Peninsula – apparent bias by Employment Judge

A number of sources have picked up on the recent case in the EAT concerning Peninsula Business Services, and their (now successful) claim that an Employment Judge should have recused himself on the basis of apparent bias against them. By way of background, Peninsula is probably one of the biggest employment litigators in the country. They are one of many similar organisations, such as (off the top of my head) EEF, Qdos, Citation, Croner and RBS Mentor, where the organisation sells compliance and insurance packages to SMEs usually consisting of an insurance policy against tribunal claims by employees, to cover costs and awards, subject to employers adopting compliant HR documentation that they provide and running any potential employment problems past a helpline first.

There are clearly advantages and disadvantages to using an organisation such as this. The benefit is that for a very small organisation HR compliance is achieved with virtually no allocation of staff by the employer, and as long as the business is smart enough to check its disciplinaries, grievances and dismissals with the helpline then they can rest assured any claims will be funded by the insurer. This is particularly attractive in a field like employment where largely meritless claims by employees against employers that have genuinely done nothing wrong can often proceed to a full tribunal hearing, and traditional hourly-billing by a solicitor can easily produce a five figure irrecoverable bill for costs.

But the disadvantage is that it reduces control by the employer. Some small employers simply want to be able to sack whoever they want and then pay a solicitor to perform some damage limitation afterwards. I have heard some employers, probably unfairly, claim that as the helpline is the gateway to the insurance policy, they ‘won’t let you sack anyone’. And, like any business agreement, the costs can sometimes be high and subject to automatic renewal and tie-in periods.

In this case, Peninsula had two claims brought against it, both of which were dealt with by the same Employment Judge. He was part-time, spending the rest of his time as a partner in a firm of solicitors who had recently posted an advertisement containing the following text:

Employers: Do you want to…

Deal with a local firm whom you can see and talk to at any time and avoid having the potential risk of dealing with untrained and unqualified ‘consultants’ or inexperienced and unqualified call centre ‘operatives’? Avoid expensive and lengthy tie ins of 3 or 5 years and pay only for the professional services that you actually utilise, avoiding subsidising others because you have to pay a large lump sum each year for services you may never use?

In finding against Peninsula in both their claims, the EJ professed rather unjudicial astonishment and castigation of Peninsula’s apparent failure to comply with employment law:

We remind ourselves that Peninsula holds itself as the biggest employment law consultancy in the country. For such an organisation to flagrantly breach employment legislation is, frankly, astonishing. … Put simply, Peninsula did not practice what they preach. …However, the claimants did have a legitimate expectation that Peninsula would comply with those standards of behaviour. This is all the more so where Peninsula hold themselves out as being an “Employer of Excellence”, (Peninsula having awarded themselves that accolade).

Of course, the appeal against the finding on the basis of apparent bias succeeded. We should remind ourselves of the basic test – “whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased” – Magill v. Weeks [2001] UKHL 67. In addition:

If there were real ground for doubting the ability of the judge to ignore extraneous considerations, prejudices and predelictions and bring an objective judgment to bear on the issues before him, a real danger of bias may be thought to arise. … If in any case there is real ground for doubt, that doubt should be resolved in favour of recusal. (Locabail (UK) Ltd v Bayfield Properties Ltd & Anor [1999] EWCA Civ 3004).

If we put ourselves in the position of the fair-minded and informed observer, we can see that there is a real possibility that the EJ’s business prejudice against Peninsula and their ilk has infected his objectivity towards them.

It should also be noted that in the second of the cases under appeal the EAT found no prejudice due to the length of time that had elapsed, and given that the EJ was, by then, full time. Also, where a lay member in the latter case had (rightly) recused himself there was no inherent objection to the case continuing with the EJ alone and the other lay member, even though the case was part-heard and they had had the benefit of his observations.

Full judgment: Peninsula Business Services Ltd v Rees & Ors [2009] UKEAT 0333_08_2307 (23 July 2009)

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