Lack of Contractual Precision Leads to Director’s Bonus Dispute

A lack of precision in employment contracts, particularly when it comes to calculation of staff bonuses, can poison the atmosphere of any business. So it was in the case of one company whose finance director insisted he should have received the same bonus as its chief executive officer (CEO).

The finance director earned a salary of £100,000 a year and, under his contract, was entitled to annual bonuses ‘at a comparable level’ to those paid to other members of the board. In the year before he left the company, he was awarded a bonus of £86,000. He launched proceedings claiming entitlement to £50,000 more than that. He argued that the CEO had received a £136,000 bonus in the relevant year.

However, in dismissing his breach of contract claim, a judge found that that figure included a one-off payment of £50,000 as a reward for the CEO’s involvement in a particularly successful deal. That did not form part of his bonus and he had thus received exactly the same bonus as the finance director. The judge also found that the latter was present at a board meeting at which bonuses for the year were agreed but had voiced no objection at the time.

Acas Guidance on Handling Pay and Wages

Failing to handle pay issues in accordance with the law can prove costly for employers.

The Advisory, Conciliation and Arbitration Service (Acas) has published guidance, aimed at small employers and line managers in larger organisations, giving practical advice on this topic. This covers choosing a new pay system, pay during absence and deductions from pay.

The guidance can be found here.

Contact us if you would like individual advice on any pay-related issue.

Acas Publishes Early Conciliation Report

Since 6 May 2014, anyone wishing to make a claim to an Employment Tribunal (ET) must first notify the Advisory, Conciliation and Arbitration Service (Acas), so that they can be offered an opportunity to resolve their dispute using its Early Conciliation (EC) scheme and thus avoid the need to go to the ET.

Acas has now published the results of its survey on use of the EC scheme during its first year in operation. These show that: 

  • Acas handled more than 83,000 EC cases between April 2014 and March 2015;
  • Three out of four employees and employers agreed to try EC in its first year of operation; and
  • Eight out of ten people who took part in EC were satisfied with the service they received from Acas. 

Statistics for EC notifications received between April and December 2014 show that 63 per cent did not proceed to an ET claim, a further 15 per cent resulted in a formal settlement (known as a COT3) and 22 per cent progressed to an ET claim. Of the latter, more than half (51 per cent) were subsequently resolved by Acas.

 The full survey can be found here.

The latest conciliation update for the year April 2014 to March 2014 can be found here

Government Consults on Gender Pay Reporting

The Government has launched an initial consultation, ‘Closing the Gender Pay Gap’, with a view to introducing regulations under Section 78 of the Equality Act 2010 that will require employers in the private and voluntary sectors with at least 250 employees to publish information about the pay of their male and female workers.

Employers are asked which, if any, of three methods of calculating the gender pay gap would be possible for them using existing data and systems:

  1. An overall gender pay gap figure arrived at by calculating the difference between the earnings of men and women as a percentage of men’s earnings;
  2. Gender pay gap figures broken down by full-time and part-time employees; and
  3. Gender pay gap figures broken down by grade or job type.

The consultation also seeks views on what additional information should be provided by employers, how often and at what point in the year the information should be published and whether the proposed threshold of 250 employees is appropriate for private and voluntary sector employers. In addition, employers are asked to estimate the time it would take to produce the information, and the cost of so doing, and to suggest alternative ways of increasing transparency on gender pay that would limit the cost for employers, for example reporting to the Government via the existing PAYE system.

The consultation document can be found here

The online consultation questionnaire for responses can be found here

The closing date for submissions is 6 September 2015.

HSE Publishes 2014/2015 Fatal Injury Statistics

SpreaderFatal injuries at work are, thankfully, rare, which means that the annual figures are subject to chance variation. However, over the last 20 years there has been a downward trend in the rate of fatal injury, although since 2008/2009 the trend is less clear.

The Health and Safety Executive (HSE) has now published provisional statistics for fatal workplace injuries in Britain for the year 1 April 2014 to 31 March 2015.

The total number of deaths was 142, compared with 136 in the year to March 2014. The overall rate of fatal injury was 0.46 per 100,000 workers, compared with 0.45 in 2013/2014.

The figures show the fatal injury rates in several of the key industrial sectors:

  • 35 fatal injuries to construction workers were recorded – a rate of 1.62 deaths per 100,000 workers – compared with 44 deaths in the year 2013/2014. The average number of deaths in the past five years is 45;
  • 33 fatal injuries to agricultural workers were recorded – a rate of 9.12 deaths per 100,000 workers – compared with 27 deaths in the year 2013/2014. The average number of deaths in the past five years is 33; and
  • Five fatal injuries to waste and recycling workers were recorded – a rate of 4.31 deaths per 100,000 workers – compared with four deaths in the year 2013/2014. The average number of fatalities in the past five years is six.

The statistics also show that 102 members of the public were fatally injured in accidents connected to work in 2014/2015 (excluding railway-related incidents). This compares with 68 deaths in the year 2013/2014.

These figures are provisional. They will be finalised in July 2016 following any necessary adjustments arising from further investigations and coroners’ rulings, during which new facts can emerge about whether or not the accident was work-related.

Full-year details and statistical notes can be found here.

Fresh Hope for Businesswoman in Whistleblowing Case

A businesswoman whose dismissal came soon after the end of her close personal relationship with her boss has won a fresh opportunity to prove that she was unfairly sacked for whistleblowing by the company they managed together.

The couple lived and worked together until her dismissal. Her role was that of company secretary and she was a shareholder. An Employment Tribunal (ET) later accepted that her dismissal was procedurally unfair but awarded her just £380 on the basis that their business relationship had irretrievably broken down and that her dismissal was thus inevitable.

The woman also claimed that her dismissal was automatically unfair in that it was prompted by protected disclosures she had made about her boss in the wake of the breakdown of their personal relationship. However, the ET ruled that there was no basis for her whistleblowing claims and struck them out.

In allowing her appeal, the Employment Appeal Tribunal described the ET’s ruling as draconian. It failed to make findings as to whether the disclosures were made to a legal adviser or other prescribed person. It also erred in finding that her disclosures to the tax authorities were not protected because she had not told her boss about them. The matter was sent back to the ET for reconsideration.

Delay of Just One Day Stymies Academic’s Unfair Dismissal Claim

university style officesEmployment cases are subject to strict time limits and independent advice is essential to avoid the consequences of missing them. In one case, a former university research fellow had her hopes of compensation dashed after launching proceedings just one day too late.

The woman, who had been made redundant, lodged against the university claims of unfair dismissal, unlawful deductions from wages and breach of the Working Time Regulations 1998. However, her case was struck out on grounds that the proceedings had been lodged a day after the expiry of the deadline. An Employment Tribunal (ET) found that it would have been reasonably practicable for her to lodge her claims in time and that it thus had no jurisdiction to consider them.

In rejecting her challenge to that decision, the Employment Appeal Tribunal found that the ET had taken the correct approach in law and reached a conclusion which was open to it. The woman’s arguments that ill health and IT problems had contributed to the fatal delay had been duly considered by the ET.

Workplace Statistics Not Enough to Prove Indirect Discrimination

Statistical evidence of unequal treatment in the workplace is not enough by itself to found an indirect discrimination claim, the Court of Appeal has ruled in an important test case involving a group of Home Office employees.

The members of the group had all failed a Home Office test and could not qualify for promotion as a result. They were all aged 35 or over or were from ethnic minority backgrounds. Statistical reports showed that candidates in those categories were less likely to pass the test than those who were younger and white.

The difference was said to be statistically significant and, on that basis, the employees launched proceedings under the Equality Act 2010, alleging indirect race and age discrimination. In ruling on a preliminary issue, the Employment Appeal Tribunal (EAT) found that members of the group had been put at a disproportionate disadvantage in that they were at a greater risk of failing the test.

In allowing the Home Office’s appeal against that decision, the Court of Appeal noted that the case raised an important issue of principle. In order for the claims to succeed, it was necessary to show not only that the test had produced apparently unequal results but also ‘the reason why’ that was the case. Each member of the group was under an evidential burden to show that he or she had been discriminated against on the basis of a protected characteristic. The case was sent back to an Employment Tribunal for determination of remaining issues in the light of the Court’s decision.

Veteran Manager Unfairly Selected for Redundancy

A manager who was made redundant after working for almost 30 years for the same employer has won the right to compensation after a tribunal pinpointed deficiencies in the procedure followed and found that her dismissal was unfair.

The company was facing serious financial difficulties and had decided that one of its two managers had to go. The woman was selected for redundancy whilst her colleague kept his job. An Employment Tribunal (ET) subsequently found that redundancy was a potentially fair reason for her dismissal.

Her dismissal was nevertheless ruled unfair on the basis that the selection procedure employed was unreasonable. Amongst other things, the ET considered that it was wrong that marketing skills – perceived as being one of the woman’s strengths and a weakness of her colleague – were not treated as a selection criterion.

In ruling upon the company’s challenge to that decision, the Employment Appeal Tribunal (EAT) rejected the woman’s plea that the procedure had been a sham in that the selection criteria had been drawn up deliberately to secure a particular outcome. However, in dismissing the company’s appeal, it found that there were numerous shortcomings in the selection procedure and that the finding of unfair dismissal was not perverse.