Welcome to our September newsletter. On the day that sees the start of John McCririck's age discrimination traibunal hearing, this month's review covers a wide range of practical situtations such as contractual entitlements, whether to take into account events occurring after a dismissal, settlement negotiations, the right to be accompanied at a hearing and, of course, a TUPE case. There is also a decision of the Employment Appeal Tribunal which acts as a useful reminder that an employer taking steps to dismiss a "problem employee", even where there are clear grounds for dismissal for gross misconduct, might nonetheless find itself on the wrong end of a finding of unfair dismissal.
Regular readers will be familiar with how underwhelming I consider the new employee shareholder contracts to be (give up your employment rights in return for shares). They came into effect on 1 September and it is notable that the Institute of Directors reported not a single enquiry from any member concerning them. As is often the case with ill thought out schemes there are now significant anomalies. For example, what of the salaried partner in a partnership or the fixed share member of an LLP. Individuals in both categories have the double benefit of a (usually small) stake in the business while retaining full employment rights since, understandably, they are employees. Undeterred, the government has provided detailed guidance in the unlikely event that this is something you want to explore.
If you have not yet subscribed, you may be interested to know that our rates start from only £49 per month for web access, regardless of the size of your business and the number of your employees. Employment law support with direct access to specialist employment lawyers is available from just £99 per month. If you are interested in the service and would like to arrange a free visit, please call free on 08000 832 832 or send an email to email@example.com.
You can also find out more about our services by viewing or downloading our online brochure.
Please let us know what you think by contributing to the Employment Solutions blog.
This month's news round-up:
In Fox v British Airways Plc the Court of Appeal has addressed two tricky questions arising from the death of an employee shortly after the termination of his employment. Can a tribunal award compensation for a benefit which was payable in the event of an employee's death and can the claim be made on behalf of the deceased's estate?
Gary Fox worked for BA for over twenty years. He developed a serious back condition and was off work for the first half of 2010. He was dismissed on the ground of medical incapacity on 21 September 2010. Five days later he had a major operation on his back from which, sadly, he did not recover and he died on 16 October 2010. He was 44, unmarried and childless.
If he had been employed at the time of his death the death in service payment due as a contractual entitlement would have been about £85,000. The scheme rules specify that eligibility for payment requires a member to be "currently in employment".
Mr Fox's father brought employment tribunal proceedings claiming that his son's dismissal was unfair and that he was a victim of disability discrimination. The principal objective of the claim was to recover the death in service payment on the basis that, had he not been unfairly dismissed and/or discriminated against, he would still have been in employment less than a month later and the benefit would have been payable. Incidentally Mr Fox's father was entitled to bring the claim on behalf of his deceased son in his capacity as personal representative (unfair dismissal claim permitted pursuant to sections 206(3) and (4) of the Employment Rights Act 1996 and the discrimination claim following the decision in Lewisham and Guys Mental Health NHS Trust v Andrews  ICR 707).
At a preliminary hearing held at the request of BA Employment Judge Hyams held that any award in respect of the death in service benefit should not reflect the loss to potential beneficiaries but should instead "the loss [to Mr Fox] of the comfort of knowing that his relatives would receive a lump sum insurance benefit on hs death". He suggested that such an award should equate to an award for loss of statutory rights, typically £350.
Unsurprisingly Mr Fox senior appealed the decision.
It is normally the correct approach when dealing with employment law matters not to take into account factors which have arisen "after the event". For example, evidence of misconduct which only comes to light after someone has been dismissed for misconduct can have played no part in the deliberations of the individual or individuals who made the decision to dismiss. Similarly, if a business unexpectedly secures significant new business requiring recruitment shortly after a redundancy round that does not invalidate the redundancies.
However, in Cumbria County Council & Anor v Bates, the Employment Appeal Tribunal held that where a teacher was convicted of common assault (involving a 16 year old former pupil) and subsequently banned from teaching after he had already been dismissed, an employment tribunal would be entitled to consider the effect of the conviction when assessing compensation.
Mr Bates worked at Dowdales School from September 1999 until April 2009 when he was dismissed for misconduct. His claim for unfair dismissal was successful. The tribunal had taken place on 7 and 9 September 2010 and written reasons for the decision were sent to the parties on 13 December 2010. A remedy hearing was set for 21 February 2011. However Mr Bates was due in Preston Crown Court on 20 June 2011 to face three charges of sexually touching a 16 year old former pupil of the school on 16 July 2010 (after his dismissal). A request by the school and the local authority for postponement of the remedy hearing until after the criminal trial was refused. At the hearing he was awarded £70,925. His compensation was reduced by 15% to take into account his own contribution to his dismissal.
As it turned out he was found not guilty of the three charges of sexual assault but he was found guilty of common assault and sentenced to six weeks' imprisonment.
There was a review hearing on 17 April 2012. On this occasion the tribunal revoked the first remedy judgment except for the basic award and part of the compensatory award, thereby reducing the overall award to £21,451. However there was a second remedy hearing on 17 September 2012 which reinstated the first remedy judgment.
On 1 October 2012 the Teaching Agency banned Mr Bates from teaching for life.
Francis v Pertemps Recruitment Partnership Ltd concerns the dividing line between dismissal and termination of a contract by mutual consent. Mr Francis was a temp in the fortunate position of having a contract of employment with an agency – who supplied him to Transco to do administrative work. When the successors to Transco’s business, SGN, no longer required his service, he was given the choice of taking a redundancy payment or hanging on while the agency looked around for new work for him.
On his return to Pertemps on 12 December 2006 (yes 2006 - it has taken that long to resolve!) he had the options outlined to him (in rather inelegant terms):
Depending on how you feel yourself, whether you are happy for Pertemps to keep on looking for another assignment for you elsewhere, and we do have other bits and pieces in at the moment or things coming up in the New Year, that we'll be happy obviously to speak to you about or...there might be an entitlement for you to a redundancy payment from Pertemps because of the work you have previously...for the last two and a half years...has come to an end.
He was also told that in either case he would receive a payment of two weeks' pay, described as "notice pay".
To start with he opted for staying on, but then he concluded the chances of something turning up were slim, and as he would not be able to claim jobseekers' allowance if he remained with the agency, he changed his mind. He also lacked faith that he would be engaged through Pertemps to work in a possible opening at the Scottish Parliament. He was then given a letter which looked suspiciously like notice of termination:
Following your meeting of 12th December 2006 it is with regret that I confirm the position of Process Assistant will become redundant with effect from 12th December 2006...Please treat this letter as formal notice of redundancy...In accordance with your contract of employment you are entitled to two weeks notice, therefore your last date of employment will be recorded as 26th December 2006.
The letter was written by an HR advisor and is, on any reading, a pretty poor effort. Mr Francis exercised his right of appeal and in February 2007 his redundancy was confirmed.
Newbury v Sun Microsystems provides a salutary tale for those who are at all unclear in their approach to finalising terms for settlement.
Mr Malcolm Newbury issued a claim against his employer for contractual commission for the year to June 2009 in the sum of $2,028,760. The employer, Sun Microsystems, counterclaimed in respect of an alleged overpayment. The proceedings were issued in June 2011 and listed for an eight day trial commencing on 12 June 2013.
On 3 June Sun's solicitors wrote a letter to Mr Newbury's solicitors including the following:
Terms of the Offer
Mr Newbury's solicitors replied:
We thank you for your letter dated 03 June 2013.
One of the more surprising political stories to emerge this month was Allegra Stratton's BBC report that the Conservatives are considering ways in which to raise the National Minimum Wage. Apparently the intention is to strike a balance between increasing people's earning power while avoiding a negative impact on the number of people in employment. How this will sit with the Tory rank and file at this year's conference remains to be seen.
For the moment the National Minimum Wage Regulations 1999 (Amendment) Regulations 2013, SI 2013/1975) provide for the usual modest increases.
The main changes are that:
As aficionados of the European Court of Justice (CJEU) will tell you, it's rare that the full judgement of the court does not follow the opinion of the Advocate General, but Mark Alemo-Herron and Others v Parkwood Leisure Ltd is just such a case. The icing on the cake is that the court held that a narrow interpretation should be taken of the Acquired Rights Directive and that it should not be taken to permit the transfer of "dynamic" contractual rights, that is, contractual rights which vary according to collective negotiations. The facts which gave rise to the decision are pretty typical: the London Borough of Lewisham outsourced its leisure services to Parkwood and Mr Alemo-Heron and his colleagues, whose contracts incorporated the National Joint Council collectively negotiated terms and conditions, were transferred to Parkwood, who as a private sector undertaking could not participate in the NJC.
In holding that a member state would not be allowed to insist on a the transfer of dynamic terms, the CJEU commented that protection of employee rights was not the sole purpose of the Acquired Rights Directive. The ARD, it said,
seeks to ensure a fair balance between the interests of those employees, on the one hand, and those of the transferee, on the other. More particularly, it makes clear that the transferee must be in a position to make the adjustments and changes necessary to carry on its operations
Permitting a dynamic interpretation would saddle such a private sector employer with terms and conditions it could not influence and seriously reduce its contractual freedom "to the point that such a limitation is liable to adversely affect the very essence of its freedom to conduct a business"
Meanwhile the Government has announced a significant watering down of its proposed TUPE reforms.
It is well known by nearly all employers that their employees have a right to be accompanied at any disciplinary or grievance meeting that they are required to attend, if they reasonably request a companion. However, it still surprises me how often we encounter employers who ignore this and pretty much all other employment rights. Unsurprisingly they tend to be the employers who are least impressed with and most penalised by employment protection legislation and the corresponding employment tribunal system.
The case of Toal & Hughes v GB Oils Ltd does not concern such an employer but does address a question often asked by employers – "do I have a say in who the employee brings along as their companion at a disciplinary / grievance hearing?". Mr Justice Mitting, sitting in the Employment Appeal Tribunal, has confirmed that although the request for a companion must be reasonable, the companion may be from any of the permitted categories – a paid trade union official, a trained union representative or fellow worker, reasonable or not. Further, if when denied his or her choice of companion, the employee settles for someone else, that does not mean that the employee has waived their right to their choice of companion.
Messrs. Toal and Hughes raised grievances against their employer. Both made it very clear to the employer that they wanted a particular Unite official, Mr Lean, to accompany them at the grievance meetings. The employer was unwilling to allow them to be accompanied by Mr Lean so they arranged for a fellow worker, Mr Hodgkin, to come along instead. They were dissatisfied with the outcome and at the ensuing appeal hearing they were accompanied by Mr Silkstone who, like Mr Lean, was an elected union official.
Complaints were made to an employment tribunal that they had been denied their statutory rights. It was decided that the employer had not acted in breach of the statutory obligation in section 10 of the Employment Rights Act 1996 (right to be accompanied). The tribunal considered whether the word "reasonable" applied to anything other than the request to be accompanied at the hearing. It was contended on behalf of the employer that it also applied to the choice of representative. This contention was rejected. Mr Lean satisfied the criteria for selection as a representative and the legislation provided for a worker to be accompanied by one companion chosen by the worker. The employer was in breach of the legislation by rejecting Mr Lean as the chosen companion.
However, the tribunal then went on to conclude that the breach was waived as a result of the subsequent selection of Mr Hodgkin, commenting that the fact that he was a second choice was "immaterial".
In the Employment Appeal Tribunal Mr Justice Mitting pointed out that an employee must request to be accompanied at a hearing but also noted that it is widely accepted that good employment practice dictates that an employee should be told that he or she has the right to make the request. He also observed, reasonably, that in this context it is not entirely clear why Parliament included the word "reasonably" in this context. In any event, considered in context, it does not apply to the choice of companion. It is the right of the worker because otherwise an employer might wish to place a worker at a disadvantage by interfering with his or her choice.
This summer has seen some radical changes in the field of employment law, notably the introduction of fees in employment tribunals on 29 July, alongside new Employment Tribunal forms and rules, a new cap on unfair dismissal compensation and the new "shareholder-employee" provisions came into force on 1 September.
Time will tell how these changes will affect practice in the long term, but in the short term and perhaps unsurprisingly, there are reports of a number of teething problems – for example:
In Carmelli Bakeries Ltd v Benali the Employment Appeal Tribunal considered a case where a baker, Mr Benali, claimed unfair dismissal and victimisation when he was dismissed for using non-kosher jam in his work for a kosher bakery - which was gross misconduct. Mr Benali had worked for the bakery since 2004 and had an unblemished record until 2011. However he had made disability related claims and had a lengthy period off work in 2008 when he was suffering from sciatica.
There was no doubt that he had knowingly used the jam. He had arranged for two (non-kosher) jars to be bought from the local Tesco store when the regular supply ran out. However an Employment Tribunal found that this was not the "operative cause" of his dismissal. The "real" reason for his dismissal was that he had earlier made a disability discrimination claim against his employer. Mr Benali lost any right to notice pay because of his admitted gross misconduct but was successful in both his other claims before an employment tribunal. He was awarded £35,567 which included a basic award, a compensatory award based on one year's loss of earnings under the Employment Rights Act and an award of £14,000 for injury to feelings under the Equality Act. The Employment Appeal Tribunal upheld these findings. Consequently, although it seemed that the employer had the most clear cut of cases to justify dismissal for gross misconduct, this was undermined by what the tribunal regarded as the real reason of discrimination. Mr Benali felt that he had been regarded as a "problem employee" singled out for "special scrutiny" and, ultimately, the tribunal agreed. However, the Employment Appeal Tribunal did allow an appeal by the bakery owners on one ground; remarkably, no consideration had been given to any deduction for contributory conduct, and this was an error. The case was therefore sent back to the tribunal to consider the point.
Continuing the cakes and confectionery theme, Park Cakes Ltd v Shumba & Ors provides a useful summary of the typical factors to be looked at when deciding whether a particular benefit (in this case an enhanced redundancy payment) has become a contractual term.
call free on 08000 832 832 or e-mail firstname.lastname@example.org.
use our extensive resources on the Canter Levin & Berg Employment Solutions website.
If you have any enquiries about using the service or if you are interested in subscribing, please contact Martin Malone on 0844 561 1256 or e-mail email@example.com.
| © Canter Levin & Berg 2013|