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Employer not obliged to pay compensation if employee breaches warranty

The High Court has held that an employer does not have to pay compensation under a compromise agreement where the employee is in breach of a warranty contained within the agreement.

In Collidge v Freeport plc, Mr Collidge, the claimant, was the founder and chief executive of Freeport.  After allegations about Mr Collidge were considered by the Board, the parties entered into a compromise agreement. 

Under the terms of the agreement, Freeport was obliged to pay compensation to Mr Collidge subject to and conditional upon a number of warranties. One of the warranties required Mr Collidge to warrant that there were no circumstances of which he was aware, or of which he ought to be aware, which would constitute a repudiatory breach by him of his contract of employment, which would entitle or would have entitled Freeport to terminate his contract without notice (i.e. summarily). Before Freeport made a payment to Mr Collidge under the compromise agreement, matters came to light which indicated that Mr Collidge was in breach of this warranty.  Freeport refused to make the payment and Mr Collidge brought a claim for breach of contract.

The High Court confirmed that Freeport was not obliged to pay the settlement monies. Its obligation to pay was conditional upon the statements contained in the warranty being true.  There were held to be numerous circumstances of which Mr Collidge was aware which would have entitled Freeport to terminate his employment without notice. It followed that Freeport was under no obligation to pay the monies to Mr Collidge.

Time extension based on belief that procedure is being followed

Under the statutory dispute resolution procedures, if, at the time the limitation period for a claim expires, an employee believes that a procedure is being followed, statutory or otherwise, the time limit for presenting that claim will be extended by 3 months.

In Harris v Towergate London Market Ltd, an employee was dismissed by her employer on the grounds of redundancy. She subsequently attended a meeting with management and her trade union representative to raise her concerns about the method of assessment and pool for selection. The employee failed to appeal her dismissal for redundancy under the company procedure, but after her employment ended, she submitted a 'grievance' letter to the employer concerning her selection for redundancy. She then issued a claim in the tribunal for unfair dismissal. The claim was out of time and she sought the benefit of the 3 month extension under the statutory dispute resolution procedures.

The Employment Appeal Tribunal (EAT) commented that the approach taken by the tribunal at first instance was flawed, as it focused on whether there was an appeal against the employer's decision to dismiss when considering whether the 3 month extension applied. This departed from the statutory test under the dispute resolution regulations. Under these regulations, if an employee presents a complaint to the tribunal after the expiry of the normal time limit, but has reasonable grounds for believing when that time limit expired, that 'a dismissal or disciplinary procedure, whether statutory or otherwise' was being followed, the time limit for presenting that complaint is extended by 3 months.

The EAT examined the type of procedure that the employee would need to believe was being followed to take advantage of the extension. It noted that the phrase was not so wide so as to include any procedure: it must be a dismissal procedure, that is a procedure capable of being utilised by a person who is or is about to be dismissed. The procedure must involve some sort of formality. Logically, a step in the procedure following a dismissal is an appeal against the dismissal. But it does not exclude a more general procedure between the parties, aimed at resolving a dispute over a dismissal. In this case, the employee consulted her union because she wanted to challenge the dismissal. She referred to her 'entitlement' to a meeting and to being accompanied by her union representative in her 'grievance' letter, which pointed to her belief that there was a procedure to enable her to challenge the criteria. The employee therefore did believe that there was a procedure she could attach herself to, and could take advantage of the extension of time.

Consultation on annual leave - Government response

The Government has this week published its response to the consultation on 'Increasing the holiday entitlement'.

The Working Time Regulations 1998 currently entitle workers to 4 weeks' paid annual leave in each leave year. A worker who normally works 5 days per week will therefore be entitled to 5 x 4 = 20 days' paid annual leave.

An initial consultation was conducted in June-September 2006, with a view to increasing the statutory minimum annual holiday entitlement for a full-time worker from 20 to 28 days, to reflect the number of permanent bank holidays. On the basis of the responses to the initial consultation, the Government launched a further consultation in January this year and sought views on the draft regulations.

As a result of the last round of consultation, some changes have been made to the draft regulations, including:

• to delay of the introduction of the second increase from 4.8 to 5.6 weeks until 1 April 2009.  The Government's preferred approach in the January 2007 consultation had been to introduce half of the additional holiday entitlement from October 2007, and the remaining half from October 2008. On further consideration of the cost pressures, in particular for the health and social care sector, the Government intends to delay the second increase in holiday entitlement from 1 October 2008 until 1 April 2009. The initial increase will come into effect on 1 October 2007, as originally proposed.
  
  
• to enable payment in lieu of the additional holiday entitlement (the additional 0.8 weeks) to continue until 1 April 2009.  This is a temporary measure to help employers with transitional arrangements, such as recruiting and training any additional staff to cover the increased holiday entitlement.
  
  
• to provide an incentive for early compliance with the regulations, whereby employers that already meet the full requirements of the regulations as at 1 October 2007 (giving the equivalent of 28 days' holiday, without payment in lieu and any carryover for no more than one year) will be taken outside of the regulations, as long as they continue to meet those requirements.
  

Consultation on Single Equality Act - launched this week

The Government has issued a consultation paper outlining its proposals for amendments to the law and the creation of a Single Equality Act, to simplify and improve existing legislation to modernise discrimination law. The consultation closes on 4 September 2007.

The proposals have been developed as part of the Discrimination Law Review and, in the employment field, views are sought on a number of wide-ranging issues, including the following:

• whether to retain the existing requirement for a comparator in direct discrimination claims;
  
  
• whether there should be a single definition of disability discrimination;
  
  
• whether the definition of indirect discrimination should be harmonised;
  
  
• whether to broaden the concept of "reasonable adjustment" beyond disability discrimination; and
  
  
• promoting the use of alternative dispute resolution.
  

UK tops the developed nations for working longer hours

One quarter of UK employees work more than 48 hours a week, more than any other developed nation, according to a recent study published by the International Labour Office (ILO).

The study focuses on working time in over 50 countries, and explores the implications for working time policies in developing and transition countries.  The ILO estimates that one in five workers around the world - over 600 million persons - are still working more than 48 hours a week. Amongst developing countries, Peru topped the list for workers who put in more than 48 hours a week. In developed countries, the UK was followed by Israel, Australia, Switzerland and the USA for working excessive hours. 

The ILO says that the results of the study are worrying, but suggests a number of policy points to advance an improvement in working time. These include:

• reducing long working hours to lessen the risk of occupational injuries and illnesses, and their associated costs to workers, employers, and society as a whole;
  
  
• adopting family-friendly working time measures, such as flexi-time, emergency family leave and part-time work; and
  
  
• promoting the development of high quality part-time work.
  

Mental illness - second largest cause of sickness absence

Mental ill health is one of the largest causes of time lost due to sickness absence in the UK, second only to sickness absence caused by musculoskeletal conditions, according to a new report, 'New directions in managing employee absence' from CIPD and Active Health Partners.

The findings are drawn from an analysis of the real absence records of 30,000 employees working across 40 different organisations. The report highlights the huge impact that mental health problems have on the workplace, and provides the following statistics:

• each mental health related sickness absence lasts, on average, 21 days
  
  
• each absence due to depression lasts, on average, 30 days
  
  
• each absence due to stress lasts, on average, 21 days
  
  
• each absence due to anxiety lasts, on average, 21 days
  

The report also examines the impact of other factors e.g. age, gender and occupation, in identifying how long a person with a particular mental ill health condition may be absent from work. Of those absences as a result of mental health: 

• private sector employees were absent for an average of 20 days, compared to an average of 24 days in the public sector;
  
  
• men take on average 20 days, compared to 22 days for women; and
  
  
• employees up to the age of 25 were absent on average for 17 days, those aged between 25 and 54 were absent on average for 21 days, and those between 55 and 65 were absence on average for 36 days.
  

Project to protect vulnerable workers

The Trade and Industry Secretary Alistair Darling has outlined plans for a Vulnerable Worker Enforcement Forum, to bring together experts from unions, business, enforcement and advice bodies, to look at the best way to protect the vulnerable in the workforce.

The Forum will:

• consider evidence from unions, advice bodies, business groups and others about the problems faced by vulnerable workers, including migrant workers, to establish the nature and extent of abuse of workplace rights and legislation;
  
  
• consider whether these workplace abuses can be tackled effectively through existing enforcement and support mechanisms or whether improvements to existing mechanisms, or new approaches, are needed; and
  
  
• identify options for improving the effectiveness of the enforcement regime, and raising overall levels of compliance in ways which do not increase burdens for good employers.
  

Mr Darling also announced two pilot projects in Birmingham and London, which will last for two years, and identify ways that vulnerable workers and their employers can better understand their rights and access help, advice and information. 

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