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Case Law Update March 2017

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07/03/2017

Dismissals based on a mobility clause in a redundancy situation were unfair

Kellogg Brown & Root (UK) Ltd v (1) Fitton UKEAT/0205/16 and (2) Ewer UKEAT/0206/16

When an employer moves site, can a mobility clause in an employment contract be used to avoid having to make a redundancy dismissal?

Facts

The employer had sites in Greenford and Leatherhead. The two claimants worked at Greenford and had mobility clauses in their contracts stating, ‘The location of your employment is … but the company may require you to work at a different location including any new office location of the company either in the UK or overseas either on a temporary or permanent basis. You agree to comply with this requirement unless exceptional circumstances prevail.’  The respondent’s disciplinary procedure included a failure to carry out reasonable instructions as an example of misconduct.

The employers told its employees that the Greenford site would close and they were instructed to transfer to the Leatherhead site.  A six-month compensation scheme was put in place to help with additional travel costs and the employer agreed to an earlier finish for those affected by M25 traffic.

Mr Fitton argued that he was, in fact, redundant and that the mobility clause was unenforceable. The site move changed his daily commute from a 20 minute tube ride to a 4 hour round trip drive and he did not have a car. The employer responded that his refusal to relocate could lead to his dismissal for refusal to comply with a reasonable instruction. Mr Fitton attempted to continue working at Greenford but was turned away and did not attend the Leatherhead site. He was summarily dismissed.

Mr Ewer was 64 and had 25 years’ service. He objected to his daily commute more than doubling.  The employer felt that neither Mr Ewer’s long service nor his age constituted exceptional circumstances and he too was summarily dismissed for failing to attend work.

Both claimants claimed unfair dismissal and a statutory redundancy payment.  The Employment Tribunal found that the dismissals were unfair and that the real reason for the dismissals was redundancy.  On appeal, the Employment Appeal Tribunal (EAT) agreed that the dismissals had been unfair because the instruction to move to Leatherhead had not been a reasonable requirement and the claimants’ refusal to transfer had not been unreasonable. The EAT did, however, disagree with the Employment Tribunal about the reason for the dismissal. It found that it was a misconduct dismissal (because the employer genuinely believed that the employees were in breach of their contracts) rather than a redundancy dismissal. This was somewhat academic from the claimants’ perspective because the basic award for unfair dismissal is the same as the statutory redundancy payment.

What this means for employers

This decision confirms that the existence of a mobility clause in a contract does not automatically make it reasonable to rely on it. The further the distance the employee is being asked to move and the personal hardship to them in doing so are highly relevant when assessing the reasonableness of the clause. In this case, the fact that the employer offered some concessions in recognition of the extra distance was not enough.

The decision does demonstrate, however, that using a mobility clause may avoid a redundancy dismissal. This could be helpful where the employer wishes to avoid having to pay an enhanced redundancy payment. It is a finely balanced decision in each case and advice should always be taken before seeking to rely on a mobility clause as a reason for dismissal.

Company not liable for MD’s assault on employee at a Christmas ‘after party’

Bellman v Northampton Recruitment Ltd [2016] EWHC 3104 (QB)

In a surprising decision, the High Court found that a company was not vicariously liable for a violent assault on an employee by the employer’s MD at an impromptu Christmas ‘after party’.

Facts

Mr Bellman worked as a sales manager for the employer. He suffered brain damage after being badly assaulted by the MD of the company. The assault took place after the employer’s Christmas party when some of the guests decided to take a taxi to a nearby hotel to carry on drinking. At the hotel, the conversation turned to work matters and the MD took offence when Mr Bellman questioned one of his managerial decisions.

The Court had to decide whether the company was vicariously liable for the MD’s actions. It held that the assault was insufficiently connected with the MD’s employment and the company was therefore not liable. Key to its decision was the fact that the ‘after party’ was not a corporate event but an impromptu gathering at which there was no expectation that employees would attend. The mere fact that the assault arose out of a conversation about work did not make it something which occurred ‘in the course of employment’.

What does this mean for employers?

This decision is surprising given the Supreme Court’s decision in the 2016 case of Mohamud v WM Morrison Supermarkets in which WM Morrison were found to be vicariously liable for the actions of its petrol station attendant when he assaulted a customer on the forecourt [hyperlink to this case report in April 2016 newsletter]. In Mohamud, the Supreme Court took a broad approach to the ‘close connection’ test that is required in all vicarious liability cases.  It may well be that the High Court decision in Bellman is appealed.

This decision can be seen as something of a ‘lucky escape’ for the company and it remains as important as ever that employers ensure that expected standards of conduct towards other employees and third parties are clearly set out in employment policies. Any infringements should be dealt with swiftly under disciplinary or performance management procedures.

It is important to remember that the test for establishing vicarious liability is much harder to satisfy than the test under the Equality Act 2010 for establishing discrimination and harassment at work events or events closely connected to work. This case does not change the law on claims made under the Equality Act 2010.

Is long-term stress a disability?

Herry v Dudley Metropolitan Council UKEAT/0100/16/LA

This Employment Appeal Tribunal decision gives useful guidance on when stress caused by events at work can amount to a disability under the Equality Act 2010.

Facts

Mr Herry was a teacher and youth worker. He brought an Employment Tribunal claim against his two employers, all of which were dismissed. He then brought further proceedings claiming disability discrimination on the basis that his disabilities were ‘stress, depression and dyslexia’.  The Tribunal held that he was not disabled and he appealed to the EAT.

The EAT concluded that his stress had been a reaction to difficulties at work rather than a mental impairment and he had also failed to show that his conditions had a substantial long term adverse effect on his day to day activities. It emphasised that there is a difference between stress caused by a reaction to life events and an actual mental impairment. He had not provided sufficient medical evidence to support his claim (he had only relied on GP notes) and the EAT recognised that terms like ‘stress’, ‘anxiety’ and ‘depression’ could be used very loosely and are not necessarily indicative of a disability under the Equality Act 2010.

What does this mean for employers?

The EAT’s comment that ‘there is a class of case where the individual will not give way or compromise over an issue at work, and refuses to return to work, yet in other respects suffers no or little apparent adverse effect on normal day to day activities’ is helpful to employers facing similar grievances or claims. Terms such as ‘stress, anxiety and depression’ have become so over-used that they only carry weight in a disability claim if backed up by proper medical evidence.  In a disability discrimination case, the onus is on the employee to provide this evidence and Mr Herry had failed to do this.

Protected conversations and ‘improper conduct’ 

Lenlyn UK Ltd v Kular UKEAT/0108/16/2211

Pre-termination conversations are protected from admissibility in unfair dismissal proceedings unless there has been ‘improper conduct’. This Employment Appeal Tribunal (EAT) decision provides useful guidance on what this might include.

Facts

Lenlyn UK Ltd ran a retail foreign exchange bureaus. Mr Kular was the financial controller of the company. Fraud by a new contractor resulted in the company losing £1.9m. The company commissioned an external forensic accountant’s report which found that Mr Kular had not been dishonest although his conduct in failing to monitor the contractor could have been negligent.  It recommended that the company consider whether there was a need for a full disciplinary investigation into Mr Kular’s conduct.

The company had a pre-termination discussion with Mr Kular on 16 December and told him that the forensic accountant’s report had concluded that he had been grossly negligent. It said it was considering taking disciplinary action against him and made him a ‘without prejudice’ offer. He was given 6 days to respond to the offer.

Mr Kular did not accept the offer and resigned on the deadline he had been given to respond. He then brought a claim for constructive dismissal. The Employment Tribunal found (and the EAT agreed) that he had been constructively dismissed and that the pre-termination discussion on 16 December was admissible in evidence because of the employer’s ‘improper conduct’ both in:

  • failing to give Mr Kular a reasonable time period to consider the offer
  • misrepresenting the contents of the forensic accountant’s report by stating that it concluded Mr Kular had been ‘grossly negligent’ (it had, in fact, stated that he could have been negligent and that the employer should consider an investigation).
What does this mean for employers?

When seeking to rely on a pre-termination conversation always take care to follow the ACAS guidelines. This case confirms that misrepresenting key facts or, simply not giving the employee enough time to consider the offer could amount to ‘improper conduct’ rendering the conversation admissible in evidence.

Contacts