United Kingdom Employment Appeal Tribunal

Appeal No. UKEAT/0154/12/KN

 

 

EMPLOYMENT APPEAL TRIBUNAL

FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX

 

 

                                                                                                      At the Tribunal

                                                                                                      On 3 October 2012

 

 

 

Before

THE HONOURABLE MR JUSTICE LANGSTAFF (PRESIDENT)

(SITTING ALONE)

 

 

 

 

WARRIOR SQUARE RECOVERIES LIMITED                                                   APPELLANT

 

 

 

 

 

 

MR O FLYNN                                                                                                    RESPONDENT

 

 

Transcript of Proceedings

 

JUDGMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

                                              APPEARANCES

 

 

 

 

 

For the Appellant	MS CAROLINE MUSGRAVE (of Counsel) Instructed by: Kennedys Solicitors 25 Fenchurch Avenue 14-20 Chiswell Street London EC3M 5AD
For the Respondent	MR OLIVER FLYNN (the Respondent in Person)

 

 

SUMMARY

VICTIMISATION DISCRIMINATION- Whistleblowing

CONTRACT OF EMPLOYMENT- Sick pay and holiday pay

 

An Employment Judge declined to strike out a claim that there had been detriment caused by public interest disclosure, argued to be out of time, without identifying the act or acts complained of, and hence not being clear as to the dates of them (or the latest date upon which they could have occurred) and appearing to think that if a detriment continued then the claim was within time. This was in error. Her decision not to strike out a claim for holiday pay, in respect of which no claim had been made for several months whilst the Claimant was off work sick, was however upheld.

THE HONOURABLE MR JUSTICE LANGSTAFF (PRESIDENT)

Introduction

1.            For reasons that were given on 19 December 2011, Employment Judge Davidson, at a pre‑hearing review held at the Employment Tribunal at London Central, held, amongst other findings, that a complaint that the Claimant had made that he had suffered a detriment by reason of making a public‑interest disclosure was within time and refused to strike out a claim that he had also made for arrears of holiday pay. The employer Respondent appeals against both those findings.

 

Protected disclosure

2.            Section 47B of the Employment Rights Act 1996 (ERA) provides, so far as is material:

“(1)  A worker has the right not to be subjected to any detriment by any act, or any deliberate failure to act, by his employer done on the ground that the worker has made a protected disclosure.”

 

3.            As to those words: first, cause and effect must carefully be distinguished. The act, or the deliberate failure to act, must be a cause of the detriment. The act, or the failure to act, has to be done on the ground specified by the employer. The detriment, however, is coincidental, or consequent upon, the act, or deliberate failure to act. The distinction between cause and effect is essential to bear in mind because of the terms of section 48 of the ERA 1996. That provides, again so far as material, by subsection (3), that:

“An [employment tribunal] shall not consider a complaint under this section [that includes a claim in respect of protected disclosures] unless it is presented—

(a) before the end of the period of three months beginning with the date of the act or failure to act to which the complaint relates or, where that act or failure is part of a series of similar acts or failures, the last of them, or

(b) within such further period as the tribunal considers reasonable in a case where it is satisfied that it was not reasonably practicable for the complaint to be presented before the end of that period of three months.”

 

4.            Again, some observations: the detriment may last into the period of three months at the end of which Employment Tribunal proceedings are begun. It may even continue until, or indeed after, Employment Tribunal proceedings have been heard, but that has no effect one way or the other upon the time limits. The time limits relate not to when the detriment was suffered but when the act, or deliberate failure to act, which gave rise to the detriment occurred.

 

5.            Accordingly, in any case that considers a question of whether a complaint is out of time, it is incumbent upon an Employment Tribunal to identify carefully the act, or the deliberate failure to act, that the Claimant identifies as causing him a detriment. The date of that act, or the date of that failure to act, must then be established. If at the latest the act, or the deliberate failure to act, is prior to the issue of Employment Tribunal proceedings by more than three months, it is only where the Claimant can show that it was not reasonably practicable for him to present a complaint before the end of that period of three months that he will be permitted to continue. A Tribunal otherwise must not (that is the meaning of the words “shall not”) consider his complaint. The Tribunal has no discretion in the matter, having found the facts, except that which is inherent in the judgment as to reasonable practicability which is called for by section 48(3)(b). Such a judgment must be based upon some evidential material. If a Tribunal has no submissions made to it nor evidence that may persuade it that it was not reasonably practicable to make a complaint earlier than was done, then it cannot exercise its power to prescribe a further period under section 48(3)(b), because it has no basis for doing so. It is for the person seeking to avoid the harsh impact of time limits to put that material before the Tribunal.

 

 

 

The facts

6.            With that introduction, I turn to the particular facts of this case. The Claimant was a senior broker in a firm that provided services in relation to recovery of fees from clients in the insurance industry.  In December 2005 he made a disclosure, capable of being a public‑interest disclosure, suggesting that money had been misappropriated by others in the employment of his employer.  In 2006 he was invited to a disciplinary hearing because he had made what was said to be an untrue allegation of fraud against the directors of the Respondent. The disciplinary hearing was adjourned and never came to a conclusion before it was formally withdrawn.

 

7.            One effect, however, of what had happened was that the Claimant fell sick in 2006. He never went back to work, though he remained in employment until 2010. During the period between the abortive attempt to hold a disciplinary hearing, at which time there were also threats that libel proceedings would issue against the Claimant on behalf of the directors whom it was alleged the Claimant had defamed, and March 2010 not much happened.  However, the Claimant pursued the question of the standing of the disciplinary proceedings. In November 2009 he was told:

“I attach the notes of the disciplinary hearing that was adjourned. The allegations were withdrawn and the proceedings withdrawn subsequently.”

 

8.            The author complained he did not know why the Claimant felt that issues remained unresolved. The Claimant wrote further letters. On 10 March 2010 the Respondent wrote again to say, in part:

“[…] the disciplinary action initiated against you in 2006 was withdrawn and so there are no ‘live’ allegations against you.”

 

9.            The Claimant’s wife wrote on his behalf in response on 15 March 2010. She asked for clarifications as to whether the two directors were withdrawing their libel allegations as well.  On 18 March the response in its material part to that letter read:

“I do not consider it either helpful or appropriate to engage in further correspondence on this issue. As a Director of your employer, I have asked you to attend a meeting to discuss the issues identified in my previous letter.  With great respect, it is not for you to insist on agendas, perfected minutes, complete personnel files or any other material in advance.  I have provided you with everything that is of relevance to the issue of your ability to return to work.”

 

10.         It asked the Claimant to undergo a medical assessment to confirm his ability to work.

 

11.         On 21 May 2010 the Claimant resigned. He made a claim on 22 September 2010 that he had suffered a detriment by reason of making a public‑interest disclosure. He also, materially, claimed that he had been constructively dismissed, and he claimed that whilst sick he had not been paid any holiday pay, merely statutory sick pay (SSP), and was entitled to arrears of holiday pay for each of the years during which he had been ill.

 

The decision

12.         Having set out the facts, the Employment Judge set out the answers to the three issues she had identified at the start of the case. Those had been identified at an earlier case management discussion in front of a different Employment Judge.  One of those read:

“Was the complaint of detriment on grounds of making a protected disclosure presented out of time?  If so, should time be extended?”

 

13.         It was noted that in addition there was an issue in respect of the holiday pay.  The issue in respect of detriment therefore contained two aspects. The first plainly related to section 48(3)(a), and the second, should it be extended, to 48(3)(b). It would therefore be known well in advance of the hearing that both matters might fall for consideration.

 

14.         The Judge said, in the central paragraph of her decision (paragraph 7.3):

“In respect of the public‑interest disclosure claim, the disclosure was made in December 2005.  The Claimant alleges that he has been subjected to a detriment as a result of this disclosure in that he has been under threat of disciplinary action and legal action for defamation. The Respondent’s case is that those threats were lifted at the latest by 30 November 2009.  However, the Claimant has been consistent and persistent in his view that these threats are still present and, in his mind, repeated by the Respondent’s actions.  If he is correct, then the detriment continues and his claim is within time.”

 

15.         The Employment Judge had set out earlier the letters containing the unequivocal withdrawal of the proceedings to which I have already referred. Her view that the Claimant was consistent and persistent in his view that the threats were still present is surprising, given that there was a note of argument prepared by a Mr Panton, a human‑resources consultant, on behalf of Mr Flynn, for the purpose of the hearing, which read as follows, under the heading “PID Detriment”:

“The Claimant asserts that he suffered detriment of stress due to the Respondent’s deliberate and unreasonable conduct following his PID action on 22.12.05.  These include

a) deliberately causing him worry by getting him to believe that he had done some wrong by making the disclosure

b) taking disciplinary action against him with the threat of instant dismissal

c) advising him that he was being investigated with a view to court action against him for defamation

d) not advising him that the defamation action was withdrawn until Mr Martin’s letter dated 30.11.2009, long after the decision was made to pay the funds of the PID action, thus prolonging the worry and stress unnecessarily.”

 

16.         It was thus being said on paper on Mr Flynn’s behalf that he had been told of the withdrawal on 30 November 2009, and there is no suggestion in Mr Panton’s document that in some way the threat continued; nor would that emerge from any close consideration of the ET1, where Mr Flynn himself said he was not advised that these malicious and vexatious proceedings were being withdrawn until 30 November 2009, after a period of over three years, adding, in a sentence that appears designed to follow, though separated by a full‑stop, “causing substantial stress, financial hardship and detriment to my family and I”.

 

17.         However surprising that might be, it is common ground that in the Judgment as a whole, and in paragraph 7.3 in particular, the Employment Judge did not properly address the law. The law requires, as I have already indicated – but as the authority of London Borough of Harrow v Knight [2003] IRLR 140 in any event makes clear (see in particular paragraphs 5 and 11) - a Tribunal must identify the act, or deliberate failure to act, if it is properly to address questions of time limits. The Employment Judge nowhere identified what the act, or deliberate failure to act, was from the date of which she was reckoning time. In particular, in a case in which the Claimant had resigned in May but brought proceedings in September, he had plainly not been in active employment in the three months prior to the proceedings being issued, and therefore it was all the more to be required that a date within the three‑month period of any act or deliberate failure to act should have been identified. None was.

 

18.         In addition, Ms Musgrave, who appears for the Appellant as she appeared for the Respondent employer below, argues that a detriment must, as Shamoon v Chief Constable of the Royal Ulster Constabulary [2003] ICR 337 makes clear at paragraph 35, be treatment of:

“[…] such a kind that a reasonable worker would or might take the view that in all the circumstances it was to his detriment? An unjustified sense of grievance cannot amount to ‘detriment’: Barclays Bank PLC v Kapur and Ors (No. 2) [1995] IRLR 87.”

 

19.         The threat was not identified by the Tribunal Judge as being an actual and real threat; it was a threat that existed in the view of the Claimant and in his mind. There is no attempt here by the Employment Judge to answer the question of whether it was capable of being a detriment on the Shamoon and Kapur tests. On the face of it, it would be very difficult indeed to see what could be reasonable about thinking that a threat of disciplinary action or legal proceedings was still present when two letters had been written appearing unequivocally to withdraw any such threat in clear terms.

 

20.         Mr Flynn would say that he wished to be assured that the two directors of whom it was suggested might take libel proceedings would not in fact do so.  However, the act that is required to be considered is an act of the employer, and the act of the employer here, it would appear, was to deny any ongoing threat of the kind that Mr Flynn plainly felt was real. Whether he was reasonable or not to feel such a threat, the real problem, to me, in paragraph 7.3 is the confusion between cause and effect. The last sentence reads, “[…] then the detriment continues and his claim is within time”. That is to say that the effect continues: but the focus of section 48(3) is not upon the effect but upon the cause. The act by which the consequent detriment occurs must be timed to see whether it is or is not within the three months immediately preceding the issue of proceedings.

 

Argument and discussion

21.         The same confusion between cause and effect exists throughout Mr Flynn’s skeleton argument. Mr Flynn began his argument to me by pointing out how he felt disadvantaged because he has no legal experience of his own; he was not represented by a lawyer, and he has no representative here, but appears for himself. He feels on unequal footing, and he wished to apologise in advance for the difficulties of a layman in coming to terms with some legal concepts. What I say therefore is not intended in any sense to be critical of Mr Flynn, who has presented his arguments well, persistently and thoughtfully, and plainly who feels deeply about the wrong that he sees as having been done to him; whether he be right in that or not is for others to decide. However, he has identified a number of ways in which he remains suffering a detriment; for instance, he argues that, having lost his employment in circumstances in which he had made a public‑interest disclosure, it may be difficult if not impossible for him to obtain commensurate employment in future. He has argued about the ongoing effects in terms of his being refused documents that he has sought from his employer, but he has not in these proceedings identified any act, or deliberate failure to act, within the three months immediately preceding the issue of his proceedings.

 

22.         Ms Musgrave argues that the very latest that any act, or deliberate failure to act, could be dated would be the date of the letter of 18 March 2010. In the case of St John Ambulance v Mulvie UKEAT/0129/11 Keith J on 1 July 2011 at this Tribunal considered a case in which a representative of the Respondent employer had written to a Claimant who had made a number of requests for resolution of his concerns relating to public‑interest disclosure that the Respondent, “was not going to revert to him further by way of any resolution of concerns”. Keith J said of that in paragraph 14 that the letter to that effect brought any continuing failure of the Respondent to an end; it had decided it was not going to deal with the concerns any more. The decision could only be characterised as a failure to act – that is, a failure to proceed with the consideration of the grievances of Mr Mulvie – and, secondly, a deliberate failure so to do, because it was plainly intended as such.

 

23.         On that basis, the Judge concluded that the complaint had to be presented at the latest within three months of the date of that letter. Ms Musgrave says that the material facts are identical in the present case. The employer had effectively signed off any further discussion because of the terms of the letter of 18 March. Whether indeed the earlier letters withdrawing any threat of proceedings were or were not clear in their terms was beside the point given this letter, since it refused at that stage to engage in any further discussion with Mr Flynn.  Accordingly, Ms Musgrave submits, any proceedings would have to be begun no later than 17 June 2010, and they were begun significantly later.

 

24.         This argument deals with what might be another deficiency in the Tribunal Judgment, though I suspect the Judge faithfully identified the thrust of the argument as it was put to her.  She recorded that the act giving rise to the detriment was the threat of disciplinary action and legal action for defamation; she did not deal with any other cause. In the ET1 a number of other matters were raised; it is not entirely clear whether they were supposed to be acts giving rise to detriment, but however one characterises them, and they feature again in the skeleton argument of Mr Flynn for these proceedings as real matters that caused him a detriment that went on until he began proceedings and afterwards, there is no material to show that any one of them occurred any later than 18 March 2010.

 

25.         Accordingly, as it seems to me, I am bound to come to these conclusions on the public‑interest disclosure case: (1) the Judge was in error of law in failing to identify what was the act, or deliberate failure to act, causative of detriment; (2) it appears she confused a continuing detriment with a continuing cause; and (3) the latest any identified act, or deliberate failure to act, could have occurred, on the facts of this case either as alleged in the proceedings before the Tribunal or found by the Judge herself, would be 18 March 2010.  It follows that I have to allow the appeal unless I could be satisfied that the decision of the Judge was plainly and obviously right, which it is plain I cannot be.

 

26.         The issue then arises whether I should hold that the claim is out of time and substitute that decision for the decision of Employment Judge Davidson. I would only remit the question of time if there were issues of fact that properly fell to be determined and had not been.  Here, no material argument was put to the Judge to seek to persuade her that if she should find that the complaints were made out of time, it had not been reasonably practicable to present them earlier. No such argument is made to me orally today. It has not been made on paper. It is for he who asserts it to make out a case for it. The failure to do so is palpable, particularly given what I am told, without any dissent from Mr Flynn, occurred at the Employment Tribunal. The Judge indicated that although she would not be held to her oral views expressed at the end of the hearing, at that stage she considered that the claims were out of time but she would permit them to continue. That led to a protest from Ms Musgrave, saying that there was no basis upon which it could be said that it was not reasonably practicable.  When the Judgment came in writing it did not make any such finding, but the point is that an opportunity had been presented - and presented clearly - before the Tribunal for Mr.Flynn to make any case if one was to be made.

 

27.         There having been no case put to the Employment Judge as to reasonable practicability, I am bound to conclude in this case that however long the detriment may have gone on, the cause of the detriment – the act, or the deliberate failure to act – must have taken place more than three months before the issue of the proceedings, and there is no material to show that it was not reasonably practicable to begin a claim within three months following, at the latest, 10 March 2010. Accordingly, that part of this appeal must be allowed and my decision to that effect substituted.

 

Holiday pay

28.         The Judge dealt with the claim in respect of holiday pay at paragraph 7.6.  She said:

“In relation to the contractual claim under case number 2205122, the only element of this claim which has not been withdrawn is the holiday pay.  I decline to strike out this claim as the Claimant appears to have a valid claim for holiday pay in respect of the holiday year in which his employment terminated.”

 

29.         The application to strike out the claim for holiday pay was in formal terms made to strike out the entirety of the claim; that was for each of the years, including the last year, for which the Claimant had been employed. Ms Musgrave tells me that at the Tribunal she argued that the decision of Fraser v South West London St George’s Mental Health Trust [2012] ICR 403, a decision of the Appeal Tribunal presided over by Underhill J as President, was binding upon the Employment Tribunal. That case was of particular authority, not least because it resolved a conflict between other authorities as to whether an employee on sick leave during the entirety of a holiday year would be entitled to holiday pay for that year. The conclusion upon a construction of the Working Time Regulations 1998 and in particular Regulations 14, 15 and 16, was, as expressed at paragraph 30:

“The claimant’s entitlement to holiday pay under regulation 16(1) depended on her having given proper notice under regulation 15 of her intention to take annual leave, and she did not do so.”

 

30.         The Tribunal added:

“It might appear somewhat artificial for an employee who was not at work anyway to have to give notice of an intention that part of her absence should count as holiday; but that merely reflects the artificiality of a period of long‑term sickness counting as holiday at all.  In any event the giving of notice is more than a formality. Without it the employer who is not otherwise paying the employee, or is paying him only sick pay, will not know whether, or – just as importantly – when, he is obliged to make any payment under regulation 16.”

 

31.         The Judgment considers carefully the impact of European authority in this area.  Mr Flynn’s response is to seek to distinguish the factual circumstances in Fraser from those of his case, and secondly to argue that the case of Stringer v The Revenue and Customs Commissioners [2009] ICR 932 should apply to the effect that he would be entitled automatically to carry over a period of holiday leave. 

 

32.         I had thought it sufficient for this Judgment to say that the decision of Fraser was a carefully considered decision after the matter had been argued with the benefit of professional representation that considered, amongst other cases, that of Stringer before reaching a conclusion.  However, only a few days before the hearing the Court of Appeal decision in NHS v Larner [2012] IRLR 825 was reported, which disapproved Fraser.

 

33.         I had been persuaded – and said orally in Court - that here the claim for holiday pay during the years up to the beginning of 2010 could not, upon the basis of Fraser, hope to succeed, but would have declined to allow the appeal since the Employment Judge had held (rightly, as it seemed to me) that a claim in respect of 2010 was not subject to the same reasoning. 

 

34.         Having come across Larner, only just after I had delivered the extempore judgment in this appeal, I invited the parties to make further submissions if they wished, though indicated it would not affect my decision (to allow the appeal in respect of time, and to reject it in respect of holiday pay), only the terms in which that decision was expressed.

 

35.         Larner is authority that annual leave may be carried forward from one year to the next.  The worker who is on sick leave at the time does not have to give notice within the holiday year that he wishes to take holiday. It is not a case of “Use it or lose it”. It transfers automatically from one year to the next.

 

36.         Issues remain to be determined in law as to whether there is any cut-off determining for how long leave may be carried forward. Mr. Flynn here contends for a 42 month period.

 

37.         Ms Musgrave for her part requests a further oral hearing at which this Tribunal may give guidance as to the appropriate carry-forward period.  Her client argues that a 15 month period would be appropriate, basing this on the CEU decision of KHS AG v Schulte [2012] IRLR 156.

 

38.         Although I can see that the issue of date may come back to this Tribunal in the present case, once the Employment tribunal has determined it, and to that extent I might be accused of “putting off the evil day”, I have decided that it would not be appropriate to give such guidance in the current appeal. This is for several reasons. First, I should be assisted by a reasoned decision of the Tribunal, having considered the facts. Second, such a decision will give a focus for Mr. Flynn when considering his submissions. Third, he pointed out to me his feeling that the proceedings as they were were unbalanced, since he lacked representation. Considering any legal points made and the best argument to advance (whether to appeal, or resist any appeal, as the case may be) is likely to take time for him, and he may legitimately feel he needs either to have legal representation or to obtain informed advice before he is able to contribute significantly to the argument on appeal. Fourth, I would prefer to give guidance in a case which was fully argued by qualified and experienced lawyers on both sides: otherwise there is a greater risk that through inadvertence ill-considered advice or guidance may be given.  Moreover, to do so would have something of the artificiality of deciding a theoretical dispute between the parties, which a court should usually fight shy of – in particular, I do not know whether having lost its appeal, and been made aware of Larner, the employer might here be willing to come to a financial settlement with Mr. Flynn, which would mean that my fears of a repeat engagement on the Fleetbank battleground would be groundless.

 

 

Conclusion

39.         The consequence of this hearing is that the appeal in respect of public-interest disclosure must be allowed and the claim struck out on the grounds of time; that in respect of the refusal to strike out the holiday pay claim is dismissed.