Employment Law

Here is our at a glance summary of the main current rates and limits in employment law:-

1.         Limit on a week’s pay – £464.00 from the 6th April 2014.

2.         Maximum unfair dismissal compensatory award – £76,574.00 from the 6th April 2014.

However please note that where the affective date of termination is on or after the 29th July 2013 that the maximum compensatory award is the lower of the statutory limit or 52 weeks’ actual gross pay at the time of dismissal.  The statutory limit does not apply where the reason for unfair dismissal or redundancy selection was whistleblowing or carrying out health and safety activities.

3.         Maximum statutory redundancy pay/unfair dismissal basic award – £13,920.00 from the 6th April 2014.

4.         Minimum unfair dismissal basic award – £5,676.00.

This minimum only applies in dismissals for reasons of trade union membership or activities or acting as a health and safety representative, employee representative, workforce representative or pension scheme trustee.

5.         Guarantee payment – £25.00 maximum each day and £125.00 maximum in any three month period.  These rates are with effect from the 6th April 2014.

6.         Maximum limit of compensation for failure to inform or consult over TUPE transfer – 13 weeks’ pay, but please note the statutory limit on a week’s pay does not apply.

7.         Maximum limit on compensation for failure to inform or consult over collective redundancy – 90 days’ pay – but note the statutory limit on a week’s pay does not apply.

8.         Maximum compensation for breach of contract claim in an employment tribunal – £25,000.00 with effect from the 6th April 2014.

9.         Statutory maternity, paternity and adoption pay (prescribed rate) of £138.18 each week from the 6th April 2014.

10.        Maternity allowance – £138.18 each week from the 7th April 2014.

11.        Statutory sick pay – £87.55 per week from the 6th April 2014.

If you require any advice on any of these limits or rates or any employment related matters then please contact Daven Naghen on 01775 722261 or email daven.naghen@maplessolicitors.com or visit our offices at 23 New Road Spalding Lincolnshire PE11 1DH.

The Government Announces That the Claims for unfair dismissal Qualifying period has been extended to 2 years.

On 3rd October the Government announced that the qualifying period for the right to claim unfair dismissal will be extended from one to two years with effect from 6th April 2012.

The Government believes that this will help increase business confidence to take on more workers, and should see unfair dismissal claims drop by around 2,000 per year. The Government is also considering other issues of employment law, and in particular whether Claimants need to pay a fee for lodging Tribunal Claims. In his speech to the Conservative Party Conference on 3rd October, the Chancellor of the Exchequer indicated that such a fee will be introduced from April 2013.

Daven Naghen, head of the Maples Employment Team commented as follows:-

“This announcement has come as no surprise, and has been in the pipeline for a while. I suspect that this law change shall be challenged, with Claimants arguing that it constitutes indirect sex discrimination or indirect age discrimination. This is because statistically fewer women have two years qualifying service and the same can be said of younger people. The issue will be whether or not the Government can objectively justify the two year qualifying period. I think that ultimately the Courts will find in favour of the Government in respect of such challenges, since the Courts will not want to be seen to be interfering with the Government’s attempts to help businesses and “kick start” the economy.

Potential Claimants may look to get around this increase in qualifying period by instead claiming some form of discrimination instead of unfair dismissal since no qualifying period is needed for discrimination (e.g. on the grounds of sex, race, age etc). Therefore although I do expect a drop in the number of cases being brought each year, I am not so sure it will be as much of a drop as the Government predicts. Employers still need to be very wary of taking on staff, due to the complex myriad of employment legislation that still provides rights to workers notwithstanding the lack of continuity of employment.”

Further commentary will follow in our Employment Newsletter leading up to 6th April 2012 implementation date.

If you need advice on any employment issue, whether as an employer or an employee, then please contact Daven Naghen on 01775 722261 at daven.naghen@maplessolicitors.com or at 23 New Road, Spalding, Lincolnshire PE11 1DH or Gemma Mayer on 01775 722261 at gemma.mayer@maplessolicitors.com or at 23 New Road, Spalding, Lincolnshire PE11 1DH

Quite often in Contracts of Employment, an employer will look to impose upon an employee a number of post termination restrictive covenants.  These are clauses that are designed to protect the business once the employee leaves, e.g. non-solicitation, non-dealing clauses etc.

There has been a recent case which has again highlighted the need to carefully draft restrictive covenants to ensure that they are valid.

The case of Bartholomews Agri Food Limited v Thornton

In this case the former employer, Bartholomews Agri Food Limited, applied to the High Court for an injunction to prevent its exiting employee, Mr Thornton, from working for a competitor.  The case considered the enforceability of a post termination restrictive covenant which read as follows:-

“Employees shall not, for a period of 6 months immediately following the termination of their employment be engaged on work, supplying goods or services of a similar nature which compete with the Company to the Company’s customers, with a trade competitor within the Company’s trading area, (which is West and East Sussex, Kent, Hampshire, Wiltshire and Dorset) or on their own account without prior approval from the Company.  In this unlikely event, the employee’s full benefits will be paid during this period.”

Unfortunately for Bartholomews Agri Food Limited, the High Court refused the application for an interim injunction against Mr Thornton.  This was because the court held that the clause was in restraint of trade and unenforceable.

The court felt that the covenant was clearly far too wide than was reasonably necessary for the protection of the employer’s business interests.  It was held to be contrary to public policy.

How/Why did the Court reach this decision?

In essence for the employer to succeed it had to show that it had a legitimate business interests requiring protection, and that the clause was no wider than reasonably necessary for the protection of its legitimate business interests.

Bartholomews Agri Food Limited argued that Mr Thornton was very much a confidant of its customers, many of whom were small, family-owned businesses working in isolated conditions.  It was argued that the customers therefore placed considerable reliance upon Mr Thornton and his role was very much that of a trusted advisor.  It was argued that as a result Mr Thornton had acquired confidential information about Bartholomews Agri Food Limited’s pricing, services and customer base.

The employer argued that really the clause was a non-dealing clause.  It argued that the clause ought to be enforceable as it was limited in time to 6 months which it felt was no longer than reasonably necessary to provide them with the opportunity to introduce one of their other agronomists to customers having regard to peak farming periods.  It was also argued that it was enforceable as it was limited to the supply of goods or services of a similar nature to those supplied by Mr Thornton in competition with them.  It was also limited to their existing customers, which it was felt was necessary to protect confidentiality and customer connection.

Thornton’s legal representatives argued that the clause did not define confidential information and he denied that he was using confidential information since the names and locations of clients would be publically available.  He claimed to the extent that he had information relating to individual clients, farms and crop yields etc that this was information a farmer would provide to any agronomist with whom he intended to work and would only be relevant to a particular season and was therefore already out of date.  Mr Thornton said that the pricing structure of Bartholomews Agri Food Limited would change from season to season.

The court held that the clause was poorly drafted.  There were no definitions, and it was felt that on one interpretation the covenant prevented Mr Thornton from being able to work in the 6 stated counties at all although Bartholomews Agri Food Limited claimed that this was not their interpretation of the clause.  The court did wonder what was actually meant by the words “of a similar nature”?
The court held that the clause was far wider than was reasonably necessary for the protection of the employer’s business interests.  It applied to all of their customers, regardless of whether Mr Thornton had knowledge of those customers and regardless of whether he carried out any work for those customers.  The court noted that in fact Mr Thornton was responsible for a very small percentage of the customers of Bartholomews Agri Food Limited.

It was also noted that the clause had been entered into in 1997, at a time when Mr Thornton was just a trainee agronomist with little experience and no customer contacts and therefore it terms were totally inappropriate for such a junior and inexperienced employee.

Comments

Daven Naghen, head of our Employment Team has commented on this decision as follows:-

“This case shows again that it is important to carefully draft restrictive covenants in accordance with the particular circumstances of the case.  For example in this instance the drafter failed to properly define the business interests that it sought to protect and then the covenant itself was not relevant to the particular role as when it was drafted Mr Thornton was only a trainee agronomist with no real customer connections or experience.

A covenant will only be enforceable if it protects a legitimate business interests, such as trade connections, trade secrets, confidential information and the stability of the work force.

The covenant must be carefully drafted so it takes into account the employees role at the time the clause is drafted, it reflects the circumstances of the case, it precisely defines the type of restrictive activity and then goes no further than is necessary to protect legitimate business interests.

The trap that businesses and employers often fall into, is that they look for one clause to fit all circumstances and often use precedents from other contracts without a full consideration of the circumstances.  I would strongly advise that any business or employer that is looking to impose post termination covenants upon an employee does obtain legal advice.

If you are an employer or an employee requiring advice about post termination covenants then please contact Daven on 01775 722261 or email daven.naghen@maplessolicitors.com or visit our offices or arrange an appointment at our offices at 23 New Road, Spalding, Lincolnshire, PE11 1DH.

In November 2011 the Government published the results of a review of sickness absence.  The review recommends the creation of an Independent Assessment Service (IAS) which would assess whether people are fit to work when they have been signed off for four weeks, relieving GP’s of this task.  According to the authors of the review, GP’s do not have sufficient time to perform in-depth assessment of individuals and they have not had training in occupational health which can make it difficult for them to make decisions on an individual’s ability to continue working

The proposed IAS would assess a person’s functional capacity and would make recommendations about a person’s ability to return to work immediately (or with work place adjustments) or whether the person is not fit to return to work at all.

The review believes that if the IAS is implemented that it would allow up to 20% of the 300,000 people currently off work in the UK to get back to work sooner and help reduce the £15 billion cost to the UK economy each year.

Other proposals of the review include:-

1. The payment of Job Seeker’s Allowance rather than Employment Support Allowance (for a period of three months) to people who are signed off sick.  This means that they would receive less money and would have to prove that they were looking for work;
2. Tax incentives for firms to take on or retain staff with long-term conditions;
3. Statutory Sick Pay record keeping obligations to be abolished, reducing the administrative burden for employers and saving an estimated £44 million; and
4. Government-backed help to find a more appropriate job for those who can no longer do what they have been doing.

Daven Nagen, head of the Maples’ Employment Team commented as follows:-

“In theory this sounds great.  From my experience of these matters GP’s do not have the time or skills to properly assess the ability of a patient to return to work (with or without adjustments) and many too often pander to the wishes of the patient.  In turn such a patient can often drift into idleness, especially with the attractive State Benefits currently available.  The IAS might just help to enable employers to manage staff absence more effectively.  At the same time I am concerned that this might just be a money saving exercise which may become too punitive on employees and not ultimately look to their best interests.”

For further advice on this review and the possible implementation of the IAS please contact Daven Nagen on 01775 722261 or email daven.naghen@maplessolicitors.com or contact him at 23 New Road, Spalding, Lincolnshire PE11 1DH

With effect from 1^st February 2012 certain limits on Tribunal awards will increase, as well as other amounts payable under Employment Legislation.  The most significant are as follows:-

(i)              the limit on a week’s pay for the purposes of calculating redundancy payments etc will increase from £400 to £430;

(ii)             the maximum compensatory award for unfair dismissal will increase from £68,400 to £72,300 and

(iii)            guarantee pay increases from £22 per day to £23.50 per day.

The new rates apply to cases where the event giving rise to compensation or payment arises on or after 1^st February 2012.  For example if an employee is dismissed on 31^st January 2012, and subsequently claims unfair dismissal, the old rates prior to 1^st February 2012 will apply.  However if the employee is dismissed on or after 1^st February 2012 then the new rates shall apply.

For further information please contact any member of our Employment Team:-

Daven Naghen on 01775 722261 or email daven.naghen@maplessolicitors.com or contact him at 23 New Road, Spalding, Lincolnshire PE11 1DH

Gemma Mayeron 01775 722261 or email gemma.mayer@maplessolicitors.com or contact her at 23 New Road, Spalding, Lincolnshire PE11 1DH

The Current Law

Currently a worker in the United Kingdom can see their employment end at the age of 65 (the default retirement age) without any redundancy payment, even if they do not wish to retire.  In essence all that an employer needs to do is serve the employee with 6 months’ notice and follow a fairly limited procedure.

In a high profile case last year, known as the Heyday Challenge, the High Court did rule that the default retirement age of 65 introduced by the Government in 2006 did comply with an EC Directive against age discrimination.  However Mr Justice Blake did say that there was a “compelling case” for changing the law.

The Government Push for Change

Recently the Equalities Minister, Harriett Harman, signalled an intention from the Government to change the law to enable people to work beyond the age of 65.  She also stated that it was the intention of the Government to push the law through as soon as possible.  It is believed that currently an Equalities Bill is before the House of Lords for its consideration.

Whether or not the Government is able to change the law in the near future, bearing in mind the forthcoming General Election, remains to be seen.  If it does then the default retirement age may be increased to say 68 or above, or possibly even be removed completely.

Reasons for Change

It is felt by many that the default retirement age is arbitrary and bears no real relation to people’s ability.  Many workers are remaining active and healthy well into their older years.

Furthermore many workers feel the need to continue to work in order to combat the effects of the recession and due to the fact that many pensions are insufficient.

It is believed that the Government supports a change in the law since it will help to reduce welfare costs, and will bring about increased spending power amongst older generations.  It is also believed that it will keep more skilled people in work for longer, which can only benefit the economy.

The proposed law changes have recently received backing from the Federation of Small Businesses and the Equality and Human Rights Commission.

On the other hand many employers are opposed to such changes.  They fear a string of compensation cases to be bought by people who do not want to retire.  They feel that there are already adequate rules in place.  For example, under current law, employees do have the right to request to continue to work beyond their default retirement age (or the date when the employer wants them to retire).  The employer can refuse the request though, and the law does not require them to give any reason for that decision.

Maples’ View

Employment Partner Daven Naghen recently commented as follows:-

“Obviously it is not known with any certainty whether or not this Government will push through the law changes, bearing in mind that there is a General Election in the pipeline.

Until any proposed changes are turned into legislation, I would suggest that employers continue to follow the current law.  Namely if they have an employee that is aged 65 or over, they can (if they so wish) look to retire that employee by following current procedures including the provision of 6 months notice.

However employers should be aware that if law changes do take place prior to the end of the 6 months’ notice that has to be given, it may be that the notice will become void and the new rules will be applicable.

I do think it is inevitable that at some stage the default retirement age will either be increased, or removed completely.  However with the political uncertainty of a General Election, it is uncertain as to when such changes will be implemented.”

Maples are following this matter carefully, and will report further as and when there are any developments.  Please log onto our website for any updates.