what's in the news

Thanks to the recent revelation that five directors at Lloyds Banking Group, including the former Chief Executive, will be asked to return a combined total of more than £1 million in bonuses, the topic of bankers’ remuneration is well and truly back on the media agenda.

So-called “payments for failure” made at the various financial institutions which have received enormous amounts of support from public funds have been the subject of much tabloid ire throughout the economic downturn.

The arguments in favour of facilitating “clawback” or reversal of bonus and share awards have had added weight since the FSA’s determination that remuneration structures in banks may have encouraged some employees to ignore long-term risks in favour of returning short-term gains which ensured that they earned their incentives.

Any company considering clawback will have to be very sure of their legal footing before attempting to force its employees to return shares acquired under employee share options (or other share incentive awards), or to pay over the proceeds of the sale of such shares, or to pay back cash bonuses. Notwithstanding the fact that such action could jeopardise the future incentive effect of share options and bonus schemes and, more seriously, might undermine the entire employment relationship, effective clawback may be difficult for three key reasons:

Firstly, unless the terms of a share award or bonus clearly specify that shares or cash can be clawed back in certain circumstances, there will be almost no chance of an employer being able to recover shares, the proceeds of shares or bonus payments from employees.

Second, clawback might be prohibited as an unlawful penalty; a contractual term which obliges A to make a specified payment to B if A is in breach may not be upheld by the courts if the payment for breach is found to be a “penalty” clause.

Finally, a clawback provision in a share incentive or bonus scheme may be triggered on a breach by an employee (or former employee) of a restrictive covenant. If so, the clawback provision might be deemed to be an unenforceable restraint of trade.

Despite these difficulties, we consider that properly constructed clawback provisions can be successfully deployed in the right circumstances. For more information please contact:

Mark Symons
Partner, Employment
T: 0118 957 0340
E: msymons@pitmans.com

Richard Devall
Partner, Employment
T: 0118 957 0602
E: rdevall@pitmans.com

Thanks to the media and public figures speaking out the awareness of cyberbullying is ever increasing. Due to the rise of the internet, the use of smart phones and the increasing popularity of social media sites such as Twitter and Facebook cyberbullying is widespread. It doesn’t just occur during work time or school time it can occur 24 hours a day, 7 days a week. Cyberbullying may be virtual but this does not mean it is not happening or that it should be ignored. 

Cyberbullying can take on many forms, through text messaging, phone calls, pictures and emails through to posts on social network sites and account hacking. This bullying is now becoming a form of serious harassment. The main problem with cyber bullying is that it is incredibly hard to monitor and prevent. Social media sites provide people with anonymity and so tracking down the culprits can be an impossible challenge. People can assume a fake profile or assume many identities.

Currently the law in place is reactive rather than proactive. Instead of providing people with steps they can take to protect themselves from cyberbullying the law instead only provides for compensation once the cyberbullying has taken place. Often people are unaware of their legal rights and what steps they can take.  People who are subject to cyberbullying should speak out and record everything, keep texts, take screenshots etc.

Cyberbullying can have a significant impact on a person’s mental and physical health, it can affect self esteem, confidence and mental health. It may be possible for someone to bring a personal injury claim against their bullies as a result of this.

The Workplace

Employers should take a clear stance on all types of bullying and make it clear it is not acceptable. It is standard practice to have anti-harassment and bullying policy in force.

If an employer fails to take action to stop bullying then there could be a breach of their implied duty of trust and confidence which could result in an employee bringing a claim. At present an employee cannot bring a claim for cyberbullying alone in the Employment Tribunal. It has to be brought along with discrimination or harassment, yet this is likely to go hand in hand with cyberbullying.

An employer may be vicariously liable for the actions of their employees. If an employee is cyberbullying their colleague then an employer may find themselves included as party to a legal claim. An employer is unlikely to be able to argue successfully they were not responsible because the bullying took place outside of work time especially if they were made aware and failed to take steps to reprimand the bully in question.

The Law

Cyberbullies are potentially breaching many laws with their actions, a summary of which is set out below:

Protection from Harassment Act 1997
A person is not allow to behave in such a way which will amount to harassment of another and which he knows or ought to know amounts to harassment. The individual can obtain an injunction against the person causing the harassment. It is also a criminal offence so a person can be guilty of harassment if they have harassed the person causing distress and harm on more than one separate occasion. By making it criminal the police can be involved and they can investigate the harassment and use their powers to identify the harasser if they are not known. It is also a separate offence if the person’s actions cause another to fear violence will be used against him on at least two different occasions.

Communications Act 2003
A person will be guilty if they send an offensive or grossly offensive message or an obscene indecent image through a public electronic communications network or cause such communications to be sent. Likewise someone will also be liable if they send a message which they know to be false and it is sent for the purpose of causing annoyance, inconvenience or anxiety. It is also an offence to improperly use a public electronic communications network.

Defamation Act 1996
If comments are damaging someone reputation, then they are potentially defaming them. Internet hosts should be notified about this to put them on notice and they should remove the allegedly defamatory material quickly. By putting them on notice they will lose the benefit of the innocent dissemination defence afforded to them if they fail to act.

Malicious Communications Act 1988
It is an offence to for one person to send to another any communication or article which coveys a threat, false information or an indecent or grossly offensive message and the result of such communications causes the recipient distress or anxiety. Communication covers hard form communication and also electronic communications.

The penalty for falling foul of the Communications Act and the Malicious Communications Act is imprisonment for up to six months, a fine or both.

What can you do?

If you are experiencing cyberbullying through social media sites such as Facebook and Twitter then such sites will have policies in place which mean you can report such incidents. Facebook and Twitter, for example, allow you to report abusive content along with fake profiles. As well as reporting such incidents you can block people from being able to contact you. The sites will often offer advice on what you should do if you are experiencing bullying, for example Facebook gives tips on what to do.

An individual should also review the privacy settings on their Facebook account to ensure it can only be viewed by certain people, for example your friends. Individuals should also be wary of how much information they detail about themselves. If personal information is revealed it could lead to someone being able to impersonate you. Be wary of accepting a stranger’s friend request as this could have undesirable consequences, as highlighted by Cher Lloyd.

If an individual is receiving abusive texts, pictures or phone calls then they can contact their mobile network operator to get a number barred. This means the person will no longer be able to communicate with the individual.  This may not stop the bullying entirely but by taking positive steps the bully will be stopped in their tracks to an extent.

People do not need to stand back and tolerate such behaviour; there are steps an individual can take against their bullies.

Schools

Despite the age restrictions imposed on social media sites, more and more children are having profiles online. Children are often the most vulnerable to cyberbullying and as highlighted in recent media stories, they are often reluctant to speak out and seek help which can have serious consequences. Children should be educated in schools about cyberbullying and what actions can amount to cyberbullying and the implications cyberbullying can have. By raising awareness children will know what to look out for and should be more willing to speak out.

As you will see there are many steps an individual can take against cyberbullies and we are here to help assist.

If you would like to discuss any of the legal issues raised in this article further please contact:

Mark Symons
Partner, Employment, Cyber Risk Management
T: 0118 957 0340
E: msymons@pitmans.com

Those in the hotel business will have been following with interest the latest developments in the referral of TripAdvisor’s UK advertising to the Advertising Standards Authority and the consequential requirement that they remove the word “trust” and “trusted” from their site in connection with hotel reviews posted in an unregulated way by members of the public (see here for example).

The Issue

Just as the issue has been enjoying attention in the national press, we have been conscious of increasing levels of concern among hotelier clients in relation to internet reviews of their businesses. Such concerns are by no means confined to any single provider of such services. These concerns encompass a perception both that their businesses are being damaged by negative reviews being placed online, and that their competitors are perhaps less scrupulous about the sources for comments on the same websites, intended to bolster business.
 
With a move away from travel agent bookings, and towards the undoubted benefits of being able to compare a wide variety of packages and destinations over the internet, these are concerns which, if not addressed, will become all the more pressing. They have undoubtedly been accentuated by the traditional January rush to make bookings for the summer holidays, and the fact that in the current economic climate, consumers are becoming ever more eager to ensure that their discretionary spending is being applied to experiences in which they can have confidence.

With those points in mind, a single adverse review can have a significant impact on a business’ revenue and goodwill, if it attracts attention and consequently prominence in whatever online forum it is published. The question for an affected business in those circumstances is what can be done about it.

It is perhaps unsurprising that TripAdvisor should have come in for special scrutiny in this regard. It is one of the world’s biggest travel resources featuring over 40 million reviews of hotels and restaurants a month worldwide and for many travellers the website has proved invaluable when they are choosing a hotel. By assessing the reviews placed with them TripAdvisor scores each hotel and restaurant on a percentage basis with a business’ rating changing on an on-going basis subject to the quality of the reviews that are posted online by the consumer.

Equally, the implications of the ASA’s ruling will be felt across an industry where individual feedback and recommendations have fast become the currency of choice for promotional purposes. The ruling in essence refused to rule out the possibility of such review systems being mis-used by unscrupulous competitors or vindictive private individuals, notwithstanding the relatively sophisticated systems of checks and moderation which TripAdvisor has in place. As such, any site which follows the same model, and in particular those where reviews remain permanently on a site unless withdrawn by the reviewer or proactively removed by the site owner, is by implication tarred with the same scepticism about the authenticity of its content.

“Negative” reviews

There are now many reported incidents where guests have posted negative reviews on comparison websites, and the establishments concerned have considered the review to be untrue or misleading. This is proving to be a particular concern as it is not necessary for the reviewer to have attended the hotel or the restaurant concerned to write a review, such that a review can be written by a disgruntled member or ex-member of staff, or a competing business looking to seek a competitive advantage.

It is also apparent that there is a small but growing band of so called “self appointed” reviewers that regularly contribute to these sites, notwithstanding that they have no formal training or understanding of the hospitality business and the standards required by the industry. The reviews provided by these amateur inspectors appear to be particularly damaging for the independent hotelier and restaurateur.

“Positive” reviews

Any service provider knows that generating spontaneous positive feedback is rather harder than the negative type. There is, as such, a natural self-selection on such sites in favour of negative feedback. While it cannot be condoned, it is therefore perhaps nevertheless unsurprising (particularly with the added pressures caused by the present economic environment) that some businesses have gone to the lengths of posting positive reviews on to comparison websites with the intention of raising their rating. We are aware of at least one example where five positive reviews were posted on to such a website with regard to one hotel, each review containing the same spelling mistakes and thus, in the view of our client, likely to have been posted by the same individual.

What can be done?

It is important to bear in mind that any reputable comparison site will almost certainly contain terms of use and a code of conduct which users must sign up to (probably on a “click through” basis) before they are able to post content. Demonstrable breaches of those codes of conduct have always been treated seriously, and in light of recent adverse publicity about reliability, it is to be expected that the sites will be making event greater efforts to ensure that genuine complaints are responded to efficiently and effectively.

Equally, of course, it is important to bear in mind that such allegations will need to be carefully considered, and capable of being proved to a relatively high standard, since the consequence for a hotel which is accused of posting fake “positive” reviews can be extremely detrimental. Those consequences might in turn lead to proceedings being issued against the site, which in turn may look to the party who made the original complaint, in order to substantiate their allegations. The prospect of such spiralling litigation deters many small businesses from embarking on such a high stakes course, and suggests that a more pragmatic approach is often required.

A Practical Approach

For small businesses a negative online review may prove personally upsetting and frustrating, even if it is genuinely true, after all of the hard work and effort that is put into running a business. It is inevitable that the distress and frustration will be all the greater where the review is untrue. Nevertheless, short of refusing to engage with the world of online comparisons (which for many is seen as a way to change the travel industry for the better, and in particular to bring small businesses to the attention of a worldwide audience), one approach is to engage with the reviews with a view to making them work for you.

Where a negative review or a number of reviews are posted that are factually wrong and can be shown to have caused the business an actual loss of trade, the incident/s highlighted in the reviews should be investigated and as much evidence as possible gathered to identify the reviewer/s. In the first instance the business should use its right to post a direct response to the negative review on the website as this may assist in negating the review.  If a review or reviews are considered particularly damaging the site operator should then be approached in a constructive manner and asked that the review is removed. As much information should be provided to the site operator as possible to show that the review contained false information or was misleading. Our experience suggests that adopting a collaborative approach with the provider, rather than “shooting the messenger”, often yields the best results.

If at this stage the site operator is not cooperative in removing the offending review, a decision will need to be taken. In the majority of cases, embarking on further disputes will simply result in an additional drain on management time and the business’ resources, which might more effectively be devoted to positive publicity aimed at counter-acting the negative reviews.

In some cases, however, the harm will be so serious, and the risks to the business so severe, that action must be taken. As a preliminary step, the identity of the end user (i.e. the writer of the review) needs to be substantiated so that legal action against them may be considered.  It may prove difficult to progress this matter if the site operator is not prepared to provide the end user’s identity or, once the user’s identity is confirmed, it is established that the user is not based in the UK.

The site operator can be asked to inform the user that legal action is being considered against them, if the operator is not prepared or is unable to divulge the end users identity and ask that the review is removed. Equally, it can be possible to obtain a court order for relatively detailed information about a user’s registration details, and even the IP address from which contributions were posted, where there is compelling evidence of genuine harm having been suffered.

However, pursuing a claim (whether in defamation or by some other route) via the UK Courts is not straightforward and should not be undertaken lightly. The legal costs for such an action could be substantial and there is no guarantee that the damages awarded by the Court, if a claim was successful would cover the costs incurred. That being so, it is always prudent to take informed, practical, advice at an early stage, so that a decision can be made that best suits the needs of the business in question, and is appropriate to the level of the harm that has been done.

David Loosemore
Solicitor, Hospitality Sector
T: +44 (0) 118 957 0240
E: dloosemore@pitmans.com

Will Richmond-Coggan
Director, Defamation/Social Media Law
T: +44 (0) 118 957 0369
E: wrcoggan@pitmans.com

1. Misconduct

The Employment Appeal Tribunal has reminded employers of the issues they should consider before dismissing staff for misconduct. In a separate case, the Employment Appeal Tribunal has held that it is not necessary for an employee’s conduct to be ‘reprehensible’ in order for conduct to be a potentially fair reason for dismissal.

What does this mean?
Dismissal for misconduct will be fair only if (1) the employer has carried out a reasonable investigation into the alleged misconduct of the employee; (2) the employer believes, at the time of dismissal, that the employee is guilty of the misconduct alleged; (3) there were reasonable grounds for the employer having such a belief; and (4) dismissal was a reasonable response in the circumstances.

What should employers do?
Employers should always take specific legal advice before dismissing an employee whether for misconduct or for some other reason. However, employers should be aware that if they believe the employee is guilty of the misconduct their belief does not necessarily need to be correct if there were reasonable grounds for the belief and dismissal was within the range of reasonable responses.
 
2. Discrimination

A Polish female doctor who was subjected to discrimination on grounds of her sex and race has been awarded just under £4.5 million in compensation. The tribunal held the employer and three senior staff members jointly and severally liable to pay the compensation.

What does this mean?
The case serves as a reminder that in cases of discrimination there is no cap on the amount of compensation a tribunal can award and that individuals in an organisation can be found liable to pay compensation as well as the organisation itself.

What should employers do?
Employers should take steps to prevent discrimination and harassment in the workplace.  This may be by ensuring that clear written policies relating to discrimination and harassment are in place, by providing staff with training in these areas and by promoting a culture of compliance with such policies.

3. Disability discrimination

The Employment Appeal Tribunal has held that in a claim for disability discrimination it is necessary for the employee to establish that he was disabled at the time when the alleged discrimination took place.

What does this mean?
A person is disabled for the purpose of employment legislation if he has a physical or mental impairment which has a substantial and long-term adverse effect on his ability to carry out normal day-to-day activities. An impairment is regarded as being substantial if it has lasted or is likely to last at least 12 months. An employee who is experiencing a substantial adverse effect on his day-to-day activities at the time of the alleged discrimination will not, therefore, be regarded as being a disabled person if his symptoms were not expected to persist for 12 months or more.

What should employers do?
Employers should bear in mind that GPs are not always aware of the legal definition of disability and even where they are it will ultimately be for a tribunal, not a GP, to decide whether a person is disabled or not. For this reason legal advice should be obtained where there is doubt as to whether a person is disabled.

4. Upcoming changes

• On 1 April statutory maternity, paternity and adoption pay is to increase to £135.45 per week.
• On 6 April the personal allowance will increase to £8,105, the threshold at which employees pay the higher income tax rate of 40% reduces to £34,371 and the lower earnings limit for primary class 1 national insurance contributions increases to £107. From that date HMRC will have the power to ask an employer to pay a security where there is a serious risk that it will not pay income tax or class 1 national insurance contributions that it has deducted from an employee’s pay.
• On 6 April statutory sick pay is to increase to £85.85 per week.

5. Pensions

From 6 April people in defined contribution pension schemes will no longer be able to contract out of the state additional pension.
 
6. Legal fee indemnities

The High Court has held that an indemnity in a compromise agreement did not oblige the employer to pay a former employee’s legal expenses associated with a criminal investigation into action alleged to have been taken by him when he was an employee.

What does this mean?
Even if the terms of an indemnity relating to the payment of legal fees are wide ranging, it  may only protect an employee from legal professional expenses arising from the ‘ordinary occupational hazards’ of the job and  not cover criminal allegations made against the employee personally.

What should employers do?
Compromise agreements and indemnities intended to cover an employee’s legal expense for addressing criminal allegations should always be explicitly drafted and legal advice should be obtained.
 
7. Overtime

The Employment Appeal Tribunal has held that a worker does not suffer a detriment where he refuses to sign a 48-hour week opt-out, and is then refused an opportunity for overtime by his employer, if the employer is found to have acted reasonably in requiring an opt out from all those working rest days to avoid breach of working time legislation.

What does this mean?
Employers can justify decisions to refuse an opportunity for overtime if the reason for the refusal is to enforce a reasonable and necessary policy designed to ensure that its employees who exercise their right not to opt out of the 48 hour week maintain that right.

What should employers do?
Employers should be prepared to justify their decisions on overtime and should ensure that they comply with their duty to take reasonable steps to ensure the 48-hour limit is complied with.
 
8. Redundancy

The Employment Appeal Tribunal has held that an employee can act reasonably in refusing an offer of suitable alternative employment even if a hypothetical reasonable employee would have accepted the employer’s offer.

What does this mean?
When considering whether a refusal of suitable alternative employment is unreasonable, it is necessary to consider whether the employee in question acted reasonably in refusing the offer. This will involve a consideration of whether the reason, given by the individual, constituted a sound and justifiable reason for turning down the offer.

What should employers do?
Employers should take specific legal advice when making staff redundant, particularly in relation to the issue of refusal of suitable alternative employment.
 
9. Redundancy

The Employment Appeal Tribunal has held that an unspecific challenge by an employee to redundancy assessment criteria did not entitle the employee to see interview notes relating to an application for an alternative position within the business prior to the decision to dismiss.

What does this mean?
An employer is under no duty to provide a copy of interview notes where an employee has not made any specific complaint or challenge to the scoring or interviewing process undertaken.

What should employers do?
Employers should  keep in mind that an employee may be entitled to obtain the notes of his/her interview on a redundancy related job application, though generally only if making such a specific challenge.

10. Vicarious liability

The Court of Appeal has ruled on two cases involving the question as to whether an employer is liable for an assault carried out by an employee on a fellow worker in response to lawful instructions. In one case, the employer was found vicariously liable where the employee  attacked his manager in response to a reasonable instruction given by his manager. It was held the attack was sufficiently related to the employment in time and space.  In the other there was no vicarious liability where the employee, was telephoned at home and asked to work an extra shift, cycled to work drunk and attacked the manager there. Although the attack happened on the Employer’s ground, the attack was unconnected to the employee’s employment.

What does this mean?
An employer will be vicariously liable for the actions of their employees where such actions are carried out in the course of their employment. For this purpose there needs to be a sufficiently close connection between the act and the employment.

What should employers do?
Employers should screen their employees’ backgrounds, ensure that they have adequate liability insurance cover in place, and clearly define their employees’ approved areas of responsibility and the scope of their work.

11. Annual leave

The Court of Justice of the European Communities has held that annual leave entitlement cannot be subject to preconditions, such as of attendance at work,  for workers who have been granted sick leave. A requirement on those workers to actually work a certain number of days before the entitlement even arises, for example, will breach the Working Time Directive.

What does this mean?
Any worker, whether he be on sick leave following an accident at work or due to any other sickness cannot have his entitlement to at least four weeks’ paid annual leave affected.

What should employers do?
Employers should ensure that all of their workers receive paid annual leave. The statutory minimum annual leave entitlement is 5.6 weeks or 28 days (pro rata for part-time workers).

12. TUPE Payments

The Court of Appeal has held that payments made under TUPE will be taxable as employment income when they are pay to employees on the transfer of a business. In this case the payments were made to compensate the employee’s for their loss of pension right and also as a way of discouraging industrial action.

What does this mean?
Employers need to be careful about paying a lump sum to their employees because if their employment is one of a number of reasons for their payment then the full amount will be taxable.

What should employers do?
Employers should ensure that where payments are made to their employees for various reasons, they apportion an amount to each reason. Tax and national insurance contributions can then be calculated accordingly.

For further information on this article, please contact Pitmans Employment team.

Mark Symons
Partner, Head of Employment
T: +44 (0) 118 957 0340
E: msymons@pitmans.com

1. Annual leave

The Supreme Court has held that employers who have shutdown periods can stipulate that annual leave be taken during those periods.

What does this mean?
Employers can insist on their employees taking their paid annual leave during periods when they are not required to work. This will be relevant to off-shore workers, teachers who are required to take their annual leave during non-term time, professional footballers, Parliamentary staff, and people who work full-time during the season in the tourist industry.

What should employers do?
Employers who have shut down periods are entitled to insist on their workers taking their annual leave during those periods. However, they should handle requests for annual leave fairly and consistently.

2. Marriage discrimination

The Employment Appeal Tribunal has held that an employer acted unlawfully when it treated an employee less favourably, not just because she was married, but because she was married to a particular man.

What does this mean?
Employees have the right not to be discriminated against by reason of their status, not only of being married, but also of being married to a particular person. The same applies to those in a civil partnership.

What should employers do?
Employers should avoid discriminating against married employees and those in a civil partnership.

3. Discrimination and Harassment

The Employment Appeal Tribunal has held that a culture of tolerance of racist banter which continues after established acts of racial harassment have taken place is capable of amounting to a continuing breach of mutual trust and confidence and, therefore, giving grounds for a claim for unfair constructive dismissal even if an employee resigns some time after the original incidents.

What does this mean?
Employers have a duty to prevent harassment in the workplace and can be liable to their employees if they do not take action.

What should employers do?
Employers should take steps to prevent discrimination and harassment in the workplace.  This may be by ensuring that clear written policies relating to discrimination and harassment are in place, by providing staff with training in these areas and by promoting a culture of compliance with such policies.

4. Bulgarian and Romanian workers

Restrictions on the rights of Bulgarian and Romanian workers to work in the UK have been extended until 31 December 2013.

What does this mean?
Bulgarian and Romanian nationals have no automatic right to work in the UK despite their countries being members of the EU. Those seeking to work in the UK are in most cases required to apply, before commencing work, for an ‘accession worker authorisation document’ and to work in accordance with the conditions in that document.

What should employers do?
Employers who wish to employ Bulgarian and Romanian workers should continue to comply with requirements such as work permits and, if necessary, take legal advice before doing so.

5. Equal pay

The Court of Appeal has held that claims for equal pay can be brought either through an Employment Tribunal or through ‘the ordinary courts’ (the County and High Courts) and that when an ordinary court exercises its discretion to strike out a case the fact that an employee would be deprived of their right to pursue a claim is a relevant factor which should be taken into account and given considerable weight in most cases.

What does this mean?
Employees only have six months to present an equal pay claim in an Employment Tribunal but six years to bring a claim through the ordinary courts. In most cases an employee will still be able to bring an equal pay claim through the ordinary courts even though the time for presenting a claim in a tribunal has expired.

What should employers do?
Businesses who acquire employees under TUPE should obtain appropriate indemnities to protect themselves against liability for any potential equal pay claims arising in the six years prior to the acquisition of the employees.

6. Equal Pay
The Employment Appeal Tribunal has held that a pay differential between employees at the time of their recruitment can justify the continuing differential in subsequent years.

What does this mean?
Employers are free to pay staff who are recruited into similar roles different amounts where there is good reason for it as long as the decision is not tainted by sex. It is, therefore, permissible to pay different amounts where one of the individuals has more experience than another. Having made the decision to pay different rates there is no obligation on the employer to harmonise the levels of pay at a later date.

What should employers do?
Employers should base decisions on pay on objective grounds and be prepared to justify their decisions should the need arise.

7 . National Minimum Wage: Live-in Domestic Staff

The Employment Appeal Tribunal has held that live-in housekeepers  may be  exempt from the National Minimum Wage  if  they live in their employer’s home and are treated as a member of their employer’s family.

What does this mean?
Domestic workers do not need to be paid the National Minimum Wage if they live in their employer’s home and are treated as a member of the family. As to whether a worker is integrated into a family there is no one factor that is decisive but particular regard will be had to the provision of accommodation and meals and the sharing of tasks and leisure activities. Other matters such as the general dignity with which the domestic worker is treated could be taken into account, as could the degree of privacy and autonomy they are afforded and the extent to which, if at all, they are exploited.

What should employers do?
Employers who employ live-in domestic staff and wish to pay them less than the National Minimum Wage should genuinely treat such workers as part of the family. Domestic workers who are exploited are unlikely to be regarded as being family members and would, therefore, be entitled to be paid the National Minimum Wage.

8. TUPE

The Court of Appeal has held that a transfer on an administration cannot be caught by TUPE rules, unlike on insolvency proceedings. As such administrations will not be “insolvency proceedings” for the purposes of the exemption to TUPE.

What does this mean?
Businesses who purchase companies who have been placed into administration will take on the liability under TUPE for the company’s employees. Employees will transfer under TUPE and  will be protected from transfer- connected dismissals.

What should employers do?
Businesses who are considering purchasing a company in administration should be aware of their potential liabilities in relation to staff and take specific legal advice where necessary.

9. TUPE
The Employment Appeal Tribunal has held that for there to be a service provision change under TUPE, the activities carried out by different providers before and after the transfer must be for the same client.

What does this mean?
There will be no service provision change where there is not only a change in contractors, but also a change of client.

What should employers do?
Businesses  who are considering selling should be aware that a change of client may mean TUPE rules do not apply and take specific legal advice as to their liabilities where necessary.

10. TUPE
The Employment Appeal Tribunal has held that there can be no service provision change under TUPE where the activities carried out by the subsequent contractor for the client are not fundamentally the same as those carried out by the first contractor.

What does this mean?
There will only be a service provision change where the activities carried out by an organised grouping of employees remain fundamentally the same. In Enterprise Management Services Ltd v Connect-Up Ltd and the Claimants, a company entered into a framework agreement with the Council which gave them preferred bidder status amongst certain schools. The result was that the Company ended up providing services to the local schools in the area. The contract came to an end and another company was awarded the contract. The crucial difference being that this contact excluded service cover in relation to a matter which had accounted for 15% of the work carried out by the original company. This company also lost 40% of the schools which the original company had provided services to. The EAT held that there were significant differences between the activities and so there was no transfer under TUPE.

What should employers do?
Businesses should be aware that TUPE may not apply where any service provided after transfer is fundamentally different from the one provided before transfer. If in doubt, specific legal advice should be sought.

11. TUPE

The Court of Appeal has held that a particular transfer does not need to be in contemplation at the time that a dismissal is effected in order for the dismissal to be caught by  TUPE.

What does this mean?
Dismissal of staff by an administrator in order to achieve a sale of a company at a future date is sufficient for TUPE to apply and such dismissals will be automatically unfair as they will be for a reason connected with the transfer.

What should employers do?
Businesses who are considering purchasing another business from an administrator should take specific legal advice as to their liabilities under TUPE and consider what indemnities to seek.

12. Employment Tribunal Awards Increase

From 1 February 2012 the limits for employment tribunal awards will increase. The maximum compensatory award for unfair dismissal will rise to £72,300. The maximum basic award for unfair dismissal will increase to £12,900 and the maximum week’s pay for basic award and redundancy pay purposes will rise to £430.

For further information on this article, please contact Pitmans Employment team.

Mark Symons
Partner, Head of Employment
T: +44 (0)118 957 0340
E: msymons@pitmans.com

1. Dismissing an employee for negligence

The Employment Appeal Tribunal has held that in cases of gross negligence dismissal will only be appropriate if the employer has carried out a reasonable investigation into the alleged negligence; if it was reasonable on the basis of that investigation for the employer to believe that the employee had been negligent; if the employer did in fact believe that the employee was negligent; and if dismissal was a reasonable sanction.

What does this mean?
A dismissal on grounds of negligence will be unfair if the employer fails to carry out a proper investigation into the allegations and fails to treat the employee fairly and reasonably.

What should employers do?
Always take specific legal advice before dismissing an employee or taking action short of dismissal, whether for negligence or for some other reason.

2. Payment in lieu of holiday leave

The Employment Appeal Tribunal has held that an employee is only entitled to holiday pay under regulation 16(1) of the Working Time Regulations if he or she has actually taken the leave in respect of which they seek to be paid, and has given notice of their intention to take leave in accordance with regulation 15.

What does this mean?
Employees accrue statutory holiday leave entitlement during periods of sickness absence. However, they will only be entitled to payment in lieu of holiday leave if they have given notice of their intention to take leave.

What should employers do?
Employers are, as a general rule, under no duty to advise their employees of their legal rights. Employers are, therefore, not required to advise their employees that if they don’t request time off they will lose any entitlement they may have to receive payment in lieu.

3. The Pensions Act 2011

The Pensions Act 2011 was passed on 3 November. The Act accelerates the timetables, set out in previous legislation, for increasing the state pension age to 66 and for equalising the state pension ages of men and women. The Act also contains a number of measures which amend the automatic enrolment provisions for workplace pension schemes.

What does this mean?
From April 2016 the state pension age for women will rise, equalising with the state pension age for men of 65 by November 2018. Between December 2018 and October 2020 state pension ages for both men and women will be increased from 65 to 66. In addition to these changes, the Chancellor announced on 29 November 2011 that the increase of the state pension age to 67 has been brought forward and is now set to take place between April 2026 and April 2028 instead of between 2034 and 2036.

Subject to employer staging dates, employees aged 22 years or older who have not reached pensionable age will need to be automatically enrolled into a workplace pension from 1 October 2012 if they earn £7,475 or more. However, there is an optional waiting period of up to 3 months before the duty to automatically enrol an employee commences.

What should employers do?
Employers should check their staging date. (Employers with fewer than 50 persons in their largest PAYE scheme will not be staged in until after the end of this Parliament.) More information on staging dates can be found here.

In the meantime, employers should start thinking about updating their employment documentation such as contracts of employment so as to allow for employee and employer pension contributions.

4. Disciplinary proceedings

The Employment Appeal Tribunal has reminded employers, in giving judgment in a recent case, of the need to act reasonably both when initiating and conducting disciplinary proceedings.

What does this mean?
Employers who make allegations against their employees without there being an adequate basis for making such allegations and who do not act reasonably when conducting disciplinary proceedings may be liable for unfair dismissal.

What should employers do?
Employers should always take specific legal advice before dismissing an employee or taking action short of dismissal.

5. Whistle-blowing

The Employment Appeal Tribunal has held that dismissal is fair where misconduct was the reason for dismissal and the dismissal was not connected with the making of a protected disclosure by the employee.

What does this mean?
Where a dismissal is connected with the making of a protected disclosure by the employee the dismissal will be automatically unfair. However, employees who make protected disclosures are not entitled to blanket protection and can still be dismissed for misconduct or other fair reasons.

What should employers do?
Employers should objectively assess the circumstances and consider whether they have grounds for a fair dismissal. Always take specific legal advice before dismissing an employee or taking action short of dismissal.

6. Vicarious liability

The High Court has held that there need not be an employment relationship for vicarious liability to exist.

What does this mean?
A party can now be vicariously liable for the wrongdoings of another, even if they are not employer and employee, as long as there is a close relationship between the two of them. Where the question of vicarious liability is an issue it will be necessary to look at all the surrounding facts and circumstances when considering the nature of the relationship. In particular, it will be necessary to consider the nature and purpose of the relationship, whether tools, equipment, uniform or premises are provided to assist the performance of the role, the extent to which the one party has been authorised or empowered to act on behalf of the other, and the extent to which the wrongdoer may reasonably be perceived as acting on behalf of the authoriser. The extent to which there is control, supervision, advice and support will be of relevance but not determinative.

What should employers do?
Employers should bear in mind that in theory they could now be vicariously liable for the actions of third parties such as independent contractors if the relationship is a particularly close one. Employers who are concerned that such liability may exist should take legal advice and, where appropriate, ensure that they have adequate insurance and indemnities in place to cover such liability.

7. Equal pay

Comparators who work at different places but are employed on common terms and conditions are able to bring equal pay claims before the Employment Tribunal. The employment judge’s decision that employees and their comparators who were employed on common terms and conditions could bring a claim for equal pay was upheld by the Inner House of the Court of Session. The employees in question were people who worked in schools, hotels, libraries and their comparators were gardeners, gravediggers and road workers.

What does this mean?
If a claimant can show that a comparator could move to the claimant’s place of work and continue to work on existing terms and conditions, common terms and conditions would apply and so could give rise to an equal pay claim.

What should employers do?
Employers should be careful when employing people at different establishments to ensure they are not comparators, or if they are, that they are paid equally. Legal advice should be taken when looking at this in relation to equal pay.

8. Trade union activities

Trade Union officials are entitled to special protection (automatic unfair dismissal rights) when conducting trade union activities. The Employment Appeal Tribunal has held that opinions expressed by a trade union official, at a meeting during a redundancy consultation process and, which were made on behalf of other workers as well as himself amounted to trade union activities.

What does this mean?
The employee was found to be dismissed for an automatically unfair reason as the reason for his dismissal was due to his trade union activities.

What should employers do?
Employers should treat disciplinary cases involving trade union officials with caution and always take specific legal advice before making a dismissal.

9. Employment Status

The Upper Tribunal dismissed an appeal from Weight Watchers (UK) Limited (the “Company”) regarding the status of their Weight Watchers leaders. The Company believed them to be self employed and not an employee for tax purposes. The Upper Tribunal disagreed and found they were employees. The Upper Tribunal looked at the degree of control the Company exercised over the leaders and the reality of the situation, not just the documentation in place.

What does this mean?
People who Weightwatchers thought were self employed are actually employees and thus they now face a huge tax bill. The Employment Tribunal has given a clear warning that they will ignore any documentation if they do not accurately reflect the true position.

What should employers do?
Employers should ensure they regularly review their documentation to ensure they reflect what is actually happening in practice. Employers would also be well advised to ensure they have provisions in place that ensure they can recover tax and national insurance contributions from their employees.

For further information on this article, please contact Pitmans Employment team.

Mark Symons
Partner, Head of Employment
T: +44 (0)118 957 0340
E: msymons@pitmans.com

As part of its continuing efforts to stimulate the UK’s ailing economy and halt the trend towards increasing levels of unemployment, the Government has turned its attention to making wide-sweeping changes to the regulation of employment relations.

The aim is to make UK labour law more business-friendly by easing employers’ fears about the consequences which might arise should the employment relationship turn sour. It has been argued that increased flexibility and confidence will encourage employers to employ more people and thus boost the economy.

The latest part of this process saw the Business Secretary, Vince Cable, announcing plans which will, if implemented, “radically reform employment relations”.

The proposed reforms are as follows:

Reform
Introducing a fee tier system when filing a claim at the Employment Tribunal. The system will either be one of the following:

• A fee paid when a claim is lodged and then a further fee prior to any subsequent hearing; or
• A fee paid when a claimant is seeking more than £30,000.

We say
- It is unusual to impose fees which restrict access to the courts or Tribunals for that purpose rather than funding the courts or Tribunals. Such a system would, it is hoped, discourage employees from engaging in so called “fishing trips” to see what financial benefit they might squeeze out of their employer by using the threat of an Employment Tribunal claim as leverage; the requirement to pay a fee is likely to put off such Claimants. However, there are a lot of very determined individuals who are likely to find the money to do this.

Reform
- Increasing the qualifying period for unfair dismissal to two years on 6 April 2012. This will give employers more time to identify potential under-performers or trouble-makers and weed them out of their organisation with less fear of reprisal.

We say
- There must be doubt whether this will achieve its objective because one suspect’s employers may still let people slip over the two years and discrimination claims could still be brought by employees with shorter service.

Reform
- Closing a “loop hole” in the law on whistle blowing by ensuring that employees will no longer be able to “blow the whistle” on breaches of their own employment contract.

We say
- This would be a major change and protect employers from a sizeable proportion of the whistle blowing claims that are currently raised. The move will have even greater resonance due to the increase in the unfair dismissal qualification period. This is because where an employee is able to prove whistle blowing, their dismissal is automatically unfair and there is no need for them to establish the necessary period of continuous service; for this reason alone, for some time there has been a substantial benefit in employees pursuing whistle blowing claims.

Reform
- Consulting on the possibility of introducing “protected conversations”. This will provide employers with a level of comfort as they will be able to discuss certain issues with their employees, such as performance, without it being able to be used against them.

We say
- It will be interesting to see how protected conversations will interact with discrimination issues; if a protected conversation includes evidence of or an act of discrimination, will the conversation still be protected? One would expect that it would not protect acts of discrimination but will such a conversation protect evidence of discrimination? The Government has said discrimination will not be protected but until the Consultation is launched it is unclear how they will do this. There are too many ifs and buts at present to know whether the introduction of protected conversations could be a good thing.

Reform
- Seeking evidence on introducing a no fault dismissal for micro firms (those with less than 10 employees).

We say
- This would effectively allow such businesses to dismiss staff without justification providing that they pay affected employees a standard settlement. No comment has been made about when evidence is to be submitted yet; however it has been reported that Mr Cable is himself not a supporter of this reform.

Reform
Other measures set out by Mr Cable that are aimed at cutting employment related red-tape include:

- Seeking evidence on the possibility of simplifying TUPE.

- Seeking evidence on the merits of reducing the statutory consultation period required for when making collective redundancies to either 60, 45 or 30 days. Currently it is 90 days.

- The deadline for submitting evidence to both measures above is 31 January 2012.

- Consulting in relation to Compromise Agreements with a view to simplifying them.

- Reviewing and simplifying 17 National Minimum Wage regulations. These regulations will be merged into one consolidated set.

- Making CRB checks available online from 2013 and allowing them to be kept up to date subject to a fee.

- Reviewing and amending the laws on paternity and maternity leave to reflect the modern era. Parental leave is now shared and so the rules on parental leave need to be amended to allow flexibility.

We say
It is all very well considering bringing in all these changes to try to make life easier for employers but one of the main problems that employers have faced is the constant stream of legislation and case law on employment issues. Having to deal with further changes will impose its own burden.

Reform
- Enforcing a rule that all claims must go through ACAS first before they can be lodged at an Employment Tribunal, the aim being that most claims will be settled by conciliation.

- The possibility of a “Rapid Resolution Scheme”. A full consultation will take place before any decision is made.

- The Tribunal will also have the power to impose financial penalties on an employer who loses a claim. This is in addition to any damages awarded and can be up to £5,000 (with a 50% reduction if paid quickly). Any penalty will be payable to the Exchequer. This is hopefully not as unwelcoming as it sounds as it is down to the Tribunal’s discretion and is likely to only be awarded where exceptional circumstances are present.

We say
We see lots of evidence of the Employment Tribunals being stretched. Claimants may be keener to settle through ACAS if they can avoid a fee. It is hoped the overly-burdened Employment Tribunal system will be given some respite with the implementation of the above changes.

For further information about these proposals or if any of the proposals will affect you or your employees then please do not hesitate to contact Pitmans Employment team.

Mark Symons
Partner, Head of Employment
T: +44 (0)118 957 0340
E: msymons@pitmans.com

High-profile reports such as the BBC Panorama’s uncovering of shocking mistreatment of mentally ill patients at the Winterbourne View care-home or this week’s revelations of financial mismanagement at Japanese electronics company Olympus– causing a fall in share price by as much as 30% – demonstrate the power of whistleblowing and the negative effects a public disclosure can have on a business.

It is clear that employers have an interest in uncovering wrongdoing or dangerous practices within their organisations, whilst also managing what information (if any) is spread to the outside world. Encouraging the reporting of these matters through internal channels may help a business avoid serious accidents, fraud, regulatory breaches or financial scandals.

The law protects whistleblowers from dismissal or other detriment, including reprisals meted out by colleagues where the employer deliberately omits to take action to stop it, as illustrated by the recent Court of Appeal decision in NHS Manchester v Fecitt and others – a case that shows the law could still do more to protect whistleblowers from their own colleagues. In Fecitt, the claimants failed to establish that they were unlawfully victimised for making protected disclosures, despite the fact that they were subjected to unpleasant treatment by a number of other members of staff as a direct result of having made those disclosures.

Defending whistleblowing claims can involve significant management time and legal costs, which are usually non-recoverable, and there is no cap on the amount of compensation that can be awarded against an employer. Furthermore, an external disclosure of suspected malpractice, especially to the press, might lead to negative publicity for a company and damage staff morale. Any claim brought by a whistleblower who believes they have suffered reprisals is likely to have a similar effect.

And now it is not just civil penalties that companies need to be wary of in respect of whistleblowing. The Bribery Act 2010 came into force on 1 July 2011 and contains a new strict liability corporate offence that means criminal sanctions may be applied where an organisation fails to prevent bribery by a person “associated” with it. An available defence is to show that the organisation had in place “adequate procedures” designed to prevent bribery. The government guidance on the Bribery Act stresses that it is important for organisations to have in place effective whistleblowing policies and procedures that encourage employees to report bribery. 
 
Unfair dismissal of whistleblowers

The law states that the dismissal of an employee will be automatically unfair if the employee’s protected disclosure materially influences (in the sense of being more than a trivial influence) how the employer subsequently treats that employee.

There is no qualifying minimum period of service – a factor which will take on even greater significance when the qualifying period for “ordinary” unfair dismissal is extended to two years on 6 April 2012 – and tribunals are not restricted by the usual upper limit on compensation. Whistleblowing claims are sometimes used tactically for this reason.

Unlawful detriment of whistleblowers

It is unlawful to subject any worker to a detriment (including threats, disciplinary action, loss of work or pay, or damage to career prospects) on the ground that they have made a protected disclosure.

The concept of a “worker” in the whistleblowing legislation is broad and includes, amongst others, agency workers, freelance workers, seconded workers, homeworkers and trainees, as well as employees.

Responding to a whistleblowing claim

Whilst the claimant generally has the burden of proving that a disclosure was protected, if an employer was the subject of a claim and wished to argue that a disclosure was not protected because it was not made in good faith, it will bear the burden of proof on that issue. Ideally this would be specifically set out in the company’s response to the Employment Tribunal claim form (or ET3 as it is known).

Since employers will, in most cases, bear the burden of proof on the issue of causation, they should ensure that the ET3 and subsequent witness statements do not merely rebut the claimant’s allegations, but establish a positive case as to why the claimant was dismissed or treated in a particular way.

If the employer has a particularly strong case on causation, it is sometimes worth considering whether there might be a tactical advantage in conceding that there was a protected disclosure. As well as narrowing the issues and therefore keeping costs down, this may help the business’ PR strategy, by avoiding the need for protracted evidence at the hearing on the actual details of the disclosure itself, much of which is likely to be damaging or at least embarrassing to the company if it is reported in the media. However, on the down side, this strategy does put all the employer’s eggs in one basket.

Another potential shield to a claim is for an employer to assert that the disclosure made by the employee does not qualify for protection because it does not meet the requirement of being a disclosure of information. This might be relevant in circumstances where an employee seeks to rely on complaints raised against their employer. A letter that contains a statement of position as part of an ongoing unresolved conflict between the parties does not contain qualifying disclosures while a document that discloses facts about the circumstance of such conflict would contain qualifying disclosures.

Compensation and remedies in whistleblowing cases

There is no upper limit on the amount of compensation that can be awarded in unfair dismissal or detriment cases under the whistleblowing legislation. However the basis on which compensation is assessed in each type of case is different.

Compensation and remedies for unfair dismissal

The usual remedies for unfair dismissal apply (re-instatement, re-engagement and compensation). However, the usual upper limit unfair dismissal compensation (currently £68,400) does not apply to whistleblowing cases, which is one of the reasons they are attractive to employees and feared by businesses. Compensation for an unfair dismissal claim (whether or not caused by a protected disclosure) cannot include compensation for injury to feelings. However, injury to feelings compensation can be claimed for any detriment up to the point of dismissal.

Where a tribunal finds that an employee has been unfairly dismissed for making a protected disclosure, it is not unusual for them to also find that the employee has been stigmatised or “black-listed” in some way on the job market because of their disclosure. This can result in the tribunal being more inclined to make a substantial award for future loss of earnings, on the basis that the employee may not realistically be able to find future employment in their industry, or at a similar level of seniority or remuneration.

Compensation in detriment cases

Where the employee has succeeded in showing unlawful detriment, the tribunal must make a declaration to this effect and may award compensation, which is uncapped. This will be assessed on a similar basis to a discrimination claim; the aim being to award a sum of money that will put the claimant into the position he or she would have been in had the wrong not taken place. As such, the assessment of compensation involves some degree of speculation, as the tribunal must decide what would have happened if the discriminatory act had not taken place, so that it can award the sum that would put the claimant in that position. It will also need to speculate as to what may happen in the future.

Tribunals may award compensation for injury to feelings as well as financial losses.

Practical steps to reduce business risk

A whistleblowing policy setting out procedures by which staff can confidentially report concerns about illegal, unethical or otherwise unacceptable conduct is absolutely essential, particularly given the recent implementation of the Bribery Act 2010. It is vital that businesses ensure that their policies enable workers to bypass the level of management at which the problem may exist; the policy should set out the various levels of management to which an individual might go to express their concern depending upon the seriousness of the malpractice and who the individual thinks may be involved in it.

It would be sensible to publicise the policy internally and train management in its principles and operation. At all times it should be made clear that victimisation or subjection to any other detriment of a whistleblower will lead to disciplinary action.

We would recommend that you investigate disclosures promptly, and keep the whistleblower informed as to the progress where possible; silence or apparent inaction may lead the whistleblower to become suspicious and make a disclosure to an external recipient.

It is important to remember that your business will not be able to rely on confidentiality clauses to prevent external disclosures, as such terms are unenforceable if the disclosure is protected. Indeed, taking action against a whistleblower for breach of confidence may in itself amount to an unlawful detriment.

If you would like to put assistance in putting together a whistleblowing policy for your business or have any issues concerning protected disclosures then please do not hesitate to contact us to discuss how the Pitmans employment team can assist.

Jamie Lynch
Solicitor
T: +44 (0) 118 957 0506
E: jlynch@pitmans.com

Mark Symons
Partner
T: +44 (0) 118 957 0340
E: msymons@pitmans.com

1. Directors liability for discrimination

The Employment Appeals Tribunal has held that directors of an organisation can be liable for discrimination.

What does this mean?
Directors who discriminate against their staff could find themselves personally liable to pay compensation. This is in addition to any compensation the organisation may have to pay.

What should employers do?
Employers should take steps to prevent discrimination in the workplace.  This may be by ensuring that clear written policies relating to discrimination and harassment are in place, by providing staff with training in these areas and by promoting a culture of compliance with such policies. Organisations should also consider putting insurance schemes in place to protect Directors against claims in such circumstances.

Pitmans provide in house workshops or webinars to assist in compliance.

2. Changes to unfair dismissal rules

The Government has announced that the qualification period for the right to claim unfair dismissal will be extended from one to two years from 6 April 2012.

What does this mean?
From 6 April it will be easier and less costly for employers to dismiss staff who have been employed for less than two years. In turn this may make it less risky for businesses to take on staff in the first place.

What should employers do?
Employers should be aware that the change will not impact on the right of employees to claim unfair dismissal if they have less than two years’ service where the reason for dismissal is one which is ‘automatically unfair’ such as whistleblowing nor will it affect discrimination claims. For this reason it is advisable for employers to take specific legal advice before dismissing an employee whatever their length of service.

3. Stress in the workplace

A survey carried out by The Chartered Institute of Personnel and Development has revealed that stress is, for the very first time, the most common cause of long-term sickness absence.

What should employers do?
Employers have a duty to assess and take measures to control risks from work-related stress. They should have a policy in place for dealing with stress, carry out return to work interviews to establish the reason for absences and ensure that line managers receive training so that they know how to respond to signs of stress.

4. Reasonable adjustments

The Employment Appeals Tribunal has held that a refusal by an employer to spend very large sums on adjustments for a disabled employee was not discriminatory.

What does this mean?
Employers are entitled to take into account the cost of making adjustments for their disabled staff when deciding what, if any, adjustments to make. Employers can also take into account how effective a change will be in avoiding the disadvantage the disabled worker would otherwise experience, the practicality of making the change, the resources and size of the organisation and the availability of financial support.

What should employers do?
Employers should cost and keep a record of the costing of any adjustments they consider in case they need to demonstrate at a later stage that the cost of making an adjustment is more that can reasonably be expected of them. However, caution is advised when relying on cost as a reason for refusing to make an adjustment and especially where it is the only reason for the refusal. Therefore employers should seek legal advice before making a final decision to refuse to make such an adjustment on grounds of cost.

5. Retraction of dismissals and resignations

The Court of Appeal has held that where an employer provided an intended, unambiguous written notice of termination to an employee, the employer was not subsequently entitled to unilaterally withdraw the notice of dismissal on the basis that the notice was premature and/ or a mistake. In this case the employer mistakenly believed, at the point of dismissal, that they had a mutual agreement for an alternative arrangement where the claimant would become self-employed after the dismissal.

What does this mean?
Once an employer has given an employee notice of dismissal, or an employee has given notice of resignation, the notice can only be withdrawn if both parties consent to the withdrawal.

What should employers do?
In such circumstances, employers should ensure that they are in full possession of the facts and have agreed all relevant matters with the employee and have clear evidence of that agreement in writing before taking action.

6. Variation of contracts following a TUPE transfer

The Employment Appeals Tribunal has held that following a TUPE transfer an agreed variation to an employee’s salary resulting from a mistaken belief that there was an error in pay which needed to be corrected was valid and effective.

What does this mean?
An agreed variation of an employment contract is only effective following a TUPE transfer if the transfer itself was not the sole or principal reason for the variation.

What should employers do?
This was an unusual case involving a genuine mistaken belief that had no relationship with the TUPE transfer and therefore broke the link between the transfer and the variation in question. If seeking to change terms and conditions of employment, employers should ensure that the reason for seeking to make the change is not connected to the transfer.

7. Ill-health early retirement

The Deputy Pensions Ombudsman has said that a local authority employer cannot rely ‘blindly’ on its medical advisers when deciding if an employee is eligible for an ill-health early retirement pension.

What does this mean?
It is for a local authority employer, not a medical practitioner, to decide whether one of their employees is eligible for an ill-health early retirement pension.

What should employers do?
When deciding whether an employee is eligible for an ill-health early retirement pension a local authority employer should base its decision on all of the appropriate evidence and not just the advice contained in a medical report.

8. Intellectual property infringement

Employers can be liable for intellectual property infringement by their staff. With this in mind the Intellectual Property Office has published guidance for businesses on how they can tackle intellectual property infringement in the workplace. The guidance provides practical advice on how to spot intellectual property rights infringement issues, and how employers should deal with them. Click here for a copy of the guidance.

Sally Britton a partner specialising in Intellectual Property can assist you in this area. Over the last 12 months Sally has seen numerous infringements by employees which could have been avoided by basic training and raising of awareness. For further information please contact Sally.

9. Conduct and capability overlap

The Employment Appeals Tribunal has held that where a dismissal letter cited ‘misconduct’ as the reason for dismissal but a subsequent response by the employer to a claim for unfair dismissal cited ‘capability’ as the reason, an earlier tribunal was not prevented from dealing with the claim on the basis of misconduct. This was because the decision to dismiss had at all times been based upon the same set of facts and the change of label, therefore, caused no prejudice to the employee.

What does this mean?
Incorrectly citing the wrong ground for a dismissal will not necessarily be fatal to a case as long as the facts upon which the dismissal is based are clear and the claimant is not disadvantaged.

What should employers do?
It is far better to get the labels right in the first place as this will be a better deployment of employers’ resources. Employers should therefore take specific legal advice if they are unclear about the appropriate use of legal terminology.

10. Mitigation of loss

The Employment Appeals Tribunal has held that where a wronged employee rejected an offer of a new position, which would have addressed the difficulties which had given rise to her discrimination claim, she was not entitled to receive any compensation for loss of earnings.

What does this mean?
Courts and tribunals expect claimants to take reasonable steps to mitigate their losses. If they fail to do so they will ordinarily be deprived of compensation for any losses suffered as a consequence of their failure to take such steps as are reasonable.

What should employers do?
An employer who is faced with a claim may, in some instances, reduce the likelihood of having to pay compensation for loss of earnings by offering alternative employment to the employee in question. However note that in this case, the alternative employment was deemed ‘suitable’ for the claimant.

For further information on this article, please contact Pitmans Employment team.

Mark Symons
Partner
T: +44 (0) 118 957 0340
E: msymons@pitmans.com

Angela Shields
Director
T: +44 (0) 118 957 0450
E: ashields@pitmans.com

The use of twitter by law firm Pitmans LLP, @PitmansEmploy, highlights an unusual point of interest to HR people. On 31 October 2011, the retail headline was how Morrisons has followed Tesco by discussing the use of the “Swedish Derogation” with respect to the pay of its temporary agency staff. One comment that may be overlooked is that in their manufacturing and logistics division, Morrisons intend to employ more workers directly.

The use of shorter fixed term employment contracts by employers does appear to be increasing in these difficult economic times. Fixed term employment contracts can specifically cover a task to be performed, a project to be completed or a specific period such as maternity leave.

So, what are the benefits and risks to the strategy? What should employers be looking out for?

In terms of benefits, the employer can obtain the resources it needs during periods of high activity. In manufacturing of retail products, for example beauty products, this may be in August to October – preparing the products for the Christmas sales push.  In retail, the resources are required from October to January covering the Christmas and sales periods. 

The employer can employ the individuals directly without the use of agency staff therefore avoiding any risks contained in the Agency Worker Regulations 2010. Reduced information sharing with agencies will follow as will the need for monitoring of whether the agency workers have accrued their 12 week qualifying period for rights.

As an employee, the individual has some basic rights to which an employer must be aware. Employees recruited on contracts to complete specific tasks which are expected to last three months or less have a right to receive a minimum notice period of one week if their contracts are terminated before the expected expiry date and they have completed at least one month’s continuous service. They are also obliged to provide their employer with at least one week’s notice of early termination. Employees on contracts of up to three months also have the right to receive statutory sick pay, guarantee payments and payments on medical suspension after one month’s continuous.

A fixed-term employee has the right not to be treated less favourably than a comparable permanent employee:

• As regards the terms of their contract; or
• By being subjected to any other detriment by any act, or deliberate failure to act, of their employer.

Three areas are singled out in the Fixed Term Employees Regulations to emphasise that this right applies in relation to:

• Any period of service qualification relating to any particular condition of service.
• The opportunity to receive training.
• The opportunity to secure any permanent position in the establishment.

There are opportunities for an employer to argue an objective justification for any difference in treatment between a fixed term employee and a permanent employee. When considering whether particular treatment can be objectively justified, employers need to establish whether there is a legitimate reason for treating a fixed-term employee differently or less favourably. Less favourable treatment should be examined on a case-by-case basis to consider whether it can be justified, with due regard given to the needs and rights of individual employees and the need to balance those rights against business objectives.

An employer needs to be aware that an expiry of a fixed term contract does constitute a dismissal and is subject to the rules of unfair dismissal.  An employer won’t need to follow the ACAS Code of Practice on Disciplinary and Grievance Procedures (unless the termination or non-renewal is for a capability or conduct reason) but in the same vein should not ignore the principles of a fair procedure when declining to renew a fixed term contract.  This will involve: discussing the expiry date of the contract, writing to the fixed term employee, holding a meeting with them and, if necessary, following an appeals process regarding the non-renewal of the fixed term.

What can the employer do to protect itself when using a fixed term employment contract?

1. Audit the fixed term contract’s terms and benefits highlighting any differences with permanent employment contracts.
2. Ensure the terms offered are the same, pro-rated or can be objectively justified.
3. Maintain appropriate records of the fixed term contract’s terms and benefits.
4. Record the use of fixed term contracts and the expiry dates well in advance so that fair procedures of non-renewal can be followed.
5. Ensure employee vacancy lists are centrally located so that both permanent and fixed term employees have access.

Finally, fixed term employees will be entitled to receive a statutory redundancy payment if they have at least two years’ continuous service and the reason for the non-renewal of their contract is redundancy.

For further information on this article, please contact Pitmans Employment team.

Angela Shields
Director
T: +44 (0)118 957 0450
E: ashields@pitmans.com