Dechert's London Employment Team is pleased to present The Employment Edit, Autumn 2021 – a summary of the most important recent cases and news affecting employers in the UK. We hope you find this newsletter helpful and informative. In this edition we look at:

• when an email between an employer and its HR adviser may be privileged and not disclosable in Employment Tribunal proceedings;
• whether it would be a reasonable adjustment for an employer to maintain a higher rate of pay for a disabled employee who is moved to a lower-paid role;

• the need for a condition to be long term to amount to a disability for the purposes of a disability discrimination claim;

• steps to take to avoid disadvantage when applying a sickness absence policy to a disabled employee;

• the dismissal of a senior employee where there has been a breakdown in the working relationship; and

• the need for careful drafting of contractual terms offering insured benefits so that the specific terms of the benefit can be varied from time to time.

Abbeyfield (Maidenhead) Society v Hart

An email between Mr Hart’s employer and an HR consultant sent before a disciplinary appeal hearing contained an indication that the employer intended to dismiss him for gross misconduct. The Employment Appeal Tribunal (EAT) found that this email was protected by litigation privilege and therefore did not need to be disclosed in Employment Tribunal proceedings brought by Mr Hart.

Mr Hart argued that the email was not privileged because it contained legal advice sought or given for an unlawful purpose (the iniquity exception). The EAT disagreed. The purpose of litigation privilege is to enable a party to discuss the strengths, weaknesses and risks of its position frankly with its advisers. This email contained this type of frank discussion – it was not a discussion about how to act unlawfully.

Takeaway: Whilst this is a helpful decision, employers should nevertheless be cautious about putting in writing anything that may tend to suggest that the outcome of a process is predetermined. The vast majority of communications within a business will not be protected by privilege and will be disclosable in litigation. The EAT also noted that, even if the advice sought is not unlawful, it may create unethical issues and put advisers in a difficult position as to whether they should act for the client.

Aleem v E-Act Academy

Mrs Aleem, a teacher suffering from mental ill health which amounted to a disability, was no longer able to teach but was fit to carry out a cover supervisor role that attracted a lower rate of pay. The EAT found that it was appropriate for the employer to pay the higher rate of pay associated with the previous teaching role while Mrs Aleem was in a probationary period, and while her grievance was outstanding, because this supported her possible return to work.

However, her employer had not failed to comply with its duty to make reasonable adjustments by paying her at the lower rate of pay for a cover supervisor once it had received advice from occupational health that Mrs Aleem remained long term unfit to return to a teaching role, and she had accepted an offer to continue in the cover supervisor role. The Employment Tribunal was entitled, in deciding whether an adjustment was reasonable, to take into account the cost of the adjustment and the employer’s financial position.

Takeaway: This is a helpful case for employers, confirming that it will only be a reasonable adjustment for an employer to pay a disabled employee permanently at a higher rate than the normal rate of pay for their role in rare and exceptional circumstances.

Seccombe v Reed in Partnership Limited

Mr Seccombe had suffered two periods of depression and anxiety prior to his employment by Reed in Partnership, and a third period during his employment due to a particularly traumatic event.

The EAT found that, for the purposes of his claim, Mr Seccombe did not meet the legal definition of disability for the purposes of the Equality Act 2010 and that his employer did not have the required actual or constructive knowledge of the alleged disability.

The EAT found that around the time of the traumatic event, Mr Seccombe was genuinely unwell, suffering from a mental impairment – anxiety – which had a substantial effect on his ability to carry out normal day-to-day activities as required to meet the legal definition of disability. However the effects of the impairment were not long term (meaning lasting for 12 months or more, or likely to recur). Mr Seccombe had returned to work and was certified fit to return by his GP. He did not mention that he was suffering from anxiety again, even in the meeting during which he was dismissed. The previous episodes of depression and anxiety had also not met the definition of long term, and the employer did not know about them. Mr Seccombe had not disclosed any issues in his pre-employment questionnaire, and neither his manager, nor a close colleague who had also worked with him in a previous job, had any knowledge of a long term mental health issue. There was therefore no reason for the employer to think that the mental impairment that developed during Mr Seccombe’s employment was ongoing or likely to recur.

Takeaway: When considering their obligations, employers should be alive to whether an employee’s medical condition has or may have a long term impact given the need to consider reasonable adjustments and related issues if the employee is a disabled person for Equality Act purposes. If the employee is undergoing a medical examination, it may be helpful to ask the medical practitioner to advise how long the particular condition has lasted or is likely to last.

Martin v City and County of Swansea

Mrs Martin was dismissed more than six months after occupational health had confirmed that she was unable to return to her existing role. Before her dismissal, Mrs Martin received salary protection and worked in an alternative temporary position whilst redeployment opportunities were explored.

Although there were numerous vacancies available, these were not suitable for Mrs Martin or she chose not to apply for them – ultimately she disengaged from the redeployment process and expressed an intention to leave her employment. Mrs Martin's claims (which included unfair dismissal and an alleged failure to make reasonable adjustments under the Equality Act on the basis of the application of the Respondent’s absence management policy to her) were dismissed by the Employment Tribunal. On appeal, the EAT found that the Tribunal had erred in its determination, for the purposes of the claim for failure to make reasonable adjustments, of the provision, criterion or practice (PCP) applied to Mrs Martin by her employer. The EAT held that the PCP was not the terms of the management absence policy but the application of that policy. It concluded that the application of the policy did put Mrs Martin at a disadvantage since her disability meant she was more at risk of being dismissed. However, the real question was whether Swansea had complied with its obligation to make reasonable adjustments to avoid the disadvantage created by the PCP. The EAT found that the employer had taken all reasonable steps and Mrs Martin’s appeal therefore failed.

Takeaway: Since the terms of an absence policy are likely to place disabled employees at a disadvantage compared with non-disabled employees, prior to taking the step of dismissal (or any other sanction), employers should consider what adjustments can reasonably be made to their usual policy to reduce the impact of any disadvantage, such as finding an interim role, making adjustments to absence trigger points, or looking for suitable alternative employment.

Moore v Phoenix Product Development Limited

Mr Moore had stepped down as CEO of the respondent employer, but had remained a director and employee. He had difficulty accepting his reduced role in the business, and the situation and his relationship with the new CEO had deteriorated over time. Eventually, the Board dismissed him due to the irretrievable breakdown in the working relationship.

Mr Moore was not offered a right of appeal against the decision to terminate his employment (as required by Acas’ statutory Code of Practice on disciplinary and grievance procedures which employers should generally follow as a minimum when dealing with such matters). He brought a claim for unfair dismissal, which was rejected by the Employment Tribunal, which noted that any appeal would have been pointless as the relationship had broken down, and that Mr Moore was entirely responsible for that breakdown.

Mr Moore’s appeal to the EAT was rejected. The EAT held that, although an appeal against dismissal would ordinarily form part of a fair process, it was not essential in every case: the relevant circumstances should be taken into account. In this case, given that Mr Moore was a very senior employee and the relationship of trust and confidence had broken down, it had been reasonable for the employer not to offer an appeal.

Takeaway: This case does not suggest that it is unnecessary to offer an appeal; it is still important to do so in most cases. However, where the relationship of trust and confidence has broken down irreparably and there is no prospect of rebuilding it, in exceptional cases where the employer is of the view that an appeal would be truly pointless, it may be appropriate not to offer one. Employers should nonetheless be very cautious in taking such a robust approach.

Amdocs Systems Group Ltd v Langton

Mr Langton had been claiming payments under a long-term sickness scheme for some time. However, he discovered that he had not been receiving an increase to those payments of five percent per annum (known as the escalator).

He argued that he was entitled to this increase on the basis of his offer letter and the summary of benefits he had been given by his original employer, before his employment transferred to the respondent employer by operation of TUPE (the Transfer of Undertakings (Protection of Employment) Regulations 2006).

The Respondent argued that he was not entitled to the escalator payments because it had changed its insurance policy, and the new insurer did not offer an escalator.

The Employment Tribunal found in favour of Mr Langton, and the EAT upheld this decision: the documents provided to the employee at the start of his employment, on an objective interpretation, gave him a contractual entitlement to the scheme which included the escalator payment.

Takeaway: Employers should ensure that contractual terms offering insured benefits to employees refer explicitly to the employer’s right to vary those benefits from time to time, and specify that any payments are determined by the particular scheme in place from time to time.

Significant damages award following rejection of flexible working request

Estate Agent Alice Thompson was awarded nearly £185,000 for indirect sex discrimination when her employer refused to agree to her flexible working request following her return from maternity leave. Ms Thompson had requested to work four days per week, and to leave an hour early in order to pick up her daughter from nursery. Her employer refused to discuss a number of solutions proposed by Ms Thompson.

The Employment Tribunal found that the reasons given by the employer for refusing the request were not sufficient to justify the discriminatory impact on Ms Thompson of the requirement to work 9 a.m. – 6 p.m., five days per week.

Takeaway: Following the remote working arrangements of the last 18 months, it is anticipated that employers will be more receptive to flexible working requests than they may have been in the past. The significant damages awarded to Ms Thompson and the extensive media coverage that this case has attracted should be a further incentive to employers to treat flexible working requests seriously and to explore possible solutions with the employee before a decision is made to reject a request (which can only be for one of the eight reasons set out in the Employment Rights Act 1996).

FCA’s approach to remuneration for 2021/2022

The FCA has published a Dear Remuneration Committee Chair Letter applicable to level one firms subject to the Dual-Regulated firms Remuneration Code, outlining its approach to remuneration for 2021/22, the key points of which are as follows:

• remuneration policies should: adapt and evolve in the continuing context of the pandemic; be aligned with a firm’s purpose, business strategy and values; and incentivise the right behaviours;

• appropriate and timely ex post risk adjustments should be made for instances of poor behaviour or misconduct and the reasons for adjustments should be clear to the relevant individuals;

• firms should use non-financial measures in scorecards to support Environmental, Social and Governance issues;

• pay data should be reviewed across all protected characteristics and any disparities addressed swiftly; and

• firms with a fiscal year-end of 31 December should submit their Remuneration Policy Statement by 30 September 2021 including:
  • a short summary of its key points;
  • an explanation of how they have assured themselves that their remuneration policies support their purpose, business strategy and values and incentivise the right behaviours; and
  • how their approach to paying variable remuneration will be considered in the continuing context of the pandemic.