Latest News← Older posts June 28, 2012
The EAT in Packman v Fauchon has clarified that there can be a redundancy even where the headcount remains the same. In this case the Claimant was employed as a book-keeper. There was a downturn in business, and the employer had introduced an accountancy software package which reduced the number of hours that the book-keeper needed to work. As a result the employer asked the Claimant to reduce her hours, she refused and was dismissed. She claimed unfair dismissal. In dispute was the reason for her dismissal. The employer contended that it was not redundancy as there had been no reduction in headcount (relying on an EAT case Aylward v Glamorgan Holiday Home Ltd (EAT/0167/02) which suggested that there must always be a reduction in headcount for a redundancy) The employment tribunal held that the downturn in business meant there was a diminishing need for book-keeping. Since the claimant did not agree to a significant reduction in her hours, the reason for her dismissal was redundancy, and awarded her the statutory redundancy payment.
The employment tribunal disregarded Aylward and pointed out that the decision in that case has always been doubted, notably by the editors of Harvey on Industrial Relations and Employment Law.
The employer appealed, relying upon the Aylward case, which, it contended, bound the employment tribunal. The EAT dismissed the appeal, departing from Aylward and noting Harvey’s criticism with approval. It did, however, disapprove of the employment tribunal not following the Aylward decision, and stated that it should have followed it but stated why it believed it was wrong.
If the amount of work available for the same number of employees is reduced then a dismissal of an employee (whether express, constructive or otherwise) caused wholly or mainly for that reason is a redundancy. This is the correct reading of s139(1) of the Employment Rights Act 1996.
For example, there may be situations in which the needs of the employer’s business are for fewer employees to do the same amount of work – if employee(s) are dismissed for this reason they are dismissed by reason of redundancy. Similarly, if the amount of work available for the same number of employees is reduced, then again a dismissal of an employee caused wholly or mainly for that reason is also a redundancy. If there is just as much work for just as many employees (i.e. in the case of a reorganisation), then a dismissal arising out of the situation would not be for redundancy, because there would be no reduction in the requirements of the business for employees to carry our work of a particular kind.
A useful observation was made by the EAT. The lay members of the EAT panel were glad that the result of the appeal, not least because from an industrial background many HR professionals approach the question of hours and number of employees by adopting an FTE (full-time equivalent) approach. Harvey gives an example, where there are two employees and the work diminishes by 50%, if one employee is dismissed as a result, that is redundancy, just as if the hours of both employees are halved, a dismissal (express or constructive) arising therefrom would also be by reason of redundancy. Essentially the FTE equivalent workforce in that example is cut from two to one, even though the number of employees (i.e. headcount) actually remains the same. The lay members therefore felt that this EAT’s decision was entirely consistent with actual industrial approach.Oxford Employment Law | Leave a comment June 21, 2012
In Asociación Nacional de Grandes Empresas de Distribución (ANGED) v Federación de Asociaciones Sindicales and ors the ECJ has held that the EU Working Time Directive requires that a worker who is sick during paid annual leave is able to interrupt the annual leave and take it at a later date – irrespective of whether the sickness commenced before or during the annual leave.
Several Spanish trade unions sought declarations that workers were entitled to postpone paid annual leave where it coincided with sick leave, despite contrary provision in collective agreements. The Spanish Supreme Courtmade a reference to the ECJ asking whether, under Article 7(1) of the Working Time Directive, a worker must be able to interrupt a period of annual leave if he or she is temporarily incapacitated so that the full (or remaining) period can be taken at a later time.
The ECJ reiterated that the right to paid annual leave is an important principle of EU social law from which there can be no derogation. The purpose of paid annual leave is to enable workers to rest and enjoy a period of relaxation and leisure, whereas the purpose of sick leave is to enable a worker to recover from an illness that has caused him to be unfit for work. The Court in a previous case had already held that a worker who was on sick leave prior to, and during, a period of previously scheduled annual leave had the right, at his request, to take the annual leave when he had recovered.
The ECJ held that the point at which the temporary incapacity for work arose is irrelevant. A worker is entitled to take paid annual leave at a later date if it coincides with sick leave, irrespective of the point at which the incapacity arose. This new period of annual leave may be scheduled, if necessary, outside the holiday year.
This case will no doubt give rise to all sort of complications, such as reporting the illness to the employer when on a foreign holiday, obtaining doctor’s notes when abroad, and whether the sickness goes as far as falling within sickness absence rather than annual leave.Posted in Oxford Employment Law | Leave a comment May 31, 2012
The Court of Appeal has decided in the case of Cavanagh v William Evans Ltd that an employer which terminates an employee’s employment contract under an express term which allows summary termination with payment in lieu of notice, cannot thereafter withhold that payment in lieu if it subsequently discovers that the employee had committed gross misconduct prior to the dismissal.
The facts were that the company concluded that Mr Cavenagh was redundant and summarily terminated his employment contract specifically pursuant to a term which provided for pay in lieu of the six month notice period. It subsequently discovered that Mr Cavenagh was guilty of gross misconduct pre-termination and did not make the payment. It was agreed that had the employer known about the gross misconduct before it exercised the PILON clause, it would have accepted the repudiatory breach of the employment contract, and regarded itself as discharged from liability for pay in lieu of notice.
The Court of Appeal held that on the exercise of the PILON clause, Mr Cavanagh had acquired an accrued right to the payment, recoverable as a debt, as his contract had been summarily terminated under the relevant contractual provision. There was no provision in the contract permitting the employer to withhold the payment in lieu if the employer subsequently discovered that he had committed a prior act of gross misconduct. Nor was there any general principle of contract law barring or extinguishing his right to recover the pay in lieu as a debt from the company. The principle that a claim for wrongful dismissal could be defeated by relying on evidence of misconduct discovered after the dismissal did not provide the company with a defence to a debt claim.
The unfortunate (and ironic) result of this case is that had the company acted improperly (in breach of contract), and terminated Mr Cavenagh’s contract otherwise than pursuant to the PILON clause, and simply failed to pay anything in respect of notice, it could then have resisted the claim for wrongful dismissal by relying on the subsequently discovered pre-termination gross misconduct.
To avoid this scenario, employers should include in their employment contracts a provision allowing for withholding (or recovery) of PILON payments in the event of subsequently discovered pre-termination gross misconduct.Posted in Oxford Employment Law | Leave a comment May 24, 2012
Tuesday 5th June 2012 has been designated an extra Bank Holiday to celebrate the Queen’s Diamond Jubilee. The spring Bank Holiday which usually falls at the end of May has been moved to Monday 4th June to give a 4-day holiday weekend.
Some employers are wondering what rights employees and employers have in respect of this additional bank Holiday. There is no statutory right to take a Bank Holiday (or a Public Holiday for that matter) off as paid holiday. What matters is the wording of the employment contract.
If the employment contract states that the employee is entitled to [x] days ‘plus the eight Bank and Public Holidays’, or lists the specific Bank and Public Holidays that an employee is entitled to, there is no automatic entitlement to the extra day. Assuming the employer does not decide to give everyone an extra day’s paid (or unpaid) holiday and close for business, if an employee wished to take the extra Bank Holiday as holiday, s/he would have to use a normal day’s holiday. In this case, employers need to be careful to treat everyone fairly and consistently, as it is likely that many employees will want to take the extra day off.
If the employment contract states that employee’s annual leave is ‘inclusive of Bank and Public Holidays’, again the employee will need to use up a normal holiday day if they wish to take the extra day off work.
If the employment contract states that the employee is entitled to [x] days annual leave ‘plus Bank and Public Holidays’, and does not list them or specify the number of Bank and Public Holidays, then the employee is entitled to the extra day.
Please contact Justin Godbolt on 01865 487136 for advice in specific circumstances.Posted in Oxford Employment Law | Leave a comment May 9, 2012
In a recent decision, the EAT has overturned an Employment Tribunal’s decision of unfair dismissal because of inadequate consultation and subjectivity in the employer’s assessment of the Claimant for alternative employment.
In the case of Samsung Electronics (UK) v Monte D’Cruz, the Claimant worked in the Print division of Samsung as one of four senior managers. Samsung proposed to reorganize by combining the four roles into a single head of department position. The Claimant applied for the Head position, but was unsuccessful. He and another ‘at risk’ employee applied for a lower position of a Team Leader role. They were both unsuccessful and an external candidate was appointed. The Claimant was subsequently made redundant and claimed unfair dismissal
The Employment Tribunal ruled that redundancy was the reason for the Claimant’s dismissal, but that the dismissal was unfair on two procedural grounds: firstly the consultation had been inadequate and secondly that Samsung’s approach to alternative employment was flawed, particularly regarding the objectivity of the criteria used for assessing the Claimant’s suitability for the Team Leader role. The Claimant was awarded over £60,000 in compensation.
The EAT disagreed with the Tribunal’s view regarding the consultation and confirmed that Samsung had provided relevant and adequate information to the Claimant at appropriate points in the process.
In respect of the appointment process for the Team Leader role, the Employment Tribunal was critical of Samsung’s decision to assess the internal candidates against ten mostly subjective competencies that were normally used as part of the annual appraisal process, including creativity, challenge, strategic focus, simplicity, self-control/empowerment, crisis awareness, and continuous innovation. Samsung used these criteria rather than the person specification of the new post and the Employment Tribunal considered them to be too subjective. The EAT found that, whilst best practice would be for an employer to tell the applicants what assessment criteria would be used and how these would be judged, failure to do so would not render the interview decision unfair. The EAT was satisfied that there is no obligation on an employer to limit themselves only to those factors that are capable of objective measurement in considering applicants for alternative employment.
This case shows the difference in approach that may be used when deciding on selection criteria for redundancy selection, and the criteria that can be used in deciding whether a candidate is suitable for an alternative role. In order to be reasonable, the redundancy selection criteria should be both objective and measurable, and not based on someone’s personal opinion. However, when an employee at risk of redundancy is being considered for alternative employment, an employer has reasonable flexibility when assessing his/her suitability for the new role. The EAT has confirmed that employers are permitted to use subjective criteria, provided the decision is made in good faith.Posted in Oxford Employment Law | Leave a comment April 23, 2012
The recent case of Doyle v North West London Hospitals NHS Trust has confirmed the Employment Appeal Tribunal’s view on how the ability of a party to employment tribunal proceedings to pay the costs of the other party should be considered.
The EAT decided that before making a costs order, an employment tribunal should in certain circumstances consider the issue of the potential paying party’s ability to pay costs, even if the paying party was represented by Counsel and the issue was not raised by the paying party or her Counsel.
Rule 41(2) of the Employment Tribunal Rules of Procedure states that when an employment tribunal considers whether to award costs or the amount of such costs, it ‘may have regard to the paying party’s ability to pay’.
In this case, the Claimant’s claims of breach of contract and race discrimination against the employer and six named individuals, were all dismissed. The employment tribunal made an order that the Claimant should pay the entirety of the Respondent’s costs, which were estimated at £60,000 but could potentially be up to £95,000. The Tribunal had not considered the Claimant’s ability to pay when reaching this decision, nor had the issue been raised by the Claimant’s legal representative.
The EAT stated that in exercising its discretion to order costs, the employment tribunal does not have to find a precise causal link between any relevant conduct and any specific costs claimed. It endorsed Mummery LJ’s guidance in the Court of Appeal in Barnsley Metropolitan Borough Council v Yerrakalva that “the vital point in exercising the discretion to order costs is to look at the whole picture of what happened in the case and to ask whether there has been unreasonable conduct by the claimant in bringing and conducting the case and, in doing so, to identify the conduct, what was unreasonable about it and what effects it had“.
The EAT concluded that the tribunal had not erred in deciding to award costs. However, in the particular circumstances of the case, which included a potentially very large costs award and nothing to indicate that the Claimant could pay such an award, the EAT concluded that the tribunal had erred in law by not raising the issue of ability to pay before deciding on the costs application. The matter was remitted to the same employment tribunal to consider the claimant’s means, to decide her ability to pay, and having done so make an appropriate costs order.
The EAT commented that tribunals should always be cautious before making a very large costs award, given the very serious potential consequences to a Claimant of such an order and because such orders may act as a disincentive to those bringing legitimate claims.Posted in Oxford Employment Law | Leave a comment March 29, 2012
From 6 April 2012 the minimum qualifying period to claim unfair dismissal rises from one to two years.
The Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order 2012 will come into force on 6 April 2012, to amend the Employment Rights Act 1996. It will increase the minimum qualifying period of continuous employment necessary to claim unfair dismissal, and entitlement to written reasons for dismissal, from one year to two years.
However, this will not affect all employees across the board, Employers could have two classes of employees with differing rights to claim unfair dismissal. This is because these changes will not affect employees whose period of continuous employment began before 6 April 2012.
Employers will need to be aware of this distinction and, in particular, consider if an employee may be able to claim the period of employment began before 6 April 2012, if:
- an employee transferred into the organisation with an existing period of continuous employment (e.g. under TUPE) or has other service which counts such as from an associated employer;
- there is a gap in employment which breaks continuity and what the effect of this break is in terms of calculating continuous service; not all breaks of service break continuity;
- an employee performed services for the employer in another manner (e.g. purportedly as a consultant) but that this could be argued to be a period of continuous employment.
Further, some dismissal rights do not need a qualification period. For example, an employee dismissed for whistle-blowing, or asserting a statutory right (such as the right to take time off to care for dependants) may claim automatically unfair dismissal, without any need for a qualifying period. Similarly, an employee who can establish that a dismissal was connected to unlawful discrimination will also be protected.Posted in Oxford Employment Law | Leave a comment March 29, 2012
In the recent case Garside and Laycock Ltd v Booth UK EAT/0003/11, the EAT set out the legal issues that employers need to take into consideration when considering reducing employee pay.
When an employer wants to make changes to the terms and conditions of employees, it should firstly go through a process of consultation with the affected employees to seek consent to the proposed changes. Imposing changes without any form of consultation is likely to constitute a repudiatory breach of contract and may give rise to claims for constructive dismissal.
If, after a period of consultation, all or some of the employees do not consent to the proposed changes to terms and conditions, the employer has three options:
1. Not proceed with the change; or
2. Unilaterally impose the change to the existing terms and conditions; or
3. Following fair warning, dismiss with notice those employees who do not consent, and offer them employment on the new terms and conditions to commence immediately once the notice period under the old contract has expired.
In this case the employees were asked to take a 5% pay cut. After consultation, Mr Booth and one other employee would not agree to the pay cut. As pay was involved in the proposed contractual change, the employer quite correctly followed option 3. If the employer had just imposed the change, the employees would have been able to bring a claim for unlawful deduction from wages in relation to the 5% pay cut on the basis that his contractual wage had been cut without his consent. He would also have had grounds to resign and claim constructive dismissal.
Mr Booth refused the new contract he was offered and was subsequently dismissed for some other substantial reason (SOSR). The fairness of such a dismissal is decided in accordance with Section 98(4) of the Employment Rights Act 1996.
The Employment Tribunal found that the reason for dismissal was SOSR, but upheld Mr Booth’s unfair dismissal claim on the basis that his employer had failed to show that the dismissal was fair in all the circumstances.
The Employment Appeal Tribunal (EAT) allowed the appeal and remitted the case to a fresh Tribunal to determine whether the dismissal was fair. In reaching its decision the EAT gave a reminder to employers as to some of the key issues in a case like this:
1. Employers do not have to show that the contractual change is crucial to the survival of the business. The key is being able to demonstrate that there is a legitimate business reason for the change;
2. When considering the factors which are relevant to the fairness of a dismissal such as this, the Tribunal should focus on the reasonableness of the employer’s decision and not the reasonableness of the employee’s refusal to agree the change;
3. The requirement to determine the fairness of dismissals “in accordance with equity” as required by section 98(4)(b) of ERA 1996 includes considering whether the employer had considered other options, and also whether the whole workforce were affected by the pay cut.
As with many issues in employment law, the key point for employers is to demonstrate that they have behaved reasonably in the circumstances. It is certainly not impossible to lawfully make changes to employees’ existing terms and conditions of employment, but planning in advance and conducting genuine consultation with the workforce should be central to any such proposed changes.Posted in Oxford Employment Law | Leave a comment March 6, 2012
You may not have noticed, but there was a right old furore over the drafting of s147 of the Equality Act 2010, which if interpreted one way meant that an employee could not compromise any claims arising under the Equality Act 2010 – i.e. all discrimination claims. In short, the drafting could be read to say that the lawyer advising the (ex)employee on the compromise agreement could never be independent, so the compromise would not be valid.
Whilst it was, well, blatantly obvious that no Tribunal would reach that conclusion, lawyers made a huge fuss over it, to the extent that two top employment law QCs couldn’t agree, although DBIS insisted there wasn’t any problem; which of course there wasn’t.
Well, the Government has now fixed the non-existent problem, with the Equality Act 2010 (Amendment) Order 2012, which comes into force on 6th April 2012. It amends the offending section 147 to remove the (non-existent) controversy. That’s that then.
In the recent decision of Eddie Stobart Ltd v Morman the EAT decided that for there to be a service provision change under Reg 3 (1) (b) of TUPE 2006, it is not enough to say that employees will transfer if they simply “go with the work”.
Stobart is a warehousing and logistics service provider. It took over a site in 2008 at which it serviced at least 5 clients. Over time, 3 contracts were lost. Of the two remaining contracts (being for meat storage and delivery) one client’s work was done mainly at night (by the night shift workers) and the other’s work mainly during the day, by different day shift workers. The main contract (for the work during the night) was with a client called Vion. Stobart closed the site, and FJG Logistics Ltd picked up the Vion work. Stobart took the view that the 35 employees who were engaged wholly (or for 50%+) of their time on Vion work on the night shift should transfer to FJG pursuant to TUPE. FJG disagreed and refused to treat any of the employees as transferring to it. The EAT agreed with FJG that there was no service provision change and therefore no employees transferred. The consequence of this decision is that the employees had been dismissed by Stobart unfairly and with no notice.
The EAT said that there needs to be analytical distinction between an organised grouping of employees (TUPE, Reg 3 ((3) (a)), on the one hand and, on the other, whether employees are assigned to that organised grouping (Reg (4 (1)).
The EAT held that it is first necessary to identify whether there is an organised grouping of employees before asking the question of which employees are assigned to it. The essential point in this case was that the employees were “organised” as to their shifts, not as to a particular customer, so there was not an organised grouping of employees which had as its principal purpose the carrying out of activities on behalf of a particular customer. The EAT said that a paradigm example of an organised grouping of employees would be where there was a particular client “team” dedicated to the client. Such was not the case here.Posted in Oxford Employment Law | Leave a comment ← Older posts