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Case Updates - November 2013

7 November 2013

Here are some recent important decisions of the Courts and Tribunals that highlight key developments in employment law.

Are mothers of children born via surrogacy entitled to maternity leave?

The office of the Advocate General of the European Court of Justice (ECJ) has recently issued two contradictory opinions on this point. In one opinion, an intended mother who has her genetic child via a surrogacy arrangement does not have the right to maternity leave under the Pregnant Workers Directive; as the stated aim of this legislation is to protect a woman who is pregnant. Furthermore, it was not sex discrimination not to give her paid leave on the child's birth, because the employer would have treated a male parent of a child born via surrogacy in the same way. However, in a contradictory decision issued on the same day, the office also took the view that an intended mother of a baby born by surrogacy does have the right to maternity leave under the same Directive, which would need to be shared with the surrogate. It is entirely unclear which opinion the ECJ will ultimately prefer, and how this will be translated into UK law.

(Z v A Government Department and C-D v S-T, both in the ECJ)

Country where employee works does not necessarily determine applicable law

The ECJ has found that, where a court is trying to decide the law applying to a contract of employment, it should not simply have regard to the country in which the employee habitually or exclusively works. If, for some reason, there is a closer connection between the contract of employment and another country, then the law of that country will apply despite the fact that the employee does not work and never has worked in that country. The ECJ suggested that national courts should have regard to country in which the employee pays taxes on their employment income and in which he or she is covered by social security and insurance schemes when deciding which law is applicable, and decide this question from the circumstances as a whole.

(Schlecker v. Boedeker, ECJ)

What is the test for determining whether an employee's refusal of alternative employment is reasonable?

Employees are only entitled to a statutory redundancy payment if they have not unreasonably refused suitable alternative employment. The Tribunal must therefore consider whether a refusal is reasonable. The test here is subjective; that is, taking into account the employee's personal circumstances, and the facts as they appeared to be at the time, did the employee have sound and justifiable reasons for turning down the offer? In this case the Court of Appeal (CA) considered that the Tribunal had improperly considered the employee's point that, having spent 30 years working in the community, it was not unreasonable for her to refuse alternative employment at a hospital. This decision makes it clear that answering this question depends on the circumstances of the particular employee and it is not appropriate to apply a "band of reasonable responses" test.

(Devon Primary Care Trust v Readman, CA)

Can a competing former employee be held to account in the absence of post-termination restrictions?

A senior employee planned to move his employer's business (including its premises and a significant number of employees) to a competitor. He did not have any post-termination restrictive covenants in his employment contract, nor any explicit terms dealing with confidential information. Nevertheless, the High Court found that the employee had breached the implied duty of fidelity (trust and confidence) by failing to inform his employer about the planned poaching raid, discussing confidential information with the competitor and arranging meetings with his colleagues. The High Court therefore partially upheld an application for summary judgment, but reserved the question of whether the employee also owed fiduciary duties until the full trial.

(Thomson Ecology Ltd v APEM Ltd, High Court)

Can sex discrimination be "cured" on appeal?

An employee had made a flexible working request in relation to her returning to work from a period of maternity leave. This request was initially rejected but, after she appealed, her request was granted (albeit on a trial basis). The employee brought a claim of sex discrimination. The Employment Appeals Tribunal (EAT) considered that, as she had still been on maternity leave at the time of the refusal, she had not suffered any detriment by reason of the refusal. The EAT held that the internal appeal process "forms part and parcel of the employer's decision making process" and therefore to the extent that the employee's claim of indirect sex discrimination was based on the initial decision, it could not be upheld. Employers should be wary of relying on this case, which did depend upon the specific timings of the request, appeal and return to work.

(Little v Richmond Pharmacology Ltd, EAT)

Tribunal can admit evidence of employee's spent conviction

This was a case in which the employer was faced with claims of race discrimination and unfair dismissal from an employee with a spent conviction for kerb-crawling.  Normally, if a person has a spent conviction, he is to be treated for all purposes in law as though he had never committed the offence, except where justice cannot be done without admitting evidence which relates to that conviction or related circumstances.  The EAT held that a Tribunal must have regard to the importance of the conviction-related evidence to the relevant issues.  Here it decided that, because the treatment of the employee by various parties could have been based, in part, on their perceptions of him due to their knowledge of his previous conviction, the evidence relating to his conviction was admissible.

(A v B, EAT)

Test for constructive dismissal clarified

The EAT has clarified that, in deciding whether an employer's repudiatory conduct caused the employee's resignation in a constructive dismissal scenario, a Tribunal need not conclude that the repudiatory conduct was the only cause, or even the predominant cause of the resignation. It is enough that the repudiatory conduct can be counted among the effective causes of resignation; it does not have to the sole or principal effective cause.

(Wright v. North Ayrshire Council, EAT)

Is there a "service provision change" where work is regular but not guaranteed?

An employer had a framework contract with the local council under which it could be offered work.  Although there was no guarantee that work would be provided, in practice, the employer (through two employees) carried out this work.  The EAT held that the specifics of the contract between the companies were not a relevant consideration but what was important was what was happening "on the ground".  As these employees were an organised grouping for the purposes of carrying out this work, their employment transferred when the contract transferred.

(Lorne Stewart plc v Hyde, EAT)

Improper grievance procedure can amount to constructive dismissal

In this case the employer had operated a grievance process under which the employee's appeal against the original grievance decision was not heard by a different manager and was rejected. The employee resigned, claiming constructive dismissal. He argued that the employer had breached the implied term of trust and confidence. The EAT commented that the right to an impartial appeal of a grievance is an important feature of the ACAS Code and the employer's own procedure. It was "not easy to see" why an organisation the size of the employer could not have provided a second, uninvolved, manager to hear the appeal.

(Blackburn v Aldi Stores, EAT)

Is stopping permanent health insurance at age 55 discriminatory?

An employee had been in receipt of benefits under a permanent health insurance (PHI) scheme, which stopped when he turned 55. He had previously been denied the opportunity to join another scheme, which would have entitled him to receive benefits until age 65, because he was already receiving payments under the old scheme and his employer and the new insurer could not reach agreement about his case. The Tribunal held that the employer had discriminated against the employee on the grounds of his age and such discrimination could not be justified as a proportionate means of achieving a legitimate aim. The employer tried to argue that its aim was to admit as many employees into its pension and PHI schemes as possible, but the Tribunal rejected this argument as the evidence showed that the offer of PHI benefits was selective. Interestingly, budgetary constraints in funding the PHI scheme were not to be taken into account.

(Whitham v Capita Insurance Services, Employment Tribunal)

For more information please contact Kirsti Laird, Senior Associate (Qualified in New Zealand)

T: +44 (0)20 7427 6411