Category Archives: Case Law Update

Updates, and commentary on employment law related decisions

Malone & Others v BA Plc – crew complements dispute


Malone & Others v BA Plc

The Court of Appeal has recently found in favour of BA Plc (“BA”) in the crew complements dispute.

Miss Elizabeth Anne Malone was selected as one of three lead claimants’ on behalf of 5000+ claimants’, all cabin crew workers from Heathrow, who brought breach of contract claims against BA -hence the Malone title.

Those claims were considered in the High Court by Sir Christopher Holland in February this year. The claimants’ argued that BA’s decision to unilaterally reduce the crew complements on its aircraft in October 2009, below the levels which had been agreed through collective bargaining between the employer and the employees’ trade union (Unite), amounted to a breach of contract. They sought declarations as to their contractual terms, injunctions requiring BA to comply with the crew complement levels in operation before the unilateral reduction, damages and costs.

The claimants’ alleged that the collective agreement which stipulated crew complement levels had been incorporated into their individual contracts of employment and was enforceable by them on an individual basis. BA argued that, even though some collective agreements negotiated between it and Unite were incorporated into the employees contracts of employment, the particular provisions relating to crew complements were not; and that these terms were not intended to be included in the individual contracts (“the incorporation issue”). BA raised an alternative defence that the employment contracts of about 60% of the claimants’ contained a clause which entitled BA to make reasonable changes to the terms, and in light of the company’s “parlous financial position”, the reductions in crew complements were reasonable changes which could be made unilaterally (“the reasonable changes issue”). The High Court accepted the submissions of BA and dismissed the claims. Malone, and others, then appealed that decision.

In the Court of Appeal Lady Justice Smith opined that the relationship between BA and the trade union branches’ representing the cabin crews was, “rather unusual”; and that issues which might usually be regarded as falling within the sphere of management are the subject of bilateral negotiation resulting in collective agreements.

It was noted that there are several collective agreements between BA and the trade unions which cover almost every aspect of the cabin crew working terms and conditions; although none of those collective agreements was enforceable between BA and the trade union as in none of them is there any express intention recorded that the agreement should be enforceable – which is a requirement of section 179 of the Trade Union and Labour Relations (Consolidation) Act (“TULCRA”) 1992.

Lady Justice Smith emphasised that it had been difficult to decide the aptness of the incorporation of the crew agreements, and that the various relevant considerations “point in both directions”, for and against incorporation; and that even within the same section of the agreements there are enforceable and unenforceable provisions within the same section.

BA’s QC argued that if section 7.1 of the Worldwide Scheduling Agreement (WSA) were to be individually enforceable, individual crew members could, with impunity, refuse to fly with a reduced crew complement which, as Lady Justice Smith noted, would have “disastrous consequences” for BA if the term were to be individually enforceable – described as being “so serious as to be unthinkable”.

However, Lady Justice Smith did not share Sir Christopher Holland’s view (obiter) that even if he had found that section 7.1 was individually enforceable he would not have granted injunctions requiring BA to reinstate their former cabin crew complements; commenting that the main issue (when considering whether there should be a permanent injunction after a full hearing) is whether damages would be an adequate remedy for the claimants; and it was clear that damages would not be an adequate remedy for the claimants’ in this case. However, this was hypothetical as it was found that there was no breach.

 Dismissing the appeal Lady Justice Smith held that the true construction was intended as an undertaking by the employer towards its cabin crew employees collectively, intended to be binding “only in honour”.

The Malone case reiterates the need for clear drafting of collective agreements (and perhaps negotiator training), specifically the status of those agreements; and highlights the up hill struggle which trade unions will face when trying to argue that provisions of collective agreements are suitable for individual incorporation into employment contracts.

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Serial litigants face risk of paying costs


The Employment Appeal Tribunal (EAT) has dismissed the appeals of “serial litigant” Mr. John Berry. 

Mr Berry brought (at least) four sets of proceedings in the Employment Tribunal complaining about job adverts which used terminology suggesting that they were targeted at younger people, for example by referring to “school leavers” or “recent graduates.”  The respondents were primarily recruitment agencies but also included potential employers.

 For example, in the Recruitment Revolution (“RR”) case RR advertised a job of “junior administrator/administrative assistant” on behalf of a client, indicating that it would be suitable for a school-leaver or someone who had recently taken A levels. Mr Berry responded that he was interested in the job but noted that they sought a school leaver who had finished A Levels, and that he is over 50 years old and passed his A levels many years ago and he “will assume therefore unless I hear from you to the contrary that there would be no point in pursuing this job application any further.’  Mr Berry never in fact applied for the job, despite an invitation to do so, which was reconfirmed in an email.

Mr Berry argued that such adverts were unlawfully discriminatory under the provisions of the Employment Equality (Age) Regulations 2006; without asserting that he was himself deterred by it from applying for the job.

Mr Berry did not attend the hearing (instead relying instead on written submissions), and the EAT was therefore not able to express a concluded view on his motivation for bringing the litigation.  Underhill J emphasised that the purpose of the Regulations is not to provide a source of income for persons who complain of arguably discriminatory advertisements for job vacancies which they have in fact no wish or intention to fill. He also gave the warning that those who try to exploit the Regulations for financial gain are liable to find themselves facing a liability for costs.

 Philip Henson,  comments:

 The management time, and legal costs, involved in defending serial (or vexatious) claims can be a significant drain on resources. It is worth noting that in several of Mr Berry’s claims he applied for a reference to the European Court of Justice, which clearly indicates that he was prepared to take his claims further. Costs orders can often be the best medicine to cure the perpetual headache of serial litigants.

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Directive on equal treatment between self-employed men and women entered into force


On 4 August 2010, Directive 2010/41/EU of 7 July 2010 on the application of the principle of equal treatment between men and women engaged in an activity in a self-employed capacity entered into force. It improves the protection of female self-employed workers and the assisting spouses or life partners of self-employed workers, particularly also during maternity. They are granted a maternity allowance and leave of at least 14 weeks, should they choose to take it. At EU level, this is the first time a maternity allowance has been granted to self-employed workers.

 The new Directive notes that although the original Council Directive 86/613/EEC was intended to provide equal treatment for men and women working “in a self-employed capacity”, it has “not been very effective”[1] in fulfilling this objective.

 Article 5 of the Directive further provides that Member States may take “Positive action” to address gender inequality, for example by “promoting entrepreneurship initiatives among women”, at a time when one in three entrepreneurs is a woman.[2]

 The Directive will no doubt be welcomed by the assisting spouses and life partners of the self-employed, particularly where their self-employed partner is the couple’s sole source of income. One notable caveat of the Directive is that the validity of the life partner relationship must be recognised under national law in order to fall under the scope of the Directive. EU member states now have to implement the Directive into their national laws within two years.


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The end of salary sacrifice schemes? – Astra Zeneca v HMRC


Astra Zeneca provided part payment of salary to some of its employees by way of retail vouchers, as it was able to acquire these vouchers at less than their face value (the Court using the example of acquiring a voucher with a face value of £10 for £9.50) in order that their employees were able to acquire the vouchers at below face value and hence receive a benefit.

Astra Zeneca claimed that it should not have to charge VAT on the provision of the vouchers to its employees because they were not a “supply of goods or services effected for consideration” as per Directive 2006/112/EC (the Sixth Directive), but claimed that it should receive credit for the input tax incurred in purchasing the vouchers as they were a “business overhead”.

HMRC refused to make the input tax incurred on the vouchers tax-deductible, and argued Astra Zeneca was not entitled to credit for the input tax it incurs on buying vouchers, because the company did not use them for the purposes of any taxable transactions.

HMRC argued in the alternative, that if the input tax was recoverable it should account for VAT (the output tax) incurred on the provision of the vouchers to its employees either because the vouchers are given for consideration, or because they were made available to employees for use for a purpose other than a business purpose.

On appeal to the European Court of Justice, the Advocate General found in favour of HMRC’s alternative argument, that the input tax was recoverable, but that the part payment of salary in vouchers was a supply of services effected for consideration, and therefore was also subject to VAT.

This decision will be of interest to companies who until now, have claimed an input tax credit on the purchase of vouchers and not accounted for the ouput tax on the provision of the vouchers as part of a salary sacrifice scheme.

The result of this case would seem to be that the provision of a voucher by an employer to an employee will be chargeable for VAT purposes, unless it can be shown that there is no link between the provision of the voucher and a reduction in the employer’s salary. The result of this is that certain salary sacrifice agreements may cease to be viewed so favourably by employers and employees alike.

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Liability for “negative” references – Bullimore v Pothecary Witham Weld (Solicitors)


Both a prospective and past employer have been found liable to a solicitor whose, job offer was retracted following the provision of a “negative” reference.

 Miss Bullimore worked for Witham Weld Solicitors (“WW”) which has since merged to become Pothecary Witham Weld Solicitors (“PWW”) between 1999 and 2004. Following the termination of her employment, Miss Bullimore brought a claim against WW for unfair dismissal and sex discrimination, which was settled.

 In 2008, another law firm, Sebastians offered Miss Bullimore a job “subject to the receipt of satisfactory references”. She approached Mr Hawthorne, a partner at PWW who had managed her during her time at WW for a reference. Mr Hawthorne obliged, but gave a reference which was “significantly influenced” by the fact that Miss Bullimore had previously brought sex discrimination proceedings against WW.

 Mr Hawthorne remarked in the reference that Miss Bullimore could “on occasion be inflexible as to her opinions”, referred “gratuitously” to the claim she had brought against WW, and made other comments which gave the reference a tone that was “negative”.

Following the receipt of this reference, Sebastians revised their job offer to Miss Bullimore to include a six month probationary period. Miss Bullimore was not prepared to accept a position on these terms, and Sebastians were unwilling to further alter them. This led to the end of the job offer.

 It was found that Sebastians “were not simply responding to a negative reference” but were influenced in their decision to withdraw their offer and replace it with one which was less favourable on Miss Bullimore’s part by the knowledge that Miss Bullimore had brought sex discrimination proceedings against WW. This action was “unlawful discrimination by way of victimisation” in contravention of section 6(1) of the Sex Discrimination Act 1975.

 This was, quite simply, “unlawful conduct by a firm of solicitors who should have known better.” Sebastians saw fit to pay Miss Bullimore £42,500 in settlement of her claim before the hearing to decide the extent of their liability to her.

 On the appeal of Miss Bullimore, it was also decided that it would be “most unsatisfactory if a claimant who lost the opportunity of employment as the result of such a reference were unable to recover substantial damages from his former employer.

The case is therefore being remitted to the original employment tribunal to consider Miss Bullimore’s claim for loss of earnings against PWW, which was initially dismissed.

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Extent of Liability for Loss – Thaine v London School of Economics


Miss Thaine was employed by the London School of Economics (“LSE”) as a painter and decorator in the maintenance department and was the only women amongst the department’s 18 employees. She began to suffer from psychiatric health problems, which prevented her from continuing to work for LSE, and led to her dismissal.

 Miss Thaine brought claims of sexual discrimination, disability discrimination and unfair dismissal against LSE, and succeeded in two of the claims of sexual discrimination. It was found that the sexually discriminatory treatment Miss Thaine had suffered at work was a “material and effective cause” of her psychiatric illness, and there was a sufficient “causal link” between the discrimination she suffered and her subsequent ill-health and loss of earnings.

 When determining the amount of compensation Miss Thaine was entitled to however, there were found to be “concurrent causes” of her ill-health, which were not the result of the treatment she had suffered at work. These included her obsessive compulsive disorder, previous depressive episodes, the break-up of her relationship with her boyfriend, and her mother’s ill-health.

 The compensatory award Miss Thaine was entitled to was reduced by 60% to reflect the extent to which the “concurrent causes” of her ill-health, for which LSE were not liable, contributed to her developing her illness.

 Miss Thaine unsuccessfully appealed, arguing that no such deduction should be made. The Employment Appeal Tribunal stated that LSE’s conduct made it liable “only to the extent” to which its conduct had resulted in Miss Thaine’s ill-health, and that “common sense” should be exercised in determining the level of reduction of the award.

 Importantly for business leaders, the Employment Appeal Tribunal saw fit to state that if an employer did not raise the argument that it was liable to an employee only to the extent of its contribution to their loss, it could be found to liable in full.

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Reasonableness of Dismissal – Wilson Devonald Ltd v Suckling


Ms Suckling was a receptionist at a law firm, who had not been the subject of “previous concerns or complaints about her work” and was dismissed following one incident of misconduct.

 Ms Suckling made the decision to allow two young clients of the firm, one of whom was bleeding from the hand, and both of whom were in a state of anxiety, to enter the offices and be let out of the back door, seemingly to facilitate an escape from pursuers, (allegedly the police). The firm argued that the Ms Suckling should not have allowed the clients to enter in the first place, and certainly should not have allowed them access to a part of the office which was off-limits for clients.

 To compound the risks of her actions, it was known to Ms Suckling that both clients “had the Hepatitis virus and were both rumoured to be HIV positive which, in view of one of them having an open wound at the time “posed an obvious risk to staff.”  She was suspended. A disciplinary hearing was heard, and she was dismissed. The Employment Tribunal found that the dismissal of Ms Suckling was “outside the band of reasonable responses” available to the firm, and that her dismissal had been unfair.

 The firm appealed, arguing that the Tribunal had been satisfied that Ms Suckling had been guilty of gross misconduct, but had slipped into the “substitution mindset[1], substituting its views for the views of the firm, in determining whether it was reasonable for the firm to dismiss her.

 On appeal, it was stated that if a reasonable employer “might have dismissed” an employee, then the dismissal was fair. There existed a “band of reasonableness”, within which there was scope for two different employers to take two different views, both of which would be reasonable in the circumstances.

The Employment Appeal Tribunal allowed the firm’s appeal, re-affirming the “band” of reasonable actions an employer has available to them following gross misconduct, which can include dismissal.


[1] As described by Mummery LJ in London Ambulance Service v Small [2009] IRLR 563

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