Personnel FILE - October 2008
In-House News: Brethertons Score High in League Tables
Brethertons has once again been confirmed as one of the UK’s leading law firms in the Legal 500 2008 directory and is the highest ranked Law Firm in both Banbury and Rugby.
Moving up 112 places in just one year, Brethertons LLP is recognised as the 221 largest law firm in the UK. The Legal 500 series is widely regarded as offering an impartial judgement of law firm capabilities based on extensive research. It is a comprehensive annual review covering each of the different legal disciplines and categorising the best firms.
Regional Law firm Brethertons is listed in the third tier of top West Midlands, South East and Thames Valley firms and has been recognised in seven of its specialist fields.
From the Legal 500 - Areas where the firm’s teams are singled-out for particular praise include:
Recommended in Debt Recovery:
“Shaun Jardine at Brethertons LLP heads a group with ‘significant expertise and experience’ and ‘strong links with businesses in the firm’s area’. The group advises on commercial and property management debt recovery in the UK and internationally. Mediation and online dispute resolution work are unusual strengths.”
Recommended in Family:
“Simon Craddock at Brethertons LLP, who has unusual expertise in international child abduction cases.”
Recommended in Employment in Thames Valley:
“Detailed and pragmatic associate Natalie Roach at Brethertons LLP.”
Richard Pell, Senior Partner at Brethertons LLP explains:
“To be recognised as a leading force in the market by the Legal 500 is a great achievement, and to have moved up 112 places in just one year is a fantastic accolade. We are extremely pleased to be recommended so highly again particularly as the research reflects the voice of the profession along with our clients.”
Brethertons has also been shortlisted for the Excellence in Pioneering Legal Services category for the 2008 Law Society Excellence Awards. They have been selected for an award for their ground-breaking new technology which provides their mediation clients with access to a confidential area for mediation discussions (propertymediationzone.co.uk)
In-House News: Credit Crunch Special
In these increasingly difficult financial times we at Brethertons are well aware that employers are looking for ways to save costs and reducing overheads. It may be tempting to look at cutting back on staffing costs in order to save money but how will you go about it whilst avoiding unfair dismissal or discrimination claims?
It may be tempting to ignore the fact that your employment contracts need updating so that you can save the costs of the review – but this could be false economy when the Employment Tribunal makes awards against you for failing to have a statutory compliant contract. If reducing staff is something that you are considering read on below for some relevant articles and useful food for thought.
If you know that your employment contracts and policies are below standard see the article below about Changing of Contract Terms and Conditions and then why not consider taking us up on our special offer of a free half an hour review of your contracts? We can highlight for you any areas of concern as well as suggesting new clauses that you may wish to include to protect your company, particularly in times of financial difficulty. Do get in touch with Natalie Roach, Head of Team Employment, on natalieroach@brethertons.co.uk if you would like more information on this.
In House News - ARMA Webinar
This month Team Employment continued their advice to clients and contacts by giving a webinar to the members of ARMA – the Association of Residential Managing Agents. The webinar – a seminar transmitted live on the internet – covered topics ranging from the status of subcontractors and the new rules on establishing eligibility to work in the UK to how to fairly dismiss or make redundancies. If these topics are of interest to you and your company, you can contact Natalie Roach, Head of Team Employment, for more information and advice.
How will new Transfer of Undertakings (Protection of Employment) Regulations affect me as a property manager?
The purpose of TUPE is to protect employees if the business in which they are employed changes hands. Its effect is to move employees and any liabilities associated with them from the old employer to the new employer by operation of law.
TUPE is an acronym for the Transfer of Undertakings (Protection of Employment) Regulations. The Regulations were first passed in 1981 but overhauled in 2006 as a result of 25 years of developing and regularly conflicting case law. The 2006 Regulations came into force on 6th April 2006 and were aimed at unifying all those decisions in the previous 25 years to create clarity.
A ‘relevant TUPE transfer’ can occur in the following situations:
OR
-
A client engages a contractor to carry out work on its behalf, or where it reassigns such a contract – including bringing the work back ‘in-house’. This is known as a ‘service provision change’. A service provision change will often capture situations where an existing service contract is re-tendered by the client and awarded to a new contractor. This is the area which will be most useful to you as Property Managers.
So, what does this mean in plain English?
Imagine a company has in-house cleaners. The company decides that they want to tender-out the contract for cleaning services. A contract to provide cleaning services is transferred to a new cleaning provider.
Under the Regulations employees transfer to the new employer on the same terms and conditions as they had with their old employer, as if their contract had always been with the new employer. This will include pay, hours of work, holiday entitlement, sick pay entitlement and all other benefits offered by the previous employer.
When a transfer is announced i.e. when a contract has been awarded to a new contractor, the existing employer, who is usually the outgoing contractor, is required under TUPE to inform and maybe consult the employees, either in person or through representatives depending on the size of the undertaking, about the transfer and any measures (changes) proposed as soon as possible. The old employer must also provide details of all employees’ terms and conditions for the new employer to ensure continuity but being careful not to breach data protection at the same time – a balance in itself! If there is a failure to inform and consult, a complaint can be made to the Employment Tribunal. If successful, the Tribunal can award whatever compensation it considers just and equitable having regard to the seriousness of the employer's failure up to a maximum of 13 weeks' pay per affected employee.
Since April 2006, the seller has had a duty to provide the buyer with written details of the transferring employees (including identity, age, particulars of employment, disciplinary and grievance records, employee claims and collective agreements) together with all associated rights and liabilities that will transfer. This information must be passed not less than 14 days before the transfer, although in practice the buyer will aim to attain this information much earlier.
If there is a failure to comply with this duty by the seller, the buyer can apply to the Tribunal for compensation which will be assessed with regard to the losses suffered with a minimum award of £500 per employee. The buyer can also sue the seller for all associated losses i.e.: the salary of those employees they weren’t informed about.
What happens if an employee does not want to be ‘transferred’ to the new employer? The employee must give their objection in writing prior to the transfer. If they object then their contract of employment simply ceases on the date of the transfer. They are not entitled to a redundancy payment or a severance payment as their position is not redundant and their ‘objection’ is treated in the same way as a letter of resignation but without the notice requirement. However be aware of the recent case of Capita Health Solutions v British Broadcasting Corporation and Mrs A McLean; it shows the danger of how employees can transfer even when both companies think they won’t or haven’t in particularly even when an objection is made.
At present TUPE doesn’t apply to share sales but this may not be the case going forward due to current proposals to widen it’s applicability so watch this space!
TUPE is a complex area of employment law as it imposes a duty on both the seller and the buyer; with liabilities being joint too and can have far-reaching implications for the employees also. If you have any such issues please do not hesitate to contact us.
Changes of Contract Terms and Conditions
If an employer seeks unilaterally to make changes to the terms and conditions of an employee’s contract of employment and the employee is not in agreement with them, it is generally a breach of contract. In serious cases, the employee can have the right to reject the employer’s proposals and to resign and claim constructive dismissal. Other options open to the employee are:
-
to go along with the employer’s proposals
-
to refuse to work under the new terms and put the onus on the employer to take appropriate action; or
-
to reject the proposals but to continue to work, under protest, under the new terms, whilst reserving all rights and perhaps bringing court or tribunal procedures in the event that a negotiated agreement cannot be reached.
In the recent case of Robinson v Tescom Corporation, Mr Robinson objected to Tescom’s restructuring proposals, which meant that his sales area was increased to cover the whole of the South of England. On 25 September 2006 he wrote to his employer saying that he did not accept the new terms and was treating the change as a breach of contract but would work under the terms of the varied job description, under protest, whilst regarding himself as dismissed and retaining the right to claim damages in future if a satisfactory agreement were not reached. The wording of his letter was taken from the Advisory, Conciliation and Arbitration Service advice leaflet on variations in a contract of employment. This sets out the employee’s options in such circumstances. However, Mr Robinson failed to work to the new terms and was subsequently summarily dismissed for gross misconduct for failing to follow a reasonable management instruction. Mr Robinson brought claims for unfair dismissal and breach of contract.
The Employment Tribunal (ET) dismissed Mr Robinson’s claims. Whilst he could have resigned and claimed that he had been constructively dismissed, he did not do so and was thereby affirming the continued existence of the contract. He had agreed to work under the new contract terms but then refused to comply with Tescom’s instruction to do so. In the circumstances, this failure to cooperate was gross insubordination and his employer’s decision to dismiss him was within the band of reasonable responses.
The Employment Appeal Tribunal upheld the ET’s decision. The option Mr Robinson chose to take required that he work within the varied contract, albeit under protest. He did not keep to his side of the bargain but insisted on working to the terms of his original contract while the situation was under review and ignored the new job description to which he had agreed to work.
Says Natalie Roach “The employee in this case was left without a remedy because he confused the options open to an employee in such circumstances. If you wish to change your employees’ contract terms or face proposals from your employer for unilateral changes to your existing terms, we can advise you to ensure you take appropriate action.”
Redundancy – Definition
In the current economic climate, many businesses will be seeking to cut costs and this could involve making organisational changes or making staff redundant.
In Martland v Co-operative Insurance Society Ltd., the Employment Appeal Tribunal (EAT) considered the question of whether employees who had been dismissed and then refused the new terms and conditions offered to them were redundant and therefore entitled to redundancy payments.
The claimants worked as ‘Financial Advisors’ (FAs) for the Co-operative Insurance Society (CIS). They had previously been called ‘agents/collectors’ and a traditional feature of CIS was that its agents provided advice to and collected premiums from its customers in their own homes. Faced with severe financial difficulties however, CIS decided to transform its entire operation, which involved improving the productivity of the FAs by having them spend more time procuring sales and less time with existing customers for non-selling purposes. To this end, CIS sought to achieve union agreement to changes in the FAs terms and conditions of employment. When this failed, it terminated their contracts and offered them new ones on different terms.
For the purposes of the Employment Rights Act, an employee is regarded as having been dismissed by reason of redundancy if the main reason for the dismissal is that the business no longer has a need for employees to carry out ‘work of a particular kind’.
The Employment Tribunal (ET) examined whether the new terms and conditions offered to the FAs required that they carry out work of a particular kind that was different from the work performed under their original contracts. If it did, then the dismissals were by reason of redundancy.
The ET held that the dismissals were not by reason of redundancy but because of a reorganisation. They were therefore for ‘some other substantial reason’ and thereby fair. The FAs had essentially been employed as salespersons and whilst the reorganisation meant that the techniques used might be different, the bulk of the selling would still be undertaken by them. The EAT dismissed their appeal. There was no single right or wrong answer to the question whether or not the work under the new terms and conditions could be described as being of a different kind. The judgment involved assessing all the evidence. The ET was entitled to reach the decision it had and had given clear reasons for so doing.
As regards the entitlement to redundancy payments, the FAs had claimed that they were entitled to an enhanced contractual redundancy payment, well in excess of the statutory amount, as provided for under a collective agreement. Their contracts of employment provided for terms agreed in the course of collective negotiations to form part of the contract. However, whilst containing precise details of the ‘severance terms’, the collective agreement stated that ‘this process is not intended to form part of individual contracts of employment’.
The ET held that had the dismissals been by reason of redundancy, the FAs would have been entitled to the enhanced payments. CIS cross-appealed this finding. In the EAT’s opinion, ‘where there is a term which is manifestly apt for incorporation into the individual contract, as the redundancy severance terms were, then it would require very clear and unambiguous language to deny it contractual effect’. The unions and employees would have expected the negotiated terms of the agreement to be met in the event of redundancy and the EAT judged that there would have been an obligation to make the enhanced payments.
Restrictive Covenants
It is not uncommon for employment contracts to contain restrictive covenants, intended to protect the employer’s business in the event that an employee leaves. However, if these are drafted in such a way that their enforcement would prevent the employee from earning a living, the courts have been apt to strike them out as being unenforceable. A restrictive covenant will only be valid if the employer can show that it does no more than protect the legitimate interests of the business and is reasonable with regard to time and the area it covers. It cannot restrict a former employee from using his or her general skills but can legitimately protect trade secrets.
In some recent cases, the courts have begun to take a more flexible approach. Rather than dismissing as unenforceable a restrictive covenant that is too widely drafted they have sought to interpret it in a way that achieves a balance so that the employer’s position is protected whilst the employee is not deprived of his or her livelihood.
In a recent case in the Scottish Court of Session (Christie Owen and Davies Plc v Walton), the former employer had obtained an injunction to enforce a restrictive covenant in Mr Walton’s contract. Mr Walton had worked for Christie Owen and Davies as a chartered surveyor, specialising in the care sector. Mr Walton challenged the ruling, claiming that the terms of the covenant were too restrictive, in particular that the definition of a ‘prohibited business’ that it contained effectively prevented him from working as a chartered surveyor.
The background to the case was that Mr Walton had for some months been looking for another job. In December 2007 he accepted employment with another company which was aiming to establish an agency working in the healthcare sector in Scotland. Prior to this, in November 2007, he had sent emails to his girlfriend’s computer which contained contact details relating to his work with Christie Owen and Davies in their Edinburgh office. The company’s IT security system detected the transfer of the large data files and the senior managers were notified. The company claimed that Mr Walton was gathering confidential information to take to his new employer to assist their expansion into the care sector in Scotland. Mr Walton claimed that he had transferred the files so that he could work at his girlfriend’s home, where he was living. On 7 December he was dismissed on the ground of gross misconduct.
The definition of a prohibited business contained in the restrictive covenant referred to any business carried on by Christie Owen and Davies during the relevant period with which the employee ‘shall have been directly or materially concerned in the course of his employment’. Mr Walton argued that he had been directly involved in far more activities than just the care sector and that the restriction was unreasonable, being wider than was necessary to protect the employer’s trade connections in that sector alone.
Mr Walton lost his appeal. In the Court’s view, the restriction only limited him from working in an organisation in the business sector with which he had been ‘directly and materially’ involved and so recognised that an employee may have carried out various activities in the course of his employment but unless these formed a significant part of his work, those business activities would not be prohibited. The restrictive covenant as regards his work in the care sector was therefore effective.
TUPE Dismissal: Transfer-Related or for Economic Reasons – Who Decides?
The purpose of the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) is to safeguard the employment rights of employees when a business is sold. If a person employed immediately before the relevant transfer of a business is dismissed for a reason connected with the transfer, the dismissal is automatically unfair unless the employer can show that it was for ‘economic, technical or organisational reasons entailing changes in the work-force’.
In Dynamex Friction Ltd. v Amicus, the Court of Appeal had to decide whether the Employment Tribunal (ET) had been justified in concluding that employees who were dismissed by the administrator of a company had been dismissed for economic reasons rather than for a reason related to the transfer of the business.
Following a strike, Friction Dynamics Ltd. had dismissed 86 of the employees involved. An earlier Tribunal held that the workers had been unfairly dismissed and the compensation due to them was estimated to be approximately £3 million. The company did not have the money to pay this and the managing director, Craig Smith, decided to try to sell the business as a going concern. Shortly afterwards, whilst the factory was closed for maintenance during August 2003, he decided to petition for an administration order. An administrator was appointed, who decided that the company could not carry on in business. It had no available cash with which to pay the wages and he therefore dismissed the employees.
However, the ET heard evidence that the administrator may have been the ‘unwitting tool’ of Mr Smith’s plan to carry on in business without any liabilities to the company’s former employees. A purchaser was found only a week or so after the employees were dismissed. A few months after the new company, Dynamex, had been incorporated, Mr Smith acquired a 60 per cent interest in it. The ET accepted that there had been no collusion between the administrator and those involved in Dynamex.
The ET was satisfied that there was no certainty that the sale of the business would go ahead when the employees were dismissed and held that the principal reason for the dismissals was an economic one and not due to the transfer of the business. However, on appeal the Employment Appeal Tribunal criticised the ET for failing to resolve material disputes as to the facts of the case, regarding whether or not the events had been ‘stage-managed’ by Mr Smith, and for failing to explain adequately the reasons for the conclusions it reached.
The Court of Appeal, by a two to one majority, allowed the appeal. The ET was wholly justified in its judgment based on the findings of fact. Furthermore, ‘in deciding whether the reason for dismissal was an economic or a transfer-related one, one has to identify whose thought process is the subject of the analysis. It has to be he who took the decision’. In this case it was the administrator’s decision that came under the microscope. He had decided that he had no option but to dismiss the employees because there was no money to pay them. This was an economic decision, taken independently. There was nothing to suggest that the administrator had taken the view that he had to dismiss the staff in order to have a better prospect of selling the business. Nor was there any collusion between the administrator and Mr Smith.
The Burden of Proof in Unfair Dismissal Cases
In Kuzel v Roche Products Ltd. the Court of Appeal considered where the burden of proof lies when an employee brings a claim for unfair dismissal but where different reasons for the dismissal are put forward by each side.
In this case, Dr Kuzel claimed that the real reason she was dismissed was because she had made protected disclosures about certain of her employer’s activities. The dismissal was therefore ‘automatically’ unfair and there should be no cap placed on the amount of compensation payable. Roche Products Ltd. argued that the reason Dr Kuzel was dismissed was either a conduct reason or ‘some other substantial’ reason.
The Employment Tribunal (ET) found that Roche had failed to demonstrate a potentially fair reason for Dr Kuzel’s dismissal but neither could it find evidence to support her claim that she was really dismissed for ‘whistleblowing’, ruling that the claim was ‘not made out’. The use of this phrase caused disagreement as to whether or not the ET was saying that the burden of proof lay with Dr Kuzel. The ET held that the reason for the dismissal was Dr Kuzel’s line manager’s ‘catastrophic loss of temper’ and his failure to follow the advice of the company’s Human Resources Director with regard to the situation.
The Employment Appeal Tribunal (EAT) held that the ET’s approach to the burden of proof of the whistleblowing claim was not legally correct and remitted the case to the same ET for a fresh hearing.
Dr Kuzel appealed, arguing that as Roche had failed to prove that it had a fair reason for dismissing her, the ET should, as a matter of law, have accepted the reason she put forward. The Court of Appeal rejected this argument. The principal reason for a dismissal is a question of fact for the ET. It is for the employer to prove the reason for the dismissal as it knows better than anyone else why the employee was dismissed. In this case, it was for Roche to show that the reason for Dr Kuzel’s dismissal was a fair one. In contesting the reasons put forward by Roche, there was no burden of proof on Dr Kuzel to disprove these reasons, let alone prove a different reason. When an employee asserts that the dismissal was for a different reason altogether, some evidence to support their claim must be produced but they do not have to discharge the burden of proving that the dismissal was for the different reason for their claim to succeed.
If the employer does not demonstrate that the reason for dismissal was the one it put forward, it is open to the ET to find that the reason was that claimed by the employee. However, ‘it is not correct to say, either as a matter of law or logic, that the ET must find that, if the reason was not that asserted by the employer, then it must have been for the reason asserted by the employee. That may often be the outcome in practice, but is not necessarily so’. The ET may also find that the true reason for dismissal was one that was not put forward by either side.
The Court of Appeal therefore dismissed Dr Kuzel’s appeal and reinstated the decision of the ET. Roche was liable for ‘ordinary’ unfair dismissal because it had not demonstrated its case, but the dismissal was not automatically unfair because Roche had shown that the making of protected disclosures by Dr Kuzel was not the reason for her dismissal. The compensation awarded was therefore limited to £56,800, the maximum amount payable in unfair dismissal cases at that time.
Webinar Programme
All webinars (seminars over the web)commence at 12.30pm, a convenient time to get your team together for an hours training over the lunch hour.
You need no special equipment other than a telephone with a hands free facility and a computer with an internet connection. You will hear the speakers through your telephone and see interactive slides/graphics on your PC as the speaker makes the presentation. Copies of the speakers handouts/slides will be emailed in advance of the presentation. Please visit our events page at www.brethertons.co.uk and complete the booking form below to reserve your link.
12.30pm - 13th November: Small Claims Court Procedures In A Nutshell
How to maximise your chances of successfully recovering your cash if you have to go to a court hearing.
If your debts remain unpaid you may find yourself attending a hearing before a District Judge in the Small Claims Court. This Webinar will cover the following subjects:-
-
How to avoid bad debts in the first place
-
Smalls County Court proceedings
-
Preparation of cases
-
Conducts at hearings
-
Enforcement proceedings and recovering expenses
Click here to download the booking form for the Small Claims Court Procedures In A Nutshell
12.30pm – 4th December: Effective Letter Writing
How to write letters which will grab a debtors attention.
If your debts remain unpaid you may find yourself attending a hearing before a District Judge in the Small Claims Court. This Webinar will cover the following subjects:
Click here to download the booking form for the Effective Letter Writing Webinar
