Welcome to the July edition of the ESP Solicitors monthly newsletter. In this update, we delve into nine significant employment cases, offering key takeaways and insights for HR professionals. To receive this update directly in your inbox, please sign up via the box on the right.

EAT confirms that future claims can be covered by settlement agreements

Employers wishing to avoid the risk of being sued at the employment tribunal may offer departing employees a binding settlement agreement in full and final settlement of most claims.

Settlement agreements must follow a certain format and the employee is required to take legal advice before signing one.

In recent years, several legal cases have considered the extent to which settlement agreements are able to validly settle future unknown claims. These are claims based on facts or circumstances which had not occurred and/or were not known to the parties at the point the agreement was signed.

The law regulating such agreements provided that such agreements must settle: ‘particular complaints’. There have since been arguments as to whether future unknown claims are caught within this term.

Earlier this year, in Bathgate v Technip, the Scottish Court of Session held that future unknown claims could be settled using a settlement agreement, provided that the wording of the waiver was sufficiently clear.

Facts: In the recent case of Clifford v IBM, this position has now been followed by the Employment Appeal Tribunal. In this case, the employee was absent from work owing to disability from 2008 onwards. In 2013, he entered into a settlement agreement under which the Employer agreed to place him on its Disability Plan. The plan gave the employee disability salary payments. Increases under the plan were discretionary.

Under the terms of settlement, the Claimant waived the right to bring various specified claims, including disability discrimination claims, whether or not these were or could be in the contemplation of the parties at the date the settlement agreement was signed.

The Claimant brought a claim of disability discrimination on the basis that payments had never increased under the Plan. The tribunal struck out his claim, holding this was a future claim but was clearly barred by the terms of the settlement agreement. It made no difference that the Claimant remained in employment.

Take-away: This case is a reminder that it is possible to settle future unknown claims using a settlement agreement, however, the wording used is of crucial importance. It needs to clearly and expressly state that it covers claims which were not or could not be in the contemplation of the parties when they signed the agreement.

1. Employee awarded almost £90,000 for associative discrimination

Overview: Employees are protected under the Equality Act 2010 from being treated less favourably because of a disability (section 13 Equality Act 2010). The disability need not be the employee’s disability; it can be another person’s. If an employer treats an employee less favourably because of the disability of someone else (normally, but not necessarily, someone ‘associated’ with the employee), this will be direct disability discrimination known as ‘associative discrimination’.

In Graham v Gravity Supply Chain Solutions and another, the employment tribunal held that Mr Graham had been directly discriminated against because of his wife’s cancer diagnosis. Cancer is one of the conditions automatically regarded as a disability under the Equality Act.

Facts: Mr Graham began working for Gravity Supply Chain Solutions as head of business partnerships in 2015, initially at its Hong Kong office, and from April 2021 for its UK entity.

In 2019, Mr Graham’s wife was diagnosed with stage 4 breast cancer at a time when he and his family were about to relocate to the US to lead the American sales operation. His manager, the chief executive, suggested Mr Graham return to the UK to support his wife’s treatment.

He agreed that the Claimant could work flexibly to meet the changing needs of his wife’s care and support their son. But, on closer examination, the tribunal found that no adjustment had been made at all. The tribunal heard that, to manage the demands of multiple time zones, the Claimant was routinely working from 6:00am often until the early hours of the morning. Over the summer of 2021, Mrs Graham’s health deteriorated further, and the tribunal heard that “the claimant’s resilience eventually ran out” in August 2021. Mr Graham sent a message to his manager explaining the risk to his health from the lack of sleep. His manager responded by suggesting he took some time off.

Mr Graham did so, initially taking annual leave and then sick leave. The tribunal found that Mr Graham’s access to work emails and computer network was stopped and did not accept that this was done to support him. It was part of a “…wider plan to impose changes on his employment and remove him from his role, and potentially the business…”.

Mr Graham went off sick. His employer failed to pay him the full sick pay he was entitled to under his contract of employment; blocked his access to work email systems; and proposed to demote him. The employer later dismissed him.

Decision: The tribunal found that Mr Graham’s wife’s disability was a material and significant reason for his employer’s actions. The three detriments claimed and the dismissal all flowed from the employer’s underlying perception about what her disability meant to the business. The claims succeeded and Mr Graham was awarded almost £90,000 in compensation (unfair dismissal of £10,400, direct disability discrimination of £66,900 and accrued but untaken holiday pay amounting to £12,600).

The tribunal judgment said: “There is nothing in the Respondent’s contentions that the Claimant was poorly performing elsewhere that omits the idea of resuming his work, responsibilities or pay at a later date. The only context in this case that could possibly change in the future, in a way that might mean the changes imposed were temporary, is Mrs Graham’s disability. This belies a particular underlying insensitivity in the context of her terminal cancer…”

Takeaway: Not only is it good employee relations practice to support employees in difficult circumstances, but the case above demonstrates how a dismissal can be unfair, detriments can be attributed to, and disability claims can arise where employers are manifestly insensitive to employees in such situations. Such claims can be potentially costly and time-consuming for employers as indicated above.

2. Changing employee’s travel requirements was unlawful sex discrimination

Overview: The requirement to travel for a job is usually something that is made clear at the start of employment and specifically referred to in an employment contract. However, what happens if an employer’s expectations for employee travel change?

Facts: In Perkins v Marston (Holdings) Limited  the Claimant was a senior manager based in the Respondent’s offices in Lancashire. She managed employees in the North-West and also at one of the Respondent’s offices in Essex. She initially managed the Essex-based employees remotely. The Respondent informed her she would need to travel to Essex as part of her role. She could not do this owing to childcare issues. She refused to agree to this change and was eventually made redundant. She claimed unfair dismissal and indirect sex discrimination.

Decision: The tribunal held that the requirement for the Claimant to travel to Essex was indirect sex discrimination. It was a requirement which placed women (who were more likely to have childcare responsibilities) at a disadvantage and placed the Claimant at a disadvantage. The Respondent attempted to justify the requirement by arguing that it was a proportionate means of achieving the legitimate aim of the: “smooth running of the business”. These arguments were not accepted. The Claimant had managed the Essex office remotely without any issue for 10 months previously.

Take-away: Employers considering changing travel requirements for employees should start by looking at the contract of employment. It is important to understand what was agreed about travel at the outset of the relationship. Even if the contract includes some flexibility, consider whether it is a reasonable requirement in the employee’s specific circumstances. Common pinch-points are childcare issues and disability. If the contract does not include the required flexibility, then, as in the Perkins case, the employee’s agreement to any amendments will be needed.

If the employee refuses to amend the contract, then the employer needs to think carefully about whether it wants to push ahead (which would involve dismissing the employee and offering re-engagement on new terms containing the necessary travel flexibility) or whether to stick with the status quo. In Perkins, pushing forward without a justifiable reason resulted in discrimination and unfair dismissal. Further, the new Labour government have indicated that they are considering banning the practice of “fire and re-hire” completely, so employers should exercise extreme caution when seeking to change contractual terms without the employee’s consent. They may need to offer financial or other perks to incentivise employees, or look at recruitment for a new role.

3. Contractual changes between employer and third party do not affect employee perks

Overview: Employers often provide benefits to employees which are not directly administered by the employer themselves but by third-party providers. Private Health Insurance and Company cars are common examples. The employer will state in the employment contract that the employee is entitled to the named benefit. The employer will then have a separate commercial agreement with the benefit provider to facilitate this. The employee will not be party to this agreement and will often be entirely unaware of it.

A recent Employment Appeal Tribunal case looked at whether the terms of a commercial agreement between an employer and a third-party benefit provider could have a direct impact on the employees themselves.

Facts: In Adekoya v Heathrow Express Operating Company, the Claimants were offered a discounted travel card when they started work for the Respondent. The card was issued under the Association of Train Operating Companies Agreement (“ATOC Agreement”). The ATOC Agreement stated that, if they were made redundant after five years or more, the employee would get lifelong travel benefits. The travel benefits were operated by the Rail Delivery Group, a third-party provider separate to the Respondent. The Rail Delivery Group had a separate Reciprocal Agreement with the Respondent giving them access to the travel benefits.

The Rail Delivery Group told the Respondent that they were no longer going to provide lifelong travel benefits to employees made redundant after five years. The Respondent did not inform the Claimants of this at the time. The Claimants (who all had over five years’ service) were all offered, and accepted, voluntary redundancy.

Following their redundancy, the Respondent refused to honour the lifelong travel benefits. The Claimants claimed breach of contract.

Decisions: The tribunal, at first instance, found that the ATOC Agreement formed part of the Claimants’ employment contract with the Respondent. It also held that the Reciprocal Agreement between the Respondent and Rail Delivery Group was also incorporated, even though the employees were not a party. The Reciprocal Agreement included the right of Rail Delivery Group to withdraw the benefit. The tribunal held that this term also gave the Respondent the contractual right to remove the benefit from the Claimants.

On appeal: The EAT disagreed with this conclusion. The Claimants did not know about the Reciprocal Agreement. It was not in their contracts or in the ATOC Agreement. Its terms were not, therefore, incorporated into the Claimants’ contracts and could not be relied upon to remove the travel benefit. The Respondent was therefore liable for breach of contract.

Take-away: If employers receive updates or changes to agreements provided to their employees by third party providers, it is incumbent that they inform the relevant employees without delay. Employers should amend contracts accordingly where relevant, especially if benefits are being removed. If not, like in this case, employers could be liable for providing any benefits withdrawn themselves.

4. When are redacted documents disclosable at Employment Tribunals?

Overview: The employment tribunals have adopted the civil court rules in respect of disclosure and inspection of documents. Rule 31.6 of the Civil Procedure Rules requires a party to disclose the documents on which they rely, or which adversely affect their own or another party’s case and those which support any other party’s case. Information can only generally be redacted if it is irrelevant or privileged.

In the recent case of Virgin Atlantic Airways v Loverseed and others, the Respondent argued that redacted information in a document was not disclosable because it was not relevant to the case. The Employment Appeal Tribunal upheld the tribunal’s decision that it should be disclosed in full.

Facts: The Claimants (all pilots) were made redundant as a result of the COVID-19 pandemic. All parties agreed that a redundancy situation had arisen. However, the Claimants disputed the fairness of their selection. They claimed that the selection criteria were not clear. They argued the process was designed to select those in the ‘middle bracket’ of pilots; the most expensive but not the longest serving.  Some claimed indirect age and or sex discrimination as well as general unfairness.

As part of the disclosure process, the Respondent disclosed different versions of an internal document titled: ‘Velocity 21’. It contained financial information about pilot costs. It included comparisons; looking at the different savings achieved from changes to terms and conditions or from reducing numbers. The Respondent redacted pilot costs and potential savings in these documents. It claimed that the redacted information was irrelevant so was not needed for fair disposal of the proceedings.

Decision: The Claimants made an application for specific disclosure of the unredacted documents. The tribunal granted this. It held that the unredacted documents were relevant to the issue of fair selection. They were also relevant to any argument of justification for the indirect discrimination claims. The Respondent appealed.

On appeal: The EAT dismissed the appeal. It held that Rule 31.6 of the Civil Procedure Rules requires a party to disclose not just the documents it relies on, or which support any other party’s case. It must also disclose those that harm their own or the other party’s case. The EAT found that the documents were relevant. They had a bearing on the issue of what the selection criteria were, whether they were fair criteria and whether they were influenced by costs savings (potentially harming the Respondent’s pleaded case that they were not).

Comment: This case proves the long-established principle that all documents which are relevant to proceedings are disclosable. With such a clear relevancy here, it is perhaps surprising that the Respondent sought to appeal this point in the first place.

5. The importance of early consultation in redundancy cases

Overview: Employers who need to make only a small number of redundancies must make sure that their consultation process does not end up being a ‘tick box’ exercise. Employers are expected to consult, at an early stage, about all aspects of a proposed redundancy, including selection criteria and pooling.

Facts case 1: In Joseph de Bank Haycocks v ADP RPO UK Limited, the EAT held that a redundancy dismissal was unfair because of the lack of consultation at an early stage. In this case, much of what was missing from the consultation process (including selection criteria and scoring) was produced at appeal. However, the EAT held that the dismissal was unfair, noting that: ‘whilst the appeal could correct any missing aspect of the individual consultation process (e.g. the provision of the claimant’s …scores), it could not repair [the] gap of consultation in the formative stage’.

Facts case 2: This focus on the start of the redundancy consultation process as being key to the overall fairness of the result was replicated recently in the case of Valimulla v Al-Khair Foundation. In Valimulla, the Claimant worked as a liaison officer covering the North-West of England. Other employees carried out a similar role in different locations. During the pandemic, work for liaison officers decreased across the country. The Respondent placed the Claimant at risk of redundancy in a pool of one. The other liaison officers were not placed at risk. Three consultation meetings were held. There was no consultation about the appropriateness of the pool. The Claimant was dismissed and claimed unfair dismissal.

The employment tribunal held that the Claimant had been fairly dismissed for redundancy. The Claimant appealed.

The Employment Appeal Tribunal, allowing the appeal, held that consultation on redundancy had to take place at a time when it could make a difference. The Respondent had not consulted with the Claimant about the pool for selection. The tribunal had also failed to consider whether choosing a pool of one was a reasonable approach in this particular case.

The EAT substituted a finding of unfair dismissal (on procedural grounds) because of the failure to consult about pooling. It remitted the question whether it was reasonable for the Respondent to have applied a pool of one to a different tribunal.

Take-away: This case is a reminder that employers should involve employees and seek their views in redundancies early enough in the process to make a difference.

6. Employee disability must be assessed at the point alleged discrimination occurred

To bring a claim for disability discrimination, an employee must be able to show that they (or someone they are associated with) is disabled. But what period of time should be looked at? People can have various conditions which may or may not meet the statutory test for disability at any given time (that is: a condition which has a substantial adverse impact on their ability to carry out day to day activities; and/or being sufficiently long term; – 12 months or greater).

In Ahmed v DWP, the Employment Appeal Tribunal held that the tribunal had erred by assessing whether the Claimant was a disabled person using a three-day date window. The discrimination allegations spanned several years.

Facts: The Claimant had a period of absence from work in September 2020. He alleged that this absence was owing to his health conditions (a blood disorder called PNH and, separately, depression). He alleged various acts of disability discrimination arising from this absence, spanning 2020, 2021 and 2022 and culminating in his dismissal.

Decisions: It was accepted by the parties that PNH was a disability. Whether depression was a disability remained a live issue. A preliminary hearing was held. The tribunal assessed the position for the impairment of depression between 22 and 25 September 2020. It found that the Claimant was not disabled by reason of depression in that window.

The Claimant appealed. The EAT held that, whilst the three-day date window used by the tribunal to assess whether the Claimant’s depression was a disability was the correct window for one of his claims (discrimination arising from a disability), it was too narrow for all of the others.  The relevant time for assessing disability is the date of the alleged discriminatory acts. In this case, these took place on occasions over several years, not three days.

7. Employers – be careful about how you act post resignation

Overview: If an employee submits their resignation this is a clear indication that the employment relationship is coming to an end. Unless the employee is resigning because of some historic poor behaviour or discrimination on the part of the employer, the risk of claims is low.

However, a recent employment tribunal case reminds employers that their behaviour following receipt of an employee’s resignation is important.

Facts: In Manjula v immigration and Nationality Services Ltd and IANS solicitors, the Claimant qualified as a solicitor in India before re-qualifying in the UK. Her UK employer obtained a sponsor licence for her, extended her work visa and employed her as a newly qualified solicitor. However, she then resigned to go to work for KPMG. She discussed the resignation with her supervisor and agreed to keep working for another two months (to help with handover of work).

However, when the Claimant told the Respondent’s director about her resignation, he slammed his hands on the table and shouted at her. He accused her of breaching his trust (by leaving once he had paid to extend her visa) and said that he would make her pay for this. He said (in an email) that he did not want her to continue to work; – she should hand in her notice immediately and that it was her last day. The Claimant was not paid any notice pay.

Decisions: The Claimant brought several tribunal claims including unfair dismissal which the tribunal upheld. It said the Claimant had been summarily dismissed for misconduct (i.e. ‘breach of trust’), but this was unfair as the employer did not genuinely believe in her misconduct or follow a fair procedure. The tribunal found that the real reason for dismissal was that the Respondent wanted to avoid her working (or needing to pay for) her notice period.

8. Sexual harassment after accepting or rejecting the sexual advances of another

Overview: Sexual harassment can take several different forms. It can refer to unwanted conduct of a sexual nature, which is what most people understand by the term. Under the Equality Act 2010, the term also has a wider meaning. It incorporates unwanted conduct which occurs because a person has either rejected or accepted the sexual advances of another.

A recent case highlights to employers that unlawful sexual harassment can occur in these wider circumstances as well.

Facts: In Merriman v Bugibba Independent, the Claimant was a doughnut decorator. She alleged that a male colleague had given her a bear hug and touched her bottom at work. After she complained about this incident, the colleague in question made derogatory remarks about her calling her a pot washer and swearing at her. The Respondent sided with the male colleague and eventually dismissed the Claimant.

Decision: The tribunal found that the Claimant had been sexually harassed. The ‘bear hug’ incident was clearly unwanted conduct of a sexual nature which had as its purpose or effect, violating the Claimant’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for her. It found that the actions of her male colleague after she had rebuffed his advances were also sexual harassment, being motivated by her rejecting him. The Claimant was awarded over £30,000 in compensation.

Take-away: Unwanted behaviour following the acceptance or rejection of sexual advances amounts to harassment, not just the original harassment itself. Employers need to consider this when such issues arise at work and understand that they may be liable for such actions of their employees under the Equality Act.

9. ‘Smell harassment’ – a workplace issue not to be sniffed at!

And finally, preventing harassment in the workplace is often a high priority for HR and covered in Training and policies. Unsurprisingly, there is no separate concept under UK law of ‘smell harassment’.

However, according to the Japanese newspaper ‘Mainichi’, there has been an increase (in Japan at least) in ‘smell harassment’ issues in the workplace. The newspaper reports that, as the weather in Tokyo gets hot and humid, the sweaty season has arrived.  Employees are taking to social media to complain about the impact that bad smells from their colleagues are having on their working life. One reported feeling ‘dizzy’ because of the body odour of their colleague.

The UK’s current laws on harassment do not make specific provision for smells. They may have the ‘effect’ of creating a ‘hostile’ environment but may not necessarily ‘relate to’ any characteristic protected under the Equality Act 2010. There is, however, a risk that unwanted smells could cause issues in the workplace, not least, to general employee morale.

In an extreme hypothetical case, an employee could resign and claim constructive unfair dismissal. Alternatively, an employer who broaches the issue of an employee’s body odour in an insensitive way could risk that employee taking offence, resigning and claiming constructive dismissal themselves.

Sometimes, bodily odour could be due to a specific illness and could be linked to an underlying disability which needs to be carefully considered. For example, a lack of showering and general dishevelment could indicate an employee’s depression which needs to be explored sensitively. In addition, a pregnant employee or one with certain types of Autism for example might be particularly affected by any malodours. Employers do also have a duty under the Health and Safety Act to ensure that ventilation, temperature, lighting, toilet, washing and rest facilities all meet health, safety and welfare requirements more generally.

As an employer, if you are facing unwanted bodily or other unwanted smells in the workplace, think about measures you can implement to reduce the likelihood of issues arising. For example: checking air conditioning and ventilation in the workplace; improving shower and sewerage facilities; and relaxing uniform rules during hot weather. Where it relates to an employee’s body odour, ensure to handle all issues confidentially and sensitively.