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Employment Law Update

Employment Law UpdateWelcome to February’s Employment Law Update.

Our latest update includes guidance on unfair dismissal, including the new compensation limits and claims made by agency workers.

We also take a look at a case involving a serial litigator and hear about the penalties given by the courts.

New compensation limits and increase in cap for a week's pay

The start of the month saw changes to the maximum compensatory award for unfair dismissal – with it increasing from £65,300 to £68,400. However, this increased award will only apply to claims where the effective date of termination is on or after 1 February 2011.

Also, the current maximum limit of a week's pay also increased from £380 to £400. This will also be the new limit to be used in redundancy calculations.

Penalties for those who exploit legislation for financial gain

The following case highlights the penalty risk that claimants face when filing lawsuits in a bid to exploit legislation for financial gain. It may be hard to imagine, but it has been known for some individuals to even search for discrimination cases to provide a “source of income”.

Mr Berry (a man in his 50s) scoured the internet for job adverts calling for a 'recent school leaver' or similar requirements. He then brought discrimination claims in the employment tribunal on the basis that he was excluded from applying for the job on the grounds of his age, and then offered to settle for a few thousand pounds to avoid litigation.

However, Mr Berry's age discrimination claim had been dismissed by the employment tribunal, because he had not actually applied for the job. Mr Berry appealed.

The Employment Appeals Tribunal (EAT) said that an employer was only liable for age discrimination if the claimant had been affected in some way and that was not the case here as Mr Berry had not applied for the job. The EAT also noted a number of similar applications made by Mr Berry –  and said that the discrimination laws are not intended to provide a "source of income" for those who complain of arguably discriminatory job vacancies which they have no intention to fill. The EAT also emphasised that those who seek to exploit discrimination legislation for financial gain are liable to find themselves facing a liability for costs.

Agency Workers and unfair dismissal claims

This is some good news for employers who recruit agency workers, but are concerned about unfair dismissal claims. Following a recent case, it’s clear that the courts are continuing to hold that workers engaged through an employment agency are not 'employees' and thus cannot claim unfair dismissal.

In the case of Tilson v Alstom Transport, an employment tribunal found that, despite providing his services through a separate limited company wherein he billed on an hourly basis, as well as being paid through a designated separate payroll company, Mr Tilson was, in fact, an employee of Alstom Transport and, as such, was entitled to claim unfair dismissal against the Company.

He successfully argued that, despite paying his own income tax and National Insurance contributions, the way in which his work was structured, and the manner in which he worked for Alstom (together with the tasks he performed on the Company's behalf), were the real indicator as to his employment status.

However, the Court of Appeal has decided that a significant degree of integration of an agency worker into an organisation is not inconsistent with an agency relationship. In this case there was no contract of employment between Alstom (the end user) and Mr Tilson and, indeed, there was a lack of intention to form an employment contract. The Court of Appeal also held that the need to apply to a line manager before taking annual leave was not enough to justify the implication of a contract.

If you’d like to find out about how Ceridian’s Employment Services can help you to stay compliant, please call 0800 0482 737 and speak to one of our expert consultants today!

  • 1st February 2011
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