Review of employment law cases - 2022

2022 was another busy year for employment law, and there was the usual stream of decided cases with implications for employers.  We’ve reviewed over 200 such cases from last year and we’ve set out below which we think are the most significant, together with a very short summary of the key take away point(s) from the case.

Contracts of Employment

There were two key decisions highlighting the importance of careful drafting when it comes to employment contracts, and other documentation such as bonus and benefit schemes.

Mast Group v Chalmers – An account manager for a medical supplies business received a letter stating she would receive a bonus of 5% of sales achieved in her territory in the year from 1st October 2019 to 30th September 2020.  Sales pre-pandemic were typically around £250,000 per quarter.  After the pandemic began the employee secured an order for a large number of Covid testing kits, resulting in sales of almost £4million in one quarter!  The employer resisted paying the full 5% bonus, arguing that it shouldn’t include sales of products that did not exist at the time the bonus letter was drawn up.  However, this argument failed – nothing in the wording of the bonus letter supported this interpretation – and the court awarded the employee a bonus of over £245,000.

Amdocs Systems Group v Langton - Mr Langton, who had been employed for many years, had an income protection benefit in the case of long-term sickness. The original documents included reference to an “escalator” of 5% per year.  At that time, the employer had insurance cover which would pay out the full benefit including the escalator.  A few years later the employer changed its insurance policy to one which didn’t include provision for an escalator.  Mr Langton began long term sick leave, and the employer argued that it was not liable to pay the escalator because of the change to its insurance policy, but they lost. If the intention had been to limit the employer’s liability only to what they could recover under the insurance policy then, the court said, that should have been explicitly stated.

Holiday pay

Despite the fact the Working Time Regulations came into force in 1998, the Courts are still working through some of the issues.  Two key cases in 2022 were:

Smith v Pimlico Plumbers – Although carry over of holiday leave is usually not allowed, the Court of Appeal held that a worker who had taken unpaid leave was allowed to carry over his entitlement for the entire period of his employment.  In this case the employer wrongly believed the worker was self-employed and so not entitled to paid holiday.  The worker is claiming around £74,000 in unpaid holiday pay.

Harper-Trust v Brazel – the Supreme Court ruled that part-year (NB part-year is not necessarily the same as part-time) workers were entitled to have their holiday entitlement calculated on the basis of 5.6 weeks leave for each year the contract existed, irrespective of how many weeks were actually worked each year.  This meant a part-year worker who only worked some of the year but whose contract continued throughout the whole year actually received more generous holiday entitlement (when compared to their usual pay) than workers who worked all year.  (NB – the government has just launched a consultation looking at reversing the effects of this decision.)

Discrimination

Burke v Turning Point Scotland – an employee who had long-Covid was found to meet the definition of disability in the Equality Act (NB – two medical reports which indicated he was not disabled were not accepted, demonstrating how the definition of disability is ultimately decided by the Tribunals).

Forstater v CGD Europe – an employee’s belief that sex is immutable and should not be conflated with gender-identity was a protected philosophical belief.  The manner in which the employee had manifested this belief on social media was found to be reasonable – even though it offended some – and so the decision not to renew the employee’s contract because she had expressed such views was unlawful.

Keown v Staines Road Surgery – a failure to allow a disabled employee at high risk from Covid-19 due to her disability to work from home amounted to a failure to make reasonable adjustments.

Termination of Employment

Hope v British Medical Association – an employee who had raised numerous vexatious grievance which he then refused to progress or withdraw was fairly dismissed.

Mogane v Bradford Teaching Hospitals – where an employer adopted selection criteria which effectively meant the employee selected for redundancy was in a pool of one, using this criteria without prior consultation meant the dismissal was unfair.

Marangakis v Iceland Food – an employee who successfully appealed her dismissal was automatically re-instated – even though she made it clear during the appeal process she didn’t want to return to work for the employer.  But if an appeal is successful, reinstatement is automatic and the dismissal ‘vanishes’, whether the employee wants it to or not!

Settlement agreements

Bathgate v Technip – in a clear divergence from existing case law, the Employment Appeal Tribunal held that a settlement agreement can only validly compromise claims which are known to the parties at the time they entered into the agreement.  Any unknown or future claims cannot be settled, even if the parties intend to settle such claims.  (NB – there is now conflicting case law on this point and this decision may yet be considered by higher courts.  However, it is likely to be some time and probably years before this happens).

Arvunescu v Quick Release (Automotive) Ltd – a well drafted COT3 agreement was sufficient to waive unknown future claims.  This was because of the wording used in the COT3 agreement – not every COT3 agreement will settle any unknown future claims.  It will depend upon the drafting.

It is difficult to see a logical distinction between the protection afforded to employers when a COT3 agreement rather than a settlement agreement is used.  Employers should consider settling potential claims via a COT3 agreement – although for reasons beyond this article, attempting to achieve a settlement via a COT3 agreement may not always be the best course of action.  In relation to settlement agreements, we recommend that employers who are using an old ‘template’ should have these reviewed.

Restrictive covenants

Planon v Gilligan – even if a restrictive covenant is reasonable, a Court may refuse an injunction if it would cause some hardship to the defendant.  In cases involving non-compete restrictions (which prevent an employee working for a competitor for a particular period of time) there is a real risk of such hardship.

It’s a boring but true mantra that each case turns on its own facts, so please don’t place too much weight on the outcomes in the above cases.  It is the underlying principles which are important.

There were plenty of legal developments in 2022 to keep employment lawyers busy, and 2023 is already shaping up to be a year of significant change to employment law.  We’ll keep you posted!

Barrass Whiting LLP

30/01/2023