Watson v University of Strathclyde

Case Round Up

In this month’s E-news we look at the importance of considering bias in internal hearings, cutting employee’s pay and the importance of correctly describing ‘ex gratia’ payments.

Apparent bias in appeal hearing breached trust and confidence

The case of Watson v University of Strathclyde illustrates the importance of employers ensuring that employees are provided with a fair hearing at all stages of the grievance process including any appeal, with proper consideration given to the membership of any panel to ensure objectivity and impartiality.

Ms Watson worked as a publications officer in the University’s Marketing and Communications Office. A new Director of Marketing and Communications, Mr Taylor, was appointed and he became Ms Watson’s line manager. The decision to appoint Mr Taylor was made by an Appointing Committee of which a Dr West was a member and who was also considered to be a powerful figure within the University Ms Watson filed a grievance complaining about her working relationship with Mr Taylor. These concerns were heightened after Mr Taylor was convicted of a breach of the peace outside work. Although Mr Taylor offered to resign as a result of his conviction, Dr West decided that this was not necessary and that his behaviour did not impact on his continued employment. Ms Watson’s grievance was not upheld and she appealed that decision. Ms Watson objected to the makeup of the appeal panel as it included Dr West and she stated she would not attend the appeal if he was on the panel.

A number of Dr West’s decisions and the relationship Mr Taylor had with Dr West were core issues in her grievance and Ms Watson felt intimidated by the prospect of confronting Dr West with these. The appeal panel, without Dr West present, decided that there was no conflict of interest and subsequently, with Dr West present, rejected the appeal. Ms Watson resigned and claimed constructive unfair dismissal.

The case concluded in the Employment Appeal Tribunal. The EAT determined that the facts showed that the inclusion of Dr West on the appeal panel rendered the procedure unfair. The EAT determined that the employee’s concerns were legitimate because the appeal panel was tainted with apparent bias. The EAT concluded the employer had failed to address Ms Watson’s concerns about the composition of the panel and its failure meant it was reasonable for Ms Watson to conclude that the University was in breach of the fundamental duty of trust and confidence. The EAT found that the test to be applied was whether a fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the panel was biased. Although the EAT did not suggest that an employer setting up a grievance appeal panel is routinely required to consider whether or not there is “apparent bias” in the panel, any reasonable employer must have regard to the need to afford an employee a fair hearing throughout the process, including at the appeal stage.

The case is a useful reminder about the rules of natural justice applying to internal employment hearings. It is important that employers do carefully consider matters when allegations of bias are made and be alert to instances of bias generally such as when a member of staff involved in a case is known to have expressed views that might lead the employee to be believe they would not approach the situation with an open mind.

Cutting Employee’s pay – when is it fair?

The economic situation has resulted in many employers having to take austerity measures including cutting pay. In a recent case Garside and Laycok v Booth, the Employment Appeal Tribunal had to consider whether it was fair to dismiss an employee who, following consultation had refused to accept a pay cut. The employer had sought consent from the employee to take a 5% pay cut. There was a wide consultation and a ballot exercised of individual employees. Mr Booth was one of two employees out of 77 who rejected the proposals. Following three meetings with him and an offer to review his pay after six months he continued to refuse the new terms. He was dismissed for some other substantial reason and offered reengagement on new pay terms which he did not accept. He was successful at the Employment Tribunal that he had been unfairly dismissed. However, the Employment Appeal Tribunal allowed the company’s appeal and said that it was not necessary for a contractual change to be crucial to a company’s survival for the dismissal to be fair.

The decision is a useful one for employers as it provides some comfort for those who wish to bring about financial savings. However, an employer wishing to change employment contracts will still need to show that it has considered a number of options, has consulted fully, and has acted fairly in dismissing any employees who reject the changes.

The meaning of ex gratia

A recent case, Publicists Consultants UK Limited v O’Farrell is a useful reminder that employers need to take care when describing termination payments in letters or compromise agreements. In this case the employee was dismissed on less than her contractual notice period of three months. She received a severance package including a payment that the termination letter described as an ex gratia payment equivalent to three months salary. Her contract did not include a right to pay in lieu of notice. She claimed she was also entitled to notice pay as under her contract she was entitled to three months’ notice.

Her employer argued that the ex gratia payment was her notice pay. However, the Employment Appeal Tribunal agreed with Ms O’Farrell and ordered her employer to pay her three months’ notice.

The case is a simple reminder to employers that they should take care when drafting as the Courts and Tribunals will not give them the benefit of the doubt. The term “ex gratia” should only be applied where the employer intends to make a payment as a “gift” which it is otherwise under no obligation to make or where the employer has protected itself with a compromise agreement.

IN THE NEWS

The Tribunal Service has published quarterly statistics for 1 January – 31 March 2011. The figures show a 51% increase in claims to Employment Tribunals compared to the same quarter of last year and means that further delays to Tribunal claims are inevitable.

The Government has announced new areas that it will consider reforming as part of its review of employment red tape. This will include a review of collective redundancy consultation periods, TUPE regulations and compensation for discrimination claims. Employment Relations Minister, Edward Davey, said “The areas we are reviewing are priorities for employers. We want to make it easier for businesses to take on staff and grow.” We will keep you informed.


Disclaimer

This briefing is for guidance purposes only. RadcliffesLeBrasseur accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.