Newsletter March 2013


There have been so many announcements from the Government in the past few months concerning changes to employment law that employers have every right to be confused about exactly which have come into force and which are still under debate.

The bottom line is that this April, the normal month for reforms to be implemented, sees barely any rule changes and I will cover the main ones in the next section below.

Many recent proposals remain just that, such as:

  • changes affecting tribunal claims, including protected settlement conversations, the 12 month earning cap on the compensatory award, tribunal fees and changes to procedural rules - these are now planned for this summer;
  • changes to whistle-blower rules - also now likely in the summer;
  • repeal of the questionnaire procedure and third party harassment rules in discrimination law - no date set;
  • employee shareholder employment status - planned for autumn 2013 but recently voted down by the House of Lords, and with the Lib Dems rumoured to be against the idea, query where that measure is going;
  • TUPE reforms - also autumn 2013;
  • Acas early conciliation and employment tribunal penalties for employers - some time in 2014.

Maybe no wonder, then, that a recently-published Government study reveals that businesses that regard employment law as burdensome often do so because they do not understand them.

It is, we are often told, a widely held view that dismissal processes are seen as stressful and costly. The study found exactly that, except that some employers participating mistakenly believed that they had to follow a statutory process when dismissing - rules which were repealed some four years ago.

A conclusion of the report is that employers' perception of legislation as burdensome is based more on a fear of litigation, rather than any actual experience. In addition, it is actually worsened by the prominence of the 'anti-regulation' debate.

There is more on the findings of this very interesting study below, but maybe the key message is that a clear understanding of the law and a sound strategy built on that can make dealing with difficult employees, and ultimately dismissing them, easier than the employer may think.

Darryl Evans
T: +44 (0)7771 725341

Those main April changes

  • The collective redundancy consultation period where more than 100 employees are affected is halved to 45 days from 6 April.
  • The prescribed weekly rate of statutory maternity, paternity and adoption pay rises to £136.78 from 7 April.
  • The rate of statutory sick pay is £86.70 from 6 April.

Also, the parental leave entitlement increased from 13 to 18 weeks in March.

Unreasonable use of competency tests for redundancy selection

Performance and competency often lie at the core of redundancy selection, especially as age discrimination has discouraged employers from using length of service as a factor.

In Mental Health Care (UK) Ltd v Biluan and another (UKEAT/0248/12) the employer applied a series of competency tests, normally used in its recruitment process, to select staff for redundancy. Attempting to avoid subjectivity and bias, it developed an elaborate selection procedure, including disciplinary and absence records as well as the competency tests, which was operated by the HR department. There was no input from the affected employees' managers and no regard to past appraisals. Despite the fact that this led to some surprising results, the employer went ahead and dismissed the employees selected through this process.

The Employment Appeals Tribunal (EAT) considered that the employer's 'blind faith in process' had led to it losing touch with common sense and fairness and was therefore unreasonable. The dismissals which resulted were unfair. So although we are all taught that objectivity is a guiding principle in redundancy selection criteria, it seems that in some situations, such as this one, a bit of subjectivity is not a bad thing.

Redundancy when replacement already recruited

Some EAT decisions come as a surprise and the one in Malekout v Ahmed and others (t/a The Medical Centre) (UKEAT/0556/12) falls firmly into that category.

Mr Malekout had been performing poorly in his job, so the employer decided to recruit another person to troubleshoot various problems and then to keep him on, resulting in Mr Malekout being dismissed. But for what reason? Poor performance, presumably.

Not so. The employer persuaded the tribunal and then the EAT that the dismissal was by reason of redundancy, on the basis that there were two people doing one person's job.

The idea that you can recruit an employee's successor in an interim or temporary role then fairly dismiss the established employee for redundancy by selecting him rather than the recruit is intriguing. I am not convinced it would work every time.

The use of covert recordings

It is by no means unknown for employees to make recordings of disciplinary and other dismissal related meetings without the employer being aware. But can the recording then be used as evidence at Tribunal? The answer is yes, possibly it can be.

Ms Vaughan brought a claim for discrimination and applied for permission to rely on 39 hours (yes, 39 hours - not a typo) of covert recordings that she had made of interactions with her managers and colleagues. She said that the recordings would show that official notes made of those interactions were inaccurate or wrong.

The Judge at the Tribunal refused the request. The EAT accepted that that was a legitimate decision on the grounds that it was not possible from the application for the Judge to assess the relevance of the tapes and therefore their admissibility.

However, it was not the case that such recordings are inadmissible simply because the way in which they were obtained may be regarded as discreditable ('very distasteful' were the words used). A properly focused application, supported by transcripts of the recordings the employee sought to rely on, could result in them being allowed. (Vaughan v London Borough of Lewisham and others UKEAT/0534/12.)

Break down of relationship - fair dismissal?

It is a common occurrence that the relationship with an, often senior, employee breaks down to the point where it becomes impossible to for him or her to stay with the business. The problem is: what statutory reason for unfair dismissal purposes applies? If there is no misconduct or poor performance, can the dismissal come with the category of 'some other substantial reason'? The answer, as the decision in Handshake Ltd v Summers (UKEAT/0216/12) shows, is yes, but by no means in all cases.

A dispute over a profit share and a failure to agree on the terms of employment led to Mr Summers' dismissal. The situation had clearly become contentious, with the employee claiming in correspondence to have lost all trust and confidence in the employer and threatening a constructive dismissal claim. However, neither side acted as if the relationship had broken down and the reality appeared to be that this was a power struggle over pay and contractual terms.

The dismissal here did not fall into 'some other substantial reason' and was unfair.

Can obesity be a disability?

In Walker v Sita Information Networking Computing Ltd (UKEAT/0097/12) Mr Walker was obese and suffered from a number of physical and mental conditions. The EAT, disagreeing with the Tribunal, decided he was disabled under the Disability Discrimination Act 1995. The key message was to focus
on the effects of his impairments, not the cause.

The EAT said that obesity is not in itself an impairment for disability discrimination purposes. However, it might make it more likely that a claimant has impairments within the meaning of the legislation.

No unfair dismissal rights for German employee

Mrs Rogers, a German national, was married to a member of the British armed forces posted in Germany. She worked at a children's centre on a military base for a trust which, although linked to the armed forces, operated wholly in Germany.

The EAT agreed with the tribunal's approach to whether the connection with Great Britain and British employment law was sufficiently close. The consequence was that she was not eligible to claim.

It also emphasised the importance of deciding cases of this type on their own facts as opposed to drawing analogies with similar cases, a reminder that there are no clear principles on when international workers will be covered by UK employment laws so (Rogers v Deputy Commander and another UKEAT/0455/12.)

Crystal Palace lose

How it pains me, as a Crystal Palace fan, to say this. Fortunately for our promotion chances, this particular defeat was not on the field of play.

Palace went into administration at the end of the period Simon Jordan owned the club. The administrator dismissed a number of employees, allowing him to put the club into 'mothballs' over the close season pending a sale before the start of the following season.

Those dismissals were found to be automatically unfairly dismissed under TUPE. They were not carried out for an 'economic, technical or organisational reason entailing changes in the workforce' (ETO reason) because they were not carried out to allow the business to continue to trade, but rather to be sold. That meant the liability for those dismissals passed to the new owners of the club. (Kavanagh and others v Crystal Palace FC (2000) Ltd and others UKEAT/0354/12.)

Recovering non-deducted PAYE from employee

This case is an important reminder to employers that if errors are made in PAYE deductions, the employer will be HMRC's first port of call and recovery from the employee who has profited may be difficult.

The First-tier Tribunal has confirmed that HMRC could not recover under-deducted tax from an employee when the failure to deduct arose from an employer's failure to apply a PAYE code and HMRC had not issued a direction transferring liability from the employer to the employee. The amount of tax due from the employee was reduced by the amount the employer should have deducted. A late payment penalty was cancelled. HMRC should have sought recovery from the employer which made the mistake, not through the employee's self-assessment tax return. (Gayen v HMRC 2013 UKFTT 127.)

Employment regulation - the 'perception reality gap'

The Department for Business Innovation & Skills (BIS) has published a new report called 'Employer Perceptions and the Impact of Employment Regulation'. 40 employers participated.

Contrary to the Coalition Government's thinking on the impact of employment law on business (its 'Red Tape Challenge' and Employment Law Review), participants generally saw employment regulation as necessary and fair. Anxiety about employment law mainly stemmed from a fear and misunderstanding of the law, a so-called 'perception reality gap', identified by other researchers such as Peck and others in their 2012 report 'Business Perception of Regulatory Burden').

The BIS report found that:

  • Employers were often supportive of a regulatory framework for the employment relationship.
  • Reducing regulation for small employers might not actually reduce anxiety as those employers are often unaware of the changes.
  • Some myths about the dismissal process need to be dispelled.
  • Tribunal outcomes were perceived as unpredictable.
  • Small employers often did not formalise disciplinary procedures unless dismissal was being considered, often leading to litigation.
  • Whilst this problem would be solved by consistently following a procedure for dealing with performance and conduct, small employers were concerned that this would damage the personal element of the employment relationship.
  • There is a clear need to provide a single information portal regarding employment law and HR.
  • Reforms to simplify employment law should focus on disciplinary and dismissal procedures.

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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