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Case law round-up – April 2015

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01/04/2015

10% uplift on damages does not apply to injury to feelings awards in the Employment Tribunals – Chawla v Hewlett Packard Ltd [UKEAT/427/13]
Since 2013, a 10% uplift has been applicable to all general damages in civil claims including injury to feelings awards in Employment Tribunal cases. A new case has cast doubt on this approach.

The 10% uplift was established by the Court of Appeal in a case called Simmons v Castle and reflected the fact that claimants were no longer able to recover ‘success fees’ and ‘after the event’ insurance premiums from their opponents following the ‘Jackson’ review of civil litigation costs and a change in legislation. Initially, it wasn’t clear whether the 10% uplift also applied to awards for injury to feelings in discrimination claims in the Employment Tribunal but, during 2014, the EAT confirmed in the case of The Cadogan Hotel Partners Ltd v Ozog that it did. This was subsequently confirmed by Presidential Guidance issued in 2014.

The Employment Appeal Tribunal (EAT) has now cast doubt over whether this approach is correct. This case will be of interest to employers currently defending discrimination claims as it impacts on the value of the claim.

The employee, Mr Chawla, was on long-term sick leave from his employment at Hewlett Packard. Hewlett Packard had a policy of shutting down access to email and intranet for employees on long-term sick leave and, as a result, Mr Chawla was not informed of certain changes to his benefits and terms and conditions. In particular, he did not receive timely information about his rights to exercise his share options and suffered a tax disadvantage as a result. As part of a disability discrimination claim, he claimed that Hewlett Packard had failed to make reasonable adjustments to provide him with information about the exercise of his share options. The Employment Tribunal partly upheld his claim and made an award of £5,000 for injury to feelings in respect of this failure and an award of £5,000 for personal injury.

Mr Chawla appealed to the EAT arguing that the injury to feelings award was too low and should have been assessed in the ‘middle’ Vento band (i.e. an award between £6,000 to £18,000). He also argued that the 10% damages uplift established by the Court of Appeal in Simmons v Castle should have been applied.

The EAT rejected his appeal holding that the injury to feelings award was consistent with the Vento guidelines and, contrary to its previous finding in Ozog, that the 10% uplift did not apply in the Employment Tribunal. Its rationale was that the 10% uplift was only intended to apply to litigation in the civil courts affected by the Jackson Review of costs. Unlike the civil courts, in the Employment Tribunal each party typically bears their own costs and this meant that the Simmons and Castle rationale did not apply. The EAT acknowledged that its decision contradicted earlier decisions of the EAT and it is hoped that an appeal will clarify the matter. In the meantime, parties can choose which line of authority to seek to rely on.

Walker Morris comment
It remains to be seen which way the law will go on whether the 10% uplift should apply to injury to feelings awards in the Employment Tribunal. Employers currently defending claims will wish to rely on this case to resist uplifts claimed in claimant’s schedules of losses.

This case also highlights the importance of not shutting employees on long-term absence out of corporate communications especially those concerning terms and conditions or employee benefits (whether it be for sickness, maternity or shared parental leave). It may be that there is an IT security reason to limit access to certain information where an employee is out of the business for a long time but this case highlights that such a practice would need to be objectively justified to avoid the risk of it being found discriminatory.

Reasonable efforts (not perfect efforts) required to avoid having constructive knowledge of a disability in a reasonable adjustments case – Donelian v Liberata UK Ltd [UKEAT/0297/14]
It is not always apparent or clear-cut that an individual suffers from a disability. This decision of the EAT provides helpful guidance for employers as to the steps required of them to ascertain whether an individual is disabled within the meaning of the Equality Act 2010.

Under the Equality Act, employers have a duty to make reasonable adjustments for employees who are disabled within the meaning of the Act (i.e. they have a physical or mental impairment which has an adverse effect on their ability to carry out normal day to day activities and the effect is substantial and long term). This duty is only triggered if the employer has actual or constructive knowledge of the disability. The Equality Act confirms that constructive knowledge occurs where the employer could reasonably have been expected to know of the disability.

In this case, the EAT held that an employer who took reasonable steps, but not every step possible, to ascertain whether an employee was disabled, did enough to avoid having constructive knowledge of the disability.

Mrs Donelian had been absent for a total of 128 days for numerous reasons including flu, viruses, wrist pain, stress, stomach upsets and dizziness. Liberata referred her to occupational health who provided an inadequate report which confirmed she was not disabled. Liberata followed this up and received some further information but the report still failed to address the questions that had been posed. Liberata then made efforts to engage with Ms Donelian (who was less than willing to co-operate) and tried to hold return to work meetings to investigate further whether she was disabled. Ultimately, she was dismissed for unsatisfactory attendance leading to her claim for failure to make reasonable adjustments. The Employment Tribunal found that she was disabled within the Equality Act but that Liberata did not have actual or constructive knowledge of this.

The EAT upheld the Tribunal’s decision holding that Liberata had done enough to pursue the question of whether Ms Donelian was disabled. Whilst another employer might have done more, the test was not a ‘counsel of perfection’ but rather, that the efforts must have been reasonable.

Walker Morris comment
This decision provides reassuring guidance for employers dealing with the perennial challenge of persistent short term absences and uncooperative employees. The question of whether the employer has done enough to escape constructive knowledge hinges on whether the efforts are reasonable rather than whether they are perfect. The Tribunal will take a holistic view looking at the overall efforts made by the employer.

It is also noteworthy that Ms Donelian was found to be disabled under the Equality Act because, frankly, this did not ‘spring out’ from her absence record. Where absences are for such diverse and disparate reasons it is tempting to assume that the employee is someone who suffers minor ailments more often that most people or that they may, at worst, be deliberately abusing the employer’s sick pay system. This case highlights the importance of keeping an open mind and ensuring that your occupational health advisor is directed to consider the issue of disability even where it seems unlikely.

Finally, the EAT did not address the fact that the occupational health advisor in this case had never met Ms Donelian. This is a shame because its guidance on this point would have been welcome especially given that under the new Fit for Work service, occupational health advisors will prepare reports based on a telephone interview rather than a face to face meeting. There are concerns that this is insufficient to produce a full and accurate report.

Dismissal for misconduct – extent of reasonable investigation required – Shresthra v Genesis Housing Association Ltd [2015] EWCA Civ 94
The Court of Appeal has held that the reasonableness of an employer’s investigation into misconduct leading to dismissal should be assessed as a whole and that it is not necessary for the employer to investigate every line of defence put forward by the employee.

Mr Shresthra had fraudulently over-claimed mileage expenses and was dismissed on grounds of gross misconduct. His employer conducted an audit covering a 3 month period of the mileages claimed against AA route-finder mileages and found that most of the journeys he had claimed for were significantly in excess of the AA mileages. Mr Shresthra argued that the higher mileages were due to roadworks, difficulties parking, one way systems and road closures but his employer took the view that it was highly unlikely that every inflated mileage claim could realistically have been caused by those factors. He was therefore dismissed for gross misconduct

Mr Shrestha brought a claim in the Employment Tribunal arguing that his employer had failed to carry out a reasonable investigation into his conduct. He argued that it had not properly investigated his defences regarding the length of his journeys and should have re-created some of his journeys to test the defence he had put forward. The employer argued that it would not have been possible to recreate the same conditions (e.g. road closures) faced by Mr Shrestha as the particular circumstances on the day could not be replicated. Moreover, the disciplinary manager had personal experience of the routes and, therefore, the accuracy of the AA mileage figures.

The Employment Tribunal concluded that the employer had reached a genuine belief in Mr Shrestha’s misconduct based on a reasonable investigation and the EAT upheld this decision. Mr Shrestha then appealed to the Court of Appeal. He argued that, in order to meet the ‘reasonableness threshold’, an employer should investigate every line of defence, unless they are manifestly false or unarguable.

The Court of Appeal rejected Mr Shrestha’s argument. It stated, “To say that each line of defence must be investigated unless it is manifestly false or inarguable is too narrow an approach to adopt and would add unwarranted gloss to the well-established Burchell test”. The Court held that the investigation should be looked at as a whole when assessing the question of reasonableness.

Walker Morris comment
Employees and their representatives often insist that employers should carry out forensic levels of investigation into alleged misconduct. This case is very helpful for employers because it confirms that investigations into misconduct prior to a decision to dismiss do not have to be perfect or forensic as long as they fall within the band of reasonable investigations of a reasonable employer. Experienced HR practitioners will recognise the similarity of this test with that of the long-established ‘Burchell’ test which states that a decision to dismiss for misconduct must fall within the reasonable band of responses of a reasonable employer.

As is often the case with disciplinary matters, common sense should prevail. The key is that the employer must have a genuine belief in the employee’s misconduct. That belief must be reasonable and reached after an investigation that was reasonable in all the circumstances.

Type 2 diabetes controlled by diet is not a ‘disability’ under the Equality Act 2010 – Metroline Travel Ltd v Stoute [UKEAT/0302/14]
The EAT has overturned a decision of the Employment Tribunal and held that an employee who suffered from Type 2 diabetes which he controlled largely by avoiding sugary drinks, was not disabled within the meaning of the Equality Act 2010.

The employee was employed as a bus driver from 24 February 1992 to 11 March 2013 when he was dismissed for gross misconduct. He claimed that his dismissal amounted to disability discrimination and the Employment Tribunal held that his condition meant that he was disabled under the Equality Act 2010. The employer appealed and the sole issue for the EAT to decide was whether the employee was, in fact, disabled.

The statutory guidance on the definition of a disability makes it clear that a condition controlled by a minor alteration of a diet is not a long term condition restricting the ability of the employee to carry out ordinary day-to-day tasks. The EAT commented, “Someone suffering from Type 2 diabetes who does not properly manage his blood sugar levels might be at risk of suffering a hypoglycaemic attack. The Employment Judge referred to the guidance on the definition of disability which provides that an impairment is to be treated as having a substantial adverse effect if, but for the treatment or correction, the impairment was likely to have that effect. It is difficult, in my opinion, to see how a perfectly normal abstention from sugary drinks could be regarded as a medical treatment, and I have not seen anything that suggests there has been any substantial interference with normal day-to-day activities unless one considers abstention from Coca-Cola and fruit juice to be an impairment in ordinary day-to-day activities”.

The EAT found that the original decision of the Employment Tribunal that the employee was disabled was perverse. It commented that if the Tribunal’s reasoning had been correct it would have meant that any person suffering from Type 2 diabetes controlled by diet or anyone with a nut allergy or intolerance to lactose or gluten is to be regarded as disabled per se, which cannot be correct.

Walker Morris comment
Whilst disability cases must always be assessed on their individual facts, this decision is nevertheless helpful for employers because it highlights that individuals who suffer from a dietary allergy or type 2 diabetes controlled by diet are not automatically classed as disabled. If the individual is healthy as long as they follow a careful diet or avoid the dietary allergens then the fact that they would become ill if they did not do so is most unlikely to cause them to fall within the definition of disability under the Equality Act 2010.

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