UK Employment Law case updates - January 2017

Latest UK Employment Law case updates - January 2017

1. Employers may rely on expired disciplinary warnings when dismissing
2. Employee unfairly dismissed despite his violent conduct
3. Statutory Maternity Pay is due despite agreement settling "all and any claims".

Employers may rely on expired disciplinary warnings when dismissing

Stratford v Auto Trail VR Ltd UKEAT/0116/16/JOJ

Where an act of misconduct does not in itself constitute gross misconduct, reliance upon earlier disciplinary offences as the principle reason for dismissal may be seen as fair.

The Claimant had been employed by the Defendant for almost 14 years. During this time, he had been subject to 17 different formal disciplinary proceedings. In October 2014 the Claimant was caught holding his mobile phone on the shop floor, which was "strictly prohibited" according to the employee handbook. A disciplinary hearing was held and the Defendant decided to dismiss the Claimant.

It was clear from the written reasons for dismissal that the Defendant did not class this action as gross misconduct. However, the cumulative effect of the numerous disciplinary offences had been taken into account and this lead the Defendant to believe that the Claimant's behaviour would not improve. It is important to note that by the date of the final incident, all the prior warnings issued to the Claimant had expired.

The ET found that the dismissal was fair and, in particular, that the employer was permitted to take past disciplinary action into consideration when deciding whether to dismiss an employee.

The Claimant appealed this decision. The question for the EAT was: where an employee is guilty of misconduct (which, in itself, does not justify a dismissal), is it reasonable for the employer to rely upon earlier misconduct as the principal reason for dismissal where any prior warnings have expired? The EAT found that it was reasonable to take into account and rely upon the previous record of the employee when dismissing.

However, this decision turned on the fact that there had been numerous incidents over the entire period of the Claimant's employment and that there was evidence that some incidents involved no formal action, which meant that there was no warning to be expired. If the circumstances had differed, and the Claimant's disciplinary record had not been so extensive, the EAT may have found differently.

Whilst this decision is helpful to employers, it should be treated with caution. The frequency of the offences and whether the employee's disciplinary record spans the duration of his/her employment should be considered carefully before relying on past instances of misconduct as a reason for dismissal.

Employee unfairly dismissed despite his violent conduct

Arnold Clark Automobiles Ltd v Spoor UKEAT/0170/16/DA

In this case, Mr Spoor was dismissed for gross misconduct after he violently grabbed a colleague by the neck. At the Employment Tribunal he was successful in his claims of unfair dismissal, breach of contract and failure to pay notice pay as it was held that his employer, Arnold Clark Automobiles (ACA) had not undertaken a reasonable investigation and had dismissed without proper regard to all of the circumstances.

ACA appealed to the Employment Appeals Tribunal ("EAT") and the EAT dismissed the appeal. Mr Spoor had over 42 years' continuous service with an exemplary disciplinary record and the Company had not considered it appropriate to undertake any assessment as to the level or degree of physical violence. The Court found there was no evidence that the Company operated a zero tolerance policy towards physical violence or that it had given due consideration to Mr Spoor's otherwise exemplary record. The Judge concluded that by reason of the Company's failure to have regard to all of the surrounding circumstances the dismissal of Mr Spoor was unfair.

The lesson from this case is that employers must be thorough in their investigations of employee conduct and must take into account all the circumstances surrounding the incidents in question and the individual employees themselves.

Statutory Maternity Pay is due despite agreement settling "all and any claims".

Campus Living Villages UK v. HMRC and Sexton

In this case, the First Tax Tribunal ("FTT") made clear that if a settlement agreement is to settle claims for Statutory Maternity Pay ("SMP"), this must be expressly stated in the agreement.

The claimant was made redundant whilst she was pregnant and claimed unfair dismissal and discrimination on grounds of pregnancy related dismissal. As the claimant remained employed within 11 weeks of her expected week of childbirth, she was entitled to SMP. Further to the ACAS conciliation process, the case was settled by way of a COT3 form. The COT3 form confirmed that it settled "all and any claims [the claimant] may have relating to her contract of employment and its termination". The employer had intended that the payment be made in full and final settlement of all of the claims, including SMP. The claimant then complained to HMRC that she had not received her SMP.

HMRC held that the claimant was entitled to receive her SMP. HMRC noted that the COT3 form did not expressly state that SMP was included in the settlement payment and that the employer had not deducted tax and national insurance contributions, which it should have done if an apportionment of the settlement payment had been SMP. HMRC also stated that the claimant's discretionary bonus, which she had received during the SMP calculation reference period, should be used to calculate her average normal weekly earnings for SMP purposes.

The FTT upheld HMRC's decision. The FTT confirmed that one-off payments such as a bonus can be included in the calculation of an employee’s earnings for SMP if they are paid during the SMP calculation reference period.

This case serves as a reminder to employers that if entitlement to SMP is to be included and effectively waived in a settlement agreement, it must be expressly stated. Moreover, SMP should be identifiable in a breakdown of compensation showing how it was calculated and that it was subject to appropriate tax and national insurance deductions.