Canter Levin & Berg Employment Solutions Canter Levin & Berg Employment Solutions
December 2012

Welcome to our last newsletter of 2012.

We start this month with a couple of cases with factual backgrounds that reinforce all the old stereotypes about City of London employees. You would be forgiven for thinking that the economic downturn in 2008 had never happened. In any event both cases reinforce important principles of employment law: (1) that contractual obligations survive until the very end of the contract of employment (failure to observe this cost Mr Imam-Sadeque £1.7m) and (2) that it is very important to identify the correct date of termination of employment and for employers to adhere to correct procedures in this regard (this could end up costing Société Générale £16.3m!).

The Government's much hyped "halving of the redundancy consultation period" has provoked predictable responses but, as I've pointed out, it makes little or no practical difference for most businesses and virtually all SMEs.

I've reported the decision of the Employment Appeal Tribunal in Bryant -v- Sage Care Homes Limited, a fairly unremarkable case save for the different conclusions reached by the employer and the Nursing and Midwifery Council (not so surprising when you think that they were considering different questions), mainly because it provides a useful reminder of the correct approach to take when dealing with dismissals based on alleged misconduct.

I've also addressed the question that I know has been concerning so many of you throughout the year: is a lapdancer an employee? The clear decision is hot off the press with the judgment of the Court of Appeal published earlier today.

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Martin Malone

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November 2012
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This month's news round-up:

1. compromise agreements and probably the world's most expensive lunch


It is an often-heard maxim in contract law that a party cannot seek to claim the benefits of a contract which he has breached. While that is a rather simplistic statement and is, in practice, subject to numerous qualifications and exclusions, the decision of the High Court in Imam-Sadeque -v- Bluebay Asset Management (Services) Limited is an example of how the general principle can apply, even in the most complex of cases.

Heard over seven days and with the judgment of Mr Justice Popplewell running to 235 paragraphs in 61 pages, the case concerned the departure of Mr Imam-Sadeque from Bluebay. As is common with executive contracts there were "good leaver" and "bad leaver" provisions. Resignation would make Mr Imam-Sadeque a "bad leaver". The distinction was particularly important for him since, as a good leaver, he would be able to exercise share options worth £1.7m. Terms were therefore set out in a compromise agreement.

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2. can an employment contract be ended without notice?


It may seem a straightforward question since people are dismissed every working day for what is commonly referred to as "gross misconduct", i.e. conduct which is so serious that it goes to the root of the contract and renders its continuation undesirable if not impossible.

However, what of the "innocent" employee? In my discussion about decision of the Court of Appeal in Société Générale London Branch v Geys in April 2011 I pointed out that, according to the Court of Appeal, Mr Geys' employment was terminated on 18 December 2007 when Société Générale made a payment in lieu of notice to him, rather than 4 January 2008 when Société Générale confirmed in writing its intention to do so. The date was very important for Mr Geys because, relying on the earlier date, Société Générale did not have to pay significant bonuses which would have accrued prior to the later termination date.

I commented:

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3. reduction in redundancy consultation unlikely to affect SMEs


There has been a great deal of press coverage about the Government's proposal to halve the consultation period for large scale redundancies from 90 days to 45 days.

According to employment relations minister Jo Swinson (yes, I'd never heard of her either until now):

The process is usually completed well within the existing 90-day minimum period, which can cause unnecessary delays for restructuring and make it difficult for those affected to get new jobs quickly. Our reforms will strike an appropriate balance between making sure employees are engaged in decisions about their future and allowing employers greater certainty and flexibility to take necessary steps to restructure.

However, Brendan Barber of the TUC countered this:

The last thing we need is for the government to make it easier to sack people. Unemployment has not gone as high as many feared because employers have worked with unions to save jobs, even if it has meant sharing round fewer hours and less work.

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4. does discrimination law protect volunteers?


It is fairly unusual for employment law cases to escalate all the way to the Supreme Court so to have two in one month is particularly notable.

Our second case for December 2012, X -v- Mid Sussex Citizens' Advice Bureau concerns an HIV positive volunteer who, following frequent absences from work, was asked to stop volunteering.

As Lord Mance pointed out in his lead judgment, any responsible organisation aims to combat discrimination of the grounds of disability (or any other discrimination for that matter) but this case is not about the moral imperative. Rather, it is about whether, as a matter of law, discrimination against volunteers is unlawful.

The claimant started work as a volunteer for the CAB in May 2006. Her contract stated:

This agreement is binding in honour only and is not a contract of employment or legally binding.

Training having been completed by November 2006 she commenced work. She was asked to volunteer on Tuesdays, Thursdays and Fridays. As it turned out she was absent between 25% to 30% of the proposed times and in practice attended between one and three days a week.

In May 2007 she was asked to stop volunteering and claimed that she was a victim of disability discrimination. This was disputed by the CAB and the claim was rejected by an Employment Tribunal, the Employment Appeal Tribunal and the Court of Appeal, in all cases on the basis that they lacked jurisdiction because she was a volunteer and therefore not protected by the relevant legislation.

On appeal to the Supreme Court the case attracted a good deal of attention

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5. new compensation limits but will they last?


As is usual at this time of year the Government has published a statutory instrument which upgrades some of the maximum awards which may be made by a tribunal.

  • The compensatory award increases from £72.300 to £74,200.
  • A "week's pay" increases from £430 to £450.
  • The minimum basic award in applicable cases increases from £5,300 to £5,500/p

As I've mentioned before it is unusual for compensatory awards for unfair dismissal to reach the maximum. According to the latest report from the Ministry of Justice the median award for unfair dismissal was £4,560 and the average award £9,133, with just 49 claims resulting in awards of over £50,000.

However, this should not be seen as a cue for complacency on the part of employers. The highest award for race discrimination was £4,445,023 (average £102,259), with sex discrimination claims averaging £9,940, disability discrimination £22,183 and age discrimination £19,327. It is also worth bearing in mind that these figures do not include claims settled without a hearing.

There has also been a trend towards a much higher number of discrimination claims being accepted by tribunals.

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6. range of reasonable responses - fairly dismissed although cleared by professional body


There is nothing particularly startling or new about the decision of the Employment Appeal Tribunal in Bryant v Sage Care Homes Limited. However, I've decided to comment on the case because it provides some useful reminders of the general principles that apply when dealing with unfair dismissal claims.

Ms Bryant had worked as a staff nurse for many years. She was working as the senior nurse at the Belmar Nursing Home in Lytham St Annes (in the employment of Sage) when, in June 2009 and while carrying out the drug round, she asked an unqualified care assistant to give medication (a sedative) to one of the residents. Unfortunately the sedative was given to the wrong resident. The error came to light when the resident who should have received the medication requested it about an hour later. Fortunately it was only a minor sedative and there were no ill effects.

The incident was reported to the Care Quality Commission and an investigation was conducted. Ms Bryant was suspended. At a subsequent disciplinary hearing reference was made to the relevant Nursing and Midwifery Council procedures. She admitted that she was wrong in allowing the error to happen and not reporting it but she had not acted intentionally and felt that she was qualified to make a judgement. Following the disciplinary hearing she was dismissed for gross misconduct.

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7. ...and finally for 2012


In May this year I reported on the thorny issue of whether a lapdancer is an employee and consequently entitled to employment protection. At that time the Employment Appeal Tribunal took the view that she was an employee but Stringfellows counter-appealed on the basis that the contract was illegal because Ms Quashie had not disclosed all her earnings in tax returns. If that was established then the claim may fail anyway because the claim for unfair dismissal would be tainted with illegality on the part of the claimant.

Today the Court of Appeal has had its say and the question of illegality is now academic because Lord Justices Ward, Elias and Pitchford have overturned the decision of the EAT in finding that she was not an employee and consequently cannot claim unfair dismissal. She was a contractor because she paid the clubs (Stringfellows and Angels) for the opportunity to entertain clients.

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