Legislation

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Legislation

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As of 25 June 2013, the following reforms came into force:

•  The qualifying period (2 years) for unfair dismissal will no longer apply where the main reason for dismissal is the employee’s political opinions or affiliations.

•  Changes to whistleblowing law:

•  For an employee to be protected as a whistle blower, what they raise an issue about must now be in the public interest meaning that employees will largely now be prevented from claiming they are blowing the whistle about breaches of their own employment contract.

•  Disclosures no longer need to be made in ‘good faith’. Until now, if whistleblowers were motivated by financial gain or vengeance, they were not protected by the law. Bad faith is only relevant now in relation to what compensation is awarded to the whistle-blower.

•  Whistleblowers will be protected from being victimised by fellow employees. Before now, employees who made protected disclosures were only protected from their employer’s activities. Employers should update their whistleblowing policies/handbook to make it clear that employees should not mistreat whistleblowers.

From 29 July 2013

•  The maximum compensatory award for unfair dismissal will be £74,200 or one year’s gross pay, whichever is the lowest.

•  Settlement Agreements come into force. These are the new ‘Compromise Agreements’ whereby employers can approach staff with a view to terminating their employment in exchange for money. These negotiations will not be admissible as evidence in most unfair dismissal claims.

•  Fees will be introduced in the Employment Tribunal and Employment Appeal Tribunal. There will be two levels of claim:

•  Level 1 claims – the issue fee is £160 and the hearing fee is £230

•  Level 2 claims – the issue fee is £250 and the hearing fee is £950

•  Appeals – the issue fee is £400 and the hearing fee is £1,200

Level 1 claims include unlawful deduction of wages, holiday pay and redundancy payment claims. Level 2 claims include discrimination and unfair dismissal claims.

Employees can apply for fees to be “remitted” (i.e. reduced or eliminated) if their financial circumstances are such that they cannot afford to pay the fees.

If an employer loses a case the tribunal may require the employer to reimburse these fees but this is not automatic.

This is likely to cause a substantial reduction in the number of smaller claims brought by employees and may encourage employers to be more robust about not paying sums to staff which they do not think are due and which it will now be un-commercial for employees to contest.

From 1 September 2013

•  The employee-shareholder provisions come into force. As a reminder, this scheme will see employees forfeiting employment rights (like unfair dismissal) in exchange for £2,000 worth of shares (or more) in their employer.

1 October 2013

•  The new national minimum wage for workers will increase as set out:

•  the adult rate will increase to £6.31 an hour;

•  the rate for 18-20 year olds will increase to £5.03 an hour;

•  the rate for 16-17 year olds will increase to £3.72 an hour; and

•  the apprentice rate will increase to £2.68 an hour.

 

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Settlement sums payable net

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Settlement sums payable net

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In Barden v Commodities Research Unit, Mr Barden was the former CEO of Commodities Research Unit. On his retirement, he was paid a sum under a settlement agreement. The agreement simply stated that Commodities Research were to ‘pay £1,350,000’ to Mr Barden. It fell silent on whether the sum would be paid net or gross. The High Court ruled that the sum should be paid net of tax (that is, after deduction of tax). To do so otherwise would be commercially absurd.

Although, in this case, the employer avoided the cost of their (or their advisers) complacency, other businesses might not be so lucky. Care should be taken to ensure that the tax status of any payment made under a settlement agreement is clear.

 

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TUPE and ‘organised groupings’

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TUPE and ‘organised groupings’

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In Ceva Freight (UK) v Seawell, Mr Moffat was employed by Ceva Freight, a logistics and freight company, and worked in the “outbound team”.  Although the team worked for a variety of clients, unlike his colleagues, Mr Moffat spent 100% of his time working on the account of one client, Seawell.  In fact, Mr Moffat’s contract specifically said that he had been employed for the purpose of enabling the contract with Seawell to be performed.

When Seawell decided to transfer the work in-house, Ceva asserted that Mr Moffat’s employment transferred to Seawell under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”).  This was disputed by Seawell and Mr Moffat’s employment was terminated.  He brought claims against both Ceva and Seawell for unfair dismissal and breach of the TUPE information and consultation obligations.

TUPE applies in two scenarios.  First, where there is a “business transfer” and second, in the event of a “service provision change” (which, generally speaking, captures outsourcing and insourcing arrangements).  In order for there to be a service provision change, there must be an ‘organised grouping’ of employees whose principal purpose is carrying out the work which is transferring.  For these purposes, an “organised grouping” can consist of one employee but the group must be specifically and consciously organised by the employer for the purpose of the activities in question.

In this case, the Employment Appeal Tribunal and Court of Session (Scotland) held that although Mr Moffat spent all of his time working for Seawell, he was ultimately part of a team whose principal purpose was outbound work, not Seawell’s work.  Ceva had specifically and consciously grouped Mr Moffat within the “outbound team”.  Although Mr Moffat worked solely on the Seawell account, Ceva had not “organised” him in a group for this purpose.  Therefore, there was no service provision change and no TUPE Transfer.

This case disproves most employers’ assumptions that an employee who spends all of his time on one contract must transfer in an outsourcing/insourcing arrangement and follows a line of cases narrowing the circumstances in which TUPE will apply.  This is expected to be reflected in the new TUPE Regulations (expected later this year).  For now, employers should bear in the mind that the fact that an employee spends 100% of his time working for one client is not sufficient on its own to establish a TUPE transfer.

 

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Woolworths spurs landmark decision

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Woolworths spurs landmark decision

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Under UK law, a duty to inform and consult employees as a group is triggered when an employer is proposing to make 20 or more redundancies at ‘one establishment’ in a 90 day period. If the duty is breached, a ‘protective award’ can be claimed of up to 90 days’ gross pay per employee.  This appears to be at odds with the European Directive (on which the UK legislation was based) which does not refer to the need for employees being at “one establishment” in order for the consultation obligations to apply.

In 2009, Woolworths went into liquidation making thousands of employees redundant. On behalf of the employees, two unions brought claims for ‘protective awards’ on the grounds that the liquidators had failed to consult with employee representatives ahead of the redundancies.

This case turned upon whether each Woolworths shop was an establishment in its own right. If each shop was not an establishment, then the duty to consult was not engaged in respect of stores with less than 20 proposed redundancies. The Employment Appeal Tribunal ruled that the UK provisions should be interpreted consistently with the Directive and the words “at one establishment” should be disregarded.

Therefore, where an employer proposes 20 or more redundancies across its organisation within a 90 day period, it will have collective consultation obligations even if the number of employees proposed for redundancy at each of its sites is fewer than 20. For example, if an employer was proposing to make 20 employees redundant within a 90 day period, the consultation obligations would be triggered whether all 20 employees are employed at one site or across various sites.

This decision brings about a substantial change with significant consequences for employers with multiple sites.  In order to avoid the risk of expensive collective claims, employers need to ensure that redundancies across the business are monitored centrally and, where necessary, that the collective consultation redundancy obligations are met.

 

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Tribunals more willing to make costs orders against employees

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Tribunals more willing to make costs orders against employees

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In employment tribunal litigation, both parties usually bear their own costs. However tribunals do have the discretion to award costs orders against parties who have ‘acted vexatiously, abusively, disruptively or otherwise unreasonably’. Historically, this power has been exercised rarely but a couple of recent cases suggest that the tide is beginning to turn.

In Vaughan v London Borough of Lewisham, Ms Vaughan brought nine unsuccessful claims against her employer. At the end of the hearing, the Tribunal ordered her to pay £87,000 towards Lewisham’s costs despite the fact that:

  1. She was unrepresented, unemployed and of limited means;
  2. No costs warnings had been provided to her;
  3. No deposit order was sought against her; and
  4. A settlement offer of £95,000 was made to her.

The Employment Appeal Tribunal defended the costs order on the grounds that Ms Vaughan had advanced a case of ‘mass conspiracy’ unsupported by evidence. The absence of a deposit order or costs warning did not suggest the claims had merit and whilst the settlement offer might seem extraordinary, it simply reflected the commercial reality arising from the fact that the employer was facing the expense of a 20 day hearing. As for Ms Vaughan’s limited means, there was a realistic prospect that she would work in due course and it was for the county court to agree a repayment plan.

In Howman v Queen Elizabeth Hospital NHS Foundation Trust, Mr Howman was dismissed for uploading a fake letter from the Trust’s CEO onto the Trust’s intranet. Following an unsuccessful claim for unfair dismissal, the Tribunal ordered that he pay the Trust’s costs of £43,000. The Tribunal said he was aware that an application for costs would be made against him if he lost and was advised by a judge in an interim hearing that he should carefully consider his position in light of the strong evidence against his case.

However, on appeal, it was held that the Tribunal had not considered whether it was appropriate to make an order that would wipe out Mr Howman’s life savings and force him to sell his family home. The case has been sent back to the Tribunal for them to consider whether to modify the amount of the award.

These cases are difficult to reconcile but it seems clear that Tribunals are becoming more willing prepared to make stringent costs orders against individuals bringing dubious claims even if they have limited means. This is particularly the case when claims are brought against public sector bodies funded by the taxpayer. Whether a similar order would be made against an individual bringing a claim against a private sector employer remains to be seen.

 

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More good news for Employers about redundancy…

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More good news for Employers about redundancy…

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In Malekout v Ahmed and others (t/a The Medical Centre) the Tribunal was satisfied with an employer’s decision to dismiss an employee for redundancy despite the fact the employer had recruited his replacement months before the dismissal.

Mr Malekout was employed as a Practice Manager at a medical practice for 14 years. In April 2008, Mr Malekout informed his employer that he had been offered another job and wanted to discuss his employment. The practice hired a second practice manager, Mr Kader, on a short term basis to ensure it was not left in a difficult position should Mr Malekout leave. Mr Malekout subsequently decided not to leave the practice but in the interim period much of his work was passed to Mr Kader and various shortcomings in Mr Malekout’s performance came to light. Ultimately, the practice decided that it only needed one practice manager and dismissed Mr Malekout by reason of redundancy. Mr Malekout claimed unfair dismissal.

The Tribunal found that there was a genuine redundancy situation because at the time of the dismissal, the practice had two practice managers and only needed one, but there was no genuine consultation so the dismissal was unfair. However, they also decided that Mr Kader’s shortcomings would have been exposed at some stage and his dismissal was therefore inevitable. As a result his compensation was reduced by 100%. The Employment Appeal Tribunal upheld this decision.

On the facts, it is difficult to avoid the conclusion that the employer manufactured a redundancy process in order to dismiss an under-performing employee. However, once again, it is clear that Tribunals are not keen to look behind a redundancy situation.

 

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Statistics on compensation awards out

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Statistics on compensation awards out

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The latest Equal Opportunities Review has published their 2012 statistics on compensation awards in discrimination cases. The total compensation awarded came to £5,268,597. Unlike unfair dismissal claims, compensation for discrimination is unlimited and covers both financial losses and ‘injury to feelings’. In 2012, there were two cases where the awards were in excess of £100,000.

Whilst it will come as no shock that massive awards of this level are extremely rare, employers need to be aware that awards for loss of earnings are higher than they were previously. Tribunals are increasingly upping the compensation awards to reflect the difficulties that Claimants face to find comparable employment in these difficult economic times.

Naturally the way to prevent this is for employers to be proactive about promoting equal opportunities, training in conscious and unconscious bias, implementing their policies and taking steps to address discrimination immediately as and when it arises.

For a more detailed analysis of the statistics, please read discrimination law specialist, Michael Rubenstein’s blog.

 

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Redundancy trumps poor performance

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Redundancy trumps poor performance

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In Fish v Glen Golf Club, Mr Fish was the secretary of a golf club. In 2008, he was made redundant as part of an attempt to improve the club’s financial position.  He disputed his redundancy arguing that the real reason for his dismissal was because the club was critical of his performance.

He relied on the hasty consultation process and the appointment of his deputy to an alternative role as evidence of a sham redundancy. He also cited as evidence the fact that there were two versions of a redundancy report, an edited version (which Mr Fish was shown during consultation) and an earlier unseen version (which was only provided during the litigation process). The earlier version was critical of Mr Fish whereas the edited report omitted these criticisms and was even complimentary.

Notwithstanding this evidence, the Tribunal found that the principal reason for Mr Fish’s dismissal was redundancy albeit that it was not necessarily the sole reason. The criticisms of Mr Fish were background to the dismissal and not the cause of it and therefore the dismissal was fair. Mr Fish appealed this decision on the grounds of perversity. He was unsuccessful as it could not be said that the Tribunal’s decision would ‘cause astonished gasps from the well informed observer’ which is the high hurdle for proving perversity.

This is a surprising decision and one wonders whether a different Tribunal would have taken the same view. Nonetheless, the case is a firm reminder that a Tribunal will rarely look behind an employer’s reasons for making a redundancy and is yet another nail in the coffin for unfair dismissal claims based on redundancy.

 

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Overtime counts when calculating statutory holiday pay

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Overtime counts when calculating statutory holiday pay

 

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Workers are entitled to overtime payments as part of their holiday pay provided the overtime was connected to the performance of the tasks required under a contract of employment.

Mr Neal worked for Freightliner under a contract that provided for a 35 hour week made up of seven hour shifts although he was required to work overtime when necessary. Such overtime was considered ‘voluntary’. In reality, Mr Neal worked shifts of 8.5 or nine hours. He received a premium for time worked in addition to the contractual seven hours but these extra hours were not taken into account for the purpose of calculating holiday pay. As such, he brought a claim for unlawful deductions of wages and a breach of the Working Time Regs 1998.

The Tribunal found in Mr Neal’s favour that workers are entitled to receive holiday pay for overtime where the work is ‘intrinsically linked’ to the employment contract. The fact that he volunteered to perform these tasks outside his contractual hours did not mean that the performance at those times was not intrinsically linked. Furthermore, the fact that he was paid a premium for the over time provided‘an additional link to the performance of his tasks andtheir inclusion as part of normal remuneration for the purposes of the calculation of holiday pay’.

Whilst this decision is likely to be appealed, employers should consider taking paid overtime into account when calculating holiday pay, as they could be challenged on this front by workers.

 

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Religious Harassment – context is everything

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Religious Harassment – context is everything

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The Times’ senior sub-editor’s comment “Can anybody tell me what’s happening to the f***ing Pope?” in the context of a busy newsroom with a looming deadline on a story about the Pope, did not amount to religious harassment.

Mr Heafield, a Roman Catholic, claimed that he had been shocked into silence by his line manager’s comment and found it to be offensive, unnecessary and blasphemous and therefore brought a claim for religious harassment.

The EAT stated that whilst the use of an expletive in a sentence about the Pope might be interpreted as disrespectful to a devout Catholic, in reality people are not perfect and use bad language.

When taking into consideration the context in which the statement was made and the fact that in referring to “the Pope” in this context, the editor was talking about the article and not the Pontiff, it was not intended to be anti-Catholic; it was therefore unreasonable for Mr Heafield to feel that his dignity had been violated or that he had been subjected to an adverse environment. On this basis, Mr Heafield’s claim of religious harassment was rejected.

This case (Heafield v Times Newspaper Limited) will provide some comfort to employers, as it reinforces the previous decisions of that it does not wish to encourage a “culture of hypersensitivity” in the workplace.

 

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How many Easter eggs did you eat?

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How many Easter eggs did you eat?

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The NHS has reported that almost 25% of adults in the UK are obese. It will hardly be surprising to hear therefore that questions have arisen as to whether obesity is a disability.

The Employment Appeal Tribunal in, Walker v Sita Information Networking Computing Ltd, found that although obesity is not, in itself, an impairment under disability discrimination law, the physical and mental conditions arising from obesity can qualify as impairments.

Mr Walker weighed over 21 stone and suffered from health problems including bowel problems, chronic fatigue symptoms and depression, which had a significant effect on his day-to-day life. He brought a claim for disability discrimination against his employer. The Employment Appeal Tribunal upheld his claim and said that is not the cause of Mr Walker’s symptoms that should be focused on but the effect. This is the case even where the cause is excluded from the definition of disability. A prime example is liver disease caused by alcoholism.

As an employer, if you have any obese employees and the effect of their obesity is that they qualify as disabled under the Equality Act, you will be under an obligation to consider and, where appropriate, make reasonable adjustments.

 

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Compensation against one respondent can be demanded from any

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Compensation against one respondent can be demanded from any

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In discrimination cases, employees can sue both their employer and anyone they think has helped their employer to act in a discriminatory manner.  In London Borough of Hackney v Sivanandan, the Court of Appeal confirmed that where employees claim money from multiple parties, compensation must be awarded on a joint and several basis (i.e. the employee can claim the full amount from any of the parties and the unsuccessful respondents then have to sort out who ought to pay which proportion of the damages between themselves).

In 1999, Ms Sivanandan, a race equality adviser applied for two positions at a race relations body, which was funded by the local authority. After failing to be shortlisted for either position, she successfully brought claims for race and sex discrimination against: (1) the race relations body; and (2) the local authority; and (3) its employee, Ms White.

In terms of a remedy, the Tribunal ruled that although liability should be apportioned between Ms White and the other respondents, it limited Ms White’s award to £1,250 in respect of injury to feelings only. The other respondents were jointly and severally liable for the £400,000 compensation awarded to Ms Sivanandan.

The Employment Appeal Tribunal overturned this decision on the basis that in cases where the damage suffered by the employee was caused by the collective action of the respondents, a tribunal cannot limit the liability of one respondent. Whilst the question of who must pay effectively comes down to the whim of the claimant, who will likely ‘cherry pick’ the respondent with the largest financial assets, as stated above the Respondents can then bring proceedings against each other in order to achieve a fairer apportionment of the costs of losing.

This decision should and will make individuals who are made a party to discrimination claims more anxious about the impact and more likely to seek and need independent advice.

 

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