May 30 2006 Employment Law Enews

Welcome to the latest edition of employment law enews.

Advocate General stresses the need for justification when applying length of service criterion

The Advocate General has given his opinion in Cadman v Health and Safety Executive, stressing that employers must justify their use of length of service and seniority criterion in setting pay rates, where these have a disproportionate effect on women. The Advocate General often gives his opinion on forthcoming European cases, and is generally a good indicator of the direction that the European Court of Justice (ECJ) will take.

In this particular case, Mrs Cadman was paid less than four male colleagues who were all on the same grade. The differential was purely due to the men having longer service. The Court of Appeal sought clarification from the ECJ as to whether employers must justify the use of such criteria where they have a disparate impact on male and female employees (ie, they indirectly discriminate).

In anticipation of the ruling, the Advocate General has argued that employers must provide objective justification for such criterion, and show that it is an appropriate means of achieving a legitimate aim. A potentially justifiable aim could be rewarding experience or loyalty, but it is essential that such aims are implemented proportionately. This could involve the employer making efforts to minimise its disparate impact on women, for example guaranteeing that periods of maternity leave are counted when calculating length of service. It was stressed that criterion must be transparent and understandable, ie in jobs involving responsibility and management, experience is clearly far more valuable than in more repetitive manual positions. The Advocate General also stated that there should be no distinction between the length of service criterion when comparing part-time and full-time workers.

While there is no duty on the ECJ to follow the Advocate General's opinion, it is generally adhered to in most cases. Issues of pay related to seniority are likely to become even more controversial following the introduction of the Age Discrimination Regulations this October.

House of Lords gives radical decision in asbestos case

The House of Lords recent decision in Barker v Corus (UK) has far reaching implications for both claimants and insurers in cases of work-related asbestos poisoning and other personal injury actions.

It is a long-standing rule that in personal injury actions, the claimant must prove that their loss was caused by a breach of the employer's duty of care. It is also well established, that when the claimant can demonstrate that the damage is the result of negligence by more than one employer, but cannot attribute specific loss between them, then each of the employers will be liable for the whole of the claimant's loss. This is a very important principle, as it has enabled claimant's to recover their total loss, even when one of the employers is insolvent. This was especially important in the case of Fairchild (2002), where the claimant contracted asbestos-related mesothelioma following exposure to asbestos by a number of employers. In this case the claimant was allowed to sue any of his previous employers, despite the nature of the disease being such that only one of the employers will actually have been responsible for causing the disease.

In Barker, the House of Lords have re-examined and re-construed these principles. Like Fairchild, the case involved terminal asbestos-related mesothelioma. In this case there were two employers that could have been responsible for the breach of duty by exposing the claimant to asbestos, but the claimant had also contributed to the risk for a short period while he was self-employed. The Law Lords upheld the spirit of Fairchild, despite the fact that the claimant had contributed to the risk. The right to claim personal injury was held to occur from the fact that both former employers had increased the risk of illness and that either period of employment could have caused the specific strain of mesothelioma (despite the lack of discernable proof).

However, the House of Lords went further, and ruled that the two employers were only liable on a proportional severable basis. This essentially means that liability will be divided based on each employer's contribution to the risk, with damages shared accordingly on a proportional basis. This has wide reaching implications. Claimants must now join all potential employers (and their insurers) to the proceedings, if they ever hope to recover their total loss. Costs will stretch far higher as a result, as more detailed analysis and greater litigation will be needed when attempting claims. Most importantly, if one employer is insolvent or untraceable, then a proportion of the claimant's loss will now be irrecoverable.

Deficiencies during investigation into an employee's conduct did not render employer's behaviour unreasonable

The decision of the Employment Appeals Tribunal ('EAT') in the case of Mr Styles v London Borough of Southwark 2006 appears to be of some help to employers, by determining that significant delays during an investigation into an employee's conduct, and a failure to interview witnesses to support his case, did not render the employer's behaviour unreasonable.

It is a established principle that employees have the right not to be unfairly dismissed. It is therefore for the employer to establish that the reason for the dismissal was one of five potentially fair reasons, and that a fair procedure was followed when dismissing the employee.

When dismissing an employee on the grounds of misconduct, the employer must satisfy several tests. Firstly, the employer must be able to establish that at the time of the dismissal, it believed that the employee was guilty of an act of misconduct. The employer must also be able to show that it had reasonable grounds for believing that the employee was guilty of that misconduct. Thirdly, the employer must show that at the time it held that belief, it had carried out as extensive investigation into the matter as was reasonable.

If a claim for unfair dismissal is subsequently made following dismissal, it is not the purpose of the Tribunal to determine whether the employee is guilty of an act of misconduct, but to determine whether the employer had reasonable grounds for believing that the employee was guilty of that act of misconduct. The Tribunal must therefore review the level of investigation carried out by the employer, and consider whether it was within the 'band of reasonable responses.'

This case related to an unfair dismissal claim made by Mr Styles, who was employed by the London Borough of Southwark ('Southwark') as a school premises officer, and subsequently as the Unison Shop Steward at the Robert Browning Primary School.

In May 2003, the Head Teacher of the school, wrote to Southwark making a series of allegations against Mr Styles. These allegations included threatening behaviour and intimidation, failing to do the job of a satisfactory standard, and failing to follow reasonable instructions.

Mr Styles was subsequently summarily dismissed on the grounds of misconduct. This decision followed a disciplinary hearing whereby Mr Styles chose not to give any evidence, nor did he choose to call any witnesses. He later made an application to the Tribunal, claiming amongst other grounds that his dismissal was automatically unfair due to various deficiencies in the disciplinary process carried out by Southwark.

On the facts of the case the EAT held that the dismissal was fair despite a significant delay of a year between the complaint being lodged, and a disciplinary hearing being held. They concluded that since the complaint related to continuing misconduct rather than single unrelated incidents, they could be seen to be recent since they identified a pattern of unacceptable behaviour and conduct.

The EAT also gave some guidance regarding an employer's failure to interview the employee's witnesses by drawing a distinction between this case, and that of A v B [2003] IRLR 405, in which a dismissal was held to be unfair because the employees witnesses had not been interviewed.

In the case of A v B, the allegations, which also involved an element of criminality, were so serious that they would potentially not only lead to dismissal, but also a loss of employment in that chosen field. The EAT recognised that although a failure to interview Mr Style's witnesses was unsatisfactory, it did not render the investigation unreasonable. They referred in their judgment to the fact that Mr Styles had a full opportunity to put his case to Southwark at the disciplinary hearing, and the appeal hearing, and he chose not to adduce his own evidence at either. They were therefore satisfied that Southwark had acted reasonably.

Whilst appearing to be a relatively helpful case for employers when considering whether a dismissal was within the "band of reasonable responses", note should be taken of the fact that it involved an employer in the Public Sector, where delays in dealing with disciplinary matters are not uncommon. Employers should also be aware that the standard Disciplinary and Dismissal Procedures did not apply to this case, which provide that each step and action taken under such must be taken without "unreasonable delay".

It is therefore questionable whether an Employment Tribunal would interpret the employer's response in a similar way, if the same claim was brought about today.

Pensions Law Workshop 13 June 2006

The Impact on Pensions of the New Age Discrimination Regulations - Breakfast Briefing

8.45am for 9:00am start and 10:30am finish
steeles London Offices, Bedford House, 21a John Street, London WC1N 2BF

Today more than ever before pensions are featuring at the centre of concerns about employment. Together with barrister Fenner Moeran we are offering a one and a half hour workshop focusing on the pensions impact of the Regulations. The workshop is aimed at HR Managers and those with responsibility for pension issues in the workplace.

In particular the workshop will focus on the Regulations' impact on:

• Provision of pension benefits;
• Final salary -v- Money purchase benefits;
• Contribution rates;
• Scheme retirement ages;
• Trustees of occupational pension schemes.

The cost of the workshop is £25.00 plus VAT. To book your place please call 01603 598000 or book online.

This article copyright © 2006 Steeles Law llp. All rights reserved.