Newsletter October 2011


Employment law remained in the news in October. Following the announcement of reforms to unfair dismissal laws and the prospect of a two year qualifying period from next April, news emerged of a government report criticising the impact these laws have on the ability to manage (out) underperforming staff.

It seems unlikely that the proposals in the report will become law, but it is also worth reflecting on whether they need to. Dismissal for lack of capability is permitted provided a fair and reasonable process is followed. My own experience is that, often, employers face risks around capability dismissals because they decide the employee has to go having failed to address the under-performance properly when it first became evident. A performance procedure, separate from the disciplinary procedure, can be a useful tool. I recognise this can often be impractical for senior executive levels within a business, but for the main work force a robust performance procedure and proactivity in using it can be very helpful.

Darryl Evans
T: +44 (0)7771 725341

Employment law reforms – more headlines

Last month I reported that fees will be introduced for the lodging of employment tribunal claims. The Minister for Employment Relations, Consumer and Postal Affairs, Ed Davey, is reported to have said that a sliding scale of fees is being considered under which people on low incomes will pay no fees at all. A consultation on the issue is expected to be launched shortly. If fees are introduced it looks like that will not be until 2013.

Meanwhile, a leaked government report saying that unproductive workers should lose their right to claim unfair dismissal caused something of a stir. The report referred to the ‘terrible impact of the current unfair dismissal rules’. Downing Street said the report is not ‘a final document’ and Vince Cable, the Business Secretary, labelled the proposal a ‘non-starter’.

Nonetheless, there do appear to be concerns in government circles about the freedom employers have to dismiss under-performers. Nick Clegg has suggested that businesses should be free to have frank discussions with staff about their performance and future retirement without fear of employment tribunal proceedings and there are reports that Ed Davey is drawing up proposals under which such ‘protected conversations’ could not be used by employers in future litigation.

‘You’re not dismissed – I’ve changed my mind’

Too late!

The Court of Appeal has recently decided that a clear and unambiguous letter dismissing an employee took effect, even though the employer insisted that it made a mistake and should not have sent the letter. The notice of dismissal could not be withdrawn.

The 'special circumstances' exception which does exist to address genuine errors is very narrow and only operates where the circumstances indicate that the employer never intended to give the notice in the first place. Here the letter’s meaning was clear - that the employee was being dismissed - and
the circumstances at the time of sending the letter did not indicate otherwise. (CF Capital plc v Willoughby (2011 EWCA Civ 1115).)

Changing terms and conditions after a TUPE transfer

Teaching assistants at Spelthorne College enjoyed some unusual employment terms, including that they worked part-time but were paid as if they were full-time.

The College was transferred to Brooklands College and TUPE applied. Later, Brooklands tried to bring the employees’ terms into line with the norm for the sector, apparently having only just recognised the pay anomaly. The employees, albeit reluctantly, agreed to a phased pay cut but subsequently claimed the reduction was ineffective. They relied on Regulation 4(4) of TUPE, which makes a purported contractual variation void if the sole or principal reason is the transfer itself.

The employees argued that ‘but for’ the TUPE transfer, the change to terms and conditions would not have happened, thus it was void. However, the Employment Appeals Tribunal (EAT) disagreed and focussed on actual the reason for the change. The employment judge in the tribunal had determined from the evidence he saw that that the variation was not because of the transfer. What was in the employer's mind was the need to correct an obvious error in pay. He also recognised the time gap between the transfer and the variation. The claim failed.

This will encourage many employers seeking to make post-TUPE changes. I am hesitant though: it sounds all too easy for an employer to say ‘what was in my mind was to have consistent pay and terms across the business’ and for the whole principle of Regulation 4(4) to be undermined. This may be more of a one-off decision based on unusual facts. (Smith and others v Trustees of Brooklands College (UKEAT/0128/11).)

Offer of a new role reduced compensation

Ms Debique worked for the British Army when she gave birth to a daughter. She was a single parent and found it difficult to combine motherhood with her responsibilities as a serving soldier. After a dispute she left and won a claim for gender and race discrimination.

During her notice period she was offered a posting which would have provided stability and which would adequately have addressed her childcare difficulties. She refused it and the EAT accepted the tribunal finding that this represented an unreasonable failure to mitigate her losses of income. The fact that the offer was from her old employer with whom she had the dispute did not rule out it being reasonable mitigation.

This will be a tactic which might not often available to employers, but it could be a very useful one in some cases. (Debique v Ministry of Defence (UKEAT/0075/11).)

Getting the right reason for dismissal

It is generally important for an employer to be clear on the reason it decides to dismiss an employee. Confusion can lead to incorrect processes being followed or an inappropriate sanction and therefore a finding of unfair dismissal.

That said, sometimes there can be overlapping reasons or the employer can just get into a muddle over what its reasons are. The case of Screene v Seatwave Ltd (UKEAT/0020/11) suggests that that need not be fatal.

When it was the victim of a fraud amounting to a €1.7m loss, Seatwave determined that its financial controller, Mr Screene, was grossly negligent in failing to spot this and summarily dismissed him. His dismissal letter cited misconduct as the reason for dismissal, but the ET3 form responding to his unfair dismissal claim pleaded ‘incapability’.

The employment tribunal found the serious negligence in the employee's failings amounted to gross misconduct and that the dismissal was fair. The EAT accepted this and was not willing to rule against that decision merely because the ET3 referred to capability. There was no prejudice to the claimant: the facts were the same, however the reason was described. The tribunal was entitled to make its decision based on its determination of the reason for dismissal.

Whistleblowing – the link between the disclosure and detriment

The Court of Appeal in NHS Manchester v Fecitt and others (2011 EWCA Civ 1190) has held that the correct test for determining whether there is a causal link between a protected disclosure and the detriment suffered by the employee is: whether the protected disclosure materially influences (in the
sense of being more than a trivial influence) the employer's treatment of the whistle-blower.

The case concerned nurses employed in a medical walk-in centre who made protected disclosures regarding a colleague. They said that he had made false statements to other members of staff about his clinical experience and professional qualifications. As a direct result they were subjected to unpleasant treatment by various colleagues and ultimately had to be removed from the centre owing to the working atmosphere.

The Court of Appeal decided that, although the employers were open to criticism for not better protecting the employees from the treatment they experienced, their failure was not a deliberate omission and was not because of the protected disclosures. Similarly, the removal of the employees from the centre was not because of the protected disclosures but was in fact a way of dealing with the dysfunctional centre.

This case is helpful in dealing with allegations by employees that, for example, their dismissal is as a result of complaints or disclosures they have previously made.

Taking account of disability in a redundancy exercise

Mr Lancaster suffered from panic and social anxiety disorders, which his employer accepted was a disability. He and two colleagues came under threat of redundancy. They were assessed against certain redundancy selection criteria. Mr Lancaster received a significantly lower redundancy score than his colleagues and was dismissed.

He claimed that he was put at a substantial disadvantage in comparison with people who were not disabled. This was due, in particular, to three of the redundancy criteria, which focused on communication skills, or alternatively because of the criteria as a whole. This, he said, triggered the duty to make reasonable adjustments as a result of which either the three offending criteria should have been removed or they should all have been.

His claim failed. The tribunal accepted that the criteria disadvantaged Mr Lancaster, but it did not consider the adjustments reasonable or that the outcome would have been any different. The EAT agreed. Because removing the three communications skills criteria would not have affected the order of the scores within the pool, the adjustment was not reasonable.

On this basis an adjustment which cannot alleviate a disadvantage for a disabled employee is unlikely to be deemed reasonable. However, care is needed because it follows that one which gives an employee some prospect or chance of avoiding the disadvantage might be. (Lancaster v TBWA Manchester (2011) EAT 0460/10).)

Employee on sick leave must request holiday to be paid for it

There has been another (modest) development in the ongoing saga of the right to the accrual of sick pay during long-term sickness absence.

In Fraser v Southwest London St George’s Mental Health Trust (UKEAT/0456/10) the EAT has held that an employee on long-term sick leave must request annual leave in accordance with Regulation 15 of the Working Time Regulations 1998 to be entitled to payment for it.

FSA compliance relevant to establishing employee status

There has been an interesting case about employment status in the financial services sector.

Mr Johnson-Caswell was treated as self-employed but an employment tribunal decided in fact he was an employee. It focussed on the need to comply with Financial Service Authority requirements and regarded the training and supervision obligations that this involved required a sufficient element of control by the employer over the claimant's work to mean the relationship must be one of employment. (Johnson-Caswell v MJB (Partnership) Ltd.)

Gaff of the week

Whilst I do not tend to include comedy items in my newsletter, I was rather taken by the following story, reported in the Daily Telegraph.

It concerned an advertisement placed for a senior doctor post at a Liverpool hospital. Included within the job specification was the phrase: ‘The usual rubbish about equal opportunities’.

Apparently ‘bosses reacted swiftly’ to limit the damage when the gaff was spotted and removed the offending phrase. A statement was hastily issued confirming the commitment of the hospital to ‘promoting equality and diversity’.

The information and any commentary contained in this newsletter are for general information purposes only and do not constitute legal or any other type of professional advice. Darryl Evans and Evans Employment Law Limited do not accept any and, to the extent permitted by law, exclude all, liability to any person for any loss which may arise from relying upon or otherwise using the information contained in this newsletter. If you have a particular query or issue you are strongly advised to obtain specific, personal advice and not to rely on the information or comments in this newsletter.

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