CM magazine Nov2021

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HR MATTERS Capability and dismissals Fallahi v TWI and the Employee Tribunal’s ability to ‘go behind’ a final written warning. CAN the Employment Tribunal (ET) ‘go behind’ a final written warning? This was answered in Fallahi v TWI where a tribunal held that an employee's dismissal was fair; it declined to look behind the final written warning, disregarding various challenges to it. Mr Fallahi worked as a senior project leader and issues over his performance were raised in the first 18 months of his role. Mr Fallahi was invited to a capability hearing by letter, which said: ‘‘I must advise you that a potential outcome of the hearing could be a first or final written warning.’’ He was issued with a final written warning after the meeting and was set objectives over the next three months. Two months in, and Fallahi was not close to meeting these new objectives. AUTHOR – Gareth Edwards His employer offered him the option of continuing with the plan or leaving with one month’s pay. Fallahi's employment did not end; he was signed off sick. He was dismissed several months later, to which he brought a claim for unfair dismissal. The ET found that the reason for dismissal was capability, that the decision was reasonable and that even if it had been procedurally unfair, it was inevitable that a fair process would have led to dismissal. Fallahi's appeal said the ET was wrong to conclude that it could not go behind the final written warning; was wrong to find that the final written warning was within the range of reasonable responses; and that the ET was wrong to consider whether the final written warning was manifestly inappropriate, rather than considering whether procedural flaws in the warning process tainted the ultimate decision to dismiss. When considering the appeal, the ET noted the limited scope for going behind a final written warning when considering fairness. The ET was required to judge the reasonableness of the dismissal in all the circumstances, not simply whether the final warning was reasonable or appropriate. The warning was only one relevant factor. The ET noted although in some conduct cases, a final warning can leave an employee ‘hanging by a thread’ – awaiting dismissal for another unconnected matter. In such cases, the ‘validity’ of the final warning will be critical. However, the ET held that this was not such a case. In this case, the employer had been dealing with the performance issues of the employee over a long period, part of which led to a final written warning. The ET was therefore entitled to find that the warning was within the range of reasonable responses. A recent CIPHR study into employers’ attitudes towards staff working from home has revealed that more than two thirds of the 150 employers polled (68 percent) are considering reducing the pay of employees that choose to continue to work from home permanently. This is even though 53 percent of the employers have saved money by having more employees working remotely. The survey – Returning to the office – what UK workers actually want found that its Home workers and pay cuts more likely that larger companies would consider reducing the pay of employees that opt for home working permanently, while 10 percent of employers have already permanently reduced location allowances during the pandemic. A May 2021 CIPHR study found that 73 percent of employees would accept some reduction in pay for permanently home working. 32 percent of those would accept a pay cut of 10 percent, the median acceptable pay cut was 3.5 percent. CHANGES to the Off-Payroll Regulations, known as IR35, came into force on 6 April 2021 and could potentially affect the position of non-executive directors (NEDs) who provide services through their intermediary companies. If such NEDs are caught by IR35, they would be subject to income tax and both employer and employee National Insurance contributions. The IR35 regulations now extend to companies who are unable to claim that they are a small company within the NEDs and IR35 meaning of section 382 of the Companies Act 2006 and have a UK presence. Under IR35 rules, a NED’s office holding responsibilities could attract employment status if their role goes beyond that of a normal office holder. This could include providing impartial advice and constructive criticism to the board which strays into the realms of being involved in the day-to-day operation of the company. However, an individual contracting through their service company and operating consultancy services which does not carry out the day-to-day management activities of a director may be deemed to be outside the scope of the IR35 rules. Hirer companies should be aware that even if they make a status determination statement which finds that the NEDs services or assignments are outside the scope of the IR35 regulations, HMRC can challenge such a decision. Gareth Edwards is a partner in the employment team at VWV. www.gedwards@vwv.co.uk Advancing the credit profession / www.cicm.com / November 2021 / PAGE 52
Advancing the credit profession / www.cicm.com / November 2021 / PAGE 53
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