Member Article

In our first quarterly case law update of the year, we take a look at some of the key cases published since October 2021 and consider the lessons that can be learned from them.

Disability Discrimination

We have seen over recent months an increased awareness and discussion around menopause, particularly regarding the impact that menopause can have in the workplace. In Rooney v Leicester City Council, the Employment Appeal Tribunal (EAT) overturned the Tribunal’s finding that Ms Rooney’s claims for menopause-related disability and sex discrimination should be struck out. In assessing whether a particular condition or impairment can be classified as a disability under the Equality Act 2010, a Tribunal will need to determine whether the condition or impairment has a substantial long term impact upon a claimant’s ability to carry out day to day activities. The symptoms of menopause may vary in severity, but they can be both physical and psychological in nature.

In this case, the EAT held that the Tribunal had wrongly focused on what Ms Rooney could do, in spite of her symptoms of menopause (which it considered to be no more than minor or trivial), and the statutory definition of ‘long term’ was not considered. As a result, the EAT found that that the Tribunal had incorrectly concluded that Ms Rooney was not disabled due to her menopause; it had not adequately analysed her discrimination claims or given sufficient reasons for its decision. Similarly, the Tribunal had erred by striking out the sex discrimination, victimisation and harassment claims as it did not explain or give reasons for doing so.

Whilst each case will be assessed on its own merits, this case is a prime example of the challenges faced by menopausal women who are seeking to establish that their symptoms amount to a disability in the context of an employment tribunal claim. In July 2021, the Women and Equalities Committee launched an inquiry into menopause in the workplace to assess whether existing discrimination legislation and workplace practices are sufficient to prevent women from leaving their jobs as a result of menopausal symptoms or other adverse consequences. The inquiry has led to the Menopause (Support and Services) Bill which purports to address these legitimate concerns. Employers are therefore encouraged to facilitate flexible working requests where possible and to provide a supportive working environment to mitigate against the impact of menopause on employees in the workplace.

Employment Status

The question of employment status is one that comes up time and time again, especially in light of the ever growing gig economy and increase in the number of entrepreneurial start-ups. The EAT recently explored this tricky area in Rainford v Dorset Aquatics, a case which assessed the employment status of a co-director and shareholder where there was no employment contract or other documentary evidence in place. The claimant was appointed as a director alongside his brother and owned 40% of the shares, with his brother holding the remaining 60%. In the absence of any written or oral evidence to the contrary, the Tribunal held that the claimant was neither an employee nor a worker, meaning that he was unable to bring certain claims in the employment tribunal and the EAT agreed. Whilst the claimant, on advice from his accountant was paid a “salary” which was subject to PAYE, and received annual dividends, the EAT concluded that this was not in itself indicative of his employment status and that an assessment of the entire working relationship needed to be undertaken.

Although there is no reason in principle why a director and shareholder of a company cannot also be an employee or worker, a Tribunal will look at a number of factors when assessing whether the statutory definition of employee or worker can be met under the Employment Rights Act 1996. This includes but is not limited to whether the individual receives a salary, the degree and extent to which that individual has control over their day to day role and whether they are able to appoint a substitute to undertake work on their behalf. The EAT held that there was no mutuality of obligation beyond the expectation that the brothers would generate and carry out enough work to sustain the company. The claimant set his own work hours and decided when to take holidays and was free to take on other work. There was no requirement for personal service, and whilst the claimant could have appointed a substitute, it did not matter that this did not happen in practice. While it is common for director shareholders to also be employees, the question of their employment status will ultimately depend on the reality of the situation and what happens in practice.

Collective Bargaining

Section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULCRA) prohibits employers from inducing their workers to bypass collective bargaining in certain circumstances. The case of Kostal UK Limited v Dunkley & Others concerned this exact question and was litigated over a number of years eventually being heard by the Supreme Court. Kostal UK Limited employed the claimants who were all members of the trade union Unite. Kostal and Unite signed a Recognition and Procedural Agreement in February 2015, and formal pay negotiations commenced in October that year. Following the rejection of an offer put forward by Unite, Kostal made the same offer to the appellants directly, incentivising them to accept the offer so that a Christmas bonus could be paid at the end of the year.

At the first instance, a Tribunal held that direct offers made to union members by Kostal UK Limited contravened TULCRA, such that S145B prohibited them from making direct offers to their workers, as the acceptance of the offer would have ‘the prohibited result’ of bypassing collective bargaining and their sole or main purpose in making the offer was to achieve that result. This outcome meant that Kostal would have to pay the mandatory fixed award to each of the 55 claimants. They therefore appealed to the EAT who dismissed their appeal. Kostal appealed again to the Court of Appeal, who in allowing the appeal disagreed with the Tribunal and EAT. The claimants subsequently appealed to the Supreme Court who agreed with the original decision made by the Tribunal and restored the awards. As the collective bargaining process was ongoing at the time the offer was made, the Supreme Court decided that the Tribunal was entitled to find that in making an offer directly to the employees, Kostal UK Limited had bypassed the union with the result being that one or more of the employment terms were determined outside of the collective bargaining process.

The majority view in this case provides reassurance that so long as employers have correctly followed collective bargaining procedures and have a genuine belief that the collective bargaining process has been exhausted, then there is nothing to prevent them from making an offer directly to workers. It also serves as a warning to employers by reminding parties involved to ensure that each step in the collective bargaining process has been followed, including any dispute resolution procedure. It is advisable to have a written agreement in place, and where this is not the case, employers should consider introducing one taking care to ensure that it is clearly drafted. Whilst the case provides some clarity for employers, individuals who are responsible for collective bargaining negotiations may also benefit from updated training in light of this judgment. In practice, whether a collective bargaining procedure has truly been exhausted will be fact sensitive and of course, subject to negotiation.

Vicarious Liability

In Chell v Tarmac, the Court of Appeal has held that an employer was neither directly nor vicariously liable for injury caused to one of its contractors from a practical joke made by one of its employees in the workplace. Mr Chell was employed by Roltech and worked as a contractor fitter for Tarmac. Tensions arose between the contracting fitters and those employed by Tarmac. One of Tarmac’s employees decided to play a practical on Mr Chell by detonating explosive pellets close to Mr Chell which caused him to suffer a perforated ear drum, noise induced hearing loss and tinnitus. He subsequently bought a direct negligence claim against Tarmac and also argued that Tarmac were vicariously liable for their employee’s actions. Tarmac denied liability and contended that the practical joke was not part of the employee’s employment. The County Court and High Court agreed, and Mr Chell appealed.

The Court of Appeal essentially asked two questions, firstly, what functions or fields of activities had been entrusted by the employer to the employee? Secondly, was there a sufficient connection between the position in which the employee was employed and the wrongful conduct to make it right for the employer to be held liable? On this analysis, the Court of Appeal held that there was an insufficient connection between the employer-employee relationship and the prank, and so it would not be fair, just or reasonable to impose vicarious liability on Tarmac for the individual’s actions. It could not be said that Tarmac had authorised what the employee did, and his act was not carried out in the course of his employment. In addition, the court of Appeal held that there was no reasonably foreseeable risk of injury arising from the prank and the reported tension between Tarmac employees and contract fitters did not suggest potential violence. Even if this were the case, the Court of Appeal agreed with the comments of the County Court which said that ‘horseplay, ill-discipline and malice are not matters that would expect to be included within a risk assessment’.

There have been a number of cases concerning employers’ vicarious liability recently which highlight the fine line of responsibility when things go wrong in the workplace. Contracts of employment often contain clauses which make it clear that an employee should not commit unlawful acts or engage in inappropriate behaviour. However where certain actions are committed during the course of employment but it’s not reasonable for that kind of action to have been taken into account during a risk assessment, then a claim for vicarious liability will likely fail.