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The Employers Update - April 2010

Welcome to Employ, designed to keep your business up to date with developments in HR and Employment Law. This month we take a brief look at garden leave clauses, whistle-blowing, bribes and serial litigants, as well questions on absences and dismissals caused by the volcanic ash disruption.

Also keep an eye on our website homepage, for regular additional articles on Employment matters.

If you need to speak to one of the Employment team about any of the issues within this newsletter or any other issue please contact us, we are always happy to help or give second opinions!

Oliver McCann - Partner and Head of Employment
James Bellamy - Employment Solicitor

Tel: 0844 8000 263
Email: oliver.mccann@taylors.co.uk


In This Edition:

» Blowing the Whistle!
» Taking a Bribe!
» Serial Litigants halted?
» Right to work?
» Your Questions Answered

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Blowing the Whistle!

There have been two recent cases relating to whistle-blowing.

The first has established that a worker can suffer a detriment from a current employer relating to a protected disclosure made to a previous employer (even where there is no link between the Employers). In other words an employee could work for Tesco and make a protected disclosure about, for example, health and safety breaches and subsequently be employed by Marks and Spencers who then found out about the employees previous protected disclosure and dismiss him as they see him as a trouble maker. Although the disclosure was made with the first employer, it is the second employer that caused the employee to suffer a detriment and as such can be held liable.

The purpose of the whistle-blowing legislation is to protect a worker from suffering a detriment (including dismissal) because they have blown the whistle – it would be contrary to legislation to hold that a worker only has a cause of action if he suffers a detriment from the same employer to whom he made the disclosure – otherwise this would mean those that may move between Group Companies are not protected, or those whose employment transfers to a new Employer under TUPE 2006.

The second case confirmed that a mere expression of an opinion did not amount to a protected disclosure. In this case, the workers complaints about proposed changes to an enhanced redundancy pay scheme were not enough to satisfy a reasonable belief that Employer was likely to fail to comply with a legal obligation to which it was bound.

What do I need to know?
These cases reinforce the risk businesses face from whistle blowing cases. In particular complaints from employees may amount to a protected disclosure giving an employee protection from dismissal and/or detriment – regardless of length of service! Dismissal because an employee has made a protected disclosure is automatically unfair with unlimited compensation.

Spotting what is, and is not, a protected disclosure is not easy and if you are in any doubt it is critical you take legal advice in the first instance. If faced with an allegation by an employee that they have been unfairly dismissed or suffered a detriment because they made a protected disclosure then legal input will help you unravel whether or not all the criteria which need to be met to gain protection are in fact met.

Taking a Bribe!

The Bribery Act has received Royal Assent this month and is expected to come into force either this October or next year.

Why does this matter in the employment field?

The Act creates a new offence which organisations (Companies/Partnerships) will be criminally liable where a person associated with the Organisation (including employees, agents and external third parties) bribes another person intending to obtain or retain a business advantage and the Organisation cannot show that it had adequate procedures in place to prevent bribes being paid.

Under current law a Company is likely to be guilty of an offence only if the employee concerned is part of vey senior management and so the Company is deemed to have knowledge of the bribe. Under the new Act the Company may be guilty of an offence even if no one within the company knew of the bribery. The defence is limited to demonstrating that it had adequate anti-corruption policies/procedures in place to stop employees, agents and third parties acting on the Organisations behalf from committing the bribery.

The government is expected to provide guidance on what will constitute adequate procedures and we will keep you posted. This may however require not only policies and procedures being put in place but setting out clear boundaries which employees can act within with the authority of the Company and making it gross misconduct offence to act outside those boundaries.

Serial Litigants Halted?

You may have heard of the serial litigants who make a living by submitting multiple job applications in response to adverts in the hope to catch unwary employers out? For example if a job application with white male details proceeds to interview but one with Asian female details does not, despite having identical qualifications/experience, then this would infer race and/or sex discrimination triggering a right on the individual to bring a discrimination claim for compensation for injury to feelings and losses.

Many employers have been caught out by these scrupulous individuals. However a recent case may now put a halt to those claims. In this particular case a 51 year old accountant applied for over 20 accountancy jobs that were suitable only for newly-qualified candidates. He was not invited to interview for any and claimed age discrimination against the organisations. The claims were dismissed because the job applications were not genuine as the individual had no interest in the vacancies and as such did not suffer a disadvantage when his application was turned down.

This is welcome news for Employers in the fight against serial litigants but this is not a reason to abandon or fail to implement proper recruitment procedures which are compliant with Equal Opportunities. If the application is genuine then a claim may have substance – for example, an individual from a minority background may be genuinely interested in a job which is advertised. She submits one application for her self and an identical one, save for the personal details, to act as a “ghost applicant” as a protective measure for fear of being discriminated against. If she is declined in the recruitment process and the ghost applicant invited to interview then she will have suffered a disadvantage and the clear inference would be the rejection was discriminatory and cannot be justified.

Right to Work?

It is generally accepted that an employee has an implied right to be allowed to work under his contract of employment. This is rarely an issue until relations turn sour between Employer and Employee particularly where the employee has handed in their notice with the intention to join a competitor.

A garden leave clause within the contract allows the employer to effectively send the employee home for the duration of the notice period but remaining employed without being in breach of the obligation to provide the employee with work.

There has been doubt whether or not a garden leave clause is enforceable where the employee concerned earns salary predominantly by way of commission and where enforcing the garden leave clause would prevent them from earning their usual salary during that period.

A recent case however upheld a suspension clause for employees who were predominantly paid by way of commission despite the impact on their ability to earn. In this case the individuals handed in their notice with a view to joining a competitor. They asked to be released immediately but the Employer refused. Instead the employer suspended them relying on a suspension clause which allowed suspension where it was reasonably believed that an employee had been in breach of contract. The Employer alleged that employees had breached the duty of fidelity and good faith as they had registered with a regulating authority to work for the new employer before they had in fact left the employment of their current employer. The employees alleged the Employer was abusing the suspension clause. The court confirmed that there was no obligation to provide work where the employee was in serious breach of the duty of fidelity and good faith and effected tied to a rival.

In this instance it was fortunate that the employer had a suspension clause, although not the typical garden leave clause. What is the position if there is no such clause? Applying the decision above it seems to provide an employer with an opportunity to place the individual on garden leave for the notice period but only where the employee themselves are in breach of contract. The employer can choose to keep the contract alive but send the individual home.

Although the case above may bail an Employer out of a hole this case is no substitute to ensuring that garden leave clauses are inserted in to the contracts of all key personnel. Call Taylors if you need help with this 0844 800 263.

Your Questions Answered

1. We have an employee who has been employed for 6 months. They simply are not up to the job and we want to dismiss. However the individual is African and we are concerned about allegations of race discrimination being made even though the reasons for termination are genuine and unrelated to his race. We do not have a set probationary period and to date we have not addressed his performance issues or had an appraisal. Can we dismiss straight away or do we have to follow ACAS dismissal procedures?

The answer differs depending on whether you want to invoke best practice procedures or simply avoid a claim.

Best practice would require you to adopt the ACAS procedures and in particular address the performance issues and give the individual time in which to improve before you make a decision, regardless of their length of service. If at the end of the process they are not up to the job then you could proceed with a capability dismissal, absent alternative roles which maybe more suitable.

On a purely legal basis you could dismiss now without liability for unfair dismissal. Employees must have 12 months service to be entitled to claim unfair dismissal or fall within the exceptions to the 12 month rule – which, unless there are other reasons for dismissal you have not disclosed, do not appear to apply in this case. As the individual cannot claim unfair dismissal then legally the procedure you adopt is irrelevant and there is no requirement to follow the ACAS procedures ie you can dismiss without warning, at the first meeting and without formally arranging the meeting.

However you quite rightly recognise the potential that the employee believes the dismissal maybe related to his race and bring a claim. For that reason, you should at the very least create a paper trail identifying the reasons for dismissal and proving that they are not race related but genuinely performance related. This maybe internal emails documenting complaints about his performance and adopting at the very least a more formal dismissal process ie invite letter setting out purpose of the meeting and the issues, holding a meeting and a decision letter. That should be enough to give you some protection. Absent documentary evidence it is your word against his!

2. We have had two employees who were stranded abroad due to the Volcanic Ash which has resulted them being absent from work for an extra 5 working days. What are they entitled to, if anything?

Much depends on what your contracts of employment say and your employee handbook and what they said to you when they first notified you about their absence. It may be that the contract allows you to deduct from holiday leave days absent from work due to delays in returning from holiday or when the individual contacted you they give you notice to take additional holidays (twice as much notice as the number of days leave is required under the Working Time Regulations).

However the most common scenario will be the absence should be treated as just that – absence. Unless the contract says otherwise you cannot force the employee to use those days as holiday, even if that is your preferred choice and nor can the employee force you to treat them as holidays where you would prefer not to.

However the absence should be viewed sympathetically and disciplinary action is certainly unlikely to be justified or in the interest of the Company. Best practice would be to try and reach an agreement for the days to be used from holidays or find some middle ground – the last thing you want is a de-motivated employee as that simply leads to future absences and poor production!

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