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 →

family unfriendly?

Posted on September 26, 2011 by Martin Malone

McGrigors is one the leading UK-based law firms with offices in London, Edinburgh, Glasgow, Belfast, Aberdeen, Manchester, Qatar and Falkland Islands. It describes itself as one of the UK’s most dynamic law firms and reports in a recent press release that it has signed a commitment to widen access to the legal profession.

However, in a firm-wide memo issued on 13 September, staff were informed that it is commencing a consultation on paying bonuses to mothers who return to work and reducing pay for mothers who take a second maternity leave within 18 months from their last one.

It also plans to reduce long term sickness benefits. Continue reading →

News of the World: stigma damages and TUPE protection?

Posted on July 25, 2011 by Martin Malone

An interesting discussion has emerged on the web about employment issues arising from the sudden closure by News International of the News of the World.

It is a central tenet of employment law that contract terms can be both express (i.e. written in to a contract) and implied. Some key duties, such as a duty of faithful service, are implied into all contracts of employment, whether or not a written contact exists. Continue reading →

termination payments: a trap for employers

Posted on July 25, 2011 by Martin Malone

A Ms. O’Farrell worked for Publicis Consultants UK Ltd. Her contract provided for three months’ notice. She was made redundant in May 2009 and was provided with statutory redundancy pay and holiday pay. Her dismissal letter also said that she would receive an ex-gratia payment equivalent to three months’ salary (£20,625) free of Tax and NI deductions. Continue reading →

do you need to pay an employee who is held in custody?

Posted on July 19, 2011 by Martin Malone

The normal rule is that an employee who is ready and willing to work but is unable to do so by reason of sickness, injury or other unavoidable impediment will, if his contract continues and subject to its terms, still be entitled to pay.

In a recent case an employee, perhaps somewhat cheekily, argued that this meant he was entitled to pay for a period when he was prevented from coming to work because he had been remanded in custody Continue reading →

Termination of employment status, or termination of employment contract, or both? A conundrum.

Posted on April 17, 2011 by Martin Malone

Strange as it might sound, it is possible for one’s status as an employee to end in circumstances that do not terminate one’s contract of employment. This was the thorny issue in Société Générale London Branch v Geys, decided by the Court of Appeal on 30 March 2011.

In that case, it was crucial to establish upon which of three potential dates Mr Geys’s contract ended, because it was only if it lasted until the latest possible date in January 2008 that a contractual entitlement to a huge bonus (the substance of his claim) could arise.

Société Générale had terminated his employment at a meeting on 29 November 2007, but Mr Geys had written back indicating that he was affirming his contract. Nonetheless, Société Générale made a payment in lieu of notice (in line with his contract) on 18 December 2007, and formally notified him of this by letter on 6 January 2008. The Court of Appeal overturned a previous ruling by the High Court and found that Mr Geys’s contract of employment ended on 18th December – thus he had no entitlement to the extra bonuses.

From Mr Geys’s point of view that, no doubt, was the most interesting (if disappointing) part of the judgment. However, of more general interest is what happened on 29 November 2007, because it highlights the conflict between “pure contract law” and statutory concepts of dismissal which underlie other claims such as unfair dismissal.

There was doubtless a repudiatory breach of contract by Société Générale – they made clear that Mr Geys’s no longer had a job. Yet such a unilateral breach cannot terminate a contract if – as happened here – the other party refuses to accept it. Hence the contract must continue, until ended in accordance with its provisions. However, Mr Geys’s status as an employee was clearly ended on that date – so for statutory purposes, it would be the Effective Date of Termination (EDT).

At first glance this is hard to get one’s head around – how can a contract of employment exist when (arguably) the essential mutuality of obligation has gone and one party is no longer an “employee”? Understandably, perhaps, the Court of Appeal wants the Supreme Court to consider whether an unaccepted repudiatory breach should, in fact, be able to terminate the contract.

However, what if the Supreme Court follows this route? The whole doctrine of constructive dismissal (which is a contractual concept which can be the basis for statutory unfair dismissal) relies on an employee promptly resigning in acceptance of a fundamental breach of contract by an employer. Where does it leave the employer’s defence that the employee affirmed the contract if the contract can be terminated by that unilateral breach alone? Will the EDT (so important for strict time limits) be at the date of resignation (as now) or the date of the breach?

The current situation is the product of conflicting legal concepts – but removing that conflict could generate just as many problems. In a case in which the date of dismissal, constructive or actual, is an important consideration proper resolution of the point could be vital, thus underlining the need for expert legal advice in any such situation.

newsletter – pay reductions

Posted on November 23, 2010 by Martin Malone

Especially when times are tough, employers sometimes seek to impose wage reductions or other substantial adverse changes to terms of employment of staff. Of course from an employment law point of view there is generally no problem if the employees concerned agree, however reluctantly, to accept the change(s) – which of course they may well do if the alternative is likely to be redundancy and accepting the change is the lesser of two evils.

An employee who does not agree adverse change(s) of any significance which are imposed anyway will be entitled to resign and bring a constructive dismissal claim (which may be a claim for unfair dismissal or breach of contract or both). As a general rule compensation awarded in that type of situation will be less than it might otherwise have been on the basis that by rejecting the offer of continued or renewed employment the employee had not done everything that he or she could reasonably be expected to do to mitigate his or her loss.

However a recent case has shown that employers must not just assume that compensation will be reduced in such circumstances.

A Mr Banks won a constructive unfair dismissal claim against his then employer, Bloxwich Fencing Ltd. Bloxwich appealed to the EAT. One ground for appeal was that the tribunal had not reduced the compensation it awarded for the unfair dismissal to take account of the fact that Bloxwich had offered to reengage Mr Banks, albeit on worse terms than those on which he had previously been employed. Bloxwich argued that this showed that Mr Banks had failed to take reasonable steps to mitigate his loss and that therefore compensation should be reduced.

The EAT dismissed this argument. The EAT found that on the facts of this particular case relations between Mr Banks and Bloxwich Fencing had deteriorated to such an extent that it had been open to the original tribunal to conclude that it was not reasonable to expect Mr Banks to go back to work for them. That was enough to dispose of the employer’s argument.

For those who may want to read a transcript of the full judgment it is available here – Bloxwich Fencing Ltd v Banks, EAT.

spectacular administrative blunder leaves Everton FC out of pocket

Posted on July 9, 2010 by Laura McDonald

The love of my life, Everton FC, have this week made a spectacular mess of employee/employer relations by failing to comply with FA regulations. Chairman and genial old theatre impresario, Bill Kenwright, had verbally agreed a new contract with promising youngster, Dan Gosling, who non Everton fans will remember as the scorer of THAT DERBY GOAL. Mr Kenwright hoped a verbal agreement would be enough… not so!

Dan Gosling - Everton youngster

Dan Gosling repaid the last 3 years of coaching, training, physio, development and expert medical treatment by taking the club to an FA Tribunal to permit him to walk out of Goodison a free agent. The clause that allowed Goose (his nickname) to leave the club is as follows:

A player under 24 can leave a club at the end of his deal but, if they have received a written offer to stay, the club that buys him either has to agree compensation or pay a fee set by a tribunal.

Dan Gosling - England U21

The Premier League ruling that Gosling can leave for nothing means Everton have missed out on a fee estimated at £4 million, while the player is certain to negotiate a substantial pay rise at his next club. Happy days for the employee, not so much for Kenwright and co… lest we not forget that £4m has bought David Moyes players like Jagielka, Cahill, Arteta, and Pienaar in the past which underlines the massive loss it is to a club already operating on a shoestring!

As an avid Evertonian and veteran season ticket holder it came as a massive shock that such an affable young man would do this to the club. By all accounts players and staff at Everton were equally shocked with protestations of “this is the way we did it with Rooney and Rodwell” falling upon deaf ears at the tribunal. It’s actually more worrying that they did it that way with Rooney and Rodwell because we’d be £30m poorer and if Rodwell eventually leaves Goodison, another £20m+ payday will come Everton’s way! Startling that the club would expose itself to such massive financial risk for the sake of writing down what they had already verbalised.

So often business owners live by the “if I treat you well, you’ll treat me well” ethos and in an ideal world this would be fantastic, however, this case highlights that it is not an ideal world and a gentleman’s agreement no longer has the same credence it once did. So often businesses come to us with employment issues after the fact when all we can do is damage limitation to achieve the best possible outcome. However, for the majority of our clients we work with them proactively to ensure their paperwork is watertight and kept up to date and any employee issues are dealt with by a qualified and experienced employment lawyer from day 1.

If only Mr Kenwright had played by the rules and not thought he was still living in the era of the Cannon Ball kid! It’s a sad state of affairs when your word is not enough but these are the times in which we live. Maybe Bill should stick to musicals and certainly engage with a better legal team to take care of the formalities!

If you are interested in finding out more about our Employment Solutions packages then please give me a call on 07794 552896 or email me on lauramcdonald@canter-law.co.uk.

choose your words carefully

Posted on May 13, 2010 by Martin Malone

In Arkley -v- Sea Fish Industry Authority the Employment Appeal Tribunal was asked to consider the construction of a contract of employment with particular reference to the terms which applied on termination of the employment.

Mr Arkley was made redundant at the age of 51 and after 22 years’ service with the Authority. Clause 2(e) of the contract stated:

“…staff with not less than 5 years contributory service aged 50 or more and currently members of the Authority’s Superanuation Scheme will be entitled to an immediate payment of pension benefits based on reckonable service enhanced by not more than 10 additional years”

In other cases the Authority had offered a choice of either 10 years’ enhancement and a reduced lump sum or an enhancement of 6.6 years with a full lump sum.

However, prior to Mr Arkley’s retirement, pensions law was changed so that employers could not offer reduced lump sum deals. As a result, he was offered only the second option (6.6 years / full lump sum).

The employment tribunal found that the employer had acted fairly because the term “not more than 10 years” could be read as meaning less than 10 years could be paid on occasions and also because others had accepted the shorter period. However, this was a “split decision” of the tribunal and the employment judge took the view that “entitled” meant exactly that, i.e. entitled to receive (an enhancement of 10 years) and that the use of the words “not more than” did not confer on the employer a discretion to offer less.

The Employment Appeal Tribunal has agreed with the dissenting employment judge. In a nutshell, on a strict interpretation of the words used, the entitlement to 10 years’ enhancement was mandatory, not discretionary. If the employer wanted to change the terms of the contract to reflect the change in the law it could have done so at the time but did not.

You can view the full judgment here.

Needless to say, the judgment reinforces the point that employers must keep the terms of their contracts of employment (and related documents) under regular review. That is a key aspect of the CLB Employment Solutions service. If you are concerned about your contracts of employment or other employment documents, please call now on 08000 320 974.