Latest UK Employment Law case updates - May 2018

  1. Beware traps when giving notice of termination by post
  2. Employers face increased risk of disability discrimination claims
  3. Last straw revives right to terminate and claim constructive dismissal
  4. EAT illustrates the dangers of unilateral salary cuts

Beware traps when giving notice of termination by post

Newcastle upon Tyne Hospitals NHS Foundation Trust v Haywood (Supreme Court)

The Supreme Court has held that where an employment contract is silent on the issue, notice of termination sent by post will be deemed to be received and begin running only once it has come to the attention of the relevant employee and they have either read it or had a reasonable opportunity to do so. 

In this case, the employee was entitled to significantly enhanced pension benefits if her employment terminated on or after her 50th birthday, on 20 July 2011. Following a short redundancy procedure, her employer sent her a letter of termination on 12 weeks’ notice on 20 April, by recorded delivery. However, she was away on holiday and did not read the letter until her return on 27 April. She argued that notice was effective as of this later date which, taking her full notice period into account, meant that her termination date fell on her 50th birthday. Her employer considered notice to have been issued on 21 July, when delivery was first attempted, which meant she was not entitled to enhanced pension benefits. The relevant employment contract did not contain deemed service provisions.

The High Court, Court of Appeal and Supreme Court (by a majority) all agreed with the employee. In the absence of a express contractual provision to the contrary, where an employee is dismissed on written notice posted to their home address, the notice period begins to run once the letter comes to their attention and they have either read it or had a reasonable opportunity to do so. The dates on which the letter would have been delivered in the ordinary course of post, or was actually delivered, are irrelevant.  On an extensive review of case law, the Court was satisfied that effective notice must generally ‘come to the mind’ of the addressee, or someone authorised to accept receipt, unless an employer has detailed deemed receipt provisions within employment documentation which set out an alternative position.

In light of this case, employers should review employment contracts to ensure they address permissible methods of giving notice and the timeframes in which each will be deemed to become effective. In addition, employers should take care when citing termination dates in their termination letters since stating an inaccurate (early) date of termination would be a technical breach of contract. To avoid ambiguity further, by hand delivery should be preferred wherever possible.

Employers face increased risk of disability discrimination claims

City of York Council v B J Grosset (Court of Appeal)

The Court of Appeal has confirmed that dismissing an employee on grounds of misconduct may amount to discrimination arising from disability in circumstances even where the employer is not aware of a causal link between the relevant conduct and an underlying disability.  Whether or not actions are caused by disability are to be assessed on an objective, rather than subjective basis.

The employee, head of English at a secondary school, suffered from cystic fibrosis. His employer was aware of this, accepted it to be a disability for the purposes of the Equality Act 2010 ("EA") and had initially made reasonable adjustments to his teaching schedule to accommodate his health needs. Following a change in management, however, new initiatives and targets were introduced which increased his workload. He consequently suffered from stress and his health suffered. During a period of acute stress, he took the decision to show an 18-rated horror film to underage students without consent from parents or the school. On discovering this, the employee was disciplined and dismissed for gross misconduct. The disciplinary panel actively considered, but rejected, the idea that his decision to show the film had flowed from the stress he was under, or his underlying health issues. 

The employee alleged that his employer's actions amounted to unfavourable treatment because of something arising in consequence of his disability, which therefore met the criteria for a successful discrimination arising from disability claim under s.15 EA.  The CA agreed, noting that he had been subjected to a detriment for showing the inappropriate file (the "something" from the test cited above), and that there was an objective, causal connection between this action and his high stress levels; which was a result of his underlying condition and his demanding new working requirements. The Court confirmed that an employer's subjective knowledge of the link between an employee's disability and their actions is irrelevant for the purposes of s.15 EA. 

This is a problematic outcome for employers, who may now be liable for discrimination arising from disability even where they reasonably satisfy themselves – through proper disciplinary proceedings – that an employee's actions are not due to a disability. The case serves as a reminder for organisations to keep detailed records of reasonable adjustments made and keep these under regular review. It is also prudent to obtain medical evidence when concerned about the actions of a disabled employee, to obtain a second view on whether these could be a result of their medical condition as it appears that no de-minimum principle will apply when assessing the relevant causal link.

Last straw revives right to terminate and claim constructive dismissal

Kaur v Leeds Teaching Hospitals NHS Trust (Court of Appeal)

The Court of Appeal has clarified the position in relation to cases of 'last straw' constructive unfair dismissal, confirming that further contributory acts by an employer revive an employee's right to resign even after they have affirmed their employer's previous breach of contract.

The employee was subject to disciplinary proceedings following an altercation with a colleague. She was issued with a final written warning for inappropriate behaviour and her subsequent appeal against this sanction was dismissed. She resigned in response the next day, claiming that the rejection of her appeal amounted to the last straw in a series of events which, taken cumulatively, breached the implied duty of mutual trust and confidence. Her employer argued that since she had continued to work following the earlier incidents she cited (which included alleged unjustified comments regarding her performance and the aforementioned altercation) she had affirmed any possible earlier breach and could not, for the purposes of a constructive dismissal claim, invoke them as part of the relevant chain of events culminating with the appeal outcome.

The Tribunal rejected her claim on the basis that the relevant disciplinary and appeal decisions had been reached in accordance with a fair process and could not therefore contribute to the repudiation of her employment contract. The EAT and CA agreed, but the latter wished to stress that even where an employee affirms repudiatory breaches caused by earlier employer conduct (e.g. by continuing to work as normal) further damaging acts on the part of the employer at a later date can revive a potential constructive dismissal claim, taking the full chain of events into account.   
 
This is a somewhat surprising outcome but confirms to employers that earlier incidents of breach, which an employee may have been thought to have affirmed, should not be discounted for the purposes of assessing potential constructive dismissal claims. The Court provided a useful checklist of questions to be considered in such cases: (1) What was the employer's most recent act/omission which the employee says triggered their resignation? (2) Has the employee affirmed the contract since that act? (3) If not, was that act/omission by itself a repudiatory breach of contract? (4) If not, was it nevertheless a part of a course of conduct (regardless of any intervening affirmation) comprising several acts and omissions which, viewed cumulatively, amounted to a breach of the implied term of trust and confidence? (5) Did the employee resign in response to that breach?

EAT illustrates the dangers of unilateral salary cuts

Mostyn v S and P Casuals Ltd (Employment Appeal Tribunal)

Employers who unilaterally reduce an employee's contractual pay cannot rely on having 'reasonable and proper cause' to breach the implied term of mutual trust and confidence. In itself, an enforced pay cut (whether actual or anticipatory) contradicts a fundamental, express term of any employment contract which will entitle the relevant employee to resign in response and treat himself as constructively dismissed. 

In his role as sales executive, an employee had reported disappointing figures over the course of a four year period. As a result, his employer asked him to accept a reduction in his basic remuneration of almost 50% (from £45,000 to £25,000 per annum). He refused, and alleged that this was a crude move to remove him from the business. When the employer rejected his position and indicated that it would move forward with a unilateral pay cut, the employee resigned without notice and brought a tribunal claim on the grounds of constructive unfair dismissal. He argued that such conduct breached the implied term of mutual trust and confidence within their employment relationship.

The Employment Tribunal rejected the claim on the grounds that the employee's poor performance and failure to remedy this gave his employer reasonable and proper cause to take action which would otherwise breach the implied term. On appeal, however, this finding met strong criticism. The EAT held that when considering the repudiation of an employment contract, tribunals should never assess whether the 'reasonableness' of an employer's conduct could justify such a breach. Furthermore, unilateral pay cuts abrogate a separate and fundamental express term of any employment contract (in relation to remuneration) and will generally entitle immediate resignation. The ET's findings could not stand and the matter was remitted to a differently constituted tribunal.

This decision clearly reminds employers that – regardless of notions of fairness or reasonableness - the threat or imposition of a unilateral pay cut will generally represent a fundamental breach of contract, entitling the employee to resign with immediate effect with potential claims of unfair and wrongful dismissal.