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What's New

Constructive Dismissal
In Morrow v Safeway Stores (2001) the Employment Appeal Tribunal (EAT) confirmed that if mutual trust and confidence between employer and employee has broken down, this would always amount to a repudiatory breach of contract, entitling the employee to resign and claim constructive dismissal.


Basic Facts
: Morrow, a bakery manager, had been repeatedly criticised for failing to manage stock levels. On another occasion she was told off in front of staff and customers for not having promotional bread available for sale. Morrow resigned and claimed constructive dismissal.

The Tribunal decided that her manager was in breach of mutual trust and confidence, but that it did not amount to a repudiatory breach. However the EAT disagreed and sent the case back to Tribunal for further consideration

Sometimes it's not what you do but the way that you do it that really matters!

Construction - Statutory Annual Holiday Entitlement
In Byrne Bros. -V- Baird & Others (2001) the Employment Appeal Tribunal (EAT) found that construction workers who were deemed to be self-employed, were entitled to paid statutory annual holidays in accordance with the Working Time Regulations (WTR). The men held CIS4 certificates and worked under a Sub-contract Agreement used by many contractors in the construction industry.

On the basis of the wording of the Agreement, the EAT accepted the men's case that:

  • They were workers who personally performing work for the company;
  • They did not operate businesses and Byrne Bros. were not clients in the traditional sense;
  • There was a degree of mutuality of obligation between the parties.

Does this important ruling end the uncertainty for the construction industry over this issue that has rumbled on since October 1999? Would a rewording of the Agreement take things back to square one? We shall see. Meanwhile, as things stand, in future cases might companies defending similar cases find applications for costs being successful argued, on the basis that they sought to defend a case that had no real merit! Watch this space.

Latest on Parental Leave
Revised Regulations extending Parental Leave came into force in January 2002. The new rules mean that parents with children who were under 5 years on 15th December 1999 are entitled to 13 weeks off for each child. Previously only parents of children born on or after that date qualified for the right to time off. It is estimated that an extra 336,000 parents will benefit from this change.

It is to be noted also that parental leave for parents with disabled children has been increased from 13 to 18 weeks.

ACAS Arbitration Scheme
The long awaited ACAS Arbitration Scheme for handling straightforward unfair dismissal claims came into operation in the Spring of 2001. To date (February 2002) only about 8 cases have been dealt with under the scheme! 

The scheme is intended to be a simpler and cheaper alternative to Employment Tribunals and is designed to deal with simple unfair dismissal cases ONLY. Obviously it has not found widespread favour and its future must now be in doubt.

Employment Bill 2001
This Bill is making its way through the Commons. Key proposals for reform of Employment Tribunals were heavily trailed in the Dispute Resolution consultative paper published last year. The Bill is expected to become law early in 2003. The main provisions are:

Family Friendly Initiatives

  • Increased maternity leave and pay;
  • Two weeks paid paternity leave for working fathers;
  • Six months paid and a further six months unpaid leave for working adoptive parents;
  • Reimbursement of maternity, paternity, etc. payments ;
  • Parents to have right to request flexible working arrangements from their employer.

Initiatives to Resolve Disputes (Reform of Tribunals)

  • Introduction of new statutory disciplinary & dismissal procedures that must be expressly incorporated into Statements of Particulars, with stiff financial penalties for employers who are found to be in breach;
  • Employees to be placed under a duty to raise grievances with employers before applying to a Tribunal;
  • Fixed conciliation periods to encourage settlements;
  • A fast track system for handling some Tribunal claims;
  • Tribunals to have wider powers to award costs.

Miscellaneous

  • Questionnaire to inform equal pay cases;
  • Secretary of State to regulate on preventing less favourable treatment for staff on fixed term contracts.

We will learn more about the details of this Bill as it passes through the Commons. However, the government are convinced that the staggering increase in Tribunal claims over recent years is due to smaller companies not having adequate disciplinary and grievance procedures in place; and also not issuing staff with terms & conditions of employment as required by the Employment Rights Act 1996.

To address these shortcomings, the Bill proposes that employers will pay a penalty of 4 weeks pay AND/OR higher compensation (of between 10% and 50%) in cases where the Statement of Particulars was not issued and/or where disciplinary/grievance procedures were inadequate.

It will be more important than every for employers to issue staff with Statements of Particulars setting out their terms & conditions of employment.

Taxing In Lieu Payments
Q
   We have agreed a severance package with an employee, part of which includes a payment in lieu of notice. Must we deduct tax from this payment or can it be paid to him gross?

A   Look and see what the contract of employment says.If the contract entitles you to dismiss him immediately and pay him money in lieu of notice, then the payment is an "emolument" and is subject to Tax under Schedule E.

If his contract makes no such provision, termination in this way is technically a breach of contract and any payment is treated as compensation for the breach. This means that up to £30,000 can be paid tax free. Note that he is still only entitled to his net salary, but it is a very common practice for employers to pay gross as part of a severance package.

National Minimum Wage

On 1ST October 2002 the national minimum wage for adults workers, aged 22 and over, increased to £4.20 per hour. The rate for workers aged 18 to 21 increased to £3.60 per hour. 

ACAS Code of Practice on Disciplinary and Grievance Procedures
This ACAS Code came into effect on 4th September 2000, and implements the new rights set out in the Employment Relations Act 1999. Chief amongst these is the right to be accompanied by a trade union official or work colleague at disciplinary and grievance hearings. Also the amount of information that is recommended that the employer makes available to an employee in a disciplinary situation is increased.

Employer must review their Disciplinary Rules and Grievance Procedures in the light of the new Code, and ensure, in particular, that the right to be accompanied are properly interpreted and incorporated into the procedures.

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