Summary

Our June update considers recent developments in employment law, including cases on disability discrimination, injury to feelings and unfair dismissal for inappropriate promotion of religion. We also outline other points of note, including developments relating to tax on termination payments and proposed changes to protection against redundancy for pregnant mothers.

Dismissal may be discriminatory where disability is only raised at appeal stage

The EAT has held that a dismissal could amount to disability discrimination under the Equality Act 2010 even if the employer was only made aware of the employee’s disability at the appeal hearing and had no knowledge of the disability at the time of the dismissal.

In this case, an employee was dismissed after her six month probationary period following concerns about her performance. The employee appealed against her dismissal and at the appeal hearing she mentioned that she suffered from depression which sometimes affected her behaviour. When her appeal was unsuccessful, she brought a claim for discrimination arising from disability under the Equality Act 2010. In the first instance, the Tribunal dismissed the claim, for reasons including that the employer had no knowledge of the disability at the time of the decision to dismiss, and that there was nothing to suggest that her depression was linked to the behaviours for which she was dismissed.

However, on appeal by the employee, the EAT found that it was at least arguable that the employer had knowledge of the disability before it rejected the appeal. Importantly, the EAT said that the outcome of an appeal against a dismissal is "integral to the overall decision to dismiss" and so the Tribunal should have considered the appeal decision as part of the claim relating to dismissal, and determined whether the appeal outcome was discriminatory. The EAT also held that the Tribunal had failed to consider evidence that the depression may have caused some of the behaviours for which the employee was dismissed and provided a helpful reminder that the correct test was whether the matters arising in consequence of the disability had a material influence on the decision to dismiss, even if there were other additional causes for dismissal.

Why this matters?

Employers sometimes consider there to be little risk associated with a potential disability discrimination claim if there is no knowledge of an employee’s disability at the point the decision to dismiss is made. However, this case makes clear that an employer’s knowledge of a disability is important even if obtained after a dismissal, but before the point that an appeal outcome is reached. An appeal hearer should therefore give careful consideration as to any health issues which are raised as part of an appeal and whether it affects the decision to dismiss.

Baldeh v Churches Housing Association of Dudley and District Ltd


Court of Appeal confirms it was fair to dismiss a Christian employee who was instructed to stop initiating religious conversations with patients

The Court of Appeal has held that a Christian nurse was fairly dismissed for gross misconduct when she continued to initiate conversations with patients about religion despite being given management instructions to stop doing so.

When patients initially complained about the nurse’s proselytisation, she reassured her employer that she would not discuss religion with her patients again unless they specifically asked her to do so. However, when three subsequent complaints were received by patients about the nurse, she was suspended and subsequently dismissed for gross misconduct. One of the grounds of misconduct was that she had acted in breach of the Nursing and Midwifery Council (NMC) Code which says that employees should not express religious or moral beliefs to people in an inappropriate way.

The nurse subsequently claimed unfair dismissal. Whilst she did not claim religious discrimination, the nurse argued that the NMC Code should be interpreted in a way compatible with her right to freedom of religion under Article 9 of the European Convention on Human Rights . The Tribunal rejected the claim, finding that Article 9 was irrelevant because the employee’s conduct related to the inappropriate proselytisation of beliefs, rather than because she was prevented from manifesting her beliefs. The Court of Appeal agreed and made clear that Article 9 did not cover improper proselytism and noted the difference between the manifestation of a religious belief and the improper promotion of that belief.

Why this matters?

This case is a helpful reminder of the boundaries around manifestation of a religious belief in the workplace. It is somewhat surprising that the employee did not choose to bring a religious discrimination claim. However, it is unlikely that the outcome would have been different had she done so, as previous case law says that employees will not succeed in religious discrimination claims where they have been instructed not to proselytise.

Kuteh v Dartford and Gravesham NHS Trust


ECJ holds that the Acquired Rights Directive may apply where clients’ investments move from one firm to another

The ECJ has held that where a Slovenian bank stopped its investment operations and activities as an intermediary and offered its clients the option to transfer their investments to another intermediary, this can be a transfer of an undertaking under the Acquired Rights Directive.

In this case, 91% of the clients took up the offer to transfer their investments, following which the bank was deauthorised from the stock exchange and it terminated the employment of all of the employees in the relevant division. The key question was whether the economic entity of the investment activities retained its identity post-transfer. To answer this question, the ECJ said that it is necessary to apply a multifactorial test, including analysis of: the type of undertaking involved, whether or not its tangible assets transferred, whether or not the majority of its clients were transferred, the degree of similarity between the activities pre and post transfer, and any period for which the activities were suspended. The ECJ held that it was immaterial that the clients could freely choose whether or not to transfer their investments. The case has been remitted to the national court.

Why this matters?

This case is a useful reminder to consider the “traditional” transfers which fall within the remit of the Acquired Rights Directive, as implemented in the UK under TUPE, which can sometimes be overlooked in these circumstances. In this case, virtually all of the clients transferred their investments to one intermediary. However, if the clients had chosen to move investments to numerous different intermediaries, the analysis of whether the economic entity would have retained its identity could be different.

Jadran Dodič v Banka Koper and Alta Invest


An injury to feelings award within middle band Vento was correct for a one-off act

The EAT has recently upheld a Tribunal’s decision to make a £16,000 injury to feelings award for a one-off act of discrimination (the act being the employee’s dismissal). Such amount falls within the middle of the middle Vento band for injury to feelings awards. The EAT was clear that a finding in respect of a one-off act of discrimination does not mean that an associated injury to feelings award must fall within the lowest Vento band. Whether discrimination is a one-off act is a relevant factor for Tribunals to consider when making injury to feelings awards, but it is not in itself determinative. The EAT agreed that the Tribunal had applied the correct test of looking at the effect of the discrimination on the claimant when assessing injury to feelings damages.

Interestingly in this case, the Tribunal also awarded a 25% uplift on the total compensation for a failure to deal with a grievance, even though the grievance was raised by the claimant after she had been dismissed rather than whilst she was in employment - the Acas Code does not expressly apply to grievances raised by former employees. The employer did not appeal the Tribunal’s decision to apply this uplift in respect of the failure to follow the Acas Code in relation to a former employee’s grievance, but the EAT did not make any comments which suggested that the Tribunal’s approach in this respect was wrong.

Why this matters?

Firstly, this case is a helpful reminder to employers that a one-off act of discrimination can potentially have the same financial repercussions as a longer term course of discriminatory conduct. It depends on the severity of the mistreatment. Secondly, there have been no previous appellate decisions on whether the Acas Code applies to grievances raised by a former employee. Employers should therefore give serious consideration as to whether it would be appropriate to handle post-termination grievances in the same way that they would when a grievance is brought by an existing employee, to limit the risks of a potential compensation uplift being awarded.

Base Childrenswear Limited v Otshudi


Round up of other developments

National Insurance Contributions: The National Insurance Contributions (Termination Awards and Sporting Testimonials) Bill has been debated and agreed by the Public Bill Committee and now moves on to the Commons Report Stage. The Bill introduces a Class 1A NICs charge on termination payments which are taxable under section 403 of ITEPA 2003, although the first £30,000 of such termination payments will be exempt in the same way as income tax.

Extending redundancy protection: The Women and Equalities Select Committee has published its response to the BEIS consultation on proposals to extend redundancy protection for new mothers. The Committee supports the extension of protection from the date a new mother notifies their employer in writing of their pregnancy to six months after their return from maternity leave. The Committee also agrees that equivalent protection should be extended to those on shared parental and adoption leave and also recommends that large employers should be required to report on retention rates for women 12 months after returning from maternity leave and 12 months after making a flexible working request. The Chair of the Committee has also more recently introduced The Pregnancy and Maternity (Redundancy Protection) Bill 2019 in the House of Commons, which goes beyond the scope of the BEIS consultation, and seeks to prohibit making employees redundant during pregnancy, maternity leave and during the six month period following the end of maternity leave, save where an employer ceases to carry on business where the woman is employed. This extends current statutory protections quite significantly and it will be interesting to see whether it makes any legislative progress.