Wednesday, September 14, 2011

Changing Terms - Another Victory for Employers

Following on from the decision in the Garside and Laycock case the Employment Appeal Tribunal has now upheld (most of) another Judgment in favour employers over the right to change terms of employment.

TNT had for many years paid an "end of sort" bonus to certain of its employees. In 2005 this had been discontinued for new starters. By 2009 470 employees were still entitled to receive this bonus. TNT decided to scrap it and entered into negotiations with the Union.

A compromise offer was made and rejected by the Union members after a ballot. TNT then gave each employee contractual notice to terminate their existing contract and offered them re-engagement on the new less generous terms. By giving contractual notice they avoided constructive dismissal claims based on breach of contract.

All the employees accepted the new terms under protest but reserved their right to claim that the termination of their previous contracts was unfair dismissal.

All but 183 of these employees then settled their claims in return for a lump sum buying out their rights. The other 183 continued to pursue Tribunal claims. 4 were heard at Birmingham Employment Tribunal as test cases. Their claims were rejected and they appealed to the EAT.

The EAT ordered the Tribunal to give more details on their reasoning in relation to 2 of the employees, who were in a different category to the other 2 claimants, and that appeal continues. They did however reject the majority of the appeal and agreed that the dismissals were fair.

The correct test had been applied. The employer had a sound and non-trivial business reason for making the change. The difference in bonus arrangements between pre- and post 2005 staff doing the same job was divisive and the company was also struggling financially from 2008 onwards. Whilst the employees acted reasonably in rejecting the changes, the legal test was whether the employer acted reasonably, and it was held that they had - proper consultation had taken place.

The EAT rejected the argument that the employer was unreasonable not to offer the "buyout" terms to those who had turned them down in negotiations (the suggestion being that if they could afford it for some people then it was unreasonable not to give it to everyone.) They found (rightly, it is respectfully submitted) that such an approach would deter employers from entering into negotiations with staff since it would make any attempt to offer an additional "carrot" to avoid having to impose something meaningless.

Interestingly at appeal stage no point was taken over the Tribunal's decision that the fact that in 2005 the employees who kept their bonus were told it was being "red-circled" did not make it unfair to remove it later. It had not been a promise of no change in the contractual terms for life, simply a recognition that they could not be changed under that specific contract, which could be ended by proper notice and a new one given. It might have been thought that this finding was a little generous to employers.

The advice to employers remains to think carefully before imposing changes to terms and conditions. Do it by agreement wherever possible. Where it is not,consider whether the existing contract permits it and if not give contractual notice after proper consultation and having carefully recorded the sound business reasons for going ahead.

The case is reported here.

Tuesday, September 06, 2011

Equality Laws Are Not "Rubbish"!

A Hospital Trust in Liverpool has begun an investigation into how a job advertisement appeared ending with the line, and I quote "Usual rubbish about equal opportunities employer etc."

The advertisement on the Royal Liverpool and Broadgreen University Hospital's website for a trainee anaesthetist was unobjectionable up until that point. Now the Trust has put out a statement stressing that this comment does not reflect its view of equality issues and highlighting that it has been accredited by the gay rights organisation Stonewall as a diversity champion.

It would appear that somewhere along the line someone took the instruction to "include the usual rubbish about being an equal opportunities employer" a little too literally!

No employer should of course give the impression that they believe discrimination laws are rubbish (not least as this will sink any attempt to defend a claim by stating that all reasonable steps have been taken to prevent employees from discriminating.)

That being said employers seem to be competing with each other as to the amount of information (and logos of different equality organisations) which they now include in job advertisements to show their commitment to diversity.

Is this growing trend really necessary? By definition, all employers are "equal opportunity employers" (apart from where the very limited exceptions like there being a genuine occupational requirement for someone of a particular age,race,sex, etc apply) because the law makes them liable to penalties if they are not.

In the future perhaps we will see other paragraphs in job advertisements confirming that employers will comply with the law of the land, which one might otherwise take as read. "We are committed to a policy of not murdering our staff while they are at work."

The BBC report is here.

Friday, September 02, 2011

Employment Tribunal Statistics - Its Not All Bad News!

The Employment Tribunal statistics for the year to 31st March 2011 have been published by the Ministry of Justice and HM Courts & Tribunal Service.

They go some way towards dampening down employers' fears of a "compensation culture" or that Tribunals/employment law rights are slanted towards employees.

The total number of Claim Forms accepted by the Employment Tribunals was down by 8% to 218,000. These Claims Forms contained a total of 382,400 claims under different jurisidictions at an average of 1.75 claims per Claim Form ( for example a single Claim Form lodged by an employee might include claims for both Unfair Dismissal and unpaid wages.)

If the overall figure still looks high it is only fair to point out that this is distorted by ongoing mass litigation in respect of working time in the airline industry, with Claims in that sector being re-presented every 3 months and making up 30% of the overall total of 382,400.

Whilst employees tend to win contested cases about wages (many of which will be undefended "can't pay" cases involving insolvent employers), those cases that go to a hearing on the more substantial types of claim, like Unfair Dismissal and Discrimination, are more likely to go the employer's way.

Only 8% of contested Unfair Dismissal claims succeed at trial and for Discrimination claims the success rate at trial is between 2% and 3%. A Race Discrimination trial is 5 times more likely to be won by the employer than the employee.

51% of Claims are either withdrawn or settled, which may reflect employers paying off people to avoid the costs of trial but might also reflect people withdrawing Claims once they realise they will not win. The statistics do not tell us the average cost to employers of settling out of court or whether settlements are from commercial or legal motives.

Fears of astronomical damages awards are also in most cases unfounded. The average for Unfair Dismissal is £8,294.00. Only 51 out of 2,608 cases attracted an award of more than £50,000.00 - although the highest award was £181,754.00.

The average discrimination awards are around £12,000.00 depending on the type of discrimination, although interestingly the average for Age Discrimination was £30,000.00 (albeit in the context of only 26 cases - 2% - succeeding at trial.)

The highest Tribunal award of the year was £289,167.00 for a Sex Discrimination case.

Although very few employers were able to obtain awards of costs against unsuccessful Claimants, the number of costs orders in favour of Respondents was still, at 355, about 3 times the number made in favour of Claimants. The average award of costs was £2,380.00, but the highest was £83,000.00, which shows that Tribunals will "bear their teeth" where the conduct of the Claimant justifies it.

The best advice is of course to have appropriate policies and procedures in place and stay out of the Tribunal in the first place!