New Star Asset Management Holdings Ltd v Evershed

On an application to amend an employment tribunal claim, the tribunal must assess the factual allegations already pleaded and still in issue. It must not treat allegations as absent merely because the respondent asserts that they are irrelevant. A new claim under the protected-disclosure provisions of the Employment Rights Act 1996 may require additional legal issues to be determined, but it does not require wholly different evidence where it rests on materially the same pleaded facts. The tribunal must balance the amendment’s likely effect on evidence, cost, hearing length and prejudice to both parties.

A former fund manager brought an ordinary unfair constructive dismissal claim after resigning following his grievance about alleged bullying and fund-management conduct. He sought to amend the claim to allege automatic unfair dismissal under section 103A of the Employment Rights Act 1996, on the basis that the grievance was a protected disclosure.

The London Central Employment Tribunal refused the amendment. It regarded the proposed claim as a new cause of action requiring wholly different evidence, noted the absence of a grievance directed to the new claim, and identified prejudice to the employer. The Employment Appeal Tribunal, in case no. UKEAT/0249/09/CEA, held that the tribunal had erred and allowed the amendment. The employer appealed, contending that the protected-disclosure claim would materially widen the inquiry, particularly into allegations concerning other employees.

Appeal dismissed. Rimer LJ, with whom Sir Scott Baker and Sedley LJ agreed, upheld the Employment Appeal Tribunal’s order allowing the amendment.

1. An amendment application requires a practical assessment of its likely impact on the factual inquiry, evidence, burden, hearing length and expense, together with the parties’ respective prejudice. This was consistent with the guidance in Selkent Bus Co Ltd v Moore [1996] ICR 836.

2. The employment judge’s conclusion that the protected-disclosure claim would require wholly different evidence was erroneous. The original particulars already contained the material allegations concerning the employer’s treatment of the claimant, other fund managers, and the alleged effect on fund performance. Those third-party allegations remained part of the pleaded case; they had not been struck out and could not be treated as removed merely because the employer asserted that they were irrelevant.

3. The amendment added a distinct statutory cause of action and required investigation of its component ingredients. That did not, however, create materially new factual allegations or require wholly different evidence. The error on that issue undermined both the employment judge’s assessment of additional evidence and the consequential finding of prejudice through a longer and more expensive hearing.

4. The absence of a grievance specifically directed to the protected-disclosure claim was not treated as an automatic bar. It was a factor capable of being considered in the discretionary balance. The Employment Appeal Tribunal was therefore entitled to re-determine the application, balancing the employer’s need to meet the new claim against the claimant’s loss of the opportunity to advance it.

The order permitting the amendment stood.

• Court of Appeal (Civil Division): dismissed the employer’s appeal and upheld the order permitting the amendment: [2010] EWCA Civ 870.
• Employment Appeal Tribunal: Underhill J, President, sitting alone, reversed the employment judge’s refusal of the amendment and allowed it: UKEAT/0249/09/CEA.
• London Central Employment Tribunal: Employment Judge Warren refused permission to amend the ordinary unfair constructive dismissal claim to add an automatic unfair dismissal claim.