UK: Employment Briefing - May 2010

Last Updated: 30 September 2010
Article by Brian Gegg, Jesper Christensen and Marc Meryon

Originally published May 2010

Whistleblower Can Rely on Disclosure Made in Previous Employment

The EAT in BP PLC v Elstone upheld a tribunal decision that a worker could bring a claim against his new employer based on a disclosure he had made whilst employed by a previous employer.

In this case, Mr Elstone had worked for two years as an employee for Petrotechnics until his dismissal for gross misconduct. He was dismissed for making disclosures about safety concerns to one of Petrotechnic's clients, BP plc (for whom he had previously worked for 25 years). He was offered work as a consultant by BP after his dismissal. A further contract was refused as BP had by then been advised by Petrotechnics that Mr Elstone had been dismissed for disclosing confidential information. Mr Elstone brought a claim under the whistleblowing legislation against BP alleging that he had been subjected to a detriment for having made a protected disclosure. The EAT, considering a point of law and not the substantive merits, agreed with the tribunal judge that the worker had to be in employment at the date of the relevant disclosure but that the legislation did not provide directly that that the employer needed to be one and the same at both the times of disclosure and detriment. The EAT emphasised that the aim of the legislation was to protect the employee against later retribution by an employer. This was the central point, rather than the identity of that employer. The case was remitted to tribunal for a decision on the merits.

Appropriate Use of Disciplinary Procedures

Sarkar v West London Mental Health NHS Trust (the Trust) illustrates the importance of ensuring that the procedure used when disciplining and dismissing an employee is appropriate for the purpose.

In this case Dr Sarkaar, a consultant psychiatrist, was dismissed by the Trust for gross misconduct. Following an investigation into complaints about Dr Sarkar's treatment of colleagues, the Trust embarked on an internal procedure (forming part of the disciplinary procedure) known as the Fair Blame Policy. This policy was designed for fairly low level infringements which 'do not constitute potentially serious or gross offences'. There was no sanction of summary dismissal available under this procedure but a clause did provide that if it became apparent that the matter was more serious than originally envisaged the matter could be heard under a separate, more formal disciplinary procedure.

During the course of the Fair Blame Policy procedure an agreement was reached in principle between Dr Sarkar and the Trust that he would return to work for a different Directorate with a different team. However Dr Sarkar was then informed that, notwithstanding the agreement, the Trust's medical director would report the matter to the General Medical Council. Dr Sarkar refused to accept the proposal and was suspended. A disciplinary hearing was held under the disciplinary procedure to consider the allegations together with further minor misdemeanours following which Dr Sarkar was dismissed for gross misconduct. He brought a claim for unfair dismissal.

On appeal to the Court of Appeal, the Court restored the tribunal's decision that despite the Trust having undertaken a reasonable investigation and formed a genuine belief as to Dr Sarkar's guilt, the decision to dismiss fell outside the band of reasonable responses. The Trust's use of the Fair Blame Policy indicated that it considered Dr Sarkar's misconduct to be relatively minor. The additional acts of misconduct also relied upon were minor and could not have supported a finding of gross misconduct.

This case underlines the importance of ensuring that the procedure used when disciplining is appropriate for the purposes. It is likely to be difficult to later decide that the offence merits a more serious sanction. If additional misdemeanours come to light an employer must consider whether they justify departure from the agreed procedure. In this case they were minor offences and it could not be said that Dr Sarkar's misconduct had significantly altered in degree.

Collective Agreements Not Incorporated into Employment Contracts

The High Court in Malone and others v British Airways plc considered whether terms contained in collective agreements relating to minimum staffing levels were incorporated into individual employment contracts. It found that whilst the contracts of employment stated that the relevant collective agreements 'form part of your contract of employment' the terms were not 'apt for incorporation' into the employment contract.

The facts related to the recent dispute between BA and its cabin crew relating to the proposal to cut staffing levels on some services. The staff argued that the provisions in collective agreements relating to staffing levels were expressly incorporated into their contracts of employment and therefore the proposed cuts would be a breach of contract. They sought a declaration of their rights and an injunction stopping BA from proceeding with the crew reductions. The High Court found that the terms were not incorporated since the parties never expressed an intention that they would be legally binding. Further the terms were more 'aspirational' than contractual and could not sensibly have been set out in a contract of employment. The court found that there was insufficient evidence of mutual intention to enable an individual staff member to enforce the terms. The court also held that even if it were wrong, it would still not have granted an injunction as, having regard to the necessary balance of convenience test, an exceptional burden would have been imposed on BA and potentially jeopardized its financial recovery.

PILON Clauses and Summary Dismissal

The question of when an employment terminates was considered in Geys v Societe Generale. Mr Geys was MD of Societe Generale from February 2005. On 29 November 2007 the Bank told him that his employment was being terminated 'with immediate effect'. He was asked to clear his desk and leave the premises immediately. The dispute concerned when Mr Geys' contract came to an end since this would significantly affect the amount of the payment in lieu of notice due to him. The effect of various bonus schemes was that if he were employed after a certain date, the difference in pay due to him would be around 2.5 million euros.

Mr Geys' contract of employment provided for the right of either party to terminate the employment on the expiry of 3 months' notice. The Bank's handbook made provision for payment in lieu of notice.

On 7 December 2007 Mr Geys' solicitors wrote to the Bank's solicitors requesting details of the termination payment due to Mr Geys. The letter ended 'in the meantime [Mr Geys] reserves all his rights'.

On 10 December 2007 the Bank sent a draft severance agreement with a summary of payments to Mr Geys' solicitors.

On 18 December 2007 the Bank paid £31,899.29 directly into Mr Geys' bank account. Mr Geys assumed that this related to a payment in lieu of notice but he could not be sure.

On 21 December 2007 Mr Geys' solicitors asked the Bank for more information about the payment, again reserving Mr Geys' rights.

On 2 January 2008 Mr Geys' solicitors wrote again to the Bank stating that Mr Geys had decided to affirm his contract and again reserved his position.

On 4 January 2008 the Bank sent to Mr Geys a letter confirming the details of the payment and stating '[The Bank] gave you notice to terminate your employment with immediate effect on 29 November 2007 and will pay you in lieu of your notice period'. It confirmed that the amount had been credited to Mr Geys' account on 18 December 2007.

The Bank argued that Mr Geys' employment terminated on 29 November when he was told his employment was being summarily terminated. Mr Geys argued that his employment actually terminated 3 months after notice was given.

The High Court held that Mr Geys' employment did not terminate on 27 November when he was ejected from his office and told he was being summarily dismissed. It took effect on 6 January 2008 when Mr Geys received the 4 January letter confirming that he had been paid in lieu of notice. Had the Bank worded its 29 November letter appropriately or sent out its further letter confirming the details of the termination of Mr Geys' employment promptly, it would have saved a significant amount of money. In order for Mr Geys to have treated the Bank's actions as terminating his contract, he would have needed to 'clearly and unequivocally' convey this to the Bank. His 'silence or inactivity' did not indicate acceptance of the breach and his solicitors persistently reserved his rights in correspondence. Further, the mere payment of Mr Geys' notice monies into his bank account did not suffice since this action was not actually communicated to him in terms that this payment constituted his pay in lieu of notice.

This case serves as a lesson to employers when summarily terminating to ensure that the termination letter is carefully drafted. This will be of particular significance where an employee may, as in Geys' case, become entitled to a significant sum of money during the notice period.

'Off the Record' Allegations and Dismissal

In A v B the EAT agreed with the tribunal that a public authority, B, had been entitled to summarily dismiss a senior employee on the basis of informal disclosures made against him by the Metropolitan Police Child Abuse Investigation Command (CAIC). A, a career civil servant, had been arrested and charged in Cambodia for having allegedly sexually abused children. He was acquitted of the charges and 'totally exonerated of any criminal wrongdoing'. A's employer, B, investigated and decided on A's innocence. B was then, however, advised by the CAIC on an informal basis that there were other allegations against A including his having posed as a doctor to abuse children and having frequented Cambodian brothels known to supply children. B was advised by the CAIC that he posed a continuing threat to children.

B held a disciplinary hearing following which A was summarily dismissed on the ground that trust and confidence in A had been broken. A claimed that he had been wrongfully and unfairly dismissed. The EAT upheld the tribunal's decision that B had fairly dismissed A even though the alleged misconduct had not been proved and it had no bearing on the work that he did. The EAT were unhappy with B's reliance on the breakdown in trust and confidence as a ground for dismissal and felt that it should more properly have been some other substantial reason (the risk of reputational damage to B). However, taking into account the nature of B's organisation, the nature of the allegations and the nature of A's senior role the risk of damage to B would have been greater had it chosen not to dismiss A and it emerged that they had been warned by the CAIC. The EAT held that when relying on information supplied by a third party, the employer must always insist on a sufficient degree of formality and specificity about the disclosure before contemplating taking any action against an employee. An employer would not be acting reasonably if it took an uncritical view of such information.

The EAT also considered whether the risk of reputational damage was a sufficient justification for dismissing A and held that it was.

And Finally...

Equality Act

The Equality Act 2010 received Royal Assent on 8 April and will come into force in October 2010. In the main, the Act will harmonise and consolidate the discrimination and equality laws but will also make a number of significant changes, strengthening the laws for employees claiming discrimination.

New Offence of Stirring up Hatred on Grounds of Sexual Orientation

Section 74 and schedule 16 of the Criminal Justice and Immigration Act 2008 came into force on 23 March 2010 and create a new offence of stirring up hatred against another on the ground of their sexual orientation. The offence is punishable by a fine and/or up to a maximum 7 years' prison sentence.

New EWC Regulations

The Transnational Information and Consultation of Employees (Amendment) Regulations 2010 amend the 1999 Regulations and come into force on 5 June 2011. Generally the new Regulations will apply to EWCs agreed on or after 5 June 2011 and to EWCs established between 16 December 1999 and 5 June 2009 unless they are revised between 5 June 2009 and 5 June 2011. Significant changes are made to the employer's duty to inform and consult and there is a new duty on EWCs to provide feedback to employees. EWC agreements will be required to set out arrangements for linking the informing and consulting of the EWC with that of national employee representative bodies. Importantly, the maximum penalty for breach of the Regulations will increase from £75,000 to £100,000. The Government has produced guidance on the new Regulations.

The Employment Group are proud to announce the following promotions of our team members for 2010

Nick Le Riche
Senior Associate

Nick joined Bircham Dyson Bell as a trainee in 2004 and qualified into the firm's Employment Group in 2006. Nick undertakes both contentious and non-contentious work including dealing with claims brought against high profile transport and charity clients as well as undertaking day to day advisory work concerning policies, contracts, procedures and disciplinary and grievance hearings.

Paul McAleavey
Associate

Paul McAleavey joined the firm as a trainee solicitor in 2006, and qualified as a Solicitor in the Employment Team in November 2008. Paul advises clients on a wide range of employment law issues, with a particular focus on business immigration and industrial relations disputes, including acting on several injunctions in the High Court.

Fiona McDermott
Associate

Fiona McDermott joined the firm in May 2008, having previously been at Taylor Vinters in Cambridge where she trained. Since joining the firm, Fiona has specialised in Employment Law and Industrial Relations. Fiona advises a variety of clients upon a number of contentious and non-contentious matters, with particular emphasis upon clients within the transport sector.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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