Wednesday, October 26, 2011

Government Urged to Abolish Unfair Dismissal for Unproductive Workers!

According to today's Daily Telegraph a leaked Downing Street report is encouraging the Government to abolish the right for unproductive workers to claim Unfair Dismissal.

The report has been prepared by Adrian Beecroft, a venture capitalist. He claims that employment law is biased against employers and stifles productivity and expanstion.

The suggestion is that poor performing employees are allowed to "coast along" and that firms are nervous about expanding in case they take on "unknown quantities."

He proposes replacing the right to claim Unfair Dismissal with "Compensated No Fault Dismissal" where the employee would receive the equivalent of a redundancy payment and notice pay. He does concede that it would be a downside to this that it would allow employers to sack people they do not like.

The Government has indicated that this proposal is unlikely to see the light of day. It is not hard to see why. Employers already have 12 months and may soon have 2 years within which to judge whether someone is up to the job before the employee acquires the right to claim Unfair Dismissal.

If employers have a genuine reason for dismissing someone then requiring them to pay an additional payment over and above the existing entitlement to notice will only increase costs rather than reducing them, and may lead to attempts to dismiss people without pay and notice for misconduct when it is really a capability issue.

Conversely if someone is dismissed without a good reason why should they be limited to the payments he has in mind if their loss will be substantially more?

There is little or no evidence that the law on Unfair Dismissal is biased in favour of employees. The statutory tests are generous to employers, which is presumably why such a low percentage of Unfair Dismissal claims succeed.

Since presumably the right to claim Unfair Dismissal in cases of, for example, whistleblowing and pregnancy would not be abolished, this proposal will simply lead to even more Claimants alleging that the "real" reason for their dismissal was one of the grounds that remains outlawed.

In other words, back to the drawing board.

Friday, October 14, 2011

I didn't mean it - tough!

The Court of Appeal has confirmed that an employer who terminated an employee's contract by mistake was not entitled to rescind their decision.

Ms Willoughby was employed by CF Capital. There had been some discussions about her becoming self-employed. After thinking about it she decided not to go ahead. In the meantime however her employer wrote to her terminating her employment with effect from 31st December with a view to her self-employment starting on 1st January.

Ms Willoughby took advice and replied that she did not want to become self-employed and considered herself to have been dismissed. CF Capital thereupon indicated that it had all been a misunderstanding, that they did not want to lose her and that if she did not want to become self employed then the relationship would continue as before.

Ms Willoughby did not return to work. CF Capital treated her as having resigned. She claimed unfair and wrongful dismissal.

The Employment Tribunal dismissed her Claims. It reviewed the case law on the "special circumstances" where otherwise unambiguous words of dismissal or resignation which are quickly retracted will not have the normal effect of terminating the employment relationship. It decided that as there had been a genuine misunderstanding and the employer had withdrawn the dismissal as soon as it knew about it there had been no dismissal, and therefore nothing which could be unfair or wrongful.

The Employment Appeal Tribunal disagreed. It said that the employer had, albeit because of a mistake, clearly intended to terminate the employment and once that had happened the employer could not retreat from that position without the employee's agreement.

The Court of Appeal rejected CF Capital's appeal against the EAT's decision. The cases about "special circumstances" apply where something is said in the heat of the moment which does not reflect the speaker's true intentions, or occasionally in the case of an "immature" employee who cannot have been taken to have made a reasoned decision. Where someone says "get out of here, I never want to see you again" during a heated row about a pay rise and then calls the employee straight back in and apologises then this will not be held to be a dismissal. Where however CF Capital had applied their mind to the matter and had chosen to write a letter of dismissal there was no scope for the application of the "special circumstances" rule.

It will very often be the case that an employee thinks the employer is making a mistake by sacking them but if in every case where there was a misunderstanding of the underlying facts it could be said that there was no dismissal this would drive a coach and horses through the contractual underpinning of dismissal law and would lead to uncertainty.

With respect, the Court of Appeal's decision must be right. The true test must be whether in the circumstances the speaker/writer intended to dismiss or resign, and that was clearly the intention here.

It remains to be seen whether this will be a phyrric victory for the employee as the Tribunal could still find that it was unreasonable failure on her part to mitigate her loss by not accepting an offer of re-employment on the same terms, but we shall have to see what happens at remedy stage (assuming a private agreement is not now reached.)

The case is reported here.