When is a woman "pregnant"?
The European Court of Justice has found that a woman undergoing in vitro fertilisation, but who has not yet had their fertilised eggs implanted, is not "pregnant" and is therefore not protected from dismissal under the EC Pregnant Workers Directive. However, the dismissal of a woman, if related to her IVF treatment amounts to discrimination on the grounds of sex since only women receive such treatment.

This was a reference to the ECJ from an Austrian court. In Mayr v Backerei und Konditorei Gerhard Flockher it was common ground that in vitro fertilised ova existed at the date of Miss Mayr's dismissal. Miss Mayr claimed that as, under Austrian law, any dismissal during pregnancy is prohibited her alleged dismissal was not effective. At first instance the Austrian court held that protection from dismissal began with the fertilisation of the ovum. The referring court however found that the existing case law was based on natural conception and referred the issue of whether a fertilised egg, which had not been implanted, could still provide protection for the woman, to the ECJ.

The ECJ found that in some member states fertilised ova may be kept for an indefinite period and if protection against dismissal was applied before the ova had been implanted some women would have protection for long periods of time. The ECJ did however find that such a worker could rely on the Equal Treatment Directive which prevents discrimination on the grounds of sex if the reason for the dismissal related to the IVF treatment, since only women receive IVF treatment.

Homophobic banter - are heterosexuals protected?
An individual's claim for harassment by colleagues on grounds of sexual orientation failed in the case of English v Thomas Sanderson Blinds Limited on the basis that he was not, and was not perceived to be, homosexual and because he accepted that his colleagues did not believe him to be homosexual.

Mr English claimed that he had been subjected to sexual innuendo by his work colleagues, to the effect that he was homosexual, on the basis that he had attended boarding school and lived in Brighton.
The Tribunal addressed the issue of whether Mr English's complaint fell within the scope of the Regulations given that he is not homosexual, he was not mistakenly or genuinely thought to be so by colleagues who had engaged in the homophobic banter, and he knew that his colleagues did not believe him to be homosexual. The Tribunal therefore found that he did not fall within the protected categories of victims of harassment.

The EAT dismissed his appeal, but did however give Mr English leave to appeal to the Court of Appeal on the basis that the Regulations do not properly implement the EC Directive in that the definition of "harassment" under the Regulations is narrower than that under the Directive. This follows a similar challenge brought by the EOC in relation to the definition of harassment in the Sex Discrimination Act which is due to be amended as a result. If the harassment definition is amended throughout the discrimination legislation then many more people will be able to bring harassment claims.

The last straw - or is it?
In Brodie v Nicola Ward the EAT has held that a without prejudice letter was privileged and that the employee could not disclose its proposal for the termination of her employment, despite the fact that the proposal was the "last straw" in her claim for constructive dismissal.

Ms Brodie was in dispute with her employer in relation to her right to contractual sick pay. During the dispute she received a without prejudice letter from her employer's solicitors proposing terms of settlement that included the termination of her employment. For Ms Brodie this was the "last straw" and she subsequently resigned and claimed unfair dismissal. She claimed she had resigned in response to the proposition in the solicitor's letter that her claim for contractual sick pay would be met in full in return for her resignation. Whilst the employer accepted that the letter had been sent they claimed that it was protected by privilege. Both the Tribunal and the EAT found that the letter was privileged under the without prejudice rule and was not subject to any exception to that rule.

This is a reminder that it will only be in exceptional circumstances, for example where there are allegations of discrimination that a court will look behind the "without prejudice" rule.

Does a warning ever really expire? Well, that depends….
The Court of Appeal has recently found in Airbus UK Limited v Webb that expired warnings can be taken into account in decisions to dismiss in certain circumstances.

Mr Webb was an aircraft fitter employed by Airbus. In July 2004 Mr Webb was summarily dismissed for gross misconduct, on the basis that he had misused company time and equipment by washing his car when he should have been working. He appealed his dismissal and a final written warning was substituted for dismissal. The warning was expressed to remain on his personnel file for 12 months until the end of August 2005.

In September 2005, some three weeks after the expiry of his final written warning, Mr Webb was found with four colleagues watching television when they should have been working. Following an interview and an investigation Airbus held a disciplinary hearing at which all were found guilty of gross misconduct. Mr Webb was summarily dismissed, but his four colleagues were not dismissed because they had no prior disciplinary record.

Mr Webb appealed unsuccessfully and he brought a claim for unfair dismissal. Both the Employment Tribunal and the Employment Appeal Tribunal found that since the decision to dismiss was dependent upon taking account of an expired warning, the dismissal was unfair. The Court of Appeal however found that employers were not obliged to ignore expired warnings for all purposes when considering which disciplinary sanction to impose on an employee. In this particular case, the employer found that the employees' actions were sufficient to dismiss all employees for gross misconduct. The reason the four other employees were not dismissed was because they had good disciplinary records. It was therefore not because of the expired warning that Mr Webb was dismissed, but he didn't have the mitigating circumstances the other employees had and therefore his dismissal stood. This will be welcomed by many employers as it allows some flexibility on what was previously found to be a rigid rule.

IR35 - factors for consideration and practical points
The Special Commissioners have recently ruled on four cases dealing with the application of the IR35 legislation to specialist IT consultants. The decisions give useful indications as to the approach that will be taken in determining whether a consultant is in reality an employee of the client company for income tax and NIC purposes. Although the decisions were not entirely consistent and there are a number of practical lessons set out below to consider when drawing up/entering into such arrangements. The companies involved were: First Word Software Ltd, MKM Consulting, Draonfly Consulting Ltd and Datagate Services Ltd.

All four cases involved the common scenario of an IT consultant as the sole worker for a personal service company ("the company"). The company had a contract with an agency to provide services of the consultant and the agency also had a contract with the client. The consultant personally carried out the work and did not do any other significant work elsewhere. The engagements lasted for between 2 and 4 years.

In order to assess the employment status of the consultants the Special Commissioners had to determine the terms of a notional contract between the consultant and the client company based on factors which indicate whether the relationship is that of employment. They did so on the basis of the terms of the written agreements and oral evidence.

Although employment status for tax purposes is considered under slightly different tests than for employment rights purposes, and one does not automatically follow the other, the decisions do nevertheless provide useful guidance for all those who engage consultants, whether directly or indirect, and who are concerned about this issue.

Set out below are the factors considered by the Special Commissioners and the practical points to take into account in order to minimise the risk of creating an employment relationship. However, if any written agreement does not reflect what actually happens in practice, then this may not be enough to establish self employed status.

Personal service and the right of substitution

Mutuality of obligation

The Special Commissioners looked at how work and payment were dealt with:

Control

The more control exercised by the client company, the more likely the consultant is to be an employee. However, the Special Commissioners recognised that the level of control necessary to indicate an employment relationship is low in respect of a highly skilled consultant. Therefore, in order to point away from employment:

Financial risk

In these cases there was not a great deal of financial risk, but factors which were held to point weakly away from employment were the risks that invoices would not be paid before and after engagements; the risks of insufficient engagements; the risk that the consultant was paid later than an employee; the risk associated with not receiving sick pay and the fact that in one case the consultant accepted lower rates when the market turned down.

Length of engagement

An open ended contract may be indicative of employment. In these cases the consultant was engaged on a fixed term contract which was subsequently extended or renewed. This factor was given little weight in all the cases.

Provision of own equipment

In all cases the majority of the equipment and materials was provided by the client company because of the nature of the work undertaken. This factor was not given much weight.

Employee-type benefits

In all cases the consultant did not receive holiday or sick pay and was not entitled to participate in the client's pension scheme, all of which pointed away from employment.

For more information about our Employment & Pensions Team please contact Jo Wort at joanna.wort@charlesrussell.co.uk

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