Employment bulletin June 2013

Breakfast Briefing and Mock Employment Tribunal

Reminders:

Rachel Tozer will be offering guidance on some recent developments in our next breakfast briefing “Staff behaving badly” on 18 June.  Read more.

Join us on 2 July 2013 when FSP will be staging a mock tribunal in conjunction with Hays.  We will be drawing on our experience from real cases.  There are only a few places left so if you wish to attend please reserve your place as soon as possible.  Read more.

A busy summer for employment law changes

Whistle-blowing

In our March bulletin we highlighted the Government’s intention to change the whistle-blowing laws.  These changes will come into force on 25 June.  As a reminder:

• You may remember that the original purpose behind these laws was to protect workers who blow the whistle on their employer’s illegal practices but the courts had extended the protection to cover workers who complained about breaches of their own contracts. This will no longer be the case – whistle-blowing will need to be in the  “public interest”.   (Unhelpfully “public interest” has not been defined and so this is bound to lead to more litigation!)
• The requirement to act in “good faith” will be removed although this will be balanced by giving tribunals the power to reduce the compensation by up to 25% in such cases.  Therefore, workers who are motivated for example by money or spite will still be protected but are unlikely to receive as much compensation as those who were shining a light on wrongdoing in the hope that it would be rectified.

Employees who started new jobs since April 2012 need 2 years’ service before they can bring a standard unfair dismissal claim but whistle-blowing claims can be brought from the first day of employment.  The “public interest” requirement may combat the expected rise in the number of whistle-blowing claims.  However, they are likely to remain a favourite, particularly with highly paid staff, as the cap on unfair dismissal compensation does not apply in whistle-blowing cases.

Political Opinions

In December, we reported on a case about a driver who had been dismissed because of his membership of the BNP. The court decided that the UK was in breach of the European Convention on Human Rights by not protecting the driver’s freedom of association.  The Government has changed the law in response.

From 25 June, employees who are dismissed wholly or mainly due to their political opinions or affiliation will be able to bring unfair dismissal claims from the first day of their employment.

Employment tribunal fees

In last month’s bulletin, we explained that for the first time fees will be introduced in Employment Tribunals.  These fees will apply from 29 July 2013.

Portable criminal record checks

On 17 June the Disclosure and Barring Service (previously called the Criminal Records Bureau) will be launching a new service (called the Update Service).  If individuals sign up to this service they won’t need a new DBS check when they move to a similar role which requires the same level of DBS check.

Read more about DBS checks.

To which dismissals does the ACAS Code apply?

“Misconduct and poor performance” would be a common and understandable answer to this question as those are the two types of disciplinary scenarios specifically mentioned in the first paragraph of the ACAS Code.  However, a recent case serves as a useful reminder that there are other circumstances which the courts consider come within the concept of a “disciplinary situation”.

In the case, the Employment Appeal Tribunal (EAT) held that the ACAS code applied to a dismissal on the grounds of “some other substantive reason” because the Code applies to disciplinary situations regardless of the outcome.  The case concerned a teacher who was obstructive and erratic, so much so that he alienated many of his colleagues who no longer wanted to work with him.  The School decided that there had been “an irreparable breakdown in the employment relationship” and so dismissed him for break down in trust and confidence.

Whether or not the disciplinary procedure was actually started was a bone of contention in the case but the EAT’s focus was on whether the disciplinary procedure should have been invoked. The EAT considered that it should have been as soon as the School had identified that it was the teacher’s conduct which had led to the breakdown in the working relationships and the School thought that this might lead to dismissal.

Although it’s possible for working relationships to break down for reasons unconnected with the dismissed employee’s behaviour, the employee’s conduct usually plays a role.  So this case clearly shows that the ACAS Code should be applied to all such dismissals.  (In fact, arguably it should be applied in all cases other than redundancies and expiry of fixed term contracts to which the Code specifically says it does not apply.)

The consequence of failure to follow the ACAS Code when it is applicable is significant as it can be expensive – the Tribunal can uplift the level of compensation by up to 25%.

Failure to consult: how hard should employers be punished?

Collective consultation for large scale redundancies and consultation under TUPE is often unpopular with employers, not least as proper consultation delays employers’ implementation of their plans.  Ignoring the obligations however can be very costly (up to 90 days’ pay per affected employee in collective redundancy situations and 13 weeks’ pay per employee in TUPE scenarios).

Two recent cases have looked at penalties for failure to consult in particularly difficult situations for employers.

In the first of these cases the employer was warned by its accountants that unless it reduced costs very quickly or secured new funding, it risked trading while insolvent.  (This would have been contrary to company law and would have exposed the directors to personal liability for the company’s obligations.)  After the bank refused further funding, the directors decided to close the loss-making plant and make all of the 124 employees in that part of the business redundant with immediate effect.  Therefore, the employer failed utterly to comply with its collective redundancy consultation obligations.

The issue for the EAT to decide was whether it was appropriate for the maximum of 90 days’ pay to be awarded.  The purpose of these penalties is punitive rather than compensatory which means that the employer’s reasoning for failing to consult is central to deciding the level of the award.  The starting point has to be the full 90 days but the tribunal can reduce this due to mitigating factors (which is usually partial compliance).  The EAT decided on an award of 60 days.  While it entirely accepted that 90 days’ consultation was not possible in these circumstances, it expected that a good employer would have “pulled out all the stops” to consult as much as it could in the limited time available to it.

The second case related to TUPE consultation.  The employer arranged the election for employee representatives in such a way that some employees were unable to vote and when 2 candidates tied, the employer chose one of them.  Although these are closer to technical breaches, the employer was ordered to pay 2 weeks’ wages to one employee and 3 weeks’ wages to another (they had been affected in different ways by the unfair election, hence the different awards).

It is worth remembering that there are detailed requirements about the election of employee representatives which is often a part of the process that employers tend to rush.

To be or not to be….(a transferring employee)?

If a former employee has appealed against her dismissal and that appeal is still pending at the date of a TUPE transfer, will she transfer to the buyer under TUPE?

Not unless:

• the employment contract stated that the employee’s employment continued until the outcome of the appeal; or
• the appeal was successful (whether decided before or after the transfer) and so under normal principles the dismissal was overturned; or
• the dismissal was connected with the TUPE transfer in which case the employee would have been deemed to have been employed at the date of the transfer.