Gowling WLG's employment, labour & equalities experts bring you the latest top five employment law developments that may affect your business from a continuing rise in tribunal claim numbers to a galaxy far, far away…

  1. Tribunal claim numbers beginning to return to pre-fees levels
  2. Victimisation and the bad faith defence
  3. Only temporary workers protected under the AWR
  4. Post transfer change held not related to the transfer
  5. A reference from a galaxy far, far away…

1. Tribunal claim numbers beginning to return to pre fees levels

On 13 September the Ministry of Justice published the 'Tribunals and Gender Recognition Statistics Quarterly, April to June 2018 (provisional)' and the 'Employment tribunal and Employment Appeal Tribunal Statistics 2017 - 2018' spreadsheet.

During the period of operation of Employment Tribunal (ET) fees (July 2013 to July 2017) receipts remained relatively stable (around 4,300 per quarter), but have been increasing consistently since the abolition of ET fees by the Supreme Court on 26 July 2017. While the number of individual tribunal claims has not yet returned to the levels we saw before the introduction of the fees regime, we have now reached an important statistical milestone. The latest quarterly statistics reveal that single-claim receipts are, for the first time, higher than the level when fees were first introduced in July to September 2013.

The Quarterly statistics also reveal:

  1. Receipts in single-claim cases are up by 165%, to 10,996 compared with the same period in 2017 (when fees still applied).
  2. Receipts in multiple claims quadrupled up by 344% to 42,700 (a large airline claim accounting for 23,000 of the claims). The 42,700 individual claims fall within 716 multiple cases up from 317 cases in the same period a year ago.
  3. There has been a 130% rise for single claims and a 34% increase for multiple claims in the 'outstanding caseload' pending before tribunals.
  4. Between the launch of the fee refund scheme in October 2017 and 30 June 2018, 14,500 applications for refunds were received and 12,400 refund payments made with a total value of £10,615,000.

In addition the 2017/18 annual statistics reveal:

  1. A total of 109,685 claims were accepted by employment tribunals, as compared with 88,476 last year.
  2. Compensation awards were made in only 536 unfair dismissal claims (as compared with 587 in 2016 - 17) and in 136 discrimination cases (as compared with 158 cases in 2016 - 17).
  3. The highest, median and average compensation awards for unfair dismissal and discrimination claims were:
Compensation Awards No. of Awards Highest Median Average
Unfair Dismissal 536 415,227 8,015 15,007
Race Discrimination 22 124,979 11,299 24,322
Sex Discrimination 39 36,616 10,638 13,212
Disability Discrimination 64 242,130 16,523 30,698
Religion or Belief Discrimination 3 6,846 5,696 5,074
Sexual Orientation Discrimination 2 24,100 12,550 12,550
Age Discrimination 6 10,432 6,184 6,796

2. Victimisation and the bad faith defence

Under section 27 of the Equality Act 2010, unlawful 'victimisation' occurs where a person (A) subjects another person (B) to a detriment because either B has done a protected act or A believes that B has done, or may do, a protected act. 'Protected acts' include alleging that A or another person has contravened the Equality Act. However, section 27(3) provides that:

"giving false evidence or information, or making a false allegation, is not a protected act if the evidence or information is given, or the allegation is made in bad faith."

But does an ulterior motive for making a victimisation claim show bad faith?

This was the question the Employment Appeal Tribunal (EAT) considered in Saad v Southampton University Hospitals NHS Trust. In this case the NHS Trust had concerns over a trainee surgeon's performance. At the time the performance issues came to a head, the claimant made an allegation of racial or religious discrimination in a grievance. The grievance was ultimately rejected and Mr Saad was subsequently dismissed. Mr Saad brought claims for unfair dismissal and victimisation.

The tribunal found the allegations raised by Mr Saad in his grievance (that a manager had been overheard comparing his appearance to a terrorist) were false but that he subjectively believed it to be true. However, it also found that he had raised the grievance to deflect his performance issues and postpone an upcoming assessment. On that basis, the tribunal found Mr Saad had acted in bad faith.

The EAT allowed Mr Saad's appeal - honesty not motivation is key. The tribunal's findings meant that Mr Saad had made his allegations honestly; his motive for doing so did not mean that he had acted in bad faith. The primary question for victimisation purposes is whether the employee has acted honestly in giving the evidence or information, or in making the allegation, that is relied on as a protected act. The existence of an ulterior motive, while potentially relevant, is not the focus of the enquiry. In this case, just because the allegation was raised as a means to deflect criticism during a performance process did not automatically mean it was done in bad faith.

3. Only temporary workers protected under the AWR

Following the controversial 2013 EAT decision in Moran v Ideal Cleaning, the number of agency workers potentially falling within the provisions of the Agency Workers Regulations 2010 (AWR) is significantly less than originally anticipated. Not all agency workers are covered, it is only those supplied to work temporarily. Those placed indefinitely (meaning open-ended in duration) are not placed "temporarily" and are therefore outside the scope of the AWR.

In Brooknight Guarding Ltd v Matei, Mr Matei was employed by Brooknight as a security guard on a zero hours contract. Brooknight provided security guards to various sites on an 'as and when needed' basis. Brooknight was a 'temporary work agency' for AWR purposes. During Mr Matei's 21 months of employment, he was mainly assigned to one particular site. The question arose as to whether Mr Matei was only placed temporarily. The EAT agreed with the tribunal, that while Mr Matei mainly worked at one site, it was as a 'cover security guard'. Each 'as required' assignment was on a temporary rather than on a permanent or indefinite basis.

The AWR define "agency worker" as "an individual who is supplied by a temporary work agency to work temporarily for and under the supervision and direction of a hirer". "Temporary" in this context means not permanent. For employment purposes, a permanent contract is generally regarded as one which is open-ended in duration, terminable on proper notice being given. In Moran, the agency workers concerned had already been assigned for periods ranging from 6 to 25 years were held not to be 'temporary' and therefore not protected under the AWR. This case is in line with the Moran judgment, but a useful example of where 'temporary assignment' will be found. As ever each case will be fact specific.

4. Post transfer change held not related to the transfer

Under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), the starting point is that any purported variation to a transferring employee's contract is void if the sole or principal reason for the variation is the transfer (regulation 4(4)).

Changes to terms and conditions will not be void if the reason for the changes is unrelated to the transfer. Where the employer wishes to harmonise terms (that is, bring the transferred employees' terms in line with the existing staff of the new employer), the transfer will be the reason for the change. As such, examples of non-void changes found in case law are few and far between. The case of Tabberer and others v Mears Ltd and others, provides a rare example of a post-transfer change not being void.

In this case, the EAT held that the withdrawal of a contractual entitlement to an electrician's travel allowance following a TUPE transfer was not void under regulation 4(4). The travel allowance when introduced in 1958 was to compensate the electricians for travel time between 40 depots that existed at the time as the travel time impacted on a then existing productivity bonus. Over the years the productivity bonus had been phased out and the number of depots reduced to just one. By 2006 the electricians were allocated jobs by handheld computers rather than from the depot. On the facts of this case, the employment tribunal had been entitled to find that the employer's decision was motivated by its conclusion that the allowance was outdated and unjustified, and that the variation was not for a reason connected with the transfer.

TUPE does not involve a "but for" test. Rather, the pertinent question is what was the reason the transferee acted as it did? In this case, it was plain that the underlying reason for the change was one which would have applied regardless of the transfer. In the earlier case of Smith v Brooklands [2011], the transferee discovered some unusual salary arrangements after the transfer, whereby some employees worked between 22 and 25 hours per week but were paid as if they worked a 36-hour week. The transferee believed that this was a mistake and implemented a phased salary reduction. The affected employees claimed that this was contrary to regulation 4(4). This argument failed, as the employment tribunal found that the reason for the contractual change was the HR director's belief that the claimants were being overpaid by mistake, and that their pay did not conform to the sector norm.

Note: Until 31 January 2014, regulation 4(4) provided that changes to an employee's terms were void if the sole or principal reason for the change was either the transfer itself or a reason connected with the transfer which is not an economic, technical or organisational reason entailing changes in the workforce (ETO reason). On 31 January 2014, regulation 4(4) was amended to remove the reference to reasons connected with the transfer. In addition under regulation 4(5) changes may be permitted if the sole or principal reason is an ETO reason and the parties agree or the terms of the contract permit the change Both Tabberer and Brooklands concern the pre-2014 version of the TUPE regulations. However, it is thought that the outcome would be the same under the current rules.

5. A reference from a galaxy far, far away…

The case of Mr Francis-McGann v West Atlantic UK Ltd, serves as a reminder to employers of the importance to check references and a lesson to employees of what not to do.

In this case, a pilot applied for a captain position with a freight airline. He falsely claimed to have previously worked as a captain and gave as a referee Mr Desilijic Tiure. The pilot was appointed as a captain before his references were checked and provided with training based on him already being an experienced captain.

The person who initially decided to hire Mr Francis-McGann was clearly not an obsessive Star Wars fan. When his references were checked, it became obvious that Mr Desilijic Tiure was not real, being Jabba Desilijic Tiure, better known as Jabba the Hutt of Star Wars fame!

Upon discovery, the employer wished to terminate his employment for gross misconduct in providing a false reference and misrepresenting his experience. The employer gave the pilot the chance to resign with immediate effect, which he did. However that was merely Episode 1.

In Episode II: the employer strikes back - Mr Francis-McGann brings a tribunal claim for three months' unpaid notice pay! The tribunal had no qualms in dismissing his claim. In the circumstances, the employer was entitled to summarily dismiss him without notice and the fact it allowed him to resign with immediate effect did not change that. Furthermore, the tribunal allowed the employer's cross claim for recovery of training costs in accordance with a contractual clause in which Mr Francis-McGann agreed to repay the £4,725 if his employment ended within the first six months. The force was clearly not with Mr Francis-McGann.

On a serious note, checking references given by applicants is an important part of any recruitment process. Where experience equates to safety, doing so is critical. Having a second pair of eyes to safeguard the process can mitigate the risk of fake references slipping through the net and protect the interests of customers and staff.