Coote v Granada Hospitality Ltd. (no 2) [1999] IRLR 452 EAT
Leonard v Strathclyde Buses Ltd [1998] IRLR 893 EAT
Standard claims arising out of the termination of an employees contract alleging, for example, unfair dismissal are common but what rights survive the employment contract?
Post Employment Discrimination
In Coote v Granada Hospitality Limited Ms Coote argued that after her dismissal her former employers had victimised her by failing to provide any reference regarding her employment which would assist her in obtaining alternative employment.
She had previously pursued a claim for Sex Discrimination alleging that her employer's action in dismissing her had been motivated by her pregnancy. That claim was settled.
Her former employers had then refused to provide a reference because she had brought sex discrimination proceedings against them. The Act provides that it is unlawful for an employer to discriminate against "a woman employed by him".
Ms Coote brought a second claim for victimisation. It was unsuccessful at the Employment Tribunal which took the view that as she was not in employment at the time of the act of victimisation that it had no jurisdiction to hear the complaint. She appealed and the EAT referred the matter to the European Court of Justice for guidance on the applicability of the Equal Treatment Directive to victimisation which occurred after the employment relationship had ended.
The ECJ held ([1998] IRLR 656) that the Directive required member states to introduce measures to protect workers from this type of victimisation. Upon re-consideration by the EAT the issue was whether the Sex Discrimination Act could be construed to include post termination protection against the act of victimisation alleged by her.
The EAT referred to the Court of Appeal decision in Adekeye v the Post Office (no 2) 1997 [IRLR] 105 which considered post termination victimisation under the Race Relations Act 1976.
In Adekeye, the Court of Appeal held that the words in the Race Relations Act 1976 identical to those in the SDA and quoted above, had to be given their ordinary meaning and their view was that this meaning only applied to a person who was employed at the time of the discrimination or victimisation not someone whose employment had ended.
The advantage for Ms Coote was that she was able to rely upon the need for the SDA to be interpreted in the light of the Equal Treatment Directive. The eat held that the SDA could therefore be read so that the words applied to post-termination discrimination.
The victimisation that Ms Coote had suffered was intended to be covered by the Equal Treatment Directive and she should be entitled to legal protection from it. Along the way it considered whether it was bound by the Court of Appeal authority in Adekeye, holding that it was because of the added protection Ms Coote had from the Directive.
The position now appears to be that those claiming that they have been the victim of an act of sex discrimination by their former employer which took place after they left employment can be protected whereas those relying upon the same provision within the RRA 1976 will not.
Clearly this position is unsatisfactory and must be resolved either by legislative change or by reference in a Race Relations Act case to a higher court on a different case.
But where the Coote judgment may also be valuable is in post employment victimisation for exercising other Directive rights. Arguably an ex-employee who is given a bad reference for having brought a claim under the Working Time regulations, a TUPE claim, or right to a protective award for a failure to consult on a collective redundancy could argue for legal protection as a means of effective enforcement of Community Legislation.
No Right to a Reference
No reference can mean no job. One of the most crucial things a former employer can do for an ex-employee is to provide a reasonable reference. Unfortunately, in the lead case, Spring v Guardian Royal Exchange [1994] IRLR 460, the House of Lords held that there was no legal obligation on former employers to provide a reference unless the contract of employment says so. But if they do provide a reference, they have a duty to take reasonable care in giving the reference and to check the accuracy of the information the reference is based on.
Extraordinarily, until 1994, the duty of care was owed not to the person the reference was about, but to the prospective employer who had been provided with the reference! Thankfully the Spring case established the duty was owed both to the subject of the reference and the person to whom it was given.
Contractual Rights after Employment
Generally speaking termination of employment brings all contractual employment rights to an end. But this is not always the case. Many contracts of employment have clauses that are written to survive the end of the contract. Most often they are for the employer's benefit, such as confidentiality , for example, or restrictive covenants seeking to stop the ex-employee from working for a competitor or poaching colleagues and clients. Restrictive covenants will only be enforceable if they are reasonable and the presumption is that they are not unless the employer can show them to be reasonable.
But if the employer is in breach of contract in terminating the employees contract, it maybe that he will not be able to rely on clauses that benefit him Ð the legal principle of not being able to deprive an employee of rights by relying on your own breach of contract (otherwise known as not having the best of both worlds). The issue came up in Levett v Biotrace LELR 37 when Mr Levett was able to rely on valuable share options after he was wrongfully dismissed.
In a similar way, events taking place after an unfair dismissal can also benefit the ex-employee in terms of compensation.
In Leonard v Strathclyde Buses Ltd the Court of Sessions considered the issue of compensation to be awarded where employees held shares in the company which had to be sold back upon termination. Shortly after the termination and the sell-back the shares significantly increased in value, a windfall the ex-employees could not benefit from because they had been dismissed - unfairly in the judgement of the original Employment tribunal hearing the case.
The tribunal awarded compensation for the loss of share value. The Respondents appealed on the basis that the rise could not have been contemplated at the time of dismissal and came about because of acts of a third party - which had purchased the company thus leading to the increased share value. The EAT held that the loss was too remote and could not be awarded. The Court of Sessions overturned that decision and restored the original ET ruling. In their view an employment tribunal had to award what was just and equitable taking into account the loss sustained by the employee as a result of the termination. If their employment had not been terminated unfairly and they had remained in employment then they would have benefited from the windfall. It was clearly within the tribunal's discretion to award compensation for the loss they sustained.
Even where the contract is silent, ex-employees must keep secret some types of confidential information that they have learnt from their employer.
Conclusion
So, end of employment may not be the end of story. What happens after employment has ended can give rise to legal rights. Sex discrimination victimisation is definitively covered following the Coote case. The principle may extend to post employment victimisation for the exercise of other Directive rights.
Where terms of a contract which give a benefit to the employee end on termination of employment, if the employer wrongfully dismisses the employee those terms may survive the contract. Where an employee is unfairly dismissed, events subsequent to termination may affect compensation levels such as pay increases that the sacked employee would have received or an increase in share price value where the employee owned shares that had to be sold back to the company on termination.
With references, union officials may seek to negotiate a contractual right to a reference to avoid the problem of the lack of common law duty for an employer to provide former employees with references. But if the employer does give a reference he must take reasonable care in ensuring its accuracy.