Gordons Legal Employment Update – 19 January 2017

Redundancy and Mobility Clauses

Kellogg Brown & Root (UK) Ltd v Fitton & Anor

Background
Mr Fitton and Mr Ewer worked at their employer’s Greenford site which was to close. Rather than being made redundant, employees were asked to move to the Leatherhead site in accordance with a mobility clause in their contracts of employment which stated: “The location of your employment is [Greenford] but the company may require you to work at a different location including any new office location of the company either in the UK or overseas either on a temporary or permanent basis.  You agree to comply with this requirement unless exceptional circumstances prevail.” Mr Fitton and Mr Ewer were dismissed without notice for failing to follow the employer’s instructions to relocate, for failing to attend the Leatherhead office and failing to notify their manager of their absence.

ET Decision
Mr Fitton and Mr Ewer claimed unfair dismissal and a redundancy payment. They said that there was a redundancy situation in accordance with the statutory definition because there was a closure of their workplace. A fair redundancy procedure had not been followed and they had not been paid a redundancy payment. The Tribunal agreed with them and both claims were successful.

Employment Appeal Tribunal Decision
The EAT concluded that they were not entitled to a redundancy payment. This was because, although there may well have been a redundancy situation, that was not in fact the reason they were dismissed. It was a misconduct dismissal and the employer genuinely believed it had the right to rely on the mobility clause and dismissed as they had refused to transfer.

Dismissal was however unfair because there was no misconduct on the part of the employees.  The employer’s instruction to require Mr Fitton and Mr Ewer to transfer was not reasonable even though (i) the move, on the face of it, fell within the mobility clause; and (ii) to assist, the employer was offering assistance with travel costs for 6 months, flexible working opportunities and a reduction in core hours. It was not a reasonable request as it would result in an additional 20-30 hours’ commute per week for Mr Fitton and Mr Ewer. In addition, Mr Fitton had bought a property near Greenford and did not have a car.  Mr Ewer had 25 years’ service working near his home town and was only around a year from retirement.  Mr Fitton and Mr Ewer therefore did not act unreasonably in refusing to transfer and their dismissal was unfair.

 Comment: This case is a useful reminder to be wary of relying on mobility clauses, particularly where the change of location is anything other than in very close in proximity to the original site. Mobility clauses must be exercised reasonably and the distance, assistance offered, level of consultation and impact on employees will all be relevant.  The case also confirms that whether a redundancy payment is payable will depend on the reason for dismissal rather than whether there is a redundancy situation or not.

Determining Employment Status

In Dhillon and Dhillon v HMRC, the First-Tier Tax Tribunal held that a checklist approach could not be taken to indicate employment status.  It stressed the need to step back and assess the whole picture when making an informed and considered decision.

By way of background, the Appellant provided haulage services, engaging drivers who:

• were paid a fixed amount per shift
• could refuse jobs;
• were not guaranteed work;
• received induction training;
• had a limited right of substitution; and
• used the Appellant’s lorries.

However, the drivers did not have any subsequent supervision and generally provided their own equipment.

The FTTT found that the drivers were employees during each individual contract.  The key factors were the considerable degree of control exercised and the fact that the drivers were not in business on their own account.

Comment: In this case, the FTTT assessed the employment status under tax legislation which does not allow for the additional category of “workers”. Whist there are some key indicators as to an individual’s employment status, this case helps highlight the fact that there are other factors which the courts and tribunals must also consider i.e. the multi-faceted tests which the Employment Tribunals have developed over the years.

The Scope of COT3 Agreements

In DWP v Brindley, the EAT held that the COT3 wording did not extend to settle new claims arising out of different circumstances. The extent of the COT3 only covered the specific matters which led to the first warning, not any action by the Respondent up to the date of the COT3.

By way of background, on 14 July 2014 the Claimant presented a claim for disability discrimination.  This claim was settled on 11 December 2014 via a COT3.  The COT3 wording covered all claims in that case and “all other Relevant Claims arising from the facts of the Proceedings up to and including the date of this Agreement”.

Prior to the agreement of the COT3, the Claimant received a second final written warning for a different period of absence in November 2014. Subsequently, the Claimant brought a new claim and the Respondent sought to have that claim struck out as they believed it had been settled under the COT3 wording.

The Employment Tribunal held correctly that the COT3 did not cover claims arising from the new circumstances in the second claim.  The EAT held that the phrase ‘arising from the facts of the proceedings up to and including the date this agreement [sic]’ meant that a relevant claim was caught if it arose from the specific factual matrix of the proceedings.

Comment: This case highlights once the again the need for care in drafting anything not least a form of settlement wording. COT3 agreements must be drafted to cover the relevant claims. If you need any advice on the scope of a COT3 agreement, please do not hesitate to contact a member of the employment team.

Disability – Type 2 Diabetes

In Taylor v Ladbrokes Betting & Gaming Ltd, the EAT held that type 2 diabetes can be a disability.

In this case, the Claimant claimed that he had been disabled for almost a year before his dismissal, due to type 2 diabetes.  The Employment Tribunal relied on two medical reports and decided at the Preliminary Hearing that he was not in fact disabled.

On appeal, the EAT held that the Employment Tribunal had misconstrued the proper test.  The question the Employment Tribunal should have applied was whether the condition was likely to result in an impairment.  In fact, type 2 diabetes would amount to a disability even if it did not have a substantial adverse effect at that time, as long as it was likely that it would result in a progressive condition.

As the medical evidence was not clear, the EAT has remitted the case back to the Tribunal to reconsider whether the medical evidence suggested there was a chance of something happening.

Comment: Employers must be mindful of any protected characteristic that their employees may possess and question whether and if so how that may impact on any treatment being meted out to the employee. It is important to review any medical evidence provided. However, as always, the issue of disability is always a question of fact for the Tribunal to determine.

The Shortfall of Employment Tribunal Penalties

New figures have revealed that the government is recouping just a fraction of the extra money it expected to generate from employers brought before employment tribunals.

Originally, an impact assessment prepared by the Department for Business, Innovation & Skills estimated that judges would impose sanctions in 25% of cases.  This would leave employers paying £2.8m a year in extra penalties.

However, only 12 of the 18 fines that tribunals have levied against employers for aggravated breach of employment law have been paid.  Margot James, Business minister, has admitted that just £17,704 has been paid in financial penalties since they were enabled in April 2014.

In other news, the Government was scheduled to have completed its review of employment tribunal fees by the end of 2015, but justice minister Sir Oliver Heald admitted last week “it is still not finished.”

Comment: The delay in the review of tribunal fees comes as no surprise given the significant reductions in employment tribunal claims since 2013. We have yet to see the results of the review of the tribunal fees and whether any recommendations will be implemented. As to the failure to recoup fines – this is squarely in line with other shortcomings in our legal system, particularly in the criminal legal system insofar as collecting fines is concerned.

Government has launched an inquiry into “fatherhood penalty”

An inquiry into how employers can better support fathers in the workplace has been launched by the Women and Equalities Committee.

The launch follows new research from Working Families which found that almost half of working fathers would like to downshift to a less stressful job because they want a better work-life balance.

The 2017 Working Families Index, which polled 2,750 parents across the UK, suggests that UK employers run the risk of creating an unsatisfied workplace for fathers who do not feel supported in the workplace to care for their children.  In fact, 38% said they would be prepared to take a pay cut to achieve a better work-life balance.

Some of the issues that the Committee seek to take views from organisations and individuals are:

• How well do fathers feel their current working arrangements help them to fulfil their caring responsibilities for children of all ages?
• Are there employment-relate barriers to fathers sharing care roles more equally?
• Do fathers have the financial support to enable them to fulfil their caring responsibilities?
• Are there social or attitudinal barriers to fathers in the workplace that need to be challenged?
• What role can the Government, employers and other stakeholders play in overcoming these barriers?
• What policy or legislative changes would be most effective in supporting fathers to fulfil their caring responsibilities?

The inquiry will close on 1 March 2017.

Comment:  The inquiry should provide an interesting insight into the current working practices of fathers and potentially helpful concepts for creating a satisfied workforce and represents a welcome shift in emphasis from this type of body.

200 judges win Employment Tribunal claim

In McCloud & Mostyn (and others) v The Lord Chancellor & The MOJ, the Employment Tribunal held that “by reason of transitional provisions” contained in the Judicial Pensions Regulations 2015, the Government “have treated and continue to treat the claimants less favourably than their comparators because of their age”. It went on to say that the Justice Secretary and the MOJ “have failed to show their treatment of the claimants to be a proportionate means of achieving a legitimate aim”.

Judge Williams announced: “In my judgment, an aim which amounts to an intention to treat one group more favourably and another less favourably, solely by reference to the age of those in the groups cannot, without further rational explanation of the reason for it, be legitimate”.

On the issues of indirect discrimination and equal pay, the judge said that in recent years “efforts have been made to improve the diversity of the judiciary at all levels with the result that the more recently appointed cohorts of judges include a greater proportion of female and ethnic minority judicial office holders”.

Comment: Although this case is specific to the judiciary, there could be ramifications on similar employee pension protections in the wider public sector. When making changes to any provisions of your employee pension scheme, whether transactional or otherwise, you must ensure that any changes pursue a legitimate aim and do not have a disproportionate impact on those who have a protected characteristic – the most likely one being age.

If you require any further information on the above developments please do not hesitate to get in contact with a member of the Employment Team, on the following number 0113 227 0100.