Canter Levin & Berg Employment Solutions

employment law support provided exclusively by specialist employment lawyers

May 2015

the employment law briefing

Well, with reference to last month's newsletter I have to admit that I got it very wrong (along with most of the bookies) in predicting the outcome of the election. Not only that but I predicted no significant changes in employment law if the Conservatives got in. While it is correct that there are to be no fundamental changes in the short term, the Queen's Speech and associated announcements have made clear that there are some important issues for employers to be aware of.

Speaking on last week's Andrew Marr show new Business Secretary Sajid Javid made clear that the much derided Beecroft proposals for no-fault dismissals which first surfaced in 2011 are to be put to bed once and for all. The Immigration Bill raises the curious notion that it will be illegal to employ someone illegally in the UK. Wages paid to illegal immigrants could be seized as proceeds of crime. In addition it raises the possibility of employers being held criminally liable for employing illegal immigrants even if this is as the result of a genuine mistake.

Exclusivity clauses in zero hours contracts have already been outlawed with effect from this week. However, the ban is not backed by any enforcement measures so affected employees do not have the right to bring employment tribunal proceedings. It therefore remains to be seen how effective the ban will prove to be in practice.

Other bills which are likely to affect employers include the Extremism Bill which includes proposals to enable employers to check whether an individual is classed as extremist and including a right to bar such individuals from working with children. The Enterprise Bill includes a small businesses conciliation service aimed at tackling late payments and a review of business rates. The Trades Union Bill seeks to implement conditions for ballots for industrial action which will prevent votes being passed by a small minority of the workforce which remain valid for extended periods.

Of course the most notable absentee from the legislative schedule is the proposed repeal of the Human Rights Act although we are informed that this will follow after consultation. Is it being kicked into touch, either because it is too difficult to draft or perhaps more likely because the Government could not get it through Parliament?

This month's news:

  1. what is to be done about appraisals?
  2. priority of discrimination protection - religion, sexual orientation and political belief
  3. is it possible for an unfair dismissal claim to be accepted after six years?
  4. is a settlement payment taxable?
  5. who does a vicar work for?

Kind regards

Martin Malone

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This month's news round-up:

1. what is to be done about appraisals?

According to an article in The Times (behind paywall) the BBC has more than lived up to the stereotypical portrayal of it in comedy series W1A by abandoning appraisals "because the meetings risk making staff members feel that their performance is being appraised"!

Appraisals are to be replaced with "performance development reviews" which are intended to promote "an honest two-way conversation". According to the Daily Mail Head of People Development (HR Manager) Kate Sloggett said:

We've changed the name to reflect the fact that these conversations shouldn't be just about one person 'appraising' the other's performance.

A Performance Development Review should provide an opportunity to discuss a person's role and career in a honest conversation.

We want staff to focus on their ideas and ambitions for development and how they might want to get on in their career as well as receiving feedback on their work over the past year.

There is a serious message behind the obvious humour. In my experience the approaches taken by employers to appraisals and staff reviews vary widely from one organisation to another. Some completely ignore them while others have introduced sometimes wildly complex "360-degree performance reviews" which are so convoluted and protracted as to render them utterly meaningless. I wonder how many HR managers are aware that 360-degree appraisals originated with the military in Germany in World War Two when, one might imagine, the consequences of a poor review were probably pretty severe!

While large organisations need to have fairly rigid processes, one of the benefits of having a relatively small workforce in an SME is that there can be far more flexibility

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2. priority of discrimination protection - religion, sexual orientation and political belief


I expect that most readers will have seen some of the widespread media coverage concerning the Northern Irish case of Lee v Ashers Baking Co Ltd and others. I have pointed out for some time that, particularly in the context of protection from discrimination relating to religion or philosophical belief, there is an obvious risk that such protection will at times collide with protection from discrimination on other grounds, an obvious example being sexual orientation. Which one is to prevail? An almost impossible question for a court to rule on you might think, and so it has turned out. Unsurprisingly the Bakery announced on 28 May that it intends to appeal the decision.

District Judge Brownlie, sitting in the County Court in Northern Ireland, had the unenviable task of deciding whether the rights of a gay man who wanted a cake decorated with a pro-gay message should take precedence over the objections of a bakery which objected on religious grounds. Although it is not an employment case, the relevance for employment disputes concerning competing and conflicting claims for protection from discrimination is obvious.

I think that it is fair to say that the parties were at opposite ends of the relevant spectrum. Mr Lee is associated with an organisation called Queerspace which "seeks to increase visibility of the [LBGT] community in a positive manner and to counteract the disregard and negative images presented to the general public over the past centuries". On the other hand the bakery business derived its name from Genesis, Chapter 49:20 which says "Bread from Asher shall be rich, and he shall yield royal dainties". In many respects the details of the judgment are fairly unimportant and, of course, as a decision of the County Court in Northern Ireland it is not binding on any other courts. The judge found as facts that the Bakery cancelled the order because of Mr Lee's support of a political campaign for gay marriage and the primary reason for doing so was as a result of genuine and strongly held religious beliefs, including a belief that the business should be run in accordance with God's wishes. As put by their solicitors:

In fulfilling your client's order, our client would have been acting so as to promote and support your client's political campaign for a change in the law of Northern Ireland so as to enable same sex marriage which objective is directly contrary to our client's religious faith and conscience. Our client is entitled to refuse to create a polemical message which conflicts with their religious belief and conscience.

Judge Brownlie pointed out that the crucial question in any case of alleged discrimination is to ask why the claimant received less favourable treatment.

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3. is it possible for an unfair dismissal claim to be accepted after six years?

If you ask most people involved in dealing with employment law matters they will correctly tell you that the time limit for commencing a claim for unfair dismissal is three months from the date of termination of employment. As we have seen on many occasions the time limit is applied very strictly and just about the only basis on which it can be extended is if it was not reasonably practicable for the claim to lodged within the time available.

The admittedly unusual case of Miss B Higgins v The Home Office and The Attorney General shows the extent to which a time limit can be extended in appropriate circumstances. Miss Higgins claimed that she was constructively dismissed by her employer in December 2007 but she did not present her complaint of unfair dismissal to an employment tribunal until 27 January 2014. The grounds of claim were pretty unclear and there was at least one inadmissible claim for compensation for loss suffered by the claimant's mother. Unsurprisingly the claim was rejected by an employment judge as an abuse of process because (i) it was brought outside the applicable time limits, (ii) the remedies sought did not appear to be those that a tribunal could award and (iii) the claimant did not appear to be claiming unfair dismissal. Miss Higgins appealed to the Employment Appeal Tribunal.

She had worked as an immigration officer for the Home Office from 2003 until December 2007. She maintained that while employed with the Home Office she applied for a position with MI5. Judge Serota QC noted that in the course of her employment Miss Higgins had mental health issues and in October 2007 had been admitted to a psychiatric hospital or unit where she had remained for several days. She tendered her resignation on more than one occasion but was allowed to withdraw the resignation. However, when she resigned on 26 or 27 November 2007, expiring on 23 December, she was not allowed to withdraw the resignation. This was the basis of her claim for constructive unfair dismissal.

In early 2008 she instructed solicitors in connection with her potential claim but maintained that she was too unwell to commence proceedings. The standard three months' time limit expired on 22 February 2008 but the ET1 was not lodged until 27 January 2014.

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4. is a settlement payment taxable?

One of the most frequently asked questions in HR is whether or not a settlement payment is taxable. Several different and apparently conflicting answers can all be correct, depending on the circumstances. In 2014 I wrote about the £30,000 tax exemption which does not apply in all circumstances and in 2011 I highlighted a potential trap for employers.

Now we have a further and significant contribution in the form of a decision by the Tax Chamber of the First Tier Tribunal in the matter of Mr A v HMRC. It is a basic principle of tax law that earnings are taxable. Unsurprisingly HMRC interprets "earnings" widely as including any payments in respect of which earnings are involved (section 62 Income Tax (Earnings and Pensions) Act 2003). As a result severance payments are frequently regarded as taxable (subject to the £30,000 exemption pursuant to sections 401 to 404A of the 2003 Act when applicable).

Mr A worked as a trader for a Bank in London. His job title was managing director and he was on a basic salary of £120,000 plus eligibility for the Bank's bonus scheme. In the period from 2003 to 2007 he received significant bonuses based on the bank's overall performance. In 2007 there was a dispute concerning his bonus and when the Bank was bought out he was made aware of imminent redundancies. He raised grievances including allegations of race discrimination (based on inappropriate comments made by the bank's chairman and vice chairman).

In early 2008 he raised further grievances including the fact that other directors had received bonuses and he had not. A questionnaire was sent to the employer in accordance with the relevant provisions of the Race Relations Act (as it then applied). On March 2008 the Bank informed Mr A that he was to be made redundant and he was offered £1650 in statutory redundancy pay and a further ex gratia redundancy payment of £48,898. A couple of days later Mr A was offered a further payment if he agreed to sign a compromise agreement (now referred to as a settlement agreement). The agreement provided that in addition to the payments already offered he would receive a further payment of £600,000 in settlement of all outstanding claims. The terminology used will be familiar to those who have dealt with settlement agreements:

The parties have entered into this Agreement to record and implement the terms on which they have agreed to settle all outstanding claims which the Employee has or may have against the Employer.arising out of or in connection with or as a consequence of his employment and/or its termination. The terms...are without any admission of liability on the part of the Employer...

Unsurprisingly HMRC queried the £600,000 payment and asked for a detailed breakdown of what it consisted of.

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5. who does a vicar work for?


Every now and then the very different worlds of ecclesiastical and employment law overlap, particularly in the context of considering employment claims by the clergy.

In 2011 a female Methodist minister won the right to bring a claim for unfair dismissal since she was held to be an employee of the President of the Methodist Conference. However in 2013 another case concerning a Methodist minister resulted in a decision of the Supreme Court (by four to one) that ministers are office holders and, as such, not employees. The case and its background were analysed by barrister Emily Walker.

The thorny question fell to be considered once again in the recent case of Sharpe v The Bishop of Worcester in which Reverend Sharpe sought to maintain a claim for constructive unfair dismissal after a campaign of victimisation. Reverend Sharpe lost his claim against the Bishop in the employment tribunal on the basis that he failed to meet the threshold tests (for eligibility to bring a claim). However he was successful on appeal to the Employment Appeal Tribunal and, from there, the matter found its way to the Court of Appeal.

Lady Justice Arden noted that the Church of England is not a legal person but it and its officers are governed by ecclesiastical law, including canon law. The office of rector or vicar in a particular parish is known as a benefice which carries with the freehold interest in the parsonage house. Pursuant to The Ecclesiastical Offices (Age Limits) Measure 1975 vicars have to retire at the age of 70. They may also be removed as a result of disciplinary proceedings. Appointment of vicars is made by patrons of the parish pursuant to a right known as "advowson". Mr Sharpe was offered his appointment in October 2004. Following his appointment he was provided with "the Bishop's Papers" containing information and advice "on matters spiritual and temporal" including his stipend, other financial matters, information about taking holidays and sick pay. However the Bishop was not in the practice of issuing instructions in the sense of an employer or a line manager.

Taking these and other features into account the employment tribunal concluded that there was no formal contract, let alone an employment contract. The appeal judge in the Employment Appeal Tribunal effectively reached the opposite conclusion based of the same facts. There were numerous indicators of an employment relationship, sufficient for one to be established. Having considered the evidence in considerable details Lady Justice Arden admitted that her mind wavered between both interpretations. She also referred to the Magna Carta, noting that its very first clause provides that the English Church should be free. "That would, I think, include freedom of thought and conscience for individual incumbents, free from interference by parishioners or the Church's hierarchy." She accordingly concluded that there was no employment contract between Reverend Sharpe and the Bishop. Similarly, there was no contract and he could not therefore be regarded as a worker.

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