Law v Pace Micro Technology Plc

In 1997 Mr David Law, the appellant, started employment with Pace Micro Technologies plc (Pace) as a full time Personnel, Health, and Safety Manager. On 28 September 2001 he was dismissed for redundancy in circumstances leading to his complaint to the employment tribunal of unfair dismissal and of disability discrimination under the Disability Discrimination Act 1995 (the 1995 Act).

Two kinds of discrimination were alleged: (a) dismissing him for a reason relating to his disability (s 5(1), which covers less favourable treatment of the disabled person) and (b) failing to comply with a duty to make adjustments, so as to allow him to work part time (s 5(2) and s 6, which cover the duty of the employer to make reasonable adjustments).

Mr Law lost in the employment tribunal, as explained in extended reasons sent to the parties on 8 August 2002. His appeal was dismissed by the employment appeal tribunal on 29 July 2003. Brooke LJ granted him permission to appeal on 12 September 2003.

It is now accepted by Pace that Mr Law’s appeal is bound to succeed in this court. I agree that the appeal must be allowed as a result of the recent decision of another division of this court in favour of an employee bringing a case of disability discrimination: Collins v. Royal National Theatre [2004] EWCA Civ 144 (Collins) (17 February 2004.)

There remain two consequential issues for the court to decide in allowing the appeal: the form of the order and permission to appeal. These points are normally dealt with briefly, on the handing down of judgments after the court has heard full argument on the merits of the appeal. The unusual features of this case are that the court has not heard full argument on the merits in view of the respondent’s concession that the appeal must be allowed and that there is a substantial dispute between the parties about the proper form of order.

In order to answer these questions it will be necessary to say more about the relevant law on disability discrimination, the particular facts of this case and the rulings of the tribunals below.

Mr Law established that he was a “disabled person” within the meaning of the 1995 Act. Although the point was contested by Pace in the employment tribunal, the finding is not challenged by Pace on the appeal. The discrimination alleged against Pace included breach of the duty imposed on employers by s 6 to make adjustments for a disabled employee. Under s6(1) it is the duty of the employer to take such steps as it is reasonable, in all the circumstances of the case, for it to take in order to prevent its arrangements from placing a disabled person at a substantial disadvantage in comparison with other persons who are not disabled. The steps may involve an employer altering working hours: s 6(3)(d).

In determining whether it is reasonable for an employer to have to take a particular step in order to comply with the duty, the tribunal is required to have regard to particular matters, such as the effectiveness, practicability, cost and affordability of taking the step: s6(4). Discrimination occurs when it is found that the employer has not taken steps which it was reasonable for him to have taken.

Once a failure to comply with the s6 duty to make adjustments has been established, it is for the employer, if he is able to do so, to establish a defence of justification “if, but only if, the reason for the failure is both material to the circumstances of the particular case and substantial”: s5(4). In this case the tribunal had to examine the reason for Pace’s failure in relation to part time working arrangements for Mr Law and to consider whether the reason for the failure satisfied the twin criteria of being both material to the circumstances of the case and substantial.

In November 1999 Mr Law fell ill. A prolonged period of chronic ill-health began (severe acute pancreatitis). On 19 November 1999 he was admitted to hospital. Three months later, on 16 February 2000, he returned to work. He had further days off between April and June 2000. In November 2000 he went off sick with a recurrence of his condition. He underwent surgery. There were complications. He did not return to work until 5 June 2001, and then only on a part time basis, working three days a week. He underwent further surgery in August 2001.

In May and June 2001 discussions took place between him and Mrs Pedder, the Director of Personnel. His post was made redundant. He was offered a new role as Health and Safety Officer at a reduced salary. Pace refused to go along with his suggestion of doing the job part-time with a pro-rata reduction in salary. He did not wish to resume 5 days working. When he was formally offered the full-time job he turned it down. Pace subsequently dismissed him for redundancy. He claimed that Pace had discriminated against him by failing to make the adjustment of employing him to work part-time as a Health and Safety Officer.

The employment tribunal held that Mr Law was a disabled person, who suffered pain and consequently was unable to work a five-day week. He was put at a substantial disadvantage by the offer of the post of Health and Safety Officer on a full time basis. It was reasonable for Pace to have to offer the job on a part-time basis. The offer would have prevented Mr Law from getting tired by full time work and it would have been practicable for Pace to have taken that step on a trial basis. The tribunal accordingly decided that Pace had unreasonably failed to take steps to make arrangements and that it had not complied with its s 6 duty.

The employment tribunal went on, however, to accept Pace’s contention that the discrimination was justified under s 5(4). Purporting to apply the decision in Jones v. The Post Office [2001] IRLR 384 it held that:

The employment tribunal also held that Mr Law was not dismissed for a reason which related to his disability. Mr Law argued that the tribunal should have found that the reason for his dismissal was a reason which related to his disability and could not be justified under s 5(3).

The tribunal decisions were made and this appeal was launched before the judgment was handed down in Collins, holding that s 5(4) does not permit an employer to justify a failure to make adjustments, as required by his s 6 duty, by reference to factors, which are properly relevant to establishing the duty and the breach of it. The test under s 5(4), as interpreted in Collins, differs from the test of justification under s5(3), as interpreted by this court in Jones v. The Post Office, of discrimination taking the form of less favourable treatment of a disabled person in breach of s5(1).

Leave to appeal was refused by the Court of Appeal in Collins. The court was told by counsel that a petition to the House of Lords was unlikely.

It is also relevant to note that, as explained by Sedley LJ in Collins, Regulations were made in 2003 to remove the justification defence in s 5(4) from the 1995 Act. The amendment does not, however, come into effect until 1 October 2004 and it will not retrospectively affect causes of action existing before that date: Disability Discrimination Act 1995 (Amendment) Regulations 2003 (SI 1673). Sedley LJ explained that the reason for the removal of the justification defence to s6 discrimination is that the defence can be entirely covered under s6 by the need for adjustments only to be reasonable. The amendment was also made to comply with the Framework Directive on Discrimination 2000/78/EC.

As indicated earlier in this judgment, the effect of Collins on this appeal is that it must be allowed. There was an error of law in the decision of the employment tribunal on the approach to the justification of discrimination contrary to s5(4) and s6 of the 1995 Act. The employment tribunal correctly found that it was reasonable for Pace to have to make the adjustment of taking the step of offering Mr Law a part-time post of Health and Safety Officer, perhaps on a trial basis. The tribunal, which did not, of course, have the benefit of the judgment in Collins, then wrongly held that Pace had justified the failure to comply with the s 6 duty, as it relied on factors, which were properly relevant to establishing whether there was a failure to comply with the s 6 duty i.e. the fact that it needed a full-time Health and Safety Officer to provide continuity and to be available at all times to deal with problems as they arose.

Further, on the application of s 5(5), the tribunal ought to have held that the dismissal of Mr Law would not have been justified, if Pace had complied with the s6 duty and had offered Mr Law the Health and Safety Officer’s post on a part-time basis. His dismissal was also an act of discrimination.

On the authority of Collins the appeal is allowed. What consequential orders should the court make? Initially, and before the judgments in Collins were available, Mr Law’s position was that the case should be remitted for the issue of justification to be re-heard by a fresh employment tribunal. The decision in Collins altered the position. His counsel, Mr Robin Allen QC, contended that, as the defence of justification was not available to Pace, this court should substitute a decision in his favour under s 5(1) and (2) of the 1995 Act. The matter should be remitted to the employment tribunal only on the question of remedies for the discrimination.

Mr Andrew Stafford QC, appearing for Pace, agreed with the initial stance taken by Mr Law about remission on the justification issue, but disagreed with the new stance taken by him following Collins. He submitted that there was a relevant issue of fact on which the employment tribunal had not made a proper finding: whether Pace knew, or ought to have known, that Mr Law was disabled. The relevance of that issue was unaffected by the decision in Collins. He accepted that the knowledge issue was not in the list of issues identified at the directions hearing in the employment tribunal on 25 February 2002 (order issued 5 March 2002), but it had been an issue at the hearing in June and July 2002. The tribunal had heard evidence and submissions on the point, but it had failed to make an explicit finding of fact. This omission made it necessary to remit the matter to the employment tribunal, so that it could make good the major gap in its decision and make a finding of fact, which cannot be made on an appeal to this court.

It is common ground that the knowledge issue is relevant under the provisions of s 6(6). No duty to make a reasonable adjustment arises in relation to a disabled person, if the employer does not know, and could not reasonably be expected to know, that the person has a disability and is likely to be disadvantaged by the arrangement concerned (in this case working full time). According to the Code of Practice (paragraph 4.57) the employer must do all that he could reasonably be expected to do to find out whether this is the case.

Mr Allen QC contended that a remission on this point was unnecessary. He submitted that Pace would have known that, while in their employment during the period from November 1999 to August 2001, Mr Law, whom the tribunal had “little difficulty” in finding was a disabled person, was seriously ill, that he had surgery and that he was away from work for prolonged periods. Indeed, a medical report had been supplied to Pace, at its request, by Mr Law’s surgeon, Mr Kenogbon, in April 2001 explaining that he was suffering from severe acute pancreatitis; that he had undergone an emergency operation on 21 November 2000, which was followed by complications; and that he had a very serious medical condition from which he had made a satisfactory recovery. He needed a 2-3 month period for further convalescence in order to make an expected full recovery. It was unpredictable whether or not he would have further attacks of pancreatitis. The letter concluded that it was not expected that his condition would prevent him from doing his job in his role as Personnel or Health and Safety Manager, but a light job was suggested in the first instance, starting on a part-time basis with gradual introduction into full activity, if he was coping well. It was plain, Mr Allen argued, from the medical report and from all the circumstances that Pace had actual or constructive knowledge of Mr Laws’s disabled condition and that he was, or was very likely to be, a disabled person under the 1995 Act.

Furthermore, on a procedural point, there was no substantive issue on knowledge before the court on this appeal, which could properly be remitted to the employment tribunal. Pace attempted to cross appeal on the issue to the employment appeal tribunal, but were not allowed to raise it, as they were seeking to uphold the decision of the employment tribunal in their favour: Harrod v. Ministry of Defence [1981] ICR 8 at pp11-12 and Riniker v. University College, London [2001] EWCA Civ 597 at paragraph 25. Permission to appeal on the point was refused by the employment appeal tribunal and has not been sought in this court. It was now too late to raise the issue, which was, in any case, without substance (“a rotten point” in his words).

I have concluded that Mr Allen is right to object to Pace raising the knowledge issue on this appeal and seeking a further hearing on it by a different employment tribunal. No permission was obtained from the appeal tribunal or from this court to raise the issue by a cross appeal. I would not extend the time for seeking permission to cross appeal.

In any case Pace would, in my view, have had substantial difficulty in persuading the appeal tribunal or this court that there was a real prospect of succeeding on a cross appeal on the knowledge issue. The tribunal was aware that the point was taken by Pace, as appears from Pace’s full written submissions on the point as part of its case on s6 (para 6). The tribunal must have had the point in mind when reaching its decision in the case. My clear impression is that, although there was an issue as to whether Mr Pace was a disabled person within the 1995 Act, Pace’s knowledge of the disability was not a substantial issue in the case, otherwise Pace would have ensured that it was in the list of issues directed at the directions hearing. The most likely inference from the other findings of fact by the tribunal and the evidence before it is that Pace had actual or constructive knowledge of Mr Law’s disability. The finding of disability is not challenged. Pace would have known, or ought to have known, of his condition both from the medical report supplied and from his prolonged absences from work: he was seriously ill and having surgery over a long period.

I would add that, if the issue of knowledge had been properly before the court and if I had entertained a serious concern arising from the lack of an explicit finding on the point, I would have declined to remit the matter for a full oral rehearing by a differently constituted employment tribunal, as requested by Pace. Instead, I would have been inclined to treat it as a case of inadequate reasons and remit the matter to the same employment tribunal with an invitation to amplify its incomplete reasons on the s6 duty by providing additional reasons for its conclusion that Pace owed Mr Law a duty to make reasonable adjustment in the light of the provisions of s6(6), the other relevant findings of fact made in the extended reasons, the written and oral submissions made at the hearing and any additional written submissions which it was willing to receive from the parties on the knowledge point. Such a course, though it should be taken sparingly, is permissible under the recommendation in English v. Emery Reimbold & Strick Ltd [2002] 1 WLR 2409 at para 25 on p 2419 and would, in my view, have been justified in this case, if Pace had applied in time for permission to cross appeal on the knowledge point.

Mr Stafford submitted that the correctness of the decision in Collins, which prevented his appeal from succeeding, should be considered by the House of Lords. The decision had construed the relevant provisions so as to render s 5(4) entirely otiose and removed justification as a defence in cases of failure to comply with s 6. He pointed out that s6(1) required the employer to take such steps as are reasonable “in all the circumstances of the case.” He then asked: if the tribunal has taken all the circumstances of the case into account when deciding the issue under s6(1) and if, as was held in Collins, the defence of justification cannot be based upon matters relevant to the duty to make reasonable adjustments, what is there left to rely upon in support of the defence of justification under s5(4)?

Although I see some force in Mr Stafford’s argument about the proper boundaries of judicial interpretation and legislation, I would not grant permission to appeal. As already noted the s 5(4) defence has been the subject of amending regulations removing it from the 1995 Act with effect from October 2004. It is only a temporary problem.

I would also add that it appears from the very recent decision of the House of Lords in Archibald v. Fife Council [2004] UKHL 32 (1 July 2004) on s6 of the 1995 Act that it was aware of the decision in Collins and that Lady Hale, with whose speech the other members of the Appellate Committee either wholly or substantially agreed, apparently treated it as correctly decided. If permission to appeal is to be granted, it should be by their Lordships’ House and not by this court. The court indicated at the end of the oral hearing that the appeal would be allowed, but that the time for presenting a petition for permission to appeal would not start to run before the written judgments on the appeal had been handed down.

The appeal is allowed. I would direct that the matter should now proceed to a remedies hearing in the employment tribunal. I would refuse permission to appeal to the House of Lords.

I agree.

I also agree.