Termination Payments

The Office of Tax Simplification has produced an interim report which, amongst other things, considers section 401 of the Income Tax (Earnings and Pensions Act) 2003, which provides that termination payments are subject to tax insofar as they exceed £30,000.

The relevant sections of the report are section 7 (p57) and Annexe G (p105). Some of the points made are:-

• the distinction in tax treatment is unfair with regard to PILONs, where properly advised employers are better able to avoid paying tax
• there is widespread confusion over the different treatment of (a) income tax and (b) national insurance payments on termination payments
• the government should consider increasing the £30,000 threshhold (which, adjusted for inflation, would be £71,000 today).

Subject Access Requests

The Information Commissioner has published a Code of Practice on how to deal with subject access requests for personal information from individuals under the Data Protection Act 1988. It provides guidance for data controllers on how to respond to subject access requests, explains how to deal with requests involving other peoples' information, and gives practical examples of requests and various exemptions.

EAT Practice Direction 2013

Last month, we sent out details of the statutory instrument amending the EAT Rules. An amended version of theRules is now available.

The EAT has now updated its Practice Direction, amended to cover fees and other matters. It is here: EAT Practice Direction 2013.

Disabiliy Discrimination: Approach to Reasonable Adjustments for Absence

Thanks to Paul Smith of Broadway House Chambers for preparing this case summary

In the context of making reasonable adjustments, what approach should be taken by employers in respect of employees whose disability interacts with other ailments?

There are two alternatives, says the EAT in HMRC Commissioners v Whiteley.

In this case the employee's disability was asthma. Her condition was exacerbated by respiratory infections which resulted in some absences from work. An employee being absent through illness for 10 days or more in a year would trigger a policy whereby the employer would consider subjecting the employee to disciplinary action. The employee complained that this policy put her at a disadvantage and that the employer had, accordingly, failed to make reasonable adjustments.

Mitting J (presiding) set out two possible avenues an employer could take when dealing with this type of situation. Firstly, they should consider, with expert evidence, the periods of absence and attempt to analyse with precision what was attributable to disability and what was not. Alternatively, they should ask, and conclude with proper information, what sort of periods of absence would the employee reasonably be expected to have over the course of an average year due to her disability.

The appeal itself concerned the employment tribunal's misinterpretation of the expert evidence and the matter was remitted to be heard afresh, but the guidance provided by the EAT is of wider application and should prove valuable to employers facing this difficult problem.

Unfair Dismissal Compensatory Award

The 'made' version of The Unfair Dismissal (Variation of the Limit of Compensatory Award) Order 2013 has been published.

It limits the compensatory award in most types of unfair dismissal cases at 52 weeks' pay or £74,200, whichever is the lower. The new limit applies to dismissals where the effective date of termination falls after Monday 29th July 2013.

Implied Terms: custom and practice

Thanks to Jahad Rahman of Rahman Lowe Solicitors for preparing this case summary

Can previous enhanced redundancy payments become contractually binding through custom and practice?

Possibly, says the Court of Appeal in Shumba & others v Park Cakes Ltd.

The Claimants, who had been subject to a TUPE transfer, were dismissed for redundancy. They claimed that they were unfairly dismissed and that they were entitled to enhanced redundancy pay on the basis that enhanced payments had been made over the years before the TUPE transfer. It was initially claimed that there was an express contractual entitlement to the enhanced benefits but that claim was not pursued and the entitlement was said to arise as a matter of custom and practice. The employment tribunal upheld the claims of unfair dismissal but the claims in relation to the redundancy payments were dismissed. Notwithstanding evidence in relation to past payments, the tribunal stated that it was "unable to infer that the enhanced terms were paid without exception".

The Court of Appeal upheld the decision of the EAT and held that the employment tribunal's failure to find that the enhanced redundancy benefits had been paid in the past on at least seven occasions was a material flaw in its reasoning. Accordingly, the case had to be remitted for re-hearing by a different tribunal.

At paragraph 36 of the Judgment, the Court of Appeal provides helpful guidance on when contractual rights concerning enhanced redundancy benefits may arise through custom and practice.

Vicarious Liability

Thanks to Miranda de Savorgnani of Outer Temple Chambers for preparing this case summary

Can a vicarious liability claim be struck out despite the fact-sensitive nature of such claims?

Emphatically yes, according to the Court of Appeal in Allen v Hampshire Police.

A police officer's wife brought a claim against the Constabulary, alleging her husband's ex-girlfriend (a police officer) had waged a campaign of harassment against her spanning four years. She claimed that the attacks were carried out in the purported performance of the officer's police function.

She appealed against strike out arguing that vicarious liability claims must be determined on the facts.

Gross LJ recalled that there must be a sufficiently 'close connection' between the relationship and the abuse, such that it created or significantly enhanced the risk that the victim would suffer the abuse.

Although vicarious liability claims are fact-sensitive and normally do not lend themselves to determination at a preliminary stage, where the facts alleged, taken at their highest did not reveal any, let alone close, connection between the tort and the tortfeasor's position as a police officer, there was a strong public interest in disposing of the claim as soon as possible.

EAT Judge's Observations on Employment Judges Sitting Alone

Thanks to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary

How should judges sitting alone approach unfair dismissal cases?

HHJ McMullen QC (sitting alone in the EAT) considered this question in Mitchell v St Josephs School.  He noted the transition from the "industrial jury" to judges sitting alone in unfair dismissal cases. But, he said the law is the same. In applying it, he suggested the role of a judge sitting alone is akin to a judicial review of the employer's procedure and decision.

On the facts of the case, the school bursar had failed to disclose the parlous state of the school's finances to the Board of Governors.

The EAT agreed with the employment tribunal that his dismissal was within the band of reasonable responses and therefore fair. Nor could the position be saved by the fact that the bursar had disclosed the state of affairs to two members of the Board. Applying the company law on attribution in Meridian Global Funds Management Asia Limited v Securities Commission [1995] 2 AC 500 and Orr v Milton Keynes Council, this did not mean the Board itself had knowledge of the finances.

In the appeal it was suggested that the Employment Judge had nonetheless adopted a subjective approach as to whether the dismissal was fair. The Judge's language, in using the first person singular, had laid himself open to this suggestion.

In the end it was considered, however, that the Judge directed himself correctly on the authorities and applied the law to the facts accordingly.

Compensation for Death in Service Benefits

Thanks to Sian McKinley of Cloisters for preparing this case summary Can the estate of an employee who was dismissed, and died shortly after, bring a claim for the loss of a death in service benefit which he had enjoyed whilst in employment? Yes, says the Court of Appeal in British Airways plc v Fox. Gary Fox died just days after he was dismissed by his employer, BA. It was said that his dismissal was unfair and/or discriminatory. While in employment he had been a member of BA’s death-in-service scheme under which, if he died while in employment, payment would be made to beneficiaries identified by the trustees of the scheme of a sum of about £85,000. Because he had been dismissed by the time he died, no such payment was made. The question was whether, in these circumstances, a claim for the full £85,000 could be maintained by Mr Fox’s estate. BA contended that Mr Fox could never have received the £85,000 had he lived, so he could never have been able to claim for its loss. The loss was suffered not by him but by the putative beneficiaries. Accordingly, the estate, standing in his shoes, had no claim to that sum either. The Court of Appeal disagreed. Underhill LJ remarked that employment law would be seriously defective if an employee were unable to claim compensation merely because the subject matter of a benefit was payable to others. The benefits in question formed part of the employee’s remuneration and its loss was a real pecuniary loss suffered by him. Normally, where a benefit such as life assurance has been lost, the appropriate measure of damage would be the cost of securing the equivalent benefit in the market. However, in these unusual circumstances, that approach was not appropriate. In light of the known fact of Mr Fox’s death so soon after dismissal, the value to him of the lost benefit was the full £85,000.

Disability Discrimination/Costs

Thanks to Vanessa James of SA Law for preparing this case summary

A solid decision in the case of Sud v London Borough of Ealing, demonstrates the Court of Appeal's commitment to supporting lower tribunals in strident costs awards where the decision to order the Claimant to pay 50% of the Respondent's costs was upheld.

Also supported was the EAT's right to decide not to remit a case back to an employment tribunal where they had found they could deal with a finding around the nature of the disability effectively and efficiently given the papers before them. Although the Claimant had pleaded her disability was a physical impairment, the tribunal had raised the issue of whether it was in fact a mental impairment and in spite of this being an 'imperfect' decision at first instance the EAT were able to resolve it adequately without the need to remit.

Adjournments on Medical Grounds

Thanks to Neil Addison of New Bailey Chambers for preparing this case summary

Is a tribunal justified in striking out a case where a Claimant is ill due to stress allegedly caused by the employer's bullying.

Yes, says the Court of Appeal in Riley v CPS. In this case the Claimant, a former Crown Prosecutor, had brought various allegations of bullying against fellow employees and was ultimately dismissed for making false allegations. Ultimately she brought a total of 3 separate employment tribunal proceedings against the CPS alleging, amongst other things, disability discrimination.

In August 2010 a 4 week trial was was scheduled for May 2011 but only 7 days before the scheduled trial the Claimant informed the employment tribunal that she was too ill to attend the trial. Her illness did not however prevent her simultaneously issuing a 4th employment tribunal claim. Medical evidence was given to the Employment Judge that the doctors were unable to identify a date upon which the Claimant was likely to be ready to commence a trial in part because she was unlikely to recover from her depression until after her trial. It was as the Judge said a "chicken and egg" situation.

The Judge decided that in the circumstances in particular the increasing delay and the effect that would have on the memory of witnesses a fair trial was no longer possible and so the case had to be struck out. The EAT agreed as has the Court of Appeal.

The Court noted that Article 6 of the European Convention on Human Rights gave both parties a right to a fair trial within a reasonable time. It was wrong to expect tribunals to adjourn cases merely in the hope that a Claimant's medical condition will improve. If doctors could not give any realistic prognosis of sufficient improvement within a reasonable time and the case itself dealt with matters that were already in the distant past, striking out must be an option available to tribunals.

As an aside, 3 days before the Court of Appeal hearing the Claimant applied for that case to be adjourned on health grounds and also the fact that she wanted to change lawyers. The Court refused that adjournment also, the case had to be dealt with.

Tribunal Fees Order Made

Just a quickie.

The 'made' version of The Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 is now available.

Judicial Proceedings Immunity

Thanks to Rad Kohanzad of Serjeants’ Inn Chambers for preparing this case summary

Is the improper action of placing undue pressure on a witness to produce a witness statement during proceedings subject to judicial proceedings immunity?

No, says the Court of Appeal in Singh v Morlands Primary School.

Whilst still employed, the Ms Singh brought a discrimination claim against her employer. Upon exchange of witness statements, she resigned claiming that the School had forced a particular witness to provide a statement of 'untruths', which she said amounted to a breach of trust and confidence.
 
In finding that Ms Singh could rely on such conduct in bringing her constructive dismissal claim, the Court of Appeal distinguished false evidence given in a witness statement, which is the subject of judicial proceedings immunity, from placing undue pressure on a witness to produce the witness statement, which is not. The latter conduct could give rise to a breach of trust and confidence, although the former could not.

Settlement did not require formal contract

Thanks to Michael Reed, Employment Legal Officer at the Free Representation Unit for preparing this case summary

Is an exchange of letters, without a detailed agreement, sufficient to settle a claim? It was in Newbury v Sun Microsystems, concluded the High Court.

Sun's solicitors wrote to Mr Newbury, offering to compromise his claim for £601,464.98, paid within 14 days. Mr Newbury's solicitors replied, accepting these terms, but that they would 'forward a draft agreement for your approval'.

The parties attempts to agree that draft floundered.

Mr Newbury then argued that a binding agreement had already been reached.

Analysing the wording of the letters, Lewis J agreed. The offer was detailed enough to be capable of acceptance and it had been accepted.

This case highlights the importance of clarity in the closing phase of negotiation. Parties wishing to agree a figure, but negotiate on other matters, must be careful. As Lewis J commented, the phrase 'Subject to contract' may be signficant.

Update on Tribunal Fees

A brief update on today's events involving tribunal fees.

1.   Fees (apparently) came into force for claims issued on or after today.  I say 'apparently' because nobody in the employment law community has yet seen the 'made' version of theEmployment Tribunals and Employment Appeal Tribunal Fees Order 2013.  I will distribute the link to the 'made' version as soon as it is available.

2.  On Friday afternoon, I sent out a bulletin announcing the publication of the Presidential Practice Direction on Issuing Claims for England and Wales and, separately (to people in Scotland only), one with the link to the equivalent Practice Direction for Scotland.  For those who did not receive that second email but who deal with claims in Scotland, this paragraph duly distributes the link.

3.  Unison's judicial review of the fee regime had its oral permission application in the High Court this morning.  Permission has been granted to proceed with the judicial review application, and there is a full hearing listed for October.  Unison's application for an interim injunction was refused.

4.  The MoJ have confirmed that Equal Pay claims currently fall under fee category 'A', not 'B' (and say amending legislation is likely to be put through in the future)

5.  I understand from comments on twitter and various emails I have received that the 'new' ET3 form has not been working today and has been taken down by the Courts & Tribunals Service (I can't find the online version when looking now, but the paper version you can print off and post ishere).

6.  The Department for Business, Innovation and Skills have told me that my bulletin last Friday (saying that the 'new' forms must be used or an ET1/ET3 will be rejected) is wrong because the 'old' forms have not yet been de-prescribed and thus are still valid (see BIS email).  Apologies for the error.

Presidential Practice Direction on Issuing Claims

The Presidential Practice Direction on Issuing Claims has been published.  It applies to England and Wales only.

It sets out the methods of issuing claims from Monday, 29th July, namely:-

• online (the preferred method)
• by post to the Leicester processing centre
• by hand to any of the following tribunal offices (but not other tribunals, and only between 9am and 4pm Mon-Fri): all four London tribunals, Birmingham, Huntingdon, Leeds, Newcastle, Nottingham, Manchester, Bristol, Cardiff.

Presumably there will be a similar Practice Direction for Scotland, but I haven't seen it yet.

New ET1 and ET3 Forms Published

The new ET1 and ET3 forms have been published, to be used from Monday 29th July 2013. 

The existing forms will be invalid from that date, and any ET1/ET3 submitted on the existing form will be rejected.

Company entitled to disclosure of documents from former CEO's home computer

Thanks to Caroline Field of Fox for preparing this case summary.

NOTE:  Five final places released for London Employment Law MasterClassthis coming Monday - booking closes 3pm today.

Can a company require its former CEO to provide inspection and copies of emails sent and received by him while acting on the company’s behalf which were stored on his personal computer following termination of the agreement for the provision of his services?

Yes, said the Court of Appeal in the case of Fairstar Heavy Transport NV (Fairstar) v Adkins and anor. Mr Adkins provided his services as CEO through a company controlled by him and registered in Jersey. Fairstar is based in the Netherlands. The written contract between Fairstar and the Jersey entity is governed by Dutch law and the Dutch Courts have exclusive jurisdiction.

The Court of Appeal criticised the High Court for delving into issues regarding the proprietary rights (if any) of the parties to the emails and the information contained in them. The appeal was allowed on the basis that a principal is entitled to require production by an agent of documents relating to the affairs of the principal. "Documents" in this context included information recorded, held or stored by other means than paper. No submissions were made as to whether the information contained in the documents was confidential. Neither party took issue with the English court's jurisdiction to hear the claim, which concerned emails stored on Mr Adkin’s personal computer in England.

The case highlights a tool which may be useful where there is no employment contract in place requiring an employee’s delivery up of the employer’s documents on termination of employment and where former employees have retained documentation prepared while acting on behalf of their employer which may not constitute confidential information capable of protection following termination of employment.

Tribunal Fees: An Update

This email contains important updates about the tribunal fee regime, which begins on Monday 29th July 2013.

1.  The Ministry of Justice has, this afternoon, issued various leaflets.  They are Employment Tribunal Fees for Individuals, Employment Tribunal Fees for Groups and Multiples, Employment Appeal Tribunal Fees, ET and EAT Fees: Do I have to pay them? and Stakeholder Factsheet.

2.  Unison's application for judicial review of the fees regime has been refused on paper, presumably on the grounds it has no reasonable prospect of success. It has requested an oral hearing for permission, which is listed to be heard at 10am on Monday.  A representative from Unison is attending my London Employment Law MasterClass on Monday to announce and discuss the result from the podium.

3.  Fox & Partners' judicial review in Scotland is (probably) going to be heard in October, and the government has undertaken to refund all fees paid if the JR is ultimately successful.  The MOJ's information sheet has been updated to reflect this undertaking.

4.  Tomorrow (Thursday), at 11am and 2pm, I am holding a free 45 minute telephone seminarwhen I'll be discussing the new tribunal fee regime (and at which I'll also be telling you a little about my MasterClasses).  Places are limited to 1,000 people on each call - if you haven't already signed up, claim your free place here.  Calls are at national rates (4.3p per minute from a BT line)

5.  A reminder: the website for submitting ET1 forms online will be taken offline at 4pm on Friday.  Get your online applications in before then to avoid fees.

6.  The new ET1 and ET3 forms, which must be used after 29th July 2013, are not yet available. They will be published on Monday morning online.

Vulnerable Witnesses – Tribunal Procedures and Case Management

Thanks to Keira Gore of Outer Temple Chambers for preparing this case summary

Can a Claimant in a sexual harassment case succeed where the Respondent has not had an opportunity to cross-examine them about their allegations?

Possibly, but only if the employment tribunal considers carefully what procedures it should adopt to ensure a fair and just substantive hearing, according to the Court of Appeal in Duffy v George.

This case – involving a Claimant bringing a sexual harassment case who said she was too frightened to attend a hearing and be cross-examined by a Respondent who was acting in person – sets out useful guidance for how employment tribunals should deal with vulnerable witnesses.

The Court of Appeal, in allowing the appeal and remitting the case, reminded tribunals that they have a wide discretion when it comes to designing fair procedures for substantive hearings (although this discretion must be exercised judicially). Procedures for handling vulnerable witnesses could include, for example, (1) separate hearings, where each party gives evidence to the tribunal in the absence of each other, (2) each party submitting ‘cross examination’ questions to the tribunal, for the tribunal to put to the other party, and (3) witnesses giving evidence to the tribunal behind screens, as happens in the criminal courts.