The Employers Update - July 2010
Welcome to this month’s edition
of Employ!
As well as bringing to you the
latest development in HR and
Employment law we have a special
Summer offer to tell you about.
If you have any queries in relation
to the content of Employ, or any
employment issue, please call the
Employment Team on 0844 8000 263
or email
oliver.mccann@taylors.co.uk.
Oliver McCann - Partner and
Head of Employment
James Bellamy
- Employment Solicitor
Tel: 0844 8000 263
Email:
oliver.mccann@taylors.co.uk
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For a limited period only through the
summer holidays Taylors are offering all
readers of Employ a special offer in
relation to contracts of employment and
Staff Handbooks –
click her for full details
The annual statistics are out once
again. For 2009/10 there was a 56% increase
in the number of claims pursued to the
Employment Tribunal. This is mainly because
of multiple claims submitted in airline
disputes. However single claims were up by
14%, with a 17% increase in the number of
claims associated with unfair dismissal and
redundancy.
The Employment Tribunal Service has been
working hard increasing the number of
disposals by 22% - unfortunately however
this has not kept pace with the overall
increase in claims, some 400,000 claims
still outstanding. Statistics also show that
the Tribunal system is “clogged up”.
What do I need to know?
- With jobs at a premium dismissed
employees have little to lose in
pursuing a claim so if you do need to
dismiss ensure you have complied with
the ACAS Code of Practice on Discipline
and Grievances and that there is,
following a thorough investigation,
grounds for dismissal
- Consider taking professional advice
before you dismiss or make redundancies
– proactive advice is often much cheaper
than the costs associated with Defending
Tribunal claims
- Consider taking out Employer
Protection Insurance –
see Taylors scheme here.
There remains a significant number of
contractual redundancy schemes operated by
employers which provide for an enhanced
redundancy payment but which also have
limitations dependant on age.
Since the Employment Equality (Age)
Regulations 2006 were introduced it was
uncertain how the regulations would affect
such schemes. Slowly cases are beginning to
trickle through the system, which give an
insight on how the courts will approach such
issues.
A recent case confirmed that a contractual
redundancy scheme, although indirectly
discriminatory on grounds of age, was
justified as a proportionate means of
achieving a legitimate aim.
Kraft Foods had a generous redundancy
scheme. Due to the high levels under the
scheme a term of the scheme sought to cap
the level of payments under the scheme to a
sum of money the individual being made
redundant would have earned had they
remained in employment until the normal
retirement age of 65. For example if you
were 63 years old at the redundancy date
your payment would be capped at the salary
you would have earned between the redundancy
date and the date you would have been
retired at the normal retirement age. The
younger the individual the higher the cap
and so the higher the potential redundancy
payment. The older the individual the lower
the cap and so the lower the potential
redundancy payment.
The Claimant was made redundant at 62 years
of age. Under the scheme his redundancy pay
equated to £76,560. If there was no cap he
would have been entitled to £90,000.
The Employment Tribunal found in favour of
the Claimant. On appeal the Court over
turned the decision and found that the
Company’s aim was to compensate for the loss
of expectation of remaining employment but
to prevent employee’s receiving a “windfall”
payment greater than what they would be paid
if they remained in employment was a
legitimate aim and was proportionate.
What do I need to know?
- Many of the enhanced redundancy
schemes are likely to be indirectly
discriminatory of grounds of age and so
the emphasis must be on what the purpose
of the scheme is and whether that is a
legitimate aim and proportionate
- If you have such a scheme it needs
to be reviewed to ensure its legality
- Any such review should involve any
recognised trade union or employee
representatives – there support to the
scheme could be instrumental in
defending a claim if subsequently
challenged
The Employment Tribunals have a standard
no costs rule. This means that each party
bears their own costs of the litigation and
these cannot be recovered from your
opponent. There are exceptions where a party
behaves vexatiously or unreasonably in the
pursuit or conduct of the claim or where the
claim is misconceived.
At Taylors we robustly pursue costs against
Claimants wherever possible, making tactical
decisions throughout designed to enhance the
prospect of recovering costs against the
Claimant.
A recent case reaffirmed that Tribunals will
make awards of costs where a claimant
behaves unreasonably. In this case the
employee was dismissed by his employer for
numerous serious financial irregularities
cash discrepancies and diverting business
away from the employer amongst other things.
The claimant admitted many of the issues but
following dismissed pursued a claim for
unfair dismissal.
The Employer’s solicitors recognised that
the procedure followed was such that the
Claimant may well succeed in establishing
the dismissal to be automatically unfair for
a failure to comply with the statutory
dismissal procedures. As such the
specifically pleaded that regardless of any
procedural irregularities the claimants
conduct was 100% to blame for his dismissal
and as such any compensatory award should be
reduced to nil.
The Tribunal concluded the dismissal was
automatically unfair but accepted that the
claimant’s conduct was such that
compensation should be reduced to nil. On
the issue of costs it was held at appeal
that the Employer was entitled to claim
costs as the Claimant had been placed on
notice about the specific defence to be
raised by the Employer and despite the
overwhelming evidence to prove that conduct
(including admissions) the Claimant
nevertheless continued to pursue a claim.
What do I need to know?
Recovery of costs is possible but to improve
your prospects in this regard warning sounds
need to be regularly sent to the opponent
about the unreasonableness of their
behaviour.
When Lord Sugar says those words “your
fired” you know he is not changing his mind,
no matter any signs of hesitancy or
expressions of “with regret”.
What happens however when an Employer
advises an employee they have been dismissed
but then attempts to retract that decision.
Most cases arise from decisions made in the
heat of the moment and then retracted
quickly. Employment Tribunals look for
special circumstances where, having regard
to the circumstances, the dismissal words,
despite being clear, were not to be taken at
face value.
In a recent case an Employer who was
experiencing financial difficulties and
contemplating redundancies suggested to some
employees that they may wish to become self
employed on a retainer plus commission
basis. The Claimant expressed an interest
and requested detailed written terms of the
proposal. After repeatedly asking for the
written proposals without success, the
Claimant was eventually given an agency
agreement and a covering letter on 23rd
December. The letter stated that the
Claimant’s employment would be terminated
with effect 31st December. Following legal
advice the Claimant phoned the MD and
rejected the agency terms. She was called on
5th January and advised that there had been
a misunderstanding and if she did not want
to become self employed she did not need to
and could continue in her employment.
The Claimant maintained she had been
unfairly and wrongfully dismissed. It was
held that the clear and unambiguous words
are to be taken at face value. It had been
found that the reference to “termination” in
the letter had been intentional and not an
error. There was nothing ambiguous about the
letter. For a clear express dismissal to be
retracted such retraction had to done
quickly and in line with case law, within a
day or two. Here the retraction did not
occur until much later and the intervention
of the Christmas holidays was no excuse.
What do I need to know?
- It is critical to take care when
communicating dismissals or referring to
termination of employment – avoid
decisions in the heat of the moment and
take advice
- If you are unsure about an
employee’s stance, seek to clarify
before committing to a course of action
- If you make a mistake, act promptly
to retract that mistake
- It will de exceptionally difficult
to retract a dismissal unless there
ambiguity
A recent case has confirmed that stigma
damages will only be awarded where the
employee’s difficulty in finding new
employment is attributable to the dismissal.
A care home worker was dismissed amid
allegations that she was rough with
residents. At the time the employee was
working her notice period and had another
job lined up to go to. The Tribunal held
that the dismissal was automatically unfair.
When assessing compensation the employee
claimed that the Employers actions of giving
an unfavourable reference to her new
employer had resulted in the loss of the new
job she had lined up. Her claim for stigma
damages was dismissed as it could not be
said that the difficulties in obtaining new
employment were because of the unfair
dismissal, the Tribunal concluding that even
if the employee had been dismissed fairly an
unfavourable reference would still have been
given.
What do I need to know?
Claimants will always try and identify facts
which can be pleaded to enhance the value of
their claim. Case law confirms that an award
for unfair dismissal compensation can
include damages to compensate not only for
stigma arising from the process of
litigation, but for the damage to reputation
caused by a dismissal. So long as the
relevant events flow naturally from the
dismissal, compensation is recoverable (Chagger
v Abbey National 2010).
It is important, particular in the
professional industry or any industry
working with vulnerable people, that
employers act with care when dismissing an
employee. Follow contractual disciplinary
rules and ensure that there is sufficient
evidence to justify dismissal following a
thorough investigation.
Employers should also take care when giving
a reference. Unfavourable references maybe
subject to challenge by the employee who
alleges that it is factually inaccurate or
misleading. If you give a reference ensure
that you take care – all information must be
factually accurate and any statements made
in the reference should be qualified.
1. 1 Do we have to pay a self employed
consultant holiday pay?
This depends on whether the consultant is
required to perform work for you personally.
If you allow the consultant to send a
substitute in replacement of the Consultant
at their discretion then they are not a
worker and so not entitled to holiday pay.
If there is no right of substitution then
the consultant is a worker. Note that the
Employment Tribunal can ignore what is
expressed in writing to be the case if the
factual reality differs ie although there is
a substitution clause the Company would not
permit substitution then this clause would
be ignored and the individual would be a
worker. Your obligation is to pay 5.6 weeks
holiday per annum. It is worthwhile
reviewing the terms and conditions of your
contractors to ensure you are not exposed
from worker/employee claims.
2. We operate in professional services
and currently have a dress code which
requires all employees’ to be smart with
women wearing a skirt or dress and men
required to wear shirt, tie and jacket.
Recently a female employee has complained
stating she wants the right to wear a
trouser suit. Can we enforce our dress code?
Taking into account modern standards of
acceptable dress and conventionality I
believe it increasingly difficult for
employers to apply such a rule without the
risk of a successful discrimination claim.
Consider your stance if you employee a
female whose faith/culture requires her to
cover her legs. You would risk claims of
race, sex and religious discrimination.
Although you may persuade a Tribunal that
there is a legitimate aim ie setting a
professional tone to your customers, it may
be difficult to justify a requirement to
wear a skirt as proportionate that
legitimate aim can equally be achieved by
wearing a smart trouser suit.
I would review you dress code policy.
Perhaps you could insist on all employees
wearing “business suits” – this leaves it
open to females to elect to wear a trouser
suit..
Copyright 2006 - 2010 Taylors Solicitors
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