Anne Mannix joins Averta in London
We are delighted to announce that Anne Mannix has joined Averta in London. See Anne's CV here.
Covert recordings as evidence in employment tribunals
These days, anyone can covertly record a meeting, whether an informal or casual meeting or a formal disciplinary hearing.
An iPhone or smartphone can make high quality recordings of conversations even when hidden in a pocket or handbag. If the employer sees the phone they won’t necessarily know that their meeting is being recorded. However, can the employee rely on that recording as evidence in a tribunal? This is a question I am asked regularly and one that has been looked at by the employment tribunals on several occasions. The most recent case is from the Employment Appeal Tribunal:
Vaughan v London Borough of Lewisham and others 
In support of her discrimination claim the claimant, Ms Vaughan, sought permission to adduce in evidence 39 hours' worth of covert recordings which she had made of contacts between herself and her managers or colleagues. The Employment Judge refused the application.
The Employment Appeal Tribunal dismissed Ms Vaughan’s appeal, saying that the Judge had been plainly right to refuse the application as made, since neither the recordings themselves nor any transcripts had been made available in advance of the hearing.
However, the EAT held it was open to the Claimant to make a more focused application, properly supported by transcripts of the material sought to be relied on.
The EAT said:
‘…we do not believe there is any absolute reason why none of these recordings should be admissible in evidence. It is not implausible – we can put it no higher – that parts of this 39 hours of material will in fact be potentially relevant and ought to be admitted in the interests of justice. The question arises whether if the Claimant were now to make a fresh application to the Employment Tribunal, producing the transcripts and the tapes of the material on which she wishes to rely, and accompanying them with a clear explanation of why they are said to be relevant, she might get a different result. It is in our view highly unlikely that on such an application the Employment Judge would rule all 39 hours' worth of material relevant or admissible, but it might be another matter if the Claimant made a focused and selective application asking for permission only in relation to a much more limited quantity of material.’
The answer to the question therefore seems to be that the sections of the recordings which were relevant are likely to be admissible if presented properly e.g. that those relevant sections are transcribed (even if by the claimant) and disclosed in advance of the hearing along with other evidence, in accordance with the tribunal’s directions.
The EAT said also:
‘the practice of making secret recordings in this way is, to put it no higher, very distasteful; but employees such as the Claimant will no doubt say that it is a necessary step in order to expose injustice. Perhaps they are sometimes right, but the Council has already made it clear that it will rely on the Claimant's conduct in making these covert recordings as illustrative of the way in which her conduct had destroyed any relationship of trust and confidence between her and it. It will also rely, as relevant to credibility, on the fact that, as it says, when asked whether she had made such recordings she has on several occasions denied it.’
I caution clients who wish to record meetings with employers to be aware that employers who find out about covert recordings can respond negatively. However, it is a matter of balance and where, as happens from time to time, an employee finds that their employer takes minutes of meetings inaccurately, whether by mistake or by dishonesty, then a covert recording is the only way to prove what has been said.
If a covert recording is distasteful then so is an untrue record of a meeting that an employee cannot otherwise challenge effectively.
11 March 2013
Will Early Conciliation be all it promises to be?
The second reading of the Government’s Enterprise and Regulatory Reform Bill brought about a number of proposed changes in the world of Employment law. One of the more notable proposals was the introduction of mandatory early conciliation, a concept designed to promote early resolution of workplace disputes through ACAS whilst protecting the rights of the employee.
From April 2014 anyone considering making an Employment Tribunal claim will be required to contact ACAS first in an attempt to settle the dispute without resorting to the use of a Tribunal, though there will be no compulsion on either party to actually take part.
The Government accepts that part of the driving force behind these proposals is to reduce the cost of Tribunals to the taxpayer; at the present time £84m is spent each year resolving disputes and as Justice Minister Jonathan Djanogly stated, the Government states that “it’s not fair on the taxpayer to foot the entire £84m bill for people to escalate workplace disputes to a Tribunal”. Although bringing a claim or appeal to the Employment Tribunal is currently free of charge, from the summer of 2013, people using Employment Tribunals will start to contribute toward the running of the system. A combination of early conciliation and Tribunal fees will, the Government hopes, remove a substantial burden from the taxpayer in this regard.
Before a potential claimant can lodge a claim they must file a form with ACAS, either by post or online, detailing the name and contact details for both the prospective claimant and respondent; at this point no details will be required regarding the specific nature of the claim. If the required details are missing then the form may be rejected, however it is important to note that once the form has been accepted the ‘clock will be stopped’ with regard the 3 month limitation period for raising a claim.
Once ACAS has received the completed form, they will make ‘reasonable attempts’ to contact first the claimant and then the respondent in order to obtain further information, explain the process and ascertain whether the parties are interested in conciliation. If either one of the parties cannot be reached or states that they are not interested in conciliation then an Early Conciliation (“EC”) certificate will be issued, allowing the prospective claimant to continue their claim before the Employment Tribunal. The certificate will contain a unique reference number which will have to be included on the ET1 form, in order to prove the early conciliation requirement has been satisfied. The limitation period that was suspended for the conciliation process is restarted when the EC certificate is issued.
If there is a possibility of settlement ACAS will have one calendar month from receipt of the form to promote a settlement. This can be extended by the conciliator by a period of up to two weeks if there is a reasonable prospect of achieving settlement in that time and both parties consent. If no settlement is possible or the time limits expire then ACAS will close the case and issue the EC certificate as above. If a settlement is reached, however, the EC certificate will be issued and ACAS will document the settlement using a standard COT3 Agreement.
Early Conciliation will replace ACAS’s current Pre-Claim Conciliation, in itself a successful service that helped almost 15,000 people in 2011 resolve their disputes. ACAS feels “the introduction of Early Conciliation in 2014 will allow [them] to help even more people resolve their disputes early”. Any settlement proposals made during the early conciliation phase will later be inadmissible should the dispute proceed to Tribunal, a move intended to provide employers and employees the confidence to negotiate without fear of later reprisals.
While the reasoning behind the introduction of compulsory early conciliation appears to be sound, there are a number of grey areas that may rear their heads once the changes take place. Without the full details of the claim and the response, normally set out in the ET1 and ET3 forms, it will be difficult for either side to fully assess their case. The efficiency of the process may also ultimately be called into question as either side can simply decline ACAS’s offer of early conciliation; even if they are willing, often one or both sides are unable to consider a financial settlement at the outset of the dispute. More worryingly, the introduction of Tribunal fees may tip the negotiating scale the way of the employer, as they may be more likely to reject early conciliation in order to wait and see whether the prospective claimant is willing to pay the fee to raise their claim. Finally, the new procedure carries with it the risk of further complicating employment disputes by introducing the ‘stopped clock’ effect on the limitation period; questions over whether the early conciliation requirement has been properly complied with and in the correct time frame may well produce satellite litigation that can only confuse and frustrate claimants and respondents alike.
DAVID TRUE February 2013
George Entwistle Payoff scandal?
Politicians are up in arms about George Entwistle’s £450,000 payoff for leaving his position as director-general of the BBC. Mr Cameron thought it “hard to justify”. The Shadow Culture Secretary Harriet Harman described it as a “reward for failure” and called on Mr Entwistle to give it up.
We are told that George Entwistle earned £450,000 a year and that if he had resigned voluntarily he would have expected to receive 6 months’ pay. If he was sacked he would have been entitled to 12 months’ pay. Apparently, he resigned, so why pay him for 12 months?
We are not all naïve enough to think that all resignations are voluntary. In this situation he almost certainly faced a stark choice: resign or be sacked. Faced with that choice he would quickly have realised that resignation was worth 6 months’ pay and a sacking 12 months’. Apart from the issue of his reputation, which was in tatters anyway, why would he resign?
From the BBC’s perspective, they will have been anxious to resolve the problem of George Entwistle as the speculation and criticism of press and politicians alike made his position untenable. To avoid prolonging the agony it will have seemed to Lord Patten and the BBC that an agreement with George Entwistle to leave immediately was practical and made sense financially. There would have been no need to follow any particular process or to consult the Trust. Also, an agreed departure will have probably secured George Entwistle’s co-operation with the endless enquiries which will follow the Saville scandal.
The deal has been criticised because George Entwistle was in post for only 54 days. So what? He had been at the BBC for years.
So what did we get? We got a clean and tidy break costing £450,000 as an alternative to a messy dismissal costing £450,000. I think that is a good deal for the BBC licence payers.
Averta's Alan Jones says cap will increase discrimination claims.
The proposed employment law reforms being shaped by Vince Cable, who recently sought to emphasise his opposition to a ‘hire and fire culture', will only lead to a rash of discrimination claims says Averta's Alan Jones.
Jones comments: "The Business Secretary Vince Cable appears to have signalled the end of removing protection from unfair dismissal, with his comments at the Liberal Democrat Conference that "headbangers…who seem to find sacking people an aphrodisiac" have been seen off. He says that a "hire and fire culture" is totally irrelevant in a country with flexible labour markets which he says have created over a million private sector jobs in the last two years."
Cable's comments were made against a backdrop of a variety of reforms to employment laws, some of which are still under consideration and consultation. There will be fees for bringing a tribunal claim, and it may be that a cap is imposed on compensation for unfair dismissal at around a year's pay. The details are unclear whether it is a year's pay for the average employee, or a year's pay for the actual claimant.
Jones continues: " This particular reform seems a step too far when one considers that the average award for a claimant is around £5,000, so the only people who are likely to be affected are high earning managers and directors. So instead of bringing tribunal claims they may have to bring complicated and expensive High Court actions for recovery of damages. How will that reduce the proliferation of claims one wonders?"
"The more important point to note however that is there are no proposals to reduce compensation in discrimination or diversity based claims. So inevitably, a claimant who faces the prospect of severely limited compensation from the Employment Tribunal for unfair dismissal would tend to bring a claim based on age, race, sex or disability. That is not to say that claimants will "invent" claims but, with an aging workforce, and people finding it hard to secure a new position, it is inevitable that diversity based claims will increase."
"Still the Beecroft proposal, commissioned earlier this year, which would have allowed companies to sack workers for a nominal pay-out (the so called "no fault dismissal" plan) has been quietly abandoned, so employees continue to have protection from arbitrary dismissal, at least for the time being."
Oct 16, 2012
Tax on termination payments – are you paying too much?
Many employees and employers know about the potential tax benefit on termination payments. Up to £30,000 can be paid free of tax in some circumstances. But, if the employee is paid more than £30,000 what happens to the balance?
Before 6 April 2011, if an employee received a termination payment from an employer after his or her P45 was issued, the employer was required only to deduct tax at basic rate. The employee would have to account for any higher rate tax liability through their tax return but they would almost always have a cash flow advantage until higher rate tax was paid many months later. However, from 6 April 2011, the employer is required to deduct tax using the 0T code (zero T) i.e. no allowances on a non-cumulative basis. This means that tax is deducted at the basic (20%), higher (40%) and additional (50%) rates. From the perspective of HMRC this reduces the possibility of an underpayment of tax at the year end. However, from the employee’s perspective it increases the chance that they will overpay tax.
To take a fairly extreme example: an employee is dismissed in March. In April, in the new tax year, he enters into a compromise agreement with his employer, who makes a payment of damages of £60,000 after his P45 has been issued. The employee is unable to find another job and receives no further income that year
The first £30,000 can be paid free of tax but the balance of £30,000 is taxed as follows:
2,864 (1/12th of the basic rate threshold) @ 20% 572.80
9,636 (1/12th of higher rate to additional rate threshold) @ 40% 3,854.40
17,500 (balance over additional rate threshold £150,000/12) @ 50% 8,750.00
Total deductions 13,177.20
However, as he has no further income, at the end of the tax year his actual accrued tax liability would be:
8,105 (personal allowance) @ nil 0
21,895 @ 20% 4,379.00
This means that the tax deducted is nearly 3 times the actual liability – an overpayment of £8,798.20.
The employee can seek a refund at the end of the tax year for any overpayment but he will be significantly out of pocket for many months, which is tough bearing in mind he has no income for the remainder of the year.
Whilst this is an extreme example it is perfectly possible and illustrates how significant the impact of this tax change can be. There will be some overpayment in many conventional situations
It may be possible to mitigate the effect of the 0T code by agreeing with the employer to make payments by instalments. If made in 3 instalments of £10,000 per month the deduction would reduce significantly. Each month would be taxed as follows
2,864 (1/12th of the basic rate threshold) @ 20% 572.80
7,136 (1/12th of higher rate to additional rate threshold) @ 40% 2,854.40
Therefore, for 3 instalments the tax deduction would be 10,281.60
This amounts to a saving of £2,895.60 for the sake of waiting an additional two months for the 2nd and 3rd instalments. There is a risk that the employer will default on the instalments although in most cases the risk will be small.
Tax can also be mitigated by making the payment before the P45 is issued where tax will be deducted on the employee’s normal tax code through PAYE. In some cases, such as the example above, this will not be possible because employment has already terminated and the P45 has been issued.
23 March 2012