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june 2007 |
Welcome to the latest edition of the Employment Law Update brought to you by the employment team at Russell-Cooke. The aim of this service is to keep you informed of recent developments in this fast moving field of law so that you are better prepared to deal with issues as they arise in your workplace and recognise when professional advice might be required. Contact details for members of the team are provided at the end of the Update. If you have a query about the issues covered or indeed about any employment law related matter please do not hesitate to get in touch.
COMPROMISE AGREEMENTS
An employee can waive contractual claims against an employer provided that there is a written agreement to do so that complies with a number of statutory requirements. An employee can enter into such an agreement provided that he/she receives “valuable consideration” for the waiver of the claims which is generally provided for in the compromise agreement. Such compromise agreements usually contain warranties from the employee that there are no circumstances that the employee is aware of or ought to be aware of that would entitle the employer to summarily dismiss the employee. A case heard by the High Court considered whether an employer would be required to make a payment due under a compromise agreement where an employee was in breach of such a warranty given under a compromise agreement. In this case, the employer, having entered into the compromise agreement, subsequently became aware of evidence that would have entitled it to summarily dismiss the employee. The High Court held that as the payment of the compromise sum was linked to the warranty, the employee was not entitled to payment under the compromise agreement. Employers entering into compromise agreements should ensure that any payment provisions within the compromise agreement are expressly linked to a warranty that the employee is not aware of any circumstances that would entitle the employer to dismiss him. Making the payment conditional upon the warranty will be likely to entitle the employer to withhold payment if it subsequently comes to light that the employee has breached the terms of the warranty. Also, employers would be well advised, where possible, to conclude any investigation of the employee before completing a compromise agreement so that any instances of misconduct can be dealt with prior to signing the agreement. [Collidge v Freeport plc [2007] EWHC 1216 (QB)]
DISMISSAL OR RESIGNATION
A case heard by the Court of Appeal considered whether an employee had resigned or was dismissed when the employee entered into a severance agreement during a meeting at which he was told by his employer that he was going to be dismissed. Whether or not an employee resigns or is dismissed impacts upon the right to claim unfair dismissal. In this case, the employee was summoned to a meeting at the employer’s head office but was not told what the meeting would be about. At the meeting, the employee was told by a director that his contract was going to be ended though there were no allegations of misconduct. Terms of severance were agreed at the meeting. Subsequent to the meeting, a letter was signed between the parties agreeing to terminate the employee’s employment and the terms of that termination. The employer’s case was that the employee had resigned upon negotiating severance terms during the course of the meeting. The employee argued that the termination was in fact a dismissal and appealed against the decision to dismiss him. When the employee’s employment terminated, he brought a claim in the tribunal for unfair dismissal. The Court of Appeal held that the employee had in fact been dismissed. The employee had had no warning regarding the intention of the meeting, he was not able to take advice and he had no time to reflect upon the content of the meeting. The Court of Appeal said that the employee was not negotiating freely but instead was seeking to achieve the best out of his dismissal which was inevitable. The terms of the severance agreement were not favourable to the employee. Also, the wording of the letter that both parties had signed (“we hereby agree that we terminate your contract”) indicated a dismissal rather than a resignation. [Sandhu v Jan de Rijk Transport Ltd [2007] EWCA Civ 430]
“WITHOUT PREJUDICE” PRIVILEGE
Communications between parties that are made in a genuine attempt to settle a dispute will generally be “without prejudice”. This means that the communications will not be admissible as evidence in litigation between the parties. The policy behind this is to encourage parties to settle disputes. However, this has to be balanced against a party’s right to put its case as best as it can if litigation commences. In a recent Court of Appeal case, the court considered when communications attract the “without prejudice” cloak and how close these communications have to be to the commencement of any such litigation. In this case, the parties had a dispute over the terms of employment and discussions took place regarding the terms and what they understood to be the terms between March and October 2005. In October, the employer informed the employee that it intended to dismiss the employee at the end of the year but the parties continued with discussions with the intention of seeking to resolve the matter. The discussions broke down, on 13 December the employee threatened legal proceedings if matters were not resolved swiftly and on 20 December the employee was given notice that his employment would terminate on 31 December 2005. The Court of Appeal held that the critical factor was whether, in the course of negotiations, the parties contemplated or might reasonably have contemplated litigation if they could not achieve a settlement. Therefore, it was the subject matter of the dispute, rather than how long before the commencement of litigation, that was the important factor and whether the discussions were a genuine attempt to settle a dispute. In this case, the discussions that took place between October and December 2005 had been “without prejudice” and were therefore privileged. [Framlington Group Limited and Axa Framlington Group Limited v Barnetson [2007] EWCA Civ 502]
STATUTORY GRIEVANCE PROCEDURE
Step 1 of the statutory grievance procedure requires the employee to set out the grievance in writing and send the statement or a copy of it to the employer. An employee generally cannot bring a claim in a tribunal where the standard grievance procedure applies, without first setting out their written statement of grievance and then waiting 28 days before initiating the claim. A case heard by the Employment Appeal Tribunal considered whether notes taken at an internal meeting by an employer could be an employee’s written statement of grievance and therefore fulfil the requirements of step 1 of the statutory grievance procedure. In this case, the employee met with his manager under the first step of the company’s grievance procedure which stated that he should raise concerns informally with his immediate manager who would record details of the grievance and attempt to resolve it with him. The employee was subsequently made redundant and the outcome of his grievance was left outstanding. The employee brought a claim for unfair dismissal and claims for race and sex discrimination which were the subject of his grievance covered with his manager. The employee argued that he had complied with the statutory grievance procedure by raising his complaints with his manager who wrote them down at the meeting. The Employment Appeal Tribunal accepted the employee’s argument and held that the threshold for employees should not be set too high and that by following the employer’s grievance procedure and meeting with his manager who recorded the details of his grievance for him, the employee had in fact complied with step 1 of the statutory grievance procedure. The outcome is such that an employee need not personally put their grievance in writing and provide the employer with the statement. The employer must be in possession of the written statement and understand it to be a grievance and whose grievance it is but it need not necessarily be sent from the employee to the employer. Therefore, employers should be aware that if they have a grievance procedure which provides for an initial meeting to investigate the employee’s complaints and notes are taken at such a meeting, these notes could constitute step 1 of the statutory grievance procedure. Action should be taken by an employer to ensure that it then complies with the rest of the grievance procedure following on from such a meeting. [Kennedy Scott Limited v Francis UKEAT/004/07/DM]
PROBATIONARY PERIODS
It is common for employers to insert into a contract of employment a probationary period and a clause allowing the employer to extend the probationary period if required. In a recent case, the Employment Appeal Tribunal considered whether a contractual term could be implied to the effect that the probationary period would be extended for a reasonable time to allow the employer to indicate to the employee whether the probationary period had been completed successfully. In this case, the employee’s contract included a three month probationary period and the express right for the employer to extend the probationary period if it so required. The probationary period ended on a bank holiday and when the employee returned to work, she was invited to a meeting after the three-month period and was informed that she had not successfully completed the probationary period and her employment would therefore terminate. She was given one week’s notice (as stipulated by the probationary period provisions in her contract) rather than the three months’ notice required outside of the probationary period. The Employment Appeal Tribunal held that an implied term should not be inserted into the employee’s contract and therefore, if the probationary period had expired and the employee had not been notified one way or another whether the probationary period had been successfully completed, the contract of employment would continue and the probationary period would lapse. In this case, the employee was entitled to three months’ notice and not one week’s notice. The case highlights the need for employers to manage probationary periods effectively. Where there is a contractual right to extend the probationary period, this should be notified to the employee before the probationary period expires. It is advisable to include a provision in the contract that allows for the probationary period to automatically continue until the employee is notified in writing that it has been successfully completed. This will prevent the probationary period expiring by default as a result of inaction on the part of the employer. [Miss M Przybylska v Modus Telecom Limited UKEAT/0566/06/CEA]
SMOKING BAN
The Health Act 2006 and associated regulations will introduce a smoking ban in enclosed or substantially enclosed public places and workplaces in England from 1 July 2007. Establishments covered by this ban include offices, factories, pubs, bars, shops and work vehicles used by more than one employee. The Act will also cover employees working at home if they may receive business visitors. If you, as an employer, currently allow employees to smoke at work you must ensure that as of 1 July 2007, the working environment is smoke-free. It is advisable to implement a no smoking policy after consulting with employees about the policy. It is, of course, possible for employees to smoke outside of the office building although employers may wish to impose limits on the number of breaks or time spent smoking outside in an attempt to maintain efficiency in the workplace. Employers must display no smoking signs in a prominent place at the entrance to a smoke-free workplace or vehicle. The no smoking signs must be A5, display the no smoking symbol and state “No smoking. It is against the law to smoke in these premises”. You may wish to update your disciplinary procedures to make it clear that a breach of the no smoking policy could amount to gross misconduct. Do not forget to incorporate the no smoking policy into your company’s handbook. You may wish to train managers in relation to its operation.
HOLIDAY ENTITLEMENT
From 1 October 2007, statutory annual leave entitlement will increase from 20 to 24 days for full-time workers and this will be increased to 28 days on 1 April 2009. All part-time workers will be entitled to the increased holiday entitlement on a pro-rata basis. Employers may rely on the transitional measures introduced which allows payment in lieu to be made in respect of the extra four days but this will cease on 1 April 2009.
ADOPTION LEAVE AND PAY, PATERNITY LEAVE AND FLEXIBLE WORKING
As well as the changes to maternity leave and pay which were summarised in the last update, the Work and Families Act 2006 and its associated regulations introduced a number of other changes as follows:
Contact us:The Employment Team Tel: 020 8789 9111
This material does not give a full statement of the law. It is intended for guidance only, and is not a substitute for professional advice. No responsibility for loss occasioned as a result of any person acting or refraining from acting can be accepted by Russell-Cooke. © Copyright: Russell-Cooke, June 2007 The Employment Team at Russell-Cooke Specialists in advising charities, not for profits and public bodies To subscribe to this legal update please visit http://www.russell-cooke.co.uk/serv_ind_emplo_law.htm and fill in the online request form, or send an email including your name and email address to, employmentlawupdate@russell-cooke.co.uk If you would like to reproduce some or all of our updates in your own publication, contact Alex Bearman on 020 8394 6524 or e-mail on Alex.Bearman@russell-cooke.co.uk
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