Redundancy and Maternity Leavers Briefing

Tribunal awards – calculating a week’s pay

In a recent case the Employment Appeals Tribunal ruled that a week’s pay should include employer pension contributions, rather than just basic pay, for calculation of compensation for claims under the Employment Rights Act 1996.

Let’s take a look at the facts.

Ms Drossou (D), who worked for the University of Sunderland, was dismissed on the grounds of an irretrievable breakdown in working relations, of which the University claimed D to be the main cause. Subsequently, D brought a claim of unfair dismissal that was eventually upheld by the Tribunal.

As a result, the EAT ordered compensation from the University, calculating a week’s pay by including the employer pension contributions. On the normal grounds that payments are not paid to the employee but into the pension fund, this decision went against the longstanding practice of excluding employer pension contributions from the calculations of a week’s pay.

The Tribunal felt that this deviation from standard practice was necessary, and said that the law under the Employment Rights Act 1996 (‘the ERA’) does not state that the amount payable by the employer has to be payable to the employee (i.e. it could be payable to a third party such as a pension provider). Additionally, the EAT stated that “remuneration” in the context of the ERA means a reward in return for services, and employer pension contributions are no less a reward for service than basic pay. The University was not satisfied with the ruling, but when it appealed to the EAT the Tribunal’s decision was upheld.

So, what does this mean for employers?

For the time being (at least until we see whether this decision is appealed) employers need to increase their calculations in accordance with the potential value of claims. Employers facing unfair dismissal claims need to be careful. If the claimant’s base salary is below £80,541 – the current statutory cap for unfair dismissal compensation – the calculation of a week’s pay becomes highly relevant. Where the employee earns less than the statutory cap on a week’s pay (currently £489), the basic award will also be increased – as well as all other awards based on the ERA definition such as the eight-weeks’ pay for a flexible working rules breach.

But, more importantly, the decision may impact protective awards. If employers fail to inform and consult under TUPE or, in a redundancy process, under the Trade Union and Labour Relations (Consolidation) Act 1992, then they could face large increases in the total compensation payable. The final amount will depend on the number of affected employees, the generosity of the pension provision and the size of protective award made up to the 13-week maximum. But if each employee has a 10% employer pension contribution and they all get an award of 13 weeks, then the total payable increases considerably.

For more information on this please contact Alison.

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Update – Parental Bereavement Leave

On 19 July 2017 the Parental Bereavement (Pay and Leave) Bill was introduced to Parliament. The Bill is expected to have a second reading in October with the hope that it will become law in 2018.

Summary

  • This aims to establish a new right for employed parents to paid leave to grieve on the death of their child.
  • It is likely that the amount of leave will be at least two weeks and attract the same rate of pay as other types of family leave such as maternity, adoption paternity and shared parental leave. This is currently the lower of 90% of an employee’s gross weekly earnings and £140.98 per week.
  • At present (except in relation to stillbirth or miscarriages in respect of which maternity or paternity leave may still apply), the law only allows for “reasonable” unpaid time off to deal with an emergency relating to dependants, including his or her death, and it is down to each employer to determine what is ”reasonable” in the circumstances.

ACAS has published a good practice guide on Dealing with Bereavement in the Workplace (available here).

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Disciplinary procedures: 10 common breaches of the Acas code of practice

This article is a summary of a piece published in Personnel Today in 2011 and subsequently updated in November 2014. The full article can be seen here.

Employment tribunals will take the “Acas code of practice on disciplinary and grievance procedures” into account when awarding compensation for unfair dismissal. This could increase and award by up to 25% for employers that haven’t followed the code. So where do most employers go wrong?

  1. Not warning the employee of the possible consequences of the disciplinary action. Employees must be given a fair chance to defend allegations properly. Disciplinary action and potential dismissal should not come as a surprise.
  2. Not setting out the nature of the accusations clearly to the employee. The employer should explain the alleged misconduct clearly and should, throughout the disciplinary process, be consistent in what it is accusing the employee of.
  3. Not furnishing the employee with relevant evidence against them. The employee should be provided with all the evidence, typically in the form of witness statements, in advance of the disciplinary hearing, in advance of attending the hearing.
  4. Not operating a system of warnings where appropriate. Whilst some cases may warrant a summary dismissal for a first offence in the majority of minor misconduct cases, a series of warnings before dismissal will be appropriate.
  5. Not allowing the employee to be accompanied at a disciplinary hearing. The Acas code reminds employers of the requirement to allow the employee to be accompanied at a disciplinary hearing. This applies when a worker who is invited by his or her employer to attend a disciplinary or grievance hearing makes a reasonable request for a companion to attend the hearing.
  6. Relying on evidence from one particular source with no corroborative evidence. There may be limited circumstances where one individual’s evidence is enough to lead to a disciplinary sanction, but an employer should always look for more.
  7. The absence of an adequate appeal stage. Employers should give the employee the opportunity to appeal when the outcome of the disciplinary hearing is communicated to them. Appeals should be unbiased and not be a “foregone conclusion”.
  8. Failure to keep clear records of the whole disciplinary process. To stand the best chance of successfully defending employment tribunal claims, employers must keep clear records of each stage of the disciplinary process.
  9. Delays in dealing with disciplinary issues. Most cases should be dealt with in a matter of weeks and unexplained delays in the disciplinary proceedings will always be frowned upon by tribunals.
  10. Having the same person deal with the whole disciplinary process. Ideally, different people should carry out the investigation, disciplinary hearing and appeal stage.

For more advice and support through disciplinary matters, please contact Alison.

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Dismissal and TUPE – a complicated case

In these times of businesses changing hands, merging and being sold, knowing how to handle the human resources issues is more important than ever.

The basic concept of TUPE is that when a business changes hands, the employees of the previous business owner automatically become employees of the new owner. Anyone who is dismissed prior to the transfer of business, for a reason connected with the transfer, will be protected by this area of the law. Such a dismissal will be automatically unfair and liability for the unfair dismissal transfers across to the new owner, even if the dismissal has meant that the employee has not.

If, however, that person should appeal against their dismissal, it would be considered null and void and they would be treated as if they had been employed at the time of transfer. Their employment would transfer to the new owner.

In a recent case, exactly this happened. The claimant was dismissed by the original company for gross misconduct. She lodged an appeal against the dismissal. Meanwhile the first company was sold and the employees entered into a TUPE transfer with a new company. The second company heard the claimant’s appeal and decided that the dismissal was unsafe but did not inform the claimant of its decision or reinstate them. Instead, it instructed an employment consultant to negotiate a settlement agreement (although this never actually happened).

The employment tribunal ruled against the claimant, stating that for unfair dismissal to hold true there needed to be a clear decision. Because of subsequent discussions they felt it was not clear and they could, therefore, not rule to reinstate the claimant. They did, however comment about the fact the internal appeal ruling was not communicated to the employee.

When this case went to the Employment Appeal Tribunal, however, they allowed the claimant’s appeal, ruling that once an appeal against dismissal is upheld the contract of employment is automatically revived. There is no need for a separate reinstatement decision or communication of that decision. The Claimant was therefore employed at the date of the TUPE transfer and entitled to pursue her claim against the second respondent.

The message for employers is to be careful about engaging in anything concerning TUPE without the support of a qualified human resources professional. For more advice on this or related matters, please contact Alison.

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Redundancy and Maternity Leavers Briefing

In a nutshell

There are over 15,000 calls a year made to the Acas helpline regarding the redundancy rights of pregnant women and those on maternity leave. Last year 1,900 tribunal cases were brought forward by women claiming unfair dismissal or discrimination because they were made redundant while pregnant. There are a number of very important points to consider when managing redundancies that affect employees who are pregnant or maternity leave.

 

Is it lawful to make an employee on maternity leave redundant?

Yes, it is. However, the redundancy will automatically be unfair and will constitute sex discrimination is the employee is selected for redundancy for a reason relating to her pregnancy, the birth of her baby or the fact that she is on, or intends to take, maternity leave. Employers must consult an employee on maternity leave about redundancy as they would any employee at work. They do not need to delay the redundancy of any employees on maternity leave, it is not necessary to wait until the employee returns.

 

What is the employee entitled to?

Any employees made redundant during maternity leave is entitled to notice pay. This must be paid at full pay if her notice period is equivalent to the statutory notice period or no more than one week longer. The maternity leave is automatically ended if the employee is made redundant but she remains entitled to receive statutory maternity pay (SMP) for the remainder of the SMP period. An employee on maternity leave also has special rights to suitable alternative employment. She is entitled to be offered any suitable alternative vacancy that exists in preference to other employees.

 

What should employers consider?

When selecting between employees for redundancy, the employer should use the same selection criteria for an employee on maternity leave as they would for others. It is less clear about how an employer should deal with two employees on maternity leave and only one suitable alternative role. The best approach is to apply a fair selection process. Should an employee refuse the offer of a suitable alternative vacancy, she can be dismissed and this dismissal is likely to be fair.

 

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