Employment Law E-Bulletin Issue 52

  • Essop and others v Home Office (UK Border Agency); Naeem v Secretary of State for Justice [2017] UKSC 27 – No requirement to establish the reason for particular disadvantage in indirect discrimination
  • Born London Ltd v Spire Production Services Ltd –  Incorrect statement that bonus was non-contractual did not breach Reg 11 TUPE
  • Ssekisonge v Barts Health NHS Trust (Unfair Dismissal – Reason for dismissal including substantial other reason) [2017] UKEAT (02 March 2017)
  • New employment tribunal compensation limits came into effect in April 2017

Essop and others v Home Office (UK Border Agency); Naeem v Secretary of State for Justice [2017] UKSC 27 – No requirement to establish the reason for particular disadvantage in indirect discrimination

Under the Equality Act 2010, indirect discrimination occurs where the application of an apparently neutral provision, criterion or practice applied by an employer puts or would put persons who share a protected characteristic at a disadvantage unless it can be objectively justified.

In the conjoined cases of Essop and ors v Home Office (“Essop”) and Naeem v Secretary of State for Justice (“Naeem”), the Supreme Court (“SC”) has held that, for the purposes of such a claim, it is not necessary to establish the reason for the particular disadvantage to which a group is put; rather, the essential element is a causal connection between the provision, criterion or practice (“PCP”) and the disadvantage suffered, not only by the group, but also by the individual.

Essop considered a Core Skills Assessment (“CSA”) that Home Office employees must pass to be eligible for promotion. Black and minority ethnic candidates and those aged 35+ had a proportionately lower pass rate than white and younger candidates, and consequently 52 employees who had failed the test claimed indirect race and/or age discrimination.

The original decision, that the Claimants had to show the reason why the PCP complained of (in this case the requirement to pass the CSA) put them, as individuals, at a particular disadvantage, was overturned. The Employment Appeal Tribunal (“EAT”) agreed that it was impossible to prove a group disadvantage without showing why it has arisen, but noted that it is commonplace for the disparate impact to be established on the basis of statistical evidence. An explanation of the reasons why a particular PCP puts one group at a disadvantage has never been explicitly required; it is enough that it does.

The Court of Appeal (“CA”) disagreed, holding that the claimants had to show why the requirement to pass the CSA put the group at a disadvantage and that they had individually failed for the same reason.

Naeem concerned an imam who had worker for the Prison Service as a full-time chaplain since 2004. As at 1 April 2011, the average basic pay for Muslim chaplains was £31,847, but £33,811 for Christian chaplains. This was due to the average shorter length of service of Muslim chaplains. Pay progression was determined by length of service and the Prison Service had only employed permanent Muslim chaplains since 2002. N claimed that this disparity meant Muslim chaplains were subject to indirect discrimination. This was rejected at first instance, and then by the EAT.

The CA also dismissed N’s appeal, holding that it was not enough to show that the length of service criterion had a disparate impact upon Muslim chaplains; it was also necessary to show that the reason for that impact was something peculiar to the protected characteristic in question.

The SC allowed both appeals, concluding that there is no requirement for a claimant to prove a reason why a PCP puts or would put an affected group sharing a protected characteristic at a particular advantage. What is required is a causal connection between the PCP and the disadvantage suffered, both by the group and the individual.

Points to note:

This judgement relates more to what claimants need to prove in such a claim. It is still open to employers to justify indirect discrimination by showing that the PCP was a proportionate means of achieving a legitimate aim. In principle, a length of service criterion may be justified as a reward for greater experience and skill, but this gets harder to do the longer the time taken to achieve parity with others. As the Prison Service was trying to transition to a new scheme under which length of service would be determinative of pay only over a shorter period, but the process had been halted by government pay restraint, the SC declined to interfere with the ET’s assessment of the question of justification and so dismissed N's appeal.

Born London Ltd v Spire Production Services Ltd Incorrect statement that bonus was non-contractual did not breach Reg 11 TUPE

Under regulation 11 of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) an outgoing employer (“Transferor”) is obliged to provide the incoming employer (“Transferee”) with information referred to as ‘employee liability information’ (“ELI”). The ELI includes ‘those particulars of employment that an employer is obliged to give an employee’ under section 1 of the Employment Rights Act 1996 (“ERA”). It is not clear whether the requirement to provide particulars of employment is confined to contractual entitlements or not.

Born London Ltd (“Born”) took over a contract from Spire Production Services Ltd (“Spire”) in circumstances that amounted to a service provision change under TUPE. In providing information to Born prior to the transfer, Spire stated that a non-contractual Christmas bonus was in place. Following the transfer it became clear that the bonus was contractual and Born brought a claim in the Employment Tribunal (“ET”) arguing that Spire had provided inaccurate ELI. It sought compensation of around £100,000 to cover the lifetime of the contract.

The ET rejected this. It confirmed that regulation 11 TUPE does not require a Transferor to say whether or not a remuneration term is contractual, and section 1 of the ERA does not restrict the statement of employment particulars to contractual terms. Thus, even assuming the bonus was contractual, contrary to Spire’s statement, there was still no breach of regulation 11 TUPE.

The EAT dismissed the appeal, observing that while much of the information required to be given under section 1 ERA will be contractual in nature, this is not necessarily the case for all of the information. Some forms of remuneration are non-contractual and there was no reason to think that these were intended to be left out of section 1 of the ERA. Thus, the notification required by regulation 11(2)(b) TUPE is not limited to contractual terms.

Points to note:

Transferees will be best placed to request that ELI be broken down into contractual and non-contractual obligations and should raise further enquiries if necessary to confirm the correct status of certain entitlements. Warranties and indemnities can then be sought in relation to any losses suffered as a result of inaccurate information.

Ssekisonge v Barts Health NHS Trust (Unfair Dismissal: Reason for dismissal including substantial other reason) [2017] UKEAT (02 March 2017)

This case involved an appeal from an ET judgement concerning a dismissal for ‘some other substantial reason’ (or “SOSR”). SOSR is one of the 5 potentially fair reasons open to employers to rely on to dismiss employees under s.98 ERA.

Faridah Mukabarisa (the ‘Claimant’), who was of Rwandan nationality, came to the UK permanently in 2000 and was awarded citizenship in 2006. She changed her first name and adopted her husband’s surname. In 2007 the Home Office questioned her right to British Citizenship and claimed she had lied about her real name. The Claimant qualified as a registered nurse in the UK and commenced employment with Barts Health NHS Trust (the “Respondent”) on 7 March 2011. As part of the recruitment process, she provided her British passport as evidence of her right to work in the UK but didn’t inform the Respondent of the outstanding query regarding its validity.

In September 2013 the Home Office confirmed that the Claimant’s passport was officially null and void and that, in turn, she was not a British Citizen. She did not notify the Respondent of this despite being obliged to under her contract of employment. The Respondent was separately informed. The Claimant’s citizenship remained subject to judicial review but the Respondent decided to dismiss her with immediate effect in the absence of satisfactory evidence as to proof of her identity and right to work.

The Claimant pursued a claim in the ET and her dismissal was found to be for SOSR and fair in the first instance. She appealed on the basis that the reasonableness of the dismissal should have been assessed under section 98(4) ERA and the relative injustice to her considered, particularly as there had been considerable delays by the Home Office affecting the timing of the judicial review. Much of the discussion hinged on the timing of the judicial review, as this had left a considerably long period of time for the Respondent to wait and continue to employ the Claimant. It was submitted that the Respondent’s decision would not change, no matter what evidence the Claimant produced, until the Home Office accepted that the Claimant’s identity was genuine.

Given the nature of the Respondent’s business and the need for full background checks, the application for permission to appeal was refused and dismissal upheld. The EAT accepted that the decision came within the band of reasonable responses. In particular it found the Home Office’s evaluation of the potential prejudice that would be suffered by either party to be satisfactory.

Points to note

This case is a useful reminder that SOSR remains an option for employers as a potentially fair reason for dismissal where an employee is not at fault.

In evaluating whether to dismiss for SOSR an employer should weigh up the balance of prejudice to the employee if it takes this step, against the prejudice to itself in the event that employment continues.

New employment tribunal compensation limits to take effect from April 2017

The Employment Rights (Increase of Limits) Order 2017 giving effect to new increases to the  compensation limits has now been implemented. The cap on compensation which can be awarded by an employment tribunal increased, from £78,962 to £80,541. The maximum amount of a week's pay rose from £479 to £489 for the purposes of calculating, among other things, statutory redundancy payments. Furthermore, the maximum statutory redundant payment and basic award in unfair dismissal cases increased to £14,670 from £14,370.

The impact on businesses, charities or voluntary bodies and public sector organisations is simply to increase the maximum (or minimum) amounts they may be ordered to pay if they are found to have breached certain employment legislation. It also increased the amounts they must pay under other employment legislation in certain circumstances. The increases only apply where the event giving rise to the entitlement to compensation or other payments occurred on or after 6 April 2017. In cases where the relevant event took place before 6 April 2017, limits previously in force under the Employment Rights (Increase of Limits) Order 2016 are preserved.

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