Govdata Ltd v Denton

Easter, a time of chocolate, roast dinners and long weekends. It also means you get your case law update a day early! Last week we looked at Director’s liability for breach of contract claims. In that case it was held that Director’s could be personally liable for any statutory breach of contract.

This week we are looking at failure to give written terms and conditions. Section 1 of the Employment Rights Act 1996 states that employees should be given terms of employment within two months of their employment commencing.

If an employer fails to provide terms, then the employee can bring a claim under Section 38 Employment Act 2002. This claim will only succeed if the employee is successful in another claim, such as unfair dismissal, and, the contract had not been issued before the claim was commenced.

The award for such claims is either two or four weeks pay, depending on the severity of the failure to provide terms. If the contract was subsequently issued after the claim was submitted, the award will be capped at two weeks.

Therefore, the question this week is:

Can a claim for failure to provide terms of employment succeed if the terms were provided before the claim was issued?

The judgment contains little by way of factual background so no juicy details this week I’m afraid. Mr Denton, the Claimant, commenced employment with Govdata Ltd, the Respondent, in December 2015. The Claimant was not given terms of employment until June 2016, by which time he had been employed for six months.

The Respondent dismissed the Claimant for gross misconduct in August 2016. The Claimant brought claims for unpaid wages and holiday pay. He also brought a claim under Section 38 Employment Act 2002 for failure to provide terms of employment.

The ET allowed both claims. Despite the Claimant receiving terms of employment before issuing the claim (and before dismissal) the ET granted two weeks pay under Section 38 Employment Act 2002. This award equated to £938.00.

The Respondent appealed, highlighting that the ET had erred in law as the Respondent had provided written terms of employment, albeit four months later than it should have. The EAT allowed the appeal, the Claimant was not entitled to two weeks’ pay as the Respondent had issued terms of employment before the claim commenced.

The takeaway point:

Unsurprisingly, a claim for failure to provide terms will not succeed if the terms were provided before the claim was issued. This judgement serves as a reminder to all that issuing a statement of terms and conditions or contract late can still give rise to a claim, even if the failure to issue terms is remedied. On paper this claim should never have succeeded but does show that even judges can make mistakes in law.

Secondly, this case highlights proportionality of costs. The Respondent here lodged an appeal and instructed legal representatives to challenge an award of £938.00. Whilst there was perhaps slight reputational damage, we would not consider it wise to fight such a trivial award.

Before signing off, everyone at PJH Law would like to wish all readers an enjoyable Easter! See you next week in the post-Easter chocolate comedown.