Employment Cases Update

Increasing compensation claims - Case Round-Up: October 2020

Date published: 28/10/2020

Mark Shulman, Consultant Solicitor with SW19Lawyers, looks at three compensation cases

In this month's round-up of cases, Mark Shulman, Consultant Solicitor with SW19Lawyers, looks at compensation cases covering:

- Additional awards for failing to provide statutory employment particulars;
- Protected disclosures and uplifts for failing to follow the ACAS Code of Practice on Disciplinary and Grievance Procedures;
- Whether interest is payable on awards made under re-engagement orders.


Mark Shulman, SW19Lawyers



Failure to provide written particulars of employment

Employers are required to provide certain statutory written particulars as to terms and  conditions of employment (section 1 ERA 1996) and a statement when there are changes to those particulars (section 4 ERA 1996). An employee or worker may make a complaint to an ET where an employer fails to provide a statement (or provides an inaccurate or incomplete statement).
The employee or worker may be eligible for an award in respect of the failure to provide particulars (see s 38 of the EA 2002). Where an employee or worker has successfully brought one of the substantive claims listed in Schedule 5 to the Employment Act 2002 and at the time when that claim was brought the employer is still in breach of its duties under section 1 or section 4 of the ERA 1996, the ET must make an award (or an increased award over and above that awarded in the claim to which the proceedings relate).The amount of the award is either two or four weeks' pay (unless exceptional circumstances apply which would make it unjust or inequitable to make the award).

However, despite this enhancement to employment rights, these section 38 provisions have received little attention by way of case law. In Iqbal (t/a Smokin' Rooster) v Singh UKEAT/0127/19/RN, the issue before the EAT was whether an ET should have made a section 38 award.

The Claimant, Mr S, alleged that he had suffered unlawful deductions during two separate periods of employment. The first period of employment was for more than 2 months but that claim was dismissed as being out of time. The second period of employment lasted for just under 7 weeks.

The ET upheld claims in respect of the second period, declaring that Mr S had been paid less than the NMW and had also suffered unlawful deductions. The ET also found that the Respondent had failed to provide a section 1 statement "…in either the previous or most recent period of employment". It therefore made a s.38 award of four weeks' pay "taking into account the Respondent's utter failure to comply with any of the documentary requirements of employment legislation and his fabrication of the contract document…".

However, after an application for reconsideration, that decision to make a section 38 award was re-visited by the ET. The EJ pointed out that the second period of employment was for less than two months and so considered that the employer's duty to provide particulars for that employment was not actually engaged. However, there was no dispute that a section 1 statement had not been provided in relation to the first period of employment. Therefore, "At the point that the proceedings were begun…, the Respondent continued to be in breach of s.1(1) and (2) ERA, in that he had failed to provide terms and conditions of employment to the Claimant for the first period of employment" (emphasis added). Therefore, the ET's decision on the s.38 award remained unchanged.

Power to make section 38 award
One of the grounds of appeal advanced by the employer to the EAT was that the ET had been wrong in making a s.38 award by reference to the earlier period of employment where the only substantive claim in relation to that period had been dismissed.
The EAT referred to the previous EAT case of Stefanko and Others v Maritime Hotel Limited and Another UKEAT/0024/18, in which Her Honour Judge Stacey had considered the provisions of section 38. In the light of that previous judgment, the EAT said that under the law applicable at the time of Mr S's claim:

" An employer has an obligation to provide an employee with a statement of initial employment particulars containing the information set out in Section 1(3) of the ERA 1996. That, pursuant to Section 198 of the 1996 Act, applies to all employees, save for those who have worked continuously for less than one month. Further, pursuant to Section 2(6) of the 1996 Act, the obligation in Section 1 continues even if an employment ends before the end of the two-month period set out in Section 1(2) of the ERA 1996".

Therefore, in relation to the second period of employment, the ET would have been at liberty to make an award, even though the employment had lasted for less than two months because the obligation to provide the s.1 statement continued even after Mr S's employment ended. Therefore, the ET had been wrong insofar as it suggested that an award could only be made if the employment had continued for two months, as that failed to apply section 2(6) of ERA 1996 (which required that a s.1 statement still had to be given).

However, at the date that Mr S's ET proceedings were issued, a s.1 statement had still not been provided in relation to the second period of employment and the ET had subsequently found in favour of Mr S (in relation to his wages claims).

Accordingly, the ET was entitled to make a section 38 award (albeit for different reasons to those given by the EJ).

Practice comment
As to the significance and benefits of having written particulars, Her Honour Judge Katherine Tucker said that:-

"The provision in the 2002 Act for the award of additional sums of money when there has been a failure to provide employment particulars underlines just how important it is to provide those employment particulars. They provide transparency and they provide clarity, for employer and employee alike".

It should be noted that this case was decided before the Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2019 made the entitlement to a statement of employment particulars, a "day one" right for both employees and workers with effect from 6 April 2020.

In cases where an employer has not provided an adequate section 1 (or a section 4 statement) and s.38 potentially applies, a claimant will want to address this in their ET1 and also include a claim for a section 38 award in their Schedule of Loss. However, it should be borne in mind that there are some limitations. Firstly, some of the claims in Schedule 5 EA 2002 can only be brought by employees (rather than workers). Also, as Schedule 5 does not specify a claim for a breach of section 1 of ERA 1996, there must be some other live additional claim upon which the ET can adjudicate.
ACAS Code uplift
Can an uplift be awarded for breach of the ACAS Code of Practice on Disciplinary and Grievance Procedures where the dismissal is for making a protected disclosure? Yes, said the EAT on the facts in Ikejiaku v British Institute of Technology Ltd UKEAT/0243/19/VP, where the protected disclosure amounted to a "grievance" under the Code.

The Claimant, a senior lecturer in business and law, worked for the Respondent as a senior lecturer until his dismissal after he made a protected disclosure (that he had been told by the Associate Dean to give a pass mark to some students who the Claimant had found to have been copying from each other in certain test scripts).

The ET held that the sole reason for the Claimant's dismissal was his protected disclosure and so his claim of automatic unfair dismissal succeeded. But the ET declined an uplift to the Claimant's compensation pursuant to s.207A Trade Union and Labour Relations (Consolidation) Act 1992 on the grounds that the Respondent had failed to comply with the ACAS Code.

The ET considered that whilst the Code expressly applied to disciplinary and grievance situations, it was silent as to whether or not it applied to automatically unfair dismissals arising from protected disclosures. The ET's view was that to broaden the Code's application to include protected disclosures (where there was no element of misconduct), would be an unwarranted gloss and expansion on the words of the Code. "[W]ith some reluctance" it declined to make an uplift award. But the ET added that if it had been able to make an ACAS uplift, an award of 25% would have been made due to "the Respondent's total failure to follow any procedure and flagrant disregard of basic fairness".

Was the protected disclosure a "grievance"?
Was the ET wrong to have refused an uplift of compensation? On appeal to the EAT, the Claimant submitted that the ET was wrong to conclude that the ACAS Code had no application. He argued that the protected disclosure constituted a grievance within the Code (i.e. constituted "concerns, problems or complaints that employees raise with their employers").

The Respondent submitted that the argument as to whether the protected disclosure constituted a grievance had not been put before the ET and therefore should not be allowed to proceed on appeal. As the "grievance" argument had not been advanced, the ET had therefore rightly confined itself to the question of whether the "discipline" section of the Code could apply and was right to decline to make an uplift award.

Discipline or grievance aspects of the Code?
The EAT confirmed that in the circumstances, the ET was right to hold that the Discipline section of the Code would not apply. A protected disclosure could never be a ground for disciplinary action (i.e. an allegation involving the culpability of the employee.) Secondly, culpability formed no part of the Respondent's case for dismissing the Claimant.

However, the grievance procedures were a different matter. The protected disclosure constituted a "grievance" within the Code's definition of "concerns, problems or complaints that employees raise with their employers". Therefore, section 207A was potentially engaged.

But had the Claimant in fact confined his s.207A claim only to the Discipline section of the Code? No, said the EAT, in the light of the Claimant's Schedule and written submissions to the ET. Also, the ET's Judgment itself had not stated that the uplift application was confined to the discipline section of the Code.

The EAT was not therefore persuaded that the Claimant had confined his s.207A claim so as to exclude consideration of the grievance section of the Code and therefore that issue was remitted for reconsideration.

In Fotheringhame v Barclays Services Ltd UKEAT/0208/19/BA the EAT considered whether interest could be awarded in relation to a sum that would have been payable under a re-engagement order when the employer did not re-engage the employee.

The Claimant (F) held a senior and high-earning position with the Respondent. He was found to have been unfairly dismissed and a re-engagement order was made under which R was required to pay the Claimant in respect of any benefit which he might reasonably be expected to have had but for the dismissal, as well as arrears of pay.

F was not re-engaged and at a subsequent remedy hearing he was awarded compensation in the sum of £947,585.20 (less tax and National Insurance).

F claimed interest on the sum awarded under the original re-engagement order, arguing that otherwise a Respondent could ignore the order, delay payment and benefit from their non-compliance.

No "relevant decision"
The ET rejected his claim for interest, deciding that the Remedy Judgment in relation to the original re-engagement order was not a "relevant decision" under Article 2 Employment Tribunals (Interest) Order 1990 – on a proper construction it was not an "…award or other determination of the tribunal by virtue of which one party to proceedings was required to pay a sum of money…".

The ET held that "The terms of a re-engagement order are prospective – they specify the terms upon which the re-engagement "is to take place" (s115(2) ERA 1996). The money to be paid becomes due if and when the re-engagement takes effect. The ET decided that a re-engagement order "…does not require payment of a sum of money on the date that the order is made".

The ET's view was that the result was not unjust to the Claimant because the ERA 1996 makes specific provision (in s117(3)) for an additional award of compensation to be paid to an employee if they are not re-engaged in accordance with a re-engagement order (unless the employer proves that it was not practicable to comply with the order). Therefore, a Respondent would not profit from deliberately delaying compliance.

The Claimant appealed against the ET's decision to award no interest.

Award was conditional
Had the ET been right to refuse interest? Yes, said the EAT. The appeal was "a point of pure construction". The summary by Underhill LJ in Mackenzie v The Chancellor, Masters and Scholars of the University of Cambridge 2019 4 All ER 289, CA, was of considerable assistance in understanding the relevant provisions concerning re-engagement orders. As explained by Underhill LJ, the effect of sections 115 and 117 of the ERA 1996 was that an order for re-engagement "…creates a situation in which the employer must either re-engage the employee or become liable for the awards specified by section 117(3), which include an additional award on top of what it would have had to pay if no re-engagement order had been made…." (at paragraph 20).

Therefore, as the EAT saw it, the flaw in the Claimant's argument was that although the re-engagement order contained an order to pay a sum of money, that sum was conditional upon re-engagement taking place. The monetary part of the re-engagement order was (in the words of s115(2)), part of "the terms on which the re-engagement is to take place." As re-engagement did not take place, section 117 itself specifically provided for a separate and distinct order to be made. That order was duly made and the previous award then fell away. It would be "a logical nonsense" for interest to be payable on a conditional award, when the condition had not been met.

Consequently, the EAT upheld the ET's decision that the Interest Order did not apply as F had contended.

Mark Shulman is a Consultant Solicitor with SW19Lawyers and an accredited workplace and employment mediator.