Employment Essentials, the 2023 Mid-Year Report: part two - cases

Back in February, we identified 10 cases to keep an eye out for in 2023. We now have the outcome in two of those cases. Here, in part two of our Employment Essentials 2023 Mid-Year Report, our Employment, Labour & Equalities team discusses the outcome in those two cases together with eight other notable judgments for our pick of 10 need-to-know judgments from the first half of 2023.

1. Redundancy: Suitable alternatives to redundancy
2. Holiday pay: Calculating holiday pay on termination of employment
3. Data protection: 'Legal Proceedings' Exemption
4. Worker status: Contractual terms still relevant
5. Discrimination: Acceptable or unacceptable manifestation of belief?
6. Discrimination: The 'duped decision-maker'
7. Discrimination: Perception
8. Discrimination: Indirect associative discrimination
9. Discrimination – 'Something' arising from disability
10. Discrimination: Flexible working requests

1. Redundancy: Suitable alternatives to redundancy

Even if a dismissal is genuinely on grounds of redundancy, whether it is fair or unfair to dismiss for that reason depends on whether the employer acted reasonably in dismissing the employee for that reason in all the circumstances. In particular it has long been the case that employers need to reasonably consider suitable alternatives to redundancy

During the period in which the Coronavirus Job Retention Scheme (CJRS) operated, were employers expected to consider furlough under the scheme as an alternative to redundancy? In a genuine redundancy situation, would failure to consider furlough mean any dismissal for redundancy would be procedurally unfair? We now have the answer from the Employment Appeal Tribunal (EAT) – Yes.

In the first of our 'one to watch in 2023' cases, Mhinurwa v Lovingangels Care Ltd, the EAT upheld an employment tribunal's decision that an employee was unfairly dismissed where the employer had failed properly to consider the possibility of furlough under the CJRS as an alternative to a redundancy dismissal.

In a potential redundancy situation, employers need to at least consider possible suitable alternatives to redundancy. In the circumstances of this case, furlough was a possible suitable alternative raised by the employee and should have been properly considered rather than rejected out of hand.

It is important to note that the EAT is not saying that the employer was required to furlough the employee, but simply that it should have properly considered the possibility as a suitable alternative. If after proper consideration an employer's decision to not furlough/not consider that furlough was a suitable option in a particular case, redundancy could be within the range of reasonable responses open to them.

Lesson for employers:

Exceptional context but principles remain the same - failure to reasonably consider suitable alternatives to redundancy may render any subsequent redundancy unfair. If defending a claim, employers should set out why they rejected any possible alternatives.

2. Holiday pay: Calculating holiday pay on termination of employment

Every worker has the statutory right to 5.6 weeks' paid holiday a year. Calculating holiday pay should be straight forward, but after two decades of voluminous case law, it is clear that it is anything but.

Just when you thought there could not be anything left to argue about, another case with potentially significant implications rears its head. The case of Connor v Chief Constable of the South Yorkshire Police concerns regulation 14 of the Working Time Regulations 1998 (WTR), which provides that workers are entitled to be paid in lieu of untaken statutory leave entitlement only in the leave year in which their employment terminates.

Under reg 14 payment of unused holiday in the year of termination can be either (a) such sum as provided in a 'relevant agreement' or (b) where there are no provisions of a 'relevant agreement' which apply, according to a statutory formula.

In this case, it was agreed that Mr Connor was entitled to be paid in lieu for 5.5 days of unused holiday on termination of his employment. His employment contract (a 'relevant agreement') said payment for accrued holiday at the end of his employment would be '…based on 1/365th of annual salary for each day's leave…' Calculating the payment according to this formula meant Mr Connor received less than he would have been paid had he taken the holiday. He brought a claim for unlawful deduction from wages.

Ostensibly reg 14 appears to allow employers to make payments on termination under a 'relevant agreement' that do not precisely reflect what the worker would have been paid had they actually taken the leave during their employment, save that the sum paid should be more than nominal. The EAT has now held that a formula under a 'relevant agreement' cannot result in a worker being paid less than the usual amount they would have been paid when working.

In this case, use of a 1/365^th resulted in an underpayment of £53.90.

Lesson for employers:

Employers need to check holiday pay calculation clauses in any 'relevant agreements' (including contracts of employment) are compliant. While the clause does not need to necessarily use the default statutory formula, the formula used cannot result in a sum that would be less than under the statutory formula. In particular, look out for any 'bad leaver' clauses which provide for only a nominal sum. A clause providing for payment at 1/365th or any amount that is less than provided for under the WTR will not be compliant.

Please note that the above only applies to statutory holiday leave and pay, so provision for contractual holiday pay for days in excess of the 5.6 weeks statutory requirement are not affected.

3. Data protection: 'Legal proceedings' exemption

Under the UK data protection regime, there is an exemption from some UK General Data Protection Regulation (UK GDPR) provisions in relation to information required to be disclosed in connection with 'legal proceedings' (and 'prospective legal proceedings'). The extent of this legal proceedings exemption under the Data Protection Act 2018 (DPA 2018) was considered for the first time in a recent Scottish case, Riley v Student Housing Company (Ops) Ltd.

Mr Riley claimed that his former employer had breached the data protection principles whilst processing his personal data when defending employment tribunal (ET) proceedings for unlawful discrimination brought by another former employee. In those proceedings, the former employee alleged Mr Riley, his line manager, had subjected him to derogatory comments concerning his disability.

Mr Riley later claimed £75,000 for his ex-employer's failure to comply with the UK GDPR. The claim was for anxiety/distress and loss of employability caused by his ex-employer's alleged failure to take the following steps:

• tell him about the ET proceedings;
• provide him with copies of the bundles;
• ask him to comment on the allegations made against him; and
• invite him to provide a witness statement.

The case turned on the construction of the wording of the exemption, and whether it is a blanket exemption, or qualified. Rejecting the claim, the Court found that the wording of the exemption results in a wide application. The Court found that the tension between data protection requirements and the demands of litigation was exactly what the exemption was intended to address. Requiring the employer to have invited the former employee to comment and give a witness statement would undercut its discretion as a litigant.

Lesson for employers:

Whilst a Scottish decision, the 'legal proceedings' exemption applies throughout the UK and it seems that this was the first case to explore the purpose and scope of the exemption under the DPA 2018, in a post-proceedings context, which will be welcomed by employer's defending claims. For more on this case see our article Personal Data in Litigation: Assessing the Data Protection Act's 'Legal Proceedings' Exemption.

4. Worker status: Contractual terms still relevant

Recent years have seen a number of 'worker status' claims from those working in today's gig economy. Many gig economy workers have been able to establish that they do indeed have 'worker status', for example, the high profile Uber drivers' litigation. The headline from the Supreme Court judgment in Uber is whether an individual is a 'worker' is primarily a question of statutory not contractual interpretation. You start with the purpose of the statutory provision and interpret it in the way that best gives effect to that purpose, 'irrespective of what had been contractually agreed'.

The EAT in Ter-Berg v Simply Smile Manor House Ltd and others has clarified that the reference in Uber to it being wrong to use the contract as a starting point does not mean that the written terms are irrelevant. Rather it is saying that in a case where the true intent of the parties is in dispute, it is necessary to consider everything which may cast light on whether these terms reflect their agreement, rather than the stricter approach that conventional contractual principles would allow.

As we stated at the time, the Supreme Court handed down its judgment in Uber (see The Worker's Evolution (Uber Edition): Who is a 'Worker' in Modern Workplaces?), the Uber judgment does not mean that the question of whether someone is a worker or employee has become purely one of statute with no role at all for contract.

Lesson for employers:

To establish worker status, the individual must be obliged under a contract to "perform personally any work or services for another party to the contract." Following Uber, you start by considering who the legislation is intended to protect as 'workers'. You then look at all the facts, including the contract as well as the conduct of the parties, and decide whether a person is a worker. So, the contract is not determinative, but it is still a relevant factor.

5. Discrimination: Acceptable or unacceptable manifestation of belief?

We now turn to a number of discrimination cases beginning with the second of our 'one to watch out for in 2023' cases, Higgs v Farmor's School.

While those holding a gender-critical belief are protected under the Equality Act 2010 (as are those holding a gender identity belief), the manifestation of such a belief may, depending on the circumstances, be restricted.

In Higgs, the tribunal found that a Christian employee was not discriminated against due to her gender critical beliefs as her dismissal was not due to her holding of those beliefs but the inflammatory language used in social media posts. The EAT has now allowed Mrs Higgs' appeal as the tribunal had not considered if the employer's actions were proportionate as an interference with Mrs Higgs' right to freedom of religion and expression, nor carried out the necessary balancing exercise between the interference with that right and the employer's objectives in taking action. It was not enough for the tribunal to find that the employer was motivated by a concern that Mrs Higgs could be perceived to hold 'wholly unacceptable views'; it needed to consider whether their motivation had arisen out of Mrs Higgs' manifestation of belief (protected under the Equality Act 2010), or by a justified objection to that manifestation of belief, not protected. The case is now going back to the tribunal for further consideration.

The EAT recognised that a danger arises from any attempt to lay down guidelines in a case such as this. However, it went on to set out the basic principles that will underpin the approach adopted when assessing the proportionality of any interference with rights to freedom of religion and belief and freedom of expression:

1. The foundational nature of the rights must be recognised: the freedom to manifest belief (religious or otherwise) and to express views relating to that belief are essential rights in any democracy, whether or not the belief in question is popular or mainstream and even if its expression may offend.
2. Those rights are, however, qualified. The manifestation of belief, and free expression, will be protected but not where the law permits the limitation or restriction of such manifestation or expression to the extent necessary for the protection of the rights and freedoms of others. Where such limitation or restriction is objectively justified given the manner of the manifestation or expression, that is not action taken because of, or relating to, the exercise of the rights in question but is by reason of the objectionable manner of the manifestation or expression.
3. Whether a limitation or restriction is objectively justified will always be context-specific. The fact that the issue arises within a relationship of employment will be relevant, but different considerations will inevitably arise, depending on the nature of that employment.
4. It will always be necessary to ask:
   1. whether the objective the employer seeks to achieve is sufficiently important to justify the limitation of the right in question;
   2. whether the limitation is rationally connected to that objective;
   3. whether a less intrusive limitation might be imposed without undermining the achievement of the objective in question; and
   4. whether, balancing the severity of the limitation on the rights of the worker concerned against the importance of the objective, the former outweighs the latter
5. In answering those questions within the context of a relationship of employment, regard should be had to:
6. the content of the manifestation;
7. the tone used;
8. the extent of the manifestation;
9. the worker's understanding of the likely audience;
10. the extent and nature of the intrusion on the rights of others, and any consequential impact on the employer's ability to run its business;
11. whether the worker has made clear that the views expressed are personal, or whether they might be seen as representing the views of the employer, and whether that might present a reputational risk;
12. whether there is a potential power imbalance given the nature of the worker's position or role and that of those whose rights are intruded upon;
13. the nature of the employer's business, in particular where there is a potential impact on vulnerable service users or clients; and
14. whether the limitation imposed is the least intrusive measure open to the employer.

Lesson for employers:

Whether action taken by an employer relates to the manifestation of a protected belief (prohibited) or instead due to a justified objection to the manner of that manifestation (permitted) will be fact-specific and can be difficult in many cases, particularly where social media posts outside of work are concerned.

Within the factors to be considered is 'the tone used' and 'the worker's understanding of the likely audience'. But, when looking at social media posts debating a controversial topic, temperate language is often lacking. To what extent are individuals required to express their beliefs nicely on social media? It will be interesting to see the tribunal's eventual finding after applying the guidance set out by the EAT.

6. Discrimination: the 'duped decision-maker'

In order for unlawful discrimination to be established under the Equality Act 2010, it is the individual employee who did the act complained of that must have been motivated by the protected characteristic. Where a decision is made jointly, a discriminatory motivation on the part of any of the decision-makers is sufficient to give rise to liability.

But, what about a 'tainted information' case? In such a scenario the discriminatory act is done by person (X) alone who is innocent of any discriminatory motivation, but has been influenced by information supplied, or views expressed, by another person (Y) who does have a discriminatory motivation.

In whistleblowing claims, an employer is still liable for the reasons of any manipulator in the 'hierarchy of responsibility above the employee' even where that reason is hidden from the decision-maker(s). In other words, if a line manager determines that an employee should be dismissed for one reason, but hides it behind an 'invented' reason which the decision-maker adopts, the reason for the dismissal is the hidden (unfair) reason rather than the 'invented' reason.

In Alcedo Orange Ltd v Ferridge-Gunn, the EAT confirm that while the discrimination and whistleblowing statutory regimes are similar in some respects, they are distinct and different principles apply to each. In discrimination claims the decision maker must act on the proscribed ground, there is no claim against a duped decision-maker.

In this case, a pregnant employee was dismissed after her line manager reported to the managing director (the decision-maker) that work was left undone as she was under-performing rather than due to the fact that she had been off work with a pregnancy-related illness. The case has been sent back to the tribunal to determine on the facts of this case whether the decision to dismiss was:

1. a decision by a sole decision maker,
2. a decision by a sole decision maker influenced by others, or
3. a joint decision.

It is only if (c) is established that the employer itself will have potentially committed an act of discrimination in deciding to dismiss.

Lesson for employers:

In a discrimination claim, it is the motivation of the actual decision-maker that is relevant. But remember, employees may in these circumstances bring a separate detriment complaint in respect of the individual (the line manager) whose actions had a significant influence on their eventual dismissal with losses resulting from dismissal flowing from that detrimental treatment.

7. Discrimination: Perception

Harassment occurs where a person is subjected to unwanted conduct related to a protected characteristic that has the purpose or effect of violating their dignity, or creating an intimidating, hostile, degrading, humiliating or offensive environment for them. In determining the question of harassment, the Equality Act 2010 requires the following to be taken into account:

1. the complainant's perception,
2. the other circumstances of the case, and
3. whether it is reasonable for the conduct to have that effect.

In Greasley-Adams v Royal Mail Group Ltd, bullying complaints had been raised by two colleagues in relation to another employee who had Asperger's Syndrome (Mr Greasley-Adams). In response to questions raised by the investigator into those complaints, Mr Greasley-Adams' complainants described him as 'difficult' and 'nosey'. Mr Greasley-Adams only became aware of these comments when he received the internal investigation report upholding the complaints of bullying made against him.

The EAT remind us:

1. It is only unwanted conduct of which the employee was aware which is relevant. The perception of the person claiming harassment is a key and mandatory component in determining whether or not harassment has occurred. If there is no awareness, there can be no perception.
2. Although Mr Greasley-Adams was in fact offended by the comments when reading the investigation report, in the context of that investigation it was not reasonable for the comments to have that effect. It was inevitable that in the course of a bullying investigation into his conduct things would emerge which he did not like.

Lesson for employers:

The circumstances in which the alleged harassment occurred are highly relevant and must be considered. This case does not mean that it was not reasonable for the conduct to have the proscribed effect 'simply because' it arose in the context of the investigation. But rather, that an employer should not be constrained in carrying out an investigation into allegations of bullying because matters emerging from that investigation are then alleged by the subject of the investigation to be 'unwanted conduct'. Similarly, interviewees should not be constrained from answering the questions put to them in the course of that investigation, provided they do so truthfully in accordance with their own view of the matters under investigation.

8. Discrimination: Indirect associative discrimination

It is not necessary for an employee to have the protected characteristic to bring a direct discrimination claim: the claim can be based on someone else's protected characteristic with whom they are associated, for example a parent of a disabled child. This is known as associative discrimination.

In 2015, the concept of associative discrimination was expanded, at least at EU level, to indirect discrimination. The Court of Justice of the European Union held in the CHEZ judgment that an indirect discrimination claim may be brought by a person not possessing the protected characteristic of those disadvantaged by the relevant provision, criterion or practice (PCP). It is enough that the person suffers alongside those who have a protected characteristic, provided the treatment stems from a measure which impacts disproportionately due to that group's protected characteristic. This left a question mark over the indirect discrimination provisions of the Equality Act 2010 which require an individual to establish that the PCP creates a group disadvantage based on a protected characteristic that they themselves possess.

We were left back in 2015 having to see if time would tell how significant the CHEZ judgment would prove to be in the English courts. In 2021, the London Central tribunal upheld a claim of indirect associative discrimination by a carer whose home working request was refused - Follows v Nationwide Building Society. The tribunal accepted that carers of disabled people were less likely to be able to be office-based than non-carers.

We now have a second tribunal judgment. The case of Rollett & others v British Airways PLC concerned changes to shift patterns which made life more difficult for employees commuting from mainland Europe, but not for those living in the UK. While the vast majority of those impacted were foreign nationals, one was a UK national.

The tribunal agreed that the Equality Act 2010 provisions must be read to protect against indirect associative discrimination. However, it then significantly differs from the Follows judgment. It held that indirect associative discrimination is limited to where the employee can show that the employer applied a PCP which put people with a particular protected characteristic at a disadvantage and the worker can show that they were put at the same disadvantage. CHEZ simply omits the requirement for the worker to have that particular protected characteristic. It remains the case that the employer may then justify the PCP as a proportionate means of achieving a legitimate aim. What indirect associative discrimination does not extend to is a broader concept of a worker who does not have the protected characteristic but who associates with a person who does, suffers a disadvantage that is unique to their association with the person with the protected characteristic as in Follows.

Lesson for employers:

As a judgment from the employment tribunal this decision is not binding on other tribunals. Nevertheless, it is the second reported case in which a tribunal has upheld a claim for indirect associative discrimination despite the clear wording of the Equality Act 2010 requiring the claimant to have the protected characteristic in issue. However, in comparison with the earlier Follows judgment this is limited to where the claimant can show the PCP put them at the same disadvantage as those with the protected characteristic.

9. Discrimination: 'Something' arising from disability

Section 15 of the Equality Act 2010 provides that a person (A) discriminates against a disabled person (B) if A treats B unfavourably because of something arising in consequence of B's disability, and A cannot show that the treatment is a proportionate means of achieving a legitimate aim

In McQueen v General Optical Council, the EAT upheld a decision that an employer had not discriminated against a neurodiverse employee by disciplining him in connection with aggressive and disruptive behaviour at work. The employee's inappropriate conduct on occasions when he came into conflict with colleagues was found not to be something arising in consequence of his disability on the facts of this case. The medical evidence was that Mr McQueen found it difficult to deal with changes to ways of working. This did not extend to difficulty discussing performance related matters. The EAT upheld the tribunal's finding that Mr McQueen's aggressive response to performance concerns being raised was simply because he resented being told what to do and was short-tempered, not linked to his disabilities.

The 'something arising in consequence' of person B's disability can be wide. The disability need not be the sole or principal cause of the 'something' – it is enough for it to be a contributing factor (provided that it is more than minor or trivial) but it is crucial that it is 'in consequence' of B's disability and that the unfavourable treatment by the employer was because of that something.

The specific medical evidence obtained during the employment relationship in this case suggested that the difficulties were confined to changes to ways of working. Here, the problematic behaviour was not linked to changes in the way of working and so it could not be said that they arose out of the disabilities.

However, a note of caution as this case does not mean that a neurodiverse employee will never be able to get over the first hurdle in a similar scenario. Each case will be fact-specific, and may be dependent upon medical evidence specifying the particular effects of the employee's particular disability or disabilities.

Had Mr McQueen been able to show that he received unfavourable treatment because of aggressive or disruptive behaviour which did arise out of their disability, this does not necessarily mean he would have succeed in his claim. It would have been open to the employer to try to objectively justify the treatment. Where an employee's aggressive behaviour at work is causing distress to other staff, the employer may be able to point to legitimate aims such as protecting the health and safety of other staff and maintaining harmony within the workforce. The key question would then be whether the treatment was proportionate. To get over this hurdle, the employer will need to show that they had considered less discriminatory alternatives (for example, behavioral coaching and mentoring or moving the employee to a different role).

Lesson for employers:

As ever, each case will depend on its particular facts. Prior case law indicates that only a loose causation may be needed. Nevertheless, there must be a connection between the "something" leading to the unfavourable treatment and the disability. This decision shows how the existence of a sufficient connection will often be highly fact-specific and reliant on medical evidence.

10. Discrimination: Flexible working requests

In Glover v Lacoste UK Ltd the EAT held that an employee can suffer detriment or disadvantage from a rejection of a flexible working request even where the employer then granted her original request before she returned to work. Once a flexible working application has been determined, then the provision, criterion or practice (PCP) will apply, even if the employee has not returned to work from maternity leave.

In this case, Mrs Glover made a flexible working request asking to work three days a week on her return from maternity leave. Her flexible working request was rejected. She later appealed, her request was again rejected but she was offered four days a week. Childcare arrangements prevented Mrs Glover from accepting this request, and so she (via her lawyers) requested that the request be reconsidered (noting that alternatively she would have to resign and claim constructive dismissal). Her original request was then agreed. She returned to work but nevertheless brought a claim for indirect sex discrimination.

The tribunal rejected her claim because of the employer's reversal of the decision before she returned to work. However, it stated that if the complaint had been upheld it would have made an award of £1,500 for injury to feelings.

On appeal the EAT allowed Mrs Glover's appeal, remitting the case to a new tribunal. Crucially the EAT found that the flexible working PCP had been applied from the date upon which her appeal had been determined. The EAT also commented that it was hard to see on what basis it could be held that Mrs Glover suffered no disadvantage or detriment when her appeal was determined against her and she felt she had to consider resigning.

Lesson for employers:

Employers should be mindful that any later change of heart will not cure any disadvantage or detriment suffered by the employee as a result of the initial rejection, but could be helpful when it comes to a tribunal considering the level of compensation.

Read part one of our 2023 Employment Essentials Mid-Year report to learn about the key legislative developments this year.

If you have any questions about this article, or about employment law in general, please get in touch with Anna Fletcher or Connie Cliff.