A comment on matters within legal and securities industry. A focus on the impact upon the employed and regulated.

Ferguson Solicitors LLP welcomes Sungjin Park and Man-Chun Siu who joined the firm in the autumn of 2011 as trainee solicitors.

Sungjin is working alongside Charles Ferguson and Fiona Macdonald.  Prior to joining Ferguson Solicitors LLP, Sungjin gained experience as an advocate representing employees in Employment Tribunals and the Employment Appeal Tribunal in London.  He has also advised and represented employees on unfair dismissal, various types of discrimination, redundancy and TUPE.

Man-Chun is working alongside James Boddy and Tom Caplan. During his studies, Man-Chun gained commercial experience working at City firms and was also involved in a number of pro bono projects.  He has also published an article regarding public tort liabilities in The Journal Jurisprudence.

Both trainees will assist their supervisor in advising clients on contentious and non-contentious employment law.  This includes unfair and wrongful dismissal, whistleblowing, discrimination claims and bonus disputes.

The Christmas party: a chance to let off steam, relax and celebrate with your colleagues after a hard year’s work. What could possibly go wrong?

Well, a great deal of course. Watch out in the New Year for stories of those Christmas parties that tipped over the edge. Where good natured banter degenerated into bullying and harassment. Where being honest with your boss turned into saying that little bit too much. Where that daring dance move became a slip too far, and a trip to A&E.

But how far is your employer liable for what takes place at a social event, well outside the office? Some pointers are as follows:

·     The scope of the party – the employer’s liability will often depend on the scope of the party as defined by the employer in the invitation. The time, location and the nature of the activity are all relevant in indicating the extent to which an employee can successfully claim against their employer in the event of an incident.

·     Management involvement – where the employer can be said to be participating in, allowing or encouraging a behaviour that causes offence to some or creates a hostile atmosphere, this may amount to discrimination or harassment. Examples would include pressuring a Muslim employee to drink alcohol, or forcing a Sikh employee to wear a Santa hat.

Ferguson Solicitors LLP specialises in dealing with employer-employee disputes within the financial industry. This includes unfair/wrongful dismissal, redundancy, discrimination, whistleblowing and bonus claims. For advice about any of the above, please don’t hesitate to give us a call on 0207 822 2999.

Liabilities apart, Ferguson Solicitors LLP wishes you all a Merry Christmas and Happy New Year!

The EAT in the very recent case of Hellewell v AXA Services [UKEAT/0084/11/CEA] has held that a group of employees did not have the right to bonus payments while suspended on suspicion of gross misconduct.

While the judgment was based on the particular wording of the employees’ contracts, the approach adopted by the EAT is worthy of comment.

The contracts were silent on suspended employees’ rights to a bonus, but the relevant clause included (in effect) the following provisions:

1. To be entitled to a 2009 bonus, you must be employed on 28 Jan 2010.

2.  No bonus is payable if you leave the company as a result of gross misconduct or poor performance. 

The EAT held that the first provision did not impose an obligation on the company to pay out a bonus. It was merely a qualification which had to be satisfied. More important was the second provision, which the EAT held to include an implied term that a bonus would not be payable until any gross misconduct allegations were dismissed or abandoned.

On the facts of the case, therefore, the employer was entitled to withhold bonus payments to the claimants, despite the fact that they were still employed on 28 January 2010. The claimants were eventually dismissed at the end of April 2010 for gross misconduct, at which point any entitlement they may have had to a bonus was extinguished.

From an employee’s perspective, this is an unwelcome development. While the judgment is confined to the particular facts of this case, in effect the EAT here allowed the employer to get away with imputing guilt to the employees before completing its disciplinary investigation, and used the mechanism of an implied term to override the express wording of the contract. It is hard to see why the implied term found by the EAT was ‘necessary’ to allow the contract to work effectively.

On the other hand, if the judgment indicates an increased willingness by the EAT to imply terms into employment contracts so as to achieve what it considers the ‘right’ result, this could work to the benefit of employees as much as it did here to the employer.

In the case of NHS Manchester v Fecitt & Ors (2011), the Court of Appeal (Elias LJ providing the leading judgment) held that the appropriate test in whistle-blowing cases in which an employee alleges detriment (short of dismissal) is that of “material influence” i.e. liability arises if the fact that the employee blew the whistle is a material factor in the employer’s decision to subject the employee to detrimental treatment. 

An employee-friendly judgment, at last

The judgment clarifies what is required to show causation in whistle-blowing cases in which some form of detriment is alleged by an employee. Although on the facts of the case the Court of Appeal allowed the employer’s appeal, it is clear that the principle established will require employers to be more cautious in the way they handle potential whistle-blowers, particularly where the whistle-blower remains in the employment. The test in ‘detriment’ cases should be contrasted with the position where the employee has been dismissed or forced out, which still requires the whistle-blowing to be the reason (or if more than one, the principal reason) for the dismissal. 

But the downside...

The Court of Appeal also had the opportunity to rule on the issue of whether fellow employees’ actions in harassing a whistleblower can give rise to liability on the part of the employer. The Court held they cannot. Why? Unlike the provisions in the discrimination legislation which render employees personally liable for their actions, and hence employers vicariously liable, there is no such provision in the whistleblowing legislation. Therefore, since no legal wrong can be committed by employees in this context, no liability for the employer can arise. This, however, doesn’t change the fat that an employer invariably acts through its agents i.e. employees and those acts may render it liable; but it is not vicariously liable for the acts of its employees in this context.

Not to worry, there may be room for manoeuvre

It is clear from the judgment that at least in the facts of this case, Elias LJ had little sympathy for the employees who had made protected disclosures. However, he left open the possibility that in future claims employees could argue that their employer was acting in breach of the implied term of trust and confidence by failing to take adequate steps to prevent harassment by fellow colleagues.

Issue

The Government recently announced that consultation on employment law reforms over the last 18 months has produced a call from businesses to change the rules surrounding unfair dismissal claims. As a result, major changes are due to come into force, particularly from 6 April 2012 when the qualifying period for bringing unfair dismissal claims will be extended to two years.

Is this a genuine attempt to resolve workplace disputes and give British businesses more confidence to create jobs, or a serious erosion of the existing protections offered to employees? And how will these changes impact on the types of tribunal claims brought in the future?

Detail

On 3 October 2011 Business Secretary Vince Cable and the Chancellor George Osborne announced changes to the rules for unfair dismissal claims. The changes, they argued, will save British businesses approximately £6 million per year and reduce the number of unfair dismissal claims by around 2000 per year.

From 6 April 2012, the qualification period for the right to claim unfair dismissal will be extended from one to two years. This is the latest development in the Government’s workplace reforms designed to increase growth and maintain a flexible labour market. It follows the “Resolving Workplace Disputes” consultation published on 27 January 2011 which proposed measures aimed at encouraging early resolution of disputes, the speeding up of the tribunal process and measures to tackle weak and vexatious claims.

Many commentators will agree that the employment tribunal process has long been in need of reform. The Government responded to these concerns by instigating a parliament-long Employment Law Review to ensure that current regulation is fit for purpose and that it balances the rights and needs of both employers and employees. But changing the qualifying period fails to address the very real concerns of those involved in the employment tribunal process on a daily basis.

The qualifying period for unfair dismissal claims has changed several times over the last 30 years. To extend the period to two years is a rather retrospective act since this was the legal position from 1985 to 1999. The period was changed to one year for good reason, largely in response to claims that a qualifying period of two years was indirect sex discrimination since it arguably affected more women than men. This argument may be more relevant today in terms of part-time workers since more female part-time workers will be able to show disadvantage.

Prior to introducing this change to the qualifying period for unfair dismissal the Government conducted an impact assessment. The results indicated that younger workers are much less likely than others to meet the two years’ qualifying service criteria. Furthermore, the impact assessment also showed that fewer employees from ethnic minorities meet the two year qualifying period. There is scope, therefore, for a variety of challenges to be made to these reforms through the Court system.

There is no qualifying period for claims of discrimination and whistleblowing so employees will still be able to pursue these claims as before. Indeed, one consequence of the reforms may be that employees with less than two years’ service will, from 6 April 2012, be more inclined to run discrimination or whistleblowing arguments in order to claim compensation successfully. If this happens, the Government could be faced with a situation where the statistics for unfair dismissal cases brought in the employment tribunal decrease, but those for discrimination and whistleblowing cases increase. This would be a perverse outcome of the reforms, from the Government’s perspective, since the latter claims are more complicated, time consuming and costly to run. The Government’s actions, instead of encouraging the early resolution of workplace disputes could actually result in clogging the already overwhelmed employment tribunal system with what may be weak or bogus claims.

How the situation will develop is still open to speculation given that the reforms will not come into force until next year. However, it seems that in an effort to boost short-term economic growth, the Government may have caused long-term financial difficulty for both employers and employees.

Summary:

In the current round of City redundancies, many employees are finding that they have little choice but to accept redundancy packages far smaller than Banks have offered in the past, even where it is clear that their role is not in fact redundant. Litigation is expensive and damages for unfair dismissal are capped at £68,400. But the possibilities of claiming for reinstatement are often overlooked. If reinstatement is ordered, employees are entitled not just to their old job back, but also to all lost earnings from dismissal to the date of re-employment, including bonus and unvested shares.

Detail:

For City employees, it used to be the case that the many disadvantages of being made redundant were offset by large formulaic redundancy packages. But since the introduction of the FSA Remuneration Code and the consequent increases in salaries, Banks have been doing whatever they can to reduce the size of redundancy pay-outs.

Some have amended (downwards) long-standing formulae e.g. 4 weeks’ salary for each year of service reduced to 2 weeks’ salary for each year of service. Others have refused to include sums expected under share and bonus incentive schemes in the redundancy package on offer. Still more have made it clear that if the employee does not accept the package, then all unvested shares will be forfeit.

The result: a lower severance payment for the employee. And since employee remuneration is now comprised more and more of restricted shares vesting over several years, the pressure on the employee to accept the package on offer can be immense. For employees with long service and high levels of unvested stock, the loss can be very substantial.

What then can be done? The employee is entitled to bring a claim for unfair dismissal, and particularly where redundancy has been used as a cloak to get rid of an under-performing or politically under-connected employee, the prospects of success in the Employment Tribunal can be high. But historically employees have shied away from such claims. This is principally because litigation is costly and the damages available are capped at £68,400.

The cap can be removed where the ‘redundancy’ involves an element of unlawful discrimination or whistleblowing. But these are notoriously difficult claims, expensive and can attach a stigma to claimants that will drive away potential employers.

An alternative way forward is to seek a different remedy for the unfair dismissal claim: reinstatement (or the related remedy of re-engagement). Despite the fact that Parliament considers this the principal remedy for unfair dismissal, very few City employees seek to be reinstated on being made redundant – even where it is clear that the redundancy is in fact a sham. This is partly because the prospect of going back to work for their former employer is unappealing, but also because the consensus has been that reinstatement will rarely be ordered by the Employment Tribunal.

This consensus should be challenged. In the case of Central & NW London NHS Trust v Abimbola, the Employment Appeal Tribunal confirmed the factors a Tribunal must take into account when deciding whether to order reinstatement:

·         whether the Claimant wishes to be reinstated,

·         whether it is practicable for the employer to comply with an order for reinstatement; and

·         where the Claimant caused or contributed to his dismissal whether it would be just to order reinstatement.

Reinstatement cases tend to focus on the second factor – whether it is practicable i.e. feasible for the employer to comply with an order for reinstatement. This is a low hurdle for the claimant employee to have to clear. If the employee can show that their position was not in fact redundant, surely reinstatement is feasible. Unless there is evidence that the employment relationship broke down for other reasons, there is no obvious reason why the tribunal should not order reinstatement.

For employees who have found themselves pushed out of a job following a sham redundancy process, reinstatement to their old position may sound unappealing. But if reinstatement is ordered the employee is entitled not just to their old job back, but also to all lost earnings from dismissal to the date of re-employment. The statutory cap does not apply. Moreover, there is a good argument that any bonus due in the interim period should be paid, and any unvested stock returned to the employee.

We have recently settled a number of cases in which this argument was deployed.  The benefits of seeking reinstatement are considerable.

For questions about this article or for assistance with any employment matter, please contact us via our 'Contact Us' page or call 020 7822 2999.

Ferguson Solicitors, the City employment specialists, are pleased to announce that the firm has changed its structure to become a Limited Liability Partnership. Charles Ferguson, founder of the firm, becomes senior partner. Fiona Macdonald joins the Partnership with immediate effect.

Charles Ferguson founded Ferguson Solicitors in 1997. Charles, described this year as a doyen of the legal profession by Chambers, is widely recognised as one of the City’s leading lawyers in employment disputes having won a number of key cases including Clark v. Nomura in 2000. Ferguson Solicitors’ pre-eminence was recognised in 2009 when Chambers promoted the firm to a coveted band-1 listing. 

Fiona Macdonald studied music at Oxford and Liverpool Universities. Having converted to law, Fiona completed her legal training at Dechert and joined Ferguson in 2003.  At Ferguson, Fiona has been involved in a number of high profile employment cases, most recently the case of Docker v. Rabobank International in 2009, in which the Claimant won his claims for unfair dismissal and race discrimination.

Charles Ferguson commented, ‘Becoming an LLP is a natural step in Ferguson’s evolution. After 13 years of being a sole trader, the new structure will give Ferguson the stability it needs to expand. Making Fiona Macdonald a partner was an easy decision to make given her record and abilities and I look forward to working closely with her over the coming years.’

Fiona Macdonald added, ‘I am delighted to become a partner in Ferguson. In the seven years I have been at the firm, I have benefitted from many opportunities and have very much enjoyed working with Charles and my other colleagues here.  Now as a partner, I look forward to fulfilling my new role and to the continued future success of the firm.

Rupert Beecroft has joined Ferguson Solicitors to work in our expanding corporate and business advice department.

A graduate in Law with French Law from University College London, Rupert trained and spent nearly 18 months as a qualified solicitor in one of the Equity and Debt Market departments of the City office of Linklaters before joining us in January 2010.

As part of our corporate and business advice team, Rupert will advise both individual and corporate clients on a wide variety of business affairs and financial matters including:

• business and company formation (within the UK and overseas);
• corporate borrowing and equity finance;
  
• shareholders’ agreements;
  
• joint ventures;
  
• mergers and acquisitions;
  
• FSA registration; and
  
• the setting up of brokerage and investment funds in the UK and in overseas jurisdictions.

The department complements our core employment law practice and draw off the existing client base.  The resulting synergy enables Ferguson to offer a one-stop service to the client who might be a disgruntled City employee one day and an enterprising individual looking to start out alone in the City the next. Either way, they will require expert and commercially astute legal advice.

James Boddy, an experienced barrister, has joined Ferguson Solicitors.

James gained a first class degree in Politics and History from Durham University before undertaking a law conversion course at City University and receiving an ‘outstanding’ grade in his Bar exams at the Inns of Court School of Law.

He spent five years from 2004 in Chambers with leading employment law set 11 KBW before joining Ferguson in March 2010. He has extensive experience of representing both claimants and respondents/defendants, and appeared regularly in employment tribunals, employment appeal tribunals, the High Court and county courts.

James now joins the team that so often instructed him and will advise Ferguson clients on all areas of employment law including discrimination, whistleblowing, unfair and wrongful dismissal, bonus disputes and restrictive covenants.

James’s arrival at Ferguson underlines our determination to provide clients with the essential expertise and experience to meet the stringent legal demands of employment law within the City, and provides an extra dimension to our already robust employment team.

James will share his working time between Ferguson and Lucca Leadership, a worldwide charity which runs courses in transformational leadership designed to help inspire, train and support any person that wants to make a positive difference in the world.

Emma qualified as a solicitor on 1st April 2010 after spending over 8 years with the firm.  During those 8 years she has completed a Geography degree from Sheffield University and the Graduate Diploma in Law and Legal Practice Course from the College of Law, London.

In that time she has seen the firm grow in size and status. She has experienced every facet of the firm; from working as a paralegal to becoming a qualified solicitor.

Emma assisted Charles Ferguson on a number of the firm’s high profile cases, including; Hussey –v- UBS, Rivlin –v- Deutsche Bank and Keen –v- Commerzbank. She moved away from employment law, however, to complete her training in the corporate and business advice department and has now qualified to work alongside Rupert Beecroft advising individuals and corporate clients on business and company affairs.

Ferguson offers a one-stop service to clients, not only providing advice in relation to their employment matters but also in respect of their future prospects within the City. Emma’s past employment law experience helps keep the corporate and business advice department in tune with the firm’s core employment law practice where the two practice areas continue to complement each other.

from the TimesOnline by Catherine Boyle.

In Renaissance Florence, the Medici used cash from their banking activities to back young artists such as Michelangelo and Leonardo da Vinci. Now art investors can buy a derivative of an artist’s future.

Tom Saunders, 23, a conceptual artist who graduated from Camberwell College of Arts in London last year, is offering investors options on his future work. For £2,000 now, you get the option of buying any piece of his work for £1 in ten years’ time.

Two investors, including one well-known collector, have reserved options already, on the proviso that they want to meet Mr Saunders before signing cheques. The resulting work of art is unlikely to be as traditional as a painting — conceptual art focuses on ideas.

The process is covered by a legal contract, known as an emerging artist derivative contract — itself a work of art according to the artist and to murmurART, the art company in East London that is staging his latest exhibition.

If Mr Saunders turns out to be the next Marcel Duchamp, whose urinal sculpture has been voted the most influential artwork of the 20th century, or even the next Tracey Emin, investors can rub their hands. But if his career crashes and burns or he becomes a recluse, they will be protected by contract provisions that cover lack of production and death.

Rupert Beecroft, at Ferguson Solicitors, which drafted the contract, said: “In terms of drafting, an option over an artist’s work is, in theory, no different from an option over a share.

“The biggest challenge was the human element of the contract and the need to define a constantly changing pool of artistic work to enable the option to be exercised and ensure enforceability of the agreement.”

Even the most well-known conceptual artists often take a long time to achieve commercial success, because their works and ideas can take years to develop. Mr Saunders is hoping to use money raised from his show to develop his career without worrying about commercial pressures.