Employment Law Bulletin - July 2024

Employers who wish to avoid the risk of employment claims from departing employees are able to enter into a settlement agreement under which employment claims are settled.

Settlement agreements must follow a certain format and the employee is required to take legal advice before signing one. In recent years, there have been legal cases looking at the extent to which settlement agreements are able to validly settle future unknown claims. That is, claims based on facts or circumstances which have not occurred at the point that the settlement agreement is signed, and which are not known to the parties. One of the reasons for uncertainty in this area was that the legal provisions regulating settlement agreements said that they had to settle ‘particular complaints’. There were arguments over whether future unknown claims could be caught within this term.
Earlier this year, in the case of Bathgate v Technip, the Scottish Court of Session held that future unknown claims could be settled using a settlement agreement, provided that the wording of the waiver was sufficiently clear.

This position has now been followed by the Employment Appeal Tribunal in Clifford v IBM. In this case, the Claimant was absent from work owing to disability from 2008 onwards. In 2013, he entered into a compromise agreement under which the Respondent agreed to place him on its Disability Plan. Compromise agreements are the old name for what are now called settlement agreements. The plan gave the Claimant disability salary payments. Increases under the plan were discretionary.

Under the terms of the compromise, the Claimant waived the right to bring various specified claims, including disability discrimination claims, whether they were or could be in the contemplation of the parties at the date of the agreement, or not. An exception in respect of future claims did not apply to matters arising from the Claimant’s transfer to the Plan.

The Claimant brought a claim of disability discrimination on the basis that payments had never increased under the Plan. The tribunal struck out his claim. It was a future claim but was clearly barred by the terms of the compromise agreement. It made no difference that the Claimant remained in employment.

This case is a reminder that it is possible to settle future unknown claims using a settlement agreement but that the wording used is of crucial importance. It needs to be clear and expressly state that it covers claims which were not or could not be in the contemplation of the parties when they signed the agreement.

Employee awarded almost £90,000 for associative discrimination

Employees are protected under Equality Act 2010 from being treated less favourably because of a disability (section 13 Equality Act 2010). The disability doesn’t have to be the employee’s disability. It can be the disability of another person. If an employer treats an employee less favourably because of the disability of another person (normally, but not necessarily, someone 'associated' with the employee), this will be direct disability discrimination - known as ‘associative discrimination’.

In the recent case of Graham v Gravity Supply Chain Solutions and another, the employment tribunal held that Mr Graham had been directly discriminated against because of the disability of his wife, who had been diagnosed with cancer. Mr Graham told his boss about his wife’s diagnosis. He later went off sick. His employer failed to pay him the full sick pay he was entitled to under his contract of employment, blocked his access to work email systems and proposed to demote him. The employer later dismissed him.

The tribunal found Mr Graham had proved facts from which it could conclude his wife’s disability was a material and significant reason for his employer’s actions. The three detriments and the dismissal all flowed from the employer’s underlying perception about what her disability meant to the business. The claims succeeded and Mr Graham was awarded almost £90,000 in compensation.

This case is a reminder of the ‘reach’ of certain discrimination claims. Employers should take a step back and consider whether their actions might be tainted by discrimination in all cases.

Changing employee’s travel requirements was unlawful sex discrimination

The requirement to travel for a job is usually something that is made clear at the start of employment. Each party knows where they stand. But what happens if an employer’s expectations for employee travel change?

The recent employment tribunal case of Perkins v Marston (Holdings) Limited serves as a reminder to employers that they need to consider whether any changes to travel requirements risk discrimination claims. In this case, the Claimant was a senior manager, based in the Respondent’s offices in Lancashire. She managed employees in the North-West and also employees at one of the Respondent’s offices in Essex. She initially managed the Essex-based employees remotely. The Respondent informed her she would need to travel to Essex as part of her role. She could not do this owing to childcare issues. She refused to agree to this change and was eventually made redundant. She claimed unfair dismissal and indirect sex discrimination.

The tribunal held that the requirement for the Claimant to travel to Essex was indirect sex discrimination. It was a requirement which placed women (who were more likely to have childcare responsibilities) at a disadvantage and placed the Claimant at a disadvantage. The Respondent attempted to justify the requirement by arguing that it was a proportionate means of achieving the aim of a smooth running of the business. Their arguments weren’t accepted. The Claimant had managed the Essex office remotely without any issue for 10 months previously.

Employers considering changing travel requirements for employees should start by looking at the contract of employment. It is important to understand what was agreed about travel at the outset of the relationship. Even if the contract includes some flexibility, consider whether it would be reasonable to require it in the employee’s specific circumstances. Common pinch-points are childcare issues and disability. If the contract does not include the required flexibility, then, as in the Perkins case, the employee’s agreement will be needed.

If the employee refuses, then the employer needs to think carefully about whether it wants to push ahead (which would involve dismissing the employee and offering re-engagement on new terms containing the necessary travel flexibility) or whether to stick with the status quo. In Perkins, pushing forward without a justifiable reason resulted in discrimination and unfair dismissal.

Contractual terms between employer and perk provider couldn't be used to end perk for employees

Employers often provide benefits to employees which are not directly administered by the employer themselves. They use third-party providers instead. Private Health Insurance and Company cars are good examples of this. The employer will state in the employment contract that the employee is entitled to the named benefit. The employer will then have a separate commercial agreement with the benefit provider which facilitates this. The employee will not be party to this agreement and will often be entirely unaware of it.

A recent Employment Appeal Tribunal case looked at whether the terms of a commercial agreement between an employer and a third-party benefit provider could have a direct impact on the employees themselves.

In Adekoya v Heathrow Express Operating Company, the Claimants were offered a discounted travel card when they started work for the Respondent. The card was issued under the Association of Train Operating Companies Agreement (ATOC Agreement). The ATOC Agreement stated that, if they were made redundant after five years or more, they would get lifelong travel benefits. The travel benefits were operated by the Rail Delivery Group, a third-party provider separate to the Respondent. The Rail Delivery Group had a separate Reciprocal Agreement with the Respondent giving them access to the travel benefits.

The Rail Delivery Group told the Respondent that they were no longer going to provide lifelong travel benefits to employees made redundant after five years. The Respondent did not inform the Claimants of this at the time. The Claimants (who all had over five years’ service) were all offered, and accepted, voluntary redundancy.

Following their redundancy, the Respondent refused to honour the lifelong travel benefits. The Claimants claimed breach of contract.

The tribunal, at first instance, found that the ATOC Agreement formed part of the Claimants’ employment contract with the Respondent. It also held that the Reciprocal Agreement between the Respondent and Rail Delivery Group was also incorporated – even though they were not a party to it. The Reciprocal Agreement included the right of Rail Delivery Group to withdraw the benefit. The tribunal held that this term also gave the Respondent the contractual right to remove the benefit from the Claimants.

The EAT disagreed with this conclusion. The Claimants did not know about the Reciprocal Agreement. It was not in their contracts or in the ATOC Agreement. Its terms were not, therefore, incorporated into the Claimants’ contracts and could not be relied upon to remove the travel benefit.

Tribunal correct to order disclosure of unredacted document containing financial information

Disclosure is the part of tribunal proceedings where each party — employee and employer — provides the other with a list of all the documents relevant to the issues in the claim. The employment tribunals have adopted the civil court rules in respect of disclosure and inspection of documents. Rule 31.6 of the Civil Procedure Rules requires a party to disclose the documents on which he relies, or which adversely affect his own or another party’s case and those which support any other party’s case.

Information can only generally be redacted if it is irrelevant or privileged. In the recent case of Virgin Atlantic Airways v Loverseed and others, the Respondent argued that redacted information in a document was not disclosable because it was not relevant to the case. The Employment Appeal Tribunal upheld the tribunal’s decision that it should be disclosed in full.

The Respondent made the Claimants (who were all pilots) redundant. This happened after the COVID-19 pandemic caused reductions to air travel. All parties agreed that a redundancy situation had arisen. However, the Claimants disputed the fairness of their selection. They claimed the selection criteria were not clear. They said the process was designed to select those in the ‘middle bracket’ of pilots - the most expensive but not the longest serving. Some claimed indirect age and or sex discrimination as well as general unfairness.

As part of the disclosure process, the Respondent disclosed different versions of an internal document titled ‘Velocity 21’. It contained financial information about pilot costs. It included comparisons - looking at the different savings achieved from changes to terms and conditions or from reducing numbers. The Respondent redacted pilot costs and potential savings in these documents. They claimed that the redacted information wasn't relevant so was not needed for fair disposal of the proceedings.

The Claimants made an application for specific disclosure of the unredacted documents. The tribunal granted this. It held that the unredacted documents were relevant to the issue of fair selection. They were also relevant to any argument of justification for the indirect discrimination claims. The Respondent appealed.

The EAT dismissed the appeal. It held that Rule 31.6 of the Civil Procedure Rules requires a party to disclose not just the documents it relies on, or which support any other party’s case. It must also disclose those that harm their own or the other party’s case. The EAT found that the documents were relevant. They would have a bearing on the issue of what the selection criteria were, whether they were fair criteria and whether they were influenced by costs savings (potentially harming the Respondent’s pleaded case that they were not).

Employment Appeal Tribunal emphasises importance of consulting about proposed pool for selection in redundancy cases

Employers who need to make only a small number of redundancies must make sure that their consultation process doesn’t end up being a ‘tick box’ exercise.

The direction of travel from several recent Employment Appeal Tribunal cases indicates that employers are expected to consult, at an early stage, about all aspects of a proposed redundancy – including selection criteria and pooling.

In Joseph de Bank Haycocks v ADP RPO UK Limited, the EAT held that a redundancy dismissal was unfair because of the lack of consultation at an early stage. In this case, much of what was missing from the consultation process (including selection criteria and scoring) was produced at appeal. However, the EAT held that the dismissal was unfair, noting that ‘whilst the appeal could correct any missing aspect of the individual consultation process (e.g. the provision of the claimant’s …scores), it could not repair [the] gap of consultation in the formative stage’.

This focus on the start of the redundancy consultation process as being key to the overall fairness of the result was replicated recently in the case of Valimulla v Al-Khair Foundation. In this case, the Claimant worked as a liaison officer covering the North-West of England. There were other employees who carried out a similar role in other geographic locations. Work for liaison officers decreased across the country during the Covid pandemic. The Respondent placed the Claimant at risk of redundancy in a pool of one. The other liaison officers were not placed at risk. Three consultation meetings were held. There was no consultation about the appropriateness of the pool. The Claimant was dismissed and claimed unfair dismissal.

The employment tribunal held that the Claimant had been fairly dismissed for redundancy. The Claimant appealed.

The Employment Appeal Tribunal, allowing the appeal, held that consultation on redundancy had to take place at a time when it could make a difference. The Respondent had not consulted with the Claimant about the pool for selection. The tribunal had also failed to consider whether choosing a pool of one was a reasonable approach in this particular case.

The EAT substituted a finding of unfair dismissal (on procedural grounds) because of the failure to consult about pooling. It remitted the question whether it was reasonable for the Respondent to have applied a pool of one to a different tribunal.

This case is a reminder that employers should be seen to be involving employees and seeking their views on all aspects of any redundancy process – at a time in the process where this is able to make a difference.

Whether an employee is disabled must be assessed at point acts of alleged discrimination occurred

To bring a claim for disability discrimination, an employee must be able to show that they (or someone they are associated with) is disabled. At what point in time is an assessment of disability made? In Ahmed v DWP, the Employment Appeal Tribunal held that the tribunal had erred by assessing whether the Claimant was a disabled person using a three-day date window. The discrimination allegations spanned several years.

The Claimant had a period of absence from work in September 2020. He alleged that this absence was owing to his health conditions (a blood disorder called PNH and, separately, depression). He alleged various acts of disability discrimination arising from this absence, spanning 2020, 2021 and 2022 and culminating in his dismissal.

It was accepted by the parties that PNH was a disability. Whether depression was a disability remained a live issue. A preliminary hearing was held. The tribunal assessed the position for the impairment of depression between 22 and 25 September 2020. It found that the Claimant was not disabled by reason of depression in that window.

The Claimant appealed. The EAT held that, whilst the three-day date window used by the tribunal to assess whether the Claimant’s depression was a disability was the correct window for one of his claims (discrimination arising from a disability) – it was too narrow for all of the others. The relevant time for assessing disability is the date of alleged discriminatory acts – these took place on occasions over several years, not three days.

And Finally...

Preventing harassment in the workplace is often at the very top of HR’s to do list. Training and policies often focus on key problem areas such as sexual harassment. They don’t often include any reference to ‘smell harassment’. However, according to the Japanese newspaper ‘Mainichi’, there has been an increase (in Japan at least) in ‘smell harassment’ issues in the workplace. The newspaper reports that, as the weather in Tokyo gets hot and humid, the sweaty season has arrived. Employees are taking to social media to complain about the impact that bad smells from their colleagues are having on their working life. One reported feeling ‘dizzy’ because of the body odour of their colleague.

The UK’s current laws on harassment do not make specific provision for smells. They may have the ‘effect’ of creating a ‘hostile’ environment but are unlikely to ‘relate to’ any characteristic protected under the Equality Act 2010, so would not be covered. There is, however, a risk that smell issues in the workplace, if left unresolved, could, in an extreme case, cause an employee to resign and claim constructive unfair dismissal. On the flip side, an employer who broaches the issue of an employee’s body odour in an insensitive way could risk that employee taking offence, resigning and claiming constructive dismissal themselves. Or, if the smell issue relates to an underlying disability, claims of disability discrimination.

Thankfully, UK summers are generally less humid than those in Japan. However, employers should think about measures they can take to reduce the likelihood of issues arising by, for example, checking air conditioning and ventilation in the workplace and relaxing uniform rules during hot weather. If an issue is raised with you, make sure that it is handled sensitively.