Main terms, ill-health pension, Army reservist

01 April 2019

This article was featured in the April 2019 issue of the magazine.

Nicola Mullineux, senior employment specialist for Peninsula, reviews the decisions in three cases

Stefanko and others v Maritime Hotel Ltd 

In this case the Employment Appeal Tribunal (EAT) was tasked with deciding if an employee, who was never provided with a written statement of main terms, was entitled to compensation despite being employed for less than two months. 

The employee in question was one of three Polish nationals who were hired as hotel waiting staff at the Maritime Hotel on separate dates from 21 April 2016. All three employees were dismissed on 7 July 2016, shortly after their employment began, having objected to ‘persistent shortfalls in their wages, late payment and a falsification of their wage slips’. 

The employees originally brought joint claims to an employment tribunal (ET) for race discrimination, based on their Polish nationality, as well as for automatic unfair dismissal, having asserted their statutory right to receive a written statement of main terms. right to receive a written statement of main terms as of 6 April 2020


Having reviewed the evidence, the ET dismissed their claim for race discrimination, finding that the employer would have treated non-Polish comparators in the same manner. Meanwhile, all three employees successfully won their claims for automatic unfair dismissal. Despite this, the ET decided only two of the claimants qualified for compensation of four weeks’ pay, as they had worked for a minimum of two months. The third employee, the ET said, did not qualify for compensation as she had only worked for six weeks at the time of her dismissal, and section 38 of the Employment Act 2002 states employers must have two months’ service from the date of employment to provide this statement.

The employee in question appealed this decision to the EAT which upheld the appeal. The EAT outlined that the initial ET had overlooked section 2(6) of the Employment Rights Act 1996, which states that the right to a written statement of main terms exists if an individual has been employed for longer than one month and their employment expires before the two months has passed. This meant that all three employees were owed four weeks’ compensation for a failure to be provided with a written statement of main terms. 

This decision highlights that a failure to provide employees with a written statement of main terms can leave organisations open to costly tribunal claims. Even those who are dismissed, or are employed on short-term contracts, are entitled to receive these terms so long as they have obtained one month’s service. 

Ensuring that written statements of main terms are provided in a timely manner minimises the risk of ambiguity or misunderstanding of the terms that form the contractual basis of the employment relationship. Therefore, employers should consider issuing these to employees as soon as possible once they have agreed to join the organisation and could choose to do so as part of any induction process. 

It is also worth noting that the government’s Good Work plan, announced on 18 December 2018, outlines that all workers, including agency staff and those on zero-hour contracts, will have a day-one right to receive a written statement of main terms as of 6 April 2020. In anticipation of this, employers may be inclined to voluntarily implement this practice ahead of time to reduce the risk of errors in future. 


Williams v Trustees of Swansea University 

The UK’s Supreme Court has agreed with earlier decisions of both the Court of Appeal (CoA) and the EAT that an ill-health retirement pension scheme did not amount to disability discrimination, despite it being potentially more advantageous to other employees. 

This case involved an employee who suffered from several physiological problems including Tourette’s syndrome. Due to the progression of his condition, the employee chose to reduce his working hours and salary to half of his full-time role as a reasonable adjustment. 

Having worked under these conditions for three years the employee chose to take early retirement. Under the rules of the employer’s pension scheme, employees who retired early due to ill health were entitled to their accrued pension alongside an enhanced pension; both of which were calculated based on final salaries. 

The rules of this policy meant that the claimant’s pension entitlement was based on his part-time salary, rather than what he had been earning prior to making reasonable adjustments and reducing his hours. As a result, the employee brought a claim to ET for discrimination arising from a disability under section 15 of the Equality Act 2010, believing he was being placed at a disadvantage because his illness had necessitated a reduction in his hours. 

Upon reviewing the evidence, the initial ET upheld the employee’s claim for discrimination. It found that the failure to base calculations on the full-time salary amounted to unfavourable treatment and that the employer failed to prove how this decision was proportionate for their business needs.

This decision was appealed to the EAT, which took a different view and found that the purpose of the scheme was actually to treat disabled employees more favourably than non-disabled, by ensuring an enhanced pension for those who had to retire due to ill-health. The fact that other individuals may have qualified for an even better pension than the claimant by retiring due to ill health without previously reducing their hours did not mean that he had been treated unfavourably. 

It was then the turn of the employee to appeal this ruling to the CoA, which, however, dismissed the claim and ruled that discrimination did not take place. The CoA explained that treatment which conferred advantages on a disabled person did not amount to unfavourable treatment, even though there could have been a greater advantage if full-time hours had been maintained.

The employee appealed again to the Supreme Court, which dismissed the appeal. In reaching its decision the Court explained that there was nothing unfavourable about the employer’s pensions scheme, outlining that had the employee been able to continue working full-time, as a non-disabled person would not have had to retire early and therefore had no immediate access to the pension at all. 

This judgment illustrates the burden of proof that is placed upon employees when making a disability discrimination claim to demonstrate how their treatment was unfavourable in comparison to a non-disabled employee. In efforts to safeguard against future claims, employers should consider reviewing and possibly amending current pension schemes to ensure these remain fair for all employees. practice to hold a meeting with employees before making any dismissal decision


Hawkes v Ausin Group (UK)

In this case, the EAT ruled that an employee, who was an Army reservist, was not unfairly dismissed after declaring his intention to take seven weeks of leave to attend a voluntary training exercise. 

The claimant, Mr Hawkes, worked as a business development manager for the Ausin Group from September 2015 to August 2016. Prior to joining the business, Hawkes made his employer aware of his role as an Army reservist and successfully negotiated an extra week’s unpaid leave for voluntary activities as part of his contract. The claimant also made the employer aware that he could be called up for mandatory active service as part of this commitment. 

In June 2016, Hawkes applied, and was accepted, for a voluntary seven-week Army training exercise in California. When informing his employer of this, the claimant failed to mention that it was voluntary which led them to believe it was a request for mandatory active service that they were obliged to accept. 

Before Hawkes was set to attend the training exercise, the employer took a further look into his obligations as an Army reservist and discovered that the training was voluntary. When this point was raised to him Hawkes confirmed that he was committed to attending the training regardless of his employer’s concerns. 

In August 2016 Hawkes was informed that his role was being made redundant, as the business could not accommodate his absence. His employer added that they did not expect his commitment to the Army to be so significant before reiterating that they would not have approved his request for seven weeks’ leave if they had known from the outset that it was voluntary. Hawkes was ultimately made redundant and paid in lieu of notice. 

After being made redundant Hawkes lodged a claim with ET for unfair dismissal. The ET agreed that, despite lacking the required two years’ continuous service, Hawkes was able to bring this claim due to his protected role as an Army reservist. However, the ET held that the employer’s decision to dismiss was fair as his seven-week absence for a non-mandatory activity was considered to be a substantial reason for dismissal.

Hawkes proceeded to appeal this ruling to EAT raising the point that, in his view, his employer’s failure to hold a meeting with him prior to dismissal was unfair. When assessing this point, the EAT determined that there was no reason to hold an additional meeting as this dismissal was not conduct related but rather due to some other substantial reason (SOSR). The EAT also added that another meeting would have made no difference as Hawkes had already decided, and made clear, that he would be attending the exercise despite the employer’s wishes. 

Whilst employer disputes with Army reservists may be few and far between, the ruling of this case highlights the distinct differences between a dismissal for conduct and SOSR. Although on this occasion it was ruled that an additional meeting was not required, due to the claimant’s clear commitment to attending the training exercise, employers are reminded that it is best practice to hold a meeting with employees before making any dismissal decision. This will ensure organisations are able to maintain good records of any conversations which may prove decisive during tribunal proceedings.