Johnson v Unisys Damages

A request for help...

I am putting together a seminar on Johnson v Unisys damages (for injury to feelings in unfair dismissal claims arising out of the dismissal).

Would anyone who has argued the point be able to Email me to tell me (a) whether damages were awarded; (b) if so, how much; and (c) which tribunal it was.

Also, if anyone has any tribunal decisions where the point is considered at length (whatever the result), could you let me have a copy? My address is 2 Gray's Inn Square Chambers, Gray's Inn, London WC1R 5AA (DX: 43 Chancery Lane).

Many thanks,

Redundancy Ready Reckoner

The DTI has put a redundancy calculator on its webpages. So the dilemma now is do we work it out manually, take the time to pull the paper 'ready reckoner' out a file, or take the time to log on to the DTI site? Personally, I still think manual calculation is quickest!

Incidentally, the DTI calculator is slightly misleading as it says the maximum for a week's pay is £260. It doesn't give any indication that the maximum changed recently, so people with an EDT prior to the 1st Feb may get the wrong figure out of the calculator.

PILON Clauses

In this month's Tax Bulletin, the Inland Revenue has produced new guidance for the tax treatment of payments in lieu of notice (PILONs).

The issue arises where a contract of employment contains a right (but not obligation) for the employer to make a payment in lieu of notice. If that right is exercised, then any payment to the employee is regarded as an emolument from employment and is therefore taxable in full.

By contrast, if the employer does not terminate using the PILON clause, but instead chooses to breach the contract, then four consequences follow:
1. the payment is regarded as damages for breach of contract, and as a 'termination payment' by the Revenue. It therefore falls into the £30,000 tax-free category;
2. class 1 national insurance contributions are also not payable (which saves money for both employee and employer);
3. the employee is under a duty to mitigate his/her losses, and must give credit for any earnings received during the notice period;
4. the employer (probably) loses the right to rely on restrictive covenants within the contract.

In summary, the Revenue's position is:
• a settlement that is substantially the same value as any payment that would have been made under the PILON clause is likely to be viewed as being made under the PILON clause - therefore fully taxable.

• in other words, in the absence of any identifiable breach of contract, the Revenue will assume that the payment has been made lawfully, even if it is not precisely the same amount as provided for by the contract;

• the Revenue may often accept that the payment has been made as damages for breach if, for example, the payment was reduced to reflect mitigation of loss, an adjustment has been made to reflect tax and NI consequences, or the decision not to exercise the PILON clause is evidenced in writing.

The Tax Bulletin makes it clear that incomplete documentation is usually the trigger for the Revenue assuming the payments are taxable. The moral is clear - documentation must be plainly drawn up at the time of the payment showing the payment is being made in breach of contract rather than pursuant to a PILON clause. Plainly, few employers will want to do this if there are restrictive covenants which it wishes to remain in force.

New TUPE Regs - Further Consultation

Following the consultation back in September 2001, the government has announced a period of further consultation.

The long-awaited draft TUPE regulations are now being promised to us in "the first half of this year", with a view to consultation enabling a vote in parliament in autumn. The DTI state that the current anticipated date for implementation of the new TUPE regulations is Spring 2004.

The reforms are said to:

- apply TUPE more comprehensively to service contracting operations
involving labour-intensive services such as office cleaning,
catering, security guarding and refuse collection (while leaving
unaffected the position in relation to "professional services" such
as accountancy, consultancy and legal advice);

- ensure that the new employer is better informed of the ongoing
employment rights of the employees he or she takes on; and

- improve the way TUPE operates when insolvent businesses are sold,
to help promote the 'rescue culture' and save businesses and jobs
that would otherwise be lost.

Disabled Employees - Statistics

The Department for Work and Pensions has published a report on employment retention following the onset of sickness or disability.

The report reveals:

• every quarter, 2.6% of the workforce become disabled within the definition of the Disability Discrimination Act 1995 (608,000 individuals). Surprisingly, only 0.3% of the workforce becomes disabled for the purpose of social security benefits (73,000 individuals) - indicating the government applies much more stringent standards before it to treat someone as entitled to disability protection, than the standards it places on employers;

• 5% of those who become disabled within the meaning of the DDA 1995 leave work immediately. After 9-12 months have elapsed, 13% have left employment.

Employment Act 2002

Two new matters arising from the Employment Act 2002.

1. Flexible Working
The government has published a basic and a detailed guide to flexible working, together with a set of forms to print off to use when requesting / granting / refusing flexible working.




2. Dispute Resolution
The government has quietly changed the proposed implementation dates for the statutory disciplinary and grievance procedures, from autumn 2003 to April 2004.