Enjoy the Jubilee but check your contracts as well

This year and last year have both had additional bank holidays. Last year there was Royal Wedding bank holiday and this coming week we will be having the Jubilee bank holiday. These extra bank holidays have meant that employment lawyers up and down the country have been able to write articles about whether employers are obliged to allow employees to have the time off work and whether it should be paid. I myself wrote a brief article on this subject myself when working for a previous employer.

The answer is fairly straightforward - it depends on the wording of the contract as to whether the employmer is required to give their employees the time off. What this topic actually highlights is the need for employment contracts to be carefully drafted as some employers can be quite unhappy at the prospect of paying employees for taking an extra day of  holiday. The need for this was also highlighted in the case of Cavenagh v William Evans Limited which the Court of Appeal ruled on last month.

Mr Cavenagh had been made redundant by William Evans Limited and under his contract of employment he was entitled to be paid in lieu of notice. After terminating his employment, but before making the PILON the Company discovered that Mr Cavenagh had a few months previously arranged for a payment to be paid by the Company into his pension fund and this payment had not been properly authorised. The Company decided to withhold the PILON monies on the grounds that Mr Cavenagh would have been dismissed for gross misconduct without notice had they known of the unauthorised payment. Mr Cavenagh sued the Company for breach of contract.

The Court of Appeal found in favour of Mr Cavenagh saying that there was a contractual agreement to pay him these monies and there were no provisions in his contract to allow recovery of the monies if misconduct was subsequently discovered.

The above case and the Jubilee Bank Holiday shows that employment contracts need to be carefully drafted. They also need to be regularly reviewed as employment law does change over time. Getting a solicitor to draft and review your employment contracts can seem to be an unnecessary expense; however, it can save you money in the long term.

Was Vince Cable right to get a Beecroft in his bonnet?

The Business Secretary Vince Cable described the Beecroft Report which amongst other things proposed a change to the laws relating to unfair dismissal as "bonkers" Beecroft responded to this description of his report by calling Vince Cable a “socialist” (I am not sure whether that is actually an insult – I know some people who are very proud to call themselves socialists). So were Beecroft’s proposals in relation to unfair dismissal really that crazy?

The Proposals

Beecroft proposed that the law relating to unfair dismissal be changed in the following ways:

·         An employer can dismiss an employee without giving a reason regardless of their length of service. This would be known a “compensated no-fault dismissal”.

·         There would be what Beecroft describes as a brief consultation before the decision to dismiss the employee is taken.

·         The employee would be paid an enhanced payment as compensation for leaving in this manner in a similar way that an employer would pay an employee a redundancy payment.

The Potential Benefits

Beecroft believes that the current laws regarding unfair dismissal do not take into account that circumstances can change during an employee’s employment. The employee may be promoted and not be able to fulfil their new role properly, there may be changes in customer demands or technology which make the employee unsuitable for the role.

Beecroft is of the opinion that his proposed changes to the law relating to unfair dismissal would reflect the commercial needs of businesses and by making it easier to dismiss an employee it would actually make companies more inclined to take on staff.

The problems

So what are the problems with these changes? Beecroft is right in that the current unfair dismissal laws do not take account of situations where an employee is promoted and it turns out that their new role is beyond them or if there are changes in customer demands or technology. It is however the case that employers can dismiss employees fairly on the grounds of capability although this can take some time (often around three months).  There is also the possibility of dismissing somebody on the grounds of redundancy if technology changes means that they are surplus to requirements. This brings into question whether or not these changes are actually needed.

There is also the issue of the process of dismissing an employee in such a fashion. Beecroft stops short of advocating allowing a manager to come in and sack an employee on the spot saying that there should be a brief consultation. He does not expand on what form this consultation should take nor does he deal with the issue of what happens if the process is not followed properly. Does this mean that the employee could still claim unfair dismissal if they felt the process was not carried out correctly?

It is also the case that employees would still be able to make discrimination claims arguing that their dismissal was a discriminatory act (e.g. on the grounds of race or sex) so there would still be a risk of an employment tribunal claim being made against the employer.

Further; on a practical level, even if you are dismissing somebody under the grounds of compensated no fault dismissal it is still a difficult conversation to have with an employee. Not all business owners/managers like having that type of conversation and so they may still avoid going down this route instead preferring to cope with the situation by letting the employee in question continue working in the hope that things may get better or the employee will leave of their own accord.

Often the arrival of a new manager can mean that they want to clear out existing staff members. These proposals would make it fairly easy to do this; however, what happens if the business realises that it has hired the wrong manager? They can easily get rid of him or her but they will potentially have lost a number of staff who that particular manager had sacked on a whim that they may have wanted to retain. There may also be some morale issues with the workforce if they feel that they are going to be sacked at any time for no good reason. This may lead to staff members leaving for more “friendly” employers because they do not want to work in such an environment leading to increased staff turnover which would be costly for employers.

Conclusion

I feel that these proposals have not been properly thought through and will be kicked into the long grass and quickly forgotten. The intention of the paper was to propose how to cut red tape. The reality is that much of the legal obligations for employers derive from the EU (e.g. maternity regulations, agency workers regulations, TUPE, part-time workers rights, and discrimination law) and unless there is a fundamental change in the UK’s relationship with the EU these obligations will not go away and a majority of the red tape will remain. The reality was that the Beecroft report just proposed tinkering around the edges and succeeded only in generating a political row for a few days.

If it aint broke......

The Queen’s speech has been accused of being light in terms of content by both MP’s and the Press; however, from my point of view it looks as though there will be plenty of interest for employment solicitors in the form of the Enterprise and Regulatory Reform Bill. One of the aims of the bill is to streamline the Employment Tribunal System leading to claims being resolved more quickly than they are at present. One way the government hopes to speed things up is to require all claimants to lodge details of their claim with ACAS and be required to take part in conciliation before the Tribunal proceedings start to kick in.

Early involvement of ACAS means that both parties will potentially start talking to each other about settlement at an early stage leading to an early settlement and costs being saved on both sides. ACAS can also help unrepresented parties get a realistic idea of what they may achieve either as a settlement or at Tribunal. A simple example of this is the ACAS officer explaining to a claimant who is claiming unfair dismissal that they cannot claim monies for injury to feelings as their claim is not one of discrimination.

However, will this actually improve things? ACAS are already involved in tribunal proceedings at a fairly early stage. They are sent a copy of both the tribunal claim and response at the outset of the proceedings and from personal experience I have found that the ACAS officers try to get in touch very early on in proceedings to see if settlement is possible. Arguably, they do a reasonably well with 29% of all Tribunal cases in 2010-2011 being settled through ACAS.

I would suggest that the reality is that ACAS officers are already doing good work in trying to find a resolution to tribunal claims and that parties cannot be forced into an early settlement if they don’t want to. Not everybody can be persuaded to come to an agreement early on due to the emotions involved. It is often the case that attitudes to settlement start to soften later in proceedings often only when the parties are within sight of the Employment Tribunal door and realising that they are actually going to have to give evidence at the hearing.  Sometimes giving the parties time to draw breath is a good way to eventually reach a settlement.

This does not mean that the representatives of the parties should not advise on early settlement. When I advise clients on the prospects of successfully defending a claim I will also discuss the option of early settlement with them and how much they should consider paying to make the matter go away, taking into account the prospects of success and the costs that they may incur. It has however regularly been the case that either my client has not been minded to settle at that stage or the claimant is completely unwilling to consider settlement in any event.

The reality is there is only so much that can be done to encourage early settlement. I think that if ACAS officers and employment lawyers do their jobs properly then claims will be settled in good time. I feel that these proposals are more a case of the government wanting to be seen to be doing something rather than actually coming up with genuinely new way of settling tribunal claims.