On appeal

Continuing a regular series spelling out the implications of important cases
which have been heard recently in the appeal courts, Richard Lister looks at
the issues

Duty of care when providing reference
Cox v Sun Alliance Life, unreported, 9 May 2001, Court of Appeal

Cox, a branch manager with Sun Alliance, resigned from the company before
disciplinary proceedings against him could be concluded. A financial settlement
negotiated through Acas incorporated an agreed reference.

Subsequently, however, the personnel director of Sun Alliance led Cox’s new
employer, Hambro Guardian, to understand that he had left under the shadow of
disciplinary proceedings involving financial impropriety. As a result, Cox lost
his job.

Cox claimed damages from Sun Alliance on the basis that the company had been
negligent in failing to take reasonable care to be accurate or fair when
speaking to his new employer. The county court in Leeds upheld the claim,
describing the allegation of financial impropriety as "baseless".

The Court of Appeal dismissed Sun Alliance’s appeal. The judgment is
noteworthy for two reasons. First, it unequivocally confirms that employers
have a duty to take reasonable care to provide an accurate reference and one
that is fair to the ex-employee.

Second, the court stated that the standard of investigation to be carried
out by a reasonably careful employer, before giving a reference for an
individual who is the subject of misconduct allegations, is the same as that
required in unfair dismissal cases. Accordingly, the employer should have: (1)
a genuine belief that the employee is guilty of misconduct; (2) based on
reasonable grounds; (3) after having carried out as much investigation into the
matter as was reasonable in the circumstances (British Home Stores v Burchell,
1978, ICR 303).

Test for misconduct dismissals
Granges Building Systems t/a Glostal Monarch v Hill, IRLB 663,
Employment Appeal Tribunal

The British Home Stores v Burchell test for fairness of misconduct
dismissals has itself been reaffirmed by the EAT. Hill was a production manager
who was summarily dismissed for directing another employee, Regan, to pass
sub-standard material as satisfactory. The company concluded that Hill had
behaved dishonestly after its investigators heard conflicting and confused
versions of events from Regan and others.

Upholding Hill’s unfair dismissal complaint, the tribunal accepted that the
employer had a genuine belief that he had committed misconduct and had made the
correct enquiries in the course of the investigation. The tribunal concluded,
however, that the evidence against Hill was inadequate and unreliable and so
the company’s belief in his guilt was not based on reasonable grounds.

The EAT dismissed the company’s appeal, ruling that the tribunal could not
be faulted for applying the second limb of the three-part BHS v Burchell test
(see above). The EAT stressed that the requirement of reasonable grounds for
the employer’s belief in the employees’ guilt is a separate and important
factor in determining the reasonableness of a dismissal for alleged misconduct.

Constructive dismissal under Tupe
Rossiter v Pendragon, 2001, IRLR 256, Employment Appeal Tribunal`

Rossiter was a car salesman employed by Lex Ford, which was acquired by
Pendragon following a transfer to which the Transfer of Undertakings
(Protection of Employment) Regulations 1981 (Tupe) applied. Four months later,
Rossiter resigned and claimed he had been constructively dismissed on grounds
that there had been "a substantial change in his working conditions to his
detriment" within regulation 5 (5) of Tupe.

He complained that Pendragon had changed his rate of commission,
unilaterally altered his holiday pay entitlement and reduced his
responsibilities. He further alleged that the constructive dismissal was by
reason of the transfer and so auto- matically unfair.

The employment tribunal dismissed the complaint, finding that Rossiter had
failed to establish any breaches of contract by his employer. In the tribunal’s
view the concept of constructive dismissal under Tupe was the same as under the
general law of unfair dismissal.

Allowing Rossiter’s appeal, the EAT held there can be a "substantial
change" in working conditions to an employee’s det- riment under
regulation 5 (5) of Tupe regardless of whether that change constitutes a breach
of contract by the employer.

This broad interpretation of constructive dismissal in a Tupe context is
potentially significant. It could, for example, enable staff to complain of
unfair constructive dismissal under Tupe even where the employer has a
contractual right to vary terms and conditions of employment.

Inferring racial motivation
Anya v University of Oxford and another, unreported, 22 March 2001,
Court of Appeal

Dr Anya, who is black, was shortlisted for a post-doctoral research position
at Oxford University, but the interviewers decided that an equally
well-qualified white candidate, Dr Lawrence, was more suitable. A panel
appointed under the university’s grievance procedure upheld the decision not to
appoint Dr Anya, although it criticised the way the university’s equal
opportunities and recruitment policies had operated.

A tribunal rejected Dr Anya’s complaint under the Race Relations Act 1976,
concluding that the reason he was treated less favourably than Dr Lawrence was
not because of his race but on a genuine assessment of his scientific ability.
The EAT dismissed Dr Anya’s appeal.

Dr Anya’s further appeal to the Court of Appeal was, however, successful.
The court stressed that tribunals should consider the history of the matter and
the previous conduct of the decision-maker in deciding whether to draw an
inference of race discrimination. In this case, the tribunal had wrongly
focused on the interview and selection process. It had failed to make findings as
to whether various prior instances of adverse treatment alleged by Dr Anya
indicated conscious or unconscious racial bias.

These matters, alongside the fact that proper equal opportunities procedures
were not followed, were relevant to whether the decision not to appoint was
racially motivated.

By Richard Lister, employment department, Lewis Silkin solicitors, richard.lister@lewissilkin.com

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