EmpLaw Newsletter March 2024

Constructive dismissal: affirmation of the contract of employment

A constructive unfair dismissal is a form of unfair dismissal claim which, rather than being based on an actual dismissal by the employer, is rooted in a resignation by the employee. It occurs where an employee resigns in response to a serious breach of the employment contract by the employer. Often (but not always) the breach in question is a breach of the implied duty of trust and confidence which underpins all employment relationships. Once an alleged breach of contract has occurred, the employee must resign in response to the breach and must not, prior to resigning, affirm the employment contract – treating it as on-going.

The question of affirmation in cases of constructive unfair dismissal was recently looked-at by the Employment Appeal Tribunal in the case of Leaney v Loughborough University. The Claimant was a university lecturer with over 40 years’ service. He was in dispute with the Respondent after a student complaint was raised against him in relation to his duties as a warden at student halls of residence. On 29^th June 2020, the Claimant was told that the respondent could not look at the issue any further. There then followed a period of negotiation with the Claimant’s solicitor which failed to resolve matters. The Claimant went off sick on 7^th September 2020 and resigned with notice on 28^th September 2020. The last act of alleged breach of contract had occurred on 29^th June 2020.

The tribunal concluded that the Claimant’s claim of constructive unfair dismissal failed on the basis that the Claimant had affirmed the contract of employment in the period from 29^th June 2020 to 28^th September 2020. Factors relied upon by the tribunal on affirmation included the length of the delay, the fact that the Claimant did not say he was working under protest, the fact that it was not an exam period so there was no reason for him to delay his resignation to protect the achievements of his students (which was something which had been argued successfully in a previous education sector case) and the fact that the tribunal were not aware of the content of the negotiations that had taken place between solicitors.

The EAT held that the tribunal had been wrong in some of the ways it had considered the issue of affirmation and sent the case back to the same tribunal to be looked-at again. The EAT gave some useful pointers on the issue:

• Tribunals should not focus too much on the mere passage of time when considering if affirmation has taken place. All the surrounding facts and circumstances should be weighed.
• Length of service can be a relevant factor in deciding whether the contract has been affirmed where there has been a period of delay. However, it is fact sensitive. An employee with long service may reasonably take longer to consider their position (without necessarily having affirming) before taking the leap away from a secure job but it is for the claimant to advance arguments in this regard.
• The fact that there was a period of negotiation between solicitors prior to resignation is relevant to affirmation. In this case, the tribunal could not rely on these negotiations as a ‘last straw’ as it had no details of them but they were still relevant as they could be seen as the employee’s attempt to give the employer the opportunity to ‘put things right’ before resigning. Delay in order to do this may not amount to affirmation.
• The tribunal in this case had focused incorrectly on things that did not happen (the delay did not happen during an exam period and the claimant did not state that he was working under protest) which, if they had happened, might have pointed away from affirmation. They should have instead focused on what conduct there had been which might have amounted to affirmation.

Workers (Predictable Terms and Conditions) Act 2023

The Workers (Predictable Terms and Conditions) Act 2023 is expected to come into force in September 2024. It introduces a new statutory right for workers to request a more predictable working pattern. Key points to note include:

• The qualifying period for this right is likely to be 26 weeks’ service although those weeks will not need to be continuous.

• The right will apply to the following:

1. workers whose existing working patterns lack certainty in terms of the hours or times they work;
2. workers on fixed-term contracts of 12 months or less (who are able to request a longer fixed-term or the removal of any provisions relating to fixed-term);
3. agency workers (who can make their request either to the agency or the hirer provided they meet certain conditions)

Applications must specify that they are a request for a more predictable work pattern; state the change being applied for (i.e. what change the worker requires in order to have more predictability in their work pattern); and state the date on which the worker wants the change to take effect. The Act makes it clear that the requested predictability could relate to hours of work, days of work or period of engagement.

Employers will be required to deal with any requests in a reasonable manner and notify the worker of their decision within one month. The right to request predictability follows a similar pattern to the statutory regime for flexible working requests, in that requests may be refused on one of a series of specified grounds. There are currently six listed in the Act, including the burden of additional costs, detrimental impact on the recruitment of staff or other aspects of the employer’s business, or there being insufficient work during the periods the worker has asked to work. The Secretary of State reserves the right to add more grounds for refusal.

If a request made by a worker or employee is granted, then employers must offer the new terms within two weeks of granting the request. In making the agreed change to the worker’s contract, employers cannot make any separate detrimental changes to the terms of the contract that existed before the request was made – in other words the employer cannot grant the predictability requested and then try and off-set it by making other terms less favourable.

A maximum of two applications will be allowed during any 12-month period.

Acas has produced a draft Code of Practice for consultation that will provides guidance on how to make and handle requests for a more predictable working pattern.

Bonus claw-back provision was not an unlawful restraint of trade

In the recent case of Steel v Spencer Road LLP (t/a Omerta Group), the High Court looked at the validity of claw-back provisions in bonus schemes. Mr Steel worked for Omerta, a global search business. His remuneration package was made up of a basic salary and discretionary bonus. In his contract of employment, there was a provision stating that he must repay any discretionary bonus if he gave notice within three months of having received it.

In January 2022, the Claimant received a large discretionary bonus of over £180,000. This was a much larger bonus than he had received in previous years. He gave notice of his resignation a month later, in February 2022. Omerta requested that he repay the bonus in accordance with the term in his contract of employment. He refused to do so. The matter proceeded to the High Court where Mr Steel argued that the term requiring repayment of bonus was void as an unlawful restraint of trade.

Any provisions which restrict an individual’s freedom to work for who they choose to are narrowly interpreted and can, if they are found to be unreasonable, be held to be void as a restraint of trade. A good example is non-competition provisions which restrict who employees can work for after they leave employment. They will be void as a restraint of trade unless they go no further than is reasonably necessary to protect legitimate business interests.

The High Court looked at the provision being challenged by Mr Steel and held that it was enforceable. Claw-back provisions such as this operated as a disincentive to employees to leave employment, but they did not restrain where an employee might work after they leave employment. Omerta were able to enforce the claw-back provisions. The bonus had to be repaid.

Are tribunal fees on their way back?

The government has recently issued a consultation paper on re-introducing fees in employment tribunals and the Employment Appeal Tribunal. Tribunal fees were previously introduced in 2013. They were subject to judicial review in Unison v The Lord Chancellor and, in 2017, were found to be unlawful as an impediment to access to justice.

In the consultation paper, the government says it has considered the impact of the Supreme Court’s 2017 judgment in Unison v The Lord Chancellor and proposes to introduce only ‘modest fees’. The Ministry of Justice admits the former fees ‘did not strike the right balance’ between claimants paying toward tribunal costs and protecting access to justice.

The key proposed fee is £55 to bring a claim in the employment tribunal. It is a one-off fee, with no further fee payable when the hearing is imminent, and no distinction between different types of cases. The fee will be £55 whether it is a single Claimant or a multi-party action. Similarly, there would be a £55 to start an appeal in the Employment Appeal Tribunal.A system for remission from fees will exist for those who genuinely cannot afford the fees (as defined by the government). The consultation closes on 25 March 2024.

By pitching the fees at a ‘modest’ level the government is unlikely to be vulnerable to an attack on an ‘access to justice’ basis as they were before. The fees are so ‘modest’ that it’s questionable whether their introduction is worth the time and money that will be spent consulting on them and putting the mechanisms in place to levy them! It also remains to be seen whether the fees will be implemented in advance of any general election and if any new government will seek to reverse the changes.

Transfer of Undertakings: can liability for harassment transfer under TUPE where the harasser transfers to a new employer?

The Transfer of Undertakings (Protection of Employment) Regulations 2006 operate to transfer the rights, duties and liabilities of assigned employees from one business to another where the business itself is transferred. Generally speaking, if an employee leaves employment before the transfer takes place, his claim will be against the original employer. This makes sense – if he is not employed at the point of the transfer then neither he (nor any claim he may have) should transfer.

A novel point on this arose in the recent case of Moore v Sean Pong Tyres. The Claimant resigned and claimed constructive dismissal and harassment against the Respondent. After the Claimant resigned, his employer’s business transferred to another company. As part of this transfer, the alleged harasser also transferred to this company.

The Respondent wanted to add this company as an extra Respondent. Their argument was a clever (but ultimately fruitless) one – in harassment claims the employer is generally liable for the harassing acts of its employees. Here, the harassing employee had transferred to a new employer under TUPE. The Respondent argued that liability for the harassing employee’s conduct should transfer to the transferee employer, even though the Claimant himself had not transferred.

The tribunal refused the application. They said that responsibility didn't transfer and even if it did, the Respondent's request was too late. The Respondent appealed the tribunal's decision. The EAT agreed with the tribunal. Usually, when an employee doesn't transfer under TUPE, rights and responsibilities towards them don't transfer either. The fact that the harasser had transferred did not alter this position.

Victimisation claims cannot succeed if the underlying allegation of discrimination is false and made in bad faith

In the recent case of Toure v Ken Wilkins Print, the Claimant was employed as a forklift truck driver. He raised a grievance alleging that he had been subjected to a racial slur by a colleague. His grievance was not upheld. He appealed against this finding but offered to drop his appeal if he was promoted and given a salary increase. He later dropped his appeal (having not received the promotion or salary increase) at which point the Respondent dismissed him for, amongst other things, his attempted blackmail.

The Claimant claimed that he had done a protected act by raising allegations of racial harassment and that his dismissal was an act of victimisation. The employment tribunal dismissed his claim, finding that the initial allegations were fictitious and that no act which could amount to victimisation had occurred following them. This was an obvious error – the Claimant’s dismissal could, in principle, be an act of victimisation. The Employment Appeal Tribunal acknowledged that the tribunal had been wrong but nevertheless dismissed the Claimant’s appeal. The tribunal had concluded that the claimant’s allegation of racial harassment was ‘fictitious’. The EAT held that it could be taken from this that the tribunal would also have concluded that it was false and made in bad faith such that it could not form a protected act.

This case is a reminder that an employee cannot claim victimisation if they knew that their original allegation of discrimination was false.

Comparators in discrimination claims: employers should not withhold information about comparator characteristics

Claimants in race discrimination claims can face difficulties when they believe that they have been treated less favourably but do not know the race of their comparator. In a recent Employment Appeal Tribunal decision, it was held that the Claimant should not delay in bringing their claim whilst trying to discover the race of their comparator.

In the case of Jones v Secretary of State for Health and Social Care, the Claimant employee, who was of African-Caribbean descent, applied for a promotion. He was unsuccessful. The successful applicant accepted the role on 2 April 2019. The Claimant did not find out he hadn’t got the job until 3 July 2019. He asked for details of the successful candidate, but this was not provided by the Respondent. The Claimant issued a claim for race discrimination on 29 October 2019.

The tribunal held that the Claimant's claim was out of time. The primary time limit ran from 2 April 2019, and it was not just and equitable to extend time. The EAT agreed. The EAT was only able to overturn the tribunal's conclusion that it was not just and equitable to extend time if it was perverse. The tribunal had correctly weighed the issues the Claimant had in discovering the race of the successful candidate and the prejudice to the Respondent caused by the delay.

The EAT did, however, criticise the Respondent for not disclosing the race of the successful candidate until after the submission of its ET3. The EAT reflected that failure to provide such basic information might, in appropriate circumstances, lead to an inference of discrimination.

This case shows that respondents should not hold back information about potential comparators. If they do so they risk an inference being drawn that they have swept the information under the carpet – leading to an inference of discrimination.

Government publishes updated Code of Practice on ‘Fire and Rehire’

Following a 12 week consultation which ran from January to April 2023, the Government have now published an updated Code of Practice on dismissal and re-engagement (otherwise known as ‘Fire and Rehire’).

The government will lay the updated Code of Practice on dismissal and re-engagement in Parliament for approval by both Houses of Parliament. Subject to that approval, a commencement order will then bring the Code into effect, likely later this year.

None of the key provisions have altered from the original draft Code published in January 2023. But, following public consultation last year, there has been some tinkering around the edges.

Key points to note include:

• The original draft Code required employers to contact Acas if they were unable to reach agreement with employees about fire and re-hire. This requirement has now been strengthened. Employers are now told to contact Acas at an early stage, before they raise fire and rehire with the workforce.
• The Code has been amended to state that it is good practice for employers to give information in writing.
• Phasing-in changes was an obligation in the original draft Code. It has now been watered-down to best practice.
• The Code does not apply in redundancy situations. But, it will apply where both redundancy and fire and rehire are being considered as options. This will happen for as long as fire and rehire remains on the table.
• There is a requirement to consult ‘for as long as reasonably possible’. But, there is no minimum time period of consultation as exists for collective redundancy.
• Employers must not use threats of dismissal to coerce employees into signing new terms and conditions.
• Employers will need to explore alternatives to fire and rehire. They must have meaningful discussions with employees and trade unions focused on reaching agreement.
• Employers should not threaten dismissal if it is not actually envisaged.
• Fire and rehire should only be used as a last resort.

There is no stand-alone claim for failure to follow the Code. However, it can be taken into account by tribunals in relevant cases (including unfair dismissal). Tribunals will have the ability to uplift compensation by up to 25% if an employer unreasonably fails to follow the Code.

And finally…

A recent criminal case involving an ex-Sainsbury’s worker serves as a reminder to employers to make sure that departing employees have returned all company property before they leave employment. As reported in the Times newspaper, Holly Trevillion worked for Sainsbury’s as a cashier. She was sacked for attendance issues but failed to return her Sainsbury’s uniform.

After experiencing financial difficulties, she used her old uniform to go on shoplifting sprees at supermarket stores. She would fill her shopping trolley with groceries while pretending to be picking for online orders. She used the uniform to disarm other staff and avoid suspicion. In court she admitted five counts of fraud by false representation. She received a two-year conditional discharge and ordered to pay £206.28 compensation to Sainsbury's and £111 costs and victim surcharge.

This example serves as a reminder to employers that they should make sure that all company property, including uniform, is returned to them when an employee leaves their employment. It is reasonable to issue an instruction requiring this. If those working in your business wear uniform, then make sure you keep records of what has been issued to each employee and make sure that all items are accounted for when they leave your employment. If Sainsbury’s had done this then the ex-employee’s shoplifting spree would no doubt have been spotted much earlier.