Gordons Legal Employment Update – 5 January 2017

Happy New Year to all readers of the Gordons Employment Law eBrief. We hope you all had a good break.

Perhaps unsurprisingly there have been few noteworthy employment law developments over the holiday period but below we take a look at a few interesting developments.

 Deposit Orders

In Hemdan v Ismail, the Claimant, who was a victim of human trafficking, was ordered to pay deposit Orders of £75 in respect of three allegations of race discrimination.  At the time the deposit Orders were made, the Claimant was in receipt of a benefit income of approximately £125 per week.  The Claimant appealed to the EAT on the basis that she considered that the Employment Tribunal had made an error in law as she had no ability to pay the deposits and the effect of the Orders effectively prevented her from accessing justice in respect of the allegations that were subject to the Order

The EAT considered the issue and determined that:

• The purpose of a deposit order is not to make access to justice difficult or to operate as to strike out claims by the back door, rather to identify claims with little reasonable prospects of success and to discourage those claims being pursued;
• There is a requirement for the Tribunal when making a deposit order to make reasonable enquiries into the paying party’s ability to pay and the Tribunal is required to have regard to that information when determining the amount of the deposit order and that an order to pay a deposit must therefore be one that the paying party is capable of complying with;
• In this case, the Claimant was recognised as being a victim of trafficking and had very limited financial resources. The deposit order made by the Employment Judge was not realistically capable of being complied with, as the Claimant was unable to raise the funds in the period available.  Additionally, the level of the deposit was set at such a level to impede the Claimant’s access to justice.

The EAT therefore set aside the deposit Order and freshly considered the amount to be ordered.  After taking everything into account, the EAT substituted the token amount of £1 per allegation.

Comment:  Whilst previously relatively rare, we have found that Employment Tribunals are becoming increasingly willing to make deposit orders in respect of claims that lack reasonable prospects of success.  We have found that when deposit Orders are made, that in the majority of cases these are not paid by Claimants who generally take heed to the ‘words of warning’ given by the Employment Judge in respect of the merits (or more accurately, the lack of merits!) of the claims that are subject to the order.

Our own record against a claimant was achieved last year when we persuaded a judge to make an aggregate order of £19,250 which comprised deposits of £50 for each one of 385 allegations. This knocked out the 385 futile allegations which was sensible and just. To our client this outcome was much more important than the costs warning for 2 reasons: (1) the meaning of a costs warning goes over the head of many claimants, particularly if they are unrepresented, so they continue anyway and (2) surely it is more important that a deposit order stops a weak case in its tracks rather than having to defend it all the way and be left with an unenforceable costs order? Even then, under current rules judges have enormous discretion about costs orders particularly if a claimant can show due to their lack of means that they have no possibility of ever paying.

Long-Term Stress

This is a useful decision for employers who struggle with the stress/disability distinction.

In Herry v Dudley MBC, the Claimant made more than 90 allegations of race and disability discrimination.  He sought to rely upon two disabilities: dyslexia and stress.  The Employment Tribunal found that the Claimant was not at the material time a disabled person.  The Claimant appealed to the EAT on this finding.

The EAT considered the case of J v DLA Piper and considered the distinction between stress and mental illness and stated that “….unhappiness with a decision or a colleague, a tendency to nurse grievances, or a refusal to compromise (if these or similar findings are made by an Employment Tribunal) are not of themselves mental impairments: they may simply reflect a person’s character or personality.  Any medical evidence in support of a diagnosis of mental impairment must of course be considered by an Employment Tribunal with great care; so must any evidence of adverse effect over and above an unwillingness to return to work until an issue is resolved to the employee’s satisfaction; but in the end the question whether there is a mental impairment is one for the Employment Tribunal to assess.”

In this case the EAT considered that the Claimant had failed to establish a mental impairment and had presented little or no evidence that his stress had any impact on his ability to carry out normal day-to-day activities.  The Claimant’s ability to conduct litigation in the Employment Tribunal was not a day-to-day activity and the fact that the Claimant had lengthy periods of absence from work is not necessarily conclusive of the evidence of a mental impairment.

Comment:  The issue of disability is always a question of fact for a Tribunal to determine. Regrettably but unsurprisingly, this new case does not provide an answer which is any sort of panacea for dealing with this old chestnut. Certainly it would be unwise for employers simply to consider that an employee will not be classed as being disabled within the legal definition simply because their medical condition has been caused due to unhappiness at work. The key point is focus on the need for medical evidence and remember that stress is not a clinically recognised illness, rather, defined as the feeling of being under too much mental or emotional pressure,  it is a potential cause of illnesses. Be wary of fit notes which state only “stress” as the reason for absence.

Considering breaches of trust and confidence

In United Lincolnshire Hospitals NHS Foundation Trust v Farren, the EAT stressed that when considering an employer’s lack of trust and confidence in an employee it is the employer’s genuine and rational view that matters, rather than the tribunal’s.

The Claimant was employed as a staff nurse by the Trust.  She was dismissed on the allegation that she administered the drug diazepam to four patients without prescription and failed to complete patient records. She brought a claim for unfair and wrongful dismissal and sought a remedy of reinstatement or re-engagement.  The ET upheld the unfair dismissal claim and dismissed the wrongful dismissal claim. The ET concluded that it would not be just to order reinstatement into her nursing role, but found that it would be just and practicable for the Claimant to be re-engaged in a different role. The Trust appealed against the re-engagement order.

The EAT noted that the ET should have considered, under S.116 of the Employment Rights Act 1996, the question of the Claimant’s honesty which went to the issue of practicability.  The tribunal is required consider whether the order is capable of being carried into effect successfully, therefore meaning that trust and confidence is relevant.  The ET should have asked whether the Trust genuinely believed that the Claimant had been dishonest, and whether that belief was rational. Therefore, the issue of trust and confidence has to be assessed between the parties as to whether it was just or practicable for the Trust to re-engage the Claimant.

Comments: Although, reinstatement or re-engagement orders are rare, it is important to remember that a Tribunal may still issue an order the reinstatement or re-engagement of a former employee.  Tribunals cannot substitute their own view but must always act “as an industrial jury” and judge whether the employer’s decision was fair and reasonable in all the circumstances.

In a similar vein, in Perrys Motor Sales Ltd v Edwards, the Claimant was dismissed by reason of his conduct in particular, making a false computer submission taken together with a current final written warning for similar conduct. The ET found the dismissal was unfair and it considered the sanction of a final written warning fell outside the range of reasonable responses.  Therefore, his dismissal was unfair.  The ET concluded that the Claimant had contributed to his dismissal by 50 per cent and therefore his compensation was reduced accordingly.

On appeal, the EAT held that the ET has misdirected itself as to the correct approach to the earlier warning. The ET had considered matters which had not been put as an issue by either party including the earlier final written warning, and it had substituted its own view in its approach to the question of fairness, rather than the view of the reasonable employer.  In turn, it has not considered the fairness of the dismissal against the existence of a valid final written warning. Additionally, the ET had erred in determining the question of any reduction to the Claimant’s award without first permitting the parties to address it on Polkey and contribution.

The case has been remitted to a different ET for rehearing.

Comments: Although this case largely focuses on tribunal procedure, the unfair dismissal points that it touches upon are very important. Disciplinary officers should be well advised to consider the appropriateness of all live warnings before coming to a conclusion to dismiss.

If you have any queries about any of the issues in this eBrief please contact a member of the Employment Team.