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LookOut - news and views on employment law

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The increase in the maximum week’s pay from £400 to £430 means that the maximum statutory redundancy payment will increase from £12,000 to £12,900.

Welcome to LookOut, Anderson Strathern's regular update providing you with news and views on employment law.

In the first LookOut edition of 2012 we examine the increases to employment tribunal award limits which are set to come into force on 1 February 2012, and the Ministry of Justice's consultation paper in relation to employment tribunal fees.

We also provide a view on three recent cases considering, damages for the manner in which an employee is dismissed; a constructive dismissal claim following the resignation of an employee after a dispute with his employer over information posted on his LinkedIn profile; and whether a dismissal is caught under the Transfer of Undertakings (Protection of Employment) Regulations 2006 if the transfer was not in contemplation at the time of this dismissal.


LookOut on… news

Increase to employment tribunal award limits

Consultation on tribunal fees

LookOut on… cases

Damages for loss arising from manner of dismissal

Linkedin or Linkedout?

Was a dismissal prior to a decision to sell a business “connected” with a TUPE transfer?


LookOut on… news

Increase to employment tribunal award limits

As of 1 February 2012, employment tribunal compensation limits will increase under the Employment Rights (Revision of Limits) Order 2010. The most notable changes will be:
 

  • an increase in the maximum unfair dismissal compensatory award from £68,400 to £72,300;
  • an increase in amount of a “week’s pay”, used to calculate (among other things) statutory redundancy pay and the basic award for unfair dismissal, from £400 to £430;

The new limits apply where the event giving rise to compensation or payment occurs on or after 1 February 2012. Accordingly where a dismissal or relevant event occurs before this date, the old limits still apply irrespective of the date at which the compensation is awarded.

AS view…

The annual increase in Tribunal limits has been greater than usual this year due to the fact that the Retail Prices Index from September 2010 to September 2011 (which is the benchmark for the increase) was 5.6%. The increase in the maximum week’s pay from £400 to £430 means that the maximum statutory redundancy payment will increase from £12,000 to £12,900.

For further information please contact a member of our Employment Law team.

Consultation on tribunal fees

The Ministry of Justice has published a consultation paper: Charging Fees in Employment Tribunals and the Employment Appeal Tribunal. Consultation opened on 14 December 2011 and will close on 6 March 2012. The consultation paper puts forward two options for fees in employment tribunals and one proposal for fees in the Employment Appeal Tribunal.

The two options for single claims (i.e. not multiple claims with two or more claimants) in the employment tribunal are:-

Option 1

  • There are two stages at which fees will be charged – when the claim is lodged and when the hearing is fixed;
  • The fee would depend on the nature of the claim and the stage it has reached;
  • Three levels of claim are proposed, with the amount varying from level to level;
    • Level 1 claims are likely to be claims for sums due on termination, for example, unpaid wages, payments in lieu of notice and redundancy payments;
    • Level 2 claims are likely to be claims for unfair dismissal;
    • Level 3 claims are likely to be claims for discrimination, equal pay and whistleblowing claims;
       
  • The proposed fees are: 
LEVEL OF CLAIM LODGING FEE HEARING FEE
Level 1 £150 £250
Level 2 £200 £1,000
Level 3 £300 £1,250


Option 2

One of the principal differences between option 1 and 2 is that option 2 proposes only one charging point rather than the two. In addition, option two proposes to introduce a fourth level of claim – a claim of any kind where the award sought exceeds £30,000. The proposed fees under option 2 are: 

LEVEL OF CLAIM FEE
Level 1 where award sought is less than £30,000 £200
Level 2 where award sought is less than £30,000 £500
Level 3 where award sought is less than £30,000 £600
Level 4 any type of claim where award sought is £30,000 or more £1,750

It is proposed that if a claimant seeks an award of less than £30,000 but is ultimately awarded more than £30,000, the Tribunal cannot apply level 4 fees.

Under both options it is proposed that the fee would have to be paid by the claimant at the commencement of the claim but, in the event that the claimant succeeds, the respondent would be ordered to reimburse the fees paid to the claimant as part of the award.

There are also detailed proposals for multiple claims based on the nature of the claim, the stage the claim has reached and the number of people in the claim. Proposals include applying a multiplier to the single claim fee depending on the number of people involved in the claim.

The Government has also proposed the following additional fees:

FEE INITIALLY PAID BY AMOUNT

A request for written reasons following
a judgment

The requesting party Level 1 - £100
Level 2 - £250
Level 3 - £250
An application for a review of a judgment The requesting party Level 1 - £100
Level 2 - £350
Level 3 - £350

A request to dismiss a case after it has
been settled or withdrawn

Respondant £60

An application to set aside a default
judgment (where the ET3 is not
lodged on time)

Respondant £100
A counter-claim Respondant £150
Judicial mediation Respondant £750

There is a proposal to extend the current HM Courts and Tribunal remission system which applies where claimants who meet certain criteria can have fees paid for them to Employment Tribunals.

The proposal for the EAT is to charge an initial fee of £400 and a hearing fee of £1,200, both initially paid by the party lodging the appeal.

AS view…

The full consultation paper can be found at http://www.justice.gov.uk/consultations/et-fee-charging-regime-cp22-2011.htm.

It is anticipated that the consultation will generate a large number of responses given the fact that the proposal represents a significant departure from the founding principles of the Tribunal system. Anyone wishing to participate in the consultation exercise can complete the online questionnaire.

LookOut will keep you informed of the result of the consultation exercise.

For further information please contact Pamela Keys or Jill Bell.

LookOut on… cases

Damages for the loss arising from the manner of a dismissal

The recent Supreme Court decision in the joint cases of Edwards v Chesterfield Royal Hospital NHS Foundation Trust and Botham v Ministry of Defence has confirmed the position that an employee, dismissed in breach of a contractual disciplinary procedure, cannot recover damages for the loss arising from the manner in which they were dismissed.

Both Mr Edwards and Mr Botham claimed that their employers had breached expressly incorporated disciplinary procedures and that, had their employers followed the disciplinary procedures correctly, they would not have been dismissed. Both claimed for damages as a result of these breaches of contract under the common law in the ordinary civil courts (i.e. claims which would not be affected by the statutory cap that applies in the Employment Tribunal).

The conflict between common law claims for contractual damages and unfair dismissal legislation is evident when reading the judgment. Lord Dyson, providing the leading judgment, stated that unfair dismissal legislation prohibits claims for damages arising from a breach of contract in relation to the manner of a dismissal. He relied upon the House of Lords decision in Johnson v Unisys Ltd which sets out the “Johnson exclusion area” which provides that where there is a loss arising from the unfair manner of a dismissal, damages are not recoverable for breaching the implied term of trust and confidence.

The question in both cases was whether the decision in Johnson prevented the recovery of damages where there had been an express breach of the employment contract and whether the claims fell within the exclusion area. The Supreme Court held that Johnson applied to both implied and express contractual terms and that the claims of both Mr Edwards and Mr Botham fell accordingly.

AS View…

The Supreme Court’s decision will come as a relief to employers! The compensatory award in unfair dismissal cases can only compensate employees for the direct financial loss they have sustained as a result of being dismissed and is capped in Tribunals at £72,300 from February 2012. This case makes it very clear that a claim for damages for the manner of dismissal (i.e. beyond claims arising for payment of notice) even where the dismissal process has been in breach of an express contractual term, is not open to claimants in such cases.

For further information please contact Chris McDowall or Barry Nichol.

Linkedin or Linkedout?

In a case believed to be the first of its kind, an employee is claiming constructive dismissal before an Employment Tribunal after resigning following a dispute with his employer over information he posted on his LinkedIn profile.

In a supposed breach of the company’s social media policy, the HR professional had ticked a box on his profile stating he was interested in ‘career opportunities’. His employer also objected to information on his CV uploaded to the site stating that he had reduced the company’s attrition rates. He was ordered to remove his CV and faced disciplinary proceedings. The furore led to the employee resigning from his position.

The Hearing is ongoing before the Reading Employment Tribunal.

AS View…

In a previous edition of LookOut we considered two interesting Tribunal cases concerning employees’ comments on the social network site Facebook. Our Andrew Brown also recently discussed the possible legal consequences of Twitter comments made by MP Dianne Abbott (click here to view). It certainly appears that employment law issues arising from social networking continue to rumble on. What is of particular interest in this case is that it concerns a site which is generally accepted as a business orientated social networking platform predominantly used for professional networking and business marketing purposes. Given the more obvious link between the site and the workplace and the considerable number of employees who use LinkedIn, it will be interesting to see the outcome of this case.

For further information please contact Andrew Brown.

Was a dismissal prior to a decision to sell a business “connected” with a TUPE transfer?

In Spaceright Europe Limited v Baillavoine, the Court of Appeal has said that a transfer under TUPE 2006 does not need to be in contemplation at the time of a dismissal from the workplace in order for the dismissal to be caught by TUPE.

The case was brought by Mr Baillavoine, who was the Managing Director of Ultralon Limited. Ultralon went into administration on 23 May 2008 and Mr Baillavoine was dismissed, together with several other employees, by the administrators. It was the administrators’ intention to sell the company as a going concern and Ultralon was purchased by Spaceright Europe Limited.

The Employment Tribunal considered Mr Baillavoine’s dismissal to be automatically unfair; he had been dismissed for "a reason connected with the transfer" which fell within regulation 7(1), as the dismissal had been effected to help sell Ultralon Limited, even though a purchaser had not been identified at the time of the dismissal. Both the EAT and the Court of Appeal maintained this position.

AS view…

Following on from the Court of Appeal’s judgment, this case reinforces the established view that if a business makes redundancies in order to maintain its trading position, and the business is also searching for a transferee, irrespective of whether one is found or not, it is not unrealistic to expect that a tribunal will consider those types of redundancies linked to the TUPE transfer and, therefore, unfair.

For further information please contact a member of our Employment Law team.


This bulletin is for general information only and does not constitute legal, investment or other professional advice. Please contact us should you require advice on any particular legal issue. Anderson Strathern LLP accepts no responsibility for any loss that may arise if reliance is placed on any information or opinions expressed in this bulletin.