another TUPE update

Not only is TUPE one of the most difficult areas of employment law, it is also one of the most volatile in terms of frequently changing rules and conflicting decisions. Last month I reported a watering down of TUPE reforms and the result of the Government’s review of TUPE has now been published, setting out its plans for those reforms which are going ahead. The headline omissions are:

– The provisions expressly applying TUPE to service provision changes (SPCs) are not to be repealed (although they will be tweaked – see below). This will no doubt be a relief to service providers who will not be lumbered with staff they have taken on from predecessors under TUPE if they now lose a contract, and a disappointment to TUPE lawyers who fancied a bit of extra litigation work!
– The obligation to provide employee information prior to a transfer will stay, but transferors will have 28 days to do this rather than the current 14.

The following changes will be made, and it is difficult to take issue with them as measures to help businesses:

– The definition of a SPC will be restricted to situations where the activities before and after transfer are “fundamentally or essentially the same” (in line with Metropolitan Resources Ltd v Churchill)
– Specifying that a change in location of the business falls within the scope of the defence to automatic unfair dismissal allowed for economic, technical or organisational reasons.

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appalling incompetence by an employment tribunal, yet the claimant loses out

Elliott v The Joseph Whitworth Centre Ltd is a decision of the Employment Appeal Tribunal which demonstrates what can only be described as an abject failure of the judicial process. In his judgment His Honour Judge McMullen QC describes the chronology of relevant events as “sad and disappointing”. Mr Elliott had been working as a caretaker at a local community centre until he was dismissed on 6 February 2010. He presented a claim of unfair dismissal to a tribunal on 30 April that year – well within the three months’ time limit. Remarkably his claim was not sent by the tribunal to his employer until nearly two years later. Ironically the Employment Tribunals Service was piloting a new computer system at the time – unfortunately named in this context Caseflow – and as is so often the case the system had in fact caused considerable administrative difficulties. Mr Elliott’s union representative was also at serious fault because he did not get round to enquiring about the progress of the case until February 2012. When he finally did, the tribunal sent out the claim form to the Respondent.
The Respondent filed a completed response but also applied to have the claim struck out on the ground that there had been such a long delay. In particular reliance was placed on Employment Tribunals Rules 18(7)(d) (claim not actively pursued) and 18(7)(f) (it is no longer possible to have a fair hearing).
Very surprisingly the employment judge who dealt with the strike out application did not consider any oral or written evidence. Nonetheless, based on consideration only of the claim form and the response, the judge decided that there could not be a fair trial. Pausing there, this is a remarkable conclusion to have reached, bearing in mind how long it can take cases to come to trial – often six years or more, particularly in the criminal jurisdiction. The judge decided that the delay of nearly two years was inordinate and, taking into account the errors by the employment tribunal and the claimant’s representative, inexcusable. I am bound to observe that, in this context, one person’s “inordinate and inexcusable” would appear to be another’s “routine and typical”. This was, on any reading of the matter, a remarkable let off for the former employer.

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it is not Sharon Shoesmith’s “fault” that she has recovered over £600,000

In an article I wrote in the CLB Employment Solutions blog in June 2011 I pointed out that newspaper coverage of the case was substantially inaccurate and sensationalist. The same could be said for much of this week’s coverage of a “confidential” settlement agreement which, according to BBC’s Newsnight, provides for a payment of over £600,000.

Speaking on Radio 4’s Today programme former children’s minister Tim Loughton stated that the payment “stinks” and that it is a “reward for failure”.

However, unlike the BBC settlements with senior executives which have been so widely reported and criticised, the payment to Ms Shoesmith follows a decision made by an employment tribunal that she was unfairly dismissed. Once the finding was made, the question of how much compensation should be awarded is mainly a calculation of actual and projected losses, no doubt increased by (frequently incorrect) press coverage which might reasonably be regarded as rendering her effectively unemployable.

While everyone is rightly appalled by the dreadful treatment which Baby P suffered, it is worth considering why Ms Shoesmith was found to have been unfairly dismissed. Although this is a high profile case, the employer’s weak link in the context of the employment claim was one which is encountered all too frequently.

While it is undoubtedly the case that what happened to Baby P took place under Ms Shoesmith’s watch as head of Haringey Social Services, the employer deployed a knee-jerk response by ignoring all relevant procedures and effectively dismissing her on the spot, reportedly at the instigation of then Children’s Minister Ed Balls. the dismissal was so peremptory and poorly handled that Ms Shoesmith learned of her sacking, and the name of her successor as Head of Social Services, by watching the news.

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a confection of cases

In Carmelli Bakeries Ltd v Benali the Employment Appeal Tribunal considered a case where a baker, Mr Benali, claimed unfair dismissal and victimisation when he was dismissed for using non-kosher jam in his work for a kosher bakery – which was gross misconduct. Mr Benali had worked for the bakery since 2004 and had an unblemished record until 2011. However he had made disability related claims and had a lengthy period off work in 2008 when he was suffering from sciatica.
There was no doubt that he had knowingly used the jam. He had arranged for two (non-kosher) jars to be bought from the local Tesco store when the regular supply ran out. However an Employment Tribunal found that this was not the “operative cause” of his dismissal. The “real” reason for his dismissal was that he had earlier made a disability discrimination claim against his employer. Mr Benali lost any right to notice pay because of his admitted gross misconduct but was successful in both his other claims before an employment tribunal. He was awarded £35,567 which included a basic award, a compensatory award based on one year’s loss of earnings under the Employment Rights Act and an award of £14,000 for injury to feelings under the Equality Act. The Employment Appeal Tribunal upheld these findings. Consequently, although it seemed that the employer had the most clear cut of cases to justify dismissal for gross misconduct, this was undermined by what the tribunal regarded as the real reason of discrimination. Mr Benali felt that he had been regarded as a “problem employee” singled out for “special scrutiny” and, ultimately, the tribunal agreed. However, the Employment Appeal Tribunal did allow an appeal by the bakery owners on one ground; remarkably, no consideration had been given to any deduction for contributory conduct, and this was an error. The case was therefore sent back to the tribunal to consider the point.
Continuing the cakes and confectionery theme, Park Cakes Ltd v Shumba & Ors provides a useful summary of the typical factors to be looked at when deciding whether a particular benefit (in this case an enhanced redundancy payment) has become a contractual term.

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employment law’s brave new world

This summer has seen some radical changes in the field of employment law, notably the introduction of fees in employment tribunals on 29 July, alongside new Employment Tribunal forms and rules, a new cap on unfair dismissal compensation and the new “shareholder-employee” provisions came into force on 1 September.
Time will tell how these changes will affect practice in the long term, but in the short term and perhaps unsurprisingly, there are reports of a number of teething problems – for example:

– A backlog of cases waiting to be processed, likely to be related to a surge of claims going in before 29 July (where the effective cut-off was actually the Friday before the Monday implementation date).
– Problems with the new forms (once it was possible to track them down) – whereas previously it was possible to save partly completed forms, practitioners have been having trouble with these.
– Glitches with online submission of responses, where only part of the employer’s response could be submitted – with all but 25 lines of their defence being cut off.
– At the same time, the old forms have remained valid, as no action had been taken to “unprescribe” them – just as well, given the problems experienced.
– Whereas previously, claims could be submitted online, in person, by fax, or email the latter two options are no longer available to make claims (although it seems emailed ET3 forms will be accepted).

Feedback has mainly come from organisations acting primarily for employers, so we don’t know how claimants are getting on with the need to pay a fee or apply for fee remission when submitting a claim, but some thought has been needed on matters of detail, such as whether a claim will be in time if submitted close to a time limit with a fee cheque which subsequently bounces (yes, it’s in time, but a Notice to Pay will be issued), and what will happen if the wrong fee is tendered (the same, so long as it matches a recognisable fee amount e.g. £160 or £250). I’ve also commented in an earlier post about the problems with fee remissions generally.

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right to be accompanied by a “reasonable” companion?

It is well known by nearly all employers that their employees have a right to be accompanied at any disciplinary or grievance meeting that they are required to attend, if they reasonably request a companion. However, it still surprises me how often we encounter employers who ignore this and pretty much all other employment rights. Unsurprisingly they tend to be the employers who are least impressed with and most penalised by employment protection legislation and the corresponding employment tribunal system.
The case of Toal & Hughes v GB Oils Ltd does not concern such an employer but does address a question often asked by employers – “do I have a say in who the employee brings along as their companion at a disciplinary / grievance hearing?”. Mr Justice Mitting, sitting in the Employment Appeal Tribunal, has confirmed that although the request for a companion must be reasonable, the companion may be from any of the permitted categories – a paid trade union official, a trained union representative or fellow worker, reasonable or not. Further, if when denied his or her choice of companion, the employee settles for someone else, that does not mean that the employee has waived their right to their choice of companion.
Messrs. Toal and Hughes raised grievances against their employer. Both made it very clear to the employer that they wanted a particular Unite official, Mr Lean, to accompany them at the grievance meetings. The employer was unwilling to allow them to be accompanied by Mr Lean so they arranged for a fellow worker, Mr Hodgkin, to come along instead. They were dissatisfied with the outcome and at the ensuing appeal hearing they were accompanied by Mr Silkstone who, like Mr Lean, was an elected union official.
Complaints were made to an employment tribunal that they had been denied their statutory rights. It was decided that the employer had not acted in breach of the statutory obligation in section 10 of the Employment Rights Act 1996 (right to be accompanied). The tribunal considered whether the word “reasonable” applied to anything other than the request to be accompanied at the hearing. It was contended on behalf of the employer that it also applied to the choice of representative. This contention was rejected. Mr Lean satisfied the criteria for selection as a representative and the legislation provided for a worker to be accompanied by one companion chosen by the worker. The employer was in breach of the legislation by rejecting Mr Lean as the chosen companion.
However, the tribunal then went on to conclude that the breach was waived as a result of the subsequent selection of Mr Hodgkin, commenting that the fact that he was a second choice was “immaterial”.
In the Employment Appeal Tribunal Mr Justice Mitting pointed out that an employee must request to be accompanied at a hearing but also noted that it is widely accepted that good employment practice dictates that an employee should be told that he or she has the right to make the request. He also observed, reasonably, that it is not entirely clear why Parliament included the word “reasonably”. In any event, considered in context, it does not apply to the choice of companion. It is the right of the worker because otherwise an employer might wish to place a worker at a disadvantage by interfering with his or her choice.

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“dynamic” contractual rights and TUPE

As aficionados of the European Court of Justice (CJEU) will tell you, it’s rare that the full judgement of the court does not follow the opinion of the Advocate General, but Mark Alemo-Herron and Others v Parkwood Leisure Ltd is just such a case. The icing on the cake is that the court held that a narrow interpretation should be taken of the Acquired Rights Directive and that it should not be taken to permit the transfer of “dynamic” contractual rights, that is, contractual rights which vary according to collective negotiations. The facts which gave rise to the decision are pretty typical: the London Borough of Lewisham outsourced its leisure services to Parkwooda and Mr Alemo-Heron and his colleagues, whose contracts incorporated the National Joint Council collectively negotiated terms and conditions, were transferred to Parkwood, who as a private sector undertaking could not participate in the NJC.
In holding that a member state would not be allowed to insist on a the transfer of dynamic terms, the CJEU commented that protection of employee rights was not the sole purpose of the Acquired Rights Directive. The ARD, it said,
seeks to ensure a fair balance between the interests of those employees, on the one hand, and those of the transferee, on the other. More particularly, it makes clear that the transferee must be in a position to make the adjustments and changes necessary to carry on its operations
Permitting a dynamic interpretation would saddle such a private sector employer with terms and conditions it could not influence and seriously reduce its contractual freedom “to the point that such a limitation is liable to adversely affect the very essence of its freedom to conduct a business”
Meanwhile the Government has announced a significant watering down of its proposed TUPE reforms.

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new National Minimum Wage from 1 October 2013

One of the more surprising political stories to emerge this month was Allegra Stratton’s BBC report that the Conservatives are considering ways in which to raise the National Minimum Wage. Apparently the intention is to strike a balance between increasing people’s earning power while avoiding a negative impact on the number of people in employment. How this will sit with the Tory rank and file at this year’s conference remains to be seen.
For the moment the National Minimum Wage Regulations 1999 (Amendment) Regulations 2013, SI 2013/1975) provide for the usual modest increases.

The main changes are that:

– the principal rate of the national minimum wage increases from £6.19 to £6.31 per hour;
– the rate paid to workers aged between 18 and 20 increases from £4.98 to £5.03 per hour;
– the rate to be paid to workers aged below 18, who have ceased to be of compulsory school age, increases from £3.68 to £3.72 per hour;
– qualifying apprentices (as specified in the National Minimum Wage Regulations 1999) who are within the first 12 months of their apprenticeship or who are not yet 19, will receive a national minimum wage of £2.68 per hour;
– the daily value for accommodation, where an employer provides a worker with living accommodation, increases from £4.82 to £4.91.

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are you sure that’s a settlement?

Newbury v Sun Microsystems provides a salutary tale for those who are at all unclear in their approach to finalising terms for settlement.
Mr Malcolm Newbury issued a claim against his employer for contractual commission for the year to June 2009 in the sum of $2,028,760. The employer, Sun Microsystems, counterclaimed in respect of an alleged overpayment. The proceedings were issued in June 2011 and listed for an eight day trial commencing on 12 June 2013.
On 3 June Sun’s solicitors wrote a letter to Mr Newbury’s solicitors including the following:
Terms of the Offer
To reach a compromise between the parties, our client has agreed to make a further offer of settlement to the Claimant. The offer reflects the strength of its evidence on the QBM but does not seek to place a discount on the Claimant’s assertion of revenue of $173 million.
Our client is willing to settle the entire proceedings by paying the Claimant within 14 days of accepting this offer, the sum of £601,464.98 (the “Settlement Sum”) inclusive of interest by way of damages, by means of an electronic transfer into his nominated bank account, in full and final settlement of the Claim and counter-claim plus the sum of £180,000 in relation to his legal costs such settlement to be recorded in a suitably worded agreement.
This offer is open for acceptance until 5pm this evening after which it will be automatically withdrawn without further notice to you.
Mr Newbury’s solicitors replied:
We thank you for your letter dated 03 June 2013.
We are instructed that the Claimant accepts the terms of your client’s offer, being payment of the Settlement Sum of £601,464.98 plus £180,000.00 in relation to his legal costs.

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consensual termination of employment cannot be assumed

Francis v Pertemps Recruitment Partnership Ltd concerns the dividing line between dismissal and termination of a contract by mutual consent. Mr Francis was a temp in the fortunate position of having a contract of employment with an agency – who supplied him to Transco to do administrative work. When the successors to Transco’s business, SGN, no longer required his service, he was given the choice of taking a redundancy payment or hanging on while the agency looked around for new work for him.
On his return to Pertemps on 12 December 2006 (yes 2006 – it has taken that long to resolve!) he had the options outlined to him (in rather inelegant terms):
Depending on how you feel yourself, whether you are happy for Pertemps to keep on looking for another assignment for you elsewhere, and we do have other bits and pieces in at the moment or things coming up in the New Year, that we’ll be happy obviously to speak to you about or…there might be an entitlement for you to a redundancy payment from Pertemps because of the work you have previously…for the last two and a half years…has come to an end.
He was also told that in either case he would receive a payment of two weeks’ pay, described as “notice pay”.
To start with he opted for staying on, but then he concluded the chances of something turning up were slim, and as he would not be able to claim jobseekers’ allowance if he remained with the agency, he changed his mind. He also lacked faith that he would be engaged through Pertemps to work in a possible opening at the Scottish Parliament. He was then given a letter which looked suspiciously like notice of termination:
Following your meeting of 12th December 2006 it is with regret that I confirm the position of Process Assistant will become redundant with effect from 12th December 2006…Please treat this letter as formal notice of redundancy…In accordance with your contract of employment you are entitled to two weeks notice, therefore your last date of employment will be recorded as 26th December 2006.
The letter was written by an HR advisor and is, on any reading, a pretty poor effort. Mr Francis exercised his right of appeal and in February 2007 his redundancy was confirmed.

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