Newsletter April 2013


The biggest employment law headline in April was the enactment of the new ‘employee shareholder’ status. From September this year an individual may accept a job offer which includes a shareholding in his employer in return for his giving up certain core protections, including the right to claim unfair dismissal. This will sit alongside the ordinary ‘employee’, the ‘worker’ and the ‘genuinely self-employed’ as the basis for determining the employment rights a person has.

A powerful new ownership mechanism for business, offering flexibility and increased employee engagement? A valuable stake for employees in future business success? A bully’s charter, whereby companies can buy out of dismissal costs for a paltry £2,000? Or a handy tax saving opportunity for investment bankers and the like? You decide.

Darryl Evans
T: +44 (0)7771 725341

Tribunal fees – update

Draft regulations have now been published ahead of the planned introduction this summer of fees for bringing claims in the employment tribunal.

The proposed fee levels are no different to those announced following consultation, so a £250 issue fee and a £950 hearing fee for most types of claim (including unfair dismissal, discrimination and whistleblowing). Simple claims, such as unlawful deductions and statutory redundancy payments, will carry a lower fee (£160 issue; £230 hearing).

The likely consequence of non-payment is that the claim will not be allowed to commence or continue in the tribunal.

Mandatory pre-claim conciliation

The Government has set out its plans for mandatory pre-claim conciliation, which will be introduced through the Enterprise and Regulatory Reform Bill and new regulations.

With some exceptions, prospective claimants will have to contact Acas with a view to exploring early conciliation before they are allowed to issue an employment tribunal claim.

They will need to submit a form to Acas containing contact details for both parties, without needing to provide any information on their potential claim. The time limit for lodging the claim will then be suspended, and Acas will need to make reasonable attempts to conciliate within a one month period. If this is not successful the claim will be allowed to proceed.

Employee shareholder agreements

The new employee shareholder status will come into being on 1st September 2013, whereby an employee or new recruit can agree to give up certain employment rights, such as unfair dismissal and redundancy, for shares worth at least £2,000 in the employer.

The first £2,000 of shares will be free of income tax and on sale the shares will be free of the first £50,000 of capital gains.

The parliamentary process led to certain concessions being made in the rules in response to House of Lords objections. These include:

  • the obligation to provide a statement explaining the employment
    rights that would be sacrificed and the rights attaching to the shares,
  • the requirement for mandatory legal advice to be sought by the
    employee, to be paid for by the employer (whether or not the employee takes
    up the job offer), and
  • a seven-day "cooling off" period from the day legal advice is

National minimum wage

From 1 October 2013:

  • the adult rate will increase from £6.19 to £6.31 an hour,
  • the rate for 18-20 year olds will increase from £4.98 to £5.03 an
  • the rate for 16-17 year olds will increase from £3.68 to £3.72 an
  • the apprentice rate will increase from £2.65 to £2.68 an hour, and
  • the accommodation offset will increase from £4.82 to £4.91.

Sickness absence - new government scheme to be introduced

As a result of a successful pilot scheme, the government is now planning to introduce in 2014 a new Fitness for Work service (FFWS) under which employers would be able to refer employees to a quasi occupational health service funded by the government.

The reason for the government funding is that the scheme has been shown to reduce periods of sickness and therefore achieve a saving for the taxpayer.

Another Facebook dismissal

In the recent case of Trasler v B & Q (ET/1200504/2012) an employee was dismissed after he posted on Facebook that his ‘place of work is beyond a f***ing joke’ and that he would soon be ‘doing some busting’. This was seen by a colleague and reported to his employer.

An employment tribunal found that although Mr Trasler knew that his comments could be read by 40-50 people who would be aware that they related to B & Q, and that he had breached the company’s social media policy, his dismissal was outside the range of reasonable responses. This was because there was no evidence of any damage done to the company or that anyone had felt threatened or offended by what he had said.

The case is a reminder that it is not just the actions of the employee, however serious they appear, that matter, but also the actual impact on the employer. At least the employer had the benefit of a 50% reduction in compensation owing to the claimant’s contributory fault.

TUPE - affected employees

All employees who are affected by a TUPE transfer of part of their business are entitled to be consulted about the transfer.

In the case of I Lab Facilities v Metcalfe and others (UKEAT/0441/10) the rump of the business which remained after the main part had been sold went into liquidation. The employees in the remainder claimed they should have been consulted on the sale because the sale rendered the remaining business not viable.

Surprisingly, the Employment Appeals Tribunal (EAT) held that for the employees to be ‘affected’ there must be more of an impact on them than just the knock-on consequence of their part of the business being less viable. Changes in their work or working conditions resulting from the disposal of the business were needed.

The EAT also concluded that the obligation to consult cannot be crystallised if no transfer ever takes place, although this conclusion is of little help in planning a transaction, where presumably one has to assume that it will occur.

Application of UK rights to foreign workers

I hope my readers who deal with, or advise on, expatriate and other foreign workers will be pleased to hear about the latest case on this rather uncertain and tricky area. The case may have made it a bit harder for expatriates working overseas to bring UK claims.

Mr Dhunna was originally recruited and worked in London for an English subsidiary of a US parent under a contract governed by UK law. Four years later he relocated to work in Dubai. There he was paid in US dollars, focussed on sales to clients in the Middle East, Asia and Africa and reported to a manager in New Delhi. He received back office support from London.

When the Dubai office was closed and Mr Dhunna was dismissed he claimed unfair dismissal and accrued holiday pay.

The tribunal upheld the claim for holiday pay because of the decision in the Bleuse case, which said that where a piece of legislation implements EU rights, it has to be interpreted in a way that gives full effect to those rights, so someone who had worked in Germany and Austria was able to bring a claim in the UK employment tribunal under the Working Time Regulations.

In a happy exercise of clear thinking, EAT disagreed, pointing out that the need to give full effect to EU law is relevant only to workers working in the EU. It does not extend to people working in, for example, Dubai. The Working Time Regulations are expressed to extend to Great Britain and there is nothing in the Working Time Directive which states that it is intended to apply to employees working outside the EU.

As regards the unfair dismissal claim, the EAT said that the test is whether the employment relationship has much stronger connections with Great Britain and British employment law than with the country where the employee works, and whether those links are sufficiently strong to presume that Parliament would have intended the employee to be able to bring an unfair dismissal claim in the circumstances. (Dhunna v Creditsights Ltd(2013/UKEAT/0246)

Bankers’ bonuses

In last May’s newsletter I reported on the case of Dresdner Kleinwort Limited & Commerzbank AG v Attrill & Ors (2013 EWCA Civ 394) in which 104 investment bankers successfully argued that they had a contractual entitlement to a bonus pool worth €400m. I said the case may be appealed.

It was and the appeal failed. The cautionary words I expressed about the possibility of creating binding legal commitments in oral statements and by setting up bonus pools with the distribution being discretionary all stand.

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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