Employment Law Update

Issue 42

Welcome to the latest issue of the Steptoe & Johnson Employment Law Update. 

The Employment Law Updates are aimed at providing information on recent developments in UK employment law.  It is our desire to provide you with not only an update of the law, but also a practical insight in managing workplace issues on a proactive basis.

To achieve our objectives and to continuously improve the Updates, it is important that we receive feedback from you.  With a view to this, please e-mail any comments or suggestions which you may have relating to the Updates to employmentgroup@steptoe.com.  We look forward to hearing from you.

1. Redundancy pay limit increase - REMINDER

The weekly limit used to calculate statutory redundancy pay rises to £380 with effect from 1 October 2009.  In addition the maximum limit of a week’s pay will be increased from £350 to £380 at the same time. 

2. BIS

The Department for Business Enterprise and Regulatory Reform (BERR) has now merged with the Department for Innovation Universities and Skills to create a new Department for Business Innovation and Skills to be known as BIS.  The combination of the two departments should be able more effectively to deal with the current recession and Britain’s economy. 

3. Sick notes

The Government has consulted on proposed changes to the current sick note used by doctors.  A new fit note will be available in paper or electronic format to help doctors, employers and employees focus on more what an individual can do rather than their incapacity.  The change is designed to facilitate an earlier and possibly phased return to work.  It is intended that the notes will come into use in Spring 2010. 

4. Company cars – fuel rates

HMRC has published revised fuel rates effective from 1 July 2009.  These range from 7p to 18p.

5. Line management behaviour and stress at work

The CIPD has issued a refined Framework for line managers concerning behaviour and stress at work.  A complimentary copy of the Guidance is available on request. 

6. Equal pay - Union intransigence

Coventry City Council v Nicholls and ors, EAT 0162/08

The council could not rely on trade union intransigence as a genuine material factor to defeat equal pay claims.  The council claimed that the unions had not been cooperative and that was the cause why agreement on single status had not been reached resulting in persisting inequality in pay arrangements.  The Tribunal and the Employment Appeal Tribunal rejected the council’s defence.  Union intransigence did not replace the original discriminatory explanation for the difference.  It was simply a plea in mitigation. 

Key point:  Although the Tribunals will be sympathetic to employers’ positions, employers have to be able to objectively justify pay differentials to avoid sex discrimination or impose equality if need be. 

7. Holiday pay

Stringer v HMRC House of Lords 2009 UKHL31

In this long running case, the House of Lords has now held that a claim for unpaid holiday under the Working Time Regulations or a payment on termination can be pursued as unauthorised deduction claims as well as under the Working Time Regulations. 

Key point:  There are more generous time limits applying to unlawful deduction claims.  A claim for unlawful deduction from wages has to be brought within 3 months.  If the underpayments form part of a series, this could allow employees to claim underpayments going back more than 3 months.  See also Bulletin 40 re: the decision on holiday entitlement during sick leave in this case.

8. Breach of confidence

Vestergaard Frandsen A/S and others v Bestnet Europe Limited and others [2009] EWHC 657

This case concerned breach of confidentiality by a consultant relating to technical information contained in the Company’s database.  The court held that the consultant had been subject to an express and implied obligation of confidence which obligation continued after his relationship with the company had ended, with regard to their trade secrets.  The court set out in the judgment the circumstances when an implied term could be imported regarding confidence and added that even if there was no contract between the consultant and the company the consultant would have been subject to equitable obligation to keep the information confidential.  Interestingly the parties concurred that as a consultant his obligations of confidentiality were analogous to those of an employee. 

The court concluded the consultant had misused confidential information in the database which was a trade secret. 

Key point:  Breach of confidence actions should not be brought to prevent competition but the motives for bringing such a claim are not relevant in deciding whether or not there is a good claim.  The case is a useful reminder of the factors to be applied when determining whether there has been misuse of confidential information consisting of technical information. 

9. Effective date of termination

Kirklees Metropolitan Council v Radecki [2009] EWCH Civ 298

The Court of Appeal has held that where an employee was removed from the payroll after a long period of suspension on the assumption that a Compromise Agreement would be signed, the effective date of dismissal was the date the employer stopped paying his salary.  Mr Radecki argued that it was only when Kirklees advised him in writing that he had been removed from the payroll that he was aware of his termination.  See Bulletin 36 for the full case details.

The Court of Appeal held that Mr Radecki knew that he had been terminated when he learned that his pay had stopped. 

Key point:  Employers should ensure there is an unequivocal termination of an employee’s employment.  Where the parties are intending to enter into a Compromise Agreement based on an agreed termination date or a date to be fixed, if the parties are unable to conclude a settlement within a reasonable period of time then disciplinary proceedings should be completed or the redundancy made effective in order to concentrate the parties minds on the date or a settlement.

10. Misrepresentations in medical questionnaire

Cheltenham Borough Council v Laird [2009] EWHC 1253

In this case the High Court rejected Cheltenham’s case that Ms Laird had made fraudulent and negligent misrepresentations in failing to mention her history of stress and depression in a pre-employment medical questionnaire. 

In the court’s view Ms Laird had given at least a correct answer to each of the questions she was asked.  Accordingly the council could not recover damages for extraordinary expenses such as the employee’s ill health pension that it would not have occurred had it employed someone else. 

Ms Laird had suffered from 3 episodes of stress related depression and she was regularly prescribed anti-depressants.  She was however offered a position with Cheltenham in 2002, conditional on medical clearance.  In 2003 after issues with the new leader of the council she went off sick and she was finally granted an ill health pension.  Subsequently the council obtained a copy of her pre-employment questionnaire and sought court proceedings against her for damages in nearly £1m representing the cost of dealing with the various internal disputes and the ill health element of her pension. 

The High Court rejected Cheltenham’s claims.  The court held that the wording of the medical questions should be construed objectively and as a reasonable person in Ms Laird’s position would have construed it.  The questionnaire did not require Ms Laird to disclose information about her history of stress and depression.  Although she had a vulnerability to depression she did not have an ongoing depressive disorder and she was not depressed at the time of the job offer. 

Key point:  If an employer is to request answers to a medical questionnaire this must be drafted properly to enable the employer to obtain the information it needs as well as considering its obligations under the Disability Discrimination Act 1995. 

11. Overpayment of salary

Keenan v Barclays Bank Plc ET 1100792/2009

Barclays had mistakenly paid their part-time employee at a rate intended for a full-time person.  Ms Keenan had previously worked as a cashier for a building society and following her TUPE transfer to Barclays she received a statement indicating that her basic salary was £17,000 whereas she had previously been paid £9,500.  She was pleased at what she regarded as a substantial and overdue pay rise.  Barclays never queried this discrepancy.  It was held that Barclays were bound to continue paying the full-time salary despite their mistake. 

Key point:  Employers should ensure employees’ part-time pay is stated properly or if linked to full time pay that it is to be pro rata’d. 

12. Unfair dismissal compensation – earnings from temporary work

Islam Channel Ltd v Ridley UKEAT/0083/09

In this unusual case the EAT held that when assessing future losses in an unfair dismissal case, the Tribunal was entitled to ignore the fact that as at the hearing date Ms Ridley had earned £5,000 more from freelance work than she would have earned had she not been dismissed.  The Tribunal decided not to set off these earnings against her predicted future loss. 

There is no automatic guillotine on losses once a former employee takes on new work.  The crucial question was whether for the period in issue it was just that she should be entitled to recover damages from Islam Channel.

It held that her freelance income was inherently insecure and that her claim for one year’s loss of future income was modest so that credit did not have to be given for the £5,000. 

Key point:  It should not be automatically assumed that any income will result in a reduction in compensation and the case does not decide that a profit made by the employee in the period up to the Tribunal hearing can never be brought into account.  The Tribunal also stated that her loss was modest.  It is possible that Tribunals may at this point of the recession consider claims for much longer periods of future loss. 

13. Unfair dismissal compensation – loss of final salary pension

Aegon UK Corporate Services v S Roberts Court of Appeal

The Court of Appeal upheld the employers’ appeal against the award made to Ms Roberts in respect of her loss of membership of her employer’s final salary pension scheme.  (See Bulletin 40 for the full case).  It agreed that Ms Roberts’ higher salary with her new employer offset her less favourable pension arrangements to such an extent that she was better off under the overall package provided by her new employer.  The Court held that the Employment Appeal Tribunal should not have applied different tests to different aspects of her package and had made an error in awarding her compensation for continuing pension loss. 

14. TUPE – service provision change

Metropolitan Resources Ltd v (1) Churchill Dulwich Limited in liquidation (2) Cambridge and others UKEAT 0286/08

The case provides further guidance on how to approach the question of whether a service provision change has occurred for the purpose of Regulation 3(1)(b) of the TUPE Regulations 2006. 

The case concerned the transfer of a contract to provide accommodation to asylum seekers and raised similar issues to those considered in Kimberley Group Housing v Handley.  (See Bulletin 35).  There is no service provision change where services are too fragmented post transfer.  In this case, however, after the contract transferred to a new contractor, although there were minor differences in the nature of the relevant activities and how they would be performed post-transfer compared with pre-transfer, this did not rule out a service provision change. 

The relevant question for the Tribunal is whether the activities carried on by the alleged transferee are fundamentally or essentially the same as those carried out by the alleged transferor. 

In this case the contract was transferred over a period of time as there was an initial phasing out the services prior to the termination of the old contractor’s contract.  The relocation to a new site and a shorter length of time that the asylum seekers were accommodated was essentially a continuation of the same service.  A different location would, on its own, be unlikely to determine that no service provision change has taken place. 

Key point:  Even if there are additional duties and functions under the new contract this is unlikely to mean that TUPE ceases to apply. 

15. TUPE - equal pay

Gutridge and others v Sodexo and North Tees and Hartlepool NHS Trust [2009] EWCA Civ 729

In July 2001 the Claimants transferred from the Trust to Sodexo under TUPE.  In December 2006 they brought equal pay claims against Sodexo for back-pay over 6 years including comparators who worked for the Trust but who had not transferred.  The Court of Appeal held that an equal pay claim pre-dating a TUPE transfer must be brought against the transferor within 6 months of the transfer and so their claim was out of time but the claims for continuing liability post transfer could be brought against Sodexo. 

Key point:  An equality clause transfers across to the transferee on a TUPE transfer.  The fact that employees have not before the TUPE transfer articulated the possibility of an equal pay claim will be a considerable risk to their employers.  Where an arrears of pay claim spans employment with the transferor and transferee the back-pay claim against the transferee must be brought within 6 months of the date the employees’ employment with the transferee ends. 

16. TUPE – new place of work

Tapere v South London & Maundsley NHS Trust UKEAT 0410/08

Ms Tapere worked for Lewisham Primary Care Trust until April 2007.  She then transferred under TUPE to the South London Maundsley NHS Trust.  It was envisaged that she would move to new premises in Beckenham but the move was postponed due to lack of room for her and her colleague.  She was unhappy about the proposed change to her place of work, as this was going to increase her journey time and it affected her childcare responsibilities.  Whilst she was away on holiday the Trust wrote to her informing her that her place of work would change on 10 September.  She did not receive the letter and when she went to work at her old place of work she found her colleagues were no longer there.  She went to the new venue but did not stay and fell ill.  She was signed off sick and resigned on 17 September 2007. 

The Tribunal did not consider that she had been unfairly constructively dismissed.  She appealed.  The EAT held that post transfer, the test of whether a substantial change to working conditions is to the material detriment of the employee under TUPE was to look at the impact of the change from the employee’s reasonable viewpoint and not by balancing the views of the employer.  Transferees cannot use a substantial equivalence argument to defend breaches of pre-transfer terms except when such terms present practical difficulties like share options.  A mobility clause is unchanged on transfer.  On these facts changing the place of work to Ms Tapere’s detriment led to her dismissal.  The EAT remitted the questions of fairness of the dismissal and redundancy pay to a new Tribunal for adjudication.

Key point:  Employers should look carefully at the terms of any mobility clause.  The length of time it takes an employee to reach the new place of work is often the critical feature not the precise location of the new workplace. 

17. Minimum wage – sleeping in allowance

Smith v Oxfordshire Learning Disability NHS Trust UK EAT/0176/09

Mr Smith was contracted to work 50 hours a week at a residential care home.  He was also required to sleep in from time to time at the care home to be on call for night duty.  He did not receive his hourly rate of £7.94 in respect of the time spent at the care home sleeping, but he was instead given a sleeping allowance of £25 a night.  He resigned in November 2007 and claimed that the care home had breached its obligations to pay him the National Minimum Wage.  The Tribunal rejected his claim and he appealed to the EAT. 

The employer argued that the allowance of £25 should be included in the minimum wage calculation.  Mr Smith considered that it should be excluded as it was an allowance and given the number of hours that he worked, including sleeping time he had not been paid the minimum wage for the last 3 months of his employment, so he was owed £205.59.  By majority the EAT dismissed his appeal holding that the £25 sleeping in allowance was not an “allowance” within the meaning of the Minimum Wage Regulations and was not therefore excluded from being calculated towards the payment of minimum wage.  It was simply a payment for performing the sleeping-in duty. 

Key point:  The case is a useful clarification relating to allowances and will be significant for employers who adopt similar arrangements for workers sleeping on site.

18. Disability discrimination – meaning of “likely”

SCA Packaging Limited v Boyle [2009] UKHL 37

The House of Lords has concurred with the Court of Appeal’s decision that the word “likely” in Schedule 1 to the Disability Discrimination Act 1995, paragraph 6(1) means “could well happen”. 

An impairment therefore that “could well” have a substantial adverse effect on an individual’s ability to carry out day-to-day activities, were it not for medical treatment will be treated as having that effect.  The individual is not required to show that without treatment such effect would “more probably than not arise”. 

Ms Boyle worked for SCA’s stock control and had a history of problems with hoarseness.  She was advised to rest her voice and SCA gave her some time off. She managed these problems. SCA believed she was cured. In September 2000 SCA decided to take down a partition separating her office from the stock control room.  She complained that the noise levels would adversely affect her health but SCA declined to change its decision.  In 2001 Ms Boyle brought a claim that SCA had failed to comply with its duties under the DDA.  SCA made her redundant in 2002 and she brought further DDA claims concerning the circumstances of her dismissal.  The Tribunal concluded that she was disabled and without treatment (her management of the problems) she was more likely than not to have suffered from hoarseness which would adversely affect her day-to-day activities and the substantial adverse effects of her condition were more likely than not to re-occur. 

Key point:  Where an employee raises a health related concern this should be taken seriously and, under the DDA, employers are required to consider adjustment regardless of how “disabled” the employee might appear. 

19. Disability Discrimination - dismissal

Fareham College v Walters UKEAT/0396/08

The Employment Appeal Tribunal held in this case that the dismissal of a disabled employee, where the employer had failed to make reasonable adjustments, was an act of discrimination.  Ms Walters who was on sick leave was invited to a formal meeting in August 2006.  She asked for her situation to be reviewed in December with a view to commencing a phased return to work in January 2007.  The college rejected this and dismissed her. 

She was successful in her claims for disability discrimination.  The college had refused to permit her a phased return to work and this put her at a disadvantage which the college had not made reasonable adjustments to eradicate.  The dismissal itself was an act of discrimination.  In dismissing her because of her disability related absence, they had treated her less favourably than it would have treated others and this was not justified.  It was held that Ms Walters was dismissed because the college considered the alternatives involved unacceptable adjustments. 

Key point:  Whenever an employer proposes to dismiss a disabled employee it needs to be able to prove that it has considered what reasonable adjustments could be made to avoid a dismissal.  In addition the employer must be able to show why possible adjustments were not reasonably practicable to pursue.  This is particularly the case where only a temporary adjustment is required.

20. Disability Discrimination – professional advancement not an adverse affect

Chief Constable of Lothian and Borders Police v Cumming UKEAT 2009 0077

The EAT held in this case that a person’s inability to meet physical requirements for entering into a profession was not a relevant adverse effect on that person’s ability to carry out normal day-to-day activities. 

Ms Cumming failed the eye sight test to become a police constable, although she was already employed by the Border Police as an operations coordinator.  She complained that her ability to carry out the duties required as a regular constable would be wholly unaffected by her impairment. 

She claimed disability discrimination and the issue was whether she was disabled.  The police force accepted that her eye condition had an adverse effect on her day-to-day life but queried whether its refusal to allow her to proceed to the next step of her professional life was a relevant “adverse effect”.  The Tribunal decided she was disabled and concluded that participation in professional life was a normal day-to-day activity and the refusal to allow her to go forward into her chosen career was therefore a substantial adverse effect. 

Lady Smith sitting alone in the EAT held that the Tribunal had erred in treating Ms Cumming’s rejection from the police force as having a relevant adverse effect.  Making an application to enter a profession does not imply any particular physical activity nor was the potential employers’ refusal to progress the application a physical effect.  A judgment that Ms Cumming was not disabled was substituted for the decision of the Tribunal.

21. Affirmation of contract

Cook v MSHK Limited and Ministry of Sound Recordings Limited [2009] EWCA Civ 624

Mr Cook was employed by Ministry of Sound and was also de facto director.  He had a six month notice period and post employment restrictions which prevented him from soliciting key artists and the like.  In May 2007 he resigned on 6 months’ notice having accepted a job with Warner.  A dispute arose during his notice period about what he would be doing in his new role.  He went off sick with stress and when he returned to work in July disciplinary proceedings were commenced against him.  He was summarily dismissed on 3 August.  Ministry of Sound maintained his conduct amounted to a breach of a duty of trust and confidence as well as a breach of his fiduciary duties on the grounds that he had a fiduciary duty to disclose that his new employment would be competitive and that he had attempted to secure a company loan, after he had resigned. 

Ministry of Sound issued proceedings seeking a declaration from the High Court of the lawfulness of Mr Cook’s dismissal and also sought damages and compensation for breach of fiduciary duty.  Mr Cook sought summary judgment in respect of his defence, arguing that there was no real prospect of his dismissal being found lawful for the alleged breaches.  On 21 July Mr Cook was successful in striking out some of the alleged breaches relied on by Ministry of Sound but other allegations for breach of contract were allowed to proceed to trial, namely that he failed to inform Ministry of Sound of his settled intention to compete and that he had accepted a company loan.  Ministry of Sound however were found to have affirmed the contract as it had not reserved its position in relation to the disciplinary proceedings.  In an attempt to avoid a constructive dismissal claim it had affirmed the contract and so it could not later accept certain repudiatory breaches by Mr Cook, to justify his summary dismissal.

Key point:  Employers should be careful when trying to rely on facts after the event.  This may require more than simply stating that the employer is “reserving its position”. 

22. Pre-judgment interest in discrimination cases

Compensation in discrimination cases can include interest on the employees’ losses up to the date of judgment.  The rate payable is now 0.5% with effect from 1 July 2009. 

23. Probationary periods and payment in lieu of notice

Cornell v Revenue & Customs [2009] UKFTT 140

Ms Cornell was put at risk of redundancy before the end of her probationary period.  She sought to argue that her payment in lieu of notice should have been for 1 week only and the balance of the sum paid by the employer which included a payment of 3 months pay in lieu should be tax free as compensation for breach of contract.  The Revenue disagreed.  The Tribunal held that it could not agree with the employee’s argument that because no assessment was made of her work performance at the end of the probationary period, she was not formally confirmed in post, as required by the terms of her contract.  The probationary period was not therefore completed at the time of her termination and so one week’s notice applied. 

It was held that one week’s notice period ceased to apply when the probationary period ended.  The application of a 3 months’ notice period was not dependant on there having been a satisfactory assessment or a confirmation of her in the post.  The fact that the company undertook a flawed redundancy consultation procedure did not amount to breach of contract.  Accordingly the whole payment was taxable as earnings. 

Key point:  Employers should confirm an employee in post once a probationary period has been satisfactorily completed so both parties are aware of the notice period required to terminate the employment from thereon. 

24. Default retirement age

The Government has announced that it will bring forward the review of the default retirement age to 2010.  Currently the default retirement age is 65.  An employer may fairly dismiss employees who are over the age of 65 by reason of retirement.  It is widely expected that the default retirement age will be abolished.  Consultation closes on 12 October. 

25. Employment status - construction industry consultation

HM Revenue & Customs have published a consultation document outlining the Government’s proposals for ensuring that construction workers are taxed appropriately.

Workers will be deemed to be in receipt of employment income unless they provide their own plant and equipment or the materials required to complete the job or provide other workers and are responsible for paying them. 

Workers who are deemed to be employees for tax and National Insurance purposes will not necessarily be deemed to be employees for statutory protection purposes but this deeming may result in workers then bringing claims for breach of their employment rights. 

26. Immigration – changes to the points-based system

The UK Border Agency has published a number of changes to the points-based immigration system and revised its Guidance for Sponsor Applications - tiers 2, 4 and 5.  Many of the changes affect students and temporary and exchange workers.  They include a list of circumstances in which a full change of employment action will not be required where a migrant salary or working hours are temporarily reduced as a measure to avoid redundancies and revisions to the circumstances in which a migrant can be the subject of an intra-company transfer. 

In respect of intra-company transfers the migrant must not as a result of the transfer directly replace a settled worker.  The qualifying period for which the migrant must have worked for the sponsor organisation before being allowed to enter the UK is amended to take account of periods of maternity, paternity and adoption leave. 

27. Race discrimination-motive

Amnesty International v Ahmed UKEAT/0447/08

Ms Ahmed, a Sudanese, applied for promotion to the role of Sudan researcher for Amnesty International.  She was not appointed because Amnesty believed that the appointment of a person of her ethnic origin would compromise its perceived impartiality and thus its effectiveness and would expose Ms Ahmed and those with her to an increased safety risk when visiting Sudan or Chad. 

Ms Ahmed resigned and claimed race discrimination and unfair constructive dismissal.  The Tribunal upheld her claims of direct race discrimination and unfair dismissal.  Amnesty appealed against that decision.  Their motive in not permitting her promotion was irrelevant, however benign.  The EAT confirmed the findings of direct race discrimination but not that she had been constructively dismissed. 

Amnesty’s concerns on the issue of impartiality or perceived impartiality were, the Tribunal believed, exaggerated.  Ms Ahmed was disappointed and upset about not being promoted but Amnesty’s decision not to appoint her was not a breach of the implied term of trust and confidence.  What Ms Ahmed was complaining about was a potential promotion to a different job, not her current employment so her claim for unfair dismissal failed. 

Key point:  Employers facing a similar dilemma could consider the possible use of a “genuine occupational requirement” defence. 

28. EU - France

New legislation on the provision of family care leave for employees who have a terminally ill close relative is currently being debated by the French Upper House of Parliament.  The new provision will allow employees to take a maximum of 3 months leave in a given year paid through an allowance from the social security system.  The employee would have to provide 72 hours notice that they intended to take leave and 3 days’ notice of their proposed return to work.  If the legislation is passed family care leave could be available to employees from Autumn 2009. 

29. Limited liability partnerships and employees

Kovats v TFO Management LLP and anor 209 UKEAT0357/08

The EAT in this case had to decide whether a member of a limited liability partnership could also be an employee. 

Mr Kovats was headhunted from a global bank by TFO in November 2004 and joined as an LLP member with one share.  In April 2007 a members’ meeting took place to discuss the future of its operations and the role of the LLP and its members.  At the meeting Mr Kovats was required to retire.  He sought clarification over his compensation package and status of his shares.  TFO denied he was an employee and Mr Kovats brought a claim for unfair dismissal.  The Tribunal found that he was a partner in a partnership.  He appealed but the EAT dismissed his appeal holding that he was not an employee. 

Key point:  The case is a useful reminder of what issues the Tribunal will look at in reaching a decision as to whether a partner can be an employee.  An employer should also consider applying the common law tests to establish whether the person is self-employed if he is not a partner as he (or she) will not automatically be an employee. 

30. Compromise Agreements and victimisation

McLean v TLC Marketing Plc and others [2009] AER 144

Ms McLean was a senior manager with TLC until she resigned in May 2007.  She brought proceedings against her employer alleging breaches of the Equal Pay Act, unlawful sex discrimination and victimisation.  She entered into a Settlement Agreement through ACAS, the terms of which were recorded in a form COT3.  The employer failed to pay the amount agreed and Ms McLean brought proceedings in a county court for the balance of the monies due.  She obtained judgment and payment of the judgment debt was made.  

She then claimed victimisation in new Tribunal proceedings the detriment being their refusal to pay the sum due on time and the failure to provide an agreed reference.  The Tribunal rejected her claim on the basis that these had been concluded by the COT3.  Ms McLean appealed and was successful.  The COT3 did not preclude claims which had not arisen at the date of agreement. 

Key point:  Clear wording is required in a COT3 to preclude all future claims. 

31. Walker review of Corporate Governance and the banking crisis

On 16 July 2009 HM Treasury published the consultation of Sir David Walker’s draft review of corporate governance in UK banks.  The review is open for consultation until 1 October 2009 and will be finalised in November 2009. 

It is probable that most of its recommendations will be implemented by inclusion in the combined Code.  Of interest are the comments on clawback and compulsory deferral where a highly paid executive leaves or his performance falls short in some material respect or the performance is found to have been overstated.  How these issues may be practically addressed is not explicitly set out in the review. 

32. Unfair dismissal - reinstatement

Abimbola v Central & NW London NHS Trust [2009] AER 188

The employee was dismissed due to misconduct for allegedly assaulting a patient but the Tribunal upheld the employee’s complaint finding that the evidence was not sufficient to support the employer’s reasonable belief in the alleged misconduct. 

A remedy hearing took place at which the employee gave evidence.  The Tribunal found the employee evasive and on occasion dishonest but ordered that he be reinstated by the employer as a psychiatric nurse.  It further directed that he be paid arrears of salary and pension rights. 

The employer appealed stating that the Tribunal was not restricted to simply considering the relevant factors and that in any event loss of trust and confidence went to the question of practicality of reinstatement as it was settled law that a breakdown in mutual trust and confidence was material to the practicability of a re-employment order. He had been dishonest and evasive and they could no longer be expected to trust him.

The reinstatement order was set aside and the case was remitted to the Tribunal to assess ordinary compensation. 

Key point:  Orders for reinstatement are not common but the existence of mutual trust and confidence between the employer and ex employee are a relevant factor when addressing the practicability of an order for reinstatement.