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Need to Know December 2009 Update:
Season's Greetings and welcome to the latest edition of Need to Know. This month we look at the excess of Christmas spirit at work, in particular the office Christmas party.
We also look at a recent case on religious belief in the workplace, mobility clauses in TUPE transfers and the exemption from making reasonable adjustments under the Disability Discrimination Act.
Finally we consider a Court of Appeal case regarding equal pay as it applies to service-related pay schemes.
Please contact a member of the employment team if you have any queries in relation to the issues covered or any other employment-related query.
An excess of festive spirit ...
Equality policies in practice - religious belief discrimination and sexual orientation
TUPE and Mobility Clauses
Disability discrimination - reasonable adjustments and exemption from the duty
Equal Pay and benefits based on length of service (Wilson v Health & Safety Executive)
An excess of festive spirit ... why it may take more than a couple of painkillers to deal with the aftermath of the Christmas Party
Office parties can cause unexpected problems for the unwary employer. Employers are liable for the acts of employees committed "in the course of their employment" and this can easily include social events organised out of office hours, including the Christmas party.
A recent report by the CIPD identified that 1 in 10 workers knew of someone from their organisation who has either been dismissed or disciplined for inappropriate behaviour at the staff Christmas party. Public sector workers are generally more aware of such action and twice as likely as private sector workers to report that people have been disciplined or dismissed for sexual harassment.
The most common reasons for disciplinary action were fighting (29%) or threatening behaviour (19%). Other commonly reported reasons for disciplinary action or dismissal included sexual harassment, (17%), bullying (12%) and "other inappropriate behaviour", which has included unorthodox use of the office photocopier, amorous activity on company premises or insulting the boss.
Employers should take such steps as are reasonably practicable to prevent unacceptable behaviour taking place :
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A sensible starting point is to dismiss from the outset the notion that "anything goes" at the office party. Staff need to be reminded in advance of any festivities that inappropriate behaviour will be dealt with in the same way as it would be during normal work time.
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Care should be taken over such points of detail as the venue, menu and entertainment, which contain potential traps for employer. Matters such as the choice of venue, for example, may carry the potential for a complaint of unlawful discrimination. Check that the venue is not inaccessible to a disabled employee. The menu and/or party games can also cause difficulties. Employees who observe religious rules/conventions involving not drinking may feel unable or extremely uncomfortable in attending an event where alcohol is served and drinking is openly encouraged (especially where it is to excess) or even distributed as prizes. Even the seemingly innocuous raffle may cause problems unless there is a variety of prizes. Keep an eye on the amount of alcohol which is drunk and ensure that non-alcoholic drinks are served. Ensure that there is no peer pressure on employees to drink.
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The party and its aftermath could lead to claims of unlawful harassment, which is defined broadly as unwanted conduct which violates a person's dignity or creates an intimidating, hostile, degrading or humiliating environment. Employers should vet external entertainers (eg, comedians) and speakers to ensure that their comments and acts do not constitute harassment – which covers "words spoken". There are potential health and safety considerations, particularly if the office party is held on the employer's premises. The misuse of alcohol could be an aggravating factor in accidents in the workplace.
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Perhaps coincidentally, absenteeism increases in the run-up to Christmas. Employers need to ensure that staff are reminded of their obligations in relation to attendance and unauthorised absences should be dealt with as a disciplinary manner.
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Finally if incidents occur it is obviously imperative that they are investigated promptly and thoroughly. The intervention of the Christmas break will not justify any failure to follow normal procedures and a failure or a delay in doing so, exposes the employer to the risks of claims for unfair dismissal based on delayed disciplinary investigations or further acts of unlawful discrimination if a prompt investigation into unlawful harassment does not take place.
Merry Christmas!
Equality policies in practice - religious belief discrimination and sexual orientation
A private sector employer is entitled to insist on equality policies being observed by employees, even those with religious objections to the consequences of those policies. This is the key message from the Employment Appeal Tribunal's decision in McFarlane v Relate Avon Limited.
McFarlane was a Christian and a relationship counsellor for Relate. He had signed up to Relate's policy of non-discrimination against clients on the basis of sexual orientation. He undertook training in psycho-sexual therapy but told Relate that on religious grounds he would not work with gay couples where he would have to give specific sexual advice. He was eventually dismissed as Relate lost trust and confidence in him performing his role in compliance with its equal opportunities policy.
McFarlane claimed this was unlawful direct discrimination on the grounds of his religious belief that homosexuality was sinful. The EAT said the dismissal related not to his religious belief itself but to his conduct, which was unacceptable whatever the motive. There is a sharp dividing line between belief and manifestations of that belief.
McFarlane also claimed his treatment was unlawful indirect religious discrimination, as the requirement to comply with the policy was a practice which put people of the same religious belief as McFarlane at a disadvantage. The EAT held such a requirement might be indirectly discriminatory but it was justified as Relate's non-discriminatory provision of services was a legitimate objective and there was no need to consider alternatives such as having separate teams of counsellors for gay or straight couples.
By voluntarily working for secular employers, those with strong religious beliefs sacrifice the right to manifest that belief in a way that is unacceptable to the employer.
The clear message to be taken from the EAT decision in this case is that employers can take action to prevent inappropriate manifestations of religious or other beliefs in the workplace, if that action is in pursuit of a legitimate objective.
TUPE and Mobility Clauses
The recent EAT decision in Tapere -v- South London and Maudsley NHS Trust considered mobility clauses in TUPE transfers.
T was a single mother with substantial childcare responsibilities. She worked for an NHS Trust hospital in Camberwell (South London). Her employment contract contained a mobility clause under which her employer could require her to work, permanently if necessary, at other locations "within the Trust".
In April 2007 T was transferred under TUPE to another Trust ("M").
M argued that T's mobility clause had transferred under TUPE but its meaning had changed. After the transfer, the contractual wording of "within the Trust", which had originally referred to the transferor, now meant "within M", referring to the transferee. The mobility clause had TUPE transferred and M took the benefit of the clause as if M had always been T's employer.
Bethlem Hospital in Beckenham, where M wanted T to work, was within and operated by M, and the mobility clause was therefore enforceable against T.
T disagreed, saying the move would increase her journey time and jeopardise her childcare arrangements. She claimed constructive unfair dismissal.
The EAT, finding in favour of T on the specific issue of constructive dismissal, held as follows:
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The contract must be interpreted as at the time it was entered into. When T had agreed the mobility clause "within the trust", she was agreeing to be bound by those words as they applied to the transferor, not a future transferee;
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Where a clause in a contract cannot be implemented by the transferee in the same way as the transferor without there being difficulties and inequities (as in T's case), then equivalent benefits and obligations can be substituted, so long as neither the benefit or the burden is increased. This is known by the unwieldy term of "substantial equivalence";
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Accordingly, the meaning of the words "within the Trust", was critical to the contractual term Y had agreed to and the benefit of that term could not simply be transferred to M without detriment to T. If M took the benefit of the mobility clause, it varied the contract to T's disadvantage and, after the TUPE transfer, her contractual terms would be worse than before the TUPE transfer. This undermined the very purpose of TUPE, which is to protect employment rights;
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The test of whether a change in working conditions will be a material detriment to the employee is a subjective test, and will depend on the impact of the change as it is perceived by the employee. It is not an objective test for the Tribunal to assess.
The EAT held there had been a constructive dismissal.
The mobility clause should have been interpreted in way it would have been at the time was contract was entered into. The meaning of the contractual words "within the Trust", even after a TUPE transfer, remained as they were before the transfer under the doctrine of "substantial equivalence". This might not be the same in every case, but it applied to T.
As an afterthought, it would be interesting to see how the doctrine of "substantial equivalence" might apply to the transfer under TUPE to a transferee of clauses such as restrictive covenants and confidentiality provisions, where the drafting will invariably be very specific to the transferor, yet after the transfer should apply for the benefit of the transferee.
Disability discrimination - reasonable adjustments and exemption from the duty
The recent EAT case of Secretary of State for Work and Pensions v Alam has provided employers with new guidance on the state of knowledge required for an employer to avoid the duty to make reasonable adjustments under the Disability Discrimination Act 1995 ("the Act").
The Act requires an employer to make reasonable adjustments to prevent a provision, criterion or practice (PCP) from placing a disabled person at a substantial disadvantage in comparison with persons who are not disabled.
An employer is able to avoid this duty where it can demonstrate that it did not know, and could not reasonably be expected to have known, that the person had a disability and was likely to be affected in the way discussed above.
The EAT had previously provided guidance on the application of the exception in the case of Eastern and Coastal Kent PCT v Grey (2009). However, in Alam, the EAT found that this previous guidance could not be considered authoritative, and chose to produce its own.
The facts are straightforward. Mr Alam left work early having been refused permission to do so. Following a disciplinary hearing, he was given a written warning. Mr Alam suffered from symptoms of depression which included severe headaches, loss of concentration and loss of temper. As a result of the written warning, he brought a claim against his employer under the Act for failing to make reasonable adjustments.
It was accepted that Mr Alam's loss of concentration (which led him to leave early without permission) amounted to a disability under the Act and the Tribunal found his employer, the DWP, to be in breach of its duty to make reasonable adjustments under the Act.
The EAT disagreed and provided a new "two-stage" test to determine whether an employer was exempt from the duty to make reasonable adjustments:
1. Did the employer know both that the employee was disabled and that his disability was liable to affect him in the manner set out in the Act?
Where the answer to this question is "no", then a further question must be asked:
2. Ought the employer to have known both that the employee was disabled and that his disability was liable to affect him in the manner set out in the Act?
If both questions are answered negatively then the employer will not be under a duty to make reasonable adjustments.
Accordingly the EAT held that the DWP did not know of Mr Alam's disability and did not know that it was liable to have any effect on him.
Applying the second question, the EAT held that whilst the DWP ought to have known that Mr Alam was disabled, it could not be said that it ought to have known that that put him at a substantial disadvantage when compared to a non-disabled person in relation to any PCP applied by the DWP.
Equal Pay and benefits based on length of service (Wilson v Health & Safety Executive)
In a case that is particularly relevant to female employees, the Court of Appeal has handed down a judgment highlighting the pitfalls of service-related pay.
Rewarding experience is an established legitimate aim of a pay scheme but:
(i) do employers have to provide justification for the way they use a service-related criterion to determine pay; and if so
(ii) in what circumstances
The facts of the case are as follows:
Mrs Wilson was employed by the Health & Safety Executive ("HSE") as a Band 3 inspector. The HSE's pay scheme was based on length of service, where length of service was for a period over 10 years. Mrs Wilson was paid less than three male colleagues who had been employed by HSE for a longer period, but who carried out the same work as her.
The Employment Tribunal, bound by the Employment Appeal Tribunal decision in Cadman v Health & Safety Executive, held that the HSE was not required to justify objectively a difference in pay attributable to length of service. However it also said that if the HSE was required to do so it would not have been able to justify a 10-year pay scale as 5 years was appropriate.
After the Tribunal decision, the European Court of Justice (ECJ), in its judgment in Cadman, stated that where the employee provides evidence which raises "serious doubts" as to whether a length of service criterion is appropriate, then the employer may be required to prove objective justification.
On appeal by Mrs Wilson, the EAT (after the ECJ's judgment in Cadman) held that, in light of the ECJ's judgment, it was open to Mrs Wilson to challenge the proportionality i.e. the objective justification, of the HSE's service-related pay scheme. The Court of Appeal upheld the EAT's decision, which went in Mrs Wilson's favour, and confirmed that employees could challenge both the adoption of a service-related pay scheme, and the way in which that scheme is applied provided, that they satisfy the "serious doubts" test.
Our advice to employers who have historically rewarded length of service with pay is to consider (1) whether such pay scales have an adverse impact on female staff who, due to childcare responsibilities, do not have seamless continuity of employment and (2) whether experience in the job in question improves performance after the first few years.
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