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Employ!
     

Oliver McCannn   

Employ!

Employers Update - November 2010

Welcome to this month’s edition of Employ!

As the winter cold begins to take hold, employment law developments keep things hot! Read on for an update on recent cases or developments relevant to HR.

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:

» Can you compromise a claim under the Equality Act 2010?
» Harder to claim unfair dismissal
» Fair redundancy consultation?
» Dismissal but not gross misconduct
» Costs as a defence to discrimination?
» Your Questions


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Can you compromise a claim under the Equality Act 2010?

There seems to have been a significant amount of fuss over the wording of the Equality Act 2010, in particular whether or not it prevents claims under the EA being validly compromised under a compromise agreement.

As before for a Compromise Agreement to be effective an employee must have received advice from an independent adviser. Under the EA the definition, on a strict interpretation, excludes someone who is acting for a person who is either a party to the contract or the complaint, or connected to such a person. However, this means that a solicitor who was instructed by the employee prior to the production of the final agreement for consideration, which is very common, will technically be precluded from acting any further.

There are opposing views as to whether or not this drafting error creates the problem above.

Representations have been made for this error to be rectified quickly so that all parties can have certainty as to the enforceability of the Compromise Agreement.

What do I need to know?
A compromise agreement may not validly settle a claim under the EA if the solicitor advising the employee has been involved in the negotiations of the compromise agreement. A temporary solution would be to settle any claims via a COT3 agreement – ACAS do offer a pre claim conciliation service.

Alternatively employers could conclude that on the specific facts of the case the employee’s ability to claim under the EA is minimal or non existent i.e. the principal allegations being unfair dismissal and breach of contract and as such proceed with settling matters via a compromise agreement.

Where there is a real risk of a claim under the EA then more care will need to be taken, although it is likely that a court or employment tribunal will adopt a purposive approach as to the interpretation of the EA in this regard and find that claims have been validly compromised.

Another option would be to build in to the agreement a repayment clause in the event proceedings are brought against the Company. This acts as a strong deterrent to the employee from ignoring the intentions of the parties and pursuing a claim.

Each matter will have to be assessed having regard to the nature of the complaints from the employee and the size of the settlement. If in doubt take legal advice.

Remember also that you will need to alter your references in the Compromise Agreement to various sections under the EA.


Will it become harder to claim unfair dismissal?

There has been a leak from the government which suggests it is reviewing the 12 month eligibility rule to bring a claim for unfair dismissal and reverting back to requiring 2 years continuous employment.

Of course if this is implemented this will be welcome news for employers who would enjoy a much longer period of time to assess a new employee’s performance and value to the business.

However employees faced with the hurdle of a two year qualifying criteria are likely to look at ways around this to pursue claims perhaps by alleging discrimination or trying to suggest the dismissal was related to health and safety or making a protected disclosure. Indeed, Taylors see many claimants under the current system seeking to circumvent the 12 month eligibility requirement.

What do I need to know?

  • Watch this space for a possible change in the law
  • Regardless of the fact that an employee may have less than the qualifying period of continuous service we would always recommend that some formal process (albeit shortened in most cases) be followed when dismissing that employee. This ensures that you have documented the reasons behind the dismissal, brought it to the employee’s attention and given the employee an opportunity to respond. It makes it much more difficult to allege that there was another reason behind the dismissal.
  • Always bear in mind that there are quite a number of exceptions to the 12 months rule for example, dismissals because of pregnancy, whistleblowing, health and safety, exercising or asserting statutory rights, trade union membership etc

What is a fair redundancy consultation?

The key to a fair redundancy is fair selection, consultation and consideration of other suitable opportunities.

A recent case has held that fair consultation includes giving the employee an explanation for his scoring and a meaningful chance to comment on the scores.

This decision makes sense as it is quite feasible that genuine errors may have been made on that individual’s scoring which may affect their selection for redundancy. Likewise there are obvious concerns over the use of subjective criteria and so it would be reasonable to give the employee the opportunity to comment and raise points on subjective criteria scores.

What do I need to know?

  • When first notifying of selection for redundancy, emphasise that this is provisional dependant on further consultation relating to the scoring and pooling
  • An individual is only allowed to see their own score, not that of others in the pool
  • Where subjective criteria are involved then employees should have sufficient information to understand their scores and to challenge
  • The Employment Tribunal will not endorse a microscopic analysis of the scoring of individuals but simply ensure that the criteria are sufficiently objective and fair and that there are no clear discrepancies in the scores allocated.

Dismissal, but not gross misconduct!

A recent case acts as a reminder that dismissal for a misconduct offence (not a gross misconduct offence) can still fall within the range of reasonable responses of a reasonable employer.

In this case the employee borrowed a mini bus from his employer with consent. He returned it to his employer in an unsafe condition in that the seats were insecure and the rear step was missing. After an investigation relating the employee was dismissed for gross misconduct. It was held by the Tribunal and the EAT that although dismissal was within the range of reasonable responses and a fair procedure had been followed, they did not find that summary dismissal was justified. The claimant should have been dismissed with notice. As such the employee had been wrongfully dismissed.

What do I need to know?
Employers often overlook the fact that they can proceed to dismissal, despite no previous warnings and despite it not being a gross misconduct offence, where the conduct is sufficiently serious to justify entering the disciplinary procedure at the dismissal stages ie conduct just short of gross misconduct.


Costs as a defence to discrimination?

It has been widely accepted that an employer cannot raise a justification defence to discrimination cases on cost alone. However a recent EAT case has pushed the door slightly open to challenge this orthodox view.

In a case against the Cumbria Primary care NHS Trust the NHS made the Chief Executive redundant. Notice to terminate his employment by reason of redundancy was deliberately given earlier than usual would be the case as the NHS wanted to avoid the Employee becoming entitled to significantly enhanced pension benefits which would arise if he was still in employment on his 50Th birthday. The additional cost to the NHS had they not issued notice early would have been approximately £500,000.

What do I need to know?
The EAT cast doubt on the previously held view that cost alone can never constitute objective justification stating an employer can have a legitimate interest in considering cost alone on the basis that if the cost of avoiding or rectifying a discriminatory impact would be disproportionately high there would be scope for considering the proportionality of the measures.

Although this judgement opens the door for such arguments extreme care still needs to be taken where the sole criteria for discriminatory conduct is cost. Take legal advice on the strength of your justification defence before committing to a course of action.


Your Questions Answered

1. Is it permissible to pay rolled up holiday pay?

The ECJ has previously decided that rolled up holiday pay is unlawful. In their view workers must be placed in the same financial position as they would have been if they were carrying out the work. This means payment must continue throughout the statutory holiday period.

However the ECJ then went on to say that employers should be given credit for making holiday payments under a rolled up pay system as long as such systems are clearly transparent and the employee comprehensively understand and agrees to the system. In these circumstances any amounts of holiday pay paid to the worker will be offset against any award made to the worker.

Ideally employers should, wherever possible, seek to use a holiday system which does not rely on rolled up holiday pay. However where this is not feasible then currently employers can get away with using such a system so long as it remains transparent.

2. Is there anything we can do to prevent an individual who has signed a contract of employment to commence employment with the business but who then changes his mind at the last minute and stays with his present employer?

Yes. At the time you make an offer of employment issue the prospective employee with a contract of employment and ensure you get the contract signed and returned to you so that there is a binding agreement. Within the contract you can insert a “No Show” clause – in essence a clause which states that the employee will pay sums to the business as compensation if he fails to commence employment under the contract i.e. changes his mind. This clause has been held to be valid. However it is critical that the clause is not a penalty clause but instead a liquidated damages clause designed to act as compensation, rather than a deterrent form breaching the contract. As such an assessment of the anticipated losses to the business arising from a “no show” needs to be made so that you can insert that amount within the clause as a genuine pre estimate of loss and ensure the clause is enforceable..


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