Legal Considerations in Employment Contracts

Question 1

a. Prepare a full note for Caleb which deals with the claim(s) that Cerys may pursue against Land Radius Ltd and the likelihood that her claim(s) will be successful. You should not consider remedy.

The issue in this situation is whether Cerys can make a claim for unfair and wrongful dismissal after she refused to make a move to Exeter or Bristol office.

In this situation, the decision to ask Cerys to move to either the Exeter or Bristol office is taken after Tim undertakes a selection process to decide who must move amongst the three managers and is based on the skillset of the three managers.

There is no mobility clause in the contract. This means that there is no automatic right of the employer to ask Cerys to move to a new location other than where she is serving at this time. Even in the situation of there being a mobility clause, a relocation requirement should be reasonable. The decision to ask Cerys to move requires a change in her existing employment contract. Such a decision cannot be made unilaterally and any changes to the contract must be mutually agreed upon between the employer and the employee. In the event that the employer seeks to change the contract of employment, which is not acceptable to the employee, she can claim unfair dismissal claim provided they have two years in continuous service with the employer. An employer can make changes to the fundamental terms of a contract after providing notice of the change, or fresh “consideration”; and after advising that the refusal to accept new terms could constitute just cause for dismissal. The employee can claim constructive dismissal if there is a unilateral requirement to relocate which fundamentally alters the contract of employment. The employer would then be required to establish that there were fair reasons for dismissal of employee and the fair procedure was followed for the same.

Section 191(3) of the ERA provides that an employee cannot unreasonably refuse offers of suitable alternative employment. Reasonableness depends on the circumstances of the relationship between the employer and employee as well as other considerations. A reasonable refusal can be made by an employee if the distance is prohibitive or if it disrupts family life, or entails a longer and tedious journey. Cerys is not prepared to move to Exeter because she would need to move house as the Exeter office is a two hour drive from her home and to Bristol office, as the time and financial cost would be prohibitive because it would take her about 50 minutes to travel into Bristol and she would not be able to go home at lunchtime to help her father care for her mother. Thus, she can establish that due to requirements of home relocation involved in move to Exeter and inability to take care of her family when she is responsible to provide care for her elderly parents, her refusal to relocate is reasonable. She can also claim that the added commute and expense of the relocation makes it unreasonable for her to be required to move to Bristol. If the relocation requires more travel and expense, it can be used by the employee to claim unfair dismissal for her refusal to relocate (Kellogg Brown & Root (UK) Ltd v Fitton & Anor UKEAT/0205/16/BA).

In the event of the employee refusing alternative job offer, she is entitled to redundancy pay (Cambridge & District Co-op v Ruse [1993] IRLR 156; Commission for Healthcare Audit & Inspection v Ward [2008] UKEAT 0579/07 (EAT). A redundancy may arise if there is no mobility clause in the employment contract and the employer wishes to relocate the employee but the employee does not wish to move or alternatively if there is a mobility clause but the employer decides to follow the redundancy route. If Cerys argues that she refused the relocation to a new office based on reasonable grounds, she would be entitled to a redundancy pay. However, Land Radius Ltd have given her notice and dismissed her. This gives her cause of action and she can claim redundancy pay instead. She can also claim dismissal was unfair. The claim for redundancy payment can be made by employee with at least two years in service.

(b) (i) Explain whether the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“the Regulations”) apply to the sale of the business to PMP

The issue is whether TUPE is applicable in the present situation. TUPE is applicable in the case of a transfer of an economic entity that retains its identity after transfer; and in case of a service provision change. According to Reg 3 (2), economic entity is an “organised grouping of resources which has the objective of pursuing economic activity, whether or not that activity is central or ancillary.” TUPE can therefore apply in cases where the employer sell or buy part or all of the business as a ‘going concern’, outsource services or makes a ‘service provision change’, or grants or takes over a lease of licence of premises and continue to operate the same business in those premises. To summarise, TUPE becomes applicable in case of a ‘relevant transfer’ of an economic activity that retains its identity. In Spijkers v Gebroeders Benedik Abattoir CV [1986] ECR 1119, it was decided that the court may consider the following points for ascertaining whether TUPE is applicable, these being related to the type of undertaking; tangible assets transferred, degree of similarity of activities after the transfer to the activities before the transfer, transfer of customers, and whether the majority of employees were transferred. In Kenny v South Manchester College [1993], the court held that changing provision of services by outsourcing, retendering or bringing them in-house would engage TUPE. In Metropolitan Resources Ltd v Churchill Dulwich Ltd [2009], the EAT decided that a ‘service provision change’ can be established by answering the question whether transferred activities are fundamentally similar to those carried out prior to the transfer. In this situation, Land Radius Ltd. have sold the business to Property Magnums Plc and the latter have taken over the tangible assets such as lease of the properties in Bath, Bristol and Exeter, and office equipment worth £265,000. They have taken over property maintenance contracts and leases of the seven vans used to carry out this maintenance work. There is also the situation of majority of employees being transferred to them as 30 of the employees of Land Radius Ltd of the 57 employees are transferred, which is more than 50 percent of the employees. Applying the law discussed here, it can be established that TUPE is applicable to the transfer.

(ii) If the Regulations do apply, on what basis can Jerry bring his claim against PMP?

As per the law, in the case of TUPE being applicable, the employment rights and obligations of the employees are transferred to the new employer. As per Reg. 4(3) and the decision in Lister v Forth Dry Dock and Engineering Co Ltd [1989] by the House of Lords, TUPE is applicable to those employees who were employed immediately before the transfer as well as those employees who would have been employed if they hadn’t been unfairly dismissed as a result of the transfer. Therefore, the scope of the engagement is wide and includes employees who were employed immediately before the transfer or who were dismissed as a result of the transfer. Reg. 4(1) provides that those employed by transferor immediately before the transfer are transferred. Instead of transferring the employees, if they are dismissed, then they may bring a claim of unfair dismissal. In Salman v Castlebeck Care Ltd [2015] IRLR 189, the employee was dismissed prior to the transfer of the undertaking and she brought a successful appeal against the dismissal and was reinstated in the new concern that had been taken over by the transferee. Based on this, it can be surmised that Jerry has a claim in unfair dismissal based on the TUPE regulations and the case law.

QUESTION 2 (36 marks)

Prepare a written note for Gina Dewes, dealing with the following matters:

A. The likelihood of David succeeding in a claim of harassment against OFA under the Equality Act 2010 on the facts outlined in Issue 1 of Document A. In reaching your conclusion you should address the operation of the burden of proof.

Harassment is defined in Section 26 and includes, inter alia, engagement by a person in unwanted conduct related to a relevant protected characteristic and the conduct has the purpose or effect of violating the other person’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for that person. Importantly, in determining whether the conduct has the effect of violating the other person’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment, reference has to be made to the perception of the person alleging harassment and whether it was reasonable for such effect to take place and other circumstances of the case. In Richmond Pharmaceuticals v Dhaliwal, [2009] IRLR 336 EAT, it was held that the tribunal must have regard to all the relevant circumstances as well as the context of the conduct in question before ascertaining this. In this situation, David is a wheelchair user and he has severe difficulties in climbing stairs, an activity restricted to his home where he pulls himself up step by step and Fern Awad asked him to use an office on the first floor despite having the knowledge of his disability. When David pointed out the difficulties he would face, she laughed out loud, and said “Oh come on David, always playing the disabled card – we’ve all got our own issues - stop whinging about being a cripple.” These words can be seen to be amounting to violation of David’s dignity and it must be remembered that in ascertaining whether this does amount to violation of dignity or a degrading or humiliating environment, regard must be had to perception of the person alleging harassment and whether it was reasonable for such effect to take place. David has in fact informed Hugo that he had felt humiliated by Fern’s comments. Prima facie, it can be established that there is a breach of David’s rights under the Equality Act 2010.

As per Section 136, the burden of proof of establishing harassment shifts to the respondent once the claimant has established sufficient facts, which may point to a breach. In effect, there is a reversal of the burden of proof under Section 136 so that it becomes the respondent’s task to establish that harassment did not take place. In a claim where a person is alleging harassment under the Equality Act 2010, the burden of proof may shift to the respondent. Section 136(2) further provides that if the court has consideration of facts from which it could decide, in the absence of any other explanation, that breach did take place, then the court must ascertain that it did take place. The task of the complainant is to establish a prima facie case of harassment, and then onus switches to the respondent to show that there was no such breach (Igen Ltd v Wong [2005] 3 All ER 812).

To summarise this section, there is a likelihood that David will succeed in a claim of harassment. The burden of proof is likely to lie on the employer under the provisions of Section 136 because prima facie facts are made out that suggest that a breach did take place when Fern made those comments to David.

(b) The merits of a claim of discrimination arising from disability that could be brought by Samira against OFA on the facts outlined in Issue 2 of Document A.

Section 15(1) Equality Act 2010 provides that a person discriminates against a disabled person if the disabled person is treated unfavourably because of something arising in consequence of their disability, unless the employer can show that this was a proportionate means of achieving a legitimate aim. The concept of unfavourable treatment of a person is central to ascertaining whether a claim of discrimination lies as against the employer. There are two important questions that have to be decided, which are what is the treatment and whether such treatment is unfavourable to the claimant. The Supreme Court has explained this further in Williams v The Trustees of Swansea University Pension and Assurance Scheme [2018], where the court has noted that if there is nothing intrinsically unfavourable or disadvantageous about the treatment, then it is not discriminatory. Importantly, the Supreme Court has also noted that there is a removal of comparator exercise. Also important to note that an unjustified sense of grievance does not amount to detriment for the purposes of Section 15 (Barclays Bank plc v Kapur (No 2) [1995] IRLR 87).

For being successful in Section 15 claim, the employee must establish that the employee was treated unfavourably because of an identified event and that event arises in consequence of their disability. Once the employee establishes this, then the tribunal can consider whether the employer has the ‘proportionate defence’ of treatment that is a proportionate means of achieving a legitimate aim of the employer. Samira can establish that she was treated unfavourably to her colleagues because she did not receive a bonus and this was due to her disability as her disability did not allow her to run outside the office. However, the company may claim that there is nothing intrinsically unfavourable or disadvantageous about the treatment because the aim of the exercise was to raise the local profile of the company and if Samira was not able to run outside, then she was also not able to achieve the aim of the exercise. Therefore, it would be inappropriate to compare her with the employees who were able to conduct that exercise. Even though Samira is able to reach an audience with her social media, she may have to establish that this suffices the aim of the exercise, that is, to reach the local area audience, which may or may not be following her on social media. She would have to establish this to defeat a defence by the company that they were trying to achieve a legitimate aim.

In the present case, Samira Jenkins has an anxiety disorder which was diagnosed three years ago and which makes it difficult for her to be outdoors or to go shopping or visit public places. Fern Awad sent an email to Samira and her three colleagues in the support team asking them to take part in a local challenge called “Run the High Street”, which involved running the length of the street outside OFA’s offices every day for a month, a distance of 1 kilometre a day. The purpose of this exercise is to raise the company’s profile in the local area. Samira used her treadmill at home to run the equivalent distance each day and posted her progress on social media, where she is very successful by Hugo’s own admission to raise the profile of the company. However, bonus was paid to each of Samira’s colleagues, but not to her. Fern told her: “The idea was for us to be seen out and about doing the challenge so no bonus, sorry.” If the employer seeks to take a ‘proportionate defence’ of treatment that is a proportionate means of achieving a legitimate aim of the employer, then it is likely to succeed because although Samira was actively posting her own progress on social media, the aim of the exercise was to raise the profile of the company in the local area for which the employees were required to run outside the offices of the company.

Continue your journey with our comprehensive guide to Judge Made Law And Principles Of Statutory Interpretation.