Questions and answers

Members of the employment law team at Norton Rose shed some light on common

Justifiable discrimination

Q:  Can an employer justify
conduct which discriminates against a disabled person?

The simple answer is yes. It is now much easier for a disabled person to
show "discrimination" (see Clark v Novacold, 1999, IRLR 318) so
employers will increasingly have to turn to the defence of justification, as
well as ensuring all reasonable adjustments can be made, to avoid large
payments of compensation. The key elements to justification are that the
employer acted reasonably and there are justifiable reasons for the employer’s
conduct based on, for example, genuine business needs.

In determining whether treatment is justified, a balancing exercise needs to
take place between the interests of the disabled employee and the employer, but
the reason for the discriminatory treatment must be "material to the
circumstances of the case" (see Baynton v Saurus General Engineers, 1999,
IRLR 604). In Baynton, for example, the employer should have balanced the
desirability of waiting for the outcome of an anticipated medical consultation
with the employer’s need to dismiss.

It is important for any employer to have a strategy to anticipate any claim.
For example, if a key individual is unable to return on a full-time basis but
the job cannot be done part-time – even after such an adjustment has been
considered – this may be justified but it is vital that a fair procedure and
fair treatment is followed.

Victoria Parry

Discipline and grievance

Q:  Is there a new code of
practice coming out on discipline and grievance?

Yes It is being considered by Acas reflecting the statutory provisions on
disciplinary and grievance procedures set out in the Employment Relations Act
1999 (sections 10-15). We expect it to be published in the spring or summer of

The key provision is the right of an employee to be accompanied by a
colleague or trade union official during disciplinary proceedings. The right
will also apply to agency staff and home workers as well as employees but
relates only to hearings which deal with "serious" matters. It is
still unclear what this means but the CBI has made representations as to the
scope of the right.

In disciplinary proceedings a serious issue may perhaps require the
possibility of clear disciplinary sanctions being applied, thereby excluding
for example investigatory meetings or consultation as to under-performance.
Serious grievances would perhaps require a formal grievance procedure to be
invoked and/or where a grievance is initially unresolved, thereby excluding for
example minor complaints or those capable of early resolution.

One perceived problem is where employees who are also union members can
invite any trade union official from anywhere to represent them. This raises
fears of inappropriate delays, which goes against the current intention that
any postponement requested by the employee should be reasonable and limited to
five working days from the employer’s proposed date for the hearing.

Nicola Fisher

PHI protection

Q:  Can an employer sack a
"long-term" sick employee who is on Permanent Health Insurance?

Such a dismissal would be effective – that is could not be prevented – but,
irrespective of the morality of the position, would leave the employer very
exposed to a significant financial claim.

The courts recently confirmed in Vitella v MFI Furniture Centres, 1999, IRLR
469, that if an employee is deprived of disability benefits in such
circumstances – the insurers obviously stop paying when the employment ends –
the employer will be fundamentally breaching an implied term of the employee’s
contract. Indeed, the case went further because the employer was held
responsible to continue Vitella’s PHI payments even though the insurance policy
had lapsed.

In other words, in addition to salary and benefits in lieu of notice and any
other contractual debts, the employer would potentially be liable to pay
compensation to the employee by way of damages representing the PHI payments
that the employee would have received in subsequent years. This could be a very
large amount as the payments may have continued until his normal retirement

David Cubitt

Parental leave policies

Q:  Should employers have a
parental leave policy now that the Parental Leave and Maternity regulations
1999, made under the Employment Relations Act 1999, are in force?

Yes. If an employer does not implement a policy, which can be done by virtue
of a collective or workforce agreement, then it will be bound by the default
provisions as set out in the regulations. These leave a lot of matters
unresolved – matters which an employer would therefore wish to address in a
policy include what evidence, if any, parents must produce to show that they
are genuinely taking leave to "care for the child", the justification
needed by an employer to postpone the leave, the ability of an employee or
employer to stagger the leave, the employer’s ability to prevent or limit
aggregation with maternity leave, the employee’s responsibilities while on
leave and other potentially key issues. Above all, the flexibility and
certainty of an express policy is clearly desirable.

Olivia Purvis

Time off for dependants

Q:  Should an employer have a
policy for dealing with time off for dependants?

Time off work for urgent family reasons is another employee right introduced
through the Parental Leave directive and also came into effect on 15 December
1999 following the passing of the Employment Relations Act 1999.

Again, a policy is desirable. How often can leave be taken, how close a
family member does the "dependant" requiring assistance need to be
and how serious does the incident need to be – for example, how ill? Can the
employer require proof of the problem giving rise to the time off, or require
employees to call every day to update the employer as to the position?

What can an employer say in a reference for departing staff, if anything, if
they were a "high-risk domestic leave-taker", how long can an
employee be off work without sanction and how can salary deductions, if any, be
made for part days, particularly monthly paid staff? This is another case of no
policy, no clarity.

Claire Darbourne

Pilon clauses

Q:  If there is a payment in lieu
of notice clause in the employment contract, does the employee have to mitigate
his loss in the event of dismissal?

Pay in lieu of notice – Pilon – clauses contained in an employment contract
can be effective for the employer and employee alike. For one thing, they
minimise unpleasant disputes when the employment relationship comes to an end
and they help to preserve restrictive covenants where the employer wishes to
terminate immediately. They do, however, prevent compensation, for loss of
employment, paid under the Pilon from being free of tax.

As regards mitigation, in Cerebus Software v Rowley, EAT 4 May 1999, 1023/98
(following on from Abrahams v Performing Rights Society, 1995, IRLR 486), it
was made clear that the employer will invariably have to pay the full Pilon
even in respect of an employee who has mitigated his loss. In other words, the
payment will be treated as a "debt" rather than "damages"
because, unlike a damages claim, the employee’s actual loss is irrelevant. So,
if an employee with a three-month Pilon walks straight into another job on a
£40,000 per annum remuneration package, he would still be entitled to £10,000
Pilon less tax and NI – something for employers to think about when reviewing
staff contracts.

Richard Brown

Need for written contracts

Q:  Why have a written contract as
the cornerstone of the employment relationship?

The contract of employment is simply an "agreement" between
employer and employee as to the employment relationship. It does not have to be
in writing.

The employer is obliged to provide written particulars of the main terms,
under section 1 of the Employment Rights Act 1996, within two months of the
employee starting work but there is a limited deterrent for not doing so. An
employee can merely seek a declaration in the employment tribunal as to the key
terms but how often does that happen?

Nevertheless a sensible employer will always have a written contract, as
without express terms it cannot deal with issues such as restrictive covenants
or the flexibility of the employee’s duties. Nor can there be any effective
garden leave provisions, confidentiality clauses, intellectual property
protection, express mobility terms, effective notice or sickness provisions or
an effective disciplinary or grievance policy. Above all, the lack of a written
contract means a lack of certainty and this can only rebound on the employer
for the (significant) minority of employees where a dispute arises.

Ruth Talbot

Cases of gross misconduct

Q:  If an employee is clearly
guilty of gross misconduct, why bother going through a lengthy disciplinary

Suspension on full pay is the usual and desirable route when an employee is
accused of gross misconduct. The disciplinary process is important, however, in
relation to defending unfair dismissal claims because even where it is
apparently an open and shut case, the employer has to show the dismissal was
justified having allowed the employee to state his case. If the employer does
not do so it will probably lose an unfair dismissal claim on procedural grounds
and, although the employee’s "contributory conduct" may reduce any
compensatory award to a nominal sum – even nil – an employer cannot rely on

Jane Marsh

Employment tribunals and their growing workload

Q:  How will the employment
tribunals deal with the expected rise in the number of claims?

The number of cases referred to employment tribunals each year has almost
tripled since 1989 – 35,000 in 1989-90 to 90,000 in 1998-99 – and conditional
fee arrangements are on the increase. This is a natural result of the increase
in the compensatory award to a £50,000 limit.

Tribunals are trying to be more efficient; written evidence is on the
increase, chairman "sit alone" provisions are extended and legal
officers have been appointed to improve the administration support. Backlogs on
hearing dates have been cleared, costs orders are threatened more than has
historically been the case, and Acas is pushing to settle as many cases as
possible – they already resolve a third of claims with about a quarter being

It does not take a crystal ball, however, to know that further changes are
likely. The proposed Acas arbitration system is intended to provide an
alternative quicker, less formal and less legalistic form of dispute resolution
in unfair dismissal disputes. This could be running by spring 2000 and, if
successful, could reduce employment tribunal workloads.

Bodies such as the EOC are looking at alternative procedures, for example a
simplification of equal pay complaints. In our view, running parallel to the
Woolf Reforms in civil litigation, mediation is likely to be introduced, and an
extension to pre-hearing reviews, currently unpopular with the employment
tribunals, is also possible – and why not a tribunal application fee,
recoverable by a successful litigant?

Tim Russell

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