High Court Case leads to Confusion?

In June of 2016 the High Court gave a decision that has many employment lawyers and employers scratching their heads. Fox Whitfield was acting for two employees who were seeking a High Court declaration that restrictive covenants in their contract were not enforceable. One of their arguments was that the contracts were given to them after they had been working for some time and at that time no pay rise or other benefits were provided to them. I t was generally accepted law that “Post-termination restrictions introduced after an employee has started work were generally thought to be enforceable only where the employee is given a tangible benefit (e.g. a pay rise) in return”. However, in this case the High Court decided that was not necessary as simply continuing to employee the employees and introducing them to new clients was deemed to be enough. There has been much comment on this case: “The principles set out in Pro Cam are likely to be challenged (and the decision may yet be appealed).” I agree it will be challenged but this case is not going to be appealed. There are clear grounds to appeal but commercially it wasn’t deemed worthwhile.

No more nominal payments as consideration?

http://tinyurl.com/paagkzo http://tinyurl.com/pvwqp88 The full decision can be read here: http://www.bailii.org/ew/cases/EWHC/QB/2016/1304.html What, if anything, this case shows is that it is very hard to accurately predict what restrictive covenants may be deemed to be enforceable by the High Court and which may not. This uncertainty is unhelpful for both employers and employees. These cases are hugely fact and detail sensitive and anyone thinking about introducing them to employees, or enforcing them to trying to escape from them should take proper legal advice as early in that process as they possibly can. Paul Whitfield acted for James Pickwell and Molly Nichols in this case. Paul Whitfield is the Principal Solicitor at Fox Whitfield. Fox Whitfield can advise HR, employers and employees on disciplinary processes, procedures and unfair dismissal claims. We can also arrange meetings in the evenings or at weekends to work around your working hours. www.foxwhitfield.com 0161 283 1276 Employment Law Solicitors – Head Office in Manchester with offices located throughout the United Kingdom.

Taxation of Termination Payments

 

The Government has published a document on the “simplification of the tax and National Insurance treatment of termination payments”. That induces some draft legislation that will change the way that termination payments and settlement agreements are taxed and negotiated.

Currently employers may be able to pay notice payments tax free if there is no contractual right to pay in lieu of notice. Also employers can pay up to £30,000 tax free in some cases and higher payments are also exempt from employers National Insurance. 

The new legislation, due to come into force in April 2018 will change this. What is proposed is that:

1. All pay in lieu of notice payments will be fully taxed and subjected to National Insurance.
2. Employers will have to pay employer National Insurance on all termination payments of over £30,000.
3. Payments for Injury to Feelings in discrimination claims will also be taxed.

Employers will still be able to pay up to £30,000 tax free and without National Insurance.

Employers should take this opportunity to look at their current employment contracts and ensure that they have the best contractual protection. It is likely that if these new laws are brought into force that there will be no reason why all employers should not have contractual pay in lieu of notice clauses in their contracts.  It is also essential that employers take fresh legal advice on any settlement agreements that they are using. Once the law changes in 2018 those will need important changes to ensure that they work properly. It is never a good idea to simply keep using an old settlement agreement as employment law does change so quickly. 

In summary the law may be a little clearer on tax once the new legislation is in force. What is also clear is that this will cost may employers and some employees additional tax when terminating employment or settling employment tribunal claims.

Paul Whitfield is the Principal Solicitor at Fox Whitfield.

Fox Whitfield can advise HR, employers and employees on Settlement Agreements , disciplinary processes, procedures and unfair dismissal claims. We can also arrange meetings in the evenings or at weekends to work around your working hours.

www.foxwhitfield.com

0161 283 1276

Employment Law Solicitors – Head Office based in Manchester with offices located throughout the United Kingdom.

 

 

Client Feedback

Sometimes it’s easy to become jaded with the law and the demands of work. Then once in a while a client reminds you that what you do really matters to them, the hard work made a difference and that they really appreciated what you did.

I recently settled a case for a client. He was an employee with a strong case. He had legal expenses cover but the advice he was getting from the insurance company lawyer wasn’t great. They told him it wasn’t worth doing anything and that they wouldn’t cover his costs.

I thought it was worth him doing something and he was willing to pay some fees himself. We issued his claim and it then quickly settled for more than twice the sum the insurance company thought it was worth. The client was very happy and offered to write me a testimonial.

What he wrote was this: –

“I was was referred to Paul Whitfield of Fox Whitfield by a friend. I wasn’t getting much support from the legal cover on my home insurance. Paul stepped in and won an out of court settlement on an unfair dismissal dispute. He handled the whole case and guided me through the process. Paul knows what he is doing, he is very professional and provides an outstanding service.”

The icing on the cake for my client was that I have now managed to get his insurance company to cover all of the costs they had initially refused. Money from employers is hard to get, but getting money from insurance companies is a whole new level of difficult!

My client is delighted and I am reminded why, sometimes, this is a great way to make a living.

Paul Whitfield is the Principal Solicitor at Fox Whitfield.

Fox Whitfield can advise HR, employers and employees on disciplinary processes, procedures and unfair dismissal claims. We can also arrange meetings in the evenings or at weekends to work around your working hours.

www.foxwhitfield.com

0161 283 1276

Employment Law Solicitors – Head Office based in Manchester with offices located throughout the United Kingdom.

HR overstepping their remit?

What are the proper limits of HR in a dismissal? Can HR tell a manager what the outcome of a disciplinary hearing should be or is their role limited to providing advice and guidance of the law and procedure?

This was looked at by the EAT in a decision this month in the case of Ramphal v Department for Transport.

An employee was accused of misuse of his company credit card and was dismissed for gross misconduct as a result. The manager who took the decision to dismiss appeared to have initially felt that this was a case where there was no dishonesty and so the employee should be given a warning for misconduct. However, the manager appears to have changed their mind after advice from HR to find that it was gross misconduct and that they had to dismiss the employee.

In order for any dismissal to be fair the employer must have a potentially fair reason to dismiss but they must also follow a fair procedure the “Was it reasonable to dismiss in all the circumstances” test.

The EAT said that the issue in the case was: “for the dismissal to be fair there has to be a fair investigation and dismissal procedure.  If the integrity of the final decision to dismiss has been influenced by persons outside the procedure it, in my opinion, will be unfair, all the more so if the Claimant has no knowledge of it“

They also gave the following guidance that HR must take into account:

“an employee facing disciplinary charges and a dismissal procedure is entitled to assume that the decision will be taken by the appropriate officer, without having been lobbied by other parties as to the findings he should make as to culpability, and that he should be given notice of any changes in the case he has to meet so that he can deal with them, and also given notice of representations made by others to the Dismissing Officer that go beyond legal advice, and advice on matter of process and procedure.“

The EAT have referred the case back to the Employment Tribunal to determine on the specific facts “whether the influence of Human Resources was improper“.

This case is a very useful reminder that the decision to dismiss an employee must be taken by the manager hearing the case and not by HR or other interested parties. Evidence that the decision was in fact made by someone else is very likely to render a dismissal an unfair dismissal particularity if that fact is not disclosed to the employee during the dismissal process.

Fox Whitfield can advise HR, employers and employees on disciplinary processes, procedures and unfair dismissal claims.

www.foxwhitfield.com

0161 283 1276

Employment Law Solicitors – Head Office based in Manchester with offices located throughout the United Kingdom.

 

UNISON LOSES COURT OF APPEAL CASE CHALLENGING TRIBUNAL FEES

The Court of Appeal has rejected Unison’s challenge of Employment Tribunal and EAT fees.

Since the introduction of Tribunal and EAT fees on 29 July 2013 there has been a steady decline in the number of claims issued.

In July 2013 the trade union Unison sought judicial review and a quashing of the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013. It argued that the fees regime breached the EU principles of equivalence and effectiveness, had been implemented without due regard to the Government’s public sector equality duty, and gave rise to indirect discrimination.

The High Court first heard the claim in the autumn of 2013, and handed down judgment in February 2014. The High Court was unconvinced by the evidence before it regarding the impact of the Fees Order and preferred to ‘wait and see’ and allow any problems to be addressed by the Lord Chancellor.

Following the rejection of the first claim and statistics supporting a dramatic fall in Employment Tribunal claims Unison brought a second claim, which was heard in October 2014. However, in a judgment handed down in December 2014 the High Court held that the statistics were not enough to show that any individual had been prevented from bringing a claim by the level of fees. It also held that any indirect discrimination in the Fees Order was justified by reference to the Lord Chancellor’s stated aims of transferring a proportion (one third) of the running costs of Employment Tribunals and the EAT to service users who could afford it; improving efficiency by deterring unmeritorious claims and encouraging alternative methods of dispute resolution. Unison appealed both High Court decisions to the Court of Appeal.

Today the Court of Appeal handed down its judgment. The Court acknowledged that it has been a longstanding principle of EU law that, “persons who claim that their rights under EU law have been breached must have access to an effective remedy for that breach otherwise the rights in question would be illusory” but the Court rejected Unison’s argument that this principle had been breached by the Fees Order. Whilst accepting that evidence in respect of notional, rather than actual, Claimants could be relevant it was held that the provision in the remission regime allowing for “exceptional circumstances” meant that it could not be said that the fee system in general was so unaffordable so as to mean that there was no effective remedy under EU law.

The Court also dismissed arguments based on indirect discrimination agreeing with the conclusion that any potential discrimination could be objectively justified. It was also not accepted that the public sector equality duty had not been complied with and found that the Equality Impact Assessment undertaken by the Lord Chancellor had identified the possibility that the Fees Order would have a greater impact on people with a protected characteristic but concluded that this would be cancelled out by the availability of remission.

Unison have said that they will seek permission to appeal to the Supreme Court. The Government also continues with its review of the fees regime. However, for the time being, it looks like Tribunal fees are here to stay.

Fox Whitfield can provide advice and assistance on all types of Employment Tribunal matters (whether bringing / defending a claim) as well as exploring alternative methods of resolving employment disputes.

If you require further advice or assistance you can contact me (Dionne Dury) on 01173305980 or email me at dionned@foxwhitfield.com