UK: Cases In Brief

Last Updated: 7 November 2013
Article by Davenport Lyons

Unfair dismissal - jurisdiction

The EAT have considered a number of jurisdictional issues in the recent case of Dhunna v Creditsights Ltd, which can be summarised as follows:

  • The overarching question is whether Parliament intended that unfair dismissal protection should apply to a person in the claimant's position;
  • The general rule is that the place of employment is decisive in determining jurisdiction for complaints of unfair dismissal;
  • Where the employment has much stronger connections both with Great Britain and with British employment law than any other system of law the claimant will be able to claim unfair dismissal if the connection is sufficiently strong;
  • The comparative exercise is appropriate where the claimant works wholly abroad. The comparison is between Great Britain and the jurisdiction where the claimant works;
  • The country in which the claimant lives is relevant. If he or she lives and works abroad he or she will need to have an "especially strong connection" with Great Britain and with British employment law to be able to claim unfair dismissal;
  • The test of jurisdiction applicable to unfair dismissal claims also applies to claims under section 10 of the Employment Relations Act 1999 (right to be accompanied at a disciplinary hearing);
  • Employees working outside the EU cannot make claims under the Working Time Regulations.

In this case the employment judge had not compared the connections of the claimant with Great Britain and British employment law to the strength of the connections to Dubai, where he lived and worked. The employment judge had also not considered the overarching question identified above, namely whether Parliament is presumed to have intended to give unfair dismissal protection to an employee in the claimant's position. For this reason the case was remitted for a rehearing.

Comment

The emphasis in jurisdiction cases is on the comparative exercise; factors pointing to a stronger connection with Great Britain and British employment law are crucial.  However the arguments are refined it remains the case that employees who live and work outside Great Britain will struggle to establish the necessary connection to claim unfair dismissal. For employers who wish to demonstrate stronger overseas connections then matters such as placing the worker on a local contract, paying in a foreign currency into a foreign bank account with line management and administrative support given from another country should be considered.

Unfair dismissal – Acas Code applies to SOSR

The Acas Code of Practice on Disciplinary and Grievance Procedures (the Code) contains provisions designed to help employers and employees deal with disciplinary situations including misconduct and/or poor performance. If an employer is found to have unreasonably failed to follow the provisions of the Code a tribunal may, if it considers it just and equitable to do so, award an uplift of up to 25 per cent on the employee's compensation.

The issues in Lund v St Edmunds School Canterbury were first, did the fact that the employee had contributed to his dismissal mean the uplift should not be applied and secondly, did the Code apply to dismissal falling under the heading "some other substantial reason" for dismissal (SOSR), in this case a breakdown in the relationship of mutual trust and confidence?

As to the first question the EAT held that the fact that the employee had contributed to his dismissal did not justify a failure to apply the uplift. The employee may have contributed to his dismissal but he had not contributed to the employer's failure to follow the Code.

In relation to the second question the EAT decided that the Code could apply to dismissals for SOSR. The Code applies where disciplinary proceedings are, or ought to be, invoked against an employee. In this case the tribunal had fallen into error by focusing on the outcome (the dismissal for SOSR). What was important was that the employee's conduct was called into question (in particular aspects of his behaviour that his colleagues found difficult and unhelpful) and this conduct could have led to dismissal. The disciplinary procedure should have been invoked, even if the later dismissal turned out to be for another reason. (The EAT did express some doubt as to whether the dismissal in this case could be characterised as SOSR.) The EAT remitted the case to the tribunal to consider whether the employer's failure to comply with the Code was unreasonable and, if so, what was a just and equitable amount to award as an uplift.

Comment

It is sometimes difficult to say whether dismissal is for the employee's conduct which has led to a breakdown in relations with the employer or if dismissal is for the breakdown itself. If in doubt it is best to err on the side of caution and follow the Code.

Contractual entitlement to bonus payments

We reported in the July 2012 Bulletin that the High Court had decided that over 100 bank employees were entitled to share in a guaranteed bonus pool of EUR 400 million following an announcement made by the bank before the financial crisis in late 2008. (Dresdner Kleinwort Ltd v Attrill).  The bank's appeal to the Court of Appeal has now failed.

The Court of Appeal confirmed the decision of the High Court, holding that the "town hall" announcement broadcast to staff over the intranet did give rise to a binding contractual obligation. In this respect it was persuasive that the promise was made in the context of a pre-existing legal relationship of employer/employee.

The Court also upheld the High Court's decision that the bank's attempt to introduce material adverse change clauses, allowing the bonuses to be reviewed depending on the bank's financial performance, was a breach of the implied term of trust and confidence.

Action points

The Court of Appeal's judgment reinforces the need for employers to exercise caution when making announcements or promises regarding bonuses. Once a promise has contractual effect it cannot unilaterally be taken back or diluted, even if events take a dramatic turn for the worse. Employers should ensure that all verbal communications are made only by authorised employees and are followed up in writing.

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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