Case law round-up – May 2016

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ACAS Early Conciliation and time limits – Tanveer v East London Bus and Coach Company Limited – UKEAT/0022/16

Since the introduction of ACAS Early Conciliation (EC) in 2014, there has been some uncertainty over the correct way to calculate extension of time limits for Employment Tribunal claims.  The Employment Appeal Tribunal (EAT) has now clarified that, when the time limit for an Employment Tribunal claim is extended by a month (under s207B of the Employment Rights Act 1996 (ERA)) after EC, the extension runs to the same date in the following month (e.g. from 30th June to 30th July). This is referred to as the ‘corresponding date’ rule.

The facts

The Claimant was dismissed on 20th March 2015.  He contacted ACAS on 18th June 2015 and an Early Conciliation Certificate was issued on 30th June 2015. The Claimant’s solicitors presented the Claim Form on 31st July 2015, and the unfair dismissal claim was dismissed by the employment tribunal as being one day late.

The Claimant’s appeal focused on the application of the ‘corresponding date’ rule in Section 207B ERA, which extends time for a claim by one month after the date of the EC certificate. The EAT held that the rule means that time runs from the date of issue of the EC certificate to the corresponding date in the following month (i.e. 30th June to 30th July), or the last day of the month in a shorter month, e.g. 31st May to 30th June.

What does this mean for employers?

This is a helpful decision and it provides clarity and simplicity. Always remember to diarise key dates in Employment Tribunal claims as a matter of practice. Don’t assume that the Employment Tribunal will automatically and immediately pick up on a Claimant’s breach of time limits, always check!

Is it religious discrimination to discipline an employee for pushing their religious beliefs in the workplace? Wasteney v East London NHS Trust – UKEAT/0157/15

It can be tricky to deal with employees who proselytize about their religion at work. There is a fine line between what is acceptable and unacceptable and employers often fear that any action taken may trigger a religious discrimination claim. This EAT decision provides helpful (employer-friendly) guidance in such situations.

The facts

Ms Wasteney was a Christian. It was alleged by a junior colleague (who was Muslim) that Ms Wasteney had attempted to ‘groom’ her to convert to Christianity. This included Ms Wasteney praying with the junior employee, laying on of hands, giving her a book about the conversion to Christianity of a Muslim woman and inviting her to various services and events at Ms Wasteney’s church. The junior colleague did not encourage this attention.

The Trust found Ms Wasteney guilty of serious misconduct in particular in relation to ‘blurring professional boundaries’ and subjecting a junior colleague to improper pressure and unwanted conduct. It issued Ms Wasteney with a disciplinary warning. Ms Wasteney claimed unlawful religious discrimination and harassment but her claims were dismissed by both the Employment Tribunal and the EAT. The EAT held that it was necessary to draw a distinction between conduct where someone is merely manifesting their religious belief and conduct where someone is improperly promoting their religious belief in an unwanted manner. In this case, Ms Wasteney’s conduct also took advantage of someone in a subordinate relationship and, as such, disciplining her for her behaviour did not amount to religious discrimination or harassment.

Ms Wasteney attempted to rely on the protection of Article 9.1 of the European Convention on Human Rights (ECHR) (freedom of thought, conscience and religion) but was unsuccessful because this right is qualified by Article 9.2 (the rights and freedoms of others). As such, the ECHR did not give Ms Wasteney “a complete and unfettered right to discuss or act on her religious beliefs at work irrespective of the views of others or her employer“.

What does this mean for employers?

Workplace situations that involve striking a balance between two people’s rights and freedoms are notoriously tricky to deal with. As this decision shows, merely manifesting a religious belief is ok – pushing that belief onto colleagues in an unwanted manner is not. The key to dealing with cases like this is to ensure that disciplinary action is solely be based upon the misconduct of the employee rather than on the employee’s relevant protected characteristic. In this case, the misconduct that the employer disciplined Ms Wasteney for was improperly promoting her beliefs in a way that took advantage of someone in a junior position. Always tread carefully and establish the facts before taking action. As ever, it is important to keep Equality policies and procedures up to date and to ensure that all staff receive appropriate training in equality issues at work.

Reasonableness of restrictive covenants – Bartholomew Agri Food v Thornton [2016] EWHC 648 (QB)

Enforceable employment restrictive covenants form a crucial part of an employer’s armoury in protecting its business interests. Because of this, time spent getting restrictive covenants right is always a good investment and it is important to keep them under review throughout the employment relationship. In this case, the High Court rejected a restrictive covenant on the grounds that it was not enforceable when it was first imposed even though the employee was later promoted to a level that made the covenant arguably reasonable.

The facts

Mr Thornton began working for his employer in 1997 as a trainee agronomist with no customer base or experience. His contract of employment contained a non-compete restrictive covenant which prevented him from working with any of the employer’s existing customer base for six months. The Court held that this covenant was unreasonable and in restraint of trade given his junior status. The fact that he was subsequently promoted to a level where the covenant might have become reasonable was irrelevant. The High Court held, following previous Court decisions on this point, that a covenant which was unreasonable when first imposed remains unenforceable. The fact that the employee ‘grows into’ the covenant is irrelevant.

The Court also found, in any event, that the covenant was drafted too widely because it sought to prevent the employee from dealing with any customer of the employer regardless of whether he had had any prior dealings with that customer. In this case, Mr Thornton worked with customers who represented just 2% of the company’s turnover and the Court held that it would be unfair to prevent him from working with customers representing the other 98%.

What does this mean for employers?

This case illustrates the importance of keeping restrictive covenants under review for all key employees. If a covenant is unreasonable at the point it is entered into, it cannot ‘become reasonable’ over the passage of time on the basis that the employee becomes more senior or well connected. Covenants also need to be tightly drafted and go no further than is absolutely necessary to protect the company’s business interests. Using ‘off the shelf’ covenants without giving specific thought to how they apply to the individual in question is usually a recipe for failure.

An interesting point in this case was that the contract stated that the employer would pay the employee for the duration of the covenant. This did not influence the outcome. The Court held that it would be contrary to public policy to allow an employer to effectively ‘buy’ a restraint of trade. In a related development, the Government will shortly launch a call for evidence asking for views on non-compete clauses, including whether post-termination restrictions in employment contracts act as a barrier to employment, innovation and entrepreneurship. It has been suggested that they act as ‘red tape hampering the efforts of start-ups and small businesses to hire the most talented people’. The Government will be seeking views on whether such restrictions have a stifling effect  innovation.

No statutory obligation to continue salary sacrificed childcare vouchers during maternity leave – Peninsula Business Services Ltd v Donaldson – UKEAT/0249/15

In a decision that impacts employers who provide childcare vouchers under salary sacrifice schemes, the EAT has held that withholding such vouchers during maternity leave is not a breach of the Maternity and Parental Leave Regulations 1999. It determined that existing HMRC guidance on the treatment of salary sacrifice schemes during maternity leave was incorrect.

The facts

Peninsula Business Services provided a salary sacrifice scheme for childcare vouchers. A condition of the scheme was that, if an employee went on maternity leave, there would be no entitlement to childcare vouchers until the employee returned to work. Under the Maternity and Parental Leave Regulations 1999 (the MPLR Regulations), an employee on maternity leave is entitled to the benefit of all the terms and conditions of her employment as normal, with the exception of pay. Accordingly, in adopting this policy, Peninsula viewed the salary sacrificed childcare vouchers as being ‘pay’ rather than a ‘non-cash benefit’.

HMRC official guidance, however, stated that benefits such as childcare vouchers provided for by way of salary sacrifice should be treated as non-cash benefits rather than as pay. This suggested that when an employee went on maternity leave she would continue to be entitled to non-cash benefits such as childcare vouchers, even where there was no longer sufficient salary to sacrifice against in order to pay for those childcare vouchers.

At the Employment Tribunal, Ms Donaldson relied on the HMRC guidance and claimed that Peninsula’s childcare voucher scheme was discriminatory because it treated someone who took maternity leave less favourably than someone who did not and that it was in breach of the MPLR Regulations because it did not reflect her entitlement to receive her normal terms and conditions, including benefits, during her maternity leave.

Ms Donaldson was initially successful at Employment Tribunal and Peninsula appealed. The EAT analysed the situation and found that because the salary earned by an employee is effectively ‘diverted’ under a salary sacrifice scheme in order to pay for the vouchers, they should be treated as part of the employee’s pay rather than a separate non-cash benefit. It held that, on this analysis, employees are not entitled under the MPLR Regulations to continue to receive the vouchers during maternity leave. The EAT held that the HMRC guidance on this point was therefore incorrect and had no legislative basis. Ms Donaldson’s discrimination claim was also rejected.

What does this mean for employers?

This is a welcome decision in that it prevents employees gaining a ‘windfall’ during maternity leave of childcare vouchers where there is no salary actually payable to sacrifice against. Indeed, the EAT took the view that this could never have been the intention of Parliament when introducing salary sacrifice legislation as it would discourage employers from offering the scheme at all. That said, the EAT expressed its conclusions ‘somewhat tentatively’ and the decision does sit a little uncomfortably with the whole salary sacrifice scheme premise that, in order to avoid payment of tax, salary is effectively diverted and converted into a non-taxable benefit. In any event, childcare voucher schemes will be closed to new entrants from April 2018 and the Government has recently launched a consultation scrutinising the use of all salary sacrifice schemes in the workplace.  It may be such schemes will be limited in the future.

Employers who have paid salary sacrificed childcare vouchers throughout maternity leave and wish to change this in light of the EAT decision should take legal advice. It may be that the provision of the vouchers throughout maternity leave is an express contractual entitlement (or it may have become an implied entitlement) and this should be checked before making any changes. There may also be industrial relations implication in making changes which will need to be thought through.

Mohamud v WM Morrison Supermarkets plc – [2016] UKSC 11 2 March 2016

In this widely reported case, the Supreme Court held that employers will be vicariously liable for any injury caused by employees if there is a clear connection between the employee’s actions and the work the employee is employed to carry out.

The facts

Mr Khan was an employee of WM Morrison Supermarkets employed to work in a Morrison’s petrol station. Following an aggressive verbal altercation with a customer (Mr Mohamud), he followed him out onto the forecourt and physically assaulted him. Mr Mohamud brought a claim for personal injury against Morrison asserting that it was vicariously liable for his injuries.

The High Court and the Court of Appeal both found that WM Morrison was not liable because Mr Khan had stepped so far outside the boundaries of his job (serving customers and keeping the forecourt and petrol pumps in running order) there was not a sufficiently close connection between his actions towards Mr Mohamud and his employment. This ‘close connection’ test is the test required by the law when establishing whether or not an employer is liable for the unlawful actions of its employees.

The case progressed to the Supreme Court which took a different view. It took a broad approach to the question of what Mr Khan’s job required him to do and it was satisfied that the ‘close connection’ test was, in fact, satisfied.  Mr Khan’s role required him to deal with customer enquiries. Mr Khan had been answering Mr Mohamud’s enquiry when the initial verbal altercation came about. Mr Khan then left the kiosk and ordered Mr Mohamud off the premises (something that Mr Khan purported to do on his employer’s behalf).  Whilst Mr Khan’s actions were totally unacceptable they were carried out in connection with his duties of serving and dealing with customers. As such, Morrison Supermarkets was held to be vicariously liable for the injuries caused.

What does this mean for employers?

This is an unusual case but it does have some useful ‘take home’ points:

  • An employer may be liable for an employee’s actions even where they are totally unacceptable and would never be condoned by the employer.
  • Unlike discrimination claims, there is no ‘reasonable steps’ defence in personal injury cases.
  • Employers should ensure that expected standards of conduct towards other employees and third parties are clearly set out in employment policies and that any infringements are dealt with swiftly under disciplinary or performance management procedures.
  • Where an employer has concerns about an individual employee’s conduct towards customers (or where a complaint has been made) this should be dealt with at the time rather than risking a further incident.