Thursday, December 30, 2010

TUPE and Tribunal Compensation - There's No Limit!

The Employment Appeal Tribunal has held that the limit on "a week's pay" that applies for the purposes of, for example, Statutory Redundancy Payments and a Basic Award for Unfair Dismissal does not apply to compensation for failure to inform and consult about a transfer under the Transfer of Undertaking (Protection of Employment) Regulations 2006 ("TUPE.")

Under the Regulations up to 13 weeks' pay can be awarded as compensation to each employee affected by a failure to inform and consult with them about how a transfer will affect them. This is a punitive sanction and the starting point is therefore the full 13 weeks' pay unless the Respondent can show mitigating circumstances to the contrary.

A number of employees of Dorlux were affected by a TUPE transfer when the company went into administration and was sold to Kozee. They claimed damages from Kozee for the failure to inform and consult and their claims succeeded.

They were each awarded 13 weeks' pay but the Tribunal capped the damages at the limit for "a week's pay." This was then £350.00. It is now £380.00 and rises to £400.00 on 1st February.

Having unsuccessfully applied to the Tribunal for a Review of this decision the Claimants appealed to the EAT against the capping.

The EAT upheld their appeal and found that the cap did not apply and that the Claimants were entitled to their full weekly pay. This increased the damages for each of them by between about £6000 and £9000.

The EAT found that although TUPE incorporated the basis of the calculation of a week's pay as set out in the Employment Rights Act (which sets out in detail how the sums are to be done), s.227 of the ERA set out the payments to which the cap related and TUPE compensation was not expressly or impliedly one of them.

This case is a lesson in the importance of reading the legislation carefully and not just assuming that the cap applies to damages based on " a week's pay." It was also a very expensive lesson for this particular Respondent in the importance of complying with the obligation to inform and consult.

The case is reported at:-

Friday, December 17, 2010

Discrimination Claims and Compromise Agreements - Solicitor ordered to attend Tribunal Hearing

In March 2010 Mrs Boateng brought an Employment Tribunal claim against her employers for Age and Race Discrimination.

In July 2010 mediation took place to try and resolve the dispute. At the end of a working day of mediating the parties all signed a Compromise Agreement and shook hands after apparently agreeing a deal.

The following day however Mrs Boateng emailed her employer's Solicitors to say that the Agreement was not binding because the employer had signed one of the copies in the wrong place.

Having parted company with the Solicitor who represented her at the mediation she tried to carry on with the case. The employer tried to have the Claims thrown out on the basis that there was a binding settlement.

In response to the strike out application Mrs Boateng abandoned the rather optimistic argument about the signature being in the wrong place and raised the more fundamental point that the agreement was not binding because she had not received the necessary advice from her Solicitor.

The Solicitor vigorously disputed this in correspondence that Mrs Boateng produced to the Tribunal.

As the rules about Compromise Agreements are a safeguard against people signing away their employment rights unless they have been fully and independently advised they are strictly enforced and if Mrs Boateng could prove what she said was true then the Agreement was invalid and the case could continue.

The Respondent applied to summons the Solicitor as a witness as to what went on but the Employment Tribunal refused to make an Order. The Solicitor refused to attend voluntarily on the basis that what had passed between him and his client was priveliged and confidential.

The Respondent appealed to the EAT who granted the Witness Order.

The Solicitor's evidence was clearly relevant to the issue of whether the statutory requirements of a binding Compromise Agreement were met. The Claimant had waived privelige by putting the matter in issue and it would be unfair on the Respondent to have to proceed without the Solicitor's evidence as the format of mediation (a form of "shuttle diplomacy" where the two parties sit in separate rooms and the mediator moves from one to the other until an agreement materialises) meant that the Respondent had no way otherwise of knowing whether what the Claimant said was correct.

The Tribunal encouraged the Solicitor to prepare a summary of his evidence ahead of the Hearing in order to assist the parties but doubted whether it had the power to compel him to do so.

Whilst obviously Mrs Boateng may be able to prove her case at a full hearing of all the evidence, on the face of it she would appear to have a task on her hands given that the Solicitor appears adamant that he gave her the advice and she gave all appearance of being happy with the deal at the time. The Tribunal may take some convincing that this is not the not entirely uncommon scenario of someone thinking better of a settlement after reflection.

The case is reported at:-

Wednesday, December 15, 2010

Unfair Dismissal - Optimistic Postman/Murderer Brings Claim

BBC News reports today that Southampton Employment Tribunal will tomorrow hear an Unfair Dismissal Claim by a convicted murderer.

Roger Kearney is serving a minimum of 15 years after being convicted earlier this year of murdering his married lover.

He was a postman at the time of the offence and now claims Royal Mail unfairly dismissed him.

Whilst one cannot help but wonder whether there is more to this than meets the eye, at face value this does not seem to be the strongest case ever to be presented to an Employment Tribunal.

Although not every offence committed outside of work would justify summary dismissal, murdering your mistress and hiding her body in the boot of a car at a service station is likely (one would hope!) to be found to be conduct that a reasonable employer could potentially regard as gross misconduct (that being the legal test.)

Even if the Claim succeeds (and we must reserve judgement on that) damages are likely to be limited on the basis that clearly the Claimant would not have been earning anything even had he not been dismissed, given his inability to attend work until 2025 at the earliest. It would also be very suprising if the Tribunal did not find committing a murder to be "blameworthy and culpable" conduct justifying a 100% reduction in the Award on the grounds of contributory fault.

It is not clear from the report whether Royal Mail are deploying the alternative argument that the Claimant was not dismissed but instead the contract ended through "frustration." This is when the contract becomes impossible to perform because of an act outside the control of the parties, such as one of them being sent to prison (which is of course in one sense within the Claimant's control, but ultimately is something imposed on him from without by the state.) Tribunals are not keen on the concept of frustration because it ends the contract without the employee being entitled to legal rights like notice and written reasons but if there was ever a case where it might be said to apply then this is surely it.

The BBC report is at:-

Watch this space! I shall update this blog when we know the outcome.

Monday, December 13, 2010

Payment In Lieu of Notice and Bonuses - Read the Small Print

Mr Locke was employed by a company involved in the proposed redevelopment of Chelsea Barracks for the Qatari Government, later the subject of an alleged controversial intervention by Prince Charles.

He performed his duties well but after just under a year of employment (before he could accrue the right to claim Unfair Dismissal) his contract was terminated with immediate effect following a disagreement over the company's wish to alter his terms.

The employer had a contractual right to terminate his employment without notice and pay him in lieu of the 6 months' notice to which he was otherwise entitled. They therefore paid him a sum equivalent to 6 months' notice pay.

They did not however pay the annual bonus of £160,000.00 which the Claimant said he would have been entitled to had his employment not been terminated.

The contract said that "You must be employed by the Company in order to receive the bonus."

The Claimant sued, claiming he was entitled to the money. The High Court rejected his Claim. It held that the clause must be taken to mean that he had to be employed by the company at the time the bonus became payable. This was on the basis that the alternative interpretation would have required the company to pay the bonus as well as 6 months' notice to someone who was no longer employed by them, and that there was no basis upon which they would have agreed to something like that which had no obvious benefit for them.

He could not claim the £160,000.00 as damages for breach of contract arising from the termination because the company had the contractual right to terminate the contract summarily.

Mr Locke appealed to the Court of Appeal, which by a 2 to 1 majority dismissed his appeal. They held that to benefit from the annual bonus he had to be employed by the company at the time the bonus became payable, and that as his employment had been lawfully terminated before then he was entitled to the money.

The company had a fairly lucky escape given the split in the Court of Appeal (assuming the matter does not end up in the Supreme Court and a different decision reached.) The message for employers is that it is important that contracts are drafted in such a way that there is no ambiguity - the PILON clause could have made clear only basic pay was payable, or the bonus clause could have made clear that there was no entitlement if the PILON clause was exercised.

Having a PILON clause is not always an unalloyed benefit for employers. If there is such a clause then the notice pay is a contractual debt rather than the damages which would be payable for summary termination otherwise. This means that there is no obligation to mitigate loss and an employee can potentially claim for a full, perhaps lengthy, notice period even if he or she walks straight into another job.

There is a report of the case at

Friday, December 10, 2010

Sex Discrimination, Victimisation, and Legal Secretaries Hearing Voices

Yet again a firm of Solicitors find themselves in the EAT, but for once the lawyers cannot be criticised!

Miss Wilson was a legal secretary working for a firm in London. During the course of her employment she made some bizarre allegations against two of the Partners in the firm.

It was conclusively established that the allegations were without foundation and it transpired that Miss Wilson was suffering from a mental illness with symptoms of psychosis. It would appear that she was hearing voices.

Having initially instigated disciplinary proceedings on the basis of her having made malicious allegations, the Firm decided not to go down that route but to terminate Miss Wilson's employment on the basis that the risk of recurrence meant that the relationship of trust and confidence between the parties had been destroyed.

Following a hearing, at which Miss Wilson attended with a representative from MIND, and throughout which she continued to insist the allegations against the Partners were true, she was dismissed with immediate effect.

Miss Wilson brought various claims relating to Disability Discrimination which were rejected by the Employment Tribunal. They found that a non-disabled person who made similar allegations would have been treated the same way. They also found that the obligation to make reasonable adjustments did not in this case extend to continue to employ someone behaving in such a strange way.

There was also a claim that her dismissal amounted to Victimisation (unlawful less favourable treatment) for having done the "protected act" of alleging Sex Discrimination. It was this part of the case which reached the EAT.

The EAT rejected Miss Wilson's Appeal and upheld the original decision to reject the Victimisation claim. The Employment Tribunal had been right to find that the reason for the dismissal was not the fact that Miss Wilson had made the allegations but the risk of future disruption as a result of her doing the same thing again in the future.

It will sometimes be a fine distinction to draw especially as the Tribunal is supposed to consider the reason for the actions rather than the motive and the EAT clearly found it a difficult task to wrestle with, hence the lengthy discussion of the relevant authorities.

An interesting aside relates to the fact that there is no right to claim Victimisation where the allegations are false and made in bad faith. Both parts of that definition have to be satisfied, so even though the allegations were palpably false they were "protected acts" because Miss Wilson genuinely, but psychotically, believed them to be true.

The case is reported at:-

Thursday, December 09, 2010

Flexible Working, Indirect Discrimination and the Pool for Comparison - the EAT muddies the waters

The Employment Appeal Tribunal in Scotland has handed down a Judgment that potentially will make it more difficult for women whose flexible working requests are refused to claim indirect sex discrimination.

The statutory right is to request (rather than to be granted) flexible working. Provided that the correct procedure is followed and one of the permissible reasons for refusal is given the employer is entitled to turn down the request.

What women who are unhappy with refusal will often do in this situation is claim indirect Sex Discrimination on the basis that as women are (still) the primary carers for children a requirement to work full time will place women, including the Claimant, at a particular disadvantage.

Tribunals have tended to assume that this is the case. The EAT has made clear that this is not necessarily so.

Mrs Wilson applied for flexible working upon return from maternity leave. Her request was rejected on the basis that all property managers employed by the company had to work full time. She said that she could not comply with this requirement because of her child care commitments and resigned, claiming Unfair Dismissal and indirect Sex Discrimination.

The Employment Tribunal refused her employer's application to strike out the claim as having no reasonable prospect of success, rejecting the suggestion that the "pool" for comparison should be only those who wanted to take advantage of flexible working (and that on basis the policy affected men and women equally.)

The EAT said this was wrong. The appropriate pool was those who would actually have wanted to work flexibly. However, they then went on to reject the employer's submission that it followed from this that the Claim had no prospect of success. The reasons why an application for flexible working would differ and it could not be said that every person who wanted to work flexibly but could not was put at a disadvantage.

The suggestion was that there was potentially a difference between, for example, a woman who made a lifestyle choice to only work part time and someone who had no choice but to do so because she could not afford child care.

This case is in Scotland and therefore only of persuasive authority (i.e. not binding on Employment Tribunals) in England, and there is some suggestion that it may be difficult to reconcile with a Court of Appeal authority on age discrimination. Nevertheless it will inevitably carry some weight.

Employment Tribunals may find themselves in an invidious position when trying to decide who is "disadvantaged" by a requirement to work full time and who just does not like having to work full time.

The case is reported at:-