Suspension – is it justified?
The employee in this case was a primary school teacher. Allegations were made that she had used
unreasonable force on three occasions in relation to two children with behavioural difficulties, including
dragging one of them out of the classroom. The Head Teacher looked into two of these incidents and thought that the force used had been reasonable. Despite this, the employee was suspended by the Executive Head of the school to "allow [an] investigation to be conducted fairly". The employee resigned and claimed constructive dismissal. She argued that suspension was a breach of her employment contract as it was not reasonable or necessary in the circumstances.
The High Court agreed that suspension had been unnecessary. It said that suspension had been adopted as the "default" position without the school considering whether it was necessary for a fair investigation, and therefore amounted to a breach of contract. However, on appeal, the Court of Appeal has ruled that the suspension was justified. The Court said that the school had reasonable and proper cause to suspend the teacher, given the allegations made against her of using excessive force with children and the potential risk of having her remain at work.
This case is a reminder that employers should not necessarily suspend an employee every time there is an allegation of misconduct. Such a "knee-jerk" reaction could be a breach of the implied duty of trust and confidence and lead to a constructive dismissal claim. However, the case also confirms that employers can suspend pending an investigation where there are good reasons for doing so. This would usually be the case where there are concerns about the safety of other employees or a risk of interference with witnesses or evidence if the employee were to remain at work. Where suspension is necessary, the employer should normally explain why and make it clear that the suspension does not imply guilt and that no decision has been made about the outcome of the investigation.
LONDON BOROUGH OF LAMBETH V AGOREYO
Bad leaver provisions – are they enforceable?
The employee in this case was a shareholder in the employer company. When the company was sold, her
shares were transferred to the buyer in return for some upfront and deferred consideration. The deferred
consideration consisted of staged cash payments and an entitlement to earn-out shares and loan notes. The deferred consideration was also subject to leaver provisions which meant that the employee would become a "bad leaver" if she resigned, and would forfeit her loan notes and be required to sell back her shares to the buyer company. When the employee sought to resign, she argued that the leaver provisions were unenforceable as they were an unconscionable bargain or an unlawful penalty for resigning.
The Employment Appeal Tribunal ruled that the leaver provisions were enforceable. The provisions were neither unconscionable nor an unlawful penalty. The EAT said that for a bargain to be unconscionable, one party must be at a serious disadvantage which is exploited by another party in a morally culpable manner. However, there was no evidence the employee in this case had been unable to take legal advice or was at a serious disadvantage. With regard to the penalty argument, the EAT said this was only relevant where the penalty arises as a result of a breach of contract by the employee. However, the loss of shares and loan notes here was not triggered by any breach by the employee but rather her voluntary decision to resign.
It is not uncommon for employees to be subject to leaver provisions of this kind when granted shares or other deferred remuneration. The case is helpful as it suggests it will be difficult for an employee to challenge such provisions where they are not linked to any breach of contract by the employee and the employee has had the opportunity to seek legal advice. Employers would therefore be well-advised to encourage employees to seek advice on such leaver provisions where possible. The issue can be more complex where bad leaver treatment is linked to the employee working for a competitor or breaching post-termination restrictive covenants, as there may be an argument that the leaver provisions are unenforceable either as an unlawful penalty or as an indirect restraint of trade. Employers should seek advice in these circumstances to ensure the provisions are drafted as robustly as possible.
NOSWORTHY V INSTINCTIF PARTNERS LTD
Compensation for discrimination
Compensation in discrimination and harassment claims is usually made up of two elements: the employee's financial loss (eg lost earnings) plus an element for injury to feelings. There is no limit on the amount that can be awarded for either element but, for injury to feelings, Tribunals generally follow a set of guidelines known as the "Vento bands". For claims made on or after 6 April 2019, the Vento bands for injury to feelings have been uprated. The three bands are now as follows:
- £900 to £8,800 for less serious cases (eg a one-off incident or comment)
- £8,800 to £26,300 for something more serious
- £26,300 to £44,000 for the most serious cases (eg an ongoing campaign of harassment).
Good work plan
In December 2018, the Government announced in its Good Work Plan that it would take forward a number of recommendations for reform of employment law made by the Taylor Review (see January 2019 Employment Update for details). Regulations have now been made which implement a number of these changes. These are summarised below.
Public sector exit payments
The Government has published draft regulations for consultation, which would impose a cap on exit payments for employees in the public sector. The proposed cap is £95,000 and would apply to severance or ex gratia payments made to employees in the public sector on termination (including enhanced redundancy payments). There are various proposed exemptions that would not count towards the cap, such as statutory redundancy pay and payments in lieu of notice up to a quarter of annual salary. The draft regulations also contain provisions for relaxing the cap in relation to discrimination, whistleblowing and TUPE-related terminations. The consultation closes on 3 July 2019 but the Government has not yet announced when the cap would come into force.
Since our last Employment Update, our work has included:
- implementing a joint-contract employment arrangement for a financial services employer
- advising on subject access requests made under the GDPR
- advising on the enforcement of post-termination restrictive covenants against, and misuse of confidential information by, a departing COO
- advising on the strategy for poaching a senior executive from a competitor
- supporting a client drafting up a new "speak up" policy and procedure, and training all managers and staff in the new policy and the positive cultural impact of promoting speaking up
- advising several asset management clients on their implementation of the Senior Managers and
Certification Regime (SMCR)
- advising a manufacturing client on the employment law implications of strike action by employees, including the lawfulness of ballot notices, the parameters of lawful picketing and options for covering the work of striking employees
- advising on the termination of employment of a senior executive because of a breakdown in working relations with the rest of the board
- carrying out training on discrimination and harassment.