its assessment of whether there is indirect
discrimination on bald statistics alone, but will take a flexible approach,
looking at the reality of the situation.
– Employers will be under a duty to give serious consideration to requests
for changes in working patterns from women wishing to balance work and family
life when the Government introduces legislation in April 2003.
