Employment Writes
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Employment Writes October 2012 Well, autumn has definitely arrived! In this month’s issue, whilst the leaves start falling, we learn that the number of claims issued in Tribunal has fallen also. We remind ourselves of some basic, but important employment law principals by looking at four interesting Employment Appeal Tribunal cases which have been decided over the summer. We also summarise the Coalition Government’s brand new proposals, which are set to significantly change the landscape in the world of Employment Law.
Tribunal Statistics Published The annual Employment Tribunal statistics, detailing the number of claims and the level of Tribunal awards, have been published for the period 1 April 2011 to 31 March 2012. The overall number of claims has, once again, reduced. At 186,300 claims, there was a 15% reduction on the previous year, so good news for the over stretched Employment Tribunal system. Reflecting the current economic climate of increasing redundancies and TUPE transfers, the two areas where claims have increased, relate to the failure of employers to inform and consult, in both the redundancy and TUPE situations. These can be potentially costly claims for the employer, with the Tribunal having the power to award up to 13 weeks’ gross pay for each affected employee in a TUPE situation and up to 90 days’ gross pay in a redundancy situation. There is no cap on the level of award made and to further add to the sting, where there has been no consultation at all, the Tribunal’s approach is to start from the maximum amount and only to reduce the award where it can find mitigating circumstances. The average award for an unfair dismissal claim was £9,133, with the maximum amount awarded of £173,408. The highest amount awarded across all claims was £4,445,023 for a race discrimination claim, which far exceeded any award in any other category of discrimination. Interestingly, the number of costs awards made by Tribunals has increased significantly, with the majority being made in favour of respondents, demonstrating a more stringent attitude of Tribunals to unmeritorious claims and vexatious litigants.
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Employment Writes October 2012
When Can An Employer Have A Pool Of One For Redundancy? The EAT overturned a finding from a Tribunal that a golf club steward had been unfairly dismissed because the employer had not considered the possibility of establishing a selection pool when planning a redundancy. The golf club had told the steward that the role had been included within ‘a pool of one’ as he was the only employee who carried out that particular role. The Tribunal held that he had been unfairly dismissed as no consideration was given to establishing a pool or considering the overlap between the different tasks carried out by the steward and other employees. The EAT concluded that a pool of one employee can be fair and has remitted the case to a freshly constituted Employment Tribunal, to consider whether it was within the range of reasonable responses for the club, once it had decided that the role of club steward was to disappear, to make the steward redundant without developing a pool. Wrexham Golf Club Company Ltd -v- Ingham (UK EAT/0190/12) This serves as a reminder for employers, in circumstances where there seems to be a ‘self-selecting role’ for redundancy purposes, to at least apply their minds to whether it would be appropriate to use a wider pool of roles to select from, even if the answer is ‘no’.
Mutual Trust And Confidence - Once It Has Gone Has It Really Gone? The EAT agreed with a Tribunal’s decision that there was no breach of trust and confidence when an employer upheld an employee’s complaint against his line manager. The employee had resigned as a result of malicious and spurious disciplinary action which his line manager had taken against him. The EAT distinguished the 2011 case of Buckland -v- Bournemouth University, in which the EAT held that, once a repudiatory breach had happened, it could not be cured and it then remained open to the wronged employee to resign and claim constructive unfair dismissal. This case was different, because the line manager’s conduct by itself was not serious enough to damage trust and confidence, and the employer’s subsequent actions prevented the situation developing into such a breach. Assamoi -v- Spirit Pub Company Services Ltd (UK EAT/0050/11)
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Employment Writes October 2012 A breach of the implied term of trust and confidence, which so often forms the basis of a constructive unfair dismissal claim, can be prevented, but not cured. We are therefore reminded of the importance of dealing with grievances swiftly and thoroughly before matters are allowed to escalate.
TUPE Related Unfair Dismissal - Reengagement Order The EAT has upheld a Tribunal’s finding that two employees, who were dismissed for failing to agree to new terms, including a pay cut, 10 months following a TUPE transfer, were unfairly dismissed. The employer alleged that such changes were being made to achieve efficiency savings. The EAT agreed that the reason for the dismissal was an economic, technical or organisational reason, but that it did not ‘entail changes in the workforce’, despite the fact that the employer had made 200 staff redundant. This was because the redundancy process had concluded and was therefore separated in time from when the employees were offered new terms. The EAT upheld the Tribunal’s decision that the dismissals were automatically unfair. The EAT also upheld the Tribunal’s order for re-engagement of the employees at their old rate of pay, with the proviso that they would not receive any pay rises until their colleagues (who had agreed to the new terms) had caught up. Manchester College -v- Hazel and an Other (UK EAT/0642/11) The Tribunal will closely examine the real reasons for and circumstances surrounding any dismissals or contractual changes. In order to avoid a finding of automatic unfair dismissal, an employer will need to show that the dismissal or contractual changes are either unconnected with the TUPE transfer or, if connected, are for an economic, technical or organisational reason, which entails changes in the work force. The ‘changes to the workforce’ can be to the number of employees or the functions performed by employees, so genuine redundancy or restructuring exercises will be captured by this definition. This case highlights the importance of ‘timing’ the ‘changes in the workforce’ to coincide with the process of facilitating contractual changes.
TUPE Related Unfair Dismissal - Failure To Mitigate The EAT upheld a Tribunal’s decision that two employees who were unfairly dismissed following a TUPE transfer had not failed to mitigate their loss by refusing the new employer’s offer of self employment.
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Employment Writes October 2012 The employer had won a tender to provide window cleaning services to a Local Authority. The new employer denied that the two employees were transferred to their employment under TUPE. Two weeks after the transfer date, the new employer contacted the two employees and offered to engage them as self employed contractors, with no guarantee of regular work and significantly worse conditions. The two employees refused the offer and brought claims for unfair dismissal. The EAT rejected the new employer’s arguments that the two employees had failed to mitigate their loss by not accepting these offers, finding that the two employees had not acted unreasonably. In any event, no duty to mitigate had arisen until after the actual dismissals, which occurred after the point when the two employees rejected the offer. F & G Cleaners -v- Saddington and Others (UK EAT/0140/11)
Stop Press - Coalition Announces Employment Law Changes 1. Unfair Dismissal Compensation. The Coalition has added a clause to the Enterprise and Regulatory Bill to allow for unfair dismissal compensation limit to be varied from the current £72,300.00 to the lower of either: 1.1
An amount more than £25,882.00 (annual median earnings) but less than £77,646.00 (3 times annual median earnings); or
1.2
12 months’ net pay of the individual concerned.
It is interesting to note that the definition of ‘a week’s pay’, to be used in calculating 1.2 above, disregards pension loss. Currently this may be added to the compensatory award calculation (subject to the cap), so claimants (particularly those in generous pension scheme) are likely to be significantly worse off. 2. Settlement The Coalition launched a consultation paper “Ending the Employment Relationship”, seeking views on the use of settlement agreements (which will replace the old compromise agreement), including an optional model agreement, letters of settlement and the use of a guideline tariff. Whilst finding ways to simplify the termination
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Employment Writes October 2012 process between employer and employee is welcomed, the Government’s proposals underestimate how complicated this area of law can be. Without knowledge of Employment Law, it would be easy for employers to leave themselves exposed to employment tribunal claims they believe they had settled or indeed to unwittingly create additional claims. The risk is demonstrated by the fact that the list of potential claims from the model settlement agreement runs to five pages. The Coalition initially announced the introduction of “protected conversations” in the workplace, along with ‘no fault dismissals’ but these proposals have been swiftly abandoned on the basis that they would create a field day for lawyers. The Statutory Code of Practice, to be drafted by ACAS, will set out a recommended approach for employers wanting to explore a negotiated exit with an employee, which includes the principle that any settlement offers should be inadmissible as evidence in unfair dismissal cases. This of course leaves such conversations as admissible evidence in claims of discrimination, breach of contract, whistle blowing and automatic unfair dismissal. Employment Lawyers remain concerned that this framework has the potential to complicate matters and give rise to satellite litigation as last seen with the disastrous Statutory Disciplinary and Statutory Grievance Procedures. 3. Employment Tribunal Reform The Coalition has also set out a consultation on proposed changes to the Tribunal System. One of the key changes is the introduction of a sift stage for new Tribunal claims with the power to strike out unmeritorious claims. This means that every case will be reviewed by the Employment Judge on the submission of the claim and response forms, to consider directions and strike out aspects where the claim has no reasonable prospect of success. While this sounds attractive, there is some scepticism about how robust it will be in practice, given the resources that will be necessary to have every case reviewed by a Judge before Hearing. Further, it is likely that very few cases will be knocked out as many cases involved evidential dispute between the parties about what actually happened. Judges won’t be able to decide such disputes without hearing all the evidence. There are other changes, planned for summer 2013, such as the introduction of fees for bringing Employment Tribunal Claims which will also have an effect of weeding out
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Employment Writes October 2012 weak and vexatious claims as well as the proposal in the Enterprise and Regulatory Bill that workers must involve ACAS for 1 month before the Tribunal can accept a claim. 4. A new species of employee/owner? The Chancellor, George Osborne, has put forward proposals for a new method of working for employees willing to trade off their employment rights in exchange for tax free profits. The proposal suggests that an employer of any size would be able to offer a new starter a package of shares in exchange for that employee/owner forfeiting any right to request flexible working, time off for training, and if the relationship ends, any claim for unfair dismissal (except automatic unfair dismissal) or redundancy. The added sweetener for the employee/owner is that between £2,000 and £50,000 worth of shares will qualify for a total CGT exemption. Commentators suggest that this is simply the Coalition’s ‘no fault dismissal’ via the back door. The Government aims to introduce such measures by April 2013. In reality this timeframe is unlikely to be achieved, given that they will need to consult on the proposals and draft legislation. The consultation document can be found at: http://www.bis.gov.uk/assets/biscore/employment-matters/docs/c/121215-consultation-on-implementing-employee-owner-status and is open until 8 November 2012.
Contact Us For more information please contact: Charlotte Cooper Head of Employment Plexus Law T: 01386 769179 E: charlotte.cooper@plexus-law.co.uk
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