Case Law Update

Once again, it has been another “dry” month in court. Here are a couple of interesting cases from the Employment Appeal Tribunal and the Court of Appeal for you to consider: one involving a family feud and a pregnant employee resulting in a claim for constructive dismissal; and the other, a revision exercise for employers attempting to justify age discrimination based on a costs-plus argument. But the top-prize this month goes to a case for judicial review in the High Court: this found against the Government and in favour of the workers; essentially extending health and safety protection against dismissal or detriment beyond the scope of employees to a broader class of workers. And the Court didn’t stop there: it also ruled that workers (not just employees) must be provided with necessary PPE (Personal Protective Equipment) to carry out their role. This is a significant case in the current COVID-19 climate and is worthy of a blog of its own here.

1. Constructive Dismissal

Did an employee's failure to return to work after her maternity leave amount to acceptance of a repudiatory breach for the purposes of constructive unfair dismissal?

Short answer: Yes, held the EAT in Chemcem Scotland Ltd v Ure.

Explanation: The Claimant was pregnant and had commenced her maternity leave. While she was on maternity leave the Respondent (a company for which the majority shareholder was the Claimant’s father) committed a number of repudiatory breaches of her contract of employment, including stopping her maternity pay. On the facts, the Tribunal found that the breaches of contract amounted to repudiatory breaches. They were committed by the Claimant's father, who was hostile to her continued employment because of their family circumstances. Employees are entitled to resign, following a repudiatory breach of contract, and pursue a claim for constructive dismissal (provided they have not affirmed the contract of employment). The Claimant in this case did nothing to demonstrate that the contract of employment was affirmed.

To claim constructive dismissal an employee must demonstrate that they consider that their contract is at an end because it has been fundamentally breached by their employer. This is called accepting the breach: accepting that the breach has ended the contractual relationship. It is normally the employee’s resignation that amounts the acceptance of the repudiatory breach by communicating the intention not to return to work. In this case, the EAT upheld the Tribunal's decision that the Claimant accepted the breaches by simply failing to return to work after her maternity leave without telling the Respondent that this was her intention. A simple failure to turn up for work would not normally be enough to amount ‘a communication’ of acceptance of a breach. But, the EAT said this was a fact-specific issue and in the present circumstances: "it was for the Tribunal, as finder of fact, to judge whether her non-appearance was eloquent of an acceptance of the repudiatory breaches". This is the conclusion the Tribunal reached and the EAT could not disturb this finding of fact. As such, the circumstances of the Claimant's failure to return to work after her maternity leave were a true reflection of her intention to accept the repudiatory breaches of her contract and there was no need for express communication of this acceptance.

Practice point: Employers should be very aware of their actions and omissions which may affect an employee during maternity leave. The same must be said for other members of staff absent for other family-leave reasons. The fact that the employee doesn’t return to work at the end of their family-leave may be sufficient to amount to acceptance of any repudiatory breaches committed during that leave and entitle the individual to claim constructive dismissal.

2. Age Discrimination

Can an argument based on costs alone be enough to justify something which would otherwise amount to indirect discrimination on grounds of age?

Short answer: No. Not where the only reason for the action is to simply to reduce cost. But the Court of Appeal in Heskett v Secretary of State for Justice, went on to find that if there is something more than merely a cost reduction involved in the decision to take the action in question, such as the need to reduce expenditure and balance the books, then it can amount to proper justification of an indirectly discriminatory act.

Explanation: The Claimant was employed as a probation officer. A cap had been placed on increases in public sector pay. In order to comply with this cap, the Ministry of Justice changed its pay structure so that progression up a pay scale took longer. For the Claimant this meant that he would earn less than his longer-serving (and hence, typically older) colleagues, in the long-term. He claimed indirect age discrimination. He argued that this indirectly discriminatory pay re-structure could not be justified because saving costs alone could not amount to a legitimate aim (a requirement to establishing a justification defence). He correctly stated that a ‘costs alone’ argument had long been established as matter of clear case law as not amounting to a legitimate aim capable of supporting a justification defence. Hence, he said, the discriminatory effect of the new pay structure could not be justified.

But, it is also well established case law that if there is more than a mere cost rationale for the action, namely a ‘costs-plus’ argument, then a legitimate aim could be established and consequently a justification defence made out.

The Court of Appeal considered, at length, whether a 'costs plus' principle exists at all. It concluded that there cannot be a legitimate aim justifying discrimination if the only reason for the employer's actions is to save costs. In other words, an employer cannot discriminate just because it is cheaper to do so than not to do so. Accordingly, the 'costs plus' principle is correct and stands.

The Court of Appeal did not leave it there. It went on to say:

• the phrase 'costs plus' is inelegant and should be avoided. A better question is: is the aim solely to avoid increase costs? and,
• if an employer is subject to financial constraints which oblige it to reduce its costs, then that can be enough to amount to a legitimate aim: "an employer's need to reduce its expenditure, and specifically its staff costs, in order to balance its books can constitute a legitimate aim for the purpose of a justification defence."

Practice point: It may appear to be ‘splitting hairs’ to argue that there is a difference between aiming to reduce costs in and of itself and aiming to reduce costs because of the need to meet a pay cap, expenditure freeze or to balance the books. The difference is admittedly subtle, but there is never-the-less a difference following the Court of Appeal’s findings in this case.

The effect of this case is to acknowledge that the costs-plus rule is correct, but the bar has been set extremely low for employers to be able to succeed in an argument that a particular action is not based on costs alone but has some ‘plus’ element to it as well.