Questions and answers

The employment law team at Pinsent Curtis answer questions on workplace

Revised Tupe regulations

Q:  When will the new Tupe
regulations come in? What will they mean for people selling businesses and
outsourcing functions?

A:  The Acquired Rights
directive of 1977, on which Tupe is based, was revised in the summer of 1998
but the new rules do not have to be implemented until the summer of 2001.

At the moment, the consultation paper is about to be launched. It is
believed that this will clarify the rules for those involved in outsourcing to
make it clearer when Tupe will apply.

Furthermore, views will be sought on whether there should be an obligation
on a transferee to replicate pension rights.

Finally, there might also be a fast-track procedure to enable people to go
to an employment tribunal prior to a transaction in order to get a preliminary
(non-binding) opinion on whether the Tupe regulations might apply.

The aim therefore is certainty, but there are questions of such complexity,
particularly in the field of pensions, which may slow down the process until
the early part of 2001.

Dr John McMullen

Union representation rights

Q:  What rights will my
employees have to be represented at disciplinary hearings once the new trade
union legislation becomes law?

A:  The first point to note is
the use of the word ‘representation’. The new law does not create any right to
be represented at disciplinary hearings.

What is created is a right to be accompanied at disciplinary or grievance
hearings where the employee "reasonably requests" that. The person
accompanying the employee is referred to as a "single companion".

The single companion can be any of the employer’s workers or someone
employed as a trade union official whom the union has reasonably certified in
writing as having experience of, or as having received training in, acting as a
worker’s companion at disciplinary and grievance procedures.

The single companion is permitted to address the hearing but cannot answer
questions on the employee’s behalf. The single companion can confer with the
employee during the hearing. Thus the role of the single companion is in fact
quite limited.

Ancillary rights include rescheduling a disciplinary or grievance hearing if
the companion is not available at the chosen time and also to allow the
companion time off during working hours to accompany an employee at a
disciplinary or grievance hearing.

Martin Brewer

Out of office responsibility

Q:  We run an informal office
drinks every Friday evening at a pub next door to the office. On some occasions
recently this has got a little out of hand. Can the company be liable?

A:  Unfortunately yes. The
case of Chief Constable of the Lincolnshire Police v Stubbs, 1999, IRLR 81,
makes clear that an employer can be liable for the activities of its employees
outside of work.

On the facts in Stubbs, the EAT upheld a tribunal decision finding the Chief
Constable liable for inappropriate sexual behaviour which occurred at work
social gatherings; one at a leaving party and the other at an after work drink
at a nearby pub.

The EAT stated that, in appropriate circumstances, social events away from
work can be regarded as extensions of the workplace in which case an employer
can be liable.

The decision in Stubbs provides an illustration of the wide set of
circumstances where an employer can find itself liable for harassment or other
discriminatory behaviour towards its employees.

Another illustration of this came from the earlier case of Burton and Rhule
v De Vere Hotels, 1996, IRLR 596. (The "Bernard Manning" case.)

In this case the EAT held that an employer can be liable for the
discriminatory behaviour of a third party where that behaviour occurs in
circumstances in which the employer can control whether it happens or not.

Following these types of cases and increased publicity regarding harassment
and other discrimination claims employers would be well advised to ensure that
they have in place a proper equal opportunities/dignity at work policy making
clear what is unacceptable behaviour, that this policy is adequately
communicated to all employees and its effectiveness kept under constant review.

Employers should also consider the need for proper training for staff
regarding this issue.

This is particularly so following the recent case of Canniffe v East Riding
of Yorkshire Council, 2000, IRLR 555.

In this case the EAT, indicated that an employer has to pass through a
"difficult eye of the needle" to avoid vicarious liability for the
discriminatory acts of its employees.

In particular, when considering whether an employer can rely on the defence
that it has taken such steps as are reasonably practicable to prevent the
discriminatory behaviour, a tribunal must firstly identify whether the employer
took any steps to prevent the discriminatory behaviour and then, secondly,
whether there were any further steps which the employer should have taken.

The EAT indicated that this would necessarily involve looking at whether an
employer has a policy and whether this has been adequately disseminated to its employees.

The EAT also indicated, however, that this may be insufficient and that a
tribunal must go and consider whether any further steps should have been taken
on the facts of the case.

For example, the EAT suggested that it might be necessary for an employer to
do more if it has knowledge or suspicion that a particular employee, set of
employees or circumstances mean that unacceptable behaviour is a risk.

The practical lesson is that, in order to have any chance of avoiding
liability for harassment or other discriminatory acts, an employer will need to
have a proactive approach and constantly assess the effectiveness of its
policies and procedures in combating harassment and other forms of

Robert Mecrate-Butcher

Sickness discrimination

Q:  Is it possible to fairly
dismiss a sick employee?

A:  A dismissal for a genuine
ill-health-related reason, on grounds of incapability and a dismissal for
malingering, on grounds of misconduct are possible under the Employment Rights
Act 1996.

However, whatever the circumstances, the employer must follow a fair
procedure and act reasonably to establish that the employee is either incapable
or guilty of misconduct. Failure to follow a proper procedure is likely to make
any dismissal unfair and will also be a breach of contract.

There is another potential pitfall in that the dismissal of an employee
whose incapacity amounts to a disability under the Disability Discrimination
Act 1995, may amount to unlawful discrimination.

The employer can avoid such a finding by establishing that the dismissal is
justified and that it had made any reasonable adjustments to the workplace to
remove any substantial disadvantage to the employee (Clark v TDG t/a Novacold,
1999, IRLR 318, CA.)

If the absent employee is entitled to receive or in receipt of PHI or
contractual sickness benefits, other issues arise.

Recent cases have determined that the existence of such benefits may in
certain circumstances create an implied term, making it unlawful for the
employer to dismiss where the effect would be to deprive the employee of the
benefit of the scheme (Aspden v Webbs Poultry and Meat Group (Holdings), 1996,
IRLR 521, HCQB).

There is, however, some comfort for the employer in that the existence of
these schemes will not prevent a dismissal in the event of gross misconduct by
the employee or where a potential redundancy situation arises. (Hill v General
Accident Fire & Life Assurance Corporation, 1998 IRLR 641, CS).

Ashley Norman

Pilon issues

Q:  Is it right that where the
contract of employment contains a Pilon provision, and the employer terminates
the contract without due notice, the employee becomes entitled to a payment to
reflect the entire notice period, regardless of the fact that the employee may
have mitigated his loss by finding alternative employment?

A:  As a matter of history, a
Pilon provision has been increasingly included in contracts to allow an
employer to terminate the employment immediately, pursuant to the Pilon
provision, thereby ensuring the ability to enforce any post-termination
restrictive covenants.

The downside of a Pilon provision became apparent in 1995 from the decision
reached in the case Abrahams v Performing Rights Society, and was revisited
recently in case of Cerberus Software v Rowley.

Cerberus were entitled to terminate the employment of Rowley on six months’
notice and the contract also provided that "the employer may make a
payment in lieu of notice".

In the Employment Appeal Tribunal Cerberus contended that this allowed it to
choose to break the contract by dismissing without notice and rely on Rowley’s
duty to mitigate his loss by seeking alternative work.

Not so, said the EAT. The EAT held that the employer had only two choices:
either terminate the contract on six months’ notice or, if it wanted the
employment to end immediately, to pay six months’ salary in lieu of notice.

This was the decision notwithstanding discretionary element of the Pilon

Employers therefore should carefully consider the benefit of a Pilon
provision (protection of covenants) as against the financial burden.

Chris Booth

References: obligations on employers

Q:  Are employers in any way
obligated to provide references for current and former employees?

A:  There is no general
obligation, either at common law or by statute, to provide a reference.
However, there may be a duty if:

– There is an express term in the contract of employment providing that a
reference must be given;

– The employer is in a business sector (such as financial services) where
the regulatory regime requires all new employers to take up references, and
existing and former employers to provide them;

– Possibly also if the employer is in a sector in which there is a
near-universal practice of providing a reference, and refusal to do so would
blight the prospects of the employee: the implied mutual obligation to maintain
the necessary relationship of trust and confidence is one of the most dynamic
principles of employment law, and it could now be extended to impose a
requirement for a reference in such cases;

– If the employee has made a complaint of discrimination (on grounds of
race, sex or disability). In such a case, to refuse to provide a reference
(against the grain of the usual practice of the employer) is likely to be held
to be victimisation, and therefore a fresh act of unlawful discrimination. This
is so, even though the employee will then be able to use the reference in
evidence for the purpose of the original discrimination complaint. (See Chief
Constable of West Yorkshire Police v Khan, Court of Appeal, 24 February 2000.)

Of course, if the employer does provide a reference then it must take
reasonable care to ensure the accuracy of all facts stated in it, and facts on
the basis of which any opinion adverse to the employee is expressed, and make
sure that not only are the facts accurate, but they are not presented in such a
way as to give a misleading overall impression to the person reading the reference.

Colin Goodier, Partner

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