On appeal

Continuing our regular series
on the implications of recent significant cases. Sue Nickson, partner and head
of employment law at Hammond Suddards Edge, looks at the issues

Who is the comparator in a
claim under the Equal Pay Act 1970?
South Ayrshire Council v Morton, 2002, IRLR 256

In the case of South Ayrshire
Council v Morton, the Court of Session considered the issue of who could be
named as a comparator in a claim under the Equal Pay Act 1970 (EPA).

Primary school headteachers had
brought applications for equal pay with secondary school headteachers, some of
whom were not employed by the same local authority. Section 1 (6) of the EPA
provides that in order to succeed with an equal pay claim, a woman must
identify a male comparator in “the same employment” as her.

This is defined as a man
“employed by her employer or any associated employer at the same establishment
or at establishments within Great Britain which include that one and at which
common terms and conditions of employment are observed either generally or for
employees of the relevant classes”.

The teachers conceded that the
two local authorities were not associated as the definition of that term within
the EPA required that one company be under the control of the other or that
both be under the control of a third party.

Because the claim could not be
brought under domestic legislation, the teachers had to rely upon European
legislation providing for men and women to have equal pay for equal work. 

In the case of Defrenne v
Sabena (No2) 1976 ECR 455, the European Court of Justice (ECJ) held that the
principle of equal pay in the European Treaty allows an employee to nominate a
comparator empl-oyed by a different employer if both are employed “in the same
establishment or service”.

The Employment Tribunal and the
Employment Appeal Tribunal found that the education authorities were part of
the same service and so found in favour of the teachers. The employers appealed
to the Court of Session.

The Court of Session held that
all pay arrangements were governed by the Scottish Joint Negotiating Committee.
Irrespective of the fact that the various education authorities decided
employees’ actual wages, there was in force a form of “collective agreement” that
applied to employees in both authorities. The teachers could therefore compare
their salary with that of teachers in the other authority due to the fact that
any discrimination had its origin in an agreement that applied equally to both
authorities. It was unnecessary to consider whether employees of the two
authorities were within the “same service”.

The effect of the decision is
particularly important to all employees subject to national collective
agreements and for employers following a transfer where the contracts of
employment incorporate a collective agreement.

Foreseeable
stress in the workplace
Sutherland v Hatton, Somerset County Council v Barber and Baker
Refractories Ltd v Bishop, 2002, IRLR 263

Stress claims have resulted in
headline compensation figures – and a twelve-fold increase in the number of
claims against employers in the last year may have caused many employers to
suffer stress of their own. But now the Court of Appeal has signalled that the
tide may have turned against employees wishing to recover damages from their
employers in such circumstances.

In the cases of Sutherland v
Hatton, Somerset County Council v Barber and Baker Refractories Ltd v Bishop,
the Court of Appeal allowed appeals by employers against earlier awards for stress-related
complaints of nearly £200,000.

The legal position is that for
an employer to be liable there needs to be a duty of care and a breach by the
employer of that duty which causes damage to be suffered. Most importantly, it
must be shown that it is reasonably foreseeable that the breach will cause
harm.

The Court of Appeal’s guidance
on “foreseeability” identifies the key issue as what the employer knows or
ought to know about the employee. Relevant factors in assessing that question
include the nature and extent of the work done by the employee. Has the
employee made it known that there is a risk to his health?

Essentially, the Court decided
that the onus was to some extent upon the employee to raise their concerns – if
they did not, the employer was entitled in most cases to take that silence as
tacit acceptance that there were no problems. This is good news for employers
in relation to stress claims, but care should be taken that obligations under
Health and Safety legislation and the Disability Discrimination Act are not
ignored.

The importance
of clear covenants
Ward Evans Financial Services Ltd v Fox & Anor 2002 IRLR 120

An employee acting in
competition with their employer when still employed is generally going to be in
breach of the implied term in their contract regarding trust and confidence.
The employee who does not compete but makes preparations to compete at a future
date may not necessarily fall foul of that term and employers will have to
include express terms to deal with such situations.

In the case of Ward Evans
Financial Services Ltd v Fox & Anor, 2002 IRLR 120, two employees had
bought an off-the-shelf company during their employment, had then resigned and
subsequently taken over the work of a client who had been with their original
employer.

The contracts of employment had
contained a provision preventing them from holding any interests that might
impair their ability to act at all times in the best interests of the company.

A further clause prevented them
from inducing a customer from leaving the firm by revealing confidential
business information.

The Court of Appeal agreed with
the High Court’s decision that although one of the employees had told the
customer he was leaving, this did not amount to inducement by way of revealing
confidential information.

However, it allowed the
employer’s appeal in relation to the claim that the employees, by setting up a
company, had placed themselves in a position that impaired their ability to act
in the best interests of the employer. The fact that the company did not trade
during their employment did not mean that their ability to act in the best
interests of their employer was not affected.

It was found that it clearly
had as the employees had failed to bring in business in the period since the
setting up of the other company. This case is a reminder to employers of the
importance of clear covenants preventing competition.

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