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October Employment Law Newsletter


Like them, loathe them or view them with detached ambivalence: some of the Government’s proposed employment law changes are poised to receive the full force of public feedback.

The consultation document on ending the employment relationship is now available and you can read it here.

Read on for our summary of some of the main features, as well as our usual round-up of cases.

Consultation - It’s All Kicking Off 

Opinions at the ready. You have until 23rd November to let the Government know how you feel about its proposals on ending the employment relationship.

Here’s a snapshot of what’s being talked about:

Cap on the unfair dismissal compensatory award
The idea is to slash the maximum amount that can be awarded from £72,300 to either the national median average earnings of £25,882 or the claimant’s annual net salary (whichever is lower). Compensation looks set to be limited to 12 months’ pay.

Some commentators are saying that the change would just make it cheaper for employers to behave unreasonably rather than making it easier for them to dismiss people. There would still need to be a fair process and lashings of reasonableness - unless of course the employer would be happy to bank on a maximum liability of £25,882. That would be a risky strategy particularly when discrimination claims, which are so often associated with unfair dismissal, continue to attract unlimited compensation.

Settlement agreements
The new name for compromise agreements. These sorts of settlements have always been on fairly standard terms but the Government has gone so far as to publish template agreements. You’ll find these at the back of the consultation document.

The aim is to make it quicker and easier for parties to settle their dispute and without needing as much legal advice. Consultation is also being sought on whether or not there should be guideline tariffs for different types of settlements.

But there’s no proposal yet to remove the requirement that employees receive independent legal advice before signing. According to some, this is a red tape-cutting opportunity missed.

Employment tribunal fees
A litigation deterrent if ever there were one. In some cases, anyway.

Under the proposals, a claimant would have to pay:

The proposals, reportedly described by unions as a disgrace, are sure to challenge those with more shallow pockets. They could be a way of whittling out spurious claims and of discouraging the serial litigant. But would they also prove to be a disincentive to employers settling claims? Probably. Some would undoubtedly hold off from making a meaningful offer in the hope that a claimant would be unable, or unwilling, to pay the kind of fees proposed.

Full-time Taxi Driver Not An Employee - Knight v Fairway & Kenwood Car Service

Mr Knight was a taxi driver with Fairway & Kenwood Car Service. He worked under written terms including this one:

"The rent is calculated on a Monday for the oncoming week and entitles you to work an 'open shift' system, this means you may work as and when you like. Our offices are permanently staffed 24 hours a day, 7 days a week. You have the option to sign on and off any time that suits you.”

Provided Mr Knight paid his rent and complied with notification procedures, he could pick and choose when he worked. He was responsible for his own tax, national insurance and VAT.

There was a disagreement about his responsibility to carry passengers irrespective of their behaviour and Mr Knight left. He claimed wrongful dismissal.

The tribunal held that as he was not an employee – there was no mutuality of obligation - it couldn’t hear his claim. He appealed but the Employment Appeal Tribunal (EAT) found against him.

The EAT held that while Mr Knight was probably employed during each shift or each job and that created an umbrella contract, it fell short of being an employment contract. He was free to work when he liked without there being any adverse consequences under the contract. And even though Mr Knight chose to work seven days each week, that was not enough to imply an employment relationship.

So there was no employment contract, no employee status and therefore no right to bring a wrongful dismissal claim.

Fundamental Breach For Constructive Dismissal - Logan v Celyn House Ltd

Ms Logan was a veterinary nurse. There was a dispute about the company’s failure to pay her contractual sick pay. She raised a grievance which incorporated other complaints against a colleague who Ms Logan claimed was overbearing.

The company rejected these and she resigned. The manner in which the company had dealt with her grievances meant that she was unable to work there any longer, she said. A claim for constructive unfair dismissal followed.

The tribunal found against her. It held that the alleged bullying was a figment of her imagination and that while the non-payment of sick pay was a repudiatory breach, that wasn’t why she had resigned. The main reason for her leaving was her perception of the way she had been treated by her colleague and the way in which the company had dealt with her complaint about that.

Ms Logan appealed and the Employment Appeal Tribunal (EAT) overturned the tribunal’s decision. The tribunal had focused on the wrong question, the EAT said. It should have asked itself whether the breach of contract involved in not paying the sick pay was part of the reason for the resignation, and not whether it was the principal reason.

Here it was enough that Ms Logan had resigned in response, in part at least, to the failure to pay sick pay.

Settlement Discussions Wrongly Taken Into Account - Gallop v Newport City Council

Mr Gallop worked for the Council as a horticulture training officer. He had various bouts of stress-related absence and he and the council eventually tried to agree a compromise agreement which would bring his employment to end.

After these negotiations broke down the Council took disciplinary proceedings against Mr Gallop which resulted in him being dismissed for alleged gross misconduct. He brought a tribunal claim, partly for unfair dismissal.

During the hearing one of the tribunal lay members asked a question which led to a Council witness revealing that a compromise agreement had been discussed. This would ordinarily be something a tribunal should not know because of the without prejudice rule. Here the tribunal Chairman did not intervene and, in fact, the tribunal went on to take that evidence into account. It held that the dismissal had been unfair but that there was a 50% chance that a compromise agreement would have been reached but for the dismissal. Mr Gallop’s award for loss of earnings, pension loss and notice pay was halved as a consequence.

He appealed and the Employment Appeal Tribunal found in his favour. It held that it is wrong for a tribunal to take without prejudice negotiations into account unless the parties have clearly waived that privilege. Here there had been no voluntary waiver; the fact of the compromise agreement had only arisen because of an innocent enquiry made by a tribunal lay member.

Postponement Pending Criminal Trial - Firouzian v Metroline Travel Ltd

Mr Firouzian was a bus driver who was accused of causing death by dangerous driving. His criminal trial was due to begin in April 2012.

He was also due to appear in the employment tribunal where he had brought claims against his employer, Metroline, for disability and race discrimination. He said that Metroline’s investigation into the accident had been discriminatory and that there had been a failure to make reasonable adjustments.

The tribunal had listed a pre-hearing review to establish whether or not Mr Firouzian was disabled. That hearing was due to take place in November 2011; so before the criminal trial. Mr Firouzian asked for it to be postponed because he was worried about self-incrimination.

This culminated in the tribunal hearing being adjourned to May 2012. But the criminal trial was then postponed to June 2012 so Mr Firouzian was back to square one as far as the order of hearings was concerned. He unsuccessfully applied for the employment tribunal proceedings to be adjourned, and then appealed.

The Employment Appeal Tribunal dismissed his appeal. It held that there wasn’t a link between the tribunal hearing, which was purely to decide the question of disability, and the impending criminal trial. There would be no breach of the privilege against self-incrimination and Mr Firouzian probably would not even be required to attend in person. There was no need for the tribunal to put the pre-hearing review on ice until after the criminal trial.

Compensation Limited By Immigration Status - Kings Castle Church v Okukusie

Mr Okukusie was a Nigerian national employed by the Church. He was dismissed after providing misleading information about his immigration status and he brought an unfair dismissal claim.

The tribunal held that his dismissal had been unfair because the Church hadn’t properly investigated his immigration status and had not warned him that if he didn’t submit the proper paperwork relating to his status then he would be dismissed. He was awarded loss of earnings up to the date of the hearing and a further six months’ loss of earnings in compensation.

The Church appealed. It argued that Mr Okukusie was not permitted to remain in the UK beyond a date which fell within the six month future loss period. He should therefore not have been awarded compensation for the full six months because he would not have been entitled to earn a salary for the whole of that period.

The Employment Appeal Tribunal (EAT) agreed with the employer. The tribunal had been wrong to have awarded loss of earnings covering time after Mr Okukusie’s leave to remain had expired. The EAT recalculated the compensatory award based on the period during which Mr Okukusie was permitted to work in the UK.

And Finally... 

A contractor in Australia must be feeling the heat after its workers cut down more than 140 trees which were being used as part of a 13-year university experiment.

It’s alleged that the maintenance workers ignored orders not to enter the research plot and managed to undo much of the work put into measuring the spread of the pathogen thought to cause Mundulla Yellows disease.

With a bite that probably matches its bark, the university is reported to be suing the contractor – which apparently denies responsibility for its sub-contractors’ actions - for more than £640,000.

There’s a lesson or two in there somewhere.