Employment Law Solicitor Hazel Phillips from Burnetts in Carlisle, West Cumbria and Newcastle takes a monthly look at some of the employment law cases hitting the headlines......
The provisions which apply to service provision changes under the Transfer of Undertakings (Protection of Employment) Regulations 2006 have always been controversial.
A service provision change is where a business stops carrying out an activity on its own behalf and brings in a contractor to do that activity for the business; a business re-assigns activities from one contractor to another; or a business decides to bring “in-house” activities previously carried out by a contractor.
In all of these cases there could be a TUPE transfer unless the activity which would otherwise transfer is being carried out “in connection with a single specific event or task of short term duration”.
The EAT considered in the case of Liddell’s Coaches v Cook whether a contract which was for a year could be considered a task of short term duration.
Mr Cook was a coach driver for Liddell’s Coaches providing school transport services. In August 2010, the local Council awarded Liddell’s a number of contracts to transport children during the re-building of a school. The contracts were for an initial one year period but the rebuild took two years and so the Council had to re-tender the transport services when the first set of contracts came to an end. Liddell’s lost out in the re-tender exercise and only retained one of transport contracts.
Liddell’s thought that Mr Cook would transfer to one of the incoming providers but the incoming provider argued that TUPE didn’t apply because the contract covered a short term event.
The Tribunal agreed, deciding that although this was a re-tender situation, the contracts still related to a single, specific event (the rebuild of the school) which was intended to be of short term duration. The Tribunal was persuaded that, because local authorities typically contract with coach operators for between three and five years, the contracts in relation to the rebuild (which were for 12 months at a time) were sufficiently short term to engage the TUPE exception.
Although Liddell’s appealed, the EAT has upheld the Tribunal’s original decision. The EAT was not convinced that the rebuild was a single specific event, but was persuaded that the contracts were of short term duration. Although the EAT noted that what would be deemed to be short term would vary from case to case, the fact that the rebuild would be completed by the end of the new contracts meant that the incoming contractors assessment had been correct.
Whilst twelve months might not necessarily seem to be a short period of time, this case is an example of Tribunals taking a restricted view of TUPE and following the unpopular course of not allowing the employee to transfer. The short term test does not come up often but it is worth bearing in mind that if the task or activity for which you are tendering is time limited then TUPE may not be applicable.
Anybody with questions about TUPE should contact John Morris or Hazel Phillips at Burnetts on 01228 552222.
Since the abolition of the default retirement age in April of last year, employers have been struggling with the question of how to raise the topic of what an employee’s retirement plans might be without putting themselves at risk of a claim for age discrimination. The case of Quick v Cornwall Council gives some guidance.
Mrs Quick was the Headmistress of a small rural primary school. It had been clear for a number of years that the Local Authority wished at least four such schools (including Mrs Quick’s) to work more closely together in order to reduce costs and maximise resources. It was also clear that this restructure would lead to redundancies.
Just when serious discussions about the restructure were starting to take place, Mrs Quick became ill. During her absence, allegations were made against her. Those allegations were upheld and Mrs Quick was dismissed. Mrs Quick brought unfair dismissal and age discrimination claims at an Employment Tribunal. She alleged procedural errors but also said that comments were often made about her age and that she had repeatedly been asked if she had any plans for retiring. Mrs Quick claimed that these were discriminatory acts.
Both the unfair dismissal claim and the age discrimination claims were dismissed. The Tribunal felt that the disciplinary process had been fair and reasonable and that the decision to dismiss was within the range of reasonable response.
Of more interest though is the Tribunal’s comments on the age discrimination allegations. The Tribunal specifically noted that, in the context of a planned restructure it was sensible for information to be recorded regarding the ages of those involved and possible retirement plans. The Tribunal seemed to suggest that, as long as there was no suggestion that the employee in question would be forced to retire, asking the question could not be seen as less favourable treatment.
Interestingly, the Tribunal went on to say that other staff asking questions about retirement was not discriminatory either because it was natural for staff who might be affected by an employee’s plans (because of the impact on their own career progression and aspirations within a particular organisation) to be interested in that information.
It may be that this decision is fact specific (and employers should note that it is a first instance decision and so is not binding upon future Tribunal cases) but employers should be reassured that Tribunals do seem to be sympathetic to an employer’s need to ask for information about future plans provided that request is handled sensitively and in the context of planning.
Anybody seeking advice on retirement issues or discrimination claims generally should contact Hazel Phillips at Burnetts on 01228 552222.
Over the summer we covered the case of Patsystems Holdings Ltd v Neilly which reminded employers that they have to be careful to ensure that the restrictions imposed are suitable for the level of seniority of the employee in question and that when an employee is promoted contracts and restrictions should be updated. What happens though if the employee won’t sign that new updated contract?
This was exactly the position in FW Farnsworth Limited v Lacy. Mr Lacy had joined Farnsworth as a graduate. After being promoted, Mr Lacy was asked to sign a new contract which gave better pay and conditions but which also contained more onerous restrictive covenants. Mr Lacy didn’t sign the contract. He read through it briefly, put it in a drawer and forgot about it.
In March 2012, Mr Lacy resigned to join a competitor. Farnworth tried to prevent that, relying on the restrictions in the contract that Mr Lacy had never signed. Farnworth argued that, although Mr Lacy had not signed the agreement, his decision to join the company’s pension scheme and to apply for medical insurance (both benefits that had not been available to him in his more junior role) should be taken as implied or inferred acceptance of the new contract.
The High Court decided that Mr Lacy’s decision to access those benefits should be deemed as acceptance of the whole contract including the restrictive covenants. If Mr Lacy hadn’t taken that step though, the restrictions would not have been binding because otherwise he had not confirmed his acceptance of those more onerous terms.
The lesson for employers – if new contracts have been issued and not signed, take steps to address that now or risk being left with less protection than you thought.
Anyone wanting advice on their position should contact Hazel Phillips at Burnetts on 01228 552222 or email@example.com
Extension of Equal Pay
The case of Birmingham City Council v Abdulla & Others is a much more worrying development.
Although, employees have slightly longer to bring equal pay claims in the Employment Tribunal (6 months from the end of the relevant employment) than the usual 3 month time limit which applies to unfair dismissal and discrimination claims, the Birmingham City Council case concerned a number of women who tried to circumvent this time limit by bringing their claims for equal pay in the civil courts where a 6 year time limit applies instead.
Despite Birmingham City Council’s strenuous defence of these claims, the Supreme Court has recently found against them. The Court felt that Parliament had provided an avenue for equal pay claims to be brought in more than one forum and therefore, the fact that the claims could have been brought in an Employment Tribunal a lot earlier wasn’t relevant.
The Supreme Court did say that anyone who deliberately delayed bringing equal pay claims so as to benefit from tactical advantages in the civil courts would risk having those claims struck out for abuse of process or would risk cost penalties. However, the case does mean that an employer is no longer safe from an equal pay claim after 6 months – instead, the risks will continue for up to 6 years after an employee leaves.
Although the judgment has not yet been released, Reading Employment Tribunal, recently heard a case which dealt with information being posted by a Senior Executive on social networking sites.
John Flexman worked for a company called BG Group in Reading. Mr Flexman took the decision to upload his CV onto LinkedIn in order to complete his profile on that website. When doing so he had also ticked the box to register an interest in employment opportunities.
In response to his actions, BG Group, contacted Mr Flexman while he was on holiday and asked him to remove his CV from LinkedIn immediately. Mr Flexman was also accused of inappropriate use of social media (uploading his CV and ticking the employment opportunities box, was apparently in breach of BG Group’s social media policy) and disclosing confidential company information.
Mr Flexman’s position was that he was one of around 21 employees who had uploaded their CVs and ticked the employment opportunities box when registering with LinkedIn but as he was the only one who was being disciplined he was being treated unfairly. Mr Flexman also maintains that the manager hearing the disciplinary procedure had also ticked the box on LinkedIn and had his CV on his profile on the website at one point and so was not an appropriate person to conduct the disciplinary process.
The dispute became heated and in the end Mr Flexman resigned and started proceedings for constructive unfair dismissal.
It will be interesting to see what becomes of this case, but as a lot of our clients are asking questions about the use of social media and we wanted to highlight the fact that the key issues that are likely to influence the Tribunal’s decision will probably be whether or not BG Group had a clear social media policy in place and whether or not that policy was properly disclosed to Mr Flexman. Anyone with queries about social media policies or how to deal with issues of this nature should contact either Aaron Lyons (firstname.lastname@example.org ) or Hazel Phillips (email@example.com) at Burnetts on 01228 55 22 22.
Breakdown of Trust and Confidence
In recent years there has a growing trend for employers to use the Some Other Substantial Reason (SOSR) dismissal as a “catch all” to justify dismissals in difficult cases. Leach v OFCOM was one such case.
Mr Leach was dismissed after his employer, OFCOM, received a "limited disclosure" from a specialist Metropolitan Police unit stating that Mr Leach had been involved in child abuse in Cambodia. OFCOM relied on the potential reputational damage which could arise if the allegation came into the public domain as grounds for a SOSR dismissal but Mr Leach challenged that by bringing a case for unfair dismissal.
The main issue for the courts to determine was whether the police disclosure was a sufficiently substantial reason to justify Mr Leach’s dismissal given that the allegations had not been proven nor admitted, and had no direct relationship to Mr Leach's work for OFCOM.
OFCOM had considered the nature of the allegations, the trust worthiness of the source of the allegations and had made reasonable efforts to verify the allegations. OFCOM had spoken to Mr Leach about the allegations and had considered if there had been any alternatives to dismissal before proceeding. In those circumstances, the Court of Appeal decided that the test for a SOSR dismissal had been met.
However, in making its decision, the Court of Appeal commented that although the mutual duty of trust and confidence is "at the heart of the employment relationship", it is not a label that can be stuck on any difficult situation which doesn’t fit neatly into any of the other fair reasons for dismissal.
Although the Court of Appeal upheld the employer’s decision in this case, the allegations were quite unusual and employers should take the court’s comments as a warning that SOSR dismissals should only be used in such exceptional circumstances.
Any employers considering whether a SOSR dismissal is appropriate to a situation within their business should contact Hazel Phillips at Burnetts Solicitors on 01228 55 22 22 or firstname.lastname@example.org
Redundancy if part-time hours are available?
To meet the legal definition of redundancy (and to have a fair reason to dismiss in a redundancy situation) the employer must be facing either the closure of its business; or the closure of a particular workplace within that business; or a reduced requirement for workers of a particular kind.
Case law from 2002 had suggested that if the employer wanted to reduce a workers hours rather than reduce the total number of employees within the workforce then this was not a redundancy situation. Instead, employers had to deal with this by seeking agreement to a change to the employees’ terms and conditions.
In the recent case of Packman v Fauchon  the employer challenged this line of reasoning, suggesting that, even though the total head count may not go down, if the employer needs to reduce the number of hours of a particular member of staff then this is a reduced requirement for workers of a particular kind and so the definition of redundancy is met.
Ms Fauchon was employed to provide book keeping services by Packman. There was a downturn in business which placed economic pressure upon Packman. In addition to which, Packman had introduced an accountancy software package which reduced the number of hours of book keeping that were needed.
Packman tried to persuade Ms Fauchon to reduce her hours but she refused. When Packman couldn’t reach agreement with Ms Fauchon, they eventually gave her notice of redundancy and her employment with them terminated when the notice period came to an end.
The employment tribunal followed the 2002 decision and held that there was no redundancy because there was no reduction in the number of employees required - Ms Fauchon was still required, just on fewer hours.
However, the EAT disagreed and, going back to the wording of the Employment Rights Act, held that the downturn in business meant that there was a diminished need for book-keeping work which created a redundancy situation.
Employers with concerns about a possible redundancy situation and how to tackle a redundancy process should contact Hazel Phillips on 01228 552222.
Imposing Restrictions on Junior Employees
Many employers want to protect their business interests, such as customer contacts, when an employee moves on. The most common way of trying to achieve this is to include restrictive covenants within an employment contract. However, such restrictions are only enforceable to the extent that they are reasonable.
For ease though, many employers include the same restrictions in every employee’s contract regardless of the role that the employee holds within the organization. Patsystems Holdings Ltd v Neilly should be taken as a warning against that approach.
Mr Neilly began his employment with Patsystems Holdings Ltd as an account manager. He was promoted a number of times over the years up to his final position with the company which was a senior executive role with substantial responsibilities. After several years in the senior post Mr Neilly decided to resign and obtain employment with one of Patsystems competitors.
Patsystems started proceedings in the High Court to enforce restrictions which had been included within Mr Neilly’s first employment contract in 2000.
However the High Court decided that, the restrictive covenants would have been void if Patsystems had tried to enforce them against Mr Neilly in 2000 because the restrictions were not reasonable in light of his status and responsibilities at that time. The High Court decided that the change of circumstances over the years did not make those restrictions any more applicable. Instead, the High Court felt that Patsystems Holdings Ltd should have entered into new restrictive covenants with Mr Neilly each time he was promoted.
It follows from this case that employers should exercise caution in relation to the use of restrictive covenants and that any restrictions that are agreed should be amended as an employee progresses through the ranks of a company.
Employee’s Facebook Comments Amounted to Harassment
In Teggart v. TeleTech UK Limited, the Employment Tribunal has ruled that the dismissal of an employee for making lewd comments on a social networking site, outside his normal working hours and from his own private computer, was fair.
While at home of an evening Mr Teggart chose to post an offensive comment about the promiscuity of a female colleague on his personal Facebook account. The post mentioned TeleTech by name but could only be read by his accepted social networking friends and was not visible to the female colleague, who was the subject of the slur. Despite this, she became aware of the comments and asked Mr Teggart’s partner to speak to him and get the comments removed. Instead of removing the offensive comments though, Mr Teggart posted more details of her perceived promiscuity.
Mr Teggart was suspended and, after an investigation and a disciplinary hearing, Mr Teggart was dismissed for gross misconduct.
Mr Teggart appealed the decision on the basis that his comments were placed on the social networking site as a joke and that the investigation had not been conducted properly. His appeal was dismissed and Mr Teggart then started Employment Tribunal proceedings for unfair dismissal and breaches of his human rights – specifically breaches of his right to private life (Article 8); his right to his beliefs (Article 9) and his right to freedom of expression (Article 10).
In deciding the matter, the Tribunal concluded that TeleTech had acted reasonably in relying on its Dignity at Work policy to dismiss Mr Teggart and that Mr Teggart’s human rights had not been breached because, by posting the comments in a public forum, he had waived his rights to the protection afforded under Article 8. In terms of Article 9, the belief that he held that his colleague was promiscuous did not amount to a protected belief and the Tribunal found that Mr Teggart’s rights to freedom of expression did not extend so as to allow him to harass a colleague.
The Tribunal was critical of the TeleTech’s handling of the disciplinary procedure but nonetheless decided that the failures within the investigatory process were not so critical as to undermine the fairness of the dismissal decision.
What really saved Teletech though was the clear and concise wording of its Dignity at Work policy which gave clear guidance as to what would be classed as harassment and specifically stated that online comments would be sufficient to be caught within their definitions. All employers should make sure that their own policies are as clear.
Employers with concerns about whether their policies and procedures are robust enough, or up-to-date with these new developments should contact Hazel Phillips on 01228 552222 or email@example.com
Context all Important
In another Facebook related decision, the Employment Appeal Tribunal (“the EAT”) in the case of Warby v Wunda Group Plc concluded that the mere mention of pregnancy and miscarriage was not necessarily discriminatory even though the comments were made in a wholly unacceptable way.
The background to this case was that, when joining Wunda, Ms Warby had negotiated a low basic wage for herself to be supplemented by commission, based on the number of sales that she made.
At the beginning of 2010, it became apparent that Ms Warby and her manager, Mr Pugh, had different ideas on how she would be paid in the long term. In order to address the disagreement, a meeting was held which resulted in both parties accusing the other of lying. In particular, Mr Pugh had accused Ms Warby of lying about having had a miscarriage. Mr Pugh had come to this conclusion because information from Ms Warby’s timeline on her Facebook account appeared to suggest that she had fallen pregnant before she had had the miscarriage which had previously been described to her employer. When making this comment Mr Pugh had suggested that the date discrepancy showed Ms Warby to be an inherent liar and that the information that she was giving now about her pay should not, therefore, be believed.
Ms Warby vehemently denied the allegations that she was lying about her pregnancy and miscarriage and claimed that it was just a misunderstanding over the dates. She further complained that her wages were being changed to her detriment because she was pregnant and that Mr Pugh’s words had amounted to harassment.
The original Employment Tribunal concluded that Mr Pugh’s words did create an intimidating, hostile, degrading, humiliating or offensive environment (a requirement for a finding of harassment) but the Tribunal did not feel that the offensive environment was linked to a protected characteristic, in this case pregnancy. Instead, the Tribunal felt that Mr Pugh’s motivation was his conviction that Ms Warby was lying. The Tribunal expressed the view that Mr Pugh’s opinions and motives may have been unreasonable, but went on to say that they did not amount to harassment on the grounds of pregnancy because there was no real link to the pregnancy.
In agreeing with the Tribunal’s conclusion, the EAT has stated that a Tribunal might conclude that hostile words containing a reference to a protected characteristic may be discriminatory but that is not always so. The EAT ruled that the context in which the words are spoken is of the greatest importance and the Employment Tribunal had been entitled to hold that, in this case, the words had been spoken with a view to establishing Ms Warby’s status as a liar rather than just being derogatory because she was pregnant.
The case is very fact specific but it highlights both the dangers of using comments posted on Facebook in a work environment and the dangers of derogatory comments more generally. Every time a derogatory comment makes reference to a protected characteristic (for example age, race, ethnicity, sex etc) a discrimination claim could follow.
With redundancies once again a “hot topic” we are often asked whether costs can be taken into account when making decisions on who to accept for voluntary severance. We have always advised caution when adopting this approach because it is almost always older workers who are the most expensive to let go either because of length of service or pension access.
Although the EAT has now confirmed that it agrees with our analysis, and that denying older workers voluntary severance because of the cost does amount to indirect age discrimination, in a positive move for employers the EAT has gone on to say in the case of HM Land Registry v Benson, that to take employee costs into account could be objectively justified and therefore lawful.
Staff at HM Land Registry (the Registry) had been invited to apply for voluntary severance following the merger of several offices. The Registry set a specific budget for the voluntary severance scheme and did not have sufficient funds to allow all of the applicants who volunteered to leave so decided to accept those employees who would cost the least.
Four employees including Mrs Benson, brought claims against the Registry arguing that the only reason that they were more expensive was because of their age and that the decision to only allow the cheapest employees access to the Scheme was therefore indirect age discrimination.
The Tribunal agreed that the policy chosen by the Registry was discriminatory but the Tribunal also accepted that there had been no other satisfactory method of selecting between the applicants for the voluntary severance. Nevertheless, the Tribunal felt that the process to identify those who would be allowed to access the voluntary severance scheme had been carried out too quickly and that if an equality impact assessment had taken place then the Registry would have identified the disproportionate impact of the cost criterion and may have reconsidered whether this was the best way to proceed.
However, the EAT felt that once the Tribunal had decided that the cost criteria was the only satisfactory method of selecting between the candidates that was the end of the issue. The EAT felt that cost savings were a legitimate aim and that it was reasonable for the Registry to impose a budget on the scheme even if that meant that not all of the volunteers would be allowed to go. The decision to focus on cost had, therefore, been objectively justified in this case.
In particular, the EAT stated that an employer is entitled to make decisions about how best to allocate resources and that, even if the employer can afford to allocate those resources differently, as long as the decision which is made is supported by a sound business case then the Tribunal is not entitled to go beyond that.
However, the EAT did point out that the Tribunal’s finding that there was no alternative to assessing the candidates other than cost was unusual. This means that, whilst the decision is good news for those who want to look at cost as a deciding factor or as a possible defence to indirect discrimination more generally, this case is probably not a complete “green light” – it is probably no more than another step in that direction.
A couple of other EAT decisions in redundancy cases have caught our attention during recent months.
The first of these is Halpin v Sandpiper Brooks which considers the extent to which a Tribunal should concern itself with an employer’s selection pool in a redundancy situation.
Mr Halpin was selected from a pool of one; his employer having adopted this approach as Mr Halpin was the only employee working in China where it was ceasing operations. Mr Halpin was offered, and refused, alternate employment back in the UK and then submitted a claim for unfair dismissal. The EAT, upholding the decision that the dismissal was fair, agreed with the Tribunal that decisions as to pools and selection criteria are matters for the employer, and recommended that Tribunals should rarely interfere with either.
The EAT went on to confirm that “selection of employees for redundancy from a pool will only be necessary where there are a number of similar qualified targets for redundancy”. In this case Mr Halpin was the only such target.
Support for this approach can also be found in the recent decision in Capita Hartshead Ltd v Byard where the EAT confirmed that it is not always unfair to choose a redundancy pool that is the same size as the number of redundancies that a company has decided need to be made.
Then there was the decision in Samsung Electronics (UK) Ltd v Monte-D’Cruz, which provides guidance on the different criteria which will be relevant when selecting employees for redundancy from within a pool, and when considering which of a number of potentially redundant employees are suitable for alternative employment.
Case law had already decided that a redundancy could still be fair despite the fact that the criteria used to select between candidates for a redeployment post were not exclusively objective. The Samsung decision builds on this and establishes that when considering which of a number of employees would be best for a suitable alternative position, an employer has greater flexibility than when purely reducing the number of employees employed to undertake a particular role.
Mr Monte-D’Cruz was one of four senior mangers who reported to the Samsung’s Head of Print. Following a reorganisation of the Print Division, Samsung intended to combine the four senior management roles into a single post, Head of Sales – Print, the occupant of which would have responsibility for managing several new lower level management posts which would be known as Business Region Team Leaders. Mr Monte-D’Cruz believed the Team Leader role was to be almost identical to his previous post.
Nevertheless, Mr Monte-D’Cruz applied for the Head of Sales – Print post. He was unsuccessful and so subsequently applied for one of the Team Leader roles. Mr Monte-D’Cruz was again unsuccessful and an external candidate was appointed to the post. Mr Monte-D’Cruz argued, amongst other things, that the appointment of the external candidate was unfair and that the selection criteria for the post included a subjective element, past performance, which was to his detriment.
The EAT decided that, although the process of considering between candidates when choosing who to appoint to a suitable alternative vacancy does need to retain some objectivity, the inclusion of some objective criteria will not make the process unfair. Providing the process is carried out in good faith, and the decision reached is reasonable in the circumstances, the Tribunal should not challenge it even if it results in the dismissal of someone at risk of redundancy and the recruitment of a new external candidate.
The Vanishing Resignation
Most employers know that, although an employee can’t withdraw their resignation once it has been confirmed in writing without consent, it is good practice for employers to permit the withdrawal of resignations made “in the heat of the moment”. However, when a resignation has been given in unambiguous circumstances without any apparent pressures then it is for the employer to decide whether or not to allow an employee to change his or her mind.
In the case of Chelmsford College Corporation v Teal, the situation was a little more complex in that the College originally told Mrs Teal that they would not accept her resignation pending the outcome of a grievance hearing.
Mrs Teal had resigned with immediate effect on 30 November 2009 after the College refused to pay her for overtime. Mrs Teal was invited to a grievance hearing to discuss that complaint and, after listening to Mrs Teal, the College upheld her complaint and paid the amounts claimed. The College wrote to her in mid-December to confirm this decision stating that they would allow her to rescind her resignation but asking her to remember that, in future, any complaints should be dealt with in a manner which caused the least disruption to the students.
Mrs Teal returned to work for the first time since her resignation on 11 January 2010 but was then told that because she was employed on a Zero Hours Contract she would not be paid for the period between 30 November and her return to work as she could not be paid for hours that she had not worked. Mrs Teal raised a further grievance about this and resigned for a second time when that grievance was rejected. Mrs Teal then brought a claim at the Employment Tribunals for constructive unfair dismissal. The College argued that this claim was out of time because the date on which Mrs Teal’s employment ended was her first resignation on 30 November.
The Tribunal which heard this case in the first instance decided that this was wrong and that the first resignation had been conditional and/or that by continuing with the grievance process she had withdrawn her resignation by conduct. This conduct (and the implied withdrawal) had been accepted by the College and, on that basis, the Tribunal decided that Mrs Teal had been in continuous employment up until her second resignation on 12 February.
The College appealed against this decision and, although the EAT decided that there was no such thing as a “conditional resignation”, the EAT felt the College had given Mrs Teal the opportunity to withdraw her resignation and had confirmed their acceptance of that withdrawal when deciding upon her original grievance into the overtime pay.
Although there had been a clear break of a couple of weeks between Mrs Teal’s resignation on 30 November 2009 and the original grievance decision in December when Mrs Teal could not be said to have been employed by the College, the EAT decided that the effect of the College’s letter refusing to accept the resignation until the grievance had been dealt with meant that the contractual relationship between the parties continued to exist during that gap particularly as there was no suggestion that Mrs Teal started a fresh period of employment when the grievance was upheld and/or when she returned to work on 11 January.
Although the decision is logical given the facts of the case, it means that employers who allow employees to withdraw a resignation must then treat those employees as if they have been reinstated. That is to say that the original contract must be resurrected and the employee will need to be treated as if there had never been any termination of employment. In effect, the resignation will vanish from all records.
This is not something which many employers will deal with on a regular basis but it is something to be wary of when deciding whether to allow an employee who has resigned to come back is really the right move for the business.
Regular readers of this bulletin may remember that, back in October, we commented on the case of Jackson v Liverpool City Council in which the courts had held that a bad reference could be justified it was factually accurate even when the reference given may be unfair to the ex-employee.
We advised you in that bulletin that employers should still exercise extreme caution when providing negative references for ex-employees and, although the case of Jessemey v Rowstock Limited reinforces that message, it also provides some comfort for employers who find it difficult to give neutral references in circumstances where claims have been brought against them.
Mr Jessemey was dismissed just before his 66th birthday. He claimed that he had been dismissed because of his age and brought claims of unfair dismissal and age discrimination. While Mr Jessemey was looking for alternative work, he discovered that Rowstock had provided an unfavourable reference for him. He believed that the unfavourable reference had been provided purely because he had brought Employment Tribunal proceedings against Rowstock and he therefore added a claim of victimisation to the proceedings that he was bringing against them.
Rowstock admitted that they had failed to follow the statutory retirement procedures but argued that this was down to ignorance rather than any malice on their part. However, given the procedural failures, the dismissal was held to be unfair and an act of age discrimination.
The Tribunal went on to find that the reference provided by Rowstock could not be seen as anything other than victimisation. In response to the question would you re-employ the applicant, Rowstock had answered no “because of his attitude and age”. Rowstock had also clearly stated on the form that they were engaged in an industrial dispute with Mr Jessemey.
The Tribunal rejected the suggestion that this clear victimisation could be excused because the statement about the Tribunal proceedings was factually correct. However, the Tribunal went on to find that they could not offer Mr Jessemey any remedy because post-employment victimisation was explicitly excluded from the Equality Act 2010.
Employers are prohibited from discriminating against and/or harassing employees after their employment ends but section 108(7) of the Equality Act expressly states that victimisation is not covered post-employment.
There were successful claims for post-employment victimisation before the Equality Act 2010 but the legislation at the time did not expressly mention this. Those cases were not considered in Mr Jessemey’s case. In addition to which, the case is just a ‘first instance’ decision of an Employment Tribunal so further Tribunals are not bound to follow it. As such, employers shouldn’t take this as a licence to make life difficult for ex-employees.
Our advice is still that it is better to avoid making comments in references that might prevent an ex-employee from obtaining alternative employment unless to do so would be dishonest.
When is an Employment Tribunal deadline not a deadline?
The answer, when the Claimant is “reasonably” ignorant of that deadline, might surprise some of you but in the case of John Lewis Partnership v Charman, Mr Charman’s failure to submit his claim for unfair dismissal within the 3 month time limit was not fatal to his claim.
Mr Charman was 20 years old when he lost his job and the Tribunal found that, at that time, he knew nothing about Employment Law or his right to claim unfair dismissal. The Tribunal decided that he was totally reliant on his parents for advice and his father reasonably believed that it was best to wait for the outcome of Mr Charman’s appeal against his dismissal before issuing legal proceedings.
Preparing for the Future
For more than 20 years it has been clear that employment contracts contain an implied term that employees will serve their employer with good faith and fidelity. However, it is also clear that making the decision to set up a competing business at some point in the future and perhaps even discussing that idea with friends and family is not, by itself, sufficient to breach these implied terms. Customer Systems Plc v Ranson & Others is a classic example of two employees taking their preparatory steps a little too far.
Mr Ranson had been planning for his future for some time. He had incorporated a competing company in 2007 but that company wasn’t really doing any business until Mr Ranson resigned from Customer Systems in 2009.
The problem was that, prior to his departure, Mr Ranson had become aware of potential opportunities at a number of Computer Systems’ customers and, rather than passing on that information to Computer Systems he had taken the opportunity to pitch for it himself in the name of his new company. Mr Ranson had also taken business contact numbers from his company mobile phone and emailed them to himself.
The High Court decided that, even though there were no specific restrictive covenants in Mr Ranson’s contract of employment, these actions went beyond merely preparing and that Mr Ranson was in breach of his implied duties to the company. The Court felt that, even once Mr Ranson had handed in his notice, as he continued working in a sales capacity for Computer Systems, he was obliged to bring sales opportunities to their attention. He was not in a position to use the information that he gathered for his own benefit or the benefit of his new company.
The case is slightly complicated by the fact that Mr Ranson discussed his plans with a colleague, Mr Offland. The Court felt that if Mr Offland had done nothing more then he would have been safe from any breach of contract. However, Mr Offland had assisted Mr Ranson in preparing tenders and the Court felt that this too was going too far.
Whilst the decision seems quite straightforward when set out like this, the case illustrates the importance of having effective restrictive covenants in place. Relying on implied conditions as Computer Systems had to do here is not a sensible way forward. If you have a legitimate interest to protect it is much easier if the contract is clear about what the employee can and cannot do.