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Employment Law Case Update – September 2023

Employment Law

This month we bring you a plethora of interesting cases centring around dismissal in all its forms – be they agreed, part of a restructure or initiated for a reason. The questions will always be: is that reason fair and/or have you followed the correct procedure? Have a look at our case run down here.

  • TUPE: Employment decision on when a TUPE transfer takes place
  • Redundancy: Employees in restructure did not unreasonably refuse suitable employment
  • Unfair Dismissal: Conclusion on the fairness of a dismissal must be based on the established reason for that dismissal
  • Sex Discrimination: Tribunal’s misstatement of grievance outcome materially impacted on its consideration of the claim

TUPE: Employment decision on when a TUPE transfer takes place

In Rajput v Commerzbank and Société Générale [2023] EAT 116 the EAT held that (i) in a ‘series of transactions’ cases, the transfer does not necessarily take place at the end of the series, and (ii) when determining the date of the transfer, a tribunal can have regard to matters which occur outside the UK. Regulation 3(1)(a), which provides that the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE 2006), SI 2006/246 apply to undertakings which are ‘situated immediately before the transfer in the UK’, does not mean that a tribunal must focus solely on events which take place within the UK-businesses which are situated in the UK.

Sarah Clarke, barrister at 3PB, who represented the claimant in this appeal, writes in a case analysis for Lexis Nexis that, on the face of it, the EAT’s finding that a transfer can take place at any point within the ‘series of transactions’ could cause uncertainty and increase the amount of litigation in this area. However, she goes on to say that she considers that, in the vast majority of cases, a transfer will take place at the end of the series. The question to be determined is when responsibility for the carrying on of the business transfers to the transferee and it is difficult to envisage many situations in which responsibility would transfer over prior to the end of the transactions. Indeed, as a matter of logic, if a transfer is ‘effected’ by a series of transactions, it cannot be until the last of those transactions that the transfer is complete, as otherwise the later transactions could not have ‘effected’ the transfer. However, this argument was rejected by the EAT and, in her view, there is scope for further judicial consideration of this.

In relation to the location of the business, this case makes it clear that, when determining when a transfer takes place, a tribunal’s focus ought not to be solely on those matters which occur in the UK. The relevance of geography to TUPE is simply that the business must be situated in the UK immediately before the transfer takes place. However, this does not preclude the business operating from other locations outside the UK. Thus, when dealing with this issue, parties must ensure that they provide evidence to the tribunal which clearly explains all matters relevant to the transfer, regardless as to where in the world those events took place.

The claimant was employed by Commerzbank (CB) from 2012 as a senior compliance officer. She was dismissed in March 2020 and brought various claims, including automatic unfair dismissal (on the basis that the sole or principal reason for her dismissal was the TUPE transfer) and victimisation (following a previous successful discrimination claim she had brought against CB). She had worked within the Equity Markets and Commodities Division (EMC) of the business, which was sold to Société Générale (SG), following a business purchase agreement which was signed in November 2018.

The EMC business was divided into three divisions, namely Flow Trading, Asset Management (AM) and Exotics, Vanilla and Funds (EVF), and was spread across several countries, including the UK, Luxembourg and Germany. The claimant worked across all three divisions.

For the purpose of the business sale, each division was (i) allocated its own purchase price, and (ii) divided into sub-batches, which transferred over a period of time. The EVF division transferred over in six batches from March to October 2019, with AM transferring over from May to November 2019. The last part of the EMC business to transfer over was Flow. It was based mainly in Germany, with only a small presence in London consisting of five employees. Most of Flow had transferred over by March 2020, with the remainder transferring in May 2020.

The employment tribunal found that the transfer took place on 1 October 2019 on the basis that 95% of the UK operation had transferred over by then. The judge thus ignored the last division which transferred over, as this was based predominantly in Germany.

The EAT, Mr Justice Kerr sitting alone, concluded that:

‘…there is no presumption or rule that a transfer effected by a series of transactions occurs at the end of the series. Completion may be artificially delayed. The last transaction in the series may be a minor detail, putting the last piece of the jigsaw in place long after the transferee has started running the business to the exclusion of the transferor.’

However, he agreed that the judge had erred in excluding from his consideration the Flow part of the business. The question to be determined was when responsibility for the carrying on of the business was transferred to the transferee (CELTEC v Astley). It was an agreed fact that Flow formed ‘part of the organised grouping of resources’ which comprised the EMC business. There was no reason why an ‘organised grouping of resources’ (in the words of TUPE 2006, SI 2006/246, reg 3(2)) could not be located across several countries at once. A business or part of a business can be ‘situated’ in the UK without its entire operation being located in the UK. He concluded that ‘there is nothing in the TUPE Regulations that required the tribunal to confine its consideration to the part of the organised grouping of resources based in this country.’

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Redundancy: Employees in restructure did not unreasonably refuse suitable employment 

In Mid and South Essex NHS Foundation Trust v Stevenson [2023] EAT 115 the EAT had to consider whether the respondent had been entitled to refuse to make redundancy payments to the claimants where the employment tribunal had held that the alternative roles offered to them were ‘suitable’ but that their rejection of them was not unreasonable due to their personal perceptions of those roles.

The EAT held that there was no error in the employment tribunal’s approach:

— the relevant statutory test is whether the claimants ‘unreasonably’ refused an offer of employment that was suitable to them (the suitability of the role is not in and of itself determinative)

— even though the claimants’ perception of the roles was objectively groundless, the employment judge had found that there was a sufficient basis for their personal perceptions of the roles (eg that they would be a loss of autonomy and status) for them not to have acted unreasonably in refusing them

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Unfair Dismissal: Direct Line beats claims advisers case over agreed exit

Insurer Direct Line has successfully defended a case by a claims adviser that it unfairly dismissed him, with the EAT ruling that the employment tribunal had been entitled to find that there was no dismissal because the employee had mutually agreed to terminate his employment after his mental health problems meant he could not work.

In Riley v Direct Line Insurance Group plc [2023] EAT 118, the EAT ruled that an employment tribunal was entitled to find that Matthew Riley had consented to leaving his job. This is because he knew that he would receive lifetime insurance payments after being left unable to work due to mental health problems stemming from autistic spectrum disorder.

His Honour Judge (HHJ) Murray Shanks said the employment tribunal did not err when it rejected Riley’s case that he was duped into terminating his employment. ‘There was ample evidence for the conclusion reached, and the tribunal considered in detail whether Mr Riley’s consent was freely given’, he said. HHJ Shanks added that the tribunal ‘went to considerable lengths to emphasise their conclusions that Mr Riley was not tricked or coerced in any way and that he participated in the discussions, was given time and fully understood what he was doing’.

Riley was absent from work from 2014 until October 2017 due to anxiety and depression, according to the judgment. He began to make a phased return—but was again left unable to work from May 2018 because of anxiety and paranoia, the judgment says. He met with managers in August 2018 and September 2018, when he discussed leaving the job and relying on an insurance policy with UNUM that would make payments equating to 80% of his salary until he reached retirement age, according to the judgment.

Direct Line notified Riley in September 2018 that he was being dismissed following a meeting at which UNUM confirmed that he would be entitled to the benefits of the policy, the judgment says. Riley launched a case at the employment tribunal later that year, lodging claims of unfair dismissal and disability discrimination over allegations that he had been tricked by managers, according to the judgment.

But the tribunal dismissed his case in 2019, rejecting Riley’s evidence that he was put under pressure and did not understand what he was being told by managers. It also found that Riley had told managers that he knew terminating his employment to rely on the insurance policy was ‘where it’s been heading for the last four years’, according to the appeal judgment. The tribunal also concluded that Riley’s discussions with managers about his leaving had been supportive and designed to help him make the right decision.

John Platts-Mills, of Devereux Chambers, Riley’s counsel, argued before the EAT that the tribunal had failed to address the questions of who really terminated their client’s employment and whether the claims adviser really gave ‘true, mutual consent’, according to the appeal judgment.

But HHJ Shanks rejected the argument, ruling that the tribunal had ‘considered evidence relating to this in detail’. ‘It is true that they did not expressly refer to his disability in this context, but they must have had it well in mind when they rejected his evidence that he did not understand what was being said at meetings and found that he had made a fully informed decision’, he said.

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Unfair Dismissal: Conclusion on the fairness of a dismissal must be based on the established reason for that dismissal

In Greater Glasgow Health Board v Mullen [2023] EAT 122, the EAT dismissed the employer’s appeal against the decision of the employment tribunal which found that the employer’s reason for dismissing their employee was a belief by it in the existence of misconduct consisting of aggressive and threatening behaviour by him to one of his line reports. The tribunal further concluded that the employer’s belief in the existence of that misconduct was genuinely held and reached after reasonable investigation. The issue was whether the tribunal had erred in their decision.

The EAT held, among other things, that: (i) in the circumstances it was not open to the employment tribunal to base its conclusion about the fairness of the dismissal in terms of section 98(4) of the Employment Rights Act 1996 on a factual hypothesis that the ‘real reason’ for the dismissal was something different to the established reason; and (ii) on the findings in fact made by the employment tribunal, the only conclusion to which they could properly have come was that dismissal was within the range of reasonable responses open to the employer and was fair. Consequently, the employment tribunal’s judgment was set aside, and the claim of unfair dismissal was dismissed.

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Vicarious Liability: School not liable for acts of work experience student

In MXX v A Secondary School [2022] EWHC 2207 (QB) the Court of Appeal upheld the High Court’s decision that the defendant, a co-educational secondary school providing education for children aged 11 to 16, was not vicariously liable for the sexual assaults carried out by PXM on the claimant (a pupil), subsequent to PXM undertaking a work experience placement at the school. The court held that the judge had been wrong to have found that the relationship between the defendant and PXM was not akin to employment but that:

— given the limited nature of PXM’s role during the course of one week (eg he had no pastoral responsibility), the facts did not begin to satisfy the requirements of the close connection test

— the grooming which led to the sexual offending was not inextricably woven with the carrying out by PXM of his work during his week at the defendant’s school such that it would be fair and just to hold the defendant vicariously liable for the acts of PXM.

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Disability Discrimination: Tribunal rules insurer discriminated against menopausal worker

A British insurance company has been ordered to pay one of its former workers £64,645 after the tribunal found it failed to make reasonable adjustments for an employee with menopausal symptoms, who later resigned.

In Lynskey v Direct Line Insurance Services Ltd ET/1802204/2022 and ET/1802386/2022, Employment Judge Wade found that Direct Line Insurance Services Ltd did not fully consider the impact of menopause on Maxine Lynskey when it launched a warning and disciplinary process based on her performance. ‘At that time the disadvantage the claimant faced in doing her job while struggling with menopausal symptoms ought to have been recognised as such and adjustments made’, Judge Wade wrote.

The insurer must pay the sum to Lynskey to account for a range of factors, including damages for injury to feelings as well as losses she suffered, according to a remedy judgment. These events are a ‘serious and sustained number of contraventions over a period involving both the claimant’s line manager and her line managers and HR’, the tribunal found.

Lynskey was a motor sales consultant for Direct Line from April 2016. She had ‘very good’ performance ratings in that role. She then informed her manager at a meeting she was having health issues related to menopause.

‘It was clear from the information the claimant provided that she was being profoundly affected by menopausal symptoms and was seeking treatment for them; that was apparent from March 2020’, Judge Wade wrote.

Lynskey then moved to a different team considered to be a ‘better fit’ in light of her personal and health circumstances, albeit one that did not involve a sales related bonus. However, the tribunal found that with this new role, Lynskey’s managers should have been aware of health issues that would affect her performance. ‘The respondent knew, or ought reasonably to have known, from March 2020, that the claimant had become a disabled person by reason of menopausal symptoms’, Judge Wade wrote. ‘She was self-evidently at a disadvantage in comparison with colleagues without her disability in meeting the respondent’s performance standards and targets, and generally more likely to be sanctioned or face disciplinary/performance warnings.’

Lynskey began underperforming, and was told she wouldn’t receive a pay rise because her performance was rated ‘need for improvement’, the judge wrote. The tribunal ruled that it was unfavourable treatment to score her performance without fully factoring in her disability. ‘Need for improvement is inherently unfavourable if the person, through disability, cannot, in fact, improve, or meet the required standards’, it said. She later faced a warning meeting where her manager ‘failed to recognise or take in the explanations’ around her symptoms. Lynskey then faced a disciplinary meeting where her health condition was not fully considered. Judge Wade found that the subsequent disciplinary warning ‘was unfavourable treatment because of something arising in consequence of disability’.

‘It is clear a less discriminatory approach could have been taken, including occupational health referral, consideration of other roles, and accepting the claimant’s mitigation, namely her disability’, the judge wrote.

After a period of ill health and personal issues outside work, Lynskey’s sick pay was stopped, the ruling said. She then submitted a grievance to her employer before ultimately resigning in May 2022, then brought constructive unfair dismissal and Equality Act 2010 complaints against the insurance company.

The tribunal upheld Lynskey’s arguments that Direct Line failed to make reasonable adjustments for her, as well as her complaints about discrimination because of her menopause symptoms. It rejected her complaints relating to constructive unfair dismissal, sex and age.

The tribunal handed down an extempore judgment (given verbally at the end of the case, not written down) on 28 April 2023, and Direct Line requested the written reasons, which were published on 25 August 2023.

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Sex Discrimination: Tribunal’s misstatement of grievance outcome materially impacted on its consideration of the claim

In Iourin v The Chancellor, Masters and Scholars of the University of Oxford [2023] EAT 108 the EAT considered a number of appeals against an employment tribunal’s decision dismissing the claimant’s claims for direct sex discrimination, victimisation, and disability discrimination against the respondent under the Equality Act 2010.

The claimant had attempted to hug and kiss a colleague when they were in a car together. She raised a grievance and the grievance committee held that this conduct was unwanted but that, in the context of their relationship, it did not amount to harassment or sexual harassment. The claimant was however required to undergo training related to harassment, which he claimed was sex discrimination.

In finding that this did not amount to sex discrimination, the employment tribunal had made a material error of law by relying on its mistaken account of the grievance committee’s finding—stating that it was harassment but not sexual harassment—in reaching its conclusion that this was the non-discriminatory reason for the training requirement. That claim was therefore remitted to the employment tribunal for rehearing.

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Further Information:

If you would like any additional information, please contact Anne-Marie Pavitt or Sophie Banks on:


The data contained within this document is for general information only. No responsibility can be accepted for inaccuracies. Readers are also advised that the law and practice may change from time to time. This document is provided for information purposes only and does not constitute accounting, legal or tax advice. Professional advice should be obtained before taking or refraining from any action as a result of the contents of this document.

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