Legal Update - October 2015
Whistleblowing and its protections
“One of my employees is becoming a bit of a troublemaker. He keeps complaining about safety issues in the workshop, alleging that I haven’t got the right equipment and that it is causing a health and safety risk. He is also generally negative about the company and his bad attitude is affecting other employees. He has only been here one year, so I think I might dismiss him, is that okay? I know you have to have two years before you can claim unfair dismissal.”
The employer is correct in that normal unfair dismissal rights don’t apply until two years’ service. In the situation described above, however, the risk is that the employee may bring a whistleblowing claim against the employer.
Knowledge of whistleblowing in the motor industry and in the wider economy is still relatively poor and many employers don’t fully understand that it may apply to them and the level of protection it may give employees.
Dismissal of an employee can be automatically unfair (with no required two year service criteria) if the reason or principal reason for the dismissal is because they have made “protected disclosures”, i.e. ‘blown the whistle’ in non-legal language.
There are essentially two main areas in which employees are protected:-
- The dismissal of an employee would be automatically unfair, as above; and
- Any detriment to the employee, because he or she made such protected disclosures, is also protected.
Whist the legislation has understandable and laudable aims, as can be seen in the news of late regarding the NHS, with the lifting of the unfair dismissal cap from one to two years it also means that some employees can exploit the rules and bring whistleblowing claims to avoid the statutory service criteria.
Employers should also be aware that there is no financial cap on compensation for whistleblowing claims, unlike normal unfair dismissal, so potentially the Tribunal awards can be large.
The legislation in the UK is extremely wide and covers a wide variety of allegations relating to (for example) any breach of any legal obligation, danger to health & safety, allegations of criminal offences or cover-ups, damage to the environment or the deliberate concealing of information about any of these issues.
There are further dangers for employers in that:-
a) It doesn’t actually matter that the allegation made against the employer is true or not. All that matters is the reasonable belief of the employee making allegations.
b) Alleged wrongdoing can be past, present or future.
c) Since changes in the law a couple of years ago, it is no longer a defence for the employer that the disclosures are made in bad faith. That can be still be relevant to remedy (i.e. how much compensation the employee gets in a Tribunal) but not to whether or not the employer is liable in the first place.
In the above situation for example, if the employee genuinely believes there are health & safety issues in the workshop and he is dismissed because of raising those issues, then he would be able to bring a claim in the Tribunal and it may be difficult for the employer to defend the same. That would be the case even if there were other quite genuine capability or conduct issues with the employee.
Note, however, that there is a distinction in law between dismissal or treating less favourably because of the disclosure itself, and dismissing or treating less favourably because of conduct which may be linked to the disclosure, but is separate. In the above example, the employee’s conduct in being very negative about the employer may, for example, be distinguished from the making of the health & safety allegations themselves. Tribunals are however entitled to explore the evidence of the ‘real’ reasons for any of the employer’s treatment of the employee.
Employers are advised to treat whistleblowing seriously and explore the issues and document that they are addressing any concerns raised. You may consider issuing a separate whistleblowing policy to demonstrate that you do take the issue seriously. If an employee is raising real concerns, then clearly the employer should act upon and try to remedy the issues.
If an employee is trying to bring a whistleblowing allegation to gain statutory protection when they are simply a poor employee or guilty of other misconduct or capability, then an employer is well advised to lay a good paper trail of treating the concerns seriously and also of the real reasons it disciplines or dismisses the employee, so that they can defend their position in the Tribunal.
Motor Industry Legal Services
Can trackers be fitted to company vehicles?
“Is it possible to place trackers on company vehicles/parts vans covertly, I don’t think this is possible and think we would have to warn staff if this is going to be the case. Could you confirm as to whether we would have to tell staff and consult and what the implications are for the company”.
It is possible to place trackers on company vehicles simply because it is property of the company, however, employees who drive those vehicles must be made aware. This is for data protection purposes because it forms part of processing your employee’s data to which they should be aware and give consent.
A potential snag is whether you allow employees to use company vehicles for their personal use. If so, then ordinarily there should be a provision to be able to switch off the tracker outside business hours.
It would be worthwhile updating your company handbook to provide a provision that trackers are included in company vehicles. In terms of advising your employees at present, a suitably worded memo/letter would suffice and reasonable notice prior to the trackers either being fitted or, if already fitted, the monitoring starting.
Motor Industry Legal Services
Fundamental Guidelines to the Consumer Rights Act 2015
Significant changes are being introduced by the Consumer Rights Act 2015 which comes into force on 1 October 2015. For all motor retailers this will mean reviewing existing complaints handling procedures, sales and service processes and importantly contractual terms and conditions of business.
We would therefore strongly advise all members to contact the MILS legal team to ensure that they fully understand the legislative changes. Members are reminded that MILS can provide advice and assistance in reviewing contractual terms and conditions and business as part of the RMI membership.
The Consumer Rights Act 2015 (CRA) consolidates previous consumer rights legislation incorporated within the Sale of Goods Act 1979 (SOGA), Supply of Goods and Services Act 1982 (SOGSA), and the Unfair Contract Terms Act 1977 (UCTA).
Importantly the CRA introduces new remedies for consumers and extends these protections to digital content.
The actual rights remain substantially the same. The implied terms remain that goods must be, of ‘satisfactory quality’, ‘fit for purpose’, and that they correspond with their description. These terms are already implied into every consumer contract and the act simply confirms that this position remains the same, unless any specific differences are brought to the consumers’ attention
- Satisfactory quality – Section 9 (1)-(4) of the CRA re-order the current section 14(3)-(5) of the SOGA
- Fit for a particular purpose – section 10 CRA is substantially similar to the current rights as provided by the SOGA
- As described Section 11 of the CRA is substantially similar to the current rights as provided by the SOGA. It should be noted that this section includes a substantial change from the SOGA in that any pre-contract information provided under The Consumer Contracts (Information. Cancellation and Additional Charges) Regulations 2013 (CCR) will; now become an implied term of the contract, see below
- Pre-contractual information. Whilst section 12 was not contained specifically within the SOGA, it was highly likely to have been implied as a matter of law in any event. The CCR requires motor traders to provide consumers with pre-contract information in certain circumstances. Failure to provide this information can enable a consumer to cancel the contract. Under the CRA, this pre-contract information will be deemed to be an implied term of any consumer contract. Consumers will be entitled to compensation if a motor trader breaches these implied terms.
- Goods to match sample Section 13 of the CRA is substantially similar to the current rights as provided by the SOGA
- Goods to match a model seen or examined Goods have always had to be accurately described, and match any ‘Sample’ provided. Section 14 is a development of this for the CRA and goes one step further. Where a consumer is shown an example of goods to be purchased it will be an implied term that the goods purchased will have the same characteristics as any example unless the differences are sufficiently brought to the consumer’s attention prior to the contract.
- Installation as part of the contract Section 15 of the CRA is a newly worded consumer protection for the CRA. However, this is commensurate with the most likely application of the current law. If the motor trader installs goods that are deemed not to conform to the contract then the installation will be deemed to be incorrect.
- Goods not conforming to the contract if digital content does not conform. Section 16 is new for the CRA. Digital content is now to be treated as any other goods when supplied. In application, this is unlikely to significantly impact on the motor trade.
- Motor trader to have the right to supply goods. Section 16 is commensurate with the current application of the law.
Where goods are supplied in breach of the act, consumers will be entitled to the following:-
- Short term right to reject- consumers will have the right to reject goods that are faulty or not as described within 30 days. If this right is not exercised within this time frame then the right is lost. The consumer can still agree to a repair. If the motor trader replaces or repairs goods during this time this limit is extended. The 30 day period is put on hold during the period of any repair and the consumer will retain the right to reject the vehicle for either 7 days from its return or the remainder of the 30 day period whichever is greater.
- Repair/replacement- consumers will have the right to request that faulty or not as described goods are repaired or replaced even after the 30 day right to reject period has expired. The motor trader can require one opportunity to repair or replace the goods. However the parties can agree to any number of repairs. If the repair or replacement is claimed by the consumer, the motor trader must carry out the work at no cost within a reasonable time and without inconvenience to the consumer. The consumer cannot demand a full replacement over a repair if this would place an unfair burden on the motor trader. Thus the motor trader should always be able to argue that he can replace a defective part rather than having to replace an entire car.
- Final right to rejection/ price reduction. In the event that the repair or replacement is impossible, or the motor trader’s one attempt at rectification fails, the consumer has a final right to reject the vehicle or claim a price reduction. Consumers will have the right to reduction in the price or to reject the goods after one successful repair or replacement. Where this rejection is outside of the initial 30 day period then motor traders are entitled to deduct an amount for the use of the vehicle.
The onus will be on the consumer to prove that the goods do not perform to the contract if they are seeking to enforce their short term right to reject, however goods will be presumed to not conform to the contract if a consumer seeks to exercise their right to a repair or replacement, price reduction, or a final right to reject within 6 months of delivery.
Motor traders may be entitled to make a deduction in respect of any use the consumer has had of the goods before they are rejected in certain circumstances. No deduction can be made if the consumer exercised their final right to reject within the first 30 days. However a deduction can be made for use for motor vehicles rejected after the short term right to reject.
As a general rule, if a part on a motor vehicle is faulty then it is unlikely that the consumer will be able to terminate the entire contract. The consumer is obliged to make rejected goods available for collection by the motor trader at the consumer’s choice of location, unless the motor trader has made it a term of the contract that obliges the consumer to return the vehicle to the motor trader.
The motor trader is responsible for the reasonable costs of returning the goods unless they are being returned to the motor dealership. The consumer is not able to recover excessive return costs but the consumer, as part of any damages claim, would be able to claim consequential damages connected to the rejection of the goods, i.e. breakdown recovery charges etc…
It should be noted that no fee can be imposed for processing a refund.
Terms will still be implied into consumer contracts for the supply of services that the service will be performed with:
- reasonable skill and care. Section 49 is substantially similar to section 13 of the SOGSA
- information about the trader or service to be binding. Whilst Section 50 is new, and its application is subject to clarification by the courts, it has always been the case that certain statements would form the basis of the contractual terms contained within a contract
- the price will be reasonable if not agreed. Section 51 is substantially similar to section 15 of the SOGSA; and
- the service will be performed within a reasonable period if not agreed Section 52 is substantially similar to section 14 of the SOGSA.
The definition of reasonable care will be deemed to be what is reasonable within the motor industry. What is reasonable may therefore vary depending upon the nature of the repair service and price paid.
This is a potentially dangerous section. The CRA states that anything spoken or written to the consumer by or on behalf of the trader or the service becomes incorporated into the agreement if it is taken into account by the consumer when deciding to enter the contract or make decisions during it.
There is no requirement that the motor traders themselves make the statement, simply that it is made on their behalf. This clause has the potential to bind the motor trader to statements or descriptions made by third parties such as manufacturers advertising statements, or standard servicing and maintenance schedules. There is no requirement within the act that it must be reasonable for the consumer to rely on such statements. This has a significant potential for complications in the future.
- Repeat performance. If the service is not performed with reasonable care and skill, or if it does not conform to pre-contractual statements made by the motor trader, consumers can require the trader to perform the service again to put it right. The consumer can request a price reduction.
- Reduction in price. If the service is not performed correctly the consumer can require the price to be reduced by a reasonable amount. This can be a reduction of up to 100%. However, a consumer must first allow a motor trader the opportunity to rectify the fault through repeat performance, unless this is either impossible or they have done so and the repeat performance was not completed within a reasonable time.
This section does not fix how this amount is to be calculated. However, as with the supply of goods any refund must be paid within 14 days from that date that a refund is agreed between the parties. The refund must use the same means of payment as the original service and no fee can be levied.
In addition to implied terms, the CRA also deals with terms that will be deemed unfair and so will not be enforceable. This is not a new concept. The main legislation currently in force is the Unfair Contract Terms Act 1977 (hereinafter ‘UCTA’) and the Unfair Terms in Consumer Contract Regulations 1999 (hereinafter ‘UTCCR’). However, there are a few more.Contracts and notices covered by this Part
The CRA clearly extends legislative protection to notices as well as written contractual terms. Notices include any announcements whether or not in writing. In practice any notice purporting to include contractual terms would likely been caught by the previous legislation. However, as the CRA more clearly and widely defines this it is more likely that consumers will be successful in challenging unfair terms.
The CRA defines a potentially unfair term more widely than previous legislation. Section 62 states that a term is unfair if it is :
- contrary to good faith
- causes significant imbalance in the parties rights and obligations under the contract
- to the detriment of the consumer
Whilst this term appears detailed, the terminology is such that there appears to be no defined measureable test as to whether any particular term or notice would or would not be unfair.
The CRA defines 2 types of unfair contractual terms. Those that are potentially unfair and those that must be regarded as unfair. These terms are contained Schedule 2 of the CRA
Not all terms of the contract can be assessed for fairness. Provided the terms are in plain and intelligible language, the court is prevented from assessing any terms that specify the main subject of the contract.
A motor trader must ensure that a written term of a contract is transparent and that any especially onerous or unusual terms are brought to the consumer’s attention. Further if a contract term is ambiguous or has different meaning, then a court will use a meaning most favourable to a consumer.
This article has been written by Christopher Baylis, Barrister and Head of Legal at Motor Industry Legal Services (MILS) and Paul Carroll, Solicitor, Partner at MILS.