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November Employment Law Newsletter


Step outside. It may still be the tail end of Autumn but there’s no ignoring twinkly lights and jaunty jingles. The season of giving and receiving is upon us.

And perhaps it’s with that in mind that the Government announced its latest employment law-related proposal. Neatly packaged as a £100m ‘employer-owner’ scheme, the idea is to allow employers to issue capital gains tax-exempt shares worth somewhere between £2,000 and £50,000 to employees in return for their giving up some employment law rights. These include unfair (but not automatically unfair) dismissal, redundancy and the right to request flexible working and time off for training.

Consultation on the Chancellor’s plan, which includes doubling the amount of notice a woman needs to give of her return from maternity leave, has been swift. It’s anticipated by the government that these new owner-employee contracts will start being used from April 2013.

In other, less festive, news…

Ex-employee Bound by Unsigned Contract - FW Farnsworth Limited v Lacy
Mr Lacy started working for his employer in 2000 under a contract which he signed in 2003. He was promoted in 2009 and given a new contract which he didn’t sign or return. In 2012 he left to work for a competitor.

This case was all about whether Mr Lacy was bound by the post-termination covenants in the 2009 contract which didn’t feature in the 2003 contract. FW Farnsworth argued that he was, and so was prevented from joining the competitor. Mr Lacy’s case was that he had skim-read the later contract, wasn’t happy with the restrictions and so had decided not to sign it.

The High Court found against him, holding that he was bound by the restrictions. He had taken advantage of the benefits of the 2009 contract, in particular private medical insurance which he had applied to take up.

Even if there had been a mere skim-read of the contract, it’s probable that Mr Lacy would have been alerted to the new restraints in that contract, as well as its benefits, the Court held. He must have been aware that the terms of his employment had been redefined, and he didn’t object. He had accepted the contract and was bound by its terms – including the post-termination restrictions - from the date on which he took the step of applying for private medical insurance.

Tribunal Should Hear Both Sides - Timbo v Greenwich Council for Racial Equality
The Claimant, an equalities officer, brought race and sex discrimination claims against her employer.

During day three of the four-day hearing, once Ms Timbo had concluded her evidence, the employer applied for the claim to be struck out on the grounds that there was no case to answer. The application succeeded. Ms Timbo’s case depended to a large extent on her credibility and the tribunal found her credibility so flawed that her evidence could not be relied on at all.

Ms Timbo appealed and won. The Employment Appeal Tribunal (EAT) held that there was a core of disputed facts which could only be determined by hearing all of the evidence, and not just the Claimant’s.

It is one thing, the EAT said, to take a ‘half-time’ view that one side’s evidence is unsatisfactory and is unlikely to be accepted unless there is evidence to the contrary. It’s another thing to conclude that a witness’ evidence must inevitably be rejected completely even if there is no evidence to contradict it.

The tribunal should have heard the case in full and determined the outcome in the light of all of the evidence.

Claimant Wins Case Without Appearing - Duffy v George
Mr Duffy and Ms George were colleagues. She won a claim against him for sexual harassment, despite not having been present at that hearing. The tribunal had granted an order that she needn’t attend because she felt intimidated by Mr Duffy and was scared of being cross-examined by him in person.

Mr Duffy appealed, arguing that the tribunal should not have made findings of fact that went against him when he had not had the opportunity of cross-examining the claimant.

The Employment Appeal Tribunal found against him. The tribunal was not bound to dismiss the case because of Ms George’s absence. The tribunal rules are wide enough to allow the tribunal to take evidence, such as hearsay or second-hand evidence whether in witness statement form or another form. It doesn’t require the maker to be available for cross-examination.

Associated Employer and Continuous Service - Holt v EB Security Limited
Mr Holt was dismissed by his employer in March 2009 after nearly two years in the job. Two weeks later he was taken on by an associated employer – EB Security - but was dismissed within a year.

The question for the employment tribunal was, could Mr Holt bring an unfair dismissal claim against EB Security? At that time he would have needed one year’s continuous service.

The tribunal found against him. It held that his period of continuous employment had been broken in March 2009 and so he didn’t have the necessary continuity of service. The two-week gap in employment was not a temporary cessation because at the end of it Mr Holt did not go back to working for the first employer.

That decision was overturned on appeal. The Employment Appeal Tribunal held that there was a temporary cessation of work. Subsequent work with an associated employer (with not necessarily the same operations as the first employer) would be enough to preserve continuity.

The Illegal Contract - Sheibani v Elan & Co
Mr Sheibani was a chartered certified accountant at Elan & Co. Half of his salary was paid through the payroll and the rest ‘off the books’ so that both he and the business could save money.

Things turned sour and Mr Sheibani brought claims for unfair dismissal and breach of contract, among others, against the firm.

During the course of the hearing, neither party raised the issue of illegality. Despite this, and without allowing the parties to make submissions on the point, the tribunal concluded that the contract was illegal. All claims, including the employer’s counterclaim for breach of contract, were dismissed.

Both sides appealed and the Employment Appeal Tribunal (EAT) found that the tribunal had made the wrong decision. The EAT held that the parties ought to have been made aware that the tribunal was considering the illegality issue; they would have conducted their respective cases differently. Also, where criminal offences are concerned, it’s essential that parties are told by the tribunal about the right against self-incrimination.

Here the tribunal’s decision didn’t just amount to an irregularity. The parties had been denied justice, the EAT held. The case was sent to a fresh tribunal to be reconsidered.

Harmonisation of Terms Post-redundancy - Manchester College v Hazel
Ms Hazel and Ms Huggins transferred to a new employer - Manchester College – under TUPE. Six months after the transfer the College embarked on a cost-savings process. As part of that it asked for voluntary redundancies and wage cuts.

Ms Hazel and Ms Huggins were told that their jobs were safe. But they were then given new contracts which incorporated pay cuts of 18% and 13%. They refused to accept this and were dismissed and then re-engaged on the new contracts.

The tribunal held that the dismissals were unfair. The employees had been dismissed for a reason connected with the transfer. It wasn’t a valid economic, technical or organisational reason because it didn’t involve changes in the workforce. The change was to do with harmonisation, and the time for reducing staff numbers had already passed by the date of their dismissal. The tribunal ordered re-engagement on the old salary.

The College appealed but lost. The Employment Appeal Tribunal (EAT) held that the tribunal had been entitled to find that the redundancy issue had already been resolved before Ms Hazel and Ms Huggins had been told that their jobs were safe, and they had been entitled to rely on that assurance. The tribunal was not wrong to have divided the issues between redundancies and harmonisation of terms and conditions.

On the re-engagement point, the EAT rejected the argument that there would be worker discontent if these employees’ previous salaries were reinstated. This was partly because the Council had given evidence that it would ‘handle it’.

And Finally.... A Collective Exhale by Council Workers
It’s been a long fight. But now more than 170 workers at Birmingham City Council can press ahead with equal pay claims which would otherwise be too late to be heard at an employment tribunal.

The Council has lost its appeal against the Court of Appeal’s decision last year which allowed the workers to proceed with their claims outside the usual six month tribunal time limit. The result is that the Abdulla Group, as they’ve become known, could be entitled to £2m between them for unpaid bonuses.

It’s a decision which is being heralded as a landmark, paving the way for workers to present equal claims at the High Court within six years of their employment ending.

Will we see more equal pay claims because of this? Perhaps. But for employers the real significance could be the lingering threat of a claim long after an employee has left. If an incentive to audit staff benefits were needed then this could be it.

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