|
|
| |
Employment Law Update
 |
August 2008 Bulletin
Employment Law Update
With the Equality Bill and the removal of the Statutory Disciplinary, Dismissal and Grievance Procedures (the SDDPs) occupying the column inches of most legal publications, it is easy to forget that other, less publicised changes are constantly taking place within the field of employment law.
Below is a summary of three of the most recent changes, and how they might affect you as an employer. Whilst we always stress to employers the importance of keeping up to date with the major legal developments, we understand that some of the minor changes will inevitably slip through the net.
With that in mind, we suggest that employers consider the following:-
Making the employee pay (literally)
Having gone through a vigorous and time consuming recruitment procedure, there is nothing worse for an employer than an employee changing his mind shortly after signing his contract of employment.
Usually, there is little the employer can do to claw back the time and money spent on recruiting the employee. The law has long stated that employees shall not be subjected to 'penalty clauses' in their contracts of employment, thereby preventing employers from simply demanding that the employee pay a fixed sum of money in the event that they do not proceed with the contract.
However, the recent High Court decision of Tullett Prebon Group Limited v Ghaleb El-Hajjali has illustrated that there are circumstances when an employer can rely on a 'liquidated damages clause' to recover any losses incurred as a result of the employee's change of heart. Although, on the face of it, these clauses aim to achieve precisely the same result as the unlawful 'penalty clauses', there is a very important difference in their construction and certain criteria must be met to ensure that such a clause will be valid.
Firstly, both parties need to have equal bargaining power, and both should be legally represented. Secondly, the level of damages stipulated in the clause should be given careful consideration, as the clause will only be enforceable if the damages represent a genuine pre-estimate of the likely costs incurred by the employer in the event of the employee's default – as opposed to an arbitrary penalty amount. Employers should therefore be prepared to justify their calculations.
This change will not affect the majority of employers, but could be an issue where an employee is being brought in to work on a contract in a specialist capacity. If you find yourself in a situation such as this, we would strongly suggest contacting our employment team who can advise you on the best way to protect yourself if the employee in question gets cold feet.
Suspending employees without pay
Until the SDDPs are revoked and replaced in 2009, employers should still approach any potential disciplinary situation with caution.
Where an employer is faced with an instance of misconduct, he may decide to suspend the employee who is being investigated. This may well be a suitable course of action where there is a potential threat to the business or other employees, or where it is not possible to investigate the allegation properly if an employee remains at work (because, for example, they may tamper with evidence or attempt to contact and influence witnesses).
The standard practice is to suspend the employee on full pay, and this is widely observed by employers. However, employers are becoming frustrated that a suspended employee continues to receive his wages when his input into the business is non-existent.
So is it possible to suspend the employee without pay, pending the outcome of the investigation? If so, should you take this course of action?
The first answer is 'Yes', the second a resounding 'No'. A suspension without pay will fall within the scope of 'relevant disciplinary action' and is therefore subject to the SDDPs. Recent case law has confirmed that the employer must send the employee a step 1 letter if it is contemplating suspending the employee without pay. The letter should be sent before the suspension takes effect - thereby giving the employee the chance to put their case forward. Employers will no doubt notice that this would result in a duplication of the disciplinary procedures – once for the suspension and again for the final disciplinary decision.
Our advice in relation to this issue is that suspensions without pay should be avoided if at all possible. The risk to an employer if the procedure is handled incorrectly far outweighs the cost of paying the employee during his period of suspension.
If you are considering suspending an employee, our specialist employment team would be happy to advise on the safest way of doing so.
A good 'tip' for employers
Under the current law, most workers are entitled to receive the minimum wage, which is currently set at £5.52 per hour for workers aged 22 and over.
On 31 July 2008 the Government announced its plan to change the law so that tips, gratuities and service changes can no longer be taken into account when deciding if a worker has received the National Minimum Wage. It is anticipated that the change will take place in 2009.
The changes will end the much used practice of employers using tips to 'top up' staff wages to meet the National Minimum Wage (which rises to £5.73 on 1 October 2008).
Employment seminar
The employment team will be holding an Employment Seminar on Tuesday 4 November 2008 at Sandy Park Conference Centre, Exeter.
We will be posting further details on our next bulletin of speakers and topics.
|
 |
Tel: 01392 688688 |
| Copyright © Michelmores LLP 2007. Woodwater House, Pynes Hill, Exeter EX2 5WR |
 |
|
|
|
