When the Court of Appeal gave judgment in R (on the application of E) v The Governing Body of JFS, it was suggested to me that this might be a good topic for the blog. I did not take the opportunity to write about it then because it seemed to me that, like the vast majority of judicial decisions, it was entirely sound and consistent with authority and, being the contrarian that I am, this was uninteresting to me. I could not dispute the reasoning that to favour a boy of Progressive Jewish faith who is of Jewish blood over a boy of Progressive Jewish faith who is not of Jewish blood must necessarily be an example of direct discrimination on the grounds of ethnicity. As was established by James v Eastleigh Borough Council, a potentially benign motive for the discrimination will not prevent a claim from being made out.

However, I have learned that the case is being heard at the Supreme Court this week, exceptionally by a panel of nine judges, a measure of the high public importance which has been attached to it, as is the large number of interveners, many of whom have been involved since the case began in the High Court. Unfortunately, cases raising important issues of policy do not always encourage the consistent application of law and I am now worrying about an interventionist judgment with negative side effects.

It is worth examining the legislative history behind the key issues that arise. There has never been a justification defence for direct race discrimination but employment law has the concept of a Genuine Occupational Requirement, which allows practices that would otherwise be discriminatory if there is a strong enough reason for them. Rather curiously, when Parliament extended discrimination protection to other areas of life, it chose not to introduce a similar defence. In fact, the idea of a Genuine Service Requirement was discussed during the consultation for the Equality Bill but was subsequently rejected.

As a consequence, there are striking and alarming parallels with the infamous situation in Lewisham v Malcolm. Just like Malcolm, this is another case in which discrimination law is being used outside of the employment sphere, in circumstances in which employment law provides a sensible and proportionate defence but the other field in question does not. As in Malcolm, the temptation for the Justices will be to narrow the concept of direct discrimination in order to achieve a desired result, but in a way that will have knock-on effects for employment law, where the policy concerns in this case simply do not arise.

They should resist that temptation. If they feel strongly that a Genuine Service Requirement defence should have been introduced, they are entitled to say so in their judgments. Indeed, the Equality Bill is still passing through Parliament and it is not inconceivable that it will be changed as a result. Ultimately, however, introducing such a defence is a matter for our elected representatives. The Justices must not undermine the decision of James v Eastleigh Borough Council to resolve a narrow issue in a hard case.

I have one final thought. The central argument of the school is that its admission policy should be lawful because it is following the requirements of Jewish law. The implication is that English law should bend in order to accomodate it. Imagine the outrage if a similar argument were to be used about Sharia law.

According to Judge Peter Clark in the Employment Appeal Tribunal, in Allen v Murdoch, the statutory disciplinary and dismissal procedures apply to claims for redundancy payments and for pay in lieu of accrued holiday arising on termination and, therefore, there is no need for a grievance to be raised in respect of these matters. This result would have knock-on effects for time limits and would be highly significant for other cases were it not for the fact that the statutory procedures have been abolished.

Nevertheless, the reasoning in this case is worth closer examination. It is based on regulation 6(5) of the Dispute Resolution Regulations which state that the grievance procedures do not apply when the complaint is about having been dismissed. It is easy to see how a claim for a redundancy payment is a complaint about having been dismissed, as is a claim for notice pay, but it is harder to see how this is the case for accrued holiday pay, where surely the complaint is about not having received holiday pay.

This is a straightforward matter of causation, the issue being the reason for which the compensation is being claimed. Notice pay is compensation for having been wrongfully dismissed and redundancy pay is compensation for having been made redundant but holiday pay on termination is compensation for not having been able to take annual leave during the employment, and not for the dismissal itself. This is significant for tax purposes because there is a tax-free allowance of £30,000 for payments resulting from the termination of employment, with the effect that redundancy payments and payments in lieu of notice are often made gross. Some tribunals also award holiday pay gross but it is submitted that this is an error for the reasons stated above. Holiday pay is analogous to wages in that a tribunal can order it to be paid through payroll, with the appropriate deductions made, but cannot order it to be paid directly to an employee without deductions, as this would give the employee a windfall and would provide an incentive not to take any leave, completely contrary to the intention of the Working Time Regulations.

This is the week where everyone is talking about the BNP. The appearance by Nick Griffin on Question Time yesterday came shortly after he finally conceded the need to change a constitution which restricts membership on racial grounds. Frustratingly, the media coverage has not analysed the relevant law which is not as straightforward as it seems and so it is worth giving some thought to this tricky issue.

The Equality and Human Rights Commission, which used its powers to bring the case, provided the best summary of issues in its letter before claim. What is clear is that there is no express provision in the Race Relations Act for political parties. Rather, they have been found to qualify as associations covered by section 25 of the Act, in the House of Lords case of Watt (formerly Carter) v Ahsan. Incidentally, this was a case brought against the Labour Party and funded by the Commission for Racial Equality, now part of the EHRC, so the suggestion by Nick Griffin that his party has been singled out is simply untrue.

However, the Race Relations Act provides a special defence to a section 25 claim for associations set up for the benefit of people of a particular racial group. It seems that the BNP was attempting to bring itself within this exception. One of the less-trumpeted consequences of the new Equality Bill is that this defence is being abolished with the consequence that, even if the BNP had been successful in arguing the point, it would have been futile. This is why Nick Griffin is reported to have made the concession.

In case you think I have forgotten that this is an employment law blog, there is a point to be made in that area as well. Application forms for jobs with the BNP ask candidates to supply their membership numbers, implying that only party members can be employed. This has the effect that employees are also selected on the basis of their race, which is undoubtedly unlawful. The BNP would have had more chance of succeeding if it had tried to defend its membership rules without this additional problem. On the other hand, a requirement that employees be members is probably lawful so long as membership is not restricted on the grounds of race. Ironically, to defend this practice, the BNP would have to assert that membership does not constitute a philosophical belief for the purposes of the Religion or Belief Regulations, where previously they have said that it is. Still, the BNP seems unworried by incoherence.

The case of Autoclenz v Belcher is the last in a long series which caused a lot of confusion but resulted in the law being in much the same position it was in when the confusion began. The story starts with the case of Consistent Group v Kalwak in the Employment Appeal Tribunal in May 2007, in which President Elias stated the seemingly uncontroversial proposition that tribunals should examine the reality of the situation to see whether an employment relationship is perceived in the way that the contract suggests.

The tribunal in Autoclenz gave judgment On 1st March 2008, relying expressly upon Kalwak. On 28th April, President Elias employed similar reasoning in Protectacoat Firthglow v Szilagyi. Just a day later, everything was suddenly changed by the decision of the Court of Appeal in Kalwak in which the appeal was allowed, primarily on the basis of inadequate reasons, but Lord Justice Rimer also criticised the reasoning of the Employment Appeal Tribunal, and relied on the comments of Lord Diplock of Snook v London and West Riding Investment as authority for the proposition that, in order for there to be a finding that a contract is sham, there must be an intention to deceive a third party as to the nature of the relationship and it is insufficient that the parties understood it differently from the written contract.

On 4th June, Autoclenz reached the Employment Appeal Tribunal. Judge Peter Clark followed the Court of Appeal in Kalwak and allowed an appeal against the finding that the claimants were employees of the respondent, on the grounds that no Snook sham had been identified. However, he dismissed an appeal against the finding that they were workers. Autoclenz appealed this finding to the Court of Appeal which they are probably now regretting as it then allowed Belcher and his colleagues, who it appears were not intending to appeal, to put in a late cross-appeal regarding the finding that they were not employees.

The tide began to turn on 10th October 2008 with the case of Redrow Homes v Buckborough in the Employment Appeal Tribunal, in which Judge Burke noted that the House of Lords had used a different definition of a sham in Street v Mountford and this had come into employment law in Echo and Express Publications v Tanton. He suggested that there is no conflict between the the two approaches in Kalwak and that of Lord Justice Rimer was, in any event, obiter, given his other finding of inadequate reasons.

The extent to which all these decisions can really be reconciled is questionable. However, what is surely true is that the Street v Mountford definition is preferable to a narrow reading of the Snook definition. In the context of a situation in which an employer has a dominant bargaining position and the employee is being deceived as much as any third party, it is absurd to require that he or she also takes part in that deception. Indeed, it could be argued that tribunals should be much less sympathetic to workers who do willingly enter into sham contracts as they are likely to be tainted by illegality in most instances.

Orthodoxy has been restored in 2009, firstly when Szilagyi reached the Court of Appeal in February and now with the decision this week. Lady Justice Smith and Lord Justice Sedley gave judgment in both cases, agreeing with Judge Burke that there is no conflict but suggesting euphemistically that the formulation of Justice Elias may be of more assistance to employment judges than that of Lord Justice Rimer. There is no appeal in Redrow Homes so that should hopefully be an end to the matter for a few years at least.

The case of Ministry of Defence v Fletcher got a great deal of media attention at first instance (see for example here), mainly because the claimant was a female soldier who was awarded £186,895.52 for sexual harassment and victimisation. Of this, £100,000 represented injury to feelings, including £30,000 for the upper band of Vento adjusted for inflation, £20,000 for aggravated damages, and £50,000 for exemplary damages. It comes as absolutely no surprise that the Ministry of Defence decided to appeal.

There was no dispute that exemplary damages can be awarded in discrimination cases but only in two situations, the relevant one here being “oppressive, arbitrary or unconstitutional action by servants of government.” It has been established that they must only be awarded in exceptional circumstances where the wrongdoing is conscious and contumelious. In this case, the Ministry of Defence had been heavily criticised for its systematic failure to provide redress for the complaints of Ms. Fletcher but this was not considered to be serious enough by the Employment Appeal Tribunal to justify such an award.

There were two interesting obiter remarks by Justice Slade. Firstly, she rejected an alternative ground of appeal that systematic failures could not be taken into account because they had not been pleaded. She stated that “remedy is at large” and anything can be taken into account so long as findings of fact have been made. She also said that, even if exemplary damages had been appropriate, they would have been reduced to £7,500. An award of £50,000 is considered to be the maximum for cases of wrongful arrest and false imprisonment and a failure to provide redress is quite simply not comparable.

Although Ms. Fletcher was undoubtedly treated appallingly, this decision is equally undoubtedly correct. As noted elsewhere in the judgment, £50,000 is a typical award for moderate brain injury or for severe post-traumatic stress disorder and so £100,000 for injury to feelings is excessive. In any event, even allowing for the aggravated damages being reduced to £8,000 and a substantial reduction of interest as a result, the overall compensation will remain in six figures despite a total reduction of around £70,000.

I had the pleasure of attending the Employment Appeal Tribunal as an observer yesterday in the case of Grainger v Nicholson, which I previously discussed here. As a result, I am now much less confident of the views which I had then. John Bowers QC, for the appellant employer, argued that the definition of a religious or philosophical belief in employment law must be much narrower than the definition of a religion or belief under Article 9 of the European Convention of Human Rights, which considers a belief in the efficacy of smacking children to qualify for protection. Otherwise, he argued, it would open a floodgate of claims and could potentially also give undeserved protection to the British National Party.

Dinah Rose QC, who represented Mr. Nicholson, countered that the wording of the Religion or Belief Regulations, and the Framework Directive which they implement, makes it clear that the test should be just as wide as it is for Article 9. So, she said, do the comments of Baroness Scotland, sponsoring the bill, in Hansard. This approach is also supported by Justice Elias, as he then was, in Eweida v British Airways (see paragraphs 26-27). The British National Party may nevertheless not easily be protected, as a result of Article 17 of the Convention, which prevents it being used to limit the rights of others.

Because the belief of Mr. Nicholson includes a moral imperative to act to prevent climate change, it is easier to see it as a philosophical belief instead of a scientific theory unlike, say, Darwinism. However, Dinah Rose went on to argue that even Darwinism should be protected. Otherwise, a teacher could be dismissed for a belief in Darwinism but not for belief in creationism. Because a belief in Darwinism is not the same as a non-belief in creationism, it would not always be protected in that way. Leaving aside the fact that modern creationists say that Intelligent Design is itself a scientific theory, this presents a real problem. I have personally been struggling to resolve this matter in a way that I find satisfactory, as neither Darwinism qualifying as a religion nor going without any protection is particularly attractive.

Fortunately perhaps for Justice Burton, he does not have to decide this issue, only the one concerning the environmental beliefs of Mr. Nicholson. He has reserved his judgment and so I shall say no more.

There has been an interesting recent judgment from the Court of Appeal, reversing the decision of the Employment Appeal Tribunal in Oakland v Wellswood (the link is to the now overruled judgment). The case is unusual because the insolvency issue did not arise in the context of an employee who had been made redundant immediately afterwards but rather someone who had been transferred to a new company but then dismissed less than a year later. Therefore, the question which arose was whether service with the old company could be taken into account in considering his continuity of employment.

Because of these facts, the Court of Appeal did not need to consider TUPE at all in making its decision. As a result of section 218(2) of the Employment Rights Act 1996, continuity of employment is preserved where there is a transfer from one employer to another, whether or not TUPE applies. Therefore, there was jurisdiction for a claim of unfair dismissal and it did not matter that the point was not argued below.

Nevertheless, the obiter comments of their Lord Justices may prove to be more significant. By virtue of regulation 8(7) of TUPE, the regulations do not apply to insolvency proceedings instituted with a view to liquidation of the assets of a company. Judge Peter Clark at the EAT concluded that this includes “pre-pack” administrations where an administrator is appointed solely for the purpose of selling the company assets to a new company before liquidation is commenced. This would seem to be an easy way to avoid the effects of TUPE and, with respect to Judge Clark, it does not really promote a rescue culture because of the frequency with which pre-packs are used by owners to sell businesses to themselves.

In any event, the Court of Appeal doubted that regulation 8(7) would apply in these circumstances and, although it was not necessary to resolve the case, it is likely that their approach will be followed in the future. As usual, I shall be posting a link to the judgment on this blog as soon as it is published online.

The Employment Appeal Tribunal case of Henderson v Connect (South Tyneside) is not very likely to be reported as there is not much new law in it. However, it is a nice example of a judgment which provides a useful survey of the existing authorities, in an area in which many of them are quite old and not all of them are particularly clear. It concerns the tricky issues that arise when an employer sacks someone at the behest of a client, especially if the client does not have good grounds for making such a demand.

The background is the seminal case of Devis v Atkins, which established that the fairness of a dismissal does not depend on justice being done. A dismissal can be unfair even where justice is done (although it may be equitable to reduce the compensation awarded) but, conversely, a dismissal can be fair notwithstanding the fact that there is injustice, such as when the employer has a reasonable belief in the guilt of an employee who is, in fact, innocent. The issue is whether the employer acted reasonably.

It follows that, if a third party has a contract with an employer which gives it a veto on who carries out work for it, and the employer does everything possible to mitigate the effects of such a decision, a dismissal will be fair. So said the Court of Appeal in Dobie v Burns. Unfortunately, however, the Court of Appeal did not quite say this but rather it said that the injustice to the employee must be taken into account when considering the fairness of the dismissal and it appeared to distinguish Devis in this respect. This is ambiguous. Although it seems to have always been interpreted in accordance with the first sentence of this paragraph, which is also supported by the EAT decision in the same case, there is another possible interpretation, which is that a dismissal which results in injustice to an employee can be unfair even in circumstances where the employer has done everything that can be done to avoid it.

Henderson rejects the latter approach although, strictly speaking, it does not rule upon the matter because it was not argued before it. In any event, there is another point from Dobie v Burns which does remain outstanding, which is the suggestion of the EAT that, where a employer has a client with a right of veto, this right should be expressly incorporated into the contracts of its employees or else a dismissal might be rendered unfair. This is something which does go directly to the reasonableness of the actions of the employer and so it could be something which tribunals will want to take into account.