Employment update

Changes to employment law

The draft SI amending the service requirement for unfair dismissal claims and the right to a written statement has been laid. Anyone entering new employment from 6 April will have to clock up two years' service in order to benefit from those rights. The service requirement was six months when the right not to be unfairly dismissed was first introduced in the 1970s, went up to two years in the 1980s and came down to a year in the 1990s. Most knowledgeable commentators think the impact will be minimal; there are plenty of rights for which there is no service requirement at all and no cogent evidence of an army of useless employees who have managed to stay in the job for over a year but less than two.

The measures announced in November 2011 as part of the Employment Law Review which are intended to streamline tribunals and which only require secondary legislation will also come into force on 6 April 2012, although the draft SI has not yet been laid. These include witness statements being taken as read, the removal of witness expenses, judges sitting alone in unfair dismissal cases and increases in the limit for untaxed fixed cost awards currently £10,000 and deposit orders currently limited to £500, although the power to increase this to £1,000 has now been taken. Other changes that will require primary legislation, including early conciliation, financial penalties for employers who flout basic standards, judges sitting alone in the Employment Appeal Tribunal and the formula for uprating tribunal awards and redundancy payments will evidently be implemented when parliamentary time allows.

The Fundamental Review of the Employment Tribunal Rules of Procedure, conducted by the outgoing president of the EAT, Sir Nicholas Underhill, is expected to recommend a much more extensive revised procedural code for employment tribunals that would come into force in 2013, following public consultation and subject to parliamentary approval.

The Consultation on Modern Workplaces closed in July 2011 but the government has not yet signalled what it wants to do and is likely to miss the April window. The proposals under consideration are about sharing parental leave more equally, extending the right to request flexible working and different ways of making the Working Time Regulations more compliant with the underlying EU law in relation to the interplay between annual leave and sick leave.

BIS recently stated that it will not implement the revised EU Directive on Parental Leave (No. 2010/18) in March 2012. Instead, the government will use the additional year's grace allowed by article 2(3) of the directive and implement the changes in March 2013, giving it a lot more time to consider and respond to the modern workplaces consultation. Consequently, the number of weeks of unpaid parental leave will increase to 18 per parent per child ahead of the other changes proposed in the consultation for 2015, such as a new flexible system of shared parental leave and an extension of the right to request flexible working. This area is clearly creating food for thought as they balance the wish to be family friendly with the need to respond to business calls for a reduction in red tape.

The consultations on redundancy and TUPE have just closed and from the questions it looks as though the government is considering whether there is scope to reduce the current collective rights. Late last year, they announced a forthcoming consultation about 'protected conversations' as a precursor to provisions setting out the circumstances in which an employer could start a conversation about the end of the employment without precipitating a constructive dismissal claim. Other ideas have been floated, including reducing the scope of some employment rights so as to exclude small employers, and the government is considering whether to remove the issue of fit notes from GPs and give it to an independent assessment panel instead so as to encourage a more robust approach to encouraging early return to work. How many of these ideas end up on the statute book will be an issue of politics rather than employment relations.

Contract claims and dismissal

What claims are open to employees who have been dismissed other than the (capped) statutory remedy for unfair dismissal? This is a question that has exercised our most senior court a number of times. The story started long before there was a statutory right not to be unfairly dismissed, in Addis v Gramophone Co Ltd [1909] AC 488, where the court held that Mr Addis had no right to recover for non-pecuniary loss, such as for hurt feelings on termination of employment. By 2003 when the concept of the implied term had been extensively developed '“ not least by the lords in cases like Malik v BCCI [1997] UKHL 23, where they held that employees could recover for loss of reputation or stigma damages '“ it was thought time to test the extent to which the implied term could also govern the manner of dismissal.

In Johnson v Unysis [2001] UKHL 1313, Mr Johnson, a long-standing senior employee, became mentally ill following his extremely unfair summary dismissal. His claim for compensation for the manner of his dismissal, which had led to his illness, failed. The majority of the court (with Lord Steyn dissenting) refused to overrule Addis because they did not consider that such a cause of action sat with the statutory unfair dismissal regime. So, if the claim was about the dismissal, then the remedy was limited to that provided by parliament: unfair dismissal. This came to be described as the Johnson exclusion zone.

Rather excitingly for common lawyers, it was almost immediately squeezed by the lords in Eastwood v Magnox [2004] UKHL 35 the following year. There they allowed a claim for damages for breach of the implied term by two employees who had become ill in consequence of a campaign of mistreatment in the context of a disciplinary process. The House of Lords held breach of the implied term related not to the dismissal itself but to the employer's conduct before it: so it fell outside the zone and damages could be and were awarded.

Last month the Supreme Court once again revisited the issue of the extent to which a dismissed employee can bring a common law action arising out of the circumstances of the dismissal. This time the contract claims were based on express terms. In the joined cases of Edwards v Chesterfield NHS Trust and Botham v Ministry of Defence [2011] UKSC 58, the claimants brought claims for damages for breach of contractual disciplinary terms arguing for recovery on classic contract principles on the basis that they would not have been dismissed at all if the employer had not breached the contractual procedure. They had succeeded in the Court of Appeal, so these were employer appeals.

It was a seven-member court and there are five judgments. Four, including the lead judgment by Lord Dyson, allowed both appeals albeit on three different grounds. So the appeals succeeded, although it is difficult to identify the ratio of the court's decision. Two of the lords dismissed one appeal (Edwards) and allowed the other (Botham) and one (Lady Hale, the lonely dissentient) dismissed both appeals so that both employees would have recovered on her reasoning. What we can discern is a policy approach upholding the supremacy of the statutory unfair dismissal regime. So much so that even a contractual disciplinary procedure has to be considered in that overall context, thus making employment contracts quite peculiar such that breach of the procedure is said (at least by some of the lords) not to attract damages. So, we are where we were: breaches of implied and express terms in contracts of employment are actionable under normal principles unless they are closely connected with or part of the dismissal, in which case they are not.

Discrimination

Discrimination cases continue to raise interesting points. In Bull & Bull v Hall and Preddy [2012] EWCA Civ 83, the Court of Appeal rejected an argument from the appellants that they should be permitted to run their guesthouse in accordance with their religious beliefs and refuse double beds to unmarried couples. The rule applied equally to unmarried heterosexual couples, but, since homosexual couples can't get married, the rule necessarily excluded all of them.

There were no prejudicial facts: the appellants, an elderly couple nearing retirement, had run the same policy for many years, had let rooms with twin beds to gay couples (and unmarried heterosexual ones) and made the policy clear on their website, though in fact the respondents hadn't seen it. In addition, the transaction at the hotel was 'not demeaning', the respondents easily found other accommodation and got their deposit back.

However, that wasn't the end of the story as they then sued, supported by the EHRC. So the issue that came before the courts was a stark one: could the hotel owners rely on their own religious belief to deny the double beds to unmarried couples if, in the case of gay couples, this meant all of them? Relying on the sometimes doubted ratio of the decision in James v Eastleigh Borough Council [1990] 2 AC 751 (free swimming for pensioners was directly discriminatory against men of a certain age), the court concluded that this was direct discrimination: the respondents were '“ in effect '“ treated as they were because they were gay. Since this was analysed as direct discrimination, the reasons were immaterial: justification didn't come into it.