Member Blog

Directors are the ‘mind and will’ of the Company. They are personally and legally responsible for their own actions with unlimited liability.

Following changes to the law, Directors now have a greater personal accountability. There are over 200 statutes under which Directors can face penalties, fines, disqualification and even imprisonment.

A developing blame culture means a rising number of people are resorting to litigation against Directors and Officers. As well as regulatory bodies, the list of potential claimants include your shareholders, employees, customers, suppliers and creditors. The cost of defending an action can be substantial.

Directors and Officers Liability Insurance protects the company Directors, Officers and Senior Managers against claims arising from their decisions and actions taken whilst managing the business. The insurance policy will pay on behalf of the Director, their legal costs and expenses and civil damages awarded against them.

Entity defence cover can be arranged in addition to the Directors and Officers Liability policy, offering protection for the ‘entity’ (the company) where actions are brought against the company rather than the individual. This is worthy of consideration following changes to the Corporate Manslaughter and Corporate Homicide Act.

Below are some claim examples:

Timber Product Manufacturer HSE prosecution following serious injuries suffered by a machine operator whilst trying to clear an obstruction. There should have been a safety cut out facility stopping the machine from operating but this had been broken and disconnected. Defence Costs Incurred £25,700

Waste Management Company Transport Manager of a waste company prosecuted by the Crown Prosecution Service following an accident involving an unroadworthy vehicle operated by the company. Defence Costs Incurred £15,000

Giftware Manufacturer Contractual dispute following appointment of a website developer to design an online trading website for the company. The director concerned was not authorised to enter into the contract and the company cancelled the agreement. Costs £48,000

Distribution Company Claim for unfair and constructive dismissal against the Finance Director of a distribution company by a former employee, alleging sexual harassment and other inappropriate activity (sending text messages out of working hours etc). Costs £21,000

Glass Manufacturers Action taken against the directors of a glass manufacturing company by Trading Standards following allegations of pre-stamping of safety glass before it had passed the necessary testing procedure. Costs £25,000

Shipping Agents Shipping agents were required to hold all goods held on behalf of the claimant in a separate account, but following their liquidation, it was discovered that this was not the case, and the claimants would have to recover their goods as a normal creditor. Directors sued for £61,000

From February 1 2012, increases in the limits of various Employment Tribunal awards and other payments came into force.

These are all contained within the Employment Rights (Increase of Limits) Order 2011 and include the following main and most commonly used figures

1. The amount of a week’s pay to be applied will rise from £400 to £430.
2. The maximum compensatory award for unfair dismissal will rise from £68,400 to £72,300
3. The amount of guarantee pay (in situations of where employees are laid off) will increase from £22.20 to £23.50 a day.

For more information on these limits or any other related questions, please go to Chamber HR

Suitable Alternative Employment in a Redundancy Situation

A recently reported case has once again addressed the question of what does and does not constitute an offer of SUITABLE alternative employment where an employee is at risk of redundancy.

In the case of Readman v Devon Primary Care Trust, the Employment Appeal Tribunal was asked whether the original Employment Tribunal had erred in law in concluding that Mrs Readman had unreasonably refused an offer of alternative employment for her own reasons, when it had correctly concluded that the offer was an offer of suitable employment which a reasonable employee could have accepted.

The Claimant in the case had been employed continuously since 1976 but had ceased to work in a hospital setting in 1985 up to the reorganisation that eventually led to her dismissal.

She had expressed to her employers during the redundancy process the possibility that she might emigrate to Canada but had properly applied for all of the job opportunities that were her preferred options prior to making a final decision. Eventually, an offer of alternative employment was put to her to work as a Matron in a hospital setting, with the full amount of development and other support being put into place for her. Mrs Readman rejected this offer and her considerable redundancy payment was withheld as a result.

The original Employment Tribunal concluded that

“We find that the claimant rejected this offer without any considered attempt to explore what aspects, if any, of her current job would be lost, and what other duties might be required. The refusal was against her desire to emigrate and her desire if possible to be able to take advantage of her redundancy rights and benefits. For these reasons we find that the claimant unreasonably refused this offer of suitable alternative employment.”

The Employment Appeal Tribunal reversed this decision and ordered that the full redundancy payment due be paid to Mrs Readman. They concluded that

“Her main objection was the fact that she had taken a considered decision in 1985 to move away from working and delivering nursing in a hospital setting, in favour of delivering her nursing skills in a community setting. …… The Tribunal was of the view that a reasonable employee would have accepted the employer’s offer, but in our judgment this Tribunal wholly failed to grapple with the question of whether it was unreasonable for this employee, for the reasons which she gave, to accept that offer. It failed entirely to grapple with the question of whether the reason which she gave, as the fundamental reason for refusing it, was sound and justifiable or whether it was unreasonable for her to have taken that position.”

This case illustrates clearly that the decision on whether an offer of alternative employment is suitable or not is a very much a subjective test and it can be reasonable for one employee to reject the offer for their own reasons when some, if not all and any other employees to whom the same offer was put, would readily accept it.

Employers should therefore look closely at two questions in this situation. Firstly, is my offer to the employee one of suitable alternative employment? Secondly, is my employee’s refusal of that offer unreasonable? The inherent danger is that employers will say that they would have accepted the offer so it must be reasonable whereas the correct approach is to look at the individual reasons for any refusal and to evaluate those instead.

For all questions or advice in this area, please go to Chamber HR

More and more employers are requiring more and more flexibility from their workforce including the ability to request that there is work done on Sundays.

Retail outlets and a variety of recreation and leisure businesses are common examples where a regular requirement may exist. All employers should be aware of the legal implications of attempting to force employees to work where there is a reluctance or refusal to do so on the part of the employee.

As always in such circumstances, the first consideration is to examine whether the employee’s contract of employment or written statement of terms and conditions addresses the issue. If the contract is silent on the issue, or if it is ambiguous in its wording or mutual obligation, an agreed change to the provisions of the contract may be unavoidable.

• The contractual terms in relation to Sunday working should confirm in writing
• The actual frequency or potential likelihood for Sunday working
• The actual or likely hours of work on Sundays
• Any period of notice of such a requirement that will be given to employees
• Any premium payments that will be made for work done on a Sunday (there is no statutory right that requires employers to provide any extra payment for Sunday working)
• Any extra provision for overtime working beyond the normal hours of work on Sundays and any additional premium payments that will be made.
• Rules on how any refusal to work will be handled should also be incorporated. Employers will normally apply their existing disciplinary procedures to any such refusal which, if the contract is properly drafted, will normally constitute a breach of contract by the employee.
• Employers should also be careful not to inadvertently guarantee Sunday working where this is not their intention.

Shop and betting workers

Employees who work in a shop or in the betting industry (either at a betting shop open to the public or a bookmaker at a sports venue) have special rights. They can opt out of having to work on Sunday even if their contractsays that they have to work. Employer must inform their employees about this right within two months of the commencement of employment. However, the rights do not apply to those staff employed to work on Sundays only.

Employees with this statutory right can opt out of Sunday work by writing to their employer and giving them three months’ written notice of their wish to cease working on Sundays. Employers are not however required to offer extra work on other days instead and employees will therefore lose the wages for Sunday working if they opt out and no other work on other days is available.

As in many other areas of the law, employees can ask an Employment Tribunal to examine unfair treatment in this area. Special and careful consideration should however be given to those employees who express a religious belief in relation to Sunday working and all employees have the right not to be discriminated against for wishing to exercise such a belief.

If you are contemplating the introduction of Sunday working or are wishing to amend or scrap your existing arrangements, please contact Chamber HR helpline 02920 349 614