Employment case law update August 2021

Read on for our monthly digest for employers on upcoming employment law changes and key employment cases that have recently been decided.

COVID-19 Automatically unfair dismissal

Montanaro v Lansafe

The claimant, Mr Montanaro, was employed by Lansafe Ltd from 17 February 2020 to provide services to Lansafe’s client.

Mr Montanaro had arranged to take a holiday for his sister’s wedding in Italy on 9 and 10 March 2020, at which time Italy went into lockdown. On 10 March, Mr Montanaro was advised by his employer to keep his mobile and laptop on and to await instructions. The UK government’s guidance at that time was to spend 14 days in isolation on return from Italy.

On 11 March, despite knowing he was not in the country, Lansafe sent a letter to the employee’s London address informing him he had been dismissed with effect from 6 March due to taking unauthorised absence.

However, Mr Montanaro, having heard nothing from his employer, continued to follow instructions from the employer’s client and worked remotely, while also updating his employer with travel information about Italy.

On 1 April 2020, Lansafe emailed the employee with his P45 and final payslip.

Mr Montanaro brought a claim for automatic unfair dismissal under section 100(1)(e) Employment Rights Act 1996.

Under section 100(1)(e) of the Employment Rights Act 1996, an employee or worker may be held to have been automatically unfairly dismissed if it can be shown that the principal reason that they were dismissed was for taking steps to protect themselves or others from what they reasonably believed to be a serious and imminent threat to health and safety.

The tribunal considered the circumstances in March 2020 and the degree to which these created a reasonable belief of a serious and imminent threat to health and safety under section 100. The tribunal found it was not inappropriate for the claimant to remain in Italy rather than return to the UK, as he was able to work and communicate with his employer and clients from there.

Employer takeaways

This is a further employment tribunal decision on the issue of COVID-19 health & safety unfair dismissal, specifically concerning the importance of employers following the correct procedure. In Montanaro, the employer failed to communicate effectively with the employee and dismissal took place without a proper investigation or disciplinary hearing. It is not enough for an employer to notify the employee of dismissal in writing.

Discretionary commission payments

Sharma v Lily Communications

Mr Sharma worked as a business development manager at Lily Communications. His payment package included discretionary commission on sales.

From March to August 2020, Mr Sharma was put on furlough.

At that time, the employer pursued a policy of deferring commission for furloughed employees, with employees not receiving any commission payments whilst on furlough, while indicating that furloughed employees would receive the payments at a later date.

On returning to work in August, Mr Sharma received a commission payment although this was not the total level of deferred commission he had expected to receive and had been assured he would receive by his employer.

Mr Sharma was subsequently made redundant by his employer in October 2020 and brought a claim for unpaid commission payments.

The tribunal found that the employer had unlawfully exercised its discretion in deciding not to pay Mr Sharma his full commission entitlement on his return from furlough.

While it was held that the employer had acted lawfully in withholding commission payments for furloughed employees, the tribunal held the employer’s decision to continue with this policy by withholding commission after the furlough period was irrational and not a good faith exercise of discretion, under widely accepted contractual principles.

The tribunal ordered the employer to pay Mr Sharma all outstanding commission on deals that he had completed whilst he was on furlough.

Employer takeaways

The decision falls in line with standard contractual principles around the exercise of employer discretion and that, absent any contractual obligation to make commission payments to staff, there remains an implied contractual obligation to act rationally and in good faith when exercising any such discretion.

Gender pay gap & unlawful discrimination

Bayfield and Jenner v Wunderman Thompson (UK) Ltd

With a high published gender pay gap, Wunderman Thompson’s creative director had presented a vision to the advertising agency’s workforce to “obliterate” its reputation for being full of “straight white men”.

Following the presentation, complaints were raised with HR that the presentation had shown a bias against straight white men, and internal misunderstandings and tensions had continued as a result.

Wunderman Thompson subsequently made two creative directors redundant. Both were straight white British men and both had been among those who had complained about the “obliteration” presentation.

Both employees brought various claims to the employment tribunal, arguing that the redundancy selection was an act of sex discrimination with the aim of removing higher paid men to address the gender pay gap.

The tribunal held that while it was acceptable and reasonable for the employer to take action to build a positive reputation and reduce the gender pay gap, in these two specific cases, it was found the reason for the claimants’ dismissals was their sex. The tribunal considered a scenario with hypothetical senior female comparators and decided they would not have been treated in the same way. Indeed, the ET noted that in the days leading up to the claimants’ selection for redundancy, a senior female creative had been ‘saved’ from redundancy for being female, among other grounds.

The ET upheld the claims of unfair dismissal, sex discrimination and victimisation. The claims for  race, age and sexual orientation discrimination, and whistleblowing dismissal, were rejected.

Employer takeaways

With gender pay gap issues more prevalent than ever in the economy and labour market, and with gender pay gap reporting a mandatory requirement for certain employers, organisations are now taking real action to address pay gap issues, but this cannot come at the expense of other areas of discrimination.

This case highlights related discrimination risks for employers when seeking to resolve gender pay gap issues, particularly if the action to address any pay gaps risks unlawfully discriminating against another group or class of individual.

If there is a gender pay gap in your organisation, you should put in place an action plan to address this but be cautious that your action plan does not go so far as to discriminate against one particular sex.

Unfair dismissal

Flynn v Tender Loving Child Care Centre Ltd

The claimant, Ms Flynn, had worked as a team leader in the baby room of the Tender Loving Child Care Centre nursery since September 2008.

One particular individual in Ms Flynn’s team was placed on a performance improvement plan, which was then extended on the basis that there had been some improvement, but there could still be more to improve.

In February 2020, this member of staff approached the claimant’s line manager citing a number of concerns, which included encouraging children to get involved in bullying behaviours, such as teaching them to call names and to kick others.

The nursery’s co-owner talked with other members of staff in the baby room who backed up the allegations.

Ms Flynn attended a disciplinary meeting where she denied the allegations. She was, however, dismissed for misconduct, and she brought a claim of unfair dismissal.

The dismissal was found to be unfair on the basis that the nursery had not conducted a proper investigation into the allegations of harassment and bullying. The nursery had relied on the team member’s written statement of allegation but had failed to put the allegations to Flynn in interviews or the appeal process.

Flynn was awarded £16,984 compensation but this was reduced by the tribunal by 75% to reflect that it was very likely she would still have been dismissed if a fair procedure had been followed.

Employer takeaways

This case is a reminder that even if an employee is alleged to have done something wrong, the dismissal will be unfair if the correct procedure is not followed by the employer. This includes investigating the allegations before any action or decisions are taken; writing to the employee setting out the allegations and inviting them to a disciplinary hearing; during the hearing, allowing the employee the opportunity to put their side forward and to investigate anything additional that the employee raises and allowing the employee to appeal against any disciplinary sanction that you impose.

Legal disclaimer

The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.