Constructive Dismissal

Here's a dare: read this judgment of the EAT and try not to laugh...

In this sorry story of bullying within a Peugeot dealership in Oxford, learn about the manager who "habitually grabbed colleagues...in the testicles" and called a senior salesman "the old parsonage", "old buzzard" and "old git". Try not to imagine the "hairdryer treatment" (aka Sir Alex Ferguson) dealt out to underperforming salesmen, or the peculiar games played with airguns and mini motorbikes...

Anyway, the EAT decided that such conduct was plainly and unarguably likely to destroy the employment relationship, and overturned the tribunal's finding that there had not been a constructive dismissal (substituting a finding that there was one).

Parsons v Bristol Street Motors

'Unless' Orders

The Court of Appeal has held that 'Unless' orders take effect without further action from the tribunal. So if a date passes under an 'Unless' order without the relevant party complying, the consequence (usually a strike-out) takes effect automatically on that date - no further application or action is required by either the tribunal or the other party.

Prior to a 2007 case in the Court of Appeal in normal civil litigation, it was unclear whether a further application or Order was required to give effect to the consequences of a failure to comply with an 'Unless' Order. The 2007 case, Marcan Shipping v Kefalas, made it clear that no further action was needed. This new case, Chukwudebelu v Chubb Security, makes it clear that the same principle applies in employment tribunals (see paras. 38-39).

When is a controlling shareholder an employee?

A different division of the EAT has agreed with Elias P.'s analysis in Clark v Clark Construction (see bulletin 29/2/08), setting out the guidance for whether a controlling shareholder of a company is also its employee.

In Neufeld v A&N Communication in Print Ltd., HHJ McMullen QC affirmed the guidance given by Elias P., holding that a 90% shareholder of a company was also its employee. Two additional points of interest arose:-

• the date at which the individual's status is to be considered is the date of the dismissal, not the date that s/he is alleged to have entered into a contract of employment (para. 14); and,
• the fact that the individual has offered guarantees (eg guaranteeing the company's debts to a bank)s not inconsistent with employment status (para. 30).

Immigrant Workers

The application process for companies wishing to apply for a licence as a Sponsor under Tier 2 of the New Points Based System which will replace the existing work permit system has now started.

The significance of this application process should not be underestimated. As from later this year, possibly 1st October, any company wishing to take on an individual on a work permit or apply for an extension for an individual to their existing work permit, must be licensed as a Sponsor.

The application process involves an online application and then the submission of specified documentation within 10 working days of the application date. Most applicants will then receive a visit from an officer of the Border and Immigration Agency as part of the evaluation procedure.

[Thanks to Mark Barnett, Head of Immigration at Steeles Law, for telling me about this.]

Definition of 'Redundant'

The EAT, in Martland v Cooperative Insurance Society, has considered whether a dismissal, when the workforce is immediately offered re-engagement on new terms and conditions of employment, amounts to a 'redundancy' dismissal (entitling the workforce to redundancy payments).

The tribunal found that such dismissals were not redundancy dismissals, but were dismissals for some other substantial reason.

The employees appealed, arguing that they had been dismissed because there was a reduction in the need for employees to do 'work of a particular kind', i.e. work under those terms and conditions.

The EAT upheld the ET's decision, holding that 'work of a particular kind' referred to the generic type of job - in this case, insurance salesmen. The tribunal was entitled to find that the job was still essentially the same, despite the substantial changes to the terms and conditions of employment.

Wasted Costs Order against Solicitors

The EAT has discharged a wasted costs order made against a firm of solicitors.

During a tribunal case, the tribunal found that the "voluminous documentation" showed conclusively that the employee's case was "unsustainable", and that some of her allegations were "wholly unfounded and unsupported".

The tribunal held that any competent adviser would have been bound to point out to the Claimant, after she had been cross-examined, that her case was bound to fail - but that her solicitor did not do so. Therefore, the tribunal held, her solicitor should be liable for subsequently incurred wasted costs.

The EAT discharged the wasted costs order, holding that the tribunal had failed to consider whether the solicitor had "failed in his duty to the court" (in accordance with Ridehalgh v Horsefield). It also noted the difficulty inherent in wasted costs order, which usually entails the waiver of legal professional privilege as to the advice given. Finally, it noted that the tribunal had failed to consider causation, i.e. if the solicitor had advised the Claimant to withdraw her claim, would she have kept going anyway?

Mitchells v Funkwerk Information Technologies

SI's coming into force on 1st and 6th April 2008

This is a list of British employment law related Statutory Instruments which come into force on 1st and 6th April 2008. This list is compiled by and reproduced with permission of www.emplaw.co.uk, which provides a page of dedicated deep links direct to these and other employment law SIs.

On 1st April 2008:-

• The Emergency Workers (Scotland) Act 2005 (Modification) Order 2008, SSI 2008/37 - in force 1.4.08
• The European Qualifications (Health and Social Care Professions) Regulations 2007, SI 2007/3101 - in force 3.12.07 & 1.4.08
• The Income Tax (Pay As You Earn) (Amendment No. 4) Regulations 2007, SI 2007/2969 - in force 1.4.08 and 1.4.09
• The Occupational and Personal Pension Schemes (General Levy) (Amendment) Regulations 2008, SI 2008/661 - in force 1.4.08
• The Pension Protection Fund (Prescribed Payments) Regulations 2008, SI 2008/664 - in force 1.4.08
• The Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2008, SI 2008/650 - in force 1.4.08
• The Scottish Commission for Human Rights Act 2006 (Commencement No. 2) Order 2008, SSI 2008/112 - in force 1.4.08
• The Social Security Benefits Up-rating Order 2008, SI 2008/632 - in force 1.4.08 to 10.4.08
• The Social Security (Miscellaneous Amendments) (No. 5) Regulations 2007, SI 2007/2618 - in force 1.10.07, 1.4.08 and 7.4.08.
• The Teachers’ Pensions (Miscellaneous Amendments) Regulations 2008, SI 2008/541 - in force 1.4.08
• The Value Added Tax (Increase of Registration Limits) Order 2008, SI 2008/707 - in force 1.4.08
• The Welfare Reform Act 2007 (Commencement No. 5) Order 2008, SI 2008/411 - fully in force 1.4.08
• The Welfare Reform Act 2007 (Commencement No. 6 and Consequential Provisions) Order 2008, SI 2008/787 - partly on 1.4.08 and fully on 27.10.08

On 6th April 2008:-

• The Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2007 SI 2007/3575 - in force 6.4.08
• The Corporate Manslaughter and Corporate Homicide Act 2007 (Commencement No.1) Order 2008, SI 2008/401 - in force 6.4.08
• The Corporate Manslaughter and Corporate Homicide Act 2007 (Amendment of Schedule 1) Order 2008, SI 2008/396 - in force 6.4.08
• The Disability Discrimination (Public Authorities) (Statutory Duties) (Amendment) Regulations 2008, SI 2008/641 - in force 6.4.08
• The Employment Equality (Age) Regulations 2006 (Amendment) Regulations 2008, SI 2008/573 - in force 6.4.08
• The Gangmasters (Licensing Conditions) (No.2) (Amendment) Rules 2008, SI 2008/638 - in force 6.4.08
• The Guaranteed Minimum Pensions Increase Order 2008, SI 2008/581 - in force 6.4.08
• The Health and Safety (Fees) Regulations 2008, SI 2008/736 - in force 6.4.08
• The Income Tax (Car Benefits) (Reduction of Value of Appropriate Percentage) (Amendment) Regulations 2007, SI 2007/3068 - in force 6.4.08
• The Income Tax (Construction Industry Scheme) (Amendment) Regulations 2008, SI 2008/740 - in force 6.4.08
• The Income Tax (Pay As You Earn) (Amendment) Regulations 2008, SI 2008/782 - in force 6.4.08
• The Information and Consultation of Employees Regulations 2004, SI 2004/3426 - fully in force 6.4.08
• The Merchant Shipping and Fishing Vessels (Control of Noise at Work) Regulations 2007, SI 2007/3075 - in force 23.2.08; 6.4.08 and 6.4.2011
• The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2008, SI 2008/2008/731 - in force 6.4.08
• The Occupational Pension Schemes (Internal Dispute Resolution Procedures Consequential and Miscellaneous Amendments) Regulations 2008, SI 2008/649 - in force 6.4.08
• The Occupational Pension Schemes (Non-European Schemes Exemption) Regulations 2008, SI 2008/624 - in force 6.4.08
• The Pensions Act 2004 (Commencement No. 11) Order 2008, SI 2008/627 - in force 6.4.08
• The Sex Discrimination Act 1975 (Amendment) Regulations 2008, SI 2008/656 - in force 6.4.08
• DRAFT The Sex Discrimination (Amendment of Legislation) Regulations 2008 - in force 6.4.08 or on the 5th day after they are made whichever is the later
• The Social Security (Contributions) (Amendment) Regulations 2008, SI 2008/133 - in force 6.4.08
• The Social Security (Contributions) (Amendment No. 2) Regulations 2008, SI 2008/607 - in force by 6.4.08
• The Social Security (Contributions) (Amendment No. 3) Regulations 2008, SI 2008/636 - fully in force by 6.4.08
• The Social Security (Contributions) (Re-rating) Order 2008, SI 2008/579 - in force 6.4.08
• The Social Security (Contributions) (Re-rating) Consequential Amendment Regulations 2008, SI 2008/703 - in force 6.4.08
• The Social Security Pensions (Low Earnings Threshold) Order 2008, SI 2008/726 - in force 6.4.08
• The Tax Credits Up-rating Regulations 2008, SI 2008/796 - in force 6.4.08
• The Tribunals, Courts and Enforcement Act 2007 (Commencement No. 3) Order 2008, SI 2008/749 - in force 6.4.08

Important: Acas revises conciliation policy

Acas has announced an important change to its policy on conciliation.

Until October 2004, Acas had a duty to offer conciliation in nearly all tribunal claims. In October 2004, the Employment Act 2002 introduced fixed conciliation periods; this limited Acas's duty to conciliate to a fixed, limited period (after which it had a power to conciliate which, in accordance with parliament's intention, it only exercised in very limited circumstances).

Acas has now announced that, in the light of the government's intention to abolish fixed periods of conciliation, it will (from tomorrow) exercise its power to conciliate in all cases, irrespective of whether the fixed period for conciliation has expired.

Costs in Employment Tribunals

The EAT has handed down a decision considering the correct approach to take when assessing costs against a litigant.

In Jilley v Birmingham & Solihull Mental NHS Trust, the tribunal made costs orders against the Claimant, and referred the assessment to a county court. The potential costs liability was substantial.

Remitting the question of costs to the tribunal, the EAT stated that:-

• it is incumbent on a tribunal to consider whether it is going to take the paying party's financial means into account. It is not good enough to delegate that task to the county court (paras. 44 and 46);
• a useful option to consider for the tribunal, when referring costs to the county court for assessment, is to place a cap on an award to reflect the paying party's ability to pay (para. 47).

Boring but important: New Tax Provisions

HMRC has laid the The Income Tax (Pay As You Earn) (Amendment) Regulations 2008 before Parliament.

The Regulations close the loophole identified in Demibourne Ltd v HMRC (see bulletin 15/8/06), which held that HMRC was entitled to charge an employer full tax and NI under the PAYE regulations, where the parties have wrongly viewed the employee as self-employed, without giving credit for the tax and national insurance already paid directly by the 'employee'. In other words, under this loophole, HMRC could charge tax twice!

Well, the loophole is closed. The Regulations come into force on 6th April 2008.

The Regulations also tidy up the PAYE Regulations, given the abolition of the starting-rate of income tax.

EAT Time Limits

The Court of Appeal has considered the EAT's strict adherence to the 42-day time limit for instituting an appeal.

As all employment practitioners know, the EAT requires certain documents to be attached to the Notice of Appeal. If any document is missing, the appeal is invalid. In this case, Jurkowska v Hlmad Ltd, one of the documents was omitted in very unusual circumstances, and was lodged 33 minutes after the 4pm deadline.

The Court of Appeal upheld Underhill J.'s decision to extend time for instituting the appeal. Whilst confirming that the strict approach in United Arab Emirates v Abdelghafar remained good law, the three Court of Appeal judges took different views as to certain aspects of that judgment and to EAT practice / procedure:

• Rimer LJ considered that an extension of time might, in exceptional circumstances, be granted even if the Appellant has no 'good reason' for the delay (which is a mandatory requirement under Abdelghafar (para. 19)
• Hooper LJ was doubtful about the comments in Abdelghafar to the effect that a lack of prejudice to the Respondent is immaterial (para. 60)
• Sedley LJ did not think that any changes should be made to the Abdelghafar test (para. 71), although he showed some tentative leaning towards Rimer LJ's views

Update: Employment Bill 2008

The Employment Bill has had its third day in committee in the House of Lords (see Hansard). Discussion included:

• tightening up minimum wage enforcement (proposals agreed);
• broadening the type of expenses that can be reimbursed to voluntary workers without triggering eligibility for the minimum wage (proposal agreed);
• making the NMW apply to all mariners when within UK territorial waters and to all mariners on UK registered ships whereever they may be working (proposal withdrawn after discussion);
• increasing fines for employment agencies who charge fees to job seekers when not allowed, and imposing a new duty to protect welfare of temps (proposals withdrawn after discussion);
• trade union exclusion/expulsion following the ASLEF ase (cl 17) - (proposals withdrawn after discussion)

Thanks to www.emplaw.co.uk for their permission to reproduce this item.

Age Regulations Amended

The government has published The Employment Equality (Age) Regulations 2006 (Amendment) Regulations 2008, which come into force on 6th April 2008.

The changes are relatively minor, dealing with:

• issues relating to continuity of service for the service-related benefit exception; and,
• closing a loophole under the Regulations in connection with time limits (the original Regulations did not provide properly for the three month extensions of time under the dispute resolution regulations).

Discrimination Questionnaires

The EAT has, this morning, handed down the important decision of D'Silva v NATFHE. It reminds practitioners that a failure by an employer to respond to a discrimination questionnaire (or an equivocal / evasive response) does not - without more - automatically raise a presumption of discrimination.

Underhill J states that there will often be good reasons why questionnaires have not been answered (or documents not disclosed), or that the failure will have no bearing on whether an act of discrimination took place. In such cases, "time and money should not be spent pursuing the point" (para. 38).

Employment Tribunal Judgments on internet delayed

According to Monday's Hansard, the Tribunals Service is putting back its proposals to provide Employment Tribunal judgments on the internet. It will not happen until Caseflow (the computerised ET case management system) is developed and rolled out across the regional ET offices. Caseflow is to be piloted in autumn 2008. National rollout will depend on the results of the pilot.

Amongst other things, once judgments are available on the internet, it will make it easier for Claimants to identify Respondents with a track record of discrimination or unreasonable practices (relevant to the statutory defence for discrimination, or the amount of the compensation uplift under the Employment Act 2002). On the downside for Claimants, it may enable Respondents to identify (and avoid recruiting) those who have previously brought a tribunal claim.

[Thanks to www.emplaw.co.uk for this information]

Victimisation in Litigation

The EAT has handed down a judgment considering the conflicting policies of allowing litigators to fight cases sensibly, and the importance of not victimising someone who brings a discrimination claim.

Mrs Dathi claimed discrimination. Her employer refused to disclose certain documents during the litigation. Mrs Dathi claimed that the letter in which the Respondent refused to disclose those documents amounted to an act of victimisation. She also contended that a robust letter resisting her application for costs was a further act of victimisation. The Respondent claimed both letters enjoyed absolute immunity, being produced for the purpose of litigation.

The EAT (HHJ McMullen QC) held that both letters came into existence for the purpose of litigation and attracted absolute immunity. Even if they did not, they would have amounted to honest and reasonable communications between representatives for the purpose of preparing for a trial, which would be a defence to a victimisation claim (see paras. 27-28).

South London & Maudsley NHS Trust v Dathi

Unilateral Variations of Contract

The EAT has handed down a decision reaffirming the options an employee has when an empoyer seeks to foist a unilateral variation of contract on him. The four choices (para. 20) are:-

• acquiescing in the variation;
• resign and claim constructive dismissal;
• refuse to work under the new terms, and force the employer to take what steps it thinks appropriate; or,
• stand and sue, by working under protest and seeking damages (either for breach, or for unfair dismissal).

In this case, the employee agreed to the changes 'under protest' but then refused to work under the new terms. The EAT held that the decision to dismiss him was fair as, having agreed (alebit under protest), he could not renege on his agreement - therefore he was refusing to obey lawful and reasonable instructions.

Robinson v Tescom Corporation

Minimum Wage Increase

The government has, today, announced the annual increase to the minimum wage. The adult rate will rise from £5.52 to £5.73. The rate for 18-21 year olds will also increase from £4.60 to £4.77, while the 16-17 year old rate will rise from £3.40 to £3.53.

All increases will take effect on 1st October 2008. See BERR Press Release for more details.

Strikes: Deducting a day's wage

The High Court has considered, in Cooper v Isle of Wight College, how much pay an employer can deduct from a worker's wage packet when that worker is on strike.

Blake J. held that the employer can only deduct the amount that an employee could recover in an unlawful deductions claim (which, for someone working a 260-day year, is 1/260th of salary). The employer cannot go further, and deduct the actual loss to the business (such as the pro rata element of holiday pay entitlement).

Strikes: Deducting a day's wage

The High Court has considered, in Cooper v Isle of Wight College, how much pay an employer can deduct from a worker's wage packet when that worker is on strike.

Blake J. held that the employer can only deduct the amount that an employee could recover in an unlawful deductions claim (which, for someone working a 260-day year, is 1/260th of salary). The employer cannot go further, and deduct the actual loss to the business (such as the pro rata element of holiday pay entitlement).