Welcome to this months employment law update. We’re starting with a note for the wary (particularly those involved in collective changes): recent legal twists are catching out even the most experienced HR/IR professional. You can read more about the changes here.
We’re also looking at:
- Working time (sleeping and being on stand by)
- A new case that highlights the importance of having a written and signed agreement with an employee upon their termination
- An interesting equal pay case in Tesco v Element.
Termination Agreements in Evergreen Timber Frames v Harrington
It is commonplace to negotiate severance terms before an employee leaves employment due to redundancy. Discussions usually agree the sums to be paid and formal settlement agreements are signed to create a clean break between the parties.
The EAT has recently looked at a case where the parties had different ideas about what had been agreed, as well as what could be enforced.
In this case, H worked for the employer (FTE) as a manager. He was told he was at risk of redundancy and his severance terms were discussed over several months.
Before his dismissal, the employer wrote setting out the amounts that H would be paid on termination if he worked his notice and said they would like to ‘gift’ him a car.
H wrote back (via an appeal letter) accepting the gift of the car but querying the redundancy calculation and complaining that they had agreed in verbal discussions that the company would also give him a computer and a month’s pay as a bonus.
When the car was not transferred on termination, H then brought claims for breach of contract. The employment tribunal upheld part of his claim relating to the car, saying an agreement had been reached for its transfer as part of the severance package.
It had been offered in the employer’s letter and accepted in the employee’s appeal letter. They awarded him £8400, representing its value. The employer appealed.
The EAT agreed with the employer. Termination discussions often involve back and forth conversations about different elements of the overall package. Negotiations would become too complicated if it were possible to hive off and accept one part of a deal whilst rejecting or trying to improve on other parts of it.
In this case, the car was not a standalone promise but one part of a wider termination package. The employee’s letter of appeal was not acceptance of part of a deal but a counter-offer to improve the severance terms overall.
The matter was sent back to a fresh tribunal on another point (to decide whether there had been a deal struck at a previous meeting to transfer the car in return for doing specific work during the employee’s notice period).
This case highlights the importance of having a written and signed agreement with an employee upon their termination.
A settlement agreement is something both parties will negotiate and the departing employee is required to take independent legal advice the terms and effect of the agreement. However, a settlement agreement will also remove liability for certain claims and provide certainty, allowing the organisation to continue as normal with peace of mind.
If you have any questions relating to how to protect yourself before entering into such discussions or regarding settlement agreements, please contact one of our employment law team for advice. Or, you can take a look at the video below, where Claire runs through the questions we’re always asked about settlement agreements.
Equal Pay in Tesco v Element
Employers dread receiving a claim form citing claims which have no teeth and that are ‘fishing’ for more information. Often, these claims lack any merit at all.
However, in some cases, getting hard data and anecdotal evidence can be impossible for an employee, especially when it comes to closely guarded information about pay.
The EAT has recently looked at a request for supporting data in relation to an equal pay claim. This case sits against the backdrop of extensive mass equal pay litigation in recent times, originally in the public sector, for women in predominantly female roles who claim they do work of equal value to predominantly male roles within a business. Most recently, this mass litigation has moved into the private sector and supermarkets like Asda, Co-op and Sainsbury’s.
In Tesco v Element, a group of predominantly female employees who worked at Tesco stores brought equal pay claims citing male employee comparators who worked at Tesco distribution centres. They claimed they did work of equal value to the men who were paid more than them.
Little information was given about the comparators in the claim forms, saying they would be clarified after the disclosure of more information from Tesco.
The employment tribunal ordered Tesco to disclose more information, including how much the distribution centre employees were paid, the work they did, and potential ‘material factor’ defences for the difference in pay.
Tesco appealed, arguing this went too far and saying the employees were on a “fishing” expedition.
The EAT dismissed the appeal.
Employment tribunals have wide case management powers. The test is whether the disclosure is necessary to fairly dispose of the proceedings. The EAT noted that a claim must have some reasonable prospect of success and in this case the employees said they did work of equal value to comparators who got paid more.
That was enough for disclosure to be necessary to dispose of proceedings fairly. They said that where a claim clearly had no reasonable prospects – for example if a junior clerk tried to compare her work to that of senior managers – that might result in a refusal to order disclosure (because it wasn’t necessary to fairly dispose of the case) or even strike out of the claim.
The EAT said that the Tesco employees had not gone on a fishing expedition to find a claim, rather they had requested relevant information to narrow and clarify their existing claim.
This case seems to place an unfair burden on employers at a stage where the merits of a claim are often unclear.
However, both in big and small businesses, pay rates are often shrouded in mystery, something which the tribunal system is all too aware of.
This case shows that Tribunals will use their powers to order disclosure of comparator and pay information to allow the parties to be on an “equal footing” in relation to the facts about pay. It does not mean however, employers have to disclose in every case, only where there appears to be reasonable grounds for a claim.
Better to nip things in the bud before things get to court, if you can, but certainly take advice before you decide to disclose or withhold requested documentation. Vista can support with any pay audits and on how to address any potential equal pay issues identified based on its experience. Contact the team here.