In this article, we analyse two important cases regarding the ability to waive future claims and the importance of early redundancy consultation. We also highlight the consultation on reintroducing employment tribunal fees.
Unknown future claims can be waived
In Bathgate v Technip Singapore PTE Ltd the Court of Session in Scotland has confirmed that employees can waive future discrimination claims against their employer by way of a valid settlement agreement.
Mr Bathgate accepted voluntary redundancy from his Singapore-incorporated employer, TSPTE Ltd. He had been the Chief Officer on various vessels for around 20 years. The settlement package included enhanced redundancy and notice payments and an additional payment to be made pursuant to a maritime collective agreement. Subsequently, the employer concluded that no additional payment would be made to employees, such as the claimant, who were 61 or over at the time of dismissal.
The claimant sought to bring claims of post-employment direct and indirect age discrimination. The employer argued that such claims had been validly waived by the voluntary redundancy settlement agreement and that the Equality Act 2010 did not apply to the claimant in his capacity as a seafarer.
The settlement agreement stated that it was in full and final settlement of the claims that B “intimates and asserts” against the employer and listed age discrimination as one of the relevant types of claim. It also contained a general waiver applying to “all claims… of whatever nature (whether past, present or future)”.
At an early stage of the claim, the Employment Appeals Tribunal (EAT) rejected the argument that section 147 of the Equality Act allows future discrimination claims to be waived pursuant to a settlement agreement even if the claim is unknown to the employee at the point of signature. In the EAT’s view such claims did not satisfy the requirement to relate to a “particular complaint”.
However, the Court of Session has overturned this decision. The Equality Act does not exclude the settlement of future claims as long as the settlement agreement clearly identifies the types of claim and the objective meaning of the words used is such as to apply to settlement of the relevant claim.
The need for the waiver to apply to the “particular complaint” does not mean that the employee must have known of the complaint, or its grounds must have been in existence at the time of the agreement. It just requires consideration of whether the complaint is covered by the terms of the waiver agreement.
Mr Bathgate’s age discrimination claims could not proceed.
What does it mean for employers?
As a Scottish decision, the case is not binding in England and Wales but it is likely to be highly persuasive in any future litigation. The decision provides helpful clarity for employers over the ability to ensure that future unknown claims are waived by an exiting employee pursuant to the terms of their settlement agreement. It also services a reminder to check that the terms of any standard settlement agreement are sufficiently clear and detailed to satisfy the waiver requirements.
Redundancy consultation should be at a formative stage
In Haycocks v ADP RPO UK Ltd the employment appeals tribunal (EAT) has flagged the importance of consultation over a proposed redundancy taking place at a formative stage of the process where the employee can make a meaningful contribution.
Mr De Bank Haycocks worked as a recruiter for the UK subsidiary of US human resources software giant ADP. He was one of 16 people in the UK office employed to recruit employees for Goldman Sachs. After the COVID-19 pandemic caused the client’s demand for new employees to diminish, the decision was taken to reduce the workforce in the Claimant’s team.
The Claimant’s manager applied standard selection criteria from the US parent company to assess and mark her team members. The Claimant came last in the rankings. The Respondent then set a timetable for a redundancy process with an initial consultation scheduled for 30 June 2020 followed by a 14-day consultation period, with a final meeting scheduled for 14 July 2020.
The Respondent invited the Claimant to the 30 June meeting and informed him of the need for redundancies and the purpose of the consultation period. The Claimant was then invited to a further meeting on 8 July before being handed a letter of dismissal at the 14 July meeting. Owing to the fact that another member of his team volunteered for redundancy, the Claimant was the only employee who was the subject of a compulsory redundancy dismissal. At no point prior to his dismissal was he provided with his scores or told of the selection criteria that had been used.
The Claimant appealed the dismissal, stating that he believed he had been scored too low and that the dismissal was procedurally unfair, the criteria was subjective and he had not been given any information to allow him to challenge the scoring. The Claimant was then provided with his scores ahead of his Appeal meeting but was never shown those of his colleagues.
The Employment Tribunal dismissed the Claimant’s claim on the basis that the deficiencies identified in the initial redundancy process had been rectified at the appeal stage which had been carried out ‘conscientiously’. The Employment Appeal Tribunal allowed the appeal and referred the case back to the ET for a decision on remedy.
The EAT held that the appeal did not correct the failure to meaningfully consult at the formative stage and the dismissal was therefore unfair. There had been no opportunity to consider a different approach or for employees to impact the decision at any stage of the redundancy process and by the time the Claimant was engaged, the decision had already been made.
Lessons for Employers
This judgment firstly serves as a warning of the dangers of relying on US selection criteria solely because an organisation is global since “use of a system which reflects good industrial relations in another nation may not reflect the usual practice in the UK”.
The decision also highlights the importance of consultation even in small-scale redundancies where there is no recognised employee representation. The EAT, reflecting on the connotations of the word “consultation”, commented that substituting “general” for “collective” might be a better description of its purpose and that consultation should be seen as “a reflection of good industrial relations” regardless of whether there is union representation.
Employers should also note the emphasis that the EAT placed on commencing consultation “at a formative stage” and allowing employees to input into the process and propose alternative approaches before key decisions are made.
Resignation reconsidered: Omar v Epping Forest District Citizens Advice
Mr Omar was employed by Epping Forest District Citizens Advice (‘EFDCA’) and resigned in the heat of the moment during an altercation with his line manager. In a meeting the same day, EFDCA’s CEO advised Mr Omar to consider an alternative role. However, in a meeting two days later, Mr Omar was informed that his line manager no longer wanted to work with them and that his resignation would stand. Mr Omar initially confirmed that he would put his resignation in writing, but later sought to retract his resignation. Mr Omar’s retraction was rejected, and he was treated as having resigned with one month’s notice from the date of the altercation/resignation.
Mr Omar subsequently brought proceedings for unfair and wrongful dismissal, arguing that he had not resigned. Although it is a general rule that employers can rely on unambiguous words of resignation, the Court of Appeal has said that there are ‘special circumstances’ which oust the general rule, including ‘heat of the moment decisions’. The Employment Tribunal has established that this rule should only apply in limited circumstances, and where applicable, a ‘cooling off’ period of a few days should be applied to see whether the employee truly intended to resign. In the proceedings Mr Omar argued that the situation fell within a heat of the moment ‘special circumstances’ exception.
In the first instance, the Employment Tribunal found that Mr Omar’s words did convey his intention to resign and the words used were understood by his line manager as conveying that intention. Mr Omar had stated his intention to resign in previous altercations but had subsequently reconsidered those decisions. On this occasion, given that a cooling off period had been allowed, wherein Mr Omar had opportunities to retract his resignation in meetings, and that Mr Omar had agreed to submit a written resignation, the Tribunal found the words used were unequivocal. The Tribunal also found that, whilst Mr Omar believed he had been offered an alternative position (which he declined), he had in fact not been offered an alternative role. The Tribunal found that Mr Omar had resigned on the date of the altercation/resignation.
The Employment Appeal Tribunal departed from previous Court of Appeal authorities and found that there is no such thing as the ‘special circumstances’ exception. The EAT held that a party cannot unilaterally retract a notice of resignation without the other party’s consent. An employer must objectively assess whether a reasonable bystander would consider that the words used by the employee constitute immediate resignation/notice of resignation, that the employee really intended their resignation and that the employee was in their right mind when resigning. The employer must consider all of the circumstances that would affect how the words used would be interpreted by the reasonable bystander. The subjective intention of the employee is irrelevant, but the subjective understanding of the employer is relevant to the circumstances. The employee being in their right mind does not mean that the decision must be rational or thought through, but an intention to resign in the future will not be sufficient. The employer must assess whether the words were really intended at the time when they are spoken. The EAT found that the Tribunal had made errors of law in coming to its decision, and ultimately allowed Mr Omar’s appeal and remitted the case back to the Employment Tribunal for a re-hearing.
Lessons for Employers
This judgement casts doubt on previous case law establishing the ‘special circumstances’ exceptions to the general rule that employers can rely on unambiguous words of resignation and should allow a cooling off period. Whilst the prior case law has not strictly been overruled by this decision, the exception should be treated with caution. Employers must instead objectively assess whether the decision communicated by the employee would make a reasonable employer believe that the employee really intended to resign and whether the employee was in their right mind when communicating their resignation.
There is a fine distinction between situations where an employee did not really intend to resign, and where an employee did really intend to resign but later changed their mind. Employers must tread carefully when objectively assessing the situation but should bear in mind that a resignation does not need to be a sensible or rational decision, and an employee’s change of heart will have no legal effect unless accepted by the employer. A written resignation is more likely to indicate a real intention by the employee, and the longer an employee waits to rescind a resignation makes it more likely that a resignation was really intended.
Navigating whistleblowing claims – SPI Spirits (UK) Ltd and anor v Zabelin
A dispute emerged between Mr. Zabelin and his employer due to the company’s decision to implement salary reductions during the COVID-19 pandemic. Initially agreeing to a temporary pay cut, Mr. Zabelin expressed concerns via email when the reduction was extended. In a meeting with his employer, he then contended that the pay cuts had caused a stressful and toxic environment among employees and alleged that the company was exploiting the pandemic to reduce pay without transparency.
Upon raising these concerns, the company reviewed Mr. Zabelin’s entitlement to a discretionary bonus. When he objected, he was dismissed over the phone. He subsequently filed claims for unlawful detriment and automatically unfair dismissal based on protected disclosures.
The Tribunal upheld Mr. Zabelin’s claims, awarding him compensation exceeding £1.6 million. This amount was determined by assessing the loss resulting from detrimental conduct and dismissal, with a 20% uplift applied for the company’s failure to adhere to the ACAS Code of Practice on disciplinary and grievance procedures (the code).
The employer argued that compensation should be capped at £270,000, citing a clause in Mr. Zabelin’s employment contract stipulating this amount in case of termination, subject to a confidentiality and non-competition agreement. They argued that the code had not been engaged since the employee had not raised a written grievance about the issues which were the subject of his protected disclosures and had therefore failed to comply with the provisions of paragraph 32 of the code which states “If it is not possible to resolve a grievance informally employees should raise the matter formally and without unreasonable delay with a manager who is not the subject of the grievance. This should be done in writing and should set out the nature of the grievance.”
The EAT dismissed the appeal. They saw the clause in the employment contract as an attempt to disapply or limit a statutory provision and that his initial email had triggered an obligation to follow the grievance provisions of the ACAS code. This obligation continued even when he made subsequent verbal complaints since there had been no material change in the nature or scope of the complaint. Even though the protected disclosures themselves were not in the initial email, they related to the same subject matter.
Lessons for Employers
This case is noteworthy for two reasons. Firstly, it reminds employers that they will not be able to contract out of the provisions of s.203 of the Employment Rights Act 1996 which allows for uncapped compensatory awards in whistleblowing cases.
Secondly, it is a firm reminder of the statutory importance of the ACAS code and the dangers employers will face if they fail to follow its grievance provisions, even when subsequent complaints are raised verbally in meetings.
MoJ’s consultation on employment tribunal free reintroduction
On 29 January, the Ministry of Justice (MoJ) launched a consultation on reintroducing a fee for all employment tribunal claims and appeals to the employment appeals tribunal (EAT). In contrast to the last fee regime (which was introduced in 2013 and abolished following a successful judicial review challenge in 2017), the fee would be a flat rate of £55 which the MoJ considers “modest”.
Key aspects of the consultation include:
One fee of £55 would be payable by the claimant on presenting a claim or lodging an appeal.
No separate hearing fee would be due.
The same fee is payable for all types of claim (unless the claim relates to an entitlement to payment under the National Insurance Fund, in which case no fee will be due).
Only one fee would be payable even if there are multiple claimants.
At the appeal stage, the fee would be payable on lodging an appeal in respect of each tribunal judgement, decision, direction or order being appealed.
No additional fee would be payable for an employment appeals tribunal hearing.
The MoJ’s stated aim is receive a contribution towards the running costs of the employment tribunals service, while at the same time adhering to key principles of affordability, proportionality and simplicity. The consultation closes on 25 March 2024. If implemented, fees may become payable from November 2024. We will update you with the outcome of the consultation in due course.
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