Taylors Solicitors

| Bookmark | Help | Print

Call us on 01254 297900 



The Employers Update - July 2010

Welcome to this month’s edition of Employ!

As well as bringing to you the latest development in HR and Employment law we have a special Summer offer to tell you about.

If you have any queries in relation to the content of Employ, or any employment issue, please call the Employment Team on 0844 8000 263 or email oliver.mccann@taylors.co.uk.

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

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


In This Edition:

» Summer Offer Not to be Missed
» Employment Claims Up Again!
» Enhanced Redundancy and Age Discrimination
» Costs against the Employee
» Your Fired! No You're Not?
» Dismissal and Stigma!
» Your Questions Answered

Employ! Email Updates

Employ! is Taylors FREE monthly employment law newsletter which keeps busy HR professionals up to date with developments in the fast-moving world of work. Sign up now to have Employ! sent to you via email each month.

Summer Offer Not to be Missed!

For a limited period only through the summer holidays Taylors are offering all readers of Employ a special offer in relation to contracts of employment and Staff Handbooks – click her for full details

Employment Claims – Up Once Again!

The annual statistics are out once again. For 2009/10 there was a 56% increase in the number of claims pursued to the Employment Tribunal. This is mainly because of multiple claims submitted in airline disputes. However single claims were up by 14%, with a 17% increase in the number of claims associated with unfair dismissal and redundancy.

The Employment Tribunal Service has been working hard increasing the number of disposals by 22% - unfortunately however this has not kept pace with the overall increase in claims, some 400,000 claims still outstanding. Statistics also show that the Tribunal system is “clogged up”.

What do I need to know?

  • With jobs at a premium dismissed employees have little to lose in pursuing a claim so if you do need to dismiss ensure you have complied with the ACAS Code of Practice on Discipline and Grievances and that there is, following a thorough investigation, grounds for dismissal
  • Consider taking professional advice before you dismiss or make redundancies – proactive advice is often much cheaper than the costs associated with Defending Tribunal claims
  • Consider taking out Employer Protection Insurance – see Taylors scheme here.

Enhanced Redundancy and Age Discrimination

There remains a significant number of contractual redundancy schemes operated by employers which provide for an enhanced redundancy payment but which also have limitations dependant on age.

Since the Employment Equality (Age) Regulations 2006 were introduced it was uncertain how the regulations would affect such schemes. Slowly cases are beginning to trickle through the system, which give an insight on how the courts will approach such issues.

A recent case confirmed that a contractual redundancy scheme, although indirectly discriminatory on grounds of age, was justified as a proportionate means of achieving a legitimate aim.

Kraft Foods had a generous redundancy scheme. Due to the high levels under the scheme a term of the scheme sought to cap the level of payments under the scheme to a sum of money the individual being made redundant would have earned had they remained in employment until the normal retirement age of 65. For example if you were 63 years old at the redundancy date your payment would be capped at the salary you would have earned between the redundancy date and the date you would have been retired at the normal retirement age. The younger the individual the higher the cap and so the higher the potential redundancy payment. The older the individual the lower the cap and so the lower the potential redundancy payment.

The Claimant was made redundant at 62 years of age. Under the scheme his redundancy pay equated to £76,560. If there was no cap he would have been entitled to £90,000.

The Employment Tribunal found in favour of the Claimant. On appeal the Court over turned the decision and found that the Company’s aim was to compensate for the loss of expectation of remaining employment but to prevent employee’s receiving a “windfall” payment greater than what they would be paid if they remained in employment was a legitimate aim and was proportionate.

What do I need to know?

  • Many of the enhanced redundancy schemes are likely to be indirectly discriminatory of grounds of age and so the emphasis must be on what the purpose of the scheme is and whether that is a legitimate aim and proportionate
  • If you have such a scheme it needs to be reviewed to ensure its legality
  • Any such review should involve any recognised trade union or employee representatives – there support to the scheme could be instrumental in defending a claim if subsequently challenged

Costs Against the Employee

The Employment Tribunals have a standard no costs rule. This means that each party bears their own costs of the litigation and these cannot be recovered from your opponent. There are exceptions where a party behaves vexatiously or unreasonably in the pursuit or conduct of the claim or where the claim is misconceived.

At Taylors we robustly pursue costs against Claimants wherever possible, making tactical decisions throughout designed to enhance the prospect of recovering costs against the Claimant.

A recent case reaffirmed that Tribunals will make awards of costs where a claimant behaves unreasonably. In this case the employee was dismissed by his employer for numerous serious financial irregularities cash discrepancies and diverting business away from the employer amongst other things. The claimant admitted many of the issues but following dismissed pursued a claim for unfair dismissal.

The Employer’s solicitors recognised that the procedure followed was such that the Claimant may well succeed in establishing the dismissal to be automatically unfair for a failure to comply with the statutory dismissal procedures. As such the specifically pleaded that regardless of any procedural irregularities the claimants conduct was 100% to blame for his dismissal and as such any compensatory award should be reduced to nil.

The Tribunal concluded the dismissal was automatically unfair but accepted that the claimant’s conduct was such that compensation should be reduced to nil. On the issue of costs it was held at appeal that the Employer was entitled to claim costs as the Claimant had been placed on notice about the specific defence to be raised by the Employer and despite the overwhelming evidence to prove that conduct (including admissions) the Claimant nevertheless continued to pursue a claim.

What do I need to know?

Recovery of costs is possible but to improve your prospects in this regard warning sounds need to be regularly sent to the opponent about the unreasonableness of their behaviour.

Your Fired! No You're Not?

When Lord Sugar says those words “your fired” you know he is not changing his mind, no matter any signs of hesitancy or expressions of “with regret”.

What happens however when an Employer advises an employee they have been dismissed but then attempts to retract that decision. Most cases arise from decisions made in the heat of the moment and then retracted quickly. Employment Tribunals look for special circumstances where, having regard to the circumstances, the dismissal words, despite being clear, were not to be taken at face value.

In a recent case an Employer who was experiencing financial difficulties and contemplating redundancies suggested to some employees that they may wish to become self employed on a retainer plus commission basis. The Claimant expressed an interest and requested detailed written terms of the proposal. After repeatedly asking for the written proposals without success, the Claimant was eventually given an agency agreement and a covering letter on 23rd December. The letter stated that the Claimant’s employment would be terminated with effect 31st December. Following legal advice the Claimant phoned the MD and rejected the agency terms. She was called on 5th January and advised that there had been a misunderstanding and if she did not want to become self employed she did not need to and could continue in her employment.

The Claimant maintained she had been unfairly and wrongfully dismissed. It was held that the clear and unambiguous words are to be taken at face value. It had been found that the reference to “termination” in the letter had been intentional and not an error. There was nothing ambiguous about the letter. For a clear express dismissal to be retracted such retraction had to done quickly and in line with case law, within a day or two. Here the retraction did not occur until much later and the intervention of the Christmas holidays was no excuse.

What do I need to know?
  • It is critical to take care when communicating dismissals or referring to termination of employment – avoid decisions in the heat of the moment and take advice
  • If you are unsure about an employee’s stance, seek to clarify before committing to a course of action
  • If you make a mistake, act promptly to retract that mistake
  • It will de exceptionally difficult to retract a dismissal unless there ambiguity

Dismissal and Stigma!

A recent case has confirmed that stigma damages will only be awarded where the employee’s difficulty in finding new employment is attributable to the dismissal.

A care home worker was dismissed amid allegations that she was rough with residents. At the time the employee was working her notice period and had another job lined up to go to. The Tribunal held that the dismissal was automatically unfair. When assessing compensation the employee claimed that the Employers actions of giving an unfavourable reference to her new employer had resulted in the loss of the new job she had lined up. Her claim for stigma damages was dismissed as it could not be said that the difficulties in obtaining new employment were because of the unfair dismissal, the Tribunal concluding that even if the employee had been dismissed fairly an unfavourable reference would still have been given.

What do I need to know?

Claimants will always try and identify facts which can be pleaded to enhance the value of their claim. Case law confirms that an award for unfair dismissal compensation can include damages to compensate not only for stigma arising from the process of litigation, but for the damage to reputation caused by a dismissal. So long as the relevant events flow naturally from the dismissal, compensation is recoverable (Chagger v Abbey National 2010).

It is important, particular in the professional industry or any industry working with vulnerable people, that employers act with care when dismissing an employee. Follow contractual disciplinary rules and ensure that there is sufficient evidence to justify dismissal following a thorough investigation.

Employers should also take care when giving a reference. Unfavourable references maybe subject to challenge by the employee who alleges that it is factually inaccurate or misleading. If you give a reference ensure that you take care – all information must be factually accurate and any statements made in the reference should be qualified.

Your Questions Answered

1. 1 Do we have to pay a self employed consultant holiday pay?

This depends on whether the consultant is required to perform work for you personally. If you allow the consultant to send a substitute in replacement of the Consultant at their discretion then they are not a worker and so not entitled to holiday pay. If there is no right of substitution then the consultant is a worker. Note that the Employment Tribunal can ignore what is expressed in writing to be the case if the factual reality differs ie although there is a substitution clause the Company would not permit substitution then this clause would be ignored and the individual would be a worker. Your obligation is to pay 5.6 weeks holiday per annum. It is worthwhile reviewing the terms and conditions of your contractors to ensure you are not exposed from worker/employee claims.

2. We operate in professional services and currently have a dress code which requires all employees’ to be smart with women wearing a skirt or dress and men required to wear shirt, tie and jacket. Recently a female employee has complained stating she wants the right to wear a trouser suit. Can we enforce our dress code?

Taking into account modern standards of acceptable dress and conventionality I believe it increasingly difficult for employers to apply such a rule without the risk of a successful discrimination claim.

Consider your stance if you employee a female whose faith/culture requires her to cover her legs. You would risk claims of race, sex and religious discrimination.

Although you may persuade a Tribunal that there is a legitimate aim ie setting a professional tone to your customers, it may be difficult to justify a requirement to wear a skirt as proportionate that legitimate aim can equally be achieved by wearing a smart trouser suit.

I would review you dress code policy. Perhaps you could insist on all employees wearing “business suits” – this leaves it open to females to elect to wear a trouser suit..

Copyright 2006 - 2010 Taylors Solicitors

» Print          »

Home  |  Services  |  News  |  People  |  About  |  Contact
Blackburn: Rawlings House, Exchange Street, Blackburn, BB1 7JN. Tel: 0844 8000 263
Manchester: Forty Four Peter Street, Manchester, M2 5GP. Tel: 0844 8000 263
©Taylors Solicitors  |  Website Terms  |  Data Protection  |  Website Design  |  Sitemap
Regulated by The Law Society