Pulling the trigger – sickness absence warnings and disability discrimination

We consider the recent case of DL Insurance Services Ltd v Mrs S O’Connor, and what employers should consider when looking at disciplining employees for sickness absence levels.

Mrs O’Connor (Mrs O), who was disabled under the Equality Act 2010, had numerous absences over the years from her job with DL Insurance Services Ltd (DL). In previous years, Mrs O’s absences had exceeded the trigger points in DL’s sickness absence policy, but no disciplinary action had been taken against her. However, she was eventually given a 12 month written warning for sickness absence as her absences (almost all of which were disability related) exceeded the trigger points by a factor of 6. At the point when she was invited to the disciplinary hearing, Mrs O’s absences totalled 60 days.

DL’s policy provided guidance to managers as to when they should make a referral to occupational health, and said that they should get medical advice before taking disciplinary action. However, although the disciplining manager discussed the matter with HR, she did not refer Mrs O to occupational health until after the warning had been issued.

Mrs O appealed the warning, but her appeal was dismissed. She then brought claims in the Employment Tribunal (ET) for disability discrimination, arguing that she had been treated unfavourably because of ‘something arising in consequence of her disability’ (contrary to s15 of the Equality Act) and that DL couldn’t show that the treatment was a proportionate means of achieving a legitimate aim.

DL argued that its treatment of Mrs O could be justified as a proportionate means of achieving the legitimate aim of ensuring adequate attendance levels. In deciding whether the treatment was proportionate, the ET took various factors into account, including that:

  • disciplinary action had not previously been taken against Mrs O, even though her absences had exceeded DL’s trigger points in past years
  • DL’s policy required managers to obtain medical advice before taking disciplinary action. DL hadn’t done this, and medical advice may have indicated that an adjustment, such as a change to Mrs O’s role, could have improved her attendance levels
  • DL could not explain how they considered a written warning would improve Mrs O’s absences, when they accepted that her absences were genuine and disability related.
  • the consequences of the warning for Mrs O included financial hardship as her sick pay was suspended during the warning and she was coming into work when she was not fit to do so as she couldn’t afford to lose pay

The ET found that DL’s conduct was not proportionate, and they had not justified the treatment. Had they obtained medical advice, they may have been able to justify their actions, depending on the advice. Mrs O’s claim was upheld in respect of the written warning, which had been imposed because of her disability related sickness absence.

DL appealed the decision to the Employment Appeal Tribunal (EAT). Whilst the EAT acknowledged that DL had treated Mrs O with sensitivity and sympathy, and had allowed her to have a much longer period of absence than their policy would have allowed, the appeal was dismissed.

The EAT noted that the disciplining manager had not discussed with Mrs O’ line manager what the impact of her absence was on the team and on service levels, before taking disciplinary action.

Whilst DL had argued that the ET had placed too much weight on its failure to follow its own policy, the EAT found that DL had not produced specific evidence to show that their actions were a proportionate means of achieving a legitimate aim, and that might have been because they failed to follow their policy.

Take away points

Employers should be prepared to consider adjusting their absence policies in cases of disability related absences, for example, relaxing the trigger points for formal action being taken. That said, it is not always appropriate to stray from the policy, for example, if the policy says that medical advice should be obtained before disciplinary action is taken, and this doesn’t happen, employers may struggle to justify their actions. Each employee’s circumstances should be considered, and up to date medical advice obtained where relevant. It is also important to consider how, or whether, disciplinary action will achieve your objectives, and you may need to consider other options such as adjustments to an employee’s role. If in doubt, it is always best to take advice – we have years of experience of advising on ill-health and disability issues and would be happy to help.

If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.

 

Pimlico Plumbers – is it a game changer?

On 13 June the Supreme Court announced its long-awaited judgment in the Pimlico Plumbers case, and the decision received a huge amount of coverage, with the media describing it as a ‘landmark’ case, especially for the gig economy. Are they right that the case could have far-reaching implications for business?

Any Supreme Court decision is of course legally binding on all the courts and Tribunals below, and so it is important to pay attention to what they have to say. However, I am far from convinced that the judgment is as significant as the media would have us believe.

Our previous article on the Court of Appeal’s decision in the case earlier this year can be found here.

The case concerned Mr Smith, who had worked for Pimlico Plumbers for nearly 6 years. He was engaged on a self-employed basis and had registered himself as such with HMRC, as well as registering for VAT. He rented a van from the company, was required to wear their uniform, and worked a 40 hour week for them. When he had a heart attack in 2011 and tried to reduce his working hours, the company refused, and he brought claims against them for unfair dismissal, wrongful dismissal, holiday pay, unlawful deductions from wages and disability discrimination.

In order to pursue claims for unfair or wrongful dismissal in an Employment Tribunal, an individual has to have been an employee. Mr Smith did not succeed in showing employment status. However, for his other claims he only had to show ‘worker’ status, and this was upheld through each stage of the case, including by the Supreme Court.

As we have covered previously in our articles about the Uber case, the definition of a ‘worker’ is where someone “undertakes to… perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.”

In the Pimlico case, the Supreme Court scrutinised the terms of the agreement between Mr Smith and Pimlico, and also the way that the arrangement operated in practice. The judgment focused on two main areas: personal service, and whether the company could be seen as his client or customer.

In considering the question of personal service, they found that Mr Smith was not necessarily required to carry out the work personally, but his right to send someone to do the work on his behalf was limited to other Pimlico plumbers. They concluded that this was not sufficient to negate the fact that the “dominant feature” of Mr Smith’s contract with Pimlico was an obligation of personal performance. Factors such as the requirement for him to wear the uniform, be tracked in his company van and carry the company ID card all strongly suggested that he had to fulfil the contract personally.

As to whether Pimlico could be seen as Mr Smith’s client or customer, the Supreme Court found that although the contract stated that there was no obligation on Pimlico to offer work or on Mr Smith to accept, in practice if the company did have work to offer to Mr Smith then they were obliged to do so. Therefore the Employment Tribunal was entitled to conclude that Mr Smith was a worker rather than Pimlico being his client or customer.

So bearing all that in mind, why is it my feeling that the case isn’t a “landmark decision”? There are two main reasons: (a) because the case did not really establish anything that we didn’t already know, but also (b) because cases like these can only be decided on their own particular facts.

Looking at (a), there has been a clear ‘direction of travel’ in all of the recent employment status cases, as we have covered in our previous articles, and many commentators were surprised that the Supreme Court even agreed to hear the appeal, bearing in mind how clear the issues were made in the Court of Appeal’s decision. It was highly unlikely that the Supreme Court would have gone against the tide.

In terms of (b), a case like this can only be decided based on the particular circumstances, which includes things like the specific wording of the agreement between the parties as well as the witness evidence. No other case will have the same set of facts, so it will be relatively unusual for direct lessons to be learned. I think the main point to take from the Pimlico case (and the other recent employment status cases such as Uber) is how willing the courts are to find worker status in appropriate circumstances.

Ironically, it seems that where the case could be most significant is in a non-legal sense. Because it has been so widely reported, it has shone a spotlight onto employment status issues, and we have already had a number of enquiries from employers and employees about where they stand. Now is a very good time to get a ‘health check’ on any self-employed arrangements, so as to assess the risk that they may actually have worker status. We are happy to help with that – do get in touch.

If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.

 

Repayment of training costs – is it legal?

Having a well trained workforce is in everyone’s interest – the employers, the employees, and for the good of the economy as a whole. Employers have long invested considerable sums on training their workforces, but as the cost of training courses rises, and as employees tend to move jobs more often than in the past, many employers are reluctant to invest large sums in training employees who may then move on and possibly let a competitor benefit from the skills the employee has gained. One way of reducing the risk of employees leaving soon after they have been on courses, or at least to reduce the financial cost of them leaving, is to require the employee to repay some or all of the training costs to the employer.

We are frequently asked to draft this type of agreement for employers, and are often asked by employees whether they are enforceable. As usual, the answer to the question of whether the agreement is enforceable is that it will depend on the circumstances, and on how well the agreement has been drafted. The enforceability of an agreement to repay training costs can really be challenged on two legal bases: first because they are a penalty clause, and second because they are in restraint of trade. I will look at each of these in turn.

Penalty Clause

In law, a provision that a party to a contract has to pay the other party to the contract a stipulated amount in the event of specified event, for example a breach of contract or an employee leaving their employment, will only be enforceable if the amount that the party has to pay is a genuine pre-estimate of the other party’s loss. In terms of the effect of this doctrine on an agreement for the repayment of training costs, it will be for the employer to show that the amount they are asking the employee to repay is a genuine pre-estimate of their loss.

For example, if an employer sends someone on a course which costs the employer £2,000, and the employee leaves their employment immediately after the course finishes, then the employer has received no benefit from their investment and, with a properly drafted agreement in place, could legitimately recover the £2,000. If however, the employee left their employment after say 3 years, then clearly the employer has had the benefit of the training for 3 years, so if they sought to recover the £2,000 then that would be unenforceable as it would not reflect the employer’s loss. It would also be likely to be unenforceable as being in restraint of trade and we will look at that below. If, however, the agreement is properly drafted, then the employer will normally be able to recover a proportion of the cost on a scale which reduces over time so that after, say, 1 year from the course finishing they would have to repay 50%, and after 2 years nothing. The figures in the sliding scale will depend on the costs involved, and this is something we can advise on when drafting agreements.

In some cases employers seek to recover costs for “on the job” training, and this is far harder for them to quantify the cost of this. It has been reported that some large firms, such as Capita and FDM, are putting some employees through training schemes which cost very little, but which the firm is requiring people leaving their employment after completing the courses to repay much larger sums, reportedly up to £18,500. On the face of it this would be a penalty clause, and also in restraint of trade, and therefore would be illegal and unenforceable. We understand that a legal challenge to these types of clauses is being launched.

Restraint of Trade

As stated above, the other basis on which a repayment of training costs provision may be unenforceable is if it is in restraint of trade. The courts will permit employers to protect their legitimate business interests by, for example, enforcing well drafted and reasonable post-employment restrictions, but they will not allow employers to unreasonably prevent an employee changing their employment if they wish. Training course repayment provisions, even where they are a genuine pre-estimate of loss, can still be void as being in restraint of trade if the effect of them is to prevent the employee changing job. Certainly, it seems likely that the sorts of provisions reportedly put in place by the likes of Capita would have the effect of preventing employees leaving their employment, so may well be held to be unenforceable.

If you need help in drafting training repayment agreements, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.

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