Employment Update June 2010
Terminating contracts of employment summarily
The last thing an employer wants to hear after going through the stress of terminating an employee’s contract of employment is to discover that it was not terminated properly. This was the costly lesson learned in Geys v Société Générale, London Branch [2010] EWHC 648 (Ch).
Geys was a Managing Director of Société Générale (SG). It was decided by SG to summarily terminate Mr Geys’ contract of employment on 29 November 2007. However it omitted to expressly state that it was doing so under the pay in lieu of notice (PILON) clause in Mr Geys’ contract. An amount representing the PILON was paid on 18 December 2007, but it was not confirmed or explained in writing until 4 January 2008 that SG was exercising its right under the PILON clause to terminate the contract.
Mr Geys argued that the Bank's purported termination of his contract with immediate effect on 29 November 2007 was invalid and amounted to a repudiatory breach of the contract. The High Court held that the purported termination on 29 November was ineffective. The PILON paid on 18 December 2007 similarly did not terminate the contract. It was only when the written confirmation on 4 January 2008 was given that the contract was terminated. The consequence of having the termination occur just over a month later than thought was estimated by SG to cost them €2.5 million.
Although the case concerned a managing director and therefore considerable amounts of remuneration, employers are well advised take heed. When terminating an employee’s contract of employment under a PILON clause, this must be done expressly so as to deny employees any room for arguing when their employment terminated.
Too old to learn new tricks?
The Court of Appeal decision in Homer v Chief Constable of West Yorkshire Police focused on whether requiring an employee to have a degree in order to qualify for a higher pay grade amounted to indirect age discrimination.
Mr Homer worked for the Police National Legal Database, a department of West Yorkshire Police. He was passed up for a pay increase because he did not meet the required criteria, namely that he did not have a law degree. It would not have been possible for him to undertake the degree since he would be of retirement age on qualifying. He therefore claimed age discrimination on the basis that the provision requiring him to have a law degree was intrinsically discriminatory. He argued that because of his age (61) he was unable to obtain a degree and qualify for appointment pre retirement at 65.
The Employment Tribunal upheld Mr Homer’s complaint. The Employment Appeal Tribunal upheld the employer’s appeal and the case then came to the Court of Appeal.
The Court of Appeal held that there was no age discrimination and there was no ‘particular disadvantage’ to Homer or his contemporaries. The provision requiring a law degree did not discriminate against them on grounds of age, but rather it disadvantaged them because of their ‘temporal proximity’ to the retirement age.
In other words, the barrier to appointment and increased remuneration was not age, but retirement from the workplace before being able to obtain the qualification.
The case is, however, authority for the fact that a court would be willing to consider factual evidence to show that it would be difficult for people in Mr Homer’s age group to obtain a law degree, or to have one already. This goes to show that such a challenge is still possible, but the onus would very much be on the employee to demonstrate any discrimination.
Swapping roles as a reasonable adjustment for disabled employees?
The Employment Appeal Tribunal (EAT) in Chief Constable of South Yorkshire Police v Jelic has ruled on the circumstances in which an employer should make reasonable adjustments to office premises and procedures for an employee who becomes disabled. Mr Jelic suffered from chronic anxiety syndrome which meant he was assigned to an area of South Yorkshire Police which did not deal with the public. The practices of the force changed so that all station staff had to deal with the public and investigate cases. This alarmed Mr Jelic who went on sickness leave and did not return after his retirement.
The Employment Tribunal held that South Yorkshire Police failed to afford reasonable adjustments to Mr Jelic. One form of adjustment highlighted was that Mr Jelic should have been offered the choice to swap roles with another colleague who performed a role more suitable for Mr Jelic. The decision was appealed unsuccessfully by the employer.
The Employment Appeal Tribunal held that swapping roles would have been a reasonable adjustment, and that it was incorrect for South Yorkshire Police not to consider this as an adjustment because the role into which Mr Jelic could be placed was not vacant.
Although a welcome result for employees, the case poses difficult questions for employers. How similar do the roles of the disabled employee and the swapper have to be? Can the swapper veto the exchange in roles? How could the employer protect itself against a constructive dismissal claim by the aggrieved swapper? Readers will be kept updated on future developments on this case.
Prison officers, stitch-ups and substitution mindsets
The Employment Appeal Tribunal ruled on whether it is reasonable for employers to suspend misconduct investigations whilst the employee concerned is simultaneously being investigated by the police.
Secretary of State for Justice v Mansfield concerned a prison officer who was suspended on a variety of charges, which included attempting to stitch-up prisoners by planting drugs in their cells. He was suspended in May 2006 pending an investigation by the prison service.
At the same time the police began an investigation into Mr Mansfield’s alleged conduct which resulted in a prosecution. However the charges made against Mr Mansfield had been dropped by April 2007. Thereafter the prison’s internal investigation resumed. A disciplinary hearing was held in January 2008 where after Mr Mansfield was dismissed for gross misconduct. This decision was upheld at two subsequent internal appeals.
Mr Mansfield then brought a claim for unfair dismissal. The Employment Tribunal upheld Mr Mansfield’s claim on two bases: firstly, there had been ‘a lengthy and unacceptable delay in the proceedings leading up to the [Mr Mansfield’s] dismissal’ and secondly that the prison governor who made the decision to dismiss did not genuinely believe that Mr Mansfield was guilty of misconduct.
The Employment Appeal Tribunal reversed this decision, holding:
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that it is not unreasonable for an employer to suspend an internal investigation pending a police inquiry into the same misconduct being investigated – the conduct of the prison was not unreasonable in the circumstances; and
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the Employment Tribunal had erred in holding that the prison governor did not genuinely believe that Mr Mansfield was guilty of misconduct – instead of deciding whether the governor’s decision was an honest belief, the Tribunal had substituted its own view; therefore had slipped into ‘substitution mindset’.
The case is a useful reminder to employers that in cases where an internal investigation into the conduct of an employee is required, there is a fine line to be trod by the decision maker.
Employers are reminded that the ACAS Code of Practice on Discipline and Grievances at Work recommends that disciplinary issues are dealt with promptly and without unreasonable delays. Each case will however depend on its own particular facts and circumstances.
In relation to ‘belief’, what matters is that the employer honestly believes in the guilt of the employee, rather than what a Tribunal thinks would have been a reasonable punishment in the circumstances. However the employer’s decision (for the reason of an honest belief in the employee’s guilt) must still be judged to be ‘within the range of reasonable responses’ by a Tribunal. In other words, a decision cannot be so disproportionate or irrational as to suggest that the employer could honestly justify making it.
Run-off services and TUPE
The Employment Appeal Tribunal has held that there is no service provision change under TUPE where activities are retained and go into ‘run off’.
In Ward Hadaway Solicitors v Love and Ors [2010], Ward Hadaway (WH) were one of four firms who supplied legal services to the Nursing and Midwifery Council (NMC). There was no obligation on the part of NMC to allocate work to WH and no obligation on WH to accept work.
In 2007 the NMC tendered out its work to a single provider, Capsticks. However WH operated a ‘run off’ service whereby it kept its current work in progress and continued to work on that, but no new work came to them.
An issue arose about the applicability of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) to two employees of WH, particularly whether the ‘activities’ undertaken for NMC would be subject to the Service Provision Change (SPC) provisions of TUPE under Section 3(1)(b) of those Regulations. The employees argued that there had been an SPC under TUPE which meant that their contracts of employment had transferred to Capsticks.
The Employment Tribunal separated the work in progress from the expectation of future work and held that only the work in progress constituted ‘activities’ for the purposes of TUPE.
However, as the work in progress was to remain with WH to allow it to ‘run off’, those activities did not cease to be carried out by WH, they did not transfer and there was no SPC under TUPE.
Increase in Pension Age
Amid the constrictions to public sector budgets, one of the few things the Government has no plans to cut is the pension age. In fact the Work and Pensions Secretary Iain Duncan Smith has recently announced that the age at which people can claim their state pension may be increased sooner than expected.
At present, the age at which the state pension can be claimed is due to increase to 66 between 2024 and 2026. There will then be further increases in 2036 and 2046, by which time the pension age will increase to 68. The purpose of the legislation is to adjust the pension age in line with increases to life expectancy.
However given the current market conditions the Department for Work and Pensions has said it will look at introducing these changes sooner rather than over the above timescales.
We will keep readers informed with the latest news.
Employee absences: a case of World Cup Fever?
World Cup time will be the source of many office headaches – whether due to poor results or, particularly for employers, unauthorised employee absences. This is particularly the case as many of the matches will be taking placed around midday and 5pm GMT. ACAS is on the ball (apologies to readers – too good to miss!) and has issued guidance on its website both for employers in coping with such absences, and employees in requesting time-off.
The thrust of the guidance to employers is to be clear, open and fair in terms of reminding employees of their ongoing responsibilities and duties, managing employee expectations, and in responding to requests for flexible working or time off.
To see the guidance in full, simply follow the link below:
www.acas.org.uk/worldcup
Other useful pointers to employers include:
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try to be flexible with absence requests. Adopting a rigid stance and refusing requests may result in low staff morale and possibly even unauthorised absence;
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although somewhat extreme, employers could consider whether it is possible to allow matches to be watched in the office. This would ensure employees maximise their time in the office as well as boost office camaraderie and loyalty;
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circulate an office policy reminding employees of their obligations and duties on attendance and time-keeping, and drawing their attention to possible sanctions for unauthorised absence; and
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remembering to address the needs of office members who are not obsessing over the World Cup!
The matters covered in this ebulletin are intended as a general overview and discussion of the subjects dealt with. They are not intended, and should not be used, as a substitute for taking legal advice in any specific situation. Semple Fraser LLP will accept no responsibility for any actions taken or not taken on the basis of this publication.
FOR FURTHER INFORMATION PLEASE CONTACT: ALISON GOW