eBrief: Gordons legal Employment Update – 15 September 2016

Thursday 15th September 2016

Welcome to this week’s Employment Law update in which we look at constructive dismissal, protected conversations, subject access requests and mental health in the workplace among other things. In response to valuable feedback we provide opinion and commentary where appropriate but as these things tend not to be laughing matters, we now leave the jokes to others, respecting our readers wishes to have more of a “speedread”.

£70k+ pay-out for refused contractual sick pay

A mechanic in Scotland has been awarded over £70,000 after taking his employer to a tribunal. The Claimant, David McKenzie, had worked at the same motor company for nearly 50 years. He was signed off sick with stress following an altercation with the son of the former boss amid fears over the company’s financial health. Such fears were eventually realised as the company was consequently bought by Pentland Motor Company (PMC).

The Claimant’s stress came to a head as the deal went through. Meantime, in contrast to other employees whose sick pay entitlements were two weeks’ full pay then statutory sick pay (SSP), the Claimant’s contract stated that he was entitled to full salary during his time off sick. Despite this, PMC wrote to Mr McKenzie to tell him that they would only be paying him two month’s full salary as a “gesture of goodwill” before receiving SSP after that.

He resigned as a consequence, claiming fundamental breach of contract and constructive dismissal before an employment tribunal. The Employment Judge found that “a clear written term was overridden without a clear reason for doing so and following virtually no investigation of the matter.”

With the market saturated with younger workers offering mechanical skills after the downturn in the oil industry, he had little chance of mitigating his losses. Having earned nothing since dismissal, the Claimant was awarded £73,482 for unfair dismissal and a further £1,855 for unpaid sick pay, totalling £75,337.

Comment: Although the contract of employment in this case contained an “unusual” clause, it should be fairly straightforward to understand that if the clause concerns money matters in particular, then a disregard for the clause is very likely to amount to a fundamental breach, not least when an employee is in a situation where they can do little to change things due to sickness absence. 

Protected conversations – stop waiving the shield of privilege

In the recent case of Faithforn Farrell Timms LLP (“FFT”) v Bailey, the Employment Appeal Tribunal has provided guidance on the section 111A “protected conversation” rules.

In circumstances where employers and employees wish to have discussions in order to settle a dispute or agree the terms of departure, there are two main options:

  • The “without prejudice” rule – which can potentially apply in all types of litigation in circumstances where there is a dispute between the parties; and

  • The “protected conversations” rule (s.111A of the Employment Rights Act 1996) which can only apply in respect of ordinary unfair dismissal claims and there is no requirement for a pre-existing dispute.

If either of these rules apply, then the negotiations can potentially be inadmissible as evidence in any court or tribunal case.

Mrs Bailey worked part time for FFT as an office secretary and was informed by the firm that it may no longer require her to continue working her part time hours. Settlement discussions took place unsuccessfully after which Mrs Bailey complained to the Employment Tribunal alleging sex discrimination and constructive unfair dismissal. Part of her claim related to FFT’s conduct during those settlement discussions.

The Employment Tribunal considered the admissibility of the discussions and concluded that section 111A only restricted the detail, not the fact of settlement discussions taking place. Therefore, the documents in issue were not wholly inadmissible.

On appeal to the EAT, the EAT concluded that because Parliament had not provided for an exception whereby parties can agree to waive privilege, the parties were unable to do so. It also concluded that section 111A privilege covers the detail of any discussions and the fact of them taking place.

Comment: This is the first appellate decision on “protected conversations”. It has provided useful guidance on the application of section 111A and the difference between it and the common law “without prejudice” rules – where privilege can be waived. In terms of the day-to-day management of disputes from an HR perspective, this is an important case. Sometimes an employer might want to waive section 111A privilege and the fact that it can’t has the potential to lead to gaps in open dialogue with employees. For a slightly longer article on this case please click here.

Care workers suing council contractor over minimum wage

Seventeen care workers are bringing the sector’s biggest ever legal claim over failure to be paid the minimum wage. The company Sevacare, which has contracts with a number of local authorities providing care to over 9,600 people each week, are now in legal battles over workers believing their pay should cover those hours deemed off-duty.

The workers bringing the claim against Sevacare allege that they were on a rate of £3.27, less than half of the National Minimum Wage (NMW) at the time. Sevacare have claimed they do pay above the minimum wage but payslips from staff based in Haringey in North London show otherwise.

The claims within the Tribunal show that a number of the workers involved act as “live-in” carers for up to seven days at a time. In addition, workers in Haringey were not paid for travelling time between their visits to clients despite the council being legally required to pay at least the NMW including remuneration for travel time.

Last year it was estimated that 160,000 care workers within England and Wales were not being paid the National Minimum Wage. In their view, Sevacare believe that this is due to inadequate funding by the government.

Comment: This is a tricky issue which we ourselves have advised on quite regularly. It poses significant potential problems for the care industry and the potential costs of care provision. We will watch the progress of the case carefully for future developments. Care providers would be well advised to undertake a strategic review of their own situations now pending the possible findings in this case.

Mental health problems in the modern workplace

The New Statesman reported on a landmark case in France which might soon change public opinion on stress at work, particularly in low-paid sectors. Following an inquiry into the suicides of more than 30 employees at France Telecom (now Orange) between 2008 and 2009, prosecutors in Paris have recommended that the former chief executive and six other senior managers be put on trial for psychological harassment. They suggest that the company had a strategy designed to pressure employees into quitting of their own accord to save the company the expense and bad publicity of firing them (by moving workers from office to office, providing very poor working conditions and forcing them to work long, impractical hours). The article can be viewed here.

Comment: This is a serious and often misunderstood area. We are hosting a breakfast seminar Mental Health in the Workplace Seminar on 27 September 2016 at our Leeds Offices. The event will provide expert insight into HR best practice when working with employees who may be experiencing mental health problems as well as what a business should be doing  from a legal perspective to manage employees with mental health issues. The event will also allow delegates to share best practice and they will also receive a legal update on topical HR issues. Click here for more information.

Employment Tribunal statistics update

The Ministry of Justice have published some tribunal statistics for the financial year from April 2015 to March 2015. Here is a selection of the figures:

Employment tribunal claims received: A total of 83,031 claims were received by employment tribunals which is an increase from 61,308 in 2014-2015. The total is made up of 16,935 single claims (compared to 16,420 in 2014-2015) and 66,096 multiple claims (compared to 44,888 in 2014-2015).    

Employment tribunal costs awards: A total of 658 costs orders were made, a decrease on last year’s total of 870.  Of these 393 costs awards were made in favour of claimants and 265 costs awards were made in favour of respondents. The largest single costs award was £102,967.

Comment: The most disappointing statistic for employers is probably the one relating to costs awards in their favour. Before you all get too despondent however, it is worth remembering that very often the dismissed employee won’t have the means to pay anyway! That said, we always take steps in every case to explore possible costs angles at an early stage and as a result we have an enviable reputation for securing costs orders against unsuccessful claimants. 

LG and Samsung facing litigation over no-poaching agreement

The high-end electronics giants, LG and Samsung, are facing legal battles due to accusations that the companies conspired to not poach each other’s employees in the US thereby driving down employees’ wages.

Their anti-poaching agreement backdates to 2005 and is said to have eliminated competition between the companies thus supressing employees’ wages. Frost, the lead claimant for the action, states that “the impact of the bilateral agreement is exacerbated because of the similarity between LG and Samsung’s businesses, and the scope of the business lines in which LG and Samsung compete in the United States.”

It is claimed that Frost was made aware of these agreements back in 2013 when a recruiter approached him via LinkedIn to discuss an opening at Samsung before quickly realising that his mistake contravened the “long-standing agreement.” 

This case is not the first of its kind. In 2015, Google and Apple reached a settlement of over £312.9m ($415m) at the resolution of a very similar claim. Over 64,000 workers were entitled to receive about $5,800 each to settle the claim that their wages were illegally stifled between 2005-2009 as a result of their employers’ actions.

The two companies contend that no such agreement ever existed. 

Are you prepared for subject access requests?

Recent figures published by the Information Commissioners Office (ICO) show the importance for employers to ensure they are fully prepared to deal with subject access requests (SARs). Almost half of all complaints made to the ICO last year related to SARs or the difficulties people face when trying to get hold of their personal information. It has been suggested that this is as a result of insufficient systems and processes which mean employees are not able to sufficiently deal with SARs.  

The case of McWilliams v Citibank NA emphasised the importance of dealing with SARs and highlighted the potential risk to employers if they are not correctly dealt with. In this case, the Employment Tribunal held that claimant was unfairly dismissed and part of its reasoning centred on the employer’s refusal to respond to the claimant’s SAR which substantially restricted her ability to defend her actions.    

Comment: SAR’s involve a significantly more detailed approach than many employers realise. We strongly recommend specialist advice if one is received and it should be borne in mind that using an SAR is fast becoming the normal precursor to employment tribunal claims. We can advise on the steps needed to comply but more generally, we can work strategically with you to examine your systems in the event that an SAR is received in the future.

If you require any further information on the above developments please do not hesitate to get in contact with a member of the Employment Team, on the following number 0113 227 0100.

Gordons LLP won Best Regional HR/Employment team in the Legal 500 Awards 2014/2015. For further information on any of the above changes please contact any member of our award winning team by phone on 0113 227 0100 or by visiting our website:- http://www.gordonsllp.com/law-services