Introduction

Evershed v. New Star Asset Management (Rev 1) ([2009] UKEAT 0249_09_3107) is a pivotal case decided by the United Kingdom Employment Appeal Tribunal (EAT) on July 31, 2009. The case revolves around the Claimant, an experienced fund manager employed by New Star Asset Management, who alleged constructive unfair dismissal following his suspension and subsequent resignation after lodging a formal grievance alleging bullying by senior executives.

The core issue in this appeal was whether the Claimant should be permitted to amend his grounds of claim to include a whistleblowing allegation under Section 103A of the Employment Rights Act 1996, which would categorize his dismissal as automatically unfair. The initial refusal by Employment Judge Warren to allow this amendment prompted the Claimant to appeal the decision.

Summary of the Judgment

The Employment Judge, Warren, initially refused the Claimant’s application to amend his claim to include allegations of whistleblowing under s.103A, deeming it a new cause of action requiring different evidence and citing potential prejudice to the Respondent. The Claimant appealed this decision, represented by Ms. Daphne Romney QC.

Upon review, the EAT found that the Employment Judge had erred in his reasoning, particularly regarding the necessity for wholly different evidence and the impact of the amendment on the Respondent. The EAT held that permitting the amendment would not substantially increase the scope of factual inquiry and that the timing of the amendment application mitigated concerns about prejudice. Consequently, the appeal was allowed, and the application to amend was granted.

Analysis

Precedents Cited

The judgment extensively references prior cases to establish the legal framework for amending claims in employment tribunals:

• Transport and General Workers Union v. Safeway Stores Ltd (UKEAT/0092/07): This case highlighted that amendments introducing substantial new legal and factual inquiries are less likely to be permitted compared to mere re-labelling.
• Housing Corporation v. Bryant [1998] ICR 123: Addressed the necessity of establishing a causal link between a prior complaint and dismissal, emphasizing that without explicit linkage, new claims could be treated as fresh and thus out of time.
• Highland Council v. Transport and General Workers Union [2008] IRLR 272: Discussed the permissibility of adding comparators to a claim post-initiation and underscored that amendments should not be dismissed solely based on omissions in the original grievance.
• Suffolk Mental Health Partnership NHS Trust v. Hurst [2009] ICR 281: Although not directly conclusive, it indicated that some aspects of Lady Smith's reasoning in Highland Council might not hold, hinting at evolving jurisprudence on claim amendments.
• Selkent Bus Company Ltd v. Moore [1996] ICR 836: Provided guidance on the approach to be taken when reviewing amendment applications, particularly concerning discretion and fairness.

Legal Reasoning

The Employment Judge initially refused the amendment based on several factors:

• The amendment introduced a new cause of action rather than re-labelling an existing one.
• The proposed amendment would necessitate wholly different evidence.
• The Claimant had not raised a specific grievance under s.32 related to the protected disclosure.
• Allowing the amendment would prejudice the Respondent due to additional costs and extended hearings.

However, the EAT found these reasons insufficient:

• New Cause of Action: While true, the EAT determined that the amendment did not significantly expand the factual inquiry required.
• Wholly Different Evidence: The EAT criticized the Judge for not substantiating this claim, noting that much of the evidence was already pertinent to the original claim.
• No Causal Link: The EAT acknowledged the Employment Judge's point but found that the original pleading implicitly suggested a connection between the grievance and subsequent suspension.
• Prejudice to Respondent: Given the amendment would be made early in the proceedings and would not drastically alter the scope, the potential prejudice was deemed minimal.
• Out of Time: Although raising a fresh claim would have been time-barred, the amendment applied at the earliest possible stage, minimizing procedural disadvantages.

Ultimately, the EAT concluded that the Employment Judge had misapplied the law, particularly regarding the necessity for entirely new evidence and the extent of prejudice to the Respondent. The tribunal exercised its discretion to allow the amendment, emphasizing the balance between procedural fairness and the Claimant’s right to present all relevant claims.

Impact

This judgment has significant implications for future employment tribunal cases:

• Flexibility in Claim Amendments: The decision underscores that amendments to claims, especially those involving protected disclosures, may be permitted even if they introduce new legal elements, provided they do not overly complicate the factual inquiries.
• Early Amendments Preferred: Applying for amendments at the earliest stages can mitigate concerns about prejudice and procedural delays.
• Emphasis on Procedural Fairness: The ruling reinforces the principle that tribunals should facilitate fair hearings, allowing claimants to present comprehensive cases without undue technical barriers.
• Clarification on Protected Disclosures: By allowing the inclusion of s.103A claims, the case clarifies the treatment of whistleblowing allegations within constructive dismissal claims.

Overall, the decision promotes a more claimant-friendly approach in employment disputes, ensuring that significant allegations like whistleblowing are adequately considered even if introduced after the initial pleadings.

Complex Concepts Simplified

Constructive Dismissal

Constructive dismissal occurs when an employee resigns due to the employer's behavior, which fundamentally breaches the employment contract. In this case, the Claimant argued that the Respondent destroyed the implied duty of trust and confidence, leaving him no choice but to resign.

Protected Disclosure (Whistleblowing)

Under Section 103A of the Employment Rights Act 1996, an employee is automatically unfairly dismissed if the dismissal is because they made a protected disclosure. A protected disclosure is typically a whistleblowing act where the employee reports wrongdoing, such as bullying, criminal activity, or other serious issues within the organization.

Amendment of Claims

Amending a claim involves modifying the original grounds of complaint after the initial filing. This can include adding new allegations or legal bases for the claim. Courts assess whether such amendments introduce entirely new areas of fact or law, which might necessitate different evidence and potentially prejudice the opposing party.

Wholly Different Evidence

This term refers to evidence that was not previously required or part of the initial claim. If an amendment demands such evidence, tribunals may be reluctant to allow it, fearing increased complexity and potential delays.

Prejudice to the Respondent

In legal terms, prejudice refers to potential unfair disadvantage suffered by the opposing party if an amendment is allowed. This can include increased costs, extended timelines, or the need to procure additional evidence.

Conclusion

The Evershed v. New Star Asset Management decision serves as a key reference point for employment law, particularly concerning the amendment of claims to include whistleblowing allegations. The EAT's ruling emphasizes the importance of procedural fairness and the tribunal's discretion in allowing claimants to present comprehensive cases. By overturning the initial refusal to amend, the judgment affirms that protected disclosures can be integral to constructive dismissal claims without unduly complicating the legal process.

For practitioners and claimants alike, this case underscores the necessity of early and thorough claim formulation while also highlighting the tribunals' willingness to accommodate substantive claims introduced promptly. It reinforces the protection offered to whistleblowers and ensures that their grievances receive due consideration within the employment dispute resolution framework.

Ultimately, the judgment balances the need to prevent abuse of the amendment process with the imperative to uphold employee rights, fostering a fairer and more responsive employment law system.