Employment law

Disciplinary procedures

Panama v London Borough of Hackney [2003] IRLR 278

A tribunal ruled that, although an employer acted unfairly in dismissing the applicant prior to a disciplinary hearing, she was not entitled to compensation because the overwhelming probability was that, if the disciplinary proceedings had continued, she would have been found guilty of gross misconduct and summarily dismissed.

The Court of Appeal held that this was an error of law.

In asking the hypothetical question, 'What would have happened at the disciplinary hearing?' a tribunal must not only ask itself what conclusion a hearing would have reached, but also whether a dismissal would be fair or unfair, having regard to section 98(4) of the Employment Rights Act 1996 and the guidance set out in British Home Stores Ltd v Burchell [1978] IRLR 379.

On the facts, a dismissal would not have been fair.

Lord Justice Peter Gibson said: 'Obvious questions which should have been asked by Hackney were not asked...

As those questions were not asked, there is no reason to think that they would have been asked if the disciplinary process had been completed.'

London Underground Ltd v Ferenc-Batchelor; Harding v London Underground Ltd [2003] IRLR 252

The question in these cases was whether employees called to a disciplinary hearing which could result in an 'informal oral warning' were entitled to be accompanied.

The Employment Appeal Tribunal (EAT) ruled that a disciplinary warning becomes a 'formal warning' in terms of section 13(4)(a) of the Employment Relations Act 1999, thus giving the applicants a statutory right to be accompanied in accordance with section 10 if the warning becomes part of the employee's disciplinary record.

The intention of having informal oral warnings, while they may lead to disciplinary procedures being initiated later on, is that once those procedures are initiated, the earlier warnings play no part in what is to follow (including the sanctions that may later be imposed).

Making a warning part and parcel of an individual employee's disciplinary record is wholly different from management merely recording what has occurred for their own purposes.

Attaching a formal timescale for continuation of the warning also gives a degree of formality to what is intended to be an informal remedy.

The purpose of the informal oral warnings is (or should be) to help the employee to improve and its nature is that it will fade and disappear naturally by the passage of time.

To give a warning a set time limit to apply in all cases amounts to a degree of standardisation which is a type of formality.

However, in Ferenc-Batchelor, the tribunal was wrong to hold that the hearing was also covered by section 13(4)(b) of the 1999 Act because it could result in the imposition of training, coaching or counselling requirements.

A requirement to undergo training, coaching or counselling is not a disciplinary sanction, since it does not contain any element of penalty or punishment.

Transfer of Undertakings (Protection of Employment) Regulations

Dudley Bower Building Services Ltd v Lowe & others [2003] IRLR 260

A tribunal considered that a 'reactive maintenance programme' performed substantially by one person was a distinct part of a transferred undertaking and amounted to a stable economic entity.

Thus the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE) applied and there was a 'relevant transfer' of that entity.

The EAT upheld that ruling.

There was no reason, in principle, why the work performed by a single employee should not amount to a stable economic entity.

Whether such an entity exists in a particular case will always be a question of fact and degree.

The decision of the European Court in Schmidt [1994] IRLR 302, has neither been overruled nor disapproved insofar as it deals with the issue of the existence of a stable economic entity.

Alamo Group (Europe) Ltd v Tucker & anor [2003] IRLR 266

The EAT upheld a tribunal's decision that transferees were liable under TUPE to pay compensation in respect of the failure by transferors to comply with their obligation to inform and consult with the employee representatives prior to the transfer.

The rights in regulations10 and 11 of TUPE to information, consultation and compensation in default are 'in connection with' the contract of employment and arise out of the employment relationship.

Consequently, they are subject to regulation 5 and the duties and liabilities imposed on the transferor employer are transferred to the transferee.

The decision of the EAT in Kerry Foods Ltd v Creber [2000] IRLR 10, to that effect would be preferred to that in Transport & General Workers' Union v James McKinnon [2001] IRLR 597.

According to the EAT, this interpretation is consistent with the general approach of TUPE.

A transferee can protect itself, and provide an incentive for the transferor to comply, by providing for warranties and indemnities in the transfer contract.

Although there are transfers where the transferor and transferee have no relationship at all, as in a re-tendering case, regulations10 and 11 provide a defence where it is not 'reasonably practicable' to consult and inform which may be relied on by the transferor and, in due course, by the transferee.

Even with a recalcitrant transferor, the EAT said it is sometimes in the employee's interest for there to be a transferor of liability, for example, where the transferor is insolvent.

Furthermore, the tribunal was entitled to award compensation, even though it found that the luckless transferees consulted and gave information and thereby ameliorated any prejudice which the employees might have suffered.

Compensation is for the primary liability of the transferor in failing to consult and inform.

It is that liability which transfers.

Proof of discrimination

Shamoon v Chief Constable of the Royal Ulster Constabulary [2003] IRLR 285

The editor of the Industrial Relations Law Reports puts it well when he describes this as 'a major decision by the House of Lords on proving discrimination.

There are five separate opinions, and it is perhaps easier to distil some of the principles enunciated than it is to penetrate some of the reasons underlying them.'

Briefly, the House of Lords held that a chief inspector had suffered a 'detriment' when the right to carry out appraisals was removed from her.

The decision of the Northern Ireland Court of Appeal, reported at [2001] IRLR 520, that to constitute a detriment there must be some physical or economic consequence which is material and substantial, was incorrect.

According to the Law Lords, in order for disadvantage to qualify as a 'detriment', it must arise in the employment field in that the court or tribunal must find that by reason of the act or acts complained of, a reasonable worker would or might take the view that he had thereby been disadvantaged in the circumstance in which he had thereafter to work.

An unjustified sense of grievance cannot amount to 'detriment'.

However, contrary to the view expressed by the EAT in Lord Chancellor v Coker [2001] IRLR 116, it is not necessary to demonstrate some physical or economic consequence.

In the present case, a reasonable employee in the chief inspector's position might well feel that she was being demeaned in the eyes of those over whom she was in a position of authority when this part of her normal duties was taken away.

Accordingly, she was entitled to a finding that she was subjected to a 'detriment'.

By Martin Edwards, Mace & Jones, Liverpool