Employment Law in the UK - Case Study Example

Unfair Dismissal A dismissal which purports to be for redundancy reasons can be challenged on two bases. The first is that the reason for dismissalwas not a genuine redundancy situation, i.e. a sham. The second is that although there is a redundancy situation there was inadequate consultation, unfair selection or no alternative employment considered: Williams v Compair Maxam Ltd [1982]. The onus of proof is on the employer to satisfy the Tribunal that the employee's redundancy was the reason for the dismissal. Except for situations in which statute provides that a dismissal, or a selection for redundancy, must be "unfair dismissal" the Tribunal has to make its decision as to whether a dismissal was fair or unfair by using the criteria set out in ERA 1996 s.98(4). Under that subsection once the employer has shown that the reason for dismissal was redundancy the determination of the question whether the dismissal is fair or unfair is determined by the Tribunal and takes into account whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee in accordance with equity and the substantial merits of the case. Is There a Genuine Redundancy The Employment Rights Act 1996 (ERA 1996) s.139 (1) says that a dismissal is by reason of redundancy when an employee is dismissed wholly (or mainly) for one or more of these reasons: - The business stops doing what the person was employed to do (eg it closes down). - The business stops doing it where the employee was employed to do it. - There is a reduced need for people in the employee's category doing that kind of work in that place. In Safeway Stores plc v Burrell [1997] it was held that this is a 3 stage test: (1) Was the employee dismissed If so, (2) Had the requirements of the employer's business for employees to carry out work of a particular kind ceased or diminished, or were they expected to cease or diminish If so, (3) Was the dismissal of the employee caused wholly or mainly by that state of affairs Following the business reorganisation in March 2005 L claimed it genuinely needed to make 3 members of staff redundant. The employer merely has to show that there is a good business reason for the reorganisation and that it will result in a strengthening of the business: Hollister v National Farmers' Union [1979]. Although this case falls under the 'other substantial reason' head the fact that the National Farmers' Union (NFU) reorganised its insurance business to benefit the running of the business was held to be a 'good business reason' to dismiss an employee who would not accept the variation in his contract terms. Was M's dismissal due to the Redundancy Even where a redundancy situation exists the Employment Tribunal must still establish the reason for dismissal. In Timex Corporation v Thompson [1981] Browne-Wilkinson pointed out "it is possible for an employer to use such a situation as a pretext for getting rid of an employee he wishes to dismiss. It is for the tribunal in each case to see whether on all the evidence, the employer has shown them what was the reason for dismissal." L has admitted that M was dismissed due to her sickness record, and not simply because of the need to reorganise the business. Where an employee has a long-term health issue which effectively frustrates the contract, it is possible to legitimately dismiss him/her provided there has been a fair review of attendance record and appropriate warnings have been given: International Sports Co Ltd v Thomson [1980]. Whether the dismissal is 'fair' turns on the interpretation of s98(4) of the ERA 1996. In Iceland Frozen Foods v Jones [1983] Browne-Wilkinson J said: "there is a band of reasonable responses to the employee's conduct within which one employer might reasonably take one view.If the dismissal falls within the band the dismissal is fair." On the facts L has made no attempt to address M's sick record with M and although the dismissal is lawful, it would not be considered 'fair' within s98(4) ERA 1996. Was M Unfairly Selected for Redundancy The question before us is whether the selection procedure L used was 'fair'. An employer may use any selection technique for redundancy provided he is not in contravention of agreed selection criteria; the selection techniques are objectively reasonable and non-discriminatory and that the reasons for the dismissal do not fall under any of the 'automatically unfair' heads such as pregnancy or trade union involvement. Hence the 'last in, first out' rule takes account of length of service and also pragmatically the cost to the employer of the redundancy packages, since the value of the package depends upon length of service. L has admitted that it used different criteria on the pool of employees it considered for redundancy. The only employee who was not selected using the 'last in, first out' rule was M. Consequently M may be able to establish that her selection was not the usual technique used by L and subsequently that she was unfairly selected for redundancy and thus unfairly dismissed. Disability Discrimination Using ill health as a criterion may be deemed discriminatory as it may contravene the Disability Discrimination Act 1995. Since December 2005 'stress' has been accepted as a disability. L has implied that ill health was not used consistently as a criterion for deciding whom to make redundant and therefore M may seek to claim discrimination on the grounds of her disability as she would argue that she has been less favourably treated than other staff. A "disabled person" is defined by the Disability Discrimination Act 1995 (DDA 1995) as someone with "a physical or mental impairment which has a substantial and long-term adverse effect on his ability to carry out normal day to day activities" (DDA 1995 s.1). Mental impairment includes "an impairment resulting from or consisting of a mental illness only if the illness is a clinically well-recognised illness": DDA 1995 Sch.1 (1). Until December 2005 the Employment Appeals Tribunal (EAT) had consistently held that "stress" was not by itself a disability for the purposes of the DDA. In December 2005 DDA 1995 s 18 (2) repealed DDA 1995 Sch 1 (1) and now it is not necessary for a "mental impairment" to be clinically well-recognised illness to qualify as a disability for DDA 1995 purposes. S 4 (2) (d) DDA 1995 specifically provides that "it is unlawful for an employer to discriminate against a disabled person whom he employs . . . . . by dismissing him or subjecting him to any other detriment." However, if the employer can show that the dismissal was justified it will not be unlawful: DDA 1995 s 5 (1) (b). The various sections of the DDA 1995 impose a duty on employers to make reasonable adjustments to ensure that in any particular case a disabled job applicant or employee is not disadvantaged by reason of working practices or the physical features of premises. In fairness to L there was no indication that the distribution of H's workload to other staff was having a greater effect on M than on other staff until M's first leave of absence due to illness in September 2004. Applying the strict letter of the law M was 'disabled' from that point. On M's return to work L had a legal duty to make adjustments to working practices or to provide alternative employment. The question before the Tribunal would therefore be whether L's failure to comply is justified. However there is the problem of M's non-disclosure of her continuing disability. At a tribunal, an employee is automatically deemed to have been treated unfairly. The onus is on the employer to prove otherwise. L could bring into evidence the fact that M had told her that 'she was much better' and that therefore the errors M was making after her return in November 2004 were due to a lack of capability rather than a disability. Further, since L did not know M was disabled this could not have been the reason for M's dismissal. L would probably rely on the fact that M had been unfairly selected for redundancy because of her sickness record, not because of her disability. If L can establish this then the dismissal can, for practical purposes, be regarded "justified". From October 2004 an employer can no longer justify a failure to make a reasonable adjustment. However, an employer is still able to claim that it would be unreasonable to make adjustments under the DDA 1995. L's duty is to take such steps as it is reasonable, in all the circumstances of the case, to take. If L does not know, and could not reasonably be expected to know that M has a disability then the duty to make "reasonable adjustments" does not apply: DDA 1995 s.4A (3). Personal Injury - Work Related Stress It was held by the House of Lords in 2004 that in exceptional cases it can be possible for a dismissed employee to bring a claim for damages in the Courts as well as an unfair dismissal claim in the employment tribunal, but this will only be so where the claim for damages in the Courts arises out of facts which are independent of the dismissal: Eastwood and Anor v Magnox Electric plc HL [2004]. The legal aspects of work-related stress were first brought to general attention by the 1995 High Court decision in Walker v Northumberland County Council [1995]. In that case, the High Court ordered a County Council to pay damages to an ex-employee on the basis that, as employers, they had a duty not to cause him psychiatric damage by giving him too much work and/or insufficient back up support. The Council had dismissed the employee on grounds of ill-health. Although Mr Walker had previously had stress related work problems the court decided that the Council had not performed its duty properly. It was held, in awarding the Plaintiff 200,000 that his first breakdown was not reasonably foreseeable but that it was foreseeable that the second breakdown may occur if he was subjected to the same volume of work. The judge held that the employer had a duty to provide the plaintiff with assistance after he had returned to work after his initial breakdown. Coleman J said "there has been little judicial authority on the extent to which an employer owes to his employees a duty not to cause them psychiatric damage by the volume or character of work which the employees are required to perform". He concentrated therefore on what he said was "clear law" that an employer has a duty to provide his employee with a reasonably safe system of work and take reasonable steps to protect him from risks which are reasonably foreseeable. The judge noted that whereas the law on the extent of an employer's duty has developed almost exclusively in cases involving physical injury to the employee as distinct from injury to his mental health, there is no logical reason why risk of psychiatric damage should be excluded from the scope of an employer's duty of care. Most importantly Colman J said that stress is not caused by a single event but by a slow process. It was reported subsequently that Northumberland County Council had decided not to appeal and agreed damages at 175,000 (The Times, 27th April 1996). It is not enough for M to prove stress. She must also show that it led to a recognised disorder or psychiatric illness: Sutherland v Hatton [2002]. The leading judgment in Sutherland was given by Hale LJ and set out guidance on the relevant law in the form of sixteen propositions. In summary, in order to succeed in a claim for negligence an employee has to show: that the employer was in breach of its duty of care, by failing to take steps which were reasonable in the circumstances, bearing in mind the magnitude of the risk of harm occurring, the gravity of the harm which may occur, the costs and practicality of preventing it, and the justifications for running the risk. that it was reasonably foreseeable that the employee would suffer psychiatric illness (or some other personal injury) as a result of the employer's breach of his duty of care, and that the breach of duty caused or materially contributed to the harm suffered. An employer is usually entitled to assume that an employee can withstand the normal pressures of the job unless it is known that the individual suffers from some particular problem or vulnerability. In the Sutherland decision the Court of Appeal stated that the employer is also entitled to take any information provided at face value and is not required to investigate any medical issues further unless put on notice that that there is an issue that warrants further investigation. The Court of Appeal stated that for a claim to be successful, it had to be reasonably foreseeable that a stress-related mental illness would result from giving the employee a particular type of work. The question of whether it was 'reasonably foreseeable' depends on what the employer knows - or ought to know - at the time of giving the work to the individual. The Court went on to suggest that where an employer can show that reasonable steps have been taken to alleviate stress, he is unlikely to be found to be acting in breach of duty. Although the Court of Appeal's decision was overturned by the House of Lords on appeal under the name Barber v Somerset County Council [2004] their Lordships approved the guidance set out by the Court of Appeal, while cautioning that they "did not have anything like statutory force". Their Lordship went on to emphasise that employers have a duty to be pro-active and to take the initiative. The extent to which an employer had to be pro-active depended on current medical thinking on stress issues. The Court of Appeal had suggested that a re-active "wait and see" approach was all that was required. It could be argued that L had acted pro-actively in trying to determine whether M remained vulnerable to the increased work-load by asking how she was. L's 'failure' to provide a suitable working environment for M was due to M's deliberate non-disclose of her continuing 'disability'. This is an important point as the employer's exposure may be limited where an employee has been less than frank in giving medical information or has failed to disclose health issues during employment. It is not clear on the facts whether L had become aware that M was making 'errors that she did not normally make', but certainly M was aware of it and could have taken the opportunity to inform L that she was increasingly vulnerable to work-related stress. L would then have had an opportunity to investigate further and take steps to alleviate factors that may have been aggravating M's condition. L will only be liable for breaching the duty to provide a safe system of work if the company can be shown to have caused or materially contributed to any harm suffered by M. The Court of Appeal in Sutherland suggested that if L could show it had taken steps to avoid breaching its duty it is unlikely to be found to have breached it. An employer's duty is not to guarantee a stress free environment but to take reasonable steps to protect employees from exposure to stress and from the ill effects of unreasonably stressful working conditions1. L would be in a stronger position if it had a formal work-related stress policy which detailed how it would deal with allegations of stress, ensuring they were thoroughly investigated and possible outcomes, such as reallocation of duties. The Court did not feel that there were any occupations that should be regarded as intrinsically dangerous to mental health. However, given that the employer has a duty of care to provide a safe system of work and to offer reasonable support to enable the employee to perform his or her duties in a way that will avoid psychological injury being caused, factors to take into consideration would include: Is the workload more than is normal Is the job particularly intellectually or emotionally demanding Are the demands made of the employee unreasonable when compared with the demands made of others in the same or similar jobs The employer should also consider whether an employee has already suffered from illness attributable to stress at work and whether the employee has recently taken frequent or prolonged absences which are uncharacteristic. However, it is worth noting that the Court ruled that the employer would not be in breach of duty if an employee agrees to stay in a job rather than face demotion even if he subsequently suffers from psychological illness through staying. This is important as it means that both the employer and employee bear the risk - the employee needs to weigh up whether to risk any psychological breakdown by staying in the job. One controversial aspect of the Court of Appeal's decision was the statement that unless it knows of some particular problem or vulnerability, an employer is usually entitled to assume that his employee is up to the normal pressures of the job and can take what an employee tells him at face value. That has been read as suggesting that the onus is on the employee to alert his employer that she is suffering from or at risk of stress or psychiatric injury. Lord Walker, giving the leading judgment in the House of Lords, did not expressly disapprove of that statement but said that the best statement of general principle remains that in Stokes v Guest Keen and Nettlefold (Bolts and Nuts) Ltd [1968], namely that "the overall test is still the conduct of the reasonable and prudent employer taking positive thought for the safety of his workers in the light of what he knows or ought to know" and that "where there is developing knowledge, he must keep reasonably abreast of it and not be too slow to apply it". If M was successful in any claim against L the Court of Appeal has indicated that any damages would take account of the pre-existing disorder or vulnerability and of the possibility that M would have succumbed to a stress-related disorder in any event. In addition, L would only pay for the proportion of harm suffered as a direct result of its wrongdoing. In this event, the level of compensation should be reduced fairly dramatically. It is thought that as a result of the Sutherland case, employees will have more difficulty in pursuing claims for stress. However, employers must not be too relaxed and should ensure that health and safety procedures and polices are both in place and followed as evidence will need to be given to prove that a safe system of work existed. More recently, the Court of Appeal in Hartman v South Essex Mental Health and Community Care NHS Trust [2005] said that it was doubtful whether there was any inconsistency between the views expressed by Hale LJ and Lord Walker. Hale LJ was simply applying established principles to a new type of situation, rather than laying down any new principle. The 16 propositions which she set out were "useful signposts" for judges deciding stress at work cases but they were not intended to cover all the infinitely variable facts that are likely to arise in stress at work cases. Conclusion Although on the face of it M appears to have a strong case it is doubtful whether she would succeed in actions for disability discrimination and/or personal injury due to her non-disclosure of her disability. In the first case L would argue that M was not dismissed because she was 'disabled' but because of her ill-health record. In terms of personal injury even were the Court to find in her favour it is submitted that her award would be lessened accordingly as her failure to notify her employer that she was in fact still disabled and therefore was particularly vulnerable to stress was directly responsible for L's breach of its fiduciary duty to provide a safe work environment. M has a stronger case for claiming unfair dismissal under ERA 1996 both in L's failure to discuss her health record with her and in the way that she was selected for redundancy as different criteria was used to determine the pool of employees for redundancy. An employee who succeeds in claims of both unlawful disability discrimination and unfair dismissal is entitled to compensation for disability discrimination as well as for the unfair dismissal. The fact that M has been unfairly dismissed does not mean that L is no longer liable for the earlier wrong of disability discrimination. The result can be a very high award as the cap on unfair dismissal compensation (ie the statutory limit to compensatory award) does not apply to compensation awarded in discrimination cases: Beart v H.M. Prison Service (No 2) [2005]. Bibliography Kelly D and Holmes A: Business Law, 1997, Second Edition, Cavendish Statutes Employment Rights Act 1996 Disability Discrimination Act 1995 Cases Barber v Somerset County Council [2004] IRLR 475 Beart v H.M. Prison Service (No 2) [2005] EWCA Civ 467, [2005] IRLR 568 Eastwood and Anor v Magnox Electric plc HL [2004] UKHL 35 Hartman v South Essex Mental Health and Community Care NHS Trust [2005] IRLR 293 Hollister v National Farmers' Union [1979] IRLR 238 International Sports Co Ltd v Thomson [1980] IRLR 340 Iceland Frozen Foods v Jones [1983] ICR 17 Safeway Stores plc v Burrell [1997] IRLR 200 Stokes v Guest Keen and Nettlefold (Bolts and Nuts) Ltd [1968] 1 WLR 1776 Sutherland v Hatton [2002] EWCA Civ 76, [2002] ICR 613 Timex Corporation v Thompson [1981] 1 IRLR 522 Walker v Northumberland County Council [1995] ICR 702, QBD Williams v Compair Maxam Ltd [1982] ICR 156 Articles Maude J: 'Truth be Told', April 2002, Employment Law Taylor J: 'Stress in the Workplace', August 2002, Oxford Press Internet Sources Arthur Cox: Stress. Available at: http://www.arthurcox.com/dynamic/publications/stress.pdf Read More