Category: Employment Law

February 1st, 2017 by Michael Millward

It seems like a strange thing to celebrate; a record number of people so unhappy about their work that they resort to the tribunal system as the only way to find a solution, but that is what the Departmant of Justice has done.

In a report published yesterday, 31 January 2017 the Department says that more than 92,000 people bought forward workplace disputes to the tribunal system in 2016 – the highest number since employment tribunal fees were introduced.

It is the bit about the figure being a record since the intoduction of fees that it seems is worth celebrating. Fees for taking a case to a Tribubal were introduced in 2013, just three years ago, as an attempt to reduce the number of ‘have a go’ claims so that employers could be saved the costs of dealing with the claim and Tribunals could focus on genuine cases, .

The Department has not compared the 2016 figure to the number of cases brought before the introduction of fees.

There is always going to be a question about the number of workplace injustices that go unchallenged because the workers affected can not afford to stand-up for their rights, but the Government claims that the introduction of tribunal fees has dramatically changed how workplace disputes are resolved.

The Government are claiming that the introduction of tribunal fees, alongside free mediation services, has dramatically changed how workplace disputes are resolved. It also claims that thousands more people will be able to access work place justice with the introduction of an extended scheme to waive fees for lowest paid workers.

That means that the monthly income threshold for full fee remission will increase from £1,085 to £1,250 – broadly the equivalent of someone earning the National Living Wage. There are additional allowances for people living as couples and those with children.

The big challenge for the Government in this area as in so many is how does it help not just those on the National Living Wage, but those people who earn just a bit more but do not have access to the financial resources to fund a claim. The people that Prime Minister Theresa May described as the ‘Just About Managing’

Justice Minister Sir Oliver Heald said:

It is right that those who can afford to should contribute to the cost of Employment Tribunals, but under the extended Help with Fees scheme, more people would not pay a fee and others will contribute less than under current arrangements.

The extended scheme would benefit the disabled, women, Black, Asian, Minority Ethnic (BAME) individuals, and the young, who all feature disproportionately among low income groups.

The Government has also decided to exempt from fees a small number of proceedings related to payments made from the National Insurance Fund, as in most cases the applicant is unable to conciliate or recover fees.

While many have chosen not to bring employment tribunal claims, the review found nothing to suggest they have been prevented from doing so, and that higher numbers turning to ACAS is a “positive outcome”.

It also found:

  • in 2015/16 there were more than 92,000 workplace disputes notified to Acas – the highest number since Employment Tribunal fees were introduced
  • tribunal users are contributing up to £9 million a year in fee income, in line with expectations
  • evidence that some have found fees off-putting – even if affordable or if they may have qualified for fee waivers.

Alongside the Review the Government is also launching a consultation, which seeks to raise awareness of the Help with Fees scheme, and highlight how thousands more would qualify for help.

Ministers will bring forward further plans to improve legal support in a Green Paper by early 2018, while the Prison and Courts Bill, due to be published shortly, will make it simpler to access justice and enable thousands more people to bring cases online.

Help with making access to justice available to everyone, equally is important, but prevention is better than cure and the Government might do better to acknowledge that many employment disputes could be avoided if managers and employees understood how to make their relationship work properly. The UK still has too many unqualified managers and too many workers who have been tutored in the ‘them and us’ culture of industrial relations.

 

Posted in Employee Engagement, Employment Law, Employment Tribunal

October 13th, 2016 by Michael Millward

The loft of my home is not somewhere that I venture on a regular basis, but out of the blue I decided to tidy it up.

Deep in the darkness I found a box, well more of a chest with all the paperwork from my past career. We are talking about everything, every offer letter, performance appriasal and even every pay slip from my entire career.

Apart from it being interesting to see just how little I was paid in today’s terms for quite a lot of responsibility most of this paperwork made a quick journey to the shredder. Amongst all the papers for each job there was also a restrictive covenants detailing what I was allowed to do after leaving that employer.

Although I don’t think I ever broke these covenants it got me thinking: just how enforceable are restrictive covenants?

London law firm Mishcon de Reya tell me that UK entrepreneurs believe that restrictive covenants or non-compete clauses as they are also known are vital for protecting their fast growing companies, and that changing the law to remove them would have a negative impact.

The Mishcon de Reya research was prompted by a Government call for opinions and evidence about restrictive covenants that could impact employment legislation.

In April 2016 former Business Secretary Sajid Javid opened a call for evidence seeking the views of businesses and entrepreneurs on whether clauses that prevent an individual from competing against their former employer are stifling opportunities to innovate and grow.

Mr Javid wanted to identify if this type of restrictive covenant is acting as a barrier to innovation and employment, and therefore preventing start-ups from prospering.

Asking the question has created something of a shockwave as differing opinions are aired.

I have seen candidates refuse to sign an employment contract because of the restrictive covenants that it contained on their future employment. I have also seen employers attempt to enforce a non-compete clause with great passion without success. It seems to be an area that employers, employees need to understand better.

Entrepreneurs, say Mishcon de Reya have several concerns:

  • with uncertainty already rife post Brexit, 73% of entrepreneurs also say restrictive covenants are important in attracting and retaining investment which is vital to UK growth.
  • most entrepreneurs (93%) feared that ex-employees would be able to steal clients after leaving employment.
  • almost three quarters (73%) were worried about retaining confidential company information.

Interestingly, while every entrepreneur saw restrictive covenants as valuable assets in protecting their business only two fifths (40%) of them who have been personally subject to a restrictive covenant believe that they are enforceable.

Mike Patterson of Berwins solicitors in Harrogate told me  that he would have expected this figure to have been lower (than 40%). This is simply because non-compete clauses are often poorly drafted and do not properly reflect the role of the employee, and the business interest of the employer that they are seeking to protect. Basic errors can include an unreasonable post-employment time period (more than 6 months) and undefined geographical area.

Marie Walsh of Consilia Legal questions the effectiveness of restrictive covenants. they normally act as a deterrent to former employees either soliciting or dealing with clients or poaching valuable staff. Entrepreneurs, she says are rarely put off from starting a venture because of a restriction in their previous employment contract, and indeed if they are truly entrepreneurial why would they need the contacts and staff of a previous employer?

The survey of employers also revealed that employers think that

  • over a third (38%) believe a lifting of current restrictive covenants would result in reduced investment in UK companies.
  • over 4 in 5 (83%) employers found restrictive covenants valuable in protecting their business
  • limiting such clauses could put businesses at risk as they fear clients would be taken (81%), staff poached (79%) and valuable confidential information lost (50%).

Jennifer Millins, partner in Mishcon de Reya’s employment department said that the courts are already adept at striking a careful balance between an employer’s right to protect its business and an individual’s freedom to work. The Government’s call for evidence, she says, appears to reflect a very one-sided view of restrictive covenants. Our poll shows that the protective qualities of restrictive covenants cannot be downplayed, and that UK business and entrepreneurs value their ongoing existence. At this stage, it is difficult to see how legislation in this area will be beneficial to UK businesses”.

Mike Patterson agrees, whilst there is always the risk that non-compete clauses are open to challenge and potentially unenforceable – he says that they can act as a valuable deterrent to employees to make them stop and think twice about the potential consequences should they decide to leave their current employer and go and work / set up in competition and/or solicit key customers and staff. Therefore, employers of all types should continue to be able to rely on them and include them when needed in employment contracts.

Overall and on balance, Mike doesn’t think that the introduction of new legislation to restrict the use of non-compete clauses will be of benefit to UK businesses and has the potential to create more uncertainty than there already is, as to what can and can’t be relied on.

Marie raises a very practical issue, enforcing a restrictive covenant or non-compete clause is as expensive as any other type of legal action. Many of the enquiries that Marie receives from businesses refer specifically to post termination restraints and their enforceability, however when the issue of injunctions and fees arise particularly legal and court fees the vigour with which these issues are pursued is lessened. Probably 7 of the last 10 instructions she has had in this area have resulted in a letter before action but were then not progressed further on account of the potential costs. Unless the breach causes a significant loss many companies will simply not pursue it further.

It is also worth remembering that for legal action to be successful the claimant must demonstrate a financial loss. If that is proven and damages are awarded the prospects of recovering compensation might as Marie says be poor because of the net worth of any new start up or the employee.

It all seems to make a lot of sense. As an employer you want your employees to respect the value of the information they handle and the relationships that the business has with other employees, customers and suppliers.

There is a case for these types of clauses but they have to be appropriately written and if you are thinking about having them as part of your terms and conditions or employment then you also have to decide if you would be prepared to enforce those clauses. If you don’t enforce them for every employee can you enforce them for any employee

Posted in Employment Law, Restrictive Covenants

October 29th, 2012 by Michael Millward

Michael Millward joined Elly Fiorentini host of the BBC Radio York Drive Show to discuss the new Deferred Prosecution Agreement (DPA) which has been introduced by the Ministry of Justice as the latest move to combat corporate crime.

Organisations rarely commit crimes said Mr Millward, it is the people that they employ who make the decision to do something that is illegal. But often people act within what they consider to be the bounds of acceptable behaviour within an organisation regardless of the legality of that behaviour.

These actions are validated by a perception of organisational culture, which one prominent banker, who lost his job as the result of the illegal behaviour of his employees, described as what happens when employees have no clear instruction. 

The new measure will help prosecutors combat corporate offending including fraud, money laundering and bribery – which cost the UK billions of pounds each year.

The measure – a Deferred Prosecution Agreement (DPA) – can be made between a prosecutor and an organisation to defer prosecution for alleged economic wrongdoing as long as stringent conditions are met.

If they agree to enter into a DPA, organisations will publically face up to their wrongdoing and may be required to:

  1. Make amends to victims
  2. Pay substantial financial penalties
  3. Reform their practices to prevent such conduct occurring again

Deferred Prosecution Agreements will give prosecutors an effective new tool to tackle what has become an increasingly complex issue.  They will ensure that more unacceptable corporate behaviour is dealt with including through substantial penalties, proper reparation to victims, and measures to prevent future wrongdoing.

The DPA agreements will be overseen by an independent judge, agreed in open court and the outcome published to ensure transparency. If, at the end of the period, the prosecutor is satisfied the organisation has met its obligations, there is no prosecution. If not, a prosecution could be brought.

This may be interpreted as a get out of jail free card, said Mr Millward, but in reality the only thing that is happening is that the organisation is being spared a criminal conviction, they still have to pay compensation and will still have a stain on their corporate reputation.

The big advantage he said is that the tax payer will be spared the cost of a lengthy trial.

DPA are said Mr Millward said a welcome solution to a growing problem that affects every industry and every organisation regardless of size at some time.

The big problem for employers in combating illegal behaviour by employees is getting to know about it quickly enough to be able to deal with it.

Organisations of all sizes need to have an effective whistle-blowing policy in place if they are to play their part in identifying illegal behaviour by employees before the authorities do.

Whilst it is likely that there will always be rogue employees, every employer owes it to themselves and their honest employees to take actions that clearly identify what is acceptable behaviour and what employees who suspect colleagues of illegal behaviour should do.

Posted in BBC Radio York, Whistleblowing

September 17th, 2012 by Michael Millward

It will shake-up employee relations and could undermine good employee and performance management practices said Michael Millward when discussing the announcement of a package of employment reforms by Business Secretary Vince Cable with BBC Radio York Drive Show presenter Elly Fiorentini this evening.

Mr Millward who is volunteer Chairman of the North Yorkshire branch of the Chartered Institute of Personnel and Development said that like many HR professionals I welcome Mr Cable’s rejection of the proposal in the Beecroft Report of no-fault dismissals, but he cautioned what the Business Secretary is planning has the potential to undermine the good performance management practices that have been developed since the massive industrial unrest of the 1960’ and seventies.

Mr Cable has said that his plans will increase labour market flexibility but making it easier for a bad employer to dismiss an employee has the potential to undermine the mutual trust and confidence between employers and employees that is essential for a successful working relationship.

Mr Millward said that the idea that businesses should be able to manage the performance of their employees effectively, without fearing extortionate costs and a time consuming process, is a good one. However, the proposed reforms must not undermine the principle of mutual trust and confidence that lies at the heart of positive and productive employment relations.”

Talking about the specifics of the proposals Mr Millward said that the consultation on ‘settlement agreements’: The reality is that employment relationships sometimes don’t work out and compromise agreements can be used as a quick, face saving way out for employees and employers. However, it is important that these are not used as a first port of call by employers simply because an employee’s ‘face doesn’t fit’.

Employers said Mr Millward need to understand that there is no substitute for good performance management practices and settlement agreements will do nothing to protect them from discrimination and constructive dismissal claims if they act improperly.

It is not clear how much of an impact the reduction in the limits to payouts for unfair dismissal to a year’s pay will have.

There is a perception that people are receiving huge payouts said Mr Millward. In reality the average award for unfair dismissal in 2010-11 was about £9,000. This is well below average earnings of most people.

The headline grabbing payments are made when the employee has proved discrimination and there is rightly said Mr Millward no announcement of a limit being introduced to the compensation award that can be made in cases of this kind.

The reduction in the minimum time for redundancy consultations does seem to be a good idea. Cutting the consultation period from ninety to thirty days does make sense. The flexibility of the UK labour market is one of its greatest strengths providing as it does the opportunity for employers to respond to changing business circumstances.

Ninety days is a long time to be discussing something that has such a dramatic impact on people’s lives. I think that many employees faced with an unavoidable redundancy situation just want to get on with it rather than spending three months talking about it.

So concluded Mr Millward waht is billed as a shake-up of employee legislation is not actually that much of a shake-up after all. But if managers, especially those in small businesses decide to use the changes with the wrong intentions they could end up damaging their relationships not just with the employees they dismiss, but also those that remain as well.

Posted in BBC Radio York, Employment Law, Performance Management, Redundancies