Employment news: March 2014
Welcome to our first Employment News. This month, we look at a recent case on flexi-time working which highlights the need to have a clear policy in place. We also look at the changing landscape of employment tribunal claims. Finally, we have set out the new compensation limits and statutory payment rates.
Flexi-time – Vision Events (UK) Limited v Paterson
Mr Paterson worked a basic 45-hour week. He was entitled to take time off in lieu of any additional time he worked under the company’s flexi-time policy. When Mr Paterson was made redundant he had accrued over 1,000 hours of flexi-time. He argued that he should be paid for this time, but the Company refused.
The Employment Appeal Tribunal (EAT) considered whether Mr Paterson had the right to payment in lieu of these hours. The flexi-time policy did not cover payment of accrued hours on termination and therefore the EAT had to consider whether a term should be implied into the policy. A term may be implied for business efficacy, effectively to make the contract workable or where the term is so obvious it was clearly intended by the parties. The EAT held that neither of these tests applied in this case. Mr Paterson was not therefore entitled to be paid in lieu of the additional hours he worked.
This case highlights the need for employers to ensure that flexi-time policies are carefully drafted and confirm what will happen to accumulated hours on termination. It is also a good idea to monitor the accrual of flexi-time hours to avoid a significant build up.
Employment Tribunal Fees – here to stay for now
Fees were introduced in the Employment Tribunals last July. The level of fees varies depending on the type of claim, but it now costs over £1,200 to get an unfair dismissal claim to hearing. Shortly prior to their introduction, Unison challenged the use of fees, claiming that they deny individuals the opportunity to exercise their legal rights. The High Court has recently dismissed Union’s challenge meaning that fees are here to stay. However, the Court made clear that the impact of fees will continue to be monitored.
Employers should bear in mind two key points arising from this case. The first is that tribunals should now order witness statements and documents to be exchanged before a hearing fee is due. This is usually three to four weeks before the hearing date. The impact of this is that it will front end the cost of defending an employment claim.
The second point for employers to bear in mind is that a successful claimant should generally be entitled to recover their fees from the respondent. Employers cannot therefore assume that fees are purely a matter for claimants. When assessing whether to defend or seek to settle a claim, employers will need to factor in the potential reimbursement of fees.
ACAS Early Conciliation
From May, employees will be required to contact ACAS before submitting their claim to the employment tribunal. The new scheme will be available from 6 April, but compulsory from 6 May. ACAS will seek to promote settlement during a month-long conciliation period. The time limit for submitting a claim will be put on hold whilst the conciliation takes place.
The 4-step procedure
Step 1 Before submitting a claim, the employee must send ACAS contact details for themselves and their employer on a special form. Alternatively, they can call ACAS to provide the information. There is no need for the employee to provide details of their claim(s) at this stage.
Step 2 ACAS must send a copy of the information to a conciliation officer.
Step 3 The officer must try to promote settlement within a one month period.
Step 4 If settlement is not reached, the officer must issue a certificate to that effect. The employee needs this certificate to be able to submit a claim.
The clear advantage of this process is that it allows the
parties to consider settlement at an early stage.
Employees may be keen to settle a matter before having to incur tribunal fees. Likewise, employers may be keen to avoid the potential adverse publicity of a tribunal claim as well as the legal fees and management time required to defend a claim. However, the conciliation process does not force the parties to meet and have meaningful discussions about the merits or otherwise of the claim(s). If either side is unwilling to consider settlement, ACAS will issue a certificate, allowing the employee to submit their claim.
It may well be in an employer’s interests to play hard ball during the conciliation process. This will put pressure on the employee to pay the tribunal fee if they wish to continue with their claim. However, employers should always bear in mind that, if they lose at tribunal, they are likely to have to reimburse any fees paid by the employee. As the new conciliation period puts the time limits for submitting claims on hold, employers can no longer assume that they will not face a claim from an ex-employee three months after the date of dismissal. Time will tell how successful this scheme is at reducing the number of employment tribunal claims. A similar voluntary scheme operated by ACAS during 2012/13 resolved over 22,000 disputes, with nearly nine out of ten employers saying that they would use it again.
Compensation limits and statutory rates of pay
New compensation limits have been published. The new limits will apply where the event giving rise to the compensation occurs on or after 6 April.
The new limit on the amount of a week’s pay will increase from £450 to £464. This is used to calculate statutory redundancy payments and the basic award for unfair dismissal. This will bring the maximum statutory redundancy award to £13,920. The maximum compensatory award for unfair dismissal is currently the lower of one year’s pay and £74,200. This will change to the lower of one year’s pay and £76,574.
From 7 April the rates of statutory maternity, paternity and adoption pay will increase from £136.78 per week to £138.18 per week. On the same date, the rate of statutory sick pay will increase from £86.70 per week to £87.55 per week.