whats in the news

You may have read it in the news recently that the coalition government has announced legislation to cap redundancy pay for civil servants, with payments for compulsory redundancies being capped at 12 months pay, and voluntary redundancy at 15 months pay. Even these caps go considerably beyond what is prevalent in the private sector. At the moment redundancy arrangements can result in employees getting up to 6 years’ worth of pay in the civil service.

This legislation would override a recent decision where the Public and Commercial Services Union successfully challenged attempts to reduce the payouts on redundancies.

In the private sector one of the possible barriers to capping redundancy pay has been lifted. In Kraft Foods UK Limited -v- Hastie it was decided that a cap on payments under a contractual redundancy scheme which was designed to ensure that employees would not receive more than they could have earned had they remained in employment to retirement age was a proportionate means of achieving a legitimate aim and therefore was not an act of age discrimination.

Where you are putting in place an enhanced redundancy scheme, or reviewing an existing enhanced redundancy scheme, it is worth ensuring that your scheme mirrors the statutory regime. For example, if you use 4 weeks pay for each year of service it is worth designing the scheme so that you still apply the statutory age multipliers and the 20 year maximum multiplier because you do not have to worry about justifying the scheme if it is attacked as being discriminatory.

Claims under a year

Where an employee has less than a year’s service one will frequently find solicitors representing employees arguing that there has been discrimination, whistle blowing or an assertion of a statutory right in order to be able to pursue a claim under the year. Now as a result of the Court of Appeal case of Edwards -v- Chesterfield Rural Hospital NHS Foundation Trust it has been decided in principle that an employee can recover damages when as a result of the breach of express contractual terms of disciplinary procedures findings of misconduct were made which would not have been made had the disciplinary procedure been properly followed resulting in dismissal.

As you may know, in the House of Lords decision in Johnson -v- Unisys Limited it was decided that an employee cannot claim damages for breach of the implied term of trust and confidence in relation to the manner of the dismissal, but other cases have shown that employees can pursue a claim for damages suffered as a result of pre-dismissal action such as suspension.

Now I look even more quickly for the disciplinary procedure to see if the policy is contractual. In most disciplinary procedures these days they are expressly provided not to be contractual. If you do not explicitly state that your disciplinary procedures are not contractual then it may well be worth adding wording such as the following to your disciplinary procedures such as:

“This procedure does not form part of any employee’s contract of employment and it may be amended at any time.”

This is quite common wording but this could have some disadvantages for an employer, and I prefer to say:

“This procedure does not create contractual rights enforceable by you against the Company but you must comply with it.”

I prefer this sort of wording because often there are provisions in the disciplinary procedure which an employer might want to enforce against the employee such as, for example, the right to suspend or provisions as to matters which amount to gross misconduct.

Of course if your existing procedures are contractual you will need to go through a proper process to amend the contractual provisions to make them non-contractual.

Equality Act – 1 October 2010

Despite uncertainty it has been announced that the first tranche of the Equality Act implementation will go ahead on 1 October 2010. We will be holding a “Wake up to Pitmans” on this on 15 September 2010.

For any concerns or queries about any employment related matter, please contact:

Mark Symons
Head of Employment
T: + 44 (0) 118 957 0450
E: msymons@pitmans.com

Richard Devall
Partner
T: + 44 (0) 118 957 0602
E: rdevall@pitmans.com

Jacqueline McDermott
Partner
T: + 44 (0) 118 957 0478
E: jmcdermott@pitmans.com

Angela Shields
T: + 44 (0) 118 957 0478
E: ashields@pitmans.com

Amanda Dorling
T: + 44 (0) 118 957 0407
E: adorling@pitmans.com