Employment Law
& HR Briefing

Introduction

This month we feature a mixed bag of recent cases, some with rather surprising outcomes.  They deal with pressure from clients to dismiss, evidence from secret recording by employees, striking out of weak claims, redundancy and notice pay.

Third Party Pressure to Dismiss - Bancroft v Interserve

It’s long been the case that where a third party – a client, supplier or customer, for example – requires an employer to dismiss an employee, this can be potentially fair as “some other substantial reason”.   What this case shows is that dismissal because a client asks for it may be potentially fair but isn’t always actually fair: the third party request isn’t a “get out of jail free” card when it comes to unfair dismissal. 

And speaking of jail, Mr Bancroft was employed by Interserve as the chef in a bail hostel.  Interserve’s contract allowed the Home Office to require the removal of contractor staff without giving reasons.  The bail hostel was managed by another contractor to the Home Office.  The manager of that contractor had a difficult relationship with Mr Bancroft and eventually wrote to the Home Office requesting that Mr Bancroft be dismissed.  The Home Office then wrote to Interserve asking for “a permanent solution to be put in place”.

Interserve didn’t try to persuade the manager or the Home Office to change their minds but it did offer Mr Bancroft another job - which would have meant a long journey and lower wages - which he rejected.  He was dismissed and claimed unfair dismissal.

The tribunal found against him.   It quoted the leading case of Henderson v Connect South Tyneside Ltd, which set out the principles to be applied, i.e. “if the employer has done everything that he reasonably can to avoid or mitigate the injustice brought about by the stance of the client, most obviously by trying to get the client to change his mind and, if that is impossible, by trying to find alternative work for the employee - but has failed, any eventual dismissal will be fair”.  Whilst Interserve didn’t try to persuade the manager to change his mind, the tribunal found it was reasonable for them to conclude it would have been pointless.

However, the Appeal Tribunal disagreed with the tribunal.  Injustice to the employee, and the extent of that injustice, is an important factor in the fairness of a dismissal.  The tribunal should have taken into account the fact that Interserve had never investigated the rights and wrongs of the difficult relationship between Mr Bancroft and the manager or done anything to try to resolve them.

So, asking the client to change its mind may not be enough; further steps may need to be taken to see if the situation can be resolved without dismissal.

Relying on Secret Recordings - Vaughan v London Borough of Lewisham

Ms Vaughan brought various claims against her employer.  She wanted to rely on 39 hours of secret recordings she had made of meetings – including disciplinary hearings – between her and the Council.  She claimed that the recordings would prove that the Council and its staff had lied, although she didn’t go into more detail.

The tribunal refused to allow this evidence.  The judge ruled that they would first need to be independently transcribed , which the claimant said she was not willing or able to do, and in any event that the time and cost to the respondent of reviewing them and the amount of Tribunal time that would be needed to consider them, meant that admitting the evidence would be disproportionate.

The EAT held that the judge was right not to allow the evidence because it was plainly not possible for her to form any view on the relevance, and thus the admissibility, of the recordings on the material that Ms Vaughan had produced.  The tribunal did not have anything to go on.
However, the EAT went on to say:

• recordings need not necessarily be independently transcribed before a decision on admissibility can be made.  As a first step Ms Vaughan should have given the Council her own transcript, along with the recordings and the Council could then have decided whether or not to dispute the accuracy.

• the fact that these recordings were secret was distasteful but does not mean they were not admissible.  If Ms Vaughan were now to make a more focussed application clearly identifying the parts of the recordings that were relevant and why, then the outcome could be different.  Although it is normal practice that case management decisions are not revisited, that is not an absolute rule and the second bite of the cherry could be allowed if it were in the interests of justice.

Notice Pay When the Employee is Off Sick - Milson v Hope

A small but sometimes overlooked point about notice pay was considered by the Employment Appeal Tribunal in this recent case. 

Miss Milson employed Miss Hope as a home help for nearly three years. She dismissed her, as it turns out unfairly, and stated that she would give her one month’s notice.  Miss Hope went off sick; Miss Milson paid her SSP for her notice period; Miss Hope claimed full pay for the notice period. The employment tribunal awarded her one month’s pay, minus the SSP, by way of notice pay. 

Miss Milson appealed.  The tribunal, she argued, had not looked at sections 86 to 88 of the Employment Rights Act 1996.  Those sections say that, if the employee is unable to work during the notice period by reason of sickness, the employer must pay the employee their full pay for the statutory minimum notice period (which in Miss Hope’s case would be two weeks).  Furthermore, they also provide that if the contractual notice to which the employee is entitled exceeds the statutory minimum notice by at least one week, the obligation is to pay the employee only what the contract requires, which in this case would be the SSP she was paid.  So, either Miss Milson owed Miss Hope nothing or she owed just two weeks’ pay, not the month the ET awarded.

The EAT held that there was no evidence as to what the contractual notice in this case was. Miss Milson had decided to pay one month’s notice but there was no evidence of any contractual term to that effect, as there had never been any written contract. There being no contractual term, that meant that Miss Milson's obligation in this case was to pay full pay for the statutory minimum notice period, so she owed two weeks’ pay, not one month's.
At the end of the day Miss Milson will have saved around £400 by virtue of her appeal; one can only hope that insurance was paying the cost!

One In, One Out = Redundancy? - Malekout v Ahmed & Others (t/a The Medical Centre)

This is an even more surprising decision, this time on redundancy.  The claimant was made redundant by the Medical Centre after 14 years’ service as Practice Manager.  In the year before the claimant was made redundant, he indicated to the employer that he was considering leaving the practice, so the employer employed another person who was described as a trouble-shooter to replace the claimant if he left.  The claimant then decided to stay, so there were effectively two practice managers.  The employer in due course decided that the claimant had to go.  The tribunal found that the reason for the dismissal was redundancy but that the procedure to carry it out was unfair, as the consultation with the claimant was a sham, because the employer had made up its mind from the outset to dismiss the claimant. However, the tribunal found that the claimant would have been made redundant in any event, even if a fair procedure had been followed, so awarded no compensation.

On appeal, the claimant argued that this was not a case of redundancy; there never were two jobs here.  The EAT gave that argument short shrift: the employer had two people in the post for effectively one job, so it was inevitable that that would result in two employees being reduced to one.  That is a diminution in the requirement for employees to carry out work of a particular kind within the legal definition of redundancy.  The claimant also argued that the tribunal was wrong to award no compensation given the absence of a fair procedure.  The EAT however found that this was not a case where no attempt was made at consultation and thus where a fair dismissal would have required further time for such genuine consultation to take place.  Had it been such a case, compensation could be awarded to reflect the extra time the employer should have taken.  The finding here, though, was that there was consultation but it was a sham, so there was no reason to disturb the finding of no compensation.

Striking Out Weak Claims - Patel v Lloyds Pharmacy Ltd

When reforms to the employment tribunal system are introduced later this year, a preliminary step known as a ‘sift’ will be introduced whereby the employment judge will have the power to strike out at the outset claims which have no reasonable prospect of success. In fact, tribunals already have the power to strike out claims which have no reasonable prospect. But there have been criticisms that tribunals are reluctant to exercise the power and the new procedure will ensure they give consideration to it at the start of every case. One area where the tribunals are particularly reluctant to exercise the power to strike out is discrimination claims.  Here, the Court of Appeal has previously ruled that it should only be in an exceptional case that a discrimination claim will be struck out as having no reasonable prospect of success.

A recent such exceptional case, however, is Patel v Lloyds Pharmacy Ltd, where, frankly, the tribunal and Appeal Tribunal took a surprisingly robust approach.  Here, the claimant, who suffered from bipolar disorder, applied for a job with Lloyds Pharmacy but was unsuccessful.  He brought a claim for disability discrimination.  He had previously worked for the respondent as a Locum pharmacist, during which time he had dealt with a Mr Butt, who was aware that the claimant suffered from bipolar disorder.   Mr Butt had terminated the locum appointment because he found Mr Patel rude, aggressive and confrontational.  He communicated his view that Mr Patel was unsuitable to the interviewers when Mr Patel applied again.  The tribunal and Appeal Tribunal found, however, that it was not possible to draw a reasonable inference from the evidence that the interviewers knew Mr Patel suffered from bipolar disorder. It was also not possible to draw an inference that Mr Butt believed that he was unsuitable because of bipolar disorder. On that basis, the claim did not have reasonable prospects of success and it was right to strike it out.  It would not be right to let a case continue on the basis that “something might turn up” when the parties gave their oral evidence before the tribunal.

Introduction

This month we look at the Government’s legislative programme, guidance on religious belief at work, a case on enhanced redundancy pay for older workers and two interesting cases from the Reading employment tribunal.

New Legislation

The Government has just published “Employment Law 2013: Progress on Reform” in which it pats itself on the back for its programme of change to Employment Law. It says that it intends to promote flexibility by regulating the labour market in a light-touch way. “The approach we take means the UK labour market is one of the most lightly regulated labour markets in the OECD”, it says, quoting figures from when Labour was in power!  Then it goes on to tell us about 18 new sets of employment laws it is introducing! (OK, many of them will reduce the burden of employment law but quite a few won’t.)

This is the timetable for some of the key changes:

Spring 2013

• Reducing 90-day collective redundancy consultation to 45 day

 

Summer 2013

• New rules on ending employment by settlement agreement
• 12 months’ pay cap on unfair dismissal
• New rules on whistle-blowing
• New ET procedural rules
• Introduction of fees for ET claims

 

Autumn 2013

• New employee-shareholder contracts postponed from planned Spring launch
• Reform of TUPE, re-defining what is a transfer

 

Spring 2014

• New right to request flexible working for all employees
• Pre-claim conciliation procedure
• Penalties on some employers who lose ET claims

 

Government Takes Another Look at Bill

As the Enterprise and Regulatory Reform Bill continues to travel through Parliament, the Government is reshaping some of the provisions.

Unfair dismissal qualifying period
The unfair dismissal qualifying period has been amended to reflect the European Court of Human Rights’ decision in Redfearn v UK.  Where the principal reason for dismissal is, or relates to, the employee’s political opinions or affiliation, the two-year qualifying period will not apply.

Whistle-blowing protection
Somewhat surprisingly, the government has removed the requirement for a public interest disclosure to be made in ‘good faith’ in order to attract whistle-blowing protection, although compensation can be reduced by up to a quarter if the disclosure is in bad faith.

Protected disclosures
An employer will become vicariously liable for a detriment caused by one worker to another who had made a protected disclosure.  But employers who have taken all reasonable steps to prevent the detriment would have a defence.  Training employees will be a necessary first step to achieving this defence.

Ability to pay
The Bill now says that where tribunals impose financial penalties on employers who lose a tribunal where there are 'aggravating features', which they will have power to do from April 2014, they must have regard to an employer’s ability to pay.

Discrimination Guidance

Following on from the European Court of Human Rights ruling in Eweida (see January’s Briefing) the Equality & Human Rights Commission has delivered some advice and guidance on dealing with religion and belief in the workplace which you can read here.

It features different scenarios and practical guidance to help deal with requests to accommodate religion and belief in the workplace.  We’d recommend a read.

Enhanced Redundancy Pay for Older Workers - Lockwood v DWP

Ms Lockwood took voluntary redundancy from her administrator’s role at the Department for Work and Pensions.

She received £10,900 after nearly 8 years’ service. She was 26. Had she been over 35 with the same level of service she would have received £17,700 more. This, she claimed, was discriminatory.

The tribunal found against her. On appeal, the DWP argued that it was not right to compare Ms Lockwood’s age group with over 35s. Older workers find it more difficult to get a new job, and the enhanced redundancy terms reflected this.

The Employment Appeal Tribunal held that it was right to compare the two age groups but, somewhat surprisingly, held that if Ms Lockwood had been treated less favourably, the treatment was objectively justified. The DWP was giving older workers a financial cushion and it was in the public interest to do so. The enhanced voluntary redundancy pay for that age group was a proportionate means of achieving a legitimate aim.

A reminder that when it comes to treating staff of different ages differently, objective justification is everything.

Relying on ET Evidence to Base a Claim - Singh v Reading Borough Council

Ms Singh was a head teacher employed by the Council. While still working at her school, she brought a claim alleging that parents, staff and governors had pursued a campaign of race discrimination, harassment and victimisation against her.

In the lead-up to the tribunal hearing, the Council sent to Ms Singh the witness statement of the Clerk to the School’s Governing Body. This sparked a new element to Ms Singh’s claim; she believed that the witness statement contained lies and that improper pressure had been put on the Clerk to make it. This was all part of the race discrimination campaign, she argued, and was the last straw. Ms Singh resigned and added constructive dismissal to her claim.

The question for the Employment Appeal Tribunal (EAT) was whether or not the witness statement, produced while preparing a case for hearing, was protected by judicial proceedings immunity. If it was privileged in this way, then Ms Singh could not use it in support of her constructive dismissal claim.

The EAT held that immunity applied. This protects not only witnesses who are giving evidence in the tribunal, but documents produced in preparing the case, the EAT said. So even if it were true that pressure was put on the witness to produce the statement, or to give false evidence, that could not be used by the claimant to bring another claim against the employer.

Unfair Dismissal: Employee on Final Warning - Buzolli V Food Partners Ltd

It is refreshing to report on a tribunal, and appeal decision, where common sense triumphed over procedural nicety.

The claimant was given a final written warning under the employer’s procedure in March 2010 for failing to attend work due to being under the influence of alcohol. In September 2010 he drove his company vehicle into a bridge causing damage which cost £6,240 to repair. He was dismissed following a disciplinary hearing with one week’s pay in lieu of notice. He brought a claim for unfair dismissal at the Reading Employment Tribunal but lost. He appealed.

On appeal, the claimant argued that his dismissal was unfair because the procedure followed by the employer breached the Acas Code in the following respects: 1) the warning letter did not state that further misconduct or unsatisfactory performance during the 12-month period of the warning may lead to dismissal; 2) the warning was not referred to at the disciplinary hearing or in the dismissal letter, it was only referred to at the appeal stage as forming part of the basis for dismissing the Claimant; 3) the Claimant was not put on notice that the disciplinary hearing may lead to his dismissal in the letter inviting him to that hearing. His barrister argued that as a result, the claimant was ambushed, hijacked and derailed!

The EAT, however, concluded that, although the employer’s procedure did not comply strictly with the requirements of the Acas Code, overall the dismissal was within the range of reasonable responses and so was fair. After all, it was common sense that breach of a final warning might lead to dismissal and the claimant should have understood that dismissal therefore could result from the disciplinary hearing. His own internal appeal document showed he understood the warning was taken into account in the decision to dismiss even though only mentioned on appeal. The case is not carte blanche to ignore the Acas Code but does show that the job of the tribunal is to look at the overall dismissal in the round rather than with a pernickety insistence on dotting every “i” etc.

Introduction

This month we update you on the new rates of maternity, paternity and sick pay and the change to compensation limits. We look at changes to parental leave coming in next month and to collective redundancy consultation coming in in April. First, however, we look at case law on investigating dishonesty and what amounts to disability.

Reasonable Investigation in a Dishonesty Case

In Stuart v London City Airport, the Employment Appeals Tribunal has held that, in a case where an employee is dismissed for alleged dishonest conduct, which is a serious accusation that may have important repercussions for the employee, a reasonable investigation must include looking at evidence that might potentially prove the innocence of the employee, as well as evidence that points to guilt. This case is an important warning against too superficial an investigation where dishonesty is concerned. It is not enough that you have evidence pointing to guilt. You have to see how it stacks up against evidence pointing to innocence.

In this case, Mr Stuart was observed leaving the perimeter of the duty free shop at the airport where he worked without having paid for certain goods. The claimant did not deny that he had done so but said he was openly carrying the goods and had crossed the perimeter without realising he had done so to talk to a colleague and then had gone on to purchase a drink at another store realising his break was about to end when he was arrested for stealing the goods. The EAT said the investigation fell short of a reasonable investigation because the dismissing manager did not look at the CCTV, did not interview the shop assistant who alleged that the claimant had concealed the goods or any other shop assistants or the friend the claimant says he went to talk to. By concentrating on the fact that he had left the shop without paying when one witness said he had concealed the goods, the employer had failed to carry out enough of an investigation.

Disability Discrimination: Normal Day-to-Day Activity

A disability, for the purposes of the law, is a physical or mental impairment which has a substantial and long-term adverse effect on the sufferer’s ability to carry out normal day-to-day activities. The Employment Tribunal in this case decided that a station assistant, who was dismissed because back pain prevented him from standing for long periods of time, was not disabled under the Equality Act 2010. The EAT, however, said the tribunal had fallen into error by concentrating on what the employee could do despite his back problem - he could walk around, carry a tray and items that were not too heavy, he could wash up and put his shoes on - rather than on what he could not do. The tribunal seemed also to have thought that what the employee did at work could not amount to "normal day-to-day activities”. There are many jobs where standing for long periods is required so it could be regarded as a normal day-to-day activity.

Increases in Statutory Payments

Statutory maternity pay, statutory paternity pay and statutory adoption pay will increase from £135.45 to £136.78, effective from 7 April 2013. The weekly earnings threshold for these payments will rise from £107 to £109. Maternity allowance will increase from £135.45 to £136.78, with the earnings threshold staying at £30.

Statutory sick pay will increase from £85.85 to £86.70, again with the weekly earnings threshold also rising from £107 to £109, this time effective from 6 April.

Compensation Limits from 1 February

Compensation and award limits went up on 1 February. The maximum unfair dismissal compensatory award rose from £72,300 to £74,200, and the maximum amount of a week's pay increased from £430 to £450.  The daily amount of guarantee payment payable for up to five days of lay-off in a three-month period increased to £24.20.

Parental Leave: Implementation of an EU Directive

The Parental Leave (EU Directive) Regulations 2013 will come into force on 8 March 2013.

First, they increase the entitlement to parental leave from 13 to 18 weeks in respect of an individual child. As parental leave is unpaid it is most commonly found being tacked on to the period of maternity leave though of course it need not be.

Second, they extend the right to request flexible working on return to work following a period of parental leave to agency workers.

Finally, they require the Secretary of State to review the implementation of the EU Directive, and to publish a report within 5 years, and further reports every 5 years after that.

Changes to Collective Redundancy Rules

The government has published the Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment) Order 2013, which will reduce the maximum period for collective redundancy consultation from 90 to 45 days, where 100 or more redundancies are proposed, and exclude the expiry of fixed-term contracts from the definition of redundancies for the purpose of calculating how many are proposed. The changes will come into effect on 6 April.

Introduction

Last week was a busy week for the future of employment law. We had a significant decision from the European Court of Human Rights (ECHR) on religious discrimination, which attracted a lot of press coverage, and several major announcements from the Government on changes or proposed changes to the law. You could (if you are an employer) say that the Government’s heart is in the right place with these changes, as it aims to reduce the burden of employment law especially on smaller businesses. The impact of some of the proposals though may be limited and others have the real potential to do the opposite to what the Government intends and make life more complicated for employers.

First, though, a note about the weather...

It’s Winter Again!

From an employment law point of view, there are steps you can put in place to deal with the issues winter can bring. First, you can introduce a severe weather policy. This can make the point that employees should not attempt to get into work where local radio has advised it is unsafe to do so but otherwise must make an effort. Employees should be required to telephone you before their start time to let you know if they are delayed or not coming. The policy should set out what happens to payment for the day. If employees can do their work from home, they should be paid for the hours they work. Employees who can only work productively at your normal place of work can in most cases be required to take the day as unpaid or as a holiday. If severe weather conditions cause a big delay in getting to work, you can provide in your policy that lost time will be unpaid or made up by agreement. Make sure that your employees are reminded of the policy whenever the weather forecast looks bad!

Remember that all employees have a right to a reasonable amount of unpaid time off to deal with emergencies involving their dependants. 'Emergencies’ for these purposes include where child care arrangements break down or there is an unexpected incident at school. So, whilst there is no legal obligation to pay employees who can’t get to work because bad weather means they have to look after their children unexpectedly, they cannot be disciplined for not turning up to work.

Unfair Dismissal Compensation

The Government has announced it is going ahead with a proposal we first mentioned here in May last year. The compensatory award for unfair dismissal will be capped at whichever is the lower of twelve months pay for the employee or the current cap of £72,300 (which rises to £74,200 from 1 February 2013).  As the median compensatory award is nowhere near the current median annual salary, this change in the law is, to a certain extent, window-dressing. The Government acknowledges that but hopes that this change will lessen employee perceptions of a windfall coming their way from a tribunal claim and, at least, make settlement easier. That remains to be seen: for most people a year’s pay is still a prize worth aiming for! EW clients are of course shielded from this worry by our ELI policy.

Religious Discrimination and Human Rights - Eweida & Others v United Kingdom

Four committed Christians who had lost their claims for religious discrimination in the UK courts brought this action in the ECHR, aiming to show that UK law was in breach of the European Convention on Human Rights. Three of the four lost again; one won. The losers were a Relate counselor who refused to counsel homosexual couples and a registrar who refused to register civil partnerships, both on the ground that homosexuality offended their religious beliefs. The ECHR in effect held that the UK courts were entitled to weigh their religious rights in light of their employers’ policies of non-discrimination and to hold that the latter took priority. The other loser was a nurse who wanted to wear a small cross on a chain round her neck but was refused on health and safety grounds. Again, the court held that the UK courts were entitled to balance health and safety concerns against her right to manifest her religion and, in this case, to hold that health and safety won out. The winner was also someone who wanted to wear a cross but this time the refusal by her employer, BA, was because of its desire to maintain a corporate image. In effect, the ECHR held that Mrs Eweida’s right to manifest her religion trumped BA’s right to a corporate image, especially as that image cannot have been all that important to BA as it changed its policy not long after.

The lesson of these cases appears simply to be that employers have to act reasonably when balancing the right of individuals to manifest their religious beliefs at work against other competing concerns and, in the hierarchy of competing concerns, corporate image comes lower than health and safety and avoiding other discrimination.

Settlement Agreements

The Government has also announced proposals for legislation and ACAS guidance to make it as clear as possible that employers offering a settlement agreement to terminate employment, “when done correctly, should have little to fear”. Specifically, if you offer a settlement to end someone’s employment but they turn you down, the fact that you offered the settlement would not be able to be referred to in an unfair dismissal claim. Employers who were willing to offer such settlements could use them, for example, to avoid going through elaborate redundancy procedures (at least where fewer than 20 employees were involved) and if the selected employees rejected the settlement, the employer could carry on with the redundancy process safe in the knowledge that the offer of a settlement could not be revealed in a tribunal. An employee who chose to resign rather than accept an offer of settlement would not be able to use the offer to support a claim that they were unfairly dismissed, unless they could show the employer’s behaviour was “improper”. There will also be a Statutory Code of Practice which will contain a model settlement agreement for employers to use - doubtless hitting the profits of lawyers who are used to charging for drafting compromise agreements.

Pre-claim Conciliation

When this next reform is introduced, later in the year, those intending to bring a claim in the employment tribunal will have to first submit their claim to Acas for them to attempt pre-claim conciliation before submitting the claim to the Tribunal. Employers will not be forced to participate in the process and may be disinclined to, preferring to wait to see if the employee will pay the new fees to bring his or her claim in the tribunal. The time limits for bringing ET claims will remain in place so there will be an incentive on claimants not to wait too long before submitting their claim to Acas.

Sickness Absence

Managing an employee’s sickness absence, in particular those employees who are on long term sick, has always been a difficult process. The Government has come up with some radical proposals to help employers tackle the problem. 

First, there is to be a new, government-funded, occupational health service. This would be called the Independent Assessment Service, and is intended to be in operation from 2014. The new service will provide an assessment from an occupational health advisor once any employee has been off work sick for four weeks, and carry out case management in complex cases. The idea behind the scheme seems to stem from recognition that the employee’s GP’s main concern is their patient’s well being and not the employer’s interests.

There will be new guidance to doctors on how to complete fit notes, so as to provide a broader perspective on the employee’s fitness for any work, rather than just concentrating on the job they are employed to do.

Other changes that will be introduced include abolishing the SSP record-keeping requirements.

It remains to be seen how these changes may affect the management of employees on long term sick. The independent assessment is the most novel idea; one assumes in the modern world those providing the service will be incentivised to get people back to work.  That could be a good thing but it may give some employers headaches!

TUPE

Finally, the Government has signalled that it intends major changes to the TUPE legislation that is currently in force. This is complicated legislation and the reforms are complicated – so this bit of our Brief is for TUPE buffs only! 

Service Provision Changes (SPC)
The biggest proposed change is to undo the last radical change to TUPE, made by the Labour Government in 2006, when it made outsourcing, in-sourcing and changing service providers (collectively known as Service Provision Changes (SPC)) subject to TUPE.

For a long time after 2006, lawyers and commercial parties have simply assumed that, in the world of outsourcing, TUPE always applies: that has given rise, at least, to a climate of certainty and that is why the law on SPC was introduced in the first place. In recent times, however, case law (see April 2012 brief) has shown it’s not as simple as that. Nonetheless, the Government is taking a big risk by undoing something everyone has got used to over the last seven years. The repeal of the SPC provisions won’t mean that TUPE never applies to outsourcing of services. It will simply turn the clock back to 2005 when the question – which led to a great deal of confusing case law, it must be said – was whether the outsourcing arrangement amounted to the transfer of an ongoing business entity that retained its identity in the hands of the new employer. Because outsourcing contracts currently assume that TUPE will apply on the ending of the current provider’s term (and so no redundancy costs will be incurred) the Government is consulting on how much time businesses need before the SPC provisions are repealed. It could be three to five years!

Employee Liability Information
Outgoing employers are currently expected to provide Employee Liability Information (i.e. information about each transferring employee) at least 14 days before the transfer date. This provision is often honoured in the breach in the context of SPC and, in cases where a business is sold, is superfluous as the parties will come to their own due diligence arrangements. In any event, 14 days before the transfer can often be too late, giving rise to problems for the new employer, for example in setting up the payroll.

The proposal therefore is to remove this obligation but to make sure that the transferor discloses the information to the transferee where it is necessary for both sides to complete their duties regarding informing and consulting.

The impact of this change however may not assist transferees. What if the ELI is never provided by the transferor? However, when the SPC provisions are repealed, this issue may be less of a problem as there will be fewer TUPE transfers in outsourcing.

Duty to Inform and Consult Representatives
There are often times when TUPE transfers result in collective redundancies and as such there are separate and onerous obligations when informing and consulting. The Government proposes that any pre-transfer consultation over planned redundancies undertaken by the incoming employer with staff who are due to transfer can count for the purpose of collective redundancy consultation.

There are obvious benefits from this change. Currently you are technically only able to start consultation on the redundancies after the transfer has taken place, which can result in delay and uncertainty for all involved.

Contractual Changes, Protection Against Dismissal and Substantial Changes to Working Conditions
The consultation document includes proposals to amend the provisions of the TUPE Regulations that restrict post-transfer changes to employment contracts, the provisions that give protection against dismissal and the provisions concerning a substantial change in working conditions to the material detriment of the employee so that they more closely reflect the minimum requirements of the EU Acquired Rights Directive and case law of the European Court of Justice. The aim is, first, to try to narrow the scope of the current prohibitions on dismissals and changing terms ‘for a reason related to the transfer’ and to confine the prohibited reason to ‘the transfer itself’. Second, the plan is to give a bit more scope for changing terms after a transfer by including changes to the place where the work is carried out within the permitted changes.

In the long run, these changes will be helpful to business but we’ll certainly need to go through a period of uncertainty first.

Introduction

This month’s newsletter highlights some recent and proposed reforms from the Government and two recent cases – one making clear that even if you fail to sign a contract of employment, you will be bound by it if you accept any of the benefits under it; the other dealing with employee comments on Facebook, freedom of speech and gross misconduct.

One In, Two Out!

The Government has announced that from January 2013, every new regulation that imposes a new financial burden on businesses must be offset by reductions in red tape that will save double those costs. The idea is to drive a culture change across government whereby departments see legislation as a last resort, not the default option. Sounds fantastic but of course it all depends on the figures you use, as the next item shows.

But Still More on the Way...

The Government has announced that right to request flexible working will be extended to all employees with at least six months’ service from April 2014. The current requirement to be a parent or carer will be removed.

The statutory procedure for considering requests will be simplified. There will be a duty on employers to consider requests in a reasonable manner, within a reasonable period of time. A statutory code of practice setting out what a reasonable process requires will be issued by Acas. Guidance will also be provided on matters such as the interaction between the right to request flexible working and discrimination.

Unsurprisingly, the Government estimates that, although this change in the law will cost employers around £70m in the first year, it will actually bring a net saving of £6.6m in the admin burden on employers, largely as a result of the new Acas Code (!) – so no need to remove any legislation to compensate!

Stakeholder Pensions

The obligation on employers of 5 or more employees to provide access to a stakeholder pension was abolished on 1 October 2012.

Dismissal for Comments on Facebook was Wrongful - Smith v Trafford Housing Trust

The High Court has held that a Christian employee was entitled to express his views, moderately and reasonably, about gay marriage on Facebook and that doing so did not constitute misconduct, let alone gross misconduct, even if in doing so he had offended a colleague. His employer acted unlawfully when it demoted him (as an act of clemency rather than dismiss him), relying on prohibitions in its rules about bringing the employer into disrepute, promoting religious views and about causing offence to colleagues. It was clear from the employee's Facebook page that he was not using it for work-related purposes, despite the facts that he mentioned he was a manager at the Trust in his profile and many of his Facebook friends were colleagues. The court could not see how his moderate expression of his particular views about gay marriage in church, on his personal Facebook wall at a weekend out of working hours, could sensibly lead any reasonable reader to think the worst of the Trust.

In principle he was free to express his religious and political views on Facebook, provided he acted lawfully, and it was for others to choose whether or not to receive them. While the court acknowledged that his comments had caused particular offence to an employee with different views, this was held to be a necessary price to be paid for freedom of speech.  It was his colleague’s choice to go to his page. 

The employee's demotion, because it was in breach of contract, constituted a dismissal. However, because the employee did not bring a claim for unfair dismissal, only one for wrongful dismissal (ie. breach of contract), his damages were limited to the pay difference between his new and old salary for the length of his notice period (under £100).

Ex-employee Bound by Unsigned Contract - FW Farnsworth Limited v Lacy

Mr Lacy started working for his employer in 2000 under a contract which he signed in 2003. He was promoted in 2009 and given a new contract which he didn’t sign or return.  In 2012 he left to work for a competitor.

This case was all about whether Mr Lacy was bound by the post-termination covenants in the 2009 contract which didn’t feature in the 2003 contract. FW Farnsworth argued that he was, and so was prevented from joining the competitor.  Mr Lacy’s case was that he had skim-read the later contract, wasn’t happy with the restrictions and so had decided not to sign it.

The High Court found against him, holding that he was bound by the restrictions. He had taken advantage of the benefits of the 2009 contract, in particular private medical insurance which he had applied to take up.

Even if there had been a mere skim-read of the contract, it’s probable that Mr Lacy would have been alerted to the new restraints in that contract, as well as its benefits, the Court held. He must have been aware that the terms of his employment had been redefined, and he didn’t object. He had accepted the contract and was bound by its terms – including the post-termination restrictions - from the date on which he took the step of applying for private medical insurance.

Owner-Employee Contracts

A new type of employment contract that is proposed to come into effect from April 2013 has been announced by George Osborne MP at the Tory party conference. The ‘owner-employee’ contract will allow companies to give employees between £2,000 and £50,000 of shares that are exempt from Capital Gains Tax, in exchange for the employee forfeiting certain statutory rights such as unfair dismissal, redundancy, the rights to request flexible working and time off for training. Employees engaged under the ‘owner-employee’ contract would also have to give 16 weeks’ notice of an early return from maternity leave rather than the current 8 weeks’ notice.

The ‘owner-employee’ contract could be used by a company of any size but is mainly aimed at SMEs who can offer the contract to new hires as well as existing employees.  Further details of the effects of this contract are to be announced later this year but one assumes the idea behind this is that the value of the shares will more than compensate the employees for any breach of their rights for which they would normally be able to bring a claim in an Employment Tribunal. The question however remains whether the work that will be involved in issuing such shares, and in dealing with them if an owner-employee leaves, will be worth it in the long run to employers, particularly the smaller businesses.

Reasons for Dismissal - Nejjary v Aramark Ltd

This case is a warning about putting all your eggs in the gross misconduct basket when dismissing an employee and ignoring current warnings. The Employment Appeal Tribunal (EAT) has held that a tribunal cannot consider aspects of the employee's record that the employer itself did not take into account, only the reason given by the employer.

In this case, a hospitality manager was sacked for three acts of gross misconduct following client complaints about events he managed. He already had two live warnings for similar offences, but these were not referred to in the disciplinary procedure at all. He appealed but the company upheld the dismissal but for some reason only on the basis of one of the three offences (failing to check a booking sheet).

The employment tribunal took the view that, on its own, the one ground relied on on appeal did not justify dismissal, but they took into account the two warnings in deciding that the dismissal was fair. The EAT however held that the tribunal had been wrong to take any account of matters not relied on by the employer in deciding whether the dismissal was fair.

The tribunal went on to find that, even if it was wrong in its conclusion that the dismissal was fair, the employee should be awarded no compensation because the history of his failings merited a 100% deduction for contributory conduct. Again, however, the EAT found this to be an error. To be ‘contributory’ conduct, the matters taken into account must have led to the dismissal; here the only matter that led to the dismissal was the one failure. The tribunal was therefore ordered to re-consider the extent of the claimant’s contribution.

Changing Terms After a TUPE Transfer - Manchester College v Hazel

Where a dismissal is for a reason connected with a TUPE transfer that is not an economic, technical or organisational ('ETO') reason entailing changes in the workforce, it will be automatically unfair.  Manchester College won the contract to provide education to offenders in prison and the employment of the tutors transferred to it.  After the transfer, the College started a cost-cutting programme.  First, it asked for volunteers for redundancy.  After the redundancy programme was complete, it asked the other tutors to agree to significant pay cuts.  The employees refused and were dismissed, with an offer of re-engagement on the new terms (which they accepted).  They then brought unfair dismissal claims.  It was held that their dismissals were for an ETO reason but they did not entail a change in the workforce.  The time for changing the workforce by cutting numbers had passed by the time of these dismissals.

Because the reason was related to the transfer (in that it was primarily to bring their pay in line with existing College staff) the dismissals were automatically unfair.  The tribunal then went on to award the employees, by way of remedy, not compensation as usual, but re-engagement by the College on their old terms and conditions.  Effectively, the College was put back to square one on its cost-cutting plans.

We think there may be an increasing trend for claimants to seek and tribunals to award re-employment (which was originally intended to be the main remedy for unfair dismissal).  In cases such as the present one, it is highly effective for employees and highly problematic for employers.

Compensation Limited by Immigration Status - Kings Castle Church v Okukusie

Mr Okukusie was a Nigerian national employed by the Church.  He was dismissed after providing misleading information about his immigration status and he brought an unfair dismissal claim.

The tribunal held that his dismissal had been unfair because the Church hadn’t properly investigated his immigration status and had not warned him that if he didn’t submit the proper paperwork relating to his status then he would be dismissed.  He was awarded loss of earnings up to the date of the hearing and a further six months’ loss of earnings in compensation.

The Church appealed.  It argued that Mr Okukusie was not permitted to remain in the UK beyond a date which fell within the six-month future loss period.  He should therefore not have been awarded compensation for the full six months because he would not have been entitled to earn a salary for the whole of that period.

The Employment Appeal Tribunal (EAT) agreed with the employer.  The tribunal had been wrong to award loss of earnings covering time after Mr Okukusie’s leave to remain had expired.

Disclosure & Barring

Significant changes to the safeguarding regime came into force in September 2012.  Further details for employers can be found here.  A key point is that the concept of a regulated activity, to which the vetting and barring scheme applies, is narrowed.  The new definition of regulated activity relating to children comprises only:

(i) Unsupervised activities: teach, train, instruct, care for or supervise children, or provide advice/guidance on well-being, or drive a vehicle only for children;

(ii) Work for a limited range of establishments (‘specified places’), with opportunity for contact: for example, schools, children’s homes, childcare premises. Not work by supervised volunteers;

Work under (i) or (ii) is regulated activity only if done regularly.

(iii) Relevant personal care, for example washing or dressing; or health care by or supervised by a professional;

(iv) Registered childminding; and foster-carers.

The concept of a controlled activity, covering those with less frequent contact with vulnerable groups, ceased to exist.  The vetting and barring scheme no longer applies to this group.

In addition, the Protection of Freedoms Act 2012 comes into force on 1 December 2012.  As a result, the Criminal Records Bureau will merge with the Independent Safeguarding Authority to become the Disclosure and Barring Service.

Pub in Trouble Over Anti-Gay Allegations

Realpubs Limited bought London’s Coleherne pub in 2008 and set about refurbishing and renaming it. It was all part of the company’s aim of repositioning the pub and moving away from its reputation as being a “gay pub”.

The company’s strategy involved planning to put a "This is not a gay pub” sign at the front of the building, finding prominent tables for customers who didn’t appear to be gay, and recruiting more female staff.

Mr Lisboa was a gay employee. He resigned and, as well as claiming constructive dismissal, brought discrimination claims partly based on Realpubs’ policy of making the pub less attractive to gay people being discriminatory.

The Employment Appeal Tribunal held that the company’s policy was discriminatory against gay customers (and it gave rise to constructive dismissal). The crucial issue was whether the pub’s policy embraced diversity, or whether it discriminated against gay customers and staff on grounds of their sexual orientation. In this case, it was the latter.

So there’s a careful balance to be struck when looking at broadening a customer base. If existing customers are marginalised and they fall within protected categories, the chances are that a tribunal will treat this as discrimination.

Misconduct Allegation

Celebi v Compass

The company was a catering company, Ms Celebi its Chef Manager at a sixth form college. She said that she collected £3,400 in cash on one particular day which she paid into the bank. The bank said that it only received £400 and she was dismissed.

Ms Celebi’s unfair dismissal claim hinged on the way in which the company worded the allegation against her. In its letter, it said:

"Having considered the matter fully I can confirm you are required to attend a disciplinary hearing for the following reasons:

• Incorrect reporting of stock figures
• Following of financial procedures
• Discrepancies in banking.”
   

According to Ms Celebi it was unfair of the company to have accused her of being responsible for the “loss of £3,000” when  what it actually meant – and what it was alleging – was that she had stolen the money. But the tribunal found against her, deciding that the reason for dismissal was the loss of £3,000 and that it was fair.

The Employment Appeal Tribunal (EAT) reached a different conclusion. The manager who dismissed Ms Celebi had given evidence that she believed Ms Celebi had stolen the money. Was it unfair of the company not to have put the allegation of theft to Ms Celebi? Yes, the EAT said.

There was some hope for the company, however. The dismissal was to do with procedural unfairness (the inadequacy of the letter), so there was scope to argue Polkey – that Ms Celebi’s compensation should be reduced to reflect the chance that she would have been dismissed had a fair procedure been followed. That issue was sent back to the tribunal to decide.

You Don’t Have To Be Cool To Work Here – But It Helps

Brands are about image and perception. Every business relies on staff to help promote their ethos, reinforce values and retain customer loyalty. A team of “on-brand” staff who act in the right way, wear the right clothes, say the right things, fit the look, is the ideal.

But is it achievable? Some of this can be taught or bought, that’s certain. How much scope is there, though, for employers to choose to recruit people who fit with their “looks policy” over those who don’t?

The answer is: if they want to avoid a tribunal claim, then not much. This is a real discrimination hotspot. Making decisions about who to recruit based on, or influenced by, candidates’ appearance is as risky as it gets. It’s something the retailer Abercrombie & Fitch found out to its cost when it sparked controversy with its advert for “cool and good-looking” staff.

Why was this such a problem? Mainly because of the common perceptions about what is cool and what’s good-looking. Subjective, yes, but usually implying youthfulness and visual perfection (which doesn’t sit will with disfigurement, for example). And while there are no discrimination laws dealing specifically with looks, there is an inextricable link between physical attributes and prohibited grounds such as age, sex and disability.

The challenge for any business which believes in the importance of staff image – perhaps even placing it above skills or other traits – is in stepping back and assessing candidates’ overall suitability for the role. That means not writing off an older person, or a disabled applicant, a man or a woman. It means not judging a book by its cover, or assuming that certain types of people just wouldn’t “fit”. It’s about getting the recruitment process right, because that gets the best people on board. Some tips:

• Be strict when drawing up job descriptions. Keep them relevant to the role and don’t include personal attributes which aren’t a requirement of the role.
• Avoid any potentially discriminatory wording in job adverts (man, woman, young, mature, fit and active, British – the list goes on.) Get a second opinion before publishing.
• Think carefully about where you advertise the role. What does a set of ads solely in magazines read by younger people say about the type of candidates you’re hoping to attract?
• Don’t ask for irrelevant information in an application form or at interview. Keep diversity monitoring questions separate from the application form too.
• Make proper notes of every decision you make, and your thought process, throughout the recruitment process. They will help refute any subsequent allegations of discrimination.

And Finally...

On the subject of job adverts, have you every worried that your recruitment efforts risk offending the incompetent?

The story goes that a business was advised by a job centre that its advert for a “reliable and hard-working” employee could be discriminatory. It wasn’t about sex, race, disability, age or any of the other prohibited grounds. Instead, it had the potential to offend unreliable people.

Really?

Introduction

After our summer (what summer?) break, we’re back this month with three recent cases on constructive dismissal – that’s where an employee walks out in response to an alleged serious breach of contract by the employer, when the employee is likely to be found to be unfairly dismissed by the employer. 

The Government has now firmed up a bit more on some of the proposals it announced earlier in the year for the reform of employment law – we bring you up to date.

Underpaid sick pay - a fundamental breach? – Roberts v The Governing Body of Whitecross School

Mr Roberts was a teacher.  Allegations were made against him at work and he went on sick leave with stress and depression. 

His contract was governed by ‘the Burgundy Book’ - a collective agreement applying to state school teachers’ pay and conditions.  It provided for 100 working days’ full pay by way of sick pay, followed by 100 days’ half pay.  However, where absence is caused by injury arising from work, it says there is to be no reduction from full pay.  At the relevant time, the school decided to reduce Mr Roberts’s contractual sick pay to half, believing that full sick pay applied only to physical, and not mental, injury. 

As well as bringing a successful tribunal claim for unlawful deduction of wages, Mr Roberts resigned because of the sick pay issue.  He claimed unfair constructive dismissal.  He lost before the tribunal because the tribunal found that the employer had formed an honest view that only half pay was due.  He appealed and he won.  The EAT said the employer had a fixed intention to pay only half pay and not full pay and then acted on it.  This was not a case where the employer had made a simple mistake in calculating the pay; here, they had decided to cut pay in half when as a matter of law the contract did not allow them to.  A fresh tribunal will now decide whether this breach led to Mr Roberts resigning and whether the resulting dismissal was unfair.

What’s the lesson of this case?  That you can be liable for breach of contract and potentially constructive dismissal if you cut pay relying on an interpretation of an ambiguous term in the contract that subsequently is proved to be wrong.

Underpaid sick pay – constructive dismissal and causation – Logan v Celyn House Ltd

The employee was a veterinary nurse.  She was called in to a disciplinary hearing relating to rotas but then went off sick with stress (as happens all too often nowadays!) In the first month of her absence, she was paid only SSP by her employer.  The Employee Handbook, however, provided for 4 weeks full pay and 4 weeks half pay.  The employee wrote twice to the employer seeking the money.  She also raised a grievance listing 12 separate grievances against the employer including, as number 12, the sick pay issue.  The employer rejected the grievance in its entirety and rejected her subsequent appeal.  The employee responded to the rejection of her appeal by resigning.  She claimed constructive dismissal.

The employment tribunal rejected her claim because - although it found that the employer was in fundamental breach of contract by not paying full sick pay as required by the handbook – the principal reason for her resignation was not the sick pay issue but the way the company had rejected all her grievances.  Since, the tribunal found, most of the grievances were a figment of her imagination, the employer had not fundamentally breached the contract by rejecting them.

The employee appealed and won.  The EAT relied on an earlier Court of Appeal decision (Meikle v Notts County Council) and held that the tribunal had asked the wrong question – what was the principal reason for her resignation?  The correct approach is that, even if the employee resigns for a whole host of reasons, it is enough if the fundamental breach is one of the reasons the employee resigns.  Here, as the breach of contract complaint was one of her 12 grievances and she resigned because of the way her grievances were dealt with, that was sufficient to find she was constructively dismissed; her reason must have included the fact that the sick pay was not paid.

The tribunal did point to a possible crumb of comfort to the employer, which was facing a compensation hearing in respect of the unfair constructive dismissal.  Without deciding the issue, the EAT pointed to a possible argument for the employer that the employee would have resigned regardless of whether the employer had breached the sick pay term and therefore suffered no loss other than the underpaid money.

What’s the lesson of this case?  That an employee can resign for a host of unjustified and unsubstantiated reasons but if just one reason is a legitimate complaint that the contract was fundamentally breached, that is enough to provide a claim of constructive dismissal.

Breach of trust and confidence - Assamoi v Spirit Pub Company (Services) Ltd

Most constructive dismissal cases are not like the two above cases, which involve breach of an express term about pay.  Most are about breach of the term implied into all contracts of employment that the employer will not act in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence between the parties.

Mr Assamoi was a head chef who had had a rocky relationship with his immediate manager.  The tribunal found that the manager (by calling him to a team meeting during his holiday, saying he was absent without permission on a day when he himself had allowed it, and then refusing to apologise) had acted in a way likely to damage the relationship of trust and confidence between himself as manager and the Claimant.  It went on to find, however, that the employer prevented the manager's conduct from constituting a breach of the implied term of trust and confidence entitling the Claimant to treat himself as constructively dismissed because they believed and accepted his account of events, said that no further action would be taken and offered him the option of a transfer to another pub under a different manager.

Mr Assamoi appealed.  He argued that an earlier Court of Appeal decision, Bournemouth University v Buckland, showed that once there has been a fundamental breach of the implied duty of trust and confidence, the employer cannot undo that breach by his subsequent behaviour, for example by apologising.

The EAT found though that the tribunal did not decide that there had been a breach of contract that was cured by the emollient approach of the employer thereafter.  Properly understood, the decision was a finding by the tribunal that, although the manager had behaved badly towards the employee, his behaviour was not so serious as to justify him leaving and the fair-minded way in which the company acted thereafter prevented the matter escalating into a state of affairs that would have justified the employee leaving and claiming he was constructively dismissed.

What’s the lesson of this case?  If management think that prior conduct might amount to a fundamental breach of the trust and confidence term, act promptly to try to get matters back on an even keel. Admittedly, once a fundamental breach has happened, it cannot be cured by subsequent actions of the employer but they might dissuade the employee from walking out in the first place.  And if the breach is not quite so serious, prompt action by the employer can prevent the matter escalating.

Employment Law Reform Proposals

The Government has just announced proposed changes to employment law. The details as we know them are:

• A settlement agreements consultation starting today that will provide a template letter and guidance on how employers and employees would be able to reach what is currently called a compromise agreement. The fact that the employer has offered a settlement agreement would not be disclosable in unfair dismissal proceedings.  There would be an official template agreement which would help business by cutting down the need to employ lawyers for the job.
• An unfair dismissal claims consultation from today that will look at reducing the compensation limit, currently £72,300. The two proposals are a cap of up to 12 months pay and a new, reduced, upper limit of median earnings.
• A consultation on streamlining of employment tribunals, including proposals on how judges could dismiss weak cases more easily;
• A commitment to consult on TUPE by the end of the year; and
• A commitment that the Government will not be taking forward the proposal for no-fault dismissal.

Agency Workers

Not that long ago, businesses in the hospitality industry thought little of engaging agency workers. They were a useful stop-gap or an extra pair of hands. Ultimately, they were a flexible way of maintaining service during busy periods or staff absence.

They still can be. But these days businesses are thinking more carefully and strategically about the way in which they use agency workers. It’s all since agency workers’ rights have been extended to include the national minimum wage, sick pay, parental leave and protection from discrimination. Bolstered by a number of “day one rights” such as the right to use the employer’s facilities, there’s much more focus on the integration of agency workers into organisations, and affording them treatment which is on a par with permanent staff.

So what are the kinds of things a hotel, bar or restaurant which engages agency workers should think about?
 

Access to facilities and amenities

• DO make sure that agency workers have access to the same facilities and amenities (canteen, gym, for example) as permanent workers, unless there’s good reason for not doing so.
• DON’T give agency workers preferential treatment, for example offering them a car parking space while there’s a waiting list for permanent staff.
   

Vacancies

• DO make sure to tell agency workers about any relevant vacancies which would be available to a comparable directly hired individual.
• DON’T assume that you’ve fulfilled your obligations by posting the vacancy on your intranet (to which the agency worker may not have access).
   

Bonuses and commission

• DO pay bonuses/commission to agency workers if that bonus/commission is calculated according to the work done by an individual.
• DON’T assume you need to pay an agency worker a bonus which is determined by the company’s overall performance or which is to reward loyalty. 
   

Avoiding the Regulations

• DO enter into the spirit of the Agency Workers Regulations.
• DON’T deliberately evade, or run the risk of being seen to be evading, the rules. Engaging workers on a series of 11 week contracts with gaps in between (to circumvent the 12 week qualifying period for certain rights) can lead to penalties.
   

Working time and holiday

• DO make sure that agency workers who have worked for 12 weeks get the same working, resting and annual leave terms as directly hired staff.
• DON’T reserve enhanced contractual holiday for directly hired staff. Agency workers who have spent at least 12 weeks in a job are entitled to the same enhancement.
   

Pregnancy

• DO allow pregnant agency workers paid time off for antenatal appointments and classes, provided they have completed their 12 week qualifying period.
• DON’T ignore any workplace hazards which could pose a risk to a pregnant agency worker. The duty to make reasonable adjustment applies.
   

Learn more about Ellis Whittam's services for the hospitality industry and watch our employment law webcast here.

When the kitchen gets too hot...

Certain celebrity chefs have made it an art form. They’re the bosses who don’t suffer fools and who tackle sub-standard performance with the ferocity of an industrial mincer.

Aggressive perfectionism in the kitchen has become a cliché. But whether through emulation or simple evolution – and whether reflective of reality or not - the commercial kitchen has a reputation for being a tough environment. For the employer, it’s a cornucopia of risk.

A demanding environment with pressures, tensions and ‘characters’. And if chef is granted culinary licence to run the kitchen as they please, things are bound to boil over. When this happens, the consequences could touch on a whole range of legal issues from gross misconduct to discrimination to bullying and harassment and constructive dismissal.

Part of the challenge for anyone overseeing the kitchen is getting to grips with what is and isn’t acceptable and in communicating this both to the chef and to those working around him or her. Having robust policies about bullying and harassment is just one step towards ensuring a safe working environment. Making sure that everyone understands what is expected of them, and offering training for improvement, is another. This includes helping managers, or anyone who is in charge of any other worker (including in charge of chef), understand the best ways of motivating and encouraging people and dealing with any performance issues.

The kitchen is a complex microclimate. But, as with any workplace, with careful controls it should run like a well-oiled machine.
 

Learn more about Ellis Whittam's services for the hospitality industry and watch our employment law webcast here.

Harrassment of Staff

It’s always been a difficult one for employers to get their heads around. The idea that they can be liable for harassment of their staff caused by members of the public has never sat well, particularly among businesses which are alive to the issues and which do their best to promote a fair and healthy workplace.

That’s how the venture capitalist Adrian Beecroft sees it too. In his government-commissioned report on employment law he identifies third party harassment as one of the laws that needs to be changed to build a better commercial environment. It’s all part of the Red Tape Challenge - the government’s attempt at simplifying employment law to reduce its burden on businesses and to encourage them to take on more staff.

As the law stands, employers must take reasonably practicable steps to stop employees being harassed by any third party. That could be a customer, a supplier, or a visitor to the workplace; essentially anyone who doesn’t work there. (For employers in the hospitality industry, this has the potential to bite quite frequently because of the number of third parties with whom staff come into contact.) Liability kicks in where a worker has been harassed twice before, not necessarily by the same third party, and where the employer hasn’t taken reasonable steps to protect that worker from another instance of harassment.

A large part of prevention is about letting third parties know what is and isn’t acceptable. So putting a notice in a hotel reception for example, or addressing issues with customers is good practice. A comprehensive harassment policy, staff training and a clear reporting channel for complaints about harassment are other fundamental measures every employer should put in place.

That’s regardless of whether or not the Beecroft recommendations are carried through. If they are, it will be interesting to see what other measures might be put in place to protect employees. Or perhaps it will be a simple reliance on employers’ duty of care.
 

Learn more about Ellis Whittam's services for the hospitality industry and watch our employment law webcast  here.

Employment Tribunal Reform - 1

The most important change to the employment tribunal system in its history moved a step closer last week with the publication of the government’s response to its consultation about charging fees to bring tribunal claims. The government has decided that there will be a fee of £160 to bring a claim for unlawful deduction from wages and other straightforward claims such as non-payment of a redundancy payment; if the case needs to go to hearing there will be a further fee of £230. The fee to bring a tribunal claim for unfair dismissal or discrimination will be £250 and, if the case goes to a hearing, a further whopping £950!

The government says that it is not its objective to deter claimants bringing claims but it also goes on to say that its policy is that employment tribunals should be used as the option of last resort to resolve employment disputes.  It would be remarkable if the number of ET claims did not fall.  Whether they would be replaced by mediations, given that they do not come free either, is rather debateable.

The government intends to introduce the new charges in the second half of 2013. The system of remission of fees for those on low incomes or state benefits which applies in the civil courts will also apply in the case of tribunals. The effect of this, of course, is that many claimants will not have to pay the fees. Tribunals will have the power to order the employer to pay any fees paid where the employer loses the case.

Inevitably, employees will be looking to employers to pay the fees they have incurred as part of any settlement, so there will be an incentive on employers to settle before the hearing fee is paid.

Employment Tribunal Reform - 2

Mr Justice Underhill has published a report, commissioned by the government, into employment tribunal rules and procedures. His key proposals are, first, there will be an initial sift stage at which every case will be reviewed with a view to striking out at an early stage claims or responses which have no reasonable prospect of success. Second, the current case management discussions and prehearing reviews will be replaced by preliminary hearings which can decide all preliminary issues. Third, tribunals will also be given powers to set time limits for oral evidence and for submissions.

Interestingly, Mr Justice Underhill saw no reason to change the rules relating to the award of costs despite the government being concerned at the relatively low use of the power to award costs by tribunals.  Whether the government will accept this bit of the report remains to be seen.

Static Headcount - Is There a Redundancy?

Don’t lawyers like to over complicate things? In Packman v Fauchon, Langstaff J, the President of the EAT, spends 40 paragraphs minutely examining the statutory definition of redundancy to come to the conclusion that the dismissal of a book-keeper was a redundancy dismissal.  She had refused, as she was entitled to, to reduce her hours when the combined effect of new software and the downturn meant less book-keeping was required and was therefore dismissed so the employer could get someone who would work the reduced hours.  The lay members of the EAT found in a sentence that there was a redundancy, simply because - even though the book-keeper headcount in one sense stayed at one - the FTE requirement of the employer was cut, from one to below one. Simples! 

In the course of his analysis, Langstaff J. came out with a couple of statements intended to be helpful in determining where there is a redundancy but likely to give rise to further arguments amongst us lawyers in the future.  First, he said, if there is just as much work for just as many employees, then a dismissal arising from that situation would not be for redundancy. But, he said, if the amount of work available for the same number of employees is reduced, then a dismissal of an employee caused wholly or mainly for that reason is a redundancy.

Employees Planning to Compete

Two cases have been reported in the last couple of weeks dealing with employees planning to set up in competition with their employer on leaving their employment. Neither makes particularly comfortable reading for employers.
 
The first case, Khan v Landsker Child Care Ltd, makes three points: first, making plans to compete against your employer is not, of itself, gross misconduct; second, not everything an employee learns about the running of the employer’s business is necessarily confidential information; third, if you are relying on loss of trust and confidence as a reason to dismiss, there has to be a valid reason for that loss.

The details of the case were that the employer discovered an email containing a business plan for a competing childcare business worked up by two employees.  The costings contained in the plan seemed to the employer to be broadly comparable to the costings of its own business. Both employees were suspended and separate disciplinary hearings were heard into allegations of gross misconduct. Both employees took the line in their defence that the plan was a paper exercise, not to be taken seriously as an imminent threat to the employer's business. The two employees were dismissed for gross misconduct, the employer relying on the apparent use of its costings and on the destruction of the relationship of trust and confidence between the parties.

The employment tribunal found the dismissal fair.  It found that the employer had a genuine and reasonable belief following reasonable investigation that the two employees were guilty of gross misconduct in planning to set up a business in competition with the employer, using company resources to assist them and breaching the implied term of trust and confidence.

On appeal, however, the Employment Appeal Tribunal held that the tribunal had failed to consider whether there was, as a matter of law, any breach of contract at all by the employees, let alone something that could be described as gross misconduct.  It said that it is not in itself gross misconduct for an employee to make preparations for a future business to be conducted after his employment with his current employer has terminated, nor is it necessarily the case that every piece of information that the employer has and which the employer might consider important is properly to be regarded, as a matter of law, as confidential information. The case was sent back to the tribunal for them to consider whether the employees had actually done anything wrong.

In the second case, Ranson v Customer Systems plc, the employee, a senior manager in the company, prepared a business plan for a competitive business whilst employed by the company and two days before he resigned from his employment secured an order for business for his new company from a company from which his employer had hoped to secure business. The court found that Mr Ranson was not in breach of his contractual obligations just by planning a competing business. The employee argued that the order for business given to him by his employer’s prospective customer was not available to his employer but was deliberately offered to him in preference to his employer. However, the judge held that the employee had acted in breach of his fiduciary duties to his employer by not making them aware of the opportunity.

On appeal, though, the Court of Appeal held that an ordinary employee does not owe fiduciary duties to his employer. A fiduciary duty, which is a duty to put the interests of the company above your own, is owed by a director to a company but not normally by an ordinary employee to the employer.  Unless there is a specific duty in the contract, an employee has to have regard to his employer’s interests but does not have to place those interests above his own. In this case, the court held that meant that Mr Ranson was not obliged to report or pass on the opportunity offered to him to his employer.

It is worth noting that the standard Ellis Whittam contract of employment does provide for an express duty to disclose to the company any involvement in outside activities which conflict with the interests of the company.  A clause like that would have helped in this case.

Introduction

There has been quite a lot going on in the world of employment law worth bringing to your attention this month. The government has introduced new provisions to its Enterprise and Regulatory Reform Bill; it has also brought out a consultation on reducing the current 90 days consultation period for collective redundancies. The European Court has issued another unhelpful ruling on sickness and annual leave. Our own courts have delivered a ruling that creates risks for those who rely on contractual pay in lieu of notice clauses and have adopted a controversial approach to certain types of redundancy.

Enterprise? Regulatory Reform?

The government has introduced into its Enterprise and Regulatory Reform Bill a new provision that in unfair dismissal claims only will prohibit the tribunal from taking account of any offer made or discussions held before the employment ended with a view to agreeing the terms of departure. This is the concept of protected conversations that the government suggested it was considering some time ago. When this provision becomes law (and we'll let you know!) employers will be able to have a frank discussion with an employee about his or her  future and make an offer to terminate on agreed terms without fear of that being taken into account in the employment tribunal in an unfair dismissal claim.

Unfortunately, the new provision is not as straightforward as it might be. First, it does not apply to discrimination claims. There, the current complex rules relating to without prejudice conversations will continue to apply. So it looks like this new idea will only be of use where the employee claims unfair dismissal only and not both discrimination and unfair dismissal.

Second, in any event, the tribunal will retain discretion to take into account the discussions if it thinks that anything said or done in them was improper or was connected with improper behaviour. So you can have a protected conversation but you mustn't say or do anything improper, whatever that means!

This looks like being a step forward for employers but, as all too often with employment legislation, it isn't going to be simple.

Collective Redundancies Consultation

Currently, if you're going to make redundant 100 or more employees at one establishment you need to begin consulting with the trade unions representing those employees or with elected employee representatives at least 90 days before the first dismissal. The government intends to reduce this minimum period before redundancies of 100 or more can take effect and is seeking views on the impact of using either 30 or 45 days. Usefully (perhaps) the government is also proposing to provide guidance to give increased certainty about how to define what is an establishment. Indeed, the government is proposing to bring in a non-statutory code of practice to give guidance generally about when and how to conduct collective consultations relating to redundancy.

Sickness and Annual Leave

Planet European Court does seem to be a million miles away from the one on which our clients have to run their businesses. In its latest decision, in ANGED v FASGA, it has reaffirmed that employees who are sick during a period of annual leave can take the holiday they have missed at a later date, which could be in a subsequent holiday year. This has been the law for some time now though it does not seem to be all that widely known. The court has now confirmed that it does not matter whether the employee was ill before the leave fell due or whether the employee fell ill on leave. Either way they get the holiday, in effect, again!

Pay in Lieu and Undiscovered Gross Misconduct

Where, as many of our clients do, an employer has a clause in the contract of employment entitling it to terminate the employee’s employment without notice but with a payment in lieu and it then relies on that clause to terminate with a payment in lieu, what happens if it then discovers that the employee has been guilty of gross misconduct which would have entitled it to summarily dismiss without payment in lieu? The answer according to the Court of Appeal in Cavenagh v William Evans Ltd is: nothing!

The employer has no right to withhold the payment in lieu, which is owed to the employee as a debt, despite the employee’s serious wrongdoing which, if known about, would have allowed the summarily dismissal to be without payment. Bizarrely, the Court acknowledged that had the employer not relied on the contractual clause but had summarily dismissed in breach of contract, the employee would not have been able to sue the employer for any payment in lieu of notice because of his own prior wrongdoing even though the employer had not known of it at the time he dismissed.  What made the difference was whether the employer was relying on the contract clause to dismiss.

In this case, the managing director of a company was made redundant and dismissed summarily in reliance on the contract clause. It was then discovered that he had improperly made a payment of company money into his pension fund. Despite this he was able successfully to sue the company for the £65,000 in lieu of notice which the contract clause provided for (though the company did get the money he took - £10,000 – back!).

Making a Senior Management Team Member Redundant – Stand-alone or Selection?

The Master of the Rolls, the senior civil court judge in England and Wales, recently took a busman's holiday in the Employment Appeal Tribunal. While he was there, he decided the case of Mitchells of Lancaster Brewers Limited v Tattersall, with somewhat controversial results.

The board of the company decided that it needed to reduce the size of its five-member senior management team (SMT). The Board looked at each of the five members of the SMT and concluded that doing away with the claimant’s role as property manager would have the least detrimental impact on the business. All the other members of the SMT had revenue generating responsibility.

Before this decision, the conventional approach to this sort of redundancy would probably be to treat it as a stand-alone redundancy - the employer had decided it no longer needed a property manager, a job which the claimant alone did.  However, the tribunal and the EAT on appeal both regarded this as a selection of the claimant from the senior management pool, even though each did a different job. This seems to be because the employer, as well as referring to the other four’s jobs as being revenue generating unlike the claimant’s, made reference to looking at the business skills of each manager to decide who best could generate revenue.

The tribunal went on to find that the selection of the claimant from the pool was unfair because it was based on subjective criteria based solely on the views of the directors. Fortunately, on appeal, the EAT held that it was hard to see why the company should not use the factors it did in selecting the claimant. It said that the fact that criteria involve an element of judgement on which opinions might differ is true of virtually any criterion other than the simplest ones such as length of service or absence and to reduce selection to such criteria would be to limit it to a box-ticking exercise.

Unfortunately for the company, the Appeal Tribunal then went on to find that the dismissal of the claimant was unfair because, in the consultation process, the company - having decided that the claimant’s role was the one to be made redundant - never gave open and fair consideration as to whether another member of the SMT should be selected for redundancy instead.

This case is useful in upholding the use of selection criteria that involve an element of judgement and opinion but is a warning that in the consultation process the employer must always take on board and respond to arguments that it has selected the wrong job to be made redundant.

The Secret to Boosting the Economy? More Legislation!

As I write, the Government has just published the Enterprise and Regulatory Reform Bill which the Government hopes will boost business confidence, lead to job creation and make Britain one of the most enterprise friendly countries in the world. Quite how clause 16, for example, which provides for compromise agreements to be re-named ‘settlement agreements’, or clause 11 which says Employment Appeal Tribunal cases will be heard by a judge without lay members, will achieve that is not yet clear! 

There are some clearly pro-employer reforms, though - most strikingly a power for the Secretary of State to cap unfair dismissal compensation by reference to median earnings (currently £26,000 compared to the current cap of £72,300) or the employee’s annual earnings and to make different provision according to the size of the employer’s business.  The Bill also introduces a mandatory period of Acas conciliation before tribunal proceedings can be commenced, though, as a consequence, this comes with an extension of the time period employees have got to bring their claims. 

A much less attractive feature of the Bill, however, is a power for tribunals to impose a penalty on employers of 50% of any financial award, subject to a minimum of £100 and maximum of £5,000, where there are "aggravating features" (a phrase which is not defined).  For more discussion on the impact of this Bill, see our blog.

Resignation and Effective Date of Termination - Horwood v Lincolnshire County Council

On 28 January Ms Horwood wrote a letter of immediate resignation to her employer. The letter was received in the post room the next day and date stamped 29 January, but the addressee didn’t read it until 2 February.  The employer wrote to Ms Horwood confirming 2 February as the effective date of termination (EDT).

When Ms Horwood lodged her tribunal claim on 29 April, the employer relied on the EDT being 29 January and argued that her claim was out of time – it was a day late. The employment tribunal found in the employer’s favour, agreeing that 29 January was the EDT.

Ms Horwood appealed to the Employment Appeal Tribunal (EAT) but to no avail. The EAT said that EDT was 29 January. In cases where an employee is resigning then the EDT is the date on which the resignation is communicated to the employer and it is communicated when it arrives and is opened. (Contrast that with dismissal letters which must be read by the employee themselves before they are deemed effective.)

In this case, where the resignation was immediate and unequivocal, the EDT was the date the letter was received and date stamped. It didn’t matter that the employer had confirmed a different date (2 February). The law defines when the EDT is. The employer could not therefore unilaterally alter the EDT of a contract which had already ceased to exist.

Miscarriage Comment Not Discriminatory - Warby v Wunda Group

Ms Warby fell out with her manager over pay. They each accused the other of lying about what had been agreed. But the manager took this one step further by accusing Ms Warby of also having lied about her pregnancy and miscarriage. Ms Warby claimed direct sex discrimination and harassment.

The employment tribunal rejected her claims. It said that the reason the manager had raised the miscarriage issue was to support his claim that Ms Warby was lying about what she believed the pay arrangements to be. It was not harassment on grounds of her pregnancy.

She appealed but lost. The Employment Appeal Tribunal said that the miscarriage comment had to be put in context.  It was to do with lying and wasn’t made on grounds of gender.

Justification of Retirement Age - Seldon v Clarkson Wright and Jakes

With the abolition of the default retirement age of 65 from the 1st October 2011, employers can no longer compulsorily retire employees without facing significant risk of litigation. The only way an employer is now able to force an employee to retire is where the employer can justify a fixed retirement age.

The recent case of Seldon v Clarkson Wright and Jakes was widely reported in the press as a case which made it easier for employers to justify a fixed retirement age. Seldon, a firm of solicitors, had a fixed retirement age forcing a partner to retire when he reached 65. The Supreme Court ruled that the compulsory retirement age was on the face of it discriminatory. However, they said it was capable of being justified because there were legitimate aims behind the retirement policy which were in the public interest.  Essentially, these were to ensure that younger colleagues were encouraged to stay in the firm by the prospect of promotion and to avoid an undignified exit for older colleagues whose performance was deteriorating.

Having a legitimate aim is only the first hurdle in showing a retirement policy is justified.  The specific policy, here retiring people at 65, also needs to be a proportionate means of achieving the legitimate aim. The Supreme Court sent the case back to the tribunal for it to decide whether, in order to meet its aims, the firm had chosen an appropriate means, i.e. retirement at age 65. This case dates back to 2006, when there was a designated policy of retiring employees at 65. That may well influence the tribunal to decide that the firm’s policy was justified in 2006. What their decision won’t tell us, however, is what age will be justified today, now that the default retirement age is no longer with us.

To sum up, to justify retiring an employee, you need a legitimate aim which coincides with a social policy objective, like preserving dignity for older workers or ensuring ‘inter-generational fairness’, i.e. ensuring that younger workers get a crack at the opportunities older workers had. The means you choose (i.e. the age you pick) must be appropriate and necessary to achieve your aims. Therefore, you have to consider whether there are other less discriminatory ways which you could achieve your aim – for example by picking a higher age than 65 where fewer workers are likely to feel adversely affected by your decision. Our best advice is: if you can, wait until we have more guidance from the courts; if you can’t, check with us first!
 

And Finally...Can't Pay, Won't Pay

Imagine facing a legal bill of £100,000. That’s what happened to Ms Doyle after losing her breach of contract, race discrimination and victimisation claims. The hearing had lasted seven days and involved seven other parties and at the end of it all Ms Doyle was ordered to pay the entire costs.

She appealed, saying that the conduct of the case didn’t warrant the costs order. The tribunal was also wrong, she said, not to have had regard to her ability to pay.

The Employment Tribunal Appeal agreed with her second point. The tribunal was within its rights to order costs, but was wrong not to have looked into Ms Doyle’s means before making the order. That was the case even though she was legally represented.

The case was sent back to the tribunal for it to look into Ms Doyle’s means and to decide on an appropriate costs order.

TUPE Roundup

A number of cases dealing with TUPE have been reported in the first few months of 2012. You will recall that TUPE provides for employment to continue from the outgoing employer to the incoming employer where an undertaking or business (or part of one) is transferred as a going concern and where the provision of a service is outsourced or brought back in house or there is a change of the supplier of the service. TUPE requires that affected employees be informed and consulted about the impact of the transfer and (deep breath required) prohibits transfer-related dismissals unless they are for an economic, technical or organisational reason entailing changes in the workforce.
 

Argyll Coastal Services Ltd v Stirling

The first case in our round-up, the Scottish EAT case of Argyll Coastal Services Ltd v Stirling UKEATS/0012/11, concerned (bizarrely) the transfer of a contract to provide a boat and crew to transport goods between the Falkland Islands. The EAT made the following observations about assessing whether there has been a relevant transfer of an undertaking where a contract is transferred: (1) The tribunal needs first to consider what it was that the client required of the contractor i.e. what exactly was the service that was contracted for? (2) The tribunal is looking for an 'organised grouping of employees', i.e. a number of employees which is less than the whole of the transferor's entire workforce, deliberately put together for the purpose of carrying out the activities required by the particular client contract, who work together as a team. (3) That group must be based in Great Britain, and (4) it is not necessary for the group to have as its sole purpose the carrying out of the relevant client activities, but it must be its principal purpose.

Eddie Stobart v Moreman

Eddie Stobart v Moreman UKEAT/0223/11 elaborates on the first point made in Argyll. It deals with employees engaged in picking and packing in a warehouse on behalf of various clients. When one client moved its contract to another warehouse business, the question arose as to whether any of the employees who had been picking and packing products for that client were transferred to the new supplier. The ET and the EAT both held that, on the facts, they were not. In this case, it so happened that, because of the time of day that the client needed its products delivering, a majority of day-shift workers spent most of their time picking and packing that client’s products. That did not mean that they transferred, however. In order for there to be a transfer in these circumstances, there needs to be an "organised grouping of employees [whose] principal purpose is the carrying out of … activities … on behalf of [a particular] client". That will only exist where the employees in question are organised by reference to the provision of services to the relevant client. Here, the employees were simply organised by shift and they picked whatever was required to be picked on their shift. They were not organised on the basis of the clients they served.

Johnson Controls Ltd v Campbell & Ors

In Johnson Controls Ltd v Campbell & Ors UKEAT/0041/12, the claimant was employed in providing a taxi administration service to UKAEA. UKAEA needed to cut costs and identified that the secretaries it employed could book taxis directly rather than using the services of the taxi booking service. As a result, the claimant was made redundant but he argued that, as UKAEA had brought the service back in house, his employment should be transferred to UKAEA. The ET and the EAT said “No”. It was not simply a case of ticking off a list of the tasks that used to be performed by the claimant and seeing if they were now performed by the secretaries. The activity undertaken by the claimant had been a centralised and co-ordinated service; that activity, centralised, co-ordinated, had simply disappeared.

Commercial Motors (Wales) Ltd v Howley

In Commercial Motors (Wales) Ltd v Howley UKEAT/0491/11, the claimant worked for a vehicle dealer in Newport which was being taken over by the Respondent. He was dismissed on 3 February 2009 but completion of sale to the Respondent only occurred in March 2009. The first issue for the court was whether there was an effective transfer of claimant's contract of employment under TUPE to the Respondent by the dismissal date so as to make the Respondent liable. The answer was ‘Yes’ because the Respondent had actually taken over day-to-day responsibility for running the business prior to the claimant being dismissed - so, in law, the transfer of the undertaking had already taken effect even though the formalities had not been completed. A second issue was whether there is an obligation on the employer to invite employees to elect representatives to be informed and consulted. (Here the employers had decided just to keep silent about the transfer). Again, the answer was “Yes” even though TUPE does not expressly say that there is; otherwise the obligation to inform and consult would be rendered pointless. The failure by the outgoing employer to elect representatives and inform and consult in this case landed the incoming employer with a bill of 13 weeks’ pay to the claimant.

Abellio London Ltd v Musse & Ors

Finally in this round-up, in Abellio London Ltd v Musse & Ors UKEAT/0283/11, the claimants were bus drivers on the 414 bus route in London. This was transferred from their employer by Transport for London to Abellio.  As a result of this transfer, the claimants would be expected to work from a different depot which would mean a much longer commute to work each day. For this reason, they resigned on the day of the transfer. There was a clause in their contracts requiring them to work from any depot of the employer to which they were assigned but they had resigned before their new employer had a chance to assign them. TUPE provides that where there is a substantial change to an employee’s working conditions to their detriment as a result of TUPE, they are entitled to resign and claim constructive dismissal. The ET and the EAT held that as their journey to and from the new depot would involve an extension of their working day of around two hours they were entitled to regard it as, in practice, a substantial change to their working conditions to their detriment. The drivers thus had a claim against Abellio for constructive dismissal even though under their contracts Abellio could have assigned them to the new depot!

Religion and Pharmacy

In Pasab Ltd & Anor v Woods UKEAT/0454/11/LA, Ms Woods, who described herself as a white Irish Muslim, was a pre-registration student at a pharmacy where the owner and other employees were Sikhs.

She was called to a meeting to discuss allegations of poor timekeeping. At that meeting, she was alleged to have made a comment that the pharmacy was ‘a little Sikh club that only looked after Sikhs'. She denied saying this but the tribunal found that she did. She was then dismissed, purportedly for poor timekeeping but, the tribunal found, in reality for her remark, which the employers regarded as racist.

She brought a claim, supported by the PDA Union, that she had been discriminated against on the grounds of her race and/or religion. The tribunal found that she had not been discriminated against but went on to accept the argument that she had been victimised, contrary to the Equality Act, for making the allegation (by implication in her remark about ‘a little Sikh club’) that the employer discriminated against her as a Muslim.

On appeal, the Employment Appeal Tribunal found for the pharmacy. It said that, since the tribunal had found as a fact that Ms Woods had been dismissed because the owners believed she had made a racist comment, the tribunal could not then conclude that the dismissal was because she had impliedly alleged religious discrimination. These were two separate things.

This case is a reminder that for a victimisation claim to succeed, the less favourable treatment must have been because of the protected act of alleging unlawful discrimination and not another reason.

Redundancy

Redundancy continues to be in the employment law news this month, with some useful guidance from the EAT. We finish off with a cautionary tale of an employer who was powerless to stop a ‘tidal wave’ of his clients signing up with a former employee; but we start with a salutary warning from the Court of Appeal about suspending employees as a ‘knee jerk’ response to suspected gross misconduct.

Avoid Knee Jerk Responses to Suspected Misconduct - Crawford v Suffolk Mental Health Partnership NHS Trust

The Court of Appeal has issues a warning to all employers, but particularly those in the care sector, about how they deal with employees suspected of gross misconduct.  There are three elements to this warning:

1. Suspension of the employee pending the disciplinary hearing should not be a knee jerk reaction, and it will be a breach of the duty of trust and confidence towards the employee if it is. This would give the suspended employee a constructive dismissal claim. The employer needs to consider carefully whether it is necessary, in the interests of the investigation or for other reasons, to suspend the employee.

2. Managers conducting disciplinary hearings need to be wary of subconsciously starting from the assumption that an employee who has been suspended is guilty and looking for evidence to confirm it.  Managers must ensure that they focus as much on evidence which points to the innocence of the employee as on that which points to guilt.

3. Whilst it is important that those in the care sector particularly are seen to be acting transparently and not concealing wrongdoing, they must remember they also owe duties to their staff, and defensive management responses which focus solely on avoiding any risk of external criticism should be avoided. In particular, referring employees to the police should not be done without the most careful consideration and a genuine and reasonable belief that the case, if established, might justify the term "criminal" being applied to the employee's conduct. Again, referring employees to the police without such a belief could give them a claim for constructive dismissal.

Do ensure you call us before suspending an employee or referring them to the police or any external agency and be sure to ask us for advice in drafting any suspension letter.

Redundancy - Selection for Alternative Employment - Samsung Electronics (UK) Ltd v Monte-D'Cruz

The claimant was a senior manager whose department was reorganised. The plan was to merge four senior managers’ roles into one new position and then create new management roles reporting to the single senior manager. The claimant was ultimately made redundant as he was unsuccessful in his interview for the single senior role and was also unsuccessful in an interview for the only alternative post that he applied for.

The tribunal found the redundancy unfair because the interview panels did not consider his past performance in an objective way and applied vague and subjective criteria in the selection of the successful candidate.   The Appeal Tribunal overturned this finding. This was not a case about selection for redundancy; all four senior managers were redundant. This was a case about selection for a new role. The case law about the procedures to be adopted, and the criteria to be applied, in selecting an employee for redundancy does not apply to the process for deciding whether a redundant employee should be offered an alternative position: the two situations are different. Whilst tribunals will look for evidence of some sort of objectivity in redundancy selection, there is no obligation on an employer always to use criteria which are capable of objective measurement, and certainly not in the context of an interview for alternative employment. In effect, employers can make a judgment about who should be offered alternative employment based on what they believe to be best for the business.

Redundancy – To Pool or Not to Pool - Halpin v Sandpiper Books Ltd

Last month we reported on a Court of Appeal case, Capita Hartshead Ltd v Byard where an employee, unusually, had won their challenge against her employer’s decision not to place her in a pool or group for redundancy selection but to single out her post. This month, we report a more orthodox decision from the Employment Appeal Tribunal.

The employee was one of a number of administrators employed by the respondent. He was identified as having potential and was promoted and given the role of being the company’s sales manager in China. Whilst his role was developing in China, he continued with some administrative work that he had done before but this aspect dwindled over a relatively short time. After a year or so, the employer decided that having a China-based employee was not financially viable and, after extensive consultation with the employee, declared him redundant.

He argued that the employer should have pooled him with the administrators with whom he had interchangeable skills rather than just deciding to make him redundant just because it was his role that was no longer required. The Appeal Tribunal held that the decision by the employer that he was “a pool of one” was not only open to it; it was one that a Tribunal could not easily overturn. It was logical. The Claimant was on his own out in China. The fact that he had quite recently been an administrator did not make the decision not to select from a wider pool unreasonable. The choice of pool is primarily one for the employer – but do call us!

Ex-Employees Setting Up in Competition - Towry v Bennett

When Mr Bennett and six colleagues left the financial advisory business Towry to join a competitor, they were sued for breach of a restrictive covenant in their contracts. Towry alleged that they had broken the non-solicitation clause by poaching clients from Towry.

The High Court dismissed Towry’s claims, ordering it to pay very substantial costs. While the non-solicitation clauses were enforceable, the judge found that solicitation hadn’t actually been proved. Towry had assumed that solicitation must have happened because of the level of business that had transferred from them to the new employer. The judge held that Towry had to prove those clients were not exercising an independent decision to transfer but had been encouraged or persuaded to do so by the employees. Solicitation couldn’t simply be inferred from the “tidal wave” of clients switching firms. Here, it was understandable that clients wanted to stick with their personal financial adviser.

Time for a review of your contracts? Towry’s contracts didn’t contain non-dealing clauses, which simply prohibit any dealing with the old employer’s clients by the employee and might well have given the employer a stronger case. Standard EW terms do contain non-dealing clauses.

Redundancy Round-Up

Although the CBI is telling us we are going to avoid a double dip recession, cutbacks, reorganisations and redundancies are still, unfortunately, very much on the agenda with just under a third of employers in a recent CIPD survey saying they intend to cut jobs this quarter.  This month, therefore, we are going to focus on some recent redundancy case law.  Before we do, a quick note about a ‘pro-employer’ change to the law that we will see the benefit of in 14 months’ time when employees who would previously have qualified to bring unfair dismissal claims will have to wait a further year.

Qualifying Period for Unfair Dismissal to Increase to Two Years

Anybody whose continuous employment starts on or after 6th April 2012 will not gain rights to claim unfair dismissal (except in certain limited cases) until after they have been employed for two years.  If you are in the early stages of a recruitment exercise, you may wish to consider making sure any new employee does not start until on or after 6th April.  That way, you will have two years - rather than one - to decide whether they are up to the mark.

To Pool or Not to Pool - Capita Hartshead Ltd v Byard

One issue that employers contemplating redundancies have to face at the outset is whether to treat individuals’ jobs as stand-alone or whether they should be treated as part of a group from which the requisite number of employees should be selected.

The claimant was one of three actuaries employed by the respondent.  She acted as Scheme Actuary to a number of pension schemes.  It became apparent that the number of schemes to which she was actuary would be significantly reducing (not, it was accepted, through any fault of hers).  The employer decided that there would be insufficient work to justify employing three actuaries.  It decided that, since the loss of Scheme Actuary work primarily affected the claimant, it would not pool her job with the other two actuaries and select one of them.  It would simply declare her job redundant.  It did this because appointments to the position of Scheme Actuary are personal to the individual and it was her schemes that were reducing.  The other two had an adequate workload.  The tribunal found that this was unfair and that the three actuaries should have been treated as one pool and a selection exercise carried out.

This was on its face a surprising conclusion because there is established authority that it will be difficult for an employee to challenge the employer’s decision whether or not to treat a group of employees as a pool from which selection should be made where the employer has genuinely applied his mind to the problem.  Nonetheless, the EAT upheld the tribunal’s decision. It held that, while it will be difficult for an employee to challenge the employer’s decision on whether to pool, it was not impossible; and furthermore the employer must genuinely have applied its mind to the issue.  Here, the employer’s reasons for not pooling did not stack up because it would have been possible to move schemes to another actuary without any real risk of harm to the business.

Justifying Cheapness as a Selection Criterion – HM Land Registry v Benson

This recent case gives some hope that employers may, in the right circumstances, be able to justify using the relative cost of making someone redundant as a selection criterion, even if it results in those in a particular age group being or not being selected.

The Land Registry had to make a large number of employees redundant.  It offered employees a voluntary redundancy scheme, with enhanced benefits.  It had more applicants than could be accommodated within the available £12m budget, so it embarked on a selection exercise.  Mr Benson and his fellow claimants were not selected.  They were all aged between 50 and 54.  They were not selected because their entitlements would have been too costly, since they would have been entitled to an immediate unreduced pension. They claimed that using a selection criterion related to the cost of their severance resulted in them being indirectly discriminated against on grounds of age. The Tribunal accepted that the criterion used was the only practicable one given the need to reduce headcount by as many as possible but went on to find its use was not justified because the Land Registry could have allocated a bigger budget to the exercise.  The Employment Appeal Tribunal, however, held that in deciding whether the criterion was justified the task of the employment tribunal is to accept the employer’s legitimate decision as to the allocation of his resources as representing a genuine “need” but to balance that against the impact complained of.  Given that the tribunal had found the criterion was the only practicable option, it was hard to escape the conclusion that its use was justifiable, even though employees in one age group lost out.  To hold otherwise would require the employer either to abandon its scheme altogether or to pay more than twice the funds it had decided to allocate to it.

Tribunal Opts for Pick ‘n’ Mix at Woolworths - USDAW v WW Realisation 1 Ltd

Employers making more than 20 employees redundant at one establishment in a period of 90 days must consult with the employees’ representatives about avoiding or reducing the redundancies and their impact.  If they don’t, they can face a claim for a protective award of up to 90 days pay per employee.

Woolworths had 814 stores across the UK. The business went into administration and then compulsory liquidation, making its retail employees redundant.

The union brought tribunal claims on the basis that Woolworths had failed to comply with its redundancy consultation obligations. The tribunal upheld these complaints and, because Woolworths couldn’t rely on the statutory ‘special circumstances’ defence (financial circumstances and even administration by themselves weren’t enough), it made protective awards of 60 days’ gross pay per employee. But not every employee received the award. The tribunal held that Woolworths’ duty to consult did not apply to stores with fewer than 20 employees and so the protective award would not be made to employees at those stores.

An important part of this case was the tribunal’s decision not to class the entire network of Woolworths’ stores (as opposed to each individual store) as a single establishment. Had it done so then all employees would have been entitled to a protective award. But the tribunal said that each employee was assigned to a particular store and each store was a distinct establishment for consultation purposes.  The tribunal found that the employees were not assigned to the business as a whole. That won’t apply in every case.   Making redundancies when you have more than one place of work is complicated – we’re here to help.

Turning Down Suitable Alternative Employment - Readman v Devon Primary Care Trust

In a redundancy exercise, if you unreasonably turn down suitable alternative employment offered to you, the employer can refuse you a redundancy payment.  Mrs Readman was employed as a community matron; she had been placed at risk of redundancy. Her employer offered her three alternative posts, one of which (matron in a local cottage hospital) was suitable alternative employment, being on essentially the same terms and conditions. She refused the post, saying that she didn’t want to return to a hospital setting after a career of more than 20 years in community nursing.  The employer refused to pay her a redundancy payment, believing that her refusal to take the alternative job was unreasonable.

The employment tribunal upheld the employer’s decision. It said the question was: would a reasonable employee have accepted the offer? The answer was yes.

But the Employment Appeal Tribunal said that the tribunal had asked itself the wrong question. It should have asked: was this individual employee acting reasonably in refusing the offer? Mrs Readman’s reason for turning down the offer was a sound and justifiable one and so she was entitled to a redundancy payment.  Who says employment law is complicated?

What Does 2012 Hold in Store?

A belated happy new year to you from all of us in the EW employment law team. What does 2012 hold in store on the employment law front? Well, you could say - as the former US Secretary of Defense said: “There are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns – there are things we do not know we don't know”!

We do know that on 1 February 2012 the annual uprating of employment tribunal limits takes place. The upper limit on a week’s pay for redundancy payment and basic unfair dismissal award purposes rises to £430 from £400. That means that making employees with two years’ service and annual earnings over £20,800 redundant on or after that date will be more expensive. There is also a significant increase in the maximum compensatory award for unfair dismissal, from £68,400 to £72,300.

With effect from the week commencing 9 April 2012, statutory maternity, paternity and adoption leave pay will increase from £128.73 to £135.45 and statutory sick pay (SSP) will increase from £81.60 to £85.85.

Known Unknowns

We know that, from 6 April 2012, the qualifying service to bring a claim of unfair dismissal rises from one to two years but we don’t know exactly how. Will it apply only to those taken on after 6 April (in which case employees won’t be worse off until April 2013) or to those with under two years or under one year at 6 April? A government spokesman has said that there will be transitional arrangements from April so that the increase will be phased in over a period but we have no details as yet.

Various changes to the Employment Tribunal rules are also expected to be introduced from April. Controversially, unfair dismissal cases are expected to be heard normally by a judge sitting alone, without lay members. Witness statements will no longer be read out loud by the witnesses; the judge will read them before the hearing and the witness will start giving evidence under cross-examination. The limit for deposit orders made where claimants have a weak case will rise from £500 to £1,000 and the maximum costs that can be awarded by the tribunal will increase from £10,000 to £20,000. None of this has been confirmed as yet.

Unknown Unknowns

In 2011, the Government trailed a long list of potential reforms to employment law. Among the changes which might come in this year are: changes to compromise agreements to make it easier to settle all claims; introducing the concept of ‘protected conversations’ giving employers more flexibility to have ‘off the record’ conversations with, for example, under-performing employees; requiring all tribunal claims to be routed through Acas, to encourage settlement; a root and branch review of the employment tribunal process; compensated no-fault dismissal for businesses with 10 or fewer employees; changes to the collective redundancy consultation rules and possible changes to TUPE.

We don’t really know which of these proposals will come to fruition and when or whether other ideas will come up. 2012 could turn out to be a really significant year for turning back the tide of employment rights or it could be a damp squib. We’ll keep you posted!

Big Changes Ahead?

There may be big changes ahead. According to a report by venture capitalist Adrian Beecroft leaked on 25th October, the Government has been advised to alter unfair dismissal rules to help employers to more easily dismiss unproductive staff and workers who "coast along". The report apparently recommends a "Compensated No Fault Dismissal" where an employee could simply be dismissed with basic redundancy pay and notice - presumably without further explanation or comeback.

In addition, in discussions about the major package of employment law to be introduced, Nick Clegg has backed the idea of “protected conversations” as a means to resolve disputes informally. The idea is that employers will be able to challenge unproductive staff or advise them to consider retirement without worrying about the concern of comments becoming grounds for a tribunal claim.

Another report has concluded that extended drinking hours have had a direct impact on workplace absence; but not in a good way. A comparison of work absence carried out through the UK Labour Force Survey found that absence rates rose by 1% after more pubs and bars could legally stay open past 11pm. That is an estimated 5,349,617 hours or 667,702 sick days. Perhaps this can be explained in part by the results of separate research carried out by Aviva, which reveals that almost one in ten employees polled said they needed to drink to unwind at the end of the day. And one in seven said that their diet has suffered as they have no time to cook. Of course, this may be because they are down at the pub!

Right to Work?

Mrs Okuoimose, a Nigerian, worked for City Facilities Management (CFM). Because she was married to an EEA (European Economic Area) national she had a right of residence but when a Home Office stamp in her passport ran out she was suspended without pay. She was dismissed some weeks later on the grounds that it would be illegal to continue to employ her. However on the same day as the dismissal, Mrs Okuoimose provided CFM with a letter from the Border Agency confirming that she could work in the UK. CFM re-instated her and she made a claim for unlawful deductions of wages for the suspension period.

The tribunal dismissed her claim, concluding that the contract was illegal during that period because Mrs Okuoimose had failed to provide proof of her entitlement to work. The EAT disagreed. If the right to residence exists (in this case because Mrs Okuoimose was a family member of an EEA national) then the expiry of a passport stamp will not alter that fact and will not make continued employment illegal. It was irrelevant whether CFM thought it was behaving reasonably or that it was worried about penalties.

Other employers who have not fared well recently include Orchard Farm in Dorset. Former employee Mr Hashman, who had won the right in October 2010 to have his anti-hunting beliefs protected under the Religion and Belief Regulations, has now won his claim for unfair dismissal. When Mr Hashman was told his services would no longer be required, he believed this was directly related to the fact he had been a witness at two hunting prosecutions, as written about on his internet blog.

Also, Poundland has had to review its dress code after a member of staff walked out after being told she should remove a remembrance poppy. She subsequently received support from customers who launched a Facebook campaign to boycott Poundland shops in protest. The company has now apologised and will allow employees to use their own discretion in wearing poppies

Reasonable Adjustments and Issues of Costs

In Cordell v Foreign Commonwealth Office a deaf employee was supported by a team of lip speakers in her role in Warsaw. An offer of another role in Kazakhstan was withdrawn after an assessment of the costs of providing a similar team there. Not only were there real practical difficulties in arranging lip speakers in Kazakhstan but also the cost of provision would amount to five times Ms Cordell’s salary and indeed was nearly as high as the costs of running the whole embassy.

She claimed disability discrimination but this was rejected by the EAT. While cost is not a decisive issue in deciding whether an adjustment is reasonable, this does not mean that it is not relevant. A tribunal can consider a range of issues, such as the size of any budget, what the employer has spent in comparable situations and what other employers are prepared to spend. The tribunal was entitled to take into account the FCO’s budget for reasonable adjustments and in this context, the adjustment sought was not reasonable.

Delay and Fairness in Disciplinary Procedures

In Dr Lim v Royal Wolverhampton Hospitals NHS Trust, the High Court held that there is an implied term in contracts of employment that disciplinary processes be conducted fairly and without undue delay. Dr Lim faced capability and conduct hearings. As part of the conduct issues, the trust raised allegations of conduct some three years after the events in question had taken place. The Court held that there was an implied term requiring that disciplinary processes be conducted fairly and without undue delay (although it also held that the Trust had not acted in breach of this).

Withdrawing a Dismissal and Special Circumstances

We know that where either an employer or employee uses unambiguous words of dismissal or resignation, they are deemed to have dismissed or resigned unless "special circumstances" apply; such as words said in the heat of an argument. In CF Capital Plc v Willoughby, the employer and Mrs Willoughby were involved in negotiations about a transfer of her status from employment to self-employed work. She asked for more information before making up her mind but before it was received, her manager wrote to confirm her move to self-employed status and stated that the termination of her employment contract would become effective from a certain date. When she protested, he tried to retrieve the position and said that he had misunderstood the outcome of the negotiations.

Were these “special circumstances”? No, said the Court of Appeal. The essence of the special circumstances exception is that the person using the unambiguous words must be given the chance to “cool off” and say that he did not mean what was said, before the recipient acts on them. The exception does not simply provide an opportunity for a retraction or withdrawal of those words.

Sleeping on the Job

In Wray v JW Lees & Co, Ms Wray’s claim concerned the question of whether all the hours she was required to stay on the premises should be taken into account in assessing whether she had been paid the National Minimum Wage. She was a temporary pub manager who was provided with free accommodation and she was required to sleep in that accommodation every night as a security and preventative measure.

She claimed pay, at the minimum wage, for all the time she was on the premises - including when asleep. Her claim was dismissed. It came down to whether or not a worker is required to do any work during the time she sleeps on the premises. If not, those hours will not be treated as salaried hours. Even if she did have to call the emergency services had there been a fire or break-in, the degree of responsibility was minimal. It would be a different story if, for example, she were a night-sleeper in a residential care home or a hotel manager.

Proposed Changes

October is a month for change and there are some significant ones coming up. George Osborne has announced that the qualifying period for unfair dismissal will be increased from one year to two years with effect from 1 April 2012. In addition, fees will be introduced for tribunal claims from 2013, including fees payable by the claimant on issue and when the hearing is listed. Rumour has it that the fees will be as high as £250 to start a case, and a further £1,000 when the case is listed for a hearing; but a forthcoming consultation paper will give more details.

The Agency Workers Regulations came into force at the beginning of the month; entitling temporary staff to the same basic employment and working conditions, including pay, overtime and holiday pay after 12 weeks' employment. For more information on the ramifications for your business, please contact us.

Also this month, the National Minimum Wage increases to £6.08 for workers over 21. Those between 18 and 21 will be entitled to £4.98 and under 18 to £3.68. For apprentices, the hourly rate will be raised from £2.50 to £2.60.

Finally, it looks like we will be working for longer even earlier than expected. Pensions Minister, Steve Webb, has said the government is proposing to raise the state pension age to 67 a decade earlier than previously planned. He said that the current timescale (for women increasing to 65 by 2018, and then both men and women retiring at 66 from 2020; increasing to 67 in 2036 and 68 in 2046) was “too slow”.

Rest Breaks

We all know that the Working Time Regulations entitle a worker to twenty minutes uninterrupted rest when they work over six hours, and that where the worker falls into an excluded category, they must be allowed an equivalent period of compensatory rest.

The issue in Hughes v The Corps of Commissionaires Management Ltd was whether requiring a security guard (an excluded category) to remain on call during his rest breaks contravenes the requirements. If he had been called out during the rest breaks, he would not have enjoyed an “uninterrupted” break.

However, in this case, he was allowed to start his break again and the Court of Appeal held that because of that, the breaks provided to him were "equivalent periods of compensatory rest" noting that he might well end up with a break longer than the 20 minutes required by the Regulation

Agents and Discrimination

Can agents of an organisation make it vicariously liable for acts of discrimination under the Employment Equality (Religion or Belief) Regulations 2003, even though they have not been authorised by the principal to discriminate?

In Bungay v All Saints Haque Centre, members of the board of a religious centre caused the unfair dismissal of some employees and also unfairly discriminated against them on the ground that they were Hindu. The question was: could they as agents make the centre vicariously liable even though they were not authorised by the principal? Yes, according to the Employment Appeal Tribunal.

All that needed to be shown for the Centre to be liable was that the directors managed it as part of their role as directors. The directors were also found to be jointly liable with the centre for damages because they were "prime movers" in the campaign of discrimination. Further, they were ordered to pay aggravated damages due to their post-employment behaviour of making unfounded allegations about the employees of theft to the police.

Separately, a telesales worker who resigned following sexual harassment by her manager has been awarded the largest employment tribunal payment of 2011 (so far). The Leeds tribunal upheld Petrina Taylor's claims of sex discrimination and unfair dismissal by British Telecom and awarded her over £290,000. In comparison, the average sex discrimination award nationally was £13,911 and the average unfair dismissal award £8,924.

What is a Reasonable Adjustment?

In Foster v Leeds NHS Trust Mr Foster went off sick with stress after his relationship with his manager had broken down and brought an unsuccessful grievance; following which he looked to return. The hospital gave him two choices – either a return to his old job or a different post but still within that manager's department. It saw no reason to redeploy him (despite Occupational Health advice that Mr Foster was only fit to return to a different department) since his grievance had been dismissed. Subsequently he was placed on a redeployment list for three months. No post came up and eventually Mr Foster was dismissed.

The Employment Appeal Tribunal upheld the tribunal’s ruling that he had been placed at a disadvantage by being required to work in a department that - rightly or wrongly - was causing him stress. Given the size of the NHS Trust as an employer, there was a real prospect that over six months a suitable alternative job would have become available, which would have fitted with the Occupational Health advice. That was sufficient for the step of placing Mr Foster on the redeployment list earlier to be deemed a reasonable adjustment.

References

Employers can incur liability if they fail to give an accurate reference about an ex-employee; but what should they do when new allegations come to light after employment? In Jackson v Liverpool City Council, one of Mr Jackson’s three references from his former employer suggested that there were record keeping issues. Because these had come to light after Mr Jackson had left, they had not been investigated and could not therefore be substantiated, and this was made clear in the reference. He failed to get the job and was unemployed for a year.

The issue was: although the reference was true and accurate, was it unfair or negligent because Mr Jackson had not been given a chance to answer the allegations? No, according to the Court of Appeal. The reference was not negligent because it was made clear to the prospective employer that the issues raised about Mr Jackson were allegations only which had not been investigated.

The moral of the tale for departing employees is to try to agree your reference before you leave. For employers it must be that where there are questions over their performance or conduct or these arise after they have left, those issues should be disclosed accurately to any prospective employer, but making it absolutely clear that the allegations have not been investigated and so no assumptions can be made.

Conditional Notice of Dismissal - When Does Termination Take Place?

The exact date of dismissal can be very important. For example when calculating whether an employee has lodged her claim within three months of dismissal (which can determine whether or not the claim is allowed to proceed). As a result, considerable case law has grown up on what many think should be an obvious matter.

In Governing Body of Wishmorecross School v Balado, Ms Balado was disciplined and then told by letter (dated 21 July) that she would be summarily dismissed. The letter explained that her dismissal would only take effect if she decided not to appeal by a certain date, or her appeal was unsuccessful.

She believed that this was notice of dismissal and so her time for issuing a claim for unfair dismissal had been triggered. The school thought otherwise and on 21 October they told Mrs Balado that her appeal had failed and that dismissal was confirmed; her last day of employment being 26 October 2010. When she issued a claim on 14 October (believing the three month deadline about to expire) the School argued that her claim had been presented before the effective date of termination and so the tribunal had no jurisdiction.

The EAT disagreed. The effect of the July letter was as a “conditional dismissal” which terminated the employment as at an identified future date. Had an employee who had received such a letter been asked – have you been given notice of dismissal - the natural answer would be – yes. The letter was clearly notice of termination, and her claim was validly presented.

How User Friendly Does the Tribunal Have to Be?

In Shea v Micros Fidelio a litigant in person consistently presented his claim at two case management discussions and the final hearing as a wrongful dismissal, rather than an unfair dismissal, claim. The difference in terminology doesn’t really matter to anyone, apart from some lawyers and judges who can get terribly snotty about such things. In short, a wrongful dismissal is a claim for unpaid notice money; and an unfair dismissal claim entails contending that the decision to dismiss was unreasonably reached.

On the basis he insisted he was bringing a wrongful dismissal claim, and as he had been paid his notice, his claim was dismissed and costs were ordered against him. In fact, his claim was actually for unfair dismissal and detriment for whistle blowing. On appeal the Employment Appeal Tribunal decided that he should have been given leeway by the tribunal and that he should not have been deemed to have “given away” his claim by insisting on the wrong one.

Similarly, in McKinson v Hackney Community College, where a tribunal tried to require a claimant to self-select a limited number of allegations and rule that these are the only ones that will be considered at the hearing, this was felt by the EAT to be a step too far.

Contrast this with HHJ McMullen’s summary of an approach by another litigant in person in Iteshi v BT, which says it all. "… It appears to me that (Mr Iteshi) joins in a grim carousel. He needs a job, applies and fails to get interviewed or appointed, he brings proceedings in the Employment Tribunal, which fail, and then he brings proceedings in the EAT, which fail. The basis of his approach to all of these cases is that he will not get justice in our Tribunals. He employs absurd logic, which he expressed to me in graphic terms: he has never taken drink or unlawful drugs, he is not a madman, and so the Judges who do not follow his submissions and do not find in his favour must be wrong and biased. There is no logic in that proposition”. Unsurprisingly, Mr Iteshi’s claims were dismissed.

And Finally … Donny Dog is in Trouble

Doncaster Rovers sacked the woman who plays mascot Donny Dog after she posed in her underwear for a Sunday newspaper next to Donny’s head, telling her that she had “disgraced” the club. Ms Chandler, who had volunteered in the role for three years, admits she did not tell the club what she was doing but stressed it was "tastefully done" and the pictures had raised money for the NSPCC – the same charity for which Doncaster’s players produced a naked calendar last year. She said: "I'm absolutely devastated. I've not stopped crying all morning. … I've fetched Donny Dog out of hiding. I'm the one who pushed him into charity work."

Happily all's well that ends well. She has been offered her job back.

Annual Tribunal Statistics

The annual employment tribunal statistics for 2010-2011 have just been published. They show an 8% decrease in employment tribunal claims in the last twelve months. Not only is this good news for employers, it is surprising in the light of the continuing economic climate and large numbers of redundancies.

Interestingly, but unsurprisingly, the number of age discrimination claims has increased. This will probably rocket in the next 12 months, once employers who do not know they can no longer compulsorily retire employees at 65 after 1st October find themselves at the wrong end of age discrimination claims (and please don’t use that as an excuse to forcibly retire people this month; there are some serious consequences of doing so in the run-up to October – speak to us first).

Pay Cuts

Following on from the case we reported in September, Garside and Laycock Ltd v Booth, we start this month with two cases in which other employers have cut their employees’ pay. In Driver v Air India an employment contract provided that employees would have to do shift work and overtime, but didn’t specify payment amounts. When the employer stopped paying overtime at time-and-a-half, and asserted it should be unpaid because the contract did not provide for any payment, the Court of Appeal decided that, although he did not have a contractually agreed payment, this did not mean that the employee had to work unpaid. Instead, it meant that he was entitled to a ‘reasonable’ sum. Like most cases, this one turned on the interpretation of the particular contract; it does not mean that every employee must be paid for overtime.

An employer’s decision not to pay a bonus was upheld in Hellewell v AXA Services, where the bonus was stated to be discretionary and provided for conditions to be met before a bonus would be paid. The EAT was clear that there was no contractual obligation to make the payment, which in turn meant that there was no deduction of wages. This is a good example of an employer having a clearly worded bonus provision. If you pay bonuses, you should always make sure there is something in writing which makes it clear whether they are discretionary, whether conditions must first be met and whether there are any special factors relating to payment of bonus on termination of employment or during a notice period.

Can You Act Badly if Everyone Else Does?

Can it ever be a defence to an employee’s claim of bad behaviour that such bad behaviour was the norm for the industry? In McBride v Falkirk Football and Athletics Club, Mr McBride resigned from his role as coach of the U19 team because he had been told - without any prior discussion - that he would no longer be able to pick the team.

The Club argued that the lack of communication and autocratic management style was the norm within the football industry, which meant that there was no breach of contract. The Employment Appeal Tribunal did not agree: every employer, no matter what the ‘norm’ may be, has a duty not to act in a way that seriously damages their relationship with their employee.

Racial Harassment

The issue of what constitutes harassment has been before the courts recently. In the first case, a child resident in a council-run children’s home regularly directed racially abusive language towards an Iranian employee, mocking his accent. In response to his claim for harassment on the basis that the council had done nothing to protect him from the child’s behaviour, the council argued that the child was not motivated by the employee’s race; his motive was just to upset the employee. Although this might be a contender for the ‘cheekiest argument of the year’ award, the argument was rejected by the Employment Appeal Tribunal, which found that to mock a racial characteristic such as an accent was analogous to racial abuse.

On similar lines, a tribunal has recently ruled that using the name ‘Borat’ to refer to someone from Eastern Europe (in this case, Poland), amounted to discrimination. The claimant’s nickname, ‘Borat’, was given to him because of his national origin, and a tribunal held he had been subjected to racial harassment.

Protection for Philosophical Beliefs

Employees have a right not to be discriminated against on the grounds of their philosophical belief. This raises the question of what is meant by a ‘philosophical belief’. Perhaps surprisingly, some beliefs that tribunals have held are protected include anti fox hunting views, a deep belief in environmental issues and in the ethos of the BBC.

A philosophical belief must have cogency, consistency and personal importance – all of which were held by an un-named midwife who was banned from wearing a silver collar to work symbolising her belief in BDSM (Bondage, Discipline and Sado-Masochism). While accepting that her views did have those required trademarks, the tribunal drew the line at accepting that a way of life involving “consensual slavery” could be legally recognised in a democratic society and refused to accept BDSM as a belief which should be protected.

When is a Self-Employed Contractor Really an Employee?

The Supreme Court has made it clear that when deciding whether someone is a self-employed contractor or an employee, the focus of the question must be to discover the actual legal obligations of the parties, and that this is done by examining not only the written terms but also how the parties acted in practice and what their expectations of each other were.

In the case, Autoclenz Ltd v Belcher, car valets were paid on a piecework basis, submitted weekly invoices, paid their own tax and NIC, and had written agreements stating that they were self employed contractors. Nonetheless, in practice, some aspects of the actual relationship negated what the contract documents said; for example a term that the valets did not have to carry out work personally. The Supreme Court held that actual practice overrode what the parties had written down, and that the individuals were accordingly employees.

What about the situation where an individual who has always been categorised as self employed then claims to be an employee so that they can claim unfair dismissal? If there has been some kind of deliberate misrepresentation (normally for tax avoidance purposes) then the contract may be ruled illegal and the individual will lose their claim by default.

In Connolly v Whitestone Solicitors, while the claimant solicitor originally saw himself as self-employed, over the three years he worked for the firm, he realised that he was actually an employee but in the absence of any review, he had no choice but to keep submitting invoices. The Employment Appeal Tribunal decided that in the absence of misrepresentation to HMRC, that is, deliberately representing himself as self employed in the knowledge that it was unsustainable to do so, the employment contract (for such it was) could not be ruled illegal.

Revenge is Sweet … But Pricey

Recent dismissals which have been judged to be unfair or discriminatory provide salutary lessons for employers. In one, the owner of a dry-cleaners in Cookstown, Northern Ireland commented to his member of staff that, at age 50, she was "too old to work five days a week". She felt understandably discriminated against, brought a claim and was awarded £6,000.

Six weeks later, the owner dismissed her for gross misconduct. The tribunal was not convinced about the reasons he gave - it concluded that in all the circumstances and given the timing, this was actually an act of victimisation. The employee has now been awarded a further £24,147.

Agency Workers

Have you reviewed your working practices for Agency Workers? The Agency Worker Regulations mean that agency workers will have the same rights to basic employment and working conditions (e.g. pay, rest breaks, duration of working time) as those recruited directly by you from 1st October 2011; provided that they have worked for twelve weeks. We are happy to talk to you about the practical ramifications of this groundbreaking legislation.

Redundancy Issues

When, in a redundancy exercise, do employers have to select from a pool or group of employees and when can they simply identify individual jobs as going? This is a tricky area and one we have many calls on. In a recent Employment Appeal Tribunal (EAT) decision, Mr Zeff worked for Lewis Day Transport Plc as a manager of the 'chauffeur desk'. There was a downturn of business in early 2009 and, after a number of meetings with staff, a decision was made to close the chauffeur desk. There were five people on the chauffeur desk: Mr Zeff, two controllers and two administrators. The company felt that they needed the administrators' role to continue but Mr Zeff and the two controllers were made redundant.

Mr Zeff brought an unfair dismissal claim and lost. The tribunal agreed with the company that there was no need to put the administrators' jobs in a pool with the other three and make a selection from the five. The administrators' jobs were still needed. The other three jobs were not needed and Mr Zeff and the two controllers were the only members of that pool. There was no need for any selection, no need for any formal selection criteria and no need for any formal selection process. Mr Zeff appealed, mainly on the basis that there should have been a redundancy selection process with formal criteria. The EAT rejected this argument, saying that there was no need for selection and therefore, no need for matrices or selection criteria. Only the three jobs held by Mr Zeff and his colleagues had been identified as surplus to requirements. The administrators' jobs were different from their jobs and were unaffected.

And in a separate case, the EAT has made it clear in Dabson v David Cover & Sons that when assessing the fairness of selection for redundancy, tribunals should not scrutinise the scoring exercise in the absence of obvious mistake or lack of good faith.

Mr Dabson complained that he had been unfairly selected for redundancy and so his dismissal was unfair. He lost his claim and appealed. The EAT emphasised that what was key was the issue of overall fairness. In Mr Dabson's case, he got a higher score for 'ability to plan routes' than he got for 'ability to assist with route planning' and as a result fell one point below his comparator who was retained. He complained that that was illogical. The EAT held that there was no necessary illogicality; different skills may be needed for an assistant than a manager. In any event, in the absence of evidence of bad faith or obvious mistake, tribunals should stay away from close scrutiny of the marking in redundancy cases and resist the temptation to re-score

To What Extent can Employers Justify Indirect Discrimination on the Grounds of Cost?

An employment tribunal in Cherfi v G4 Security decided that the practice of not allowing a security guard employed at a site to leave the site to attend Friday prayers at a local mosque was properly justified, and this was upheld by the EAT. There was a legitimate need on the part of the client owner of the site for a specific number of security guards to be on site during operating hours and allowing Mr Cherfi to leave would have been a breach of the employer's contract with the owner. The employer had offered weekend working to the claimant as an alternative to being on site on Friday but the claimant declined.

A balancing exercise had to be carried out between the effects of the discriminatory practice on the worker and the employer's legitimate business needs. Significantly, the EAT said that although there were other factors present in this case, there was no reason in principle why it would not be possible for indirect discrimination to be justified on the grounds of cost alone. Whether cost can justify indirect discrimination is a grey area which the European Court of Justice is due to give a (hopefully) definitive ruling on, probably next year.

The Bribery Act

The Bribery Act became law on 1 July 2011. The legislation applies to all companies, partnerships and individuals based in the UK, as well as foreign companies and individuals doing business in the UK. The legislation makes it absolutely clear that commercial organisations are responsible for 'policing' not only their own garden, but even the remotest areas of their operations to ensure that nothing illegal is taking place, including the third parties with whom they do business. This represents a step change in the level of risk assessment and control.

Penalties under the new Act include the possibility of jail for directors and unlimited fines for organisations. On top of that would be legal costs, not to mention incalculable reputational damage associated with a high profile prosecution.

The Act defines new criminal offences:

• offering, paying, requesting or receiving a bribe;
• bribing a foreign public official;
• a corporate offence of failing to prevent bribery being undertaken on its behalf.

There is a defence to the corporate offence of failing to prevent bribery if an organisation can show that the directors have put in "adequate procedures" to prevent bribery. There is a degree of flexibility in what "adequate procedures" actually means. Organisations must take a risk based approach and their procedures should be proportionate to the risk posed.

Those procedures should ensure there is clear leadership from the top, emphasising zero tolerance for bribery, proper financial controls and clear guidance on gifts and hospitality. Ellis Whittam clients have received a new bribery policy intended for use by smaller businesses dealing in lower risk, lower value areas of business. More may be required of larger businesses, particularly those dealing in very high value contracts or with officials in this country or abroad.

Be Careful What You Describe as an Ex Gratia Payment

Ms O'Farrell worked for Publicis Consultants UK Ltd in the post of Director. Her contract provided for three months' notice of termination by either party. She was informed of her redundancy by letter on 14th May 2009, the effective date of termination being the day after. She was paid to 18th May and was provided with statutory redundancy pay and holiday pay. The letter also said, "Ex-gratia Payment - You will receive an ex-gratia payment equivalent to three months' salary. This payment amounts to £20,625. The payment is free of Tax and NI deductions."

Ms O'Farrell then claimed that the company was in breach of contract by failing to pay her notice pay. The company argued that the ex-gratia payment was meant to be a notice payment, but the tribunal rejected that argument and found for Ms O'Farrell.

At the company's appeal the Employment Appeal Tribunal held that the issue was how should the ex-gratia clause in the letter to Ms O'Farrell be construed. Did the words mean 'we are hereby paying you for your period of notice' or did they mean 'we are hereby paying you a sum other than the monies to which you would be entitled by way of pay in lieu of notice'? To an ordinary reader the letter meant that three payments were to be made. The company was legally obliged to pay two of them, the third was a payment "made freely and not under obligation". Nothing in the language used in the letter of 14th May 2009 suggested that the ex-gratia payment was a payment for a period of notice and no background information put forward changed that position. The tribunal's interpretation of the words ex-gratia was therefore held to be correct and the company's appeal was dismissed.

We can help you draft letters to ensure you don't fall into the trap Publicis fell into and, if necessary, to draft compromise agreements which bar the employee's access to the tribunal in return for the payment.

Lawyers at Internal Disciplinary Hearings

The Supreme Court, in R (G) v Governors of X School, has overturned the decisions of the Court of Appeal and High Court that a music teaching assistant at a primary school should have been allowed legal representation at an internal disciplinary hearing. G had been accused of engaging in improper conduct with a 15 year old undertaking work experience. He was denied legal representation in an internal disciplinary hearing and was dismissed for gross misconduct. He claimed that his right to a fair trial had been infringed (European Convention on Human Rights, Article 6) because the finding would be likely to mean that he would then be placed on the "barred" list by the Independent Safeguarding Authority (ISA) and therefore permanently barred from his profession.

The Supreme Court adopted the same test as the Court of Appeal but disagreed on the facts. It said that a claimant may, under the Human Rights Act, have the right to legal representation in internal disciplinary procedures if the decision in the disciplinary proceedings will have a substantial influence or effect on the decision of a regulatory body (here the Independent Safeguarding Agency) as to his right to practice his profession. On the facts, the Supreme Court felt that the ISA would take an independent view of the case, uninfluenced by the outcome of the disciplinary proceedings, and so there was no need for legal representation in those internal proceedings.

The human rights legislation does not apply directly to private sector employers unless they are carrying out public functions and, normally, we would advise not to permit an employee to have legal representation in internal disciplinary proceedings. However, there have been cases that have said that if an employee brings an unfair dismissal claim, human rights should be weighed in the balance when a tribunal considers whether the dismissal was reasonable. Where dismissal of an employee may have an impact on the employee's ability to practise their chosen profession in the future, please call us for advice in the event the employee requests legal representation at the disciplinary hearing.

Dismissal for Not Taking a Pay Cut

In Garside and Laycock v Booth the employer, like many employers at the time, asked employees to take a 5 per cent pay cut in order to avoid redundancies. The claimant was the only employee to refuse. Ultimately he was dismissed (though with the offer of re-engagement on the new terms, which he declined). He claimed unfair dismissal. The tribunal found that the need to get all employees to accept the new terms was a substantial reason for dismissal but found that the employer did not act reasonably. The employer appealed.

The EAT said there were two reasons in particular why the tribunal had got it wrong: first, it had regarded the test which it should apply as being whether the employer was in a situation so desperate that the only way of saving the business was to propose stringent reductions in pay and conditions. That was not the test; all that was required was a sound good business reason for the change.

Second, it had found that the claimant was acting reasonably in declining the pay cut whereas the test is about whether the employer was acting unreasonably. It does not follow that if the employee is acting reasonably the employer is acting unreasonably.

The EAT remitted the case for re-hearing to a new tribunal. Interestingly, it commented that the tribunal, in deciding whether the employer acted reasonably, must decide, according to the legislation, whether the employer acted "in accordance with equity." In the context of an imposed pay cut, that might involve looking to see whether the pain was shared equally or whether, for example, management kept their existing pay while imposing a cut on the general workforce!

Baby 'P'

The tabloids proclaimed their outrage last month when the Court of Appeal held that Haringey Council had not been entitled to dismiss Sharon Shoesmith, and stated that compensation would be payable to her (unless a settlement is reached). Sharon Shoesmith was dismissed as Director of Children's Services in Haringey following the furore after the death of 'Baby P'.

The Court of Appeal said that because Haringey was a public sector employer, and because Sharon Shoesmith was in the unusual position of holding her post under a statute as well as under an employment contract, it was able to decide whether Haringey's decision process was reasonable or not. It accepted that her dismissal had been procedurally flawed, because she was given no opportunity to comment on the allegations against her. Whilst the newspapers have disagreed with the decision, it is unlikely to affect private sector employers who, at least if they are EW clients, are well aware you have to give the employee their say before you dismiss. From a legal point of view, it is a storm in a teacup.

Perhaps unusually, the courts have handed down two pro-employer decisions - the first ensuring that tribunals use common sense when making awards for future losses, the second making it clear that employers have a wide discretion when selecting employees for redundancy. We discuss both cases later.

Flexible, Family-Friendly Employment

In line with the Government's other proposals for the reform of employment tribunals and the resolution of workplace disputes, the Department for Business, Industry and Skills has launched a new Consultation called 'Consultation on Modern Workplaces'. The proposals include:

• an extension in the ability to request flexible working - this would extend the right to request flexible working to all employees, not just those with children under 17 (or 18 for parents of disabled children); it would allow employers to prioritise competing requests; allow more temporary changes to terms and conditions as well as permitting more than one request in a 12 month period. This will not be a right to work flexibly - requests could still be turned down by employers.
• flexible parental leave to be introduced in April 2015 - this would keep 18 weeks' maternity leave for mothers to be taken in a continuous block around the time of the birth and would retain the current statutory maternity pay and maternity allowance arrangements and two week's paternity pay and leave. The remaining maternity leave would be reclassified as 'parental leave' and could be taken by either parent or both. There is also a proposal to allow employers and employees to agree for parental leave to be taken in blocks, or on a part-time basis. The government seeks employers' views on extending the age limit for taking unpaid parental leave beyond the existing limit of the child's fifth birthday and giving fathers the right to unpaid leave to attend antenatal appointments.
• an amendment to the Working Time Regulations to comply with European law - this will require annual leave to be carried over in situations where annual leave has not been taken because of sick/maternity/parental leave and where the leave cannot be rescheduled in the current leave year. The proposal limits carried-over holiday for sickness absence to the four weeks' compulsory paid leave under European holiday laws (i.e. the employee would not be able to carry over the extra 1.6 weeks they receive, above the European entitlement, under the UK holiday laws). The government is also considering proposals to allow employers to 'buy out' that extra 1.6 weeks or to require employees to defer that leave until the first six months of the following leave year if this can be justified in terms of business need.
• equal pay - in situations where an employer is found by an employment tribunal to have discriminated against women in contractual or non contractual pay cases the tribunal would have the power to order the employer to carry out an equal pay audit.

See the Consultation here. [Now closed.]

Compensation for Future Losses

This is the first of the two cases this month which help employers. In Wardle v Credit Agricole Corporate and Investment, the Court of Appeal stated that if a tribunal finds that there is a probability that an employee will find a job equivalent to the one he has lost by a certain date, losses after that date should not be taken into account when calculating future losses. It found that the employment tribunal had been wrong to conclude that it had to award compensation up to the point when it could be sure that Mr Wardle, the employee, would find another job on the same terms.

In this case, the tribunal had found that Mr Wardle had a 70% chance of returning to an equivalent role by the end of 2011. The Court of Appeal found that the compensation should have ceased at that stage.

The Court recognised that as such the tribunal's predictions could be inaccurate but that it was the best that could be done to achieve finality.

Close Scrutiny is Inapropriate in Redundancy Scoring Exercises

In the second of the two cases helping employers, the Employment Appeal Tribunal has made it clear that when assessing the fairness of selection for redundancy, tribunals should not scrutinise the scoring exercise in the absence of obvious mistake or lack of good faith.

Mr Dabson was made redundant from his employer, David Cover & Sons. His complaint of unfair dismissal was rejected by the employment tribunal. He argued that the tribunal had not dealt properly with his complaint that he had been unfairly selected for redundancy and that his dismissal was unfair.

The EAT emphasised that what was key was the issue of overall fairness and the need to stay away from close scrutiny of the marking in redundancy in the absence of obvious mistake or bad faith.

Tribunal Cannot Divide Liability for Damages in Discrimination Cases

The Employment Appeal Tribunal has handed down judgment in London Borough of Hackney v Sivanandan & Others. The question for the EAT was whether tribunals can divide liability for damages where more than one party has been found liable for an act of discrimination.

The EAT decided that tribunals have no power to divide liability between respondents.

In this case, the claimant had brought a race discrimination claim against a number of respondents including: a company which had not shortlisted her for a job; the London Borough of Hackney, which funded it; the company's director; and its executive committee. An employment tribunal upheld the claims and found that the claimant had been victimised by all of the respondents, either because they had aided the discrimination or because they were responsible for the potential employer.

When deciding compensation, it decided that the total amount (over £421,000) could be collected from any one of the respondents or from any of them in different amounts until the total debt was paid. Hackney (which had the biggest pockets) appealed to the EAT on the ground that the tribunal should have divided the amount of compensation amongst the respondents. The EAT rejected the appeal and stated that there cannot be a division of compensation; all the Respondents were liable to the Claimant for the full amount (provided she did not receive the full amount more than once).

Can a Person Working Illegally Bring a Race Discrimination Claim?

The EAT has given judgment in a case with unusual facts which has restated the law relating to illegality in the employment context. The case of Allen v Hounga is authority for the proposition that where an illegal immigrant's claim is not inextricably bound up or linked with illegal conduct, it can proceed before the employment tribunal.

Miss Hounga was employed as a domestic servant by Mrs Allen. She was brought over from Nigeria by Mrs Allen to live and work in the Allen family home. She had acted dishonestly in order to acquire a visa and she stayed in the UK illegally after the expiry of her visa. Whilst employed, she was the victim of serious physical abuse by Mrs Allen and was dismissed in traumatic circumstances. The Employment Tribunal found that since she had known she had no right to work, she could not bring her complaints relating to her contract of employment (unfair dismissal, breach of contract, unpaid wages) as the contract was illegal but that her complaint of race discrimination could be heard and was successful.

When the matter came before the EAT, the EAT confirmed the decision of the employment tribunal. It found that both parties had known of the illegality and that therefore the contract of employment was illegal. However, it refused to find that if an employee does not have the legal right to work in the UK he or she cannot bring a discrimination claim. In this case, Mrs Allen's behaviour in dismissing the Miss Hounga was not linked to the illegal conduct and it was therefore not affected by the illegality so the discrimination claim succeeded.

Justifying Indirect Discrimination on the Grounds of Cost

In cases of indirect discrimination, when deciding whether a discriminatory practice can be justified, tribunals balance the effects of the discriminatory practice on the worker with the employer's legitimate business needs.

In Cherfi v G4S Security, the Employment Appeal Tribunal upheld the decision of the employment tribunal that the practice of not allowing a security guard employed at a site to leave the site to attend Friday prayers at a local mosque was properly justified. The client owner of the site required a specific number of security guards to be on site during operating hours and allowing Mr Cherfi to leave would have been a breach of the employer's contract with the owner of the site.

Significantly, the EAT said that although it was not the case here, it might be possible for indirect discrimination to be justified on the grounds of cost alone. Whether cost can justify indirect discrimination is a grey area which the European Court of Justice is due to give a (hopefully) definitive ruling on, probably next year.

Fees to Lodge Claims

Recent surveys demonstrate widespread support from employers for introducing fees to lodge tribunal claims, a proposal recently floated by the government. Similarly, a proposal to introduce a 'formal offer' system seems to be welcomed by employers.

If introduced, it would mean that compensation awarded by an employment tribunal could be increased or decreased if the other party had turned down a reasonable offer of settlement before the hearing. It would also clarify circumstances in which an unreasonable refusal to accept an offer might result in the losing party paying the other side's costs. We will let you know as soon as the government announces the results of its consultation.

Equality Act 2010 Guidance on the Definition of Disability

Guidance which helps to define those who fall within the definition of a disabled person under the Equality Act 2010 came into force on 1st May 2011. You can see the guidance here.

The Equality Act 2010 replaced the Disability Discrimination Act 1995 and slightly simplified the definition of disability. The Guidance goes through the elements of the definition, and provides examples to help in cases where there is dispute about whether a person is disabled or not.

Negligent Misstatement

The High Court has handed down judgment in McKie v Swindon College. The employee in that case brought a case against a former employer, Swindon College. An email was sent from the College to his then employer, six years after he had stopped working for Swindon College. The email suggested (wrongly) that there had been serious concerns about his behaviour as an employee. The employee was dismissed as a result of the email. Whilst he had been employed by Swindon College, he had been promoted and had received bonus awards. When he had left, he had received a glowing reference.

The court found that Swindon College had been negligent towards the employee. It had owed the employee a duty of care because it was foreseeable that the employee could lose his job as a result of the damaging email, that there was sufficient closeness between the College and the employee, that it was fair, just and reasonable to impose a duty of care and that there was a link between the sending of the email and the damage that the employee suffered. The court was dealing with liability (i.e. whether Swindon College had to pay compensation), and will assess the amount of compensation on a future date if the parties cannot agree a figure.

This case reminds employers of the need for care when communicating about current or former employees, whether they are writing formal references or not. Whilst this will not work for all companies, some employers make it a disciplinary offence to provide references or make statements about ex-employees without first running the reference past HR.

An Intern or a Worker?

The Government's new social mobility strategy and views on internships have made headlines in recent weeks. The Deputy Prime Minister, Nick Clegg, has pledged to introduce a national scheme for interns which would entitle them to be paid the national minimum wage.

A recent survey suggests that as many as one in five companies have used interns to help them to survive the recession. In some cases, interns do more than might be expected from arrangements which were traditionally a form of work experience. The Low Pay Commission reported last year that unpaid interns were being systematically abused.

Employers should be aware that interns who are shouldering their own workloads, dealing with clients and managing responsibilities could potentially fall within the definition of a worker. This would entitle them to be paid the National Minimum Wage and a complaint could be made to the Employment Tribunal.

What Happens if an Employer Faile to Consult Under TUPE?

Employers often struggle to work out what their obligations are under the Transfer of Undertaking Regulations 2006 ('TUPE') when they are about to sell off part or all of their business ('a transfer').

The Court of Appeal's decision in the case of Marcroft v Heartland (Midlands) Ltd sheds some light on the issue. The employee had not been consulted about a transfer, although he was aware it was going to take place. He argued that because he was not consulted, the transfer had to be invalid.

The Court of Appeal decided that whilst TUPE says that a company must provide the representatives of workers who will be affected by a transfer with certain information before a transfer; this does not include telling the workers that they have the right to object. In any event, failing to provide workers with the required information does not mean that the transfer itself is invalid - instead it entitles them to claim compensation in the Employment Tribunal. The employee was unable to persuade the Court that there was an implied term in his contract that the transfer would be invalid if he was not personally provided with information about the transfer.

Agency Workers Guidance Available

The Agency Workers Regulations come into force on 1 October 2011. To give employers time to prepare for the substantial impact they will have on the use of agency workers, the Government has published helpful guidance, available here. The key features of the Regulations, as the Guidance explains, are -

• Day 1 rights for all agency workers: If you hire agency workers, you must ensure that they can access your facilities (such as canteen, childcare facilities, etc.) and information on your job vacancies from the first day of their assignment.
• After 12 weeks in the same job: Agency workers are entitled to equal treatment with workers directly employed by the hirer in relation to pay and other basic working conditions (annual leave, overtime, etc.). Pregnant agency workers will be allowed to take paid time off for ante-natal appointments during an assignment.

The Regulations are not retrospective and for those agency workers already on assignment, the 12 week qualifying period will start from 1 October 2011.

Annual Increase in National Minimum Wage

The national minimum wage will rise from 1 October 2011.

• The adult rate will rise to £6.08 per hour
• The rate for 18-20 year olds will rise to £4.98 per hour
• The rate for 16-17 year olds will rise to £3.68 per hour
• The rate for apprentices will rise to £2.60 per hour
   

The accommodation offset (the maximum amount which can be counted towards daily pay if an employer provides an employee with accommodation) will rise to £4.73 per day.

A Public Gross Misconduct Hearing?

There are unconfirmed reports that the police officer who was found by an inquest jury to have unlawfully killed newspaper seller Ian Tomlinson during the G20 protests in London could face a gross misconduct hearing in public.

This would be a unique situation, and in many situations would be a breach of the implied term of trust and confidence (although in this case, the police authority has considerable room to argue that the need for openness and transparency outweighs the officer's expectation of privacy).

Modern Workplaces Consultation

The Government has announced proposals for reform to the current parental leave laws. The proposals, which would probably come into force in 2015, include: limiting maternity leave to 18 weeks, retaining ordinary paternity leave and reclassifying the remainder of maternity leave as parental leave which would be available to either parent on an equal basis.

In addition, the government is proposing to extend the right to request flexible working to all employees, while simplifying the procedure for dealing with requests.

The consultation document also raises the prospect of a law enabling Employment Tribunals to require employers who have lost an ET case about pay discrimination to carry out an equal pay audit and new rules about carrying over annual leave which employees have not had the opportunity to take because of sickness, maternity or parental leave.

The consultation closes on 8 August 2011. We will keep you in touch with developments and any response Ellis Whittam makes. If you have any views in the meantime, do get in touch with us.

Discriminatory Acts

This month, there have been a number of important decisions from the Employment Appeal Tribunal (EAT). The EAT dealt with the issue of when employers can be liable for the discriminatory acts of an agency worker, and decided that in certain circumstances the employer could be liable - a real problem for businesses. In another case, the EAT decided that there was no obligation on employers to correct an employee's mistake about the time limit within which to lodge an ET1.

We should remind you that the Government's consultation into tribunal reform ends this month.

Tribunal Statistics

The Tribunals Service has published its quarterly statistics for the period 1st October 2010 to 31st December 2010. The statistics show a fall of 51% in the number of claims compared with the same quarter in 2009-10; falling back to the same level as in the third quarter of 2008-09. The number of claims received for age discrimination nearly tripled (from 1,100 to 2,900), with pregnancy and sex discrimination also rising - by 47% and 27% respectively.

Draft Guidance for Agency Workers Regulations

The Department for Business, Innovation and Skills has published comprehensive draft guidance on the Agency Workers Regulations 2010 for employers and recruiters. The document is available for comments on the BIS website until 15th April 2011. The Regulations are due to come into force on 1st October 2011 and BIS will consider any feedback before finalising the guidance.

The Regulations give agency workers equal treatment to normal, permanent staff. This means giving an agency worker the same entitlements in basic working and employment conditions (e.g. conditions relating to pay, rest periods or annual leave) "as if" that worker had been recruited directly as an employee or worker to occupy the same role. However, genuinely 'temporary' agency workers, who work for less than 12 weeks, will be exempt. The 12 week period begins on 1st October 2011, so no agency workers will be able to claim these new rights before Christmas 2011.

It should be noted that equal treatment is not required in respect of all the terms and conditions that a worker would be subject to had s/he been recruited directly. Equal treatment covers basic working and employment conditions that are usually included in relevant direct employees' contracts of employment or in permanent employees' contracts as a matter of course. The principle has no effect in the case of terms and conditions that are not included in this way or in work environments in which there are no 'basic working and employment conditions'.

The Regulations will not change the employment status of agency workers.

Guidance on the Bribery Act

Guidance relating to the Bribery Act 2010 (which comes into force on 1st July 2011) has just been published. It explains procedures that commercial organisations can use to prevent bribery.

From July, it will become a criminal offence for commercial organisations (an organisation that 'carries on a business') to fail to prevent bribery. This will happen if one of your employees or contractors bribes another person, intending to obtain or retain business for your business or to obtain or retain an advantage in the conduct of your business.

However, there is an important defence. If your business had adequate procedures in place designed to prevent people associated with it from engaging in such conduct, then you will not be guilty of any criminal offence. We suggest you review your businesses, carry out the relevant risk assessments and determine whether your procedures are adequate to prevent bribery. Where they are not, you should introduce appropriate anti-bribery procedures without delay. Please contact us if you would like further guidance.

Ignoring Your Disciplinary Procedure

You could be forgiven for thinking that we are going to remind you of the importance of following your disciplinary procedure. And of course, that's normally an important rule. But the Employment Appeal Tribunal, in a display of lateral thinking, has found a way of excusing an employer which failed to follow its own procedure.

In Ezsias v North Glamorgan NHS Trust, a consultant surgeon claimed he had been unfairly dismissed. The real reason for the dismissal was that his behaviour had led to a breakdown of his relationships with colleagues at work, and they had expressed unwillingness to continue working with him. The NHS Trust did not follow its misconduct dismissal procedure, and the Employment Appeal Tribunal said this did not make the dismissal unfair because Mr Ezsias was not dismissed for his conduct, but because of the breakdown in relationships.

Don't be too heartened by this case; it was unusual. Normally, a failure to follow your own disciplinary procedure is likely - unless the breach is minor - to make a dismissal unfair even if the employee is plainly guilty of misconduct.

No Duty to Arrange Ill-Health Retirement

As you know, employers are required to make 'reasonable adjustments' for disabled employees to facilitate a return to work and adjust for any disadvantages they suffer.

But there are limits. In Tameside Hospital NHS Foundation v Mylott, the Employment Appeal Tribunal said this duty does not require employers to facilitate an application for ill-health retirement. The duty to make reasonable adjustments is there to help employees back into work, not there to help them leave it.

The End of Expert Witness Immunity

The Supreme Court has handed down a majority 5:2 decision in Jones v Kaney which means that expert witnesses are no longer immune from contract or negligence claims brought against them arising out of evidence they give in non-criminal cases. The main rationale for the immunity was that experts might be discouraged from giving their frank and honest opinions, if they went against their client's interests, if they could then be sued by their client. However, the majority of the Justices rejected this argument.

Legal Fees in Compromise Agreements and Tax

Historically, if an employee's legal fees following settlement of a claim after termination of employment are paid directly by the employer, they are exempt from tax.

However, from 6th April 2011, this changes as a result of new Regulations. Whilst almost certainly a drafting error, the effect of the new Regulations is that the employee's legal fees will only be tax deductible (assuming they are paid directly by the employer) if the payments are made under a Compromise Agreement under the Employment Rights Act 1996. This covers settlement of unfair dismissal claims, and some other (relatively uncommon) claims. But it does not cover discrimination claims. Nor does it cover settlements via ACAS under a COT3 agreement - and accordingly this useful loophole has now disappeared for such settlements.

Changes Ahead

A few years ago, the DTI (as it was) announced all major employment law changes would be limited to April and October each year to make it easier for employers to plan ahead.

Next month is a big one for employment law changes, the biggest change being that 5th April 2011 is the absolute last day on which you can serve six months' notice of intention to retire an employee. Try retiring an employee on or after 1st October 2011, if you haven't served the proper notice, and you're going to face problems with unfair dismissal and age discrimination claims. We address what you need to do in the first article in this month's bulletin.

Compulsory Retirement

It's finally here. Unless you serve a notice giving notice to retire an employee on or before 5th April 2011 (at the very latest), you will probably find yourself at the wrong end of an age discrimination and unfair dismissal claim if you retire an employee. We recommend that in order to avoid all risk of a tribunal claim you should issue all notices to retire by 30 March 2011. Any compulsory retirement will only be permitted after 1st October 2011 if it is "objectively justified", which is unlikely to be easy to achieve (note: some exceptions will remain for dismissals up until October 2012 if certain notice provisions have been followed - always provided the first notice of intention to retire is given on or before the crucial date of 5th April 2011).

If experience to date is anything to go by, tribunals are unlikely to be sympathetic to employers who cling to the old ways and think that they can continue to dismiss somebody just because they have reached a particular age.

Many employers are spending these last weeks reviewing their personnel files and issuing (the minimum) six months' notice of retirement to employees who will have reached 65 by 1st October 2011. Whether or not you do this, you need to think carefully about amending contracts of employment and making sure your company adjusts to the implications of having an older workforce - including more focused appraisals and performance management of all employees, not just those who reach a certain age.

Other Changes on 6th April 2011

The other main changes taking place on 6th April 2011 are:

• Positive Action: You will be able to positively discriminate in favour of employees or applicants with protected characteristics (women, ethnic minorities, etc.) when appointing or promoting, provided the candidates are otherwise equally qualified and you are doing so in order to address an imbalance in the workforce.
• Statutory Maternity, Paternity and Adoption Pay: This increases from £124.88 to £128.73 per week.
• Statutory Sick Pay: This increases from £79.15 to £81.60 per week.
• Additional Paternity Leave: As well as the existing two weeks' paternity leave at the time of a baby's birth, a father will now be able to take up to 26 weeks' paternity leave once the mother has returned to work, provided the leave does not extend beyond the child's first birthday. The father can be paid up to any unexpired portion of the mother's statutory maternity pay.
• Employer-Supported Childcare: New entrants to employer-supported childcare schemes will only receive tax relief at basic rates (existing members will continue to receive tax relief at the higher rate).
• Immigration: The number of people allowed to enter the UK under tier 2 of the points-based system will be limited to just over 20,000 a year. Employers will no longer receive a general allocation of tier 2 sponsorship certificates; you will have to apply on a case-by-case basis.

Note that the government has announced it will no longer be extending the right to time off for training to small employers (with fewer than 250 employees) from this April.

The Royal Wedding

We have been receiving enquiries about whether employers must give employees the day off to watch the marriage of Prince William with Kate Middleton on Friday, 29th April 2011.

The day has been declared a bank holiday. This does not necessarily mean that employees are allowed a day's holiday from work. It will depend on the wording of their contracts of employment. If their contracts expressly allow them to have bank holidays off, then that is conclusive. If their contracts do not, but just provide that they are allowed (say) 28 days paid holiday a year, then ultimately you as the employer have the final say on what days your workforce are allowed to take.

Having said that, you are likely to find a higher absence rate than normal - much like World Cup days - if you refuse employees the chance to take the day off to watch the wedding. Think carefully about which employees it is critical to have working on 29th April, and which are not. Be aware that it will be difficult to dismiss any staff for taking the day "sick" unless you can prove they were not telling the truth, which will not be easy. A Royal Wedding comes around once a generation - sometimes flexibility is part of the cost of doing business.

Pre-Pack Administration Caught by TUPE

The Employment Appeal Tribunal has decided, in OTG Ltd v Barke, that pre-pack administrations are caught by the Transfer of Undertakings (Protection of Employment) Regulations 2006. This means that the rights of all employees from the insolvent company transfer to the new company, making it far more expensive (if not impossible) to rescue an ailing business and, ironically, undermining the whole purpose of the TUPE regulations which is to protect jobs. This is not the result of UK laws, or decisions of the courts which fail to recognise business needs, but is the implementation of an EU Directive which the UK courts can do little but follow.

Equal Pay

Equal pay claims are costing local authorities hundreds of millions of pounds. Private sector businesses have suffered less from equal pay litigation, but statistics continue to show a very clear gender gap for pay, with a recent report claiming that women on average earn 16% less than men, widening to 27% less for women aged 40.

The High Court has recently held, in Ashby & others v Birmingham City Council, that employees are entitled to bring equal pay claims in the civil courts up to six years after their employment finishes, provided there is a good reason for not bringing employment tribunal claims within the "standard" six months after employment finishes. This decision will shock many employers, who may find themselves vulnerable to a dated equal pay claim against which they have little ability to defend themselves, relevant personnel having left and recollection for disparities in pay having long ago dimmed.

Redundancy Selection After TUPE Transfer

It is often necessary to make redundancies when buying a business, particular if there is overlap in the functions between the old and new businesses.

A practical problem can arise with scoring employees from the "new" business who have been acquired under the Transfer of Undertakings (Protection of Employment) Regulations 2006. The incoming employees are likely to be scored by somebody from the incoming business, as otherwise they can legitimately claim it is unfair for them to be scored by someone with no knowledge of them. The existing employees, by contrast, will be scored by someone from the existing business.

The Employment Appeal Tribunal has stated, in First Scottish Searching Services v McDine, that it is not necessary to have any moderating of the two sets of scores. As long as the employer goes about things reasonably and objectively, the lack of a system of moderation will not make any redundancy dismissals unfair. This decision is a welcome dose of common sense into the complicated and sometimes absurd world of TUPE.

Industrial Action

We are warned we might face strikes and co-ordinated industrial action over coming months, due to the government's spending cuts. The laws governing strikes are often regarded as complicated, imposing strict requirements in terms of what must go onto ballot papers, who must be entitled to vote (and, similarly, prevented from voting), and what trade unions need to include in letters to the employer.

Traditionally, even the tiniest error by a trade union can result in an employer obtaining an injunction to stop the strike (or, more accurately, to delay the strike - since the union can simply repeat the ballot process and get it right second time around).

This month, the Court of Appeal has relaxed the approach to strike injunctions, stating that the rules have to be broadly followed but a pedantic, literal approach is inappropriate. This means that unions can get away with less rigorous procedures before calling a strike and employers will find it much harder to obtain injunctions to stop the strikes.

Default Retirement Age

The Government has announced that it will abolish the default retirement age (DRA) with effect from 1st October 2011. After that date, most employers will be unable to automatically retire employees at 65 unless they can prove that the retirement age is a reasonable and appropriate method of achieving a sensible business objective.

There is little assistance on what will be sufficient to justify a retirement age after October - the ACAS guidance unhelpfully comments that this will be determined by case law once the DRA has been abolished, and the Department for Business, Innovation and Skills has announced that it will not be an easy test to satisfy.

So, after October, employees who do not wish to retire will have a right to remain in work - and a potentially substantial age discrimination claim if you dismiss them because of their age. Accordingly, employers are going to have to focus to a far greater extent on implementing efficient performance management processes to manage performance levels - though they should apply these across the board and not just for older workers.

Employment Tribunal Reform

The tribunal system is up for reform again. The proposals, which are currently under consultation, come under 4 main headings:

• Reduce number of claims lodged: introducing fees in employment tribunals; increasing qualification periods for unfair dismissal from one to two years.
• Encouraging settlements: enabling greater use of alternative dispute resolution tools such as mediation; requiring all claims to be submitted to ACAS in the first instance, rather than the Tribunals Service, to offer pre-claim conciliation in all cases; including a statement of loss as required information for claims involving monetary compensation; and having a formal offer to settle process with potential consequences in costs.
• Shortening tribunal hearings: witness statements to be read in advance by the judge, and not read out aloud; withdrawing the payment of expenses in tribunal hearings to discourage non-essential witnesses from appearing; extending the case categories where judges can sit alone in tribunals to include unfair dismissal.
• Improving case management: introducing the use of 'legal officers' to deal with some case management functions; making the power to strike out more flexible; allowing a judge to be able to issue a deposit order at any stage of the proceedings; and increasing the deposit and cost limits for weak and vexatious claims.
   

These are all good for employers. Less good, however, is the proposal that any employer which loses a claim shall have to pay a fine, on top of the compensation for the employee, of 50% of the award made (up to a maximum of £5,000). This money will go directly to fund the tribunal system.

We will keep a close eye on these proposals for you, and keep you informed as to their progress.

Parental Leave

On 17th January, the deputy Prime Minister Nick Clegg announced the Government's intention to provide more flexibility to parents in how they manage the care of their children and to revamp the current paternity leave available to fathers. A consultation is soon to be launched with the majority of reforms intended to be made by 2015. The principles underlying the consultation are:

• Any new arrangement must absolutely maintain women's guaranteed right to time off in the first months after birth, paid as it is now; and it must protect the rights of lone mothers.
• The reforms must transform the opportunities for fathers to take time off to care for their children.
• It must be possible for the mother and father to share part of their leave, splitting it between them, in whatever way suits them best.
• The new system must take into account the needs of employers and it must be simple to administer.

In the meantime, the Additional Paternity Leave (APL) regulations passed in April 2010 begin to have effect as they apply to parents of children due on or after 3rd April 2011. APL will give employed fathers a right to up to six months' extra leave which can be taken once the mother has returned to work after 20 weeks and up until the child's first birthday.

Some of the leave may be paid if taken during the mother's maternity pay period. This is paid at 90% of earnings up to the same standard rate as Statutory Maternity Pay which is currently £124.88 per week (rising to £128.73 from 11th April 2011). The father will need to give their employer 8 weeks' notice of their intention to take APL.

APL will also apply to adoptive parents who are notified that they have been matched with a child on or after 3rd April 2011.

Employers will need to ensure that they have mechanisms for ensuring they cover paternity leave in the same way as they currently do maternity leave.

New Compensation Limits

The tribunal compensation limits have increased, in line with inflation, for all dismissals on or after 1st February 2011.

The main changes are that the maximum week's pay for redundancy payments (or a basic award) has increased to £400, leading to a maximum award of £12,000 (30 years x £400). The maximum compensatory award for unfair dismissal has increased to £68,400.

Duty to Make Reasonable Adjustments

Where an employee has a disability that puts him or her at a substantial disadvantage, an employer is obliged to investigate whether reasonable adjustments can be made to lessen the disadvantage. It is not enough for an employer to say that the employee never made any suggestions for adjustments. They are matters which are within the employer's knowledge, not the employee's.

In British Midland Airways v Hamed, a flight attendant with a knee injury was not permitted to do an administrative job, as these were reserved for pregnant employees who could not work as flight crew. It was therefore proposed to dismiss her on capability grounds.

The Employment Appeal Tribunal stated that if an employer is considering a capability dismissal because a disabled employee can no longer do the job for which they are employed, they must consider the full range of jobs available in their organisation, even if training would be required for the employee to move jobs.

Employers also need to be aware that if an employee is on long-term sick leave, firstly this may be tantamount to a disability, and secondly, it may be possible for that employee to be working again if the employer has other different roles (perhaps more sedentary roles if the employee has mobility issues) that would mean the employee no longer has to be on sick leave.

Unfair Dismissal - What Does the Employer Know, Anyway?

We all thought that the higher appeal courts had said everything there is to say about unfair dismissal law. But seemingly not. The Court of Appeal has held in a case involving Milton Keynes Council that companies will not be liable for unfair dismissal if a senior manager has relevant information which makes a disciplinary matter less serious, but the investigation/disciplinary officer is unaware of it and takes a decision to dismiss despite this information being known within the company.

This is reassuring news for employers, although it does not give free reign for dismissal officers to deliberately overlook information. Any employer must conduct a reasonable investigation, and must have reasonable grounds for its belief in guilt. But it is only the dismissing officer's thought process which will be examined, not the thoughts or knowledge of others within the company.

Turn Up, or Else…

The Employment Appeal Tribunal has confirmed that an employer that fails to attend the tribunal cannot complain if it then loses the case.

In TJ Courtier Chaffeur Express v Maharian, the employer's decision to ignore directions and not attend the hearing because they did not consider the Claimant to be an employee proved to be its downfall. The tribunal decided the Claimant was an employee, and the employer's attempt to challenge this on appeal was rejected because they had lost the chance to contest that part of the claim.

Time Limits for Appealing Tribunal Judgments

Appeals from tribunal decisions are tricky. The Employment Appeal Tribunal is not interested in appeals where you say the tribunal believed the other side instead of you. It is the employment tribunal's job to decide who is telling the truth. The only basis on which you can appeal a tribunal decision is showing that it made an error stating or applying the law.

Sometimes you need detailed legal advice before deciding whether to invest more money and time into challenging a tribunal decision. The Employment Appeal Tribunal allows 42 days for an appeal, but will hardly ever extend this deadline, even if a party is not legally represented.

It is therefore important to lodge an appeal and the accompanying documents within the time limit to protect the position, even if it has not yet been possible to get full legal advice on whether to lodge an appeal.

Employer's Charter

The government is considering an 'Employer's Charter', ostensibly ignited by the surge in employment tribunal claims in 2010.

Last year 236,000 claims were made, a considerable increase from the low of 86,000 in 2004. An HR Director for a small charity, speaking on the Today programme on Radio 4 earlier this month said "the flood of new legislation is where it started going wrong, with case law getting more complicated". She also blamed the previous government for "gold plating" European legislation when it was introduced in the UK. This is on the back of a Times article in which another charity described tribunals as "legalised extortion" and "clogged up by claims of little merit".

The proposals include increasing the qualifying period for unfair dismissal from one year to two years, introducing a fee for starting tribunal cases, and possibly exempting small employers from some employment laws. Although we welcome these proposals, we do not think they go far enough. Taking employees outside the unfair dismissal regime will simply encourage them to claim discrimination or whistleblowing, which do not require minimum service periods and which tend to be far more expensive claims to defend.

An issue fee will undoubtedly be paid by a union (where unions are backing the claim), or become part of the overheads of no-win, no-fee solicitors, and therefore will not provide any real barrier to a claim. We think the government should introduce financial penalties for unions who back a high proportion of claims which ultimately fail, and that employers should be more willing to contest weak claims in order to undermine the culture where employees know they will be handed a cheque for a few thousand pounds simply by lodging a claim.

Royal Wedding - Public Holiday

The Government has announced a public holiday on 29 April 2011 to mark the Royal Wedding of Prince William and Kate Middleton. Many employees assume that, as it will be a bank holiday, they will be entitled to take this day as paid leave. In fact, employees do not have an automatic right to paid leave on bank holidays and it will depend on the wording of their employment contract.

The only legal obligation on an employer is to allow their workers the minimum annual leave laid down in the Working Time Regulations 1998 (28 days for a full-time worker). Where an employment contract provides for "twenty days holiday plus bank holidays", then the employee will be entitled to the royal wedding bank holiday in addition to the usual eight bank holidays. Where the employment contract simply states that the employee is entitled to "twenty eight days holiday per year", there will be no such contractual entitlement. This will also be the position where contracts of employment specify particular bank holiday dates.

Whilst some employers might be willing to grant staff an additional day's holiday, others might struggle to do so for financial, organisational or practical reasons so they would be wise to check employees' contracts of employment.

New Compensation Limits and Increase in Cap for a Week's Pay

The maximum compensatory award for unfair dismissal will increase from £65,300 to £68,400 with effect from 1 February 2011. This increased award will only apply to claims where the effective date of termination is on or after 1 February 2011.

In addition, the current maximum limit of a week's pay will increase from £380 to £400 (also from 1 February 2011). This will also be the new limit to be used in redundancy calculations.

Serial Litigants at Risk of Paying Costs

This is a useful decision for employers facing claims from serial litigants. Mr Berry (a man in his 50s) scoured the internet for job adverts calling for a 'recent school leaver' or similar requirements. He then brought discrimination claims in the employment tribunal on the basis that he was excluded from applying for the job on the grounds of his age, and then offered to settle for a few thousand pounds to avoid litigation.

The Employment Appeal Tribunal (EAT) dismissed four appeals by the serial litigant, who had made 50 similar applications. The EAT concentrated on one of the four appeals, which concerned a recruitment agency which had advertised a job that indicated that it would be suitable for a school-leaver or A-level student. Mr Berry's age discrimination claim had been dismissed by the employment tribunal, because he had not actually applied for the job. Mr Berry appealed.

The EAT said that an employer was only liable for age discrimination if the claimant had been affected in some way and that was not the case here as Mr Berry had not applied for the job. The EAT also noted a number of similar applications made by Mr Berry and said that the discrimination laws are not intended to provide a "source of income" for those who complain of arguably discriminatory job vacancies which they have no intention to fill. The EAT also emphasised that those who seek to exploit discrimination legislation for financial gain are liable to find themselves facing a liability for costs.

Misconduct - Dismissal Procedure

The recent employment tribunal case of Henshaw v Touch Tanning Ltd re-iterated the importance of following the ACAS Code of Conduct, wherever possible, when dealing with disciplinary matters. A family-run business was described as having one person act as "judge, jury and executioner" in its disciplinary process.

A receptionist in a tanning salon failed to follow a procedure whereby new customers were required to fill in a form to determine how many minutes they could spend on a sun bed. The form was accompanied with information explaining the risks of using sun beds, together with a disclaimer. The receptionist admitted that she knew she was supposed to follow this process and she described her failure to do so as a "one-off incident", explaining that she felt tired and lethargic and that the customer seemed to know what she wanted. A director of the Company instructed her daughter (not an employee of the Company) to investigate the matter.

An investigatory meeting was held (which the director also attended), where it was decided that the employee was required to attend a formal disciplinary hearing, to be chaired by the director's daughter. The employee refused to attend the hearing and was dismissed for gross misconduct in her absence. The employee did not appeal the decision.

An unfair dismissal complaint was made and the employment tribunal found that the Company had breached the ACAS Code of Practice on Disciplinary and Grievance Procedures, as well as taking into account a number of other procedural failings. It concluded that the daughter should not have investigated and dealt with the formal hearing. It also had no doubt that, had the employee appealed, she would have dealt with that hearing too. This was also in breach of the Company's own disciplinary procedure. There was no reason why the employee's line manager could not have conducted the investigatory stage. Nevertheless the employment tribunal went on to find that the employee had contributed to her dismissal, so her compensation was therefore reduced to zero.

The lesson for employers is that tribunals expect them, if it is practicable, to have a separate investigator to the person who hears the disciplinary.

Agency Workers

Some good news for employers - the courts are continuing to hold that workers engaged through an employment agency are not 'employees' and thus cannot claim unfair dismissal. In the case of Tilson v Alstom Transport, an employment tribunal found that, despite providing his services through a separate limited company wherein he billed on an hourly basis, as well as being paid through a designated separate payroll company, Mr Tilson was, in fact, an employee of Alstom Transport and, as such, was entitled to claim unfair dismissal against the Company.

He successfully argued that, despite paying his own income tax and National Insurance contributions, the way in which his work was structured, and the manner in which he worked for Alstom (together with the tasks he performed on the Company's behalf), were the real indicator as to his employment status.

However, the Court of Appeal has decided that a significant degree of integration of an agency worker into an organisation is not inconsistent with an agency relationship. In this case there was no contract of employment between Alstom (the end user) and Mr Tilson and, indeed, there was a lack of intention to form an employment contract. The Court of Appeal also held that the need to apply to a line manager before taking annual leave was not enough to justify the implication of a contract.

Dismissal Extinguishes Right to Guaranteed Bonus

In the case of Locke v Candy & Candy, the Court of Appeal has provided important confirmation that where a contractual bonus clause states that an employee has to be "employed by the company in order to receive the bonus", employees are not entitled to any bonus if they are not employed at the time the bonus becomes payable.

In this case the employee was summarily dismissed under a payment in lieu of notice (PILON) clause shortly before the bonus became payable. The Claimant, having been given 6 months payment in lieu of notice in accordance with his contract, sought to recover a guaranteed annual bonus of £160,000, which only became payable after 12 months employment. He had been dismissed with immediate effect around ten days short of this under a contractual clause permitting the company to make a payment in lieu of notice. Had he been asked to work his notice rather than being paid in lieu, he would have received his bonus entitlement.

The Court of Appeal held that the PILON did not allow the Claimant to receive all the benefits that he would have been entitled to had he remained in employment with the company and, because the contract required him to be employed in order to receive the bonus, he was not entitled to the bonus.