November 2004 Employment Law Enews

* Christmas Promise
* Payment of salary where 48-hour maximum week applies
* Party's ability to pay costs

Welcome to steeles' latest edition of Employment enews. In this edition we look at promises made by employers at social christmas events, payment of salary where a 48 hour week applies and a paying party's ability to pay costs

Christmas Promise

The EAT has held that a manager's promise of a substantial pay rise, made at the Company's annual dinner dance, did not amount to an enforceable promise to increase pay and accordingly the employee's constructive dismissal claim failed. Taking into account the fact that the promise was made at a social event during "the convivial spirit of the evening", the EAT held that there was no intention to create legal relations and therefore the promise was not contractually enforceable.

Payment of salary where 48-hour maximum week applies

Under the Working Time Regulations 1998 employers are obliged to ensure that their workers do not work more than an average of 48 hours per week. A worker can opt out of the maximum by written agreement, however such agreement must be capable of cancellation on not more than three months notice. It is unlawful to subject a worker to any detriment for refusing to sign an opt out agreement.

There has been concern in the past that to reduce the salary of an employee, who has previously opted out of the maximum 48 hour week, and has worked in excess of this, but has since exercised his right to cancel this opt out and reduced his hours, would amount to a detriment.

The EAT has held that where an employee withdraws his opt-out from the 48 hour maximum week, a consequent reduction in salary would not amount to a detriment.

Employers are advised, however, to consult with the worker before making any reduction, explaining that a reduction needs to be made and how it is proposed it will be applied, with a view to obtaining their agreement wherever possible. Reduction of salary on a pro rata basis is likely to be most appropriate.

Party's ability to pay costs

Under the new Employment Tribunal and Employment Appeal Tribunal rules, which both came into force on 1 October 2004, the Employment Tribunals and the Employment Appeal Tribunal are now entitled to take into account the paying party's ability to pay when deciding what (if any) sum should be awarded in costs. There are now two types of orders, which can be made by an Employment Tribunal against a party to the proceedings: costs order (where the receiving party is legally represented) and preparation time order (where the receiving party is not legally represented). The orders, which are mutually exclusive, are mandatory in certain circumstances.

The EAT has recently given guidance on this, setting out two factors which it considers to be relevant when determining a party's ability, in this case the Claimant, to pay costs:

* The fact that the Claimant has recovered a sum of money as part of the proceedings; and

* The fact that the trade union in this case was funding the claim and was likely to meet any legal fees which the Claimant was ordered to pay.

The EAT also stated that the costs of adjournments should normally be decided at the time that the decision to adjourn is made.

This bulletin is intended for general guidance only and should not be relied upon without detailed legal advice on your specific circumstances.

This article copyright © 2004 Steeles Law. All rights reserved.