PersonnelFILE November 2009
In House News: Award Winning Firm
The ongoing success of Banbury and Rugby’s largest law firm was recognised with a double award win from two highly esteemed industry publication awards:
Both awards faced strong competition from national law firms, the ceremonies were both held in London and attended by professionals from the world of Insolvency and Property Law. Edward Bible who heads up the Insolvency team at Brethertons accepted the award for national Insolvency Litigation Team of the year and Yashmin Mistry who heads up the Property Enfranchisement team won the award for Regional Enfranchisement Solicitor of the Year.
Richard Pell, Senior Partner at Brethertons explains: “These awards recognise all the work, effort and specialist legal expertise both Edward and Yashmin along with their teams have delivered to their clients, they are very much deserved. Client satisfaction is the real measure of the success for the work we do. It’s a real honour and mark of our success to win such prestigious awards which saw us judged alongside some of the best organisations operating in the legal profession.”
Established 200 years ago, Brethertons is one of the fastest growing and innovative firms of solicitors in our region. Brethertons have 170 staff in 5 office locations in Banbury and Rugby and provide commercial and private client services.
Fit Notes to Replace Sick Notes
Following recommendations made by the Government’s National Director for Health and Work, Dame Carol Black, in her report on the health of Britain’s working age population, ‘Working for a Healthier Tomorrow’, the Department for Work and Pensions plans to replace the current system of hand-written sick notes for those unable to work.
Presently, someone is either deemed fit or unfit for work. Under the proposed new system a doctor will provide a patient with a computer-generated fit note designed to facilitate the individual’s return to work by emphasising what he or she is capable of. Doctors will have the options of advising whether someone is fit for work, not fit for work or fit for some work now. The latter option would be used where a doctor considers that the patient could return to work if some aspects of his or her work were changed, either temporarily or permanently. Also, as doctors are often able to judge with a reasonable degree of certainty when a patient should be able to return to work, it is proposed that they should be able to specify whether or not there is a need to see a patient again when his or her current statement expires.
Where a doctor considers that the patient is fit for some work now, additional information about the patient’s condition or the doctor’s advice for a return to work must be provided. The doctor will also have the option to suggest appropriate adjustments to assist the employee to return to work. The proposed suggestions are:
-
a phased return to work
-
altered hours
-
amended duties; and
-
workplace adaptations.
The aim here is to give the employer appropriate information in order to facilitate an employee’s return to work where possible. The proposals make it clear that the employer will not be bound to implement suggestions by a doctor for workplace changes. Changes will be at the discretion of the employer and with the agreement of the employee. However, where the employee is disabled for the purposes of the Disability Discrimination Act 1995, failing to act on a doctor’s advice would not seem a wise move.
Improved communication between employers, employees and doctors should help to identify the causes of an employee’s absence and the intervention necessary to achieve a return to work. However, the British Medical Association has expressed concern that the proposals represent a fundamental change in the doctor-patient relationship.
Insolvency and TUPE – Update
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) operate to protect the employment law rights of employees when there is a relevant transfer of a business or part of a business. However, Regulation 8(7) provides that the transfer provisions of TUPE do not apply to any relevant transfer where insolvency proceedings are analogous to bankruptcy proceedings and have been instituted with a view to liquidation of the assets of the transferor and are under the supervision of an insolvency practitioner. In such circumstances, employees do not automatically transfer to the new owner and any dismissals are not automatically unfair.
A recent case, Oakland v Wellswood (Yorkshire) Ltd., concerned a ‘pre-pack’ administration. In a pre-pack, the profitable parts of the company are transferred to a new company set up for the purpose of continuing all or part of the trade of the insolvent company. The new, viable company often takes on employees and assets of the old company, which is liquidated after the transfer.
Mr Oakland was a director of Wellswood (Yorkshire) Ltd., which traded as a wholesaler in fruit and vegetables. By mid-2006, the company was in financial difficulties. It approached a major creditor, Gilbert Thompson (Leeds) Ltd. (GTL), as a potential buyer and sought the advice of an insolvency practitioner. It was agreed that administration was the appropriate course of action. GTL was not willing to purchase the old company as a going concern but decided to incorporate a new company as a wholly owned subsidiary of GTL. The new company would acquire the assets of the old company and five of its seven employees, including Mr Oakland.
On 6 December 2006, the sale of the assets to the new company was completed and administrators were appointed to the old company.
The new company subsequently dismissed Mr Oakland, who brought a claim of unfair dismissal. The Employment Appeal Tribunal (EAT) held that the administration had been instituted with a view to the eventual liquidation of the old company’s assets and Regulation 8(7) of TUPE therefore applied. Mr Oakland could not therefore bring a claim of unfair dismissal because the transfer provisions of TUPE did not apply in his case and he did not have sufficient service with his new employer to bring a claim.
On appeal, the Court of Appeal focused on Section 218(2) of the Employment Rights Act 1996 (ERA) and held that administration does not terminate a contract of employment. The administrator transferred the business and, under Section 218(2) of the ERA, Mr Oakland’s continuity of service was preserved. He was therefore entitled to bring a claim for unfair dismissal even though there was no finding that he had transferred to the new company under TUPE.
Brethertons’ say:
“Whilst the Court of Appeal’s decision confirms that continuity of service is preserved when the transferee in a pre-pack sale takes on an employee of the transferor, it was not required to express a definitive view regarding whether or not the insolvency exemption from TUPE applies automatically to a company in administration or to a pre-pack sale. However, the Court expressed the view that a strong argument could be made that it does not.”
Substitution Clauses and the Status of a ‘Worker’
In Archer-Hoblin Contractors Ltd. v MacGettigan, the Employment Appeal Tribunal (EAT) considered the effect of a substitution clause in determining whether a person is a worker within the meaning of Section 2(1)(b) of the Working Time Regulations 1998 (WTR) and therefore entitled to paid holiday.
Mr MacGettigan worked under contract for Archer-Hoblin as a steel fixer. His contract stated that he did so as a self-employed subcontractor and it contained a substitution clause which provided that:
‘You have the right to send someone with similar experience and qualifications in your place. You will be paid for the work they do and must arrange to pay the substitute yourself. You must notify the Contractor of the substitute for security and Health and Safety purposes.’
The Employment Tribunal (ET) found that Mr MacGettigan was a worker within the meaning of the WTR. Whilst the substitution clause in his contract was not a sham, if one examined the reality of the situation he had performed all the work under the contract himself, working on a daily basis for five months, and believed that he would lose his job if he sent a substitute. His claim for holiday pay therefore succeeded.
Archer-Hoblin appealed against this decision.
The EAT noted that whilst an unqualified power of substitution is inconsistent with the status of a worker under the WTR, a limited power to provide a substitute is not. However, the ET had erred in taking into account whether Mr MacGettigan actually performed work or services personally rather than determining the issue by reference to the terms of the substitution clause. The latter gave him an unqualified right to delegate the work so was inconsistent with a contract to perform any work or services personally. Unless the substitution clause was a sham, Mr MacGettigan was not a worker within the meaning of the WTR.
In the EAT’s view, the ET should have considered whether the unfettered substitution clause in Mr MacGettigan’s contract with Archer-Hoblin accurately represented the intention of the parties and then based its decision as to whether it was a sham on that finding. Whether or not the substitution clause was a sham could not be ascertained with sufficient certainty from the ET’s findings and so it was not possible for the EAT to determine whether or not the ET’s decision that the clause was not a sham was perverse.
The EAT therefore set aside the ET’s findings and remitted the case for rehearing to a different ET.
Swine Flu – Guidance for Employers
On 18 September, the NHS announced that new cases of swine flu (influenza A H1N1) in England had risen by a third, suggesting that the surge in infections anticipated with the approach of winter may have already begun.
The swine flu virus is an unusual strain, not only because it has proven to be highly infectious in the summer months but also because it seems to affect young people more severely than it does the middle-aged. Thus far, more than 70 people have died in the UK after contracting the virus. Pregnant women and those with underlying health problems are considered to be particularly at risk.
Swine flu has several potential legal implications for firms, for example:
-
Liability for failing to take steps to prevent the spread of the infection, particularly to those known to be in a high-risk group, and to maintain a safe working environment. Have you carried out a risk assessment yet? Don’t forget that there is a specific statutory duty on employers to carry out a risk assessment in respect of pregnant women and new mothers
-
The impact on staff who remain at work, if they work longer hours than usual in order to cover for staff who have contracted the virus
-
Problems which may arise if an outbreak results in you failing to deliver to one of your customers or you have a supplier or contractor who lets you down as a result of swine flu (which may be considered to be ‘force majure’). Consider your potential liabilities should either event occur and check your insurance position carefully.
-
It will be a fortunate business that is left completely unscathed by the virus but there are steps that you can take to protect your staff and keep them informed so as to improve the chances of keeping your business up and running. Be prepared to be flexible. Could staff work from home? Are there alternative ways of doing business other than by direct contact, for example teleconferencing instead of face to face meetings?
Given that employees may be able to self-certify themselves as unfit for work for up to a fortnight, employers must be prepared to deal with the disruption the pandemic may cause. If you have not already done so, put in place contingency measures for dealing with mass absenteeism. Also, consider what steps you can take to prevent staff returning to work too soon.
Examine all your staff policies and procedures to make sure they are compatible with any situations that may arise. For example, does your sickness policy cover the position of a member of staff who is healthy but who has to take time off work because they have caring responsibilities for someone else who is infected with the virus?
Make sure you have up-to-date contact details for all your staff and know who to contact in an emergency.
As always, when considering measures you can take to protect employees, it is important to take care not to overstep the line between protecting them and violating their human rights.
Swine Flu – Known High-Risk Groups
People in the following groups may need to start taking antiviral drugs as soon as they are diagnosed with the illness. Doctors may advise some high-risk patients to take antivirals before they develop symptoms, if someone close to them has swine flu.
It is already known that people are particularly vulnerable if they have:
-
chronic lung disease
-
chronic heart disease
-
chronic kidney disease
-
chronic liver disease
-
chronic neurological disease (neurological disorders include motor neurone disease, multiple sclerosis and Parkinson's disease)
-
immunosuppression (whether caused by disease or treatment)
-
diabetes mellitus.
Also at risk are:
Brethertons' say:
You need to be alive to the responsibilities you have as an employer to your workers, both under employment law but also under Health and Safety Legislation and the duty of care you owe to them. These duties will be of particular note in this instance.
The Gender Pay Gap – Be Prepared
The gender pay gap is the term used to describe the difference between the hourly earnings of men and women. It is determined by calculating the overall pay of women as a percentage of that of men. The pay gap is the difference between this and 100 per cent. So, for example, if women’s pay is 80 per cent of men’s, the pay gap is 20 per cent.
There are different ways of calculating the gender pay gap. If calculated using the mean (average) hourly pay, women’s pay (excluding overtime) was 17.1 per cent less than men’s pay in 2008, showing an increase on the comparable figure of 17.0 per cent for 2007.
At present, private sector employers are only under an obligation to disclose gender pay information if requested to do so as part of a questionnaire under the Equal Pay Act 1970 or during Employment Tribunal proceedings. However, the Equality Bill contains a power to require employers with more than a specified number of employees to report on the gender pay gap. The original provision was for those with more than 250 employees to provide this information but a reduction in the number to 100 has been mooted.
Initially, organisations with more than the specified number of employees will be ‘encouraged’ to volunteer information on the average hourly pay of male and female workers. To this end, the Equality and Human Rights Commission will carry out a consultation in order to develop a system of pay reporting for the private sector. If by 2013 it is clear that a voluntary reporting system has been ineffective in narrowing the gender pay gap, legislation will be brought forward to force disclosure. The Equality Bill also bans secrecy clauses which prevent staff from disclosing their salaries to colleagues.
A recent survey of senior Human Resources professionals revealed that only 29 per cent of organisations had conducted gender pay audits and only five per cent had actually reported their findings. Employers would therefore be well advised to carry out an audit sooner rather than later and to ensure that any discrepancies are remedied so as to reduce the risk of equal pay claims in the future.
The ‘Last Straw’ and Constructive Dismissal
It is an implied term of any employment contract that an employer should not act in a way that breaches the trust and confidence which an employee can expect from them. A serious breach of an implied contractual term or the ‘last straw’ in a series of less serious actions which cumulatively undermine the employee’s trust and confidence will amount to a repudiatory breach of the employment contract. It would normally justify the employee in terminating the contract and claiming constructive dismissal.
It was established in Omilaju v Waltham Forest London Borough Council that the last straw, which allows an employee to resign and claim constructive dismissal, need not necessarily be a breach of contract. It could be a relatively minor act. However, to be successfully relied on by the employee the last straw has to be the last in a series of acts or incidents which cumulatively amount to a repudiation of the contract of employment by the employer. It has also to contribute, however slightly, to the breach of the implied term of trust and confidence. In addition, an action on the part of the employer that can be objectively judged to be entirely innocuous cannot be a last straw, even if the employee genuinely but mistakenly interprets the act as being hurtful and destructive of the trust and confidence in his or her employer.
In Wishaw and District Housing Association v Moncrieff, Mr Moncrieff was told that there were 13 areas of concern regarding the quality of his work as a Property Services Officer and that he would therefore be asked to attend a formal disciplinary interview. He considered these allegations unfair and in some cases untrue. Receipt of the notes of this meeting against a background of family problems caused him to suffer ill health and he was unable to work.
Mr Moncrieff remained off work on the advice of his GP. However, the Chief Executive of the Housing Association was sceptical that his illness was in any way due to domestic problems. When referring Mr Moncrieff to the Occupational Health department she stated that the family issues cited as the reason for his depression, which included his brother’s attempted suicide, were well known in the office because he had talked openly about them and his brother was now back at work. Mr Moncrieff was upset by this and claimed that someone had lied to her about it.
Over the ensuing months, the relationship between Mr Moncrieff and his employer deteriorated to the point where they were only corresponding via their respective solicitors. Eventually, Mr Moncrieff resigned and brought a claim of constructive unfair dismissal, using the last straw argument, and the Employment Tribunal (ET) upheld his claim. The Housing Association appealed and successfully overturned this decision.
The Employment Appeal Tribunal (EAT) held that in last straw cases, the ET must first identify the last straw act. It must then consider whether, assessing that act objectively, it is capable of contributing to a series of earlier acts so as to amount cumulatively to a breach of the implied term of trust and confidence. If the ET concludes that the act does have that potential, then it is required to consider the other acts in the series and ask whether, looked at together, all the acts, including the last straw, amount to a breach of the implied contract term. If, however, the ET concludes that the final act does not have the characteristics of a last straw, then it need not examine earlier events.
In this case, the EAT found that it was impossible to determine what the ET’s finding was regarding what exactly constituted the last straw or, indeed, whether the correct approach had been taken. For that reason alone, the ET’s judgment could not stand and Mr Moncrieff’s claim of unfair constructive dismissal was bound to fail.
Furthermore, when the EAT examined the correspondence between the parties, in its view there were only two letters that were possible candidates and neither one, when viewed objectively, could be regarded as evidence of a last straw.
TUPE and the Duty to Disclose ‘Employee Liability Information’
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) protect the employment rights of employees when their employer changes as a result of the relevant transfer of a business or a part of one or when there is a service provision change – for example when a contract is assigned to a new contractor following re-tendering.
The TUPE Regulations introduced a new duty on the transferor to supply specific information about the transferring employees to the new employer by providing what is termed ‘employee liability information’. This must be given at least two weeks before the completion of the transfer unless this is not reasonably practicable. The information that must be provided is:
- the identity of the employees who will transfer
- the age of those employees
- information contained in the statements of employment particulars for those employees
- information relating to any collective agreements which apply to those employees• instances of any disciplinary action within the preceding two years taken by the transferor in respect of those employees in circumstances where the statutory dispute resolution procedures applied or, from 6 April 2009, where the ACAS Code of Practice on disciplinary and grievance procedures applied
- instances of any grievances raised by those employees within the preceding two years in circumstances where the statutory dispute resolution procedures applied or, from 6 April 2009, where the ACAS Code of Practice on disciplinary and grievance procedures applied; and
- instances of any legal action taken by the transferring employees against the transferor in the last two years and details of any potential legal actions which may be brought by those employees where the transferor has reasonable grounds for believing that such action might occur.
The information must be provided in writing or in a form which is accessible to the new employer. It is advisable for the transferor to consult with the transferee to discuss the method to be used.
If the transferor does not comply with this duty, the transferee can make a complaint to the Employment Tribunal (ET). If the ET finds in favour of the new employer, it has the power to award compensation for any loss incurred because the information was not provided. The level of compensation will normally be no less than £500 for each employee for whom information was not provided or for whom the information given was defective, unless the ET rules that it would be unjust or inequitable to award this default amount.
Varying a Contract of Employment
In the current economic climate, many employers are seeking ways to reduce staff costs. For example, both British Airways and British Telecom are reported to have offered staff increased time off work in return for a deduction in pay. However, when considering reorganising the pattern of working, it is important to remember that where this would necessitate adverse changes to an employee’s existing terms of employment, the employment contract can only be varied with the agreement of both parties, either by agreeing the changes with each individual affected or, in some cases, through a collective agreement.
If an employer makes a unilateral change to an employee’s conditions of employment without the employee’s agreement it is generally a breach of contract. In serious cases, the employee would have the right to resign and claim constructive dismissal.
If you are proposing changes to an employee’s contract of employment, the first step you take should be to consult fully with them well in advance of the planned changes. Explain and discuss the reasons for the changes before inviting the employee to give his or her views on the draft revised contract. Failure to consult will count against you if an employee rejects the new contract terms and the matter ends up in court. However, if there is a sound business reason for the change and you have carried out the necessary consultation and sought out alternative solutions, it will be more difficult for the employee to succeed in a claim against you.
When times are tough and redundancies are likely unless alternative ways of cutting costs are found, a more successful outcome is likely to be achieved when employees fully understand the situation because they have been involved in the decision making process.
Although variations to a contract can be agreed verbally, it is advisable to record any agreed changes in writing.
If the employee agrees to sign the revised contract, all well and good. If the variation concerns particulars that must be included in the written statement of employment particulars, don’t forget to give the employee written notice of the changes within a month of their taking effect.
If agreement cannot be reached, the employer can terminate the original contract, taking care to give the required notice, and offer a new contract to the employee, including the revised terms. If the employee accepts the new contract, continuity is preserved. The termination does not constitute a breach of contract but is technically a dismissal so a disgruntled employee can bring a claim of unfair dismissal. Where more than 20 employees at one establishment are dismissed but immediately reemployed on revised terms, the employer has a statutory duty under the Trade Union and Labour Relations (Consolidation) Act 1992 to consult with them in advance. Failing to do so could result in the employer having to pay a protective award to each employee.
Note that special rules apply if changes to an employee’s terms of employment are as a result of the sale or transfer of a business or a part of one to which the Transfer of Undertakings (Protection of Employment) Regulations 2006 apply.
Default Retirement Age – Review Brought Forward
The Department for Work and Pensions has announced that the Government now plans to undertake an evidence based review of the default retirement age, currently age 65, in 2010, not 2011 as originally planned. The U-turn is attributed to acceptance that an earlier review is appropriate given the ageing population. Many people wish to work beyond the age of 65 and, with longer life expectancy, a culture of early retirement is becoming increasingly unaffordable.
