Employment update

Employment reform

The Enterprise and Regulatory Reform Bill, which will usher in a new 'ERRA' in employment law, had its second reading on 11 June. The main changes will evidently 'improve our employment tribunals' and 'scrap unnecessary red tape and help ensure that people who work hard and do the right thing are rewarded'. On the claims side, they include compulsory pre-claim ACAS conciliation and an extension of time for filing the claim if conciliation fails, a feature which will hopefully not create a whole field of satellite litigation about time limits. Determination of low-value claims by agreement without a hearing, and provision for most appeals to be heard by a judge alone in the EAT.

As to substantive provisions, the bill gives powers to the secretary of state to reduce the maximum compensatory award for unfair dismissal '“ currently £72,300 '“ potentially to as low as the median annual salary '“ currently £26,000. It also introduces an amendment to the law on whistleblowing to provide that the claimant must '“ reasonably '“ believe his or her disclosure to have been in the public interest. And it makes provision for financial penalties for employers if they breach employment rights with aggravating features, the penalty to be no more ?than £5,000.

The Beecroft report submitted in October 2011 was finally published by BIS on 21 May 2012 although evidently in a hurry as the text needs type proofing. Some of its ideas have already been adopted; for example, extending the service requirement for unfair dismissal protection from one to two years. Others probably will be: reducing the consultation time for collective dismissals to 30 days and removing employer liability for third-party harassment under the Equality Act 2010. In fact that Act is getting a whole consultation to itself now that it has been in force for a couple of years. The Beecroft report's main novel idea of a compensated no-fault dismissal procedure has generated huge debate but mostly of a political or ideological nature, with insults hurled around on both (all) sides and little calm consideration of pros and cons. Similarly, the potentially useful but tricky idea of 'protected conversations' mooted by the coalition in its early days, has not seen the light of day, apparently because it is proving difficult to delineate the operable circumstances effectively.

Disciplinary proceedings

Judges have been busy too. In Mattu v University Hospitals of Coventry and Warwickshire NHS Trust [2012] EWCA Civ 641, the Court of Appeal has reconsidered the extent to which an employer's disciplinary proceedings amount to a determination of civil rights such that article 6 of the Human Rights Act is engaged (see Kulkarni v Milton Keynes Hospital NHS Foundation Trust [2009] EWCA 789).

In Mattu the appellant wanted to argue that his case should have been heard by an independent tribunal and that he should have had the right of legal representation. The CoA dismissed his claim and has expressly disapproved the dicta in Kulkarni. An employer's disciplinary process does not usually amount to a determination of civil rights even if in practice the dismissal makes it harder (much harder) for the individual to get another job in his chosen profession. For article 6 to be engaged, a number of criteria must apply, including the fact that the proceedings must themselves be determinative of the right to work (for example, GMC hearings) such that a determination against the individual would make it virtually impossible for them to continue in their chosen profession.

Contractual obligation

Two important contract decisions were handed down. In Attrill and ors (1) and Anar and Ors (2) v Dresdner Klainwort Ltd (1) Commerzbank Ag (2) [2012] EWHC 1189 (QB,) the High Court at first instance held that a large group of employees were entitled to a guaranteed bonus pool even though the bank had not made the anticipated profits. It held that where an employer, with the interests of staff retention in mind, made a clear and unequivocal oral promise in a general, non-mandatory informal employee meeting to pay guaranteed performance-based bonuses, its announcement created a contractual obligation which passed to its transferee. This was not just an expression of intention but a contractual promise. Given the amounts at stake the case will no doubt have a way to go.

In Dundan Cavenagh v William Evans Ltd [2012] EWCA Civ 697, the Court of Appeal has revisited the scope of the authority in Boston Deep Sea Fishing v Ansell [1888] for the proposition that employees should not benefit from their own wrong doing, even if the employer is unaware of the wrong doing at the time of dismissal.

In Cavenagh the employer agreed to pay its managing director six month's pay in lieu of notice under his contract of employment following a notification of redundancy to him. It subsequently discovered that he had wrongly procured company funds to pay his mortgage and refused to pay the contractual notice pay. The employee successfully argued that the employer had made an election to terminate the contract by contractual payment in lieu of notice and that therefore the sum was owed as a debt.
This was to be distinguished from the Boston Deep Sea Fishing rule, which only applied to defeat a claim for damages for wrongful termination which could be defeated by proof of an earlier repudiatory breach subsequently discovered by the employer. It seems odd that employers who are seeking to defend a wrongful termination claim have more protection from wrong doers than those who ?terminate lawfully but then discover the repudiatory misconduct.

TUPE update

And finally, TUPE case law continues to establish increasingly stringent tests for what amounts to organised groupings of employees in service transfer type cases, not to mention the government consultation on proposed changes, which I will deal with in a round up later in the year.

In Seawell v Ceva Ltd and Moffat, the claimant was employed by Ceva as the logistics manager for the Seawell contract and spent 100 per cent of his time on it. Seawell decided to take the contract work back in house and the claimant claimed successfully before the tribunal that he was wholly assigned to the activity and should have transferred. The EAT disagreed. His work was not co-terminous with the transferred activities for which there was no organised grouping of employees within Ceva so the claimant could not have been assigned to those activities because they weren't consciously grouped as such by the putative transferor in the first place. In this regard, the previous EAT authorities of Argyll Coastal Services v Stirling (EAT S/0012/11) and Eddie Stobart Ltd v Moreman (EAT/0223/11) were to be followed.

Sue Ashtiany is a principal at Ashtiany Associates, consultant with Nabarro LLP and government ambassador for diversity in public life