When something unfair can be fair

Many small employers – and indeed employees – struggle with the concept of “fair dismissal”. In a way it’s not surprising, since fair in employment law terms means something different to fair in ordinary language. I’ve discussed before exactly what it means here and here, but when dismissal is combined with the strange legal term “some other substantial reason” it’s not surprising that people’s heads begin to spin.

Thankfully, we have a great example today of a real-life case where two of these legal situations apply – and it’s a situation I’ve encountered several times with clients and is always fraught with difficulty.

The company did sub-contracted work for a much bigger organisation. As part of one contract they had an onsite manager.  The client wasn’t happy with the performance of the contract and demanded that the company bring in a new manager. The company asked for time for the existing manager to try to improve things but the client was insistent.

The company then had a problem. They had an employee who had no job, and despite their efforts they did not have an alternative role for her that matched her skills and status. They did offer her a job on lower pay which she turned down. She wasn’t redundant however, as her job still existed, and because they had never discussed performance issues with her, the company had no grounds to dismiss her for this reason. Indeed, until the client raised it, they weren’t aware that there were problems with the contract.

They decided that they had no other option but to dismiss, using the “some other substantial reason” as their justification. The client did not want the employee on their premises and the company didn’t have another job for her. Quite understandably, the employee claimed unfair dismissal. She lost however because the tribunal ruled that the company had both a fair reason (she could not work on the contract she was employed on because the client didn’t want her) and they had followed a fair process (looking for alternative jobs). The tribunal did recognise that the situation was “unfair” to the employee in the normal sense of the word – and many would sympathise with her position –  but her employer had behaved fairly and legally.

It’s worth remembering that such cases are often good and easy to understand examples for small employers – and they also help to banish the myth that “tribunals are biased in favour of employees”.

Let’s Settle This (Part 2)

In my last post, I looked at when a small business might want to consider a Settlement Agreement. This follow up post looks at some of the practical issues when discussing an agreement.

The first thing is making the initial approach to the employee. Some people find this quite difficult to do but often – especially where there is a clear dispute – the employee may well be expecting you to say something. It’s important that at this early stage you simply talk about the principle of coming to an agreement, rather than jumping in with an immediate offer.

Follow this up in writing – confirming that you consider your discussion a protected conversation under the Employment Rights Act. This means that any discussions will not be admissible* if things break down and you do end up with a Tribunal Claim. (*Unless in the course of the discussions you say something as stupid as “I’m only getting rid of you because you’re pregnant/gay/Muslim” etc, or try to bully or harass the individual, in which case they can be used in support of a claim). You may also want to add the words “Without Prejudice” to any letter/email although strictly speaking these words only protect lawyers.

Think about the offer you are going to make. The individual is signing away legal rights so will expect something more than their basic contractual payments. Like any negotiation, consider your opening offer and what you are prepared to go up to. Remember also that negotiations break down it may be 6-8 weeks before you can justify dismissal so you’ll be paying the person for this long anyway – so an additional cash amount might be cost-neutral. You can also think about whether there are any non-financial benefits you can offer – a good reference for example. Try to avoid thinking in emotional terms “I don’t want to give this person £££” and look at it commercially

It’s also now “expected” – though you don’t legally have to do it – that the employer will make a contribution towards the employee’s legal fees. The amount is usually fixed, but in my experience will depend on the particular solicitor – one of the advantages of the north of England is that they are often cheaper!

Finally, remember that the agreement is voluntary – you or the employee can walk away at any point and if this happens then you continue as if the discussions had never taken place. This might mean restarting a performance or disciplinary process.

Let’s Settle This!

As with much of employment law, many of the small businesses I work with have heard of Settlement Agreements but aren’t quite sure exactly what they are. Recently I’ve had a couple of cases where clients have had concerns that discussing a settlement with an employee will be interpreted as a sign of “weakness”. This is the first part of a two part post (second part later this week), which looks at what they are and when and how they can be useful.

Firstly, you may be more familiar with their old name – Compromise Agreements – which was changed a couple of years ago as many people felt that “compromise” suggested that they had somehow “given in”. They are a legally binding agreement between an employer and an employee to end an employment contract, usually in a situation where there is some dispute between them.

The advantages for employers in this situation are:

  • No risk of a subsequent employment tribunal
  • Ends the relationship swiftly, allowing you to concentrate on running the business not dealing with an employee problem
  • Avoids any potential issues of bad publicity or reputation damage

There are disadvantages however

  • You may have to pay out more to the employee than you would contractually be obliged to
  • You may be expected to contribute to the employee’s legal fees
  • You may have to make certain commitments (e.g. provide a reference) that you might not otherwise want to
  • It is voluntary – you cannot force an employee to agree to one

To be legally binding, a Settlement Agreement must be in writing, contain certain clauses and most importantly the employee must have received independent advice from a qualified solicitor*, who must also countersign the agreement. Employers do not have to have employment law advice on the agreement (though many do) and there’s no requirement for their adviser to sign. A settlement agreement does not have to be a long winded legal document however – it’s perfectly possible to create a valid one on a side of A4.

But hang on, you may be thinking – “why don’t I just dismiss the individual? After all, didn’t you say in this post that it wasn’t as complicated and scary as many employers think?”

Clearly, you can just do this – but in many situations Settlement Agreements can be the better solution for both parties. And in part 2 of this blog post we’ll show you how to negotiate one.

*A qualified solicitor is one who has specific insurance which allows them to advise on employment matters. It is designed to protect the employee in the event of negligent legal advice. There are also certain others who are allowed to countersign settlement agreements such as CAB legal advisers, or some Trade Union officials

The Clarkson Affair – what small employers really need to know

The suspension of TV presenter Jeremy Clarkson from Top Gear, after what’s been described as a “fracas” with his producer, has caused a huge amount of discussion, media comment and online debate. (If you’re one of my non-UK readers, or have been avoiding the news for the past week, here’s a summary of the story)

In adding to the already large amounts of discussion on this story, I’m aiming to provide a reminder for small organisations of the process for dealing with such a situation – while not all that common it happens more often than you may think.

Firstly, you need be clear to all staff about what behaviour is unacceptable. Most organisations would class fighting or physical assault as gross misconduct, which is likely to lead to dismissal without notice (people sometimes refer to this as “summary” or ” instant” dismissal – however as you have to undertake a proper process before dismissing, I avoid these terms as they imply that you make a knee-jerk decision). Many organisations would also class threatening verbal abuse as gross misconduct, especially if it has (as some versions of the story suggest) a racial element.

Even if you don’t classify it as gross misconduct, it’s unlikely to be acceptable behaviour and might well lead to disciplinary action – and if you have someone  already on a final warning (again, as Mr Clarkson apparently is), further disciplinary action is also likely to result in dismissal.

If you are considering gross misconduct, you should normally suspend the individual while you investigate matters. Someone’s job is at stake so it’s important that you talk to any witnesses or consider any supporting documentation. You may also want to talk to the individual themselves as part of the investigation although this isn’t always necessary. Make sure any meetings are documented. If your organisation is large enough, get someone to carry out the investigation who isn’t connected to the incident or who won’t be involved in the final decision.

At the end of the investigation, if there seem to be grounds for gross misconduct, call a disciplinary hearing and ensure the individual has access to all the allegations before the hearing. Remember, you must allow them to put forward their side of the story or any mitigating circumstances before you make the final decision.

And if you do dismiss, then the individual must be allowed an appeal, usually to someone not involved in the final decision – although in a very small organisation this isn’t always possible, but in this case you should allow the opportunity to request a review of the decision.

Without knowing all the ins and outs of the Clarkson case (we only have partial media reports), it does seem the BBC is doing things “correctly”, even if this upsets those who want to see Clarkson either back on TV or dismissed immediately. And it’s a reminder that no matter how valuable an individual employee is to the company, they aren’t above the normal standards of behaviour.

If your company needs help with handling a disciplinary case, why not get in touch?

(NB – some may point out that Clarkson is not a BBC employee but a freelance contractor. I understand that because of the large numbers of freelance contractors in the media industry, the BBC policy is to cover both employees and contractors. However, you don’t need to follow such a process with any freelance workers you use in your business, only those who are directly employed by you)

Updated 25/3/15

The decision has been made and it seems that not only have the BBC carried out a full and proper investigation of the issues, they’ve also carried out the process in a fortnight, which gives the lie to those who suggest that suspensions and investigations drag out things unnecessarily!

Sacking someone? It’s just like making Risotto

Watching one of Nigella Lawson’s cookery programmes (yes I do, what of it?) I was struck by one of her comments that when it comes to cooking, “people confuse time-consuming with difficult”.

It seems to me that this is the same mistake that a lot of businesses apply to HR – and sadly it’s an illusion that many in HR like to perpetuate.

Take dismissing someone for example. “It’s hard to do” say some small business organisations and government ministers. “It should be made easier”

Actually, it isn’t hard to do. If you have an employee who can’t do the job, regularly breaks rules, is no longer able to work for you, undertakes tasks you no longer require, or with whom your working relationship has fundamentally broken down, then you can dismiss them. The time consuming but not difficult bit is that you have to follow a fair process before you make your decision. That means allowing the individual to put forward any mitigation at a hearing, letting them attend with a colleague or union rep and, if you do dismiss, allowing them an appeal.

Even the infamous TUPE regulations, which cause so many sleepless nights for employment lawyers and HR people, are – in 90% of cases – simply a tick box exercise: Have you consulted employees at the correct time? Have you supplied employee information at the correct time? Have you informed them of any changes that may be made post transfer? Are there any disputes about whether a particular person should transfer? Are there any benefits that can’t be replicated – and what are you doing about them?

Perhaps it’s the current expectation that everything will happen instantly (although businesses moaned about employment issues long before the advent of on-demand services). Or the assumption that what we don’t understand must be “complicated” (like rocket science, which is one of the simplest concepts there is).

Making a risotto involves stirring stock into rice for around half an hour. You could bung it all in a microwave for 5 minutes but if you did you’d end up with an inedible mess. Complying with employment rules is like making risotto – it’s not difficult but you need time to get the right result.