employment view
January/February 2007
discretionary bonuses - no further appeal
The House of Lords
have just refused permission to appeal to them in the case of Keen v
Commerzbank.
Thus the Court of Appeal decision (see quillets employment view,
November 2006) remains good law, and therefore:
(1) If a bonus scheme contains a very wide contractual discretion,
it will require ‘… an overwhelming case to persuade the court to
find that the level of a discretionary bonus payment was irrational
or perverse in an area where so much must depend on the
discretionary judgment of the [employer] in fluctuating market and
labour conditions’.
(2) Moreover, a condition in a bonus scheme that the employee must
be employed throughout the relevant year will be difficult to
challenge: the ‘reasonableness’ provisions of the Unfair Contract
Terms Act do not apply to contracts of employment.
working time - annual leave
Following a consultation, the DTI has announced an increase in
minimum holiday entitlement under the Working Time Regulations from
4 weeks inclusive of bank holidays to 4 weeks plus bank holidays.
Currently, employers have the option whether to give workers four
weeks’ holiday plus 8 bank holidays, or four weeks inclusive of bank
holidays.
This change will be implemented in two stages.
From 1st October 2007 the entitlement will rise by 0.8 weeks, taking
holiday entitlement from 20 days to 24 days for employees working 5
days a week.
From 1st October 2008, the entitlement will rise by a
further 0.8 weeks, taking holiday entitlement
from 24 days to 28 days for employees working 5 days a week.
There is a further consultation, closing on 13 April 2007, on the
way in which these changes will be implemented.
employment
tribunal compensation
With effect from 1st February 2007 compensation limits in the
employment tribunals are as follows:
The maximum compensatory award for unfair dismissal is now £60,600
(previously £58,400).
The maximum week's pay (for calculating basic awards, redundancy
payments etc.) is now £310 (previously £290).
new maternity
rights from 1st April 2007
please note: these rules apply to mothers of babies due on or after
1st April 2007, regardless of when the baby is actually born
maternity leave and pay
Mothers expecting babies on or after 1st April 2007 are entitled to:
39 weeks statutory maternity pay (previously 26 weeks)
52 weeks statutory maternity leave (regardless of length of service)
Also, from 1st April 2007 the standard rate for statutory maternity
pay will increase to £112.75 per week.
keeping in touch days
Currently women on maternity leave may not carry out any work for
their employer during the maternity pay period. If she does so, she
loses week’s SMP for any week in which she works.
However, from 1st April 2007 a woman will have 10 “keeping in touch”
days which will allow a woman to undertake a limited amount of work
for her employer during the maternity pay period and retain her SMP
for that week.
reasonable contact
From 1st April 2007 employers can make 'reasonable' contact with
women on maternity leave, something they have previously been
reluctant to do for fear of being accused of harassment or worse. So
for example it will probably be acceptable to make contact to
discuss return to work.
returning to work early
Mothers returning early from maternity leave will now need to give 8
weeks' notice (previously 28 days).
expired
warnings
In the recent case of Airbus UK v Webb (2007, three weeks after a
final written warning had expired, Mr Webb committed a similar
offence (together with four colleagues) to that for which he had
previously been warned. He was dismissed for the offence. His
colleagues were not dismissed.
The employment tribunal found the dismissal was unfair because of
inconsistent treatment.
The employer appealed, on the basis that it was legitimate for an
employer to take an expired disciplinary warning into account. The
EAT held that ‘ … a tribunal is obliged, and not merely entitled, to
ignore expired warnings’.
Employers will view this as unsatisfactory, particularly where
warnings are in respect of serious matters. But there is a concept
in unfair dismissal that a written rule can operate as a ‘substitute
warning’ so long as the rule has been properly communicated and the
consequences of breach made clear.
So if particular conduct identifies a serious issue, then in
addition to giving a warning to the employee (which will expire) the
employer should add an appropriate rule to the works rules (or
indeed items constituting gross misconduct) to avoid problems in the
future.
statutory
disciplinary and dismissal procedure
The recent case of YMCA Training v. Stewart [2007] in the Employment
Appeal Tribunal considered the statutory disciplinary and dismissal
procedure.
what should be done
Under the statutory disciplinary and dismissal procedures, if an
employer is contemplating dismissal, or action short of dismissal (eg
loss of pay or seniority) he must follow a three-step disciplinary
procedure as follows:
Step 1 : Write to the employee notifying them of what they are
alleged to have done wrong – in terms of performance or conduct; set
out the basis for the allegations; and invite them to a meeting to
discuss the matter.
Step 2 : Inform the employee of the grounds for making the
allegations and hold a meeting to discuss them – at which the
employee has the right to be accompanied. Notify the employee of the
decision and the right to appeal.
Step 3: Hold an appeal meeting (if the employee wishes to appeal) at
which the employee has the right to be accompanied – and inform the
employee of the final decision.
If an employer does not follow the minimum 3 step procedure then any
dismissal may be 'automatically unfair'. Moreover, any compensation
payable to the dismissed employee may be increased by up to 50%.
what was done in YMCA case
In this case, the employer wrote to the employee notifying her of
various allegations of misconduct and inviting her to an
investigatory meeting. The letter was accompanied by a witness
statement.
At that meeting, there was some discussion about the allegations and
the evidence, and the employee gave some explanations. The employer
decided to make further investigations after the meeting.
Subsequently, the employer telephoned the em-ployee inviting her to
attend a disciplinary hearing. So there was nothing in writing
inviting her to this meeting. At this meeting, the employer gave his
reasons for upholding the allegations and summarily dismissed her.
The employee brought a claim of unfair dismissal. The tribunal found
that the dismissal was automatically unfair because the employer had
failed to com-ply with steps 1 and 2 of the statutory disciplinary
and dismissal procedure.
The EAT allowed the employer’s appeal. They held that the original
letter and witness statement sent prior to the investigatory meeting
contained sufficient details of the alleged misconduct and the basis
for the allegations.
They said that provided an employee has been in-formed of the
alleged misconduct, the grounds for the allegations, been given time
to consider her response and had a meeting to discuss the dismissal,
then the requirements of Step one and Step two of the statutory
procedure have been complied with.
effect of YMCA decision
This decision means that an initial investigatory meeting can amount
to a Step 1 meeting.
Moreover, the EAT decided that a decision to dismiss can
legitimately be communicated during the Step 2 meeting, rather than
after the meeting.