Watch Out! Assurances Given to Employees Can Have Contractual Force!

Promises made and assurances given to employees can have contractual force, so it is vital not to make such commitments without taking legal advice. That point was made by one case in which a council went back on an assurance that a group of workers would have the opportunity to apply for voluntary redundancy.

The council was subject to severe budget cuts and had informed the review and monitoring officers over its intranet that they would be contacted and invited to make applications for voluntary redundancy on generous terms. They were, however, subsequently told that voluntary redundancy was not available to them and they were made compulsorily redundant. Their complaints of breach of contract were later rejected by an Employment Tribunal (ET) on the basis that the intranet announcement did not give rise to contractual rights.

In upholding the workers’ challenge to that ruling, the Employment Appeal Tribunal (EAT) found that the ET had made a number of errors of law. It had, amongst other things, wrongly focused on an irrelevant issue as to whether the council had a policy, or custom and practice, of offering voluntary redundancy. The intranet notice, on the face of it, committed the council to inviting applications for voluntary redundancy and questions as to whether these would in fact have been granted went to damages, not liability.

The EAT remitted the case to the ET for reconsideration of whether the workers had a contractual right to apply for voluntary redundancy and, if so, the amounts of damages, if any, they should be awarded. Subject to argument to the contrary, the EAT was minded to send the matter back to a differently constituted ET.

Multinational Employers and TUPE Obligations – Tribunal Gives Guidance

Multinational companies frequently move their operations between countries – but how do to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) impact on their search for value? The issue was strikingly raised by a case in which a Yorkshire-based office worker offered to follow his job to the Philippines – but only if he continued to be paid his UK salary.

Airport The man’s employer had decided to shut down the finance department in which he worked and shift the entire operation to Manila. It was agreed that TUPE applied to the transfer of the department’s functions between two companies in the same international group. There was no suggestion that the amount of work that had to be done by the department or the number of employees engaged to do it would be reduced following its transfer to the Philippines.

When offered redundancy, the man responded by offering to relocate from Wakefield to Manila on the same terms and conditions that he had enjoyed in Yorkshire. Had that request been granted, he would have been paid almost 10 times as much as local workers in the Philippines. It was, however, refused and he was dismissed. His unfair dismissal claim was subsequently upheld by an Employment Tribunal (ET).

In upholding the employer’s challenge to that ruling, the Employment Appeal Tribunal (EAT) noted that the man’s contract provided for him to work in the Leeds or Wakefield area. There had been no consensual variation of that term and the employer was not required to engage him in Manila on the same salary that he had enjoyed in Yorkshire. It had never deviated from its refusal of his proposal and there was a complete absence of the meeting of minds required to achieve a variation.

Remaining issues in the case, in particular as to whether the reason for his dismissal was truly redundancy, were remitted to a newly constituted ET for fresh consideration in the light of the EAT’s ruling.

New ‘Vento’ Bands

Following a consultation, the Presidents of the Employment Tribunal have issued revised guidance on the amount of compensation payable for injury to feelings in discrimination cases (the ‘Vento’ bands).

In future, the guidance will be subject to revision on an annual basis, without the need for further consultation, with the first review taking place in March 2018.

The Presidents consider that, for the time being, the Retail Prices Index (RPI) is the appropriate measure of the rate of inflation to be applied.

Applying the formula adopted by the Presidents, the new bands for awards for injury to feelings are as follows:

  • Lower band – between £800 and £8,400. Awards in this range are appropriate where the act of discrimination is an isolated or one-off occurrence;
  • Middle band – between £8,400 and £25,200. Awards in this range are made in serious cases but where an award in the top band is not merited; and
  • Top band – between £25,200 and £42,000. Awards in this range are made in the most serious cases, such as where there has been a lengthy campaign of discriminatory harassment. Only in exceptional circumstances will a compensation award for injury to feelings exceed the upper limit.

The Guidance will apply to claims presented to the ET on or after 11 September 2017.

The response to the consultation can be found on the Courts and Tribunals Judiciary’s website. 

Agency That Failed to Pay the National Minimum Wage Hit Hard In Pocket

Paying the National Minimum Wage (NMW) is a strict legal requirement and employers that fail to do so can be hit with punitive penalties. In one case, an employment agency that laid on thousands of underpaid workers at a warehouse received a six-figure fine.

Following an investigation by HM Revenue and Customs (HMRC), it emerged that workers who clocked on one minute late to work were docked a full quarter of an hour. After clocking off at the end of their shifts, they were also required to queue for an average of 11 minutes for security checks.

The agency accepted that, as a result of those unpaid periods, workers had not received the NMW. To make up the difference, it paid almost £470,000 to affected workers. It was also required to pay a total of £263,628 in respect of 13 penalty notices raised by HMRC. It was, however, permitted to pay half the penalties – £131,814 – because it remitted the sum promptly, within 14 days.

After the agency appealed against the penalties to an Employment Tribunal (ET), HMRC acknowledged that the notices were defective in that they did not include certain information, particularly the names of individual workers concerned and the amounts by which they had been underpaid.

In dismissing the agency’s appeal, however, the ET found that the notices were nevertheless valid. The agency knew precisely the figures on which the notices were based, did not dispute that workers had been underpaid and had agreed how much was owed to them. The penalties were designed to have a deterrent effect on others and HMRC had been entitled to issue multiple notices.