November’s Employment Law Digest – case law update

Landmark Supreme Court holiday pay ruling

In Chief Constable of the Police Service of Northern Ireland and another v Agnew and others the Supreme Court considered and clarified a number of important points about holiday pay and claims for holiday pay.

The headlines are:

• Claimants are entitled to claim for underpayment of holiday pay as a series of unlawful deductions and are not limited to the period of 3 months before the presentation of their claims to the Employment Tribunal.
• A relevant series is not necessarily broken by a gap of more than 3 months between such deductions (In Bear Scotland Ltd v Fulton, the Employment Appeal Tribunal had ruled that a gap in a series of deductions of more than 3 months broke the series of deductions, but this is no longer good law).
• There is a series of unlawful deductions where holiday pay is calculated by reference to basic pay rather than normal pay. This series is not broken by a lawful payment of holiday pay if that lawful payment was calculated by reference to basic pay i.e. because the worker concerned did not work overtime in the reference period and so was not in fact underpaid.
• Whether two or more deductions constitutes a series of deductions is a question of fact, and all relevant circumstances must be considered, including, the similarities and differences; the frequency, size and impact of the deductions; how they came to be made and applied; what links them together, and all other relevant circumstances.
• When calculating the daily rate of normal pay, it is not appropriate to use the number of calendar days in a year. It should be a question of fact to consider working days and normal working pay.

My colleague Laura Darnley’s article which goes into greater depth on this landmark ruling is well worth a read and can be accessed here.

Causation for compensation

In McNicholas v 1) Care and Learning Alliance; and 2) Cala Staffbank:

• Ms McNicholas was a teacher and worked at a nursery operated by the Care and Learning Alliance.
• As a result of protected disclosures by Ms McNicholas about practices within the nursery, she was subjected to detriments by both respondents, which included a complaint by both respondents to the General Teaching Council for Scotland (GTCS) about her fitness to teach.
• Ms McNicholas brought a whistleblowing claim on the basis that she had been subjected to detriments as a result of having made protected disclosures.
• The Employment Tribunal (ET) upheld her claim. It found that the complaint to the GTCS was not made by the respondents in good faith. The respondents knew that it was retaliation against Ms McNicholas for her disclosures. The respondents’ true motive for the GTCS referral was to appease the first respondent’s client, Highland Council.
• However, the ET concluded, that a decision by the GTCS to investigate the complaint broke the chain of causation between the detriment of the complaint and Ms McNicholas’ losses. The ET limited the awards made to Ms McNicholas including for future loss, injury to feelings and psychiatric injury to losses which arose prior to the date of the GTCS decision and declined to make any award to the appellant in respect of pension loss or for her legal expenses in defending the GTCS proceedings.

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On appeal, the Employment Appeal Tribunal held that:

• The decision by the GTCS to investigate the allegations was a natural and reasonable consequence of the respondents’ wrongful act in reporting Ms McNicholas to the GTCS. The decision by the GTCS did not break the chain of causation.
• The wrongful act of the respondents remained the effective cause of Ms McNicholas’ loss.
• The case was remitted to back to the ET to reassess the heads of future loss, injury to feelings and psychiatric injury and reconsider the claims for pension loss and legal costs incurred in defending the GTCS proceedings.

Unfair dismissal for use of offensive racist language

In Borg-Neal v Lloyds Banking Group:

• Mr Borg-Neal was a manager and long-standing employee at Lloyds Banking Group with a clean disciplinary record.
• The Bank was rolling out race education training to over 70,000 employees and during a training session, Mr Borg-Neal asked the trainer how he should handle a situation where he heard someone from an ethnic minority use a word that might be considered offensive if used by someone not within that minority. When he did not get an immediate response, he added, “The most common example being the use of the N word in the Black community.” Unfortunately, Mr Borg-Neal used the full word rather than the abbreviation.
• The Bank accepted that the claimant did not intend to cause any hurt, that he asked the question with no malice, and that the question was valid. However, it considered that the claimant should have known better than to use the full word in a professional environment and he should have realised that it could have serious impact, which it did. Although the claimant had apologised immediately and not repeated the word, the trainer had been off work for 4 – 5 days as a result. The Bank dismissed the claimant for these reasons.

Mr Borg-Neal brought claims against the Bank for, among other things, unfair dismissal, discrimination arising from disability and direct race discrimination.

The Employment Tribunal (ET) held:

• The Bank was entirely reasonable to hold the view that (1) the full N word is an appalling word which should always be avoided in a professional environment; and (2) even if no malice was intended and the full word was used not as a term of abuse and not as a descriptor of people, nevertheless, simply hearing it said is likely to be intensely painful and shocking for black people because it may well echo other discriminatory experiences and because of its history and derivation. Indeed white people might also be very uncomfortable if the word is used in their hearing.
• Nevertheless, whether the claimant should have been dismissed for using the word, is a different question from whether he ought to have used the word. The ET noted it suspected the Bank felt that not dismissing the claimant would somehow be condoning use of the word. In many circumstances, that may be true. But in the very unusual and particular circumstances of this case, the ET found that no reasonable employer would have dismissed the claimant.
• The very particular circumstances were that this took place at a race education training session, where the whole purpose was to explore intention vs effect, and for the attendees to learn. The Bank accepted that the question was without malice. The word was not used as a term of abuse towards anyone or to describe anyone. The claimant wanted to learn. He apologised immediately and continued to apologise throughout the disciplinary process. He never used the full word again. There was no evidence that he had ever said or done anything racially discriminatory before.
• If the Bank wanted to make a point, it could have given the claimant a warning and more training. The claimant had been unfairly dismissed.
• The ET upheld one of the disability discrimination claims – that the claimant had been unjustifiably dismissed because of something arising from his disability. The claimant has dyslexia and this can lead him to keep reformulating questions and to ‘spurt’ things out before he loses his train of thought. The ET concluded that his dyslexia was a strong factor causing how he expressed himself at the session, and in his use of the full word rather than finding a means to avoid it.
• The ET rejected the claimant’s race discrimination claim on the basis that it did not believe that any substantial part of the reason for dismissal was that the claimant was white.

If you would like more information about these cases please do get in touch with expert employment lawyer Katie Adams.