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Employers Update - November 2011

Welcome to Employ! the monthly employment / HR newsletter which keeps you up to date with key developments.

With Christmas just a jingle bell away, we give you our “Five Festive Tips for Employers” below which will make sure that your staff Christmas party is “merry” rather than “messy”!

As ever we welcome your HR questions for us to answer in our Q&A section. Please contact any member of our expanding employment team should you need advice.

Key Employment Team Contacts:

Oliver McCann Will Clayton Elaine Hurn Leanne Eddleston
Oliver McCann
Email Oliver
0844 8000 263
  Will Clayton
Email Will
0844 8000 263
  Elaine Hurn
Email Elaine
0844 8000 263
  Leanne Eddleston
Email Leanne
0844 8000 263



In This Edition:

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Five Festive Tips for Employers

Christmas Party season maybe upon us but we all need to remember that whilst we may relax over a glass or two, there is no relaxation in the law regulating our behaviour! However you don’t need to be Scrooge this festive season, just simply take reasonable steps to protect your staff, yourself and your business. Here’s 5 simple tips that will help you to do so:

  1. Ensure that staff know the rules: It is common for a “secret santa present” to be used as a source of fun, but perhaps remind colleagues that if they contribute to the process any secret gift should not cause offence! Make sure that staff are aware of what is expected of them and, in particular that your bullying and harassment, disciplinary and grievance policies still apply to any Christmas fun and any fall-out.

  2. Be wary of providing unlimited free alcohol or putting your credit card behind the bar: you may not expect your staff to stay sober, but they need to understand that there are limits, especially since they are still representing the business during a work organised event. An email before the fun gets underway explaining that staff are expected to drink in moderation and to behave sensibly will serve as a good reminder to everyone.

  3. Remember your duty of care: Your duty of care to employees extends beyond the office when they are attending work sponsored / organised parties. Keep one eye out for any behaviour that is likely to have a negative impact in the office the next day (e.g. employees becoming overly friendly or acting in a way likely to offend) – the worst thing you want the morning after is a hangover, not a harassment complaint from one of your employees. If someone has had one mulled wine too many, make sure they are safe getting home. If possible, sorting out transport in advance (possibly free) is a good way of making sure that everyone stays safe and is not tempted to get behind the wheel.

  4. Maintain professionalism: The boss is entitled to let his / her hair down too! But remember your role as management, lead by example and as a golden rule, don’t share anything at the Christmas party that you wouldn’t ordinarily disclose during a normal working day!

  5. The Christmas bonus: times are still tough for many companies, and the business may be considering whether it can afford the usual staff Christmas bonus this year. But before you cut it completely – beware: if you have been paying it for a number of years, employees may argue that it has become a contractual right through custom and practice. Consider your position carefully, and if you need further advice contact us for help!

Beware of contractual Disciplinary Policies!

A recent case has considered what factors should be taken into account when deciding whether the provisions of a disciplinary policy are deemed to form part of an employee’s contract of employment.

The claimant, a Doctor employed by the NHS, brought a claim for breach of contract on the grounds that the manner in which disciplinary action against her was taken was in breach of the disciplinary procedure, which she argued was contractual.

The Tribunal gave some guidelines as to when a particular provision will have contractual effect which may include:

  1. the importance of the provision to the contractual relationship;
  2. the level of detail prescribed by the provision;
  3. the certainty of what the provision requires;
  4. the context of the provision; and
  5. whether the provision is workable.

In this particular case, taking the above factors into account, it was held key provisions of the relevant disciplinary policy had been incorporated into the Claimant’s contract of employment and that, accordingly, the Trust had been in breach of some of those provisions in the way that it had dealt with the disciplinary process.

What do I need to know?
We recommend that disciplinary policies and procedures are kept non-contractual (i.e. separate from the contract of employment) for the following reasons:

  1. If the disciplinary procedure is contractual and the Employer fails to follow it to the letter, then the employee will be able to bring a claim for breach of contract or wrongful dismissal. Further, the employee would be able to bring these claims even if they do not have the requisite service to bring an unfair dismissal claim (i.e. 1 year).
  2. If a disciplinary procedure is contractual, it is more difficult to update or amend it as to do so would be a variation to the employee’s contract of employment. In that situation in order to effect the changes, the employer would need to consult with the relevant employees and seek their consent to the proposed amendments.

As such it is advisable to expressly state within the disciplinary procedure that it is non-contractual.

Notwithstanding this, the above case shows that in certain circumstances a provision in a disciplinary procedure may be held to form part of the contract depending, amongst other things, on the weight of its importance to the working relationship.

Reinstatement and Re-engagement – the Hidden Remedy!

During the recession we have seen a significant rise in the number of claimants seeking re-instatement or re-engagement as the remedy sought in the event they are successful in an unfair dismissal claims. This perhaps reflects the desperate state of the job market and also a tactic to apply additional pressure to settle or obtain an increased award at Tribunal. It is therefore no surprise that we are seeing more decisions come through in relation to these remedies like this recent redundancy dismissal case which asked the pertinent question:-

"If a redundant employee successfully claims unfair dismissal on the grounds that the employer failed to follow a fair process, but the Tribunal concludes that there was a genuine redundancy situation, should the Tribunal still consider awarding a remedy of reinstatement or re-engagement?"

A recent case has established that notwithstanding the fact that there was a genuine redundancy dismissal, remedies of reinstatement or re-engagement should still be considered. This case also established that in such a case, the vacancies to be considered should include vacancies that may have arisen following the date of dismissal during the period in which the employer should have been following a fair procedure.

What do I need to know?
One of the key, but very obvious, points raised by this case is the need for employers to ensure that they carry out a fair process in relation to redundancy dismissals, or, indeed, any other dismissals.

In a redundancy situation carrying out a fair process will require informing and consulting with affected employees (as a minimum individually, but also where possible collectively), carrying out a fair selection process and considering alternatives to redundancy. Depending on the number to be made redundant, the employer may also be legally obliged to follow the statutory minimum consultation requirements.

This case serves as a warning to show that, not withstanding the fact that a dismissal is made genuinely on the grounds of redundancy, if an employee is able to show that the dismissal was unfair on procedural grounds, they may still be granted re-instatement or re-engagement as a remedy and this could cause serious practical difficulties for an employer. Employers are advised to take legal advice throughout a redundancy process to reduce their exposure to claims.

Has Christmas Come Early? More “employer-friendly” Changes Afoot!

In last months edition of Employ! we set out details of the government’s ongoing “Resolving Workplace Disputes” consultation and the proposed employment law reforms that this may bring to the benefit of employers, in particular increasing the eligibility criteria to claim unfair dismissal from 1 year to 2 years.

This month it has been reported that the government will now also consult on yet more employer friendly changes which the government believes will save them £10m and employers £40m per annum.

The key points include:

  • a consultation on "protected conversations" -The idea is that employers should be able to have frank discussions with their employees on performance, plans for retirement and other issues without fear that those conversations will be used against them in Tribunal. The prime minister has said that such conversations should be available at the request of either the employer or the employee.
  • a "call for evidence" on the length of time required for a consultation period on planned redundancies. It is currently 90 days where more than 100+ staff are at risk of redundancy, but the government is considering reducing that to 30 – this would be a massive boost in the current economic climate and not only represent massive savings for a business which is desperate to reduce overheads quickly but will also potentially reduce expensive litigation from Unions and Employees over what the correct period of consultation should have been.
  • a requirement for all claims to go to the conciliation service Acas before reaching employment tribunal – aimed at freeing up much valuable time. As many employment tribunal cases settle through ACAS the hope is that by insisting on conciliation first less cases will proceed to the Employment Tribunal. Whether it has the desired effect remains to be seen.
  • options for a "rapid resolution scheme" for more simple cases to be settled within three months

What do I need to know?
This is the latest in a spate of coalition reports and proposals which aim to relax “red-tape” employment regulation which the government believes is inhibiting employers, in particular small businesses, and which is ultimately hampering growth.

The protected discussions proposal is hot on the heels of the recently leaked “Beecroft Report” which controversially proposed scrapping the unfair dismissal regime altogether in relation to poor-performing employees and instead proposed a system of “compensated no fault dismissals”. Under Beecroft’s proposal, an employer would be able to get rid of an under-performing employee by simply paying them their notice pay and a sum equivalent to a statutory redundancy payment, without fear that the employee could bring an unfair dismissal complaint in the Tribunal. Such proposals were unsurprisingly met with fierce criticism from employee groups, and some scepticism as to their viability from employers.

In any event, the press has now reported that the government has indicated that Beecroft’s radical unfair dismissal proposals will not be implemented. It appears that the “protected conversations” proposal is advanced as a less controversial pro-employer suggestion.

It is not yet clear how the government intend to consult on its proposals or whether or when such proposals may be translated into policy or legislation. However, clearly these proposals would be welcomed by employers, but bitterly opposed by employee groups and unions.

In the meantime, whilst “protected conversations” is merely a possibility, Employers should continue to ensure that they have in place and follow a clear and fair performance management / capability process, so that if an employee does bring an unfair dismissal complaint, they are able to adequately defend it. If you want to cut to the chase then you need to call us first to develop a strategy and script for such a conversation – where there is a will there is way!

A Duty to Mitigate!

Most readers will be aware of the rule that a dismissed employee seeking compensation in the Tribunal is under a duty to take reasonable steps to mitigate (i.e. reduce) their loss by seeking to obtain alternative employment as soon as possible.

If an employee fails to take steps to mitigate their loss, then this will affect the amount of compensation awarded by the Tribunal for loss of future earnings. This is borne from the fact that the compensatory award is intended to compensate an employee, not to penalise the employer.

Sticking to the theme of re-engagement/re-instatement in a recent case, an employer used this remedy, prior to a claim being brought, as means to strengthen their position. The case has established that the duty to mitigate obliges an employee to consider an offer of re-engagement in an alternative position with the respondent employer.

In this particular case the Claimant, as single mother, was employed by the Ministry of Defence (MOD). She found it difficult to reconcile her responsibilities as a single parent with the duties in her role at the MOD and resigned. She subsequently brought successful indirect race and sex discrimination claims against the MOD.

However, she was not awarded any compensation in relation to her loss of earnings. During her notice period, the MOD had offered her an alternative position which addressed all of her concerns regarding childcare (e.g. by ensuring she would not be sent out on active service for a number of years and by providing access to schooling etc). The Claimant unreasonably rejected this offer of re-engagement and therefore failed to mitigate her loss.

What do I need to know?
This case highlights that claimant employees are under a duty to mitigate their loss and shows the dangers they face in Tribunal if they unreasonably reject an offer of re-engagement by an employer.

This case also shows how an employer may be able to reduce its liability and the risk of a large compensation award being made against them if they are able to make a reasonable offer of re-engagement or another alternative to the “wronged” employee.

This potential to reduce liability needs to be balanced against the fact that there will be circumstances in which it entirely reasonable for an employee to reject an offer of re-engagement (for example, if the employee has resigned following direct discrimination or harassment by the employer. In such a situation it would be foreseeable that an employee may not wish to be re-engaged with that business).

Further Developments, but not so Sickening for a Change!

In our August edition of Employ! we reported a decision where an employee who had been absent on sick leave and who had accrued holiday leave was entitled to take that leave (or payment for it upon dismissal) notwithstanding the fact that she had not made a formal request to take the leave in accordance with the Working Time Regulations.

A recent decision has now been made in direct conflict to that earlier case and which may signal some good news for employers on this ever-developing topic!

In this recent case before the EAT, an employee had been on long-term sick for three years, before being dismissed. On the termination of her employment, she was paid for her accrued but untaken holidays in respect the most recent year of absence. She then subsequently brought a tribunal claim for her statutory holiday entitlement for the two previous years of absence.

What do I need to know?
In light of the now well recited case law in this area, there was no doubt that the employee had accrued statutory holiday entitlement during her sickness absence. However, the EAT held that in order to be paid for holiday under the Working Time Regulations, an employee must give the required statutory notice of their intention to take that holiday during the relevant leave year.

In this case the employee had not done so and she therefore lost her right to take or be paid for holiday in the initial two years of sickness absence.

The EAT commented that the situation would have been different if the employee had, during those two initial years of absence, made a request to take her statutory holiday at a time after she had recovered from her ill health (i.e. upon her return to work). Had she done so, upon her dismissal she may have been entitled to a payment in lieu of the holidays requested in those previous years. But she had failed to do so and was not therefore entitled to any payment.

Although this case will be welcomed by employers, it is in direct conflict to the decision earlier this year. Unfortunately, until this conflict is resolved by the Tribunals, employers would not be advised to rely blindly on this further decision when dealing with requests for annual leave from sick employees.

Taylors’ advice remains the same – where possible encourage those on sick pay to use their accrued annual leave!

Your Questions Answered

Q. Is it possible to carry out a disciplinary process fairly if an employee is off on long-term sick and unable to attend the office for investigations and hearings etc?

A. At a most simplistic level the answer to this question is yes, it is possible to discipline, and even dismiss someone, while they are on long-term sick. However, the method of doing so fairly and minimising the risk of a successful claim (be it for unfair dismissal or disability discrimination) will vary depending on the specific facts of the case.

In some cases, where it looks possible that the employee will be returning to work at some point in the near future it may, depending on the circumstances of the disciplinary case, be reasonable to delay the disciplinary process until their return. However, in other circumstances where a return seems unlikely for a prolonged period of time and more pressing disciplinary action is deemed necessary, then it may be reasonable for an employer to take action despite an employee’s absence and to make a decision on the information available to them.

Overall the important thing to remember is that, as with any other disciplinary process or dismissal, you must follow a fair procedure and this should always include a full and proper investigation, an opportunity for the employee to state their case and an opportunity for them to appeal the decision should they wish to do so.

It is likely to be necessary to make some adjustments to allow this process to be carried out. Such adjustments may include the following:

  • Arranging meetings to be held remotely, by telephone or other remote conferencing (if an employee is well enough to participate in this manner);
  • Allowing a family member or a friend to be present at any hearing or meeting or to assist with the process overall;
  • Allow submissions in writing – this ensures that the employee has been given an opportunity to state their case before action is taken;
  • Being particularly flexible regarding timescales of the disciplinary process – for example giving the employee a longer period of time than would usually be given to lodge any appeal.

Overall it is a question of reasonableness and if you can show that you have considered alternatives and made reasonable adjustments to carry out a fair process then this will help minimise the risk of a successful claim being made.

Copyright 2006 - 2011 Taylors Solicitors

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