Tue 04 Aug 2020

Tribunal can recommend employer offers severance package as a reasonable adjustment

A recent decision by the EAT will make for worrying reading for many employers .

A recent Employment Appeal Tribunal judgement, Hill v Lloyds Bank plc may give HR professionals, and the businesses they work for, a few sleepless nights for two reasons.  Firstly, that the provision of an undertaking to provide a severance package would be a reasonable adjustment, and secondly that should the matter get to the stage of litigation, an employment tribunal could make a recommendation in those terms.

When an employee makes a successful discrimination claim one of the potential remedies is that the employment tribunal may make an "appropriate recommendation".  That is a recommendation that within a specified time frame the employer takes particular steps to remove or diminish the adverse effect on the employee of any matter to which their complaint and the tribunal proceedings relate.  Currently recommendations can only be made for the benefit of the particular claimant in a case and not the wider workforce.  If the employer fails, without reasonable excuse, to comply with the recommendation the tribunal may increase the amount of any compensation to be paid to the claimant.

The facts of this case were certainly not unusual.  A bank employee alleged she had been bullied by two colleagues.  On return from absence due to a reactive depression, allegedly caused by the bullying, she sought an undertaking from her employer that (i) she would not be required to work with the two colleagues concerned; and (ii) if that was not possible she would be offered a severance package equivalent to that provided on redundancy.  The bank refused to give any undertaking to that effect, instead offering words of comfort around using best efforts in response to such a request. 

An employment tribunal held that the bank had failed to make reasonable adjustments - specifically the giving of the undertaking requested by the employee - and awarded her compensation.  The tribunal also made a recommendation that the employer give an undertaking in similar terms to that which the employee had previously requested.  Both parties requested the recommendation be reconsidered, and the Tribunal subsequently set it aside.  The bank then made appeals against liability and the terms of the original recommendation, while the employee appealed against the recommendation being set aside.

The EAT upheld the employment tribunal's finding that there had been a failure to make reasonable adjustments.  The bank had a practice of only offering words of comfort, and that put the employee at a disadvantage.  Offering the undertaking would have alleviated that disadvantage and been a reasonable adjustment in the circumstances.  The financial package would only kick in if it was no longer possible for the employee to work separately from the two alleged bullies, so its primary purpose was to enable her to work without fear of that undertaking being breached and not to make provision for her to leave work.  The fact that the undertaking was of an indefinite nature and it had a financial value attached to it did not prevent it from being reasonable.  There was no reason in principle preventing the tribunal from making a recommendation requiring the bank to give a written undertaking along the lines requested by the employee.  The question of the recommendation was remitted back to the tribunal to consider.

Recommendations are arguably a rather blunt tool.  There is no power to enforce recommendations and, certainly in circumstances such as this where there is potentially a significant cost in terms of the severance package to be offered, the employer may decide to refuse to comply with the recommendation and roll the dice in terms of the amount of additional compensation that might be ordered versus the cost of a severance package at some unknown point down the line. 

However, particularly for an employer the size of the bank, there is the risk of both bad publicity and the failure to comply with the recommendation being used as evidence to support subsequent similar discrimination claims in the future.  The bank's reluctance to give firm undertakings regarding severance packages in circumstances like these will likely be mirrored by many other businesses.  To that extent there is a possibility of similar cases arising in the future within the wider business community.  There is clearly merit in ensuring these types of cases are considered on an individual basis, both from the point of view of reaching the appropriate conclusion and to avoid any practice of not giving undertakings (the practice then becoming the basis of a claim) arising.

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