Latest News : Employment Bulletin - January 2013

Latest News

Employment Bulletin - January 2013

 16th Jan 2013


What a year that was. We saw the unfair dismissal qualifying period double, the start of automatic pension scheme enrolment, heftier costs penalties, shorter cases and judges sitting alone. And a lot more besides.

Now that the high jinx of the festive season has fizzled out, the stage is set for another twelve months of employment law developments to keep us on our toes. Collective redundancy consultation will be shortened this spring and the summer will bring with it tribunal fees. At some point we'll have employee shareholders and mandatory Acas conciliation and - you've guessed it - much, much more.

So let's hit this year running with a round-up of some of the last cases of 2012.

Neil Andrews

Ex-employee Bound by Unsigned Contract - FW Farnsworth Limited v Lacy

Mr Lacy started working for his employer in 2000 under a contract which he signed in 2003. He was promoted in 2009 and given a new contract which he didn't sign or return. In 2012 he left to work for a competitor.

This case was all about whether Mr Lacy was bound by the post-termination covenants in the 2009 contract which didn't feature in the 2003 contract. FW Farnsworth argued that he was, and so was prevented from joining the competitor. Mr Lacy's case was that he had skim-read the later contract, wasn't happy with the restrictions and so had decided not to sign it.

The High Court found against him, holding that he was bound by the restrictions. He had taken advantage of the benefits of the 2009 contract, in particular private medical insurance which he had applied to take up.

Even if there had been a mere skim-read of the contract, it's probable that Mr Lacy would have been alerted to the new restraints in that contract, as well as its benefits, the Court held. He must have been aware that the terms of his employment had been redefined, and he didn't object. He had accepted the contract and was bound by its terms - including the post-termination restrictions - from the date on which he took the step of applying for private medical insurance.

Employer Bound by Mistaken Job Offer - The Partners of Haxby Practice v Collen

Ms Collen applied for a job as a practice nurse. The salary wasn't revealed in the advert or during interview. She was offered the job by telephone and told that her pay would be £22,427. A letter confirming the terms would follow.

The letter (the written offer) set out a salary of £30,762. Ms Collen didn't query it, later explaining that in her excitement the original figure hadn't registered with her. When she started the job she was told that there had been a mistake and the salary was in fact £22,427. There were unsuccessful attempts at reaching a compromise and her employment terminated one month into the job. She brought a claim based on the higher salary.

The tribunal found in her favour and held that the employer was bound by the higher annual salary. This decision was upheld on appeal. The parties had agreed during the initial telephone call that they would only be bound once the written offer had been sent and accepted. And even if the offer made by telephone was effective, it had been superseded by the written offer and Ms Collen's acceptance of that.

It's worth noting that, had she accepted the written offer knowing that the figure it contained was a mistake, the outcome would have been different

Duty of Fidelity Turns Good Leaver Bad - Imam-Sadeque v BlueBay

Mr Imam-Sadeque ('Mr I-S') was a senior investment manager at BlueBay. He decided to leave and join a start-up asset management company ('Goodridge'), so resigned and began working his six months' notice. The resignation was significant; as Mr I-S had chosen to leave he would normally be classed as a 'Bad Leaver' and would not be entitled to the value of his shares - a healthy £1.7m.

He was put on garden leave and a compromise agreement was negotiated. It provided that, as long as Mr I-S complied with the terms of the compromise agreement and his employment contract, he would be classed as a 'Good Leaver' and could benefit from £1.7m.

BlueBay then discovered that Mr I-S (while still a BlueBay employee) had been helping to set up Goodridge as a competitor, had disclosed information, and had poached a BlueBay employee. BlueBay withheld the £1.7m, relying on a repudiatory breach of contract. Mr I-S brought a High Court claim for breach of contract by BlueBay in refusing to pay out.

The Court found for BlueBay. Mr I-S had broken his side of the deal and had breached his duty of fidelity. He had therefore forfeited his chance of achieving 'Good Leaver' status. The Court rejected the argument that the condition in the compromise agreement relating to the forfeiture of rights was a penalty clause. Rather, it offered Mr I-S access to rights to which he would not otherwise be entitled. The Court also noted that the agreement had been struck between parties with similar bargaining positions who had had the benefit of legal advice.

Reasonable Adjustments and the PCP - Rider v Leeds City Council

Ms Rider was a nursery officer at a children's centre. She suffered from severe asthma and a painful and debilitating spinal condition which affected her mobility.

She complained to her employer that her working environment made her condition worse and was seconded to another job where she worked for two years without any difficulty. The Council told her many times that at the end of the secondment she would have to go back to her original job. Ms Rider claimed that that requirement put her at a substantial disadvantage compared with colleagues who didn't have her disability. She was eventually dismissed for capability, never having returned to the original post. She was not offered a different role, nor were reasonable adjustments considered.

Ms Rider's claim hinged on whether the Council had failed in its duty to make reasonable adjustments to enable her to return to work after the secondment ended. For that duty to have arisen, the employer had to have applied a provision, criterion or practice ('PCP') which put her at a substantial disadvantage.

The tribunal held that the employer had not applied a PCP because Ms Rider had not actually gone back to her original job. That decision was overturned on appeal. The Employment Appeal Tribunal held that where an employer tells an employee that they must return to a post, without reasonable adjustments or alternative roles being accounted for, the employer is applying a PCP If that PCP places the disabled employee at a substantial disadvantage compared with a person who is not disabled, there is a duty to make reasonable adjustments.

Accumulated Warnings and Dismissal - Wincanton Group v Stone

Mr Stone was a lorry driver whose employment record was tainted by a written warning for misconduct (refusing to obey a reasonable management instruction relating to a policy change). He was in the process of challenging the basis on which that warning had been issued but, in the meantime, was dismissed after being involved in a serious driving accident. That second act of misconduct, by itself, might not have led to dismissal but the employer said that the balance was tipped by the first warning.

The tribunal found that his dismissal was unfair. The first warning was for different sort of conduct to the second incident and so should not have been taken into account. The tribunal was critical of the company for having issued the first warning at all; Mr Stone hadn't been guilty of misconduct, it held.

Wincanton appealed, arguing that the tribunal was wrong to have looked behind the first warning and to have substituted its view. The Employment Appeal Tribunal upheld the appeal and set out guidance for tribunals to follow in these types of cases.

The first step is to make sure that the earlier warning is valid. If it is then the tribunal:

  • should take into account that fact that that warning has been issued;
  • should take into account any proceedings that may affect the validity of that warning;
  • must not go behind a warning by holding, for example, that it should not have been issued. It is acceptable to take into account the factual circumstances giving rise to the warning;
  • may take into account the employer's consistency of treatment of employees.

Legal Representation at Internal Appeal - Ministry of Justice v Parry

Ms Parry was an office-holder, employed as a District Probate Registrar. She was dismissed for gross misconduct. Before her appeal hearing, she asked to be represented by her solicitor. This request was declined and her solicitor sent detailed submissions in support of Ms Parry's case which were considered by the employer. The appeal officer upheld the dismissal decision and an unfair dismissal case was launched.

The tribunal found in Ms Parry's favour. Part of the reason was that she had been denied legal representation - a point which the Employment Appeal Tribunal (EAT) went on to look at in some depth. It is not automatically unfair for an employer to refuse to allow an employee to have their solicitor present at an internal appeal hearing, the EAT said.

However, in exceptional cases where dismissal would prevent a person from working in their chosen profession (as in the case of a Registrar) then Article 6 of the European Convention on Human Rights - the right to a fair trial - kicks in to guarantee a right of legal representation at a disciplinary hearing. There is a contractual right to dismiss, the EAT acknowledged, but it must be recognised that this could affect an employee's broader civil rights.

In Ms Parry's case, there wasn't enough evidence to show whether or not Article 6 applied and so the case was sent to a fresh tribunal for a complete rehearing.

And Finally.... Employer Escapes With £98 Liability - Smith v Trafford Housing Trust

Mr Smith was a housing manager employed by the Trust. He posted comments on his Facebook page setting out his objections to gay marriage in church. The Trust suspended him, eventually finding him guilty of gross misconduct. The sanction would have been dismissal but because of his service recorded he was demoted to a non-managerial role at a much reduced salary. He brought a tribunal claim, arguing that the demotion and pay cut breached his contract.

Mr Smith won, in principle at least. The High Court held that the demotion amounted to dismissal. Mr Smith's original contract had come to an end and he had agreed to work under a new, lesser paid, contract with the Trust. The Court held that he should be awarded damages for wrongful dismissal, calculated as the difference between his earnings in the two jobs for the three month notice period. That was despite Mr Smith having argued for a more substantial sum based on longer-term performance of his contract. Had he chosen to resign and claim unfair dismissal, rather than work on under protest and opt for wrongful dismissal, his damages would have been higher again.

In its judgment, the court made some important points about Facebook cases. Employers should ask themselves whether a reasonable reader of an employee's Facebook page would rationally conclude that postings were made on the employer’s behalf. In Mr Smith's case, views were also expressed on sport, food and cars - clearly not for work purposes. The Court also emphasised the importance of free speech and of the need to look carefully at the views that are expressed and the manner in which they are conveyed before embarking on disciplinary action.

On the subject of the damages award, the Judge said that it leaves 'an uncomfortable feeling that justice has not been done to [Mr Smith] in the circumstances'.

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