January/ February 2025 Newsletter
Case update
Gallagher -v- McKinnons Auto and Tyres Ltd – Protected conversations (pre-termination negotiations)
Under s.111A Employment Rights Act 1996, the contents of communications regarding settlement offers (referred to as ‘pre-termination negotiations’) will be inadmissible for the purposes of an unfair dismissal claim in the employment tribunal if the offer or discussions are held before the termination of the employment with a view to it being terminated on terms agreed between the employer and the employee. However, there are exceptions to this rule, with one of the exceptions being that if there has been improper behaviour by the employer in relation to the settlement agreement discussions or offer.
The recent Employment Appeal Tribunal decision in the case of Gallagher -v- McKinnons Auto and Tyres Ltd serves as a reminder that what constitutes improper behaviour is fact sensitive in each case and ultimately for the Tribunal to decide.
In that case, the employee who had been off sick was told at a meeting, which he had believed had been to discuss his return to work, that his role was potentially redundant and offered an enhanced redundancy package of £10,000 in return for signing a settlement agreement. He was told that he had 48 hours to inform them if he wished to accept the redundancy package and that if he did not do so, the employer would start a redundancy process.
Mr Gallagher did not accept the offer within the 48 hour period and the employer commenced a redundancy process, at the conclusion of which Mr Gallagher was dismissed for the reason of redundancy. He submitted a claim of unfair dismissal to the employment tribunal, alleging that improper pressure had been placed upon him at the meeting.
The ACAS Code of Practice on Settlement Agreements lists some examples of improper behaviour which includes putting undue pressure on a party by not giving the employee a reasonable period of time to consider the settlement agreement. It states that as a general rule a minimum period of 10 calendar days should be allowed to consider the written terms of a proposed settlement agreement and for the employee to receive legal advice, unless the parties agree otherwise.
In the case of Mr Gallagher, the employment tribunal held that no improper behaviour had taken place. The directors of the company had not been aggressive at the meeting, it was immaterial that Mr Gallagher had expected the meeting to discuss his return to work, but had in fact discussed settlement, there was no written settlement agreement presented at the meeting, and Mr Gallagher was not informed that he would be dismissed if he did not accept the offer (but simply told that that consultation would commence).
The Employment Appeal Tribunal upheld the Tribunal’s decision that there had been no improper behaviour. It held that the employer’s decision to discuss a settlement offer, rather than Mr Gallagher’s return to work, was potentially unfair but did not amount to improper behaviour, nor did the short time period given to accept the verbal offer of settlement. It was also entirely proper to find on the facts that the claimant had not been threatened with dismissal if he did not accept the offer, but simply that the redundancy process would start. The contents of the relevant communications was therefore inadmissible.
When implementing settlement agreements, employers would be well reminded to read and implement the guidance contained in the Acas Code of Practice. Employees should be treated fairly when putting offers of settlement and not ambushed, bullied or intimidated. Give them a reasonable period of time to consider an offer of settlement and to take legal advice, and do not put undue pressure on them.
New right to Neonatal Leave
The Department for Business and Trade have confirmed that parents with babies in neonatal care will have a day one right to neonatal leave from 6 April 2025. This follows the passing of the Neonatal Care (Leave and Pay) Act in 2023.
Neonatal Care Leave will apply to parents of babies who are admitted into neonatal care up to 28 days old and who have a continuous stay in hospital of 7 full days or longer. These measures will allow eligible parents to take up to 12 weeks of leave on top of any other leave they may be entitled to, including maternity and paternity leave. Alongside the leave entitlement, Statutory Neonatal Care Pay will be available to those who meet continuity of service requirements and a minimum earnings threshold.
Knight-Webb Solicitors are specialists in employment law. We pride ourselves in providing a first-rate, cost-effective and personal service to clients. We can advise you on employment law matters and update your policies and procedures, taking into account all the recent and upcoming changes in the law, including those outlined in this Newsletter.
Contact Sunita Knight-Webb on 020 7207 6195 or at sunita@knightwebb.com
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Autumn 2024 Newsletter
Employers to be under a duty to take reasonable steps to prevent sexual harassment of employees
From 26 October 2024, employers will be under a duty to take reasonable steps to prevent the sexual harassment of their employees in the course of their employment. This preventative duty applies to sexual harassment not only from other workers but also third parties such as customers.
Employment tribunals will be able to award an uplift of up to 25% to an employee’s discrimination compensation where they find that there has been a breach of that duty.
The Equalities and Human Rights Commission has published technical guidance together with an eight-step guide on preventing sexual harassment at work summarising the detailed guidance. The eight steps are:
- Developing an effective anti-harassment policy.
- Engaging with staff.
- Assessing and taking steps to reduce workplace risk.
- Reporting.
- Training.
- Handling harassment complaints.
- Dealing with third-party harassment.
- Monitoring and evaluating actions.
Mandatory for tips to be passed on to workers
The Allocation of Tips Act 2023 came into force on 1 October 2024. It is now mandatory for all tips to be passed onto workers without deductions.
The government has published a statutory Code of Practice, providing guidance to employers and workers in tipping industries, on the fair and transparent allocation and distribution of tips. Workers are able to enforce their rights through the employment tribunal system, where judges have a duty, where relevant, to take the code into account. The government has also issued non-statutory guidance.
Knight-Webb Solicitors are specialists in employment law. We pride ourselves in providing a first-rate, cost-effective and personal service to clients. We can advise you on employment law matters and update your policies and procedures, taking into account all the recent and upcoming changes in the law, including those outlined in this Newsletter.
Contact Sunita Knight-Webb on 020 7207 6195 or at sunita@knightwebb.com
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Spring 2024 Newsletter
In this edition of our Newsletter, we report on two recent important employment law cases.
Redundancy exercise – Absence of meaningful consultation at a stage when employees have the potential to impact on the decision is indicative of an unfair process where there was no good reason for this consultation not to take place
Where the employer is proposing to dismiss 20 or more employees over a 90 day period, there is a statutory collection consultation obligation. In De Bank Haycocks v ADP RPO UK Ltd [2023] EAT 129, the Employment Appeal Tribunal considered the need for employers to conduct consultation with their workforce at the ‘formative state’ of a redundancy exercise, even where the collection consultation obligations do not apply.
In that case, the employer had utilised a redundancy selection matrix which its management were instructed to use by its US owner and which entailed what was described as ‘entirely subjective’ criteria when making an employee redundant. The employer proceeded with a two week individual consultation process – there were three consultation meetings and he was not informed of his individual scores.
The EAT held that the dismissal was unfair and set out the following principles (amongst others) from the relevant authorities:
- The employer will normally warn and consult either the employees affected or their representatives.
- A fair consultation occurs when proposals are at a formative state and where adequate information and adequate time in which to respond is given along with conscientious consideration being given to the response.
- Whether in collective or individual consultation, the purpose is to avoid dismissal or ameliorate the impact.
- A redundancy process must be viewed as a whole, and an appeal may correct an earlier failing making the process as a whole reasonable.
- It is a question of fact and degree as to whether the consultation is adequate, and it is not automatically unfair that there is a lack of consultation in a particular respect.
- Any particular aspect of consultation, such as the provision of scoring, is not essential to a fair process.
- A dismissal decision could still be reasonable in the absence of consultation – the example being given where consultation would be futile.
The EAT held that ‘use of a system which reflects good industrial relations in another nation may not reflect the usual practice in the UK’. To use American selection criteria solely because the organisation is a global one’ would not reflect good (domestic) industrial relations practice. The EAT held in this case that there was a clear absence of consultation at the formative state and there were no indications in the Tribunal decision that there were good reasons for this consultation not to take place, not least as there was no time pressure on the employer. The absence of meaningful consultation at a stage when employees have the potential to impact the decision is indicative of an unfair process. The appeal process which the employer conducted could not repair the gaps in consultation in the formative stage.
Settlement Agreements can validly settle future unknown claims
In Bathgate -v- Technip UK Ltd and other [2023] CSIH 48, the Scottish Court of Sessions confirmed that employees can in a settlement agreement waive their rights against their employers to bring future statutory claims of which the employee has no knowledge at the date they entered into the settlement agreement. In that case, Mr Bathgate had entered into a settlement agreement under which he was due to receive an ‘additional’ future payment subject to the rules of a collective scheme relating to redundancies. After the settlement agreement was signed, he discovered he was not entitled to the additional payment as the rules of the scheme dictated that the payment was only available for employees aged 60 and under, whereas he was aged 61. He brought an age discrimination claim.
Under section 147 Equality Act 2010, discrimination claims can be settled under a settlement agreement provided that the clauses refer to the ‘particular’ complaint. The settlement agreement stated that he would not bring claims that ‘he became aware of after the date of the agreement… and all claims … of whatever nature (whether past, present or future)’, and the agreement named the claims to be waived which included age discrimination claims under section 120 Equality Act 2010.
The Court held that his age discrimination claim had been validly waived under the terms of the settlement agreement, and that a future claim of which an employee does not and could not have knowledge may be covered by a waiver where it is plain an unequivocal that this was intended.
https://www.scotcourts.gov.uk/docs/default-source/cos-general-docs/2023csih48.pdf?sfvrsn=b339387_1
January / February 2023 Newsletter
Case update
Marital status discrimination – claim brought by estranged wife failed – issue was whether her marital status was the cause of the less favourable treatment, as opposed to the fact she was married to employer’s main shareholder.
In Ellis v Bacon and anor, the Employment Appeal Tribunal allowed an appeal against an employment tribunal’s finding that an employee was discriminated against because of her marital status. Mrs Bacon had joined the employer as a bookkeeper, eventually marrying the Managing Director and majority shareholder. Her husband was later replaced as Managing Director but remained the majority shareholder.
The marriage broke down which precipitated acrimonious divorce proceedings. False allegations were raised against her that she had misused company computer equipment, a baseless complaint was made to the police, her directorship was removed and dividends were unpaid. She was eventually dismissed in a letter signed by the replacement MD, Mr Ellis. She brought an employment tribunal claim against Mr Ellis for direct discrimination on the grounds of her marital status. The tribunal upheld her claim. It found that he had sided with Mr Bacon in relation to the marital dispute and was compliant with him in the detrimental acts, including dismissing her on spurious grounds. The tribunal round that these actions involved less favourable treatment against Mrs Bacon because of her marital status as wife to Mr Bacon.
The Employment Appeal Tribunal allowed the appeal. It held that the issue was whether Mrs Bacon was treated less favourably because she was married, not whether she was badly treated because she was married to Mr Bacon. Another way of looking at the issue was to ask whether an unmarried woman whose circumstances were otherwise the same as hers, including being in a close relationship with Mr Bacon, would have been treated differently.
Flexible working requests can be made from the first day in a job
The government has announced that it will introduce legislation giving employees the right to request flexible working from the moment they start a job, as opposed to having to wait six months under the current legislation.
Millions of people across the UK are currently working flexibly, which can take various forms including working from home, job-sharing, compressed hours, flexitime and part-time and term-time-only working. The government has said about 1.5 million low-paid workers, including some gig economy employees, students and carers, would benefit from the new law. Flexible working may allow workers to boost their income by taking on a second job if they wish.
Summer 2022 case update
Interim injunction to enforce 12 month non-compete clause refused – time is of the essence when seeking injunctive relief
When enforcing a restrictive covenant, a court must consider the doctrine of restraint of trade. Any contractual term restricting an employee’s activities after termination will be void for being in restraint of trade and contrary to public policy, unless the employer can show that it is no wider than is necessary to protect the legitimate business interests of the employer.
One of the remedies available to an employer when seeking to enforce restrictive covenants is to apply for an interim injunction which may be granted as a temporary measure to “hold the ring” until matters can be fully explored at trial.
In Planon Ltd v Gilligan [2022] EWCA Civ 642, the Court of Appeal (CA) dismissed an appeal from the High Court’s refusal to grant an interim injunction to enforce a non-compete clause, but for reasons different to those of the High Court. The Court of Appeal’s views on the effect of delay are a reminder to those seeking injunctive relief that time is of the essence.
Planon develops and sells software for managing facilities and its customers include universities, hotels, public buildings and large office blocks. Mr Gilligan was employed as an account manager, and later promoted to sales manager. His contract contained post-termination restrictions which included a non-compete clause which provided that he would not, for 12 months after the termination of his employment, be involved in any capacity with any business concern which was, or intended to be in, competition with any part of Planon’s business which he had been involved with to a material extent in the six months before his employment terminated. Mr Gilligan resigned and joined a competitor, ServiceNow.
The parties were agreed that the effect of the non-compete clause was, in short, to stop Mr Gilligan from working in facilities management software for the 12 month period of the restraint.
In the Court of Appeal, Elisabeth Laing LJ noted that by the time of the hearing before the CA, Mr Gillingham had been employed by the competitor for seven months; the period of restraint had only about four months to run. This was a weighty factor which meant it would now be contrary to the balance of convenience to grant an injunction to enforce it. Much of the damage to Planon’s legitimate interests would already have been caused.
Bean LJ took a difference view of the initial period of delay. He considered that if Mr Gilligan’s job with ServiceNow posed as severe a threat to Planon’s protectable trade secrets or customer connections as the company asserted, the damage would have been done in the first few days, and certainly well before the lapse of two months (which was the time it took between learning of his employment by ServiceNow and the High Court hearing). He said that the status quo should be preserved and that the High Court judge would have been justified in refusing an interlocutory injunction on this ground.
The case is a reminder that the longer the delay to a court hearing the better the chance that the former employee may successfully argue that the damage is done and that the status quo should allow them to continue in their new employment.
November / December 2021 case update
Unfair dismissal whistleblowing claim – Not enough that selection for redundancy was ‘materially influenced’ by protected disclosures.
The recent Employment Appeal Tribunal judgement in the case of Secure Care UK Limited v R Mott illustrates some of the hurdles employees face when bringing whistleblowing claims for automatic unfair dismissal.
The Claimant worked as a Logistics Manager for the Respondent, which provided transport services for NHS patients with mental health problems. He made nine alleged protected disclosures, relating to matters such as inadequate staffing. He was put at risk of redundancy and dismissed.
The tribunal accepted that three of the disclosures qualified as protected disclosures. It found that there was a genuine redundancy situation but that the Claimant’s disclosures had had a material impact on his selection. The tribunal held the Claimant was unfairly dismissed.
The EAT disagreed. The tribunal had applied the wrong test – it had used the ‘materially influences’ test, which applies to s47B Employment Rights Act claims for whistleblowing detriments (as opposed to dismissal), rather than the sole or principal reason test required for s103A ERA claims for automatic unfair dismissal.
The EAT also found that the tribunal had failed in the causation assessment. It had failed to distinguish the impact of the three protected disclosures (and whether these caused the dismissal) from the impact of all nine disclosures.
Knight-Webb Solicitors are specialists in employment law. We pride ourselves in providing a first-rate, cost-effective and personal service to clients. We can advise you on employment law matters including furlough arrangements, redundancies and settlement agreements.
Contact Sunita Knight-Webb on 020 7207 6195 or at sunita@knightwebb.com
