New rules on unfair dismissal judged fair enough
by Martin Williams, March 15th, 2012
6th April 2012 is set to bring employers an extra year’s protection from claims of unfair dismissal.
People who are hired on or after 6th April 2012 will now have to be employed for two years before qualifying for the right to claim for unfair dismissal. Those already in post will still have the right to claim after 12 months.
The change is part of the Government’s plans to boost economic growth and business confidence. The Department for Business, Innovation and Skills claims this one measure could save businesses an estimated £6million per year and reduce Employment Tribunal cases by around 2,000.
Policy makers might like to see any boosts in April’s employment figures as a sign employers appreciate another year’s grace before unfair dismissal claims can loom. A more likely, if cynical, explanation is that organisations may actively avoid taking on new recruits until 6th April, to gain the longer qualifying period.
Sleeping on the job won’t get you the National Minimum Wage
by Martin Williams, September 29th, 2011
From 1st October 2011 the new national minimum wage for qualifying workers aged 21 years and over will rise from £5.93 to £6.08.
Many people may not be aware of the numerous exceptions to this standard but there are in fact seven different figures for minimum wages ranging from the rate for “young” workers (i.e. workers above compulsory school age but under 18 and not apprenticed, currently £3.64 but rising by 4p in October), to that for agricultural apprentices in England and Wales (currently £3.57).
Whilst this may appear one of the simpler parts of employment legislation (i.e. you pay someone at least the minimum rate for the hours that they work and job done), a recent case heard by the Employment Appeal Tribunal (EAT) demonstrates that this area of law can test the most learned brains of our great judiciary.
In Wray v JW Lees & Co, Ms Wray, a temporary pub manager at the White Hart pub, was provided with free accommodation on the pub premises as part of her contract, and was required to sleep in that accommodation overnight. When she was subsequently made redundant, Ms Wray made two claims to the Employment Tribunal – firstly for unfair dismissal, and secondly for a failure to pay the minimum wage. It is this second part of her claim that is of interest here.
Ms Wray was paid a gross amount of £325 per week during the period that she was at the White Hart. It was her employer’s case that:
- she worked 42½ hours per week, being the actual hours that the pub was open. This equated to an hourly rate of £7.65 which was comfortably above the minimum wage, which was £5.73 from 1 October 2008.
Ms Wray, however, claimed that:
- when calculating the hourly rate, several things should be taken into consideration, including:
a) the numerous extra hours which she said that she spent working outside the actual opening hours of the pub; plus
b) the hours when she was required to be at the pub overnight.
The Tribunal found that Ms Wray worked a further 14 hours a week over and above the hours that the pub was open – that is, a total of 56½ hours. On the basis of a weekly wage of £325 that would produce an hourly rate of just over £5.75 – just above the minimum wage at that time. The decision was therefore down to the time spent at the pub overnight.
There is no definition in the National Minimum Wage Act of what specifically constitutes “work”. The Tribunal had, therefore, looked to the definition provided by the Working Time Regulations (WTR) in order to make their decision. On consideration, the EAT ruled that this was an incorrect approach as the WTR have no relevance to the minimum wage. The issue should have been determined exclusively by reference to the relevant provisions of the National Minimum Wage Regulations 1999.
The EAT dismissed the appeal by Ms Wray. It was their view that whilst Ms Wray was required to sleep at the premises, she was not required to actually do any work during that time and could not, for example, be compared to an overnight security guard. She was freely allowed to leave the premises during the course of the evening or night, and the only requirement was that she slept there.
Does thinking 9/11 was part of a global conspiracy amount to a philosophical belief?
by Martin Williams, September 9th, 2011
The short answer is no, according to the Employment Judge Rostant in the case of Farrell v South Yorkshire Police Authority.
Mr Farrell was an intelligence analyst who was asked to produce a report for the police which included an assessment of ongoing terrorist threats. He proceeded to produce a diatribe on how 9/11 and 7/7 were “false flag” operations authorised by theUSandUKgovernments respectively and that a global elite was stirring up trouble (economic and military) for its own ends. He acknowledged in the report that the police would not appreciate his views and was right: he was dismissed as it was found his continued employment was untenable.
The claim in the Tribunal was for unfair dismissal and discrimination on the grounds of religion or belief. It appeared that Mr Farrell’s views were influenced by his adherence to “End Time” theological views. However, he did not claim that he was discriminated against because of his religion, accepting that his view were not mainstream Christian beliefs. What he claimed was that he had a philosophical belief in the ascent of a New World Order which was part of the anti-Christ system and the wars inIraqandAfghanistanalong with 9/11 and 7/7 were perpetuated in furtherance of that agenda.
The case of Grainger plc and others v Nicholson gave guidance on what amounts to a “philosophical belief” for the purposes of religion or belief discrimination law. The belief must:
- be genuinely held
- be a belief, not an opinion or viewpoint, based on the present state of information available
- be worthy of respect in a democratic society
- be a belief as to a weighty and substantial aspect of human life and behaviour
- attain a certain level of cogency, seriousness, cohesion and importance
It was this final point that the Employment Judge felt that Mr Farrell fell down on as his belief did not reach the required level of cogency and coherence. This was especially so when the beliefs were about matters where there was a substantial amount of evidence, as opposed to where beliefs relate to the unknowable, for example the existence of a deity. “In that context the assessment of cogency and coherence must take into account the broadly accepted body of knowledge in the public domain.”
Mr Farrell was held to have presented contradictory views which did not hold up under questioning and, in light of the weight of the evidence to the contrary, his conspiracy theories were “wildly improbable”. The emphasis was, therefore, not on whether such beliefs were genuine enough to be philosophical but whether it made any sense to hold them at all.
Cases citing religion or belief discrimination are growing in number and as they rise through the court system (this was only a first instance Tribunal decision after all) the decisions will have a greater influence on what is regarded as acceptable or not in the workplace.
Compulsory Retirement – not a meaningless matter for the closed mind
by Martin Williams, September 9th, 2011
From 1 October 2011 retirement will only be a fair reason for dismissal if the age at which it occurs can be objectively justified. However, some employees are still going through the present system of retirement prior to that date. A new case has arisen which reminds employers that although they may have actioned compulsory retirements prior to the change coming into full force this may not be without its problems.
The Employment Appeals Tribunal (EAT) has recently held in Compass Group plc v Ayodele that the “duty to consider” procedure in Section 6 of the Employment Equality (Age) Regulations 2006, requires the employer to consider an employee’s request to work beyond a default retirement age in good faith.
Mr Ayodele was notified by his employer that it was their intention to dismiss him on his 65th birthday. He made a request not to retire on that date, however his employer had a policy that all staff were retired at the age of 65 with no exceptions. The initial meeting held with Mr Ayodele confirmed this, as did the subsequent appeal meeting. Following his retirement, Mr Ayodele submitted a claim for unfair dismissal.
At the hearing, Compass Group gave evidence that both meetings had been “meaningless formalities”. The matter of Mr Ayodele’s retirement had been a “done deal” because “the policy was the policy” and there was no leeway to be granted when applying it.
The Employment Tribunal found that Mr Ayodele had been dismissed unfairly. It held that a sham process such as that displayed by the Compass Group neither followed the legislation, nor complied with the spirit in which that legislation was intended. The Tribunal held that it was implicit that any statutory obligation must be carried out in good faith, and awarded Mr Ayodele two years’ loss of earnings. This decision was later upheld by the EAT, who stated that an employer could not “simply sit through the [request to extend] meeting with a closed mind”. This was not a way in which to effectively comply with the legislative provisions and there is no point in holding a meeting simply for formalities sake.
While this case is important, it does not entirely open the floodgates for claims following retirement dismissals. The good faith obligation only obliges the employer to “genuinely consider” a request, it does not mean that the reasoning behind a decision can be later challenged. If however a claimant can prove that their employer had no intention of even considering their request to work beyond retirement, this could well fall under the umbrella for claim potential. In the future a lack of genuine consideration of a request to stay on could also undermine the decision to retire an employee, even if the age for retirement set by the employer could be objectively justified.
With employers rushing to retire employees before the October deadline, it may be that some make this mistake, the fear of an ageing workforce being the only thing on their mind. The deadline for the Claimant to lodge an ET1 with the Employment Tribunal is 3 months from the date of termination. It will remain to be seen how many cases are submitted and what lasting impact this ruling may have.
Number of tribunal claims falls by 8% from 2010 levels
by Martin Williams, September 5th, 2011
The annual statistics for Employment Tribunals (ET) for April 2010 to March 2011 have been published by HM Courts and Tribunals Service.
The statistics show that there were 218,100 claims made to the ET between 1 April 2010 and 31 March 2001, an 8% fall in the number of claims received by tribunals when compared with 2009-10.
Each claim can contain a number of different grounds, which are known as ‘jurisdictional complaints’. During 2010-11, the total number of jurisdictional complaints totalled 382,400. Out of these, 30% were concerning Working Time Directive (largely British Airways related Working Time Regulation claims which are resubmitted every three months), 28% where for unfair dismissal, breach of contract and redundancy, and 19% were for unauthorised deductions.
When looking at the concluded jurisdictional claims by outcome the key figures were that 32% were withdrawn, 29% were settled via Acas and in 12% of cases the Claimants were successful at ET.
Published figures regarding compensation awarded are as follows:
- Unfair dismissal – an average award of £8,924.
- Race discrimination – an average award of £12,108 (with a maximum award of £62,530).
- Sex discrimination – an average award of £13,911 (with a maximum award of £289,167).
- Disability discrimination – an average award of £14,137 (with a maximum award of £181,083).
- Age discrimination – an average award of £30,289 (with a maximum award of £144,100).
The number of unfair dismissal and redundancy claims are reported to have fallen slightly. Conversely, claims under the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 have nearly tripled and age discrimination claims have risen by 32%. We could see more of the latter now that the default retirement age has been abolished.
The drop in the number of claims follows a staggering surge the previous year, where claims increased by some 56%. Whilst the figures this year are positive, they still represent an increase of 44% on the 2008-09 number, demonstrating that while numbers are beginning to fall, the increased call for remedy by aggrieved employees is still ever-present.
Dismiss all of your staff, then hire them all back the following day with a 5.4% pay cut.
by Martin Williams, September 5th, 2011
In July 2011, dismissal letters were sent to all of Shropshire County Council’s 6,500 employees. The letter stated that all council staff were to be dismissed on the 30th September and immediately rehired the following day, but only if they agreed to a 5.4% pay cut. Those staff who did not accept the pay cut were to be dismissed without compensation. This drastic sounding process follows a similar move by Birmingham City Council earlier this year.
The reason behind this bold move was said to be a £76m shortfall in government funding. The pay cuts were to avoid Shropshire having to make 400 permanent redundancies.
The move followed a 90 day consultation period and a series of negotiation meetings during which no agreement was reached on how to deal with the reduced budget. This ‘dismissal and re-engagement’ tactic was said to be a last resort.
Terminating employment and offering re-engagement on new terms
When an employer needs to make a change to terms and conditions of employment, there are three ways in which the employer may vary the existing contract of employment:
- Seeking the employees’ express agreement to the new terms.
- Unilaterally imposing the change and relying on the employees’ conduct to establish implied agreement to the change.
- Terminating the employees’ employment and offering re-employment on the new terms.
As Shropshire’s consultation on option 1 above did not work, they had to fast track to option 3. This is generally seen to be better than option 2, which has many legal risks associated with it.
So what are the risks to the employer involved in this type of action?
Wrongful dismissal
Provided that the employer serves due contractual notice on employees (or buys out the notice period with a payment in lieu of notice) it will probably not face any claims for wrongful dismissal.
Unfair dismissal
Even where the employer offers continuing employment on revised terms, termination of the existing contract will constitute a dismissal in law and employees will be able to bring unfair dismissal claims in the ordinary way, even if they choose to accept the offer of new employment.
In order to defend an unfair dismissal claim an employer must:
- establish a potentially fair reason for dismissal, and
- show that it acted reasonably in dismissing the employee for failure to agree to the change in terms of employment.
In the context of changing terms of employment, employers usually rely on the potentially fair reason, “some other substantial reason” (“SOSR”) although redundancy is sometimes pleaded in the alternative where the change gives rise to, or was proposed in, a redundancy situation.
As long as the employer has a sound business reason for dismissing an employee who refuses to accept a change in terms, it should be able to establish SOSR.
An Employment Tribunal will take into consideration various factors in deciding the reasonableness of the employer’s decision to dismiss. However, the Tribunal cannot substitute its personal feelings as to what would have been fair, but must consider solely what a reasonable employer would consider sound.
A dismissal following a failure to agree to a change in terms will almost always be unfair where the employer has failed to follow any procedure and consult with employees over the proposed changes, even where the business is faced with financial problems which means that time is of the essence. The adoption of a “fair” procedure goes to the heart of the question of reasonableness, and thus employers seeking to adopt a fair procedure should seek specialist advice.
The importance of the ACAS Code of Practice
by Martin Williams, August 31st, 2011
390,870 reasons why employers should follow a proper procedure when dismissing an employee:
A recent case in the Employment Tribunal in Wales saw the Claimant awarded £390,870.58 following a ruling that he had been unfairly dismissed on the grounds of disability discrimination. This is said to be Wales’ highest ever discrimination award and is believed to be the third highest disability discrimination award in UK history.
The case of Jones v Jewson Ltd has yet to be formally reported, but indications are that part of the award included an uplift due to an unreasonable failure to follow the Acas Code of Practice (“the Code”) on disciplinary and dismissal procedures.
The Claimant (Mr Jones) had worked for the Respondents for 22 years and was aged 55 when he suffered a stroke. After the stroke, Mr Jones’ doctor advised him that he should avoid stress at work. As Mr Jones’ role at the time involved him averaging over 60 hour weeks, it was generally agreed that this role would be stressful. It was also maintained that no role within the company was going to be without stress. As a result, after five months of sickness absence, Mr Jones was dismissed on the grounds of incapacity.
The tribunal found that the dismissal was unfair and amounted to disability discrimination by reason of failure to make reasonable adjustments. Such considerations are a crucial consideration in any such case. Had a less stressful role within the business been identified (or at the least even considered) for Mr Jones, it may have been that, within time, he could have recovered his good health and returned to work. Had the Respondent sought a full specialist medical report, they may have also discovered that the assumption that Mr Jones had poor prospects for recovery was ill founded. Mr Jones, in fact, made a full recovery within 11 months of suffering the stroke. Had the Respondents taken the advice of a specialist, or even simply waited for a longer period of time to have a more informed idea of Mr Jones’ prognosis before dismissal, they may have been £390.870.58 better off today. This case really does emphasise the importance of following a full and thorough procedure no matter how the situation may appear at any given time.
Included in the award made to Mr Jones was a sum of £15,000 for injury to feelings, and an uplift for failure to follow the Code which is believed to be in the region of £18,000. This was not the full uplift that the tribunal could have awarded (see below) but it does nonetheless re-emphasise the importance of following it. Crucially there are two key reasons for doing so as follows:
1. It can avoid an unfair dismissal claim
The Code is intended to help employers and employees deal effectively with issues of alleged misconduct or poor performance in the workplace. It should also be taken into account when dealing with capability issues. When deciding whether an employee has been unfairly dismissed for misconduct or poor performance, an employment tribunal will consider whether the employer has followed a fair procedure. In doing so, it must take account of any provisions of the Acas Code that appear to be relevant.
2. It can affect the level of compensation
If an employee brings a successful claim for unfair dismissal or a number of other common types of claim the level of compensation awarded to the employee can be affected if either party failed to follow the Code:
- If the employer unreasonably failed to follow it, the tribunal may increase the employee’s compensation by up to 25%.
- If the employee unreasonably failed to follow it, the tribunal may reduce their compensation by up to 25%.
In this case, the uplift was only in the region of 5%, the reasoning for which will no doubt become clear when the case is officially reported. It was perhaps felt a fair sum in a case where the usual cap on a compensatory award (which currently stands at £68,400) was exceeded by such a great amount (there being no limit on compensation payable in successful discrimination claims). Either way the lesson to be learned is stated loud and clear that the Acas Code is crucially important to a disciplinary situation of any kind and employers should not ignore it.
Employee dismissed for uncertain immigration status
by Martin Williams, July 29th, 2011
The EAT has held that an employer acted reasonably in dismissing an employee who had an uncertain immigration status.
The Employment Appeal Tribunal (EAT) has held in Kurumuth v NHS Trust North Middlesex University Hospital that an employer’s decision to dismiss an employee where they had not been satisfied that she was entitled to work in the UK was reasonable.
Mrs Kurumuth was a Mauritian national who obtained a work permit for theUKin 1992. She was subsequently refused further leave to remain in 1997 and upon appealing the decision, received a letter from the Home Office stating that she was entitled to remain in theUKwhilst her appeal was being determined. Mrs Kurumuth was employed by the Trust as a Healthcare support worker but following the introduction of the points-based immigration system, the Trust checked Mrs Kurumuth’s immigration status with the UK Border Agency (UKBA) and became unsatisfied that the letter from the Home Office was evidence that she had a right to work in the UK. The Trust suspended her without pay and she was later dismissed without notice.
Mrs Kurumuth brought several claims against the Trust including unfair dismissal. The Tribunal found that Mrs Kurumuth’s dismissal had been procedurally unfair according to the Employment Rights Act (ERA) 1996 and awarded her a basic compensatory award on the basis that the Trust had failed to follow any proper disciplinary procedure involving Mrs Kurumuth. Mrs Kurumuth appealed to the EAT arguing that the Trust’s decision had been substantially unfair.
Under the ERA, it was up to the Trust to show what the reason for dismissal was and the reasonableness of that dismissal. Despite the failure to adopt a reasonable procedure, it was accepted by Mrs Kurumuth that the Trust held a genuine reason for her dismissal in that it believed that she was not entitled to work. This satisfied the fairness requirements of the ERA 1996 and only the reasonableness of the grounds for dismissal needed were considered by the EAT.
Relying on Elens Klusova v London Borough of Hounslow [2007], the EAT found that the Trust had shown a genuine reason for the dismissal of Mrs Kurumuth as she was unable to show that she was able to work lawfully in the UK. The Trust had taken all steps reasonable in the circumstances to investigate and because the UKBA had failed to provide a clear statement on Mrs Kurumuth’s immigration status, had formed a genuine belief that she was not entitled to work. The EAT concluded that the Trust’s belief was reasonable and the appeal was dismissed.
The EAT held that the Trust should pay Mrs Kurumuth for her notice period together with salary due for the period that she was suspended for. Further, that she was entitled to one week’s pay being the time it would have taken the Trust to follow the correct disciplinary procedure.
This decision confirms that as long as an employer has made a proper investigation into the immigration status of an employee, it may be reasonable for them to dismiss the employee where no official confirmation of their status is available. As always, employers should be mindful of following reasonable procedures in dismissing an employee.
Insolvency and TUPE
by Martin Williams, June 17th, 2011
What happens when an employee is unfairly and wrongfully dismissed by his new employer following a pre-pack TUPE transfer?
A pre-pack administration occurs when a business facing financial difficulty is sold on to a third party, or existing directors. The main reason to go down the pre-pack administration route is that the business effectively “continues” and the business and assets are sold to the new owners. This in turn removes debts, unwanted contracts and, possibly, employees without disrupting the business.
In the case of Molloy v Pressure Coolers, the Claimant was a bench fitter employed by a company called Maestro International Limited. Maestro then went into pre-pack administration with its business and assets sold to Pressure Coolers. The Claimant was dismissed not long after the transfer took place and claimed that he was unfairly and wrongfully dismissed.
Under TUPE Regulation 8, it states that in certain circumstances liability for sums payable to an employee for “relevant statutory claims” (including unfair and wrongful dismissal) should be paid by the Secretary of State and not by the company to who acquired the failing business.
However in this particular case, the purpose of the pre-pack administration was not to liquidate Maestro’s assets as required under Regulation 8, but to sell the business as a going concern.
At the Employment Appeal Tribunal, Mrs Justice Cox decided that for Regulation 8 to apply, then the relevant liability must have arisen prior to the transfer of the business itself. Here, it was Pressure Coolers that dismissed the Claimant after the transfer had taken place and therefore the EAT held that the Pressure Coolers were entirely responsible for paying out the award to the Claimant.
The key thing to remember is that where the transfer has already been effected, the employee will no longer be with an insolvent company and so the Government will not pick up the bill. Even if the dismissal takes place prior to any “sale” of the business the employees could transfer, or, if dismissed, claim against the buyer if the original company was not put into administration with a view to liquidation.
Government guidance and case law is rather unhelpful here and specific advice should be sough before important decisions are made.
Can you claim your salary whilst in jail?
by Martin Williams, June 11th, 2011
If you are in prison, you might be a bit more concerned about the charges being made against you than about your finances…
Nevertheless a bank branch manager at Santander, Mr Burns, was arrested for the nominal amount of 13 charges. He remained in custody from February 2009 until August 2009, when he was convicted for two of the charges, being common assault and assault with intent to commit sexual assault.
Whilst in custody, Santander did keep his job open for him, but stopped paying his wages. Once he was released from custody, he was suspended by Santander, but it was a paid suspension pending the outcome of disciplinary proceedings. Once those had concluded, Mr Burns was dismissed.
He went on to make a claim against Santander for the unpaid wages. His arguments were not successful. He appealed the decision and failed again.
Where an employee is ready and able to work, but is unable to do so due to sickness, injury, or other unavoidable impediment, then that employee should be able to claim his wages. However in this case the Tribunal decided that the reason for Mr Burns not being at work could not be classified as an “unavoidable impediment”. It was his own doing, in that he behaved in such a way that he deprived himself of his own freedom.
By Rebecca Pitt