Sexual misconduct

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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Do employees need to know about all of the factors being considered for their sanction?

An employer had initially decided to issue a final written warning to an employer for misconduct in October 2012. The employer, however, only decided to dismiss the employee after the manager concerned discovered that the employee had, in fact, been issued with a ‘first’ written warning for an earlier misconduct in a letter that was given after October 2012.

The employee was then told that when the manager had to make a decision regarding the October 2012 allegations, they would only be informed of the first warning letter. However, he wasn’t told how significant the warning would be in deciding his sanction and he was not given the opportunity to argue his case.

The Employment Appeal Tribunal found that the employee should have been told that the warning would be taken into account in deciding his sanction and given a chance to argue his case. They argued that the employer had misled the employee, the employer had failed to accord him natural justice and therefore he had been unfairly dismissed.

So what information should employers give?

It’s important to tell any employees facing disciplinary proceedings about all of the factors that are being taken into account when you are deciding on their sanction. Failure to do so could lead to the dismissal as being rendered unfair. This may result in a necessity to reconvene the hearing at a later date in order to give the employee to have a say on any developments in the case.

For more information about this or other human resource matters please contact Alison.

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Is it fair for an employer to dismiss an employee on the recommendation of an HR consultant?

Many small employers rely on external HR consultants to manage their disciplinary proceedings and they will be pleased to hear that a recent ruling confirmed that it is fair for an employer to dismiss an employee on the recommendation of an external HR consultant.

The following case gives a clear example of this in practice.

Case background

A company had nine employee. Its Managing Director discovered that one of these employees (a Senior Manager and subsequently the claimant) was engaging in sexual activity with another member of staff, on company premises, after hours.  He felt that this was inappropriate and called in an external HR consultant to conduct a disciplinary hearing, relating to this matter.  After the hearing, the HR consultant recommended that the senior manager be dismissed, and the Managing Director approved this.

However, the senior manager went on to appeal this dismissal.  The appeal was then heard by another external HR consultant and, after considering the case, she felt the original decision was correct and recommended that the Managing Director should dismiss the appeal; he agreed.

Not satisfied, the senior manager brought this to an Employment Tribunal.  They rejected his submission that the procedure used in his dismissal was flawed.  Their reasoning was as follows:

“We have considered whether a reasonable procedure had been followed by the respondent. We reject the submission of [the Claimant] that the procedure was flawed because [the managing director] was effectively the dismissing officer and the appeal officer.  In this case [the managing director] brought in consultants to deal with this matter as he was involved in the matters under investigation as he was a witness to the events and could not impartially deal with the resulting proceedings. The fact that a consultant was brought in to deal with such matters advises the owner of the business of the decision and seeks permission to implement it does no more than reflect the reality of the situation.  In an organisation of the size and administrative resources of the respondent company and given the senior position of [the Claimant] in the company, the actions taken to deal with the disciplinary proceedings against [the Claimant] were reasonable.”

However, although they felt that the process being followed was correct, the Employment Tribunal ruled that the Claimant’s dismissal was, in fact, unfair.  They felt that no reasonable employer would consider sexual activity (between two adults, out of hours in a deserted office) as Gross Misconduct.  As a result they did not feel that summary dismissal was justified.

The Managing Director was, understandably, unimpressed at this.  He had sought the professional opinion of two HR consultants and they had agreed with each other, whilst conducting proceedings correctly.  He took this to the Employment Appeals Tribunal.  They, however, ruled that this was a clear example of the Employment Tribunal substituting their own view for that of the employer.  They felt that this was inappropriate and therefore allowed the employer’s appeal against the finding of unfair dismissal. 

Conclusion – what this means for your business?

In summary, the process and advice from the HR consultants was found to be fair and the fact that the employer acted upon it was deemed to be entirely reasonable.

This sets an important precedent for smaller businesses who rely on HR consultants for advice in these sensitive matters.

If you would like advice about how the issues in this note apply to your situation, please contact Alison Benney

Tel: 01803 668518 

Mobile: 07967 221595

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