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When is a PILON Not a PILON?

It is often thought that informing an employee that their employment is terminated with immediate effect and making a payment in lieu of notice (“PILON”) soon after is sufficient to bring the contract of employment to an end. Not necessarily so!

A recent case involving a high flying city banker demonstrates the importance of effective communication, in writing, upon termination.

The banker concerned was dismissed for being too successful with the bank concluding his employment package was too generous as a result. On 29th November they issued a letter purporting to terminate the employees contract of employment. No mention was made of the bank's intention to exercise its contractual right to make a PILON. On the 18th December a payment was made direct into the employee’s bank account but without explanation.

The effect of the banks actions and lack of detail was to be in repudiatory breach of contract which the employee could choose whether to accept and treat the contract as at an end or affirm and insist on performance.

The employee gave notice to the bank that he was affirming the contract i.e. insisting on their performance of the contract, The bank responded by stating that the bank had, or was, exercising its right to make a PILON by letter on 4th January.

By then it was too late as the year end had passed which crystallised a contractual right to the Banker for a further payment of 2.5 million Euros.

What do I need to know?
The court held that a repudiatory breach needs to be accepted before the contract comes to an end. This was not evident from either the employee's communications or behaviour and the effect of the affirmation soon after was to keep the contract alive.

This case emphasises the importance of expressly stating your decision to exercise a contractual right to make a PILON in order to lawfully bring the contract to an immediate end (in cases where there is no right for summary termination). Note that you must have a contractual right to make a payment in lieu of notice otherwise it may still be open for an employee to reject your attempt to breach the contract but instead insist on performance until the notice period expires.

Conduct Dismissals - Take Care!

A recent Court of Appeal decision emphasises the ease at which a conduct dismissal can be challenged as being unfair.

In this case a nurse, employed from Singapore, was accused of, and dismissed for, alleged misconduct relating to her treatment towards a patient. The incident occurred in a side room with only the dismissed nurse present, her colleague and the patient. The colleague filed a report to her superior about the Nurses treatment to the patient. The Nurse admitted one allegation but insisted it was unintentional and denied the others. Effectively it a case of conflicting evidence between the accused and the complainant, with no witnesses. The investigation officer and subsequent disciplinary panel believed the evidence of the colleague, predominantly because they could see no reason why a junior employee with only a few months service would complain unless she thought it necessary. This was despite inconsistencies in the colleague’s evidence.

The Court of Appeal agreed with the Employment Tribunals decision that the Nurse had been unfairly dismissed.

What do I need to know?
Important conclusions from this decision are:

• The more serious the consequences of dismissal for the employee the more careful an investigation is required. Here, as dismissal would result in the employee potentially losing her career as a nurse and also being deported the investigation undertaken was not thorough enough to be reasonable in these circumstances.
• Where there is a conflict of evidence between two witnesses and no corroborative evidence to support either it is not obliged to believe one employee and to disbelieve the other. If it is unable to resolve the conflict it is perfectly proper to give the alleged wrongdoer the benefit of the doubt particularly where there is an unblemished disciplinary record. This is such a common point it is worth including the passage from the judgement:

“where the evidence consists of diametrically conflicting accounts of an alleged incident with no, or very little, other evidence to provide corroboration one way or the other ….Employers should remember that they must form a genuine belief on reasonable grounds that the misconduct has occurred. But they are not obliged to believe one employee and to disbelieve another. Sometimes the apparent conflict may not be as fundamental as it seems; it may be that each party is genuinely seeking to tell the truth but is perceiving events from his or her own vantage point. Even where that does not appear to be so, there will be cases where it is perfectly proper for the employers to say that they are not satisfied that they can resolve the conflict of evidence and accordingly do not find the case proved. That is not the same as saying that they disbelieve the complainant. For example, they may tend to believe that a complainant is giving an accurate account of an incident but at the same time it may be wholly out of character for an employee who has given years of good service to have acted in the way alleged. In my view, it would be perfectly proper in such a case for the employer to give the alleged wrongdoer the benefit of the doubt without feeling compelled to have to come down in favour of on one side or the other.”

Disability Discrimination - Consider a Reshuffle!

PC Jelic worked on the Community Service Desk (where little face-to-face contact with the public was required) following stress related absences. Medical evidence confirmed that whilst fit for current duties he would struggle in a public facing role. However PC Jelic’s role had evolved over time and required dealing with the public.

The police force retired PC Jelic on ill health grounds but failed to consider alternatives to termination. PC Jelic alleged medical retirement was disability discrimination, and it could have been avoided had reasonable adjustments been made such as deployment into a non client-facing officer role; or continuing in his role with a non client-facing restriction; or transfer into a police staff role (with or without the benefit of medical retirement).

It was found that PC Jelic did have a disability and that there was accordingly a duty to make reasonable adjustments. It considered the suggested reasonable adjustments and concluded that it was possible for the Employer to swap over PC Jelic with one of his colleague who worked in an area where PC Jelic had expertise and which was a non client facing role. There was the caveat that this would be subject to the views of PC Jelics colleague. It also concluded that it there was no reason why retirement on medical grounds followed by re engagement in a new role could not be a reasonable adjustment.

At appeal the EAT agreed swapping roles was a possible reasonable adjustment which should have been considered. It did however conclude that whilst ill health retirement followed by re engagement was a possible reasonable adjustment in this case the tribunal had failed to give adequate reasons for reaching this decision.

What do I need to know?
Although there legislative guidance on possible reasonable adjustments is a non exhaustive list and as such each case needs to be considered fully, in consultation with the employee, in order to explore all possible adjustments that could be made and whether they are practicable and reasonable. In this case the Employer failed to hold any meetings with the employee to consider adjustments and as such was a victim of its own mistake. It mattered not that the employee subsequently identifies reasonable adjustments following termination – had there been proper consultation at the outset these options may well have transpired before termination.

Discriminatory Selection

Eversheds solicitors have lost a claim by a former male associate solicitor for sex discrimination who has been awarded £123,000 compensation.

The firm embarked upon a redundancy programme in 2009. One of the selection criteria which the individuals at risk were assessed against was the speed in which they achieved actual payment for work done. A maximum of two points was to be awarded for this criterion.

The claimant was awarded 0.5 points yet a female associate was awarded 2 points automatically because she was on maternity leave at the time and so could not be assessed properly against the criteria. Had the female not been automatically awarded the 2 points it is probable she would have been selected for redundancy instead.

What do I need to know?
Take care when establishing redundancy selection criteria and in particular consider whether any are potentially discriminatory for any reason. Eversheds clearly concluded that it would be discriminatory on grounds of sex to score the lady against a criterion which she had not had the opportunity to establish a history with due to her maternity leave and hence why they awarded her full points automatically. However it has had the reverse effect with the male employee alleging discrimination instead. Eversheds intend to appeal and argue that the Sex Discrimination Act specifically excludes maternity from being taken into account when comparing the treatment of men and women – watch this space!

Your Questions Answered - Special World Cup Fever Q and A!

1. During the World Cup, what do I do if I have an influx of holiday requests to cover the days important matches are played?

Stick to your holiday policy if you have one, most of which are designed to ensure business continuity and prevent too many staff being off at once – it is their responsibility to plan ahead not yours. If you don’t have one then now is the time to send out memorandum setting out your position on holiday requests i.e. first come first served, approved by line manager, no more than 2 per department, amount of notice required etc

2. We operate a shift system 24/7. I am concerned that some employees may turn up for a 10pm start under the influence of alcohol following a World Cup game. How can I monitor this and can I insist on testing?

It would be worth while sending out a memorandum to all staff advising employees that the Company rules on alcohol and drugs will be enforced as normal and that the World Cup is not an excuse to flout the rules or, more importantly endanger their health and safety and that of others. If you don’t have a policy consider implementing a policy. Consider also what the tolerance levels are, if any! Advise those that are suspected of being under the influence of alcohol or drugs they will be asked to submit to a test, refusal of which may result in inferences being drawn. Forewarn that random testing may also take place. Some may complain that this is a breach of their privacy but if you place the onus on the employee to prove they are not under the influence then more likely than not they will agree to the test when requested.

Other tips

• Consider flexible working practices ie early starts for an early finish, rearranging shifts etc
• Consider providing facilities to watch or listen to matches in a communal room or canteen – if outside break times consider allowing the employee to make the time up elsewhere – note it may be discriminatory to limit watching purely England matches so consider carefully requests to watch other games
• Remind staff of their absence reporting requirements forewarning that absences (which will be closely monitored) which are not genuine will result in disciplinary and possibly dismissal
• Ensure fair treatment to all, including those not interested in football

On that note – lets hope by the time you read the next edition of Employ!, we are celebrating World Cup glory!

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