LEVEL 6 - UNIT 19 PRACTICE OF EMPLOYMENT LAW SUGGESTED ANSWERS - JUNE 2012

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1 LEVEL 6 - UNIT 19 PRACTICE OF EMPLOYMENT LAW SUGGESTED ANSWERS - JUNE 2012 Note to Candidates and Tutors: The purpose of the suggested answers is to provide students and tutors with guidance as to the key points students should have included in their answers to the June 2012 examinations. The suggested answers set out a response that a good (merit/distinction) candidate would have provided. The suggested answers do not for all questions set out all the points which students may have included in their responses to the questions. Students will have received credit, where applicable, for other points not addressed by the suggested answers. Students and tutors should review the suggested answers in conjunction with the question papers and the Chief Examiners reports which provide feedback on student performance in the examination. Question 1 (a) The first thing to note in considering the validity of a restrictive covenant in a contract of employment is the way in which the clause is laid out. Regard should be had in the present situation that they are individual clauses and therefore use could be made of the blue pencil test if required. In the context of the individual clauses the court will consider the reasonableness of a restrictive covenant (in terms of the parties and the public) and the extent to which the restriction can be justified as a legitimate business requirement. Clearly if the drafted clauses do not meet the criteria they will be unenforceable and Jane Reeves will be able to ignore them. In deciding the reasonableness of a covenant the court will consider the amount of time the covenant is to be effective for and secondly the geographical area it will cover. It is not a hard and fast rule in relation to what will amount to a valid restraint; each case needs to be considered on its own facts. A good comparison is shown by the cases of Fitch v Dewes [1921] and Fellows v Fisher [1976]. The scope of the restraint will be based on such features as what the enterprise does, the position of the employee in the business, the role of the employee and the transferability of the skills the employee has. These and other factors will inform whether or not the restriction is reasonable. In the current situation clearly Jane Reeves is a key member of staff and has the ability through her customer contacts to seriously damage the viability of the salon by setting up in competition. In such circumstances the time aspect of three months and the geographical area of three miles is not excessive and though it cannot be ascertained definitely, is likely to be considered to be reasonable. Page 1 of 6

2 (b) By making Jane Reeves leave she has not been able to work her notice period. Regardless of how long she has worked at the salon she will be entitled to a minimum period of notice which she has not been given. If the contract of employment contains a clause providing for payment in lieu of notice (PILON) entitling the employer to pay a lump sum rather than working the statutory or contractual notice period, then there will be no breach of contract. On the other hand if there is no such clause or no payment is made this will be a breach of contract. If there is a breach of contract by failing to give appropriate notice then this will have an effect on the validity of the restrictive covenants in the contract of employment. A breach of the employment contract in such circumstances would mean that the covenants are unenforceable regardless of whether they would have been valid in other circumstances. (c) An appropriate clause would be: You shall not for a period of three months either on your own account or for any other person directly or indirectly endeavour to entice away from Hair 2day, any stylist or otherwise encourage any such stylist to breach her contract of employment. Question 2 (a) This is a difficult situation for Patrick Kerry to be placed in however, it should be stated from the very beginning that he will not be able to fairly dismiss Jenny Lin. Provided that she does not fall into one of the excluded categories e.g. the armed forces then she will be entitled to maternity leave like any other woman who is employed. As a consequence she will be entitled to up to 52 weeks (26 weeks Ordinary Maternity Leave and 26 weeks Additional Maternity Leave). The important point to note that it is not dependent upon how long Jenny Lin has worked for Patrick Kerry and secondly the reason why she was employed in the first place, in this case to cover maternity leave through a fixed term contract. Where a person is dismissed the usual rule requires a minimum amount of service before a claim can be made. Under s.108 Employment Rights Act 1996 there is no minimum required provided the principal reason for the dismissal was connected with pregnancy or maternity of the employee. Clearly the intentions of Patrick Kerry to dismiss her will mean that if he does so it will be easy for her to show that the principal reason was connected with her maternity. Therefore as Jenny will not be prevented from being able to make a claim the next issue will be the basis upon which such a claim will be made. Under s.99 Employment Rights Act 1996 a woman who is dismissed by reason of her pregnancy, childbirth or maternity leave or other pregnancy related reason is treated as having been unfairly dismissed. Consequently any dismissal by Patrick Kerry on this basis will have serious repercussions and he should be advised not to do so. (b) Firstly the employee should set out in writing the grievance. Once the employer has received the written grievance he will need to arrange a meeting to discuss the matter with the employee. The employee has the right to be accompanied at the meeting and although the Code does not require the employer to tell the employee of this right it is good practice to Page 2 of 6

3 do so. The right to be accompanied is restricted to colleagues or a trade union representative. At the meeting the employer will need to make a decision on what action to take as a consequence of the grievance. This of course will require the employer and the employee to discuss the issues and hopefully come to a consensual decision as to the way forward. The employer must allow the employee to take the matter further if it is not resolved. (c) The ACAS Code of Practice sets out five key elements of fairness and they need to be considered when undertaking a disciplinary procedure. The first element is that matters should be raised and dealt with promptly. In the current situation Patrick Kerry should not delay but ensure that he confronts the situation and begins investigating and arranging for a disciplinary meeting to take place. The employer should act consistently throughout the process and therefore it is advisable to have a written policy to ensure that all disciplinary procedures are dealt with in the same way. Patrick Kerry will need to carry out an investigation to ensure that Rachel Surtees is actually acting in a way which is inconsistent with her role at the hotel. At present he has only been told about what others have seen consequently he will need to talk to the witnesses in more detail and obviously hear what Rachel Surtees has to say on the matter. Rachel Surtees will need to be informed of the situation in writing and invited to attend a disciplinary meeting where she will be able to put her side of the case. Finally she will need to be informed that she is entitled to be accompanied to the meeting. She does not have to have anyone else come to the meeting with her but it is a requirement that Patrick Kerry inform her of this right. (d) To be able to apply for unfair dismissal to an Employment Tribunal will require several criteria to be met. Firstly, an individual must be an employee. We are informed that all staff at the hotel are directly employed by Patrick Kerry and therefore it should be assumed that Rachel Surtees is an employee. Under s.108 Employment Rights Act 1996 an applicant must be employed for a continuous period of 12 months (2 years April 2012). Rachel Surtees has been employed for four years and she does not fall within one of the excluded categories. It should also be noted that she is not working abroad. For a valid claim Rachel Surtees must bring the claim within 3 months of the dismissal, information supplied shows she has time to bring the claim. A dismissal must also have taken place. Under s.95(1) and s.95(2) of the Employment Rights Act 1996 termination by the employer, expiry of fixed term contract and constructive dismissal. In this situation the basis would be an express dismissal. In conclusion she would be able to make a claim for unfair dismissal. Question 3 (a) The appropriate way to deal with this matter is through the use of a compromise agreement as stated in s.203 Employment Rights Act To ensure that a compromise agreement is valid it must comply with the Page 3 of 6

4 requirements under s.203(3) Employment Rights Act The agreement must be in writing and must relate to a particular complaint that the employee has or may have. A key aspect of the agreement is the part played by an independent adviser. Such an agreement can only be made where the employee has received advice from a relevant independent adviser who has professional indemnity insurance. The adviser must be identified in the agreement and countersigned by them. Finally, the agreement must state the conditions regulating compromise agreements are satisfied. (b) Obviously if the appropriate procedures are followed any individual can be made redundant if a redundancy situation arises. The main issue here is whether or not a decision can be made in regard to Rodney Adams without him being able to claim unfair dismissal or discrimination. The main issue is that Rodney Adams has been chosen for redundancy because of his age. Age is a protected characteristic covered by the Equality Act 2010, specifically s.5(1). Under s.13(1) a person (A) discriminates against another (B) if, because of a protected characteristic, A treats B less favourably than A treats or would treat others. Under s.13(2) if the protected characteristic is age, A does not discriminate against B if A can show A s treatment of B to be a proportionate means of achieving a legitimate aim. Prima facie if Atom Haulage makes Rodney Adams redundant it will be committing direct discrimination on the basis of age discrimination. This will mean that he will be able to make a claim with technically unlimited damages. The burden of proof is upon the employer to show that the action taken is a proportionate means of achieving a legitimate aim. In the circumstances the reasoning that he will have to re-apply for his licence the following year will not be sufficient reason for a proportionate means of achieving a legitimate aim. Therefore it would not be wise decision to make Rodney Adams redundant due to the fact that he would in the circumstances be able to make a claim for direct discrimination. (c) It is important to decide whether or not the Regulations apply as if they do then it may have serious repercussions in relation to the remaining employees. Regulation 3(1)(a) Transfer of Undertaking (Protection of Employment) Regulations 2006 states that the Regulations apply where there is a transfer of an economic entity which retains its identity. A key aspect is deciding whether or not if Atom Haulage is bought it will be considered to be an economic entity. Regulation 3(2) defines an economic entity as an organised grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary. This definition has been built upon through the case of Spijkers (1986). Essentially a transfer of an undertaking involves the transfer from one person to another of an economic entity retaining its identity. There are a number of factors which need to be considered, some or all of which may apply. Firstly, the type of business or undertaking needs to be considered. The business is a haulier who has some warehousing capacity. The business is of a type which provides a service rather than a product. Page 4 of 6

5 It is also important to consider whether the assets, tangible or intangible, are transferred. In regard to the tangible assets there are likely to be a wide range of assets such as office equipment, etc. The main tangible asset will be the HGVs. The main intangible asset will be the goodwill of the business. Whether employees are taken over and whether customers are transferred is also important. In regard to whether the employees are taken over, this will be a matter of negotiation between the transferor and the transferee. The leaflet mentions existing contracts, if these continue this will be an important factor in deciding whether it is a transfer of an economic entity. Finally the degree of similarity between activities carried on before and after the transfer and the period, if any, for which those activities are suspended. Clearly here the expectation is that it will continue to act as a haulier. There is a degree of conjecture in respect of exactly what will be transferred in terms of assets, etc. There are a number of variables but it is likely that the transfer will be covered by TUPE. Question 4 (a) A relevant statement for section 5.1 would be: Having worked for the Respondent for the past four years I was unfairly dismissed on the 27 April I was diagnosed in late February 2012 with a mild form of depression which was as a direct result of the heavy workload placed upon me by Katherine Simmington, the managing director of the Respondent. I notified Katherine Simmington that I would not be able to work for four weeks on the advice of my doctor and that I would need to have a phased return on returning to work. She appeared concerned and told me that we would have a good chat on my return to work. On my return to work on the 9 April allowances were made and the phased return was going well. At no time before the 27 April was I given any indication that I would be dismissed. On the morning of the 27 April I was asked to go to Mrs Simmington s office for an informal chat by Nicola Danton, Mrs Simmington s secretary. On entering the office I was told by Katherine Simmington that she would like to do her bit for care in the community, but the business was suffering and that she would have to find someone else to take over my job. I was then told to leave and I was escorted from the premises by one of the security guards. At no point was I allowed to put my views to Katherine Simmington or any other member of staff at the Respondent s premises. Since I was unfairly dismissed I have had no further correspondence with my former employer or received any compensation for the loss of my job or lack of notice. (b) A Case Management Discussion (CMD) Agenda should be completed by each party as far as is possible and it should be agreed if at all possible. Such an Agenda will assist the Tribunal in holding the CMD. The Agenda should contain the following information: Page 5 of 6

6 Parties there are unlikely to be any issues in the current case. Such issues to be considered here include things such as whether there are any claims that should be considered together or separately. The employer is a company so no other parties to add, etc. The Claim and Response from the information provided there is unlikely to be any particular issues. Matters considered under this heading include whether or not there are any applications to amend the Claim. Remedy the Claimant is seeking compensation, will need to ensure that have prepared a schedule of loss. The Issues what are the issues for the Tribunal to decide? The main point here would be deciding whether the Claimant was unfairly dismissed. Preliminary Hearings considering whether further case management discussions are necessary or whether a pre-hearing review is required and what matters need to be considered. Documents and Expert Evidence Emphasis here on lists of documentation and exchange. Note should be made in respect of the dated the 17 April from Nicola Danton. May require expert evidence if Respondent believes the Claimant could no longer do her job because of her mental illness. Witnesses How many witnesses, will a witness order be required? Important witness in this case will be Rodney Ward. He may not wish to attend hence there may be the need for a witness order. The Hearing time estimates. There are no specifics here from the scenario but could consider for example request for hearing via electronic communication. Other Preparation there are a number of items which could fall under the agenda here for example whether there should be skeleton argument or any reasonable adjustments required. (c) Hearsay is a technical term which is evidence a witness gives about what someone else said. It is important that regard is had to what the evidence is being used to adduce, that is it is being used to persuade the Tribunal that what they said was true. Under r.14 Employment Tribunals (Constitution and Rules of Procedure) Rules 2004, providing it is appropriate to do so the Tribunal is not bound by any enactment or rule of law relating to the admissibility of evidence in proceedings before the courts. Therefore the basic rule is that the Tribunal can take any evidence into consideration, regardless of whether it is hearsay evidence or not, but it is for them to take into account what weight to give to it. Page 6 of 6