UK: Employment Newsletter - May 2013

Last Updated: 7 June 2013
Article by Brian Gegg

DISMISSAL NOT UNFAIR

By Jesper Christensen

Failure to follow the Acas Code of Practice on Disciplinary and Grievance Procedures (the Acas Code) will usually increase the risk of a dismissal being found to be procedurally unfair and can result in increased compensation being payable to a dismissed employee.

However, in Buzolli v Food Partners Ltd, the EAT has upheld an Employment Tribunal's decision that a dismissal was fair despite some procedural defects which meant that the Acas Code was not followed to the letter.

Mr Buzolli worked for Food Partners Ltd as a driver. In March 2010 he was given a final written warning for failure to attend work due to being under the influence of alcohol. The company's disciplinary policy stated that this would remain on his file for 12 months. In September 2010 Mr Buzolli crashed his company vehicle, causing over £6,000 worth of damage. Following an investigation and disciplinary hearing, he was dismissed.

Mr Buzolli claimed that the company had not complied with the Acas Code because his final written warning had not stated that further misconduct within the 12 month period could result in dismissal; his existing warning had not been mentioned in the disciplinary hearing; and it had not been made clear in the letter inviting him to the disciplinary hearing that he might lose his job. Both the Employment Tribunal and the EAT rejected his unfair dismissal claim. They concluded that despite procedural flaws, Mr Buzolli should have been aware of the significance of the final warning, and that Food Partners had complied with the Acas Code. The EAT agreed with the Tribunal's approach of looking at the employer's procedure overall, rather than at specific failings. It also noted that Mr Buzolli had not mentioned his objections at the appeal stage.

The common sense approach of the EAT in this case will be welcomed by employers. The case also highlights the importance of maintaining clear and comprehensive disciplinary procedures and policies. The employer was able to rely on a well-drafted disciplinary policy which meant that the Tribunal could overlook procedural defects which might otherwise have rendered the dismissal unfair.

USE OF COMPETENCY TESTS UNREASONABLE

By Brian Gegg

In Mental Health Care (UK) Ltd v Biluan and another, the EAT considered whether it was fair to use a series of competency tests normally used for the purposes of recruitment for a redundancy selection procedure.

The claimants were employed at a hospital. In 2010 the hospital decided to close a ward, resulting in 19 redundancies. The pool for redundancies comprised all nursing and support staff. Three criteria were included in the selection process: competency assessment, disciplinary record, and sickness absence record. The criteria were weighted, with the competency assessment being the most important. This assessment was the same one used for the hospital's recruitment process, involving a written test, individual interviews and group exercises. It was conducted by HR staff who did not know the employees, without input from their line managers. Because of the relative weighting, in most cases the competency assessment proved decisive. This produced some surprising results, with some good workers being selected for redundancy. Two claimants brought successful unfair dismissal claims against the hospital arising out of their selection for redundancy.

The EAT upheld the finding of unfair dismissal, criticising the selection criteria and its application. It was particularly critical of the lack of input from line managers and the failure to refer to past performance appraisals.

Using a recruitment style assessment centre will not generally be appropriate for a redundancy selection process. Although the EAT recognised in this case that the hospital had gone to great lengths to organise the redundancy procedure efficiently, it was critical of the lack of input from managers who knew the employees personally and of a blind faith in the process which had led to a loss of common sense and fairness.

DISCRIMINATION COMPENSATION

By Caroline Yarrow

In H M Land Registry v McGlue, the EAT upheld the Employment Tribunal's decision that an employee on a career break who was excluded from the Land Registry's voluntary severance scheme had been indirectly discriminated against on the grounds of sex.

The EAT has now also had to rule on the amount of Mrs McGlue's compensation.

Although she remained in her post at the Land Registry, Mrs McGlue gave unchallenged evidence in the Tribunal that if she had been accepted for the voluntary severance scheme, she would have taken the payment and then found equally well paid work elsewhere. The Tribunal awarded her £72,000 for economic loss, the amount she would have received under the voluntary severance scheme, as well as £12,000 for injury to feelings and £5,000 for aggravated damages.

The Land Registry appealed to the EAT, arguing that Mrs McGlue had not suffered any loss because she had not left her job. The EAT upheld the Employment Tribunal's decision. Mrs McGlue was entitled to be placed in the same situation as she would have been if the discrimination had not occurred. Accepting her evidence that she would have taken the severance payment and then obtained similar pay elsewhere, the EAT held that her loss was the full amount of the severance payment, with no deduction for her continued earnings. The EAT also ruled that there was no basis to award her aggravated damages.

This case shows that excluding an employee from a voluntary severance scheme for discriminatory reasons could prove very costly. Although such cases will turn on individual circumstances, it is important to note that even if an employee remains in the same job, compensation may not be limited to an injury for feelings award.

LOSS OF TRUST AND CONFIDENCE NOT 'SOME OTHER SUBSTANTIAL REASON'

By Nicholas Le Riche

The case of Handshake Ltd v Summers illustrates the difficulties of relying on a breakdown of trust and confidence to justify a dismissal on the grounds of 'some other substantial reason' under the Employment Rights Act 1996.

Mr Summers was recruited as a senior manager for Handshake Ltd in 2003. A dispute arose as to the calculation of his profit share and bonus. From 2006 onwards, the company also attempted unsuccessfully to formalise the terms of his service agreement. The negotiations became contentious and, in 2009, Mr Summers' solicitors wrote to the company claiming that he had lost all trust and confidence in his employer and threatening a constructive dismissal claim. The strength of this letter shocked the company's managing director, and Mr Summers was dismissed on the basis that there had been a breakdown in their working relationship amounting to a complete loss of trust and confidence.

The Employment Tribunal held that Mr Summers had been unfairly dismissed. The real reason for dismissal was not a loss of trust and confidence, but the power struggle over his pay and other terms of employment. It also held that Mr Summers was partly responsible for his dismissal and reduced his compensatory award by 40%. This decision was upheld by the EAT which confirmed that, whilst a breakdown in trust and confidence can amount to some other substantial reason, it did not in this case. Although the relationship between Mr Summers and the company had become confrontational, there was no evidence that they were unable to work together.

The EAT stressed in this case that difficulties in a working relationship will not justify dismissal where the parties are simply in dispute over terms of employment, particularly where there are no other contributing factors. This case is also consistent with views expressed by the courts previously that a breakdown in trust and confidence should not be used as a convenient label in situations where an employer cannot easily rely on one of the other fair reasons for dismissal.

REDUNDANCY SITUATION EXISTED DESPITE REPLACEMENT HAVING BEEN RECRUITED

By Kevin Poulter

In Malekout v Ahmed and others (t/a the Medical Centre) the EAT upheld an Employment Tribunal's decision that a redundancy situation existed even though a replacement had already been recruited for an under-performing employee who was then dismissed.

Mr Malekout was the practice manager of the Medical Centre. In May 2008 he informed the practice that he was thinking of resigning. Not wanting to be left without proper management, the Medical Centre engaged another practice manager, Mr Kader, initially as a short-term 'trouble-shooter'. As Mr Kader gradually took on greater responsibilities, it became clear that Mr Malekout had not been completing key administrative tasks, and that there were failures in the way he had been managing the practice. However, Mr Malekout then decided to remain in his post, so there were effectively two people for one job as practice manager. The practice decided to retain Mr Kader and dismissed Mr Malekout for redundancy.

The Employment Tribunal held that the reason for dismissal was redundancy, although it was procedurally unfair mainly due to lack of genuine consultation. The Tribunal also found that had a fair procedure been followed, Mr Malekout's dismissal would have been inevitable. A 100% Polkey deduction was therefore applied, resulting in a nil compensatory award.

On appeal, Mr Malekout argued that there could not have been a redundancy situation because there was only one job of practice manager. The EAT held that his appeal raised no arguable point of law. The reason for employing Mr Kader in the first place was the fear that Mr Malekout would resign and leave the practice without proper management. Having then put two people in the post for one job, it was inevitable that those two people would be reduced to one, which was clearly a redundancy situation. The EAT also upheld the 100% Polkey deduction.

In looking at the situation at the moment of dismissal, the Employment Tribunal and EAT categorised this narrowly as a redundancy case despite the fact that Mr Malekout had effectively been replaced some months before by a more capable employee. A different Tribunal might have looked further back at the previous events leading up to Mr Malekout's dismissal and categorised it as a capability situation.

GOVERNMENT RESPONSE TO CONSULTATION

By Garvey Hanchard

The Government has published its response to the consultation on changes to the Employment Tribunal rules which are due to come into force in summer 2013, coinciding with the introduction of Tribunal fees.

Key points of the consultation include:

  • The Presidents of the Employment Tribunals will publish guidance providing further details on specific rules.
  • An employment judge will review claims in an initial 'sift' stage, and will have the power to strike out claims which have no reasonable prospect of success.
  • Case management discussions and pre-hearing reviews will be combined into one preliminary hearing.
  • The current two-step withdrawal and dismissal procedure will in most circumstances be replaced with a one-step procedure.
  • Restricted reporting orders will be available in a wider range of cases.
  • Written reasons will have to be provided, if requested, for all decisions made by an employment judge, although these may be very short if appropriate.
  • Employment judges will be able to make assessments on costs orders over £20,000.
  • At the preliminary hearing stage, employment judges will be able to impose deposit orders on a weak part of a claim or response as a condition of it continuing through the tribunal process, rather than on just the whole of a party's case.
  • Interest will accrue on awards from the date of judgment but interest will not be payable if the full award is received within 14 days.

AND FINALLY...

For a roundup of hot topics and recent employment law changes this month.

The Department for Work and Pensions has issued updated guidance on fit notes for health professionals, employers and line managers. The guidance for employers includes details of steps to take when given a fit note, an explanation of the various sections in a fit note and practical advice on supporting an employee back to work.

On 28 February 2013 the Mental Health (Discrimination) Act was given Royal Assent. The Act repeals legislative provisions which prevent people with serious mental health problems serving as company directors, MPs and jurors. Model company articles will now be amended to remove the provisions relating to automatic termination of a director's appointment on the grounds of mental disorder.

It was announced in the Budget that the Government will be consulting on a new tax exemption for health-related benefits paid for by employers to support employees' return to work. The exemption will be capped at £500.

The Information Commissioner's Office has published guidance on 'bring your own device' (BYOD), the practice of allowing staff to use their personal devices for work purposes. This guidance stresses the need to assess and manage the data security risks associated with BYOD, and to have in place acceptable use and social media policies which are tailored to the specific needs of individual employers.

The House of Lords has approved an amendment to the Enterprise and Regulatory Reform Bill abolishing the Agricultural Wages Board, which currently sets the minimum wage and other employment terms for agricultural workers.

BIS has published consultation seeking views on the Government's proposals to improve the quality and scope of apprenticeships, and to introduce a new scheme of 'traineeships'. The outcome of the consultation will be available shortly on its website.

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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