PLC Public Sector reports:
With the formation of the first peacetime coalition government since the 1930s, fluctuating opinion polls, town hall control being passed to and fro and the worst economic prognosis since the World War II (or the Great Depression if some commentators are to be believed), it is clear that we are currently living in interesting political times.
A key theme of such times is the willingness of a party in opposition to be seen as a complete alternative, promising to undo the “wrong” that is occurring under the current party if they are given power. A recent Employment Tribunal relating to a Parish Council highlights that, once in power, this is not always as easy as it may sound.
Franzen-Ashwood and others v Letchworth Garden City Council was a claim relating to the level of severance pay due to employees made redundant following the election of a party intent on making the council “zero cost”. Aside from an insight into just how fractious politics can become, even (or should that be especially?) at the most local of levels, the key point of interest in this case is that it highlights how difficult it will be for a public authority to avoid a commitment it makes, on the basis that it had acted ultra vires in agreeing to the commitment in the first place.
The commitment in question was an agreement to pay an increased level of severance pay (12 months instead of three) to council staff from if they were made redundant before a certain date. The commitment was made due to a campaign being organised by a group known as HELP (Help Eliminate Letchworth Parish Council), who felt that the cost of running the council was a complete waste and should be stopped. As part of the campaign, staff were intimidated and threatened with redundancy should HELP representatives secure control of the council at forthcoming elections. Concerned that a loss of staff pre-election would mean that the council would be unable to fulfil its commitments, the council agreed the enhanced severance package for those staff that continued to work for the council in spite of the intimidation from HELP and obvious risk of future redundancy.
Three months later HELP were successful in the parish elections and set about reducing the council’s budget to zero. As part of this process the council purported to unilaterally reverse the increase in severance pay back to three months (having failed to get the employees to accept six months’ pay as a compromise). The council proceeded to make all staff redundant and paid three months’ pay as severance.
The council’s six employees all submitted Employment Tribunal claims for nine months unpaid severance pay, which the council resisted on the grounds that the agreement to pay 12 months severance pay had been ultra vires due to the fact that it was irrationally generous and Wednesbury unreasonable.
The Tribunal rejected these arguments holding that:
- The council had been entitled to continue to deliver according to its mandate up until the elections.
- The council had clearly felt that providing an incentive to staff to stay in the council’s employment was necessary in order to do this. The agreement to pay the increased severance was generous, but not irrationally so.
- It had not thwarted the intention of the incoming HELP group who had been elected for a four-year term. The severance only related to the first year of this term.
- In light of the intimidation they had been subjected to, the claimants had acted to their detriment in return for the increased severance pay, therefore even if the agreement had been irrational, the council should be estopped from reneging on the agreement.
- Not respecting the enhanced severance rights would be an unjust interference with the claimants’ right to property under Article 1 of the first protocol to the European Convention of Human Rights.
This decision is the latest and most clear cut example of the difficulties in reversing a decision by a public authority. Case law such as Gibb v Maidstone and Tunbridge Wells NHS Trust make it clear that doing so will be “a very steep hill to climb”. However, don’t expect to see those in opposition cutting back on their promises to do so any time soon!
A very important and current article.
WIthin the law sector, liability runs through everything. As such, it’s imperative that lawyers recheck their path as it were, to make sure they are in no way liable. Due to the nature of law there can be no room for error, and as such, it can be a difficult process. Processes like libel legislation for example continues to be used as a tool for bullying, so articles like this are greatly needed to raise awareness of the issue. Great article.