When is travelling time working time? And when does working time not earn the minimum wage?

September 14th, 2015 by Harini Iyengar

The European Court of Justice (“the ECJ”) has now given judgment in Federacion de Servicios Privados del sindicato Comisiones obreras v Tyco Integrated Security Case C-266/14 consistent with the Advocate General’s opinion, on which James Goudie QC blogged recently. For peripatetic or mobile workers (who do not have a fixed or habitual workplace) time spent travelling from home to the first appointment and from the last appointment back home counts as working time under EU law. The judgment has very significant implications for employers whose workforce includes, for example, home care staff, gas fitters, and sales teams. Read more »


Calculating Damages for a Lost Career: Sharan Griffin v Plymouth Hospital NHS Trust

September 25th, 2014 by Harini Iyengar

Harini Iyengar comments on the latest Court of Appeal case on the calculation of damages for a lost career


The Court of Appeal has conducted an interesting analysis of the proper approach towards calculating damages for a lost career, namely the assessment of future loss of earnings and of pension loss in a final salary scheme, in Griffin v Plymouth Hospital NHS Trust [2014] EWCA Civ 1240.  It rejected the challenge to the period of time for which future loss of earnings was compensated, but held that the failure to apply the substantial loss method of calculating pension losses had been an error of law in the circumstances of the case.

The Claimant was a specialist clinical technician in bone densitometry who had fallen ill with systemic lupus erythematosus in 2007 and had resigned in 2009 claiming that Plymouth Hospital NHS Trust had failed to make reasonable adjustments to facilitate her return to work.  She won her claims of constructive unfair dismissal and disability discrimination.  The Claimant’s salary had been £32,753 and, on the basis that she would now work a 25-hour week because of her disease, she was awarded compensation of £105,643.01, which increased on remission to £166,595, and which she appealed again.  The Claimant had very specialist skills for which the NHS provided the only real market in her local area.  Underhill LJ urged HMCTS and / or the Judicial College to give priority to producing an updated version of the 2003 Guidance “Compensation for Loss of Pension Rights – Employment Tribunals” (“the Pensions Guidance”) on the assessment of pension loss in the Employment Tribunal, to take account of important changes in pension law and practice.

The Appeals

The Claimant appealed to the Employment Appeal Tribunal arguing that the award of compensation by the Employment Tribunal (“the Tribunal”) was too low.  Supperstone J remitted the case to the Tribunal to make further findings and then reconsider its award.  The Tribunal increased the award on remission.  Again, the Claimant appealed that the compensation was too low.  HHJ McMullen dismissed that appeal.

Two findings of fact were critical to the Tribunal’s first assessment of financial loss: (1) with reasonable adjustments, Ms Griffin would have continued her employment indefinitely on a 25-hour week; (2) in the events which happened, her return to Plymouth Hospital was now impossible but she could find no other work because no other local employer needed her specialist skills.

The award of the entirety of her past loss of earnings until the date of the hearing on the basis of a 25-hour week was uncontroversial.  Future loss of earnings was more complex.  The original remedy judgment held that the Claimant was “likely” to obtain suitable alternative employment at 25 hours a week in a year’s time, and so awarded her £15,201.48.  It was just an estimate based on an assumption that she would continue to make reasonable efforts to mitigate her loss, and using a mid-point of the probabilities in accordance with Elias LJ’s remarks in Wardle v Credit Agricole Corporate and Investment Bank.  Nevertheless, the Tribunal was silent as to what sort of job it expected the Claimant to obtain and at what level of remuneration.  Supperstone J considered that that had been an error of law and remitted the case to the Tribunal to review its decision on continuing loss of earnings.

On remission, the Tribunal heard no further evidence but relied on the evidence and submissions which had been presented at the first hearing, supplemented by further written and oral submissions.  It noted that the Claimant had applied for positions with pro-rata salaries of £11,000-£22,000 and was satisfied that there were no other positions outside that range which were suitable for her.  She had transferable skills of administrative and clerical natures.  It went on to find that, despite the lack of any evidence as to how she could obtain promotion in an administrative role, she would impress a future employer with her intelligence, capability and determination, she would have obtained a job at £18,000 pro rata, but have progressed to management and earned £25,000 pro rata after five years and £30,000 pro rata after another five years, and after a further two years she would have achieved parity with her job for the Respondent.  This gave a total of £43,196.51 in loss of future earnings.

As for pension loss, the Claimant had been a member of the final salary NHS pension scheme.  At the first remedy hearing, both parties had relied on the Pensions Guidance although – as typically happens – the Claimant had contended for the substantial loss approach and the Respondent for the simplified approach.  Using the simplified approach, the Tribunal assessed pension loss at £32,827.69, based on a finding that the Claimant would be able to join a final salary pension scheme again after four years. On remission, the Tribunal again decided to adopt the simplified loss approach.

Therefore, the issues for the Court of Appeal were: (1) the lawfulness of the Tribunal’s decision to limit her period of future loss to 12 years; and (2) the use of the simplified approach to the assessment of pension loss.

The Period of Loss

The first issue pertaining to the period of loss was whether the Tribunal had been right, on remission, to exclude evidence of subsequent developments.  The second issue was the lawfulness of the finding that she would regain her previous level of earnings after 12 years.

By the date of the remitted remedy hearing, several months had passed since the date on which the first remedy hearing had found that the Claimant would have found work, but she had not.  Instead, she had accepted advice from the Job Centre to take a National Vocational Qualification in Business Administration, which required a work or voluntary placement, and so she had begun a voluntary year-long placement.  She had been refused permission to present documentary evidence to establish these facts.

Before the Court of Appeal, the Claimant relied on Curwen v James and NCP Services Ltd v Topliss to argue that it had been an error of law for the Tribunal to speculate about that which it already knows.  The Respondent contended that Supperstone J had remitted only the issue of what level of earnings the Claimant should expect from the date at which she obtained paid employment, and not the settled finding as to when that date would be.

Admission of New Evidence as to Period of Loss

Underhill LJ distinguished between the situation in which a court or tribunal at first instance is conducting its primary assessment of compensation and the situation in which an appellate court is asked to admit evidence of events occurring subsequent to the primary assessment of compensation.  He said that the principle in Bwalfa and Merthyr Dare Steam Collieries (1891) v Pontypridd Waterworks Co – that in assessing compensation the decision maker must avail himself of all the information at hand, not listen to conjecture on a matter which has become established fact, and not guess when he can calculate – must apply just as much when a tribunal is reconsidering damages as a result of remittal.  The second situation was essentially different, however, as the appellate court approached a case in which a valid final award had been made.  The general approach is that because of the important interest in the finality of litigation, neither party should be able to re-open a final award simply because things had turned out differently from what had been expected.  Nevertheless, Underhill LJ pointed out, that approach was not applied with absolute rigour.  He said the best guidance was that provided by Lord Wilberforce in Mitchell v Mulholland, that “the matter is one of discretion and degree”.  New evidence was likely to be admissible where basic assumptions had been falsified by subsequent events, or where a refusal would affront common sense or a sense of justice, or on other grounds which “must be left to the Court of Appeal”.

The Finding as to the Date on which the Claimant would Obtain New Employment

The Court considered that it was clear from Supperstone J’s judgment that the remitted question pertained to the Claimant’s rate of remuneration in the employment which the Tribunal had found that she would obtain after a year, and that there had been no challenge before Supperstone J as to the date on which she would obtain it.  Whether the Claimant should be allowed to take advantage of the adventitious opportunity of the appeal to adduce fresh evidence was a matter for the discretion of the Tribunal in accordance with the guidance given in Mitchell v Mulholland.  Underhill LJ considered that the documents about the Claimant’s NVQ placement added nothing of significance in regard to the level of job she might in due course hope to obtain or her rate of pay, and the Tribunal had already had a wealth of information from the first hearing about the type of work she might do.  Further, the Claimant had never in fact tried to rely on the documents to challenge the finding as to the date on which she would obtain employment.  The Court of Appeal made clear, however, that even if the Claimant had sought to have the new evidence admitted in order to try and change the finding as to the date on which she would obtain new employment, the question of the date which had been found at the original remedy hearing was a good example of the type of matter falling within a field of uncertainty in which the trial judge’s estimate had been made, which should not be tampered afterwards, in the interests of finality.

The Finding that the Loss would End after Twelve Years

Before the Court of Appeal, the Claimant criticised the Tribunal’s approach to her medical evidence, in particular that it had found she would eventually take on a management role despite the greater stress which that would involve.  Underhill LJ, however, firmly stated that in fact there was nothing in any of the medical evidence which would justify a conclusion that the stress of a management role might mean that the Claimant was incapable of fulfilling such a role.  He accepted a criticism that the Tribunal, whilst refusing the Claimant permission to adduce documentary evidence, had commented on her submission that she was doing a voluntary placement which it inferred was in a stressful environment, but held that this error did not vitiate the Tribunal’s second remedy judgment as a whole.  The Court rejected a submission that the finding of a twelve-year period was perverse and /or inadequately reasoned, because the exercise was inherently based on speculation about the Claimant’s attitude and abilities and the local job market.  Underhill LJ condemned as “hopeless” a submission that the Tribunal had erred in placing too much reliance on the Claimant’s performance as a witness and as an advocate when assessing her abilities and attitudes.  Likewise, a point that the Tribunal had erred by failing to take account of the possibility that the Claimant might have been promoted had she remained at the Respondent failed because she had made no submission on those lines to the Tribunal.

Finally, the Court of Appeal rejected an argument that the Tribunal had erred in law by omitting to use the Ogden Tables to calculate the Claimant’s future loss of earnings.  The point did not arise for determination, because the Court had already held that the Tribunal had lawfully found that she had not suffered a career-long loss.

Whilst expressing sympathy for the Claimant’s serious long-term debilitating disease, Underhill LJ said that the Tribunal was under no obligation to take a pessimistic if not indeed rather demeaning view that her disease prevented her, as a woman of ability and determination, from ever again undertaking a job with some degree of responsibility, particularly once she was freed from the toils of litigation.

Pension Loss

As to pension loss, the Court of Appeal was careful to state that the only issue for them was whether it had been an error of law to use the simplified approach to pension loss instead of the substantial loss approach, and that the judgment should not be treated as an attempt at a comprehensive summary of the Pensions Guidance nor used as a short-cut where different issues arise.  Underhill LJ then reminded himself that in a final salary scheme the employee’s entitlement is simply to the benefits and there is no entitlement to the employer’s pension contributions.  The loss takes the form of loss of enhancement to accrued pension rights and loss of acquisition of future rights.  For loss of enhancement, actuarial tables are provided in the Pensions Guidance.  Only the latter head of loss should be affected by the choice between the simplified and substantial loss approaches.  The essential difference between the two approaches is that when assessing pension losses arising in the period after termination of employment, the simplified approach measures loss by reference to the employer’s pension contributions, regardless of the fact that it was a final salary pension scheme.  The substantial loss approach requires the use of actuarial tables comparable to the Ogden Tables.  After using the tables, the Tribunal generally has to apply withdrawal factors to reflect the probability that the particular employee before it would have left employment before retirement age other than for the usual risks of mortality and disability.

Underhill LJ noted in passing that he respectfully agreed with Elias P’s criticism of the Pensions Guidance in Network Rail Infrastructure Ltd v Booth, that, where an employee had lost employment with a final salary pension scheme but obtained new employment with a money purchase pension scheme, it was unnatural to take account of the new employer’s pension contributions when assessing loss of earnings, but to disregard them when calculating pension loss, as the Pensions Guidance required.

For Underhill LJ, the tendency of the Pensions Guidance to limit the use of the substantial loss approach to cases, in which the employment had continued for a long time, the employment was very stable, and the employee had reached a certain age where she was less likely to move on, was explained by the fact that those three factors increased the likelihood of the employee still being an active member of the pension scheme at retirement – which would justify an assumption of “whole-career loss”.  Such an employee was to be contrasted with an employee who probably would have changed jobs anyway after a couple of years.

Pragmatically, the Court of Appeal pointed out that if the substantial loss approach were taken and then a massive, intuitive, withdrawal factor had to be applied, the level of uncertainty would beg the question whether there had been any point in attempting to assess whole-career loss in the first place.

Underhill LJ confessed to finding that section of the Pensions Guidance “a little opaque” but considered it clear that the substantial loss approach was recommended only where there was a sufficiently firm basis for the necessary assumptions, eg where the employee had already found new employment, or it had been determined that the employee would never find new employment, or a date had been found by which the employee would have found new employment.

Underhill LJ criticised the Tribunal for rejecting the substantial loss approach solely on the basis that, when considering whether the Claimant had been in the Respondent’s employment “for a considerable time” it said that that factor did not apply where the Claimant, aged 34, was still a long way from retirement.  The Tribunal had failed to address the question of how likely the Claimant had been to stay in that employment until retirement.  On the facts of the particular case, he pointed out, the Claimant was an employee with a specialist skill for which the principal, if not indeed the only, market was in the NHS, so she was likely to remain in the NHS for her entire career despite being 34.  Furthermore, her medical condition made her cautious about embarking on a major career change.

Noting that the Tribunal had applied a withdrawal factor of 20% to the calculation of loss of enhancement, the Court of Appeal said that that finding, even though made for a different purpose, was inconsistent with the finding that the uncertainties of the Claimant’s continued NHS employment were so great as to rule out the substantial loss approach to loss of future pension rights.  Underhill LJ relied on the Network Rail case to back up his views.

The Court of Appeal further criticised the Tribunal for assessing the likelihood of the Claimant eventually regaining her pre-dismissal earnings after 12 years instead of doing its proper task of calculating her pension losses.

Underhill LJ observed that the Tribunal had found that the Claimant would have obtained employment with the benefit of a final salary pension scheme after four years, but had not relied on that factor when rejecting the substantial loss approach.  The Court of Appeal considered that the Tribunal had had no proper basis for rejecting the expert’s unchallenged evidence that it had been unlikely that any future employer would offer a final salary scheme as most of these are closed to new entrants.

The Court of Appeal held that the Tribunal misdirected itself in the reasons it gave for applying the simplified loss approach and that in the particular circumstances of the case and in the light of other findings, the only correct conclusion was to apply the substantial loss approach.

The Pensions Guidance

In conclusion, Underhill LJ pointed out that although the Pensions Guidance was extremely valuable, it had no statutory force and its recommendations are “not gospel”.  Further, there have been several important changes in pension law since 2003, other changes are forthcoming, and the current Pensions Guidance is out of date.  He urged HMCTS and the Judicial College to review and update the Pensions Guidance as a priority.


As fewer and fewer new employees are able to join final salary pension schemes, public sector employees are becoming more and more aware of the very valuable pension rights which they enjoy, which they simply cannot replicate elsewhere.  Therefore, there are many incentives for public sector employees to litigate aggressively on pensions issues.

The current cap on compensation for unfair dismissal is £76,574, although, for dismissals after 29 July 2013, a Tribunal may not award a successful Claimant more than one year’s gross earnings.  This case, involving disability discrimination, illustrates the increasing discrepancy between compensation for unfair dismissal claims and compensation for discrimination or whistleblowing claims.

Nevertheless, in practice, the cap on unfair dismissal compensation has created a dangerous tendency for parties in employment litigation to start with a rough and ready, and rather short-term, approach towards the analysis of the future losses caused by a statutory tort.  Given the current high rate of settlement in employment disputes, it is unsurprising that parties are slow to expend time and costs on a very detailed schedule of loss at an early stage in proceedings.  Likewise, given the fact that many cases do settle in the period between the liability and the remedy hearing, parties, for good reasons, often dally in preparing and sharing their rigorous calculations of loss of future earnings and pension loss.

The assessment of future loss of earnings and of pension loss is a complicated and time-consuming matter, which requires the careful collection of relevant evidence, its analysis, an attempt to speculate about the future in a logical and rational manner, and a series of precise mathematical calculations.  It is refreshing to the see the Court of Appeal grappling with the outdated and awkward Pensions Guidance, which practitioners have found so difficult to apply in practice over the years.  As Underhill LJ points out, an updated version of the Pensions Guidance is overdue and will be very helpful to the Employment Tribunals, employers, employees, and their advisers.

As with any interesting appellate judgment, the implications of this case are limited by its specific facts, and other questions remain unanswered – in particular whether it would be an error of law not to use the Ogden Tables when assessing compensation in a case of lifetime career loss.


Jessemy v Rowstock Ltd: post-termination victimisation and the limits of judicial reasoning

March 7th, 2014 by Harini Iyengar

Harini Iyengar explains the Court of Appeal’s conclusion in Jessemy v Rowstock Ltd [2014] EWCA Civ 185 that victimisation of former employees remains unlawful even though “on any natural reading of the relevant provisions of the [Equality Act 2010], taken on their own and without reference to any contextual material, post-termination victimisation is not proscribed”.


The Court of Appeal (“CA”) has held that post-termination victimisation is unlawful, by adopting an ingenious interpretation of section 108(7) of the Equality Act 2010.  Whilst the outcome is clearly correct according to the coterie of right-minded employment lawyers (amongst whom I would aspire to class myself), the case provides an intriguing example of a court concluding that what the law says is in fact exactly what it does not say.  Does the type of judicial reasoning which the CA has deployed in Jessemy v Rowstock Ltd give discrimination law a bad name?

The Judgment

The judgment of the CA was given by Underhill LJ, former President of the Employment Appeal Tribunal (“EAT”), (with whom Ryder and Maurice Kay LJJ agreed) and upheld the judgment which his successor, Langstaff J, had given on the same issue in the EAT in Onu v Akwiwu, whilst overruling Mr Recorder Luba QC in Jessamy v Rowstock Ltd in the EAT.

As Underhill LJ stated, “the issue is one of pure law”, so, in regard to the facts, it is sufficient to relate simply that the claim of post-termination victimisation which the Employment Tribunal (“ET”) and then the EAT dismissed concerned a Claimant who was subjected to a detriment in the form of a poor reference from a former employer because he had brought proceedings for unfair dismissal and age discrimination.

The First-Generation Discrimination Statutes

The CA first considered the law on victimisation under the “first-generation” discrimination statutes (the Sex Discrimination Act 1975, the Race Relations Act 1976, and the Disability Discrimination Act 1995) which prohibited discrimination by an employer against a worker “employed by him” or “whom he employs”.  In Post Office v Adekeye the CA held in 1997 that the natural meaning of these phrases confined the protection against discrimination to workers employed at the time of the act complained of, however, in Coote v Granada Hospitality Ltd in 1999 the European Court of Justice (“ECJ”) held that since sex discrimination was proscribed under the Equal Treatment Directive, the “principle of effectiveness” meant that employees complaining of sex discrimination had to be protected against victimisation on that account, whether the victimisation occurred during employment or after termination.  On remission, the EAT held in Coote that “employed by him” should be construed as including a former employee who had complained of sex discrimination, and that Adekeye should not be followed.

Then, in Rhys-Harper v Relaxion Group plc in 2003, the House of Lords authoritatively determined that in regard to all three first-generation discrimination statutes, “employed by him” and “whom he employs” (despite the use of the present tense) could and should be read as applying to former employees.  According to Underhill LJ, “The essential point is that it was regarded as extremely unlikely that Parliament had intended to exclude all claims for post-employment discrimination.”  The majority reached those conclusions by applying ordinary domestic principles of construction, rather than the ECJ decision in Coote.

The Second-Generation Discrimination Provisions

In 2003, in regard to sexual orientation and religion or belief, and in 2006 in regard to age, the second-generation discrimination rights were brought in through statutory instruments which expressly rendered unlawful any discrimination or harassment which arose out of and was closely connected to “relationships which have come to an end”.  Equivalent provisions were inserted by regulation at the same time into the first-generation discrimination statutes.

This analysis brought Underhill LJ to the bedrock of his argument: “The upshot of all that is that at the time that the 2010 Act was drafted it was well-established that post-employment discrimination – which included victimisation – was unlawful.”

The Equality Act 2010

He went on to analyse the structure of the Equality Act 2010.  Part 2 sets out key concepts on equality, Chapter 1 giving the protected characteristics and Chapter 2 explaining “Prohibited Conduct” in the form of direct and indirect discrimination, ancillary matters, and then “Other Prohibited Conduct” in sections 26 and 27 defining harassment and victimisation respectively.  Unlike the first- and second-generation anti-discrimination rules, under the Equality Act 2010 rules, discrimination, harassment and victimisation are separated out as distinct forms of prohibited conduct.

It is only in Parts 5 and 8 that the relevant prohibited conduct is made unlawful.  In Part 5, sub-sections 39(3) and (4) make it unlawful to victimise an employee by subjecting him or her to any other detriment (such as providing a bad reference).  Section 83 contains the definition of “employee” as someone who is employed under a contract of employment, a contract of apprenticeship or a contract personally to do work.  Part 8 covers “Prohibited Conduct: Ancillary” and includes section 108:

(1)   A person (A) must not discriminate against another (B) if –

(a)   the discrimination arises out of and is closely connected to a relationship which used to exist between them, and

(b)   conduct of a description constituting the discrimination would, if it occurred during the relationship, contravene this Act.

(2)   A person (A) must not harass another (B) if –

(a)   the harassment arises out of and is closely connected to a relationship which used to exist between them, and

(b)   conduct of a description constituting the harassment would, if it occurred during the relationship, contravene this Act.

(3)   It does not matter whether the relationship ends before or after the commencement of this Act.



(6)   For the purposes of Part 9 (enforcement), a contravention of this section relates to the Part of this Act that would have been contravened if the relationship had not ended.

(7)   But conduct is not a contravention of this section in so far as it also amounts to victimisation of B by A.

The CA plainly identified “the problem” about section 108 as being that it explicitly proscribes post-termination discrimination and harassment, but contains no equivalent provisions as to victimisation.  Underhill LJ politely said of section 108(7) that its “intended effect is far from clear”.

The New Generation Directives

Underhill LJ next moved on to European Union (“EU”) law, in the form of the Race Directive of 2000, the Framework Directive of 2000 on religion or belief, disability, age and sexual orientation, and the Recast Directive on sex discrimination of 2006, which he categorised as the new generation directives, structured differently from the Equal Treatment Directive which was in force at the time of the claims in Coote and Rhys-Harper.  The new generation directives all contain a prohibition on victimisation which is worded in a broadly similar way, requiring Member States to introduce into their national legal systems such measures as are necessary to protect employees against dismissal or other adverse treatment by the employer as a reaction to a complaint within the undertaking or to any legal proceedings aimed at enforcing compliance with the principle of equal treatment.

Reaching the same conclusion in regard to EU law as he had in regard to domestic law, he said, “It is clear from the decision of the ECJ in Coote that that provision must apply equally to acts done after as well as during the currency of the employment relationship.”

The Straightforward Reasoning of the ET and the Luba EAT in Jessamy

The CA described the reasoning of the ET and the EAT in Jessamy as “straightforward”.  Mr Recorder Luba QC’s EAT regarded it as “highly unlikely” that Parliament had intended with the Equality Act 2010 to legislate away any redress for post-employment victimisation, given both the domestic law in Rhys-Harper and the UK’s obligations under EU law.  The EAT fully acknowledged the “flexible interpretative approach” required by EU law, and cited Attridge LLP v Coleman and Ghaidan v Godin-Mendoza, but concluded that to read section 108(7) as prohibiting post-termination victimisation would “fly directly in the face of what Parliament has actually enacted.”


The Wholly Domestic Interpretation of the Langstaff EAT in Onu

In contrast, Langstaff J’s EAT in Onu took an approach based on interpretative principles of domestic law, as in Rhys-Harper,  to conclude that the reference to “an employee of A’s” in section 39(4), could be stretched to include former employees.

The Reasoning of the Court of Appeal

Underhill LJ considered that it was “clear that on a natural reading of the relevant provisions of the 2010 Act, taken on their own and without reference to any contextual material, post-termination victimisation is not proscribed”.  How then did he manage to reach the opposite conclusion through deft judicial reasoning?

To start with, he acknowledged the shortcomings in Langstaff J’s approach in the EAT.  Although, in isolation, “an employee of A’s” can be read as referring to a former employee, that is not consistent with the scheme of the Equality Act 2010, in which prohibited conduct arising out of a past relationship will be proscribed, if at all, by the ancillary provisions in Part 8, and in particular by section 108.  There, discrimination and harassment post-termination are prohibited but not victimisation.

He then stated that when the contextual materials were considered, it was clear that the provision in the statute was “not the result which the draftsman intended”, pointing out that Langstaff J, Mr Recorder Luba QC, and the barristers in the case all shared that view.

The contextual materials on which Underhill LJ relied were (i) Rhys-Harper and the second-generation discrimination provisions which expressly made post-termination victimisation unlawful; (ii) the absence of any indication from the Government that the Equality Act 2010 was intended to change the law by removing protection against post-termination victimisation; (iii) the Explanatory Notes on section 108 which referred to claims being “dealt with under the victimisation provisions and not under this section”; (iv) the fact that if post-termination victimisation were not proscribed then the UK would be in breach of its obligations under EU law; and (v) the absence of any rational basis for treating post-termination victimisation differently  from post-termination discrimination and harassment.

Taken together, these five matters led him to conclude, “It follows that the apparent failure of the statute to proscribe post-termination victimisation is a drafting error.   …  In the end, it is unnecessary to be able to show how the error arose as long as it is clear that it was indeed an error.”

The key issue for Underhill LJ was therefore, “… how far is it right to go to correct what is an undoubted drafting error: would that, as the EAT put it, involve crossing the Rubicon?”  Underhill LJ reasoned that since the Equality Act 2010 gives effect to the UK’s equality obligations in EU law, the Court must adopt “the Ghaidan approach” which empowered it more widely to “depart from the natural reading of the language of the statute, including by the implication of words which alter its effect as drafted” than would be possible on a conventional domestic approach to statutory construction.  He considered that the “flexible interpretative” Ghaidan approach “unquestionably” applied here.  After a detailed analysis, he concluded that “the only question is whether it is “possible” … to imply words into the 2010 Act which achieve that result” of proscribing post-termination victimisation, that it plainly was possible, and that the implication of such words “in fact represents what the draftsman intended.”  According to Underhill LJ, the Luba EAT erred in failing to appreciate just how flexible the Ghaidan approach was.  Yet, while making this criticism, he acknowledged that “the effect of section 108(7) is decidedly opaque”.  After bravely attempting to find meaning in the sub-section, Underhill LJ concluded that the first possible meaning (that post-termination was not intended to be proscribed and therefore was also not proscribed where it happened also to constitute post-termination discrimination) was one which would have “no rational reason … for having that effect, and it would have perverse results”, and the second possible meaning (that post-termination victimisation was proscribed elsewhere in the statute but for some reason cases of overlapping post-termination victimisation and discrimination claims should only be complained of under those other provisions) was “unconvincing” because cases of overlapping claims are common and do not in practice give rise to double recovery.  Ultimately, Underhill LJ did accept that “it is indeed impossible to see the point of sub-section (7)”.  He considered that “the draftsman may rather have lost his way in his treatment of section 108”, noting that in Schedule 28 “discrimination” was said to be defined in, amongst others, section 108, whereas in fact that section proscribed it.

From this position, that the draftsman must have lost his way, made an error, and drafted a meaningless sub-section, Underhill LJ reached the view that the section 108(7) contained “no clear indication of an intention that post-termination victimisation should be lawful”.  Therefore, he reasoned, there was “no obstacle” to implying that section 108 gave effect to the EU obligation to proscribe post-employment victimisation.  Perhaps intending to guide the lost draftsman, the Court of Appeal suggested either an amendment to section 108(1) to add:

In this sub-section discrimination includes victimisation,

or a new sub-section 2A to add:

A person (A) must not victimise another (B) if –

(a) the victimisation arises out of and is closely connected to a relationship which used to exist between them, and

(b) conduct of a description constituting the harassment would, if it occurred during the relationship, contravene this Act.

Having determined that it was meaningless, Underhill LJ was “not sure that anything needs to be done about sub-section (7)”.  He was, however, careful to state that the meaningless sub-section “can have no meaning which is inconsistent with post-termination victimisation being unlawful.”

Then, at the request of the Equality and Human Rights Commission, which was concerned about discrimination in the provision of goods and services, not all of which is proscribed by EU law, Underhill LJ also considered whether the domestic approach to statutory construction would lead to a different result.  He accepted a “more straightforward domestic route to the same result, by way of a “rectifying construction” of the kind adopted by the House of Lords in Inco,” involving a “plain case of drafting error”.  For Underhill LJ, where there is a drafting error through omission, there is “no real difference” between the Ghaidan and the Inco approaches. 

In Inco the court concluded that “the draftsman slipped up” and “the court must be able to correct obvious drafting errors”: the court held that the words “from any decision of the High Court under that Part” were to be read as meaning “from any decision of the High Court under a section in that Part which provides for an appeal from such decision.”  According to Lord Nicholls in Inco, a court could adopt such a course only if “abundantly sure of three matters: (1) the intended purpose of the statute or provision in question; (2) that by inadvertence the draftsman and Parliament failed to give effect to that purpose in the provision in question; and (3) the substance of the provision Parliament would have made, although not necessarily the precise words Parliament would have used, had the error in the Bill been noticed.”  Lord Nicholls went on to say, however, that the third condition was of crucial importance, because otherwise the court would be crossing the boundary between construction and legislation.

No doubt recognising the dramatic nature of his interpretation, Underhill LJ said, “It would be different in a case where no such intention is established and the argument is simply that the implication sought is necessary in order to comply with EU law or the requirements of the Convention.”


Through sophisticated reasoning, the CA has achieved a result which is fair in the minds of the coterie of employment lawyers, and which will be of practical service to many litigants (be they workers, employers, or those giving or receiving goods and services) by ending legal uncertainty.  Is it right, however, for a court to respond to a statutory provision which has no satisfactory meaning by implying into the statute words which make conduct unlawful?  The CA did not hold that sub-section 108(7) must be deleted as meaningless, but left it to “some other court” to “cudgel its brains about what real effect, if any, it has”.  In spite of its hesitation to delete the sub-section, the CA felt confident in asserting that, whatever it might mean, the sub-section was definitely inconsistent with post-termination victimisation being permitted.

It seems to me that the CA has turned a statutory provision, which is, at best, meaningless, and is, at worst, ambiguous and inconsistent with the UK’s equality obligations under EU law, into a provision which renders conduct unlawful.  Can the position really be said to be analogous to Inco?  The Equality Act 2010 separated out harassment and victimisation into different claims, after decades of being aspects of discrimination.  In my view, the difficulty is that, whilst the draftsman clearly drafted poorly, exactly what he was up to in terms of tinkering with the law on discrimination, harassment and victimisation and how they should interrelate, remains very unclear, yet, I feel sure that he was up to something. 

Our clever judges know how to achieve the result which right-minded employment lawyers desire, through the deployment of deft judicial reasoning, but is it right to develop principles of judicial interpretation which permit a statutory provision to mean that conduct which is stated to be lawful is held to be unlawful? 

Access to justice in general is a matter of acute concern to barristers right now.  Within the field of employment law, the introduction of ET fees is having a profound effect on discrimination litigation, a part of the legal system which is intended to protect the most marginalised and disadvantaged groups of workers.  Is it idealistic and unrealistic for me to long for judicial reasoning which makes sense to those outside the inner circle of employment lawyers, in regard to what the major discrimination statute means?  Does the type of judicial reasoning which the CA has deployed in Jessemy v Rowstock Ltd give discrimination law a bad name?

Harini Iyengar


ETO Exception Established under TUPE despite the “Subjective Fact-Intensive Analysis” Still Required

November 27th, 2013 by Harini Iyengar

Harini Iyengar considers the Court of Appeal’s (“CA”) latest analysis of the Economic Technical or Organisational Reason Exception (“ETO”) under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) and the tension between the employment regime and the insolvency regime


This welcome judgment for employers and their advisors illustrates when the elusive ETO defence can operate successfully.  Nevertheless, the CA stressed the highly fact-sensitive nature of the ETO defence.  Obtaining the right evidence in TUPE cases is a perennial practical problem and the CA’s analysis shows clearly that success will continue to depend upon the quality of the documentary and witness evidence available, and upon cross examination of witnesses, with its inherent uncertainties.

In Crystal Palace FC Ltd and CPFC 2010 Ltd v Kavanagh and others [2013] EWCA Civ 1410 the CA restored the judgment of the Employment Tribunal (“the ET”) that the employees should not be treated as unfairly dismissed for a reason connected with a transfer under regulation 7 of the TUPE (“Regulation 7”) because the reason for dismissal had been an economic, technical or organisational reason entailing changes in the workforce.  Briggs LJ stated:

Regulation 7 unambiguously requires a subjective fact-intensive analysis of the ‘sole or principal reason’ for the relevant dismissal, so that the Employment Tribunal needs to be astute to detect cases where office holders of insolvent companies have attempted to dress up a dismissal as being for an ETO reason, where in truth it has not been.

The Context

Maurice Kay LJ, giving the leading judgment, pointed out the unavoidable tension between Employment law objectives of protecting employees’ acquired rights and Insolvency law objectives of protecting creditors’ interests. 

This interesting TUPE case arose in the context of the financial difficulties experienced by Crystal Palace Football Club (“the Club”).  At the end of the 2009-2010 season, the Club was in dire financial straits and went into administration at the behest of the Agilo Master Fund Ltd (“Agilo”).  The club’s owner was Crystal Palace FC (2000) Ltd.  There was a serious prospect of liquidation and the administrator was Mr Brendan Guilfoyle.  It is a fact that the liquidation of a football club will often leave few or no assets to be realised for the benefit of its creditors as the players tend to be the most valuable assets.  So, Mr Guilfoyle sought to sell the Club as a going concern.  A consortium led by Mr Steve Parish was interested but the position was complicated because the Selhurst Park stadium was owned by Selhurst Park Ltd. 

On 9 February 2010, Mr Guilfoyle advertised the Club for sale in the Financial Times, in the knowledge that Mr Parish’s consortium was already interested.  Three days later, Selhurst Park Ltd also went into administration and PWC were appointed administrators.  The principal creditor was the Royal Bank of Scotland, part of Lloyds Bank Group (“the Bank”).  Six days later, Mr Parish had signed a confidentiality agreement with Mr Guilfoyle.  It became clear to Mr Guilfoyle that there were no other credible bidders and the consortium was incorporated as CPFC (2010) Ltd (“CPFC (2010)”) and granted preferred bidder status.  Nevertheless, there was an obstacle because, understandably, CPFC (2010) wanted to acquire the Club only if it could also acquire the stadium.  The CA found (as so often happens in the context of TUPE and insolvency), “In the course of negotiations, the respective parties adopted positions, sometimes in public, for tactical reasons and what they were saying did not necessarily represent their true thoughts and intentions.”  

By May 2010 the terms of a sale agreement had been between Mr Guilfoyle and CPFC (2010).  On 24 May 2010 it was signed on behalf of CPFC 2010, however, it was held in escrow pending an agreement to acquire the stadium. 

Towards the end of May 2010, Mr Guilfoyle found the Club facing severe cashflow problems.  Agilo had lent the Club another £1,000,000 but it had been quickly used up.  Negotiations for a loan of £1,500,000 from Mr Parish were aborted when Agilo objected to its being given a preferential ranking.

The Facts became Critical

The CA found “the facts became critical” at that point in time and quoted extensively from the findings of fact contained in ET judgment.  Mr Guilfoyle decided to mothball the Club over the closed season when no matches would be played.  To that end he told his assistant to ask the Managing Director (“MD”) for a list of employees who could be made redundant and still permit the core operations of the club to continue during the closed season.  The MD took instructions from the administrator and he had been managing the Club on a daily basis during the administration.  The letter from the administrator to the MD stated that given the continuing uncertainty over the sale of the stadium and therefore the sale of the Club they had decided to sell the playing assets and mothball the Club’s trading operations at the end of May 2010.  Later correspondence stated that they had no funding for May and were reliant on the sale of a valuable player to discharge May’s liability.  The administrator had therefore decided that the Club would not trade in June and the creditors’ voluntary agreement would not be issued to creditors.  The proposal was to make the majority of administrative staff redundant on Friday and proceed with selling the more valuable players.  The MD met the Head of Finance and prepared a list of staff, retaining staff he believed necessary to continue to run the Club.  The administrator’s assistant wrote back to say more names were required.  Then a revised list was sent.

Mrs Kavanagh and three other employees were the Claimants.  They and 25 others were given letters of dismissal by Mr Guilfoyle on 28 May 2010, some with immediate effect and others from 31 May 2010. 

The CA quoted the ET’s words, that it was “a fast moving transaction, with scope for misunderstandings.”  In fact, the media got notice of the dismissals, and critical reports gave the impression that the Bank’s reluctance to agree the sale of the stadium was causing the impediment to the sale of the Club.  The Bank gave in to the media pressure.  On 7 June 2010 the sale had been agreed subject to formalities and technicalities.  The formalities of the sale of the Club to Mr Parish’s consortium were completed by 19 August 2010. 

Did the ETO Exception Apply?

The ET had found Mr Guilfoyle’s reason for dismissing the Claimants was genuine and it was in order to keep the Club alive as a going concern, in the hope that there would be a sale in the future.  The transfer of the Club remained a possibility but no more than that.

They drew a distinction between the administrator’s reason for the dismissal and his ultimate objective: “If the administrator’s reason is the necessity of reducing the wage bill in order to continue the business, in our view that is an ETO reason.  That reason is separate from the longer term objective of being able to sell the business in due course.  If the administrator’s reason for dismissal is that a smaller workforce will make the business more attractive to a prospective purchaser (who may not yet have been identified), that is not an ETO reason.”  The economic reason entailing changes in the workforce was simply that the administrator had run out of money and unless staff costs were reduced the Club would have to be liquidated.  It was not in Mr Guilfoyle’s contemplation that the very fact of making redundancies and the subsequent publicity would have the effect of very quickly changing the Bank’s mind, which enabled the sale of the Club.

In contrast, the Employment Appeal Tribunal (“the EAT”) had held that the ETO defence failed; it was clearly not an ETO reason because the dismissals were not in fact for the purpose of continuing the business but were with a view to sale or liquidation.

The CA considered the EAT’s reliance on a particular paragraph in Spaceright v Baillavoine: “For an ETO reason to be available there must be an intention to change the workforce and to continue to conduct the business, as distinct from the purpose of selling it.  It is not available in the case of dismissing an employee to enable the administrators to make the business of the company a more attractive proposition to prospective transferees of a going concern.”

Limiting Spaceright to its own facts, the CA held: “These proceedings involve the interaction of the legislative regime governing the position of employees on transfers of the undertakings of their employers and the regime governing companies in serious financial difficulties which have been put into administration.  The interaction of the two regimes will often involve tension between two policies.  The first is TUPE’s policy of protecting employees.  The second is the policy of encouraging the achievement of a better result for the company’s creditors than would be achieved on liquidation.” 

The CA described Regulation 7 as the “legal fulcrum” upon which the judgment swung.  Its application is “an intensely fact-sensitive process.”  A warning was issued to ETs and administrators that, “Care has to be taken not to enable those administering a company to so arrange matters as artificially to contrive an ETO reason and thus illegitimately to avoid the TUPE regime.”  The CA acknowledged on the other hand that there is a statutory regime to encourage corporate rescue and care must be taken not to characterise an arrangement by administrator as TUPE avoidance.

Interaction between the Protection of Employment and Insolvency

Briggs LJ provided an interesting discussion of the interaction between the protection of employment regime and the administration regime which operates for corporate insolvency. He said that he had been troubled about wider implications of the EAT judgment and the over extension of Spaceright.  His Lordship drew attention to Paragraph 3 of Schedule B1 to the Insolvency Act 1986 which sets out the purposes of administration, which include “rescuing the company as a going concern” and “achieving a better result for the company’s creditors as a whole than would be likely if the company were wound up (without first being in administration)”.  The latter purpose often involves a TUPE transfer.  An advantage of administration over liquidation is that the administrators have power to continue the company’s business protected by the moratorium on the pursuit of claims by creditors, so that it can be prepared and marketed for sale as a going concern, and proceeds of sale can then be distributed to the creditors, either by the administrators themselves or in a subsequent liquidation.  Once a business is closed down its value rapidly declines to an amount no greater than the aggregate value of the forced sale value of its constituent assets. 

“Pre-pack” administration, in which the business sale is arranged prior to the company going into administration, is becoming more popular.  In many administrations, however, the administrator continues the business in the hope or expectation of a sale for as long as he can, which means for as long as the necessary resources are available to him and while a sale at a price greater than the break-up value remains a realistic possibility.  Pragmatically, Briggs LJ pointed out that a company will only be in administration if it is hopelessly insolvent, to the extent that its directors have formed the view that without protection from its creditors it will not be able to trade its way out of its difficulties.  In his judgment, the company’s poor performance will often have arisen because of the manner in which the business was being conducted, and so the administrator will urgently need to reform and economise.  Dismissal of employees is unfortunately a principal method of economising.  Where employees make successful TUPE claims, liability will transfer to the purchaser, who will reduce the purchase price accordingly, thus reducing the sums available to creditors.

Describing Regulation 7 as a “tie-breaker”, Briggs LJ called for a “reality check” because if Regulation 7 were interpreted so that whenever there was a transfer, the employees’ rights on dismissal were transferred, then it would represent a significant enhancement of their employment rights by reason of the transfer, because, but for the transfer they would simply have received the less valuable rights afforded to dismissed employees under the insolvency code.


It is refreshing to see the CA doing a “reality check” so that the ETO defence which exists in theory in the acquired rights regime can be understood and made use of by businesses and administrators in practice at a moment of financial crisis, with a view to optimal long-term outcomes for both employees and creditors.


When do the secular courts protect the rights of a minister of religion? When is a minister of religion called by God to a non-contractual relationship and when does she do her job under a contract?

May 20th, 2013 by Harini Iyengar

The Supreme Court held in The President of the Methodist Conference v Preston that a Methodist minister was not an employee and therefore had no claim for unfair dismissal.

Question for the Supreme Court

Haley Anne Preston was a Minister of the Methodist Church until 2009.  The Employment Tribunal dismissed her claim of unfair dismissal on the basis that she was not an employee.  The Employment Appeal Tribunal and the Court of Appeal disagreed.

The question for the Supreme Court concerned the essential character of the relationship between a Minister in full connexion with the Methodist Church who held a particular appointment within the Church and the governing body of the Church.  By majority, the Supreme Court concluded that it did not give rise to legal rights and duties and both sides, and that the rights and duties which existed did not constitute a contract of employment.

Lord Sumption and the Majority Judgment

Lord Sumption reviewed the caselaw and noted that there had been two recurrent themes: the distinction between office-holders and employees, and the idea that the spiritual nature of a minister’s calling meant that the relationship between a minister and a church did not create legal relations.  In Diocese of Southwark v Coker [1998] ICR 140, the Court of Appeal held that a stipendiary assistant curate was not an employee, and two of the judges considered that there was a legal presumption that ministers of religion were office-holders who did not serve under a contract of employment.  The House of Lords in Davies v Presbyterian Church of Wales [1986] 1 WLR 323 adhered to the distinction between an employment and a religious vocation, although they did not exclude the possibility of legally-enforceable obligations arising via the law of trusts.  In President of the Methodist Conference v Parfitt [1984] QB 368, the Court of Appeal held that a minister was not an employee.  The leading modern case until the present had been Percy v Board of National Mission of the Church of Scotland [2006] AC 28.  The House of Lords had taken the view that offices and employments were not always mutually exclusive categories and there could be a contract of employment alongside a minister’s occupation as an office. 

Lord Sumption accepted that, following Percy, the question whether a minister served under a contract of employment could no longer be answered simply by asking whether the occupation was an office or employment, or whether it was spiritual or secular.  Nor could it be answered by relying on the presumption that ministers generally did not work under a contract of employment because of the spiritual nature of the work.  The primary considerations were the manner in which the minister was engaged and the character of the rules or terms governing her service.  The background upon which the exercise of contractual construction should occur included the fundamentally spiritual purpose of the functions of a minister of religion.

His Lordship examined the Methodist Deed of Union in detail, noting in particular that the ministry was of a life-long character, from which a minister could not resign without acceptance by the President, and that Methodists adhered to a doctrine of priesthood for all believers, with the same disciplinary code for lay members and ministers.  The Church did not regard the stipend or the manse as consideration for the services of the minister; they were material support without which the minister could not serve God. 

For Lord Sumption, the three cumulatively decisive features were: first, the manner in which a minister was engaged (through admission into full connexion and ordination) was incapable of being analysed in terms of contractual formation; second, the stipend and manse were provided because of admission into full connexion and ordination, and not the work done; third, there was no right to resign unilaterally, even on notice.  These features made the ministry a vocation and not an employment.

Ms Preston relied on the way in which she had been invited in writing to take up the position of Superintendent Minister at Redruth, and had accepted in writing.  Lord Sumption said, “In other contexts, an exchange of letters like this one might well have given rise to a contract.”  Nevertheless, because the exchange occurred within the framework of the Church’s standing orders, it meant they were only part of a much longer procedure.  The invitation from the local committee was only a recommendation to the President.  The relevant relationship was between the minister and the Conference, which had the power to move Ms Preston between circuits.  She was serving not under the five-year relationship to which she was invited, but under a life-long ministry.

Lord Sumption said that the analysis of the Employment Appeal Tribunal and Court of Appeal gave rise to difficulties.  First, it would mean that almost any arrangements for the service of a minister of religion would give rise to a contract, unless the minister was a non-stipendiary volunteer.  Secondly, the analysis of offer and acceptance in the correspondence was inconsistent with the standing orders.  The supposed contract would not fit into the scheme of the Church’s constitution.  Third, Lord Sumption found Ms Preston’s case indistinguishable from Parfitt.   He said that the Court of Appeal had been wrong, and had got around Parfitt by over-analysing Percy and by paying insufficient attention to the Deed of Union and standing orders.

For Lord Sumption, the central question was whether the parties had intended to enter into a legally binding agreement.  He said that the correct approach was to examine the rules and practices of the particular church and any special arrangements made with the particular minister.  He declined to answer how a minister could enforce a claim to a stipend and to occupation of a manse, without a contract, but said these benefits were probably enforceable as part of the trusts of the Church’s property.

Lady Hale’s Dissent

Dissenting, Lady Hale pointed out that just as there was nothing saying that the relationship was a contract of employment, there was nothing saying that it was not, so their Lordships could approach the issue with an open mind. 

She observed that the spiritual nature of religious ministry did not prevent there from being a contract of employment, pointing out that rabbis are normally employed by a particular synagogue, and that priests appointed to the Church of England are now engaged on “common tenure” terms which permit them to bring claims of unfair dismissal.

She also pointed out that it has always been possible to be an office-holder and an employee, as in the case of managing directors and university teachers.  To Lady Hale (who, of course, is a former professor), universities had a good deal in common with organised religion.  Indeed, she considered that the constitutional documents of the Methodist Church bore a strong resemblance to those of a university.

Lady Hale said that it would be very odd indeed if a minister who was not paid her stipend or who was threatened with summary eviction from her manse could not rely on the terms of her appointment to enforce the payment or resist eviction.  Her Ladyship said that the problem with leaving the legal redress to the law of trusts was that the Church holds property under any number of different trusts, whereas the stipend is paid centrally and the body which controls her and is responsible for her remuneration and accommodation is the Conference.  Another problem is that there is a distinction between just being a minister in full connexion with the Church and having a particular station or appointment within the Church.  No minister, even retired, can give up the evangelical duty to do what they can for the Church, and no person in full connexion can give it up without permission.  On the other hand, there was a process for assignment to particular posts, confirmed annually by Conference (although this was a rubber stamping process during the five years’ appointment).

The main factor which told against the appointment to a particular station being a contract between the minister and the Church was that the minister had no choice, and must go where Conference stationed her.  The reality, Lady Hale said, was almost certainly completely different.  Ministers had to go where they were put, however, it would be a very foolish stationing committee that put a minister where she was not willing to serve.  Lady Hale noted that they had had very little evidence about this, and did not think that a prior commitment to go where you are sent negates a mutual contractual relationship when you are sent and agree to go to a particular place.

Everything about the relationship looked contractual, Lady Hale considered, just as in Percy.  It was a very specific arrangement for a particular post, at a particular time, with a particular manse and a particular stipend, and with a particular set of responsibilities.  It was an arrangement negotiated at local level but made at a national level.  According to Lady Hale, the Church may well have had good reasons to be concerned about Ms Preston’s performance, but the allegation was that instead of investigating the concerns, the Church had reorganised the Circuits so as to make the investigation unnecessary and deprived Ms Preston of her post by reorganising it out of existence, without any of the safeguards to which she would have been entitled if an employee. 


The Supreme Court used the facts of Ms Preston’s case to distinguish her job for the Methodist Church from the job of Ms Percy for the Church of Scotland (the previous leading case on the employment status of ministers of religion).  Therefore, it seems that whether the UK secular courts will give a minister of religion the right to complain of unfair dismissal in future cases will depend on the specific and individual facts about the working relationship between the minister and her Church. 

It should be noted that the anti-discrimination laws protect a wider class of worker than employees, including workers under a contract personally to do work, who cannot complain of unfair dismissal.  Nevertheless, protection under the Equality Act 2010 against discrimination still requires that the work is done under a legally-binding contract.  Therefore, it appears that, at least at a domestic level, whether the secular courts will give a minister of religion the right to complain of discrimination in future cases will again depend on the specific and individual facts about the working relationship between the minister and her Church.  Some ministers of religion will find themselves in the same vulnerable position as volunteers, whom the Supreme Court recently held in X v Mid Sussex Citizens Advice Bureau [2012] UKSC 59 to be outside the protections of equality law.

Lord Sumption stated that the judgments of the Employment Appeal Tribunal and Court of Appeal (and by implication Lady Hale’s dissent) were problematic for him, because they would mean that almost any arrangements for the service of a minister of religion could give rise to a contract of employment.  As an employment practitioner, it is difficult to understand his concern, given that from 2011 the default position for ministers of the Church of England (the biggest UK Church) has been to hold their office under terms of common tenure, which give very similar rights and protections to those which employees enjoy under the employment statutes, and given that rabbis are generally employed by their synagogues or by the synagogue movement (eg Lew v Board of Trustees of United Synagogue [2011] EWHC 1265 (QB)).  Further, in my experience, ministers of religion generally do their jobs under a complex set of written rules and procedures anyway, much more detailed than in many other cases in which the employment tribunals do not hesitate to imply contracts of employment.  It is hard to see what unfairness or injustice would be caused to religious organisations if their arrangements with their ministers of religion were recognised as contracts of employment, in accordance with the reality as described by Lady Hale.

As there are no bishops in Methodism, this case does not seem to have any implications for the ongoing debate about women bishops in the Church of England.  At present, despite their rights under domestic and EU law, the would-be women bishops seem intent on keeping their dirty linen away from the secular courts.

Harini Iyengar


Policies or Aims, Obnoxious or Otherwise

November 6th, 2012 by Harini Iyengar

The European Court of Human Rights today released its judgment in the case of Redfearn v UK, and held that the UK had failed through its domestic law adequately to protect the right of Mr Redfearn, a British National Party councillor, to freedom of association under Article 11 of the European Convention on Human Rights.

Harini Iyengar summarises the judgment and considers whether the UK must now remove the qualifying period for unfair dismissal or enact a new law prohibiting workplace discrimination because of political affiliation or association.


Mr Redfearn, who was white British, worked as a bus driver for Serco, which provided services to Bradford City Council.  Most of his passengers were vulnerable adults and children with physical and/or mental disabilities, who were of Asian origin.  There had been no complaints about his work or conduct at work, and his Asian boss had nominated him for the award of “first-class employee”.

When Mr Redfearn was reported in a newspaper to be a local election candidate for the British National Party (“BNP”) (a party then open only to white British people, which was wholly opposed to integration between British and non-European peoples, and was committed to restoring the British population to an overwhelmingly white makeup), he was temporarily put on to mail delivery duties.  Upon his election as a BNP councillor, Serco received a complaint from UNISON, took legal advice, and dismissed him.

UK Court Proceedings

Since Mr Redfearn lacked the requisite qualifying period of employment to claim unfair dismissal, he brought claims of race discrimination.  The Employment Tribunal (“ET”) dismissed the claim of direct race discrimination on the basis that the dismissal had not been “on racial grounds” but had been on health and safety grounds: his continued employment could lead to difficulties with other employees; damage Serco’s relationship with the unions; lead to attacks on Serco’s minibuses jeopardising the health and safety of its employees, its vulnerable passengers and Mr Redfearn; cause considerable anxiety to passengers and relatives or carers entrusting vulnerable passengers to Serco’s care; and damage Serco’s reputation so as potentially to place at risk its existing contracts and future work bids in the public sector and elsewhere.  Indirect discrimination was held to be justified as a proportionate means of achieving the legitimate aim of maintaining health and safety.

The Employment Appeal Tribunal (“EAT”) found that the ET had erred in law because “on racial grounds” should have been construed more broadly and the ET had failed to explain its conclusion that indirect discrimination had been justified, including not considering any alternatives to dismissal.

Before the Court of Appeal, Serco succeeded in having the ET judgment restored.  Mummery LJ held that the treatment by Serco had not been “on racial grounds” because the less favourable treatment had not been on the ground of being white but on the ground of a particular non-racial characteristic shared with a tiny proportion of the white population, ie membership of the BNP.  Serco would have applied the same treatment to an employee who had belonged to a similar political party which confined its membership to black people.  As to indirect discrimination, Mummery LJ held that the ET had wrongly identified the “provision, criterion or practice” (“PCP”) too narrowly as membership of the BNP.  This was meaningless because the PCP could never be applied to a non-white person because only white people could join the BNP.  Serco’s real PCP was instead applied to membership of any political organisations like the BNP, which existed to promote views hostile to people of a different colour, and therefore did not put Mr Redfearn to “a particular disadvantage”.

European Court of Human Rights Proceedings

Mr Redfearn argued that the UK had breached his right to freedom of expression under Article 10 of the European Convention on Human Rights (“ECHR”), his right to freedom of association under Article 11, and his right to freedom of thought, conscience and religion under Article 9.  He also complained of breaches of Article 13 concerning access to an effective remedy and Article 14 concerning discrimination in the securing of ECHR rights and freedoms.

His case on Article 11 was that for an employee to lose his job for exercising his right to freedom of association struck at the very substance of the right, so the UK had a positive obligation to enact legislation protecting him.  He complained that, lacking one year’s continuous employment, he had been unable to bring a claim of unfair dismissal, and that, had he been able to do so, the defence of “some other substantial reason” in the form of his political involvement could have been used by Serco.

The European Court of Human Rights (“ECtHR”) was split 4:3, with the majority in Mr Redfearn’s favour.  The majority considered that his complaint was more appropriately analysed under the right to freedom of association than under the right to freedom of expression, but the former must be read in the light of the latter.

It also recognised “the difficult position that Serco may have found itself in when [Mr Redfearn’s] candidature became public knowledge”.  Further, the ECtHR accepted that even without specific complaints from service users about Mr Redfearn, his membership of the BNP could have impacted on Serco’s provision of services to Bradford City Council “especially as the majority of service users were vulnerable persons of Asian origin”.  Nevertheless, it was significant that Mr Redfearn had been a “first-class employee” and no complaints had been received about him until his political affiliation became known.  The ECtHR gave particular weight to the fact that the complaints which were received were about prospective problems rather than anything which Mr Redfearn had done or failed to do in the actual exercise of his employment.  It was also swayed by the fact that he was working in a non-skilled post which did not seem to have required significant training or experience, was aged 56 at the date of dismissal, and was therefore likely to have experienced considerable difficulty in finding new employment.  The ECtHR concluded that the consequences of dismissal were serious and could strike at the heart of Mr Redfearn’s Article 11 right.

The next step was to consider whether the UK had struck a fair balance between his Article 11 right and “the risk, if any, that his continued employment posed for fellow employees and service users”.  According to the ECtHR, it was not required to “pass judgment on the policies or aims, obnoxious or otherwise, of the BNP at the relevant time,” because the BNP was not an illegal party under domestic law and was not performing illegal activities.

In the judgment of the ECtHR, a claim for unfair dismissal would be an appropriate domestic remedy for someone dismissed for his political beliefs or affiliations, because the employer would have to establish that the dismissal had been fair for “some other substantial reason” and the ET must take full account of Article 11 rights in accordance with the Human Rights Act 1998.  Nevertheless, lacking the requisite period of employment, Mr Redfearn could not benefit from the law on unfair dismissal.  The ECtHR avoided condemning the Race Relations Act 1976 as a wholly ineffective remedy, but because it required “a liberal interpretation of the relevant provisions”, as adopted only by the EAT domestically, the 1976 Act had failed to offer Mr Redfearn any protection of his Article 11 rights.

In consequence, the one-year qualifying period for unfair dismissal had been detrimental to Mr Redfearn.  The ECtHR held that it was in principle both reasonable and appropriate for the UK to have bolstered the domestic labour market with a one-year qualification period.  It was troubling to the ECtHR that exceptions to the qualifying period existed for certain forms of discrimination but not for employees dismissed on account of their political opinion or affiliation, and it noted that Article 11 also protects those whose views offend, shock or disturb.

The ECtHR says that it was incumbent on the UK to take reasonable and appropriate measures to protect employees with less than one year’s service from dismissal on grounds of political opinion or affiliation, either through an exception to the one-year qualifying period or a free-standing claim of unlawful discrimination on grounds of political opinion or affiliation.

According to the ECtHR, Mr Redfearn’s case did not disclose any appearance of a violation of his right to freedom of thought, conscience or religion under Article 9 of the ECHR.  It also dismissed the Article 13 complaint.  Although the Article 14 complaint was not manifestly ill-founded, the ECHR declined to examine it further given its judgment on Article 11.


Mr Redfearn’s case arose in 2004, when there was a one-year qualifying period for unfair dismissal, when the Race Relations Act 1976 was in force, when the Employment Equality (Religion or Belief) Regulations 2003 were in force but before the domestic courts had developed a wide definition of philosophical belief.

The current legal landscape is subtly but significantly different.  The qualifying period for claiming unfair dismissal is now two years.  The Equality Act 2010 ditched the problematic requirement for discrimination to be “on racial grounds”.  Mr Redfearn would now have to establish before an ET that he had been less favourably treated “because of” his race or his religion or belief.  The domestic courts have also developed the law on religion or belief discrimination.

What Claims would be Brought Today?

Given the two-year qualifying period for unfair dismissal, it is likely that many of those, like Mr Redfearn, who believe they have been unfairly discriminated against at work because of their political affiliation or association, will find themselves, like him, in the terrain of discrimination law because they have less than two years’ continuous employment.  In light of the changed test for direct discrimination and the EAT caselaw on religion or belief discrimination, it is likely that such claims will in the future be argued as claims of both race discrimination and religion or belief discrimination.  Indeed, given the opportunity to recover much greater compensation than that available for unfair dismissal, it is likely that even an employee who had requisite service to claim unfair dismissal would also bring discrimination claims in this context.

Since the BNP has now extended its membership to people who are not white nationals, it is doubtful whether a claim for direct race discrimination would succeed even with a liberal interpretation of the “because of” test in the Equality Act 2010.

Although the BNP now admits non-white members, it seems probable that most of its members are white, and so an argument of indirect race discrimination could be developed by an employee.  The ECtHR was unimpressed with the protections provided by the law on indirect discrimination, and the provisions on indirect discrimination in the Equality Act 2010 closely resemble those which were in the Race Relations Act 1976.

Nevertheless, because the facts of new cases will inevitably differ from those in Mr Redfearn’s case, it is likely that an employer who dismisses an employee because of BNP membership will face claims of both direct and indirect race discrimination.  It would be strenuously argued by the employee that the ETs, in the light of Redfearn v UK, have to interpret the law on direct race discrimination and indirect race discrimination differently in future in cases involving BNP membership, in line with the EAT’s approach.

Something mysterious about the ECtHR’s judgment is the conclusion that the law on unfair dismissal, including the defence of “some other substantial reason” provides adequate protection for freedom of political affiliation and association, but the law on indirect discrimination including the defence of justification as a “proportionate means of achieving a legitimate aim” does not provide adequate protection.  In practice, the evidence and arguments for both defences would be very similar.

Given the recent evolution of the law on religion or belief discrimination, the employee would probably also bring claims of direct and indirect religion or belief discrimination.  Domestic caselaw has recently widened the concept of philosophical belief to include any belief with sufficient cogency, seriousness, cohesion and importance which is worthy of respect in a democratic society.  The EAT’s watershed judgment in Nicholson v Grainger plc held that belief in man-made climate change was capable of amounting to a philosophical belief protected by the 2003 Regulations.  In Hashman v Orchard Park Garden Centre, the EAT held that a belief in the sanctity of life including a belief that fox-hunting and hare-coursing were incompatible with the sanctity of life was likewise a protected philosophical belief.

Is a New Law preventing Workplace Discrimination because of Political Affiliation or Association Required?

How does the current domestic law on religion or belief square with the ECtHR’s view that the treatment accorded to Mr Redfearn did not engage his rights to freedom of thought, conscience and religion under Article 9 of the ECHR?  Can a meaningful dividing line be drawn by the ECtHR between religious and philosophical beliefs and political beliefs?  In South Africa, the Dutch Reformed Church used to use theological arguments in favour of apartheid, just as in the American South, the Bible was used to justify segregation and anti-miscegenation laws.  On the other hand, the Equality and Human Rights Commission has suggested that a religious belief in the racial superiority of a particular race would fall outside the scope of the UK protections against discrimination because of religion or belief, as it would be incompatible with the rights and freedoms of others.

It remains to be seen whether the UK courts in a future case will extend the law on the protection of philosophical beliefs to cover political beliefs such as those of Mr Redfearn.  If so, it would still remain to be seen whether the ECtHR would be prepared to accept that such a conflation in UK law of protection for religious and philosophical beliefs and protection of political beliefs constituted adequate protection of the right to freedom of political affiliation and association.

If the UK courts decline to extend the law on religion or belief discrimination to cover political beliefs which offend, shock or disturb, then it must follow from the ECtHR’s judgment today that it is incumbent on the UK to protect freedom of association either with a removal of the qualifying period for unfair dismissal (surely unthinkable given its recent extension to two years) or with a new law concerning discrimination because of political affiliation or belief.

In the light of Redfearn v UK, we must await the ECtHR judgments in the cases of Eweida and Chaplin v UK and Ladele and McFarlane v UK with even greater anticipation.

The judgment can be found here.