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On 29 July 2013 the Government introduced a new section into the Employment Rights Act 1996 introducing the concept of “pre-termination negotiations”.

No doubt we are all familiar with pre-termination negotiations (or, more colloquially termed “settlement discussions”) but, to avoid any confusion, they invariably take place between employee and line manager and are along the following lines:-

“Look, Brian, I value the effort you have put into your job but, after ten years of service, the job has moved on but your skills have not. I have genuine performance concerns. We could go down the performance management route, and see what develops, which may not be a pleasant process for either of us. Would you prefer to do a deal and leave on agreed terms?”

The terms of any such discussion are now inadmissible in any subsequent proceedings for ordinary unfair dismissal brought by the employee – that is, neither party is entitled to notify the Tribunal that the discussion even took place, never mind what was said. This can be a very important rule. Often employers will say things during settlement discussions which contradict their stance before the Tribunal. For instance, during a settlement discussion, a line manager may say to the employee “you are good, just not quite good enough”, whereas, before the Tribunal, the official line may be “he was the worst employee we ever had”. Obviously, in such a situation, the employee will want to tell the Tribunal all about what was said during the settlement discussion.

How to handle a settlement discussion

The law in this area can now be summarised as follows:-

1. Settlement discussions cannot be referred to in Tribunal proceedings for unfair dismissal.

2. Most significantly, an employer can announce to his employee “out of the blue” that they are having a settlement discussion”. This is significantly wider than the old “without prejudice” rule (see point 6 below), under which there had to be in existence a dispute (i.e. both employer and employee complaining about each other) before any discussion about that dispute could be said to be without prejudice and confidential.

3. ACAS has produced a statutory Code of Practice which Tribunals are required to take into account. One of the Code’s key suggestions is that employers, when putting forward a settlement proposal, explain why they are doing this. For instance, if the employer has performance concerns, he should say so.

4. Whilst employees do not have a statutory right to have a companion during any settlement discussion, the Code does suggest that employers allow this as a matter of best practice.

5. The Code further states that the employee cannot use anything said during settlement discussions as the basis for a grievance.

6. Note that the new “settlement discussion” concept is additional to the old “without prejudice” rule. It has long been the policy of the courts that, where parties are in dispute, any discussions genuinely aimed at settling such disputes are exempt from being referred to in legal proceedings. The reason behind this rule is that it is in the best interests of all if parties are able to do deals and avoid the expense of legal proceedings. However, the old “protection” is only triggered by discussions held once the parties are in dispute. For example, where the employer has begun disciplinary action and the employee has filed a counter grievance. In that scenario, there is a two-way dispute – employee and employer are complaining about each other. Conversely, if the complaints are coming from the employer only, there is no dispute and hence no scope for a without prejudice discussion. However, the new settlement discussion rules fill this gap. They effectively allow the employer to announce to the unsuspecting employee “you are not up to standard in my opinion; I am considering disciplinary action; lets see if we can do a deal first”.

When the settlement discussion will not be confidential

The statutory protection (i.e. from being referred to in Tribunal proceedings) afforded to settlement discussions applies only to ordinary unfair dismissal claims. Protection does not apply to claims for discrimination, automatically unfair dismissal (e.g. a health and safety related dismissal or a whistle blowing dismissal), nor to wrongful dismissal claims (i.e. claims for notice pay.

Settlement discussions lose their protection if the employer is guilty of improper behaviour. What is “improper”? The Code gives a non-exhaustive list of examples including harassment, bullying and intimidation, offensive words or aggressive behaviour, physical assault or threats of physical assault or other criminal behaviour and discrimination/victimisation. Also, the employer must not put improper pressure on the employee by, for example, not allowing him reasonable time to consider terms of settlement (the Code suggests a minimum period of ten days), telling the employee that if they do not do a deal they will be dismissed (although it is perfectly proper to notify them that they will face a disciplinary process).

Stephen Hopkins, Partner at The Wilkes Partnership, says: “Overall, settlement discussions should be seen as a welcome development in the law by employers. Provided employers avoid the obvious pitfall of approaching such discussions in a disproportionately aggressive manner, they have everything to gain and nothing to lose”.

If you have any query arising from this update, please contact Stephen Hopkins or any member of the Employment team.

Prop Lit When can you Recover Rent

The Property Litigation Team at The Wilkes Partnership regularly advise both landlords and tenants in relation to break clauses. Often that advice centres on whether or not a tenant has complied with all conditions to which the break notice is subject. Victoria Khandker looks at an unexpected decision, in which the High Court has held that, in the absence of a term to the contrary, tenants can now seek to recover part of any rent paid in advance, which relates to a period following the break, once that break has occurred.

There has been a line of case law which made it clear that, in order to satisfy a break clause which was conditional on payment of all rents due, and where the break date was not the day before a rent payment day, a tenant would always have to pay a full quarters rent in advance of that break date, even where the break date meant that the lease would be terminated mid-quarter. No subsequent apportionment would be permitted, unless the lease set out otherwise.

In the recent Chancery case of Marks and Spencer PLC v BNP Paribas Securities Services Trust Company (Jersey) Limited and BNP Paribas Securities Services Trust Company Limited [2013] EWHC 1279 (Ch) there was a tenancy of four floors of office space in ‘The Point’, Paddington. In order for M&S to bring its tenancy to an end in January 2012 by exercising a break clause, it was required to pay in full both the December quarter rent and a ‘break fee’ equivalent to one year’s rent. In spite of the fact that the lease did not expressly allow M&S to recover any refund of the rent for the remainder of the quarter which fell after the break date, the Court held that such a term would be implied into the lease as “an eminently reasonable term” and therefore that M&S was entitled to repayment from its landlord, BNP, of rent and other charges paid in advance (including service charges, insurance and car parking rents), for the remainder of the quarter.

This is the first time a Court has implied such a term into a lease. However, each case will always turn on its own facts, and it was very important in this case that the tenant had paid a premium for early termination of the lease. It appeared therefore that the parties had considered what compensation the landlord should be entitled to in such a situation, and therefore that it was probably not entitled to a further sum by way of overpayments. Additionally, there was wording in the lease in this case, such as reference to the rent being paid in instalments, which may also have tipped the balance in M&S’s favour.

Victoria Khandker points out that “This is only a first instance decision and as such is not binding on other Courts. It is not clear at present if the case is being appealed but it appears unlikely. The key thing to remember is, despite this decision, that where a break is conditional a tenant should still always pay the full quarter’s rent in advance without deduction, and attempt to recover any overpayment thereafter, failing which the break notice may fail completely. There is no guarantee a refund will be received, but this is always going to be secondary to effecting the break properly.”

The Property Litigation Team at the Wilkes Partnership is experienced in advising on all issues relating to break clauses for both landlords and tenants. If you would like to discuss any of these issues further please contact Victoria Khandker (0121 710 5843) or Carl Csukas (0121 710 5842) who will be happy to assist.

TUPEimage2

A recent case in the Employment Appeal Tribunal (Rynda (UK) Limited v Rhijnsburger) reminds us of the fundamental principles which apply to service provision change transfers. In this case, a single employee was held to constitute an organised grouping of employees that was the subject of a TUPE transfer.

To recap, where activities are outsourced, or where there is a change in contractor providing the activities, or where outsourced services are brought back in-house, the employment of anyone within an organised grouping of employees carrying out those activities transfers automatically. This is known as a service provision change and is a “relevant transfer” under TUPE. So, for example, where an organised grouping of IT people provide an IT service to a particular client and the client decides to transfer the work to a new contractor; upon the transfer, the IT workers move with the contract on their existing terms and conditions.

Rynda reminds us of the following key principles:-

1. A single employee can constitute an “organised grouping of employees”.

2. The tribunal’s starting point will always be to identify precisely the “activities” which were being performed by the grouping and which are transferring out to a new contractor. The next step is to identify whether an “organised grouping of employees” carried out those “activities” as its “principal purpose”.

3. In other words, there is a three stage approach:-

(a) What were the activities?
(b) Was there an organised grouping?
(c) Was its principal purpose the carrying out of the activities?

4. The key period for the Tribunal to focus upon is the stage immediately prior to the transfer. For instance, if the transfer takes place on 1 June 2014, the Tribunal should focus on what was happening during, say, March, April and May.

5. For there to be an organised grouping of employees, the arrangement must not be purely by chance or accident or without any deliberate planning or intent. The employer must consciously decide that certain employees are to work on a certain project.

6. The organised grouping of employees must have as its “principal purpose” the service in question. In other words, if various services are performed by the group for various clients that is unlikely to be sufficient. There must be a deliberate focus on a particular client/service.

7. Temporary arrangements are ignored (ie anything which is short term, finite or subject to review).

Stephen Hopkins, Employment Partner, comments: “There have been numerous cases on service provision changes and whether they amount to a relevant transfer under TUPE. This case is a useful reminder of the key principles that apply. Note that the Government decided in response to its recent consultation on TUPE reform not to remove the service provision change provisions, therefore these principles are highly relevant”.

If you would like to discuss any issue or query arising from this update please contact Stephen Hopkins or any member of the Employment team.

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TUPEimage1

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) has always caused consternation amongst businesses because of the significant protections it affords to transferring staff and the blunt manner in which it operates. Essentially, if TUPE applies to a business transfer, all employees who are wholly or mainly assigned to that business must transfer to the employ of the new owner on the same terms and conditions, and with protection against dismissal and with the right to be informed and consulted via appropriate representatives. The new employer automatically “steps into the shoes” of the old employer in terms of all employee rights and liabilities from the point of transfer and is significantly hampered in its ability to make changes in relation to the workforce it inherits.

TUPE comes from an EU Directive which was transposed into UK law in 1981 and was last amended by the UK in 2006. It has always generated a significant amount of case law.

Following a significant public consultation, the current Government intends to implement changes to TUPE which are expected to come into force in January 2014.

The key changes will be as follows:-

1. Service Provision Change Transfers

There are two types of business transfer caught by TUPE – the conventional business transfer (e.g. sale of a factory) and service provision change (“SPC”) transfer (i.e. where a service changes hands – outsourcing, re-tendering and in-housing).

Initially, the government had contemplated abolishing SPC transfers. The significance of the SPC concept is that it makes TUPE more clear and certain. In the context of outsourcing, re-tendering and in-housing the SPC concept means it is often beyond doubt that TUPE does apply. The abolition of SPCs would mean a reversion to old TUPE and the old uncertainty as to whether TUPE applied at all to the transfer of labour intensive activities (eg the provision of IT services) when no assets transfer.

One amendment which is to be introduced is that the “activities” performed by the employees in question must remain “fundamentally or essentially the same” after the transfer. This is no great development given the Courts have already adopted this approach.

2. Employee Liability Information

This refers to the obligation upon a transferor to provide information to the transferee (eg regarding the terms and conditions and disciplinary and sickness records of the workforce). Such information must now be provided at least 28 days prior to the transfer rather than 14.

3. Collective Agreements with Trade Unions

After January 2014 a transferee will be permitted to re-negotiate collective agreements after 1 year from the transfer, although any overall changes to staff’ terms and conditions (“Ts&Cs”) must be no less favourable to employees. So, this allows employers a little room for manoeuvre.

Further, new TUPE will expressly adopt a “frozen” (as opposed to .”dynamic”) approach to collective agreements. That is, the transferee, whilst he will be bound by existing Ts&Cs under any collective agreement, will not be bound by future changes to Ts&Cs under those collective agreements.

4. TUPE Dismissals

The Government has decided to retain the carve out from automatic unfair dismissal where an employer dismisses for an “economic, technical or organisational reason entailing changes in the workforce” (this is known as the “ETO defence”).

So, no significant change here – although the Government will be amending the wording of the Regulations so that it is more closely aligned with the language of the EU Directive on which TUPE is based. The Regulations will no longer refer to dismissals being automatically unfair where they are made “in connection with” the transfer”, instead it will only refer to dismissals that are “by reason of” the transfer (subject to the ETO defence explained above). Arguably this makes it easier for employers to avoid automatic unfair dismissal liability under TUPE, however the weight of opinion is that this is only a semantic, not a substantive change in reality.
What will certainly not change is that any dismissal which is directly “by reason of” the transfer will remain automatically unfair. For instance, any pre transfer dismissals by the transferor made in an attempt to make the business more attractive to a purchaser will remain unfair. Similarly, any pre-transfer dismissals by the transferor at the transferee’s request will remain unfair.

Another change that will occur, again pro-employer, is the possibility to start collective redundancy consultation by the transferee before the TUPE transfer (see comment below).

5. Relocation

To date, TUPE has dealt harshly with transferees who require their new workforce to relocate. For example, if a London firm buys the business of a Birmingham firm and wishes to take the entire business in house (ie within its London’s premises) then, intuitively, one would consider the Birmingham workforce to be entitled to redundancy payments only and no more (unless they wished to locate to London and were unfairly refused). However, TUPE has always treated those Birmingham staff as automatically unfairly dismissed and therefore entitled to unfair dismissal compensation in addition to their redundancy entitlement. This is now to change. Adopting TUPE jargon, “relocation” will constitute an “ETO reason”, thereby preventing genuine place of work redundancies from being automatically unfair

Stephen Hopkins, Employment Partner at The Wilkes Partnership, comments: “The changes to TUPE are to be largely welcomed by employers. They are not a monumental change to the existing Regulations, but they do give more scope for transferee employers to make changes such as relocation post transfer and implementing changes to terms derived from collective agreements inherited under TUPE. The Government has also stated that it will amend the Trade Union and Labour Relations (Consolidation) Act 1992 so that collective redundancy consultation by the transferee can start pre TUPE transfer. This is a helpful development, as otherwise transferee employers have to wait to start the clock running on collective redundancy consultation with employee representatives until after the TUPE transfer takes place. Also, the ability to inform and consult directly with employees in micro businesses that employ 10 or fewer employees, is a sensible development. Overall, these changes are good news.”

Finally, the Government has also made noises that it would prefer to see greater flexibility for employers to harmonise terms and conditions post TUPE transfer and that it will “engage with European partners to demonstrate the potential benefits of a harmonisation framework for individuals and the economy”. Will this mean relaxation of TUPE to permit a form of post transfer harmonisation? Watch this space – although this will need the buy in of Europe, so it could be difficult and take a while.

If you would like to discuss any issue or query arising from this update please contact Stephen Hopkins or any member of the Employment team.

EmploymentNew1

The concept of becoming an employee owner was first floated by the Chancellor, George Osborne, in October 2012. After a bumpy ride through Parliament, and huge controversy around its implications, employee shareholder status finally became legally effective this month. Section 205A of the Employment Rights Act 1996 permits an employee to waive some (but not all) of his/her employment rights in return for receiving shares in the company, thus becoming an “employee shareholder”.

The minimum share allocation is £2,000 and up to this level there is no income tax charge. Any gains made on the first £50,000 of shares attract no capital gains tax.

There are clearly significant tax savings in becoming an employee shareholder, but the employee must give up certain employment rights in exchange for these savings. Are companies going to offer this benefit to their staff? How valuable is it to the employer and the employee?

What rights does the employee give up?

The protective rights waived by the “employee shareholder” are as follows:-

  1. The right not to be unfairly dismissed;
  2. The right to a redundancy payment;
  3. Other subsidiary rights relating to requesting time off for study/training, requesting flexible work and returning early from statutory maternity, paternity or adoption leave.

Importantly, the right not to be discriminated against is not waived. This is a significant carve out from the rights given up because discrimination claims attract the highest awards of compensation.

Procedure

Procedurally, the process of becoming an employee shareholder is a little cumbersome in that the employee must provide a detailed written statement to the employee explaining the rights being sacrificed and the rights attaching to the shares.

The employee must also receive independent legal advice (similar to entering into a Settlement Agreement, formerly a Compromise Agreement).

Analogous to being sold a financial product, the employee has a seven day cooling off period from the day legal advice is received.

A good deal for employees?

The trade off is a simple one: shares in return for rights. All depends, of course, upon the value of the shares offered. The average successful unfair dismissal claim is worth around six months’ net pay. For an employee earning £2,000 net per month, this equates to £12,000. The employee must also factor in the real likelihood that they may never need to enforce their employment rights (e.g. they may resign or may be dismissed in a perfectly fair and legitimate way – i.e. on the ground of genuine redundancy, after a reasonable process has been followed). Accordingly, one would imagine, a share offering of some £5,000 would prove attractive. Whether the employer would be willing to volunteer £5,000 worth of shares is another matter.

For senior employees in highly paid positions, tax efficient equity participation will outweigh waiver of employment rights. The benefits under their contract of employment will be more valuable financially, than the value of any unfair dismissal /redundancy payment entitlement.

A good deal for employers?

It is thought that this development in the law will be of obvious relevance to those employers who already offer shares to their workforce. Going forward, why not extract a waiver of employment rights as the quid pro quo for such shares?

The development will also be of interest to employers wanting to devise attractive remuneration packages to incentivise senior staff in their organisation. As explained above, for highly paid employees, their contractual benefits are usually more valuable than potential unfair dismissal/redundancy payment entitlements.

If a company and an individual are considering entering into an employee shareholder agreement they should carefully consider the tax and employment law issues and the choices relating to shares and options. Used correctly, this could be an attractive option for both employees and employers.

If you have any queries or would like to discuss any of the issues raised in this update, please contact Stephen Hopkins or Pam Sidhu in the Employment Team.

G200 Leaders
The Wilkes Partnership have joined the Growth Board launched this week by the great200leaders scheme. Created by Birmingham City Council as part of the Business Development Programme, the great200leaders scheme helps SMEs implement growth and expansion plans. The Wilkes Partnership LLP is joined by Orbis Partners LLP and Clay Rogers & Partners Limited on the Growth Board, which is designed to give professional support as part of the scheme.

Adrian Davies, CEO of Winning Moves, the business improvement consultancy managing the delivery of the great200leaders scheme, said: “great200leaders exists to support the brightest and most progressive business leaders in Greater Birmingham to build their leadership skills and give them the confidence to take their company to the next level. Creating the Growth Board means that all of our participating businesses will have access to professional expertise as part of the Business Development Programme. We are delighted that Wilkes, Orbis and Clay Rogers are involved, which demonstrates their own commitment to helping their clients and local businesses to be the best they possibly can be.”

The great200leaders scheme is a unique personal performance and business growth scheme. Aimed at individuals and companies in the Greater Birmingham and Solihull LEP area, the scheme offers 200 business leaders the chance to receive over 100 hours of coaching and mentoring, with financial assistance available for qualifying businesses.

The Wilkes Partnership Solicitors will be providing mentoring support to participants on legal issues, whilst Clay Rogers will be available on employee benefits, auto-enrolment and wealth management and Orbis Partners on funding, corporate finance and exit planning. All three firms are urging ambitious business owners and directors in the West Midlands to make the most of the pioneering £8m programme designed to create the next generation of business leaders and entrepreneurs. Each will contribute to the programme covering core issues that directors and shareholders of growing businesses need to know, as well as offering one to one workshops with each participant.

Rick Smyth, corporate partner at Wilkes, said: “Helping and supporting growing businesses, particularly those that are owner-managed, has always been a core focus at The Wilkes Partnership. We are delighted to be involved in this programme that provides an invaluable opportunity for entrepreneurs and owner-managers to acquire the skills and expertise they need for success. Remaining places on the great200leaders scheme are limited so it’s important that businesses apply now if they wish to be considered.”

Speaking on behalf of all the Growth Board members, Tim Clay, Executive Chairman of Clay Rogers, said “As businesses develop and mature, understanding the legal, financial and regulatory issues becomes increasingly important in creating real value. All three firms involved in the Growth Board have an extensive track record in helping growing businesses in their particular disciplines. We are very much looking forward to being involved in this excellent programme”.

To find out more about, and apply for a place on, the great200leaders scheme, contact Rick Smyth at rsmyth@wilkes.co.uk or go to http://www.winningmoves.com/G200L

Planning Article JH

One of the major concerns of developers who have obtained planning permission for large commercial or residential schemes is whether the local planning authority’s decision might be challenged by an objector, seeing permission from the High Court for judicial review. John Hughes, Head of Planning, draws attention to an important recent change in the rules relating to time limits for judicial review.

“Sale contracts or option agreements frequently provide for a delay in completion to allow for the possibility of a legal challenge. The rules of court have for many years provided that an application for permission to bring an application for judicial review must be brought promptly and in any event within 3 months, subject to the Court’s power to extend the period.” notes John. “The three month period sits uneasily with the statutory period of six weeks for appeal against a decision of the Secretary of State, and has been criticised as creating an unduly long period of uncertainty. In some cases Judges have refused permission for judicial review even though the application was brought within 3 months on the ground that the objector did not act ‘promptly’ but this has only added to the uncertainty. Equally, objectors should be entitled to know where they stand as well as developers.”

This uncertainty has now been resolved by a recent amendment to the Civil Procedure Rules which will be welcomed by landowners and developers. Where a challenge is made to a planning decision, three months no longer applies; as from 1 July 2013 the deadline is 6 weeks. It should be noted however, that the old rules will still apply where the grounds for the decision arose before that date.

Judicial review is an inherent power of the Court to review administrative decisions of Government and public bodies. It is often used by objectors seeking to overturn planning permission, and indeed is generally the only possible avenue left as an objector has no statutory right of appeal against the grant of permission, unlike a developer who can appeal against the refusal of his application. Objectors wishing to apply for judicial review should, however, bear in mind that only a legal challenge can be made at this stage; the planning merits – e.g. whether the proposed development might be harmful to the environment, or to local people’s amenities etc – do not come into it. An applicant for judicial review has to show that the local planning authority’s decision is unlawful, either because the authority has exceeded its powers; or has prejudiced the objector by failing to follow proper procedures; or has acted irrationally in the way it reached its decision. This last one – often referred to as ‘Wednesbury unreasonableness’ after a leading case involving the former Wednesbury Corporation – is the ground most often used.

It is a two stage process; the objector must first of all obtain permission from a Judge in the High Court for the claim to proceed. He has to be convinced that there is a prima facie case. If permission is granted, the local planning authority will have the opportunity to defend its position at the hearing that will then take place. “Even if the Court is persuaded that the authority was in error in the way it arrived at its decision, that does not necessarily mean that the decision will be quashed. The Judge has a discretion whether to quash and refer the matter back to the authority for redetermination.” notes John.

John has considerable experience in advising on judicial review cases, both in his former life as a local authority lawyer and in private practice. He is happy to give an opinion to both developers and objectors on the legitimacy of a particular decision and the prospects of a successful challenge.

For more information please contact John Hughes on 0121 710 5946

Digital Estate MP
Approximately half the UK population have a Facebook Profile.
 
More than half the UK population use internet banking.
 
Are you one of the millions of people who interact with their bank or building society entirely online, via email or by telephone? Do you update your Facebook status or Tweet your whereabouts on a daily basis?
 
If the answered “yes” to the questions above then you should consider the effects of holding such assets on the administration of your estate when you die.
 
With the plethora of email accounts, passwords, usernames, security codes, secret words and so on it may seem almost impossible to access your assets and close accounts, remove social profiles and ensure that the administration of the estate is completed. The policies to gain access among firms and companies vary significantly and some may require just a death certificate whereas some may require a Court Order.
 
In order to make the process simpler for your Executors, keep a (secure) log of any information that may assist your Executors when the time comes. This may include a list of “online assets” a list of passwords, usernames and active email accounts. The list should be kept somewhere secure like a safe, bank deposit box or with us if we draft your Will. As with other estate planning documents, at least one other person should know the whereabouts of the list, perhaps a spouse or civil partner or other close relative.
 
One piece of advice we would offer is to read the User Agreements that you must agree to before you sign up to these services and ensure that you are compliant with the same before sharing or allowing another member of the family access to the account.
 
One recent “step in the right direction” in relation to online affairs came from Google in April this year with the addition of the “Inactive Account Manager” tab which enables you to make provisions for what will happen to your account if it remains inactive for a specified period of time. While the service does not specify that it is to be used in the event of your demise, this is clearly what the idea is getting at.
 
For more information on this and any other aspects of putting your affairs in order before you die please contact the writer, Matthew Parr on 0121 710 5944.

Emp Law ReformSweeping changes to UK employment law take effect from today, Monday 29 July 2013. Stephen Hopkins and Pam Sidhu, employment law experts at The Wilkes Partnership, believe the reforms will be welcomed by employers.

 The reforms are arguably the most substantial changes to employment law by the coalition government to date. The most significant change is the introduction of employment tribunal fees. For the first time since the tribunals were set up in the 1970s, employees will now have to pay a fee to bring a claim, whereas up until now they have been able to do this for free.

Employees who wish to bring Tribunal proceedings (for instance, claiming unfair dismissal) will be required to pay a fee.  For many years, employers have felt it to be unjust that an employee can, with apparent impunity, bring (often weak) claims – impunity in the sense that the Employment Tribunal Service has always been accessible free of charge. Further, if/when the employer successfully defends the case, it is only on rare occasion that the employee is ordered to make a contribution to the employer’s (often high) legal costs.

The typical fee to bring an unfair dismissal claim, the most common claim brought in the Employment Tribunal, is £1,200. This is likely to be a major deterrent for employees, and we anticipate that there will be a noticeable reduction in the number of employment tribunal claims brought by workers.

 When do fees become payable?

Claimants will have to pay a fee to bring a claim if their claim is presented on or after 29 July 2013.

The two most important fees are:

  •  When the claim is first begun; and
  •  A second fee which is payable if there is to be an actual hearing. Employers will of course appreciate that often claims settle on financial terms without any hearing ever taking place; the prospect of paying a second fee will no doubt be a further incentive for employees to do deals.

How much are the fees?

There are two tiers of fees – Type A and Type B.  Type B are the more expensive.  The cheaper, Type A claims, include “Wages Act” claims – i.e. where the employer has improperly failed to pay wages owing.  Type B claims include claims for discrimination and unfair dismissal.  Type B fees are higher for the simple reason that these claims are generally more expensive and time consuming.

Type of fee

Type A

Type B

Issue fee

£160.00

£250.00

Hearing fee

£230.00

£950.00

Judicial Mediation

Mediation is a popular means of seeking to settle an employment dispute.  The fee arrangement here is that the employer always pays the fee, and the fee is £600.00.

Multiple Claimants

On occasion, employees join forces and bring multiple claims.  An enhanced fee structure is in place in respect of these types of claims.

Appeals to the Employment Appeal Tribunal

If an employee (or an employer) wishes to appeal, there is an initial fee of £400.00 followed by a fee of £1,200.00 for a hearing.

What if an employee brings a claim for both a Type A and Type B matter

The employee pays one fee only, at the higher rate.

Can the employee recover any fees he/she has paid from the employer?

Yes, if the employee is successful they can ask the Employment Tribunal to order that the employer must reimburse all fees paid.

Fee Remission Scheme

Importantly, it is possible for impecunious employees to obtain a waiver of the fees. The presumption is that everyone is able to pay unless they can demonstrate, by applying through the remissions process, that they are in fact unable to do so. There are three circumstances in which full or part remission of fees will be allowed:

  •  If the employee is receiving a qualifying benefit, such as income based jobseeker’s allowance, full remission applies;
  • If the employee’s gross annual income is lower than an applicable threshold, full remission applies. For instance, in the case of a couple with two children the applicable threshold is £23,860;
  • If the employee’s monthly net disposable income is £50 or less, full remission applies. Otherwise, part remission applies on a sliding scale.

Stephen Hopkins, Partner in the Employment department, comments: “The introduction of fees is a significant development, which is to be welcomed by employers. Employees will now have to factor in the requirement to pay a fee before bringing a claim against their employer in the Employment Tribunal. In some cases, this may deter the bringing of claims. However, it is important to note that employees can obtain a waiver of the fees in certain cases. At first, remission of fees will match the system currently used in the civil courts (as explained above), but this will also soon be changing.”

Pam Sidhu, Associate, comments: “While the likely reduction in claims is good news for British businesses, we also expect that employees will want any fees they have paid to launch a claim factored into any out of court settlement reached with the employer. Also, there are further significant developments taking effect today, with regard to re-labelling of “compromise agreements” as “settlement agreements” and pre termination discussions around settlement packages being deemed to be confidential except in the case of “improper behaviour”. Employers will want to take advice on these new developments to ensure compliance.”

Please note the position regarding legal costs, i.e. the charges imposed upon an employer by their own lawyer, is unaffected.  It has always been, and remains, the case that an employee will be ordered to pay such fees if they have acted wholly unreasonably in the bringing of and/or conduct of the proceedings.  Rarely does this happen in practice. However, significantly, the amount of costs that the Tribunal can award a party who successfully argues a costs application from 29 July 2013, is now unlimited.

Currently, UNISON is challenging the new fees in the High Court and there is to be an oral hearing on 29 July 2013, on the same day as the introduction of fees.

For further information please contact Stephen Hopkins at shopkins@wilkes.co.uk or any member of the Employment team

Estate Roads

Whether you or your client have an interest in part or all of an industrial estate or business park, problems can arise out of multi-occupation as occupiers compete for space, whether legally or otherwise. Carl Csukas, Partner in Property Litigation, looks at two recent cases, both of which resulted in proceedings being issued.

  • Our client owned the freehold of a four storey vertical style factory, developed in the 1920’s/30’s, in Acton. It was part of an estate with six or seven other, similar buildings all accessed off a single estate road. As is often the way in property law, problems arose due to economic progress and development. As with most of the buildings, my client only had five or so parking spaces. In the 1920’s/30’s car and commercial vehicle ownership was at a low level and vehicles were small. The nearest main road had become a red route and the side roads required residents’ permits. Occupiers and non-occupiers were, therefore, in the habit of parking unlawfully on the estate road. A party purchased the freehold of the largest estate building, at the far end of the estate road, and the freehold of the estate road. So as to secure and ease access for itself, it sought a declaration that parking on the estate road by other building owners was unlawful and an injunction to prevent such parking. At trial we defeated the claim and established prescriptive parking rights over the estate road in favour of our client (and the four other occupiers named as defendants). The claimant had to bear the legal costs of five parties for its trouble.
  • Our client owned the freehold of offices/warehousing opposite Wembley Stadium. The greater site had developed piecemeal over many decades, there being a jumble of units, access roads and poorly defined boundaries. Running from the public highway there was a legal, private right of way across our client’s land serving several other units. In all relevant deeds that right of way was defined as being 12 feet wide at all points. That legal right of way had been created several decades before on the breaking up of a larger Title. The physical situation on the ground was that the access road of which the legal right of way forms part was actually more than 20 feet wide and had been so for many years. Our client maintained a right to park cars along that part of the access road which was not part of the 12 feet wide legal right of way. One of the unit holders that had the benefit of the legal right of way claimed that it had obtained a prescriptive right of way over the balance of the access road where our client parked and that such parking was an interference with that prescriptive right of way. Obtaining a prescriptive right of way would add value to that unit holder’s land as it would allow large HGV’s to access its unit. Proceedings were issued. Our client claimed trespass and an injunction. The unit holder sought a declaration that it had acquired a prescriptive right of way over the balance of the access road and an injunction to prevent parking by our client. This did not go to trial and a settlement was achieved. Our client is now going to purchase the other unit, granting the unit holder a short term lease back to give it time to relocate it’s business.

Carl Csukas says “The moral is that whether you own the freehold of an industrial/business/retail park or you own or lease a unit on such a park, it is not just the state of repair of the buildings and payment of rent and service charges which need to be thought about. Parking and access rights are extremely valuable and are closely guarded. Deed plans need to be carefully scrutinised and compared with physical reality before interests are acquired. If necessary specific pre-contractual enquires need to be made and evidence sought, perhaps in the form of statutory declarations, from the vendor, predecessors in title or neighbours. Beyond that what is happening on site needs to be closely monitored or otherwise you or your clients could become embroiled in claims of trespass or for prescriptive rights.”

Acquisition of prescriptive rights is complicated and there are a number of ways in which rights can accrue, but under the Prescription Act 1832 for rights of way and rights to park the basic prescriptive period will be 20 years. The Property Litigation Team are experienced in advising on this type of dispute both before and after acquiring a property.

If you have any queries or concerns do not hesitate to contact Carl Csukas (on 0121 710 5842) or Victoria Khandker (on 0121 710 5843) who will be happy to assist.