Just when you thought that the raft of potential changes and 'tweaks' to employment law was pausing for a Christmas break, the latest topic to fall under the Government's radar for review is "the ending of the employment relationship". In this addition of our newsletter we will take a look at the latest proposals and also reflect on a number of other recent employment tribunal cases.
What's being talked about:
- Cap on the unfair dismissal compensatory award: The idea is to slash the maximum amount that can be awarded from £72,300 to either the national median average earnings of £25,882 or the claimant's annual net salary (which is lower). Compensation looks set to be limited to 12 months' pay. It has been suggested that the change would just make it cheaper for employers to behave unreasonably rather than making it easier for them to dismiss people. There would still need to be a fair process. Discrimination claims, which are so often associated with unfair dismissal would continue to attract unlimited compensation.
- Settlement agreements: This will be the new name for compromise agreements. These sorts of settlements have always been on fairly standard terms but the Government has gone so far as to publish template agreements. You'll find these at the back of the consultation document.
- Employment tribunal fees: Under the proposals, a claimant would have to pay: £160 to issue a claim for unpaid wages or redundancy pay, and a further £230 to take their case to a hearing; £250 to issue an unfair dismissal, discrimination, or equal pay claim, and another £950 for a hearing. The proposals reportedly described by unions as a disgrace, are sure to challenge those with more shallow pockets. Although there could be a way of whittling out spurious claims and discouraging the serial or vexatious litigant? But would they also prove to be a disincentive to employers settling claims? Probably. Some would undoubtedly hold off from making a meaningful offer to settle in the hope that a claimant would be unable, or unwilling, to pay the kind of tribunal fees proposed.
Time to have your say?
The consultation document on ending the employment relationship is now available and you can read it here.
Have you been following these proposals on ending the employment relationship? Do you have any views on them? Don't keep them to yourself. You have until 23 November to let the Government know how you feel about its proposals.
Having considered the ending of the employment relationship let us turn to what should happen at the beginning and during the employment relationship.
Compensation limited by immigration status
In the matter of Kings Castle Church v Okukusie, Mr Okukusie was a Nigerian national employed by the Church. He was dismissed after providing misleading information about his immigration status and he brought an unfair dismissal claim.
The tribunal held that his dismissal had been unfair because the Church hadn't properly investigated his immigration status and had not warned him that if he didn't submit the proper paperwork relating to his status then he would be dismissed. He was awarded loss of earnings up to the date of the hearing and a further six months' loss of earnings as compensation.
The Church appealed and argued that Mr Okukusie was not permitted to remain in the UK beyond the date which fell within the six month future loss period. He should therefore not have been awarded compensation for the full six months because then he would not have been entitled to earn a salary for the whole of that period.
The Employment Appeal Tribunal (EAT) agreed with the employer. The tribunal had been wrong to have awarded loss of earnings covering time after Mr Okukusie's leave to remain had expired. The EAT recalculated the compensatory award based on the period during which Mr Okukusie was permitted to work in the UK.
Action point
Under the Immigration, Asylum and Nationality Act 2006 employers have a duty to prevent illegal working by carrying out document checks to confirm if a person has the right to work in the UK. Employers should check and keep copies of original, acceptable documents before someone starts work and carry out repeat checks at least once every 12 months if a person has a time limit on their stay.
Employee bound by restrictive covenants in unsigned contract provided after promotion
The High Court has held that an employee was bound by the terms of a new contract of employment provided to him after he was promoted, but which he had not signed and returned to his employer. The new contract contained post termination restrictive covenants on which the employer sought to rely. Whether the covenants were enforceable was not an issue in this case.
The Court held that the employee's acceptance of the new contract could be implied by the fact that he applied for private medical insurance (PMI) cover that was only available to him under it. The employee was therefore bound by the terms of the new contract from the date he applied for the PMI. (FW Farnsworth Ltd and another v Lacy and others [2012] EWHC 2830.)
Action point
This case highlights the importance for employers to ensure that existing employees actually sign and return new contractual terms issued following a change in role or promotion to avoid any uncertainty in this regard.
It is also very important that restrictive covenants are reviewed on promotion as it is likely that these will need to be amended in the light of the employee's more senior status.
And finally we go from the sublime…
Making an employee redundant in France is a very different matter to here in the UK. The legitimacy of the redundancy is dependant on the real and serious nature of the economic difficulties experienced by the company across the board (including international) and not just at site level at the time of the redundancies. So looking for another (and cheaper) reason to terminate an employee's contract of employment may start to look attractive. However it has been reported that one international employer found out the hard way that you can still get it very wrong.
Instead of making a case for redundancy on economic grounds, it has been reported here the case of Mrs M v Clifford Chance that someone at the Paris office of the international company had the idea to terminate Mrs M's employment on the grounds of misconduct. Mrs M, a secretary of the company of 54 years, who had completed four years of loyal service at the company, was notified of her dismissal for serious misconduct. She was sacked without notice or compensation. The letter of dismissal claimed that Mrs M was surly and pig-headed and had an off-putting manner.
Understandably Mrs M did not take this lying down and took her claim for unfair dismissal to the EAT and won. It was reported that she was even awarded damages for injury to feelings. The tribunal found that her employer had tried to disguise a redundancy as a termination for misconduct and held that she had been unfairly dismissed. Her employer appealed the findings and after two further Court appeals over a period of 5 years the matter has finally been brought to a conclusion in the employee's favour.
To the ridiculous…
Fourteen ex-employees of Florida law firm Elizabeth R Wellborn are suing for wrongful dismissal after they were fired for wearing orange shirts on payday.
Workers at the company turned up to the office dressed in cheery orange t-shirts on payday. they say it's something they have always done on payday, so when the office closes at the end of the day and they hit happy hour at the local bar, there's more of a feeling of "togetherness". The togetherness fashion statement appears to have bypassed the firm's management committee who summoned all orange-clad employees into a conference room and fired them on the spot.
Apparently the management team was under the impression that the orange shirts were part of a protest by employees, despite assertions to the contrary. Unfortunately for the sacked employees, the "at will" Florida employment laws mean that people can be fired for any reason (provided that reason it not specifically outlawed), including their choice of clothing!
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