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November 2011 Updates

Employment law reform

As has been widely speculated, the government has announced that:

  • It will be increasing the unfair dismissal qualifying period from one year back up to two years with effect from 1 April 2012. In most instances, therefore, to bring an unfair dismissal claim thereafter, an employee will need to have accrued two years? continuous service with the employer they are bringing their claim against.
  • It will be introducing a system of fees which Claimants will need to pay when lodging and continuing with Employment Tribunal claims from April 2013 onwards. The precise level of those fees is subject to further consultation.

The government has announced that it is also considering the possibility of introducing:

  • Protected conversations. These would enable employers and employees to sit down and have frank conversations with one another about things such as poor performance and possible termination of employment, without the employee being able to use them as the basis for a constructive unfair dismissal claim. Protected conversations would never be "off the record" to the extent that they involve unlawful discrimination.
  • Lower minimum periods for collective redundancy consultation, reduced down to 60, 45 or 30 days.
  • The compulsory lodging of all claims through Acas so that they are subject to compulsory conciliation/mediation before they can proceed through to the Employment Tribunal.
  • Options for a "rapid resolution scheme" to enable simple claims to be settled within three months.
  • Changes to the Employment Tribunal system, depending upon the outcome of a fundamental review of its rules of procedure, which is currently underway, and is specifically looking at possible changes to cost awards and deposit orders.
  • Changes to the Equality Act 2010, to clarify that compromise agreements can be used to settle discrimination claims.
  • Changes to the law on whistle blowing to exclude complaints for breaches of an employment contract.
  • Financial penalties which Employment Judges would have the discretionary ability to levy against "bad" employers who breach employment rights and which would be payable by them to the Exchequer.
  • The ability for Employment Judges to sit alone (instead of on a three person panel) when hearing unfair dismissal cases.
  • The portability of CRB checks, to prevent the need for fresh checks to be carried out when people move jobs.
  • Changes which would "modernise" maternity and paternity leave, with an emphasis on greater involvement for fathers.

The government has also said that it is still considering the possibility of introducing "compensated no-fault dismissals" to benefit small employers and further reduce the number of unfair dismissal claims which can be brought. This concept would allow a small employer (of 10 or fewer employees) to dismiss an employee on notice, or with payment in lieu, without having a potentially fair (or, indeed, any) reason for doing so and without following any form of procedure prior to doing so.

Considering when a disciplinary policy is contractual in effect

In Hussain v Surrey and Sussex Healthcare NHS Trust, the High Court considered when the contents of an internal disciplinary policy can become contractual in effect.

It decided that relevant factors include:

  • The importance of the provision to the contractual working relationship.
  • The level of detail set out by the provision.
  • The certainty of what the provision required.
  • The context of the provision.
  • Whether the provision was workable in practice.

Dr Hussain brought a claim for breach of contract against the defendant Trust in respect of disciplinary proceedings brought against her.

In this instance, the Court held that key provisions within the Trust?s disciplinary policy were apt for incorporation into Dr Hussain's contract of employment and that they were so incorporated.

Conducting disciplinary procedures fairly and without undue delay

Is there a term implied into contracts of employment to the effect that disciplinary processes must be conducted fairly and without undue delay? In Dr Lim v Royal Wolverhampton Hospitals NHS Trust, the High Court held there is and that, in a given case, it may also be an express one.

Dr Lim is a consultant anaesthetist employed by the defendant Trust. Dr Lim's breach of contract claim concerned a proposed combined capability and conduct hearing.

In respect of the proposed capability hearing, Dr Lim claimed that the Trust had breached his contract of employment by referring him to a capability panel without first referring him to the National Clinical Assessment Service (NCAS) for an assessment as to whether any of the deficiencies in his practise could be addressed by way of an educational or organisational action plan.

The Court held that the Trust was required to refer Dr Lim to NCAS and to await and then duly consider its findings. Only then could the Trust fairly proceed to a capability hearing, if appropriate. As such, the Trust was held to be in breach of contract.

In respect of the proposed conduct hearing, Dr Lim argued that the Trust had breached his contract by seeking to revive allegations of misconduct some three years after the allegations which it was based upon had occurred. On the facts of the case, the Court did not find the Trust to be in breach of contract on this point.

Holiday pay and sickness absence

It is clear from previous case law that employees continue to accrue annual leave entitlement during sickness absence and that they can choose to take annual leave at the same time as being absent due to sickness. However, in Fraser v St George's NHS Trust, the Employment Appeal Tribunal has decided that an employee cannot claim holiday pay if they have not given their employer prior notice that they wish to take their annual leave.

In this case, the Claimant was injured at work and was on sick leave for four years until her dismissal. For the last two years of her employment, she received no pay. When her employment ended, she sought four weeks? holiday pay in relation to each of those two years.

The Employment Appeal Tribunal held that the claim should fail. It decided that an employee is only entitled to holiday pay if they have (a) actually taken the leave to which the pay relates and (b) complied with the rules set out in the Working Time Regulations around the giving of notice for taking annual leave.

Lodging pleadings with the Employment Tribunal

In Yellow Pages Sales Ltd v Davie, the Employment Appeal Tribunal considered whether an Employment Tribunal Claim Form (otherwise known as an ET1) has been validly lodged where (a) it has been sent to the correct fax number and (b) the sender has a report confirming that all pages have been sent but (c) the Employment Tribunal?s fax machine does not print it out due to a technical error.

The Employment Appeal Tribunal decided that it is deemed to have been received and, therefore, validly lodged.

Applying the statutory cap to unfair dismissal compensatory awards - taxation issues

The Employment Appeal Tribunal has decided, in Hardie Grant London Ltd v Aspden, that you have to "gross up'" a compensatory award for unfair dismissal to allow for taxation before you apply the statutory cap.

The Claimant won a constructive dismissal claim. Tax was due on the amount by which her compensatory award exceeded £30,000. The Tribunal applied the statutory cap of £65,300 as at the effective date of her termination of employment. Having done so, it then grossed up her compensatory award to £87,166.67. It wanted to give her a net award "in her pocket" pitched at the maximum amount of the statutory cap.

The Employment Appeal Tribunal held that this was the wrong approach and that grossing up must occur before the statutory cap is applied. It therefore reduced the compensatory award back down to £65,300.


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SRA number 404293