REWARD
PILON following resignation could amount to unfair dismissal A recent EAT case shed new concerns on the possibility that bringing forward an employee’s termination date after they resign, by utilising a contractual pay in lieu of notice (PILON) clause, could amount to an unfair dismissal. In Fentem v Outform EMEA Ltd, the employee resigned from his role giving nine months’ notice, in accordance with his contractual terms and conditions. One month before his notice period was due to end, the respondent informed him they were enforcing the PILON clause in his contract to bring forward his termination date; he was paid in lieu for the remainder of the unworked notice. In doing so, the employee wouldn’t be eligible for a bonus under the organisation’s scheme. Fentem argued the early termination of his contract amounted to an unfair dismissal by his employer; he raised this claim to the ET. Under previous case law (Marshall Ltd v Hamblin), it’s widely recognised that an employee’s resignation isn’t a dismissal, if an employer exercises their contractual right to utilise a PILON clause. Fentem believed this outcome to be unfair so asked the EAT to reconsider the position. The EAT agreed the use of PILON in his situation should amount to a dismissal but didn’t have the authority to overturn the initial EAT decision in the Marshall-Hamblin case. For the decision to be overturned, it must be heard by a higher court, such as the CoA or UK Supreme Court. As such, the EAT couldn’t uphold the claim, but an appeal to the CoA has been permitted. Until a judgement is made by the CoA, employers are allowed to continue to use existing PILON clauses to bring forward the termination date of an employee who resigns but should be careful when doing so. This is to avoid the risk of unfair dismissal claims in the future. It’s also important to remember that where there’s no contractual PILON clause, bringing forward an end date will likely amount to unfair dismissal, unless explicit agreement is sought from the employee to do so. It’s best for an agreement of this nature to be confirmed in writing, and at no point should an employer refuse an employee’s request to work their notice or persuade them to leave early. Doing so could increase the risk of successful unfair dismissal and / or breach of contract claims.
contained mixed feedback, but nothing which led the employee to believe she was performing below expectations. Despite this, she was placed on a performance improvement plan in March 2019. At the same time, a new full-time male IP lawyer was hired on a £80,000 annual salary; his full-time equivalent wages were more than Long’s. British Gas were unable to show the difference between her pay and that of the newly appointed male employee was unrelated to sex. On 6 June 2019, she was told she was at risk of redundancy. The tribunal found the grounds for redundancy to be genuine but was dissatisfied with the selection process used. British Gas used a scoring matrix to decide who to make redundant. In this, Long scored one out of seven for ‘focus’. According to the respondent’s commentary, this meant she rarely demonstrated this capability and / or sometimes demonstrated the opposite. The employment judge found this to be irrational and concluded the employee’s personal circumstance as a mother of young children was unconsciously being held against her. The ET also found that Long was placed at a disadvantage due to a discriminatory performance capping policy, which meant her annual performance couldn’t surpass ‘achieving expectations’ because of her taking maternity leave. This low and disproportionate result was given, even though her appraisal in 2017 highlighted that she was exceeding expectations. As a result, it was decided that the policy operated in a way that was disciminatory towards women. Further flaws in the redundancy process included failure to consider how a long- serving employee like Long (seven years) could be reasonably compared against a short-service employee (less than one year). Long’s claims for sex discrimination, less favourable treatment on the grounds of part-time working, unfair dismissal and equal pay were successful. Her beliefs that the company assumed she wasn’t performing as well as a full-time male colleague and was less focussed because she was a woman with triplets working three days per week, were well-founded. This case highlights the importance of ensuring the selection criteria used in a redundancy process applies to all employees fairly and equally, and that all employees are paid equally for work of equal value. n
Employers should also keep in mind the reluctance of the EAT judge to not uphold the appeal and prepare for the potential that the CoA will overturn the original decision. This would create new issues for employers, as it’d likely mean employees would, in every case, have to be allowed to work their entire notice period. The only other options available to employers may be to utilise existing garden leave clauses, whereby the employee continues to be paid for the duration of their notice but isn’t expected to come to the workplace or to complete any work. An employee’s length of service continues to accrue as usual on garden leave, so any related benefits may have to be offered to them. Where there’s no contractual pay in lieu of notice clause, bringing forward an end date will likely amount to unfair dismissal Part-time working mum was discriminated against, paid unequally and unfairly dismissed The ET recently found that an employee who returned to work from maternity leave on a part-time basis after having triplets, was subject to sex discrimination and less favourable treatment compared to full-time equivalent male workers. In this case, Long v British Gas Trading Ltd, the employee had worked as an intellectual property (IP) counsel since January 2012. When she returned from maternity leave in September 2017, she was one of two IP lawyers, the other of which worked full-time. Long was paid £46,800 per year for working three days per week, 8am - 4pm, Monday - Wednesday. Her full-time colleague resigned in June 2018, leaving her to cover both roles for around six months, before a replacement was hired. During this time, Long felt considerable pressure from her managers to work over and above her contractual hours, including on her non-working days. The tribunal found this to be both unsustainable and unreasonable. Her performance review in 2018
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| Professional in Payroll, Pensions and Reward |
Issue 81 | June 2022
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