Close

11th January 2019

Tribunal Tale – Stefanko and others v Maritime Hotel Limited

Background

Most of us are likely to have seen a contract of employment at one point, either as the employer issuing the contract or the employee being asked to sign it. This is often an agreement between employer and employee that both parties sign, but can also be a list of the applicable terms and conditions.

The right to receive a ‘written statement of particulars’ (i.e. the terms and conditions) of employment is the very first section of the Employment Rights Act 1996 (ERA), and indeed a contract of employment (or statement of terms) is often referred to as a ‘section one statement’. For the purposes of this article ‘section one statement’ will be used to describe both a written agreement and a list of the applicable terms.

Under current laws, the right to such a statement applies only to employees, and not to workers or the self-employed. It is generally prudent that anyone carrying out work for an employer is asked to sign some sort of agreement outlining the terms, but it needn’t necessarily have the same content as a section one statement.

There is further protection for employees in that if they are not given a section one statement within the first two months of commencing employment, an award of up to four weeks’ pay can be made. One might be forgiven for assuming that the right to such an award may apply only after two months’ employment, given that the section one statement can be given within that period, and indeed the Employment Tribunal (ET) who heard the original case came to that conclusion. However, the Employment Appeal Tribunal (EAT) in this case has confirmed otherwise.

Facts of the case

Ms Stefanko and two colleagues worked for Maritime Hotels in Dorset from around 21 April 2016 (with various start dates) until all were dismissed without notice on 7 July 2016. None of them were given a section one statement.

The three employees were dismissed because they complained about shortfalls in their wages, late payment of wages and falsification of their payslips. At the original ET hearing, they were found to have been dismissed for asserting a statutory right, which constituted automatic unfair dismissal. That claim can be brought before an employee attains two years’ service, unlike ‘ordinary’ unfair dismissal.

At the time of their dismissal, two of the employees had worked for Maritime Hotels for over two months, but one (Ms Woronowicz) had only six weeks’ service. All three claimed in relation to not being given a section one statement, but Ms Woronowicz’s claim was rejected as the ET stated that the right to compensation for not receiving such a statement applied only after two months’ service. Ms Woronowicz then appealed.

The EAT’s decision

The EAT stated that the ET had made a clear error of law. It pointed to a provision in ERA that states that section one (the right to a statement) did not apply to an employee with less than one month’s service. That provision is in line with the European origin of the law, but clearly didn’t apply to Ms Woronowicz as she had six weeks’ service when her employment was terminated.

In addition, a separate provision in ERA makes it clear that a section one statement must be given even if the employment ends before two months’ service (or thereafter). As such, the EAT held that Ms Woronowicz was entitled to compensation for not being provided with a section one statement and referred the case back to a fresh ET to decide what level of compensation should be awarded.

What does this mean?

The essence of this decision is that an employee is entitled to be given a section one statement within two months of starting work, but can still claim for not being given such a statement if they are dismissed between one and two months’ service.

It’s therefore worth considering whether it’s wise to wait before issuing a section one statement, or whether it’s best to issue it either before or at the commencement of employment, to reduce the risk of similar claims.

In any event, the flexibility to provide a section one statement within two months is soon to be removed. As outlined in a previous article, as part of its ‘Good Work Plan’, the government intends to require employers to provide a section one statement when individuals begin working. The right to a statement will also be extended to workers as well as employees.

With that in mind, employers may wish to get ahead of that change (for employees, at least) by not waiting for the two month mark before issuing a section one statement.

While not the main focus of this article, or indeed the appeal case itself, the reason for the employees’ dismissal also merits some consideration. The employees were not paid correctly or on time, and were dismissed for asserting their statutory rights in that regard.

Where that happens, the dismissal will almost certainly be automatically unfair, which in itself can carry significant penalties. It may be tempting to remove employees who are considered troublemakers (whether they are or aren’t), but doing so after they have made a complaint about their employment rights is risky.

If you have any questions on any of the issues raised in the above article please contact Seanpaul McCahill.

11th January 2019