July 18, 2012

Employment Update – Recent Decisions (Part 1)

Gordons’ specialist employment law team will provide a two-part update with an overview of some recent decisions, exploring what the decision means for the employer and what they should be aware of.

Part 1 looks at decisions in the areas of payments in lieu of notice, working time regulations, breach of fiduciary duties and fees in Employment Tribunals.

PART 1

PAYMENTS IN LIEU OF NOTICE

Cavenagh v William Evans Ltd

The Court of Appeal has held that a confirmation of payment in lieu of notice became a debt which was due despite an act of gross misconduct having occurred during employment.

WHAT DOES THIS MEAN?

The Claimant was advised that as the employer was moving to a different business structure, his role was being made redundant. This was confirming in writing in a letter. The letter also confirmed that the Claimant would receive payment in lieu of notice.

Subsequently, the employer discovered that the Claimant had wrongly, some two months prior to the notice of termination of his position, procured a payment of £10,000. On discovering this, the employer refused to make in any payment in lieu of notice.

The Claimant brought a claim in the County Court seeking notice pay and other payments.

The claim reached the Court of Appeal which held that the payment in lieu of notice became a debt as the employer had lawfully terminated the Claimant’s contract of employment.

WHAT SHOULD EMPLOYERS DO?

Interestingly, the employer did not run certain defences which may have been expected in these circumstances. If they had done, then the outcome may well have been different.

Employers should ensure that payment in lieu of notice clauses cover situations where payments can be withheld or recovered if a breach of contract by the employee comes to light. Further, in a compromise agreement, an employer should make it a condition that the employee has not committed a repudiatory breach of contract. This can be achieved by getting a warranty from the employee.

WORKING TIME REGULATIONS

Ajayi and anor v Aitch Care Homes (London) Ltd

The Employment Appeal Tribunal has held that there had been no breach of the Working Time Regulations 1998 (“WTR”) in circumstances where two workers had been caught sleeping whilst on duty.

WHAT DOES THIS MEAN?

The employer had made expressly clear that workers would need to remain alert at all times and anyone found sleeping whilst on duty would normally be dismissed. The Claimants had been employed as night support workers and had been caught sleeping whilst on duty.

One of the workers alleged that they had been exercising their rights under the WTR, namely by having a rest break under Regulation 12. The workers were dismissed and brought claims alleging that they had been automatically unfairly dismissed.

The Employment Appeal Tribunal (“EAT”) agreed with the decision made by the Employment Tribunal, namely that there had not been an automatically unfair dismissal. The EAT noted that not only does the employer need to have imposed (or propose to impose) a condition which breaches the WTR, but the employee also needs to refuse (or propose to refuse) to comply with the condition. The employee would then need to have been dismissed as a result of the refusal (or proposal to refuse).

The workers did not have the requisite service to bring a claim for unfair dismissal, therefore the question of reasonableness of the dismissal was not considered.

WHAT SHOULD EMPLOYERS DO?

Employers should exercise caution if they seek to dismiss a worker who claims to be exercising rights available to it. The employer must be able to provide cogent evidence of its rationale and be able to demonstrate that it did not unfairly dismiss a worker.

BREACH OF FIDUCIARY DUTIES

Ranson v Customer Systems Plc

The Court of Appeal has held that an employee who met with Client’s of the business for his own needs was not in breach of his contract of employment.

WHAT DOES THIS MEAN?

The Claimant intended to set-up a business in competition with his employer once he had resigned. Before tendering his resignation and during his notice period, the Claimant discussed potential work with clients of the employer who had approached him.

Before the Claimant left employment, an order was placed with him.

The employer issued proceedings alleging that the Claimant had been in breach of his contractual obligations and breach of his fiduciary duties.

On the facts of the case, the Court of Appeal held that the Claimant did not owe fiduciary duties to his employer.

WHAT SHOULD EMPLOYERS DO?

Employers should not seek to solely rely on fiduciary duties as this may not be applicable to all levels of employees. Employers should ensure that appropriate restrictive covenants are contained in an employee’s contract.

FEES IN EMPLOYMENT TRIBUNALS

The Ministry of Justice has released the results of a consultation which was undertaken into introducing fees in the Employment Tribunal. The changes are to be implemented in 2013. The proposals are to introduce various levels of costs to be associated with differing levels of claims, for example:

  • Straightforward claims will have an issue fee of £160 and a hearing fee of £230;
  • Anything which is not a straightforward claim will have an issue fee of £250 and a hearing fee of £950;
  • There are other fees as well and fees for Employment Appeal Tribunals

Although employers may see this as a positive step which deters individuals from bringing a claim, there will be a scheme in place which will allow individuals not to have to pay any fees at all. It is envisaged that this would be similar to the scheme currently used in civil courts.

The decisions provided in this e-brief are fact-specific and it is always recommended that legal advice is sought before any decision is made.

For further information or advice on any of the issues outlined in the e-Brief, please contact any member of the employment team.