I remember Collidge -v- Freeport plc [2008] EWCA Civ 485 when it was at first instance, dealing as it does with the very common clause found in compromise agreements that:
“Subject to and conditional upon the terms set out below, [Freeport] will pay to you the sum of £445,680 gross as compensation in respect of the termination of your employment…
“You warrant as a strict condition of this agreement that as at the date hereof… there are no circumstances of which you are aware or of which you ought reasonably to be aware which would constitute a repudiatory breach on your part of your contract of employment which would entitle or have entitled the company to terminate your employment without notice”.
… in other words that subject to the warranty being true, we’ll pay you lots of money. The warranty was not true. Collidge had done bags of things which would have entitled Freeport to summarily dismiss him.
The judgment confirms that in this agreement, the warranty was a condition precedent. In other words, all performance by Freeport of its obligations under the agreement was subject to the warranty - rather than it simply having a remedy of damages for its breach. Compromise agreements are tricky - they have to be very tightly drafted according to the individual circumstances, but increasingly are simply run off as precedents. Given that the context in which the agreement was signed, Collidge may well have thought that he was protected from subsequent discoveries of impropriety, so this case emphasises both the quality draftmanship required on compromise agreements as well as the thoroughness with which the employee’s solicitors must advise.
The Code is intended to come into force in April 2009 at the same time as the abolition of the hated statutory Dispute Resolution procedures, and is currently open for consultation. Acas have taken the tack of having two documents - a Code of Practice, and a document containing wider guidance. The consultation document notes that many have called for a shorter, simpler code, and this indeed is what they’ve delivered. By way of reminder, failure to follow the Code of Practice will not in itself be determinative of a legal issue such as fairness, as is the current case with the statutory procedures. Instead, it will be a factor to which the tribunal can have regard, and non-compliance will also empower the tribunal to adjust any compensation by up to 25%.
This seems sensible - it means the code of practice rewards compliance and punishes non-compliance, but isn’t so absolute in its effect such as to result in injustice.
I’m pretty stunned by the simplicity of the document, which can be found here. Those used to Acas guidance will have been checking the amount of paper in the printer, but no need here. The full document, including the consultation what nots, is a mere 14 pages. The steps that should be followed are fairly uncontroversial, but have a look for yourself. One paragraph that did catch my eye was this:
23. Some acts, termed gross misconduct, are so serious that they may call for summary dismissal for a first offence.
What this, with its surrounding paragraphs, says is that dismissal on the first offence can only be for gross misconduct. Whilst that will be the case 95% of the time, I’m not sure that as a statement it’s correct in law.
Everyone’s been laughing it up at this case where a man dismissed from his job as a kitchen porter at a hotel brought an unfair dismissal claim, stating that his dismissal had been orchestrated by Jehovah’s Witnesses. According to the ET:
“The Claimant made repeated references in his claim form to secret video recordings carried out on behalf of the Watch Tower Society; he talked about the Watch Tower Society instigating his dismissal; coming into the Hotel to turn staff against him; spreading rumours about his sexuality; preventing witnesses from assisting him; installing secret cameras in changing rooms and in his room; falsely imprisoning him in a Psychiatric Hospital; and showing the tapes to the then Prime Minister, Tony Blair.”
It isn’t funny though, not really. As much as us lawyers smirk in amusement at outlandish and delusional claims in front of the court, take a moment to put yourself in the shoes of the Claimant himself. I can’t quite imagine what it must be like to be so utterly convinced that you’ve (a) been wronged and (b) that everyone’s been corrupted against you. In practice once I dealt with a county court claim where the Defendant would write letters to the county court that were ten or twelve pages of bitter anguish at not one, not two, but four of the district judges there having been bribed to find against him. DJ’s must be cheap - the claim was only for about £1500, but what can you do about people like this? In the tribunal claim it was found that the Judge had no right to involve the offical solicitor in the case, and simply had to deal with the Claimant’s claim as it was presented.
This is off-topic, but I think for practical purposes the idea that you humour someone in this state is barbaric. Is it right that if someone doesn’t actually pose a physical risk to themselves and others we’ll allow them to subject themselves to so much misery without intervention?
The National Staff Dismissal Register will be a searchable database of employees who have been dismissed for ‘dishonesty’ or have resigned while dismissal proceedings are ongoing - see the article on Personnel Today. I’m amazed this hasn’t generated more headlines. It’s been developed in consultation with the Information Commissioner’s Office, so one assumes the data protection angle will be looked after, and I’d guess there will be a dispute resolution service to remove disputed details. I’ve not seen complete details of the scheme, but some immediate issues that spring to mind:
- If use of the database is widespread, finding another job after dismissal will be near impossible; this could seriously affect an unfairly dismissed employee’s chance of mitigating his loss pending the unfair dismissal finding (at which one assumes the dismissal will be removed from the system). This will mean higher compensatory awards, and potentially arguments over damage to reputation and so on.
- What if I’m being investigated for an allegation that constitutes dishonesty, but I resign for other reasons? What if I’ve been constructively dismissed? What if the allegations of dishonesty were victimisation following a discrimination claim? The disputes reaching the database operators could well trespass into findings best left for a tribunal - and if the procedures don’t exist then serious injustice could result.
- Will there be any compulsion for those employers signed up to the system to report their employees? A lot of investigations and disciplinary procedures end with a resignation, a cessation of the procedure, and the employer simply refusing to respond to subsequent reference requests. An employee in that situation still has reasonable chances of employment, but if his former employer is obliged to put him on the database then his chances are shot.
I can well understand why there are concerns. A TUC representative stated to the BBC:
“The TUC is seriously concerned that this register can only lead to people being shut out from the job market by an employer who falsely accuses them of misconduct or sacks them because they bear them a grudge. Individuals would be treated as criminals, even though the police have never been contacted.
“The Criminal Records Bureau was set up to assist employers to make safe appointments when recruiting staff to work with vulnerable groups. The CRB already provides appropriate and properly regulated protection for employers. Under the new register, an employee may not be aware they have been blacklisted or have any right to appeal.”
…and at the moment those very genuine concerns aren’t answered.
It’s a cynical view that all you do when your company goes bust is put it into administration and buy it back, but would seem to be amply demonstrated by this case.
Company goes into administration, administrator has no money for wages so sacks all the staff, then duly sells business back to original owner. Is dismissal for a reason connected with the transfer, thus giving TUPE protection? No. The dismissal’s because the administrator didn’t have any money. The allegation that this is exactly what was planned by the owner all along isn’t relevant once you establish the motivation and mind of the actual dismissing officer.
This is a real kick in the balls for employees in this situation. Although I think the decision’s probably correct, the morals of it are amply spelled out by the court:
As counsel have identified, the critical question is whose decision was it? Once the answer is that it was the administrator’s decision, then nothing done by Craig Smith before that decision was taken nor after it could have any bearing on the reasons why Mr Rutherford acted as he did. The facts may give rise to the inevitable conclusion that Craig Smith cynically manipulated the insolvency of Friction, saw the opportunity of the August holidays as the best time to place the company in administration and did so not simply with a hope but with every expectation that by reason of Realty’s close association with Dynamex, Dynamex itself would soon fall into his palm. That is what happened. It is not an attractive story. It brings no credit to Craig Smith. But Craig Smith did not decide to dismiss the employees even though he knew that would happen and wanted it to happen. Mr Rutherford dismissed them. He did so for economic reasons.
Having decided as it seems to be to me inevitable that the reasons have to be discerned from the actions of the administrator whose actions were unsullied by Smith’s scheming, then there is only one conclusion for any tribunal to reach: the reason for dismissal was an economic one. As Mr Ralls recognised, if the focus is on Mr Rutherford’s state of mind, then he is “a shot fox”. Unsporting as shooting a fox may be and as lacking in fair play as Craig Smith’s machinations were, I am compelled to allow the appeal and restore the decision of the Shrewsbury Employment Tribunal.
This is not an uncommon situation, and there may well be some argument for legislation providing for extra accountability by those who purchase a business they owned until a few weeks before. Will this happen though? No.
It’s happened to me metaphorically but never literally: being grabbed by the balls can give you a good constructive dismissal claim, as this funny case shows.
The report is so short it also acts as a good swot-sheet for constructive dismissal authorities.
EDIT: Actually, I’ve just remembered an incident where this did happen to me at work.
My earlier assurances that my blogging wouldn’t be interrupted by work have been shown to be completely hollow - over two weeks have passed since my last post.
And it’s not even as if there’s been nothing to report. Favourite case recently must be Kuzel v Roche Products Ltd which talks of the burden of proof in Unfair Dismissal cases. Generally in law the person advancing a case, eg you saying that your neighbour cut down your hedge, the state saying you murdered him in retaliation, has the burden of proving the allegation. Not so in unfair dismissal. S.98(1) ERA 1996 moves the burden on to the employer. So if I say “you sacked me for an absolutely bloody stupid reason” then my employer doesn’t have to disprove my version of events to oppose the claim, they have to come up with their own valid reason for my dismissal and prove that. The reasons I advanced don’t really come into it.
In this case however the employee had advanced whistleblowing (protected disclosure) as the reason for her dismissal. It’s obvious why she would make sure she did this if she thought she might have a shout - whistleblowing claims aren’t subject to the financial limits of normal unfair dismissal and include an award for injury to feelings. The employer ran some taking-the-piss SOSR defence about the relationship having broken down. The tribunal stuck two fingers up at everyone by finding that dismissal was for a third reason, against the pleadings of both parties. The consequence for the simple unfair dismissal claim is obvious - it succeeds as the potentially fair reason advanced by the employer was not found to be proved. The odd consequence is for the whistleblowing claim - where does the burden of proof lie? Traditionally it should be at the employee’s door, it’s her case and her allegations. The statute is largely silent on the issue, the reversal of the burden of proof only seeming to explicitly apply to the reason actually advanced by the employer to be the reason for the dismissal. Well for once we’ve some useful guidance, produced by the EAT and approved by the Court of Appeal:
- Has the employee shown that there is a real issue as to whether the reason put forward by the respondent was not the true reason?
- If so, has the employer proved his reason for dismissal? Failure to do so will render the dismissal unfair, and then coupled with a primia facie case from the employer will entitle the tribuanl to infer that the employee’s stated reasons are correct.
- Has the employer disproved the reasons advanced by the employee? Even if the employer has failed to prove it’s own reason for the dismissal it may still have disproved that of the employee.
- If not, dismissal is for the reasons stated by the employee. It is not however, at any stagae, for the employee to prove her reason.
I’ve mucked around with the above to apply generally.
The Court of Appeal seem to have taken the line that this case is one for minority interest, stating that it shows how worked up lawyers can get about something like the burden of proof. I agree, but not with their observation that this sort of case will be rare. Protected disclosures are often presented in conjunction with a general claim for unfair dismissal, and its similarity to a discrimination claim may well mean that the facts coincide with the parties having fallen out generally. The unfair dismissal might well then often succeed without the whistleblowing. The same can be said about maternity-related dismissals.
A neat summary of the situation at present:
The question of whether a claimant in an unfair dismissal case is or is not an employee within the meaning of the 1996 Act is increasingly litigated before employment tribunals in unfair dismissal cases, particularly those brought by workers on the books of employment agencies. This is not surprising in view of recent developments: the length of the qualifying period for protection has been reduced to 1 year making it possible for more “temporary workers” to qualify for protection; the maximum award of compensation for unfair dismissal has been substantially increased making it more worthwhile for claims to be brought and providing employers with an additional reason for resisting claims; and, most important of all, there has been an explosion of numbers in the workforce (estimated at 1.3m) engaged to work under arrangements with employment agencies.
This case in the Court of Appeal, James v London Borough of Greenwich, has caused no end of grumbling in employment law circles at the failure of the court to lay down specific guidelines as to when an agency worker will become an employee of the end user. God knows why, previous EAT cases had made it simple enough. The hysteria that followed Dacas never made any sense - a bit of obiter chucked in that it would be possible in some cases to imply an employment contract in those circumstances wasn’t controversial.
What was controversial, when you take a step back, was the idea that this possibility was ever going to upset the statutory restriction of unfair dismissal rights to employees (unlike, for example, discrimination law), and the normal rules of interpretation of contracts.
Rights for agency workers is a real political hot potato, and change is needed, but frequent finding of employment relationships in genuine agency arrangements could cause huge economic upheaval. The courts were never going to do it lightly: they haven’t the balls, and it doesn’t make sense anyway.
Time for the annual review of financial limits. The two biggies:
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The cap on a week’s pay when calculating redundancy payments (or the basic award for unfair dismissal) goes up to £330;
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The maximum compensatory award for unfair dismissal is raised to £63,000.
I’m really not sure if the latter should be retained, especially as the corresponding award in discrimination cases is unlimited. If Alf is sacked after thirty years’ graft for sneezing on the MD’s sandwiches, why is he more restricted in his recovery than when Abdul is sacked for his religion?
The other changes are:
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Unfair dismissal minimum awards for certain health & safety, sunday working, Working Time Regs, pension trustee, or certain trade union reasons rises to £4,400;
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… and wrongful expulsion from a trade union bags you a minimum award of £6,900.
All of this applies to dismissals on and after 1st February 2008. The full list of changes can be found here.
Consultation, consultation, consultation. The worst crimes imaginable can nip under the radar if you only sit your employees down and talk about how terribly dreadful the situation is, but needs must, and what can we do to make the blow easier? Compulsory collective consultation in redundancy situations involving 20 or more job losses has been around for over thirty years, but we still see new developments.
If you, a company, are contemplating making 20+ redundancies at one establishment within ninety days, you have to spend at least 30 days in consultation prior to the first dismissal. If it’s 100+ redundancies, it’s 90 days. Fail to do this, and your employees can apply to the tribunal for a “protective award”. I personally have never understood the term - it’s a fine for non-compliance, nothing less. A protective award = 90 days’ pay. So, let’s say you’re making 25-odd employees redundant, which indicates in itself you haven’t bags of cash lying around, if you don’t give ‘em 30 days’ worth of consultation (no matter how little effect it might have on the final result) then you cop for 90 days’ pay to each of them. What’s that? 90 days? But we were only supposed to consult for 30! Tough shit. It’s a fine. You should have done it properly. This idea, following Susie Radin in 2004 which finally clarified the award as punitive, has been backed up by the EAT. This particular case has been notified all over the employment news-o-sphere, but I suspect it’s simply the first cock-up to be appealed rather than any shift in practice for most tribunals.