re-engagament after TUPE transfers

Last month I reported on the latest TUPE changes and took the opportunity to revisit some key TUPE principles. The decision of the Court of Appeal in Hazel & Anor v The Manchester College. The specific questions considered were whether it was automatically unfair to dismiss transferred employees who accepted jobs on new terms, albeit under protest, after transfer and whether, having found that it was, an employment tribunal could order that they should be engaged on the old terms by way of a remedy.
The facts leading up to the case were that two employees, Christine Hazel and Mandy Huggins were lecturers employed by the prison education service, based at HMP Elmley in Kent. In August 2009 they were TUPE transferred when the services were outsourced to The Manchester College, following a successful bid to take over the prison contracts. The following year the College started a cost saving restructuring process. As part of that the lecturers were offered new terms and conditions, which included pay cuts as part of a harmonisation of terms. The reasons given included the general economic situation facing the further education sector, changes in the funding allocation machinery and the discovery of “hidden costs” in Offender Learning. The College provided notification to the DWP of a possible 300 redundancies. They were warned that they might be dismissed if they did not agree, but they would be offered re-engagement on the new terms. After consultation, they agreed all the changes save for the pay reductions which were 18.5% for Mrs hazel and 13.2% for Mrs Huggins.
On 30 September 2010 they were sent notices of dismissal, effective 28 December 2010. On 20 October they accepted the new terms under protest and “without prejudice”. They continued working after 28 December but at the reduced pay level. They brought employment tribunal proceedings claiming unfair dismissal notwithstanding that they were still working for the same employer but based on the termination of the existing contract as they were entitled to (see Hogg v Dover College).
It was Employment Judge Corrigan, sitting in the Employment Tribunal in Ashford in July 2011, who raised the possibility that TUPE might also apply, with reference to the 2009 transfer. Faced with having to acknowledge that there was a TUPE transfer it was then submitted on behalf of the College that the dismissals were for an economic technical or organisational reason entailing changes in the workforce. However this argument failed so the dismissals were automatically unfair. At a remedy hearing re-engagement orders were made which meant that their pre-dismissal rates of pay were reserved.
Appeals to the Employment Appeal Tribunal concerning both liability and remedy failed.
The College maintained its appeal to the Court of Appeal.


number of employment tribunal claims plummets but “too soon” to say whether that’s to do with the new fees

On 7 February the High Court published its judgment following a hearing last October and Noovember and confirming its rejection of Unison’s challenge to employment tribunal fees in Unison, R (on the application of) v The Lord Chancellor & Anor. Put simply, the overall outcome was that the Court considered that it was too soon to tell what the impact of the introduction of fees would be and so the case had been brought prematurely.
The challenge was fourfold:

1. The obligation to pay a fee made it excessively difficult to enforce EU law rights such as equal pay. In the absence of concrete evidence that this is in fact the case, it was too soon to say, in the Court’s view.
2. The fee levels were not equivalent to those in other courts. This was rejected for a number of reasons, including that in the county court, where fees may be lower, there is more of a risk of having to pay the other side’s costs, and the option of free conciliation is not available.
3. The Public Sector Equality Duty had not been complied with. This argument also failed – these proceedings were the wrong way to make the challenge. Moreover, it was too soon to see whether fears that the elimination of discrimination would be held back were well-founded.
4. Fees are indirectly discriminatory, having a bigger impact on, for example women. Recognising that generally speaking women tend, still, to be paid less than men, and so would find it harder to find the money to pay fees, it was still too early to say.

However Unison could still garner some hope from the decision:

– The Lord Chancellor appeared to accept that as a general rule, successful claimants should recover any fees they have paid from a losing employer. The fly in that particular ointment is the poor recovery rate in tribunals – what are the chances of recovering fees when many employers never pay any part of the compensation that they have been ordered to pay?
– It was made plain that if and when evidence emerges that the fee regime has had, for example a discriminatory impact, then The Lord Chancellor will not be able to argue that Unison have left it too late to bring a claim.

The Court had plenty to say about the haste with which the case had been brought and was clearly underwhelmed by the standard of preparation. For example, the time estimates for the case were inadequate, adjournments were necessary to deal with new material, new documents and arguments cropped right up to the end of the hearing and over a hundred authorities were produced, most of which were never looked at.
In addition the timing of the case turned out to be most unfortunate. The Court sat on 22 and 23 October and 4 November. On 18 October the Government published details of new employment tribunal claims brought between July and September 2013. The information was referred to in the judgment but rather airily dismissed.


a reasonable alternative to redundancy?

In redundancy situations employers sometimes offer “suitable alternative employment” as a means of avoiding redundancy. Suitability depends on how similar the work is, the terms of the job being offered, the skills, abilities and circumstances of the person being offered the job and the pay, status, hours and location. If a reasonable offer is unreasonably refused, the individual concerned may lose the right to a statutory redundancy payment.
When the writing was on the wall for Tavistock and Summerhill School as a result of falling rolls, the governors decided there was no option but to close the school and gave notice of redundancy to the staff in March 2011 – without much regard to collective consultation, although the Head and Deputy Head were involved in management discussions about it. The parents stepped in and mounted a rescue plan, and offered most of the staff new employment just before the end of the summer term, when their employment was due to end. No such offer was made to the Head, and no explanation was ever given for this. The teachers turned the offer down, having found other employment. Were they reasonable in doing so? Both the Employment Tribunal and the Employment Appeal Tribunal agreed that they were. The offer came very late in the day after all had made alternative arrangements either by way of alternative employment or, in one case, planned retirement. Accordingly all were entitled to redundancy payments.
A number of further issues were considered in the case, including the obligation to carry out collective consultation. It was found that a protective award was due to all of the employees, including those on the management team who had been aware of what was being discussed:
A clear distinction must be drawn between the discussions with a view to saving the school at a high management level and consultation with employees about job losses or possible job losses in the future.


minimum wage update

The latest review of the minimum wage has attracted more attention than usual, perhaps because we are not that far away from the next general election. First, the Department for Business, Innovation and Skills (BIS) announced that the maximum penalty for failure to pay minimum wage is to increase to 100% of unpaid wages, up to £20,000 (from £5,000) from the end of this month (The National Minimum Wage (Variation of Financial Penalty) Regulations 2014).
Shortly after that announcement, the Chancellor mentioned in a BBC interview that the standard rate of minimum wage may be increased from £6.31 to £7.00 for workers aged 21 and over on the basis that “the economy can now afford it”. The current “living wage” outside London is £7.65 so the proposal still falls short of what many consider should be the default rate. According to BIS as reported in Hansard, the Department “supports the living wage and encourages businesses to pay it when it is affordable and not at the expense of jobs”.
With inflation at 1.9% recent increases have broadly retained parity with the cost of living. However, this is on the back of much higher inflation when the real value had fallen back.
Notwithstanding the Chancellor’s bold statement, Vince Cable announced to a legislative committee on Wednesday that the Low Pay Commission has recommended an increase of 3%, i.e. an increase to £6.50 per hour. Consequently, notwithstanding the fanfare and bold aspirations the very likely increase is broadly in line with previous years.


expiry of fixed terms – do they count for consultation duties?

Fixed term contracts have become very popular in the public sector, not least as the result of the need for strict budgeting and frequent funding reviews. This is nowhere more so than in the academic world. University of Stirling v University & College Union deals with whether fixed term workers whose contracts are not being renewed should be counted when totting up the number of employees being made redundant at one time for the purpose of working out whether the duty to carry out collective consultation is triggered. As most readers will be are there are special procedures to be applied in the event that more than 20 redundancies are proposed at one establishment in any period of 90 days. This triggers an obligation to notify the Redundancy Payments Service and a minimum consultation period of 30 days. In this case the decision turned on whether the employees whose contracts ended were made redundant – which for this purpose means being dismissed
… for a reason not related to the individual concerned or for a number of reasons all of which are not so related.
The Court of Session concluded that non-renewal of the fixed terms was a reason related to the individual employee – so these dismissals did not count as redundancies. This conflicts with previous decisions of the Employment Appeal Tribunal which assumed that non renewal of a fixed term was not a reason relating to the individual (Lancaster University v The University & College Union [2011] IRLR 4).


reasonable adjustments for absent employees in the event of redundancy

In McCarthy v Jaguar Cars Ltd the Employment Appeal Tribunal considered, and upheld, an Employment Tribunal decision that where a disabled person had been selected for redundancy although the selection criterion relating to attendance amounted to a discriminatory provision, criterion or practice, the employer had made a reasonable adjustment by scoring the employee on the period before he became disabled.
Mr McCarthy was a process engineering manager who became ill with depression and went off sick in 2007. There was no dispute that his illness was a disability. He was still absent from work when a redundancy situation arose in 2009. He fell within the pool for selection, scored poorly and was made redundant. He appealed successfully and was re-scored, this time based purely on his attendance and performance prior to his illness when he was at work and performing well. The result of the re-mark was virtually the same.
The Employment Tribunal found that the re-mark was an appropriate way forward and “expunged any disadvantage” to Mr McCarthy and the Employment Appeal Tribunal upheld the decision.
It is quite plain that the Tribunal were accepting the concession made, that the application of the criterion would ordinarily lead to a substantial disadvantage to the Claimant, and they were satisfied, for the reasons we have just reproduced, why it was that the steps taken by the employer removed the relevant disadvantage. Against that background, we reject the proposition that it was necessary to deal, for example, with Mr McCarthy’s contention that there were different ways of making reasonable adjustments (for example by averaging his points). The Tribunal found that what was done was the making of reasonable adjustments and that they eliminated the disadvantage.
Overlaps between rights and procedures such as those highlighted in this case can often seem daunting for employers, so much so that I can think of some employers who have abandoned proposed dismissals for fear of procedural errors. Another good example is the difficult co-existence of protection from disability discrimination and dismissal on the ground of ill-health incapacity. In fact, as long as key principles are adhered to, employers can proceed in relative safety. For example, dismissal for incapacity will generally be fair as long as it is established (almost always supported by professional medical evidence) that the employee will be unfit to return to work for the foreseeable future.


zero hours contracts – update

Anne Sharp, the chief executive of ACAS, recently identified zero hours as one of three key issues for this year (the others are resolving disputes earlier and pay) and in doing so welcomed the launch of a consultation on this pattern of employment.
As I have pointed out in an earlier blog post there is currently a divergence of views about whether zero hours contracts are a good or bad thing. When initially presented by Business Secretary Vince Cable as “a bad thing”, many employees on zero hours contracts were quick to point out that they were quite happy with their arrangements.
However, two main problem areas have emerged for discussion:

– Situations where workers on zero hours contracts are subject to an exclusivity clause – so potentially employees employed under such contracts could be offered no work at the same time as being prevented from taking on work elsewhere:
– A lack of transparency over the terms of zero hours contracts, access to employment rights and the financial impact of an uncertain income, for example on access to personal finance or state benefits.

Broadly, whilst the consultation acknowledges the scope for abuse of exclusivity clauses, it seems unlikely that any legislation will be proposed. For example, the thinking appears to be that existing common law rules on the enforceability of exclusivity clauses could be adequate protection against the abuse of such terms, possibly bolstered by guidance, while preserving the option in cases where protection is genuinely required (for example if the employee has access to confidential information). In principle, this makes sense, but it does ignore the lack of certainty about whether a particular clause is enforceable until tested in court, the expense of challenging such a clause in these days when access to justice is increasingly limited, and the temptation to impose a doubtful clause simply for deterrent effect.


impartiality and the need to follow procedures accurately

A couple of cases this month illustrate the crucial importance of paying more than lip service to fair procedure.
West London Mental Health v Chhabra illustrates the dangers of allowing non decision makers to meddle in disciplinary proceedings. In this case, concerns were raised about a consultant psychiatrist, including about possible breaches of confidentiality after she was observed working on patient related matters during train journeys. Advice was taken from HR and an investigator was appointed. The investigator came to the view that she had admitted a breach of confidentiality and that it was unlikely to be repeated. The investigator sent a draft report to the head of HR, who suggested a number of amendments which made the case look significantly more damning, many of which were adopted. Based on the “sexed-up” report, a decision was made to treat the confidentiality allegations as gross misconduct. Other issues relating to working relationships were characterised as issues of capability and handled under a separate procedure.
Dr Chhabra challenged the process and succeeded in obtaining an injunction to halt the disciplinary proceedings. The case made its way to the Supreme Court which found that the head of HR had gone beyond helping to make sure that the investigation report had covered everything necessary and was expressed clearly, which would have been permissible, and had influenced the conclusions reached – which was not. Dr Chhabra’s implied contractual right to a fair process had been breached.
The Supreme Court judgment identified four specific irregularities:

– The findings of fact and evidence, taken at their highest, were insufficient to support a charge of gross misconduct.
– There was too much reliance on a list of typical examples of what the Trust might regard as constituting gross misconduct rather dealing with the concept of misconduct.
– The Trust breached its contract with Dr Chhabra when it allowed an HR manager to make extensive amendments to the case investigator’s report and in breach of an undertaking that the HR manager would play no further part in the investigatory process.
– There was a failure to re-assess the decision to dismiss when the factual grounds for the making the decision were altered.

The result was that the Trust was prevented from dealing with certain confidentiality concerns as matters of gross misconduct and in respect of the remainder it could not do unless it conducted an entirely new disciplinary process from the outset.
It is of course extraordinary that objections to a disciplinary procedure should have made it all the way to the Supreme Court, although perhaps less so when one considers the labyrinthine processes and procedures that apply in the NHS.


what are the practical effects of the new TUPE changes?

How much difference will the new changes to TUPE (The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014) actually make? For TUPE aficionados the changes are no doubt very interesting but, bearing in mind that I have already commented on the changes in general terms I will confine my observations to those most likely to be of significance for those dealing with transfers.
Guidance recently issued by the Department for Business, Innovation and Skills and commenting specifically on the new changes is also a handy general reference for those dealing with TUPE transfers. For instance, there is a useful reminder that TUPE applies to “relevant transfers”, i.e. (i) when a business, undertaking or part of one is transferred from one employer to another as a going concern or (ii) when a client engages a contractor to do work on its behalf, or reassigns such a contract (including bringing the work “in house”). The second scenario is generally referred to as a “service provision change”. Further, the guidance restates the maxims of TUPE transfers:

the identity of the employer must change (e.g. share takeovers are not covered);
asset only sales are generally not covered;
the transfer must be of an economic entity that retains its identity following the transfer;
for this purpose “economic entity” means “an organised grouping of resources which has the objective of pursuing and economic activity, whether or not that activity is central or ancillary”; and
in the event of the transfer of part of a business the resources (including employees) do not need to be used exclusively in the transferring part of the business and by no other part.

So, what of the changes?
The first important one is a reinforcement of an existing principle concerning service provision changes – the activities carried out must be fundamentally the same before and after the transfer for TUPE to apply.
The provisions allowing for a transferee to start consultation before the transfer with the transferor’s consent have been tweaked to make it clear that if the transferee changes his mind about wanting to consult early and cancels his request he cannot then revive it.
Protection from dismissal and adverse contract changes in the event of a transfer (the core purpose of TUPE) will not apply in certain circumstances where the sole or principal reason for dismissal or a contract variation is an economic, technical or organisational (ETO) one entailing changes in the workforce. Those who have dealt with TUPE transfers will no doubt be aware that the “ETO defence” may turn an automatically unfair dismissal to a potentially unfair dismissal. Accordingly, this change takes the application of ETO reasons a little further.


whistleblowing protection for concerns about driving in snowy weather

In Norbrook Laboratories (UK) Ltd v Shaw Mrs Justice Slade DBE sitting in the Employment Appeal Tribunal was asked to consider whether a series of emails, taken together, could be treated as a protected disclosure for the purposes of section 43B(1) of the Employment Rights Act 1996 (whistleblowing protection).

Mr Shaw claimed automatic unfair dismissal and being subjected to a detriment, both on the grounds of having made a protected disclosure (he had insufficient qualifying service to claim “ordinary” unfair dismissal). His disclosure was communicated by two emails sent on 30 November 2010 and one on 6 December 2010. Taken in isolation each email did not constitute a protected disclosure.

Mr Shaw commenced employment with Norbrook as part of an on-the-road pharmaceutical sales team. His duties included visiting clients and prospective clients with a view to securing sales. As readers may recall the winter of 2010 was particularly severe with large snowfalls and motorways closed.

On 30 November he sent an email to Norbrook’s health and safety manager, Mr Cuthbertson:

Could you please provide me with some advice on what my Territory Managers should do in terms of driving in the snow. Is there a company policy and has a risk assessment been done.

Taken in isolation this was an enquiry and not a protected disclosure. He was told that there was no applicable policy or risk assessment but he was given advice about driving in the snow. About two hours later he sent a further email to Mr Cuthbertson:

I was hoping for some formal guidance from the company. The team are under a lot of pressure to keep out on the roads at the moment and it is dangerous. Do I log this as the formal guidance?

Following enquiries from territory managers about whether they would be paid if they were snowed in Mr Shaw sent a further email on 6 December, this time to a member of staff in the human resources department. This email included the following:

I am only after a simply [sic] policy statement to increase transparency and help build morale and goodwill within the team. As their manager I also have a duty to care for their health and safety. Having spent most of Monday and Friday driving through snow I know how dangerous it can be. In addition the time spent battling through the snow is unproductive; they can gain more sales by phoning customers. If they are not going to be paid then I have to put in contingencies for diverting calls to those team members still on the road. In the absence of any formal guidance I take full responsibility for the directions given to my team.

The Employment Tribunal concluded that, taking the communications as a whole, they were capable of amounting to a qualifying disclosure with reference to section 43B(1)(d). On appeal it was submitted for Norbrook that this conclusion was perverse or erroneous, that he was merely expressing an opinion and that the disclosure (if that is what it was) could not be spread over a number of documents. Mr Shaw submitted that he made two qualifying disclosures: failure to comply with health and safety requirements and breaches of the Health and Safety at Work Act 1974.