#15479 - Unfair Dismissal And Redundancy Remedies - Employment Law

Unfair Dismissal & Redundancy Remedies

• Unfair dismissal remedies:

  • Compensation (basic & compensatory) - If there is a breach of the ACAS Code, compensatory award can be increased by up to 25%.

    • Basic: [AGE FACTOR] x [SERVICE] x [WEEK’S PAY] - s.119 ERA

      • Age factor: SUBJECT TO MAXIMUM OF 20 YEARS. WEEKLY GROSS SALARY SUBJECT TO STATUTORY MAXIMUM

Weekly Pay = [Monthly salary] x 12 / 52.

• Reductions:

  1. Employee's conduct contributed to dismissal (s.122(2) ERA)

  2. Otherwise just and equitable to reduce

  3. Employee acted unreasonably in refusing an offer of reinstatement (s.122(1) ERA)

  4. Redundancy = redundancy payment deducted from award.

• Compensatory: s.123 ERA. Actual loss subject to STATUTORY MAXIMUM.

  • Limit = lower of one year’s gross pay or the current maximum

  • In some cases there is no cap.

  • Norton Tool Principles: ET must state reasons for award albeit award need not be precisely or arithmetically related to loss:

    1. Immediate loss of net wages

    2. Future loss of wages (broad brush approach)

    3. Loss of fringe benefits (immediate and future)

    4. Loss of pension rights (difficult to establish)

    5. Loss of statutory protection (250-350)

    6. Expenses of looking for new work (can even cover cost of moving house to take up new job)

  • Adjustments: (1) payments already received, (2) sums earned since dismissal - mitigation of loss, (3) Polkey reduction - dismissal would have occurred anyway, (4) ACAS adjustments - 25% reduction, (5) increase if failure to provide written particulars - s.38 EA 2002, (6) contributory fault - s.123(6) ERA, (7) deduct enhanced redundancy payment above basic award, (8) statutory maximum.

• Polkey v Dayton Services: absolute right to be consulted before dismissal, even if consultation would make no difference.

• Reinstatement - s.144 ERA: consider practicability, if just & effect on business.

  • Disregard replacement unless necessary & employer waited a reasonable time and not heard from employee.

• Re-engagement - s.115 ERA: same criteria as reinstatement

• Additional awards: employer's unreasonable refusal = s.117 ERA, an award of 26-52 weeks’ gross pay (subject to statutory maximum)

• Statutory Redundancy Payments: s.135 = all qualifying employees entitled.

  • If employer insolvent, can claim from National Insurance Fund

  • Pre-conditions:

    1. Employee

    2. Continuously employer for 2 years prior to EDT

    3. Dismissed due to redundancy

    4. Claims within 6 months of 'relevant date' (usually EDT)

    5. Not excluded

    6. Has not unreasonably refused suitable alternative employment

  • Most employers pay voluntarily under contract, if not:

    • Claim to Tribunal (commence within six months of EDT - s.164 ERA)

    • Claim to employer by written notice

  • If redundant due to automatically unfair reason OR not fair in all circumstances = unfair dismissal claim.

  • Calculation = s.162 ERA (same as for basic award)

• Redundancy Remedies

  • Wrongful dismissal

  • Statutory redundancy payment

  • Unfair dismissal

  • Protective award (collective consultation not correctly carried out)

• Commencing proceedings and ACAS:

  • Employment Tribunals Regulations 2013

    • Use form ET1

    • 3 month time limit (exceptions: statutory redundancy payments & equal pay claims = 6 months)

    • ACAS mandatory early conciliation procedure ('stop the clock')

      1. Send ACAS prescribed information in prescribed manner

      2. ACAS send copy to conciliation officer

      3. Officer tries to promote settlement within prescribed period (1 month - can be extended by up to two weeks)

      4. If settlement not reached, officer must issue a certificate to be attached to the ET1.

• When the claimant receives the certificate from ACAS with less than one month of the time limit still to go (or in fact if it has expired), they will nevertheless have a whole month from the day they receive the certificate from ACAS, in which to submit their ET1.

• Lodge at Tribunal Office and online (allocate to nearest Tribunal Office to claimant's place of work)

• Tribunal Office will send a copy of ET1 to the employer, together with a covering letter (the ET2) and a blank form ET3 for the employer’s response

• Calculating time limit:

  • EDT ---> + 3 months (or 6 months) = deadline to claim (take last date in month if no corresponding day)

  • Go back one day (unless calculating restart of clock after ACAS)

  • Add on early conciliation period

    • From the day after the claimant has contacted ACAS to the day they receive the certificate from ACAS inclusive.

• Extending time limits:

  • First class post = CPR 6 rules apply (deemed service on second clear day after posting)

  • 'Not reasonably practicable' to present complaint within the time limit extension of time test - e.g. where post unexpectedly delayed or claimant seriously ill (q of fact) applies to:

    • Unfair dismissal

    • Unlawful deduction from wages

    • Breach of contract

    • Claims under ERelA 1999

    • Claims under TUPE 2006

    • Claims under Part-Time Workers Regs 2000

  • 'Just and equitable' test for extension of time (greater discretion):

    • Discrimination

    • Statutory redundancy (6 months extended by a further 6 months)

• Fees: for submitting ET1

  • Type A claims: unlawful deduction from wages, breach of contract, redundancy payments, lack of written statements of reasons for dismissal.

    • 160

  • Type B claims: unfair dismissal, discrimination, whistleblowing claims.

    • 250 (applies if mixture of type A and B claims)

  • Benefits/low income = remission

  • Hearing fee (Type A: 230, Type B: 950)

• Response by Respondent - ET3

  • Complete and return within 28 days from date Tribunal sends it.

  • Date when the copy of the claim was sent is taken to be the date on the covering letter from the Tribunal.

  • State:

    1. Full name and address

    2. Whether intends to resist

    3. Grounds for resisting, giving sufficient particulars

• Conciliation after proceedings issued

  • If parties agree or conciliation officer considers reasonable prospect of settlement

  • Even where early conciliation failed to settle.

The Employment Tribunal

• Power to refuse a claim if it does not contain certain required info, no fee, or not capable of being "sensibly responded to".

• Judgement in default if no ET3 submitted.

• Sift stage: decide whether to dismiss where no arguable complaints/defences or for lack of jurisdiction.

• Preliminary hearings (NB. Optional Judicial Assessment)

• Disclosure - closely follow the Civil Procedure Rules (can apply for specific disclosure)

• Further particulars (where needed, either party can apply for order).

• Witness statements (taken as read at hearings - must now be available for public inspection + witnesses must attend)

• Hearing: at least 14 days’ notice of the date, time and place for the hearing

• Strike out where no reasonable prospect of success - EJ may require a deposit before a party with little reasonable prospect to continue.

• Costs: (no general rule) if C successful, respondent will be ordered to reimburse any Tribunal fees paid by the claimant + potential penalties.

• Funding: Legal Aid only available in discrimination cases.

• Appeal: within 42 days from the date the document recording the decision was sent to the parties

Settlements

• Right of employee to pursue claim in Tribunal cannot be excluded.

  • Except:

    1. Where formal settlement agreement fulfilling s.203 ERA:

       1. In writing

       2. Relate to particular proceedings/specific claim

       3. Identify named, relevant independent advisor from whom employee has received advice (esp. re ability to pursue claim in Tribunal)

       4. State that the advisor is covered by professional indemnity insurance

       5. State above conditions are satisfied

If not fulfilled, will be able to bring statutory claims to tribunal but may still be barred from bringing contractual claims.

2. Where an ACAS conciliation officer has taken action under s.18 Employment Tribunals Act 1996, normally involving a COT3 form of settlement.

• s.111A ERA: pre-termination settlement negotiations inadmissible in normal UD claims unless there has been improper behaviour (but are admissible in automatic UD claims, WD and discrimination claims)

Tax issues

• Genuine compensation for loss of office = tax free up to 30,000 (total value of package)

• Contractual payment = subject to tax

• Payments for agreeing to a restrictive covenant (whether enforceable or not) are liable to income tax (ITEPA s.225) so any consideration for entering into/restating restrictive covenants cannot fall within the 30,000 tax free band.