Employment Law ENEWS

17 October 2005

In this edition we focus on fixed-term employees entitled to significant redundancy payments, the issues of "personality" and "management style" dismissals as well as information on our forthcomming seminar

Fixed-term employees entitled to significant redundancy payments

An Employment Tribunal has ruled that the Department for Education and Skills (DfES) will have to pay significant redundancy payments to four education advisers who were engaged on fixed-term contracts if it does not renew their contracts after their terms expire in March 2006.

The Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 ("the Regulations") give fixed-term employees the right not to be treated less favourably than comparable permanent employees as regards the terms of their contracts or by being subjected to any other detriment by any act, or deliberate failure to act, of their employer. A fixed-term employee can successfully bring a claim before a Tribunal if the less favourable treatment is on the ground that the employee is a fixed-term employee, and the treatment is not justified on objective grounds.

Further, the non-renewal of a fixed-term contract amounts to a dismissal. If the reason for the non-renewal is that the employer no longer requires an employee to perform the role the fixed-term employee had performed (for example, the fixed-term employee was engaged to oversee a specific project and that project has come to an end) this will amount to a redundancy dismissal. The fixed-term employee will be entitled to a statutory redundancy payment provided he/she has 2 years' continuous service. He/she may also be entitled to a contractual redundancy payment if this is offered to permanent employees who perform a similar job and the employer cannot objectively justify refusing to offer the same contractual benefit to the fixed-term employee.

In this recent case, the Tribunal concluded that the four educational advisers were engaged in broadly similar work to another permanent adviser, that the DfES could not justify their exclusion from the enhanced redundancy scheme enjoyed by permanent employees, and that they should be entitled to equal redundancy benefits if their contracts are not renewed on expiry. This means that the DfES will either have to pay significant enhanced redundancy payments to the advisers if it decides not to renew their contracts or keep them on as permanent employees.

Employers will often engage employees on fixed-term contracts when they need somebody to oversee a project or complete a task. The non-renewal of this type of contract is likely to amount to a redundancy dismissal. This case has confirmed that fixed-term employees could be entitled to the same redundancy payments as permanent employees. Employers are advised to review the contracts they offer to employees and consider whether it is necessary to engage employees on a fixed-term basis.

Personality and management style dismissals

An employer dismissing an employee must specify the reason(s). The reason(s) must fall within those allowed by Section 98(2) of the Employment Rights Act 1996 (ERA), namely: capability or qualifications, conduct, redundancy or where to continue to employ would be in contravention of an enactment. Alternatively, the reason must be for "some other substantial reason of a kind such as to justify the dismissal" (the so called SOSR) (Section 98(1) ERA).

In Perkin v St Georges Healthcare NHS Trust [2005] EWCA Civ 1174, the Court of Appeal had to consider, amongst other things, whether a manager's personality and his inability to work constructively with colleagues, amounted to conduct, capability or SOSR.

It seems clear from the Court's findings (and those of the lower Courts) that Mr Perkin, in his senior management role, was near impossible to work with.

It was important to decide whether Mr Perkin's personality and his inter-personal dealings amounted conduct or capability in order to assess the process applied in dismissing him. It was argued by Counsel for Mr Perkin that if his behaviour should have been treated as capability then, even as a senior manager, a proper process might reasonably have included counselling, support, training and some measure of warning (none of which happened). Alternatively, if his behaviour amounted to misconduct there should have been a disciplinary process with warnings, as it was submitted that what Mr Perkin was accused of did not amount to gross misconduct.

The Court of Appeal held that the dismissal of Mr Perkin because of his personality clashes with colleagues and his approach to them, amounted to SOSR, entitling the employer to dismiss without prior warning. The Court's reasoning should not be taken as an endorsement that in all cases it will be unnecessary to warn an underperforming manager who is difficult to work with. However, it does establish that where there is a serious breakdown of trust and confidence, occasioned by a senior manager's personality, an employer can justifiably move to dismiss the manager without applying normal conduct or capability procedures.

The decision also accords with recent developments in the law where an abusive manager can be considered to be harassing his/her colleagues. The Courts seem to be sending a message to difficult managers to mind their step!

Employment Law Update Seminar Norwich

Employment law continues to develop each year at a rapid pace and 2005 has been no exception, with a number of significant case law and legislative developments. These changes have wide ranging implications for all employers. steeles' Employment Law Update Seminar will focus on the most recent employment law developments so that HR practitioners can keep right up to date with the legal issues which affect their day-to-day work. We aim to identify for you the practical implications of these changes as far as your business or organisation is concerned. We will review the following areas: Age Discrimination; Disability Discrimination; Sex Discrimination; Sexual Orientation; Redundancy; Grievance Procedures; Stress and Civil Partnerships. BOOK NOW

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