Mark Shulman, Consultant Solicitor at Keystone Law

**AGE DISCRMINATION
Can cost justify discrimination?
**Regulation 3(1) of the Employment Equality (Age) Regulations 2006 (now substantially re-enacted under section 13(2) of The Equality Act 2010) allows age discrimination to be justified if the treatment is "a proportionate means of achieving a legitimate aim".

In [Woodcock v Cumbria Primary Care Trust]() [2012] EWCA Civ 330 the Court of Appeal considered whether cost savings could be a legitimate aim. The Chief Executive of an NHS Primary Care Trust was made redundant as a result of reorganisation. Two weeks before Claimant reached his 49th birthday, someone noticed that, unless they served the redundancy notice on him before he was 49, he would be 50 when his notice period expired, thus entitling him to an enhanced early retirement package which could have cost the NHS up to an extra £500,000. The claimant was subsequently given his notice prior to a formal consultation meeting so that it could be achieved before he was 49. He claimed unfair dismissal and age discrimination.

In dismissing the claims, the Court of Appeal accepted the "cost plus" approach i.e. cost on its own cannot justify age discrimination, but cost put into the balance and included as part of a number of factors justifying discriminatory treatment could do so. Therefore, if the Trust had simply aimed at saving or avoiding costs, it would not have been a means of achieving a 'legitimate aim' and would have been incapable of justification. However, there was a legitimate aim because the dismissal of the Chief Executive was to give effect to the Trust's genuine decision to make him redundant.

In terms of proportionality, this required striking a balance between the discriminatory effect of the treatment of the Chief Executive and the needs of the Trust. The 'corner cutting' in the redundancy consultation exercise had deprived him of nothing of value because the consultation would have achieved nothing in any event. It was also the case that the Chief Executive had "no right, entitlement or expectation" to the enhanced benefits that he would have received had he remained employed until he was 50. He would have received "a pure windfall" and avoiding giving the employee an undeserved windfall was more than merely an exercise in cost saving. Applying the "cost plus" approach there had been no unlawful discrimination.

The case provides clear guidance to employers that costs alone will not justify discrimination but saving or avoiding cost as part of a bundle of factors might do so. Therefore caution is still required as in some cases it could be difficult to know where a Court or Tribunal will draw the line between circumstances amounting to pure costs and cases that fall within the "cost plus" principle. Whilst employers may try to "find a factor" (other than cost) to justify potentially discriminatory decisions on the grounds of age, Tribunals are bound to look carefully at any attempt to disguise what in reality is a justification based on pure cost savings.

**DISCRIMINATION
Discrimination on the grounds of marriage
Can being married to an organisation's Chief Executive justify his wife's dismissal if it is on the grounds of that close connection? Yes said the EAT In [Hawkins v Atex Group Ltd & Ors]()** UKEAT/0302/11/LA provided that marriage on its own was not the effective cause of the dismissal.

The Claimant was married to the Chief Executive of her employer. Previously, the husband had been instructed by the employer not to employ any members of his family beyond 2009 but the Claimant subsequently became an employee. She was dismissed because her appointment had been unauthorised. She brought (among other claims) a marriage based discrimination claim under section 3 of the Sex Discrimination Act 1975 (now in the slightly different wording in section 8 of the Equality Act 2010) but it was struck out as the Tribunal found that the marriage on its own was not the effective cause for the termination.

The EAT conducted a thorough review of direct marriage discrimination and found that action based on close relationships (including marriage), rather than on marriage itself, will not be discriminatory. The paradigm case is where a woman is dismissed – or otherwise less favourably treated – simply because she is married. An example of a marriage specific reason is found in Chief Constable of Bedfordshire Constabulary v Graham [2002] IRLR 239 where the EAT upheld a female inspector's marriage discrimination claim where she was refused a job in the division commanded by her husband, a Chief Superintendent. The main reason why she was rejected for the post was that "as the spouse of a serving officer…she would not be a competent and compellable witness against her spouse in any criminal proceedings". This was a marriage specific reason because it could only arise between spouses.

A rather less straightforward case is where the reason for the treatment in question comprises both (i) the fact that the complainant is married and (ii) the identity of her husband – i.e. where she is dismissed not simply because she is married, but because of who she is married to. In Hawkins, the EAT accepted that it will sometimes be legitimate for employers to accord different treatment to employees who are parties to a close personal relationship, for example to deal with conflicts of interest and perceptions of favouritism, nepotism and the like and such treatment may be "less favourable". Underhill J considered that it was not the intention of Parliament that such treatment would automatically be unlawful in cases where the parties in question were husband and wife.

Employers often have conduct rules prohibiting close relationships and Hawkins confirms that where there is a combination of reasons for the treatment of a married employee and not just a marriage specific reason, the application of such a rule can be lawful even where the employee concerned is disadvantaged as a result.

**TUPE
Changing working conditions
Could a change in work base location from North London to South London after a TUPE transfer amount to a substantial change in working conditions entitling the employees concerned to resign and claim unfair dismissal? Yes said the EAT in [Abellio London Ltd v Musse & Ors]()** UKEAT/0283/11/CEA. In that case a group of bus drivers resigned following a service provision change under the Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE"). They claimed that Regulation 4(9) of TUPE applied under which employees who have transferred to a new employer have the right to resign if the transfer involves (or would involve) a substantial change in their working conditions to their material detriment. The bus drivers contended that as a result of their relocated workplace from their original Westbourne Park depot to a work base in Battersea some six miles away, this constituted a "substantial change" in their working conditions.

The EAT confirmed that to establish a "substantial change" under Regulation 4(9) there does not have to be any breach of contract by the employer. "Working conditions" is wider than "contractual conditions" and can include:

* contractual conditions; * physical conditions; * place of work.

What amounts to a substantial change is always a question of fact to be determined by reference to the nature and degree of change and for a change to be "material" it need only be more than trivial or insubstantial.

The EAT upheld the Tribunal's decision that in London, a move from north to south of the river was substantial and an increase in the working day of between one to two hours because of additional travel time was a material detriment.

From a practical perspective transferees in a TUPE transfer situation might have to accept the risk of automatic unfair dismissal claims where there is a material change of location
(or a change in other working conditions) after the transfer. But one way to reduce risk would be to try and seek suitable indemnity arrangements with the transferor.

**Dismissal for ETO reasons – changes in the workforce
**Under Regulation 7 of TUPE, the dismissal of an employee for a reason connected with a TUPE transfer is automatically unfair unless the transferee establishes that the reason for the dismissal was an economic, technical or organisational reason entailing changes in the workforce ('an ETO reason').

In [Meter U v Ackroyd & Ors]() UKEAT/0206/11/CEA the EAT considered whether  the "workforce" in Regulation 7(2) was limited to employed workers or whether the ETO defence could include a workforce comprising services provided by franchised limited companies.

Meter U provided meter reading services to electricity suppliers but it did not employ its own meter readers. Instead it operated through franchises with independent limited companies, normally owned by individual meter readers. After a TUPE transfer the meter readers declined an opportunity of forming franchise companies and were dismissed. They brought Tribunal claims against Meter U claiming that there had been automatically unfairly dismissals for a transfer-related reason.

Meter U appealed. The EAT decided that in ordinary common sense the word 'workforce' does not include a limited company as such an entity was not a person, worker or employee. There had been "changes in the workforce" (i.e. a reduction in the number of employees when Meter U replaced transferred employees with the limited company franchisees). Accordingly, there were dismissals for an ETO reason and were potentially fair on grounds of redundancy. The claims were remitted to the Tribunals to decide whether these dismissals were fair or unfair.

Following the Meter U decision, it should be borne in mind that whilst the franchise service companies themselves did not fall within the definition of a "workforce" as they were corporate entities, it could potentially be argued that the individuals providing services through a service company could fall within the ambit of the "workforce" under Regulation 7 of TUPE. This point remains to be tested in a future case.

**UNFAIR DISMISSAL
Changing a dismissal notice
**"If at first you don't succeed, try, try again". Can the effective date of termination in a dismissal notice be changed unilaterally by an employer? Yes, if the employer is issuing a fresh notice of dismissal rather than seeking to vary the original notice.

In [Parker Rhodes Hickmott Solicitors v Harvey]() UKEAT/0455/11/SM the claimant started employment with a firm of solicitors on 1 September. The following year the firm decided to terminate the Claimant's contract due to lack of work. The Claimant was given a letter saying that his role would be redundant from 31 August. The Managing Partner was concerned that the termination date may have continued his employment past the one year mark for acquiring unfair dismissal protection. So she sent a second letter which was in identical terms to the first, apart from the date of termination was now 28 August.

The Tribunal found that the effective date of termination was 31 August and so they had the jurisdiction to hear the employee's claim for unfair dismissal. The employer's appeal to the EAT was upheld on the basis that the Court of Appeal's decision in Stapp v The Shaftesbury Society [1982] IRLR 326 was "determinative":

* notice once given can be unilaterally withdrawn or varied; * a summary dismissal, even if wrongful, was effective to terminate the employment there and then; * it made no difference in principle whether the dismissal was summary or (as in the present case) on notice. Both were types of dismissals terminating the employment contract and the fact that such dismissal may have been wrongful did not affect the effective date of termination for unfair dismissal purposes.

Two further important practical points arise in connection with this case. First, the qualifying period of service for bringing "ordinary" unfair dismissal claims increased from one to two years for employees whose employment with a new employer commenced on or after 6 April 2012.

Second, in calculating qualifying service, the EDT can be extended to increase the period of service where an employee has not been given the minimum statutory notice to which they are entitled (see section 97(2) of the Employment Rights Act 1996). So, for example, where an employee is employed continuously for less than a year and is then wrongfully dismissed without notice, for example two days before completion of their one-year period of employment, the effective date of termination can (unless there is a justifiable summary dismissal) be extended by one week (the period of minimum statutory notice) to give the employee the necessary one year's continuous employment to present an unfair dismissal claim to an employment tribunal.

**PRACTICE AND PROCEDURE
Costs
The judgment in Growcott v Glaze Auto Parts Ltd** UKEAT/0419/11/SM  provides various practical tips about costs warning letters.

The Claimant was dismissed after an act of gross misconduct. She brought a claim of unfair dismissal and the employer's solicitors responded to the claim with an e-mail that warned the claimant that they would pursue a claim for costs against her if her complaint was dismissed because they believed her claim was misconceived. The ET rejected the claim of unfair dismissal and made a costs order against her.

It is well worth reading the costs warning e-mail from the employer's solicitors, as set out in the EAT's judgment. What the EAT considered as being a "fair and sensible warning" is a useful starting point for practitioners when drafting a costs warning letter. That e-mail was described as "couched in accurate, straightforward and simple terms. It was wholly suitable to convey to any litigant the way in which the Employment Tribunal was bound to approach the forthcoming hearing".

Mark Shulman *is a Consultant Solicitor with Keystone Law and an accredited workplace and employment mediator.
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