Employment case law update | Winter 2023

Here we take a quick look at some key employment case law decisions from recent months.

Reasonable adjustments – Hilaire v Luton Borough Council [2022] EAT 166 

In this case, the Employment Appeal Tribunal (“EAT”) considered whether the duty to make reasonable adjustments was triggered where a disabled employee refused to participate in an interview which formed part of a redundancy process.

S20(3) of the Equality Act 2010 states that where a “provision, criterion or practice” (known as a PCP) puts a disabled person at a substantial disadvantage, then the employer is required to take such steps as are reasonable to take to avoid the disadvantage – this is known as the duty to make reasonable adjustments.

Mr Hilaire suffered from depression and arthritis. As part of a redundancy process, he was asked to apply and interview for a role in the proposed new structure. Being aware of his ill health, the employer gave him extra time and support to complete his application, however he refused to attend an interview and was later dismissed for redundancy.

He challenged the decision bringing a number of claims, one being that the requirement to interview was a decision, which placed him at a substantial disadvantage thereby triggering the duty to make reasonable adjustments – which he alleged that they failed to do. Initially, the tribunal rejected his claim.

Mr Hilaire appealed and the EAT found that the tribunal had made an error by failing to consider how his disability might impact on his ability to participate in (not just attend) the interview.

However, because Mr Hilaire had sent an email which said “even if I wasn’t off sick with work related stress, causing depression, I still would not have attended this interview” the EAT found that the actual reason why he refused to attend the interview was nothing to do with his disability, but because he had lost confidence in the business and felt that the process was a sham.

Because of this, his decision not to participate in the interview had nothing to do with being disabled or facing a substantial disadvantage, therefore the duty to make reasonable adjustments was not triggered. His reasonable adjustments claim therefore failed.

The EAT went on to say that i) any necessary adjustments must avoid the disadvantage and ii) a reasonable adjustment is not a mechanism to give an advantage “over and above” that of trying to remove the particular disadvantage.

What does it mean for employers?

If your business is faced with a situation where a PCP is alleged to put a disabled employee at a substantial disadvantage, then consider the following points:

• Does the PCP put the disabled employee at a substantial disadvantage? (This is anything more than minor or trivial and is often a low bar to be reached).
• Is the employee’s inability to follow or meet the PCP caused by that disadvantage?
• If the duty to make reasonable adjustments is then triggered, can the business discount any adjustments that actually would not alleviate the disadvantage raised?
• Even if a step could alleviate the disadvantage then it still must be objectively reasonable. If it goes further and puts the disabled employee at an advantage over and above alleviating the disadvantage (like just slotting Mr Hilaire into a role without an interview in this case) then it is unlikely to be reasonable.

Redundancy and a pool of one – Teixeira v Zaika Restaurant Ltd and another [2022] EAT 171

In the recent case of Teixeira v Zaika Restaurant Ltd, the Employment Appeal Tribunal (“EAT”) overturned an employment tribunal’s finding that the employee’s compensation should have been reduced to nil because it considered it highly likely that he would have been dismissed in any event.

Mr Teixeira worked as a tandoor chef in an Indian restaurant. He was part of a team of 10 chefs, but was the least experienced member of the team. Unlike his colleagues, he did not hold a ‘speciality chef’ position, did not run a department, had less continuous service and although there was another tandoor chef employed in the restaurant, Mr Teixeira was the more junior.

The COVID-19 pandemic caused a downturn in work at the restaurant. Without warning or consultation, Mr Teixeira was told that he was redundant and was dismissed. He was the only chef made redundant. He pursued a claim for unfair dismissal.

The employment tribunal found that he had been unfairly dismissed. There was a clear lack of any fair procedure prior to the dismissal. However, when assessing the amount of compensation to award Mr Teixeira, the employment tribunal decided to reduce any compensation down to nil, on the basis that it was not unreasonable to conclude that Mr Teixeira would have been placed in a pool of one, meaning that he would have been dismissed in any event, even if a fair procedure had been followed.

Mr Teixeira appealed to the EAT. On consideration of the appeal, the EAT concluded that even if Mr Teixeira had been reasonably placed into a pool of one, this did not always mean that the dismissal would have taken place, or at least taken place when it did. If there had been warning of dismissal followed by consultation, there was still a possibility of a different outcome other than dismissal. Consultation could have led to a wider selection pool, a different selection criteria or an altogether different outcome.

Additionally, the EAT indicated that even if Mr Teixeira’s dismissal was inevitable, his actual dismissal would have been delayed for as long as it would have taken to conduct meaningful consultation, meaning that he should at least have received compensation in terms of lost pay for that period of time.

What does it mean for employers?

The case serves as a helpful reminder that employers must take fair and appropriate steps in every redundancy situation to ensure that a fair process is followed. Employees should always be warned that their roles are at risk and meaningful consultation should, in almost every case, be undertaken with affected employees or else there is a risk of not only a finding that any dismissal will be unfair, but also risk of employees recovering compensation.

Settlement agreements – Bathgate v Technip UK Ltd [2022] EAT 155

The binding decision of the Employment Appeal Tribunal (“EAT”) has held that a settlement agreement cannot waive future employment claims that have not arisen at the date the agreement was signed. Let’s look at what this means in practice.

For background context, it is important to remember that certain employment-related claims cannot be waived, contracted out of or settled, except through Acas conciliation, or a validly binding settlement agreement.

Settlement agreements (previously called compromise agreements) are a really effective tool used in many different employment scenarios. For a settlement agreement to be valid, it must (amongst several other factors) be in writing and relate to a “particular complaint” or legal proceedings.

The second point is of key relevance to this decision. In this case, Mr Bathgate took voluntary enhanced redundancy and signed a settlement agreement on 31 January 2017. His employer agreed to make enhanced payments in return for settling all claims.

One of the payments was (for some unknown reason) not calculated at the point the agreement was signed, but stated to be calculated by reference to a Collective Agreement. That agreement however only applied to staff under the age of 61. Mr Bathgate was aged 61 when the agreement was signed, but was under the impression that he would receive the payment anyway.

His employer ultimately decided that it was not going to make this payment to him because of this age limit. In response, Mr Bathgate brought a claim arguing that the decision not to make the payment amounted to age discrimination. The tribunal initially held that he could not proceed with his claim because he had waived any age discrimination claims under the settlement agreement. Mr Bathgate appealed.

The EAT disagreed with the original tribunal decision, holding that Mr Bathgate had waived his right to sue for age discrimination before he knew whether he had a claim or not. The EAT therefore decided that, in accordance with the relevant legislation, settlement agreements could not settle future claims that have not arisen at the date of the original agreement.

What does it mean for employers?

There has often been doubt about whether settlement agreements can waive claims relating to future events that have not yet taken place. In this case, the EAT’s decision is different from what had been previously understood from the case law. It is therefore important for businesses to be aware of the risk of future litigation on the scope of the waiver. For employers offering such agreements, it is key to take advice on the specific circumstances and ensure that the particular claims are identified. Similarly, if your business is using a template agreement it would also be beneficial to have this reviewed and updated.

Settlement agreements – Arvunescu v Quick Release (Automotive) Ltd [2022] EWCA Civ 1600

Mr Arvunescu worked for Quick Release (Automotive) Ltd (“QRA”) from May to June 2014. On termination of his employment he pursued a race discrimination claim against QRA in the employment tribunal. This claim was settled in March 2018 by a COT3 agreement negotiated via Acas.

The terms of the COT3 settlement agreement included wording that purported to settle claims against QRA that arose “directly or indirectly out of or in connection with” Mr Arvunescu’s employment.

In May 2018 Mr Arvunescu brought a second claim against QRA, alleging that it had victimised him for pursuing his earlier claim. He alleged that he had applied for new employment with a German subsidiary of QRA, but that his employment had been rejected because this subsidiary was made aware of his previous claim against QRA.

The employment tribunal dismissed his claim, finding that the claim against QRA had been settled by the wording of the COT3 agreement. Mr Arvunescu appealed to the Employment Appeal Tribunal but it also found that the claim was settled by the COT3. Mr Arvunescu appealed to the Court of Appeal.

The Court of Appeal dismissed his appeal. The court found that Mr Arvunescu’s claim was caught by the COT3 wording. The court considered that, while the claim did not arise “directly or indirectly” out of Mr Arvunescu’s previous employment with QRA, it certainly arose “indirectly in connection with it”. The court concluded that to determine the claim and make judgment, it would need to consider whether the reason for refusing Mr Arvunescu’s application for the job was the fact that he had previously brought a claim against QRA. On this basis, the court concluded that the current claim was indirectly connected or linked to Mr Arvunescu’s previous employment.

What does it mean for employers?

The case provides clarity that potential claims that are based on events that have occurred at the point when the COT3 settlement is reached, can be settled by that agreement provided the wording is drafted appropriately. This contrasts with the Bathgate decision above, where the future claim related to facts, which had not occurred before the settlement agreement was signed.

Employers are advised to always ensure that the written terms of the settlement are carefully drafted in order to reduce the risk of future claims.