employee shareholder contracts – unwelcome, unworkable and unlikely to see the light of day

Posted on March 28, 2013 by Martin Malone

For some months I have been writing about the problems likely to be encountered in implementing the government’s proposed employee shareholder contracts, apparently a particular favourite of George Osborne. Just last month I referred to criticism from the Law Society and it now turns out that no sooner had Mr Osborne referred in the Budget to changes to facilitate the implementation of the new contractual arrangements than the whole plan was thrown out by the Lords the very next day and by a majority of 54. The contracts were initially due to be introduced on 1 April 2013 and recently put back to 1 September 2013 but it now remains to be seen whether the government will continue to push on with its plans – in the face of almost universal opposition from the full political and economic spectrum – or admit defeat. I am bound to observe that one might reasonably think that there are rather more important issues which should be occupying the government’s attention at the moment.

In the record of proceedings and along with delegating the planning functions of the Mayor of London, registration of town and village greens and development orders within the curtilage of a dwelling house (see my observations elsewhere concerning jumbled legislation) came the simple words “Clause 27 – Leave out Clause 27″, thereby at a stroke eliminating the proposals in their entirety. Continue reading →

bonus payments: beware what you say

Posted on May 21, 2012 by Martin Malone

Managers at Germany’s second largest bank, Commerzbank, are facing the prospect of having to find £42million after Mr Justice Owen, sitting in the High Court in London, held that 104 former City bankers at Dresdner Kleinwort are each entitled to bonus payments of up to £1.3million each.

The Bank claimed to be entitled to withhold payments when it faced massive financial pressure as part of the general turmoil in 2009. In 2008 the business was struggling and in May it was put on the FSA’s "watch list" as a result of the apparent fragility of its business. With a view to avoiding mass defections resulting from the instability this caused CEO Dr Stefan Jentzsch promised at a meeting that there would be a 400 million euros’ guaranteed bonus pot. This was a verbal representation to the employees concerning what was described as a discretionary bonus scheme.

In early 2009 the Bank decided to reduce the resulting allocated bonuses by 90%. Continue reading →

are TUPE provisions limited only to contractual terms?

Posted on April 26, 2012 by Martin Malone

In Abellio London Ltd (Formerly Travel London Ltd) v Musse & Ors the Employment Appeal Tribunal gives us a useful reminder that the right of employees to resign in response to a detrimental change of terms on a transfer of an undertaking is not restricted to changes in to their contractual terms. When a transfer takes place, and employees are not happy with it, they have two options. They can inform either the transferring employer, or the transferee employer, that they object to becoming employed by the transferee, in which case their employment ends without any dismissal – or any right to make any claim. If, however, the transfer involves a substantial change to their working conditions which is to their detriment, they can resign, and will be treated as dismissed.

Abellio dealt with claims by several London bus drivers on route 414, who were based at a depot in Westbourne Grove. When the route was transferred to Abellio under a service provision change they were expected to transfer to a depot south of the river in Battersea. While there was a mobility clause in the contract, this only mentioned depots run by the transferor, and not Battersea, which was an Abellio depot. Further it added significantly to their daily commute – by between one and two hours a day.

Continue reading →

Court of Appeal critical of heavy handed attempt to injunct former employee

Posted on March 23, 2012 by Martin Malone

In Caterpillar Logistics Services (UK) Ltd v de Crean, the Court of Appeal has upheld the refusal of an injunction application against a former employee.

Mrs de Crean had worked in a senior capacity and had a contract which included a confidentiality agreement but did not include terms restricting her activities after her employment ended. Three weeks after she resigned to join another company, the employer, with no prior warning, sent a long letter to her threatening legal proceedings. It made allegations of misconduct and demanded that she give undertakings not to use or disclose confidential information as they defined it, and also agreeing not to carry out certain areas of work in her new job. She was not prepared to give undertakings in these terms and the employer attempted to seek an injunction, first in the High Court and then in the Court of Appeal.

Both courts refused the application, and were highly critical of the employers’ over-reaction to the situation and their high-handed actions Continue reading →

can a Christian be required to work on Sundays?

Posted on February 27, 2012 by Martin Malone

I have often written about the surprising extent to which protection is available from discrimination on the ground of religion or belief or, for that matter because of having no religion or belief. It is therefore perhaps surprising that one of the central tenets of Christian faith, rest on a Sunday, is not something to which Christians are necessarily entitled. There are special rules for shop workers and betting workers but apart from these sectors, unless the contract of employment states otherwise, it is usually possible for employers to insist on employees working on Sundays, even if they are devout Christians. The point was recently confirmed in the employment tribunal case of Celestina Mba v Merton Council. Miss Mba worked for Merton Council at Brightwell Respite Care House in Morden for three years. She was required to work on Sundays since the Council said it had a duty to ensure children had weekend care. Miss Mba said she was prepared to work night shifts and on Saturdays in order to avoid having to work on Sundays. However, the tribunal found that there was no viable alternative to her working on Sundays.

The tribunal also took into account evidence from witnesses including Michael Nazir-Ali, former bishop of Rochester, and concluded that not working on Sundays was “not a core component of the Christian faith” because it was observed by some and not by others. Continue reading →

no compensation for manner of dismissal

Posted on February 27, 2012 by Martin Malone

In Edwards v Chesterfield Royal Hospital and Botham (FC) v Ministry of Defence the Supreme Court revisited the question of whether, over and above any right to compensation for unfair dismissal, employees can recover damages for the way in which they have been dismissed and specifically in the situation where the employer has failed to follow a contractual disciplinary procedure.The cases of Mr Edwards and Mr Botham concerned the same issues of law and were therefore considered together.

It has been long been clear that there is no scope for damages for injury to feelings being awarded in a claim for breach of contract (as opposed to a discrimination claim, where compensation for injury to feelings is established by statute). Numerous attempts have been made, however, to try and establish the possibility that a separate claim might succeed where an express term had been broken, rather than the implied term of mutual trust and confidence. The Supreme Court, by a majority, has now excluded that possibility, rejecting the suggestion that breach of a disciplinary procedure followed as part of the dismissal process can somehow be seen as independent of the dismissal itself. To do so might take it outside the rule excluding separate damages for the manner of dismissal – something the Supreme Court considered Parliament had intended should be fully encompassed within the statutory protection against unfair dismissal.

Continue reading →

holiday pay for long term sickness absentees

Posted on December 8, 2011 by Martin Malone

Two recent cases have shed some helpful light on the implications of the decision in Stringer and ors v HMRC which established that holiday pay continues to accrue while employees are on long term sick leave and are entitled to be paid for it.

First, in KHS AG v Schulte [2011] EUEJC C214/10 the European Court of Justice has confirmed that it is permissible for member states to impose a cut-off on the carry forward of unused holiday allowances for employees on long term sickness leave. In the particular German case the cut-off under the relevant collective agreement was 15 months, but the opinion of the Advocate General given in August suggests that on the same principle a cut-off period of 18 months (as recommended by the International Labour Organisation) would also be acceptable. This will no doubt be taken into account in the amendments needed to the Working Time Regulations to reflect the earlier decisions on accrual. Continue reading →

more TUPE and variation of terms

Posted on November 22, 2011 by Martin Malone

The EAT has given further helpful guidance on determining whether a variation to terms and conditions after a services transfer pursuant to TUPE 2006 falls within the ambit of Regulation 4(4) and Regulation 7(1) (automatically unfair dismissal for a reason connected with the transfer) of TUPE 2006. The decision in Enterprise Managed Services Ltd v Dance is arguably of greater relevance in today’s work environment than that in Smith v Brooklands (also reported this month) since it concerns re-tendering between contracting businesses. However, the EAT in Dance follows the same approach as that in Brooklands (unsurprising since the leading judgment was given by HHJ McMullen in both cases).

In this case, Mr Dance and others were employed by Williams which, along with another contractor, Enterprise, provided services to MHS. From around October 2008 meetings were held between MHS and its contractors emphasising, amongst other concerns, budgeting constraints and the requirement that future services would have to be provided at reduced cost but achieve high service performance. Both Williams and Enterprise depended on MHS for the supply of work. In January 2009 Enterprise reviewed terms and conditions for its workers, introducing performance related pay and different hours. These altered terms were accepted by its staff. Williams made no changes but lost the contract and Mr Dance and others transferred by operation of TUPE to Enterprise in April 2009. Continue reading →

variation of terms after a TUPE transfer: when is it permissible?

Posted on November 22, 2011 by Martin Malone

One of the most difficult issues a transferee employer has to deal with after the transfer of a business to it is when it can make changes to the terms and conditions of staff in the transferred company. TUPE 2006 makes clear that any purported variation of an employment contract will be void if the sole or principal reason for the variation is the transfer itself or a reason connected with the transfer that is not an "economic, technical or organisational reason" (Regulation 4(4)).

This has led to a great deal of caution exercised by transferee employers and their advisors when intending to implement changes. However, the legislation is quite clear. There is no absolute prohibition on changes to terms and conditions in the context of a TUPE transfer unless such changes are solely or mainly by reason of the transfer, or are for a reason connected with the transfer (which is not an economic, technical or organisational reason). On occasion, it can be said that sight of the wood is lost for the trees.

The case of Smith & others v Trustees of Brooklands College illustrates this point succinctly. Continue reading →