Dismissal of senior executives
March 23, 2009
There has been a lot of publicity recently about Senior Directors’ roles in the failings of organisations, and whether they should take responsibility personally for what has taken place.
There was outrage across the country a few weeks ago when it became apparent that Sir Fred Goodwin, RBS Chief Executive had retired on a six figure salary when his bank had come close to collapse and it was felt it had contributed to the current economic circumstances which is leaving millions of people jobless and even homeless. People could not believe that somebody that had overall responsibility for the bank and its success or failure could not only ‘get away with’ the massive failings but was essentially rewarded for it by being able to leave quietly on a small fortune. This has led to calls for new measures so that the FSA can stop these kinds of huge ‘rewards for failure’ in the future.
On the other hand is the case of Sharon Shoesmith, the former head of Children’s Services at Haringey Council was sacked without notice for the failures of the council to protect Baby P from repeated horrific abuse – after a damning report on the council’s failings was released. This is possibly the kind of action the people who were so outraged at the RBS outcome would expect a senior executive to face after such a catastrophic disaster. However Shoesmith made a claim to the Employment Tribunal for unfair dismissal, and has recently added sex discrimination to her claim – a total that could amount to over £1million in compensation if she is successful. This will be a fascinating case to watch, because of the huge publicity surrounding the case of baby P but also because of the implications of how the dismissal was handled at such a high level?
So what’s the answer? Should organisations be able to find those in ultimate charge guilty of gross negligence or misconduct after a failure as critical as those of RBS or Haringey Council? More on this in the next article!
First time parents - do they know their rights?
March 17, 2009
One of my friends is expecting a baby in about six weeks, and whilst I’m trying to think of the nicest present to get for their alternative baby shower (just basically a big knees up), probably the best gift I can give my friend at the moment is advice on her employment rights as she is becoming a parent for the first time.
What has struck me is the fact that my friend is not completely aware of her rights, and this is probably the case for employees in many companies. My friend is a teacher and she told me that she wants to go back to work part time after her maternity leave but that the college has indicated that they will not let her because she’s in a management level role – but they will probably invite her to come back into a lower grade position if she wants to work part time. My friend had almost taken this as the final word on the subject until I informed her of the right to request flexible working regulations – and the process that needs to be followed to have a constructive two-way conversation regarding the different options and their implications. I explained that as a parent of a child under six years of age (soon to be extended to 16 years) she had the right to request flexible working by writing to the employer – and the employer has an obligation to consider the request and either grant it, negotiate another option if it reasonably believes the option she puts forward is unfeasible, or refuse the request if there is a genuine reason that means it cannot be granted (reasons might include higher costs or it having a detrimental effect on other staff, customers/clients or service quality). I asked my friend if she thought it is reasonably possible for her to work part time and still achieve the needs of her job – and she said it is, so I advised her to put the reasons she believes this is possible in her request – then the onus is on the employer to argue the opposite.
Another thing my friend said is that her employer has asked her to give back her company laptop during her maternity leave; and again I have advised that this is not really correct under the recent changes to maternity legislation. In October last year an amendment was made to the law which means that women are now entitled to their full contractual benefits during ordinary and additional maternity leave – and these benefits are likely to include a company laptop, especially if, as in my friend’s case, the employee uses the laptop for personal use at home as well as for work.
It’s easy to see why companies might not inform employees of their full rights under maternity, paternity and adoption law, if they feel that the provisions they will have to make will have a detrimental effect on the company. However legally, and ethically, I feel that it is important to make sure employees know where they stand and what options they have as parents. This could be in the form of a booklet or a section on the company intranet – as although the information may be found in the employee handbook, if there is just one dusty copy up on a shelf somewhere, employees becoming parents for the first time, or even those who are becoming a parent again but for the first time since legislation has moved on, may not have seen the relevant sections.
Retirement procedures (2)
February 11, 2009
Yesterday’s article looked at the first two parts of the statutory retirement procedures (part of the Age Discrimination Regulations 2006): which were 1) giving notice of retirement and 2) the right to request to work beyond retirement age. Here is an explanation of the final stages of the statutory retirement procedures:
Considering the request:
The duty to consider the request should basically follow the statutory dispute resolution procedures (which are due to change in April this year). A meeting should be arranged to discuss the request, (unless the employer immediately grants the request) followed by the employer’s decision and the employee’s right to appeal the decision. As with disciplinary and grievance procedures, individual companies’ retirement policies may state time limits within which meetings will be arranged and decisions given, or may simply state ‘within reasonable time’. The employee has the right to be accompanied by a colleague or trade union official at the meeting.
Further requests:
If a later retirement date is agreed, the company needs to go through the correct procedure again to automatically dismiss the employee at their new retirement date (i.e. at least six months notice) unless they have agreed an extension of six months or less. If the employee then wants to work beyond that date, they must go through the whole process again with a request to work beyond the agreed retirement age. This would be treated as a completely different request.
Procedural fairness:
As with other statutory procedures; failure to follow any parts of the above rules could lead to a ruling of automatically unfair dismissal in an Employment Tribunal. It is therefore in employers’ interests to know and understand their responsibilities under the legislation. As I always say, the best thing to do when dealing with a retirement is to consult your employment law advisor or ACAS in plenty of time.
Retirement procedures (1)
February 10, 2009
Yesterday I explained the background and implications of the Heyday case on the default retirement age in the UK. At the moment the Age Discrimination Regulations (2006) still apply, which means that a mandatory retirement age of 65 can still be used and it is lawful to dismiss for reason of retirement after 65, as long as the statutory procedure is followed. Here is an explanation of the current procedure:
Notice of a planned retirement:
The employee needs to be given at least 6 months notice of the intended retirement date – which will be after they have reached the age of 65. It is important to note that if an employee has a longer notice period in their contract of employment (unlikely but possible) then they will be entitled to the longer notice period as you are giving them notice of the termination of their employment.
Requests to work beyond retirement age:
The employee has a right to request to work beyond the intended retirement age, and the employer has a duty to consider this request. When an employer gives notice of the intended date of retirement, they must also inform the employee of their right to request to work longer. The employee should put this request in writing and should indicate whether they would like to continue working indefinitely or until a specified date.
Tomorrow’s article will continue to look at the statutory retirement procedures.
Heyday and the mandatory retirement age
February 9, 2009
If you work in HR or are an employer, you will probably have heard about the famous case relating to the default UK retirement age that has been made by Heyday, which is part of the charitable organisation Age Concern. Here is an explanation of the background to the case, and where it leaves UK employers at the moment:
What is the basis for the case?
The case was brought by Heyday to the High Court, to challenge the mandatory retirement age of 65 that the UK currently has. The mandatory retirement age forms part of the age discrimination regulations that came into force in October 2006, and means that at the moment employers can legally dismiss employees over the age of 65 by reason of retirement (without any other justification), as long as they follow the correct procedure. The mandatory retirement age is due to be reviewed in 2011 but the case brought by Heyday is bringing the question of whether this aspect of the UK law complies with the Equal Treatment Framework Directive (EU Law) forward. The question is to do with the interpretation of the European Directive – and Heyday is arguing that the Directive has been incorrectly interpreted by the UK government when the age discrimination regulations were implemented. Heyday argues that it is against the principle of age discrimination to allow employers to dismiss employees simply because of their age.
What has happened so far?
In July 2008 the High Court referred the question of whether the mandatory retirement age is lawful to the European Court of Justice (ECJ). In September 2008 the Advocate-General, who is responsible for making recommendations to the ECJ on these sorts of rulings, gave his opinion, and it was not good news for Heyday. The Advocate-General said that whilst he agreed that the retirement provisions as stated in the UK age discrimination regulations do fall under the Equal Treatment Framework, he did not think that the Directive prevents EU states from introducing a mandatory retirement age. Whilst this is not a binding decision, around 80% of past ECJ decisions have gone the same way as the Advocate-General, so it is quite a telling opinion. The ECJ is due to make its decision this year, and there are around 260 cases in the UK that are waiting for the outcome before they can be decided.
What should employers do for the time being?
At the moment, employers can still dismiss employees after the age of 65 by reason of retirement, as long as they follow the statutory procedure and as long as they are a private sector company. The rules relating to public sector employers are different and they cannot necessarily automatically dismiss by reason of redundancy after the age of 65. This is because of the principle of ‘direct effect’ which means that EU rulings apply directly to the public sector, whereas the private sector continues to rely on UK regulations until they are changed or removed. So if the ECJ finds the UK regulations are incompatible with the Directive, public sector employers will have to immediately change their procedures. Employers need to keep their eye out for the ruling as this may affect their policies and procedures if it means a change to the UK regulations.
ECJ ruling ends dispute over holidays on long term sick
February 3, 2009
The European Court of Justice (ECJ) made a ruling at the end of last month that will end years of debate over whether staff who are on long term sickness absence should continue to accrue holidays and then be entitled to them at the end of their sick leave.
The right to a minimum amount of paid leave (which will increase to 20 days plus bank holidays in April) is part of the Working Time Directive (1998), and the ECJ ruling found that this right remains even when the employee has been absent through sickness for a long time:
“A worker does not lose his right to paid annual leave which he has been unable to exercise because of sickness. He must be compensated for his annual leave not taken”
This news has been taken badly by many employers and business groups, because of the added expense this ruling is likely to mean, especially in the current economic circumstances. It means that an employee will be entitled to take the accrued annual leave after the end of their sick leave, no matter how long this period is – which will mean issues with providing cover for extended leave requests and effectively integrating the employee back into work. In many cases employees on long term sickness absence do not return to work at all, and in this case the employee would be entitled to a lump sum payment of their outstanding accrued holidays when their employment is eventually terminated.
What this means for HR departments is that they will need to review their policies and handbooks to ensure the new rules are incorporated into the wording. Many current policies will give a maximum length of sick leave during which an employee may accrue annual leave (e.g. 6 or 12 months) and this will therefore need to be taken out. Many companies have a policy that states that employees on long term sick will continue to accrue the statutory minimum amount of holidays, but will not be entitled to accrue their additional company holidays (if they have an enhanced number of days) after a certain period. It is my understanding that this type of policy will still be legal after the ECJ ruling – as long as the employee accrues the legal minimum amount of holidays whilst they are on long term sick. It might therefore be prudent to add this into the policy when changing it, so that the company is not liable to pay even more annual leave that has been accrued by the employee if they are entitled to an enhanced amount of days when they are in work.
Heavy snowfall affects UK businesses
February 2, 2009
Today has seen the heaviest snowfall in 18 years across the South East of England, and many other areas have also been affected by the severe weather. This has caused major delays to many road and rail networks, meaning a lot of workers could not get to work this morning. The first I heard about this is when a friend of mine who lives in London called me first thing this morning to gleefully announce that she was heading back to bed after not being able to get to work on the tube, bus or train! London is said to be the worst affected for travelling as this is where the transport network is most concentrated. Tonight the weather is due to turn very icy, with some areas reaching lows of minus 7 degrees, so it looks like there will be further travel chaos for commuters tomorrow. Commuters are warned to take extreme care when driving as not all roads have been gritted properly and so car tyres may not grip the roads. I’ve actually seen a few minor road accidents in the last few weeks caused by icy driving conditions.
Whilst I wasn’t affected too badly by the snow, I did have to stay at home today due to unforeseen carer leave. However this wasn’t a problem for me because I have a laptop and have recently gained home access to the work computer network and my emails, via a virtual private network (vpn). I’ve actually managed to have a very productive day at home! However this isn’t the norm where I work, and the issues with the weather today have made me realise that we don’t have suitable contingencies for when staff cannot get to work or have to go home early (as we had today)to avoid impending bad weather.
Flexible working options such as home working are seen as a great benefit to employees and are often part of employers’ recruitment and retention strategies, but what’s happened today shows that good facilities for home working can also be a great help to companies when alternatives to employees being in work are needed. Many businesses today will have suffered from a massive amount of down time with employees not being able to get to work, such as the company where my friend in London works. Flexible working plans can help to ensure no loss of productivity when circumstances impede normal working situations.
Let me know if your company has been affected by the weather, and what measures (or lack of them) were in place to cope with the loss of working time.
Making sure data is secure
January 13, 2009
A friend of mine recently had a complete nightmare with lost information. The server that all the company information was stored on was stolen in a burglary and unfortunately the backup drive that was used to take backups of the data was still plugged into the server! All the company information was completely lost.
For my friend, who is a HR Officer, this meant that all staff information was gone; she had no idea of people’s holidays that they had taken, absence records, policy documents, staff correspondence, and the employee database had gone. It has taken a long time to try to re-create all the files that have been lost, and some information will never be replaced. Fortunately because a lot of HR paperwork needs to be signed, they had a lot of employees’ documents in hard copy in a filing cabinet, but the whole episode has been extremely difficult to deal with.
Data security is such an important matter for any business, and in HR the loss of information could have major repercussions, especially if the information lost could be needed for things like disciplinary and dismissal decisions. There is also the question of data protection and the fact that personal information is now somewhere outside the company.
Ensuring data is secure and regular backups are taken should be part of company policies and procedures, with responsibilities for day to day back ups for employees, and key requirements for server backups on job descriptions for relevant personnel, such as IT Managers.
Another option, rather than having in-house data backup systems, which is subject to human error, is to use online backup services from companies that manage your data security for you. These services can be described as disaster recovery (i.e. recovering all data after hardware is lost, e.g. in a fire or theft) or business continuity (which includes automatically saving changed documents as new versions so that you can keep a record of the progression/change history of a document).
These options are now being used by many companies that want to avoid the kind of problems that my friend experienced through a human mistake, which can happen to anyone, as we know from the countless episodes of lost Government data that happened last year.
Unfair Dismissal (3)
December 29, 2008
This is the third and final post in a series on unfair dismissal. So far I have covered employees’ eligibility to claim, what dismissal is, and the fair reasons for dismissal. This post looks at the way the employer acted in dismissing the employee.
4. Has the employer acted reasonably?
After the dismissal has been found to be for one of the fair reasons, the tribunal will look at how reasonably, or fairly the employer has acted in dismissing the employee. This assessment takes into account the size and administrative resources of the company, and also the process followed. The courts take into account the ACAS Code of Practice on dismissals, even though the Code is not actually part of the legislation, so this is a good place to start when carrying out a dismissal. The Code is based on the Statutory Dispute Resolution Regulations 2004, and as it stands currently, an employer that has not followed the basic statutory procedure will be found to have automatically unfairly dismissed the employee. The basic procedure follows three steps:
Step 1: Statement
The employer should write to the employee notifying them of the issues and invite them to a meeting (with adequate notice) to discuss.
The Employment Relations Act (ERA) 1999 gives employees the right to be accompanied by a Trade Union Official or colleague at dismissal hearings, and the employer should notify the employee of this right in the written invitation.
Step 2: The meeting
The employee must be given the opportunity to state his/her case, which needs to be considered prior to the decision to dismiss or not.
Step 3: The appeal
Employees have a right to appeal against a dismissal, and the employer must notify the employee of this right when giving the decision to dismiss. If the employee appeals, the employer must invite the employee to attend a further meeting (at which the employee has a right to be accompanied), then must inform him/her of the final decision.
In April 2009 the Statutory Dispute Resolution Regulations will be repealed, and a new ACAS Code of Conduct will be introduced. Employers will need to review and change their procedures, and people that are involved in dispute resolution procedures (disciplinaries, dismissals and grievances) should be re-trained on the correct process to follow.
Dismissal is a complicated and lengthy process. The information in the last few blog posts gives you an overview of the considerations an employment tribunal would make when dealing with an unfair dismissal claim, but unless you’re extremely experienced, it is advisable to seek legal advice before acting in any potential dismissal situation.
Unfair Dismissal (2)
December 28, 2008
Yesterday’s post introduced the concept of unfair dismissal, and the first factor to consider, which is whether the employee qualifies to claim. The next two factors to consider are has a dismissal actually taken place, and what is the reason for the dismissal?
2. Has a dismissal taken place?
You’d think this was fairly obvious, but not always. There have been cases where an employer claims that the employee has resigned, and the employee claims they have been dismissed. The onus of proof is on the employee in this dispute. In certain extreme circumstances, a radical variation of the employment contract could actually be classed as a dismissal. There is also constructive dismissal – this is where an employee leaves the company because they are forced to do so because of the conduct of the employer. The conduct needs to be quite serious to entitle the employee to leave and claim constructive dismissal. Lots of things might lead to a constructive dismissal, for example asking an employee to do something inappropriate (e.g. discriminatory) or a breach of contract.
3. What is the reason for dismissal?
Whether a dismissal is fair basically relates to two things: what the reason was for the dismissal, and how the dismissal was carried out.
There are lots of automatically unfair reasons for dismissal, including for carrying out the duties of a health and safety representative, participation in protected industrial action, the assertion of a statutory right (e.g. the right to be accompanied at a disciplinary or grievance hearing), and many more.
The possible fair reasons for dismissal are:
Capability or qualifications: this could relate to the employee’s skills, academic achievements or health.
Conduct: this is the behaviour of the employee at work
Redundancy: the legal definition of a redundancy is where there is a reduction or cessation of work, or a cessation of business (like many of the companies that have gone into administration recently) or a cessation of business at a particular site.
Retirement: this is closely linked to the age discrimination legislation, and a key decision on the fairness of an automatic retirement age is soon to be made by the European Court of Justice.
Contravention of a statutory duty: this means that the employer is not legally able to employ the employee, for example a person who has not been granted leave to enter or stay in the UK.
Some other substantial reason: this reason allows the courts to accept a dismissal that appears not to fall into the other categories, but that they deem to be reasonable.
The next post will look at the way the employer has carried out the dismissal.