1. EMPLOYMENT BULLETIN
MARCH 2010
CONTENTS:
• Annual/Sick Leave: BIS Guidance issued
• Corporate Manslaughter: Sentencing Guidelines
• Bonuses: No implied term that eligibility depends on continued employment at payment
date
• Employment Status:
• DDA: Effectiveness of reasonable adjustment is of paramount importance
• Unfair Dismissal: Dismissal fair to protect employers’ reputation
• Directors: Duty to avoid conflicts of interest
•Unfair Dismissal: Trust and confidence goes both ways between employer and employee
• Inducing Breach of Contract: New employer liable for poaching staff
• Unfair Dismissal: Dismissal unfair when informal procedure abandoned in favour of formal
action
• Discrimination: Lack of knowledge precluded victimisation finding
• National Minimum Wage: Increases from October 2010
• National Minimum Wage: New Minimum Wage for Apprentices
• Holidays and Sickness: ECJ decision applied
Margaret-Anne Trench – Solicitor
20 Green Lane, Lower Kingswood, Surrey, KT20 6TB
T: 01737 833850 M: 07900 490070
Regulated by the Solicitors Regulation Authority (SRA No: 469453)
Member of the Employment Lawyers Association
VAT registration number: 941 1724 41
www.barrco.org.uk

2. Annual/Sick Leave: BIS Guidance issued
The Department for Business, Innovation and Skills (BIS) has finally issued updated
guidance on the interaction of annual leave and sick leave in light of the recent European
decisions. In short, the guidance says that a worker can choose to take their statutory
annual leave at the same time as sick leave, or the worker can choose to take the missed
annual leave at a later date. You cannot force an employee to take annual leave while on
sick leave. A worker who has missed out on statutory annual leave due to sickness may be
able to carry over the missed leave to the next leave year. Full details of the guidance can
be found at www.berr.gov.uk/policies/employmentmatters.
Corporate Manslaughter: Sentencing guidelines
Sentencing in cases of corporate manslaughter or health and safety offences resulting in
death are now the subject of definitive guidelines issued by the Sentencing Guidelines
Council in England and Wales. The guidelines apply in any case in which an organisation is
being sentenced on or after 15th February 2010, regardless of when the offence occurred.
The advice in the guidelines is clear: punitive and significant fines should be imposed both to
deter and to reflect public concern at avoidable loss of life. In relation to an offence of
corporate manslaughter the guidelines suggest these should result in a fine which will
seldom be less than £500,000 and may be measured in millions of pounds. Where death
has occurred but a charge of health and safety offence has been brought, rather than
corporate manslaughter, the appropriate fine will seldom be less than £100,000 and may be
measured in hundreds of thousands of pounds or more. Full details of the guidelines are
available: www.sentencing-guidelines.gov.uk/docs/guidelines_on_corporate_manslaughter.
Bonuses: No implied term that eligibility depends on continued employment at
payment date
Unsurprisingly, the High Court has refused to imply a contractual term that an employee
must be employed and/or not under notice at the date of payment to be considered under a
bonus scheme. The case highlights that to avoid any such confusion surrounding bonus
schemes and their eligibility; employers should have clear and concise express written
particulars.
Employment status:
Another recent case highlights the fact that even though workers had entered into written
contractual arrangements, which purported to be a contract for service, when looking at the
facts of the arrangements they were actually employed via a contract of employment. The
decision is a useful reminder of the factors to consider in ascertaining employment status,
confirming the importance of identifying and analysing all the elements of the contract
between the relevant persons. The decision also illustrates that a right of substitution, even
if exercised, does not necessarily lead to a conclusion that the person is self-employed. If
the substitute must be approved by the client and is engaged and paid by the client, this may
be consistent with an employment relationship.
DDA: Effectiveness of reasonable adjustment is of paramount importance
Margaret-Anne Trench – Solicitor
20 Green Lane, Lower Kingswood, Surrey, KT20 6TB
T: 01737 833850 M: 07900 490070
Regulated by the Solicitors Regulation Authority (SRA No: 469453)
Member of the Employment Lawyers Association
VAT registration number: 941 1724 41
www.barrco.org.uk

3. An Employment Tribunal has recently reminded us of the correct approach to adopt on the
question of making reasonable adjustments. The correct approach was first to consider
whether making the adjustment would overcome the disadvantage suffered by the disabled
person, and then to consider the other factors, such as whether it was practical for the
employer to take such steps or the associated cost. The case involved an agoraphobic
employee, who requested to work from home. It was held that the tribunal had been wrong
to focus on the employer’s failure to consider this request, without first considering the fact
that any such adjustment would have been futile in any event. The evidence showed that
the nature of the work, which involved face-to-face interviews with the public and handling
confidential files that others in the office needed to have access to, could not be done
effectively from home. The case reinforces the principle, that if there is no prospect of the
adjustment proposed for removing the disadvantage, it will not be a reasonable adjustment.
Unfair Dismissal: Dismissal fair to protect employers’ reputation
An employee was fairly dismissed by a public authority following a police “disclosure” that he
had been engaged in paedophile activity, although he had not been convicted of any
offence. The employee in question was a senior civil servant whose job involved foreign
travel. He was dismissed after allegations of serious misbehaviour, including that he had
been engaged in paedophile activity in Cambodia, notwithstanding his acquittal by a
Cambodian court, that the alleged activity was not while he was at work and that his job did
not involve contact with children. The tribunal agreed with the employer that it was entitled
to take the view that to continue to employ, in the position in question, a person who it had
been officially notified was a sex child offender and posed a continuing risk to children,
would – if he were subsequently exposed (which it was plainly reasonable to anticipate) –
severely shake public confidence in it and affect its public reputation.
Directors: Duty to avoid conflicts of interest
The case involved a company director following his resignation from employment and his
directorship. He initially went to work for another company for four months but following his
redundancy he set up his own company in competition with that for whom he had been a
director. It is important to note that he was bound by post employment restrictive covenants
in his written contract of employment, but these had all but expired by the time he set up his
new company. His former employers applied to the court for an order under the Companies
Act 2006, restraining the employee from canvassing or soliciting its customers. This is the
first case of its kind to consider the duty on directors to avoid conflicts of interest under this
act. The court confirmed that judiciary duties of a director do not entirely come to an end
when they resign. Where a former director resigns and sets up in competition with the
company, they remain subject to a statutory duty to avoid a conflict of interests between their
duties to their old employer and their self interest, as regards the exploitation of any
property, information of which they became aware at a time when they were a director.
However, the court ruled that there was no blanket prohibition on the former director
canvassing or soliciting business from his former employers’ customers. It is important to
remember that each case turns on its own facts and that the nature of the business in
question was particularly influential in this case. It is also important to note that the outcome
may have been different had the former director still been subject to ongoing post
employment restrictions.
Margaret-Anne Trench – Solicitor
20 Green Lane, Lower Kingswood, Surrey, KT20 6TB
T: 01737 833850 M: 07900 490070
Regulated by the Solicitors Regulation Authority (SRA No: 469453)
Member of the Employment Lawyers Association
VAT registration number: 941 1724 41
www.barrco.org.uk

4. Unfair Dismissal: Trust and confidence goes both ways between employer and
employee
Trust and confidence is normally a phrase associated with employees resigning and bringing
a claim for constructive dismissal based on an irretrievable breach of the trust and
confidence between employer and employee. However the Court of Appeal has recently
confirmed that trust and confidence goes both ways between employer and employee and
that an employer is entitled to terminate an employee’s contract if they are guilty of
misconduct so serious that it undermines the trust and confidence which is at the heart of
the contract of employment. The case in question concerned two senior directors who failed
to advise their employer of a serious problem emerging with a supplier concerning a
substantial letter of credit and probably involving serious fraud. When the matter eventually
came to the employer’s attention, both were suspended and subsequently dismissed for
gross misconduct. This was on the basis that the employer was entitled to accept that the
contract of employment had been repudiated in its essence, entitling them to terminate it.
Inducing Breach of Contract: New employer liable for poaching staff
In a costly squabble between two financial broking companies based on claims that one had
unlawfully poached some 50 brokers from the other, the High Court has ruled that unlawful
poaching did take place but has yet to determine damages, (claimed at around $500million).
It was claimed that the new employers had arranged for the brokers to make sham
constructive dismissal claims with the idea of enabling them to claim that their former
employers were in breach of their contracts of employment, and therefore they would be
released from their contracts, including the post employment restrictive covenants clauses,
which would otherwise have prevented them for working for the new employer. The High
Court held that the brokers had not been constructively dismissed from which it followed that
the restrictive covenants in their employment contracts were enforceable and therefore had
been breached. Having knowledge of the post employment restrictions, the former employer
was entitled to bring an action against the new employer for inducing a breach of the
employees contracts rather than sue each broker individually. The case is a reminder to
employers that when drafting post employment restrictive covenants, they should make
provision that employees show the restrictions to any new employer and that also if the old
employer gains knowledge that the employees are moving to a new employer they can send
a copy of these restrictions to them, which if they ignore will expose them to a claim for
inducing a breach of contract. Although it is more common to sue the employees direct this
course of action allows the former employer to sue the new employer who for all intent and
purposes is likely to have more financial resources to pay any damages.
Unfair Dismissal: Dismissal unfair when informal procedure abandoned in favour of
formal action
The case involved a mental health trust who had received several complaints from staff
regarding a consultant psychiatrist, alleging his conduct was harassing and distressing. The
Trust decided to deal with the allegations under its Fair Blame policy, an informal procedure
designed for conduct which did not constitute a serious or gross offence. While the
investigation was ongoing, it was alleged that the employee had behaved inappropriately
again and at the end of the informal proceedings, the consultant was unexpectedly advised
that the matter would be referred to the General Medical Counsel, as a result of which the
Margaret-Anne Trench – Solicitor
20 Green Lane, Lower Kingswood, Surrey, KT20 6TB
T: 01737 833850 M: 07900 490070
Regulated by the Solicitors Regulation Authority (SRA No: 469453)
Member of the Employment Lawyers Association
VAT registration number: 941 1724 41
www.barrco.org.uk

5. consultant withdrew from the informal procedure to be dealt with via an ordinary disciplinary
hearing. The outcome was his summary dismissal for gross misconduct. The Court of
Appeal agreed with the tribunal’s decision that it was entitled to consider that it was
inconsistent for the Trust to use the informal procedure, indicating that it regarded the
misconduct to be relatively minor, then to dismiss the consultant for gross misconduct based
on much the same matters. In addition, the additional misconduct which came to light during
the investigation process was held not to amount to gross misconduct, either individually or
accumulatively, justifying dismissal. This case is a warning to employers when dealing with
misconduct matters to ensure that they embark upon the correct procedure from the outset.
Discrimination: Lack of knowledge precluded victimisation finding
Knowledge of a complaint of discrimination (the protected act) is a vital component in the
chain of causation of dismissal for the dismissal to amount to victimisation. In this case a
doctor who complained of race and religious discrimination was dismissed, due to (among
other things) a threat by another key member of staff to leave. The court held this could not
be victimisation because at the time that the threat was made that member of staff had no
knowledge of the discrimination complaint that had been brought.
National Minimum Wage: Increases announced for October 2010
The Government has announced increases in the national minimum wage to take effect from
1st October 2010. The new hourly rate for a standard adult is £5.93, the development rate is
£4.92 and the young workers rate is £3.64. Note also that the Government has extended
the adult standard rate to include 21 years old from October 2010, the qualifying age up until
that date remaining at 22.
National Minimum Wage: New Minimum Wage for Apprentices
The Government has accepted recommendation by the Low Pay Commission to introduce a
national minimum wage for apprentices. This will be set at £2.50 per hour and will apply to
apprentices under 19 years of age or those aged 19 and over but in the first year of their
apprenticeship. All other apprentices already receive the national minimum wage,
depending on their age.
Holidays and Sickness: ECJ decision applied by Tribunal
Another employment tribunal has reaffirmed the recent European judgement and held that
an employee who was off sick for a couple of years before his resignation was entitled to be
paid in lieu of his full holiday entitlement on termination of his employment because his
sickness absence had prevented him from taking his annual leave. It was ordered that he
be paid his holiday pay in lieu for the whole of 2005, together with the period until his
termination date in 2006. This obviously demonstrates the tribunals approach to sickness
and holidays following the European decision, despite the Working Time Regulations stating
that there is no right to carry forward four weeks of statutory minimum entitlement into the
next holiday year.
Margaret-Anne Trench – Solicitor
20 Green Lane, Lower Kingswood, Surrey, KT20 6TB
T: 01737 833850 M: 07900 490070
Regulated by the Solicitors Regulation Authority (SRA No: 469453)
Member of the Employment Lawyers Association
VAT registration number: 941 1724 41
www.barrco.org.uk