Employment law problem question and answer on scenarios including job termination, sick pay and reviews.

Question

Peter started work at The Beach House, a five star restaurant in Oxford, in November 2007 as a waiter. He was good at his job and was rapidly promoted to become the senior waiter.

The Beach House prided itself on providing a healthy working environment for its employees, however in the spring of 2014 there was a shortage of competent waiting staff and Peter became very stressed due to overwork. The working relation was not helped by a difficult relationship with the restaurant manager, Mr Rico. Peter developed stress-induced eczema and took six weeks unpaid leave to visit his parents in Germany.

On his return his difficulties continued. He burnt his hand whilst serving a customer and was off for three weeks but received no sick pay. Peter repeatedly asked Mr Rico about it but he refused to authorise it.

Company policy required a six month appraisal for each employee. Peter has not had one for the last two years. Whenever he asked Mr Rico about it he was always met with excuses.

At the beginning of December 2014, during a busy shift, Peter removed a pre-purchased but unopened bottle of wine from a table which had just been vacated by a party of diners and took it to the kitchen. He was confronted by the assistant manager and told that he should have obtained permission to do this and received a written warning about his conduct.

At the end of January 2015 Peter was confronted by Mr Rico when eating food from the metal cooking tray he was taking to the washing up station in the kitchen. He was told that it was a new rule that staff were not to eat in the kitchen during working hours. Peter lost his temper and using a few choice expletives, shouted that he had not been told about the new rules and anyway other staff had eaten food during work time and had not been reprimanded.

Peter was sent home immediately. The next day he received a phone call from Mr Rico telling him not to come back to work as he was being dismissed for gross misconduct.

Advise Peter on whether he can bring any claims against his employer and what remedies he would be entitled to if successful.

Answer

Peter, a former Senior Waiter at The Beach House ("BH"), requires advice on claims he could bring against BH, and the remedies he would be entitled to, if successful. Peter's employment commenced in November 2007. He was summarily dismissed at the end of January 2015 for gross misconduct.

Qualification on period of employment

As will be shown below, Peter's period of employment affects the claims he is entitled to bring in the Employment Tribunal. It also affects the amount he is entitled to recover in remedy in both the Tribunal and civil courts. Factors affecting his period of employment will therefore be discussed at the outset.

Section 212 (1) Employment Rights Act 1996 ("ERA") states "any week during the whole or part of which an employee's relations with his employer are covered by a contract of employment counts in computing the employee's period of employment".

In Spring 2014, Peter developed stress-induced eczema due to over work and took six-weeks unpaid leave to visit his parents in Germany. He also had three-weeks leave following an injury at work where he burnt his hand.

Section 212(3) (a) ERA states that time in which an employee is incapable of work in consequence of sickness or injury, is covered by the contract of employment. In Pearson v Kent County Council[1] the Court of Appeal upheld the necessity of there being a medical reason for incapacity to work, during the leave period in question. If Peter can provide medical evidence of his incapacity to work on these two leave occasions, his period of employment will not be affected. Peter's three-week leave due to the injury to his hand would have incapacitated him for work as a Senior Waiter and would not break his period of employment. His six-week leave following developing stress-induced eczema is less clear.

Section 212(3) (c) ERA states that absence from work in circumstances where it is agreed "by arrangement or custom" that the contract of employment will continue, will be considered as periods "covered by the contract of employment". It was held in the case of Booth v United States of America[2] that such an arrangement requires advanced agreement between the parties that the continuity of employment would not be broken by the leave. In the absence of agreement or relevant medical evidence, Peter's six-weeks unpaid leave in Spring 2014 breaks his continuity of employment. His employment period calculation would start from nil in Spring 2014, on his return to work.

Unfair Dismissal

S 94 (1) ERA gives employees with the requisite two-year period of employment[3] the right not to be unfairly dismissed. If broken by his six-week unpaid leave, Peter would have less than two-years employment by the date of his dismissal in January 2015 and lose the right to bring an unfair dismissal complaint. Peter does otherwise have strong grounds for a claim.

Section 98 (1) ERA states that "it is for the employer to show the reason...for the dismissal, and that it is either a reason falling within subsection (2) or some other substantial reason...". With regard to this, Iceland Frozen Foods Ltd v Jones [4] established the concept of the band of reasonable responses. Justice Browne-Wilkinson stated that the Tribunal is to "determine whether in the particular circumstances of each case the decision to dismiss the employee fell within the band of reasonable responses which a reasonable employer might have adopted"[5]. Under s98(2)(b) "conduct" is a potentially fair reason. However, the reasonableness of the decision to dismiss based on Peter's alleged conduct is questionable.

In Laws v London Chronicle (Indicator Newspapers) Ltd [6] Lord Evershed describes gross misconduct as "wilful disobedience". This requires knowledge of the wrongful conduct and intention to act regardless. Peter says he was not aware of the new rule forbidding eating in the kitchen during work hours. In the absence of knowledge, dismissal for this conduct would not fall within the band of reasonable responses.

In Wilson v Racher[7] an employee was summarily dismissed for using obscene language towards his employer. However, the employee's conduct did not amount to gross misconduct because the swearing was a one-off incident, in the context of aggravated circumstances. These facts are similar to Peter's. He had a difficult working relationship with the restaurant manager Mr Rico and his use of "choice expletives" was in an aggravated situation. Dismissal for this particular conduct is likely to be too harsh and not within the band of reasonable responses.

In Auguste Noel v Curtis[8], the EAT found that the substance of previous warnings and the number of them can be relevant to considering an employee's conduct and the decision to dismiss. Peter had received a written warning from the assistant manager because he removed an unopened bottle from a table after the diners had left and took it to the kitchen, without asking permission. We do not know whether the previous written warning given to Peter was within Mr Rico's knowledge at the time of the dismissal. In any event, it seems unfair for a senior waiter to be disciplined in this circumstance, particularly as it was a busy shift. It is unlikely that even a combination of Peter's alleged past behaviour would amount to conduct justifying dismissal and the decision to dismiss remains outside the band of reasonable responses.

If a fair reason is established (which is unlikely), s98(4) ERA requires the Tribunal to look at the employer's conduct. Polkey Appellant v A.E. Dayton Services Ltd[9] involved a redundancy situation where consultation procedures were not followed. The House of Lords re-affirmed the band of reasonable responses test and confirmed its application to the procedures followed as well as the reason for the dismissal. In Whitbread Plc (trading as Whitbread Medway Inns) v Hall [10] it was further established that the concept of the band of reasonable responses extended to the level of investigation carried out by the employer.

At s22 ACAS Code of Practice (the Code) in reference to cases of gross misconduct it states "a fair disciplinary process should always be followed before dismissing for gross misconduct"[11]. In McLaren v National Coal Board [12], the Court of Appeal made a finding of unfair dismissal because the employee was not granted the opportunity to explain his conduct prior to his dismissal. Sir John Donaldson states at paragraph 377 "...the standards of fairness which required an employer to afford an employee the opportunity of explaining his conduct prior to dismissal were immutable and applied notwithstanding the exceptional circumstances of the miners' strike...". The failure to investigate, hold a hearing, and give Peter an opportunity to respond to the allegations against him would fall out of the band of reasonable responses on the facts of this case.

S112 ERA 1996 sets out the remedies for unfair dismissal complaints. Peter would be entitled to request that he be reinstated[13] (treated as if he had not been dismissed) or re-engaged (employed on comparable terms as determined by the Tribunal)[14]. It is unlikely that either of these options would appeal due to Peter's difficult relationships at work. Peter would also be entitled to a Basic Award[15] and Compensatory Award[16]. The Basic Award is a calculated formula designed to reward length of service. It takes into account the employee's age, length of service and weekly pay.

Dunnachie v Kingston-upon-Hull CC[17] confirmed that the Compensatory Award refers to financial losses only. The leading authority on losses recoverable under section 123, Norton Tool Co v Tewson[18], outlines the major heads of claim: (1) losses up to the date of the hearing; (2) future loss; (3) loss of accrued rights; (4) loss due to the manner of dismissal; and (5) loss of pension rights.

These awards are subject to a consideration of contributory fault.[19] Despite a finding of unfair dismissal, the Tribunal could consider some of Peter's behaviour, for example his "choice expletives" as contributing to his dismissal and a percentage reduction to his Basic and Compensatory Award could be made. In an extreme case, the Tribunal may reduce compensation awarded to an employee to nil or a nominal amount, as was stated by Lord Dilhorne in the case of W Devis and Sons Ltd Atkins[20]. This shows that in respect of remedy, the conduct of the parties is to be considered independent of findings on liability.

Breach of Contract/Wrongful Dismissal

Peter was dismissed without notice. The Employment Rights Act 1996 ("ERA") s86, requires a minimum amount of notice to be given on termination of employment. If Peter had a written contract, a copy should be obtained to check his contractual entitlement, which may be more.

Section 86 (6) ERA provides "this section does not affect any right of either party to a contract of employment to treat as terminable without notice by reason of the conduct of the other party". Gross misconduct is a repudiatory breach rendering the contract so destroyed that it can no longer be performed[21]. In such circumstances, the parties are permitted to accept the other's breach and treat the contract as immediately terminated, without notice. As discussed above, it is unlikely that Peter's conduct would amount to gross misconduct and on this basis, he has grounds to bring a breach of contract claim (also known as wrongful dismissal) against BH. The Employment Tribunal has jurisdiction to hear a breach of contract claim[22] and Peter could also bring this claim in the civil courts.

By way of remedy, Peter would be entitled to damages to put him in the position he would have been had the breach not occurred and he would be entitled to recover a sum equivalent to his notice period entitlement.

Under section 86 ERA, statutory notice entitlement is calculated in relation to the employee's period of employment. If his six-weeks unpaid leave was suitably arranged so to be included in computing his period of continuous employment or covered as illness incapacity, Peter would be entitled to seven weeks' notice pay - that is a week for each year he was employed, which is the entitlement prescribed under s86(b) ERA his period of continuous employment being "two years or more but less than twelve years". If not, under s86(1)(a) ERA, his entitlement would be one week's notice pay.

Statutory Sick Pay/Unlawful Deduction from Wages

S 151 of The Social Security Contributions and Benefits Act 1992 sets out the legal obligation to pay statutory sick pay: "where an employee has a day of incapacity for work in relation to his contract of service with an employer, that employer shall...be liable to make him...a payment (to be known as "statutory sick pay") in respect of that day." If there is a written contact, Peter's contractual sick pay may be monetarily greater than his statutory entitlement.

Unless further requirements are imposed in the contract, an employee is permitted to self-certify his or her incapacity for the first seven days of absence, after this a doctor or GP "fit note" would be required[23]. A failure to adequately notify would entitle the employer to withhold any amount of sick pay otherwise payable[24].

Section 23 ERA grants employees the right not to suffer unauthorised deductions and Statutory Sick Pay is classed as wages[25]

Provided Peter complied with relevant notification requirements, he may have a claim for unlawful deduction in relation to his leave. By way of remedy, he would receive damages for the sick pay he is owed. The amount of Peter's damages would again be affected by the inclusion or non-inclusion of his six-weeks unpaid leave.

Time-limits

In the Tribunal

In respect of complaints for unfair dismissal, breach of contract and unlawful deductions there is a three-month limitation period[26]. Time runs from "the effective date of termination" (EDT) as defined in section 97 ERA. In Peter's case, his contract has been terminated by his employer without notice, and his EDT would be the date his contract terminated, therefore the end of January 2015.[27] Three-months expired around the end of May 2015 and Peter is out of time to bring his complaints.

The Tribunal has jurisdiction to extend its deadline on reasonably practicable grounds[28]. It will also consider the reasonableness of the further period taken to bring a complaint. A lack of knowledge of rights and/or the time-limit have been considered reasonably practicable grounds[29]. However, those cases were decided in pre-internet days and are unlikely to hold much weight today.

In Shultz v Esso Petroleum[30], it was held that the employee's illness may have provided reasonably practicable grounds. Peter has a history of stress-induced eczema, which may have debilitated him from bringing a timely claim and if so he could make an application to bring his claims out of time. Peter should bring his complaints as soon as possible.

Footnotes

[1] [1992] I.C.R. 20

[2] [1999] IRLR 16

[3] s108 (1) Employment Rights Act 1996

[4] [1983] I.C.R. 17 EAT

[5] see above at para 25

[6] [1959] 1 W.L.R 698

[7] [1974] I.C.R 428

[8] [1990] I.C.R 604 [1990] I.R.L.R 326 EAT

[9] [1988] ICR 142, [1987] IRLR 503, HL

[10] [2001] I.C.R. 699 CA

[11] ACAS Code of Practice 1 "Disciplinary and grievance procedures" April 2009

[12] [1988] ICR 370, [1988] IRLR 215, CA

[13] s114 Employment Rights Act 1996

[14] s115 Employment Rights Act 1996

[15] s119 Employment Rights Act 1996

[16] s123 Employment Rights Act 1996

[17] [2004] ICR 1052, [2004 IRLR 727 HL

[18] [1973] 1 All ER 183, [1972] ICR 501, [1972] IRLR 86

[19] s122(2) Employment Rights Act 1996

[20] [1977] ICR 662, [1997] IRLR 314

[21] Boston Deep Sea Fishing and Ice Co v Answer (1888) 39 CH D 339

[22] s2 Employment Tribunals (Extension of Jurisdiction) Orders 1994, SI 1994/1623 (England and Wales)

[23] Regulation 7(4) of the Statutory Sick Pay (General) Regulations

[24] s156 Social Security Contributions And Benefits Act 1992

[25] s27(1) (b) Employment Rights Act 1996

[26] s111(2) (a) Employment Rights Act 1996, 7(a) Employment Tribunals (Extension of Jurisdiction) Orders 1994, SI 1994/1623 (England and Wales) and s23 (2) Employment Rights Act 1996 respectively

[27] s97(3)(b) Employment Rights Act 1996

[28] s111 (2) (b) Employment Rights Act 1996 s7(c) Employment Tribunals (Extension of Jurisdiction) Orders 1994, SI 1994/1623 (England and Wales) and s23(4) Employment Rights Act

[29] Porter v Bandridge Ltd [1978] IRLR 271; Dedman v British Building and Engineering Appliances Ltd [1973] IRLR 379

[30] [1999] IRLR 488

[31] s5 Limitation Act 1980