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Employment review: A summer of legal bouts

29 September 2017 by Lydia Newman

Employment review: A summer of legal bouts - Read more

Changes to injury to feelings compensation come alongside clarity on NED dismissal liability and holiday pay, says Lydia Newman.

Though you may think employment law naturally lacks focus, this summer has seen several weighty decisions made during a series of legal bouts.

First, the Court of Appeal considered ‘Vento bands’, used to assess injury to feelings awards, and decided they should be increased in employment tribunals.

The Employment Appeal Tribunal (EAT) meanwhile held that non-executive directors (NEDs) were liable for their part in dismissing a whistleblower, and separately decided which payments should be included in the calculation of holiday pay.

Elsewhere, the High Court imposed a prison sentence after the deletion of evidence. The Supreme Court also found that employment tribunal fees are unlawful, in one of the most significant employment judgments of recent years.

Outside the courts, the Taylor Review was published in July, with its principal author Matthew Taylor discussing the report with Governance and Compliance in the last issue.

Vento bands uplift

It has been held that a 10% uplift (known as a Simmons v Castle uplift) does apply to injury to feelings awards in discrimination cases, effectively raising the Vento bands, used in calculating compensation for injury to feelings.

In July 2012, the Court of Appeal ruled in Simmons v Castle that a 10% increase in non-financial damages should apply to personal and similar cases in the civil courts. It had been disputed whether this should apply to injury to feeling awards for discrimination in the employment tribunal.

“It has been held that a 10% uplift does apply to injury to feelings awards in discrimination cases”

In the recent case of De Souza v Vinci Construction, the claimant, a cleaner, succeeded in a claim of disability discrimination against her employer. The employment tribunal awarded her £9,000 for injury to feelings and £3,000 for psychiatric injury.

The tribunal was asked to consider whether a Simmons v Castle uplift applied to both awards and decided it only applied to the psychiatric injury award, increasing it to £3,300.

On appeal by both parties, the EAT found the uplift applied to neither the personal injury nor the injury to feelings award.

The claimant then appealed to the Court of Appeal, which overturned the tribunal, finding that since s124(6) of the Equality Act 2010 required discrimination awards to correspond with that which could be awarded by the county court, the Simmons v Castle uplifts should be applied to both injury to feelings and psychiatric injury.

A 10% uplift will therefore apply to awards in these circumstances.

New bands

In related developments, the presidents of the employment tribunals in England, Wales and Scotland released their response to the consultation on Vento bands. The new Vento bands will apply to any claims on or after 11 September 2017.

The proposed new bands are:

  • Lower band: £800 to £8,400
  • Middle band: £8,400 to £25,200
  • Upper band: £25,200 to £42,000
  • Exceptional cases: over £42,000

Presidential guidance has been issued on this and will be reviewed in March 2018 and each year thereafter. Prior to this, the Vento bands had not changed since 2008.

NED dismissal liability

In the recent case International Petroleum Ltd (IP Ltd) and ors v Osipov and ors, the EAT upheld a finding that a chief executive was unfairly dismissed on account of protected disclosures relating to oil exploration contracts in Niger.

In addition, the appeal tribunal upheld the lower tribunal’s finding of personal liability for two NEDs of International Petroleum, on the basis that they were instrumental in the decision to dismiss the claimant.

The EAT therefore upheld the decision that the two NEDs and the company itself were jointly and severally liable for the £1.7 million loss that flowed from the dismissal – save for the unfair dismissal basic award, for which the firm was solely liable.

“Organisations should be aware of the ability of employees who have been dismissed to allege that this is related to whistleblowing”

It was argued on appeal by the NEDs that their liability was restricted to any detriment prior to dismissal, as a claim for unfair dismissal can only be brought against an employer.

This argument was, however, rejected by president Ingrid Simler of the EAT. She held that the insertion of s47B(1A) into the Employment Rights Act 1996 by the Enterprise and Regulatory Reform Act 2013 had created ‘a framework for individual liability of a fellow worker for detriments without restriction’.

‘It is likely to be an unusual case where an employee will wish to pursue a claim and seek a remedy against a fellow worker for a whistleblowing detriment amounting to dismissal, rather than pursuing the claim against the employer, but I can see no principled reason for excluding it,’ she said.

Organisations should be aware of the ability of employees who have been dismissed to allege that this is related to whistleblowing, and to bring dismissal-related claims against both the employer (as an unfair dismissal claim) and against the dismissing manager personally (as a detriment claim).

Holiday pay

Holiday pay can be complicated for many businesses, especially when employees work variable hours, or receive variable pay.

The EAT has held in the case of Dudley Metropolitan Borough Council v Willetts that overtime that is regularly worked is ‘normal remuneration’ for the purposes of calculating holiday pay.

The claimants were electricians, plumbers, roofers and similar working for the council who, alongside day jobs, worked entirely voluntary overtime that paid additional standby and callout allowances. The claims were successful in the employment tribunal but the respondent appealed.

The EAT found that to exclude such payments from holiday pay results in a financial disadvantage to workers, which deters, or might deter, the taking of annual leave – a pillar of EU social law.

The tribunal also found a clear link between the payments and the performance of their duties, because when working overtime the workers were performing the same tasks as under their contracts.

The key question for companies to consider is what an employee would have earned if they had not been on holiday. Holiday pay should correspond to normal remuneration that would have been received, or a viable claim could arise.

Jailed for deleting evidence

A former employee has been sentenced to prison for six weeks by the High Court for the breach of a court order aimed at preserving evidence pending trial.

The employee had emailed confidential information from his personal email account and disclosed the information to a rival following a Transfer of Undertakings (Protection of Employment) (TUPE). The employer brought a claim against the employee and the competitor for misuse of confidential information.

“This is a rare example of imprisonment, but a strong reminder of the importance of complying strictly with interim injunctions aimed at preserving evidence pending trial”

Under an interim injunction, the employee was banned from disclosing the information and was ordered to keep all hard copy and electronic documents pending the return date. The employee was also barred from informing anyone else about the order or any future legal action.

Despite this, the employee notified the rival immediately and told his family about the order. He also deleted over 8,000 emails in breach of the order.

Afterwards the employee took legal advice, informed the court and tried to recover the emails (albeit without any success). The court, considering the deliberate nature of the breaches against the employee’s subsequent remorse and cooperation, imposed six weeks imprisonment.

This is a rare example of imprisonment, but the case is a strong reminder of the importance of complying strictly with interim injunctions aimed at preserving evidence pending trial.

Unlawful tribunal fees

The Supreme Court has declared that employment tribunal and EAT fees are unlawful because they prevent access to justice, and has quashed the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013.

As a consequence of this groundbreaking decision, any fees paid since 29 July 2013 must be repaid by the government, and fees are no longer payable for future claims. The government has accepted the court’s ruling and is putting in place systems for reimbursing all fees paid to date.

Lydia Newman is an employment solicitor

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