A question of timing - Case Round-Up: December 2016

In this month's round-up, Mark Shulman, consultant solicitor with Keystone Law, looks at recent cases on unfair dismissal and discrimination time limits.

Mark Shulman, Consultant Solicitor at Keystone Law

Res judicata
*In [Pugh v RT Electrics Ltd ]()*UKEAT/0177/16 the Claimant brought various claims, some of them made out of time. At a preliminary hearing, the ET decided that the claims for indirect disability discrimination and failure to make reasonable adjustments had been brought after the expiry of the three-month period under the Equality Act 2010, but that it would be just and equitable under section 123 of that Act to allow them to proceed.

However, at the final hearing, a second ET held that it did not have jurisdiction to hear the claims after all because they were out of time. The issue arose as to whether the second ET was entitled to consider the question of time limits anew, and if so, was it unfair to do so without notifying the Claimant and giving him a reasonable opportunity to be heard on the matter?

Rule 73
Rule 73 of the ET Rules provides that:

"Where the Tribunal proposes to reconsider a decision on its own initiative, it shall inform the parties of the reasons why the decision is being reconsidered and the decision shall be reconsidered in accordance with rule 72(2)..."

Rule 72(2) states that:

"…the original decision shall be reconsidered at a hearing unless the Employment Judge considers, having regard to any response to the notice provided under paragraph (1), that a hearing is not necessary in the interests of justice. If the reconsideration proceeds without a hearing the parties shall be given a reasonable opportunity to make further written representations."

The Claimant's case on appeal was that:

the ET's previous decision was res judicata* (the issue of extension of time having already been determined); * the ET's final decision on time bar could not be regarded as a reconsideration decision under Rule 73 taken on the ET's own initiative. There had been no attempt to follow the procedure prescribed by Rule 73. The ET's judgment had been reserved without any suggestion that the question of its jurisdiction was to be considered; * even if there was power to reconsider the EJ's original decision, the ET's discretion to reconsider under Rule 73 is not unfettered and it was not in the interests of justice to do so in the present case.

Issue estoppel
On the issue of res judicata, the EAT explained that the original EJ had been asked to determine the issue of whether the discrimination claim was out of time, and if so, whether it was just and equitable to allow an extension. This had required the ET to make a substantive determination. The EJ decided it was just and equitable to assume jurisdiction over the discrimination claims, with the result that an issue estoppel operated to prevent a subsequent challenge to jurisdiction at the final hearing stage.

Reconsideration under Rule 73
The EAT rejected the contention that the ET had effected a reconsideration of EJ's original judgment on its own initiative. It had not been put before the ET; there had been no argument advanced that any such reconsideration was "permissible and appropriate". The ET's judgment made no reference to any reconsideration. Had the ET considered that it was embarking on a reconsideration, it would have been required to apply Rules 72 and 73 which it had not done.

Crucially, the procedure for reconsideration of judgments is statutory. The Rules are in mandatory terms and must be applied before any such reversal can be contemplated. In the present case, the EAT thought that the interests of justice did not demand a reconsideration.

Even if had been open to the ET to revisit the question of jurisdiction, the EAT would have found that the way in which it did so was procedurally unfair and deprived the Claimant of a fair hearing on the matter. No opportunity was given to him to make submissions on the issue of time limits and this was against a background of his having understood that the issue had been determined. His lack of legal representation exacerbated the unfairness.

The EAT substituted the ET's judgment so that the time limit decision was set aside in relation to the indirect discrimination and lack of reasonable adjustments claims. There was no need to remit the case back to the ET, as the claims would have succeeded but for the wrong approach to revisiting time limits.

Unfair dismissal – extension of time
In [Baisley v South Lanarkshire Council ]()UKEATS/0002/16/JW, the Scottish EAT decided that an ET had been wrong not to extend time in an unfair dismissal claim because the requisite fee had not been paid on time. The ET had also been wrong in ruling that it had been reasonably practicable for the Claimant to lodge a second claim in time.

The Claimant's representative lodged an ET claim for unfair dismissal in time and then sent in a fee remission application which was rejected. The appeal against this rejection was sent by fax, but never received by the ET and the claim was dismissed as the original ET fee had not been paid.

A second claim was then lodged very shortly afterwards along with the appropriate ET fee, but this was out of time.

The ET ruled in relation to the first claim that although the Claimant's solicitors had not sent the fee remission appeal in time to the ETS, whilst there were reasons for them not doing so, the fault was theirs and so an extension of time would not be granted.

Further, in relation to the reasonable practicability argument concerning the second claim, the ET referred to the principle that if a claim is presented out of time due to an error by solicitors, the Claimant's remedy is against the solicitor (Dedman v British Building & Engineering Appliances Ltd (1974) ICR 53). The ET's view was that given that the claim was submitted on the deadline date and given that there were difficulties with the Respondents' fax machine, the Claimant's representatives ought to have followed up the fax with a telephone call to the ETS to check it had been received and/or to have hand-delivered the claim to the ETS. As they had not done so, it could not be said that it was 'not reasonably practicable' to submit the claims on time. The Claimant appealed.

Judicial route to fairness
Should the ET have allowed an extension of time under the first claim (under Rule 5) to pay the ET fee? The decision in [Software Box Limited v Gannon ]()UKEAT/0433/14 provided a judicial "route to fairness" to the ET so that it may extend the time for the payment of the fee, or submission of the appeal against fee remission, notwithstanding that the earlier time limit has expired.

The issue was whether the EJ had treated the examples given by Langstaff J in Software Box as an exhaustive list of applicable circumstances where Rule 5 applied and whether the ET's reasoning implied that an extension of time could be granted only in circumstances where there was no fault by the party seeking to invoke it (or their advisers).

Discretion under Rule 5
The EAT reached the view that the ET had (wrongly) relied on what was regarded as fault by the Claimant's advisers as determinative of the issue. The only conceivable "fault" on the part of the advisers was that they did not take an active step to contact the ET to ensure that the fax they had sent had actually been received. But the problems they had encountered with their fax machine did not include the non-receipt of faxes by the ET and so describing such an omission as "fault" seemed to demand something approaching "a perfectionist method of working" and so such an inquiry was not necessary by a reasonable solicitor.

Secondly, even if there was clear fault on the part of the Claimant's advisers, there were other factors to be weighed in the balance. On the face of the ET's judgment, no attempt was made to address the balance of prejudice i.e. the relative fairness and unfairness, convenience and inconvenience and consequences to each party of the decision to be made in the exercise of the ET's discretion. Nowhere in the decision was the prejudice to the Claimant of losing the ability to litigate balanced against the absence of prejudice to the Respondent who was left in no worse a position than they would have been had the fee remission application been received in time. Had the ET considered the matter, the prejudice was all one way (i.e. prejudice only to the Claimant).

The failure to address the balance of prejudice in considering whether to extend time, amounted to an error of law sufficient on its own to allow the appeal.

Reasonable practicability
On the issue of reasonable practicability in terms of lodging the second claim, the ET had also been wrong. The relevance of the first claim was that it was part of the factual background explaining the circumstances that required a second claim to be made. The difficulty with the ET's decision was that the circumstances of the two claims were treated as one. The only circumstances taken into account were those relating to the problems with the fax machine and the first claim. On the basis of perceived fault on the part of the Claimant's advisers, the ET had rejected the argument that it was "not reasonably practicable" to submit the "claims" in time, although the ET had specifically recorded that the Claimant had presented the second claim within such further period as was reasonable in terms of section 111 ERA.

On a proper analysis of each claim it would have been recognised that the Claimant and his advisers wrongly, but genuinely, understood that the appeal against the refusal of fee remission had been lodged in time. On discovering that the application had not been received and on learning about the rejection of the first claim, there was no delay in the lodging of the second claim.

Had the ET had separated the first and second claims, the irresistible conclusion would have been that the second claim was initiated promptly. Having regard to the balance of prejudice (which overwhelmingly militated in favour of allowing a claim that would otherwise not be able to proceed), it was difficult to see the justification for rejecting the second claim.

For these reasons the ET erred in its approach in the reasonable practicability test and for that reason also the decision could not stand.

The original claim was remitted to the ET to continue to be processed as an unfair dismissal claim, allowing 28 days for the Claimant to resolve the payment of the fee/fee remission matter.

Discrimination – continuing act
Was a failure to make good a promise to make up back pay a continuing act of   discrimination? Yes, said the EAT in [Fairlead Maritime Ltd v Parsoya ]()UKEAT/0275/15/DA.

The Respondent had operated an indirectly discriminatory policy of under-paying its employees with "employability issues" - effectively where it considered immigration issues might arise given an employee's visa status. The ET had found this put those sharing the Claimant's protected characteristic (he was an Indian national) at a disadvantage and also put him at a disadvantage.

The Respondent did not challenge those findings but submitted that the Claimant was no longer disadvantaged by the policy after June 2013, when his pay was increased to the correct level after he had been granted a longer-term visa. They argued that the Claimant's ET claim, lodged in September 2014 was therefore out of time.

The ET disagreed, finding that the Respondent had told the Claimant that once his "employability" was resolved, the earlier shortfall in pay would be made good. Its failure to make good on that promise meant there was a continuing act of indirect discrimination until the termination of the Claimant's employment in July 2014. The claim was therefore brought in time. Alternatively, it would have been just and equitable under section 123(3) of the Equality Act 2010 to extend time.

The Respondent appealed.

Continuing act or one-off decision?
The EAT confirmed that where an employer operates a discriminatory policy (a discriminatory regime, rule, practice or principle), that will amount to an act extending over a period (Barclays Bank plc v Kapur and Ors [1991] IRLR 136 HL), which is to be distinguished from the continuing consequences of a one-off decision (Owusu v LFCDA [1995] IRLR 574 EAT).

In the present case, the act complained of was not limited to the mere existence of the Respondent's unjustifiable and indirectly discriminatory policy of not paying full salary to those who required a visa for their employment. It was the application of that policy to the Claimant that gave rise to the act complained of. The question then arose as to when that policy ceased to be applied?

The ET had found that there had been a promise made to the Claimant that the shortfall in his salary would be made good once his long-term visa was granted. Although the ET's reasoning had not been as clear as might be hoped, the EAT was persuaded that there had been a continuation of the discriminatory policy of which the Claimant had complained. The policy operated by the Respondent was not to pay full salary to those whose employability was in issue; that continued beyond the time when the Claimant's visa status was resolved and even after the Respondent had then put him onto the correct salary rate (when the Respondent still continued to fail to make good the shortfall). Therefore, the Respondent had continued the discrimination.

Extension of time
The relevant principles are those as set out by the EAT in British Coal Corporation v Keeble [1997] IRLR 336. Specifically, when considering the exercise of such a discretion, ET's had to identify the cause of the Claimant's failure to bring the claim in time.

It had found that "the Respondent had strung the Claimant along" with continuing promises to make good the earlier shortfall in his pay. The Claimant had reasonably sought to amicably resolve matters by raising his concerns with the Respondent and he believed that the continuing failure to make good the shortfall amounted to separate decisions, thus extending time. And even though the ET had not expressly mentioned the issue of prejudice to the employer, that was not fatal. The employer itself had not raised the matter at the ET and no prejudice was identified at the EAT (other than the inability to avoid a liability that would otherwise arise). Therefore, the ET had also reached a permissible view on the issue of extending time.

Mark Shulman is a Consultant Solicitor with Keystone Law and an accredited workplace and employment mediator. His blog on new employment legislation can be found here.

Published: 14/12/2016 17:52

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