Redundancy: selection pool of one person made dismissal unfair

The EAT has upheld, in the case of Capita Hartshead Ltd v Byard UKEAT/0445/11, a tribunal decision that a redundancy dismissal was unfair where the employer used a selection pool of just one employee (a pension scheme actuary). The tribunal had not erred when it held that the employer's decision to limit the size of the pool to one was not reasonable in the circumstances and other actuaries should have been included. The tribunal based this decision on its findings of fact that the other actuaries did similar work, the claimant's work had been praised and there was only a "slight" risk of losing clients if their scheme actuary was changed.

In the course of its judgment, the EAT carried out a useful review of the law in this area, and set out the correct approach in such cases. As a result, employers can still choose a redundancy pool that is the same size as the number of redundancies to be made, but must be careful when doing so as tribunals will carefully scrutinise such decisions.

The key question is whether the employer has “genuinely applied its mind” to identifying the pool. A pool which is the same size as the number of employees to be made redundant should only be used where there are strong reasons to back up that decision.

Dismissing an Employee: Draft Regulations Published

The Government has now published the draft Unfair Dismissal and Statement for Reasons for Dismissal (Variation of Qualifying Period) Order 2012, which contains the increase to the qualifying period before which an employee becomes entitled to bring a claim for unfair dismissal from one year to two years.

The draft regulations are also set to increase the qualifying period for entitlement to written reasons for dismissal, also from one year to two years.

The changes will only affect those employees whose period of continuous employment begins on or after 6 April 2012. Everyone will continue to be eligible to bring an unfair dismissal claim after one year’s service and be entitled to written reasons for their dismissal. Any employer who was acting on the basis that the two-year qualifying period would apply to all employees regardless of when they commenced work is advised to have a rethink!

Also, the draft regulations do not change those circumstances where an employee does not even need one year continuous service in which to bring a claim for unfair dismissal, such as discrimination or whistleblowing.

Whilst, the Government is seeking to cut some of the red tape for employers by increasing the requisite qualifying period, it is anticipated that there will be a rise in disgruntled employees trying to show that their circumstances are such that they do not need any continuous service in order to bring an unfair dismissal claim by tagging it onto a claim of, for example, sex discrimination. This also brings with it the danger that with such claims there is no cap on the compensation that an Employment Tribunal could award a successful employee whereas with a ‘normal’ unfair dismissal there is a cap on the compensation.

Following fair procedures for the dismissal of any staff members, regardless of length of service, remains a sound risk management strategy.

Employment Status

The question of an individual’s employment status has cropped up again recently in the case of Weight Watchers (UK) Ltd v HMRC where the Upper Tribunal (Tax and Chancery Chamber) considered whether 'Leaders' engaged to conduct Weight Watchers meetings were employees of Weight Watchers Ltd for the purposes of PAYE and NI contributions?

The Upper Tribunal (Tax and Chancery Chamber) decided that in this case, yes they were employees.

In summary, the facts of the case were that Leaders engaged by WWUK signed contracts describing themselves as independent contractors and not the servant of Weight Watchers. They were required to pay their own tax and national insurance. The Leaders were only paid if they personally conducted their own meetings and they were required to obtain WWUK's specific approval in relation to time, date and place of any meetings. Although the contract contained an express substitution clause, the Leaders were obliged to find a suitably qualified replacement if they did not want to lead a meeting.

The Upper Tribunal dismissed WWUK's appeal and concluded that the Leaders were employees of WWUK rather than self employed contractors. The Upper Tribunal held that the Leaders were required to provide their services personally and that WWUK imposed a high degree of control as they were required to follow WWUK's programme and expected to turn up and conduct the meetings at a certain time and place each week.

Whilst WWUK had written a 'substitution clause' into the contracts, the Upper Tribunal adopted a purposive interpretation of the contracts in accordance with the decision of the Supreme Court in the case of Autoclenz v Belcher and concluded that in reality, the right to substitute was "fettered" because the Leaders were required to find a suitably qualified replacement and show good reason for proposing not to take a meeting.

The decision serves as a reminder that while it is important that contracts are drafted in such a way as to reduce the risk of an arrangement being classed as one of employment, it is equally, if not more, important to ensure that the practical reality is in accordance with those terms. The tribunal will have little difficulty in dismissing "labels". The decision also serves as a reminder to keep employment status issues (and related documentation) under regular review.

The tribunal's decision makes clear that a substitution clause will only work if it enables the worker to sub-contract her obligations to a substitute.

New Regulations pave the way for April’s employment tribunal changes

In addition to the changes to the qualifying period of continuous service for which an employee will be able to bring a claim for unfair dismissal from 6 April 2012, last year also saw the Government announcing a number of measures aimed at resolving workplace disputes more quickly, reducing the pressure on the employment tribunal system and saving costs for employers and the taxpayer.

Such proposals for amending the Employment Tribunal Rules of Procedure were as follows:

• permitting unfair dismissal claims to be heard by judges sitting alone, without lay members;
• increasing the maximum levels of deposit orders (from £500 to £1000) and costs awards (from £10,000 to £20,000);
• requiring witness statements to stand as a witness’s evidence, without being read out loud (unless the tribunal directs otherwise);
• withdrawing state-funded witness expenses.

The Government has now also published Regulations which pave the way for judges to sit alone in unfair dismissal cases from 6 April 2012 and to provide a power to increase the maximum amount for a deposit order.

We are still waiting for draft Regulations to address witness statements and witness expenses.

Also in April, we expect the previous President of the Employment Appeal Tribunal, Mr Justice Underhill (his appointment came to an end on 31 December 2011 being replaced by Mr Justice Langstaff from 1 January 2012), to present the Government with the outcome of his fundamental review of employment tribunal procedure. Such a review is likely to see the beginning of considerable change for employment tribunals.

In relation to some of the other tribunal changes that were announced at the end of last year, such as giving tribunals the discretion to impose financial penalties on employers found to have breached employment law and extending the early conciliation role of Acas, there are yet no proposals for dates for implementation.

Your Questions Answered

A frequent question that employers are concerned with in dealing with disciplinary hearings involves the use of recordings. Here we answer some of the issues that arise from the principle question, “My employee has asked me if they can record their disciplinary hearing, I don’t want to agree but what can I do?”

Are employees entitled to record disciplinary hearings and discussions?
The short answer to this question is no. An employee has no right to record a hearing and it is not "unfair" to refuse permission. An employee's right is to bring a colleague or trade union representative along to the disciplinary hearing to take a note of the hearing if they feel this is necessary and of course it is best practice to provide the employee with its note of the hearing.

What if an employee covertly records a hearing?
This in itself may be treated as a disciplinary matter, particularly if the employee has already been refused permission to make a recording. More seriously, a covert recording may be admissible as evidence in an employment tribunal, notwithstanding the way it has been obtained. Clearly a recording of the disciplinary hearing itself is unlikely to be controversial, however, in the case of Chairman and Governors of Amwell View School v Dogherty, the EAT debated whether a covert recording of the disciplinary panel's private deliberations should be admissible as evidence. In that case, it was decided that it should not on grounds of public policy, however, the EAT commented that the decision might have been different had the case involved discrimination.

So how can employers avoid this happening in the first place?
Firstly, make sure that covert recording of meetings and hearings is included in the list of serious misconduct in the disciplinary procedure so that employees are in no doubt that this is a disciplinary matter. Secondly, where a disciplinary hearing is adjourned in order to make a decision on the outcome, ensure that neither the employee nor his representative leaves any bags or files in the room where the discussions will take place. Remember also that any notes or internal communications, including emails, relating to the disciplinary hearing will be disclosable in any future employment tribunal proceedings so don't commit to paper anything which you would not want an employment tribunal to see (such as commercially sensitive information for example).

The HR Exchange : Next event - 8 March 2012

Finally, just a reminder that our next HR Exchange event will be held on 8 March 2012 at the Oswaldtwistle Mills conference centre.

The discussion theme is “Social Media in the Workplace – Friend or Foe”, a topic that is relevant to the majority of employers, large and small. It promises to be a great session with guest speakers, advice on how to manage social media in your business and plenty of opportunity to share experiences with other business owners and HR professionals.

Places are limited, so if you haven’t already booked your space, be sure to submit a form as soon as possible. Relevant details and the booking form can be found on the website:
http://www.thehrexchange.co.uk/

We look forward to seeing you there!