Cross and others v British Airways plc [2005] IRLR 432
EAT (1) clarifies the test for establishing ‘normal retiring age’ with regard to the provision which imposes a restriction on the age at which an employee can claim unfair dismissal; (2) rules that employers can put cost considerations into the balance when justifying a potentially discriminatory provision, criterion or practice.
Unfair dismissal claims
Facts: Claimants A were pilots and cabin crew originally employed by British Caledonian Airways (BCal) prior to its merger with British Airways in 1988. BCal had a contractual retirement age (CRA) of 60. At the time of the merger (not then treated as a TUPE transfer), BCAL employees agreed to BA’s terms and conditions, including its CRA of 55. Claimants A claimed unfair dismissal in 2001 and 2002 when they were forced to retire at age 55, alleging that there had been a relevant transfer under the Transfer of Undertakings (Protection of Employment) Regulations 1981 (the TUPE Regulations) and their retirement age should have been maintained at 60. An employment tribunal ruled that there had been a relevant transfer and that their CRA of 60 therefore continued. It held that as all the other employees’ normal retiring age (NRA) was the same as their CRA, a reasonable understanding of the employees affected “would be that their NRA was 60”. As their NRA was 60, they had unfair dismissal protection until that age In the circumstances, however, the tribunal found that their dismissal was fair for “some other substantial reason” under section 98 of the Employment Rights Act 1996 (ERA). Claimants A appealed.
Decision: The EAT held that the employment tribunal had no jurisdiction to hear Claimants A’s claims; the tribunal had erred in finding that Claimants A had a NRA of 60 when they were dismissed. Citing Waite v GCHQ [1983] IRLR 341, it confirmed that the proper test for determining the NRA is “to ascertain what would be the reasonable expectation or understanding of the employee holding that position at the relevant time”. The tribunal had erred in finding that if Claimants A had been “aware of all the factors”, their reasonable understanding would have been that their NRA was 60. Assessing what would be, or would have been, the norm if the situation had been otherwise, is not to arrive objectively at the norm. The EAT also disagreed with the argument that a NRA of 55 was “”impermissible” by virtue of the effect of regulation 5 of the TUPE Regulations. Claimants A had retained their original CRA of 60 in 1988 post-transfer, but by 2001, their NRA was 55 – that retirement age had been ratified and applied constantly over the 13 year period thereafter. There was no question of evasion or abuse of the TUPE Regulations.
Sex discrimination claims
Facts: Claimants B, all female, were employed by BA as cabin crew and brought sex discrimination claims. For BA staff who joined prior to 1971, there was a CRA of 60 for males and 35 for females. All employees recruited after 1971 had a CRA of 55 but a special exception was made for existing male employees who retained their retirement age of 60. The position of women employed prior to November 1971 was harmonised when the Sex Discrimination Act 1975 (SDA) came into force, meaning that all those employees who had been in service prior to 1971 could retire at 60. In claiming indirect discrimination, Claimants B noted that in a workforce of 13,127 in 2002, there remained only 536 employees with a CRA of 60, the vast majority of whom (436) were male, whereas the workforce as a whole was predominantly female. They argued that all post-1971 female staff should also have a CRA of 60. The employment tribunal found that BA had applied a provision, criterion or practice (PCP) within the meaning of section 1(2) of the SDA in that in order to be allowed to work until 60, an individual had to have been employed prior to November 1971. 90.28% of male employees were in the disadvantaged group as opposed to 98.55% of female employees. 9.72% of male employees could comply with the PCP whereas only 1.45% of female employees could. On this basis, the tribunal found that Claimants B had established that the PCP was to detriment of a considerably larger proportion of women than men. It found however, that BA had justified that policy. In so finding, that tribunal took into account the cost implications of increasing the retirement age to 60. Claimants B appealed to EAT.
Decision: The EAT found that the employment tribunal had not erred in finding that the application of a CRA of 55 to cabin crew employed after November 1971, and a CRA of 60 to those employed prior to that date, constituted a PCP which had an adverse impact on a considerably larger proportion of women than men. Nor had the employment tribunal misdirected itself by holding that cost grounds can properly be a factor justifying indirect discrimination, if combined with other reasons. While an employer cannot justify a discriminatory PCP solely on cost considerations, it can put cost considerations into the balance, together with other justifications.
Comment: Section 109 of the ERA excludes the tribunal’s jurisdiction to hear unfair dismissal claims if, on or before the effective date of termination, the employee has attained his or her NRA (or 65 where there is no NRA). Cross serves as a useful reminder that when deciding whether or not there is a NRA, the contractual retirement age is not conclusive, but merely a starting point. Member companies who acquire businesses by means of a TUPE transfer may well wish to harmonise the retirement age across the workforce. Cross demonstrates that even where there is a TUPE transfer which entitles employees to transfer on their existing terms and conditions including their CRA, the NRA may well, over time, become different. From an unfair dismissal perspective, however, this point will become academic if, as anticipated, section 109 of the ERA is abolished to tie in with the introduction of legislation outlawing discrimination on grounds of age.
Member companies can take some comfort from the second aspect of the EAT’s judgment, namely that economic (which includes cost) grounds can properly be a factor justifying indirect discrimination, if combined with other reasons. There appears to be nothing to prevent this reasoning being applied in the context of other forms of discrimination.
B v BAA plc EAT/055704
EAT rules that reasonableness factor applies to national security provisions
Facts: B started work for BAA plc at one of its airport terminals and was subject to Counter Terrorist Check (CTC) clearance by the Department for Transport (DfT). His contract of employment provided “from time to time where there is an operational need you may be required to work at other locations on a temporary or permanent basis”. The DfT wrote to BAA stating that it could not grant clearance. It confirmed this to B in writing, explaining he had the right to appeal the decision. B appealed to the DfT, during which time BAA suspended him on full pay. When BAA made enquiries at the DfT about the progress of B’s appeal, it received a response stating that “there is absolutely no chance” of B being cleared on appeal, continuing “this is one of those cases where we cannot even hint why”. Following this, BAA dismissed B on grounds that he had not been granted CTC clearance, and upheld its decision at appeal. An employment tribunal held that the dismissal was for the purpose of safeguarding national security within the meaning of section 10 of the Employment Tribunals Act 1996 (ETA) and therefore dismissed B’s claim of unfair dismissal. B appealed to the EAT.
Decision: The EAT commenced by stating that section 10(1) of the ETA, which provides that “if on a complaint [of unfair dismissal]…..it is shown that the action complained of was taken for the purpose of safeguarding national security, the employment tribunal shall dismiss the complaint”, is not restricted to Crown employment. It then ruled that the fact-finding exercise necessitated by section 10(1) is the employer’s reason for the dismissal, and whether that dismissal was for the purpose of, not whether it had the effect of, safeguarding national security. In the EAT’s view, however, a true and proper construction of section 10(1), taking into account the Human Rights Act 1998, would additionally require section 98(4) of the ERA (consideration of fairness and whether the employer acted reasonably in treating the reason for dismissal as a sufficient reason) to be considered. Given that section 10(1) requires that “the action complained of is taken for the purpose of safeguarding national security”, the unfair dismissal must be shown to be justified. BAA, in seeking to rely on that section, had to show not only that the removal of B from the position of security guard was required for the purpose of national security, but also that the steps it took by way of dismissal were also required, taking into account the issues which would normally be considered in a case of dismissal for “some other substantial reason”, for example was it within the range of reasonable responses of the reasonable employer to dismiss, for the purposes of national security, rather than to simply re-deploy? The employment tribunal had erred because it had not considered this.
Comment: For those member companies who work in areas where national security is a consideration, there may well be times where prospective employees are refused security clearance by a Government agency. B V BAA, the first appellate decision under section 10(1) of the ETA, marks a significant change and places a higher burden on employers wishing to rely on that section. Previously, if an employer could show that it had dismissed an employee for the purpose of safeguarding national security, that was enough. An employment tribunal had to dismiss the complaint of unfair dismissal, and the issue of reasonableness did not arise. Following B v BAA, however, an employer must be able to show not only that it removed an employee from a particular role for the purpose of national security, but also that the steps which were taken by way of dismissal were also required for that purpose. The EAT stated that an employment tribunal, in assessing those steps, should take into account the issues which would normally need to be considered in a case of dismissal for some other substantial reason, such as whether it was within the range of reasonable responses of the reasonable employer to dismiss rather than redeploy. If an employer can show that not only that it removed someone from a particular role for the purpose of national security, but also that it acted reasonably in dismissing them for that purpose, it can still rely on section 10(1). If, however, a claimant can show that an employer acted reasonably by removing him from the role for which security clearance was required, but failed to offer him redeployment to an alternative, available role where security clearance was not required, the employer will not be able to rely on section 10(1).
NEWS IN BRIEF
EAT examines statutory right to be accompanied to redundancy meetings
The Scottish EAT has held in Taskforce (Finishing and Handling) Ltd v Love EAT/0001/05 that in redundancy cases, the right to be accompanied under section 10 of the Employment Relations Act 1999 (ERA 1999) is not triggered. It held: (1) where the purpose of the meeting is to inform an employee that a redundancy situation has arisen, that it is not a hearing within the meaning of that section; and (2) in any case, the section 10 right is not triggered because the matter is not of a disciplinary nature. It would therefore be wrong for an employment tribunal to find, in a redundancy case, that the failure to inform an employee of his right to a companion would render the dismissal unfair, given that no right to a companion arose in the first place. The EAT went on to confirm that a dismissal for redundancy should not automatically be regarded as unfair on account of the absence of an appeal procedure.
Readers should note that the Scottish EAT was looking at a dismissal which took place before 1 October 2004, when the statutory dismissal and disciplinary procedures came into force. The legislative provisions governing the introduction of the standard three step dismissal procedure now require employers to offer employees the right of appeal, and to hold an appeal if the employee so requests. Where reasonably practicable, the appeal hearing must also be conducted by someone more senior than the person who conducted the original redundancy meeting. A failure to follow the three step procedure, where applicable, would now of itself render a dismissal automatically unfair. The legislation also makes it clear that a meeting under the statutory procedures does in fact constitute a hearing for the purposes of section10 of the ERA 1999.
Nonetheless, this case supports the proposition that redundancy meetings, whilst hearings, are not disciplinary in nature. As such, they do not therefore trigger the statutory right to be accompanied.
Employment status of agency workers under the spotlight again
In Bunce v Postworth ltd t/a Skyblue [2005] EWCA Civ 490, the Court of Appeal has again considered the employment status of an agency worker. B, a welder, sought to claim unfair dismissal against S, an employment agency, or Carillion Rail (C), a client to whom he was sent to carry out welding work. B had worked, for all or part of the 52 weeks prior to his engagement being terminated, on 142 assignments, 103 of which were for C, 39 for other companies. An employment tribunal found that it did not have jurisdiction to hear B’s claim because he was not an employee of either S or C. B unsuccessfully appealed to the EAT with regard to the tribunal’s findings on his relationship with S.
On appeal to the Court of Appeal, B contended that the terms and conditions of the general agreement between himself and S comprised an umbrella contract, but that a further contract between those two parties came into being each time he was sent on an assignment. While the Court accepted this was legally possible, it did not accept this was the case on the facts before it. The general agreement between B and S contained very detailed provisions governing their relationship in respect of each assignment. Even if there was a further contract in respect of each assignment, B had to, but could not, establish that they were contracts of employment, with S. In the Court’s view, one of the essential qualities for a contract of employment, namely control, did not rest with S but with the end-user. The Court did not accept B’s argument that the fact that C’s ability to control B originated from the express terms of his agreement with S, that it had delegated that control to C and that was enough to satisfy the control requirement by S. Keene LJ held that “the law has always been concerned with who in reality has the power to control what the worker does and how he does it”.
Even though the issue of whether or not B was in fact an employee of the end user was not before the Court of Appeal in this case, its comments regarding the control issue would suggest that more and more agency workers will in future cite the end user as respondent in this type of triangular relationship.
New regulations will oblige employers to consult on pension scheme changes
The Department for Work and Pensions has launched a consultant on draft regulations that will place a duty on employers to consult pension scheme members at least two months before making certain types of changes to an occupational or personal pension scheme. These include increasing the age at which benefits become payable, removing an employer’s liability to make contributions toward the scheme, introducing member contributions where none were payable beforehand and reducing employer contributions in the case of money purchase schemes. The current proposals are for consultation to be undertaken with trade union representatives, a representative elected for information and consultation purposes, or a representative elected for the specific purpose of consulting on pension scheme changes. The DWP has indicated the regulations will have a phased implementation, applying to businesses with over 150 employees from 6 April 2006, those with over 100 employees from 6 April 2007 and those with more than 50 employees from 6 April 2008. To see the full consultation and draft regulations, go to: http://www.dwp.gov.uk/publications/dwp/2005/occ_pen_schemes/oppscer06.pdf. This public consultation closes on 26 August 2005.