employee shareholder contracts – unwelcome, unworkable and unlikely to see the light of day

Posted on March 28, 2013 by Martin Malone

For some months I have been writing about the problems likely to be encountered in implementing the government’s proposed employee shareholder contracts, apparently a particular favourite of George Osborne. Just last month I referred to criticism from the Law Society and it now turns out that no sooner had Mr Osborne referred in the Budget to changes to facilitate the implementation of the new contractual arrangements than the whole plan was thrown out by the Lords the very next day and by a majority of 54. The contracts were initially due to be introduced on 1 April 2013 and recently put back to 1 September 2013 but it now remains to be seen whether the government will continue to push on with its plans – in the face of almost universal opposition from the full political and economic spectrum – or admit defeat. I am bound to observe that one might reasonably think that there are rather more important issues which should be occupying the government’s attention at the moment.

In the record of proceedings and along with delegating the planning functions of the Mayor of London, registration of town and village greens and development orders within the curtilage of a dwelling house (see my observations elsewhere concerning jumbled legislation) came the simple words “Clause 27 – Leave out Clause 27″, thereby at a stroke eliminating the proposals in their entirety. Continue reading →

new employment with the same employer or continuous employment throughout?

Posted on January 28, 2013 by Martin Malone

Welton v Deluxe Retail (t/a Madhouse) is a case concerning continuity of employment for the purposes of calculating qualifying service for statutory employment rights. Under these provisions, any week when the employee’s relations with his or her employer are “governed by a contract of employment” will count towards continuous employment.

The case came about after Mr Welton was dismissed by Deluxe on 23 February 2010 – a Tuesday – when they closed their Sheffield shop down. The working week ran from Sunday to Saturday and therefore ended on Saturday 27 February 2010. At some point in the next working week, he was offered, and accepted, a job at another of Deluxe’s shops, in Blackpool. He started work on 8 March, i.e. more than a week after the previous working week ended.

Mr Welton resigned from his employment by letter dated 11 December 2010. Consequently, if employment at both stores was treated as continuous then he had sufficient service in order bring his claim. However, if the employment at the Blackpool store did not count as continuing from his employment at the Sheffield store then he did not. It was found at a preliminary hearing that he was not offered employment before the Sheffield store closed and the earliest date on which an offer to employ him in Blackpool was made was on 1 March.

The question was – did his contract begin when he actually started work, in which case there was a one-week break in continuity, or did it start at the earlier date when he accepted the offer? Mr Welton (representing himself in The Employment Appeal Tribunal) put up three arguments:

1. that he should be seen as being subject to a contract of employment during the first working week after the termination of his employment at Sheffield;
2. that, if not, his absence was due to a "temporary cessation of work" and, therefore, not a termination of employment; or
3. if not, there was an arrangement, albeit after the event, that his absence should not break contunuity of employment. Continue reading →

when training schemes don’t add up

Posted on January 23, 2013 by Martin Malone

The Court of Appeal has considered the correct interpretation of provisions of the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 which exclude work under certain training and work experience schemes from the calculation of the period of successive fixed terms.

The Regulations provide that once an employee has worked for four years on successive fixed term contracts, he or she becomes a permanent employee, and is entitled to a declaration to that effect – which is what Mrs Hudson sought in her claim against the Department of Work and Pensions. She had been taken on in 2006 by the DWP as part of the New Deal (an excluded scheme under the Regulations), to get work experience, an arrangement which was originally for a one year fixed term, but was twice extended by a further year. When it expired, she was kept on for another year, with arrangements being made to help her broaden her experience and improve her job prospects. She then secured a further job with the DWP in open competition, which was not, this time, a training role.

The question was whether, once the employee was in a non-excluded position, previous training posts could be counted towards her successive fixed terms, or whether the wording of the Regulations meant that they should be permanently left out of the reckoning. The majority of the Court of Appeal took the latter view, and as Lord Justice Elias pointed out, if that were not the meaning of the exclusion, it would have the unfair result of discouraging employers who offer exempt training scheme contracts from offering further contracts at the end of training. However, I take the view that the preferred analysis can be found in the dissenting judgment of Dame Janet Smith

You might be forgiven for thinking that there is some skewed logic being applied in the majority decision, particularly with reference to the words "Prevention of Less Favourable Treatment" in the title of the Regulations. Is it really that much of a burden for employers that have, in one capacity or another, had someone working for them for four years, to have that contract effectively turned into a permanent contract? Is it really a disincentive to offers of training for employers to be concerned that after four years contracts might be treated as permanent? Is it really the function of the Court to offer what is, effectively a political and social analysis of what might not have been meant by an exclusion in Regulations?

Further, there are those (me included) who might see it as ironic that Regulation 18 provides that: Continue reading →

the unsigned contract in the desk drawer bites back

Posted on November 27, 2012 by Martin Malone

It’s a familiar scenario: after a promotion, an employee is sent a new contract to sign. It includes some new benefits, but also there are some post termination restrictions in there. The employee looks it over, perhaps, then tucks it away at the back of a drawer to deal with later, or with no intention of ever signing it. Fast forward a few years – that employee has left his job, and is working for a new employer. Can his old employer enforce those post termination restrictions, even though the employee never expressly agreed to be bound by them?

The question of whether a contract of employment which is unsigned is nonetheless effective is one that is often asked and it is therefore very helpful to have some guidance from the Chancery Division of the High Court. Often much emphasis is placed on the obligation for an employer to provide a written statement of main particulars of employment within eight weeks from the start of the employment. Failure to do so gives the employee the right to complain to an employment tribunal and to ask the tribunal itself to specify the written particulars. If combined with another or other claim(s) there may also be a right to compensation. However, what is generally far more important for an employer is whether it can rely on the terms of a contract which has been issued to an employee but which has not been signed

According to Mr Justice Hildyard in FW Farnsworth Ltd & Anor v Lacy & Ors the employee may be bound by the terms in the contract.

Paul Lacy and Maria Yuste worked for FW Farnsworth Limited and Northern Foods Limited. It was alleged that during the course of their employment they passed confidential information to a competitor, Pooles of Wigan Limited. Additional defendants, Neil Court-Johnston, Bobella Limited and Joanne Kenedy (sic) were alleged to have participated in the conspiracy.

In 2009 Mr Lacy was issued with a contract which contained restrictive covenants which, for example, prevented him from working for a rival business or soliciting defined customers for a period of six months following the termination of his employment. He had also been issued with a contract in 2003 which did not contain any such restrictions. The key question was whether he was employed under the 2003 contract or the 2009 contract. He had started work in 2000 and signed the 2003 contract when it was issued to him. In 2009 he progressed to the position of Site Technical Manager. Some time after this appointment, in September 2009, he was issued with the 2009 contract which he neither signed nor returned.

The employer maintained that he had impliedly accepted the terms of the 2009 contract because he applied for and received additional benefits which were only available under the 2009 contract, specifically a move to a defined contribution pension scheme and medical benefits for him and his family. In response Mr Lacy maintained that neither of the matters were so unequivocally referable to the 2009 contract as to imply that he was bound by its terms.

Continue reading →

is a lap dancer an employee?

Posted on May 21, 2012 by Martin Malone

The Employment Appeal Tribunal has considered the employment status of a lap dancer, Nadine Quashie, who worked at a Stringfellows club. She had made a claim for unfair dismissal, which had been rejected by an employment tribunal on the ground that she was not an employee and therefore not entitled to claim. Overturning this decision, the EAT looked at the three essential elements of an employment contract – the obligation to carry out work personally, the element of control over work by the employer, and mutuality of obligation and found all of these were present.

Continue reading →

Court of Appeal critical of heavy handed attempt to injunct former employee

Posted on March 23, 2012 by Martin Malone

In Caterpillar Logistics Services (UK) Ltd v de Crean, the Court of Appeal has upheld the refusal of an injunction application against a former employee.

Mrs de Crean had worked in a senior capacity and had a contract which included a confidentiality agreement but did not include terms restricting her activities after her employment ended. Three weeks after she resigned to join another company, the employer, with no prior warning, sent a long letter to her threatening legal proceedings. It made allegations of misconduct and demanded that she give undertakings not to use or disclose confidential information as they defined it, and also agreeing not to carry out certain areas of work in her new job. She was not prepared to give undertakings in these terms and the employer attempted to seek an injunction, first in the High Court and then in the Court of Appeal.

Both courts refused the application, and were highly critical of the employers’ over-reaction to the situation and their high-handed actions Continue reading →

can a Christian be required to work on Sundays?

Posted on February 27, 2012 by Martin Malone

I have often written about the surprising extent to which protection is available from discrimination on the ground of religion or belief or, for that matter because of having no religion or belief. It is therefore perhaps surprising that one of the central tenets of Christian faith, rest on a Sunday, is not something to which Christians are necessarily entitled. There are special rules for shop workers and betting workers but apart from these sectors, unless the contract of employment states otherwise, it is usually possible for employers to insist on employees working on Sundays, even if they are devout Christians. The point was recently confirmed in the employment tribunal case of Celestina Mba v Merton Council. Miss Mba worked for Merton Council at Brightwell Respite Care House in Morden for three years. She was required to work on Sundays since the Council said it had a duty to ensure children had weekend care. Miss Mba said she was prepared to work night shifts and on Saturdays in order to avoid having to work on Sundays. However, the tribunal found that there was no viable alternative to her working on Sundays.

The tribunal also took into account evidence from witnesses including Michael Nazir-Ali, former bishop of Rochester, and concluded that not working on Sundays was “not a core component of the Christian faith” because it was observed by some and not by others. Continue reading →

no compensation for manner of dismissal

Posted on February 27, 2012 by Martin Malone

In Edwards v Chesterfield Royal Hospital and Botham (FC) v Ministry of Defence the Supreme Court revisited the question of whether, over and above any right to compensation for unfair dismissal, employees can recover damages for the way in which they have been dismissed and specifically in the situation where the employer has failed to follow a contractual disciplinary procedure.The cases of Mr Edwards and Mr Botham concerned the same issues of law and were therefore considered together.

It has been long been clear that there is no scope for damages for injury to feelings being awarded in a claim for breach of contract (as opposed to a discrimination claim, where compensation for injury to feelings is established by statute). Numerous attempts have been made, however, to try and establish the possibility that a separate claim might succeed where an express term had been broken, rather than the implied term of mutual trust and confidence. The Supreme Court, by a majority, has now excluded that possibility, rejecting the suggestion that breach of a disciplinary procedure followed as part of the dismissal process can somehow be seen as independent of the dismissal itself. To do so might take it outside the rule excluding separate damages for the manner of dismissal – something the Supreme Court considered Parliament had intended should be fully encompassed within the statutory protection against unfair dismissal.

Continue reading →

more TUPE and variation of terms

Posted on November 22, 2011 by Martin Malone

The EAT has given further helpful guidance on determining whether a variation to terms and conditions after a services transfer pursuant to TUPE 2006 falls within the ambit of Regulation 4(4) and Regulation 7(1) (automatically unfair dismissal for a reason connected with the transfer) of TUPE 2006. The decision in Enterprise Managed Services Ltd v Dance is arguably of greater relevance in today’s work environment than that in Smith v Brooklands (also reported this month) since it concerns re-tendering between contracting businesses. However, the EAT in Dance follows the same approach as that in Brooklands (unsurprising since the leading judgment was given by HHJ McMullen in both cases).

In this case, Mr Dance and others were employed by Williams which, along with another contractor, Enterprise, provided services to MHS. From around October 2008 meetings were held between MHS and its contractors emphasising, amongst other concerns, budgeting constraints and the requirement that future services would have to be provided at reduced cost but achieve high service performance. Both Williams and Enterprise depended on MHS for the supply of work. In January 2009 Enterprise reviewed terms and conditions for its workers, introducing performance related pay and different hours. These altered terms were accepted by its staff. Williams made no changes but lost the contract and Mr Dance and others transferred by operation of TUPE to Enterprise in April 2009. Continue reading →