Employment Law Newsletter Autumn/Winter 2009
Recent case law and legislative changes
In this edition of the Newsletter, we review some recent important decisions on disability discrimination, remedies in discrimination claims and confidentiality obligations in compromise agreements. We also set out some recent legislative changes.

Compensation for employee who suffers from stigma when searching for new job as a result of having brought a discrimination claim
In Chagger v Abbey National plc and anor [2009] EWCA Civ 1202 Mr Chagger was made redundant by Abbey National plc in circumstances which a tribunal held amounted to unfair dismissal and race discrimination. At the remedies hearing over six months later, he presented evidence of extensive attempts to mitigate his loss by finding similar work. He claimed his failure to do so was caused by the stigma of having brought the claim against Abbey National. The tribunal made an award of £2,794,962.27, which included future loss based on his inability to work in the financial services industry ever again.
The Court of Appeal held that the loss is assessed by asking when Mr Chagger might obtain a job on equivalent salary to that which he earned at Abbey National. It does not matter whether this period is longer or shorter than the period that he would have been employed by Abbey National but for the discriminatory dismissal. Given the claimant’s attempts and failure to mitigate his loss by finding employment elsewhere in the financial services, the tribunal had been entitled to assess future loss as though he would have stayed with Abbey National throughout his entire career, less any earnings in his new career as a teacher.
The Court of Appeal also held that employees who suffer a stigma when searching for a new job, as a result of having brought a discrimination claim against a previous employer, are entitled to be compensated for that loss by that employer. However, such loss will not ordinarily need to be considered as a separate head of loss, it will simply be a factor to be considered when assessing how long the claimant will remain out of work.
Compromise Agreements – Employee loses right to payment after breaching confidentiality obligation, costs order made
In Dunedin Canmore Housing Association Ltd v Donaldson UKEATS/0014/09/BI, the parties entered into a compromise agreement which included a term that the claimant was to be paid £8,000 in compensation for the termination of her employment.

As with the majority of compromise agreements, there was an express term that both sides kept the agreement confidential. Shortly after the agreement was signed, the employer stated that Mrs Donaldson had breached the confidentiality clause in disclosing terms of the agreement to a former colleague and in addition to a man with whom she had on ‘on/off’ relationship, and refused to pay the agreed sums.

Mrs Donaldson brought a claim against her employer and stated in her ET1 that she had not breached this clause. However the Tribunal determined that she had in fact disclosed the terms of the agreement and that the breaches had been material. The employer made an application for costs but the tribunal refused this. The employer appealed.

The EAT held that Mrs Donaldson “had not approached the essential factual matters that lay at the heart of her case honestly and reasonably.” The EAT stated that a Tribunal “has a responsibility to make clear that it is quite unacceptable to cause expense to another party by bringing proceedings on that basis” and made an adverse costs order.

Disability Discrimination Act 1995 covers discrimination by association
On 30 October 2009, the EAT confirmed through their decision in EBR Attridge Law LLP and another v Coleman (No 2) UKEAT/0071/09 that the DDA does indeed cover associative discrimination. As a result of the EAT’s decision, Ms Coleman’s claim that she suffered discrimination and harassment because of her son’s disability can now proceed to a hearing on the merits.

Ms Coleman brought a claim alleging that her former employer, law firm Attridge Law, and one of its partners had subjected her to direct discrimination and harassment contrary to sections 3A(5) and 3B of the DDA. The issue here was that Ms Coleman was not disabled within the meaning of the Act although she was the primary carer of her disabled son.

The employment tribunal made a reference to the ECJ to determine as a preliminary issue whether associative discrimination is prohibited by the Framework Directive. The ECJ ruled that the Equal Treatment Framework Directive 2000/78/EC covers associated discrimination and upheld the tribunal’s decision that words should be read into the DDA to cover discrimination by reason of, and harassment related to, a third person’s disability. Under the principle of indirect effect, a national court is required to interpret national law, “so far as possible, in the light of the wording and purpose of [a relevant EC directive] in order to achieve the result pursued by [the directive]”.

This is an important case which plays a large role in the future of disability discrimination. As the EAT pointed out, this judgment is not limited to carers or even those associated with a disabled person, and covers direct discrimination or harassment based on the disability of any third party. From the perspective of the DDA, this judgment will primarily help the carers of disabled people.

How the DDA should now be read
For the purposes of all acts of discrimination on or after 1 October 2004, the effect of the EAT’s judgment is that the DDA should be read as if the following new subsections were inserted into sections 3A and 3B respectively:
3A(5A) A person also directly discriminates against a person if he treats him less favourably than he treats or would treat another person by reason of the disability of another person.
3B(3) A person also subjects a person (A) to harassment where, for a reason which relates to the disability of another person (B), he engages in unwanted conduct which has the purpose or effect of—
(a) violating A’s dignity, or
(b) creating an intimidating, hostile, degrading, humiliating or offensive environment for him.
Sub-section (2) applies to this sub-section, save that the relevant perception is that of A.
Section 4(1) and (2) should be read as including, in the introductory words, the phrase underlined below:
It is unlawful for an employer to discriminate against a disabled person – or, in a case falling within s. 3 (5A), any person – …
Section 4(3) (a) and (b) should be read as including after, “a disabled person”, the phrase “or, in a case falling within section 3B (3), any person”.

Recent Legislative Changes
Using tips to make up national minimum wage prohibited from 1 October 2009
From 1 October 2009, service charges, gratuities and cover charges can no longer be used to make up national minimum wage pay. This means that all eligible workers must receive at least the national minimum wage as base pay with any tips they receive being paid on top. Additional voluntary measures have been introduced through the Code of Best Practice (at www.berr.gov.uk) to improve the information available to consumers and workers.

Sharp increase in limit for a week’s pay
The maximum limit of a week’s pay (for calculating amongst other matters statutory redundancy pay and the basic award for unfair dismissal claims) increased from £350 per week to £380 per week. The relevant order came into force on 1 October 2009 and the limit will remain unchanged until February 2011.

National Minimum Wage (NMW)
Increases in the hourly rates of the NMW took effect on 1 October 2009 and are as follows:

• Standard (adult) rate: £5.80 (rose from £5.73).
• Development rate: £4.83 (rose from £4.77).
• Young workers rate: £3.57 (rose from £3.53).
• Accommodation offset rate: £4.51 (rose from £4.46).

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 .