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Recent Cases July 2007
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Changing terms and conditions
Employers often change the terms of policies with little negotiation and in reliance upon vague terms in the employment contract allowing changes to terms and conditions to be made upon notice. The recent case of Wetherill & Others v Birmingham City Council, demonstrates the risks of doing so. The Court of Appeal confirmed that BCC had breached the contracts of employment of a number of employees, when it removed the upper bands of a car user allowance scheme. The amount of car user allowance payable to an employee depended upon their role and was banded according to engine size. BCC gave the employees one months notice that the bandings would change. Many considered the allowance part of their remuneration and complained that the change to the bandings breached their contracts. The Court confirmed that under the terms of the scheme, BCC could change the bandings upon proper notice. However, by introducing the change without adequate transitional provisions to protect employees' existing rights under the scheme, BCC was in breach of the employees' contracts of employment. The employees needed sufficient time to discharge financial commitments entered into before the new rates were announced (such as the purchase of a car with a large engine). |
Return from maternity leave
An employee on maternity leave is entitled to return to the "job in which she was employed before her absence". This is to ensure that a returnee comes back to a work situation as near as possible to that she left. However, the Employment Appeal Tribunal (EAT) has confirmed if the employee's role is variable, this can be taken into account in deciding whether the job she is asked to do upon her return is the same as the one she was employed to do before her absence. As such, a teacher could not insist on coming back to teach the same class, when the school customarily required teachers to change classes every two years. However, the head teacher's failure to ask the claimant to confirm which class she would like teach in the new school year (in circumstances where other teachers were asked) was sex discrimination, even though there was no guarantee that preferences would be granted (Blundell v Governing Body of St Andrew's Catholic Primary School). |
Discrimination by third parties
For many years it was thought that where an employer was in a position to prevent discrimination by a third party against its employees but failed to do so, the employer would be liable for the discrimination. It was subsequently accepted that for an employer to be liable in this way, it must have had a discriminatory reason for failing to take preventive action. However, all of the previous cases on this point were decided before the statutory definition of harassment was introduced. Under the new section 3A of the Race Relations Act 1976, harassment occurs where a person is subjected to "unwanted conduct which has the purpose or effect of violating his/her dignity, or creating an intimidating, hostile, degrading, humiliating or offensive environment for him/her". Similar provisons apply to other unlawful harassment.
In Gravell v Bexley Council, the EAT had to consider, for the first time, the effect of s3A upon a claim for third party racial harassment. Ms Gravell, who is white, worked in the housing department of Bexley Council. She alleged that the Council had a policy of ignoring racist comments from customers and that she was told not to tell customers that any such comments were unacceptable. As a result, she claimed she had to listen to racist remarks made by customers without being able to object. She also received racist jokes by text message sent by a colleague. The racist comments and jokes in question were targeted at other racial groups. She claimed that when she complained about the incidents the Council took no action. The EAT held that the Council's policy of not challenging racist behaviour by customers could, if established on the facts, have the effect of creating an offensive environment for Ms Gravell falling under section 3A. In appropriate cases, an employment tribunal can find that an employer has liability for harassment by a third party even in the absence of control over that third party's actions.
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Severance negotiations and agreements
A succession of recent cases have dealt with the problems which can arise when an employer and employee enter into severance negotiations. Often, such negotiations are initiated by the employer in the context of another procedure, such as performance management, and it is important that they are handled carefully by the employer. This point is demonstrated by a recent Court of Appeal decision, Sandu v tan de Rijk Transport Ltd, in which an employee entered into a severance agreement during a meeting at which he was told that he was going to be dismissed. The question arose as to whether he resigned or was dismissed. The Court held that the employee had been dismissed; he had not been told why he was being called to the meeting, had been given no opportunity to reflect on the proposals or take advice, and the terms of the severance agreement were not particularly favourable to him.
Most employers who wish to negotiate severance agreements ask the employee to engage in 'without prejudice' negotiations. The benefit of this approach is that 'without prejudice' conversations, correspondence and documents cannot be disclosed in subsequent legsl proceedings. However, in order to attract that protection from disclosure, litigation must be contemplated by the parties at the time of the discussions. In the employment context it is unusual for litigation to have commenced at the same time as severance negotiations take place and this begs the question: how proximate (if at all) do negotiations have to be to the start of any ensuing litigation, to attract the "without prejudice" rule? The Court of Appeal recently confirmed that in cases where litigation has not started, the critical issue was the subject matter of the dispute, rather than how long before the threat or start of litigation the negotiations took place. It was crucial to consider whether, in the course of negotiations, the parties contemplated or might reasonably have contemplated litigation if they could not reach agreement. As such, negotiations to resolve a disagreement regarding terms of employment relating to bonus and share alloaction were 'without prejudice' because, at the time of the discussions, the parties were clearly in dispute (Framlington Group Limited and Axa Framlington Group Limited v Barnetson).
Severance negotiations frequently result in the employer and employee agreeing to enter into a compromise agreement in order to protect the employer from future legal proceedings. An employer will often require an employee to confirm a number of matters e.g. that the employment contract has not been breached and that no alternative employment has been found, as part of the agreement. This information affects the value an employer will place upon the settlement of the employee's claims. The High Court recently held that an employer did not have to make a payment due under a compromise agreement because the employee had wrongly confirmed that he had not breached his employment contract when in fact he had made a number of fraudulent expense claims (Collidge v Freeport plc).
If you would like any more information about this, or related employment matters, please do not hesitate to contact Adrian Berkeley on 0161 371 0011
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