Employment law breakfast seminar

Thursday 5 June 2014

Justin Govier, Partner Jonathan Bruck, Senior Solicitor Erica Humphrey, Solicitor

Negotiating an exit Justin Govier Partner

Negotiating an exit prior to 29 July 2013

•Where to start? (Before 2 years !)

•Without prejudice rules - genuine attempt to settle a dispute and no “unambiguous impropriety”

•Often needed earlier than that, exploratory conversations

•Artificialscriptedconversations,manufacturingof disputes and wrong labelling of WP

•“Cloak and dagger”

Pre-termination negotiations after 29 July 2013

•“Any offer made or discussions held before the termination of the employment in question, with a view to it being terminated on terms agreed”

•Cannot be used as evidence in ordinary unfair dismissal cases

•Unless improper behaviour

•Non-monetary offers

•Even if no eventual settlement

•Still have WP principles (Portnykh -v- Nomura)

Limitations

•Only ordinary unfair dismissal cases

•Not automatic unfair dismissal, not discrimination, not breach of contract

•Increase in multiple claims

•Everyone has a protected characteristic

•Risk assess

Acas code of practice and guidance

•Guidance broad and general

•Useful examples, but not all the answers

•Need case law, although doesn’t always help

•Trying to formalise an informal process

Some issues

•Chronology – letter, meeting, agreement?

•Should allow employee to be accompanied

•Militatestoletterfirst

•Allow time to consider offer (10 calendar days to consider proposed formal written terms of a settlement agreement)

•Template letters – useful, current caution around amending

•Create precedent letter

Improper behaviour

•Harrassment, bullying, intimidation, offensive words, aggressive behaviour, physical assault (or threat), criminal behaviour, victimisation, discrimination

•Undue pressure, e.g. not giving reasonable time for consideration of proposed written terms. 10 calendar days recommended (unless agreed otherwise)

•Stating (before disciplinary process) that employee will be dismissed if offer rejected (as opposed to stating that disciplinary process will commence)

Not improper behaviour

•Stating that the terms of a procedural termination will be less favourable

•Not agreeing to provide a reference

•Not paying for independent advice

•Encouraging employee, in a non-threatening way, to re-consider rejection of offer

•Often it’s not what you say, but how you say it

•More pitfalls for SMEs

Has it been a success so far?

•Legally – more clarity

•Practically: - It is a process, less “cloak and dagger”, statutory seal of approval, nothing wrong with it - transparent, frank communication - Reduction in two-pronged approach - Internal procedures -Benefitsoutweighproblems - Employees use as well

Getting the package right

•Knowing your employee

•Part HR professional / part psychologist

•Non-financialissues

•Tactics (room to move)

•Non-financialdealbreakers?

Factors

•Management time going through process•Certainty•Immediacy•Confidentiality•Non-derogatory clause•Announcement (customers, suppliers, employees)•Restrictive covenants•Legal fees•Avoiding test case for others•Public dispute•Recruiting replacement (e.g. “redundancy”)

Factors

•Lump sum (accelerated receipt)•Dismissal in any event•Contributory conduct •Loss of earnings•One year cap•Job market•Reference•Tribunal fees•Punitive•Advice – legal and non-legal•Employee expectations (as opposed to realities)•Merits of the case

Employment law update Erica Humphrey Solicitor

Employment tribunal statistics 2012/13

•Feesintroducedforclaimsfiledonorafter29July2013•Upto£1,200(£250filingand£950hearing)•79%fewerclaimsreceived:

- Oct-Dec 2012 – 45,710 claims received -Oct-Dec2013-9,801claimsreceived

•75%fewerthaninthelastquarter•Unison challenge – judicial review

- (R (Unison) v Lord Chancellor and another [2014] EWHC 218(Admin)

Unfair dismissal compensatory award

•Basic award - £464•Compensatory award – lesser of £76,574 or 52 weeks’ actual

gross pay•Lawfirmchallenge–judicialreview

- R (on the application of Compromise Agreements Ltd) v Secretary of State for Business, Innovation and Skills

Case law update: calculation of holiday pay - commission

•EU law – “at least four weeks’ paid leave”•Working Time Regs - a ‘week’s pay’•Williams and others v British Airways Plc [2011] – “normal

remuneration” includes any payment “intrinsically linked” to the performance of tasks

•Lock v British Gas Trading Limited [2012] - AG opinion: commission was intrinsically linked to his role as a salesman - Suggested that is averaged over the last twelve months

Case law update: calculation of holiday pay - overtime

•Neal v Freightliner Ltd [2012] – EAT •Faulton and another v Bear Scotland Ltd [2012] – EAT•Watch this space…

Case law update: collective redundancy

•The Woolworths case (USDAW v Ethel Austin Ltd (in administration) and another case UKEAT/0547/12)

•Collective consultation when: - Proposing to make redundant 20 or more employees - “at one establishment” -Withinaperiodof90daysorless - 100+ employees = 45 days’ consultation -Fewerthan100employees=30days’consultation

•EAT: the words “at one establishment” should be disregarded•Referred to the ECJ

Case law update: disciplinary and grievance

•BlackburnvAldiStoresLtd(2013)(EAT) - Failure to provide impartial grievance could amount to a fundamental breach of contract

•MillervWilliamHillOrganisationLtd(2013)(EAT) - Reasonable belief in the employee’s guilt - Where an employee dismissed for criminal or serious misconduct, level of investigation must be “careful and conscientious” - Should focus no less on any potential evidence that may… at least point towards innocence…as he should on the evidence directed towards proving the charges against him

Case law update: disciplinary and grievance

•StuartvLondonCityAirport(2013)(CA) - Employee fairly dismissed for theft even though acquitted in a criminal trial

•BritoBabapullevEalingNHSHospital(2013)(EAT) -Afindingofgrossmisconductwillnotinevitablymake dismissal a reasonable response

Early conciliation Jonathan Bruck Senior Solicitor

Early conciliation

•Mandatory for claims presented after 6 May 2014

The issues

•Claimant (C) must notify Acas of intention to make a claim

•“stop the clock” on limitation

•Up to one calendar month (extension for further 14 days by agreement)

•Claims for relevant proceedings cannot be presented before earlyconciliationcompleteandearlyconciliationcertificate

Acas notification

•Earlyconciliationnotificationform

•Names, addresses and contact details

•Group claim form

•More than one Respondent (R) – different time limits!

•On-line, phone, post

•Acas records receipt (Day A)

•Email receipt / date stamped

Upon notification

•EarlyConciliationSupportOfficerattemptstocontactCwithin24 hours

•Obtains details (using checklist)

•Allocates conciliator

Options for claimant

•DemandCertificatefromECSO(whowillpresumablytrytopersuade otherwise?)

•Ifcertificateissued,clockrestarts

•Agree that Acas can contact R (Acas database for large employers)

Options for Respondent

•Contactusuallywithin48hours

•Refuse involvement

•Discuss settlement with conciliator

Certificate

•Issued at any time that conciliator concludes settlement is not possible (or 2 weeks if ECSO cannot contact C)

•Same conciliator if claim issued - helpful

Expectations

•Acas will not advise on timing

•Acas obliged to accept, even if out of time

•Certificateisnotavalidationofclaim

Early conciliation

Effect on time limits

•Day A = day Acas receives EC form/phone-call from C

•DayB=dayCisdeemedtoreceiveECcertificate(oractualreceiptdateifearlier)

•Deemed receipt: -datecertificateemailedbyAcas -2workingdaysafterAcaspostscertificate(assuming1stclassused)

•Time limit for claiming extended to 1 month after Day B if time would otherwise expire between Day A and Day B + 1 month

Early conciliation Example

•C dismissed with effect from 8 May 2014 & wants to claim UD•Normal time limit would expire 7 August 2014•C emails EC form to Acas on 5 June 2014 (Day A)•AcasmakescontactwithCon9June2014.CagreestoAcascontacting

R but R is not willing to agree a settlement•AcasissuesECcertificateandemailsittoCon13 June 2014 (Day B)•When does the UD time limit expire? -ERA1996:‘Inworkingoutwhenatimelimitsetbyarelevant provision expires, the period beginning with the day after Day A and ending with Day B is not to be counted’ -thereforethe8daysbetween(andincluding)6June2014and13June 2014 do not count -timelimitextendedby8daysto15 August 2014

Early conciliation

Another example

•C dismissed with effect from 8 May 2014; wants to claim UD•Normal time limit would expire 7 August 2014•C emails EC form to Acas on 5 August 2014 (Day A)•AcasmakescontactwithCon8August2014•C agrees to Acas contacting R•Acas makes contact with R on 12 August 2014•R is not willing to agree a settlement•AcasissuesECcertificateandemailsittoCon13 August 2014

(Day B)•TimelimitforUDclaimexpires13September2014(onemonth

after Day B)

Settlement

•IfCOT3tosettleallclaimsthennocertificate

•IfCOT3tosettlesomeclaimsthencertificateforrest

•New ET1

Issues for Respondents

•Checklist

•Jurisdiction

•Exemptions

•Timing

•Name of Respondent

Relevant proceedings

•Most claims

•Can go through EC but then add new claims

•C has mix (e.g. unfair dismissal and right to be accompanied), therefore exempt, goes through EC anyway and seeks to rely on clock stop?

Other Exceptions

• Joint claims, someone else complied

• If R contacted Acas first (no clock stopping unless C presents form)

• Mixed proceedings

• Unfair Dismissal Interim Relief

Conclusion

• Timing issues might present headaches for C and litigation

• Will C’s try it on anyway?

• Will Rs conciliate in fees regime?

• Individual cases will depend on the parties and conciliator

• Concern over Acas resources (new conciliators appointed)

• 10 days delay already experienced

• Longer period of uncertainty for Rs

• R may still not receive advance notice of claims