Welcome to the October edition of the ESP Solicitors monthly newsletter. In this update, we explore the new employment rights and 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.

1. Supreme Court re-instates injunction preventing Tesco from using fire and re-hire

Background: In 2007, Tesco re-organised its warehouses resulting in mass relocations. As an alternative to potential redundancy, Tesco negotiated with USDAW (the recognised trade union) that it would give any staff who stayed on and agreed to be relocated, a ‘Retained Pay’ payment which would be paid to them each month. Such ‘Retained Pay’ was described in their employment contracts as permanent. In 2021, Tesco attempted to remove Retained Pay by firing and re-hiring on new terms which excluded Retained Pay.

Litigation: USDAW initially obtained an injunction from the High Court preventing Tesco from terminating the contracts of employment. The High Court decided that the contracts of employment were subject to an implied term that Tesco could not terminate the contracts for the purpose of removing Retained Pay.

On appeal: this decision was overturned by the Court of Appeal which held that no such implied term existed. It found that Tesco had the right to give notice in the ordinary way, and the employees’ entitlement to Retained Pay would only last as long as the particular contract endured.

Appeal to Supreme Court: USDAW appealed this decision to the Supreme Court. The Supreme Court, re-instating the injunction and overturning the Court of Appeal’s decision, held that Tesco’s right to terminate the employment contract, by giving the requisite notice, was qualified by a term implied by fact that Tesco’s right to dismiss could not be exercised for the purpose of depriving employees of the right to Retained Pay. 

Analysis: Although fact-specific, this case illustrates that there are exceptional occasions where an employer’s ability to exercise an express term of the contract of employment (here, the right to terminate a contract by giving contractual notice), will be limited by an implied term.

It should be further noted that in the Employment Rights Bill, currently due for a second reading in parliament on 21 October, the government aims to restrict the circumstances in which employers can fire and re-hire employees even further; such that variations can only be relied on to mitigate serious financial hardship for the organisation. Although, if passed, this bill is not currently due to come into law until 2026, employers considering fire and re-hire should bear in mind that establishing clear financial grounds for any proposed variation will be likely to be immensely helpful.

2. EAT case confirms principle of indirect associative discrimination under s19 Equality Act 2010

Overview: Associative discrimination occurs when someone faces a disadvantage but does not hold the relevant protected characteristic themselves (such as age, race etc.). UK law already recognises direct associative discrimination and harassment. For example, in Coleman v Attridge Law, the European Court of Justice ruled that an employee could claim discrimination due to her child’s disability.
However, the position for indirect discrimination was less clear. Could an employee who suffered the same disadvantage as a protected group, but didn’t share the characteristic, make a claim for indirect discrimination under s19 Equality Act 2010? The recent Employment Appeal Tribunal decision in Rollett v British Airways confirmed that they could. Although separate legislation now covers this under s19A Equality Act 2010, the case remains useful.

Facts: In Rollett, a group of employees claimed indirect race and sex discrimination due to changes in their work schedules after a company restructure. The employees argued that the new schedule disadvantaged non-British nationals (more likely to commute from abroad, which would be indirect race discrimination) and women (more likely to have caregiving responsibilities, which would be indirect sex discrimination). Among the claimants were a male caregiver and a British national living abroad. Neither shared the protected characteristic of the group but claimed they suffered the ‘same disadvantage’.

Decision: The tribunal agreed that s19 Equality Act 2010 should be interpreted to allow for associative indirect discrimination, following the EU law principles set out in CHEZ Razpredelenie Bulgaria AD v Komisia za zashita ot discriminatsia. The tribunal upheld the claims, even though the claimants didn’t have the specific protected characteristics.

On appeal: British Airways appealed, arguing the tribunal had overstepped in its interpretation of s19. However, the Employment Appeal Tribunal dismissed the appeal.

Current law: As of January 1, 2024, the principle in CHEZ is directly incorporated into UK law under s19A Equality Act 2010, confirming that a person can claim indirect discrimination even if they don’t share the relevant protected characteristic so long as they suffer the same disadvantage as those who do.

3. Good practice to wait until after mergers before dismissing employees on the grounds of capability (long term ill health)

Overview: Where an employer knows (or reasonably ought to know) that an employee is disabled, the duty to make reasonable adjustments is engaged. Employers must take reasonable steps to remove any disadvantage at which an employee is placed by reason of their disability. A recent EAT case looked at whether, where an adjustment was only raised at appeal stage, this could amount to a failure to make reasonable adjustments. 

Facts: In Cairns v Royal Mail Group, the Claimant was employed as a postal delivery man on outdoor duties. A knee injury and osteoarthritis (a disability) meant he could no longer work outdoors. He moved to a supernumerary indoor role for a period. The Respondent began a consultation to dismiss him on grounds of ill-health retirement arguing that he could no longer do his outdoor job. At the time, no other indoor vacancy existed. The Claimant was subsequently dismissed.

Claims and Decision: The Claimant claimed unfair dismissal. He also claimed that failing to wait, at appeal stage, for the imminent merger of the Claimant’s postal centre with another centre (which would have created new indoor roles) was a failure to make reasonable adjustments and discrimination arising from a disability. The employment tribunal dismissed all claims, holding that there comes a time when a surplus job must come to an end.

On appeal: The Claimant appealed the outcome on discrimination. The Employment Appeal Tribunal, allowing the appeal, held that the tribunal had focused too much on the situation at the time of dismissal. In doing so, it had failed to consider an essential part of the Claimant’s case: that the Respondent ought, at the time of his appeal, to have kept him in employment so that he could be assigned to an indoor role on the merger of the two postal offices.

Analysis: This case raises an interesting point, that if you know that your organisation is due to expand in the near future, be it as a result of a merger or growth, you should consider managing any relevant employee relations issues in this new context or be prepared to face criticism for not doing so.

4. Anti-Islamic aspects of Claimant’s belief in English nationalism found not to be a protected belief under Equality Act 2010

Overview: Under the Equality Act 2010, employees have protection from discrimination on the grounds of their ‘religion or belief’. Whether or not a person’s views should be regarded as a ‘protected belief’ is often a contentious preliminary issue. Tribunals are guided by principles set out by the Employment Appeal Tribunal in Grainger v Nicholson, something which the EAT had to consider in a recent case involving a belief in English nationalism.

Facts: In Thomas v Surrey and Borders Partnership NHS Foundation Trust, the Claimant argued that his assignment had been terminated by the Respondent because of his belief in English nationalism. As a preliminary issue, the employment tribunal considered whether his belief was a ‘protected belief’ under Equality Act 2010. 

Decision: The tribunal held that, although many aspects of the Claimant’s belief in English nationalism would have been found to have been protected by Equality Act 2010, his belief included anti-Islamic beliefs. He believed that there was no place in British society for Muslims or Islam itself, and that Muslims should be forcibly deported from the UK. The tribunal held that his belief fell foul of the fifth criteria from Grainger v Nicholson: that the belief must be worthy of respect in a democratic society; must not be incompatible with human dignity and; must not conflict with the fundamental rights of others. The Claimant’s belief was therefore not protected. The Claimant appealed.

On appeal: The EAT agreed with the tribunal. UK law had to be interpreted, insofar as possible, in accordance with the European Convention of Human Rights (the Convention). Article 17 of the Convention states that a person cannot claim the protection of the Convention where to do so would allow the performance of any act “aimed at the destruction of any of the rights and freedoms” set out in the Convention. The EAT noted that forcible deportation of Muslims from the United Kingdom would undoubtedly amount to the destruction of their Convention rights. The language used by the Claimant fell within the grave forms of “hate speech”. The EAT held that, whilst the threshold for protection under the Convention, and therefore under Equality Act 2010, is low, the tribunal did not err in finding that the Claimant’s beliefs did not pass that threshold.

5. Whistleblowing, can you claim both automatic unfair dismissal and whistleblowing detriment? The Jury’s still out

Overview: Employees have two distinct claims they can bring in relation to whistleblowing: (1) a claim for whistleblowing detriment under s47B Employment Rights Act 1996, and (2) automatic unfair dismissal on the grounds of whistleblowing. There has been some uncertainty in recent times as to whether an employee who claims that they have been dismissed on the grounds of whistleblowing can bring, in addition to an automatic dismissal claim, a claim against their employer that the act of dismissal was a detriment on the grounds of whistleblowing. The distinction is an important one as the remedies for each claim are different. 

In Timis and Sage v Osipov, he Court of Appeal held that an employee could claim the detriment of dismissal against his employer on the basis that the employer was vicariously liable for the act of the dismissing officer. The Employment Appeal Tribunal reached the opposite conclusion in Wicked Vision v Rice. The recent case of Treadwell v Barton Turns Development followed Osipov.

Facts: In Treadwell, the Claimant was dismissed by one of the Respondent’s directors. She claimed automatic unfair dismissal on grounds of whistleblowing against the Respondent. She later applied to amend her claim, to add a claim of whistleblowing detriment under s47B Employment Rights Act 1996 against the Respondent. The detriment relied upon was the decision taken by one of the Respondent’s directors to dismiss. She claimed that the Respondent was vicariously liable for this act of detriment. She did not seek to bring a claim of detriment against the dismissing officer as an individual. The employment tribunal refused the amendment. The Claimant appealed.

On appeal: The Employment Appeal Tribunal, allowing the appeal, held that it was bound by the decision of the Court of Appeal in Timis and Sage v Osipov which held, at para 91:

“It is open to an employee to bring a claim under section 47B (1A) against an individual co-worker for subjecting him or her to the detriment of dismissal, that is for being a party to the decision to dismiss and to bring a claim of vicarious liability for that act against the employer under section 47B (1B). All that section 47B(2) excludes is a claim against the employer in respect of its own act of dismissal.”

The EAT held that it was not bound to follow the opposite conclusion reached by the EAT in Wicked Vision v Rice. This case is, itself, is currently on appeal to the Court of Appeal where we should hopefully obtain some clarity. 

6. Workers (Predictable Terms and Conditions) Act 2023 shelved
It has been confirmed that the Workers (Predictable Terms and Conditions) Act 2023 will not be brought into force this autumn, as originally expected. The Act gave workers with uncertain hours the right to request predictability about their working days and times, the number of hours worked, and the length of their contract. The Act received Royal Assent in September 2023 and ACAS had published a draft Code of Practice on handling requests made under it. This now all looks to have been shelved.

However, the idea itself is likely to live on. A spokesperson for the Department of Business and Trade gave the following statement to Practical Law: “We will introduce a new right to a contract that reflects the number of hours regularly worked as part of our significant and ambitious agenda to ensure workplace rights are fit for a modern economy, empower working people and deliver economic growth.” This statement is in-line with the briefing note which accompanied the King’s Speech in July, where proposed legislation “banning exploitative zero-hours contracts” was linked to “ensuring workers have a right to a contract that reflects the number of hours they regularly work”. 

Rather than muddy the waters by having two separate legal mechanisms for requesting predictability, the government has decided to scrap the one it inherited and move forward with new legislation, which will form part of its Employment Rights Bill, currently due for its second reading in Parliament on 21 October 2024.

7. Employers – draft your contracts carefully!

Overview: Most employers use standard contractual documentation which is issued to new recruits without much thought. A recent Court of Appeal decision, relating to a commercial contract, reminds us that a lax approach to contractual wording can have big implications, and not just in a commercial context.

Facts: In Cantor Fitzgerald v Yes Bank, the Claimant had a contractual agreement with the Defendant under which it was entitled to commission if it found financing for the Defendant in certain, specified circumstances. The relevant phrase was “private placement, offering or other sale of equity instruments”. There was a public sale of equity. The Claimant claimed commission. The Defendant alleged that no commission was due, arguing that the adjective ‘private’ at the start of the list qualified the whole list and not just ‘placement’. The Court of Appeal agreed with the Defendant. The Claimant was not entitled to commission.

On appeal: The Court of Appeal concluded that, unless something in the drafting of the list suggests otherwise, the reader will naturally tend to assume that an adjective or determiner at the start of a list qualifies the entirety of it. In this case, the word ‘private’ applied not just to ‘placement’ but separately to ‘offering’ and ‘other sale of equity instruments’. The case stood.

Take-away: Employers should take the time to check the use of qualifying terms in lists in any key employment documents. Adjectives should not be used at the start of a list unless they are intended to be applied to the full list. Here are some other top tips to avoid wording mishaps in employment and settlement documentation:

• Be careful before making any list definitive. Consider using the phrase ‘including, but not limited to’ when drafting lists. 

• If a provision requires all aspects of a sub-clause to be satisfied, include the word ‘and’ between each sub-clause rather than ‘or’. 

• Make it clear whether clause headings are to be considered as being part of the contract. The same goes for schedules and appendices.

8. Employment Appeal Tribunal looks at test for justification in indirect discrimination claims

Overview: Indirect discrimination occurs where an employer has a provision, criterion or practice (known as a ‘PCP’) which places people with a certain protected characteristic, and also places the person complaining, at a particular disadvantage when compared to people without that characteristic. An example might include a restrictive working pattern which women (who are acknowledged to statistically take the higher childcare burden) find more difficult to comply with than men. An employee impacted by this work pattern could allege indirect discrimination.

Employers facing an indirect discrimination claim can defend the claim if they can justify the unequal treatment as being a proportionate means of achieving a legitimate aim. The Employment Appeal Tribunal took a look at the test for justification in the recent case of Hilton-Webb v Minis Childcare.

Facts: The Claimant raised multiple complaints of disability discrimination. She suffered from a visual impairment which amounted to a disability. The tribunal found in her favour in relation to a claim of indirect discrimination relating to the provision of printed documents in small fonts. The Respondent asserted that it had printed documents in small fonts for reasons of management efficiency. The tribunal held that printing in small fonts was a PCP pursued by the Respondent. It placed the Claimant and those with her disability at a substantial disadvantage when compared with those who were not disabled. On the issue of justification, the tribunal held that: ‘there is simply no objective justification for this. There is no legitimate aim, and it cannot be proportionate when the simple thing to do would be to provide documents in larger font’. The Claimant’s claim succeeded.

On appeal: The Respondent appealed. The EAT set out a helpful reminder of the different elements of the justification defence for indirect discrimination:

1. The Respondent must assert and establish the aim.
2. It is for the tribunal to decide whether the aim is legitimate.
3. The Respondent must establish that the PCP was a means of achieving that aim.
4. It is for the tribunal to decide whether the adoption of the PCP was proportionate to achieve the aim.

Take-away: Reviewing the tribunal’s reasoning in this case, the EAT held that the reasons did not explain why the tribunal stated that there was ‘no legitimate aim’. The Respondent had clearly put forward management efficiency as their reason for using small font sizes, and management efficiency had been found to be a legitimate aim in relation to another of the Claimant’s claims. The claim was remitted back to the tribunal for reconsideration.

9. High Court rules that employee whose duties were re-assigned was constructively dismissed

Overview: Contracts of employment often include a provision stating that employers can alter an employee’s powers and responsibilities. A recent High Court decision reminds us that such clauses are not without limit, and must be exercised in such a way so as not to undermine trust and confidence in the employment relationship.

Facts: In McCormack v Medivet, the Claimant was employed as Director of Clinical Operations. A new CEO informed her that a restructure was being carried out and that she would be moved to the newly created position of Chief Clinical Officer. The Claimant was not consulted about this change and, following the announcement, many of her previous duties as Director of Clinical Operations were taken away from her. The Respondent indicated that she would be placed into the new role of Chief Clinical Officer in due course. In the event, this did not happen. The Claimant went off sick and resigned. She brought a claim in the High Court for breach of contract, alleging that the Respondent’s actions in reallocating her responsibilities amounted to a fundamental breach of contract. 

Decision: The High Court held that the Respondent should have exercised its discretion to change the Claimant’s responsibilities honestly, rationally and for the purpose for which they were conferred. Actions had to be taken in good faith and decisions underpinned by logic. The Court found that the Respondent had gone beyond the limits of its own variation clause in the way in which it had gone about making changes. The Claimant had not been consulted with in advance, and the changes were made on the basis of a very brief assessment of the work that the Claimant had been doing. The Respondent’s conduct also breached the implied term of mutual trust and confidence. The Court held that both breaches were fundamental, and the Claimant had been entitled to resign in response to them.

Take-away: This case reminds employers that they need to take care when relying on express contractual variation clauses. Clear evidence of the business case for any change being necessary should be gathered. Consultation should be carried out at an early stage. Employers must ensure that any unilateral change (relying on a variation clause) does not breach the implied duty of mutual trust and confidence. Breach of this term is always fundamental and would entitle an employee, as happened in this case, to resign and bring a claim.

10. And finally – can a name alone be sexual harassment?

Facts: A warehouse worker has lost his discrimination claim after complaining about his boss having the name ‘Willy’. In Aylmer v Dnata Catering, the Claimant objected to his boss, William McGinty, referring to himself as ‘Willy’. The Claimant asked his boss to avoid using the name because of its other common use as a slang term for penis. He said in an email to his boss: “If you don’t remove it and keep insisting on being called that – I consider it as sexual harassment.” When his complaints were not followed up, he claimed that he had been victimised on the basis that his initial complaints related to sexual harassment. 

Decision: Unsurprisingly, the tribunal rejected his complaint. The employment judge ruled that Willy is a “common abbreviation” for William and the Claimant’s complaint about using that abbreviation was not a ‘protected act’ (on which the Claimant could base a claim of victimisation).

Take-away: Perhaps it is a sign of the times that a once common abbreviation of the name William could, today, be regarded by someone as ‘disrespectful’ and ‘less than human’. Luckily, common-sense prevailed before the tribunal and the allegation was dismissed.

Next Steps: Safeguarding and protecting your workforce from harm is one of your most important responsibilities as an employer. This includes preventing sexual harassment in the workplace. From 26 October 2024, the Worker Protection (Amendment of Equality Act) Act 2023 comes into force introducing a new positive duty on employers to take reasonable steps to prevent sexual harassment in the workplace.

You may be interested in our preventing sexual harassment in the workplace checklist. It intends to help HR professionals assess and decide upon the most appropriate steps to avoid harassment in the workplace and ensure the safety of employees. Download the checklist here.