How To Settle A Dispute With A Worker
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1 8 May 2014 South London CIPD Employment Law Update
2 Settling Employment Claims
3 The Options Contractual claims No required format Statutory claims Agreed through Acas Settlement agreement in required format Personal injury claims Can settle existing and potential claims Unusual to settle latent claims of which employee is not aware Can t settle claims for future injuries
4 The Options (cont) Pensions claims Can t waive accrued pension rights Can settle rights which are in dispute Trustees of pension scheme not usually party to general settlement agreement Future claims Can settle if wording absolutely plain and unequivocal But not claims for future injuries
5 Acas Mandatory Early Conciliation Available from 6 April 2014 and mandatory for claims presented on or after 6 May 2014 Duty on parties to attempt early conciliation Claimant must contact Acas in prescribed manner with prescribed information before filing most claims ( A ) Acas ECSO makes initial contact with Claimant who is passed on to CO if they want to conciliate CO must try to promote settlement within prescribed period of one month (extendable by 14 days) EC Certificate issued if settlement not possible ( B ) Time limits extended by EC period between A & B or to one month after B
6 Acas Settlement Finalised on Form COT3 Orally binding once terms agreed Parties bound by agreement reached by authorised representatives Should include require that claimant agrees to withdraw claim Other clauses as in settlement agreements Will not usually include waiver of personal injury claims as a matter of policy
7 Settlement Agreements Compromise Agreements renamed Settlement Agreements in July 2013 Can t settle certain claims (most of which can be settled by Acas) If marked without prejudice and subject to contract, only binding when signed Must refer to particular statutory complaints to be settled (usually long list in a schedule) Employee must take independent legal advice Check for certification of non-lawyers
8 Without Prejudice Only applies to genuine attempt to settle existing dispute Anything said or written cannot be put in evidence Always state that communication is without prejudice But not without prejudice just because stated Exception for unambiguous propriety eg as evidence of discrimination
9 Pre-termination Negotiations New rules came into force in July 2013 Anything said or stated not admissable in ordinary unfair dismissal claims Wider than without prejudice Can be used even where no existing dispute Still admissable in other proceedings Unclear where multiple complaints Can be referred to in costs application Exception where improper behaviour
10 New ACAS Code of Practice Published in July 2013 Recommended minimum period for consider of offer of ten calendar days Employees have right to be accompanied to any meetings by colleague etc No legal right to be accompanied Separate non-statutory guidance includes Template letters (optional) Model settlement agreement (not sufficiently comprehensive)
11 New ACAS Code of Practice (cont) Examples of improper behaviour listed Harassment, bullying and intimidation Physical assault or threats of assault Victimisation and unlawful discrimination Undue pressure Not giving enough time to consider offer Stating that employee will be dismissed if agreement not reached Not improper to state alternatives if agreement not reached (such as possibility of dismissal)
12 Contents of Settlement Agreement Termination date Payments due up to termination Compensation for loss of employment Continuation of benefits after termination Contribution to legal fees Waiver of claims (refer to schedule) No grievance or appeal to be pursued Tax indemnity Return of company property
13 Contents of Settlement Agreement (cont) Warranties by employee Company property etc returned No new employment No breaches of contract for which could be dismissed Agreed reference Resignation from directorships etc Garden leave until termination Re-assertion of post-termination restrictions Confidential information
14 Contents of Settlement Agreement (cont) Confidentiality of settlement agreement No press statements or derogatory remarks Entire agreement clause Statement that without prejudice and subject to contract until signed Calculation of statutory redundancy payment (if relevant) List of all claims being settled Certificate by independent adviser
15 Other Issues Best to conclude settlement shortly before termination If termination not imminent Risk that HMRC consider compensation to be taxable retention bonus Risk that new disputes arise before termination May be possible to reduce risk by making payment conditional on signing further agreement (if asked) around termination
16 Final Issues Make new obligations mutual Avoids argument that extra consideration required If stated to be confidential, strong expectation of privacy Likely to be exempt from FOIA request Don t negotiate settlement on basis of redundancy if not genuine Agreement invalid due to misrepresentation
17 What s Happening
18 Reduction in Cap on Unfair Dismissal Compensation Came into force for EDTs on or after 29 June 2013 Now lower of 76,574 (as of 6 April 2014) or 52 weeks actual gross pay IMPACT: Certainty for employers on exit decisions for low earners Assessment of future loss of earnings to be simpler
19 Whistleblowing Disclosures made on or after 25 June 2013 New public interest requirement Claims no longer need to be in good faith Reduced compensation if disclosure not in good faith (up to 25%) Greater protection for whistle blowers: Personal liability of employees & Vicarious liability of employers for detrimental acts IMPACT: Whistle blowers - similar position to discrimination claims Employers - provide training to staff
20 Equality Act 2010 Amendments Specified third party harassment abolished Came into force on 1 October 2013 Discrimination questionnaires abolished Came into force on 6 April 2014 Wider recommendations abolished No date announced for coming into force Discrimination on the grounds of caste Consultation exercise to be announced Coming into force by April 2015 Already protected?
21 Financial Penalties for Employers Came into force on 6 April 2014 Penalty on employer Which loses claim only where one or more aggravating features (not defined) In addition to any compensation awarded, but payable to Government Minimum 100 and maximum 5,000 taking into account employer s ability to pay 50% of compensation where awarded Reduced by 50% if paid within 21 days
22 Other Changes in the Pipeline Flexible working: Existing statutory request procedure replaced with new duty as of 30 June 2014 Right to request flexible working extended to all employees with 26 weeks service Flexible parental leave to be introduced and additional paternity leave abolished Right for father to attend two antenatal appointments Adoption rights will mirror birth parent rights.
23 Case Law Review
24 Enhanced Redundancy Pay Park Cakes Ltd v Shumba (Aug 13) No reference in written contracts But in policy documents in HR Manual Claim that payable as implied through custom and practice Need to prove (amongst other things) that - Drawn to attention of employees; or Followed without exception for substantial period
25 Enhanced Redundancy Pay (cont) CA held that ET s judgment that policy not drawn to employees attention not based on any facts ET failed to consider effect of policy being available to employees or reps on request Fact of no explicit publication not decisive Extra 600 payment always termed ex gratia, so hard to show contractual CA also gave guidance on when terms likely to be implied by custom and practice
26 Dismissing for Gross Misconduct Brito-Babapulle v Ealing Hospital NHS Trust (Aug 13) E believed B seeing private patients during sickness absence E dismissed B for gross misconduct ET held that Once gross misconduct is found, dismissal must always fall within the range of reasonable responses
27 Dismissing for Gross Misconduct (cont) EAT held that E entitled to treat conduct seriously But must consider mitigating factors personal to individual Finding of gross misconduct does not inevitably lead to dismissal Comment employee with two jobs can be sick from one, whilst legitimately working for other
28 Dismissing for Ill-health BS v Dundee City Council (Nov 13) BS employed for 35 years, then off sick for 272 days before being dismissed ET held that BS unfairly dismissed as insufficient investigation into health in light of length of service EAT held that length of service not relevant and key question was whether D should have been expected to wait any longer
29 Dismissing for Ill-health (cont) CS set out key principles Can employer be expected to wait any longer bearing in mind: Availability and cost of temporary cover Whether sick pay exhausted Administrative costs likely to be incurred Resources of employer Need to consult employee and take views into account Need to find out medical position
30 Occupational Health Reports Gallop v Newport City Council (Dec 13) G signed off with reactive depression G s GP and OH said G not fit to return to work N obtained OH report which said G not covered by DDA G became fit to return, was suspended and dismissed for bullying G claimed unfair dismissal and disability discrimination
31 Occupational Health Reports (cont) N admitted G had mental impairment N denied failing to make reasonable adjustments ET held that N did not have required knowledge for duty to make reasonable adjustments CA found that OH report worthless as failed to focus on statutory test for disability N should have reached own judgment based on answers to specific questions put to OH
32 Harmonising Terms after TUPE Transfer Hazel & Huggins v The Manchester College (Feb 14) H and 1,500 others transferred to M M proposed redundancies and negotiated with UCU over new terms H refused to accept pay cuts and were dismissed H accepted re-engagement on new terms, but brought claims for unfair dismissal
33 Harmonising Terms after TUPE Transfer (cont) ET held that H dismissed for reason connected with transfer, but not valid ETO reason as did not entail changes in workforce Fact of other redundancies at same time not relevant as dismissals were connected with refusal to accept harmonisation of terms H unfairly dismissed and should be reengaged on old salaries (red-circled) EAT and CA upheld ET judgment
34 Case Study and Practical Application
35 Case Study Case study on your tables Review allocated case study in detail and discuss for 20 minutes Feedback on case study for 10 minutes
36 Questions, Thank you and Goodbye Mundays LLP, Cedar House, 78 Portsmouth Road, Cobham, Surrey KT11 1AN andrew.knorpel@mundays.co.uk - sofia.syed@mundays.co.uk
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