Articles | Employment bulletin May 2015

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UK employers have an obligation to carry out collective consultation with representatives of affected employees where they propose to make 20 or more redundancies at one establishment within 90 days or less.  Until recently, it was widely understood that where a business operated over multiple sites, these would count as separate establishments and the obligation to consult collectively was only triggered where at least 20 redundancies were proposed at one particular site.

However, in the ‘Woolworths’ case, concerning the closure of multiple stores in late 2008, the Employment Appeal Tribunal concluded that the words ‘at one establishment’ in the relevant UK legislation should be disregarded as inconsistent with EU law.  Instead it held that employers had to consult where 20 or more redundancies were proposed across an employer’s entire business.

The decision was met with surprise and criticism.  While the appeal process has rumbled on, employers have been unsure whether they need to keep running totals of redundancies across all their different workplaces.

Thankfully for larger employers, the European Court of Justice has now clarified that the words ‘at one establishment’ are not inconsistent with EU law and simply mean the local unit or entity where a worker carries out their duties.  The position is therefore that collective consultation is only required where 20 or more redundancies are proposed at a particular site within 90 days or less.

Despite this latest development, pinning down an employer’s obligations in a large-scale redundancy exercise remains a challenging task.  One issue yet to be resolved is the precise point in time at which employers must commence consultation; EU law states it is when redundancies are ‘contemplated’, UK law when they are ‘proposed’.  Given the persisting uncertainties, employers should continue to tread carefully.

Employers often rely on pre-existing warnings to dismiss an employee after repeated instances of misconduct.  Tribunals will generally not ‘look behind’ a prior written warning unless there is evidence that it was issued with an improper motive or was manifestly inappropriate.  A recent case in the Court of Appeal has highlighted the consequences for employers where a warning given in bad faith is subsequently relied on to justify a dismissal.

The employer, Spectrum Property Care Ltd (Spectrum) issued a final written warning to its employee, Mr Way, after he abused his position to recruit the son of a friend and ex-partner.  While this warning was ‘live’, Mr Way sent inappropriate emails and was subsequently dismissed for misconduct.  Mr Way brought a claim for unfair dismissal, claiming that Spectrum had relied upon a final written warning given in bad faith.  Mr Way alleged that the manager chairing the disciplinary process had covered up his own involvement in the recruitment episode and had told him what the outcome of the hearing would be in advance.  Mr Way also claimed that Spectrum’s Managing Director had warned that any appeal against the final written warning could result in his dismissal.

The Employment Tribunal (ET) in this case refused to hear any evidence on whether the final written warning was issued in bad faith.  The ET was satisfied that Spectrum had undertaken reasonable investigation into the inappropriate emails, and that its decision to dismiss was fair given the live final written warning.  The case proceeded to the Court of Appeal, who disagreed and found that an employer would not be acting reasonably in taking into account a warning given in bad faith when deciding whether an employee’s conduct was sufficient reason for dismissal.  The Court ordered that the case be reconsidered by a fresh Employment Tribunal, which would need to consider whether the final written warning was in fact given in bad faith.

The decision in this case demonstrates the danger of making assumptions about the validity of past warnings.  If there is concern about the circumstances in which a previous warning has been issued, an employer should carefully investigate before relying on that warning to dismiss.  Any warnings given in bad faith or that cannot be objectively justified should be discounted in a future disciplinary process.  The case reiterates the importance of ensuring that full and thorough disciplinary procedures are followed even when merely issuing written warnings.

An employer directly discriminates against a worker when, because of a protected characteristic (such as race, sex or age), it treats that worker less favourably than it treats or would treat others.  The Court of Appeal recently considered whether an employer’s termination of a consultancy agreement amounted to discrimination when the decision-maker relied on information supplied to him with an allegedly discriminatory motive.

The case concerned Dr Reynolds, a 73 year-old medical officer working under a consultancy agreement with Canada Life.  The Managing Director of Canada Life gave a presentation to the General Manager highlighting problems with Dr Reynolds’ performance, including general inefficiency and a refusal to use email.  Following the presentation, the General Manager terminated Dr Reynolds’ agreement.  Dr Reynolds brought a claim against Canada Life for direct age discrimination, claiming that the decision to terminate was discriminatory as the earlier negative presentation was motivated by age discrimination.

The Court held that the termination of her agreement did not amount to unlawful discrimination because the General Manager who had made the decision to terminate was not motivated by Dr Reynolds’ age.  He had formed his own genuine view, based partly on his own experience of Dr Reynolds, that she was providing an inadequate service and was incapable of change.  The motivations of the Managing Director, when presenting on Dr Reynolds’ performance, were irrelevant to the assessment of whether the decision of the General Manager to terminate constituted unlawful age discrimination.

The Court noted that the decision to dismiss and the supply of allegedly discriminatory information should be treated as separate acts.  Dr Reynolds could have pursued a separate claim against the individuals involved in the presentation, for which Canada Life may have been liable.

The Court’s decision underlines that allegations of discrimination will be assessed based on the state of mind of the alleged discriminator.  Had the decision to dismiss in this case been taken collectively by the General Manager and the Managing Director, the motivations of each individual decision-maker would have been subject to scrutiny and the Court may have reached a different conclusion.

Pinning down an individual’s employment status is essential to determining the extent of their employment rights.  Employees enjoy a far wider range of rights than workers, including the right not to be unfairly dismissed (subject to a length of service requirement).  Key issues to consider in working out employment status are whether there is an agreement to perform work personally, the degree of control which each party exercises, and whether there are mutual obligations to provide and carry out work.  However, a recent case concerning the “cure of souls” stretched the boundaries of conventional analysis.

The case required the Court of Appeal to consider the relationship between an ordained minister in the Church of England, The Reverend Mr Sharpe, and his superior, the Bishop of Worcester.  Mr Sharpe had worked as a Rector between 2005 and 2009, with no written contract.  He brought a claim for constructive dismissal (requiring employment status) and alleged that he had suffered a detriment because of making protected disclosures (requiring employment or worker status).  Although Mr Sharpe had made an oath of obedience to the Bishop, he was given considerable freedom to carry out his duties.  The Bishop had no power to commence disciplinary proceedings against Mr Sharpe and could not remove him from his office.

The Court found that the position of Rector was governed by ecclesiastical law and that there was no necessity to imply a contract of employment between Mr Sharpe and the Bishop.  Because no contract existed, Mr Sharpe was also not a worker.  Even if a contract did exist, the Court did not believe it amounted to a contract of employment, noting “the freedom of rectors to go about their cure of souls in the way they see fit” and declaring it “impossible to think of a professional person in an employment situation who would have the same level of security of tenure and independence of action”.

While the facts in this scenario are unlikely to resonate with many employers, this unusual case is a strong reminder that workplace rights are built upon the foundation of employment status.  Employers need to periodically assess the status of their consultants, workers and employees to ensure that they are being correctly treated and their contracts accurately reflect the reality of their status.