yet another TUPE update

Posted on February 27, 2012 by Martin Malone

To add to the panoply of TUPE cases, we have four useful decisions this month which illustrate the impact of the Regulations. Three out of the four, Enterprise, Pannu and Hunter, all deal with the scope of the rules applying TUPE to service provision changes (SPCs), which, as all our regular readers know, are not a matter of European law, but our very own wonderful invention. The cases consider situations where there is a change in the nature of the activity, the situation where the same services are provided but for a different client, and what amounts to a provision of a service, rather than the supply of goods.

In Enterprise Management Services Ltd v Connect-Up Ltd, the Employment Appeal Tribunal considered the break-up of a contract for the provision of IT support services to Leeds schools. Enterprise provided the services as a preferred supplier, under a contract which left schools free to go elsewhere if they so wished – which some did, to two other providers. At the end of the contract suppliers were invited to tender for a new contract which excluded about 15% of the work covered by the previous arrangement. Those tendering included Connect-Up, who were already providing IT support to some schools. The new contract also allowed schools to choose from a number of suppliers, and over half opted for Connect-Up. Employees dismissed by Enterprise when they lost the contract were found not to have transferred to Connect-up as the major provider of IT services after the new contract came into force for two reasons: Continue reading →

employee references – the potential minefield that is the requirement to be true, accurate and fair

Posted on October 26, 2011 by Martin Malone

Many employers are wary of giving references, fearing they will end up in a no win situation. They may find themselves at the wrong end of a claim either by a new employer complaining that a reference was misleading, or by a former employee complaining that they have not got a job because the reference given was not true, accurate and fair. They are probably right to be wary – there is no universal obligation to give a reference, but if an employer does choose to give one, it is undoubtedly true that care needs to be taken when writing a reference.

Where an employee leaves during the course of a disciplinary or performance procedure, it would be misleading to prospective employers to fail to mention this, but what of the position where misconduct or a professional failing is discovered after the employee has left?

The Court of Appeal considered this in the case of Jackson v Liverpool City Council, where after a social worker had left his job at the Council, a number of issues were raised by clients which suggested record keeping failings on his part. When he later applied for a further job and a reference was requested, the Council gave a reference indicating that had he not left, he would have been subject to a form of performance management, but that the issue had not been investigated. The reference met the requirements of being both true and accurate – but was it fair? Continue reading →

principles for uplifting compensation and calculating loss of earnings

Posted on July 19, 2011 by Martin Malone

The general purpose of damages and compensation in civil cases in UK law is (so far as money can do so) to put the winner of a case as nearly as possible in the position he would have been if he had not been wronged. Hence compensation is generally unlimited, although there are, of course, statutory limits in certain cases, such as the cap on the compensatory award that an employment tribunal can order in unfair dismissal cases (currently £68,400).

The Court of Appeal has recently given new guidance on how courts and tribunals should approach two particular issues which can arise in the calculation of compensation in employment cases Continue reading →

Newsletter – circumventing statutory compensation limits

Posted on July 25, 2010 by Martin Malone

Mr Edwards was a consultant surgeon working for the Chesterfield NHS Trust. He was dismissed for gross misconduct and subsequently was unable to find employment within the NHS.

Rather than claiming unfair dismissal at an employment tribunal, where compensation is limited by statute (currently to an absolute maximum of £76,700), he brought a breach of contract claim in the High Court where there is no limit on the amount which can be awarded. He claimed a huge amount, a little under £4.3m including a sum in excess of £3.8 million for loss of future earnings.

He was able to go to the High Court rather than an employment tribunal because he was able to show that the Trust was in breach of contract. It had failed to follow the disciplinary procedures which were set out in his employment contract. In particular his employment contract provided that a person with legal qualifications should have chaired the panel which considered his case, that a clinician of the same medical discipline as himself should have been on the panel and that he should have been allowed legal representation at the hearing. The disciplinary procedure operated by the Trust in his case suffered from defects in all those areas. He claimed that if the procedure had been handled correctly, in accordance with his contract, no finding of misconduct would have been made and he would not have been dismissed.

At first instance he won a pyrrhic victory (the Court said his claim could proceed but intially ruled that damages would be limited to loss of earnings for the contractual three months’ notice period, later varied to include damages in respect of the period during which he would have remained employed while a disciplinary procedure which complied with the terms of his contract ran its course).

He has now won a more substantial victory in the Court of Appeal. The Court of Appeal has agreed with him that damages should include compensation for loss of the chance of staying in employment.

That is quite significant. It means that an employee can, in appropriate cases, be eligible to win damages far in excess of the amount an employment tribunal can award for unfair dismissal. However this will not be an open door to huge claims. Thus in a misconduct case the employee would have to show that he had been dismissed after a disciplinary hearing conducted in a way which was seriously out of line with his contractual entitlement and that there was a genuine chance that he would not have been dismissed had the hearing been properly conducted.

No doubt in the real world it is unlikely that these conditions would often be fulfilled but even so this is a salutary warning to employers. Advice should be taken from us in good time and always before disciplinary proceedings take place, to ensure that the risk of “getting it wrong” is minimised.

Newsletter – rewards for failure

Posted on July 25, 2010 by Martin Malone

It’s not only private sector bank chiefs who can be handsomely rewarded even though they have presided over disasters. One reason for what can sometimes appear to be unwarranted generosity is of course self-interest: senior directors are usually aware of any dirty linen there may be in their employers’ cupboards and an important part of the compensation packages they negotiate is often their agreement to keep quiet, euphemistically referred to as a “confidentiality clause”. That, of course, can be worth a lot.

In a recent public sector example, the former chief executive of Maidstone and Tunbridge Wells NHS Trust (a Ms Rose Gibb) resigned from her job in October 2007. This was just a few days before publication of a report on an outbreak of the clostridium difficile “super bug” which had caused the deaths of 90 people. Ms Gibb was not, of course, personally responsible but the outbreak occurred on her watch and the report said there had been ‘a significant failing on the part of the Trust which failed to protect the interests of patients’.

To the outrage of many, including Alan Johnson who was then Secretary of State for Health, the Trust had agreed to pay Ms Gibb a “compensation package” of around £250,000. As normal, the agreement included confidentiality clauses. Given the public outcry when the amount became known, the Trust quickly changed its mind. Although it had agreed to pay around £250,000 it refused to hand over more than the “pay in lieu of notice” part of it. That was £75,000 but was not enough to satisfy Ms Gibb. As the Trust had agreed to pay more it was perhaps understandable that she sued for the £175,000 balance.

The High Court rejected her claim, holding that the agreement was so unreasonable that it was void (see for example BBC News of 28 April 2009 “Bug scandal boss loses pay fight“). Ms Gibb appealed to the Court of Appeal. Not surprisingly, as the case concerned legal rights rather than moral ones, she has won.

Basically, the Court of Appeal’s reasoning was simply that the agreed payment was not irrational (the Trust’s lawyers had advised that Ms Gibbs could win up to £250,000 if she was dismissed) and that the High Court must not act as auditor or substitute its own view as to what was reasonable for the view of the Trust. In any event, and perhaps rather more controversially in the circumstances, the Court thought that “…£240,000 was not on its face outlandish compensation for the arbitrary termination of a career which it was unlikely Ms Gibb would be able to resume or resurrect“.

Parts of the Court of Appeal’s unanimous judgment of 23 June 2010 make wonderful reading. Lord Justice Sedley referred in passing to the execution of Admiral Byng in 1757, saying “It seems that the making of a public sacrifice to deflect press and political obloquy, which is what happened to [Ms Gibb], remains an accepted expedient of public administration in this country“.

Even though he agreed that Ms Gibb should have the full £250,000 Sedley LJ pointed out that profligate expenditure by a public body is not beyond the reach of the courts. He referred to an entertaining 1894 example of judicial auditing of civic expenditure. Councillors had been inspecting a waterworks in the Wicklow Hills and had had a rather good picnic lunch at public expense. They were appealing against a surcharge imposed on them as a result but got little sympathy from the judge who said:

“I think it is relevant to refer to the character of this luncheon. I have before me the items in the bill. Amongst the list of wines are two dozen champagne – Ayala 1885 – a very good branch – at 84s a dozen; one dozen Marcobrunn hock – a very nice hock; one dozen Chateau Margaux – an excellent claret; one dozen fine old Dublin whiskey – the best whiskey that can be got; one case of Ayala; six bottles of Amontillado sherry – a stimulating sherry; and the ninth item is some more fine Dublin whiskey… There is an allowance for brakes; one box of cigars, 100; coachmen’s dinner; beer, stout, minerals in siphons, and ice for wine. There is dessert and there are sandwiches, and an allowance for four glasses broken – a very small number broken under the circumstances …”

all Ismaili arbitration panel unlawful under Religion or Belief Regulations

Posted on June 23, 2010 by Martin Malone

Although not at first glance an employment law matter, the recent Court of Appeal decision in Jivraj -v- Hashwani is an interesting example of the application of the Employment Equality (Religion or Belief) Regulations 2003.

The parties entered into a commercial contract which included an arbitration clause requiring arbitrators to come from a certain religious group. The clause required one appointment from each party and the third to be the President of HH Aga Khan National Council for the United Kingdom. It was further stipulated that all arbitrators should be “respected members of the Ismaili community and holders of high office within the community”. One of the parties sought to have an arbitrator appointed who was not a member of the community. The other party then sought the appointment of a sole arbitrator under the Arbitration Act 1996 because the subsequent introduction of the Religion or Belief Regulations had rendered the “Ismaili only” stipulation invalid.

In the High Court Mr Justice David Steel took the view that arbitrators are not employees and therefore the apointment of the sole arbitrator under the 1996 Act was invalid. He also took the view that even if arbitrators were subject to the 2003 Regulations they would be exempt on the basis of a “genuine occupational requirement” that the arbitrators should be Ismailis.

The Court of Appeal took a different approach but achieved (at least in part) the same result. It was held that an arbitrator is employed by a person to provide a service. “Employment” under the Regulations includes any contract personally to do any work and work covers the provision of services of any kind. Consequently, arbitrators are employees in this sense and therefore subject to the Regulations. Incidentally, in this context it made no difference whether arbitrators are employed or self-employed in the tax sense; they are still employees within the meaning of the Regulations.

Because membership of the Ismaili community was clearly not a necessary qualification in order to act as an arbitrator, the “genuine occupational requirement” exception could not be effectively invoked. Consequently, the arbitration clause fell foul of the 2003 Regulations and failed in its entirety. However, the appointent of the sole arbitrator under the 1996 Act was also invalid so the result was effectively the same.

There are two important matters highlighted by this decision. First, the imposition of a religious qualification to perform a function, even if it falls outside the scope of regular employment, renders the performance of that function liable to an effective challenge under the Regulations. Perhaps the most obvious example is a recruitment panel for the appointment of a teacher. Evidently, a panel deliberately made up of members of one faith would breach the Regulations. However, applying the same principle, any stipulation based on faith would in such circumstances place the legitimacy of the panel to perform its function at risk. For example, even the appointment of one person (for example, the parish priest) if that person was appointed on the basis of his or her religion could invalidate the entire panel as an effective decision-making body. There is obviously scope for a good deal of litigation resulting from this.

Second, the decision shows just how widely the Regulations (and, by implication, most other equality / anti-discrimination legislation) can be applied. The interpretation of what constitutes “employment” as applied in this case is one of the widest ever seen and opens up all manner of day-to-day functions to protection under the Regulations. It is to be expected that we will see some very imaginative applications of the Regulations and consequent claims in coming months. The issue is also likely to cause further friction between secular and religious bodies which has already been a lively issue in 2010 as reported in earlier blog posts.

You can read the Court of Appeal decision which was delivered on 22 June here.

damages for breach of contract – £4.3 million claim

Posted on June 7, 2010 by Martin Malone

It is widely thought that a claim for damages resulting from a breach of the terms of a contract of employment is limited to what would be recoverable if the contract was lawfully terminated. This generally equates to the value of pay and other benefits for the contractual notice period.

However, this basis of assessment was challenged in the case of Michael Edwards -v- Chesterfield Royal Hospital NHS Foundation Trust which was recently considered by the Court of Appeal.

Mr Edwards is a surgeon and he appealed against a decision of the High Court concerning the amount of damages recoverable for his wrongful dismissal claim. He was dismissed for gross professional and personal misconduct. However, he maintained that the disciplinary procedure was not correctly applied in his case and that, had it been, a finding of misconduct would not have been made. He claimed £4.3 million comprising losses to the date of the the proceedings, future loss of income to retirement and loss of pension benefits. The High Court decided that losses should be restricted to losses arising during the contractual notice period of three months.

On appeal, it was held that he was entitled to losses for the notice period plus the time it would have taken for the disciplinary process to run its course.

On further appeal to the Court of Appeal the question was whether he could recover “damages at large” (i.e. not restricted to the time taken for the disciplinary process and the notice period provided for in the contract of employment). The court was asked to take into account the extent of damage and loss of status resulting from the dismissal as a basis for a much greater award of damages. It was submitted that because the contract of employment did not expressly exclude the type of damages he was seeking to recover, he should be awarded compensation “in full”. Mr Edwards also relied on the Human Rights Act, taking into account that public authorities as monopoly employers, were obliged to treat their employees fairly.

The Court of Appeal considered the leading judgment of the House of Lords in Johnson -v- Unisys Ltd. This decision provides that the common law does not imply a term into a contract of employment that an employer will not act unfairly towards an employee concerning the circumstances of dismissal. However, the appeal judges noted that it was recognised in Johnson that if a breach of contract was established, damages are not necessarily limited to payments due under the contract. Accordingly, assuming that Mr Edwards was successful with his substantive claim, the scope of damages should not be restricted as submitted on behalf of the Trust.

Further, the judges noted damages could take account of the loss of opportunity to hold the post of surgeon with the NHS.

The decision has a potentially wide application, particularly in respect of employees who may suffer a loss of status as the result of a dismissal. As demonstrated in this case, the value of such claims can far exceed the statutory limit on compensation for unfair dismissal (currently £65,300).

As with so many cases the decision emphasises just how important it is for employers to make sure that contractual documentation is properly drafted (and kept up to date) and that procedures are scrupulously applied. CLB Employment Solutions is designed to ensure that you have the peace of mind which comes with knowing that your employment and HR procedures are applied with the continuing assistance of specialist employment lawyers.

You can read the judgment here.

unfair dismissal – procedurally unfair but what if it might have been fair

Posted on May 17, 2010 by Martin Malone

Many employment judges regard the frequently made distinction between procedural and substantive unfairness as artificial and there is judicial authority to support that view.

Now that the ill-fated Employment Act 2002 (Dispute Resolution) Regulations 2004 (which imposed mandatory procedures) have been scrapped, the hoops which an employer needs to get through to avoid a finding of unfair dismissal or facing increased compensation are not as onerous as they were.

Employers can also rely on section 98A(2) of the Employment Rights Act 1996 which provides that:

…failure by an employer to follow a procedure in relation to the dismissal of an employee shall not be regarded for the purposes of section 98(4)(a) [need to act reasonably in all the circumstances] as by itself making the employer’s action unreasonable if he shows that he would have decided to dismiss the employee if he had followed the procedure.

However, what happens if an employer doesn’t raise this point specifically at an employment tribunal hearing. This was the issue for the Court of Appeal in Salford Royal NHS Foundation Trust -v- Roldan (13 May 2010). The appellant, a Filipino nurse, was recruited from Singapore and employed by the Trust from 2003 until she was summarily dismissed for gross misconduct in October 2007. It was alleged that she had ill-treated a patient. An appeal by way of a re-hearing was unsuccessful.

The consequences for her were severe. There was a police investigation and in addition to losing her job, she also lost her work permit and the right to remain in the United Kingdom. She was prosecuted but acquitted.

Employment lawyers often refer to a Polkey dismissal (after the House of Lords case of that name) which concerns what should happen if, where they have not, dismissal would hav been the result had fair procedures been followed. Put as simply as possible, if an employer satisfies an employment tribunal on the balance of probabilities that an employee would have been dismissed even if fair procedures were applied, the dismissal must be held to be fair. If there was a chance of a fair dismissal in such circumstances but less than a 50% chance, the dismissal should be found to be unfair but compensation can be reduced to take account of the possibility of a fair dismissal.

In Ms Roldan’s case the employment tribunal found that the procedure applied was unfair and that the dismissal was unfair. At a remedy hearing, the tribunal refused to apply a Polkey reduction because there was no evidence to suggest that dismissal would have followed if correct procedures were followed. The tribunal also refused to hear an argument on behalf of the employer concerning the application of section 98A(2) (above) because it had not been raised at the main hearing.

The Employment Appeal Tribunal disagreed and found that the alleged procedural failings did not in themselves establish unfairness. The EAT also took the view that the tribunal should have considered section 98A(2) and allowed further evidence from the Trust.

The Court of Appeal has disagreed with the EAT and restored the decision of the tribunal. The tribunal was entitled to conclude that the dismissal was unfair. Justification of the tribunal’s decision was reinforced by seriousness of the consequences for Ms Roldan (A -v- B [2003] IRLR 405 (EAT)). Perhaps the most important part of the decision is that the Court of Appeal decided that the tribunal was right not to consider submissions or further evidence concerning the possible application of section 98A(2). This should have been dealt with at the initial hearing and there was no error of law in the tribunal’s refusal to revisit the issue.

The case reinforces the need to make sure that all relevant submissions are dealt with at the tribunal hearing. In all cases in which the employer may be vulnerable from a procedural perspective, section 98A(2) must be raised in the course of the main hearing; otherwise it can be expected that the opportunity to do so will be lost.

inconsistent to use “fair blame policy” and then dismiss for gross misconduct

Posted on March 25, 2010 by Martin Malone

West London Mental Health trust operated a “fair blame policy”, an informal procedure designed to deal with fairly low level breaches of conduct. the Trust had received complaints about Mr Sameer Sakar, a consultant psychiatrist, alleging conduct which was “harassing and distressing” and had the effect of leaving other staff “vulnerable and intimidated”. Following an investigation the Trust commenced its informal procedure. However, while the investigation was continuing Mr Sakar was alleged to have engaged in further inappropriate conduct including making an abusive telephone call, acting aggressively towards a security guard and complaining to a professional body about a colleague who had herself complained about him.

The sanction of unfair dismissal was not available under the informal procedure. However, the process broke down at a meeting at which the Trust’s director said that she would send a report about Mr Sakar’s behaviour to the GMC. There followed a disciplinary hearing which led to Mr Sakar’s dismissal for gross misconduct.
An employment tribunal found that Mr Sakar was unfairly dismissed because the fair blame policy implied that the conduct complained about was relatively minor so that summary dismissal would not be an appropriate response. The tribunal also found that the Trust’s director had frustrated the fair blame process by indicating that she would send a report to the GMC.

The Employnment Appeal Tribunal overturned the tribunal’s decision on the basis that it had not taken all relevant matters into account and by substituting its own view of the matter in place of that of the Trust.

However the Court of Appeal disagreed. the tribunal was entitled to conclude that it was inconsistent for the Trust to use the fair blame policy and then commence a process which led to dismissal for gross misconduct. This course of action was not within the range of reasonable responses available to the employer. In addition, the tribunal was entitled to take the view that the additional matters which arose after the commencement of the fair blame process were of a relatively minor nature.

What would have been the outcome had the fair blame process not been used? It’s impossible to say but it is clear that the decision to use the process was a material factor leading to the finding of unfair dismissal. Employers should be careful to ensure that procedures designed to operate in addition to the ACAS guidelines do not have the effect of creating unforeseen traps.