How (not) to sack someone

As an employer, if you want to avoid your name appearing in the Metro or any of the other free papers, try to avoid sacking employees suffering from cancer by email.  This is the moral from the recent report concerning Melinda Bolnar, a 27 year old teacher suffering from bowel cancer and who had just endured seven months of chemotherapy and given a 30% chance of survival.  According to the report it is alleged that her private school sacked her by email.  I should point out that the case is due to be heard at an Employment Tribunal later this year and the above report are merely the employee’s allegations against her employer and not the proven facts.

The report probably doesn’t give the whole story but it certainly gives the impression that Melinda was sacked without any form of disciplinary or capability procedure.  If that genuinely is the case the school might find themselves in difficulty when the case does reach the ET.

So (assuming that is what happened) what should an employer do if it wants to terminate the employment of an employee suffering from long-term illness?

The first and most important question is why should the employer want to terminate the employee’s employment?  This will be at the heart of any subsequent litigation that may arise.  The usual answer given by employers is that they could not afford to keep the position empty whilst the employee was away or that temporary cover could not be extended indefinitely.  Much will depend upon the role performed by the employee and the extent to which it is reasonable for the employer to reach the conclusion that dismissing the employee was reasonable in all the circumstances.  The size and resources of the business will be important too. What action might be reasonable for a small employer to take will be greatly different from a multi-national PLC or, for example, the NHS. How the employer treated other staff in similar circumstances on other occasions will be relevant: what are the contractual sick pay provisions, if any?

There are only a limited number of grounds on which dismissing an employee will be fair.  They include capability to do the job.  This can mean lack of ability of the employee to fulfil their role (i.e. incompetence) or it could include inability to do the job through sickness.  Problems can arise for an employer when the employee takes lots of short periods of time off sick (whether genuinely or otherwise) but when, as in the type of case under discussion here the employee is off for weeks or months.   

A prudent employer will properly investigate the reasons for the employee being absent and will try and establish when they might return.  This will need to be done with sensitivity and tact, which means good communications between employer-employee are going to be vital to make this work.  It will probably need medical evidence to be obtained and a well-drafted contract of employment should include a clause which allows the employer to send the employee to a doctor of its own choosing.  If the medical evidence suggests that the employee will be fit to return to work, even if on a gradually stepped basis at first, in a fairly short space of time, the business will need to think long and hard before dismissing.  On the other hand, if the absence looks like being lengthy then the employer may be justified in bringing the employment relationship to an end, provided it does so on grounds of (in)capability.

Where difficulties arise (as in Melinda Bolnar’s case) is where the employee feels there are other grounds for dismissal.  The Metro report states that she is suing for disability discrimination.  Much will depend, as usual, on who said or did what and when.  To avoid difficulties of this sort an employer needs to act clearly and openly about what it is doing and why. 

It needs to follow a proper process, as laid down by the ACAS Code of Practice introduced this April. In brief this means the employer investigating properly, inviting the employee to a meeting to discuss the issues, allowing them to be accompanied by a work colleague or Trade Union representative and to make their point.  Finally, the employee should be informed of their right to appeal the decision if it goes against them.  If the employer gets it wrong they can not only face a claim for unfair dismissal (with the potential for the award to be increased by up to 25% if they are deemed to have acted unreasonably) but also a claim for disability discrimination.  Claims under the DDA are not capped at the £66,200 maximum compensatory award, as with unfair dismissal cases.

Of course, all the above leaves aside the moral issue of whether it is the right step to take but and Courts/Tribunals don’t make judgments on moral grounds: the newspapers do that.

If you are an employer or employee requiring further advice on any of these issues, please get in touch with me at michaelscutt@dalelangley.co.uk or on 0207 464 8433

Will Court decision lead to an increase in dismissals?

The House of Lords (HL) has finally handed down judgment in the case of Stringer v HMRC.  To say this decision has been keenly anticipated is an understatement.  I posted on it a little while ago.

The decision confirms that employees are entitled to accrue holiday pay whilst on long-term sick leave.  Some commentators have suggested that employers will want to dismiss those employees to avoid incurring even greater costs caused by the employee’s absence.  This will undoubtedly happen in some cases, but the risk to employers in adopting such a course is risky.  In doing so, they will risk the employee claiming for disability discrimination as well as unfair dismissal.  An employee on long term sick leave may well be able to successfully argue that they are disabled under the DDA.  Both employees and employers also need to bear in mind, of course, that one of the potentially fair reasons for terminating a contract of employment is capability (which includes incapacity to through illness/injury).  Any employer contemplating terminating an employee’s employment because of ill-health needs to proceed very cautiously.

The other main point of this decision is that employees who have previously been denied holiday pay whilst sick can renew their request for unpaid holiday pay for any period within the last six years.  This is because they will be able to argue that the employer has been in breach of contract and in the civil courts it is possible to sue for breach of contract for up to six years after the breach.  Employees will also be able to claim (in the Employment Tribunal) unpaid holiday pay as an unlawful deduction from wages. 

If you need further advice on this subject please contact me.

TUPE

Apart from the post below I haven’t touched upon these regulations, mainly because they are not the most interesting regulations in the world to read.  However, I have been spurred on by posting on the case of Royden & others v Barnetts  (see below) and TUPE comes up quite a few times on the search engines as a keyword.  In future posts I will look at the TUPE issues on the insolvency of the employer as well as the consultation obligations imposed upon employers by TUPE.

So, what do the Transfer of Undertakings (Protection of employment) Regulations 2006 (TUPE) actually do?

It protects those employees where the employing business changes hands, by;

 (1) protecting them from dismissal because of the transfer,

(2) by requiring the employer to inform and consult those employees affected, and

(3) transferring all rights  liabilities and obligations from the transferor company (“oldco”) to the transferee (“newco”).  

 

 

There must be more than a transfer of shares.  All employees employed by oldco at the point of transfer automatically move across to newco with the same terms and conditions of employment.  This means that if newco tries to provide amended terms and conditions to transferred staff they will be in breach of contract and may end up facing claims for constructive dismissal.

Furthermore, if newco dismisses transferring staff for a reason connected with the transfer that will be an automatically unfair dismissal , although if newco can argue that there were “economic, technical or organisational” reasons entailing changes in the workforce of either the Transferor or Transferee”  for the dismissal, it won’t be automatically unfair.  It might still be an unfair dismissal if the reason for the dismissal (not being the transfer) was also unfair. 

An ET would look at all the circumstances of the dismissal before making its finding.  In particular the ET will consider whether the employee was likely to have been dismissed even if the transfer had not occurred.  If yes then the dismissal will probably not have been for reason of the transfer, but it might still be unfair (i.e perhaps unfair selection for redundancy, or maybe discriminatory reasons were involved; the list is long).   One of the potentially fair reasons for a dismissal under the Employment Rights Act 1996 is “some other substantial reason” (SOSR).  For an employer to escape liability altogether for the dismissal it will have to show that the reason for dismissal comes within SOSR and that it was reasonable for them to rely upon that as the reason for dismissal. 

If an employee is found to have been unfairly dismissed (whether automatically or not) the maximum amount they can recover from an ET (up to February 2010 anyway) is £66,200 plus a basic award of £350 (or £525 depending on age) per week per year of service.  The employee needs 12 months continuous employment experience with oldco to be able to claim unfair dismissal.

Claims involving TUPE can be complex and if you are concerned about your position or think you might need legal advice do call me on 0207 464 8433 or email me on michaelscutt@dalelangley.co.uk

Solicitors get it wrong too

Of course they do I hear you shout.  In a recent case before the Liverpool Employment Tribunal a firm in Southport got themselves into a serious mess with the TUPE (Transfer of Undertaking (Protection of Employment) Regulations 2006.  TUPE, for those who haven’t had the misfortune to be acquainted with it, are the Regulations that protect employees when a business (“an undertaking” in the Regs) gets transferred from one business to another.  The Regs are very complicated and most employment lawyers, if being honest, would admit to loathing them.  If an employee is dismissed because of a reason connected with a transfer of an undertaking, TUPE provides that the dismissal is automatically unfair. 

What in fact occurred in this instance was that Barnetts won a contract to supply conveyancing services to the Britannia Building Society, in place of the firm then doing the work.  When the TUPE regulations were updated in 2006 one of the alterations was to allow “service provision changes” to be covered by the Regs.  This meant that if, for instance a local authority decided to outsource its school dinner function to a private company, the dinner ladies would TUPE across, thus preserving their employment rights.  It also applies to solicitors  and I am only surprised that more firms haven’t been caught by it before now.

In this case some of the employees who were transferring did not want to do so (because it meant moving to offices further away) and thus they claimed that the effect of the transfer was to repudiate their contracts of employment.  They brought claims for unfair dismissal against Barnetts, the new company and of the six employees that brought claims, two succeeded.  The two that succeeded were able to show that they were “assigned” to the Britannia work; their fellow claimants couldn’t. Both Barnetts and their predecessor firm agreed that TUPE didn’t apply; bad decision. 

This must have been something of a blow for Barnetts after the inevitable pleasure that would have ensued in winning the work in the first place.  The Tribunal hasn’t awarded compensation yet to the successful claimants but it will, no doubt, be fairly large and, on top of the amount of management time expended in defending the claims, will take the gloss off winning the Britannia work in  the first place.

The above article will appear in the “Docklands” and “Peninsula” newspapers week commencing 30th March.

Climate change – the new religion?

 

 

 

 

 

If there was any doubt that it was then it has been dispelled by a London Employment Tribunal recently.  The facts are interesting enough, but the point of law raised is potentially massive and may cause to happen what Judges fear more than anything else: the floodgates opening! Cue Biblical style disaster, get building the ark now! (Judges and lawyers always worry about “the floodgates” opening when there is a new development in law – it might mean a deluge of cases swamping the courts).

In this particular case, according to The Independent, one Tim Nicholson was employed by a company called Grainger plc, a property investment company, as their Head of Sustainability.  His job seems to have been to develop the company’s green policies and reduce its carbon footprint.  Grainger apparently had strong policies on corporate responsibility and the environment, albeit Mr Nicholson thought they were just for decorative effect.  When he tried to do his job and implement green iniatives he was met with resistance and obstruction. 

He was made redundant and claimed unfair dismissal.  Importantly, he also claiemd that he had been discriminated against because of his “philosophical” belief in climate change. He had made far reaching “green” adaptations to his lifestyle and practised what he preached.  He brought the claim under the Employment Equality (Religion and Belief) Regulations, which provide that a person shall not be subject to less favourable treatment on the basis of their religious or philosophical belief.  What is important in this instance is that a belief in climate change has not hitherto been afforded, officially anyway, the status of a philosophical or religious belief, although you might be forgiven for thinking that it had given the huge amount of publicity given to it.        The Regulations themselves do not provide a definition of what constitutes a religion or a philosophical belief. At a preliminary hearing the Employment Judge decided that Mr Nicholson’s green beliefs did come within the protection provided by the Regulations.

The important issue from the employment law perspective is the impact this could have upon claims.  We are not told for how long Mr Nicholson was employed by Grainger prior to his redundancy, but if he had less than 12 months continuous employment he would not be eligible to bring a claim for unfair dismissal.  However, there is no 12 month qualification period where the dismissal is alleged to have been on discriminatory grounds.  Secondly, claims for discrimination are not limited by the statutory cap on compensation (currently £66,200) that applies to unfair dismissal claims. 

This wasn’t the final hearing and no judgment has been given on whether Mr Nicholson was dismissed unfairly or discriminatorily.  There will probably be an appeal and I would be very surprised if this decision is not overturned at some stage.  Keep those floodgates closed!

What the dooce?

I’ve got to admit my ignorance, I’ve only just discovered the verb “to dooce” and what a great word it is!  There are various definitions but most include “to lose your job because of something that you wrote on your blog”.   Rather incongruously, it can also mean to be afflicted with constipation, although if you were about to lose your job because you spilled the beans on your employer,  it’s unlikely that constipation would be your main concern. 

It was the recently reported case of Kimberley Swann, the 16 year old girl from Essex, who was fired from her job as an adminstrator because she described her job as “boring” on Facebook that brought me up to speed with  this addition to the language.  For those who missed the story, Miss Swann worked for a company called Ivell Marketing & Logistics in Clacton  which is, I’m sure, a  fun and exciting place to work.  She had only been there three weeks when she posted an entry on Facebook stating that her job was “boring”.  Remarkably she didn’t even name her employer and it was only her colleagues with access to her Facebook page that put two and two together  and informed the company.

She was sacked on the basis that her comments were a “display of disrespect and dissatisfaction [that] undermined the [working] relationship and made it untenable”.  In other words a breach of the implied term of  trust and confidence that needs to exist between employer and employee.  Tellingly Kimberley had only been employed for three weeks and therefore had not acquired her employment rights.  In particular, because she had not got 12 months continuous employment experience with the company, she could not sue them for unfair dismissal. 

In my view had she been able to sue them the employers would never have taken this action.  It was clearly unfair.  The comment was not made during work hours but when she got home, so there couldn’t have been any issue about her not having her nose to the grindstone whilst actually at work.  Furthermore she did not mention the company’s name  online so the effect of her words would be very limited indeed.  

Finally, from the reports I’ve read the employer did not undertake any investigation or disciplinary process. Under the current law (which  will change on 6th April next)   that makes for an automatically unfair dismissal (had she been eligible to apply).

Many employers now seem to have rules and policies about the use of social networking sites during working hours (Jobsworth, of course, has few friends so the issue doesn’t arise for him) and more general internet usage policies have been in the workplace for as long as we’ve had the internet.  Repeated breach of such a policy might be a cause for dismissal after a proper investigation and appropriate warnings had been given.  Using the company’s computers to download pornography would constitute gross misconduct.  Employers need to consider carefully how their internet usage/social networking sites policies operate and what sort of behaviour they want to prevent, but I cannot imagine any policy being able to prevent what is, after all, probably just fair comment made outside work hours and not using work equipment.

The employer’s actions were really a vast over-reaction.  The TUC General Secretary, Mr Brendan Barber, said employers needed to have thicker skins when dealing with comments on social networking sites and that they wouldn’t dream of following their staff to the pub to see if  they  “were sounding off about work to their friends”.  Quite right too.  However, having read the report of the story in The Mirror  I wonder if the key to the story isn’t with the sentiment contained in the comment but in the actual words she used.  Apparently she wrote “first day at work!! So dull … im so totally bord (sic)”. 

One further definition of dooce is “to write repetitively on a subject for at least four years”.  I’ll be bearing that in mind from now on.

Redundancy or Pay Cut?

Not an enviable choice to be faced with, but one that an increasing number of people seem to be having to make, or have foisted upon them, in industry.  It is a practice that doesn’t seem to have caught on here in the City where swingeing headcount cuts still rule supreme when an employer wants to cut costs.  I’ve written many times in this blog before about the redundancy process and selection criteria and the claims that can arise when employers get it wrong.  However, what must an employer do if they decide that a pay reduction is preferable to a cull? 

 

It’s not an easy option because any variation in an employee’s pay, if imposed unilaterally by the employer, is a breach of contract and the employee would be entitled to sue for breach of contract and/or unlawful deduction from wages.   Consequently the employer will need to obtain the consent of affected staff before proceeding and, particularly in unionized workplaces, this is unlikely to be given readily. 

 

Some employers take the step of terminating all employment contracts and then re-employing the same staff on reduced terms.  This is highly risky because it can give rise to claims for redundancy, unfair dismissal and breach of contract if not handled properly.  An employer would need to consult with affected staff and persuade them that the only alternative to pay cuts was job losses, in order to obtain consent. How long the consultation period would have to be would depend upon how many  employees were involved and a prudent employer would want to observe the provisions of the Trades Union and Labour Relations (Consolidation) Act 1992, which provides for fixed periods of 30 or 90 days’ consultation where more than 20 or 100 staff are involved. 

 

For smaller employers the process of obtaining consent is going to be viewed as just as onerous as undertaking a redundancy exercise and that might make the whole process unviable.  Having said this, the new Employment Act 2008, which comes into force in April, repeals the current statutory dismissal procedure that applies on redundancies as to all other dismissals, and that may persuade more employers to go down the route of pay cuts.  I’ll be covering  more issues arising from the new legislation in future posts.

If you need advice on any issues arising here please feel free to call me on 0207 464 8433 or email me at michaelscutt@dalelangley.co.uk.

What would you do if faced with this choice?  Please answer the poll below.

 

 

 

A slightly different version of this post will appear in the “Docklands” and “Peninsula”newspapers week commencing 2nd March.

What happens if my employer goes bust? Part 2

It all depends on what is meant by “going bust” (sorry, typical lawyer’s answer).  There are several ways a company can go bust, i.e become insolvent, and much will depend on whether the company can be rescued or if it is beyond help.  Insolvency practitioners talk about “terminal” and “non-terminal” insolvencies.  Insolvency law is a complex area and what follows is only a “noddy’s guide”.

Terminal insolvencies include where a liquidator or receiver is appointed to wind up the company.  That is a liquidator’s sole job and if he is appointed by the Court or shareholders his appointment will automatically terminate all employment contracts.  Employees will then have to apply to the Redundancy Payments Office for redundancy pay,  unpaid wages etc and take their places in the queue of creditors.   I’ve written in this blog before about the RPO and the less than generous sums paid – see the entry on 18th September last year.

A Receiver appointed by debenture holders is an agent of the company and his appointment doesn’t automatically bring all employees’ employment to an end.  This is the same position as with Adminstrators (appointed by the Court) when a company goes into Administration (as with Lehman Bros for instance).  This is the most common form of insolvency procedure and is designed to try and rescue the company if at all possible – it’s a “non-terminal” insolvency procedure in other words.  The Administrator has 14 days to “adopt” employment contracts.  Those employees who are dismissed may therefore have claims for redundancy pay or unfair dismissal.    

A Receiver is slightly different in that he is appointed either by the Court or debenture holders and his job is to sell assets sufficient to cover the monies lent by the debenture holders (who will have had a fixed or a floating charge over company assets).  If appointed by the Court then employment contracts will be terminated, but not if he is appointed by debenture holders.

So, in other words, unless the insolvency procedure automatically terminates all employment contracts, the position is going to be uncertain.  An employee is going to have to wait to see what steps the Administrator or Adminstrative Receiver is going to take.  They may be taken on or they might be dismissed.  If kept on and the company is rescued, perhaps by another company buying up the remnants of the business, issues may then arise over the transfer  and then there will then issues over whether the TUPE rules apply. 

This is another can of worms and needs to be considered carefully.  A recent case, called Oakland v Wellswood (Yorkshire) Ltd held that the TUPE 2006 regulations do NOT apply where an Administrator of  company which is in administration disposes of the business as a going concern, which is the same position as where a business is disposed of by a liquidator.   Whether TUPE applies or not can be crucial because if it does then an employee’s continuous employment continues thus preserving the right (if accrued) to bring a claim for unfair dismissal.  As ever take legal advice on your situation if in doubt.

 

I can be contacted on 0207 464 8433 or leave a comment on these pages.

Redundancy – know your rights!

Judging from the traffic on this site, redundancy is the big employment law issue at the moment and not surprisingly given the current climate. 1,000 job losses announced this week at Nomura, 650 at Credit Suisse and that on top of the losses at Goldman Sachs and Lehman Brothers. In my day job I am seeing plenty of people from investment banks and beyond, all with concerns and queries about either being told they’ve been selected for redundancy or are at risk. If you’re one of those people what do you need to know?

1. Are you an employee? Most employment protection legislation (apart from that involving discrimination issues) only covers employees and not self-employed people, for instance.

2. How long have you been continuously employed by your employer? To be able to claim a redundancy payment you need two years continuous employment experience. If you have this then you are entitled to be paid a “statutory redundancy payment” (SRP) in addition to your notice monies. SRP is not generous – £330 per complete year of service if you’re between 22-41 and £495 if you’re over 41. Your notice entitlement will be as set out in your contract of employment or as stipulated by the Employment Rights Act 1996 – basically 1 week per year of service up to a maximum of twelve weeks (four weeks notice minimum to be given by the employer once the employee has one month’s service).

3. If you have more than one year’s continuous employment experience then you have acquired the right not to be unfairly dismissed. This is a big topic but, in brief, it may allow you to argue that your selection for redundancy was unfair.

4. Have you been discriminated against? There are six main grounds for discrimination – race, sex, age, disability, religious belief and sexual orientation in addition to other grouds such as being subject to less favourable treatment because of being a fixed time or part-time worker. In addition whistleblowing is another type of claim that might be available. Remember it is your role that needs to be redundant, not you. What will happen to the work you do once you’ve left?

5. Most of the employees I see have been given a compromise agreement by their employer and they need an independent solicitor to advise them on their legal rights under the agreement. I have written elsewhere in this blog on compromise agreements and the issues they raise – see the page headed “compromise agreements” on the tab at the head of this blog for more information. One main reason why employers offer compromise agreements is that they want the employee to waive their rights to sue for unfair dismissal, discrimination, breach of contract etc. This is particularly the case if the employer is offering an enhanced package (in the City this is often, but not always, one month’s full pay per year of service).

6. If you have been given a compromise agreement then you will need to have it reviewed by a solicitor; give me a call if you want me to help. If you are unhappy about your selection or want further advice, get to see a solicitor and get some advice.

7. It is always helpful when seeing a new client to see the contract of employment, all correspondence relating to the redundancy situation and, of course, the compromise agreement.

Please call me on 0207 464 8433 or email me at michaelscutt@dalelangley.co.uk if I can help you at all.

Consultation on Redundancy

This is becoming a hot topic again in view of the number of large scale redundancies we are now seeing – 3,000 at RBS and 10,000 at BT announced just this week.  I’m seeing more and more people with compromise agreements seeking advice on their situations, as you might expect.  However, in some cases, the employers are not consulting with their employees at all, but are simply telling them that they will be made redundant and then showing them the door.  This should not happen and can lead to employers unfairly dismissing the employees treated in this way.  If this happens to you you may be able to argue that you have been unfairly dismissed.

Different rules apply depending upon how many employees are being made redundant at any one time and whether there is a recognized Trade Union involved. If within a 90 day period more than 20 people at one “establishment” are to be dismissed, then the employer is under a statutory duty to consult with the affected employees.  At least 30 days consultation must take place before the redundancies occur and that increases to 90 days if 100 or more employees are placed at risk.

Many employers will stage the redundancies to avoid the need to consult in this way.  However, they cannot escape the need to consult at all and must follow (until repealed next April) the statutory disciplinary and dismissal procedures introduced in 2004. Failure to consult in individual cases can lead to a finding of automatically unfair dismissal against the employer and a potential increase in the compensatory award made by an Employment Tribunal (ET). If an employer fails to follow the collective consultancy provisions then an ET can make a “protective award” for failure to consult.  That can be 30 days or 90 days’ salary. 

If a Union is involved then the employer must consult with the union’s representatives.

Since the 6^th April 2008, employees of businesses with more than 50 employees are entitled to request their employer to tell them about and consult with them on business issues which affect them.  The Information and Consultation of Employees Regulations 2004 stipulate that if ten percent of employees request it, the employer must set up a system of consultation and information.   If an employee makes that request and is sacked for it, it will be treated by an ET as automatically unfair dismissal.

 

Please call me on 0207 464 8433 or at michaelscutt@dalelangley.co.uk

 

 

 

This column will appear in the “Docklands” and “Peninsula” newspaper week commencing 17^th November 2008.