ABG Employment Newsletter – June 2013

Employment Tribunal fees

The Government is scheduled to go ahead with its proposal to introduce fees in the Employment Tribunals and the EAT during the summer. It has announced the implementation date as 29 July 2013.

Under the new fees system a claimant or EAT appellant will be required to pay an issue fee on submitting their claim or appeal and then a hearing fee before the full hearing.

Issue fees will range between £160 and £250 depending on the type of claim. Hearing fees will be between £230 and £950, again depending on the kind of claim.

Where a claim or appeal is successful, the Tribunal and the EAT will have power to order the losing party to reimburse the fees paid by the successful party.

Where a claim or appeal has already been lodged in the system before the new fees come into effect, no fees will be payable.

Post-employment victimisation

On the face of it the Equality Act 2010 does not cover post-employment victimisation, i.e. it does not make it unlawful for an employer to victimise a former employee after the end of the employment relationship on the grounds that the employee has brought discrimination proceedings. However the EAT has now ruled that, despite this apparent omission, the Act should be read as in fact applying to post-employment victimisation. It felt that the Act could be read in this way and that, even if not, it should be interpreted as outlawing post-employment victimisation in order to give effect to EU law which requires post-employment victimisation to be made unlawful.

In the case the employee had resigned and had brought a discrimination claim against her former employer. Some months later the employer telephoned the claimant’s sister and made threats against the claimant. She then brought a further claim for victimisation.

Although the victimisation claim failed at the tribunal, the EAT overturned the decision and upheld the claim. It said that an earlier decision of the EAT (presided over by a different judge) to the effect that the Equality Act did not cover post-employment victimisation was wrong. Prior to the Equality Act the House of Lords had held that previous discrimination legislation did protect former employees against post-employment victimisation. This time round the EAT felt that the Equality Act had not been intended to bring about any change in the law, bearing in mind the provisions of EU law.

TUPE transfers and informing and consulting employees

Where there is a TUPE transfer the transferor is under a duty to inform and consult representatives of affected employees before the transfer takes place. “Affected employees” means any employees who may be affected by the transfer or by measures taken in connection with it. This can include employees whose jobs are in jeopardy by reason of the proposed transfer.

In a recent case the EAT ruled that there was no breach of the information and consultation obligations when the employer did not inform or consult representatives of employees who worked in a part of the business that did not transfer but was closed down. When they were dismissed, they were affected by the closure of the part of business in which they worked rather than by the transfer of the other part of the employer’s business.

The company provided services to the film and television industry. There were two distinct parts to its business with the staff in the different parts being employed at different premises and carrying out different work. After the company had encountered financial difficulties one part of the business was sold and the employees transferred under TUPE. However, the other part of the business was closed down. Some of the employees in that part of the business claimed that the company was in breach of the information and consultation obligations under TUPE because the employer had initially said that some of them would or might transfer to the new owners of the other part.

However, the EAT rejected this argument pointing out that a transferor does not necessarily have to start informing and consulting as soon as a transfer is envisaged. The TUPE Regulations specify that it must do so long enough before the transfer to enable effective consultation to take place. It can never be said definitively that an employer is in breach of its information and consultation obligations until the proposed transfer actually occurs. In this case the part of the business which closed had not transferred and so the employees in that part had not been affected by a business transfer. They were affected by the closure of their part of the business.

Constructive dismissal despite reinstatement on appeal

The EAT has ruled that an employee was constructively dismissed after she had initially been dismissed on capability grounds but was then reinstated following a successful internal appeal. Although she was reinstated with full back pay there was a dispute over the terms of her return to work, as a result of which the employee resigned.

During the employee’s lengthy absence from work, concerns were raised about her performance. Following a capability hearing she was dismissed, but was reinstated on appeal because of procedural flaws in the way the capability procedure had been applied. The original sanction of dismissal was reduced to a final written warning for 3 years although this was not a permissible option under the capability procedure. The employers imposed a series of conditions on her return, including a training programme and a competency assessment. Pending the employee’s agreement to these terms, she was suspended from work on full pay.

The employee refused to agree to the conditions imposed on her and resigned. She lodged a grievance which was rejected and then brought an unfair dismissal claim for constructive dismissal.

Although the Employment Tribunal dismissed her claim, this was overturned by the EAT. It said that the employer’s handling of the disciplinary process and the subsequent imposition of the conditions amounted to a repudiatory breach of contract entitling the employee to treat herself as constructively dismissed.

This was a case where the employee was entitled to add together all the events which she found unsatisfactory about her employment and the combined effect of these events amounted to a serious breach of contract on the employer’s part, which meant that the employee was entitled to resign. The conditions attached to her return to work following her successful appeal amounted to the last straw.

No penalty for football manager

A liquidated damages clause may be included in a contract so as to provide that, where one party is in breach, that party will pay a specified fixed sum to the other as liquidated damages for the breach of contract. Such a clause is valid and enforceable if it is a reasonable estimate of the potential loss suffered by that party, but will be invalid as a penalty clause if it bears no proportion to the loss and has been inserted as a deterrent to the other party against breaching the contract.

However, a payment clause in a contract cannot amount to a penalty if the trigger for payment is not a breach of contract but simply the happening of an event such as early termination of the contract.

This is demonstrated by a recent case involving a Premier League football manager. He had a 2 year contract but it provided that the club had the contractual right to terminate the contract at any time before the end of the fixed term. The contract specified that in this event the manager would receive a payment equal to his gross basic salary for the unexpired balance of the fixed term.

The manager’s contract was terminated after he had been in the job for only one month. The club argued that he was not entitled to the payment as it was a penalty, but this defence was rejected by the Court on the basis that the early termination of the manager’s contract was not a breach of contract at all but simply a lawful termination which was allowed by the terms of the contract. In those circumstances it was not possible to argue that it was an invalid penalty clause.

The comments in this note are of a general nature only. Full advice should be sought on any specific problems.

Christopher Gigg 
[email protected] 
+44 (0)115 934 3310

Kathryn Meir
[email protected]
+44 (0)115 934 3308