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Expired warnings and misconduct? Be careful when dismissing!

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Andrew Egan

Andrew Egan

Andrew Egan, an employment specialist with law firm, Charles Lucas & Marshall, explains the implications of a recent tribunal decision as to whether expired warnings for employee misconduct are still relevant if the employee is eventually dismissed.

In Stratford v Auto Trail VR Ltd, Mr Stratford, who had worked for Auto Trail since 2001, was dismissed for misconduct. He had a poor disciplinary record consisting of many offences, most recently a nine month warning in December 2012 and a three month warning in January 2014.

Both warnings had expired by the time of the events which led to his dismissal. On 15 October 2014, he was disciplined for having his mobile phone in his hand on the shop floor, which was ‘strictly prohibited’ by the employer’s handbook.

As this was his 18th formal disciplinary offence, in addition to numerous informal conversations, the investigating manager felt that there was reason to believe that there would be a further conversation in future and dismissed Mr Stratford. After appealing unsuccessfully, Mr Stratford brought a claim for unfair dismissal.

The tribunal judge held that the employer had been entitled to take into account Mr Stratford’s disciplinary record and that his dismissal in the circumstances was fair.

Mr Stratford appealed to the Employment Appeals Tribunal (EAT) on the basis that the misconduct did not justify his dismissal and that it was not reasonable for his employer to rely upon expired warnings for previous misconduct as the main reason for his dismissal.

The EAT upheld the employer’s decision, saying that the obligation to act reasonably when deciding whether a particular act was sufficient to justify dismissal meant that it was open to a Tribunal to find that the dismissal was fair.

The Judge noted that the previous misconduct, the fact that a final warning had already been given although had expired by the date of the subsequent misconduct, were objective circumstances relevant to the questions of reasonableness, equity, merits and fairness.

As a general rule, an expired warning cannot be used to increase any misconduct, which would not normally lead to dismissal, into a dismissible offence. However, where the behaviour amounts to gross misconduct warranting dismissal, an employer is entitled to take into account an expired warning when determining what sanction to impose.

Every case will turn on its own facts. In this case, Mr Stratford’s disciplinary record contained many more incidents, spanning the entire period of his employment.

Employers are therefore best advised to ensure that their disciplinary policy stipulates that the duration of any warning may be extended in respect of a subsequent act of gross misconduct which is substantially the same.

Also, where examples of misconduct and gross misconduct are given, the policy should make clear these are only a guide. Employers should specifically draw their employees’ attention to the employer’s disciplinary policy.

For further information contact Andrew Egan on 01635 521212 or andrew.egan@clmlaw.co.uk


Written by Andrew Egan

January 19th, 2017 at 1:07 pm

Directors’ Service Agreements – Cover All Bases

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Andrew Egan, an employment lawyer with Charles Lucas & Marshall explains why directors’ service agreements and contracts of employment need to be detailed and fair.

Andrew Egan

Andrew Egan

I see a number of company directors and senior executives in relation to disputes concerning their employment contract terms, redundancy or disputes at the employer company. When such matters arise, the first place to look for an answer is their director’s service contract or employment contract.

An executive director or senior employee will usually have a written contract of employment, commonly known as a service agreement. This will often need to be read in conjunction with the company’s employee handbook, the rules of any pension plan and the terms of any variable incentive-based remuneration schemes such as share option plans or long term incentive plans.

Often, such contracts have not been well drafted or do not cover all of the contractual benefits of the director or senior employee eg eligibility for and payment of bonus and commission, expense claims, participation in share or incentive schemes, restrictions on employment following termination of employment, confidentiality and intellectual property issues etc.

Some of these may make up a large proportion of a director’s total remuneration, whilst the others greatly impact the director’s future employment options once he leaves the company.

The absence of a written employment contract (including a director’s service agreement) may mean an individual is not an employee or a worker and may have no enforceable employment rights under either contract or statute, regardless of any verbal agreements which the individual and the organisation he works for may believe have been reached.

In the case of Ajar-Tec Limited v Stack the Employment Appeals Tribunal (EAT) had to consider whether a shareholder and director, who provided work to a company under no formal employment arrangement and who received no remuneration, was an employee, a worker or neither under the Employment Rights Act 1996.

The EAT remitted the case to be heard by a different tribunal, as it was unsure whether it was possible to imply a contract on the facts before it. The case is a firm reminder of the importance of formalising employment relationships.

Employers should provide proper and detailed service agreements for directors and other senior employees at the outset, to ensure they comply with their statutory company obligations and their legal obligations to that director or manager.

Employees should also take independent legal advice on their service agreements to ensure, for example, there are no unfair terms, that they will receive the correct bonus commission or shares and that any restrictive covenants are fair and enforceable.

For further information please contact Andrew Egan on 01635 521212 or andrew.egan@clmlaw.co.uk

Written by Andrew Egan

September 16th, 2014 at 8:10 am