Employment Law Newsletter November 2007

1.         Age Discrimination

Three recent cases on age discrimination are noteworthy:

Court –v- Dennis Publishing, London Central Employment Tribunal

This case involved the typical scenario of a 50-something senior manager being made redundant and being replaced with someone 20 years younger.

Dennis Publishing publishes a wide range of magazines including Viz, Motoring Express and Maxim. It is owned by Felix Dennis, who did not take an active role in the day-to-day running of the company.

The Claimant was 55, had been with the company since 1989. He was the Promotions Director and was responsible for creative solutions, a form of advertising, within the Motoring Division. Lifestyle was the other division to have a creative solutions team, comprising 5 people. The company decided to create a centralised team for selling creative solutions across all four divisions. For this purpose, it invited a new employee to head the new team. The Claimant was not informed of this fact, and the following month, attended a meeting with the Director of Advertising to discuss potential new clients but instead found himself being informed that he was to be made redundant.

The Employment Tribunal held that the company had directly discriminated against the senior employee on the grounds of his age when it selected him for redundancy. A number of factors led the Tribunal to draw an inference of discrimination, including a general culture within the company that younger cheaper employees were preferable to older, more expensive staff, and a failure to consider for redundancy any other employees, who all happened to be at least 20 years younger than the Claimant. Claims of unfair dismissal and breach of contract also succeeded.

The Tribunal cited passages from Felix Dennis’ book ‘How To Get Rich’ written in 2006 (and which made it to the WH Smith bestseller list) that ‘by the time talent is in its late forties or early fifties, it will have become very, very expensive’ and that it was ‘unwise to leave senior employees in any job too long’. The Tribunal acknowledged that Felix Dennis had not played an active part in either the restructuring or in the Claimant’s dismissal. Nevertheless, the philosophy espoused in his book, which had been read by the managers who had dismissed the Claimant, had infected the culture within the company.

Palacios de la Villa –v- Cortefiel Servicios SA, European Court of Justice

The European Court of Justice held that a Spanish law permitting compulsory retirement was not in breach of the prohibition on age discrimination in the EC Equal Treatment Framework Directive. Although national laws providing for compulsory retirement are not automatically excluded from the Directive’s scope, the legislation was an appropriate and necessary means of checking unemployment and encouraging recruitment, and so its discriminatory effect was objectively justified.

The case is significant in the UK because there has been a similar challenge to the retirement age of 65. A High Court challenge has been brought by Heyday, a membership organisation backed by Age Concern.

Bloxham –v- Freshfields Bruckhaus Deringer, London Central Employment Tribunal

A former partner of Freshfields Bruckhaus Deringer challenged amendments to a pension scheme on the grounds that it directly discriminated against him on the grounds of age. The Tribunal held that whilst the changes were directly discriminatory, they were objectively justified. They were a proportionate means of achieving a legitimate aim. It recognised that, in reforming pension schemes, imposing any cut-off date for entitlement to benefits inevitably affects members of different ages to varying degrees. Employers therefore need to consider the effects of the changes on all those involved. That the employer had done so and had undertaken wide and effective consultation on the proposed changes were factors weighing in its favour. The aim of reforming the pension scheme was to provide for a more sustainable pension arrangement and to reduce the effect of intergenerational unfairness on younger partners inherent in the previous scheme. The Tribunal held that disapplying the 20 percent discount to his pension as suggested by the Claimant would have the effect of improving those in his situation at the expense of other age groups, which would have been unfair and perverse.

2.         Stress

McAdie –v- Royal Bank of Scotland plc, Court of Appeal

An Employment Tribunal had erred in finding that an employee had been unfairly dismissed on ill-health grounds. When considering the reasonableness of the dismissal, the Tribunal had been entitled to take into account the fact that the employer had itself caused that incapacity. However, the Tribunal had failed to ask itself whether dismissal was a reasonable response in the circumstances. If it had done so, it could only have found that the dismissal was reasonable – the employee had expressly stated that she would never return to work.

The Claimant’s employment with RBS began in 1983. She was a valued employee and was promoted over the years to a senior position. In 1995, a period of ill-health caused her to opt for a less stressful position, in which she worked part-time. In June 2003, she was asked to transfer to a different branch, which she reluctantly did after making formal complaints to the manager who arranged the transfer and to that manager’s manager G. After she started at the new branch, there was a telephone conversation between the Claimant and G during which she considered G to be ‘extremely intimidating and bullying’. She complained in writing and received no response for a month. When the response was received, the Claimant was not satisfied with it. Her health deteriorated and she was signed off work sick from 10 September 2003. She lodged a formal grievance in November 2003; her grievances were dismissed. In June 2004, RBS initiated its long-term sickness procedure. In early November 2004, she was diagnosed with ‘severe adjustment disorder’ resulting from workplace issues.

The Employment Appeals Tribunal pointed out and Court of Appeal accepted that it may be necessary to ‘go the extra mile’ in finding alternative employment for the employee who is incapacitated by the employer’s own conduct, or to put up with a longer period of sickness absence than would otherwise be reasonable.

Deadman –v- Bristol City Council, Court of Appeal

The Claimant brought a claim in the High Court for personal injury alleging his employers had breached their common law duty to take reasonable care and terms of his employment contract, causing him psychiatric illness.

The Court of Appeal held that in convening a panel of two members rather than three to investigate a complaint of harassment against the Claimant, the Council had breached its harassment procedure, the terms of which had been incorporated into the Claimant’s employment contract. However, the High Court judge had erred in finding the Council liable for the Claimant’s psychiatric illness, as it was not reasonably foreseeable that the breach would cause him to suffer from depression. Nor had the Council breached the Claimant’s contract by leaving a letter on his desk informing him that the investigation was to be reopened, as a general statement in the harassment policy to the effect that the Council would deal with complaints of harassment sensitively was not apt for incorporation in the employment contract.

3.         Smoking dismissal was fair

Smith –v- Michelin Tyre plc, Employment Tribunal decision

An employer’s decision to dismiss a long-serving employee for a one-off breach of a workplace smoking policy was fair. The employer had always prohibited smoking, except in authorised areas, because of the use of flammable products in its production process. The Tribunal held that dismissal had been a reasonable response, weighing the employee’s personal circumstances against the importance of the policy in preserving the employer’s business, its property and the lives of its other staff.

The employee had gone into the staff locker room, opened the fire door and sat at the door smoking. Factors in the company’s favour were that its no smoking policy had previously been highlighted to staff at a company presentation. Its disciplinary policy provided that contravention of smoking policy could amount to gross misconduct resulting in summary dismissal.

4.         Future developments

Enforcement of Tribunals awards

The Tribunals, Courts and Enforcement Act 2007 received royal ascent on 19 July 2007 and will be gradually implemented over the next two years. Currently, Tribunals have no enforcement powers of their own. If a party fails to pay the compensation awarded and/or any costs awarded, the Claimant or Respondent must enforce the monetary award via the normal civil courts. This requires them to register the judgement in the County Court, following which the court will order payment by a specified date. If payment is not made, the Claimant or Respondent is then entitled to commence one of the prescribed methods of enforcement. The Act will remove this preliminary step and allow parties to proceed immediately to enforcement in the same way that a judgement of the County Court or High Court can be enforced immediately as of right.

The Act also provides for a simple unified tribunals system to bring together the numerous tribunals within one system administered by the Tribunals service.

Statutory Dispute Resolution Procedures

The Employment Simplification Bill is part of the government’s legislative programme this year. It is expected to implement the Gibbons review of workplace dispute resolution including scrapping the statutory dispute resolution procedures and implementing a package of replacement measures. These are expected to come into force only in April 2009.

Knight-Webb Solicitors are specialists in employment law. We pride ourselves in providing a first-rate, cost-effective and personal service to clients. We can help you to avoid the employment law pitfalls and ensure that your procedures are up-to-date, taking into account all the recent changes in the law, including those outlined in this Newsletter. Contact Sunita Knight-Webb on 020 7207 6195 or at sunita@knightwebb.com.