Employment Update
18 August 2008
Click here to read our new user-friendly and interactive edition of People, the Employment and Pensions newsletter, which incorporates new features, hyperlinks and print options to enable you to navigate its content with ease.
The past few months have been packed with employment and pensions law developments. In our new Q&A feature, we examine the scope of the proposed Equality Bill, which promises the biggest shake up in discrimination law since the 1970s. Our new at-a-glance guide looks at the future of workplace dispute resolution and the Government's measures to replace the unpopular statutory procedures.
This edition also provides a snapshot of recent case law and legislative developments, an overview of the new rights for agency workers, an insight into the proposed compulsory pensions and an account of the employee-owned sector.
The Employment Appeal Tribunal (EAT) has confirmed that the effective date of termination (EDT) for an employee, which is key to establishing whether an unfair dismissal claim has been brought in time, was the date on which the employer sent a letter to the employee stating unequivocally that the employment relationship had ended. It was not the date specified as the termination date in a draft compromise agreement.
The case highlights the significance of an EDT during compromise agreement negotiations. As discussions can often be protracted, it is important to be aware that the matter may not be resolved within the employer’s timeframe and that the EDT may not be the termination date specified in the draft compromise agreement.
In Radecki v Kirklees Metropolitan Borough Council, Mr Radecki was suspended with pay following concerns about his skills and experience and problems with other members of staff. A draft compromise agreement, marked “without prejudice” and “subject to contract”, stated that Mr Radecki’s employment would terminate by mutual consent on 31 October 2006 and the agreement was the subject of further negotiation.
Mr Radecki was removed (with his knowledge) from the payroll on 31 October 2006 before the compromise agreement was finalised. Negotiations continued but Mr Radecki subsequently informed the Council in February 2007 that he rejected the draft compromise agreement. This prompted a letter from the Council on 5 March 2007 confirming that Mr Radecki was terminated on the payroll system on 31 October 2006 and that his employment ended on this date. Mr Radecki was then sent his P45 which confirmed this date as his last day of employment.
Following this letter, Mr Radecki issued a claim for unfair dismissal. The Employment Tribunal found that his EDT was 31 October 2006 and therefore the claim was issued outside the usual three month time limit. Mr Radecki appealed to the EAT.
The EAT upheld Mr Radecki’s appeal and confirmed that removing Mr Radecki from the payroll while he was suspended and in the course of negotiating the draft compromise agreement did not terminate the employment relationship. His EDT for the purposes of establishing whether his claim was in time was 5 March 2007, when the Council wrote to Mr Radecki stating that his employment had ended. His claim was therefore in time.
The High Court has confirmed that a “no show” clause in an employment contract, which required a prospective employee to pay a specific amount if he did not start work with the employer, was a liquidated damages clause, rather than a penalty. On this basis, the clause was enforceable and the employer was entitled to receive the amount due under the clause.
In basic terms, parties to a contract may agree in advance a specific amount of damages that one party will pay to the other if a particular obligation under the contract is breached (i.e. a “liquidated damages” clause). However, such a clause may be a “penalty” clause if the sum specified is “extravagant and unconscionable” in comparison with the greatest loss that could conceivably have been proved to have followed from the breach.
In Tullett Prebon Group Ltd v El-Hajjali, the potential employer, Tullett, had identified Mr El-Hajjali as a potential candidate for a senior role. Negotiations took place over a period of months and both parties eventually entered into a contract. This contract contained a no show clause, which required Mr El-Hajjali to pay a specific amount to Tullett if he failed to take up employment with them. Soon after signing the contract, Mr El-Hajjali informed Tullett that he had decided to remain with his current employer. Tullett brought a claim for liquidated damages for breach of the no-show clause.
The High Court noted that Mr El-Hajjali was in a powerful position in the negotiations with Tullett because of his established skills and knowledge, the revenue he could achieve and his loyal client base which might transfer to the new employer. He also had the benefit of legal advice throughout the negotiations and was advised by his solicitors that, on the basis of the no show clause, Tullett was likely to sue if he changed his mind after signing the agreement. Mr El-Hajjali did not question or challenge the clause at the time.
The Court held that Tullett was able to establish a loss resulting from Mr El-Hajjali’s failure to work for them and the loss was in fact considerably more than the amount specified in the no-show clause. The stipulated sum was not extravagant or unconscionable in the circumstances of the case. There had been a specific discussion within Tullett as to the stipulated sum and the need to avoid the liquidated damages clause being regarded as a penalty clause.
The Court confirmed that although no estimate of loss was made, Tullett had made calculations as to the level of profit that Mr El-Hajjali might bring to the company. On the facts of this case, there was sufficient consideration of the matter to render the clause a liquidated damages one rather than a penalty one.
The Department for Business, Enterprise and Regulatory Reform (BERR) has launched a new campaign, aimed at helping businesses save time and money on employment costs.
The
'Employing People' campaign is part of BERR’s Employment Law
Guidance Programme and aims to promote savings by directing
businesses to Business Link's online tools, calculators and
interactive guides, to help them reduce unnecessary duplication of
materials and wasted effort. Click here to access the resources.
BERR has also recently published the final report of the Vulnerable Worker Enforcement Forum, together with the Government's conclusions.
The Government set up a Vulnerable Worker Enforcement Forum to look at the nature of employment rights abuses, assess the effectiveness of current arrangements and to identify possible improvements. The Forum comprises business groups, unions, Citizens Advice and workplace enforcement bodies.
As a result of the Forum's findings, the Government intends to:
-
run a campaign to raise awareness of basic employment rights and to encourage the reporting of abuses in the workplace
-
promote a single enforcement helpline, providing vulnerable workers with access to the enforcement bodies to enable them to report abuses and obtain information and advice about employment rights
-
ensure closer working between the enforcement bodies
-
improve advice and guidance for business
With the credit crunch having an impact on a number of employers, many of the UK’s executives have postponed holiday plans in light of increasing job insecurity, according to the latest research from the Chartered Management Institute. According to the research, even if they do go away, many refuse to stop working.
Asked why they are unable to take their full holiday entitlement, 34% of respondents cited extensive workloads. The survey goes on to show that holiday plans have also been affected by the executives’ determination to remain employable. For example, 23% use their holiday entitlement to develop skills making them ‘recession proof’, 49% don’t want to let clients or colleagues down and 27% are focused on ‘meeting project deadlines’.
Even if they do go on holiday, significant proportions continue to work: 39% regularly check work emails and 29% dial-in to pick up voicemail messages. 1 in 5 also argue that it is a good time to ‘catch up on background reading’.
Subscribe now
If you have received this update from a colleague and wish to
receive it yourself on a fortnightly basis, just click here
to subscribe.
|
The Employment and Pensions Group also provides a range of other value added services, in addition to the fortnightly employment update.
If you would like to receive any of our other services, simply click here, to indicate which service(s) you would like to receive and to confirm your contact details. |
18 August 2008
Future Events
Invitations will be sent out 4 weeks before each presentation. Alternatively, you may book your place by clicking here, specifying which seminar or workshop you would like to attend, or asking to be added to our mailing list.
Workshops
Wednesday 10 September
2008
Managing
sickness absence
09.00 - 11.30
Click here
to reserve your place
Thursday 16
October 2008
Designing 21st century pension
schemes
09.00 - 11.30
Click here
to reserve your place
Wednesday 26
November 2008
21st century workplace - is technology a
help or hindrance?
09.00 - 11.30
Click here
to reserve your place
Wednesday 25
March 2009
Conducting investigations, disciplinaries and
grievances
09.00 - 11.30
Click here
to reserve your place
Seminars
Wednesday 21 January
2009
Annual HR Planner
Half day
Click here
to reserve your place
Wednesday 25
February 2009
Protecting intellectual property - how far
can you go?
Half day
Click here
to reserve your place
Where to find us
Field Fisher Waterhouse LLP
35 Vine Street
London
EC3N 2AA
Tel: (0)20 7861 4000
Fax: (0)20 7488 0084
www.ffw.com