Wright, Johnston & Mackenzie Solicitors

Equality Act 2010 - Now in force

The Equality Act came into force on 1st October 2010.  It repealed previous Acts of Parliament and revoked previous Regulations dealing with anti-discrimination law. 

The Act introduced the idea of “protected characteristics”, which are age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation. 

It no longer matters whether the ‘victim’ of discriminatory treatment possesses the protected characteristic.  The main test is whether the less favourable treatment is because of a protected characteristic, regardless of who it is possessed by.  This protects people discriminated against because they are, or are perceived to be associated with someone who has a protected characteristic (e.g. carers). 

Other important provisions that the Equality Act introduces include an extension of protection covering indirect discrimination and disability discrimination.  Positive discrimination is acceptable under the Act if it is a proportionate way of achieving defined aims.

In relation to recruitment processes, pre-employment health and disability enquiries are generally banned as from 1st October 2010, which will make it harder for disabled people to be unfairly screened out when applying for jobs.

The gender pay gap and discriminatory pay practices are tackled.  Clauses in employment contracts that ban employees from discussing their pay or bonuses with colleagues are now unenforceable against employees who discuss these matters for the purpose of finding out whether pay rates are discriminatory. 

Although it is envisaged that the effect of the Act will be gradual (and employers will not suddenly be exposed to a flood of claims) companies’ policies will need to be updated to reflect the changes. 

Recruitment procedures should be reviewed in relation to new prohibition on asking questions regarding an applicant’s health.

There will be more scope for claims of third party harassment and associative discrimination.  Employers should consider whether additional diversity training is necessary.

Pay secrecy clauses are still permitted, but they cannot be relied upon to prevent discussions aimed at establishing the existence of discrimination.

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Care is needed when giving job references

The case of Bullimore v Pothecary Witham Weld, Solicitors (PWW) involved the provision of job references.  The Employment Appeal Tribunal (EAT) held that the providers of a discriminatory job reference can be held liable for the loss of earnings, even in circumstances where the recipient of the reference (i.e. the potential new employer) victimises the applicant.

H, a partner in solicitors firm PWW, dismissed the employee (B), who raised a claim of unfair dismissal.  The claim was subsequently settled out of court. 

Following a successful interview, B was offered a position in another firm, S, which was subject to satisfactory references.  H gave an unfavourable reference to the firm S and referred to the previous Tribunal proceedings.  The job offer was subsequently withdrawn and both H and S were held to have been influenced by previous Tribunal proceedings on the part of B and so were held to have discriminated against B by way of victimisation. 

The Tribunal held that the claim for loss of future earnings against PWW was too remote. The EAT disagreed, observing that this was a not uncommon form of victimisation, and if the reference recipient was not also motivated by victimisation, the Claimant would have no remedy for loss of earnings.

In this case, the president of the EAT noted that the original Employment Tribunal’s conclusion might seem “rather harsh” and said, “the position of the employers who are asked for references for employees with whom they have fallen out is a very delicate one.” 

Nevertheless, the overriding message for employers is to take great care when providing references for an ex-employee.  It is usually best to stick to a basic, factual reference where at all possible.  Remember you do not have to provide a reference on request. 

Contact the Employment Team for a second opinion on references and we’d be happy to help you.

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New Guide on Stress at Work

New guidance for employers has been issued by ACAS, the Health and Safety Executive and the Chartered Institute of Personnel and Development (CIPD).  The guide aims to explain employers’ duties for the reduction and prevention of work-related stress.

There are legal obligations placed upon employers to identify any problems within the work place that could trigger stress for their employees.  The legal principles can be surmised as duties upon the employer to:

• identify significant and foreseeable risks to employee health
• prevent harm to employee health that is foreseeable and caused by work
• consider any physical or mental impairment that has a substantial or long-term effect on their ability to work
• consult with employees on health and safety matters.

There is a four step guide to the law, namely identifying a problem, preventing harm, protecting individuals and protecting the workplace.  Within each of these steps are duties each employer must observe.  The law does not expect employers to eliminate all risks, but employers are expected to be proactive in considering what factors could cause ill-health or exacerbate existing health conditions. The law states that an employer should:

• take reasonable steps to examine the workplace to identify risk
• identify possible sources of stress that could foreseeably cause employee ill-health (see ‘When is action required?’ below)
• take notice of signs of harm to employees that are plain enough for employers to realise that preventative or protective action is required
• consider existing health needs or disabilities on the employee’s ability to carry out their work
• expect that employees can withstand normal pressures of work.

The law requires employers to take action when harm to employees’ health is ‘foreseeable’. As an employer, you are entitled to expect that employees can cope with the normal pressures of the job unless you know of a particular problem or disability. However, there are number of factors that will help determine whether harm is foreseeable or not, including:

• Is the workload much more than is normal for the job?
• Are the job demands unreasonable when compared with the demands made of others doing comparable work?
• Are there signs that employees are suffering from stress, such as prolonged or repeated incidences of absence?
• Are there any other non-work factors that may be contributing?

In addition you must give consideration to whether the employee’s health needs could be categorised as a disability. This is defined as a physical or mental impairment that has a long-term adverse effect on their ability to carry out normal day-to-day activities. 

A copy of the guidance can be found at here on the CIPD website.

Health & safety in the workplace is a key issue for many employers and our outsourced HR service can help you with consultation processes with your workforce. Contact Julia MacDonald .(JavaScript must be enabled to view this email address) for more information.

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Aggregate pay comparison rejected

In Brownbill and others v St Helens and Knowsley Hospital NHS Trust, contractual terms relating to enhanced payment for unsocial hours were not part of the term governing basic pay.  Terms providing for enhanced pay should be looked at separately from terms providing basic remuneration.

In this case, a large number of female NHS employees raised an equal pay claim after finding their comparators’ unsocial hour rates were at a higher percentage of their basic pay.  Unsociable hours were worked as part of their normal contracted hours due to the nature of their jobs. 

At the Employment Tribunal, it was held that, as the claimants overall earned a higher wage than their comparators, there was no less favourable term to be rectified.  The claimants argued that section 1(2) of the Equal Pay Act 1970 (now part of the Equality Act 2010) operated so as to modify the less favourable terms to match the corresponding terms in their comparators’ contracts.

On appeal, the EAT stressed that the focus should not be on the overall outcome but on the contractual terms and the ‘unsociable hours’ were terms that could and should be compared.  There must be a valid non-discriminatory reason for the difference in the treatment of unsocial hours.

This decision was made prior to the Equality Act 2010, however this new legislation only modifies the relevant provisions slightly. 

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Employer could not retract mistaken dismissal

In the case of Willoughby v CF Capital plc, there had been talks between employee, W, and her employer where W had expressed an interest in becoming self- employed.  W’s employer sent an agency agreement to W effectively moving her to self-employed status and stating that her existing employment contract would terminate on a certain date.

W phoned her employer and rejected the agency agreement and said that she treated herself as having been dismissed.  Her employer attempted to reassure her that this was not the case and, if she did not want to move to being self-employed, then she could continue in employment as before.  W maintained she had been dismissed and lodged a claim for unfair and wrongful dismissal - a claim denied by her employer, who alleged that W had resigned.

The Employment Tribunal, although acknowledging that on the face of it, the letter amounted to a dismissal, said that there were special circumstances to this case.  A reasonable person in W’s position would have recognised that something was amiss upon receipt of that letter, and given that W’s employer had withdrawn the dismissal as soon as reasonably practicable, then W’s claim was dismissed on the basis that she had resigned.

On appeal, the EAT agreed with the Tribunal in so far as the letter amounted to W’s dismissal and this presumption could only be displaced in ‘special circumstances’.  However, the EAT stated the Tribunal was wrong and the mere fact an employer or employee may have been mistaken in dismissing or resigning does not constitute a special circumstance.  Furthermore, the withdrawal was not timeous and the intervention of the Christmas holiday period was no excuse where termination would be effective from 31st December.

This case illustrates the importance for the employer of getting the facts right and of keeping a written record of what has been agreed between parties at every stage of negotiations.  The misunderstanding in this case could have been readily identified had the employer sent the employee a note of what was discussed at the meeting.

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Broker did not breach restrictive covenants

The case of Phoenix Partners Group LLP v Asoyag highlights a difficulty for employers framing post termination restrictive covenants. 

A restrictive covenant is a provision in an employment contract which prohibits the employee from doing something (usually approaching customers or working for a competitor) in the event that he/she leaves their employment.

A financial broker, A, was employed by PPG partly due to his significant client contacts in the Eurostoxx market.  In December 2009, A gave his notice to resign from employment having accepted an offer from a competitor, GFI.  He then asked PPG if certain parts of the restrictive covenant in his contract could be lifted, but PPG refused.  Irrespective of the refusal, he started working for the new company the day after his employment ended with PGG in March 2010.  PPG argued that A was in breach of the restrictive covenant as he was engaging with a business that competes with PPG’s business.

PPG applied to the High Court for an injunction to prevent A from acting in breach of the covenant. 

It is well established that the validity of a restrictive covenant has to be judged as at the date the contract was entered into.  The question of whether A was in breach was to be judged as at the date of the alleged breach.

Since A’s departure from PPG, the company’s trading activity had diminished to such an insignificant level that there could not be said to be any competition between PPG and GFI.

The Court concluded that the injunction should be discharged, with there being little prospect of PPG being able to prove breaches of restrictive covenants or confidence.

This case highlights that, when agreeing restrictive covenants, employers need a degree of foresight and preferably legal advice to ensure that clauses cover anything that might realistically occur that could harm their legitimate interests in the future.  Ironically, the fact that A took the majority of PPG’s clients with him meant that he could escape and had PPG drafted the clauses differently, this might have been avoided.

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