Employment Law

The Government has recently announced that collective redundancy consultation periods, the Transfer of Undertakings Regulations and discrimination compensation awards are to be included in its next review of employment law later this year.  The Government will in particular consider the following complaints from employers that:-

(i)              The requirement of 90 days’ collective consultation when 100 or more employees face dismissal hinders their ability to restructure;

(ii)             The Transfer of Undertakings Regulations are overly bureaucratic; and

(iii)            High awards in discrimination cases encourage weak, speculative or vexatious claims.

So far in its review the Government has:-

(i)              Considered the Employment Tribunal system and increasing the qualifying period for unfair dismissal to 2 years;

(ii)             Commissioned an independent review into managing sickness absence; and

(iii)            Has reviewed the compliance and enforcement regime for employment law.

For more information on this subject please contact Daven Naghen on 01775 722261, daven.naghen@maplessolicitors.com or 23 New Road, Spalding, Lincolnshire PE11 1DH.

In Kurumuth –v- NHS Trust North Middlesex University Hospital, the EAT held that it was reasonable for an employer to dismiss an employee when the UK Border Agency failed to satisfy it that she had a right to work in the UK.

Daven Naghen, head of the Maples Solicitors LLP Employment Team commented as following:-

“In this case the employer acted reasonably, as it took all reasonable steps to investigate the immigration status of the employee.  As a result of its investigations it could not satisfy itself that the employee was entitled to work in the UK and therefore it was fair to dismiss her and avoid the risk of civil penalties of up to £10,000 for employing an illegal worker.  Provided businesses do all that is reasonable to check the immigration status of its workers, they should avoid liability for unfair dismissal if it cannot be established that an employee has the right to work in the UK.”

For more guidance on this subject then please contact Daven Naghen on 01775 722261, daven.naghen@maplessolicitors.com or 23 New Road, Spalding, Lincolnshire PE11 1DH

Very recently the Government has announced that it will halt registration with the Vetting and Barring Scheme (VBS) in response to criticism that the scheme is disproportionate, overly burdensome and unduly infringes on civil liberties.  Voluntary registration with the VBS for new employees and job movers working or volunteering with children and vulnerable adults was due to start on 26^th July 2010, with compulsory registration to follow in November 2010.  The VBS is now being reviewed by the Government to see if it can be done at ‘proportionate, common sense levels’.

The VBS is intended to protect children and vulnerable adults by stopping those who pose a known risk from working with them.  The following requirements still remain in force, which came into effect from October 2009:-

(i)              It is a criminal offence for barred individuals to work with children or vulnerable adults in a wider range of posts than previously.  Employers also face criminal prosecution for knowingly employing a barred individual in such circumstances;

(ii)            There are two barring lists administered by the Independent Safeguarding Authority, which can be checked as part of an enhanced Criminal Records Bureau Check.

(iii)          Additional jobs and voluntary positions are covered by the barring arrangements; and

(iv)          Employers, Local Authority’s, professional regulators and inspection bodies have a duty to refer to the ISA any information on an individual working with children or vulnerable adults where they consider them to have caused harm or pose a risk.

For more information on this scheme please call Daven Naghen on 01775 722261 or email daven.naghen@maplesolicitors.com.

The Employment Tribunal Service has published its annual statistics report for 2009 to 2010, which shows a substantial increase in the number of claims lodged in Employment Tribunals. The number of claims in 2009 to 2010 rose to 236,100, which is an increase of 56% on the number of claims lodged in the previous year.

The report also reveals that the number of claims associated with unfair dismissal, breach of contract and redundancy rose 17% as compared to the previous year, which is probably as a result of the recession.

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

“These statistics do not surprise me. In the current economic climate, disgruntled employees who lose their jobs have little to lose by making a claim – since they are unlikely to have another job to go to. It is therefore more important than ever that employers or all sizes ensure that they get full and proper legal advice before considering dismissal and redundancy of staff.

I would also highly recommend that any small to medium sized business considers insuring against the risks of Tribunal claims, by signing up for my firm’s Employment Guard Scheme. The premiums for such insurance can be as little as £13.13 per month, and can cover claims of a value up to one quarter of a million pounds.”

If you need advice regarding any employment issues, or require a free no obligations quotation for the Employment Guard Scheme then please contact Daven Naghen on 01775 722261 or email Daven on daven.naghen@maplessolicitors.com

Apparently statistics show that in this country staff are absent from work on average 7.4 days per year, and these absences cost businesses an average of £710 per employee per year.

If for example your business employs 10 staff with average absence rates, then you could be losing £7,100 a year!  This does not even cover other consequences of staff absence such as reduced productivity, additional costs of overtime for others and poor customer service.

There are a number of methods which can help to reduce and manage staff absenteeism.  These include:-

(a)      limits or restrictions on contractual sick pay, e.g. only at the discretion of the employer;

(b)      return to work interviews, so that staff that may be ‘swinging the lead’ know they are being monitored and may need to give full explanations of absences;

(c)       disciplinary procedures for unacceptable absence levels, which can cover frequent short absences;

(d)      a contractual requirement to have an employee medically examined by an independent doctor in order to confirm the employee’s medical condition;

(e)      the use of trigger mechanisms to monitor attendance such as the Bradford Factor;

(f)        having line managers trained in absence management; and

(g)      incentives to keep staff at work (e.g. rewards for good attendance records – but beware employees who when really unfit for work will come in in order to preserve their good attendance record!).

Daven Naghen, head of our Employment Team, advises that “Every business has different needs, and some of the above methods work for some and not others.  However it is essential that all businesses have suitable policies and procedures in place to manage staff absences.  If these policies and procedures are properly implemented, with appropriate action taken when applicable, then the level of staff absences should reduce significantly and this will provide the business with significant cost savings as well as improved productivity.”

If you need your policies and procedures reviewing, or even prepared from scratch, then please contact Daven on 01775 722261 or email daven.naghen@maplessolicitors.com

A director’s role in the company is to promote the success and enhance the efficiency of the company, as well as ensuring that the day to day business is conducted within the laws of the land.  It is obviously therefore important that a director does not under perform or fail to perform his role or else the performance of the company may suffer.  In such circumstances there may be a need to remove the director.  How can this be done?

1.         Resolution to remove a director

A director may be removed from office by an ordinary resolution of the shareholders passed at a general meeting of the company.

The shareholder proposing the removal must give 28 clear days notice to the company that he wishes for the director to be removed.  This notice must be sent to the director to be removed to give him the opportunity to make written representations to the other shareholders.

Notice to convene a meeting must then be sent out along with the director’s written representations.  At the meeting the director can also make further representations as well as have his written representations read out.

A majority vote in favour of the resolution to remove the director must obtained (i.e. 51% of the shareholdings).

It should be noted that there may be difficulties with following this procedures as follows:-

(i)        The directors may not be willing to co-operate, and refuse to convene a general meeting.  This would force the shareholders to do so, provided the shareholders have at least 5% of the shares.

(ii)       If the director in question is also a shareholder, which is often the case in small businesses, he may have sufficient voting power to block the resolution (i.e. if he has 50% or more of the shares, or in combination with other shareholders who support him).

(iii)      Even if the director is a minority shareholder, the company’s Articles of Association (“the Articles”) may give him enhanced voting rights in such circumstances.

(b)       In accordance with the Articles

In certain circumstances as prescribed in the Articles, a director can “automatically” lose his office such as bankruptcy, mental incapacity or retirement.  Other provisions in the Articles may state that a person ceases to be a director if without the permission of the other directors he is absent from directors’ meetings for six consecutive months and the other directors resolve that his office is vacated or if he is removed from office by a notice to him signed by and on behalf of all the other directors.

(c)       Disqualification

The Court has the power to disqualify someone from holding the office of a director for a period of time, for example if a director has been guilty of general misconduct in the running of a company or because he has personally failed to comply with the filing requirements of the company.

Beware!

There may be certain consequences if a director is removed from office that need to be addressed.

Firstly what if the director is also a shareholder?  Unless there is a “buy back” clause in the shareholders’ agreement or in the Articles then removing him as a director will not stop him from being a shareholder.  It is therefore often appropriate to do a deal with the director for him to sell his shares.

Secondly the director, if a minority shareholder, can apply to the Court to claim that he has been “unfairly prejudiced”.  If this is found to be the case by the Court it may order the director sells his shares at a value set by the Court or alternatively the Court may order other remedies. 

Thirdly the director may also have a service contract and be an employee.  Removing the director from his office does not end his employment contract, and he will either be entitled to continue to be paid under his service contract or he will have to be dismissed.  This may lead to a claim for compensation for unfair dismissal or wrongful dismissal.

Hence it can be difficult to remove a director in the first place, and even if the company manage it then there may still be issues to be resolved relating to the director’s shares and employment contract.

For advice, whether you are a company wanting to remove a director, or a director facing removal, then please contact either Daven Naghen on 01775 722261 or email daven.naghen@maplessolicitors.com or contact Gemma Mayer on 01775 722261 or email gemma.mayer@maplessolicitors.com or contact James Turner on 01775 722261 or email james.turner@maplessolicitors.com.