Termination of employment

Supreme Court Extends Ability of Employees Working Overseas to Bring Claims in the UK

By Hazel Oliver

UKwithFlagOverlapII.jpgThe Supreme Court has handed down a significant ruling (PDF) on the ability of an employee who worked overseas to make a claim for unfair dismissal in the UK, in the case of Ravat v Halliburton Manufacturing and Services Ltd.

Background

The Employment Rights Act 1996 currently allows employees with more than one year's service to make a claim for unfair dismissal. This legislation does not contain any specific limit on territorial jurisdiction. However, previous cases have established that there must be some limits on the ability of an employee who works overseas to make a claim in the Employment Tribunal.

In the earlier decision of Lawson v Serco [2006] IRLR 289 in the House of Lords (the predecessor of the Supreme Court), Lord Hoffman identified three categories of employees who would fall within the jurisdiction of the Employment Tribunal:

  • employees working in Great Britain;
  • "peripatetic" employees, where the employee is based in Great Britain;
  • expatriate employees in "exceptional" cases.
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Supreme Court Ruling Limits Recovery of Breach of Contract Damages

By Hazel Oliver

Union Jack & Gavel.jpgThe UK's Supreme Court has handed down a major judgment (PDF) on damages for breach of an employment contract in the joined cases of Edwards v Chesterfield Royal Hospitals NHS Trust and Botham v Ministry of Defence. Both cases concerned whether a dismissed employee can claim damages arising from breach of a contractual disciplinary procedure.

Background

In the case of Johnson v Unisys Ltd [2001] IRLR 279, the House of Lords (predecessor of the Supreme Court) had ruled that an employee cannot recover compensation for the "manner of dismissal" by means of a breach of contract claim, but must instead bring an unfair dismissal claim in the Employment Tribunal where the statutory limit on compensation would apply. (This is the so-called "Johnson exclusion".) Subsequently, in Eastwood v Magnox Electric plc [2004] IRLR 733, the House of Lords clarified that a claim for an employer's breach of the implied duty of trust and confidence during a disciplinary process could be made where this breach was both prior to and independent of any later dismissal.

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Major Employment Law Shake-up Unveiled

By Richard Lister

Changes SignII.jpgThe UK Government has announced wide-ranging plans for what it claims to be "the most radical reform to the employment law system for decades". The proposals were set out by the Secretary of State for Business, Dr Vince Cable, in a speech to the EEF manufacturers' organization. Some of the measures had been previously floated but others were novel, including:

  • amending the UK's whistleblowing legislation so that complaints by employees about a breach of their own employment contract will no longer constitute a protected disclosure;
  • seeking views on introducing compensated no-fault dismissals for "micro employers" with fewer than ten employees;
  • simplifying and "slimming down" the processes required to carry out a fair dismissal, including potentially working with the conciliation service Acas to change their Code of Practice on Disciplinary and Grievance Procedures;
  • consolidating the myriad regulations relating to the national minimum wage; and
  • streamlining the current regulatory regime for the recruitment sector.
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The European Court of Human Rights Rules on the Limits of a Trade Union's Freedom of Expression

On 12 September 2011, the European Court of Human Rights (ECHR) in Strasbourg delivered its judgement in the case Palomo Sanchez and others v. Spain. In this judgement, the Court confirms the right to freedom of expression but takes the view that this right cannot be taken advantage of to harm others.

In this case, a number of deliverymen of a Spanish company sought to secure recognition of their social security protection. Therefore, they set up a trade union. They also brought several sets of proceedings against the company. In one of these proceedings, two independent deliverymen testified in favour of the company. The trade union reacted to this with a publication in its newsletter of a cartoon of a sexual nature featuring the two witnesses and the HR manager (the newsletter being distributed among the workers and posted in the company). Inside the newsletter, articles criticized the fact that those independent deliverymen had testified in favour of the company. Moreover, the language used was offensive. As a consequence, the company decided to dismiss for serious cause the trade union representatives who had distributed the newsletter.

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Green Light for Unfair Dismissal Reform and Tribunal Fees

By Richard Lister

LS Scales of JusticeII.jpgThe UK Government has confirmed that it will be increasing the qualifying period for claiming unfair dismissal from one to two years and introducing fees for bringing employment tribunal claims.

These were two of the most significant proposals contained in a consultation document on reforming employment tribunals and the resolution of workplace disputes, published by the Department for Business, Innovation & Skills (BIS) last January. At the Conservative Party conference on 3 October 2011, the Chancellor of the Exchequer, George Osborne, announced that both reforms are to be implemented. This pre-empted the Government's formal response to the consultation, which is expected shortly.

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Blue-collar Worker vs White-collar Worker: The Constitutional Court Requires the Legislator to Act

In a judgment of 7 July 2011 the Constitutional Court ruled that the legal provisions concerning the notice periods for blue-collar workers and concerning the so-called "carenz-day" for blue collar workers are contrary to the constitutional principle of equality. The Court gives the legislator two years time (until 8 July 2013 at the latest) to remedy this discrimination and to accomplish the harmonisation of the legal position of blue- and white-collar workers.

On 8 July 1993, the Constitutional Court ruled that the difference in treatment between blue-collar and white-collar workers which is purely based on the nature of the work, can hardly be considered as a distinction that is based on an objective and reasonable criterion. Therefore, it was up to the legislator to proceed, at least gradually, to a harmonisation of the legal position of blue- and white-collar workers.

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The Supreme Court Comes to a Final Verdict: A Protected Employee Can Waive His Entitlement to the Protection Indemnity

A (candidate-) employee representative can only be dismissed after following the procedures provided for by the Act of 19 March 1991 (dismissal for serious cause or for economic/technical reasons).

In the event of non-compliance with the procedures, the employee is entitled to a protection indemnity which varies from two to eight years of salary.

Can a (candidate-) employee representative waive his entitlement to the protection indemnity after his dismissal? The question has been the subject of controversy since the entry into force of the Act of 19 March 1991 twenty years ago. However, it appears from the case law following the social elections of 2008 that our five Belgian Labour Courts concur with the position that even though the protection is a matter of public order, the employee may validly waive his entitlement to the protection indemnity after his dismissal, since the legal provisions regarding this indemnity do not have a "public order" nature.

In a recently published decision of 16 May 2011, the Supreme Court has now fully confirmed this position. According to the Supreme Court, the fact that the protection against dismissal is a matter of public order the does not mean that rights resulting from this protection would also become matters of public order, making it impossible for the protected employee to waive his entitlement to these rights. As soon as it is established that the employer has not respected the dismissal procedure and that the employee has not requested his reintegration into the employer's company or this reintegration has been refused by the employer, the entitlement to the protection indemnity is finally acquired and the employee may consequently waive it. This decision is of course important in the framework of negotiated departure deals (e.g. early retirement pension). If a settlement agreement takes into account the conditions set out by the Supreme Court, it will be much more secure in the event of possible challenges.

Employment Must Terminate to Obtain Pension

Starting from 1 January 2011, in order to obtain a pension one must terminate current employment. Until the end of 2010, it was possible to obtain a pension without terminating employment. Now, the pension will not start to be paid until employment is terminated. Employees who have terminated their employment and who have started to receive pension payments may take up new employment, even with the same employer and their pensions will continue to be paid. Of course, the employer is under no obligation to take the employee back. Employees who were employed and simultaneously were receiving pension at the date when the new regulation came into force will retain the right to the pension until the end of September 2011. By that time they must terminate their employment, even for a short period of time, or the payment of their pension will be discontinued.

Work Stability Indemnity: Not Submitted to Social Security Contributions

Certain collective bargaining agreements compel the employer to follow a specific procedure when dismissing an employee. In general, an employer's failure to respect such procedure entitles the employee to a so-called work stability (or security) indemnity.

In accordance with social security regulations, such indemnity is excluded from the remuneration submitted to social security contributions since it is "an indemnity due in the event of non-respect by the employer of his legal, contractual or statutory obligations."

However the National Social Security Office (NOSS) presents a contrary opinion in its 'Instructions to employers.'

In its judgment of 10 May 2010, the Brussels Labour Court of Appeals invalidated the position of the NOSS concerning an indemnity provided for in the insurance industry (collective bargaining agreement of 8 November 1987). The court thus confirmed that social security contributions were not due on these indemnities.

This case-law can also be applied to other industry sectors or companies where collective bargaining agreements contain similar work stability clauses.

Indemnity for Unfair Dismissal of Blue-Collar Workers: The Supreme Court Requires More In-Depth Examination of Cases

Article 63 of the Act on Employment Contracts states that, when the termination of the employment contract of a blue-collar worker is not justified by the worker's abilities or behaviour or when it is not based on the company's operational needs, the worker is entitled to a lump-sum indemnity for unfair dismissal.

It has generally been considered that Article 63 compensates blue-collar workers for the fact that their notice periods are shorter than those for white-collar employees.

Up to now, Courts have usually applied this provision strictly and excluded the possibility to consider a dismissal of a blue-collar worker as unfair as soon as the termination of employment was linked to the employee's behaviour, that behaviour being wrongful or not. Generally, Courts have not examined the reasons which have led the employer to terminate the employment contract.

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