News & Insights

Employment bulletin October 2013

Discrimination is a major theme this month both in cases and changes to the law.

Age discrimination and insured benefits

Insurance companies benefit from a specific exemption from the ban on age discrimination when offering goods or services which means that they can still restrict their products to certain age groups. However, that exemption does not apply to employers. Employers have to be able to justify different treatment because of age as “a proportionate means of achieving a legitimate aim” which means that the employer has to show a social policy aim and that the different treatment is no more discriminatory than is necessary to achieve that aim.

In practical terms, if an insurance company discontinues payment of permanent health insurance because an employee is 55, the employer will not be able to rely on the insurer’s actions as justification for denying the benefit to that 55 year old employee. In a recent case the employer in such circumstances tried to argue that their “legitimate aim” was to admit as many employees into their pension and PHI scheme as possible but the Tribunal didn’t accept that this was true as PHI was only offered to some employees. The Tribunal concluded that the real reason was budget constraints which cannot justify discrimination. The Tribunal also found that the employee had been indirectly discriminated against as he had been refused the option of joining a more beneficial PHI scheme as he was not “actively at work” at the relevant time. Such a condition is more likely adversely to affect older people and again the employer was unable to justify it.

The employer will now have to fund the value of the PHI payments until the employee recovers or reaches 65. This is a very good reminder of the cost of discrimination claims.

“Shambolic and lacking in competence” redundancy process

Another case concerning age discrimination may be more comforting to employers. The case concerned a redundancy exercise in the police force. The employee alleged that the employer had manipulated the selection criteria to produce a result which adversely affected him due to his age. The Tribunal analysed the employer’s process and concluded it was “at best inconsistent…certainly shambolic in places and lacking in competence”. The employer was then required to persuade the Tribunal that the reason for the treatment was not age. The employer showed that although there were mistakes these were honest mistakes and the tribunal found there was no discriminatory motive behind employer’s actions.

While not the most appealing argument to run this case reconfirms that the line “we may be incompetent but we treat everyone equally badly” can be a valid defence to a discrimination claim!

Flexible working and indirect sex discrimination

The refusal of a flexible working request from a woman for childcare reasons can lead to a claim of indirect sex discrimination. Usually the issue is whether the employer can justify the refusal by showing a good business reason which means that flexible working would have been unsuitable. However, a recent case considered whether an employer can “cure” any potential discrimination on appeal.

The employee appealed against the refusal of her flexible working request but resigned before the appeal was heard. Her appeal was upheld to the extent that a 3 month trial of the proposed working arrangement was offered. However, she confirmed that her resignation stood.

The Employment Appeal Tribunal (EAT) was persuaded that the employer had not discriminated against the employee as it had reversed its decision and given her the option of a trial of part time working. As that decision had been made while she was still on maternity leave, she did not suffer a detriment on her return to work. It’s important to remember that an appeal forms part of the employer’s decision making process and an initial decision to refuse a flexible working request is conditional as it’s subject to a right of appeal.

Clearly, employees should think carefully about the timing of any resignation and appeal. Employers should remember that a major benefit of a well handled appeal is the opportunity to correct what has gone before.

Who should hear an appeal?

While the last case showed how an appeal can “save” an employer, our next case illustrates how mishandling an appeal can give rise to a claim in its own right. The employee raised a grievance about various matters including being sworn at by his manager and another manager disliking him because he kept raising issues about lack of training. The grievance was investigated by the regional managing director. The allegations of abuse and dislike were not upheld. The employee appealed.  The same regional managing director heard the appeal at a short appeal meeting which the employee found threatening and bullying. The employee resigned shortly afterwards and brought a claim for constructive unfair dismissal.

The EAT confirmed that in appropriate circumstances an employer’s failure to appoint a more senior member of management who had not been involved in the grievance previously and therefore could deal with it impartially can be a breach of the implied term of trust and confidence entitling an employee to consider him/herself dismissed.

Third party harassment

As we mentioned in our April bulletin, the section in the Equality Act which made employers liable for harassment of an employee by a third party where harassment had occurred on at least two previous occasions which the employer knew about and had not taken reasonable steps to prevent was due to be repealed in March. The timing was delayed but it has now been repealed with effect from 1 October 2013.

Employees will now find it hard to bring successful claims against their employers for harassment by customers for example, unless they can show that the employer’s failure to stop the harassment was in itself discriminatory. However, a failure to take reasonable steps to stop such harassment could form the basis of a constructive dismissal claim so employers should not think that they can ignore such treatment of their staff with legal impunity. Clearly ignoring it would be likely to cause serious employee relations issues in any event.