Employment Law Insight: November 2024
Rollits LLP
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In this month’s Employment Law Insight we take a close look at the interaction between employment law and criminal allegations in light of the recent high-profile case involving Benjamin Mendy and Manchester City. This case has highlighted complex issues surrounding employee rights and employer responsibilities following criminal allegations.?
Separately, following the recent publishing of the Employment Rights Bill 2024, this month’s newsletter includes some practical steps employers may consider taking ahead of the implementation of the upcoming changes, which are anticipated to come in force in 2025 and 2026.
Mendy v. Manchester City Football Club Ltd [2024] ET??
An Employment Tribunal has ruled that Manchester City must pay their former player Benjamin Mendy the majority of the ￡11m withheld from his remuneration when he faced rape and sexual assault charges.
Mendy, once the most expensive defender when moving to Manchester City for ￡52 million in 2017 now plays for FC Lorient in France’s second division.
Mendy was charged with various sexual offences and remanded into police custody in August 2021. Following this, he was suspended by the Football Association (FA). The nature of that suspension was precautionary, rather than punitive, and there were no findings of misconduct made by the FA at this point.?
The Club suspended Mendy without pay from September 2021 until he left the club in June 2023. The total pay in respect of this period was around ￡11 million before tax.?
In January 2023 Mendy was found not guilty on six counts of rape and one of sexual assault, the jury failed to reach a verdict on one count of rape and one count of attempted rape. In July 2023 he was found not guilty of those offences in a retrial at Chester Crown Court. Mendy was ultimately acquitted of all criminal charges.
Mendy brought a claim in the employment tribunal for unauthorised deductions from wages under s.13 Employment Rights Act 1996 in respect of the withheld pay.?
The Employment Judge found that the Club was entitled to withhold Mendy’s salary for the periods during which he was remanded in custody, which amounted to around five of the 22 months. ?The Judge was satisfied that Mendy found himself in custody (and therefore unable to perform his employment contract) in part due to his own actions in breaching the bail conditions he had previously been placed under.?
The Judge considered that when Mendy was not in custody, he was also unable to fulfil his obligations under his employment contract due primarily because he had been suspended by the Football Association (FA). The Judge concluded that the suspension was therefore an impediment to contractual performance which was “involuntary” or “unavoidable” from Mendy’s perspective. The Club was therefore not entitled to withhold his pay for these periods. Accordingly, Mendy is entitled to claim around ￡8.5 million in unpaid wages.
The exact amounts due will be calculated by the parties, or determined at a future hearing if the parties cannot agree. The fact that Mendy’s contract contained no provision permitting the Club to withhold wages where an FA suspension and/or bail conditions prevented him from performing his obligations was an important part of the reason for this decision.
How to deal with employees facing criminal allegations
When an employee is accused of criminal allegations or charged with a criminal offence, it can often cause problems for their employer.?
Whether an employee can be dismissed for such behaviour is an incredibly fact specific question and should be judged on a case by case basis. For employees with more than two years’ service, employers will need to ensure they have a fair reason for dismissal under statute and will need to follow a full and fair procedure prior to making any decision to dismiss.
Depending on the nature of the criminal allegations / offences, the potentially fair reason for dismissal under statute is likely to be either misconduct or ‘some other substantial reason’ (SOSR). The latter is likely to be relevant if the employee can no longer perform their duties (for example due to being remanded in custody or subject to a long prison sentence) or if there is evidence of clear reputational damage (for example, complaints from third parties).
Whether the employee’s actions can be deemed misconduct may depend on whether the behaviour was committed inside or outside of work and/or whether the behaviour could be deemed to be relevant or connected to their job role – for example, it will be much easier to dismiss an employee who is found to have committed theft during the course of carrying out their work duties than if they were accused of theft from a local supermarket on the weekend. Employers should review their policies and consider if they refer to behaviour outside of work potentially justifying disciplinary action. It may be relevant if there is cause to believe that the employee’s actions could impact customers or clients or if there is a significant risk to such parties arising from the alleged offences.?
If an employee is remanded in custody, this should not delay an employer’s investigation into the matter – which should be commenced without unreasonable delay using written representations if appropriate. Employees are also not entitled to be paid if they are unable to attend work due to being remanded in custody.? If employees are suspended whilst an investigation is ongoing, the suspension should be on full pay unless the employer has the contractual right to withhold payment (which would be highly unusual). Suspension should not be an automatic action by the employer following news of criminal allegations and should only be used where appropriate in all of the circumstances. For example, if a teacher or care worker was accused of sexual offences related to children, suspension may be deemed appropriate due to the significant risks involved if they were to remain in employment whilst the investigation was being carried out.?
If an employee is convicted of a criminal offence and is ordered to serve a prison sentence, it may be the case that their employer can argue that the contract of employment has been ‘frustrated’ meaning their contract is deemed to be terminated by operation of law and as a result there is no dismissal. Successfully arguing frustration is rare and it is common for employees to argue there was no frustration and to bring unfair dismissal claims on this basis. Case law has shown that generally frustration will only be successfully argued where prison sentences exceed one year in length - however this is not a hard and fast rule, with cases judged on their individual facts. It is important to note that employers can reasonably base their decisions on the length of the sentence imposed- it is not necessary for them to consider whether the employee may in fact serve a lesser part of that sentence. ?
As shown by the above, this is a tricky area of law and taking legal advice early will be key in successfully handling issues involving employees and criminal allegations.
Unlawful Deduction claims time limits??
The protection from unlawful deductions regime is set out in sections 13 – 27 of the Employments Rights Act 1996 (“ERA 1996”). ? Under section 13 of the ERA 1996 states that, an “employer shall not make a deduction from wages of a worker employed by him unless-
Pursuant to section 14 ERA 1996, the above provisions do not apply where the deduction of the worker’s wages are made by the employer in respect of “(a) an overpayment of wages, or (b) an overpayment in respect of expenses incurred by the worker in carrying out his employment.” ?
Employers are also prohibited from receiving a payment from one of the workers of the employer, unless, under section 15 ERA 1996, a statutory or contractual provision applies, or the individual has confirmed their agreement or consent to the deduction in writing. ?
There has been uncertainty as to the date at which the three-month time limit to bring the claim for unlawful deductions begins to elapse. Recent case law has now confirmed that the time limit for bringing a claim for unlawful deductions is three months, starting with the date of the deduction and not the date of termination. ?
In the case of Wharton v Sheehan Haulage & Plant Hire [2024] EAT, initially the Employment Tribunal determined that the claimant had not contacted Acas within the specified time limit of the employment termination date. The Claimant had failed to instruct Acas and begin the early conciliation process within three months of the termination date. The Employment Tribunal therefore concluded that the Claimant had submitted their claim out of time. ?
However, the Employment Appeal Tribunal contradicted this position and determined that the three-month time limit begins at the date of the unlawful deduction. In the above case, the Claimant was paid nine days after the date of their employment terminating. This therefore added a further 9 days onto what the Employment Tribunal had deemed to be the time limit. The Claimant had in fact commenced the early conciliation process with Acas within 3 months of the date of the unlawful deduction. ?
The Claimant had subsequently submitted the claim form within one month of the date of the Acas early conciliation certificate and it was held that the Claimant had brought the claim within the relevant time limit.
Employment Rights Bill 2024 – an update?
Further to last month’s newsletter and our article on the Employment Rights Bill 2024 ((1) Employment Law Insight: October 2024 | LinkedIn ), which was published on 10 October 2024, this month we detail some important dates of when the legislative changes are likely to come in force. The second reading of the Bill was scheduled for Monday 21 October 2024 ?
The Government is, at present, seeking consultation in relation to four proposals covered within the Employment Rights Bill 2024:
The open consultations are due to close in the first week in December. ?
In the government’s Next Steps paper, (Next Steps to Make Work Pay (web accessible version) - GOV.UK ( www.gov.uk ) it is stated “we expect to begin consulting on these reforms in 2025, seeking significant input from all stakeholders, and anticipate this meaning that the majority of reforms will take effect no earlier than 2026. Reforms of unfair dismissal will take effect no sooner than autumn 2026.” ?
With the above announcement, employers may wish to consider their recruitment process and add further steps to their screening and interviewing process. This would hopefully reduce the need for dismissals (or redundancies) and reduce employers having to defend an unfair dismissal claim.? ?
Furthermore, employers may wish to take further practical steps ahead of the implementation of the Employment Rights Bill 2024 in order to prepare for the ban of exploitative zero-hour contracts. Potential steps may include having discussions with employees and workers to determine their ideal working arrangements (i.e. hours / days) and reviewing the contracts of employment which they offer to individuals.
Employers may also wish to amend their recruitment process to decipher any preferred hours from the start in order to determine whether they can properly accommodate and pay for them. ? An overall review of all policies and procedures may also be beneficial given that the Employment Rights Bill 2024 has indicated that there is to be a change in relation to parental leave (i.e. this will become a day one right) and the new bereavement leave entitlement.