May 2015 - Warnings given in 'bad faith' cannot be relied upon in any circumstances

Dan HobbsClare Harrington

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Five from 5

5 Essex Court have been writing their popular ‘Five from 5’ employment bulletin for seven months, offering 5 bite size pieces of topical employment news, once a month.

Under our new partnership, Clare Harrington and Dan Hobbs, employment barristers from 5 Essex Court took over as editors of our employment law blog in April 2015. They add their ‘Five from 5’ articles to our blog, and will be adding other matters of interest also. Most months one of these articles will also link you through to a longer article on their own blog Five from 5 - In Depth.

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This month's '5 from Five'

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Warnings given in 'bad faith' cannot be relied upon in any circumstances

Alex Ustych

The Court of Appeal has determined that warnings issued in bad faith are invalid (regardless of surrounding circumstances) and has warned the EAT and Tribunals about taking ‘inappropriate shortcuts’

In Way v. Spectrum Property Care Limited [2015] EWCA Civ 381, the Claimant alleged that a final written warning was issued in bad faith and so could not be relied on to fairly dismiss him. The ET refused to hear evidence on this point and his unfair dismissal claim failed. The EAT decided that the ET erred by refusing to hear the evidence, but rather than remitting the case to the ET, it ‘assumed’ that bad faith was made out but found that circumstances surrounding the warning/dismissal entitled the Respondent to rely on that warning regardless.

The Claimant appealed to the COA on the basis that the EAT misunderstood the impact of bad faith on a warning (which cannot be relied on under any circumstances) and that the EAT further erred by refusing to remit the case to the ET.

The appeal was allowed on both grounds. The COA agreed that the EAT’s judgment “has a degree of illogicality” and that a warning given in bad faith cannot be taken into account by an employer when seeking to justify a dismissal which, but for the warning, would not have occurred (in line with Sandwell Metropolitan Borough Council [2013] EWCA Civ 135).

The COA suggested that a warning’s validity is governed by whether bad faith objectively did or did not exist in the first place.

The COA also found that, even if the warning could have been taken into account, the case should have been remitted to the Tribunal as there was an “open question” as to the outcome of the claim.

Christopher Clarke LJ generally warned (in the ‘Postscript’ at par. 58) against the practice of Employment Tribunals and the EAT taking “inappropriate shortcuts” when, respectively, trying to limit the scope of investigation to what is strictly relevant and when trying to avoid the remission of cases.

Alex Ustych represented the Claimant/Appellant in the EAT and COA.

 

Don’t go changing… the limits of the unilateral power of variationDigit Image - 2

Catriona Hodge
As an exception to the general rule that contractual variation must be made by consent, it is recognised that an employer may reserve the power unilaterally to vary the terms of the employment contract (see Wandsworth LBC v Da Silva [1998] IRLR 193). To be effective, the clause must be clear and unambiguous.

The potential latitude that this power affords an employer was demonstrated by the case of Bateman v Asda Stores Ltd in which the EAT recognized the right of the employer unilaterally to amend its staff handbook in order to introduce a new pay structure. However, two recent cases in which the employer has sought unsuccessfully to rely upon a variation clause illustrate its limits.

The claimant in the case of Hart v St Mary’s School was employed part-time as a learning support teacher at the respondent school where she was required to work three days a week. When the respondent demanded that she spread her working hours over a five-day period she resigned claiming constructive dismissal. The Respondent sought to rely upon a clause within the contract which provided that the claimant’s working hours “may be subject to variation depending upon the requirements of the School Timetable.” However, the EAT held that the clause was not sufficiently clear to confer on the employer a unilateral power of variation.

In the case of Sparks and others v Department for Transport, the claimants sought a declaration that their employer had committed an anticipatory breach of contract in deciding unilaterally to introduce a new policy for attendance management. The new procedure brought forward the trigger points for instigating disciplinary action. Although the respondent had reserved the right unilaterally to alter the employment contract, the power was expressly limited to changes that were not detrimental to an employee. As these changes were detrimental to the claimants, the court found that they fell outside the scope of the variation clause.

 

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What will a Conservative government mean for employment lawyers and the Employment Tribunal system?

Clare Harrington

We can probably be reasonably sure of two things: –

Firstly, that there will be no government led fundamental change to the fees scheme introduced during the last parliament. Whilst references were made to an overhaul of the scheme by the Labour Party (with some commentators interpreting this as potentially signalling the return to no fees in the employment tribunal), no such undertaking was made by the Conservatives. Rather, the Conservative election manifesto focused very much on the continuing drive for efficiency and delivering a £375 million modernisation of the courts system with aims of ‘reducing delay and frustration for the public’.

Secondly, that the new government’s focus appears to be on Europe with its manifesto pledge to scrap the Human Rights Act and introduce a British Bill of Rights with the effect of breaking the formal link between British courts and the European Court of Human Rights and making the Supreme Court the ultimate ‘arbiter of human rights matters in the UK’.

 

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Holy Orders not enough for the Employment Tribunal!

Victoria von Wachter
In Reverend Sharpe v Bishop of Worcester, the Court of Appeal found that the Reverend was neither an employee nor a worker. The equivalent of the 'Ready Mix Concrete test' was not satisfied in that the Claimant did not have to be told what to do, when to do it or how to do it. It was up to the Reverend as to how he set about the cure of souls.

The court was more troubled by the nature of payment and found that the stipend paid was non negotiable and moreover was stopped if the Claimant was not performing his duties by reason of sickness – and therefore eligible for SSP. The court came to the view that this was akin to a contractual arrangement.

Also of note was the fact that naughty Reverends are dealt with by means of a complaints process which could lead to a 'penalty' as opposed to a 'disciplinary'.

However, the Employment Tribunal found that when all was said and done, there was no contractual relationship between Mr Sharpe and the Bishop (in his corporate capacity), the whole arrangement being one that operated by consent and goodwill. This also militated against the Reverend being a worker with whistleblowing protection (s43(K) ERA). Furthermore the Reverend had an unfettered right to delegate.

The case was interesting in that the more informal style of management and control exercised by the church was allowed to trump the intuitive assessment that this was a Claimant who was under the direction and control of his Bishop. Canon law which loosened the strings between the rector and his Bishop was preferred over Employment Statute.
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The “Public Interest” may be wider than you think

Sarah Keogh

The EAT has given the first guidance as to the test to be applied when considering the words “in the public interest” inserted into s43B Employment Rights Act 1996 in 2013. In Chesterton Global Ltd v Nurmohamed UKEAT/0335/14/DM, an employment tribunal found that an employee complaining about the manipulation of accounts which would affect his commission and that of around another 100 senior managers, reasonably believed that his disclosures were both protected and in the public interest. The EAT dismissed the employer’s appeal:

1. The correct question for the tribunal was not whether the disclosures were in the public interest per se, but whether the employee reasonably believed them to be in the public interest.

2. The correct approach to whether the belief was reasonable was the same as that set out in Babula v Waltham Forest College [2007] ICR 1026 in relation to whether an employee reasonably believed a disclosure to fall into a protected category, namely it must be objectively reasonable even if it turns out to be wrong.
The intention of Parliament in adding the words “in the public interest” was to prevent an employee relying on a breach of his own contract affecting him personally but without any wider public interest implications.This did not prevent all claims based on a breach of an employee’s own contract from being in the public interest. A relatively small group may be sufficient to satisfy the test. What is sufficient is necessarily fact sensitive. In the present case, 100 senior managers were a sufficient group of the public to bring the matter into the public interest.
The practical implications of this decision may be significant, and will cause uncertainty for employers. Provided a claimant can point to a breach affecting not only himself but also other employees, this opens the door to a whistle blowing claim. How small a group will suffice, and in what circumstances, will no doubt be the subject of further litigation. Bearing in mind the employee no longer needs to show that he has made a disclosure in good faith (save in relation to damages), we may see claims where disclosures relating to other employees are cynically used to get past the “public interest” hurdle.
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