Employment news round-up November 2010

As Christmas approaches, Alastair Currie takes a look at what gifts are under the Employment law tree for Employers this month: two plum puddings in the form of two proposals to reduce the employment law burden on employers; a tribunal decision on the Acas Code and SOSR dismissals; the validity (or otherwise) of Compromise Agreements under the Equality Act; and finally…how not to earn extra cash for Christmas.

In this article…

• Shedding tiers – an update
• Has Christmas come early for employers?
• The ACAS Code and SOSR dismissals
• Are compromise agreements still valid?
• A nice little earner…

Shedding tiers – an update

We noted in our August news round-up that the government had announced that they were “minded” to scrap the ‘two tier code’ which aims to preserve the terms and conditions of employees recruited to work on outsourced public sector contracts. 

In a written answer to a question in the House of Commons earlier this month regarding the government’s future plans in relation to the code, Ed Davey confirmed that the government had “sought the views of interested parties including trade unions and employers groups with a view to abolishing the code”.  He further stated that a decision regarding the code would be made by the government in due course.  There is a rumour that the code could be abolished in April 2011, but this has not been confirmed. 

The proposal is still in its early stages, but we will keep you informed of any developments.

Has Christmas come early for employers?

As part of the government’s “brutally honest review” into the burdens on small and medium sized businesses, Lord Young has confirmed that the government is actively considering increasing the qualifying period for unfair dismissal from one year to two years.

Whilst employees are unlikely to welcome the fact that they may need an extra year’s service before they are entitled to bring an unfair dismissal claim, the proposal is relatively good news for employers. 

Employers will, however, still face the risk of discrimination claims or unfair dismissal claims where no qualifying period is required – for example, whistleblowing, health and safety and maternity related dismissals.  It could therefore be that, if this proposal goes ahead, more employees will seek to shape their claims with a discrimination angle. 

The ACAS Code and SOSR dismissals

In Cummings v Siemens Communications Ltd, a tribunal has held that the ACAS Code of Practice on Disciplinary and Grievance Procedures applies to dismissals for ‘some other substantial reason’.

Mr Cummings' employment was terminated for ‘some other substantial reason’, after he refused to accept a change to his terms of employment which would require all employees to take 12 days’ unpaid leave.  Mr Cummings brought a claim for unfair dismissal.

The tribunal considered whether the ACAS Code applied in these circumstances.  It noted that although the introduction to the Code stated that “a disciplinary situation includes misconduct and / or poor performance”, the Code was not limited to those circumstances and could apply where an employee had been dismissed for ‘some other substantial reason’.  The tribunal held that the company had breached the Code by failing to invite Mr Cummings to the meeting in writing. However, the company had complied with the ‘content and spirit’ of the Code, and the employer’s procedural errors were not sufficiently serious to render the dismissal unfair.

Are compromise agreements still valid?

You may have read in the press that an apparent drafting error in the Equality Act 2010 means that compromise agreements can no longer be signed off by an ‘independent adviser’ and, therefore, cannot be used to settle claims.  The problem is this: under the Act, a compromise agreement must confirm that the complainant (the employee) has received advice from an independent adviser about the agreement's terms and effect; but, according to the new Act, someone acting for a person who is a party to the contract (which will include the employee) is not an independent adviser.  It therefore appears that anyone advising on the agreement automatically precludes themselves from being an independent adviser.  If this interpretation of the legislation is correct, then this would mean that no compromise agreement could ever be enforceable.

The Government Equalities Office has stated that the legislation does not have this effect and that compromise agreements remain valid; but the Law Society has taken a different view.   The views of several QCs have been sought, but they are not in agreement over the correct interpretation of the Act.
 
For practical purposes, if the validity of a Compromise Agreement were challenged, it is possible that a court or tribunal would use rules of statutory interpretation to read the Equality Act so that it avoids the difficulty set out above.   It all likelihood, common sense will prevail, and tribunals will find a way to give effect to the Act without rendering all compromise agreements invalid – particularly because the explanatory notes to the Act and debate in the House of Commons clearly indicate that the government intended to maintain the status quo.
 
The risk, therefore, of compromise agreements being invalidated because of the Equality Act seems to be low.  You should, however, be aware that until the legislation is amended, or decision is made by a court or tribunal which determines the matter, there is some uncertainty about what the interpretation would be. In the meantime, the safest option is to settle claims via ACAS, using a COT3 agreement.  Otherwise, there is a theoretical risk that compromise agreements under the Equality Act 2010 may not be enforceable, but the risk appears to be low. 

An amendment to the legislation would, of course, be the ideal solution and we understand that the GEO is in discussion with the government about this possibility. 

A nice little earner…

The Employment Appeal Tribunal has recently dismissed four appeals by alleged serial litigant, John Berry, who is believed to have made thousands of pounds from ‘ageist’ job adverts. 

Mr Berry, 54 of Bristol, allegedly scours the internet for job adverts containing phrases like ‘school leaver’ or ‘recent graduate’ and submits a job application.  Shortly afterwards, he sends an email alleging age discrimination and, in the vast majority of cases, the employer settles for a few thousand pounds to avoid the cost of going to court.  Mr Berry is thought to have lodged as many as 60 claims against various recruitment agencies and other businesses.

In considering the appeals, the Employment Appeal Tribunal made it clear that they were not in a position to assess Mr Berry's motivation in bringing the claims as Mr Berry did not attend the hearing – apparently a common theme of his.  However, they did say that the purpose of the Employment Equality (Age) Regulations 2006 was not to provide a source of income for those who complain of arguably discriminatory job advertisements which they have no intention to fill, and that those who seek to exploit discrimination legislation for financial gain are liable to find themselves facing liability for costs.  The Employment Appeal Tribunal’s decision is reassuring for employers and should serve to deter vexatious litigant (or, ‘vexigants’ as they are sometimes known!).