Gowling WLG's employment, labour and equalities experts bring you the latest top five employment law developments that may affect your business.

  1. Direct Discrimination: comparators and 'material difference'
  2. TUPE: Dismissal ostensibly for dysfunctional working relationship was TUPE-related
  3. Trade union statutory recognition: admissibility assessed at date of CAC decision
  4. Whistleblowing: complaint about false rumours potentially a qualifying disclosure
  5. Equal pay: Asda claimants overcome corporate structure hurdle

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1. Direct discrimination: comparators and 'material difference'

For A to discriminate directly against B, A must treat B less favourably than it treats, or would treat, another person (known as the comparator). A court or tribunal must compare like with like (except for the existence of the protected characteristic) and so "there must be no material difference between the circumstances" of B and the comparator. As such, establishing the relevant "circumstances" is key to identifying an appropriate comparator.

In Olalekan v Serco Ltd, a prison custody officer (PCO) was dismissed for assaulting a prisoner who was being restrained. He alleged that his dismissal was discriminatory on the grounds of race, and he referred to assaults on prisoners during restraints by white PCOs who had not been dismissed. Due to the very different nature of the assaults in question, the tribunal found that the comparators were involved in materially different situations.

While the claimant in this case did not succeed for other material differences, the EAT did reject the employer's contention that another relevant difference between the claimant's case and that of his chosen actual comparators was that none of the comparators' cases were decided upon by the decision-maker in his case. The Court held that a person who is otherwise a suitable comparator is not rendered unsuitable merely because a different decision-maker is involved. There may be cases where the difference in the decision-maker amounts to a material difference. For example, where one decision-maker was operating under a different policy from the other, or where one decision-maker is operating at a significantly different level from the other. However, if the only difference is the identity of the decision-maker, that would be unlikely to amount to a material difference because the employer would be liable for the actions and decisions of both decision-makers (subject, of course, to any defence under s109(4) Equality Act 2010).

Lesson

Where a claimant in a direct discrimination claim seeks to compare themselves to an actual comparator, it is not necessary for the decision-maker in the comparator's case to be the same person who decided the claimant's case. An employer may be liable for discriminatory treatment meted out to different employees in similar circumstances even though different decision-makers were involved.

2. TUPE: Dismissal ostensibly for dysfunctional working relationship was TUPE-related

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) gives enhanced protection against unfair dismissal on a TUPE transfer by providing that certain dismissals are automatically unfair. As a result, an employer's ability to dismiss employees fairly when there is a TUPE transfer is severely limited. Dismissals will be treated as automatically unfair if the sole or principal reason for the dismissal is the transfer itself, unless it can be shown that the dismissal is for an economic, technical or organisational reason ("ETO") entailing changes in the workforce.

In Hare Wines Ltd v Kaur and anor, the Court of Appeal has held that an employee dismissed on the day of a TUPE transfer on the pretext of difficulties in her working relationship with a fellow employee of the transferor who was to become a director of the transferee was automatically unfairly dismissed by reason of the transfer.

In this case, Ms Kaur was employed since 2002 by the transferor whose directors were Mr Hare and Mr Windsor. She had a strained working relationship with a colleague, Mr Chatha. In December 2014, it was decided that the transferor would cease trading for financial reasons, and its business and employees would be taken on by a new company, Hare Wines Ltd, of which Mr Hare was initially sole director and shareholder, and of which Mr Chatha was to become a director.

On the same day as the transfer, Mr Windsor terminated Ms Kaur's employment while all other employees transferred to the new company. The question for the tribunal was whether (a) Ms Kaur was dismissed because she got on badly with Mr Chatha (who was about to become a director of the transferee business) and the proximity of the transfer was coincidental, or (b) Ms Kaur was dismissed because the transferee did not want her on the books, the reason for that being that she got on badly with Mr Chatha.

The EAT agreed that this case fell within scenario (b). When ascertaining the principal reason for the dismissal, while "proximity to the transfer is not conclusive, it is often strong evidence in the employee's favour". The poor working relationship between Ms Kaur and Mr Chatha had existed for several years. The inference that the transfer, rather than the poor relationship, in isolation from the transfer was the principal reason for the dismissal was therefore "very strong" in this case.

3. Trade union statutory recognition: admissibility assessed at date of CAC decision

There is a complex statutory procedure by which trade unions may seek compulsory statutory recognition by an employer for the purpose of collective bargaining. An application will not be admissible if a collective agreement, under which another union is recognised for collective bargaining purposes in respect of any workers falling within the relevant bargaining unit, is already in force. So, if any union is recognised for collective bargaining in respect of at least some of the workers covered by the current application, then the application will not be admissible.

But where a trade union applies to the Central Arbitration Committee (CAC) for compulsory statutory recognition by an employer, what is the relevant date for deciding whether there is an existing collective agreement in place? Is it the date the application is made by the union or the later date of the CAC's decision? In the case of Unite the Union v Clugston Distribution Services, an existing collective agreement with another union was updated to cover workers in Unite's proposed bargaining unit. The revised agreement was entered into by the employer and existing union two days after Unite submitted its application to the CAC but well before the CAC hearing to determine the application.

The CAC has determined it is the date of its decision that is applicable. The CAC must look at the reality of the industrial situation as it pertains at the time of the decision, rather than a fixed point in the past. The CAC added that it should be remembered that those who drafted the provisions of the Schedule were at pains to ensure that the CAC did not get embroiled in inter-union territorial disputes. Rather, the intention of Parliament was to provide a vehicle that enabled trade unions, should the applicable tests be satisfied, to achieve recognition in workplaces where collective bargaining was absent; it was not for the CAC Panel to become the arbiter in disputes between unions as to which is best placed to represent the needs of the workers.

This decision of the CAC is interesting because it recognises that the industrial relations situation between an employer and unions is not static. The relevant factual matrix upon which it should assess the admissibility of an application for statutory recognition is the date the CAC panel decides the application, rather than the date on which the application was submitted. An application from a union for statutory recognition does not 'stop the clock' in terms of intervention from another union.

4. Whistleblowing: complaint about false rumours potentially a qualifying disclosure

In Ibrahim v HCA International Ltd, the EAT held that a hospital interpreter's complaint to HR that he was being defamed by rumours that he had breached patient confidentiality was capable of amounting to a qualifying disclosure for the purpose of a whistleblowing claim.

For there to be a qualifying disclosure of information, the information disclosed must, in the reasonable belief of the worker, tend to show that a "relevant failure" under section 43B of the Employment Rights Act 1996 has occurred, is occurring, or is likely to occur. Included in the list of six potential "relevant failures" is "breach of any legal obligation". The EAT has now confirmed that the reference to "legal obligation" is broad enough to include tortious duties, such as defamation, and breach of statutory duty, such as those contained in the Defamation Act 2013.

However, for Mr Ibrahim's complaint to HR to attract protection as a qualifying disclosure, he also needed to show that he made the disclosure in the reasonable belief that doing so was "in the public interest". On the facts of this case, it was clear that Mr Ibrahim's only concern was that the false rumours had been made about him, and the effect of those rumours on him. He did not have the reasonable belief that the disclosure was in the public interest. As such, his whistleblowing claim failed.

5. Equal pay: Asda claimants overcome corporate structure hurdle

Large-scale equal pay claims have traditionally been the reserve of public-sector workers, but times have changed. This month we have the latest instalment in the high profile Asda litigation described by Lord Falconer KC, representing Asda as "by far the most important, complex and financially significant equal pay claim ever pursued in the private sector. If successful, it will have an enormous effect …because the ripple effects of the case will be huge'.

As a preliminary issue, the Court of Appeal has considered: can an employer avoid equal pay claims through corporate structures that physically separate female-dominated and male-dominated workforces?

Asda operates:

  • A network of retail stores in which it has 133,000 employees. Instore staff is employed on retail terms. The retail workforce is not heavily unionised and their terms are not set through collective bargaining, although there are different pay rates based on cost of living differentials in three separate geographical areas.
  • 24 distribution centres where 11,600 employees work. They are employed on distribution terms, collectively bargained through the GMB on a national basis.

None of the distribution centres are located on the same site as any of the retail stores.

Over 7,000, predominantly female retail employees are seeking to compare themselves with the higher-paid, and predominantly male, distribution employees.

Under section 79 of the Equality Act 2010, an equal pay comparison is only valid between the claimant and her chosen comparator if they are both employed by the same employer and work at the same establishment or if they are both employed by the same employer and work at different establishments but 'common terms apply at the establishments'.

Asda argued that there were essentially different employment regimes for its stores and depots, such that there were no 'common terms' applicable to employees at the different type of locations. The Court of Appeal, agreeing with the original tribunal, has rejected this argument. Common terms can apply as between two establishments (a store and a depot) not only where they apply to actual employees in the relevant classes working there but also where they would apply, even if the claimant's class of employee would never in practice be employed at the comparator's establishment (and vice versa). For example, an in-store baker would be paid the same even if she was hypothetically employed as a baker based at a distribution depot (it doesn't matter that you would never have a baker based at a depot).

In this case, it was found that for both the retail staff and the distribution staff, Asda applied common terms and conditions wherever they worked and as such the female retail staff can compare themselves with the male distribution staff.

Having decided the issue on the basis that 'common terms' applied under section 79, the Court of Appeal nevertheless confirmed that the female claimants were also entitled to draw the comparison under European law because a 'single source' existed - terms and conditions were set by the same employer. The Court held that it was enough that Asda's board of directors, as a matter of ordinary company law, had the power to set, or change, the terms, regardless of the corporate structure treating them as separate business divisions.

What now?

This latest judgment is only concerned with whether the claimant retail employees are entitled to compare themselves with employees in the distribution operation at all. Remaining issues for the tribunal to consider include whether the female store workforce are employed to do work of equal value to that carried out by male distribution centre workforce. The tribunal will also need to consider whether Asda has a 'material factor defence', which means that it can show that a difference in pay is objectively justified for a reason unconnected with gender.

Given the length of time it has taken to get to this stage (the claims were lodged back in 2008) and the potential importance of the litigation to Asda, it is likely to be some time before the case is concluded.