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.

Employment Law and Human Rights – The Debate Continues

The impact of the UK’s human rights obligations on employment law is still a subject of much debate almost 20 years after the advent of the Human Rights Act 1998. In one important case, the Court of Appeal upheld a trade union’s plea that the right to freedom of association may be violated by the exclusion of parks police officers from pre-redundancy consultation rights that are afforded to other workers.

The case arose from a local authority’s decision to disband its parks police service. Two officers who lost their jobs as a result lodged complaints of unfair dismissal with an Employment Tribunal (ET). Their trade union also sought a protective award in respect of the council’s alleged failure to carry out collective consultation prior to the making of more than 20 redundancies, as required by Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA).

Both claims were permitted to proceed to a full hearing by the ET, but that decision was subsequently reversed by the Employment Appeal Tribunal (EAT). In respect of the officers’ claims, the EAT noted that those persons in police service are precluded from bringing unfair dismissal claims by Section 200 of the Employment Rights Act 1996. The union’s claim was excluded by Section 280 of TULRCA.

The Court had no enthusiasm in rejecting the officers’ appeals on the basis that their dismissals did not engage Article 8 of the European Convention on Human Rights – which enshrines the right to privacy – whether read by itself or in conjunction with Article 14, which bans discrimination. In urging the Government to review the law on the point, the Court noted that the exclusion of parks police from unfair dismissal protection was anomalous and an apparent injustice.

In upholding the union’s appeal, however, the Court found that the right to collective consultation conferred by TULRCA fell fairly and squarely within the ambit of Article 11 of the Convention, which guarantees freedom of association and peaceful assembly. The union’s claim for a protective award was thus not excluded and its case was sent back to the ET for full consideration on its merits.

The Perils of Dismissing a Senior Employee

Terminating the employment of senior personnel can be legally complex and costly and, even when professional advice is taken, things can go wrong. The point was made by a case concerning a consultancy group that dispensed with the services of its CEO in acrimonious circumstances.

Following the termination of his employment, the CEO launched proceedings against the group on the basis that it had not honoured his entitlements under a long-term incentive plan (LTIP). After receiving advice from a law firm, the group agreed to compromise his claim by paying him £1.35 million.

The group later sued the firm on the basis that its advice had in some respects been negligent. A number of those allegations were rejected, but a judge found that the firm had breached the duty of care it owed the group in failing to identify a payment in lieu of notice (PILON) clause in the CEO’s contract.

Had the group been advised about the effect of the PILON clause in respect of the vesting of the LTIP, it would have been in a position to negotiate the settlement of the CEO’s claim for a lesser sum. In those circumstances, the group was awarded £118,125 in damages. The facts of the case emerged as both the group and the firm were refused permission to appeal against those parts of the judge’s ruling that were adverse to them.

Employment Tribunals Bend Over Backwards to Ensure Fair Hearings

Employment Tribunals (ETs) are at the forefront of the battle to eradicate discrimination in all its forms from the workplace. It is obviously vital that they practice what they preach and that is all the more reason why they are anxious to ensure that even the most vulnerable complainants receive a fair hearing.

One case in point concerned an academic who suffered from severe mental health difficulties and claimed that he had endured disability discrimination, victimisation and unfair dismissal at the hands of a university. His complaints were dismissed by an ET, but he challenged that decision before the Employment Appeal Tribunal (EAT) on the basis that he had not been afforded a fair hearing.

He submitted that the ET should have taken it upon itself to postpone or adjourn the proceedings, in which he represented himself, when the extent of his mental health difficulties became apparent. He had broken down under cross-examination and, although he had been willing to continue, the ET had acceded to the university’s request to cut short the hearing and move straight to closing submissions.

In rejecting his appeal, however, the EAT noted that he had been aware of his right to seek a postponement or adjournment of the hearing, but had not done so. The ET had made appropriate adjustments to enable him to fully participate in the case until he broke down. The decision to bring his cross-examination to a premature end had if anything disadvantaged the university. He had still been able to present his case and, viewed overall, the hearing had been a fair one.

Employment Tribunals Can Appoint Litigation Friends – Landmark Decision

It has for a very long time been possible for vulnerable people to be represented in court by litigation friends so that they can have proper access to justice. Now, in a decision of general public importance, that right has for the first time been extended to proceedings before an Employment Tribunal (ET).

The case concerned a woman who had succeeded in automatic unfair dismissal and whistleblowing claims against her former employer. There was medical evidence that she suffered from post traumatic stress disorder and a moderate depressive illness, triggered by traumatic experiences that she had endured during her employment.

A further hearing was due to take place before an ET at which the amount of her compensation would be assessed. Her lawyers argued that, due to her psychiatric problems, she lacked the capacity to conduct the proceedings. The ET, however, refused to appoint a litigation friend on the basis that it had no power to do so.

In ruling upon her challenge to that decision, the Employment Appeal Tribunal (EAT) noted that neither the Employment Tribunals Act 1996 nor the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 conferred any express power to appoint litigation friends.

However, in allowing the woman’s appeal, the EAT found that the absence of such a power was incompatible with the common law duty of fairness and the woman’s human right to a fair hearing. Without a litigation friend, the woman and other vulnerable litigants in the same position would be prevented from participating in employment proceedings in any real sense.

The EAT recognised that ETs are creatures of statute and can exercise only those powers that are conferred on them by Parliament. However, when interpreted in accordance with fairness and human rights legislation, it found that the Regulations were broad enough to enable ETs to use their case management powers to appoint litigation friends. The case was remitted to the same ET for that to be done.

Because the case had raised novel issues of general public importance, the EAT had taken into account representations from the Law Society and the Secretary of State for Business, Energy and Industrial Strategy in reaching its decision.

Trade Union Induced Prison Officers to Breach Discipline – High Court Ruling

Certain key workers whose jobs are vital to the proper functioning of the Government are denied the right to take industrial action afforded to everyone else. Prison officers are amongst them and, in a guideline decision, the High Court took a robust approach in prioritising the needs of the state over individual interests.

PrisonThe case took place against the background of heavy cuts in prison funding that had resulted in the number of prison officers being reduced by about a third. Assaults and incidents of violence had increased and officers had been placed under great pressure, feeling diminished and undervalued in their work.

In those circumstances, the Prison Officers’ Association (POA) had issued a circular to its members which, amongst other things, stated that they should only attend their workplace during contracted hours, eschew voluntary tasks and embark on a course of withdrawal from an overtime scheme.

The POA argued that the circular did no more than encourage its members to stick to the letter of their contracts. However, the Ministry of Justice (MoJ) argued that it amounted to a breach of Section 127 of the Criminal Justice and Public Order Act 1994, which enshrines the ban on prison officers taking industrial action.

In upholding the MoJ’s arguments, the Court found that the circular amounted to an inducement to prison officers to withdraw services that they were contractually obliged to provide. On a true interpretation of the Act, they were precluded from withdrawing any services that they had provided before the circular was issued.

The POA argued that the purpose of the circular was to bring management to the negotiating table. However, the Court found that it had induced members to commit breaches of discipline that would be likely to generate a risk to the safety of both prisoners and staff. In the circumstances, the Court granted the MoJ declaratory relief, reflecting its decision, and issued a permanent injunction against the POA.

Company Fined £1.8 Million after Staff Exposed to Legionnaires Disease Risk

Employers who fail to ensure the health and safety of their workers can expect to receive financial penalties that are designed to hurt. In one case that proved the point, a security company that exposed its staff to a grave risk of contracting Legionnaires disease was fined £1.8 million.

factoryA local authority launched an investigation after one the company’s employees fell ill with the potentially fatal condition, which is generally caused by inhaling bacteria in tiny droplets of water. Air conditioning and washroom facilities are favourable environments for the bug to breed.

It could not be established with certainty that the man had become infected at work, but investigators uncovered numerous failures by the company to maintain its water-based systems. Monitoring and testing of the systems was erratic and staff had received inadequate training. Despite extensive guidance and advice from the council and health and safety consultants, there were no up-to-date policies or suitable and sufficient risk assessments in place.

The company received the financial penalty, and was also ordered to pay £33,700 in prosecution costs, after it pleaded guilty to two offences contrary to the Health and Safety at Work etc. Act 1974. In challenging the fine before the Court of Appeal, the company pointed out that significant improvements had since been made to its premises, which were now considered to be a model of their kind. It was not the case that it did not care about its employees’ welfare.

In dismissing the appeal, however, the Court noted that the level of culpability was extremely high and that the breaches were flagrant. The company had an annual turnover of about £250 million, employing 200 staff at the relevant premises alone, and the penalty imposed could not be viewed as manifestly excessive.