Update: employment

The decision of the Court of Appeal in Madrassy v Nomura Bank [2007] EWCA Civ 33 provides important guidance on the burden of proof in discrimination cases. Ever since the burden of proof had formally reversed, following the implementation of Directive 97/80/EC, courts and tribunals have struggled with its precise implication.

The directive has been transposed into the amended Sex Discrimination Act at section 63A(2) which reads 'where, on the hearing of the complaint, the complainant proves facts from which the tribunal could, apart from this section, conclude in the absence of an adequate explanation that the respondent has committed an act of discrimination'¦ the tribunal shall uphold the complaint unless the respondent proves that he did not commit'¦ that act'.

Other discrimination laws follow the same rubric. The question arising is what does the complainant have to prove before the burden shifts and what may tribunals take into consideration at that stage? The Court confirms that it is not enough for a complainant simply to show a difference in status and less favourable treatment. They must also show, on the balance of probability that the treatment was on grounds of the protected status i.e. that it was more likely than not that the conduct was 'on grounds'. The court goes on to make clear that a tribunal can take into consideration all relevant facts, whether adduced by the complainant or the respondent is determining the first stage issue, whilst distinguishing those form the 'explanation' provided by the respondent, which is a second stage issue. It also confirms that an employment tribunal (ET) can listen to everything before deciding what is relevant for the consideration of whether a prima facie case has been made out or not.

Sick pay policy

In O'Hanlon v Revenue and Customs Commission [2007] EWCA Civ 283, the Court of Appeal considered the employer's duty in respect of sick pay and whether an employer is required to make adjustments to its sick pay policy either to continue with full pay or else to disregard disability-related absence when applying its sick pay policy. Mrs O'Hanlon had argued that her sick pay should not have reduced after six months but should have continued at its full rate.

Upholding the decisions of the employment tribunal and Employment Appeal Tribunal, the Court commented that this was not an appropriate adjustment and would act as a disincentive to return to work. They distinguished the decision in Nottinghamshire County Council v Meikle [2004] EWCA 859 where the liability of the employer for sick pay had arisen because the employer had failed to make such reasonable adjustments as would have permitted the employee to continue working. The Court adopted effectively the same reasoning for rejecting the non-aggregation argument. It failed for the same reason as the full-pay argument failed.

Employment equality

The Equal Treatment (Amendment) Directive (2002/73/EC) was transposed into domestic law by the Employment Equality (Sex Discrimination) Regulations 2005, amending relevant sections of the Sex Discrimination Act (SDA). These regulations introduced the concept of harassment as discrimination (playing catch-up with the other equality strands) and also clarified that less favourable treatment on grounds of pregnancy and maternity leave was sex discrimination as well as being unlawful by virtue of stand alone employment protection provisions principally in the Employment Rights Act 1996. However, in judicial review proceedings brought by the Equal Opportunuties Commission, the High Court has decided that the regulations did not properly implement the directive. The court held:

• The regulations should not have introduced the need for a comparator who is not pregnant or on maternity leave (section 3A SDA) as this was a retrograde step following the House of Lords decision in Webb v Emo [1992] 4 All ER 929.
• The definition of harassment in section 4A(1)(a) should be recast to eliminate the need for causation and to facilitate claims for harassment which are not 'on the ground of her sex' as well as claims relating to harassment by a third party; and
• Section 6 of the SDA should also be recast to clarify women's rights to bring discrimination claims relating to periods of maternity leave. In particular, as a result of current drafting, women and their employers did not know whether a woman was protected if she was not consulted about a change to her job while on maternity leave, or if she fell behind in promotion prospects if her time on additional maternity leave were excluded from length of service.

The government has promised to rectify the defects in sex discrimination law as soon as reasonably possible. However, it should be noted that the decision of Burton J might have far-reaching consequences and a knock-on effect on other discrimination strands which, other than the disability-related provisions, are currently limited to claims where the harassment is on if, as found, it is wrong for the harassment provisions not to protect against third-party conduct in sex discrimination claims, then it is equally wrong from the other strands.

Suspension

Is a suspension a neutral act? Lord Justice Sedley, giving the decision in the Court of Appeal in Mezey v South West London and St George's Mental Health NHS Trust [2007] EWCA Civ 106 thinks not, at least for some professional employees. The Court refused the Trust leave to appeal against a High Court injunction to restrain the suspension of one of its employees. The claimant consultant psychiatrist had accepted that pending the outcome of formal disciplinary proceedings, she would not engage in clinical work, however she objected to the Trust's decision to limit her to the library and her office and wanted to widen the scope of her permitted activities to include attendance at audit and case conferences and organisation of academic programmes.

The Trust argued that suspension was qualitatively different from dismissal and was a neutral act preserving the employment relationship and as such that the injunction should not have been granted. This was rejected in the oral hearing for leave to appeal: 'At least in relation to the employment of a qualified professional in a function which is as much a vocation as a job, suspension changes the status quo from work to no work, and it inevitably casts a shadow over the employee's competence.' There was no reason in principle why the court should not have the power to restrain a suspension if it is in breach of contract and damages would not be an adequate remedy.

Practice and procedure

The stream of cases on statutory procedures continues. In Loosley v Social Action for Health UKEAT 0378/06 the EAT considered whether a substantive failure by an employer to offer suitable alternative employment in a redundancy situation fell within the definition of 'a procedure' under section 98A(2) or whether it amounted to automatically unfair dismissal.

The employee who was due to be dismissed for redundancy was unfairly not told of an alternative job, which was within his capability. Instead it was allocated to a more junior employee. The tribunal found that the job was funded by a third party, who did not want the employee to have the job, but wished the other employee to do so, such that if he had been offered the opportunity of applying for the post he would not have got it. The employers otherwise did all they could to assist the employee. A claim that the employer could not rely on s 98A (2) because the defect was one of substance, not procedure, was dismissed. It was held that in the circumstances of the case the failure to allow the employee to be considered for an alternative post was a procedure failure and therefore that the tribunal had correctly gone on to consider the chances of whether the employee would have been dismissed in any event.

Disciplinary and dismissal

Pinkus v Crime Reduction Initiative (UKEAT 0529/06) deals with a situation where the employee resigned after the employer had initiated the statutory disciplinary and dismissal proceedings against her, brought a grievance and then tribunal proceedings almost six months after the resignation, claiming constructive dismissal. The grievance procedures set out in Part 2 of Schedule 2 to the Dispute Resolution Regulations 2004 apply to claims of constructive unfair dismissal. Regulation 15 grants an extension of time of three months from the last day 'which would otherwise be available for presenting a complaint where either of the grievance procedures is the applicable statutory procedure and the circumstances in paragraph 3 apply'. Paragraph 3 of Reg 15 provides for the presentation of the complaint after the expiry of the normal time limit provided the complainant has complied with Paragraph 6 or 9 of Schedule 2 (the step one letter) in relation to the grievance within that normal time limit. Ms Pinkus had complied with the requirements of Schedule 2 by two letters sent to the employer within the original three-month time limit and had therefore managed to extend her time by a further three months. She just got her claim in in time. The fact that the employer had previously commenced the statutory disciplinary procedure was immaterial.

Garner v Premier Foods Ltd (EAT '“ Richardson J, LNB 22 March 2007). An EAT authority to the effect that following the employer's own '“ arguably perfectly fair procedures '“ is not enough to defeat a claim of automatically unfair dismissal. The employer increased a penalty on appeal from warning to dismissal, which it had power to do under its procedures, which required the appeal stage to be by way of re-hearing with a further right of appeal. The ET supported by the employment appeal tribunal thought that this required a second step 1 letter and a recommencement of the whole procedure.

There are some puzzling findings of fact so the case may be a bit eccentric but the message when advising clients seems to be: if in the course of the disciplinary process you decide to add anything to the pot, start again, irrespective of what your own rules say.

Mediation in the Tribunal

The House of Lords has approved at Third Reading revised provisions in the Tribunal, Courts and Enforcement Bill dealing with mediation by tribunal members in employment cases. A new section 7B is to be inserted into the Employment Tribunals Act 1996, enabling further regulations and practice directions to be issued. A pilot mediation scheme has been running in a number of tribunals since summer 2006 and this Bill is an indication (as are sections of the Gibbons report, A review of Employment Dispute Resolution in Great Britain Department of Trade and Industry March 2007) of the government's investment in mediation as a method of dispute resolution. The government has indicated that the legislation would also permit external mediators to be used. However, it has left open the question of whether a party should be penalised for refusing mediation. The Bill will now proceed to the Commons.