yet another TUPE round up!

TUPE

The Advocate General has given his opinion in the case of Alemo-Herron & Ors v Parkwood Leisure Ltd supporting the proposition that employees transferred under TUPE can continue to benefit from “dynamic” collectively agreed terms and conditions post transfer.

Next, the DWP has launched a consultation on the amendment of the Transfer of Employment (Pension Protection) Regulations 2005 on the pension contributions a transferee must make following a business transfer. The current regulations say that ‘relevant contributions’ must be made and that the amount contributed must equal the employee’s contributions subject to a maximum of 6% of basic pay. The reason for the change is that the regulations do not make it clear that the pension scheme member is entitled to choose their own rate of contribution. The proposal is that members will be able to choose their own contribution, which the employer must match, up to the 6% cap. Transferees will also be able to satisfy their obligation to protect pension contributions by keeping up contributions equivalent to those made before the transfer.

I also reported, in brief, last month, the consultation on changes to TUPE 2006 to removed so-called “gold plating”. In a bit more detail, the proposals are Continue reading

short term and one off service provision changes

Liddell

Liddell’s Coaches v Cook is another case involving a contract to bus children from one place to another (see also Redfearn -v- UK). In this case the legal issue concerned the exclusion of service provision changes “other than in connection with a single specific event or task of short-term duration” from TUPE. When East Ayrshire council found out it had built a primary school over a mineshaft, it had to “decant” the children to other schools while it rebuilt it. To do that it entered into five one year contracts with Liddells, a bus company. Typically, contracts for school transport were of three to five years’ duration. The next year more contracts were let to cover the final months of the rebuild. Liddells only won one of the five contracts, with the others going to other companies including three to a company called Abbey. Two drivers lost their jobs at Liddells, and the question was whether they had transferred to Abbey or not.

The Employment Appeal Tribunal upheld the decision of an Employment Tribunal that they had not. The contract was for a single specific event – to cover the period during which children had to be bussed elsewhere whilst the school was rebuilt. As Lady Smith pointed out, there was no need for that event also to be of short term duration to fall within the exception – there were two separate exceptions – one relating to single events and the other relating to events of short duration, notwithstanding Department of Business Innovation and Skills guidance suggesting the contrary. As it happened, in context, one year was a short term duration in any event.

The EAT judgment was very specific in its analysis of what constitute long term and short term activities: Continue reading

feeling left out?

Tamang v ACT is an illustration of the importance of careful drafting – and of the importance of not making assumptions. The case arose after a pair of security guards claimed that they had been unfairly dismissed for a TUPE related reason after a service provision change, and that they had not been consulted about the change. They started claims against both their old employers and the new service providers, but then reached an agreement to drop their claims against the original employers, and signed settlement agreements which only named those original employers. The employees then carried on the proceedings against the new service providers, who sought to rely on the compromise agreements, arguing that they acted as a release against all the respondents.

The Employment Appeal Tribunal rejected that argument, holding that the agreement was a valid form of settlement, but only against the respondent actually named; it was not in fact a release of the respondents but a promise not to continue or start new proceedings against a named party.

The EAT referred to Chitty on Contracts (widely regarded as the leading work on contracts subject to English law) with particular reference to release, accord and satisfaction. Continue reading

re-engagement for employees dismissed after "dramatic" TUPE transfer

Manchester College v Hazel & Anor looks at when a dismissal relating to harmonisation of terms after a TUPE transfer will be fair, and when it is not, the appropriate remedy. The case arose after a contract for provision of education in the prison service was transferred under TUPE to a new provider. After the transfer, the new provider discovered expenses which had not been uncovered during due diligence prior to transfer and started a cost-cutting process. After asking for volunteers for redundancy, it then sought to change contract terms for some of the transferred employees to harmonise terms and conditions – this involved significant pay cuts. Cases were brought by two of the employees affected, Miss Hazell and Mrs Huggins, who refused to agree the changes and were dismissed for their refusal. They were then offered new contracts at reduced rates, which they accepted. However, they also made unfair dismissal claims in relation to their old contracts. The Employment Appeal Tribunal first looked at the fairness of the dismissals. While the harmonisation was an “economic, technical or organisational” reason for dismissal – it did not entail a change in the workforce, and so fell outside the scope of that defence. While there happened to have been recent redundancies the harmonisation was a separate issue and did not make a change to the workforce employed. Because the dismissals were for a reason connected to the transfer, they were automatically unfair.

His Honour Judge McMullen QC summarised the court’s view of the matter as follows:

In our judgment, the findings in relation to timing are ones of fact for the Tribunal. It was required to look into the mind of the actors in this drama and decide what it was [that] caused the dismissal of the Claimants. Continue reading

new (or maybe not so new) proposals to "streamline employment law"

In our June newsletter I outlined what changes were to be expected as a result of the Government’s review of employment law. If anything, what has now emerged is an even more diluted version of what was anticipated in the sense that the proposed changes will be the subject of numerous consultations, rather than firm decisions to implement changes. The "fire at will" Beecroft proposals are nowhere to be seen but those which remain are unlikely to provide radical alterations to the existing employment tribunal provisions (except perhaps for the introduction of fees – see our July round-up).

It is clear that Vince Cable has had his way with the BIS press release emphasising that the UK has a lightly regulated, flexible labour market, considered by the OECD to have the third lowest employment protection among 20 OECD countries and 10 emerging countries.

Introducing the changes Mr Cable said

We have been looking across the range of employment laws with a view to making it easier for firms to hire staff while protecting basic labour rights.

Our starting point is that Britain already has very flexible labour markets. That is why well over one million new private sector jobs have been created in the last two years, even when the economy has been flatlining.

But we acknowledge that more can be done to help small companies by reducing the burden of employment tribunals, which we are reforming, and moving to less confrontational dispute resolutions through settlement agreements.

The consultations will cover: Continue reading

August employment news from abroad

Welcome to the Employment Solutions Blog from Saint Martin de Gurson (a small village between Bordeaux and Bergerac in South West France). As I hope you’ll understand this month’s report is a condensed version of the usual monthly report but I hope that you find some items of interest.

1. what happens if a claimant refuses to co-operate in obtaining medical evidence

GCHQ v Bacchus is a case in which Mr Bacchus failed to attend an appointent so that GCHQ could obtain its own psychiatric evidence in connection with his claim for disability discrimination based on anxiety. He was ordered by an employment tribunal to attend an appointment but did not do so. The tribunal nonetheless proceeded on the basis that it already had medical evidence (provided by the claimant). GCHQ appealed successfully to the Employment Appeal Tribunal. The EAT agreed with its submissions that it was unfairly disadvantaged by being unable to obtain its own medical evidence. However, the claim was not struck out. Instead, the EAT made an “unless order” requiring the claimant to attend the medical examination, failing which his claim would be struck out.

The case highlights a notable distinction between employent tribunal procedure and that which applies for personal injury claims in the county court. The standard court procedure is for the claimant to nominate proposed medical experts. If one is accepted by the defendant then a single report is prepared. However, the expert is required to make a statement acknowledging that the report is prepared for the court rather than for either party, and should therefore be impartial. On the face of it, there seems no good reason why the same procedure should not apply for tribunals. As I have commented on numerous occasions, taking into account the complexity of many tribunal claims, there is no reason why well tried court procedures should not be adopted.


2. can an employer fairly use a “pool of one” for selection for redundancy

In Wrexham Golf Co v Ingham the Employment Tribunal was asked to consider whether an employer can fairly use a “pool of one” when determining candidates (or, more accurately in this instance, a candidate) at risk of being made redundant. Those who are familiar with redundancy procedures will be aware of the need to be scrupulously fair when selecting a candidate or candidates for redundancy and the need to be able to demonstrate this if called upon to do so. It is generally an essential part of this process to identify what is commonly referred to as a pool of candidates for redundancy from which selections can be made. Often the pool will comprise employees in an under-performing department or those whose duties can be combined so as to reduce the overall number of employees performing a particular type of work. In some cases there might be only one employee performing a job which can de dispensed with.

However, the decision in Ingham emphasises that identifying the pool is but one part of the process of termination of employment which, overall, must be fair. When a tribunal considers the question of fairness a tribunal must consider whether the actions taken by the employer were within a range of reasonable responses available to a reasonable employer. In this case the tribunal had focused unduly on the question of “the pool” to the exclusion of the wider question of overall fairness in the context of the range of reasonable responses. Accordingly the finding of unfair dismissal, even though Mr Ingham was the sole bar steward at the club, was unfair, and the matter was remitted to a fresh employment tribunal for a full rehearing.


3. philosophical beliefs, the Proms and public protest

The BBC Proms 2012 are in full swing and provide those of us who enjoy them with a delightful selection of the finest classical music as particularly demonstrated by a recent concert of some of Vaughan Williams’ Symphonies which I was lucky enough to catch on BBC4 the other day. By the way, I recommend The Broadway Sound on 1 September, conducted by the remarkable John Wilson. Anyway, back to employment news! Sarah Streatfield is a violinist in the London Philharmonic Orchestra (LPO) who protested about a performance by the Israel Philharmonic Orchestra (IPO) at the 2011 Proms. Her protest took the form of a letter to the Independent protesting about the decision to invite the IPO to participate in the Proms. Three other members of the LPO and twenty other musicians were co-signatories.

She was suspended for six months on full pay for “damaging the reputation of the orchestra”. She claimed that the LPO failed to respect her “humanist beliefs” and claimed direct and indirect discrimination as well as harassment and victimisation.

An employment tribunal accepted that her humanist beliefs were capable of protection under the Equality Act 2010. However, since the LPO had no knowledge of those beliefs the discrimination claims stood no reasonable prospect of success. This resulted in the striking out of her claims for discrimination.

However, her claims for victimistation and harassment were not struck out. The tribunal provided an indication of its view of the prospects of the claims succeeding by requiring her to pay a £250 deposit as a condition of proceeding.

The significant aspects of the decision are that the claims for victimisation and harassment may proceed (subject to payment of the deposit) and, much more importantly as a general proposition, that humanism is a philosophical belief which is capable of protection under the legislation.

Many may take the view that this is a very liberal interpretation of what constitutes a philosophical belief capable of statutory protection. Although the decision is not binding on other tribunals, it might well be thought that the border between political and philosophical beliefs has been breached. An interesting philosophical question!


4. making employees on maternity leave redundant

Most employers are aware that treating employees on maternity leave unfairly is likely to result in an expensive claim for discrimination and, perhaps also, unfair dismissal. However, there are circumstances in which, entirely fairly, employees who are on maternity leave, find themselves at risk of redundancy. Since the factors which can lead to the need to redundancies can arise at any time, it is inevitable that, from time to time, those affected, may be on maternity leave. Those who are uncertain about such matters might reasonably decide to postpone redundancies or to exclude employees on maternity leave from the process.

There is an understandable and entirely approrpriate concern on the part of employers that affected employees should be treated fairly and, with this in mind, ACAS has published a guide for Managing Redundancy for Pregnant Employees or those on Maternity Leave. The guide is commendably well written and straightforward and includes really useful case studies which will undoubtedly assist those employers who face this scenario. It is highly recommended reading.


5. £157bn overtime and “nightcations”

This item comes with a source warning! According to research undertaken by Travelodge one in ten Britons are working an additional 16 hours’ unpaid work per week “in order to keep their bosses happy” and take a night off rather than a holiday in order to “recharge their batteries and boost relationships”. Apparently the value of this unpaid work is £157bn, based on an average 9.1 extra hours per week which equates to an average £5,726.18 unpaid work per working person. The report also states that 66% of adults are suffering “soaring stress levels” while 31% find it “difficult to get through the average week”. Apparently 37% of “workaholic Britons” are opting for “nightcations” instead of longer holidays.

According to Shakila Ahmed of Travelodge:

This year we have experienced a significant rise in just Saturday night bookings compared to previous years. To obtain a better understanding of the rationale behind this trend we commissioned research to investigate how the economic crisis is affecting the psychologies of British holidaymakers.

Our research findings have highlighted that Nightcation breaks are a growing trend amongst Britons as they are an easy to book, cost effective short break that help workaholic Britons recuperate and recharge for the week ahead.

Travelodge tell us that “more than a third of workers recognise that a Nightcation gives their relationship with their partner a much needed boost”.

I leave you to draw your own conclusions as I enjoy another glass of fine St Emilion while writing this newsletter in South West France!


6. finally, (for regular readers) I know that you’d be disappointed if there wasn’t a TUPE item!

In F & G Cleaners Limited v Saddington (the claimant’s name may seem appropriate in a TUPE case for regular readers) the question for the Employment Appeal Tribunal was whether employees who were offered self-employment in the event of a TUPE transfer were unfairly dismissed. The answer might seem obvious for regular readers (and TUPE aficionados) but it is surprising how often this scenario can arise, particularly in the field of contract cleaning.

Unsurprisingly the EAT took the view that there was no failure to mitigate by failing to take the offer of self-employment. However, the interesting twist is that it was also held that there could have been a failure to mitigate if the only disadvantage was the inability to claim unfair dismissal. For those who are interested in this point, I’ll leave you to click the link and read the judgment.

In this case the decision not to accept self employment was not a failure to mitigate and (important in employment law) the potential failure to mitigate did not arise when the offers were made but when the dismissals took effect. I doubt that this was a relevant consideration for the employees at the time. Who was the person who ever said that employment law is straightforward and suitable for a summary tribunal process?!

the inevitable monthly TUPE item!

For sad TUPE anoraks, Landsorganisationen i Danmark v Ny Molle Kro and Daddy’s Dance Hall are classic cases, where transfers of leases of a bar and nightclub respectively were found to be transfers of undertakings. LOM Management Ltd v Sweeny (Transfer of Undertakings) [2012] UKEAT was a case where the daughter of tenants of a Glasgow pub maintained that she was transferred to the new tenant when the lease was transferred. She argued that her situation was the same as in those cases. The employment tribunal agreed, but the Employment Appeal Tribunal took the view that while it was possible for the reversion of a pub tenancy to the brewery and reletting to a second to amount to a transfer of an undertaking, it would not do so unless there was evidence of a transfer of an economic entity which retains its identity, and according to the EAT there was no such economic entity in this case.

Interestingly (at least to anoraks), Continue reading

organised groupings are not just a matter of happenstance

Another TUPE case this month highlights the need for an "organised grouping of employees" in a service provision change case which has as its principal purpose the carrying out of the activities concerned on behalf of the client.

In this March’s decision in Eddie Stobart v Moreman and others it was held by the Employment Appeal Tribunal that employees who spent the majority of their time working for a particular client were not an organised grouping for the purposes of the TUPE Regulations.

Issues concerning the identification of an "organised grouping" have returned quickly in the shape of the latest EAT decision on the point. In Seawell Ltd v CEVA Freight (Uk) Ltd & Anor Ceva had a contract for the storage and supply of materials to Seawell for use on the oil platforms they operated. Mr Moffat worked for Ceva, and spent all his time on their contract, and a number of other Ceva employees spent varying amounts of time on Seawell work, but most of their time on other clients’ work. Seawell took the work back in house and ended the contract. Ceva maintained that there was a service provision change, and told Mr Moffat to report to Seawell after the changeover, but Seawell would have none of it, and Mr Moffat found himself without a job. He succeeded in an Employment Tribunal claim against Seawell but failed on appeal.

Continue reading

early retirement benefits transfer under TUPE

In any business sale, the buyer and seller are concerned to be as sure as they can be that rights and obligations will transfer to the buyer under TUPE – and in areas where there is doubt, will usually provide for an indemnity by the seller for any rights not accounted for in the purchase price. Generally, pension schemes fall outside the scope of TUPE, but parts of pension schemes which are not "benefits for old age, invalidity or survivors" do transfer.

In 2007 Procter & Gamble sold part of its business to Svenska Cellulosa Aktiebolaget SCA with employees based at its Manchester manufacturing site transferring to SCA under TUPE. The transferring employees were participating members of the Procter & Gamble pension fund, which allowed for early retirement benefits. There were no indemnities in the sale and purchase agreement, and SCA were very clear that they didn’t want to take on any pension liabilities. After the sale the question arose whether some early retirement benefits under the P&G scheme, which had a normal retirement age of 65 but allowed early retirement from age 55 transferred or not. There was no argument at all that TUPE did not apply – and the High Court therefore had to consider whether these benefits were excluded from TUPE with the standard old age retirement pensions or not. Continue reading

servant or serf?

It doesn’t seem so long ago that the concept of an automatic transfer of employees under TUPE evoked exclamations of incredulity and disbelief amongst non-lawyers (and some lawyers). Now we have all got used to the idea, Gabriel v (1) Peninsula Business Services Ltd (2) Taxwise Services Ltd reminds us that unless TUPE applies, employees cannot be transferred without their consent. To paraphrase Lord Atkin in the case establishing this principle (Nokes v Doncaster Amalgamated Collieries Ltd [1940] House of Lords), it is the right of a citizen to “choose for himself whom he would serve”, and this right of choice constitutes the main difference between a “servant and a serf”.

The case came about after Peninsula, where Ms Gabriel worked, bought the shares in a company called Qdos Taxwise Ltd (“Taxwise”) in 2007. Continue reading