POSTED: November 24 2017
Tribunal fee reversal – The implications for employers.

Tribunal fee reversal – The implications for employers.

This year has seen a host of tribunal rulings that are set to impact on reward throughout 2018 and beyond. Martin Pratt, Partner at Gordon Dadds, explains.

From rulings on holiday pay to discrimination, a number of employment tribunal decisions will have significant implications for staff reward  – both now and in the future. In light of some of these cases, HR professionals must take action now to change their procedures and policies so that they don’t find themselves exposed to employee claims at a later date.

In a nutshell

Undoubtedly the biggest employment law case so far this year is the Supreme Court’s July decision in R (on the application of UNISON) (Appellant) v Lord Chancellor (Respondent) that the previous coalition government’s 2013 introduction of fees for proceedings in the employment tribunals and the Employment Appeal Tribunal (EAT) was unlawful. The fees led to a 70% reduction in employment tribunal claims.


The Supreme Court held that the decision to introduce fees was unlawful from the outset – meaning that thousands of employees who had been forced to pay to bring a claim against their employer will get refunds.

The Court pointed out that rights given by Parliament (such as unfair dismissal and the right not to be discriminated against) could not be reduced in effectiveness, as here, by the simple order of a minister. Employment tribunal cases are important for society as a whole, not just the individuals involved. As the Fees Order prevented access to justice, the government had exceeded its powers in imposing them. The court also pointed out that the fees regime was in and of itself discriminatory to charge higher fees for claims under the Equality Act than for other claims like unlawful deductions from wages.

What it means for reward

An increase in employment tribunal claims is inevitable. Employers need to ensure that their processes and procedures across the board are compliant as any slip-up now is far more likely to result in a tribunal claim.


In a nutshell

In Dudley Metropolitan Borough Council v Willetts the EAT (Employment Appeal Tribunal) held that voluntary overtime, normally worked, was “normal remuneration” for the purposes of calculating holiday pay and should therefore be paid when the worker is on vacation.


A group of electricians, plumbers, roofers and the like who were employed during the day for Dudley Council also worked completely voluntary overtime that paid them additional callout allowances and standby payments.

The EAT agreed with these workers that the Council should have been including such voluntary overtime in the calculation of their holiday pay. The purpose of the Working Time Regulations, which mandate the payment of holiday pay, is designed as a measure to encourage the taking of annual leave to safeguard the health of workers. Excluding habitual voluntary overtime payments would discourage the taking of holiday, so should be included.

What it means for staff reward

Employers should, when calculating holiday pay, consider what the worker would have received but for taking the holiday. It is important to decide upon a reasonable “reference period” in which to calculate average weekly earnings for the purposes of holiday pay. Employers will have some discretion in calculating a “reasonable” reference period but it is now clear that regularly taken overtime cannot be excluded from the calculation.


In a nutshell

A worker cannot successfully claim harassment just by asserting he or she has a disability without being able to establish that he or she fits the definition of disabled under the Equality Act 2010, said the EAT in Peninsula Business Services v Baker.


The employee in this case told his manager that he had dyslexia. This was confirmed by a psychologist’s report and an occupational health report that said that he may well be disabled.

The employer had become concerned that the employee was not concentrating on his work and engaged private investigators to carry out surveillance on him. The employee alleged that was harassment on the grounds of disability and won before the original employment tribunal. However, that tribunal was not asked to determine whether the employee was actually disabled within legal meaning, but instead held that because he “may well have been” disabled, the motivation for the decision to engage surveillance was a simple assertion of an alleged disability and that that decision was harassment.

The EAT overturned the tribunal’s decision because the tribunal discrimination protection is not available to those who only “assert” a disability.

What it means for staff reward

Disability discrimination protection applies to those who actually have a disability (which the original tribunal did not determine) to those associated with an actual disabled person, or to those who are wrongly perceived to be disabled.

The decision was harsh on the employee, as he had the psychologists report and the occupational health report to back him up, but crucially the tribunal wasn’t asked to make a final determination on disability. This case will provide some comfort for employers in that merely asserting you are disabled doesn’t mean you are protected by disability discrimination law. However, that is about as far as it goes. Employees’ lawyers will no doubt in future to be careful and ensure that the tribunal is asked to make a specific finding on this fact.

Indeed, the case can be seen as a warning about the danger of covert surveillance. In this case the employee had five years’ worth of consistently positive appraisals and it was only the technical issue on the presence or otherwise of a disability that saved the employer from a harassment award. The original tribunal said “the extraordinary step of arranging covert surveillance on an employee who had been working for the company for five years and whose appraisals had been consistently favourable cannot have been triggered by anything other than the suspicion that the Claimant was not disabled.”


In a nutshell

Asda is facing equal pay claims from more than 7,000, mostly female, shop-floor workers in its retail stores who are seeking to show that they do like work, or work of equal value, to those working in the more male-centric distribution centres. A previous employment tribunal held that female employees who work in Asda’s retail stores are entitled to compare their work to that of the higher paid male employees that work in its distribution centres. Asda appealed decision to the EAT.


The EAT has confirmed that, as a first step, it is permissible for the shop-floor workers to compare themselves to the distribution workers despite the fact they are in different departments and there are different methods of calculating their pay. It’s then up to the employer to justify the differential. Asda had sought to have the claims thrown out, arguing that because of these factors such a comparison was not appropriate.

The EAT held that where there is a “single source” of pay and conditions, in this case Asda’s executive board, a direct comparison is permitted.

What this means for staff reward

Since the Equal Pay Act came into force in the 1970s, equal pay claims have largely been seen to be the preserve of the public sector. No more. Other employers in the private sector, including Sainsbury’s, are facing similar issues, and will be watching Asda’s forthcoming appeal to the Court of Appeal with great interest. This case, already long-running, will continue for some time (despite the EAT judge’s appeal to Asda to resolve its equal pay issues) through the Court of Appeal and potentially the Supreme Court. When it concludes, if not before, the floodgates for equal pay claims in the private sector may well open.


This article was first published in online HR magazine, Reward. You can see the article in full here.