EMPLOYMENT LAW

JERRY HAWTHORNE 

One of the most recent radical developments affecting employers and employees was the repealing in April 2009, of the controversial Dispute Resolution Regulations which had been brought into effect in October 2004.  These Regulations had been brought in with a view to encouraging employers and employees to settle their disputes internally thus reducing the number and cost of public Employment Tribunal hearings.  The Regulations which were abolished in April 2009 were compulsory and there were potentially large financial penalties for failures to comply with them.  The compulsory procedures proved an abject failure. 

As was stated by Mr Justice Elias of the Employment Appeal Tribunal:

“Rarely can legislation have been so counterproductive.  Provisions designed to reduce Tribunal disputes have spawned satellite litigation in which arcane and complex points of law have been argued, frequently so remote from reliability that they would surprise even the most desiccated chancery lawyer conjured up by the imagination of Charles Dickens.”  (Suffolk Mental Health partnership NHS Trust v Hurst & Others 2009 IRLR 12).

From 6th April 2009 those procedures have been replaced by a semi voluntary ACAS Code of Practice.  They are “semi” voluntary because failures to comply will still involve potential liabilities.  For example, an unreasonable failure to comply with the ACAS Code will give the Employment Tribunal power to impose an increase in compensation awards against employers of up to 25 per cent.

The new ACAS Code covers employers’ disciplinary and competency issues as well as grievances that employees raise in writing.  The new code does not include dismissals on the grounds of redundancy or the ending of fixed term contracts.  The ACAS code essentially reverts back to a more commonsense approach.  Thus for disciplinary issues employers including Charities,  are required to establish the facts, give  the member of staff full details of the problem and hold a meeting with him or her to discuss the matter.  Employers must allow the individual employee to be accompanied by a colleague or representative from his professional association/trade union and allow him to call witnesses and make representations.  After the end of the meeting the employer may reach the decision on any appropriate disciplinary action, inform the employee and provide an opportunity to appeal.

The position for employees’ grievances is similar.  If attempts to resolve staff grievances informally prove unsuccessful the employee is required under the code to put his grievance in writing.  The employer is then required to hold a meeting reasonably soon for the purposes of investigating the complaint with the employee.  Similar rights with regard to being accompanied and of appeal, apply to meetings about grievances and their outcomes as apply to disciplinary meetings.

A potential pitfall for employers under the Code is that staff should be guided by employers to understand how disciplinary and grievance procedures will be used in practice.  The Code is somewhat vague about this but where employers have not put any written procedures in place or have laid down procedures without consulting staff they could be criticised.  It not infrequently happens that an employee will lodge a grievance during the disciplinary process.  Under the new Code, employers can decide whether to suspend the disciplinary procedure in order to investigate the grievance first or decide that because the issues raised are related, both should be dealt with during meetings and appeals, concurrently.

Dealing with some specific questions that can arise in other areas:

1. Criminal Records Bureau (CRB)

“In the 2007 case of B v A, the Employment Appeal Tribunal held that the dismissal of an employee whose job involved looking after children was a fair dismissal even though the employer failed to make further enquiries as to matters which the employee said were untrue, which had been revealed in an enhanced CRB disclosure letter. 

Prior to the statutory changes expected to come into effect during Autumn 2009, The Criminal Records Bureau itself  had advised   that:

“the Department for Education and Skills (DfES) has advised the CRB that they do not intend to change the criteria or arrangements for obtaining a CRB Check for those in education. The only change will be to make it mandatory for schools and other employers in the education service to obtain a CRB Check in the circumstances where they are currently advised to do so.

In particular there will be no requirement to obtain a CRB check on existing staff in education.  Employers will continue to have discretion to seek a CRB check where they have ground for concern about the suitability of an existing member of staff with the persons consent.  Otherwise, as now, people should only be checked when they seek a new appointment, or have a break in service of more than 3 months, or if they have not previously been eligible for a Disclosure and move to work that involves significantly greater responsibility for children than in their present position.  There will continue to be no requirement to obtain a CRB check on existing staff for those in education.

The guidance in the DfES’s Circulars “Child Protection: Preventing Unsuitable People From Working With Children in the Education Service” (issued in May 2002) and “Criminal Records Bureau: Managing the Demand for Disclosures” (issued in December 2002) remains in force.  As does the arrangement whereby Head teachers are able to exercise some discretion in allowing people to start work pending the result of a CRB check, provided that they are confident that other pre-employment checks (e.g. List 99) have been carried out, and they have implemented arrangements to ensure that no risk to children could arise. …”

For  other private employers , there has been no statutory legal requirement for CRB checks to be undertaken for staff and even for those staff who have been subjected to CRB checks, there has been no statutory provision as regards renewals or rechecking after a period of years.  However, the general law relating to negligence and misbehaviour of employees  at work, has been substantially developed particularly through House of Lords decisions.  Thus in the case of Lister v Hesley Hall Limited (2001 IRLR 472) the House of Lords held that a boarding school which employed a warden who sexually abused children in his care was vicariously liable even though the abuse was the very antithesis of the purpose of his employment and despite the fact that the employer had not known of his activities.  Previously the law had been that employers were not liable for the actions of employees who were on “ frolics of their own”.

The Lister  case is relevant  to the question CRB checking because the fewer checks an employer puts in place with regard to safeguarding vulnerable people in his care, the greater the risk of liability for employees’ abuse irrespective of employer fault..

Since the CRB gave their advice quoted above the Independent Safeguarding Authority (ISA) has been established under the Safeguarding Vulnerable Groups Act 2006.  This   creates a new vetting and barring scheme and once it is fully operational, employers will be criminally liable for hiring someone in regulated activities who is not registered and has not been checked by the ISA.  The new scheme which is expected to become operational from about October 2009, will cover employees and volunteers in the education, care and health sectors.

2. “What are the changes with regard to taking people on a probationary period”?

There are no specific changes in the law relating to probationers for normal employments without specific regulations such as those affecting the police or armed forces.

Employers are entitled to employ staff on a probationary basis during which employment may be ended by either party usually on a week’s notice expiring at any time.  The probationary period however is subject to the normal law relating to unfair dismissal which usually applies after 12 months continuous service and to the laws against discrimination which apply from the job advertisement, interview stage through to day one of the employment onwards.  The effect of the latter is that Charities and other employers which dismiss employees for reasons which are unlawfully discriminatory, will be liable for compensation for claims of unfair dismissal/discrimination irrespective of the probation period.

Probationary periods tend to be useful firstly for making plain to employees and employers, that the initial employment is for a trial period and secondly for ensuring that during that trial period, any contractual notice that would normally be required to be given, for example two or three months or sometimes more in the case of schools, would not be applicable during the probationary period when one week’s notice may be substituted.  The employee will have the right not to be unfairly dismissed irrespective of the length of notice given, after 12 months.

3. “What are the Regulations regarding jury service and what and how can you claim people’s time”?

Surprisingly, no statute specifically requires an employer to allow employees time off work for jury service although dismissing an employee for taking time off work for jury service would in most cases render the employer liable for an automatic unfair dismissal decision.  Even before that an employer might be liable to be fined for contempt of court for refusing absence for jury service. Employers are not required to pay the salaries of such absent staff but many do.  No payment to employers is made by the state or court in respect of staff absent on jury service but individual jurors are entitled to a payment for loss of earnings and benefits.  Application forms for affected employees are available at the court/where the jury service is served.

4. “What to look out for when employing freelancers and sub contractors”? Are individuals like Ministers of Religion, Employees?

The key points for charities and other employers to consider are first, regardless of what may be agreed in writing between the individual and the employer about self employment, their status may be interpreted by Employment Tribunals when looking also at the work actually done by the individual, as creating an employment contract.  A good example relates to ministers of religion who traditionally were regarded legally as servants of God rather than of man, so not are not employees. The PWW website contains a detailed analysis of the development of this area of the law. It is perhaps also noteworthy that in one of the    leading   cases  which involved     clients of this firm – Parfitt v President of Methodist Conference (1984 IRLR 141 CA) the Court of Appeal decided   that a Methodist church minister was not an employee for the purposes of Employment legislation. That decision may well prove to be the high water mark for religious charities however. A reconsideration of the traditional position occurred in October 2006 where it was held that a Minister of the New Testament Church of God, based in Harrow, North West London, was an “employee” of that Church within the meaning of the Employment Rights Act  and could properly claim unfair dismissal. The Court of Appeal agreed with the Employment Appeal Tribunal and found also that Reverend Stewart was an “employee” for the purposes of unfair dismissal.  This Employment Tribunal’s interpretation of employment may apply even in cases where the Inland Revenue accept that the individual is self employed.  In such case, the employer may become liable to pay national insurance/PAYE for the individual.  Specific provision is made for the construction industry.  Under the construction industry scheme, a flat deduction on account of tax and NI contribution is made from payments by employers to any self-employed sub contractors in the trade who do not have gross payments certificates.  The government has made available new information packs for the scheme which was updated in April 2007. 

The criteria for deciding whether someone is an employee or not were detailed as long ago as 1968 in the case of Ready Mixed Concrete (South East) Limited v Ministry of Pensions and NI (1968 1 ALL ER 433).  For the worker to be an employee he must be paid; have agreed expressly or impliedly to carry out at least some of the work personally that is with his own hands and the employer must exercise some degree over the worker’s work.  Work permits and immigration are also possible issues to consider in this area.  Asylum seekers have no automatic right to work in the UK and must obtain specific permission to do so from the Immigration & Nationality Directorate, Lunar House, 40 Wellesley Road, Croydon, CR9 2BY or a Regional Office.  The Home Office has wide powers to require employers to supply information about employees who are suspected of having committed immigration related offences.

5.  “What is the status of a  voluntary worker?”

That a  volunteer is not an employee was confirmed by the Employment Appeal Tribunal in 2003 when it held that voluntary advisers and other volunteers working for a Citizen's Advice Bureau were not employees even within the meaning of the wide definition in  the Disability Discrimination Act 1995. Charities should still ensure that  adequate occupiers’ and other liability insurance is in place for them and should consider tailor made agreements  especially for their voluntary workers  whom  they wish to send overseas.

6.     “What changes affect  charities which  employ five or fewer  staff”?

On 6th May 2003 the EC made recommendations regarding the definition of micro, small and medium sized employer along the following lines:  Micro employers – have less than 10 employees and less than 2million Euro balance total or turnover.

Small employers are those with fewer than 50 employees and less than 10million Euro balance total or turnover and other small employers are those with fewer than 250 employees and less than 43million Euro balance total or 50million Euro turnover.

Employees do not include apprentices or students for those purposes.

Statutory maternity, paternity and adoption pay can be reclaimed by small employers.  For the purposes of SMP a small employee is defined as one whose NI contributions do not exceed £45,000 for the qualifying tax year.

The small employers exemption as regards maternity and adoption leave has been removed as from 1st April 2007.

Small employers are exempted from some health and safety documentation rules.

There is a general unfair dismissal requirement for courts and Employment Tribunals to take into account “the size and administrative resources of the employers undertaking” when considering the fairness of dismissal.

Under the pre-April 2007 law relating to “maternity and adoption” leave, the provisions making dismissals automatically unfair if an employee was not allowed to return to work after maternity or adoption leave did not apply to small employers who satisfied certain conditions.  Small employers in that context meant five or fewer employees.

Employers’ Liability Insurance:  With effect from 28th February 2005 companies which only has one employee and that employee also owned 50% or more of the issue share capital are exempted from the requirement to have employers’ liability compulsory insurance.

Disability discrimination exemption for small employers was removed on 1st October 2004.

Likewise, the special rules for small employers in respect of disciplinary and grievance procedure came to an end on 1st October 2004.

Small employers can pay PAYE and Class 1 national insurance contributions quarterly whereas larger employers must pay monthly.

Industrial training levies in the construction and engineering industry for the purposes of raising money towards the expenses of relevant training board do not apply to smaller employers.

Trade Union Recognition:  The rules requiring employers to recognise trade unions in come circumstances only apply where at least 21 workers are involved.

Stakeholder Pensions:  Employers with fewer than five employees are exempt from employer’s obligations under the “stakeholder pensions” scheme notably the obligation to facilitate employees’ access to a scheme.  Employers increasing staff to five or more have three months from the date of taking on a fifth employee to comply with the regulations.

Companies with fewer than 50 employees are exempt from the requirements of the Information and Consultation of Employees’ Regulations 2004.

Employers with fewer than 5 employees are exempt from record keeping rules as regards certain fire safety regulations.

Special rules for small firms and charities  under Redundancy and Sex Discrimination Legislation were abolished some years ago.

MARIA DONNELLY

Often the source of many Employment Tribunal and Court cases, employment references are increasingly becoming the subject of much discussion amongst employment lawyers and can prove to be a matter of great concern for both employers and employees. 

1. Obligations and duties upon the employer
Whilst it is established law that there is no general or statutory obligation upon an employer to provide an ex – employee with a reference, employers should be mindful that there may be some contractual or other express or implied obligation to provide a reference if requested.  That could include a term in an employment contract to provide a reference, either express, or implied, if it is normal practice in that profession and it would be unreasonable for a new employer to take on a new employee without a reference. 

Employers who refuse to provide a reference or provide a poor reference on grounds relating to race/sex/religion or where the employee has made a public interest disclosure are at risk of facing claims for discrimination, where the loss would include financial losses and injury to feelings awards. 

New employers should be careful to ask candidates’ consent before asking former employers for references, and express permission should be obtained.  References will be most effective where the new employer includes a job description with the request, which can take the form of asking relevant questions.  References are often requested at the short list or offer stage, and it is then too that the candidate(s) may be asked to bring documentary evidence of qualifications to the interview.  

Making a job offer “subject to satisfactory references being received” may create difficulties, as above, there may be no legal requirement upon the former employer to provide a reference, or a referee may inappropriately or wrongly indicate that the applicant is unsuitable for that post and new employers may face Employment Tribunal claims, if the offer is withdrawn.  Organisations are advised to adopt a policy in connection with references, which should include, what the organisation will do in the event that no reference is received from a former employer.

2. Fairness & Accuracy
Employers must take reasonable care to ensure that any reference provided is fair and accurate, whether or not a former employer was legally obliged to provide a reference or not.  But balancing their common law duty to take reasonable care to ensure that references provided are accurate, against the concern for employers of a possible claim against them for any loss arising from the provision of the reference, is becoming increasingly difficult and much litigated.  Cases include Coote v Granada Hospitality Ltd in the EAT (1999), Chief Constable of West Yorkshire Police & Others  v  Khan 2001 and Castledine  v  Rothwell Engineering (1973), where the question of employees being given an underserved good reference was aired, in relation to unfair dismissal proceedings. 

It is established that references are not required to be either comprehensive or full but employers must be careful not to provide an unfair or misleading impression. Case law includes Cox  v  Sun Alliance Life Ltd 2001.

Former employers are not only at risk from ex – employees’ claims which could include breach of contract if a negligent reference is provided, but are at risk from a subsequent employer, if the subsequent employer is able to establish that he suffered a loss as a result of having relied on a reference.  The case of Legal and General Assurance Ltd 2002, established that there would be no case against a former employer where an employee does not seek a reference because he is aware that if one is given would refer to facts which are bound to result in him being turned down, even if those facts are disputed. 

3. A Data Protection Act point
The provision of references generally involves the disclosure of “personal data” for the purposes of the Data Protection Act but it is only until the reference is with the organisation who requested it, that the employee has then a right to a copy under the DPA. 

4. Conclusion, case law and final points
In an effort to reduce the risk of potential claims both from former employees and their prospective new employers, employment law developments mean that it is increasingly becoming the case that standard practice in the provision of references, and particularly for large organisations, is to provide in the reference, only, the name, position held and the dates of employment of the former employee.  Although much could be said about the consequence of that on good former employees.  It is advisable that again organisations adopt a policy in relation to the provision of references.

Spring  v  Guardian Assurance Plc 1994
Cox  v Sun Alliance Life Ltd 2001
Kidd  v  Axa Equity & Law Life Assurance Society Plc 2000
Rhys -  Harper  v  Relaxation Group Plc 2003
Metropolitan Police Service  v  Shoebridge 2004

A brief note about the Financial Services and Markets Act 2000 and the content of references for former employee within the regulated sector.