Category Archives: employment law

right to legal representation at a disciplinary hearing

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Since September 2000 the basic rule has been that a worker (as defined) has the right to be accompanied by a fellow worker or trade union representative at an employer’s internal disciplinary or grievance hearing.  The companion does not have the right to answer questions on behalf of the worker but does have the right  to put the worker’s case, to sum up that case and to respond on the worker’s behalf to any views expressed at the hearing. Continue reading →

principles for uplifting compensation and calculating loss of earnings

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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 →

consultation on modern workplaces – parental rights

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The Government issued its BIS "Modern Workplaces Consultation" on 16 May 2011 . One of the topics covered is "Flexible Parental Leave". Consultation closes on 8 August 2011.
In bare outline, the main elements in the “flexible parental leave” part of the proposals are :

Initial leave rights (around the birth/adoption of a child):
  • Maternity leave to be reduced from the current 52 weeks to 18 weeks (the minimum required by new EU law);
  • "Flexible parental leave" would be available for the next 34 weeks (i.e. after the 18 weeks’ maternity leave period), shared between the parents as they see fit;
  • If the parents decide not to share the 34 weeks so that one of them takes it in full, then a further period of "reserved leave" (4 weeks is suggested) will be available to the other (this is social engineering – the government specifically says at para. 48 that this is because it wants to change the "widespread cultural expectation that it should always be the mother who takes time out from work to care for children");
  • Ordinary paternity leave to remain at 2 weeks;
  • Fathers also to have the right to time off before the birth to attend a limited number (two is suggested) of pre-natal appointments.

Employers would be able to insist that leave is taken in a continuous period (the consultation paper says that "the process of agreeing when leave is taken is left up to the parties … Where they can not agree, the default position would be for parents to take leave in one continuous block"). It also suggests that there "should be no restriction on parents choosing to take leave concurrently. Allowing only one parent to be out of the workplace at any one time would place unnecessary restraints on how leave may be taken, and interfere with the ability of parent and employer to agree how leave is taken".

Subsequent leave rights

Currently parents who have been employed by their current employer for a year or more are entitled to 13 weeks’ parental leave for each child aged between one and five, Not more than four weeks can be taken in any year and the leave must be in blocks of a full week.

The essence of the proposals is to increase the amount of parental leave from 13 to 18 weeks (this is required by new EU law), to remove the requirement of a year’s employment and possibly to increase the age of the child from 5 to 8, 12, 16 or even 18.

Pay

Currently employed mothers who qualify get statutory maternity pay (SMP) for 39 weeks. They receive 90 per cent of their average earnings, subject, after the first six weeks, to a cap of (currently) £128.73 per week.

Under the new proposals the 18 weeks’ maternity leave and the first 21 weeks of the 34 weeks of flexible parental leave would be paid at 90 percent of average earnings subject to the cap noted above, currently £128.73 per week. There is no mention in the consultation paper of special provision during the first six weeks, as at present. The four weeks’ "reserved leave" noted above would be leave with pay as would the two weeks ordinary paternity leave (as at present).

Other leave (including the father’s right to time off for pre-natal appointments and the right to parental leave after the child’s first birthday) would generally be unpaid.

Finally

The suggestions in the consultation paper are not set in stone. They may well be changed, although no doubt the general thrust of encouraging parents to share in the bringing up of small children will be retained. Concerns have been raised that in practice there will be enormous administrative costs involved, not least in policing, if a new system along the lines suggested in the consultation paper is to be adopted and not abused. Concerns have been expressed by, amongst others, the British Chambers of Commerce (BCC) and the Federation of Small Businesses (FSB).

TUPE

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A key element of the TUPE Regulations provides that, where either the new or previous owner of a business dismisses an employee for a reason connected with its sale or transfer, then that dismissal will be automatically unfair. The only way the employer can avoid that result is if he can show that the dismissal is for an “economic, technical or organisation reason involving changes in the workforce”.

So far, so good. However, the owner of a business is quite likely to “tidy it up” with a view to putting it up for sale, and this might include dismissing an employee some time before the business is actually transferred – perhaps, indeed, before a new owner has even been identified. In that situation, is the dismissal really for a reason connected with the transfer and is the employee still protected? It appears that the EAT’s definitive answer to that question is now “yes”.

Two different – and conflicting – lines of authority have previously existed. One required an actual transfer to be in existence (albeit not yet actually taken place) before TUPE’s protection could arise; the other considered that a prospective transferee need not even be in place yet. In Spaceright Europe Ltd v Baillavoine & Anor, (EAT 1 February 2011) the EAT has ruled that the second – more generous – line of authority is the one that should be followed.

A Mr Baillavoine was Chief Executive Officer of Ultralon Holdings Ltd (UHL). Various consultants were appointed over time and reviews of the companies’ viability carried out. In due course, on 23 May 2008, UHL and its subsidiary Ultralon Ltd (UL) went into administration: Mr Baillavoine was dismissed by the administrator. On 25 June 2008 the businesses of UHL & UL were sold to Spaceright – a TUPE transfer. Spaceright was run and owned by those same consultants.

Mr Baillavoine had lost his job, and shares he had in UHL were worthless. He was understandably suspicious, and claimed unfair dismissal. An employment tribunal ruled in favour of Mr Baillavoine. It concluded that he had been dismissed so as to enable a purchaser of the business to acquire the business and assets without his continued employment (his salary of £120,000 might also have presented a problem for a prospective purchaser of the business). His dismissal was therefore automatically unfair unless it could be shown to have been for an “economic, technical or organisation reason involving changes in the workforce” – which it couldn’t.

Spaceright appealed to the EAT but lost. Faced with the conflicting authorities mentioned above, the EAT clearly preferred the latter. It agreed with the original tribunal that TUPE applied even though at the time of Mr Baillavoine’s dismissal the sale of the business which eventually took place had not been agreed. As there was no “economic, technical or organisation reason involving changes in the workforce” for dismissing Mr Baillavoine it therefore followed that his dismissal was automatically unfair.

Compromise agreements

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For many years it has been the practice of the Inland Revenue, now HMRC, to publish “extra-statutory concessions”. These effectively correct errors in and omissions from legislation which would result in tax being collected where it would be inappropriate.

The practice has always been of questionable legitimacy. For HMRC to have discretion, even via published “extra statutory concessions”, to decide that tax should not be payable when the law says it should does not fit well with contemporary ideas of law enforcement. In order to regularise the position, HMRC has therefore engaged on a process of formalising extra-statutory concessions into law wherever possible. As part of that process a new statutory instrument, the draft Enactment of Extra-Statutory Concessions Order 2011, has been drawn up. It came into effect on 6 April 2011. Amongst other things it codifies a significant employee related concession.

The relevant extra statutory concession relieves an employee or ex-employee from income tax in respect of monies paid on their behalf by their employer to cover legal costs incurred by the employee exclusively in connection with the termination of his or her employment, provided the costs are paid by the employer pursuant to a court order or direct to the lawyer under the terms of a compromise agreement.

While in principle this codification is to be welcomed, it is worth noting that as drafted the regulations are less beneficial to employees than the concession they are designed to replace. The regulations as drafted apply only if the compromise agreement is made under the Employment Rights Act 1996, for example to settle an unfair dismissal claim. They therefore do not apply if the compromise agreement is under the Equality Act 2010 and they do not apply to legal fees paid in connection with an ACAS COT3 conciliation. This may turn out to be a mistake. However unless the regulations are amended (they have been enacted as drafted) the current position is worse for at least some employees than it has been for many years under the concession.

The End of the Default Retirement Age – or is it?

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The abolition of the default state retirement age of 65 has been the source of a headache for the majority of employers for at least the last six months. Companies in financial difficulty have been frantically checking their employees’ personnel files for dates of birth in an attempt to terminate the contracts of those that may later be entitled to large redundancy payouts! It will by now be well known to most employers that as long as notice of retirement (for employees who are aged 65 or over on or before 30th September 2011) was issued by 5th April 2011, employers are able to justify these dismissals by reason of retirement (currently one of the six fair reasons for dismissal). Accordingly any dismissal after this date will be potentially a) age discriminatory; and b) unfair.

However many companies have been so busy trying to ensure that the procedures applicable until 5th April are followed correctly that they have given little thought to what they will do about their existing employees who will, inevitably, get older and at some point their employment with the Company will terminate.

Essentially there are two options available for employers. They can:

1. Introduce an Employer Justified Retirement Age (EJRA)

An employer will still be able to justify a company-wide retirement age if it can establish that such a retirement age is a proportionate means of achieving a legitimate aim. However the Government has already stated that it will not be easy to justify a set age for retirement, nor however will it be impossible. There are various points that an employer can make when arguing that an EJRA is justified:

a) To reduce the requirement to dismiss employees on grounds of diminishing performance, and allow them to retire with dignity;

b) To enable employers to plan financially for the longevity of their business, especially in the current economic climate;

c) To promote recruitment and retention within the company by ensuring there is a clearly defined career path as to when employees can be retired;

d) The additional cost of employing older employees.

Obviously the above points are yet to be tested in the UK Tribunals and Courts. However in the European Court of Justice, the general consensus seems to be that employment should be shared between the generations – the older employees have had their time and now the young need to be given an opportunity. For example, in the case of Peterson v Berufungsausschuss fur Zahtze fur den Bezirk Westfalen-Lippe [2010] IRLR 254, it was held that a maximum age of 68 for dentists was appropriate as it gave younger generations the opportunity of working.

Furthermore, the case of Rosenblatt v Oellerking Gebaudereinigungsges mBh [2011] IRLR confirmed that although a compulsory retirement age of 65 was basically age discrimination, it was justifiable if:
• that age had been negotiated between the Employer and the Union;
• the Employee would receive a pension so they are in receipt of replacement income; and,
• compulsory retirement has been widespread in the relevant country without having an effect on employment levels.

Please remember however that the above arguments have NOT yet been tested in the UK Tribunals and Courts!

2. Remove the Compulsory Retirement Age

This is currently viewed as being the safest option for employers to take and involves simply doing nothing (apart from reminding employees that the statutory retirement age has been abolished!) and addressing issues that may crop up with older employees as and when they arise.

For example, if an employee has issues with long term sickness, ensure that management are correctly trained in the procedures to deal with this and bring it to a conclusion – this will include obtaining the employee’s consent to request medical reports (from GPs and/or independent medical practitioners) and consider any recommendations such reports may make before thinking about dismissal.

Employers should also ensure that they have the correct policies and procedures in place to deal with potential issues of discrimination and harassment in the workplace, and therefore should seek expert legal advice in the preparation of such policies to ensure they are in line with current legislation. It should be borne in mind that, providing the correct advice is sought, there is nothing to stop an employer dismissing a 70 year old for poor performance in the same way as a 30 year old who is similarly unable to perform their duties to the required standard.

Companies therefore now have a crucial decision to make – do they want to introduce an “Employer Justified Retirement Age” (and can they justify it?!), or do they remove the retirement age altogether and review their current documentation (including contracts of employment) and procedures?

As discussed above, both options have their problems and it is therefore essential that expert legal advice is sought before making either decision in order to assess which will be the most beneficial for the company and, of course, which will hold the least financial risk. Canter Levin & Berg Employment Solutions offers comprehensive Employment Law advice to Employers at highly competitive prices, provided by qualified Lawyers with over 30 years experience. Please contact us on 08000 320 974 for your free 20 minute consultation and to discuss the options that are available to you.

Protection of Freedoms Bill

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The “Protection of Freedoms Bill” is a Government Bill. It had its first reading on 11 February and is likely to be law by the end of 2011. It covers a variety of matters, including placing restrictions on wheel clamping of cars, use of CCTV and removal of restrictions on times for marriage and civil partnership ceremonies. From an employment law angle the most significant part of the Bill is Part 5, headed “Safeguarding Vulnerable Groups, Criminal Records etc”.

This Part of the Bill will try and strike a sensible balance between protection of vulnerable adults and children on the one hand and counter-productive, often unnecessary and expensive, authorisation requirements and CRB checks on the other. After the Soham murders, public disquiet about the ease with which a paedophile could get a job in a school led to the Bichard inquiry followed by the passing of the Safeguarding Vulnerable Groups Act 2006. It soon became obvious that the pendulum had now swung too far in the opposite direction – for example the vetting and criminal records checks required for almost anyone other than close family to have contact with school children made it impossibly difficult for some perfectly sensible activities to continue: school play groups were affected as was the ability of parents to club together to arrange for collecting children after school.

The Protection of Freedoms Bill aims to get a better balance. It will retain some parts of the present system so it will continue to be an offence for a barred person to work with vulnerable groups in regulated activity roles. It will also still be an offence for an employer or voluntary organisation knowingly to employ a barred person in a regulated activity role. However the requirement for registration will be scrapped and there will be no ongoing monitoring. The Criminal Records Bureau and the Independent Safeguarding Authority will be merged. The new regime will retain current arrangements for referrals to the state barring body (currently the ISA) where individuals have demonstrated a risk of harm to children or vulnerable adults and, where relevant, barring will continue to apply to both paid and unpaid roles – barring will be automatic where a serious offence which provides “a clear and direct indication of risk” has been committed.

There is a useful official explanatory note on the Bill on a government web-site.

Summary of forthcoming changes

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Here  is an outline list of eight employment law related changes (and non-changes) announced by the Government due in the near future.  The last three are of sufficient general importance to merit separate consideration – provided by separate posts (see links below).

The outline list is as follows:

1.  Time off to Train

The Government has now announced that this right will not be extended to employees of small businesses in April 2011. Almost a year ago the previous government introduced a right for employees to request time off for training, phased in from April 2010. This started last April for employees of larger employers (250+ staff) and was to be extended to employees of any size of employer in April 2011.  The Coalition Government announced in November that firms with fewer than 50 employees would remain exempt.  It has now announced (on 16 February) that all further implementation is to be deferred “to allow further, thorough discussion, scrutiny and evaluation”.

2. Bribery Act deferred

Implementation of the Bribery Act 2010 was also due for April 2011.  This has been postponed to, at the earliest, June 2011.  The Ministry of Justice has yet to issue final “guidance” and has promised that the Act will not come into force until 3 months after the guidance is issued.

3. Visa reform (non EU workers)

Currently businesses are given an annual allocation for the number of foreign workers they can bring into the country. On 16 February the Government announced a new system under which employers will have to apply to the UK Border Agency for a certificate of sponsorship for a specific post.  Subject to Parliamentary approval this will come into force on 6 April 2011.

4. Flexible working

The age limit of children in respect of whom employers must seriously consider requests by employees for flexible working is increased from 17 to 18 as from 6 April 2011.

5. Equality Act 2010

The provision allowing “positive action” in recruitment and promotion (s.159) comes into force on 6 April, as does the “public sector equality duty” (s.149).

6. Criminal record checks and vetting of employees

See the separate news item under the heading “Protection of Freedoms Bill“.

7. Additional Paternity leave

See the separate news item under the heading “Additional paternity leave“.

8. Abolition of “default retirement age”

See the separate news item under the heading “Abolition of default retirement age“.

It turns on the words – “theft of money” or “loss of money”

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Celebi -v- Scolarest Compass Group UK & Ireland Limited is a decision of the Employment Appeal Tribunal which emphasises the importance for employers of ensuring that they use the right terminology when taking disciplinary action against employees. The case is also a good example of how an apparently straightforward dismissal can keep an employer occupied for years because the relevant events took place in November 2006 and Mrs Celebi was dismissed in May 2007. The case went to the Employment Appeal Tribunal in 2008 when the issues mainly concerned technical matters relating to the procedures in the Employment Act 2002 (which no longer apply) and a rehearing was ordered. That took place and the resulting decision led to the appeal which took place last year. I’m commenting on it now, first because the case demonstrates how employment cases can become very protracted and expensive and, second, because of the warning that it provides to employers who think they have acted correctly but who happen to use the wrong words at the wrong time can undermine what was otherwise an apparently fair process.

Mrs Celebi was a chef manager at a college. On 14 November 2006 she collected £3,400 in cash. She completed paperwork confirming this when the money was sent to the bank but only £400 was received. As a result of this she was suspended.

She was sent a letter which identified the basis of the investigation as “serious allegations: Loss of £3,000 cash banking/inaccuracy in banking”. She was called to a hearing to consider allegations of incorrect reporting of stock figures, failing to follow financial procedures and discrepancies in banking. Her dismissal in May 2007 cited the same reasons.

Her initial claim for unfair dismissal was dismissed but her appeal succeeded in 2008 so that the case was remitted to a new tribunal hearing. The “second tribunal” again found that the dismissal was fair, not least because Scolarest had found, after a reasonable investigation, that she had been responsible for the loss of the £3,000. The person who dismissed her said in her evidence (on more than one occasion) that she believed that Mrs Celebi had stolen the money.

So how did Mrs Celebi succeed on her appeal? Judge McMullen considered numerous cases including the well known decision in British Home Stores -v- Burchell (was there a genuine belief, on reasonable grounds and after a reasonable investigation, of the guilt of the employee concerned) and Strouthos -v- London Underground (a charge against an employee facing dismissal must be “precisely framed”). He also considered Spink -v- Express Foods in which it was held that it is “a fundamental part of a fair disciplinary procedure” that an employee can only be disciplined in respect of a charge that has been put to them. Although it might readily be implied that the employer’s position was that the money had been stolen, on the evidence, that was never directly put to Mrs Celebi. The tribunal was wrong because it concluded that the dismissal was attributable to theft. The letter requiring Mrs Celebi to attend a disciplinary hearing did not expressly state this and it was held that she might have responded differently to an allegation of negligence rather than theft.

The result is that the dismissal was unfair and another tribunal was required to consider the question of remedy. However, Judge McMullen pointed out that the tribunal might wish to consider the effect of Polkey -v- A E Dayton Services (reduction or elimination of a compensatory award on the basis that, had correct procedures been followed, the employee would have been fairly dismissed). That is unlikely to provide any comfort to the employer given the history of the matter and their employment of solicitors and leading barrister Daniel Barnett to represent them for the second appeal.

One of the main benefits of CLB Employment Solutions is that we advise our subscribers about these issues before they end up in an employment tribunal. If you are not yet a subscriber please call free on 08000 320 974.

End of the default retirement age

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We have reported on several occasions over the last few months that the government is planning to scrap the default retirement age at age 65 but doubts were expressed about whether the change would be implemented as forecast. Those doubts have now been resolved as a result of the government’s announcement on 13 January that employers will no longer be able to force staff to retire at 65 from this October. Employment relations minister Ed Davey said that it was “great news” for older people, businesses and the economy.

The change means that from 6 April employers will no longer be able to issue notifications for compulsory retirement at the age of 65 using the default retirement age procedure. The current regulations require such notifications to be issued and for the employer to discuss the proposed retirement with the employee. However, the retirement can be imposed by the employer even if the employee disagrees.

Only one third of employers still apply compulsory retirement at age 65 but many have expressed concern about loss of the opportunity to implement retirements without the risk of facing claims for unfair dismissal and age discrimination. Interviewed on Radio 4′s Today programme Mr Davey sought to allay those fears by saying that guidelines would be issued to reassure employers that they can still conduct performance appraisals and fairly dismiss staff who are no longer able to perform their duties effectively. Of course, that means that there is room for uncertainty about capability and whether the determination is really age related. There also remains a good deal of concern about how employers will in practice demonstrate that unlawful discrimination is being avoided by using a proportionate means to achieve a legitimate aim.

John Cridland, director general designate of the CBI has highlighted the concerns. He said:

“The impact on employers, especially smaller ones, will be considerable. There is not enough clarity for employers on how to deal with difficult questions on performance. Less than three months is not enough time for businesses to put in place new procedures. The outcome will be more unpleasant and costly legal action.
“Employers accept that more people will want to work beyond 65 as the population ages, but the government has not recognised the fundamental question, which is how should employers manage retirement on the basis of a performance appraisal. This will be particularly acute in physically demanding sectors.”

So what does the change mean in practice for employers?

  • Employers must change their policies and procedures to remove those which rely on or refer to the default retirement age at 65.
  • Employers who want to retain a retirement age will have to give careful consideration to how it can be objectively justified. In most cases a blanket policy will fall foul of this requirement.
  • The “duty to consider” procedure needs to be phased out. From October this will play no part in arrangements for retirement.
  • Any employers who wish to rely on the current arrangements must start the process on or before 6 April.
  • Employers who wish to “retire” an employee will have to show a fair reason for dismissal.
  • Consideration needs to be given to reviewing and if necessary amending arrangements for performance appraisals and taking appropriate action where necessary. Confining appraisals and any corresponding dismissals to those around the current default retirement age is likely to be regarded as discriminatory.
  • There will inevitably be a significant increase in the number of employment tribunal claims resulting from the termination of employment of older employees.

As ever, our subscribers are more than welcome to contact us for advice and to make sure that all necessary changes are implemented in good time.