Dismissal: Telling the Employee

Thanks to Ed McFarlane of Deminos HR for preparing this case summary.

If an employee's solicitor informs her of her dismissal a day before the employee reads a dismissal letter, is the effective date of termination the date that the solicitor tells her? 

Yes, held the EAT in Robinson v Fairhill Medical Practice (HHJ Burke QC).

The Claimant did not attend a disciplinary hearing and was communicating with her employer through a solicitor due to illness.  The employer emailed the solicitor on 6th July to inform her that the Claimant was to be summarily dismissed; the solicitor told the employee of the decision on 7th July; the employee read the dismissal letter on 8th July.  At a pre-hearing review, an employment tribunal held that the effective date of termination was 7th July, so the claim for unfair dismissal was struck out as out of time as the claim was presented a day late on 7th October.

The EAT considered the Supreme Court's decision in Gisda Cyf v Barratt, that dismissal is effective when it is communicated to an employee or she has a reasonable opportunity to know of it, and held that communication of dismissal through a third party suffices, so, as the effective date of termination was 7th July, the Claimant's appeal failed.

The EAT upheld the appeal against the decision to dismiss the Claimant's disability discrimination claim as out of time, noting that the fault of the Claimant's adviser ought not to be held against her as a factor on whether it was just and equitable to extend time, and substituted its own decision for that of the employment tribunal.

Employment Law Timeline

Thanks to Adam Turner of Berwin Leighton Pasiner for giving permission to reproduce this.
 

Berwin Leighton Paisner have produced a first-rate timeline of past and forthcoming employment law changes. 

Not much else to say - you can see it here!     

TUPE Exception: Task of Short Term Duration

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

What is the meaning of the "single specific event or task of short term duration" exception to service provision change TUPE transfers?

The EAT has given helpful guidance in Swanbridge Hire v Butler & ors.

Kitson Environment Europe had a contract for insulation and cladding work on five power station boilers on behalf of Shaw Group Ltd.  There was a parting of the ways and Kitsons were replaced by Swanbridge, who finished the work.  Was this a service provision change under the TUPE regulations?

Under Reg 3 (3) (a) (ii) of TUPE 2006 there will not be a service provision change if the client intends that the activities are, following the change, to be carried out in connection with a single specific event or task of short term duration. The employment tribunal held that the insulation contract was not "a single specific event or task of short term duration".  The contract was "lengthy and protracted".  It took 18 months to complete, of which 8 months were in the hands of Swanbridge.  There was therefore a service provision change and TUPE applied.

The EAT allowed an appeal against this finding.  First, the Employment Judge failed to consider the intention of the client at the time of the alleged service provision change.  The exception applies where it is the client's intention to contract for a single specific event or task of short term duration, and the tribunal failed to make findings in this regard.  Secondly, the Employment Judge also erred in deciding whether the 'event' (although the EAT considered it was a 'task') of insulation and cladding of the boilers was short term by reference to how long, cumulatively, both the outgoing and incoming contractor spent on the work.

Finally the EAT expressed a view on opposing views held by Langstaff J in SNR Denton UK v Kirwan and Lady Smith inLiddell's Coaches v Cook as to whether "of short term duration" qualifies "event" as well as "task".  The EAT expressed a preference for Langstaff J's view that "of short term duration" qualifies "event" as well as "task".

Repayment Clause: Unenforceable Penalty?

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

Can a tribunal consider whether a repayment clause is an unlawful penalty?  Yes, holds the EAT in Cleeve Link Ltd v Bryla.

The employer had paid money for fees and air flight to the agency which recruited the employee from Poland. The employment contract stated that such fees and costs could be deducted from the employee's wages, on a sliding scale which reduced over time. The employee was summarily dismissed for gross misconduct 12 weeks into her employment, whilst the clause was still in effect.  The employer set the fees off against outstanding salary, and she brought an unauthorised deductions claim.

The employer argued that the question of whether the deduction clause was enforceable was irrelevant to the statutory scheme under Part II of the Employment Rights Act 1996. On appeal, the EAT (HHJ Hand presiding) disagreed, stating that an employment tribunal's jurisdiction frequently involves the application of common-law contractual principles to situations where the cause of action is statutory.

The EAT also provided guidance as to when a repayment clause may be enforceable. The starting point is to look at the contract when it was entered into. Then the tribunal must decide, objectively, whether the purpose of the clause was to deter or to represent a genuine pre-estimate of loss. This question may involve a comparison between the amount stated in the clause and a realistic figure the employer might recover. If the difference is "extravagant" or "unconscionable", the clause is likely to be unenforceable.

TUPE: ETO Reason

Thanks to James Bickford Smith of Littleton Chambers for preparing this case summary

Is a company administrator able to make dismissals for economic, technical or organisational reasons (ETO) and then sell the business on without passing TUPE liability for them to the purchaser?
 
Yes, if the reason for the dismissals was to enable the company in administration to continue to trade, holds the Court of Appeal in Crystal Palace FC Ltd v Kavanagh and others.
 
The employment tribunal had found that the reason dismissals were made by the football club’s administrator was to continue trading the business, with an ultimate objective of selling it on to a purchaser waiting in the wings. It followed that the dismissals were made for ETO reasons so that liability did not pass to the club’s purchaser. The EAT rejected that approach as contrary to Spaceright Europe Ltd v Baillavoine. It held that the administrator's admitted intention of selling the club on meant that the dismissals could not be made for ETO reasons. That meant that liability passed to the Club’s purchaser.
 
The Court of Appeal finds that the EAT had been wrong to reverse the tribunal. Administrators “will almost always have a transfer of the undertaking as their ultimate objective” but that does not mean that the reason for dismissals made by them will always be to make the business more attractive to a purchaser. They can also be made to allow the business to carrying on trading. On the facts the dismissals at the Club had been made for that reason, so liability did not pass to the purchaser.
 
The case will be of considerable importance to insolvency professionals. It marks a partial retreat from Spaceright and a recognition (notably in the firm concurring judgment of Briggs LJ) of the importance of the wider policy objective of corporate rescue.

National Minimum Wage

Thanks to Naomi Cunningham of Outer Temple Chambers for preparing this case summary

Do they also serve who only sleep?

Yes (sometimes), said the EAT in Whittlestone v BJP Home Support Ltd.

W was a care worker. She was paid £6.35 per hour for time spent attending to clients at their homes, but nothing for travel time. She also undertook "sleepovers", when she was required to be present at a client's home from 11pm to 7am, and for which she was paid £40. She was provided with a bed, and permitted to sleep except when her services were actually required. It was common ground that she was doing "time work" for the purposes of regulation 3 of the NMW Regulations 1999.

W was entitled to the NMW throughout the time she was required to be present, irrespective of whether she performed any tasks. She was also entitled to the NMW for her travel time between clients' homes.

Legal Expense Insurance

Thanks to James English of Samuel Phillips solicitors for preparing this case summary

Can a legal expense insurer insist that the insured use its panel lawyers?

No, held the CJEU in Sneller -v- DAS, an important case strengthening an employee's position in dealing with insurers.

The Claimant held legal insurance with DAS.  The insurance contract stated that the insured had the freedom to choose their own lawyer if DAS decided that the case should be dealt with by external lawyers (rather than its own staff).  The Claimant wished to bring a claim of unfair dismissal instructing his own lawyer, but DAS preferred to keep it inhouse. 

The CJEU considered Article 4(1) of Directive 87/344/EC on legal expense insurance, which recognises an insured person's freedom of choice in instructing a lawyer.  The CJEU held that the requirement that the insurer must decide if lawyers are to be instructed was too restrictive.  The Claimant's freedom of choice as to their representative should not be dependent upon the insurer's view on whether it is necessary to instruct lawyers.  However, the insurers might not necessarily have to meet the costs in full.

Extension of Time - Unfair Dismissal

Thanks to Lisa Joyce of DTM Legal LLP for preparing this case summary

If a Claimant asserts that he did not have mental capability to bring a claim in time, does a tribunal have jurisdiction to hear a claim brought as soon as the Claimant was able to, if it was brought outside of the time limit?

Yes, on the facts of this case, according to Norbert Dentressangle Logistics Limited v Mr Graham Hutton.

The Employment Judge concluded that it was not reasonably practicable for the Claimant to have presented the claim within the three month time limit. This was on the basis that the Claimant remained unwell and he was having significant difficulty as he explained it. The Employment Judge relied upon the Claimant's graphic description of his inability to function normally.

The Employment Judge then turned separately to look at the second question, that of whether the claim was brought within a reasonable time thereafter. It was the Claimant's position that he dealt with the claim as soon as he felt able. The Employment Judge had no reason to doubt the Claimant's credibility and accepted this.

The EAT concluded that it was reasonable for the Claimant to delay beyond the initial period, on the basis that it accepted this evidence.

Employee's Tribunal Legal Costs not tax-deductible

Thanks to Ed McFarlane of Deminos HR for preparing this case summary

Can an employee claim income tax relief on legal costs (and an adverse costs award) arising from his employment tribunal claim?

No, held the First Tier Tribunal Tax Chamber, in Wardle v Commissioners for HMRC, applying s336 of the Income Tax (Earnings and Pensions) Act 2003. The Claimant, a banker who had brought employment tribunal proceedings against his former employer (Wardle v Credit Agricole) lost his appeal against an HMRC Closure Notice on his self-assessment, and failed to reduce his income tax bill by offsetting substantial legal costs and was left with an increased tax liability of £49,136.98.

The tribunal ruled that the costs claimed were not incurred by the taxpayer as a holder of employment, nor were they incurred "wholly, exclusively and necessarily in the performance of the duties of the employment" which, given that the expenses claimed mainly arose after the employee had been unfairly dismissed, might not be that surprising, and rejected the proposition that the Claimant necessarily incurred some legal costs as an aspect of his compliance role during employment.

Whereas an employer may be able to offset against tax the costs of tribunal litigation as a business expense, an employee has no right to an offset for the costs of a tribunal claim.

A question not answered by this case is whether a self-employed worker who incurred costs taking an employer to tribunal, e.g. in pursuit of unpaid holiday pay, might be able to offset those costs against income tax as an allowable business expense.

Enforcement of Employment Tribunal Awards

Thanks to Craig Gordon of HR Bullets, who has given permission to reproduce a summary he prepared on his website.

In light of BIS-sponsored research showing that over half of those awarded a tribunal pay out don’t actually receive what they’ve been awarded, the government has said it will look at measures to clamp down on non-payment.

Among the measures the Employment Relations Minister Jo Swinson is considering are:

• making changes to the employment tribunal rules to give judges the power to demand deposits from businesses who they think might not pay up
• fixed penalty notices for late payment
• naming and shaming employers who fail to pay out (presumably in a similar vein to that now going to be used for non-payers of the national minimum wage), and
• making sure that people are aware how they can take enforcement action if they are not paid what they are due

The government is also looking at what action it can take to make sure people get their tribunal award when a company has stopped trading. If a company is insolvent, the Redundancy Payments Service can already pay certain elements of an employment tribunal award. Along with raising awareness of this service, ministers are also looking to make sure that rogue directors are not able to continue to evade their responsibilities.

The Payment of Tribunal Awards 2013 study examined whether awards were paid, reasons for non-payment and the effect of enforcement action. One of the most common reasons for non-payment was that employers simply refused to pay. Other findings included:

• Just under half (49%) of claimants who had been granted an award by a tribunal had been paid the award in full, and a further 16% had been paid in part. This amounts to 64% of all claimants, and leaves more than a third who had not received any money at all, even after in some cases enforcement action was taken.
• Of those who were not paid their award without resorting to enforcement, almost half (46%) pursued enforcement through the courts (22% of all claimants).
• Claimants with larger award values (over £5,000) who were not paid their award were more likely to report that the company had become insolvent or ceased trading.
• The reason most commonly given for non-payment was that the company no longer existed/had become insolvent or otherwise ceased trading (37%). One in three claimants whose award was not paid (29%) stated that the employer had refused to pay, and 17% were unable to locate the employer.
• The main reason given for not using enforcement to pursue an award is lack of awareness. Overall, only 41% of claimants agreed that they were aware of the options open to them if their employer did not pay their award (falling to only 28% of those who did not use enforcement).

TUPE reform

Following consultation on changes to the Transfer of Undertakings (Protection of Employment) Regulations 2006, the government has now published draft regulations to implement its proposed amendments.
 
These are intended to be laid before Parliament in December 2013 and to come into force in January 2014.