Employment Law

A round-up of the most significant employment law cases to be published over the last month including insights on dismissal cases, using without prejudice letters and when injunctive relief may be sought to enforce a non-compete clause. We also have an interesting case on ethical veganism v legality of actions.

• Equality Act: Ethical veganism encompassing an obligation to break the law to relieve animal suffering was not a protected belief
• Unfair Dismissal: Statutory cap should be applied to unfair dismissal compensation after deduction of earlier payments made to employee
• Constructive Dismissal: Fundamental breach possible even where employer’s actions do not suggest intention to end employment relationship
• Dismissal: ACAS code applied to discriminatory sham redundancy dismissal
• Injunctive Relief: Interim enforcement of non-compete clauses
• Without Prejudice: Without prejudice letter inadmissible despite exaggerated allegations

Equality Act: Ethical veganism encompassing an obligation to break the law to relieve animal suffering was not a protected belief

In Free Miles v The Royal Veterinary College ET/2206733/2020, an employment tribunal has found that a belief in ethical veganism encompassing an obligation to break the law to relieve animal suffering did not amount to a philosophical belief under section 10 of the Equality Act 2010 (EqA 2010).

Ms Free Miles was a veterinary nurse employed by the Royal Veterinary College (RVC). In February 2019, she was arrested by police in connection with alleged burglaries by the Animal Liberation Front. The police found a sick turkey at her flat which she said she had rescued. Following her arrest, Ms Free Miles was summarily dismissed by RVC for reasons including that RVC believed she was connected with an animal rights group that endorsed law breaking and that she had participated in activities including trespass and theft.

Ms Free Miles brought an employment tribunal claim against RVC for, among other things, direct and indirect philosophical belief discrimination. She relied on her belief in ethical veganism, arguing that this belief included a moral obligation to take positive action to reduce animal suffering, including trespass on property and removal of animals. By the time of the tribunal hearing, Ms Free Miles had been charged by the police with criminal offences relating to animal rights activities.

The tribunal stated that, had Ms Free Miles’ belief in ethical veganism been limited to the belief that humans should not eat, wear, use for sport, experiment on or profit from animals, it would have had no reservation in concluding that it amounted to a philosophical belief under section 10 of the EqA 2010. It also said that it might have reached the same conclusion had the moral obligation to take positive action to reduce or prevent animal suffering been limited to lawful action.

However, Ms Free Miles’ belief included trespassing on private property and acting in contravention of the law. The tribunal concluded that a belief to take actions that are unlawful and to interfere with the property rights of others could not be worthy of respect in a democratic society, so did not satisfy the fifth element of the test in Grainger Plc v Nicholson [2010] 2 All ER 253. Laws were made by democratically elected representatives and had to be obeyed by all citizens. It was not open to individuals to decide which laws to obey and disobey. Ms Free Miles’ discrimination claims therefore failed.

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Unfair Dismissal: Statutory cap should be applied to unfair dismissal compensation after deduction of earlier payments made to employee

In Dafiaghor-Olomu v Community Integrated Care [2022] EAT 84, the EAT has held that any payments made by an employer to an employee in respect of an unfair dismissal claim must be deducted from the total compensation sum before the statutory cap is applied.

Mrs Dafiaghor-Olomu won an unfair dismissal claim against Community Integrated Care (CIC). She sought re-engagement and compensation. The tribunal refused re-engagement but awarded £46,153.55 in compensation which CIC paid in full. At a second remedies hearing following a successful appeal, the tribunal increased the compensatory award to £128,961.59. The EAT was required to determine whether the statutory cap should be applied after the earlier payment made by CIC was deducted from the sum of £128,961.59 (leaving an outstanding payment of £74,200, being the amount of the statutory cap in place at the relevant time) or whether the statutory cap should be applied to the total award before the earlier payment was deducted (leaving an outstanding payment of £28,046.45). CIC argued for the latter approach, stating that the former would mean it got no credit for the earlier payment and would be penalised for complying with the tribunal’s original order.

The EAT considered the wording of section 124(5) of the Employment Rights Act 1996. It felt that this showed that Parliament’s intention was for the tribunal to calculate the total compensation due to the employee and then subtract from it any earlier payments made by the employer before applying the cap. However, in reaching this conclusion, the EAT expressed considerable sympathy with CIC. In paying the original compensatory award, CIC had complied with what it perceived to be its duty. Had it foreseen the possibility that the tribunal would increase the award at the second remedies hearing, it would probably have declined to make any payment until the compensatory order was final. Instead, it ended up owing £74,200 plus £46,153.55 instead of just £74,200.

Additionally, the EAT upheld the employment tribunal’s decision not to reconsider its refusal to award re-engagement after the second remedies hearing on the basis that such an order was impracticable because of Mrs Dafiaghor-Olomu’s attitude towards which jobs were suitable for her. It also dismissed a cross appeal in which CIC argued that the employment tribunal had not been entitled to increase the compensatory award at the second remedies hearing.

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Constructive Dismissal: Fundamental breach possible even where employer’s actions do not suggest intention to end employment relationship

In Singh v Metroline West Ltd [2022] EAT 80 the EAT has held that, in a constructive dismissal claim, a fundamental breach of contract can be established even where the employer’s actions do not indicate an intention to end the employment relationship.

Mr Singh was invited to a disciplinary hearing by Metroline West Ltd. The next day, Mr Singh was signed off sick by his doctor. While absent, he was examined by occupational health who did not suggest his sickness was not genuine. However, Metroline believed that Mr Singh was trying to avoid the disciplinary hearing. It therefore paid him statutory sick pay only, instead of company sick pay. Mr Singh brought a claim for constructive dismissal, alleging, among other things, that the failure to pay him company sick pay was a fundamental breach of contract.

The employment tribunal found that Metroline had contractual power to suspend Mr Singh without pay if it thought his absence was not genuine, but this power had not been exercised. Separately, Mr Singh’s contract allowed company sick pay to be withheld where, after investigation, absence was found not to be genuine. There was no investigation in this case and no other relevant contractual grounds on which company sick pay could be withheld. There was therefore a breach of contract. However, the tribunal found the breach was not fundamental. By withholding pay, Metroline had not indicated an intention not to be bound by the employment relationship; rather, its aim in withholding pay was to encourage Mr Singh’s participation in a disciplinary process integral to that relationship.

However, the EAT upheld Mr Singh’s appeal on this issue. It was an error of law for the tribunal to adopt the approach that, for the breach of contract to be fundamental, there must have been an intention by the employer not to be bound by the contract in a manner that meant that it no longer wished to continue with the employment relationship. What is required is that the employer demonstrates an intention to no longer comply with the terms of the contract that is so serious that it goes to the root of the contract. In this case, there was a deliberate decision to withhold pay to which Mr Singh was entitled, resulting in a significant reduction in earnings, in circumstances where there were other contractual provisions which would have allowed Metroline to deal with suspicions about his absence. This was a fundamental breach.

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Dismissal: ACAS code applied to discriminatory sham redundancy dismissal

In Rentplus UK Ltd v  Coulson [2022] EAT 81 the EAT has held that the ACAS Code of Practice on Disciplinary and Grievance Procedures (ACAS Code) applied to a discriminatory dismissal purportedly by reason of redundancy. The tribunal had not erred in awarding the maximum 25% uplift available for failure to follow the ACAS Code.

The employer’s ground of appeal that the ACAS Code could not apply where their reason for dismissal was redundancy and the reason found by the tribunal was sex discrimination failed. This was because the tribunal had rejected redundancy as the reason for the dismissal and the upholding of the sex discrimination claim did not mean that it was the only reason for the dismissal. The EAT considered it was implicit in the tribunal’s reasoning that the claimant was in a “disciplinary situation” to which the ACAS Code applied, this being that she was dismissed due to dissatisfaction with her personally and/or her performance, which was tainted by sex discrimination, and a fair capability or disciplinary procedure should therefore have applied.

It was clear that the tribunal had concluded the dismissal process was a sham and there had been a total failure to comply with the ACAS Code. The breach was referred to as “egregious” and so was beyond unreasonable. While, generally, a tribunal should identify the employer’s failings for which an uplift is being made by reference to the relevant part of the ACAS Code which the employer is said to be in breach of, in this case the tribunal had concluded that the employer had acted in bad faith such that there was a total failure to apply any of the protections provided for by the ACAS Code. In these circumstances, there was no error of law in the award of an uplift of 25%.

The EAT provided guidance in the form of questions that tribunals considering an ACAS uplift should apply:

• Is the claim one which raises a matter to which the ACAS Code applies?
• Has there been a failure to comply with the ACAS Code in relation to that matter?
• Was the failure to comply with the ACAS Code unreasonable?
• Is it just and equitable to award an uplift because of the failure to comply with the ACAS Code and, if so, by what percentage, up to 25%?

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Injunctive Relief: Interim enforcement of non-compete clauses

In Planon Ltd v Gilligan [2022] EWCA Civ 642 the Court of Appeal has dismissed an appeal from the High Court’s refusal to grant an interim injunction to enforce a non-compete clause.

The High Court had held that the delay between the initial exchanges of correspondence between the parties and the application being heard was not the sort of delay that would disqualify the employer from interim injunctive relief. However, the employer’s prospects of success at trial in enforcing the non-compete clause were not that good, the critical point being the non-compete clause was likely to prevent the employee from being able to work in his field for 12 months. Damages would not, or might not, be an adequate remedy for either the employer or employee in this case.

While the Court of Appeal dismissed the employer’s appeal, its reasoning differed from that of the High Court. It held that the High Court had not taken the correct approach when considering whether the non-compete clause was reasonable. However, in view of the delay by the time the matter came before it, the court did not consider it appropriate to express a preliminary view about the enforceability of the clause.

The court considered the effect of delay in the case. There was a divergence of opinion between Elisabeth Laing LJ and Bean LJ, with Nugee LJ expressing no view, on the effect of the delay between the facts becoming known to the employer and the High Court hearing. Elisabeth Laing LJ considered that the judge had reached a decision open to him on the facts while Bean LJ considered that the judge would have been entitled to refuse an injunction on the ground of delay. The court noted that there was no rule of law to the effect that damages would be an adequate remedy for the employee (if it was found that at trial that a restrictive covenant is unenforceable). Bean LJ suggested that, except in cases of very wealthy defendants, or where a claimant employer is offering paid garden leave for the whole period of the restraint, it was unrealistic to argue that damages would be an adequate remedy.

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Without Prejudice: Without prejudice letter inadmissible despite exaggerated allegations

In Swiss Re Corporate Solutions Ltd v Sommer [2022] EAT 78 the EAT has held that an employment judge erred when holding that a without prejudice letter could be admitted into evidence under the “unambiguous impropriety” exception to the without prejudice rule in proceedings brought by an employee against her former employer. The without prejudice rule prevents statements made (whether in writing or orally) in a genuine attempt to settle an existing dispute from being put before the court as evidence of admissions against the interest of the party that made them.

The letter referred to the employee’s actions in having copied three emails to her personal email address when sending them to her employer in pursuit of a grievance. The emails had contained personal data and matters confidential to the employer and its clients. Before offering to settle her complaints by way of termination of her employment and payment of compensation, the letter alleged that the employee’s actions breached the confidentiality obligations in her employment contract, were a criminal offence under the Data Protection Act 2018 and meant that she had acted, or might have acted, without integrity in breach of Financial Conduct Authority (FCA) rules. This could result in summary dismissal, criminal convictions, fines and FCA findings which could make it difficult for her to work again in the regulated sector.

In holding that the unambiguous impropriety exception applied, the employment judge found that there had been no basis at all for the employer’s assertion that the employee’s actions amounted to serious misconduct and that the severity of what she had done had been grossly exaggerated in order to put pressure on her to accept the termination of her employment.

The EAT held that the employment judge had erred in finding there was no basis at all for the allegations of serious misconduct. It considered that the high threshold for unambiguous impropriety could be met in circumstances in which a party made exaggerated allegations although it was unaware of any decided case on this point. However, exaggeration would not usually pass the threshold without findings as to the guilty party’s state of mind. The employment judge did not make such findings, and the EAT doubted that this could have validly been done at a preliminary hearing without oral evidence. The only possible outcome in this case was that the without prejudice letter was inadmissible in evidence.

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Further Information:

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