Chambers Blog

  The recent Court of Appeal case of Dynamex Friction Ltd & Anor v Amicus & Ors is a fascinating look at the impact upon employees where a company enters administration and the business subsequently passes to a phoenix company. In many cases the owners and controllers of the phoenix are the same individuals who drove the original company into administration in the first place.

The Transfer of Undertakings (Protection of Employment) Regulations 2006 are designed to provide rights to employees where their employment transfers from one person or company to another. It provides that employees will have a claim of unfair dismissal if they were dismissed in consequence of the transfer. If the business had simply been sold on without the intervening administration, then the employees' employment would have transferred with it.

In this case however, when the company went into administration, the administrator decided that there wasn't enough money in the company to pay the employees so dismissed them all. He then sold on the business to a company which fell into the eventual control of the original director. Here the reason for the dismissal was not a transfer, it was because the administrator couldn't afford the wage bill.

The employees contended that their dismissal was the consequence of the transfer, as they alleged the overall process was a result of the ‘machinations' of the previous director and that he had planned it all along. Had this argument been successful it would have struck an important blow for the many employees who find themselves in this situation. The Court of Appeal however, by a majority, found that once it was established the dismissing officer made his decision independently, and for a particular reason, it was impossible to look behind that reason at any surrounding context or scheming.

Written by Joseph Neville, Pupil at New Walk Chambers, specialising in Employment Law.

  Geraint Jones Q.C. has recently been involved in the first case to test whether the House of Lords decision in Arthur J S Hall & Co  v  Simons (2002) 1 AC 615 had/has retrospective effect. In Awoyomi v Radford & Postill  Mr. Justice Lloyd-Jones decided, contrary to the common position taken by Leading Counsel on each side, that despite their agreement that the House of Lords decision had only prospective effect, it did in fact have retrospective effect. That is, it was declaratory of what the law has always been, as opposed to being a change in the law with the House of Lords acting in a quasi-legislative way. The case has now been referred to the European Court of  Human Rights on the basis that the High Court decision totally denies the Claimant in that case from access to the Courts. The Court of Appeal,  Lord Justice Lawrence Collins, refused leave to appeal. In his order dated 30^th August 2007 he made no mention of the applicant's submissions regarding Convention rights. In the absence of a prospective reading of the rule in Hall v. Simons, no other domestic remedy was available to the applicant. Accordingly, the applicant has not been provided with an effective remedy and that is the issue to be argued before the ECHR.

Written by Geraint Jones, Barrister at New Walk Chambers, Specialising in Arbitration, Environmental Law, European Union Law, Public Law, Professional Negligence and Sports Law.

 The status of expired warnings for misconduct

It used to be thought that an expired final warning given to an employee could not be taken into account when an employer was considering dismissal. This at least is what was thought to be the effect of Diosynth Ltd v Thomson [2006] IRLR 284. There the Court of Session held that an employer would be acting unreasonably in treating a previous warning which had expired as a determining factor in deciding to dismiss for similar breaches. An employee was entitled to expect a lapsed warning to mean what it said and to cease to have effect on expiry. The EAT in Webb v  Airbus UK Ltd v Webb [2006]  284 said that where but for a lapsed warning a dismissal would not have occurred, the dismissal would be unfair.

The Court of Appeal have now allowed the employers appeal in Airbus UK Ltd v Webb "The Times" 26 February 2008. Mr Webb had just finished a 12 months warning for fraudulent use of company time when he and 4 others on nights were caught watching the tele at work outside break time. He was dismissed but not the other 4. The Court of Appeal in distinguishing Diosynth said that in Webb the employee's later conduct on its own was shown by the employer to have been the principal reason for dismissal. In Diosynth a different issue was being addressed: there the position of the employer was that the expired final warning tipped the balance in favour of the dismissal as the other factors taken together would not have justified dismissal. It was the first misconduct of the 4 who were not dismissed but who received a final warning. In Mr Webb's case it was repeated misconduct, for which he was then dismissed, having received the lesser penalty of a final warning previously. The EAT in Webb wrongly held that Diosynth was authority for the proposition that a previous spent warning should be ignored for all purposes.

So, an employer cannot treat the lapsed warning as determinative, but can take such lapsed warning into account. Gedditt?

It will have to be seen if this puzzling analysis stands up to scrutiny in the House of Lords if there is an appeal. It seems to go against the ACAS Code of Practice which recommends the desirability of employers disregarding spent warnings, [see paras 22 and 24 of the Code], is against the legitimate expectations of employees acting in reliance upon internal disciplinary procedures and is hardly good for industrial relations where certain and consistent rules are at a premium.

Rather than "2 strikes and you are out", it is more a case of "1 strike and you are out" (if you did it  before even though we forgave you!)

Written by Robert Rees, Barrister at New Walk Chambers, specialising in Employment Law.