Paris Smith LLP - Employment law update 2013

Employment Law Conference

“2013 – Another Busy Year for

Employment Law”

Clive Dobbin & David Roath

LLP Partners

2 October 2013

Topics

Changes in legislation –

Clive Dobbin, Paris Smith LLP

Case Law update –

David Roath, Paris Smith LLP

Changes in Legislation

Clive Dobbin

LLP Partner

Paris Smith LLP


Tribunal Reform

Unfair Dismissal compensation

Settlement Agreements

Pre-Termination Negotiations

Employee shareholders

To come

Tribunal Reform

Tribunal Rules

New ET1/ET3

Tribunal Fees

Employment Tribunal Fees

Claimants must now pay fee to commence tribunal

claim

Applies to claims presented on or after 29 July 2013

2 stage fee structure

Issue Fee

Hearing Fee


Type A claims – e.g. unpaid wages, redundancy

payments, PILON, breach of contract, equal pay,

non-consultation under TUPE

Type B claims – e.g. unfair dismissal and

discrimination

If various claims, fee will be the fee which relates to

the highest level claim


Type A Type B

Issue Fee £160 £250

Hearing Fee £230 £950

Hearing fee payable 3-4 weeks prior to hearing (to

be determined)


Fees for specific applications:- Set aside default judgement £100

Judicial mediation £600 (payable by Respondent)

Counter-claim £160

Application for a review £100 Type A

£350 Type B

For application, need to issue application, will then be

issued notice requiring payment of fee

Only when fee is paid will application be considered


Civil Courts fee remission system will apply to

employment tribunals

New fee remission system coming into force on 7

October 2013

2 tests – disposable capital test and household

income test

Tribunal will have discretion to order unsuccessful

party to reimburse fees incurred by successful party

Unfair DismissalCompensation Cap

Unfair dismissal compensation cap

Cap applies to unfair dismissal compensatory

award

Applies where effective date of termination is on or

after 29 July 2013

Future increases will take effect from 6 April, rather

than 1 February

Unfair DismissalCompensation Cap

Lower of:-

£74,200

52 weeks’ pay

A week’s pay calculated in same way as under

Employment Rights Act

Excludes from calculation pension contributions, benefits

in kind and discretionary bonuses

Settlement Agreements

Compromise Agreements renamed Settlement

Agreements

Change effective from 29 July 2013

In agreements references to ‘Compromise Agreement’

need to be changed to ‘Settlement Agreement’

Get your agreements reviewed?


Evidence of ‘pre-termination negotiations’ inadmissible in

ordinary unfair dismissal proceedings

‘Pre-termination negotiations’ – any offer or discussion of

proposed settlement terms

Purpose – to make it easier to have discussions with regard to a

proposed termination

Overcomes problems with case law on whether a current

dispute


Limits

Applies to ordinary unfair dismissal claims only (not

automatically unfair dismissal claims)

Doesn’t apply to discrimination claims

Doesn’t apply to breach of contract claims

Can employee just claim constructive dismissal via a

breach of contract claim?


Limits (cont)

Doesn’t apply where improper behaviour

ACAS Code & ACAS Guide now published

Examples of improper behaviour Discrimination, harassment and victimisation

Not being given a reasonable time to consider offer (Code

suggests a minimum of 10 days)

Employee being warned, if does not sign agreement, disciplinary

proceedings will be commenced and employee will be dismissed

Employee Shareholders

Employees give up certain rights in return for being given

shares

Shares should be worth at least £2,000

Can be new employees or current employees

For applicants, can make offer conditional on new status

For existing employees, protected against being

dismissed, or being subjected to any other detriment,

because do not agree to new status

Employee Shareholders – Rights Given up/Varied

Unfair dismissal

Redundancy payment

Right to request flexible working (other than if request

made on return from parental leave)

Right to request time off for study/training

Return from maternity leave (notice period increased from

8 to 16 weeks)

Can still bring other claims (e.g. discrimination)


Safeguards

Employee must be given a statement of particulars,

including:-

The rights being given up

Whether any voting rights attach to shares

Whether shares carry right to any dividends

Whether entitled to participate in distribution of

surplus assets on a winding up

Employee Shareholders – Statement of Particulars (cont)

Statement of particulars (cont)

How rights differ to other (largest class of) shares

Whether shares are redeemable, and at whose

option

Whether there are any restrictions on transfer

Whether shares subject to pre-emption, drag along

or tag along rights

Employee Shareholders – Safeguards (cont)

Requirement for employee to obtain advice

Employer must pay for the reasonable costs of

obtaining advice (even if individual doesn’t become

an employee shareholder)

7 days must pass between advice and agreement

Employee Shareholders - Benefits

First £2,000 of shares free from income tax and NI

Future gains exempt from capital gains tax (on

shares worth, when given, up to £50,000)

Does not apply if individual has a “material interest”

Also income tax exemption applies to payment of

legal fees for advice


Not a huge enthusiasm during consultation period

If going to take advantage of it:-

Consider articles

What rights attach to new shares (e.g. dividends and

voting rights)

Deal with what happens when employee leaves

Make sure you get the procedure correct

Changes in Legislation –October 2013

October 2013 - 3rd party harassment rules

Changes in Legislation –January 2014

TUPE reforms

Service provision changes - to remain, but new service must

be ‘fundamentally or essentially the same’

Employee liability information – to remain, period of time

extended from 14 days to 28 days prior to transfer

Easier to change location

Can renegotiate terms from collective agreement one year

after transfer, provided overall change is no less favourable to

employee


April/Spring 2014

ACAS mandatory pre-claim conciliation

Financial penalties on employers who lose tribunal

claims

Abolition of discrimination questionnaires

Case Law Update

David Roath

LLP Partner

Paris Smith LLP

Gross Misconduct

Unfair dismissal

To be a fair dismissal, employer must:-

1. Have fair reason to dismiss

2. Act reasonably in dismissing for that reason

Decision to dismiss must be within the band of

reasonable responses

Gross Misconduct

Does finding of gross misconduct mean that dismissal will

inevitably be reasonable?

Brito Babapulle v Ealing Hospital NHS Trust

Finding of gross misconduct

Decision to leap straight to dismissal not correct

Consider all potential mitigating factors such as:-

Length of service

Unblemished record

Consider both stages (and show in decision letter)

Unfair Dismissal

Use of covert video surveillance

Will it make a dismissal unfair?

Privacy under Article 8

Data Protection Act

Unfair Dismissal

City and County of Swansea v Gayle

ET found Council’s use of covert surveillance to be “too

thorough”

Unjustified interference with Article 8

Ignorant of Data Protection Code

Unfair Dismissal

City and County of Swansea v Gayle

EAT overturned decision

Employer cannot be criticised for being too thorough

Article 8 not engaged – filming outside sports centre,

employer’s time and fraudster

Even if it was, action legitimate

Surveillance did not impact on fairness

Ignorance of Data Protection Code did not affect fairness

Court Video Surveillance

Use only where necessary

Use reputable firm

Consider Data Protection issues

Redundancy

Loss of right to statutory redundancy payment

Employee unreasonably refuses an offer of suitable

alternative employment

Is alternative suitable (objective test)?

Is refusal reasonable?

Employee’s reasons subjective – does employee have

sound and justifiable business reasons to refuse?

Redundancy

Devon Primary Care Trust v Readman

Tribunal must focus on employee’s reasons for refusal

and the circumstances of the employee in question

Band of reasonable responses test does not apply

Preference for money not decisive (but should be taken

into account)

Holiday Pay

What rate of pay should an employee be paid when on

holiday?

Should overtime worked in previous 12 weeks be taken

into account?

WTR uses calculation from Employment Rights Act (ERA)

Workers must be paid at the rate of a week’s pay for

each week’s leave

Holiday Pay – Position under ERA

Employee with normal hours and where pay does not vary

with the amount of work done:-

Holiday pay is based on basic salary

Overtime worked is not taken into account

Where no normal hours or pay does vary according to

amount of work done or time of work:-

Pay is based on average pay over the previous 12 working weeks

Holiday Pay

European Court of Justice decisions

Robinson Steele v RD Retail Service Workers on holiday should receive their “normal

remuneration”

Williams and others v British Airways Remuneration “intrinsically linked to performance of

tasks” should be included when calculating holiday pay

Allowances over basic pay were intrinsically linked

Holiday Pay

Neal v Freightliner

Normal hours

Worked regular overtime (but not guaranteed or compulsory)

ET rules that:-

Overtime duties “intrinsically linked”

UK law not in line with European Directive

Neal awarded pay based on overtime worked as well

EAT decision needed

Accrued Holiday

Regulation 14 WTR

Payment of accrued holiday should be:-

calculated in accordance with relevant agreement; or

pay the worker would have received if they had taken a

period of paid leave

Can the sum to be paid be a token amount (such as £1?)

No, according to ET in Podlasiak v Edinburgh Woollen Mill

Only ET decision, but shows direction of decisions

Holidays and Sickness

Worker is entitled to 5.6 weeks’ annual leave

4 weeks under Directive

1.6 weeks additional provided by WTR

Regulation 13(9) WTR prohibits carry over of unused leave

NHS Leeds v Larner – employer must allow carry over for

sick employee

Does 5.6 week entitlement carry over?

Holidays and Sickness

Sood Enterprises Ltd v Healy

Carry over is limited to 4 weeks under Directive

Compensation

Compensatory award in unfair dismissal cases

Loss of salary and value of benefits (such as

pension)

What if the employee has died?

Can claim continue?

Can claim include loss of insurance benefit?

Compensation

Fox v British Airways

Loss of death in service benefit recoverable

Unusual case

Often loss would be cost of securing alternative benefit

Breach of contract more common

Pay in lieu of notice (where no express right)

Watch insured benefits on termination:-

Death in service

Private medical

Reasonable Adjustments

Equality Act

Duty on employers to make reasonable adjustments for

disabled employees

Provision, criterion or practice puts a disabled employee at

a substantial disadvantage in comparison with those who are

not disabled

Sickness/Attendance Policy

Must you discount all absences relating to disability?


Commissioners for HMRC v Whiteley W suffered from Asthma, which was often made worse by common

viral infections

ET ruled HMRC should have found that all absences due to infections

were “directly related” to her asthma, and should have discounted

them altogether when applying its sickness absence policy

ET wrongly interpreted medical evidence

Asthma sufferer would not necessarily suffer more infections, but

disability potentially exacerbated effects?


Commissioners for HMRC v Whiteley

At least two possible approaches employers might adopt:-

Consider the periods of absence in detail and (if necessary, with

expert evidence) assess precisely the level of absence that is

attributable to disability

Consider what level of absence someone with a particular

disability would reasonably be expected to have over the course

of an average year due to that disability

Collective Redundancies

Requirement to consult collectively

Propose to dismiss as redundant 20 or more employees

at one establishment within a period of 90 days or less

100 or more redundancies – 45 days before the first

dismissal takes effect

Less than 100 redundancies – 30 days

Separate establishments often useful for employer

Collective Redundancies

USDAW v Ethel Austin

The words “at one establishment” must be disregarded

for the purposes of any collective redundancy exercise

involving 20 or more employees

Multi site caught if 20 or more overall

Conflicting EAT decisions

Reference to ECJ

Grievances

Implied term of trust and confidence

Breach of contract (including implied term) can lead

to claim of constructive dismissal

Can failure to follow grievance procedure amount to

breach of implied contractual term?

Grievances

Blackburn v Aldi Stores Right to an impartial appeal in respect of a grievance is an

important feature of the Acas Code and also the employer’s own

procedure

Failure to adhere to a grievance procedure is capable of

amounting to or contributing to a breach of the implied term of

trust and confidence

Breaches of grievance procedures “come in all shapes and sizes”

Not all breaches of procedure will be breach of implied term

Confidential Information

Employee owes duty of confidentiality whilst employed

(implied duty of fidelity)

Usually express duty of confidentiality post employment

Employee can be sued for breach of confidentiality

What about new employer who benefits (without

inducing)?

Confidential Information

Pintorex Limited v Keyvanfar

New employer vicariously liable for breach of confidentiality by

employee

Director of new employer would also have been jointly liable for the

breach of confidence if he had been involved in a common design

to commit the breach of confidence or had dishonestly ignored the

breach

As a new employer, you can’t encourage or induce breach, or turn a

“blind eye”

LinkedIn

Who owns the account?

Who owns the contacts?

LinkedIn T&Cs

Do you have a policy?

Post termination restrictions

LinkedIn

Whitmar Publications Ltd v Garage Employee had managed four LinkedIn groups on behalf of

Whitmar

Claimed that the groups were personal to her and “just a hobby”

The court required the ex-employees:-

To give Whitmar exclusive access, management and control

of the LinkedIn groups

Not to access or do anything that would inhibit or prevent

Whitmar from accessing the LinkedIn groups

LinkedIn

Whitmar Publications Ltd v Garage

A (small) piece in the puzzle

Whitmar did not have post termination restrictions

Have:-

Post termination restrictions

Express duty of confidentiality – refer to LinkedIn contacts

Rules over LinkedIn use

Thank You, Any Questions?

For further information and advice, contact:

Clive Dobbin, Partner

T: 023 8048 2370

E: [email protected]

www.parissmith.co.uk

Number 1 London Road, Southampton, SO15 2AE

Paris Smith LLP - Employment law update 2013

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Transcript of Paris Smith LLP - Employment law update 2013