2012 Legal Round-Up

30 December 2012

Libel case following “false” allegations of sexual harassment

27th Feb 2012

According to The Telegraph a married solicitor who was cleared of sexually harassing a female colleague is suing her for damages.  He claims that her false allegations have ruined his personal and professional reputation.

It is reported that Mr Loughran, 50, a litigation solicitor with Anglian Water, accused Ms Edge, 29, of maliciously making untrue statements intended to cause him considerable hurt, distress and embarrassment. He is alleging slander and libel. Mr Loughran is quoted as saying “I asked her to stop repeating the allegations and I even wrote to her asking for an apology, but none was forthcoming.” Mr Loughran is also seeking an injunction banning Mrs Edge from repeating her claim.

Mr Loughran alleges that Ms Edge made an allegation to the Anglian Water HR department of sexual harassment against Mr Loughran and a written statement was later drawn up.

An internal investigation began and both Mr Loughran and his wife were questioned about the allegations for around three hours. Mr Loughran claims he was found not to have sexually harassed Ms Edge in any way.

The article can be read here

Government’s proposed changes to employment law

2nd March 2012

Recently we held a seminar on the planned and proposed changes to employment law and questioned whether this would make employers’ lives any easier. Whilst the aim the government has put forward is to simplify employment-related matters for employers, arguably many of the measures are likely to have the opposite effect. For example, the plan to increase the unfair dismissal qualifying period from one to two years’ service may well result in more claims for discrimination and/or whistleblowing (both of which do not have a qualifying period). Whilst the proposal for “protected conversations” appears to add little to the existing situation of open or “without prejudice” conversations, the concept could create various hazards for employers.

We will of course keep you up-to-date with each of the changes that are planned and proposed, so check back here for more information.

To download the slides from our session please click here.

If you would like to contact our team to discuss how these changes may impact on your business then please call us on: 020 3178 5361.

Tanker drivers resume talks to avoid strikes

10th April 2012

This morning, Acas Chief Conciliator Peter Harwood said: “Acas conciliation talks have resumed this morning.”

According to Acas, the discussions have been “constructive” and it seems that the parties engaged in the process are committed to resolving the fuel tankers drivers’ dispute.

The dispute over terms and conditions and health and safety has been brewing for more than a year but flared up last month when Unite announced that workers in five companies, including oil giant BP had voted to strike. It is understood that turnouts across the five companies averaged 77.7 per cent.

Jahad Rahman of Kervin & Barnes Solicitors said “under the Trade Union and Labour Relations (Consolidation) Act 1992, the union will have to give seven days’ written notice of any industrial action. The notice must contain a description of who is to be called upon to take part in the industrial action and outline the numbers of employees involved, the categories and workplaces in which they work, and the number of employees in each category and workplace”.

Jahad previously advised trade unions, including Unite. If you require advice on any collective employment law matter, please don’t hesitate to contact Jahad on 0203 178 5363 or jrahman@kervinandbarnes.com.

Verbal statements can be binding to vary contracts of employment

15th June 2012

Attrill & Ors v Dresdner Kleinwort Ltd [2012] EWHC 1189 QB

Although the facts of this case arose in the financial services sector, it is of interest wherever discretionary bonus or other types of incentive schemes are used.

After a bonus announcement concerning the creation of a guaranteed minimum bonus pool of EUR 400m for employees of Dresdner in August 2008, employees of Dresdner received a letter in December 2008 stating that a bonus had been provisionally awarded at a specified sum, but subject to a material adverse change clause (MAC clause), which was a claw back provision.

In January 2009 Dresdner was sold to Commerzbank  and this fact was used to trigger the MAC clause such that in February 2009 employees received an  e-mail informing them that provisional bonus amounts would be cut by 90% pro rata.

Each of the 104 claimants claimed the unpaid balance of the sum stated in their December 2008 bonus letters ( in the aggregate a sum of EUR 51,855,474); and from Commerzbank, the like sum as damages for inducing breaches of contract.

The vast majority of the employment agreements made express provision for the award of discretionary bonuses and they also contained entire agreement clauses, yet the court found the verbal announcement of a guaranteed minimum bonus was contractually binding, varying the employment contracts without the need for employees individually to accept the change.

The MAC clause contained in letters sent in December 2008 to employees about their discretionary bonuses for 2008 was introduced in breach of the implied terms of the contracts of employment. Also, despite the fact that the Court accepted the change in the financial climate, had Dresdner been entitled to rely on the MAC clause, there was a failure to comply with its terms which invalidated purported reductions in the provisional bonus awards.

To read the full judgment, please click here.

Absence Management during the Olympic/Paralympic Games

5th July 2012

Absence management may become a regular issue during the Olympic/Paralympic Games, London 2012. For enjoying the Games, here are some of the main issues and our tips.

The Games start on 27 July and if they haven’t already done so, employers need to plan for the impact this will have on their business and employee productivity. Absence management may become a regular issue.

The main issue causing disruption is likely to be either unscheduled non-attendance, which might be the result of travel delays or “sickness absence”, or more manageable absence from granting requests to work flexibly, homeworking or holiday requests. Employee productivity may even be an issue for staff in the workplace, as employers may also be providing access to the Games via the internet or communal TV screens.

Here are some of the main issues and our tips for enjoying the Games.

Employee Productivity
In addition to absence management, there may be management issues with employees in the office. If employees are spending too much time watching the Games during working hours, this should be handled through the disciplinary process (starting with an informal warning). An alternative approach is to ban watching the Games during working hours, but that course of action might be better left as a fall-back; the gold medal goes to the employer who through planning and communication with staff-minimises disruption without destroying enjoyment of this very special event.

Maintaining appropriate standards of workplace behaviour
If staff are watching events in the workplace, they are likely to express support for the national team. This can lead to inappropriate behaviour and even nationalistic banter. Ensure the company has an equal opportunities and anti-harassment policy in place and that employees know what kind of behaviour is unacceptable and may be dealt with as a disciplinary issue. Employers should be aware that ‘nationality’ is included in the definition of ‘race’ in the Equality Act 2010.

Travel delays
Try to anticipate these:

  • consider temporarily changing working hours, perhaps staggering start and finish times to try to avoid peak delays
  • communicate with staff to find alternative methods of travel

Is there a right to be paid if employees cannot attend work because of travel disruption/delay?
Maybe! This depends on a combination of legal rights. Basically is there a contractual right to be paid if the employee cannot attend work? This may not be spelt out clearly in the contract, and if there is no custom and practice to follow, the legal position in such cases is that wages are not payable unless the employee has done something in exchange. Often that means actual performance of work by the employee (particularly for piece-workers and hourly-paid employees) but for some types of employees (for example, salaried) it may just require that the employee is ready and willing to work if they are able. If they could not reach the workplace, then they may still be entitled to be paid. The answer will depend on the terms of the contract.

Temporary working from home/flexible working
If there are major travel disruptions as part of absence management, consider home/flexible working:

  • assess the impact of this on other parts of the workforce (can they do their jobs without the other member of staff being at work?)
  • check any existing policies on working from home/flexible working as they may already cover the issue but note also that there is a formal statutory right to request flexible working for employees who are carers
  • changes to employment terms and conditions may be required, so employees will need to consent
  • factor in the pressure that homeworking could put on IT systems
  • homeworking will also require health and safety risk assessments.

Holiday requests
Most employees will have applied for holiday already but if there are last minute competing holiday requests being made by those wanting to watch the Games, as well as by those with different interests, this could cause problems and employers need to manage competing requests and consider what are the essential staffing requirements. This is the ‘softer’ side of absence management. One way of dealing with more requests than there are holiday slots is to have a ballot, or pick names randomly out of a hat! But make sure everyone has had a chance to apply if they want to.

Sickness absence
Is the absence genuine? Employees should be reminded of the organisation’s policy and if there is likely to be a significant risk that the policy will be abused, changes to the sickness notification procedure may be useful, and/or a requirement to provide medical evidence of the illness for even short absences. As all HR staff will already know, short-term intermitted absences are already at the heart of absence management.

Employment Tribunal Fees from summer 2013

14th July 2012

On Friday the Ministry of Justice published specifics on the Government’s plan to introduce fees in the Employment Tribunal system. The MoJ indicated that the fees would be brought in from summer 2013 onwards.

In its most recent statement, the MoJ outlined its aims as: passing the costs of the Tribunals Service back to the users and encouraging alternative dispute resolution such as arbitration and mediation. These aims differed from those previously declared ­ as set out in one of our earlier updates ­ including deterrence of weak claims.

At the lower level, there will be a £160 fee for issuing a claim; followed by a £230 hearing fee. At the higher level, the issue fee will be £250 and the hearing fee £950. The applicable ‘level’ will depend on the type of claim only the more straightforward claims such as those for unpaid wages will be at the lower level.

Other additional fees are proposed ­ including for filing a counter-claim (£160) and for dismissal of a claim following settlement (£60). Fees will also apply to appeals to the EAT (£400 appeal fee and £1,200 hearing fee).

The MoJ reaffirmed that fees will only be payable by those that can afford them (but not, or only partially, by those that cannot) and that reimbursement of fees paid will be able to be awarded to a successful party (claimant or respondent) in appropriate circumstances.

To read the MoJ press release on Employment Tribunal fees please click here.

If you have any questions in relation to current Employment Tribunal procedures and/or a particular claim then please contact our team.

Changing the Rules in the Employment Tribunal system

17th July 2012

The Rules relating to Employment Tribunal procedures are to change. Whilst, on the face of it, that may sound like something only of interest to employment lawyers the proposed changes could improve the system for all of those having to use it.
Following a review, a report was published last week with an accompanying set of draft Rules. Some of the most interesting proposals are as follows:

  • Tribunals bringing in an initial “sift” stage: An Employment Judge will go through the claim and the defence to work out (i) whether either should be struck out for having no reasonable prospect of succeeding; or (ii) what directions t should be made in the case.
    • Point (i) should mean that claims filed without any basis ­ or hopeless defences to claims ­ will be weeded out of the system.
  • Case Management Discussions and Pre-hearing Reviews being merged and known as ‘Preliminary Hearings’.
    • This should reduce costs for both parties and enable more efficient case management.
  • Main hearings will be given indicative timetables with potential ‘guillotines’ (i.e. cut off times for evidence from different individuals).
    • This should allow for the most efficient use of the Tribunal’s time and cut down on irrelevant evidence.
  • It will be easier to achieve private hearings and obtain ‘restrictive reporting orders’.
    • This should give the necessary protection to both those making and those implicated in sensitive accusations.

Within the same report, suggested legislative changes were put forward ­ including the concept of claimants having to pay a deposit order for part of their case (i.e. in relation to a particular issue). In our opinion this would increase the likelihood of deposit orders being granted. For example where an employee had a mediocre unfair dismissal claim and an extremely weak race discrimination claim the respondent employer could apply for the claimant to pay a deposit on the discrimination issue alone and it would stand a greater chance of success. Again, this could weed out extremely weak cases which can only benefit all parties concerned. Especially when combined with the proposed ET fees.

If you have any questions in relation to Employment Tribunal procedures and/or a particular claim then please contact our team.

More on Holiday Pay & Long-term Sickness Absence

2nd Aug 2012

NHS Leeds v Larner

There has been a further judgment on the relationship between holiday/holiday pay and long-term absence from work.

The Court of Appeal case of NHS Leeds v Larner [2012] EWCA Civ 1034 has made it clear that a worker who has not taken paid annual leave during a given leave year because of their long-term sickness absence is entitled to payment in lieu of that leave. Furthermore, the worker does not have to request carry-over of the annual leave in order for it to carry over. If the worker then leaves employment they should be paid in lieu of the accrued annual leave that automatically carried-over as a result of their long-term sickness absence (as well as any untaken accrued leave from the current leave year).

In the given case, Mrs Larner was on long-term sickness absence throughout her employer’s entire leave year 2009 to 2010. During that time she neither took paid annual leave nor requested for it to be carried over. Early on in the next leave year (2010 to 2011) she was dismissed. Mrs Larner was paid in lieu of accrued, untaken annual leave for 2010 to 2011, but not paid for the untaken holiday in 2009 to 2010. She brought a claim for unauthorised deductions from wages and breach of the Working Time Regulations 1998.

Mrs Larner was successful at the Employment Tribunal. NHS Leeds appealed to the Employment Appeal Tribunal and lost. NHS Leeds went on to appeal to the Court of Appeal and again lost.

The Court of Appeal heard the case because it was deemed to be an important issue for employers and employees to be sure of and because Employment Tribunals have not always been consistent when approaching this topic.

For those that read our November 2011 update on Fraser v Southwest London St George’s (here) ­ the Court of Appeal, in this case, noted that the different outcomes can be explained by the difference in facts. For example, in Fraser there was evidence that the employee could have taken annual leave between recovery and dismissal (11 months later).

To read the full judgment in NHS Leeds v Larner please click here.

If you have any questions in relation to annual leave, long-term sickness absence, and/or how these principles fit with maternity leave then please contact our team.

Enforceability of Restrictive Covenants – as at inception

4th October 2012

The recent case of Patsystems v Neilly [2012] EWHC 2609 (QB) confirmed that the enforceability of restrictive covenants should be assessed as at the date they were entered in to. Furthermore, if the restrictions were void from the start then they cannot simply be resuscitated by a general endorsement of updated terms and conditions.

Here Graeme Neilly was employed by Patsystems in 2000 as an ‘Account Manager’. At that time he was on £35,000 with a contract requiring one month’s notice. The contract contained a 12-month “non-compete” clause. Neilly was promoted to ‘Director ­ Global Account Management’ in 2005. His remuneration reached £80,000 plus bonus and he was then on three months’ notice. Within his promotion letter, Neilly was asked to sign and return an endorsement agreeing to the variation in terms; it also stated that all other terms and conditions outlined in his original documentation would remain unchanged ­ he did so.

In 2012 Neilly resigned and informed Patsystems that he would be going to work for Trading Technologies (TT). Patsystems considered that Neilly’s intention to work for TT would breach the non-compete restriction and brought a claim in the High Court. Pending the outcome of the speedy trial Neilly signed up to certain undertakings.

The High Court concluded that the 12-month non-compete was void from the start as it could not have been deemed necessary to protect Patsystems’ legitimate business interests as at the date it was entered in to (2000). Furthermore, the change in terms in 2005 and accompanying endorsement from Neilly could not ­ based on the words used (as above) ­ have meant to reinstate a term which was already a nullity. Justice Underhill added that employment contracts are frequently varied and it cannot be the case that each time the terms are altered an otherwise “defunct restrictive covenant” is revived.

The High Court opined on two ways in which the restriction could have been made enforceable in 2005: (1) by drawing attention to the restrictions in the endorsement of amended terms i.e. “I am entering in to these restrictions despite their enforceability to date”; or (2) by entering in to a fresh contract (without expressly drawing attention to the restrictions).

Whilst it did not come down to this point, Justice Underhill noted that, in his opinion, the 12-month non-compete was too long and six months would have sufficed.

Employment rights for sale?

9th October 2012

On 8 October 2012, the Chancellor, George Osborne, announced plans for a new kind of employment contract called an “owner-employee”.

Under the new type of contract, employees will be given between £2,000 and £50,000 of shares in the business they work for and those shares would be exempt from capital gains tax. In exchange, they will give up their UK rights on unfair dismissal, redundancy and the right to request flexible working and time off for training, and will be required provide 16 weeks’ notice of a firm date of return from maternity leave, instead of the usual 8 weeks.

Companies of any size will be able to use this new kind of contract, but it is principally intended for fast growing small- and medium-sized companies that want to create a flexible workforce.

Owner-employee status will be optional for existing employees, but both established companies and new start-ups can choose to offer only this new type of contract for new hires. Companies recruiting owner-employees will continue to have the option of inserting more generous employment conditions into the employment contract if they want to.

Legislation to bring in the new owner-employee contract will follow later this year so that companies can use the new type of contract from April 2013. The Government will consult on details of the contract later this month.

If you would like to read the Department of Business press release please click here.

Our team are able to assist with atypical remuneration packages for employees. If you would like to contact them please click here.

Holiday pay should be based on “normal remuneration”

5th Nov 2012

The recent case of British Airways plc v Williams & Ors [2012] UKSC 43 has highlighted that an individual’s holiday pay should be based on their “normal remuneration”. Holiday pay should therefore include any supplements to basic salary that are intrinsically linked to the “performance of the tasks which the worker is required to carry out under [their] contract of employment”.

This Supreme Court judgment was made in relation to claims from thousands of British Airways pilots represented by BALPA ­ the British Air Line Pilots Association. During annual leave, the pilots were receiving remuneration encompassing basic fixed pay alone. They argued that they should also be receiving: (i) Flying Pay Supplement; and (ii) Time Away From Base (TAFB) allowance ­ both of which vary according to the time spent flying and are paid on top of basic salary (albeit that the TAFB allowance was said, by some, to also include cover for ancillary costs as well).

The BALPA pilots were successful at Employment Tribunal and Employment Appeal Tribunal level but lost to British Airways at the Court of Appeal. The pilots went on to appeal to the Supreme Court which then referred a number of questions on this topic to the CJEU (formerly the ECJ). The CJEU concluded that the purpose of paid annual leave is ­ in terms of remuneration ­ to put workers in the position they would have been in had they been working. The CJEU’s determination centred on analysis of the Aviation Directive; however, as the Working Time Directive (which applies to workers in other sectors) is broadly based on the same principles it is likely that this decision will apply to all workers.

The Supreme Court has now referred the Williams case back to an Employment Tribunal for determination of exactly what “normal remuneration” should consist of in their circumstances.

It is envisaged that cases may now be brought by those working in other industries to claim higher rates of holiday pay based on the inclusion of supplements intrinsically linked to the performance of a worker’s contractual duties. To pre-empt this employers may wish to assess whether they need to include such supplements in their workers’ holiday pay and be prepared to answer queries.

If you need assistance relating to any of the issues in the above update then please contact our team.

Legal changes to likely affect workplace equality

14th December 2012

A number of recent proposals and legal changes are likely to affect workplace equality over the next few years. These relate to equal pay, leave for parents, the representation of women on corporate boards and changes to civil partnership.

1.   The recent Supreme Court decision in the case of Birmingham City Council v Abdulla and others [2012]UKSC 47 has vastly altered the way in which employees can bring equal pay claims. Prior to this judgment equal pay cases had to be issued in an employment tribunal and the time limit for doing so was six months from the termination of the employment. The position now is that employees will have six years to bring a claim and can do so in the civil courts. Employees who take some time to realise they may have an equal pay claim (e.g. because former colleagues have brought claims) will not now be prevented from doing so provided that six years have not passed.
Whilst ‘equal pay for equal work’ claims are far more commonplace in the public sector, the law provides protection for private sector employees as well. Employers concerned about the potential of spurious claims being brought should take some comfort from the fact that costs are more frequently awarded in civil courts compared to employment tribunals. Unsuccessful equal pay claims in the civil courts may therefore result in hefty costs awards in the employer’s favour.

2.   Within the past month the Government has set out proposals to reform leave for parents. Its stated aim is to allow for greater flexibility to share childcare. The proposal allows for what is now maternity leave (ordinary and additional) to be shared between parents. A mother would still have to take two weeks’ compulsory maternity leave, but after that time the remaining 50 weeks could be taken by the mother or the father or a combination of the two (which could also overlap). The 39 weeks of Statutory Maternity Pay (provided eligibility is established) would also be transferrable between the parents. If implemented the change is planned to come in during 2015.

3.   The European Commission has recently proposed that there should be quotas for women on executive boards of companies based in the EU. The current idea is to have an objective of attaining 40% female boards by 2020. This would be achieved by companies selecting females over males where their qualifications are on a par. Companies with less than 40% of female board membership would be required to have systems in place for furthering this target or else they would face sanctions. The proposal has been criticised by two sides ­ those who believe it does not go far enough and that the quota should be compulsory (rather than just an objective); and those who believe everyone should be judged on their merits and that there should be no interference and therefore no quota.  Whether this type of positive discrimination can be justified under the Equality Act 2010 is debatable.  The European case of Kalanke v Freie Hansestadt Bremen ECJ 1996 ICR 314, ECJ Case C-450/93 suggested that positive sex discrimination is already permissible in certain circumstances.

4.   On 11 December 2012, the Government published its response following the consultation on equal civil marriage conducted earlier this year. This response sets out the Government’s intention to bring forward legislation in England and Wales to:

  • enable same-sex couples to have a civil marriage ceremony
  • enable those religious organisations that wish to conduct same-sex marriage ceremonies to do so on a permissive basis only
  • provide explicit legal protections for religious organisations that will allow them to continue to operate unhindered within their doctrines and beliefs as they do now
  • retain civil partnerships for same-sex couples only
  • enable existing civil partners to convert their partnership to a marriage, if they wish
  • enable individuals to change their legal gender without having to end their marriage

Clearly this will have repercussions for the existing provisions of the Equality Act 2010 and its work-related provisions.

If you have any questions in relation to workplace equality then please contact our team.