Employment Law Newsletter Summer 2011

In this edition of the Newsletter, we highlight some recent and forthcoming changes in employment law.

Case Round-Up

‘Ex gratia’ termination payment was not notice pay

In Publicis Consultants UK Ltd v O’Farrell, Mrs O’Farrell was dismissed on less than her contractual notice period of three months. She received a severance package described in the termination letter as ‘an ex gratia payment equivalent to three months salary’. Nevertheless, she succeeded in her claim for breach of contract for failure to give notice. The Employment Appeal Tribunal held that the termination payment was truly ex gratia, rather than a payment the employer was obliged to make. The EAT applied the contra proferentum rule: the termination letter was drafted by the employer, as it could be interpreted in two ways, it had to be interpreted in the way less favourable to the employer.

The decision is a reminder that employers need to be careful when drafting documents (including termination letters and employment contracts) as courts and tribunals will not give them the benefit of the doubt. Employers should only use the term ‘ex gratia’ where the payment is a ‘gift’ or protect themselves by requiring employees to waive their claims through a compromise agreement.

References and other communications to a new employer must be true, accurate and fair
Most employers are aware that when giving a reference in respect of a former employee, they owe him or her a duty of care to ensure that it is true, accurate and fair. In a recent case, the High Court has held that the duty can extend to other communications with a future employer.

In McKie v Swindon College, Mr McKie was an exemplary employee of Swindon College and received a very favourable reference when he left. He was later appointed to a role at Bath University and in his new job he had contact with Swindon College. The new HR director of the college sent an email about Mr McKie to Bath stating that the college would not allow him onto its premises because it had safeguarding concerns, there had been serious staff relationship problems during his time there and that Mr McKie had left the college before any formal action could be taken. The Court found that the contents of that e-mail were untrue but nevertheless these resulted in Mr McKie’s summary dismissal by the university. He sued Swindon College for loss of earnings. The Court decided that the claim should succeed because the loss was foreseeable and that there was a causal connection between the negligence involved in sending the email and the loss.

Redundancy and discrimination

Claimants in two recent cases have alleged discrimination in their former employer’s redundancy selection process. The cases serve to illustrate that employers sometimes need to ‘think outside the box’ when making redundancies.

Firstly, in Eversheds Legal Services Ltd v De Belin, Eversheds, the national law firm, was making redundancies. It awarded an employee on maternity leave a notional maximum score in respect of one of the selection criteria relating to performance during the period for which the woman was on maternity leave, while giving the claimant, a male, his actual score. He was selected for redundancy and brought a successful claim for sex discrimination. The employer appealed but the decision was upheld by Employment Appeal Tribunal (EAT) who said that there were less discriminatory alternatives, such as measuring both employees’ actual performance during the period before the woman’s maternity leave started, that could have been used.

In Lancaster v TBWA Manchester, however, the claimant with a social anxiety disorder unsuccessfully argued that a reasonable adjustment under disability discrimination legislation would have been to replace redundancy selection criteria which required communication skills and which he contended placed him at a disadvantage, with objective criteria such as attendance and length of service. The EAT agreed with the tribunal that this was not a reasonable adjustment because, given the creative and senior level of the post held by the claimant, the redundancy selection criteria were reasonable. Further, it would have made no difference to the outcome.

The Bribery Act 2010

The Bribery Act 2010, which came into force on 1 July 2011, introduced four new criminal offences:

• Offering, promising or giving a bribe to another person.
• Requesting, agreeing to receive or accepting a bribe from another person.
• Bribing a foreign public official.
• For commercial organisations, failing to prevent bribery by those acting on the organisation’s behalf (the ‘corporate offence’).

The only defence available to the corporate offence is that adequate procedures were in place to prevent bribery.
There is a maximum penalty of ten years’ imprisonment for all offences except that there is an unlimited fine for the corporate offence.

Organisations should note that:

• The corporate offence applies to any business registered in the UK and to any foreign organisation carrying on a business in the UK. Acts committed in the UK or, if overseas, by a British citizen or any other person with a close connection with the UK will be covered.
• A relevant organisation is potentially liable for the acts of ‘associated persons’, regardless of whether the matter has any connection with the UK.
• Whether the procedures in place are adequate will be judged on the level of risk faced by the organisation.
• Bona fide reasonable and proportionate hospitality and or other business expenditure will not be contrary to the Act.

Agency Workers Regulations 2010
The Agency Workers Regulations 2010 are due to come into force on 1 October 2011 and are intended to give effect to the Temporary Agency Workers Directive of the EU. The existing rights of agency workers will not be affected.

The Regulations apply to agency workers who undertake temporary work through agencies to end users, or ‘hirers’. They provide that all agency workers must be able to access the hirer’s facilities and amenities and to have access to information about its job vacancies from the first day of their assignment.

In addition, after a 12-week qualifying period, agency workers are entitled to the same “basic working and employment conditions” that they would have been entitled to had they been recruited directly by the hirer, unless the worker has a permanent contract with the agency under which they are paid between assignments.

ACAS Code of Practice on Disciplinary and Grievance Procedures

Following the abolition of the statutory dispute resolution procedures in 2009, the ACAS Code of Practice was introduced as a more flexible way to manage disciplinary and grievance issues.

Recently ACAS has conducted research to evaluate the working of the Code. Among other things, they have found that:

• The level of awareness of the Code is high among HR staff and employee representatives, but lowest among employers without a formal HR function
• Some people think that the Code is fairer to employers because they can no longer be ‘struck down’ at a tribunal for not following precise processes, and some think that the employee’s position is weaker for the same reason.
• The number of grievances has decreased with the abolition of the statutory procedures.
• There is an increased emphasis on early resolution at employers with policies that have been revised in line with the Code.

ACAS concludes that more can still be done to encourage early resolution of disputes and increase employers’ awareness of the Code, especially small employers.

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 help you to avoid the employment law pitfalls and ensure that your procedures are up-to-date, taking into account all the recent changes in the law, including those outlined in this Newsletter.

Contact Sunita Knight-Webb on 020 7207 6195 or at sunita@knightwebb.com