Employment Review - June 2007
In this month’s review we report on two cases that provide further guidance on the statutory dispute resolution procedures. One of these is particularly important, as it determined that an employer’s notes taken during a meeting with an employee could fulfil step one of the statutory grievance procedures. We also consider a Court of Appeal decision that has provided some further guidance on when communications will be regarded as being ‘without prejudice’ and therefore inadmissible in legal proceedings.
Employer’s note fulfilled step one of the statutory grievance procedures
Recent work
DTI consultation on additional paternity leave & pay
National minimum wage
Statutory dismissal procedures
Court of appeal considers ‘without prejudice’ rule
Sick employee entitled to compensation for loss of earnings
Equal pay claims and victimisation
DTI guidance on rolled up holiday pay
Increase in holiday entitlement
Employer’s note fulfilled step one of the statutory grievance procedures
The EAT has upheld a tribunal chairman’s decision that a note made by an employee’s manager during a meeting and which contained “various details of complaints… which could, at least in places, reasonably be expected to raise with any employer reading them, concerns about allegations of sex and race discrimination” was a written statement of grievance under step one of the standard grievance procedure.
Whether step one has been complied with will always depend on the facts of the case. However, this case highlights that the focus is on substance, not technicality. The threshold to be crossed by employees has not been set high. The case confirms that step one of the statutory grievance procedures does not require the employee to physically write the statement that is submitted to their employer.
Employers should be aware that if the means they use to investigate employees’ complaints involve an initial meeting at which notes are taken or if notes are taken during an exit interview, these notes may amount to compliance with step one of the statutory grievance procedures. In these circumstances, employers should seek confirmation as to whether the individual is intending to make a formal grievance.
Kennedy Scott Limited v Francis UKEAT/0204/07/DM.
In the last month we have:
- Presented a Seminar on the new Smoking Ban legislation coming into effect on 1 July 2007
- Advised on the interaction of issues arising from simultaneous grievance and disciplinary issues
- Provided strategic TUPE advice to a large IT Company
- Provided a workshop to Local Authority clients on Equal pay claims following the implementation of the Single Status Agreement
- Presented Employment Update Seminars to the Midlands Accountants’ Forum
- Successfully defended an age discrimination claim against a large employer
- Successfully set aside a default judgement against an employer
DTI consultation on additional paternity leave & pay
At present, employees have an entitlement to two weeks statutory paternity leave and which must be taken within 8 weeks of the child’s birth. The Work and Families Act 2006 provides for this to be extended. On 14th May 2007 the DTI issued a second consultation document in relation to the new additional paternity leave and additional paternity pay. No date has yet been fixed for when the new rules come into force, however, the consultation document says that it will not apply in relation to children born before the 5th April 2009.
Under the new proposals, employed fathers will be entitled to up to 26 weeks paternity leave, with statutory paternity pay after their partners have returned to work. The aim is for additional paternity leave to be available in the second six months of the child’s life. The new rights are aimed at making it easier for mothers to return to work before the end of their entitlement to maternity leave, which was extended to 12 months in April 2007. The right to additional paternity will only be available if the mother is a working mother who returns to work. If she is not a working mother there is no right to additional paternity leave. This is a major difference from the statutory right to the basic two weeks paternity leave to which most employed fathers have been entitled since 2003, which is expected to continue and which does not depend on the mother being a working mother.
The DTI is inviting responses to its proposals by 3rd August 2007.
The draft National Minimum Wage Regulations 1999 (Amendment) Regulations 2007 have been laid before Parliament and will come into force on 1 October 2007. The Regulations will increase the national minimum wage (NMW) hourly rates in line with recommendations made by the Low Pay Commission earlier this year. Subject to parliamentary approval, the new rates will be as follows:
- Workers aged 22 and over – to £5.52 per hour
- Workers aged 18-21 – to £4.60 per hour
- Workers aged 16-17 – to £3.40 per hour
The National Minimum Wage Regulations 1999 (Amendment) Regulations 2007.
Statutory dismissal procedures
This case confirms that an employer is not obliged to give the employee detailed evidence in advance of a disciplinary hearing; it is sufficient that the employee knows the nature of the case against her and the misconduct relied on.
The case concerned a cashier who was informed by her employer that cash, for which she was responsible, had gone missing. She admitted that she had been falsifying the accounts for some three months in order to cover up the loss of the money. The employee was called to a step one meeting by means of letter setting out the reasons and warning her that she was at risk of dismissal. At the meeting the employer produced accounts, which went back for approximately one year, and the employer alleged that the employee had been falsifying the accounts for a much longer period than she had originally stated. She denied the allegations but she was still dismissed for gross misconduct.
The Employment Tribunal decided that the employer had failed to put the additional charges in writing before the step one meeting and this failure was a breach of the statutory dismissal procedures, so the dismissal was automatically unfair. However, the Tribunal in assessing compensation reduced this to zero.
The EAT considered that the dismissal was not automatically unfair. The employer did not have to give all the evidence in advance of the disciplinary meeting but had to give sufficient information for the employee to prepare her defence.
Whilst this is a reassuring decision for employers, best practice should still be followed when organising a disciplinary hearing. That should include:
- Written notification of the disciplinary hearing to the employee
- At least 48 hours notice of the meeting,
- The letter should set out sufficient facts for the employee to prepare their case in relation to the issue,
- In a step one letter where dismissal is contemplated this should be expressed and, if the issue is one of gross misconduct, the letter should warn of a possible summary termination (or termination without notice),
- Copies of evidence that the employer is going to rely on should be given to the employee prior to the hearing,
- If additional evidence comes to light it is still better practice to provide details of this to the employee prior to the hearing, even if only on the day, provided the employee has sufficient time to fully consider the additional evidence.
Ingram v Bristol Street Parts UKEAT/0601/06/CEA.
Court of appeal considers ‘without prejudice’ rule
The Court of Appeal has provided useful guidance on the ‘without prejudice’ rule. In BNP Paribas v Mezzotero, the Employment Appeal Tribunal clarified that in order for negotiations to be ‘without prejudice’ and inadmissible in litigation, they must be genuinely directed at resolving a dispute. Marking correspondence with the words ‘without prejudice’ does not automatically mean that the evidence will be excluded.
The Court of Appeal has addressed the question of the point at which, in escalating exchanges between employer and employee, ‘a dispute’ can be said to have arisen. In this case the Claimant, Mr Barnetson, was offered the position of Chief Operating Officer for Framlington Group Limited (which subsequently became AXA Framlington Group Limited) (”Framlington”). When Mr Barnetson started work, he was hired on the basis of an oral contract. However, when he sought to obtain written confirmation of his terms and conditions, there was some disagreement between the parties.
Following unsuccessful attempts to agree the terms and conditions, Framlington told the claimant that it intended to dismiss him at the end of 2005. On that basis, the parties began to negotiate the terms of his departure. However, no settlement was reached and Mr Barnetson was subsequently dismissed. He then issued proceedings in the High Court claiming wrongful dismissal.
During the proceedings, Mr Barnetson served a witness statement, which referred to the earlier attempts to agree terms and conditions. Framlington alleged that these discussions were protected by the ‘without prejudice’ rule and should be excluded from evidence. The High Court disagreed and found that the discussions were simply an attempt to agree a variation to Mr Barnetson’s contract. The parties were not concerned at that time with compromising an existing dispute. They were therefore not ‘without prejudice’ discussions. Framlington appealed.
The Court of Appeal allowed the appeal. The Court held that the ambit of the ‘without prejudice’ rule should not be extended any further than is necessary in the circumstances of any particular case to promote the public policy interest underlying it. The dividing line between serving the interests of public policy and wrongly preventing the other party from putting his case at its best may not always be clear.
The critical feature was the subject matter of the dispute (rather than how close in time they were to the litigation) and whether, in the course of negotiations, the parties contemplated or might reasonably have contemplated litigation in the absence of settlement. In this case, the notification of its intention to dismiss Mr Barnetson, the large amount of money involved and the manner and content of the negotiations indicated that litigation was in both parties’ minds.
Framlington Group Limited and anor v Barnetson [2007] EWCA Civ 502.
Sick employee entitled to compensation for loss of earnings
In the employment tribunal, her employer argued that since Mrs Triggs had been off work sick prior to her dismissal in February 2005, her loss of earnings after the dismissal was due to her continuing sickness rather than to her dismissal.
The Employment Appeal Tribunal has held that an employee who was off work sick when she was constructively dismissed was entitled to compensation for loss of earnings.
Mrs Triggs, the claimant, was a secretary for GAB Robins (UK) Limited, a firm of chartered loss adjustors. She alleged that she was bullied by one of her managers and had an excessive workload. As a result, she was signed off work sick with anxiety and depression from September 2004 and never returned to work. Whilst on sick leave, she raised a grievance about her workload and the treatment she had received from her manager. When the company failed to address her grievances adequately, she resigned in February 2005 and claimed constructive unfair dismissal.
In the employment tribunal, her employer argued that since Mrs Triggs had been off work sick prior to her dismissal in February 2005, her loss of earnings after the dismissal was due to her continuing sickness rather than to her dismissal. The dismissal itself had no effect on her incapacity to work or on her loss of earnings. However, the employment tribunal disagreed and held that Mrs Triggs was entitled to recover loss of earnings following her constructive dismissal. Her employer appealed.
The EAT upheld the decision of the employment tribunal. It distinguished between an actual dismissal, where loss of earnings may not be awarded, and constructive dismissal, where it was necessary to consider the cumulative sequence of events. Here, this included the incidents of bullying and overwork, which gave rise to Mrs Triggs’ sickness. They held that overall, the course of conduct by the employer amounted to a breach of the implied term of trust and confidence and formed part of the constructive dismissal. Mrs Triggs’ sickness was caused by that breach and should be treated as a consequence of the dismissal leading to loss of earnings, which would otherwise have been received at the full rate from the employer. The loss of earnings was therefore attributable to action taken by the employer.
GAB Robins (UK) Limited v Triggs UKEAT/0111/07/RN.
Equal pay claims and victimisation
The House of Lords has held that letters sent by a Council to its staff warning of the serious consequences for the Council if equal pay claims brought against it were successful amounted to unlawful victimisation.
Over 500 female catering staff brought equal pay claims against their employer in 1998, claiming equal pay with male road sweepers. The majority of employees accepted terms of settlement offered by the Council. However 39 employees (on the advice of their Union) took their claims to the Tribunal and were awarded substantial compensation. Two months before the employees’ hearing the Council sent a letter to the employees, and another to all catering staff, including those who had settled their claims. The letters (which the tribunal described as “careful and rational”) said that the school could not bear the financial consequences of losing the equal pay claims and that, if they did, the Council would be forced to consider stopping the provision of school meals to all except those children who were legally entitled to it, as well as making consequential job losses. Both letters also referred to the fact that settlement options were still open to the employees. The letters distressed the employees and soured relations with their colleagues. The employees brought additional employment tribunal proceedings, complaining of victimisation. The Council argued that the letters were written in the normal course of litigation and simply contained a clear statement of the potentially harmful consequences of pursuing the claims. They said that they were entitled to write to their employees telling them the truth.
The House of Lords upheld the original decision of the Employment Tribunal. They held that the employees had been distressed by the letters and the fact that one of the letters had been sent to all staff exposed the employees to criticism from their colleagues. The Tribunal had therefore been entitled to find that this amounted to a detriment suffered as a result of their continuing with their equal pay claims and therefore amounted to victimisation. The Lords confirmed that an employer involved in litigation is entitled to make “honest and reasonable” attempts to settle claims. However, it is not entitled to do anything that might make a reasonable employee feel that they are being pressured into conceding their claim. Indirect pressures such as being exposed to criticism from colleagues, is just as likely to deter someone from continuing with their claim as a direct threat. The employees will now be entitled to receive further compensation from the Council.
It would be sensible in cases where employees are being legally represented to make sure that any communications, which might have a bearing on litigation, are made to the employees’ representative. Employers should carefully consider the content and tone of any letters that seek to encourage settlement of claims. Also, other communications regarding the budgetary implications of claims should not attribute fault to employees for bringing or continuing with their claims. Employers should also be careful about raising these types of issues in “without prejudice” discussions, which have traditionally been a forum for parties to communicate more openly. Without prejudice communications are disclosable in proceedings if the “unambiguous impropriety” exception applies i.e. where the party would be seriously disadvantaged if they could not refer to the without prejudice communication.
St Helens Borough Council v Derbyshire & others [2007] UKHL 16.
DTI guidance on rolled up holiday pay
The DTI has further amended its guidance following the ECJ decision in Robinson-Steele v PD Retail Services to make it clear that payments made by an employer prior to replacing its rolled-up holiday pay arrangements may be offset against future liabilities to make payments in respect of holidays.
The DTI guidance now says:
“Following a European Court of Justice (ECJ) judgment on 16 March 2006, Rolled-Up Holiday Pay (RHP) is considered unlawful and payment for statutory annual leave should be made at a time when leave is taken. Employers should have taken steps to renegotiate contracts involving RHP to eliminate this practice. Any payments in respect of annual leave, additional to wages or salary, made during this transitional period in a transparent and comprehensible manner, may be offset against and future liability to make payment in respect of annual leave, to avoid any overpayment of holiday pay.”
The additional paragraph confirms the DTI’s view that employers should have replaced any existing RHP arrangements.
Guide to the Working Time Regulations – URN: 03/1068/A1: Section 7: Paid Annual Leave, DTI.
Increase in holiday entitlement
The Government has published its response to the recent consultation on proposals to increase the statutory holiday entitlement, indicating its intention to increase entitlement to 4.8 weeks on 1 October 2007 but to delay the full increase to 5.6 weeks until April 2009. It is also proposed to allow payment in lieu of the initial increase (the additional 0.8 weeks) until 1 April 2009, which will assist employers with transitional arrangements.
The increases that take place in October 2007 and April 2009 will be calculated proportionally depending on when the employer’s leave year starts. The Government has stated that it will provide an online calculator to make it simpler for everybody to work out their new holiday entitlement.
Draft Working Time (Amendment) Regulations 2007.