3 key changes happening now to Employment Law that could affect you

1. The new Law about Compromise Agreements

Or as they have just been renamed, ‘Settlement Agreements’. These Agreements are widely used when employees leave their employment if there is any risk at all that they may bring a court or Employment Tribunal claim against their employer. Many employers now offer them routinely when they have to make redundancies as well as where employer and employee no longer get on and it is necessary to part company. The benefit for the Employer of having a Settlement Agreement is that the employee promises that they will not bring any court or tribunal claims against the employer.
The benefit for the Employee is that, in return, the employer promises them an extra “golden handshake” payment, and perhaps an agreed reference. An additional benefit to both Employer and Employee is that the Agreement also normally protects their reputations and confidentiality. However, the Settlement Agreement is not binding unless it complies with various legal requirements, including the employee having independent legal advice. While the government had been talking about changing the law about this for some time, the date and full details were only announced rather abruptly last month, taking effect on 29 July.

1. a) Existing precedents for a compromise agreements from before 29 July has just become out of date

If any employers are still using an existing precedent for a compromise agreement from before 29 July it has just become out of date and will not prevent the employee bringing further claims.
There is also a new Code of Practice to stop Employers from placing the Employee under undue pressure to sign the agreement. Employers who want to use Settlement Agreements from now on should seek legal advice to ensure they follow the new law correctly.

2. No procedure or reason needed to dismiss staff with less than 2 years’ service

This was introduced gradually but is now complete.  Staff with less than 2 years’ service cannot claim unfair dismissal if they are dismissed. This means that the Employer can dismiss them without any warning or consultation, or even, in most cases, giving any reason. This is a relief for businesses from having to follow sometimes cumbersome dismissal procedures and face costly tribunal claims if there is even a hint that they have got the procedures wrong. It also means rough justice for some Employees. However, as so often in law, it is in practice a little more complicated than that. Staff with less than 2 years’ service cannot now claim unfair dismissal but they can still bring claims for discrimination because of, for example, race, sex, disability, age and religion, or if they believe they were victimised for complaining when their Employer ignored legal obligations like Health and Safety.  Inevitably, aggrieved ex-employees and their legal advisers will look for any way they can argue that the “real” reason for the dismissal was one or other of these things, if they want to bring a claim. One pitfall for employers is that the complicated way in which the law allows for notice periods makes it harder than it should be to work out whether an employee has completed 2 years’ service or not. If the 2 year deadline is close, the employer needs to take legal advice.

3. Employment Tribunals to charge fees

Since Employment Tribunals (formerly called Industrial Tribunals) were invented, until now it has cost absolutely nothing to issue a claim, as unlike courts, Tribunals have not charged fees. This made it easier for people with deserving claims to stand up for their rights. However, it also meant that even employees with more spurious claims might as well have a go and issue a claim as it cost nothing, in the hope of being bought off if the employer could not afford the time, money and emotional energy to contest the claim. Such abuses had become almost a routine. On 29 July, that changed. Tribunals now charge fees of (depending on the claim) of £160- £250 to start a claim, with hundreds of pounds more payable to proceed to trial. There will be exemptions from fees for the poorest. The likely result is that employers will face fewer costly tribunal cases, especially weak or trivial cases. There may unfortunately also be some people with deserving cases who are put off from bringing a claim, but the fact that something had to be done is proved by the two recent cases at the end of this briefing.

Case examples

Anyone who doubts that the law can make life harder for employers, or who wonders why the government thought it necessary to introduce Tribunal fees and make it a little harder for people to bring Tribunal claims, should consider the two recent cases with which we finish this briefing, beginning with Woodhouse –v- North West Homes Leeds.

Case study 1: Suing his employer 7 times and submitting 10 unjustified grievances is not a good enough reason to dismiss an employee

Mr Woodhouse had during four years of employment with North West Homes sued his employer no less than 7 times in Employment Tribunals for alleged discrimination, and every time his claims were rejected. He also submitted 10 internal grievances, also alleging discrimination. Every one of these grievances was investigated but not one was found to be justified. During this time, despite his frequent complaints of discrimination, Mr Woodhouse was apparently happy enough in his job that he continued working there. After the 7 tribunal claims and 10 grievances, taking up goodness knows how much time and money, Mr Woodhouse’s employer had had enough, and dismissed him on the grounds that their relationship had broken down. Mr Woodhouse promptly took his employer to a Tribunal yet again to challenge his dismissal.  This time, after an Appeal, he won.  His Employer may now have to pay him substantial compensation. The Employment Appeal Tribunal did not consider 10 unjustified grievances and 7 unjustified tribunal claims to be a good enough reason to dismiss an employee, if the employee, however mistakenly, believed them to be justified and was not being consciously fraudulent. This decision places considerable demands on the limited resources of employers.

Case study 2:  Secret surveillance justified to prevent blatant abuse

The Employment Appeal Tribunal reaffirmed a more helpful principle for employers in the recent case of Swansea City Council –v- Gayle.  Mr Gayle, a worker for Swansea City Council, was twice seen playing squash at the local Sports Centre when supposed to be working. Rather than confront him immediately, to strengthen its evidence the City Council had someone secretly follow Mr Gayle and film him playing squash on 5 further occasions when he was paid to be at work. At last confronted with this evidence, Mr Gayle could not deny it and was sacked. He then took the City Council to a Tribunal for unfair dismissal and racial discrimination, alleging that to film him without his permission, when the Council already had other evidence they could have tried to rely on, made his dismissal unfair and a breach of his Human Rights. Two and a half years after the original incident, on Appeal, the employer was finally vindicated, confirming that it is not illegal or a breach of Human Rights for an employer to carry out covert surveillance and filming if there is good reason to think that it will help prevent serious abuses. So, a victory, of sorts, for the employer. However, while Mr Gayle will not therefore be getting his compensation for unfair dismissal after all, no one will compensate the City Council and any of its staff who were involved as witnesses for the time and anxiety that this case may have caused them over the past 2½ years, nor the Council Tax Payers of Swansea for all the thousands of pounds it will have cost the Council to contest the case.

The lesson of both the above cases, whether the employer won or lost, is that regardless of the rights and wrongs of the matter, it is better to take legal advice at the beginning of a dispute to avoid the cost of procedural pitfalls and legal arguments that may otherwise follow.

Please note that the information in this article is not designed to provide legal or other advice or create a solicitor - client relationship. No liability is accepted for any loss caused in reliance upon its content and you should not take or refrain from taking action based upon the same.