In King v The Sash Window Workshop Ltd and anor, the European Court of Justice has held that the means of enforcing the right to paid holiday under the Working Time Regulations 1998 SI 1998/1833 is incompatible with the EU Working Time Directive (No.2003/88). On the EAT’s interpretation of Regs 13 and 16, where an employer grants only unpaid leave to a worker, the worker would be obliged to take leave without pay and then bring an action to claim payment for it. This result is incompatible with the right to paid annual leave under Article 7 read with the right to an effective remedy under Article 47 of the EU Charter of Fundamental Rights. The ECJ also held that, where the employer refuses to pay for annual leave, the worker’s holiday rights carry over until the termination of employment.
K worked for SWW Ltd as a self-employed commission-only salesman from June 1999. He was offered an employment contract in 2008, which included the right to paid annual leave. However, he elected to remain self-employed (under a contract that was silent on the issue). While K did take some holiday throughout his years of service, he was never paid for this. When SWW Ltd terminated his engagement in October 2012, K successfully claimed holiday pay before an employment tribunal, which accepted that he was a ‘worker’ for the purposes of the Working Time Regulations 1998. Among other things, the tribunal awarded him pay in lieu of annual leave accrued but not taken during previous years, also claimed as a series of deductions. The EAT allowed SWW Ltd’s appeal on this issue, holding that the tribunal had failed to make findings of fact to support its conclusion that K was prevented from taking his annual leave for reasons beyond his control. There was therefore no basis for departing from the usual position under Reg 13 that entitlement to leave expires at the end of the relevant leave year. K appealed to the Court of Appeal, which made a reference to the ECJ, querying whether Reg 13 is consistent with the right to paid annual leave under Article 7 of the Working Time Directive, given that (on the logic of the EAT’s analysis) the worker would first have to take unpaid leave before testing his or her entitlement to pay. It also sought clarification of the extent to which untaken paid leave can be carried over, for the purpose of claiming a payment in lieu of untaken holiday upon termination of employment under Article 7(2) of the Directive.
Advocate General Tanchev gave the opinion that employers are bound to provide an ‘adequate facility’ for workers to exercise the right to paid annual leave under Article 7, such as in the form of specific contractual terms or the establishment of a legally enforceable administrative procedure. Where no such adequate facility has been made available, any reference and carry-over periods that would otherwise fall within a Member State’s discretion must necessarily be disapplied. In such a case, the worker would be entitled on termination of employment to payment in lieu of annual leave untaken up until the date on which an adequate facility was made available.
a worker must be entitled to benefit from the remuneration to which he or she is entitled when taking his or her annual leave
The ECJ has now given its judgment and has gone further than the Advocate General. It noted that it was clear from its case law that a worker must be entitled to benefit from the remuneration to which he or she is entitled when taking his or her annual leave. Thus, a worker who is faced with uncertainty as to the level of remuneration to which he or she is entitled during the leave period will not be able to benefit fully from that leave as a period of relaxation and leisure, and is likely to be dissuaded from taking leave in the first place. When seen in that light, the right to paid annual leave cannot, therefore, depend on a factual assessment of the worker’s financial situation when he or she takes leave.
Turning to the Working Time Regulations, the ECJ observed that they implement the right to paid annual leave by way of two separate rights: a right to a period of annual leave under Reg 13 and a right to be paid in respect of that leave under Reg 16. Likewise, Reg 30 provides for two separate judicial remedies. The ECJ noted that, on the EAT’s interpretation of Regs 13, 16 and 30, a worker can claim breach of Reg 13 only to the extent that his or her employer did not permit him or her to take any period of leave, whether paid or not; and can claim payment under Reg 16 only for leave actually taken. This has the effect that, where the employer grants only unpaid leave, a worker is obliged to take leave without pay in the first place and then to bring an action to claim payment for it. The ECJ held that this result was incompatible with Article 7 of the Directive when read with Article 47 of the EU Charter. In K’s particular circumstances, he would be unable to claim after the termination of employment in respect of paid leave due but not taken, which would deprive him of an effective remedy.
As to the accumulation of the right to paid annual leave, the ECJ noted that, in the case of a worker who is prevented from taking paid annual leave due to sickness, case law has permitted national law to limit the worker’s right to carry over that leave to 15 months. That case law took into account not only the protection of workers but also the protection of employers, who might otherwise be faced with the risk that a worker will accumulate periods of absence of too great a length. In contrast, in the present case, there was no requirement to protect the employer’s interests – on the facts, SWW Ltd was not faced with organisational difficulties and indeed was able to benefit from K not taking any paid annual leave. It was irrelevant that SWW Ltd considered, wrongly, that K was not entitled to paid annual leave – it is up to the employer to inform itself of its obligations in this regard and an employer that does not allow a worker to exercise his or her right to paid annual leave must bear the consequences. The ECJ therefore concluded that the Directive requires a worker to be able to carry over and accumulate paid annual leave rights until the termination of his or her employment where those rights have not been exercised over several consecutive reference periods because the employer refused to remunerate that leave.
This case has significant implications for the right to holiday pay in the UK. It suggests that workers who are wrongly classified as self-employed contractors may be able to claim back pay in respect of unpaid annual leave going back many years when their ‘worker’ status is established. It also suggests that the Deduction from Wages (Limitation) Regulations 2014 SI 2014/3322, which limit back pay claims to two years, are incompatible with EU law.
ECJ Judgement – Allowance in lieu of annual leave paid on termination of the employment relationship
10 Must-Know Employment Law Facts
Employment Law covers many different aspects of employer responsibilities and employee rights, including contracts of employment, hours of work, Statutory Sick Pay and dismissal. Your employer should comply with employment law else they are at risk of employment tribunal claims. Let’s take a look at 20 key facts about employment law, that your employer should be abiding by:
Settlement Agreement or Employment Tribunal Claim?
If you believe you have received poor treatment in the workplace by your employer, or any other grounds for a claim , you will be faced with the choice of whether you could like to pursue an Employment Tribunal Claim or try to settle your claim, usually via a ‘settlement agreement’ contract. Lets break down the most important factors to consider when deciding which avenue to take.
What potential claims do you have, and how likely are those claims going to be successful?
The first step is to determine what potential claims you may actually have based on the circumstances of your case – have you been a victim of workplace harassment, discriminated against, victimised or unfairly dismissed? The nature of claims you choose to pursue will of course have a significant impact on your chances of success and the value of any Employment Tribunal Claim. You will also need sufficient evidence to reinforce the particular claim(s).
What outcome are you seeking from an Employment Tribunal Claim?
Generally speaking, if you are only pursuing an Employment Tribunal Claim to seek compensation (a financial payment), it is more likely that you will be able to settle your claim. If you are looking for another form of remedy however, then you might have to seek this through a successful claim in the Employment Tribunal (as it is normally difficult to persuade an employer to re-engage you through a settlement agreement).
Is settlement an option for you, or is an Employment Tribunal Claim a point of principle?
There is very little point in entering into a settlement agreement negotiation if you aren’t interested in a settlement. If you are strongly set on not settling from the get-go, then your time and effort is best focused on preparing your Employment Tribunal claim. On the other hand, if you are open to settlement, then it is best to approach the other party at an early stage to negotiate and agree upon the terms of the settlement.
What impacts could a claim have on you in the long term?
The public nature of an Employment Tribunal should be considered as early as possible. All Employment Tribunal judgements are now published online and the parties to the litigation will therefore want to think carefully about what impact any publicity could have on their careers or business.
How committed are you to the process an employment tribunal claim?
The process of an employment tribunal claim can be stressful and daunting. However, using a no win no fee employment solicitor like ourselves, your stress can be alleviated as we guide you through the entire process from initial assessment to making a claim.
‘Phoenixing’ a Continued Problem
A whopping £390,000+ worth of employment tribunal claims went entirely unpaid last year following the employers in question being placed in administration or being dissolved or liquidated. Experts have stated that these figures may indicate the continued struggle with ‘phoenixing’ businesses avoiding tribunal debts.
It was revealed, thanks to figures from the Department for Business, Energy and Industrial Strategy (BEIS) by People Management under a freedom of information (FOI) request, that 56 awards (worth a total of £394,505) were unpaid due to insolvency in 2017. This figure was broken down further, bringing to light that of the 56 unpaid awards two (worth £20,695) were unpaid due to administration, twenty six awards (worth £87,544) went unpaid due to dissolution and twenty eight awards (worth £286,267) were unpaid because of liquidation.
A company is placed in administration as a means of attempting to save it from insolvency. This involves control being handed over to an administrator, who will attempt to pay off, or reach a deal with, as many creditors as possible, as to reduce the company’s debts.
A company is liquidated when, as a means to pay off debts, its assets are sold off. This usually occurs after administration is unsuccessful. Finally, a company is dossolved once it is struck off the Companies House register.
The particular companies in question were not revealed, however the figures suggest that there is a continued issue of ‘phoenixing’, the unscrupulous practice of company owners avoiding tribunal awards or other penalties by making their business insolvent only to set up a very similar, new company afterwards.
Croner associate director, Paul Holcroft stated ““In the current climate, where we hear of town centres being depleted of their shops and pubs at an alarming rate, there will be very many genuine insolvency situations which mean tribunal awards go unpaid, however, with the possibility that ‘phoenixing’ is contributing to that number, employers may well be intentionally circumventing the system.”
“Without detailed analysis, it is difficult to tell which are genuine insolvencies and which aren’t, but anecdotal evidence from claimants has suggested that many insolvent ex-employers are now trading again.”
It’s clear that phoenixing is a common problem that continues to grow. However, the Taylor Review on Modern Working Practices, which was published in July 2017, called for the government to take further action against companies which dodged paying tribunal awards, and to establish a “naming-and-shaming” system for those who did not pay awards within a reasonable time period.
As stated on gov.uk, UK law allows directors, owners and employees of insolvent companies to set up brand new companies and carry on a similar business as long as the individuals involved aren’t personally bankrupt or disqualified from acting in the management of a limited company.
Brexit & UK Employment Law
Last week a 98 page White Paper was released that outlines the UK Government’s suggestion for the future relationship between the UK and EU. Also the post-Brexit status of the UK’s employment legislation derived from European Union law appears to be no longer in doubt. The document indicates that there tends to be no intention to repeal or amend equality or employment law, including a commitment to the “non-regression” of labour standards. This “Brexit Blueprint” also states that the European Court of Justic (ECJ) won’t have any further sway over the UK’s legal decisions, therefore bringing accountability of UK laws back to the UK.
The paper states that “existing workers’ rights enjoyed under EU law will continue to be available in UK law at the day of the withdrawal”, referring to the United Kingdom’s plan for their relationship with the EU in the future by suggesting that it will commit to a “non-regression of labour standards”. Therefore any UK employment laws which are based on EU law will remain unchanged after Brexit.
The blueprint offers a new framework where EU workers who are previously established can apply for ‘settled status’ and remain in the UK. Any Irish workers can remain in the UK indefinitely under ‘special status’ – Irish and UK citizens alike will be able to freely move between the UK and Ireland (the Common Travel Area). However without an agreement in place, EU and UK workers will no longer be able to freely move between each other’s countries without certain restrictions.
There has been an indication that there will be a commitment to a “mobility network”, so that EU and UK citizens can travel between their countries to work and study. However
Whilst the white paper supports the notion of there being ‘no automatic right’ to work in the UK, it does suggest that possible ‘reciprocal arrangements’ could take place that would mean businesses can relocate “talented staff” in particular situations.
Evidence about ‘protected conversations’ in an unfair dismissal case?
Yes, if the date of termination is in dispute, held the EAT in Basra v BJSS Limited.
Pre-termination discussions between employer and employee are protected under section 111A Employment Rights Act 1996 and cannot therefore usually be referred to by either party in an unfair dismissal claim, unless there has been “improper behaviour”. In Basra, however, the EAT held that there is an exception to this rule if the date of termination is in dispute.
The Claimant wrote an email to the Respondent in response to a without prejudice offer letter it had sent saying “today will be the last day at BJSS”. The Claimant then stopped attending work, and later brought a claim for unfair dismissal. BJSS argued the Claimant’s employment had ended by mutual termination and, in the alternative, the email was a resignation. The Claimant denied resigning and said he had been dismissed by BJSS at a later date. The tribunal, following Faithorn Farrell Timms LLP v Bailey, noted that s111A protection cannot be waived (unlike without prejudice negotiations) and excluded BJSS’s offer letter as protected under s111A ERA.
The EAT held that as the protection under s111A only applies to pre-termination negotiations, “the chronological line between what is, and what is not, admissible therefore lies on the point at which the contract is terminated”. The EAT went on to say that “where there is a dispute as to whether or not the contract was terminated on a particular date, the tribunal would not be in a position to say what evidence should be excluded until that dispute is determined”. Thus the tribunal needs to determine the termination date before applying s111A
EAT upholds finding of direct discrimination because of perceived disability
In Chief Constable of Norfolk v Coffey the EAT has upheld the decision of an employment tribunal that a police officer, who was turned down for a transfer to the Norfolk Constabulary because her hearing loss was marginally below the medical standard for police recruitment, had suffered direct discrimination because of a perceived disability. The Constabulary’s reason for refusing the transfer was the concern that the claimant would end up on restricted duties. This indicated that it perceived her to have a progressive condition which, by virtue of paragraph 8 of Schedule 1 to the Equality Act 2010, met the statutory definition of disability.
In 2011 C applied to the Wiltshire Constabulary to become a police constable. She attended a medical, at which it was discovered that she suffers from bilateral mild sensori-neural hearing loss with tinnitus. Although C’s hearing loss was marginally outside the range set down by the Home Office for police recruitment, the Wiltshire Constabulary arranged a practical functionality test which C duly passed before going on to work on front-line duties. In 2013 C applied to transfer to the Norfolk Constabulary. C attended a pre-employment health assessment, where the medical adviser noted that her hearing was ‘just outside the standards for recruitment strictly speaking’ but that she had undertaken an operational policing role with the Wiltshire Constabulary without any undue problems. He recommended that C undergo an ‘at work’ test, but this recommendation was not carried through by the Assistant Chief Inspector (ACI) who dealt with the application. Instead, the ACI declined C’s request to transfer on the basis that her hearing was below the acceptable and recognised standard, and that it would not be appropriate to step outside that standard given the risk of increasing the pool of officers on restricted duties.
C brought an employment tribunal claim for direct discrimination. It was not alleged that she actually had a disability; her case was that her hearing loss did not have, and was not likely to have, a substantial adverse effect on her ability to carry out day-to-day activities, including working activities. Instead, it was argued that she had been treated less favourably because she was perceived to have a disability, in the form of a progressive condition that could well develop to the point of having a substantial impact on her ability to carry out day-to-day activities. The tribunal considered that the only way to read the ACI’s comments about the risk of C ending up on restricted duties was that she perceived that C had a potential or actual disability which could lead to the Constabulary having to make adjustments to C’s role as a front-line police officer. Since this perception was the reason for refusing C’s transfer, the tribunal upheld the discrimination claim.
On appeal to the EAT, it was argued that the tribunal had erred both in respect of its finding that the ACI perceived C to be disabled and its finding that C had been treated less favourably because of that perception. On the former point, the EAT stressed that the question of whether a putative discriminator A perceives B to be disabled will not depend on whether A perceives B to be disabled as a matter of law. It will depend on whether A perceives B to have an impairment with the features which are set out in the legislation. Paragraph 8 of Schedule 1 to the EqA makes special provision in respect of progressive conditions. Where a person has a progressive condition that results in an impairment having an effect on his or her ability to carry out day-to-day activities, but the effect is not a substantial adverse effect, it will still be treated as such if it is likely that the condition will result in a substantial adverse effect in future. Although the ACI protested that she did not consider C disabled with the meaning of the EqA, her knowledge of the law was incomplete and did not include Paragraph 8 of Schedule 1. The reference to the risk of C being on restricted duties could only be read as the ACI perceiving that C had a progressive condition which could worsen. Thus, the tribunal had been entitled to find that she perceived her to be disabled.
Turning to whether the tribunal had been correct to find that there had been direct discrimination, the EAT accepted that a genuine difference in abilities will be a material difference between claimant and comparator. However, it saw no warrant for an employer’s flawed belief in a lack of ability to be a material difference. The tribunal was entitled to conclude that a person with the same abilities as C, whose condition the employer did not perceive to be likely to deteriorate so that he or she would require restricted duties, would not have been treated as C was. C had performed an active policing role in Wiltshire; she had been accepted at the interview stage; her rejection followed when the ACI ignored advice to rely on a practical assessment of C because, as the tribunal put it, she believed the C would become a liability to the force. The tribunal did not err in law in concluding that she had been subjected to direct discrimination.
Link to transcript: http://www.bailii.org/uk/cases/UKEAT/2017/0260_16_1912.html
(ET1) Claim Form – Amending a Tribunal claim to add a new claim – right to argue a time point remains
Not necessarily, according to the EAT in Galilee v Commissioner of Police for the Metropolis.
An amended claim takes effect from the date when permission is granted, not the date of the original claim.
Therefore, granting permission to amend does not deprive the employer of the right to argue that the claim is out of time.
Further, it is not necessary to decide if the claim is out of time when deciding whether to grant permission to amend, save in clear cases. Permission to amend can be granted subject to the time point being decided at a later stage or the decision whether to grant permission can be deferred to the full hearing
Good news for employee backdated holiday pay claims
In King v The Sash Window Workshop Ltd and anor, the European Court of Justice has held that the means of enforcing the right to paid holiday under the Working Time Regulations 1998 SI 1998/1833 is incompatible with the EU Working Time Directive (No.2003/88). On the EAT’s interpretation of Regs 13 and 16, where an employer grants only unpaid leave to a worker, the worker would be obliged to take leave without pay and then bring an action to claim payment for it. This result is incompatible with the right to paid annual leave under Article 7 read with the right to an effective remedy under Article 47 of the EU Charter of Fundamental Rights. The ECJ also held that, where the employer refuses to pay for annual leave, the worker’s holiday rights carry over until the termination of employment.
K worked for SWW Ltd as a self-employed commission-only salesman from June 1999. He was offered an employment contract in 2008, which included the right to paid annual leave. However, he elected to remain self-employed (under a contract that was silent on the issue). While K did take some holiday throughout his years of service, he was never paid for this. When SWW Ltd terminated his engagement in October 2012, K successfully claimed holiday pay before an employment tribunal, which accepted that he was a ‘worker’ for the purposes of the Working Time Regulations 1998. Among other things, the tribunal awarded him pay in lieu of annual leave accrued but not taken during previous years, also claimed as a series of deductions. The EAT allowed SWW Ltd’s appeal on this issue, holding that the tribunal had failed to make findings of fact to support its conclusion that K was prevented from taking his annual leave for reasons beyond his control. There was therefore no basis for departing from the usual position under Reg 13 that entitlement to leave expires at the end of the relevant leave year. K appealed to the Court of Appeal, which made a reference to the ECJ, querying whether Reg 13 is consistent with the right to paid annual leave under Article 7 of the Working Time Directive, given that (on the logic of the EAT’s analysis) the worker would first have to take unpaid leave before testing his or her entitlement to pay. It also sought clarification of the extent to which untaken paid leave can be carried over, for the purpose of claiming a payment in lieu of untaken holiday upon termination of employment under Article 7(2) of the Directive.
Advocate General Tanchev gave the opinion that employers are bound to provide an ‘adequate facility’ for workers to exercise the right to paid annual leave under Article 7, such as in the form of specific contractual terms or the establishment of a legally enforceable administrative procedure. Where no such adequate facility has been made available, any reference and carry-over periods that would otherwise fall within a Member State’s discretion must necessarily be disapplied. In such a case, the worker would be entitled on termination of employment to payment in lieu of annual leave untaken up until the date on which an adequate facility was made available.
The ECJ has now given its judgment and has gone further than the Advocate General. It noted that it was clear from its case law that a worker must be entitled to benefit from the remuneration to which he or she is entitled when taking his or her annual leave. Thus, a worker who is faced with uncertainty as to the level of remuneration to which he or she is entitled during the leave period will not be able to benefit fully from that leave as a period of relaxation and leisure, and is likely to be dissuaded from taking leave in the first place. When seen in that light, the right to paid annual leave cannot, therefore, depend on a factual assessment of the worker’s financial situation when he or she takes leave.
Turning to the Working Time Regulations, the ECJ observed that they implement the right to paid annual leave by way of two separate rights: a right to a period of annual leave under Reg 13 and a right to be paid in respect of that leave under Reg 16. Likewise, Reg 30 provides for two separate judicial remedies. The ECJ noted that, on the EAT’s interpretation of Regs 13, 16 and 30, a worker can claim breach of Reg 13 only to the extent that his or her employer did not permit him or her to take any period of leave, whether paid or not; and can claim payment under Reg 16 only for leave actually taken. This has the effect that, where the employer grants only unpaid leave, a worker is obliged to take leave without pay in the first place and then to bring an action to claim payment for it. The ECJ held that this result was incompatible with Article 7 of the Directive when read with Article 47 of the EU Charter. In K’s particular circumstances, he would be unable to claim after the termination of employment in respect of paid leave due but not taken, which would deprive him of an effective remedy.
As to the accumulation of the right to paid annual leave, the ECJ noted that, in the case of a worker who is prevented from taking paid annual leave due to sickness, case law has permitted national law to limit the worker’s right to carry over that leave to 15 months. That case law took into account not only the protection of workers but also the protection of employers, who might otherwise be faced with the risk that a worker will accumulate periods of absence of too great a length. In contrast, in the present case, there was no requirement to protect the employer’s interests – on the facts, SWW Ltd was not faced with organisational difficulties and indeed was able to benefit from K not taking any paid annual leave. It was irrelevant that SWW Ltd considered, wrongly, that K was not entitled to paid annual leave – it is up to the employer to inform itself of its obligations in this regard and an employer that does not allow a worker to exercise his or her right to paid annual leave must bear the consequences. The ECJ therefore concluded that the Directive requires a worker to be able to carry over and accumulate paid annual leave rights until the termination of his or her employment where those rights have not been exercised over several consecutive reference periods because the employer refused to remunerate that leave.
This case has significant implications for the right to holiday pay in the UK. It suggests that workers who are wrongly classified as self-employed contractors may be able to claim back pay in respect of unpaid annual leave going back many years when their ‘worker’ status is established. It also suggests that the Deduction from Wages (Limitation) Regulations 2014 SI 2014/3322, which limit back pay claims to two years, are incompatible with EU law.
ECJ Judgement – Allowance in lieu of annual leave paid on termination of the employment relationship
Can an employer rely on parts of without prejudice or protected conversations?
Can a Respondent employer rely on parts of a ‘without prejudice discussion’, or protected conversation, whilst at the same time using the rules as a shield?
No, held the EAT in Graham v Agilitas IT Solutions Ltd.
The Claimant was facing termination of employment. During talks which the Respondent characterised as being without prejudice and/or protected under s111A of the Employment Rights Act 1996, the Claimant made comments which the Respondent subsequently used to form the basis of disciplinary action. The Claimant alleged improper conduct/unambiguous impropriety by the Respondent in the form of bullying and threatening behaviours in the same meeting.
The Claimant was entitled to have the employment tribunal examine the improper conduct. The case has been remitted.
Giving false reason for dismissal was breach of the implied term of mutual trust and confidence
In Rawlinson v Brightside Group Ltd, the EAT has held that an employment tribunal was wrong to reject the wrongful constructive dismissal claim of an employee who resigned when falsely told that he was to be dismissed due to a work reorganisation (the real reason was his performance). The tribunal erred both in its failure to find that the employer had acted in breach of the implied term of trust and confidence, and in its characterisation of the employee’s complaint as relating to the manner of his dismissal. By deciding to give him a reason for the termination of his employment, the employer had assumed an obligation not to mislead, an obligation it then breached. The complaint did not relate to the dismissal but to the falsehood told with a view to keeping the relationship alive for the notice period.
R was employed as an in-house legal counsel by BG Ltd, a firm of insurance brokers. A few months into his employment, the company decided to dismiss R due to concerns about his performance, despite never having raised these with him. To ‘soften the blow’, R was simply told that BG Ltd had decided to outsource legal services. It wanted him to work through his three-month notice period to ensure a smooth handover of work. However, R resigned with immediate effect on the basis that that any outsourcing exercise would constitute a ‘relevant transfer’ under TUPE and the company was therefore breaching its statutory obligations. R subsequently brought employment tribunal claims for, among other things, breach of the duty to inform and consult under TUPE and wrongful constructive dismissal (based upon a fundamental breach of the implied term of trust and confidence).
The tribunal rejected R’s TUPE claims, finding that there was no relevant transfer. As for the contract-based claim, the tribunal found that the company’s failure to forewarn R of any performance concerns and the potential for dismissal did not amount to a breach of the implied term of trust and confidence. Although R genuinely, and with some cause, believed that he was unfairly treated, BG Ltd had no obligation to provide the information to him. The tribunal considered that R’s complaint was really about the manner of his dismissal. This meant that it would be precluded by the House of Lords’ decision in Johnson v Unisys Ltd 2001 ICR 480, where it was held that common law damages for breach of contract cannot be awarded in respect of unfair treatment connected to a dismissal. R appealed.
The EAT agreed with R that in all but the most unusual cases, the implied term of trust and confidence must import an obligation not to deliberately mislead. This does not mean an employer is necessarily placed under some broader obligation to volunteer information, such as a reason for dismissal. Nevertheless, where a choice has been made to do so, the implied term requires that it is done in good faith. Even allowing that there may be particular cases in which the operation of the implied term would permit some element of deceit – the ‘white lie that serves some more benign purpose’ – the EAT could not see how that was so here. The tribunal had therefore erred in failing to find that the implied term had been breached.
The tribunal had further erred in failing to see that R’s complaint did not relate to the dismissal, but to the falsehood told to him with a view to keeping the relationship alive for the notice period. It therefore did not fall within the ‘Johnson exclusion zone’. As the House of Lords recognised in Eastwood and anor v Magnox Electric plc (Brief 762), if an employee suffers loss as a result of an employer’s breach of the implied term in the steps leading to a dismissal, he or she has a common law cause of action that precedes, and is independent of, the subsequent termination of employment. R’s response to the communication of an untrue reason for his dismissal was to walk out, giving rise to a loss of earnings over the notice period. The EAT therefore allowed the appeal and substituted a finding that R’s wrongful dismissal claim should succeed.
Link to transcript: http://www.bailii.org/uk/cases/UKEAT/2017/0142_17_2111.html