A compromise agreement is a legally binding agreement which usually brings an employment relationship to an end. 

It is one of the only means recognised in the law, by which an employee can legally “contract out” of their employment law rights.  As an enticement, the employer usually agrees to financially compensate the employee.  In return, the employee agrees not to pursue any legal claims against the employer.   Very often the compensation payment reflects what the employee would receive if they were to make a successful claim for unfair dismissal. 

What are the benefits of using a compromise agreement?

The compromise agreement route often results in benefits for both the employer and the employee.  The employer may have concerns about the risks to the business of a legal claim by the employee.  These risks include, costs, time expended and reputational damage. This may be the case even where the employer has followed, for example, a redundancy, capability or misconduct procedure, leading up to the dismissal.  

From the employee’s point of view, a lump sum payment is often welcome where there may be perceived irreconcilable differences in the employment relationship or where simply the parties no longer hold the same values.  The employee will not want to leave under a cloud and will be keen to preserve their reputation in the market place. 

It may be in both parties’ interests to have a clean break. 

Do I really need legal advice?

Employer’s should seek legal advice on the terms of the compromise agreement and the settlement figure. All too often employers use standard agreements, adapted in-house, which are not fit for the particular circumstances and further expose the employer to the risks set out a above.  Each situation needs to be handled carefully and is fact sensitive.  

A compromise agreement is not valid unless the employee obtains independent legal advice on the meaning of the agreement and in particular its effect on their ability to pursue their employment law rights.  The quality of legal advice received is important from the employee’s perspective. 

The employee needs to understand the implications of signing the agreement, including but not limited to, the claims that they cannot now bring against the employer, what they may disclose to any prospective future employer, whether there are any regulatory implications, the relevance of any ongoing medical issues, whether they should take advice on a personal injury or stress at work claim,  the meaning and implications of any restrictive covenants and the adequacy of the compensation payment itself and the notice pay. 

Our solution driven employment team at Benest & Syvret are experienced in and engaged with, the issues relevant to compromise agreements.  We are pleased to advise both employers and employees in this area of the law. 

Jersey zero hour contractors (employees) have an advantage over their UK counterparts in that the Employment (Jersey) Law 2003 (Employment Law) already affords them the same rights as other employees.  However zero hour contractors may be disadvantaged by their zero hour contractor label and a lack of certainty as to their hours, their pay and place of work. This may have knock on effects, not only for their own sense of security, but also when applying for a mortgage; banks after all like a safe bet.

Amendment 15 to the Employment Law was approved by the States Assembly earlier this week.  Amendment 15 introduces Article 3A to the Employment Law, affording the opportunity for a zero hour contractor to obtain an updated statement of terms of employment, in circumstances where they have an established pattern of work for 6 months or more.  This opportunity not only provides a sense of security, but may also assist such employees in obtaining a mortgage and/or credit, where previously they wee unable to do so.  For this reason, whilst Article 3A applies to all employees, it is likely to have a greater impact on those who are working on zero hour contracts. 

Employment on what is labelled a “Zero Hour Contract” is not uncommon, for example, where there are no regular working hours and there is no obligation on the employer to provide work, but that work may be provided on an ad hoc basis, potentially at varying locations. 

This is often an accurate description of the working relationship between the parties. There are other cases where, despite what it states in the written statement of terms of employment, the reality of the employment relationship is that the employee is working the same number of hours, at the same time and place on a regular basis.  They have in reality, a settled working pattern. 

Zero hour contractors in Jersey enjoy the same ‘day one’ rights as any other employee. These rights include (but are not limited to) the right to a written statement of terms of employment, to not be dismissed for what is referred to as an “automatically unfair” reason, to statutory paid annual leave, to statutory minimum periods of notice of termination of employment,  to family friendly rights and the right to be paid the minimum wage.  

Zero hour contractors who have sufficient continuity of service may claim unfair dismissal and redundancy pay, like any other employee.  These rights apply regardless of what is written in the zero hour contractor’s statement of terms of employment. 

What is the process for dealing with an application for a new statement of terms of employment?   

Where an employee makes an application under Article 3A, the employer has 4 weeks to consider and respond to the employee’s request for an amendment to their contract.  This timescale may be extended by a further 4 weeks by agreement between the parties.  

The employer may refuse the request in limited circumstances, for example where the requested amendment does not reflect the employee’s settled working pattern, where it would have a detrimental effect of the employer’s business, where the employer has reasonable grounds to believe that the employee’s working pattern will change in the next 4 weeks, or where the employee’s employment is due to end within 4 weeks of the request.  

Where the employer refuses the request for an amended statement of terms of employment, the employee may, within 2 weeks of receiving the notice of refusal, make an application in writing under Article 3B, for the employer to review its decision.  The employer has 2 weeks to respond to that review request, either by agreeing to amend the statement of terms as requested, or alternatively, by holding a meeting with the employee to discuss the request.  The employee has a right to be accompanied to that meeting by a work colleague or union representative.  Where a meeting is held the employer must provide the employee with the outcome within 2 weeks of the meeting date. 

Where an amendment to the statement of terms is approved, the employer must issue the revised statement within 4 weeks. 

What recourse is there in the event of dispute? 

Where the employer fails to comply with their obligations under Amendment 15 or where there is a dispute as to what terms should be included in the statement of terms of employment, the issue may be referred to the Employment and Discrimination Tribunal, who will make a determination as to what terms should be included in the statement.   

The Tribunal may impose a fine of up to 4 weeks’ pay on an employer who contravenes the provisions of Amendment 15.  In certain circumstances this may also constitute a criminal offence, subject to a maximum fine of £10,000. 

How does this differ from a request for Flexible Working under the Employment Law? 

A request under Amendment 15 is for a statement of terms that reflect the employee’s existing working pattern.  Put simply, it is a request for the existing state of affairs to be confirmed in writing. 

An application for flexible working under Article 15A-G of the Employment Law may be made where the employee no longer wishes to work to their existing contractual terms. The employee may wish to reduce their working hours and/or change the times that they work or the place of work (e.g. part-time working /home working). 

Call to action for Employers

Be proactive about reviewing existing statements of terms of employment to ensure that they reflect employees established working patterns. 

As a matter of good practice, update employee handbooks to include reference to an employee’s right to request a statement of terms of their employment which reflects their established working pattern and details the process and timetable for dealing with such requests.  This is likely to reduce the risk of contravening the new provisions. 

Call to Action for Employees

Check your statement of terms of employment to ensure that it accurately reflects the reality of your working arrangements.  If it doesn’t and you have worked to a settled pattern of work for 6 months or more, make an application in writing to your employer requesting an amended statement of terms of employment, stating that it is an application under Article 3A of the Employment Law.  
If you would like to discuss this or any other aspect of Employment Law in Jersey, please contact Claire Kingham on 875875 or email info@benestsyvret.com

The recent #Black Lives Matter peaceful protest in People’s Park, which attracted over 1,000 islanders, calls for an in depth and honest conversation about racism in the core institutions of our island. 

This is also an appropriate time to reflect upon the adequacy of Jersey’s discrimination legislation, first enacted in 2014. This legislation is largely based on the UK Equality Act, but with some significant differences. 

A claimant under the UK Equality Act must raise a prima facia case of discrimination.  The burden then shifts to the respondent to prove, on the balance of probabilities, that the alleged discriminatory act did not occur. This is referred to as the reverse burden of proof. Unlike the UK, claimants under the Jersey discrimination legislation bear the burden of proving, on the balance of probabilities, that the act of discrimination occurred. This places Jersey claimants at a disadvantage when compared to their UK counterparts.  As a result, the amount of work involved for the Jersey claimant in the preparation of their claim is likely to exceed that which is required in the UK, as are the claimant’s costs, where legal advice is sought. 

There is currently an overall cap of £10,000 on the compensation available to a Jersey claimant, in respect of each successful discrimination claim. The maximum compensation available is therefore £40,000, where the claimant is successful in claims for direct discrimination, indirect discrimination, harassment and victimisation.  In reality, not all of those claims will be relevant in the vast majority of cases before the tribunal.  

Of that £10,000, up to £5,000 may be awarded by the Jersey tribunal for ‘hurt and distress’.  In the UK the maximum compensation currently awarded for ‘injury to feelings’ is £45,000 and this sum is increased annually to take account of inflation. This is significantly more than the Jersey cap of £5,000, which has not been increased since its implementation in 2014. 

Bearing in mind the Jersey overall cap on compensation of £10,000, the tribunal may only award up to £10,000 in respect of financial loss.  Where, for example, an award of £2,000 is made in respect of ‘hurt and distress’ only £8,000 will be available from which to make an award for financial loss.  The situation is significantly different in the UK, where compensation for financial loss incurred as a result of a discriminatory act is uncapped. The aim of the UK Equality Act is to award a sum of money to a successful claimant that will put them in the position in which they would have been, had the discriminatory act not taken place. Furthermore, unlikely Jersey, a claimant in the UK may be compensated in respect of future loss.  

The consequences for a victim of discrimination could be catastrophic, in terms of psychological damage and financial loss.  In such cases an overall cap of £10,000 on compensation would appear to be wholly inadequate. In certain circumstances, where a duty of care is established, it may be open to a claimant to bring a personal injury claim against the respondent and thereby increase the level of compensation available.  This would however involve issuing a second set of proceedings, in the Royal Court, which would be time consuming and costly for the claimant.  

The arguments in favour of increasing compensatory awards in Jersey discrimination claims are compelling.   When the Jersey discrimination law was enacted in 2014, the Minister for Social Security was of the view that the £10,000 cap on compensation in discrimination claims was a ‘starting point’, which may be subject to review in the future.  Some six years later, such a review is now well overdue, if the Jersey regime is not to be accused of tokenism.

Sir Philip Rutman, permanent secretary at the Home Office, has resigned and is claiming constructive unfair dismissal. 

As Sir Philip will have been advised, constructive dismissal is notoriously difficult to prove.  It occurs where the employer has committed a fundamental breach of the employee’s contract of employment. The employee resigns in response to that breach and brings proceedings against the employer, seeking compensation for their loss of employment. 

Elements of a claim for constructive dismissal

To be successful in a claim for constructive dismissal the employee must prove that:

a) The employer was in breach of an express or implied term of the contract of employment. 

An express term is a written term of the contract.  By way of example, a failure to pay the contractually agreed wage is likely to provide good grounds for a claim for constructive dismissal. 

The employer’s duty not to destroy or seriously damage the relationship of trust and confidence that exists between the employer and the employee, is a term implied into employer/employee contractual relationship. In his recent public statement, Sir Philip identifies the following behaviours on the part of the Home Office, which he claims breached the implied term: 

1. A vicious and orchestrated briefing campaign where it was alleged that he briefed the media against the Home Secretary, Priti Patel; and 
2. The tension that was created between him and the Home Secretary, when he encouraged her to change her behaviours, in the face of complaints from civil servants that her conduct included shouting and swearing, belittling people, making unreasonable and repeated demands and behaviour that created fear.

b) The breach of contract was repudiatory.

A repudiatory breach of contract is one which goes to the root of the contract and shows that the employer no longer intends to be bound by at least one of its key terms.  The breach must be sufficiently serious to justify the employee’s resignation.  It may be a one-off event, or a course of conduct by the employer, culminating in a ‘last straw’ event.  This is fact sensitive and each case will be judged on its merits.  Sir Philip alleged that the above-mentioned course of conduct was so serious as to constitute a fundamental breach. 

Sir Philip alleges that he has strong grounds for his claim. He says that he has gathered a catalogue of complaints against the Home Secretary and has demonstrated to her that he is willing to engage in a reconciliation process.    He claims that she has made no effort to engage with him with a view to resolving the issues.  In all but the most serious of cases an employee is expected to attempt to address the issues that have arisen with the employer, by availing of the employer’s grievance procedure.  Sir Philip appears to have ticked this box by seeking to address the issues with the Home Secretary. 

c) The resignation must be in response to the breach.

To succeed in a claim for constructive dismissal the employee must show that the employer’s behaviour was the principal reason for the resignation.  A carefully worded letter of resignation will be a valuable piece of evidence in any subsequent litigation, as it will show what was going through the mind of the employee at the time of the resignation.   Employees would be well advised therefore to seek legal advice before drafting their letter of resignation. 

d) The employee must not wait too long in resigning in response to the breach.  

If the employee delays too long after the breach before resigning and continues to work and receive wages, the Tribunal may find that they waived the employer’s breach of contract and affirmed their contract.  This is a real risk for employees and could potentially destroy even the strongest of claims for constructive dismissal. The Tribunal has been clear that “The employee cannot say on the one hand that he has lost trust and confidence in his employer, and on the other that he is going to continue to work for the employer and accept wages until it is convenient for him to leave.  If he does not act promptly he is taken to have affirmed the contract, which is to say that he is taken to have forgiven the fundamental breach.” 

In a recent case in the Jersey Employment & Discrimination Tribunal, an employee narrowly escaped an employer’s attempt to strike out their claim for constructive dismissal at an early stage.  The employee had drafted his Tribunal claim form without the benefit of legal advice. The employee had given an indication in this claim form that when he resigned all was not lost and that the relationship could be repaired.  The employer argued that if the relationship was “fixable” it was not a repudiatory breach of contract. Fortunately for the employee, the Tribunal rejected the application to strike out the employee’s claim and a full hearing of the evidence will take place. This Employee still faces the hurdle of dealing with the unfortunate wording of his claim form at the full hearing.  The Tribunal places much weight on the content of a claim form and ideally this should be drafted with the benefit of legal advice.   

Settlement

Sir Philip was in settlement negotiations with the Home Office.  As part of the negotiations he sought a guarantee that in the event that there were any further adverse media briefings, the Home Office would make a public statement in support of him.  The failure to agree on this point and the fact that the settlement agreement contained a gagging clause, led Sir Philip to the decision not to settle his claim. 

Any settlement offer put forward by an employer should be carefully considered with the benefit of legal advice.  Even if an employee is successful in their claim for constructive dismissal, there are various grounds upon which the Tribunal may reduce the compensation it would otherwise have awarded.