Five revised chapters

Enclosed with this Bulletin are five revised chapters. maternity rights deals with numerous recent cases, including the Court of Appeal decision in Crees v Royal London Mutual Insurance Society Ltd; Greaves v Kwik Save Stores Ltd (right to return to work after maternity leave), and the recent decision of the European Court of Justice in Brown v Rentokil (pregnancy dismissal and sex discrimination). redundancy is updated to include consideration of such recent decisions as Safeway Ltd v Burrell and Church v West Lancashire NHS Trust (in which the EAT considered the proper meaning of ‘work of a particular kind’ and whether a ‘bumped’ employee can be regarded as having been dismissed for redundancy). temporary workers (formerly known as temporary employees) deals with such cases as Carmichael and another v National Power plc and BBC v Kelly-Phillips. Also updated for this Issue are part-time employment and probationary employees.

Industrial tribunals now renamed employment tribunals

Industrial tribunals have now been renamed employment tribunals with effect from 1 August 1998, by virtue of the coming into force of the relevant provisions of the Employment Rights (Dispute Resolution) Act 1998. In addition, the Industrial Tribunals Act 1996 will now be cited as the Employment Tribunals Act 1996. The new terminology will be used in this and subsequent Bulletins, and in future chapter updates. In addition, the chapter industrial tribunals: practice and procedure will be renamed employment tribunals: practice and procedure when it is next updated.

Employment Rights Act 1996 and Employment Tribunals Act 1996

The Employment Rights Act 1996 consolidates the law relating to substantive employment rights, and the Employment Tribunals Act 1996 consolidates the law relating to employment tribunals and the Employment Appeal Tribunal; both Acts came into force on 22 August 1996. Between them, the two Acts consolidate in full the remaining provisions of the Employment Protection (Consolidation) Act 1978, together with a great deal of other employment legislation (e.g. the relevant provisions of the Wages Act 1986 and Sunday Trading Act 1994). The Trade Union and Labour Relations (Consolidation) Act 1992, which consolidated those aspects of employment law which relate to such areas as the rights and responsibilities of trade unions, and provisions relating to industrial action, are not affected by this exercise otherwise than in some very minor respects. The legislation relating to discrimination on grounds of race, sex and disability is also largely unaffected.

Increase in employment protection payment limits

The Employment Rights (Increase of Limits) Order 1998 (SI 1998 No 924), which came into force on 1 April 1998, increase the limits on awards under employment protection legislation, following the statutory annual review. The new limits, together with the existing limits and details of the chapter references affected (other than those revised for this Issue or Issue 17), are set out below.

(1) The daily limit on guarantee payments rises from £14.50 to £15.35 per day. (See G9011 and G9014 guarantee payments.)

(2) The limit on a week’s pay for calculating basic and compensatory awards for unfair dismissal, statutory redundancy payments, and weekly amounts payable under the insolvency provisions of the ERA 1996 for debts such as arrears of pay, rises from £210 to £220 per week. (See W2002 a week’s pay, I5022 insolvency of employer, T6035 trade unions and the closed shop, and U6011, U6015, U6017 and U6047 unfair dismissal iii. Note that as a result, both the maximum statutory redundancy payment (see R3048), and the maximum basic award for unfair dismissal (see U6015), rise from £6,300 to £6,600.)

(3) The maximum compensatory award for unfair dismissal rises from £11,300 to £12,000. (See T6035 and T6041 trade unions and the closed shop, and U6011, U6012, U6022 and U6036 unfair dismissal iii.)

(4) The minimum basic award in certain cases of unfair dismissal for trade union or health and safety reasons, and for unjustifiable discipline by a trade union, rises from £2,770 to £2,900. (See T6035 trade unions and the closed shop, and U6017 and U6020 unfair dismissal iii.)

(5) The minimum and maximum special awards in certain cases of unfair dismissal for trade union or health and safety reasons, where reinstatement or re-engagement has been sought but not ordered, rise from £13,775 and £27,500 to £14,500 and £29,000 respectively. The minimum award in such cases where either reinstatement or re-engagement has been ordered but the order has not been complied with, rises from £20,600 to £21,800; the maximum award (156 weeks’ pay) remains unchanged. (See U6047 unfair dismissal iii.)

Other recent developments

There are set out below, chapter by chapter, some other important recent developments which affect the subject-matter of the chapters that have not been revised for this Issue. (Items new to or modified by this Issue are marked *.)

Note that William Hill Organisation Ltd v Tucker, referred to in A1067, has now been reported at [1998] IRLR 313.

* The Working Time Regulations 1998 (SI 1998 No 1833), which will come into force on 1 October 1998, implement the Working Time Directive, referred to in A1037. With regard to the right to holiday, the provisions of the Regulations are broadly similar to the draft Regulations referred to in A1037, subject to certain minor changes. For a more detailed treatment of the Regulations, see under Health and Safety at Work below.

* As anticipated in C4012/2, the Working Time Regulations 1998 (SI 1998 No 1833), will come into force on 1 October 1998, and will inter alia implement the provisions of EC Directive 94/33 which cover entitlement to rest periods, and night work, for adolescents. The special entitlements for adolescents set out in (a) to (d) in C4012/2 are maintained. For a more detailed treatment of the Regulations, see under Health and Safety at Work below.

In February 1998, the DTI published a consultation paper containing proposed amendments to the legislation which requires employers to inform and consult employee representatives in relation to a transfer of an undertaking (see C5002 et seq.) or collective redundancies (see C5019 et seq.). The main proposals are as follows.

Whom to inform or consult. Currently, companies can choose to inform and consult either a recognised union, or elected representatives of the affected workforce. If the proposals are adopted, employers would have to consult representatives of any recognised trade union, and could only consult other types of representatives where there were employees who were not covered by a union.

Non-union representatives. It is proposed that non-union representatives should be capable and independent and either be elected for the purpose (on an ad hoc basis), or elected as a standing body (a suitable existing standing body could be used).

Elections. Currently, there are no provisions for the conduct of elections. It is proposed that where employee representatives are to be specially elected, the conditions set out in the consultation paper (paragraph 26) must be followed.

Discharge of duty. Where an employer genuinely provides full opportunities for the election of representatives but the employees fail to take this up, the employer can discharge its duty by providing the required information directly to individual employees.

Compensation. It is proposed that the maximum compensation payable to each employee for the employer’s failure to meet its obligations to inform and consult in relation to transfers, will be increased from four weeks’ pay to ninety days’ pay. A similar sum (with no provision for set-off between the two) would apply in relation to such failure in relation to redundancies.

‘Affected’ employees. The employer will be required to consult all those who may be affected by the dismissals or measures to be taken, not just those who may be dismissed at that time. In cases of both redundancy and transfers, ‘affected’ will be taken to mean affected either directly or indirectly.

Training. Training for union officials, in relation to handling information and responding to consultations regarding transfers of undertakings and redundancies, will of a type for which they are allowed reasonable paid time off. A similar right will be made available for other employee representatives.

In R v Secretary of State for Employment, ex parte Seymour-Smith [1997] 2 All ER 273, the House of Lords discharged the declaration by the Court of Appeal ([1995] IRLR 465 — see C6001) that the two-year qualifying period for unfair dismissal claims was incompatible with the Equal Treatment Directive. It held that the European Communities Act 1972 does not enable directives to affect the validity or construction of domestic legislation, such as the 1985 Order which imposed that qualifying period. Thus the declaration would not enable the applicants to pursue their unfair dismissal claims in the employment tribunal. On the issue of whether the 1985 Order was contrary to Article 119 of the EC Treaty, the House of Lords referred the case to the European Court of Justice for certain preliminary rulings, including on whether unfair dismissal compensation constitutes ‘pay’ for the purposes of Article 119.

Note that in Fairness At Work, the White Paper published by the DTI in May 1998 (Cm 3968), the Government proposes that the qualifying period for protection against unfair dismissal should be reduced from two years to one year.

In Morris v Walsh Western UK Ltd [1997] IRLR 562, the EAT held that for continuity of employment to continue by virtue of section 212(3)(c) of the ERA 1996 (see C6006(b)(iii)), the arrangement referred to there had to be in place during the absence from work, not made retrospectively. Thus the decision in Ingram v Foxon (see C6007), where the agreement had also been a retrospective one, would not be followed.

In Senior Heat Treatment Ltd v Bell [1997] IRLR 614, the EAT inter alia upheld (in the context of a transfer of undertakings case) the decision in Rowan v Machinery Installations (South Wales) Ltd (see C6012) that section 214 of the ERA 1996 (whereby the receipt of a redundancy payment breaks continuity for redundancy qualification and payment purposes) does not apply to a voluntary redundancy payment, but only to a statutory one.

In Davidson v City Electrical Factors Ltd [1998] IRLR 108, the EAT in Scotland sought to give clear guidance on what an employment tribunal should do when presented with an unfair dismissal complaint from an employee with less than the two years’ continuous service required by section 108 of the ERA 1996, pending the outcome of the Seymour-Smith challenge to the two-year qualifying period, referred to above. In Davidson the EAT expressed the view that employment tribunals should adjourn all unfair dismissal complaints from employees with between one and two years’ continuous service pending resolution of the Seymour-Smith case. (For a subsequent statement by the President of the EAT in connection with this case, see under Industrial Tribunals: Practice and Procedure below.)

* In Carrington v Harwich Dock Co Ltd, The Times, 31 August 1998, an employee resigned from his employment on a Friday and recommenced employment with the same employer on the following Monday, in order to enhance his pension entitlement. The EAT (allowing an appeal from the employment tribunal) held that the employee was nevertheless continuously employed for the purposes of the qualifying period for bringing a complaint of unfair dismissal provided by section 108(1) of the ERA 1996. The EAT doubted the correctness of the decision in Roach v CSB (Moulds) Ltd [1991] ICR 349, having regard to the mandatory words of section 212(1) of the 1996 Act (see C6006(a)).

For a case in which the EAT in Scotland held that the terms of the equal opportunities policy issued by the Scottish Prison Service were incorporated into the applicant prison officer’s conduct of employment (and were not simply a ‘mission statement’, as argued by the employers), see Secretary of State for Scotland v Taylor [1997] IRLR 608.

Note that the case of Clark v BET plc referred to in C7037 (share option schemes) has now been reported at [1997] IRLR 348. As to the other aspects of the decision in the case, see wrongful dismissal.

Note that in Malik v BCCI SA [1997] IRLR 462, the House of Lords held that in principle, an employee may recover damages for financial loss stemming from a loss of reputation (see C7063). For more details relating to the case, see wrongful dismissal.

Note that in Waltons & Morse v Dorrington [1997] IRLR 488, the EAT upheld the decision of an employment tribunal that it is an implied term of every contract of employment (see C7013 et seq. for implied terms generally) that the employer will, so far as reasonably practicable, provide and monitor a suitable working environment for his employees. For more details relating to the case, see health and safety at work.

In Wandsworth London Borough Council v D’Silva [1998] IRLR 193, the Court of Appeal held that not all employment procedures will be contractual. In that case the local authority operated a sickness code, which it proposed to vary unilaterally. The employees alleged that to do so would be a breach of contract, and applied to an employment tribunal to test the legality of the council’s action (For employees’ remedies generally, see C7062 et seq.) The Court of Appeal, allowing the council’s appeal from the EAT, held that the code did not have contractual effect. A code or policy would only have contractual effect if it could be regarded as conferring rights on employees rather than simply laying down standards of good practice which an employer would be expected to follow.

The Disability Discrimination (Repeal of section 17 of, and Schedule 2 to, the Disabled Persons (Employment) Act 1944) Order 1998, which came into force on 1 April 1998, repeals section 17 of, and Schedule 2 to, the 1944 Act, which provided for the establishment of a national advisory council and district advisory committees. The effect of this repeal appears to be that the National Disability Council, established under section 50 of the DDA 1995 (see D4061), is now (by virtue of section 50(10)) no longer barred from giving advice to the Secretary of State on its own initiative regarding the operation of, and arrangements made, under various statutory provisions (including the provisions of Part II of the DDA 1995, relating to discrimination in employment).

In O’Neill v Symm and Co Ltd [1998] IRLR 233, the EAT held that where an employer dismissed a disabled employee but was unaware of the employee’s disability, the dismissal could not constitute less favourable treatment of that employee ‘for a reason which relates to a disabled person’s disability’, within the meaning of section 5(1)(a) of the DDA 1995. Therefore, the dismissal did not amount to discrimination against that employee for the purposes of that section. (See the discussion of that issue in D4035.)

In Morse v Wiltshire County Council [1998] IRLR 352, the EAT recently confirmed that whether or not any adjustments were reasonable in the circumstances will be determined by the employment tribunal objectively. Thus it may not be sufficient for an employer simply to assert that adjustments were considered and thought to be unreasonable if the employment tribunal finds that there were other reasonable adjustments which could have been made by the employer. The EAT also confirmed in that case that the duty to make adjustments also exists in respect of dismissal. This means, for example, that selection criteria in a redundancy exercise may have to be adjusted to take account of disadvantages caused by a disability. (See D4039.)

* In Clark v Novacold Ltd [1998] IRLR 420, the EAT upheld the employment tribunal’s decision that when the applicant was dismissed for absence due to disability, he had not been treated less favourably for a reason which related to his disability than others to whom that reason did not apply, within the meaning of section 5(1)(a) of the DDA 1995. This was because he was treated no differently than a person who was not disabled would have been treated in similar circumstances.

The EAT held that the proper comparator, where a disabled person is dismissed for absence due to disability, is someone who is off work for the same amount of time but for a reason other than disability. Such a comparator would possess all the characteristics of the applicant save for the fact of disability, and thus a comparison between them would prove whether or not the difference in treatment was due to the applicant’s disability. (See the discussion of this issue in D4036.)

However, the EAT held that the employment tribunal had not been correct in assuming that section 5(2) of the DDA 1995 (failure to make adjustments — see D4037) should only be considered if they found in favour of the applicant under section 5(1). In fact (stated the EAT), section 5(2) gives additional rights which are not contingent on the applicant having succeeded under section 5(1).

A further case on the issue of ‘who is an employee?’ (see E5002 et seq.) was Fleming v Secretary of State for Trade and Industry [1997] IRLR 682, in which the Court of Session in Scotland held that the appellant managing director and majority shareholder was not an ‘employee’ of the company for the purposes of the employment protection legislation. The court held that whether or not a person is an employee is a question of fact, and the fact that a person is a majority shareholder is always a relevant factor, and may be decisive. However, the court would not lay down any rule of law to that effect. In the present case, there were also other factors indicating that the appellant was not an employee, i.e. that he was able to decide not to draw his salary and that he personally guaranteed the company’s obligations.

In Secretary of State for Trade and Industry v Bottrill [1997] IRLR 120, the EAT upheld the views expressed by the Court of Session in Fleming, that there is no rule of law to the effect that a person who is a majority shareholder in a company cannot be an ‘employee’ of that company for the purposes of the employment protection legislation. In this case, the conclusion of the employment tribunal, that the claimant was an employee, had been reached after the tribunal had carefully and properly weighed the competing factors.

The appeal from the Court of Appeal’s decision in Preston (see E8520) has now been heard by the House of Lords ([1998] 1 All ER 280), which has held that two questions should be referred to the ECJ. For a more detailed discussion of this decision (together with a discussion of the recent ECJ decision in Maggorian v Eastern Health and Social Services Board and another [1998] IRLR 86), see equal pay.

Note that the Public Interest Disclosure Act 1998, referred to (as a Bill) in H2001, received Royal Assent on 2 July 1998. It applies to disclosures relating to: crimes; breaches of a legal obligation; miscarriages of justice; dangers to health and safety; or damage to the environment.. Employees will be able to apply to an employment tribunal if they have suffered dismissal or victimisation. The Secretary of State will have power to make regulations on compensation awards and the bodies to whom a worker may make disclosure. The Act is expected to come into force around the end of 1998. (See also under Unfair Dismissal II below.)

The House of Lords has reversed the decision of the Court of Appeal in Pickford v Imperial Chemical Industries plc ([1998] IRLR 435 — see H2044). Their Lordships held (by a majority) that the employer had not been negligent in failing to warn the plaintiff employee of the need to take breaks from her typing work. They also held that where the trial judge was unable to decide from the medical evidence alone what the exact cause of the plaintiff’s condition was, he was entitled to consider all the other evidence and conclude that she had failed to prove that the condition was caused by typing, as opposed to merely being associated with it.

* As anticipated in H2071, draft regulations for implementing the Working Time Directive were published for consultation in April 1998, which were subsequently issued (with certain modifications) as the Working Time Regulations 1998 (SI 1998 No 1833). They are due to come into force on 1 October 1998, and the main points are set out below (see Children and Young Persons above for the special provisions relating to adolescent workers).

(a) An average limit on weekly working hours of 48 hours per week (except in respect of the excluded categories referred to in H2071), averaged over 17 weeks (which can be extended to 26 weeks if the workers are covered by derogations (see (e) below) or up to 52 weeks by an agreement between employers and workers). Individuals can voluntarily agree to disapply the weekly limit.

(b) An average limit on night shift working of 8 hours in each 24-hour period. This is averaged over 4 months, but can be extended by the derogations (see (e) below) or by an agreement between employers and workers. Night workers whose work involves special hazards or heavy physical or mental strain are subject to an 8-hour limit for each 24-hour period. Adult night workers are entitled to a health assessment before being required to perform night work, and periodically thereafter.

(c) Adult workers are entitled to one day off per week, a minimum daily continuous rest period of 11 hours, and a minimum 20-minute rest break after 6 hours of continuous work, in each case subject to derogations in certain circumstances (see (e) below).

(d) All workers will be entitled to three weeks paid annual leave, rising to four weeks in November 1999. However, this entitlement does not arise until the completion of a three-month qualifying period of employment.

(e) Derogations from the certain of the above provisions are allowed in respect of (i) workers whose working time is not measured or predetermined or can be determined themselves (e.g. managing executives), (ii) specified circumstances (e.g. security or surveillance activities, activities requiring continuity of service such as hospital services, and tourism), (iii) force majeure (i.e. unusual and unforeseeable circumstances beyond the employer’s control) , and (iv) employer/worker agreements (which can be made whether or not there is a recognised trade union — in the case of a non-unionised workforce, agreements are known as ‘workforce agreements’, and the regulations provide a mechanism for electing employee representatives for this purpose).

(f) The limits in the regulations (see (a) and (b) above) will be enforced by the health and safety enforcing authorities, e.g. the Health and Safety Executive and local authorities. The entitlements in the regulations (see (c) and (d) above) will be enforced by employment tribunals.

* The Employment Rights (Dispute Resolution) Act 1998 (referred to, as a Bill, in I4001) received Royal Assent on 8 April 1998. Note that the provision rectifying a drafting error in the 1996 consolidating legislation (see (f) in I4001) will be deemed always to have had effect, i.e. it is retrospective.

The remainder of the Act was to be brought into force by statutory instrument. The first such order, the Employment Rights (Dispute Resolution) Act 1998 (Commencement No 1 and Transitional and Saving Provisions) Order 1998 (SI 1998 No 1658), brings most of the Act into force on 1 August 1998, in particular:

(a) Part I of the Act (employment tribunals, hearings and other provisions), except section 4 (hearings by chairman and one other member);

(b) Part II of the Act (other methods of dispute resolution: arbitration, compromise agreements and other provisions), except section 11 (settlement of redundancy cases); and

(c) section 14 (acts which are both unfair dismissal and disability discrimination).

Section 11 will come into force on 1 October 1998, and section 13 (internal appeal procedures and unfair dismissal awards) on 1 January 1999. Section 4 will be brought into force by a subsequent order.

In Zurich Insurance Co v Gulson [1998] IRLR 118, the EAT held that an employment tribunal has a discretion as to the conduct of the proceedings before it (as to which, see generally I4030). A party does not have the right to cross-examine come what may. The tribunal has a duty to keep the inquiry before it within reasonable bounds, and it does not have to allow lengthy and detailed cross-examination on matters that do not appear to it to be of assistance. If the tribunal reaches a flawed conclusion because it disabled itself from receiving relevant and significant evidence, that may be a ground for appeal.

* Following the decision of the EAT in Scotland in Davidson v City Electrical Factors Ltd (as to which, see under Continuity of Employment above), the President of the EAT issued a statement (reported at [1998] IRLR 435) in which he emphasised that there is one EAT and that ‘a judgment of the EAT wherever it is sitting has the same effect in law’; i.e. all employment tribunals are bound by such a judgment, whether the EAT is sitting in England or Scotland.

* In Jones v Governing Body of Burdett Coutts School [1998] IRLR 521, the Court of Appeal, in allowing an appeal from the EAT, held inter alia that the EAT’s discretion to allow a new point of law to be raised (see I4042), or a conceded point to be reopened, should be exercised only in exceptional circumstances, for compelling reasons. This was especially so if the result would be to open up fresh issues of fact which, because the point was not in issue, were not sufficiently investigated before the employment tribunal. The inexperience of a party’s advocate is not a sufficient reason, nor is the importance of the point to be raised. Also, if any court or tribunal exercises its discretion in a particularly unusual manner, it is bound to give reasons.

As anticipated in P2005, the 1986 Disclosure Regulations have now been replaced by the Occupational Pension Schemes (Disclosure of Information) Regulations 1996 (SI 1996 No 1655), with effect from 6 April 1997, which provide inter alia for specific sanctions for any breach to be enforceable by the new Occupational Pensions Regulatory Authority. A new requirement is that, for each scheme year which ends on or after 6 April 1997, an annual report must be made available free of charge to scheme members and recognised trade unions, which is required to contain more detailed information than was required under the 1986 Regulations.

Note that the EAT decision in Adams v Lancashire County Council (see P2027) was subsequently reported at [1996] IRLR 154. An appeal against that decision was dismissed by the Court of Appeal, which substantially upheld the reasoning of Robert Walker J in the EAT; see [1997] IRLR 436.

In Longden v British Coal Corporation [1998] IRLR 29, the House of Lords allowed in part the employers’ appeal against the decision of the Court of Appeal ([1995] OPLR 165 — see P2035). It upheld the Court of Appeal’s decision that the incapacity pension, payable to the plaintiff between his early retirement following an accident at work and normal retiring age, did not have to be set off against his damages for the difference between the retirement pension he would have received, and the incapacity pension he would receive, after normal retiring age. However, the House allowed the employers’ appeal in holding that an appropriate portion of the lump sum payment which the plaintiff received when he was prematurely retired on ill-health grounds would be set off against his claim for loss of retirement pension.

In Preston and others v Wolverhampton Healthcare NHS Trust and another [1996] IRLR 484, the Employment Appeal Tribunal upheld the decision of the Birmingham employment tribunal referred to in P2014/8. The decision of the EAT was in turn upheld by the Court of Appeal ([1997] IRLR 233), but the House of Lords ([1998] 1 All ER 280) held that two questions should be referred to the European Court of Justice. For a more detailed discussion of this case (and a discussion of the recent ECJ decision in Maggorian v Eastern Health and Social Services Board and another [1998] IRLR 86), see under equal pay.

With effect from 2 March 1998 the Education (Modification of Enactments Relating to Employment) Order 1989 (SI 1989 No 901 — see P9005) was replaced by the Education (Modification of Enactments Relating to Emp1oyment) Order 1998 (SI 1998 No 218).

Note that by virtue of the Police (Health and Safety) Act 1997 Commencement Order 1998 (SI 1998 No 1542), the provisions of that Act (see P9006) came into force on 1 July 1998 (not 1 June 1998, as anticipated in the text).

With effect from 1 October 1997 (by virtue of the Armed Forces Act 1996 (Commencement No 3 and Transitional Provisions) Order 1997 (SI 1997 No 2164)), there came into force amendments made (by section 23 of the Armed Forces Act 1996) to the provisions of the Race Relations Act 1976 relating to racial discrimination claims by members of the armed forces. Briefly, the effect of these changes is as follows.

Section 75 of the 1976 Act (see R1033) has been amended by substituting a new subsection (9). Previously, a complainant was excluded from the right to make a complaint to an employment tribunal, but could only use the internal service redress procedures. Now a complainant may go to an employment tribunal, but must invoke the internal service redress procedures first, although this requirement does not apply in the circumstances specified in the Race Relations (Complaints to Employment Tribunals) (Armed Forces) Regulations 1997 (SI 1997 No 2161), which also came into force on 1 October 1997. These circumstances are broadly where an internal complaint has been made and has not been withdrawn.

In Northern Joint Police Board v Power [1997] IRLR 610, the EAT held, on a preliminary point, that discrimination against an English person, or a Scot, based on their ‘national origins’ is discrimination on ‘racial grounds’ within the meaning of section 3(1) of the 1976 Act (see R1006). The EAT held that the Scots and the English are separate ‘racial groups’ defined by reference to ‘national origins’. In order to determine whether a group is defined by reference to ‘national origins’, there must be identifiable elements (both historical and geographical), separate from an individual’s origins, which at some point in time reveal the existence of a nation. On that basis, there was no doubt that England and Scotland were once separate nations, and therefore an employment tribunal can entertain an allegation of discrimination on the basis of national origins. It is then for each individual to show that his origins are embedded in such a nation, and that he was discriminated against in that context.

However, the EAT held that the applicant could not bring a claim on the basis that he had been discriminated against on grounds of his ‘ethnic origins’. That term has a racial flavour to it, and there was no common racial element within the group classified as Scots, given the wide variations in origin, background and race within Scotland.

Note that the Court of Appeal decision in Harrods Ltd v Remick (see R1022) has now been reported at [1997] IRLR 583.

In Tattari v Private Pensions Plan Ltd [1997] IRLR 586, the Court of Appeal held that PPP is not a ‘qualifying body’ within section 12 of the Race Relations Act 1976 (see R1029), because it does not have the power or authority to confer on a person a professional qualification or other approval needed to enable them to practice a profession, exercise a calling or take part in some other activity. Thus the applicant could not bring a complaint that PPP’s failure to include her on their list of specialists, because it did not recognise her EEC certificate of higher specialist training, was discriminatory.

In Waters v Commissioner of Police of the Metropolis [1995] IRLR 589, the Court of Appeal upheld the decision of the EAT ([1995] ICR 510 — see R1043 and also Sex Discrimination below).

In Nagarajan v London Regional Transport [1998] IRLR 73, the Court of Appeal upheld the decision of the EAT that the appellant employee had been discriminated against by way of victimisation under the Race Relations Act 1976 (see R1016) in connection with two job applications.

The EAT held that in order for there to be discrimination by way of victimisation, two tests had to be satisfied. First, that there was evidence that the discriminator treats the person victimised less favourably than he treats or would treat other persons who had not done the protected act. Secondly, that the discriminator treats the person victimised less favourably ‘by reason that’ (i) the person victimised has done the protected act, or (ii) the discriminator knows or suspects that the person has done or intends to do the protected act. Thus, one or more individuals must be found who had a conscious motive connected with the race relations legislation. In the present case, neither of these criteria were satisfied.

The Asylum and Immigration Act 1996 (Commencement No 3 and Transitional Provisions) Order 1996 (SI 1996 No 2970) brought section 8 of that Act (see R2025/1) into force on 27 January 1997. It does not apply to employment which began before that date.

The Immigration (Restrictions on Employment) Order 1996 (SI 1996 No 3225), which also came into force on 27 January 1997, sets out the exceptions to, and the documents which provide a defence to, section 8 of the Asylum and Immigration Act 1996 referred to above. The Order

(a) provides that an employer will not be guilty of the offence referred to in R2025/1 if the employee (i) is an asylum seeker whose claim has not yet finally been determined or abandoned, and who has been given written permission to work by the Home Office, or (ii) has an appeal pending under Part II of the Immigration Act 1971 and in the meantime has leave to enter or remain in the UK which does not preclude him from taking that employment, or (iii) is permitted to work under the Immigration Rules;

(b) specifies the categories of documents relating to an employee on which an employer can rely — for example, a passport which confers a right of abode in the UK, or a birth certificate issued in the British Isles; and

(c) specifies the manner of keeping and recording such documents.

Note that in Marshall v NM Financial Management Ltd [1997] IRLR 449, the Court of Appeal upheld the decision of the deputy High Court judge ([1997] IRLR 20 — see R4002 and R4012).

For a case in which the Court of Appeal held that an employer’s interest in maintaining a stable workforce (see R4004/1) is one which can be properly protected, within the limits of reasonableness, by a non-solicitation covenant (although not in every case), see Dawnay Day & Co Ltd v De Braconier D’Alphen and others [1997] IRLR 442.

In Dentmaster (UK) Ltd v Kent [1997] IRLR 636, the Court of Appeal, allowing an appeal from the High Court judge, granted the plaintiffs an interlocutory injunction to enforce for a period of six months a post-termination covenant restraining the defendant ex-employee from soliciting the business of anyone who had been a customer of theirs during the last six months of his employment, and with whom he had dealt at any time in the course of his employment. This was held to be fair, on the basis of previous decisions (in particular the Office Angels case — see R4008), especially having regard to the brevity of the restraint period, and the limited scope of the covenant.

* In FSS Travel & Leisure Systems Ltd v Johnson [1998] IRLR 382, Mummery LJ in the Court of Appeal restated the law regarding the extent to which an employer can protect trade secrets by means of a restrictive covenant in an employee’s contract of employment (see R4005):

‘The critical question is whether the employer has trade secrets which can be fairly regarded as his property, as distinct from the skill, experience, know-how, and general knowledge which can fairly be regarded as the property of the employee to use without restraint for his own benefit or in the service of a competitor . . . It must be possible to identify information used in the relevant business, the use and dissemination of which is likely to harm the employer, and establish that the employer has limited dissemination and not, for example, encouraged or permitted its widespread publication . . . It is not sufficient for the employer to assert a claim that he is entitled to an accumulated mass of knowledge which he regards as confidential . . .’

On the facts of the case, the restrictive covenant in the defendant’s contract of employment was an unreasonable restraint of trade and invalid, and in any case, having regard to the principles outlined by Mummery LJ and outlined above, the plaintiffs did not have trade secrets that they were entitled to protect by means of such a restrictive covenant.

With effect from 1 October 1997 (by virtue of the Armed Forces Act 1996 (Commencement No 3 and Transitional Provisions) Order 1997 (SI 1997 No 2164)), there came into force amendments made (by section 21 of the Armed Forces Act 1996) to the provisions of the Sex Discrimination Act 1975 relating to sex discrimination claims by members of the armed forces. Briefly, the effect of these changes is as follows.

Section 75 of the 1976 Act (see S2016(c)) has been amended by inserting new subsections (9A) to (9E). Previously, a complainant who was a member of the armed forces could make a complaint to an employment tribunal, in the same manner as a civilian complainant. Now an armed forces complainant may go to an employment tribunal, but must invoke the internal service redress procedures first, although this requirement does not apply in the circumstances specified in the Sex Discrimination (Complaints to Employment Tribunals) (Armed Forces) Regulations 1997 (SI 1997 No 2163), which also came into force on 1 October 1997. These circumstances are broadly where an internal complaint has been made and has not been withdrawn.

For a case in which the EAT applied the ECJ decision in P v S (see S2005/2) and held that discrimination arising from a declared intention to undergo a gender reassignment falls within the scope of the SDA 1975, see Chessington World of Adventures Ltd v Reed [1997] IRLR 556.

In Falkirk Council and others v Whyte [1997] IRLR 560, the EAT in Scotland upheld an employment tribunal’s decision that one of the selection factors applied by the employers was a ‘requirement or condition’ within the meaning of section 1(1)(b) of the SDA 1975, even though it was stated to be a ‘desirable’ qualification rather than an absolute bar to obtaining the post, where it was clear that the qualification was the decisive factor in the selection process. The EAT stated that if the case turned on whether the relevant factors had to become an absolute bar for the post in question, then cases such as Perera v Civil Service Commission (see S2007) would not be followed.

In Waters v Commissioner of Police of the Metropolis [1997] IRLR 589, the Court of Appeal upheld the decision of the EAT ([1995] ICR 510 — see S2011) that an employee cannot be victimised by her employer for the purposes of section 4(1)(d) of the SDA 1975 where she alleged that she had been assaulted by a male colleague, where the alleged assault had not been committed in the course of her colleague’s employment so that the employer could not be vicariously liable for it. Thus the allegation was not in respect of an act by the employer which would amount to a contravention of the SDA within the meaning of section 4(1)(d).

In Grant v South West Trains Limited [1998] IRLR 206, which had been referred to the European Court of Justice by an employment tribunal (see S2005/2), the ECJ ruled that an employer’s refusal to grant travel concessions to an employee’s partner of the same sex, where they were allowed to the spouse or partner of the opposite sex of an employee, did not constitute discrimination contrary to Community law.

The ECJ held that there were three main issues in the case. First, it held that because travel concessions were refused to a male person living with a male just as to a female worker living with a female, there was no direct sex discrimination. Second, in the present state of Community law, stable relationships between two persons of the same sex were not regarded as equivalent to marriages or stable relationships outside marriage between persons of the opposite sex, so that employers were not required to treat them as such. Third, discrimination based on sexual orientation is not included in ‘discrimination based on sex’ prohibited by Article 119 of the EC Treaty; the ECJ distinguished P v S and Cornwall County Council [1996] IRLR 347 (see S2005/2), as that case applied only to gender reassignment and did not apply to differences of treatment based on sexual orientation.

* Following its decision in the Grant case, the ECJ wrote to Lightman J, who had referred the Perkins case to the ECJ ([1997] IRLR 297 — see S2005/2) asking whether in the light of the Grant decision, he would wish to withdraw the reference. A further hearing was scheduled (reported as R v Secretary of State for Defence, ex parte Perkins (No 2) [1998] IRLR 508), in which Lightman J held that in view of the Grant decision, the answer to the question referred to the court in Perkins was so obvious as to leave no scope for reasonable doubt and enabled the court to resolve the question of European law itself. Accordingly, the reference would be withdrawn. Lightman J went on to hold that although Grant was a decision on the meaning of the word ‘sex’ in the Equal Pay Directive, it must reasonably inferred that the same word has the same meaning in the Equal Treatment Directive (which was relevant here). The European Court clearly proceeded on this basis.

* In Smith v Gardner Merchant Ltd [1998] IRLR 510, the Court of Appeal upheld the finding of the EAT ([1997] IRLR 342 — see S2005/2) that discrimination on the ground of sexual orientation is not discrimination on the ground of sex within the meaning of the SDA 1975.

However, the Court of Appeal also held that discrimination stemming from the victim’s sexual orientation may at the same time constitute discrimination on the ground of his or her sex. Where a male employee has been harassed and suffered less favourable treatment by reason of his homosexual orientation, to compare like with like for the purpose of the comparative analysis required by section 5(3) (see S2005), his treatment must be compared with that of a female homosexual. If the fact showed that the harasser would have subjected a female homosexual to like harassment, no sex discrimination would have been established. The case was remitted to the employment tribunal to decide these issues.

* In London Underground v Edwards (No 2) [1998] IRLR 364, the Court of Appeal dismissed an appeal by the employers from the decision of the EAT ([1997] IRLR 157 — see S2008). In so doing, the Court of Appeal stated that it is not appropriate to lay down a ‘rule of thumb’ for defining what amounts to a ‘considerably smaller’ proportion for determining the potentially discriminatory nature of a requirement or condition, since this issue has to be resolved in an infinite number of different employment situations.

The three ACAS Codes referred to in S7004 have all been revised, with effect from 5 February 1998. The revised Codes have been brought into effect as follows:

(a) the revised Code of Practice on Disciplinary Practice and Procedures in Employment, by virtue of the Employment Protection Code of Practice (Disciplinary Practice and Procedures) Order 1998 (SI 1998 No 44);

(b) the revised Code of Practice on Disclosure of Information to Trade Unions for Collective Bargaining Purposes, by virtue of the Employment Protection Code of Practice (Disclosure of Information) Order 1998 (SI 1998 No 45); and

(c) the revised Code of Practice on Disclosure of Information to Trade Unions on Time Off for Trade Union Duties and Activities, by virtue of the Employment Protection Code of Practice (Time Off) Order 1998 (SI 1998 No 46).

Note that in Fairness At Work, the White Paper published by the DTI in May 1998 (Cm 3968), the Government proposes that the automatic exclusion of employees taking official strike action from the right to claim unfair dismissal, where the two conditions referred to in that sub-paragraph are met (broadly (i) that all the employees are dismissed, and (ii) that none are offered re-engagement within three months of the dismissal) should no longer apply. However, the Government are not proposing to alter the current position of employees taking unofficial strike action, whereby such employees may be dismissed selectively and, if they are, have no right to claim unfair dismissal. (See S8045 for the current position.)

In the White Paper, the Government has indicated its intention to repeal the requirement on trade unions to give to employers the names of those employees whom they will ballot, thereby reversing the effect of the decision in the Blackpool and the Fylde College case referred to in S8024(e). More generally, the White Paper states that in the Government’s view, the law and Code of Practice on industrial action ballots and notice needs reform; the present provisions are described as ‘unnecessarily complex and rigid’. The Government proposes to simplify the law and Code, and seeks views on how this should be done. In addition, the White Paper proposes the abolition of the office of Commissioner for Protection Against Unlawful Industrial Action (see S8026(3)).

In RJB Mining (UK) Ltd and others v National Union of Mineworkers [1997] IRLR 621, the employers were granted an injunction restraining the union from proceeding with a series of one-day strikes, on two separate grounds.

(1) It was highly arguable that the union was in breach of section 227 of TULRCA 1992 (see S8024(b)) in omitting from the ballot on the proposed industrial action a significant number of its members who would be called upon to take part in the action, and including in the ballot a number of others who would not. While the union was not expected to achieve total perfection in conducting such ballots, if the union’s structure makes it difficult or impossible to comply with new legislation, the union must consider how compliance can be better achieved.

(2) The union was also arguably in breach of section 228 of TULRCA 1992 (see S8024(c)) in that, after deciding to conduct a single aggregated strike ballot rather than separate workplace ballots, as permitted by section 228(3), it had omitted to ballot a significant number of one particular group of members. The union had chosen to hold a single aggregated ballot and could not now seek to disregard a section of members which, on its own case, it had intended to include. The court has to decide whether there has been compliance with the Act, subject to the de minimis rule, regardless of whether any established non-compliance would have affected the outcome of the ballot.

In Fairness At Work, the White Paper published by the DTI in May 1998 (Cm 3968), the Government proposes to enable employees to have a trade union recognised by their employer where the majority of the relevant workforce wishes it. Statutory procedures for recognition and de-recognition will be introduced. A detailed description of how the proposed statutory recognition procedure will work is set out in Annex I to the White Paper; the Government is inviting views on exactly how the statutory de-recognition procedure should work. (For the current position regarding recognition, see T6044.)

The White Paper also proposes to abolish the office of Commissioner of the Rights of Trade Union Members, and to give new powers to the Certification Officer to hear complaints involving most aspects of the law where the Commissioner is currently empowered to provide assistance (see T6042). In addition, the White Paper also proposes, following the House of Lords’ decision in Wilson/Palmer referred to in T6061, to amend the law so as to make it unlawful to discriminate by omission on grounds of trade union membership, non-membership or activities. A prohibition on the blacklisting of trade union members is also proposed.

On 29 August 1997, the Department of Trade and Industry issued a consultation letter in relation to the ‘check off’ system for the deduction of trade union subscriptions direct from pay at source (see T6043). The DTI stated that in its view, workers paying their subscriptions by check off should retain the right to opt out of the system at any time. It also believes that employers should obtain the written consent from workers to begin deducting subscriptions by check off. However, the DTI considered it ‘burdensome and unnecessary’ for employers to be required to seek further written authorisation from workers at least every three years, as currently required. It took a similar view about the requirement that employers should give prior notification to workers of increases in check off deductions. It therefore proposed to repeal these requirements by means of a deregulation order under the Deregulation and Contracting Out Act 1994. Such an order has now been approved by Parliament, as outlined below.

The Deregulation (Deduction from Pay of Union Subscriptions) Order 1998 (SI 1998 No 1529), made under section 1 of the 1994 Act, repeals the requirements that employers must: (i) obtain repeat authorisations from individual employees at least every three years, to confirm their wish to continue paying their trade union subscriptions direct from salary; and (ii) notify employees at least one month in advance if the amount to be deducted is to increase. The Order was made on 23 June 1998, and came into effect immediately. Employers continue to be required to obtain written authorisation from employees before they can begin making check off deductions from their pay. Moreover, employers must continue to give their employees a regular itemised pay statement showing the amount of any deduction. Employees remain free to withdraw from the check-off at any time.

The Employment Protection Code of Practice (Disclosure of Information) Order 1998 (SI 1998 No 45) brought into effect, as from 5 February 1998, the revised Code of Practice on Disclosure of Information to Trade Unions for Collective Bargaining Purposes (see T6048). The Employment Protection Code of Practice (Time Off) Order 1998 (SI 1998 No 46) brought into effect, as from the same date, the revised Code of Practice on Disclosure of Information to Trade Unions on Time Off for Trade Union Duties and Activities (see T6059).

* In FW Farnworth Ltd v McCoid [1998] IRLR 362, the EAT held that an employment tribunal had correctly held that it had jurisdiction to entertain the applicant’s complaint that by derecognising him as a shop steward, the employers had taken action against him as an individual by preventing or deterring him from taking part in trade union activities, or penalising him for doing so, within the meaning of section 146(1)(b) of TULRCA 1992 (see T6061). The EAT refused to accept the employers’ argument that this was action taken against the trade union and not against an individual. According to the EAT, the Court of Appeal’s decision in NCB v Ridgway and another [1987] ICR 641 does not mean that section 146(1) applies only where the action taken affects the individual in his capacity as an employee rather than as a member or officer of the union.

In January 1998, the DTI issued a consultation document seeking views on the approach the Government should take in the negotiations on proposed amendments to the EC Acquired Rights Directive 1977 (77/187/EEC – see T7003), which may then need to be incorporated into the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE).

* In June 1998, the DTI announced that agreement had been reached on amendments to the Directive at the Social Affairs Council.The amendments aim to promote a partnership approach to business restructuring, by ensuring that employers understand their obligations and that employees’ rights are safeguarded. It is hoped that these changes will reduce current uncertainty about the application of the Directive, without reducing its scope or restricting the current rights of workers involved in transfers.

At the time of writing, the text of the amendments is awaited. However, the DTI press release states that the amendments will:

(a) make clear that the Directive applies to sub-contracting operations;

(b) specify that it applies to transfers from the public to the private sector;

(c) enable Member States to apply the Directive to pension rights;

(d) spell out the requirements for consultation under the Directive; and

(e) give employee representatives the power to negotiate to save jobs when an insolvent business is transferred.

The DTI has also published a consultation paper containing proposed amendments to the legislation which requires employers to inform and consult employee representatives in relation to a transfer of an undertaking or collective redundancies; for details, see under Collective Consultation above.

In Cornwall County Care Ltd v Brightman [1998] IRLR 228), where a transferee dismissed employees after the transfer and re-employed them on less favourable terms and conditions, the employees were held to be unfairly dismissed since the reason for the dismissals had been the transfer. However, the EAT held that the employees had ‘accepted’ the new terms and conditions by continuing to work for the transferee and so were unable to continue to claim a right to their original terms and conditions. That claim was ‘bought out’ by the compensation for unfair dismissal. (For variation of terms of employment, in particular the implications of the Court of Appeal’s decision in the Wilson and Meade cases, see T9110 et seq.)

* In Warner v Adnet Ltd [1998] IRLR 394, the Court of Appeal rejected a submission that the provisions of Regulation 8(1) and 8(2) of TUPE (see T9102) are mutually exclusive. The Court held that the two sub-paragraphs must be read as a whole. Although Regulation 8(1) covers a dismissal for a reason connected with a transfer, which will then be automatically unfair, Regulation 8(2) expressly contemplates circumstances in which Regulation 8(1) will be disapplied and that the view formed by a tribunal under Regulation 8(1) is a provisional or prima facie finding. In the Court’s view, there would be no point in including the concept of an economic, technical or organisational (ETO) reason in the Regulations if a finding that a dismissal by reason of a transfer was determinative of an employee’s claim for unfair dismissal. ‘If the transfer is not the reason, there is no need to enquire further. If it is the reason, Regulation 8(2) may apply. If it does, Regulation 8(1) is then disapplied and the dismissal is not automatically unfair.’

* In ECM (Vehicle Delivery Service) Ltd v Cox [1998] IRLR 416, the EAT considered the implications of the ECJ decision in Süzen (see T8006/4 et seq.). The EAT held that when properly understood, there is no conflict between the decision in Süzen and that in Schmidt (see T8006). There is an economic entity, as distinct from a mere activity, where the employees concerned are dedicated to a particular contract and their continued employment is contingent upon the continued existence of the service contract.

The EAT went on to hold that there is nothing in Süzen which requires TUPE to be interpreted so as to allow a transferee to cause the Regulations to be disapplied by refusing to take on the workforce. Adopting a purposive approach to the interpretation of the Regulations, it would not be proper for a transferee to be able to control the extent of its obligations by refusing to comply with them in the first place. ‘The issue of whether employees should have been taken on cannot be determined by asking whether they were taken on.’

In Nash v Mash/Roe Group Ltd [1998] IRLR 168, an employment tribunal ruled that the provision in section 109 of ERA 1996 (which excludes jurisdiction to hear claims of unfair dismissal where there is no normal retiring age and the employee is over 65 – see U4026) is unlawful indirect sex discrimination and a breach of Article 119 of the Treaty of Rome, and therefore must be disapplied. The applicant, a man aged 69 at the date of his dismissal, successfully argued that the upper limit of 65 adversely affected a considerably greater proportion of men than women (based on statistics of men and women over 65 in work), and no evidence was tendered to justify the provision. However, there may be an appeal; in addition, note that the issue whether unfair dismissal compensation is ‘pay’ within Article 119 is currently under reference to the ECJ in R v Secretary of State for Employment, ex parte Seymour-Smith, referred to under Continuous Employment above.

Note that in Fairness At Work, the White Paper published by the DTI in May 1998 (Cm 3968), the Government proposes that the qualifying period for protection against unfair dismissal (see U4003) should be reduced from two years to one year. The White Paper states that the Government it is in favour of prohibiting the use of waivers for unfair dismissal (see U4032) but allowing them for redundancy payments. It states that it would welcome views on this approach.

The Employment Protection Code of Practice (Disciplinary Practice and Procedures) Order 1998 (SI 1998 No 44) brought into effect, as from 5 February 1998, the revised Code of Practice on Disciplinary Practice and Procedures in Employment (see U5021 et seq. and U5039 et seq.).

The Public Interest Disclosure Act 1998, which received the Royal Assent on 2 July 1998, will amend the ERA 1996 so as to protect workers who disclose information about certain types of matters from being dismissed or penalised by their employers as a result. It applies to disclosures relating to crimes, breaches of a legal obligation, miscarriages of justice, dangers to health and safety or the environment, and to the concealing of evidence relating to any of these.

To qualify for protection, the worker making the disclosure must be acting in good faith throughout, and must have reasonable grounds for believing that the information disclosed indicates the existence of one of these problems. Disclosures are protected if they are made:

(a) to the employer or other person responsible for the matter; or

(b) to a Minister of the Crown, in relation to certain public bodies; or

(c) to a regulatory body designated for the purpose by order; or

(d) for the purpose of obtaining legal advice; or

(e) in particular circumstances whereby they are reasonable; or

(f) in relation to exceptionally serious problems.

A worker who is dismissed or penalised (i.e. subjected to a detriment) as a result of making a protected disclosure will be entitled to complain to an employment tribunal, which may award him compensation or make a re-employment order. The levels of compensation for dismissal are to be determined by regulations. Any such dismissal will be automatically unfair (see U5011 et seq. for automatically unfair dismissals), and the normal qualifying period and upper age limits will not apply (see U4004 and U4026 unfair dismissal i). The Act is expected to come into force around the end of 1998.

In Alboni v Ind Coope Retail Ltd [1998] IRLR 131, the EAT held that in determining both (i) the reason for dismissal and (ii) whether the employers acted reasonably in the circumstances in treating it as a sufficient reason for dismissal, an employment tribunal is not only entitled but is bound to have regard to events between notice of dismissal and the date that dismissal took effect. ‘dismissal’ means the date of determination of the employee’s actual employment, rather than the date on which the employee is notified of the fact that the employment will come to an end on some future date. The EAT regarded the matter as beyond doubt, following the Court of Appeal’s decision in Parkinson v March Consulting Ltd (see U5071).

* In Lock v Cardiff Railway Company Ltd [1998] IRLR 358, in allowing an appeal from the employment tribunal’s rejection of the appellant’s unfair dismissal claim, the EAT inter alia held that the employment tribunal had failed to have regard to the provisions of the ACAS Code of Practice on disciplinary practice and procedures, as required by section 207 of TULRCA 1992 (see U5021). The EAT commented that even where the Code is not expressly referred to by the parties, employment tribunals should always have it to hand as a guide to themselves as to what is good sound industrial relations practice.

In Fairness At Work, the White Paper published by the DTI in May 1998 (Cm 3968), the Government states that it proposes to abolish the maximum limit on the compensatory award for unfair dismissal (see U6022), and is considering whether the limits on additional and special awards (see U6047) should be maintained.

* The Employment Rights (Dispute Resolution) Act 1998 is now partially in force, by virtue of SI 1998 No 1658 (see also Industrial Tribunals: Practice and Procedure above). In relation to unfair dismissal: (i) with effect from 1 August 1998, the Act amends section 110 of the ERA 1996 (dismissal procedures agreements), and (ii) with effect from 1 January 1999, it encourages all parties to make use of ‘in-house’ appeals procedures by giving the employment tribunal power to:

(a) reduce the compensatory award if an employee fails to make use of an appeals procedure provided by the employer, where the employee has been properly notified of it; and

(b) make a supplementary award to an employee where the employer does not allow the employee to use an appeal procedure provided by him.

(For the current position as to mitigation, see U4038.)

In Whelan v Richardson [1998] IRLR 114, the applicant was held to have been unfairly dismissed. After her dismissal, she was in lower-paid employment for 18 weeks, and she then obtained higher-paid employment which she was still in at the date of the remedies hearing. The issue before the EAT was whether the employment tribunal had correctly calculated her compensation for loss of earnings. The tribunal’s calculation was on the basis of her pre-dismissal rate of pay from the date of dismissal:

(i) up to the date she obtained permanent higher-paid employment (less moneys earned during that period from the temporary lower-paid employment), rather than

(ii) right up to the date of the remedies hearing (which would have meant that her claim for loss of earnings would have been extinguished by her higher rate of pay in her new job).

Approach (i) was favoured in Fentiman v Fluid Engineering Products Ltd, and approach (ii) in Ging v Ellward Lancs Ltd (see the discussion in U6026). The EAT held that the tribunal had indeed been correct in accepting approach (i). Once the applicant obtains permanent alternative employment paying the same or more than pre-dismissal earnings, the loss attributable to the action taken by the employer ceases. It cannot be revived, whether that employment is lost as a result of the applicant’s own action or that of the new employer. The chain of causation has been broken.

In Digital Equipment Co Ltd v Clements (No 2) [1998] IRLR 134, the Court of Appeal reversed the decision of the EAT ([1997] IRLR 140), regarding the correct order of deductions from unfair dismissal compensation (see U6036) where the employee’s dismissal for redundancy had been held unfair.

The Court of Appeal held that a redundancy payment in excess of statutory redundancy pay should be deducted in full from the compensatory award, and not merely taken into account in calculating the loss on which the compensatory award is based. According to the Court, what is now section 123 of the ERA 1996 draws a clear distinction between (i) ‘the loss sustained by the complainant in consequence of the dismissal’, which is to make up the amount of the compensatory award, and (ii) the compensatory award itself. By providing in subsection (7) that ‘if the amount of any payment made by the employer to the employee on the ground that the dismissal was by reason of redundancy . . . exceeds the amount of the basic award . . . that excess goes to reduce the amount of the compensatory award’, Parliament clearly intended that an employer, who pays compensation for redundancy more generously than the statutory scale, is entitled to full credit for the additional payment against the amount of the loss which makes up the compensatory award.

In Simrad Ltd v Scott [1997] IRLR 147, the EAT in Scotland set out some guidance on the calculation of the compensatory award for unfair dismissal under section 123(1) of the ERA 1996 (see U6022). The EAT held that the assessment of the compensatory award involves a three-stage process.

(1) There must be a factual quantification of losses claimed.

(2) The tribunal must consider the extent to which these losses are attributable to dismissal or action taken by the employer. The word ‘attributable’ implies that there has to be a direct and natural link between the losses claimed and the conduct of the employer in dismissing, on the basis that the dismissal was the immediate cause of the loss. If the only connection is that but for the dismissal, the loss would not have arisen, then the loss is too remote.

(3) The phrase ‘just and equitable’ requires the tribunal to look at the conclusions it draws from (1) and (2) above and determine whether, in all the circumstances, it remains reasonable to make the relevant award.

The issue of mitigation will feature in the application of the test in (3) rather than in (2), since mitigation is essentially an equitable plea to be judged in the context of reasonableness at common law, although the facts relating to a plea in mitigation will frequently bear upon the question of causative link.

The Employment Protection (Recoupment of Jobseeker’s Allowance and Income Support) Regulations 1996 (SI 1996 No 2349), which came into force on 7 October 1996, revoke and replace SI 1977 No 674, as amended (see U6046). The provision formerly in paragraph 5(2) of the 1977 Regulations, referred to in that section, can now be found in paragraph 4(2) of the 1996 Regulations.

The Employment Protection (Continuity of Employment) Regulations 1996 (SI 1996 No 3147), which came into force on 13 January 1997, revoke and replace (with amendments) the similarly-titled 1993 Regulations (SI 1993 No 2165 — see U6010).

In relation to interest on awards of compensation for unfair dismissal (see U6052), note that SIs 1993 No 2798 and 1994 No 1748 have been revoked and replaced by the Employment Tribunals (Interest on Awards in Discrimination Cases) Regulations 1996 (SI 1996 No 2803), which came into force on 2 December 1996. (For further details, see industrial tribunals: practice and procedure.)

* The National Minimum Wage Act 1998, which received Royal Assent on 31 July 1998, contains regulation-making powers which enable the Secretary of State to set a national minimum wage (see W1020), and prescribe the method to be used in determining whether a worker to whom the national minimum wage applies has been paid at least the amount set. The national minimum wage is expected to come into force in April 1999. The other main provisions of the Act are as follows.

(1) The national minimum wage will apply to workers who work or ordinarily work in the UK, and is to be a single hourly rate. The Secretary of State may make regulations excluding any persons under 26 from the national minimum wage, or providing that they are entitled to a different rate. However, any such persons may not be treated differently in relation to different areas, different sectors of employment, undertakings of different sizes or different occupations. It will be an offence for an employer to refuse or neglect to pay a worker at a rate not less than the national minimum wage. In addition, workers will have a contractual right to recover the difference between what they have been paid and the national minimum wage. Workers will also have the right not to be subjected to any detriment by their employer, or to be unfairly dismissed, for using the provisions of the Act.

(2) The Secretary of State has power to establish a Low Pay Commission (LPC) to recommend the level of the national minimum wage, and how it should be determined whether a person has been paid at least the amount set. The non-statutory LPC, which has already been established administratively by the Secretary of State, is to be treated as the statutory LPC for these purposes unless the Secretary of State determines otherwise. The Secretary of State is required to refer certain matters to the LPC before exercising the regulation-making powers referred to in the previous paragraph. (The Secretary of State has already asked the LPC to make recommendations as to the level of the national minimum wage, and whether certain classes of person should be excluded from its scope or be entitled to it at a lower rate, and has responded to the LPC’s recommendations — see below).

(3) Employers will be required to keep such records as may be prescribed. Workers who have reasonable grounds to believe that they are not being paid the national minimum wage will be able, by notice, to require their employer to produce the relevant records, and to inspect and copy them. Workers will have the right to complain to an employment tribunal where an employer has failed to comply with these requirements.

(4) Officers may be appointed by the Secretary of State for the purpose of enforcing certain provisions of the Bill, and will be given various powers in this connection. Where an officer believes that an employer has been paying workers less than the national minimum wage, he will be able to serve on an employer (subject to a right of appeal) requiring them to do so. If an employer fails to comply with an enforcement notice, an officer may complain to an employment tribunal or take other civil proceedings to recover the difference. There is also provision for an officer, if satisfied that an employer has not complied with an enforcement notice, to serve a penalty notice on an employer requiring him to pay a penalty (twice the prescribed hourly rate for each day of non-compliance) to the Secretary of State.

On 18 June 1998, the Government announced its response to the recommendations of the Low Pay Commission (LPC) as to the amount and scope of the national minimum wage. The main points are as follows.

(a) The national minimum wage will be introduced at a rate of £3.60 per hour, with effect from April 1999.

(b) 16 and 17 year-olds, and all those on formal apprenticeships, will be excluded from the national minimum wage.

(c) A lower rate (the ‘development rate’) will be paid to 18 to 21 year-olds and for workers starting a new job with a new employer and receiving accredited training. The lower rate will initially be £3.00 per hour with effect from April 1999, rising to £3.20 (the rate recommended by the LPC) in June 2000.

(d) The LPC had recommended that the adult rate rather than the lower rate should apply to 21 year-olds. The Government is asking the LPC to review the position of 21 year-olds again in 1999, once the £3.00 rate has been implemented, and then provide a further report on whether, in the light of experience to that date, the LPC reconfirm that recommendation.

In Mennell v Newell and Wright [1997] IRLR 519, the Court of Appeal upheld the view expressed by the EAT ([1996] IRLR 384 — see W1010) as to the scope of what is now section 104 of the ERA 1996 (assertion of a statutory right). The Court agreed with the EAT that section 104 is not confined to cases where a statutory right has actually been infringed; it is sufficient if (i) the employee has alleged that the employer has infringed the statutory right, and (ii) the making of that allegation was the reason or principal reason for dismissal. However, the employers’ appeal was allowed on the facts. The employee could not show that he had ever alleged that the employers were in breach of a statutory right, and therefore such an allegation could not be the reason for his dismissal.

* In Robertson v Blackstone Franks Investment Management Ltd [1998] IRLR 376, the Court of Appeal held that commissions which became payable after the termination of the applicant’s contract were ‘wages’ within the meaning of section 27 of the ERA 1996 (see W1004). This was because having regard to that definition, wages for work done before the termination may be payable and paid after termination, without either losing their character as wages or becoming a payment in respect of the termination itself. However, having regard to the provisions of section 25(3) of the ERA 1996 (which provides, broadly, that an employer is not to be ordered to pay any amount in respect of a deduction or payment which he has already paid or repaid to the worker), the amount payable to the applicant should be reduced to take account of the sum which the employers had already paid him as an advance against future commissions.

In Janciuk v Winerite Ltd [1998] IRLR 63, the EAT held that the employment tribunal had correctly assessed the appellant employee’s damages for breach of contract on the basis that he was not entitled to compensation for the loss of a chance that had a contractual disciplinary procedure been operated, he might not have been dismissed. Where the employer breached the contract by dismissing the employee without following the contractual disciplinary procedure, the measure of damages is based on an assessment of the period for which the employment would have continued if the procedure had been followed. This accords with the principle in Laverack v Woods of Colchester Ltd that the employee will be compensated on the basis that the employer would have chosen to perform the contract in the least burdensome way (see W8025).

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The following Statutes and Statutory Instruments from this year can be found on this Employment Law Link CD.

Data Protection Act 1998

Employment Rights (Dispute Resolution) Act 1998

National Minimum Wage Act 1998

Public Interest Disclosure Act 1998

The Working Time Regulations 1998 (SI 1998 No 1833)

The Employment Rights (Dispute Resolution) Act 1998 (Commencement No. 1 and Transitional and Saving Provisions) Order 1998 (SI 1998 No 1658)

The Deregulation (Deduction of Pay from Union Subscriptions) Order 1998 (SI 1998 No 1529)

The Employment Rights (Increase of Limits) Order 1998 (SI 1998 No 924)

The Suspension from Work on Maternity Grounds (Merchant Shipping and Fishing Vessels) Order 1998 (SI 1998 No 587)

The Children (Protection at Work) Regulations 1998 (SI 1998 No 276)

The Employment Protection Code of Practice (Time Off) Order 1998 (SI 1998 No 46)

The Employment Protection Code of Practice (Disclosure of Information) Order 1998 (SI 1998 No 45)