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So, where’s “mutual agreement” on this pension form?

Pensions and Employment speak different languages and as an employer it’s important to have a team working for you that understands both.

A recent example arose in the Pensions Ombudsman case of Mr. O (PO-7782).

Mr O worked for a local authority. Following an outsourcing and TUPE he was transferred to Capita Secure Information Solutions Limited. Unsurprisingly, Capita had some cost-cutting targets to meet and notified the Service Desk staff to say that there might need to be staffing reductions.

The staff in question were members of the Local Government Pension Scheme. This provides expensive-to-fund unreduced pension benefits where a member who is 55 or over:

• is made redundant;
• is dismissed on grounds of business efficiency; or
• leaves by mutual consent on grounds of business efficiency.

As Mr O was on sick leave at the time he agreed to a compromise agreement with a £25k payment in exchange for leaving his employment. In his case a pensions top-up would have cost Capita an extra £50k.

Capita had to fill in a form saying what the reason for Mr O’s departure was. This caused issues. Capita tried to say it was by “mutual agreement” but the relevant LGPS form didn’t have that as an option.

It then tried “redundancy” but realised this was an error (and would have triggered the pension benefits). It then ran with “resignation”. The Ombudsman looked at the facts, ran them against the only options available on the form and ordered Capita to resubmit it with “mutual consent on grounds of business efficiency” as the reason. Mr O got his unreduced pension costing Capita £50k and his £25k as well.

There’s always more to these things, but the key thing for this blog entry is to make sure you’re clear on what your pension scheme provides on leaving service. If you have any early retirement/redundancy provisions, they could leave you with an unexpected and very unwelcome bill even if you’ve got all your employment ducks in a row.

So, where’s “mutual agreement” on this pension form?

Social Media: The Employer Strikes Back

The recent case of Plant v API Microelectronics Ltd should serve as a reminder to employees of the potential dangers of using social media to post comments about their employer, and to employers of the importance of having in place a clear social media policy.

In that case, API introduced a policy which prohibited unacceptable social media activity, including posting comments that could damage the reputation of the company. Following an announcement of a proposed relocation, Mrs Plant unwittingly posted a comment about suing her employer on Facebook, not realising that the page was linked to her employer’s technology.

API instigated a disciplinary process, ultimately leading to Mrs Plant’s dismissal. Mrs Plant claimed unfair dismissal in the employment tribunal, relying on her otherwise clean disciplinary record and long length of service. The Tribunal held that, whilst the decision may seem harsh, the dismissal was still within the band of reasonable responses by the employer and, as such, ultimately fair.

Social Media: The Employer Strikes Back

The Fall of Big Sam

Last week, the Football Association (FA) dispensed with the services of its shortest-serving England manager after just 67 days in the role and following only one game in charge. Sam Allardyce (Allardyce) was removed from his position last Tuesday after reports revealed that he advised undercover reporters (posing as businessmen) on how to circumvent the FA’s third party ownership rules. The FA stated that this amounted to a “serious error of judgement” and “inappropriate conduct”, which undermined the integrity of the game.

Allardyce was previously investigated by the BBC’s Panorama for impropriety in 2006 in a programme called “Football’s Dirty Secrets”, when he was accused of accepting bribes from agents to sign players. Reports state the latest revelations are the result of a 10-month investigation by The Telegraph to uncover corruption in football. However, the actions that have led to Allardyce’s departure post-date his appointment to the role. Therefore, the due diligence the FA will have likely undertaken as part of the recruitment process will not have revealed these issues.

There are several measures employers can take during the recruitment process to try and protect themselves against appointing individuals who will bring the organisation into disrepute. For example, employers should:

  • Carry out thorough pre-employment checks to safeguard the organisation and certify the information they are relying on. Employers should be transparent and open with candidates about the process they intend to adopt.
  • Adopt a cautious approach to use of social media when researching candidates’ backgrounds. Employers should ensure that they limit their searches to only target information relevant to the decision whether to employ the individual. Employers should also remember that employment laws on discrimination apply to online and offline checks in equal measure.
  • Undertake due diligence to satisfy themselves that candidates will not discredit the organisation or cause difficulties with colleagues or clients following their appointment.
  • Seek references from previous employers. Where previous employers reference events that occurred several years ago, these might no longer be relevant to a candidate’s suitability. However, where employers are regulated, they may wish to set tougher conditions that must be met to qualify for the role, or include warranties in the contract of employment to cover the risks associated with the information revealed.
  • Consider where their information has come from before using it. Where information is already in the public domain, it may be legitimate for an employer to rely on this. However, employers should not rely on information based solely on rumour or suspicion.
  • Make provision for any specific rules and regulations that will affect the employee.

Where the candidate will be subject to certain regulations, employers may wish to include a clause in the employment contract that encompasses the duties under these regulations. For example, the contract could include a term that states “you will abide by all your duties including all regulatory duties”.

Where an employee’s misconduct only arises after their appointment (or only comes to light following the recruitment process), employers should be careful not to have a knee-jerk reaction and instead assess whether the behaviour in question justifies disciplinary action. Employers should carry out any disciplinary processes in accordance with their policies and procedures to ensure that they take a fair approach. It may be that the employee is simply given a written warning, but, in the most extreme cases, an employer may wish to terminate the employment contract.

If a fixed-term contract does not allow for early termination, an employer can only end the contract early without breaching it if the employee has committed a repudiatory breach of contract. It is reported that the FA has entered into a settlement agreement with Allardyce, though, due to the confidentiality of the agreement, it is not clear on what terms. Had the parties not entered into this mutual agreement, the FA may have been able to justify dismissal without notice on grounds of gross misconduct. To do so lawfully, it would have to show that Allardyce’s actions fundamentally undermined the trust and confidence between himself and the governing body, essentially amounting to a repudiatory breach of contract.

It is unclear at this stage whether The Telegraph’s investigations will thrust any other managers into the headlines: only time will tell. However, any manager who encourages or condones a breach of the FA’s regulations is likely to face severe questioning and, potentially, disciplinary action.

The Fall of Big Sam

Can you dismiss an employee if they have allegedly committed a criminal offence?

An American football team, the San Francisco 49ers, has dismissed its player Bruce Miller following his arrest on suspicion of assault after an altercation about a hotel room. Although both an American and sports related story, it poses an interesting question to employers in the UK … can you dismiss an employee who faces a criminal conviction?

You would first need to consider whether this behaviour was misconduct. There is no outright rule that an employer should dismiss an employee who it is alleged has committed or is found to have committed a criminal offence. The Acas Code of Practice states at paragraph 31 that “if an employee is charged with, or convicted of, a criminal offence this is not normally in itself reason for disciplinary action. Consideration needs to be given to what effect the charge or conviction has on the employee’s suitability to do the job and their relationship with their employer, work colleagues and customers.”

Some points an employer may want to consider include:
• the seriousness of the offence;
• whether it can leave the job open while the employee cannot work;
• whether the conviction affects the employee’s job (e.g. loss of driving licence); and
• the employee’s refusal to cooperate with the employer’s disciplinary investigations.

Employers should also consider what its employee handbook says on this topic. For example, a typical clause in the handbook may state “a criminal investigation, charge or conviction relating to conduct outside work may be treated as a disciplinary matter if we consider that it is relevant to your employment.” Therefore, the employer will need to review and consider whether an investigation or suspension would be necessary. Responding to an employee’s criminal conviction remains a grey area on which advice should be sought.

Can you dismiss an employee if they have allegedly committed a criminal offence?

Insight: UK Employment Law Round-up – July 2016

In this issue, we look at whether Britain’s decision to leave the European Union is actually likely to have a significant impact on UK employment law.

In our case law review, we will also consider the extent to which without prejudice privilege attaches to protected conversations.
UK Employment Law Round-up – July 2016
There is also some useful guidance from recent case law about the types of dismissal to which the ACAS Code of Practice on Disciplinary and Grievance Procedures applies.

We give comment on the current position in relation to Employment Tribunal fees, and the implication of the equal pay claims brought against ASDA in the Employment Tribunal.

Read the full newsletter here.

Insight: UK Employment Law Round-up – July 2016

Louis van Gaal 0, Jose Mourinho 1

Louis van Gaal’s red reign is over as Manchester United Football Club have dismissed the manager from his position. Van Gaal leaves after completing two years of a three-year contract. It appears that Manchester United have based their decision on Van Gaal’s capability to perform in the role. The scores on the doors are as follows:

  • Manchester United achieved their lowest goals total for 26 years with only 49 Premier League goals this season, only one more than Blackburn achieved in 2012 when they were relegated;
  • they conceded 35 goals this season, which was the joint-lowest tally in the league with Tottenham; and
  • the team made the most backward passes in the league, 3,222 to be precise.

Though Van Gaal led the team to victory with an FA Cup win last weekend, it appears that the disappointing results preceding this success warrant the decision to end his contract.

If a fixed-term contract does not allow for early termination, an employer can only end the contract early if the employee has committed a repudiatory breach of contract. In the absence of such a breach, if the contract does not include notice provisions and an employer terminates it early, the employee can claim damages for loss of earnings for the remainder of the term without the need to mitigate his or her loss. It is therefore advisable for an employer to include, in a fixed-term contract, the right to terminate the agreement early such as, in this case, for poor performance.

Van Gaal is rumoured to be on a guaranteed basic salary of £3.3 million a year. The termination provisions in his contract provide for two-thirds of his salary (including image rights and a loyalty payment) to be paid until June 2017 unless he finds alternative employment, and around £5 million if the club dismisses him at the end of this season. Generally, parties involved in settlement discussions agree to have a continuing duty of confidentiality relating to the negotiations and the agreement they reach. However, due to the high profile nature of this matter, it may be difficult to keep the details of this agreement confidential.

There is speculation that Jose Mourinho will succeed Van Gaal as manager at Manchester United. Ryan Giggs, assistant manager at the club, has previously suggested that he will sever ties with Manchester United if they do not offer him the managerial position. It is reported that Mourinho is likely to bring Rui Faria with him as assistant manager, which may mean an effective demotion for Giggs if he decides to stay at the club.

In the recent case of Gibbs v. Leeds United Football Club [2016], Gibbs was an assistant manager who declined the managerial post when the manager he worked with was dismissed. He continued in his role whilst negotiating a consensual departure. However, Leeds United Football Club excluded him from many of his usual responsibilities and he was denied contact with the first team. He resigned as a result. The High Court held that the fact he was prepared to leave if suitable terms were agreed did not bar him from bringing a constructive dismissal claim. Whilst the facts differ slightly, this decision highlights that Giggs is free to negotiate a termination package with the club without hampering a future claim for constructive dismissal should he resign in response to an effective demotion following Mourinho’s appointment. To succeed with a claim for constructive dismissal, Giggs would have to show that he was entitled to resign by virtue of Manchester United’s conduct, namely a repudiatory breach of contract.

Louis van Gaal 0, Jose Mourinho 1

Non-compete clauses: Government to investigate the impact

The Government’s view is that the UK thrives on innovation. It recognises that innovation enables businesses to develop new ideas, products and services and create new jobs and export opportunities.

With this in mind, the Government has launched a call for evidence to look at whether post-termination restrictions in employment contracts act as a barrier to employment, innovation and entrepreneurship. A post-termination restriction can prevent former employees from working for a competitor, contacting former clients or employing or engaging former work colleagues. The duration of such clauses may be as long as 12 months.

While the contractual clauses protect businesses, they can be restrictive on employees and considered anti-competitive if the clauses are wider than is necessary to protect the business.

It is difficult to see how banning the use of post-termination restrictions would generate innovation. The damaging effect on employers is clearer to see. An employer that has invested time and money in an employee who is then allowed to go off and immediately compete has lost any chance to protect its business and client relationships from that competition.

The consultation closes on 22 May 2016.

 

Non-compete clauses: Government to investigate the impact

Out of time, but not out of the running

The EAT handed down its judgement in the appeal of Abertawe Bro Morgannwg University Local Health Board v. Morgan this month. The case is a reminder of the ability of the Tribunal to extend time for a claimant to bring their claim.

Ms Morgan was a psychiatric nurse therapist. Her employer dismissed her for being incapable of work due to reasons of ill health. She had been absent for 17 months due to severe depression. The Claimant filed claims to the Tribunal of disability discrimination (including breach of the duty to make reasonable adjustments), harassment and unfair dismissal.

The Tribunal heard the claim in early 2013. It upheld the claims of harassment arising from the conduct of two individuals, and the reasonable adjustments claim. The Tribunal found the Board should have re-deployed Ms Morgan to a suitable role. The Tribunal noted that Ms Morgan had presented all claims outside the normal three-month time limit, with one claim being made some three years after the incidents that gave rise to the claim occurring. However, the Tribunal decided that it would be just and equitable to extend time.

The Board appealed to the EAT. The EAT did not agree with the Tribunal’s findings on the reasonable adjustments claim and the EAT remitted the case to the Employment Tribunal. It also found the Tribunal had erred in its decision to extend time since it should have looked at the claims separately and considered the reason for Ms Morgan submitting the claims late. The EAT also remitted these matters to the Tribunal.

The matter did not come before the Tribunal until 9 February 2015. At the hearing the Tribunal agreed to extend time for the reasonable adjustments claim. On the harassment claims, the Tribunal decided to only extend time for one complaint.

The Board appealed against the Tribunal’s decision. The EAT referred to section 123 of the Equality Act 2010. This provides:

“(1) [Such a complaint] may not be brought after the end of –

(a) the period of 3 months starting with the date of the act to which the complaint relates, or

(b) such other period as the employment tribunal thinks is just and equitable.…”

The EAT noted that it remains for the Claimant to persuade the Tribunal to exercise a judicial discretion to extend time. It also noted the Tribunal will do so if persuaded that, taking account of all relevant circumstances, it is “just and equitable” to do so. The Tribunal will consider the period of delay in presenting the claim. It will consider the reason(s) the Claimant did not present the claim within the initial three months and during any following period of delay. The Tribunal will consider the credibility and acceptability of the reasons. Finally, the Tribunal will consider the prejudice that each party will suffer because of a decision to extend or not to extend time.

The EAT undertook a critical analysis of the Tribunal’s reasoning in finding that time could be extended. It looked at the prejudice to both parties in extending time. The EAT was mindful of the fact Ms Morgan had been poorly and unable to pursue her claim and that if it did not extend time she would be unable to bring a well-founded claim. It also considered the Tribunal’s finding that Ms Morgan was pursuing an internal grievance intending to fully resolve her concerns. Her ill health also delayed this. The EAT did criticise the Tribunal for not expressing its reasons in a better way. However, it found the Tribunal did not take into account any matters which it should not have, or reach a conclusion which could be described as perverse. Therefore, the EAT found no basis on which to interfere with the Tribunal’s decision.

The case will now be remitted to the Employment Tribunal to determine appropriate remedies.

Out of time, but not out of the running