Tag Archive: collective consultation

EAT considers issue of when collective redundancy consultation must begin

An issue of major practical importance to employers engaged in a collective redundancy exercise is when the obligation to begin consultation with the employee or union representatives is triggered.  Employers need this knowledge to ensure they comply properly with their consultation obligations and avoid potentially significant liabilities for protective awards.  Unhelpfully, however, the law on this issue has been uncertain for some time following conflicting case law (in UK Coal Mining Ltd v National Union of Mineworkers and Akavan Eritysialojen Keskuslitto AEK RY v Fujitsu Siemens Computers OY) and protracted litigation in the case of United States of America v Nolan. The Nolan case is finally hoped to resolve the issue but, although it is due to be heard again in the Supreme Court on 15 July 2015, it is not clear whether this point will be considered then, or at a later date.  However,  the EAT has now also considered the issue in a separate case.

Background

Where an employer proposes to make large scale redundancies of 20 or more employees within a period of 90 days, it must consult on its proposal with either employee or union representatives of the affected employees. Consultation must be with a view to reaching agreement on avoiding the need for dismissals, reducing the number of employees to be dismissed, and mitigating the consequences of the dismissals.

A critical issue is whether, as part of the obligation to consult on ways of avoiding dismissals, an employer is obliged to consult at the stage when it is proposing to make (but hasn’t yet made) a business decision that will inevitably lead to collective redundancies. If so, this considerably widens the scope of consultation and could, for example, require employers to consult over the business reasons for the proposal. If not, employers will only need to begin consultation once the decision has actually been made.

This was one of the live issues in the Nolan case, where the United States of America sought to argue that employers are not obliged to consult over a proposed operational decision to close a workplace.  The issue was referred to the ECJ but, in the circumstances of the case, the ECJ considered it had no jurisdiction to decide the issue.  The case then returned to the Court of Appeal which ordered a further hearing on the issue.

E Ivor Hughes Educational Foundation v Miss J E Morris and others

However, before the Nolan case has been heard again, the issue has arisen before the EAT in a separate case.  In the case of E Ivor Hughes Educational Foundation v Miss J E Morris and others, the Foundation decided at a meeting on 27 February 2013 to close one of the schools it operated, unless pupil numbers increased. The final decision to close was taken on 25 April 2013 when pupil numbers for the forthcoming academic year were known. The tribunal held that the obligation to collectively consult arose on 27 February 2013 as on that date the decision was taken to close the school unless numbers increased, and this was either a fixed, clear, albeit provisional decision intention to close, or amounted to a strategic decision on changes compelling the employer to contemplate or plan for collective redundancies.  A protective award of 90 days in respect of each claimant was made on the basis that the Foundation carried out no consultation at all, with the tribunal holding that it was irrelevant that the claimants had not actually suffered any loss. The tribunal’s decision was upheld by the EAT.

In this case, the tribunal found that the earlier consultation date applied under each of the tests for the commencement of collective consultation currently laid out in case law, and the conflicting nature of these tests was not therefore material on the facts. Importantly, however, the tribunal did come down on the side of the earlier, rather than the later date even though, at that date, pupil numbers (and therefore the impact on the school’s future) weren’t known. In practice, the issue of when an employer’s plans are at a proposal stage, or when they are deemed to be clear and fixed, may be a somewhat grey area and it is to be hoped that the higher appellate courts will eventually give comprehensive guidance on this so that employers can fully understand, and meet, their obligations and avoid potentially costly liabilities for protective awards.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/eat-considers-issue-of-when-collective-redundancy-consultation-must-begin/

ECJ decision in Woolworths collective redundancy case

Adam Hartley, a Partner in our London office, comments: the European Court of Justice (ECJ) has today handed down judgment in the reference from the Court of Appeal in USDAW v Ethel Austin (commonly referred to as the Woolworths case) on the question of when the obligation to consult on collective redundancies is triggered. In a decision which will be welcome news for employers, the ECJ has held that the requirement for collective consultation is triggered when the employer proposes 20 or more redundancies within 90 days at one establishment, not across the entire undertaking. This returns the law to how it was before the decision of the EAT in Woolworths.

This will be particularly welcome news for large employers operating across many establishments. The EAT’s decision in Woolworths created significant problems as it meant that 20 separate redundancies at 20 separate establishments could trigger collective consultation requirements, even though the reasons for the redundancies were disparate and separate. Large employers would have had to constantly monitor their operations for any dismissal which might be categorised as a redundancy because of the risk that this could trigger collective consultation obligations. This potentially placed a huge administrative burden on employers and, as the ECJ recognises in today’s decision, did not fulfil the objectives of the Collective Redundancies Directive (the Directive). Today’s ECJ decision produces a much more sensible result.

Background

When the Woolworths and Ethel Austin chains of stores went into insolvent administration, in both cases the administrators implemented an extensive redundancy exercise, no collective consultation was carried out and the employees brought claims for a protective award for failure to consult. The tribunal made a protective award only in respect of those employees who worked in stores employing 20 or more staff. However, on appeal the EAT held that UK law was not compliant with the Directive and that the obligation to consult on collective redundancies should arise whenever there are 20 or more redundancies anywhere in the employer’s business (for more on the EAT decision see our Be Alert). The Court of Appeal made a reference to the ECJ to determine the proper meaning of the Directive.

The relevant provision of the Directive, Article 1(1)(a), provides Member States with a choice of two possible definitions of “collective redundancy”:

  1. The dismissal, over a period of 30 days, of at least:
  • 10 workers in an establishment with 21-99 workers.
  • 10% of the workforce in an establishment with 100-299 workers.
  • 30 workers in an establishment of 300 or more (Article 1(1)(a)(i)); or
  1. The dismissal, over a period of 90 days, of at least 20 workers, whatever the number of workers normally employed in the establishments in question (Article 1(1)(a)(ii)).

Unlike the majority of EU member states, the UK opted for the second definition, which is given effect in UK law by s.188 TULRCA, which provides that employers are obliged to inform and consult collectively where they propose to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less. The effect of the EAT’s decision in Woolworths was to delete the words ‘at one establishment’ from s.188, resulting in significantly more onerous consultation requirements for employers.

ECJ decision

The ECJ stated that the term ‘establishment’ is a term of EU law and cannot be defined by reference to the laws of the Member States; it must also be interpreted in a uniform manner across the EU legal order. In the leading case Rockfon the ECJ had already decided that ‘establishment’ must be interpreted as designating the unit to which the workers made redundant are assigned to carry out their duties. It is not essential that the unit in question has a management that can independently effect collective redundancies.

In it judgment in Athinaiki the ECJ further clarified that an establishment may consist of a distinct entity, having a certain degree of permanence and stability, which is assigned to perform one or more given tasks and which has a workforce, technical means and a certain organisational structure allowing for the accomplishment of those tasks.

Where an undertaking comprises several entities meeting those criteria, it is the entity to which the workers made redundant are assigned to carry out their duties that constitutes the establishment.

The ECJ stated that ‘establishment’ could not have a different meaning in the two possible definitions of collective redundancy.

The court noted that interpreting the Directive to require account to be taken of the total number of redundancies across all of the establishments of an undertaking would significantly increase the number of workers eligible for protection, which would correspond to one of the objectives of the Directive. However, this was not the only objective of the Directive; it is also to ensure comparable protection for workers’ rights in the different Member States, and to harmonise the costs which such protective rules entail for EU undertakings. The interpretation of the Directive argued for by the union would be contrary to those objectives.

It followed that the Directive requires account to be taken of the dismissals effected in each establishment considered separately.

It is for the Court of Appeal to determine whether the employment tribunals were correct in taking the view that the stores to which the employees affected by the dismissals were assigned were separate establishments.

Implications

This is a welcome return to the old law which will be particularly good news for multi-site employers in sectors such as retail, hospitality, transport and logistics. In the majority of cases, separate premises will be treated as separate establishments for the purposes of determining whether 20 or more redundancies are proposed in a 90 day period. This will make collective consultation much easier to manage than would have been the case if the ECJ had upheld the EAT’s interpretation of the law.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/ecj-decision-in-woolworths-collective-redundancy-case/

Advocate General’s opinion in key collective redundancy cases

Adam Hartley, a Partner in our London office, comments: As we reported at the beginning of the month,  on 20 November 2014 the ECJ heard legal arguments in the Woolworths’ case and two other cases, Lyttle & Others v Bluebird UK Bidco 2 Limited and Cañas v Nexea Gestion Documental & Another, on the question of when the obligations to inform and consult on collective redundancies are triggered. Today the Advocate General has given his opinion on the cases which, if followed by the ECJ, would mean that collective consultation is only required where an employer proposes to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less; establishment meaning the local employment unit.

Background

 DLA Piper is advising on the Lyttle case, which arose out of the collapse of the Bonmarché chain of clothing stores. The facts were very similar to those in the Woolworths case; the employer went into insolvent administration, the administrators implemented an extensive redundancy exercise, no collective consultation was carried out and the employees brought claims for a protective award for failure to consult. In Woolworths the tribunal made a protective award only in respect of those employees who worked in stores employing 20 or more staff. However, on appeal the EAT held that UK law was not compliant with the European Collective Redundancies Directive (the Directive) and that the obligation to consult on collective redundancies should arise whenever there are 20 or more redundancies anywhere in the employer’s business (for more on the EAT decision see our Be Alert).  The Court of Appeal (and the Northern Ireland Industrial Tribunal in Lyttle) made a reference to the ECJ to determine the proper meaning of the Directive.

The relevant provision of the Directive, Article 1(1)(a), provides member states with a choice of two possible definitions of “collective redundancy”:

1. The dismissal, over a period of 30 days, of at least:

  • 10 workers in an establishment with 21-99 workers.
  • 10% of the workforce in an establishment with 100-299 workers.
  • 30 workers in an establishment of 300 or more (Article 1(1)(a)(i)); or

2. The dismissal, over a period of 90 days, of at least 20 workers, whatever the number of workers normally employed in the establishments in question (Article 1(1)(a)(ii)).

Unlike the majority of EU member states, the UK opted for the second definition, which is given effect in UK law by s.188 TULRCA, which provides that employers are obliged to inform and consult collectively where they propose to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less. The effect of the EAT’s decision in Woolworths was to delete the words ‘at one establishment’ from s.188, resulting in significantly more onerous consultation requirements for employers.

The Advocate General’s opinion

 The Advocate General (Wahl) has today published his opinion on the case which, if followed by the ECJ (as seems likely), will mean that the Court of Appeal in Woolworths  should reinstate the UK law to the position prior to the EAT’s decision.

 At the hearing on 20 November, arguments were put to the ECJ on behalf of USDAW,  Bluebird,  the European Commission, the UK Government and the Spanish Government. The Advocate General preferred the arguments put forward by David Reade QC, instructed by DLA Piper, on behalf of Bluebird, in particular the argument that in Rockfon (the leading case on the interpretation of the term ‘establishment’ in the Directive)  the ECJ made clear that the Directive applies to the local unit to which an employee is assigned. The Advocate General considered that although Rockfon was about the meaning of ‘establishment’ in Article 1(1)(a)(i) (ie the option not chosen by the UK), it would be “manifestly nonsensical” for ‘establishment’ to have a different meaning in Article 1(1)(a)(ii).

 The Advocate General specifically rejected the argument put on behalf of the employees that the interpretation of ‘establishment’ as meaning the local employment unit is contrary to the purpose of the Directive. The Advocate General considered that the Directive is concerned with the socio-economic effects of collective redundancies in a given local context and social environment. Interpreting ‘establishment’ as the local employment unit is entirely consistent with that.

 The ECJ’s full decision is likely to follow in approximately six months and is expected, although not guaranteed, to follow the AG’s opinion. If the ECJ does follow the AG’s opinion this will be a welcome return to the pre-Woolworths position. As David Reade QC, on behalf of Bluebird, argued at the hearing, the EAT’s decision in Woolworths created significant problems for large employers  operating across many establishments;  20 separate redundancies at 20 separate establishments could trigger collective consultation requirements which could lead to employers having to collectively consult even though the reasons for the redundancies were disparate and separate. Large employers would have to constantly monitor their operations for any dismissal which might be categorised as a redundancy because of the risk that this could trigger collective consultation obligations.  This places a huge administrative burden on employers. For employers with international operations, the EAT’s decision could even require collective consultation once the number of redundancies reaches 20 across all its EU operations.  This would be manifestly unworkable given that each Member State has implemented different consultation triggers and could lead to an employee elsewhere in the EU being entitled to consultation under UK law but not under the laws of their own jurisdiction. The Advocate General’s interpretation of the law produces far more sensible results.

 

 

Permanent link to this article: http://www.dlapiperbeaware.co.uk/advocate-generals-opinion-in-key-collective-redundancy-cases/

Collective redundancies: case law on the horizon

Adam Hartley, a Partner in our London office, comments: With the general election now firmly on the horizon, things have gone relatively quiet on the employment legislation front. However, attention now shifts to the courts, with two important decisions on collective redundancy expected in the coming months. This is a complex area of law which can lead to substantial liabilities for employers; the outcomes in the conjoined cases USDAW & Another v WW Realisation 1 Ltd (in liquidation) & Others, Lyttle & Others v Bluebird UK Bidco 2 Limited and  Canas v Nexea Gestion Documental & Another (together usually referred to as the Woolworths case)  and University College Union v University of Stirling will be watched with interest.

Advocate General’s opinion expected shortly in Woolworths case

As we have reported previously,  in January 2014, the Court of Appeal referred to the European Court of Justice (ECJ) questions about a case relating to the redundancies that followed the administration of the Woolworths and Ethel Austin chains of shops.

 The redundant employees claimed protective awards for failure to consult under the UK legislation (Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA))  which implements the Collective Redundancies Directive (CRD) and which requires an employer to consult with employee representatives when proposing to dismiss as redundant 20 or more employees at one establishment within a 90 day period. At the employment tribunal, only the claims of employees who had been employed at shops with 20 or more employees succeeded.  The claims of those who worked at stores with fewer than 20 employees failed.  At the Employment Appeal Tribunal, the Court interpreted the UK legislation so as to omit the words “at one establishment” from TULRCA.  The effect of this decision was that, technically,  UK employers are now required to consult collectively when proposing to dismiss as redundant 20 employees within 90 days, no matter where in the business the affected employees are located. (For more on the EAT decision see our Be Alert).

On 20 November 2014, the ECJ heard legal arguments in the Woolworths’ case (and two other conjoined cases) on the question of whether obligations to inform and consult under the CRD are triggered when, within a 90 day period:-

  • either there are at least 20 redundancies across an employer’s entire business (option 1); 
  • or only when there are at least 20 redundancies at an individual establishment (i.e. the local employment unit) (option 2).

DLA Piper is advising the respondent in Lyttle & Others v Bluebird UK Bidco 2 Limited. The Advocate General indicated at the hearing that his opinion will be handed down on 5 February 2015 and we will report in Be Aware when it becomes available.    The ECJ’s full decision is likely to follow approximately six months later.   Although a conclusion one way or the other on this issue is therefore in sight, in the meantime, the practical difficulties to which the EAT’s decision in the Woolworths’ case gave rise remain.  This is especially true for large multi-site employers where keeping track of numbers of redundancies is challenging and consulting collectively on unrelated redundancy dismissals is difficult and can be counter-productive.

Collective redundancies and fixed term contracts

The obligation to consult in relation to collective redundancy proposals in s. 188 TULRCA applies to employers who propose to “dismiss as redundant” more than 20 employees. By s.195 TULRCA, those words mean “dismissal for a reason not related to the individual concerned or for a number of reasons all of which are not so related”.

On 21 January 2015 the Supreme Court in University College Union v University of Stirling heard an appeal regarding whether certain employees’ dismissals, at the expiry of their fixed-term contracts (FTCs), “related to the individual concerned” within the meaning of s. 195 TULRCA and thus did not count for the purposes of triggering collective redundancy consultation. The Court has been asked to consider whether a reference should be made to the ECJ.

In 2009 the University of Stirling proposed to dismiss employees as redundant, in order to offset a projected financial deficit. The University began consultations with trade unions including the University and College Union (UCU) but did not consider that it had any legal obligation to consult collectively in relation to proposed dismissals arising from the expiry and non-renewal of FTCs. The University did not, therefore, collectively consult with UCU or other unions on the non-renewal of FTCs in relation to these staff.

The UCU considered that the University’s collective consultation obligation extended to employees employed on FTCs, and complained to the Employment Tribunal. The Employment Tribunal held, in respect of four test cases, that three of the four employees had been dismissed and that those three had been dismissed as redundant. The Employment Appeal Tribunal overturned this decision, and the Inner House upheld the EAT’s determination. In the Inner House’s view, each of the test case employees had been dismissed for reasons particular to them as individuals, including that they had agreed that their employment would come to an end at a determinate point. They had not been dismissed as redundant, and there was no need to make a reference.

The Supreme Court has reserved its decision. In the meantime, employers who are conducting redundancy exercises at the same time that fixed term contracts are expiring may wish to consider whether to include those fixed term employees in the consultation exercise.

 

Permanent link to this article: http://www.dlapiperbeaware.co.uk/collective-redundancies-case-law-on-the-horizon/

Woolworths redundancy appeal referred to ECJ

Alan Chalmers, a Partner in our Sheffield office comments: the Court of Appeal decided yesterday to make a reference to the European Court of Justice (ECJ) in the controversial Woolworths/Ethel Austin collective redundancy litigation.

In USDAW v Ethel Austin (in administration) the Ethel Austin and Woolworths chains of shops had gone into administration resulting in their employees being made redundant. The employees who were members of a trade union claimed protective awards for failure to consult collectively under s.188 TULRCA, which provides that an employer is required to consult with appropriate representatives when proposing to dismiss as redundant 20 or more employees at one establishment within a 90 day period. At the employment tribunal, only those employees who were employed at premises where 20 people or more were employed succeeded in claiming protective awards. Those who worked at stores of fewer than 20 people failed in their claims. The union appealed to the EAT. The issue before the EAT was whether s.188 was to be interpreted so as to omit the words “at one establishment” in order to give effect to the core objective of the EU Directive on collective redundancies,  allowing protective awards to be made to all employees whose employer dismissed 20 employees as redundant within 90 days. As reported in our Be Alert dated 2 July 2013, the EAT held that those words should be deleted. The consequence of this was that the Secretary of State (and ultimately the taxpayer) was liable for the protective awards.

Not long before the EAT handed down judgment in Ethel Austin, a tribunal in Northern Ireland referred a similar case, Lyttle v Bluebird UK Bidco Ltd, to the ECJ. That case concerned redundancies arising out of the administration of the Bon Marche chain.

In the Court of Appeal, the Secretary of State sought to argue that the appeal in Ethel Austin should be stayed pending resolution of the Lyttle case.

However, the Court of Appeal concluded that the appropriate course of action was to refer the case to the ECJ rather than stay the appeal. The Court took into account the fact that the employees in Lyttle did not have legal representation and considered that the ECJ would benefit from the employees having legal representation. In addition, the ECJ’s judgment in Lyttle might not dispose of all the issues as the ECJ would also need to consider whether, if UK law is incompatible with the Directive, the employees should be able to rely on the Directive against the Secretary of State in any event.

In the long term, it is almost certainly beneficial to employers to have a definitive resolution of this important issue. However, although it is possible that the ECJ will join the reference with Lyttle and expedite it, given the importance of the questions raised, it is unlikely there will be a decision any time soon; the usual timetable from reference to decision is around 18 months.  In the meantime, the practical difficulties arising from the EAT decision continue. This case has important implications for large employers with multiple locations, most obviously those in the retail, logistics and hospitality sectors. Whereas previously those employers did not have to collectively consult until there were at least 20 redundancies at any one establishment, now they must do so if the overall number of redundancies amounts to 20, wherever they occur. This can cause significant problems both in terms of recognising that the obligation has been triggered and in arranging the consultation meetings if participants are at different locations. Collective consultation will be longer and more expensive for employers in this situation.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/woolworths-redundancy-appeal-referred-to-ecj/

New TUPE regulations published

Clare Gregory, a Partner in our Sheffield office, comments: With just over a fortnight to go until they come into force, the Government has now made, and published, the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014 (“Regulations”).  They will take effect on 31 January 2014. A copy of the Regulations is available here.

The Regulations reflect the relatively conservative reform of TUPE with which the Government has decided to proceed after widespread concern about its original proposals. Nonetheless there are some important changes of which employers need to be aware.

Pre-transfer consultation

The Regulations provide that, in collective redundancy situations, a transferee may consult, or start to consult, with the relevant representatives before the transfer takes place.  The transferor must agree and the transferee must give written notice to the transferor. The transferee can cancel its decision to consult pre-transfer at any time by written notice.  In practice, this change may prove to have little impact; many businesses already choose to consult about post-transfer redundancies before the transfer takes place. However, there is no doubt that having a clear legitimate basis on which to do this will provide businesses with welcome certainty and may assist transferees to make cost-cutting measures more efficiently post-transfer.  Individual consultation is, however, still likely to be required to take place post-transfer.

Changes to terms and conditions post-transfer

The Regulations continue to provide that any purported variations to contracts of employment where the reason, or principal reason, for the variation is the transfer will be void. However, the Regulations provide for two exceptions to this (1) where the sole or principal reason for the variation is an economic, technical or organisation reason entailing changes in the workforce, provided that the employer and employee agree the variation (ETO defence); or (2) the terms of the contract permit the employer to make the variation.  

These changes are an attempt to assist transferees to harmonise their employees’ terms and conditions, which, until now, has been a significant problem in practice. However, the new Regulations are not without their difficulties and arguably are in breach of ECJ case law which suggests that any variations by reason of the transfer are prohibited by the Acquired Rights Directive.  The Government is expected to issue detailed guidance in this area, but, ultimately, until cases come before the UK courts the extent to which employers can rely on these provisions to facilitate post-transfer harmonisation remains uncertain.

Change in location is a “change in workforce” for the purposes of the ETO defence

The Regulations expressly provide that ‘changes in the workforce’ provided for in the ETO defence include a change to the place where employees are employed.  This is a welcome change to the legislation, preventing genuine place of work redundancies from being automatically unfair.

Renegotiation of terms derived from collective agreements

The ongoing effect of collective agreements has been the subject of recent case law in the UK. The Regulations therefore provide welcome certainty that no provisions contained in a collective agreement agreed after the date of the transfer, and where the transferee is not party to the collective bargaining, will transfer. The new Regulations also provide that terms and conditions incorporated from a collective agreement may be varied after a period of one year post-transfer, provided that the terms are no less favourable to employees overall.

Employee liability information

The Regulations extend to 28 days (from 14) the deadline for a transferor to provide employee liability information to the transferee. This change should assist transferees and better meet their commercial needs by enabling them to have important employee information earlier in the business transfer process.  This change applies to TUPE transfers which take place on or after 1 May 2014.

Micro-businesses permitted to consult employees directly

Where an employer employs fewer than 10 employees and there are no appropriate trade union or employee representatives, the employer may consult with the employees directly.  This is likely to be welcome news for smaller employers, significantly reducing the administrative burden of electing representatives.

Summary

The new Regulations contain some useful provisions for employers.  However, until cases start to come before the UK courts the full extent of the changes will remain uncertain.  In particular, transferee employers should remain cautious about harmonising terms and conditions of employment and take advice before implementing any changes.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/new-tupe-regulations-published/

December 2013’s review of the year

Sandra Wallace, Partner and Employment group head, highlights the most important legislative and case law developments from 2013 and identifies the key cases to watch out for in 2014.   Remember to use our On the horizon legislation tracker to keep up to date with the further changes to legislation which are expected in 2014 and beyond.

 

2013 LEGISLATION ROUND UP

Employment Tribunals

1 February Cap on a week’s pay for statutory awards increased from £430 to £450
  Unfair dismissal compensatory award increased from £72,300 to £74,200
25 June In political affiliation cases the two year unfair dismissal qualifying period no longer applies
29 July One year cap on unfair dismissal compensatory award introduced
  Protection of settlement negotiations from admissibility in unfair dismissal tribunal proceedings introduced
  Introduction of fees regime for employment tribunal claims and new tribunal rules
  Compromise agreements renamed ‘settlement agreements’
7 October New fee remission system in force for employment tribunal fees

Family friendly

8 March Parental leave increased from 13 to 18 weeks
7  April Statutory maternity, paternity and adoption pay rates increased from £135.45 to £136.78 per week

Whistleblowing

25 June Amendments to whistleblowing legislation to remove good faith requirement and introduce public interest test
1 November

Close of call for evidence on further whistleblowing reform

Redundancy

1 February Cap on a week’s pay for statutory redundancy payments increased from £430 to £450
6 April Period of required collective consultation for 100+ redundancies reduced from 90 to 45 days

Employment status

1 September Employee shareholder status introduced

Discrimination

25 June Obligation for the Government to make an order outlawing caste discrimination came into force
1 October Repeal of third party harassment provisions from Equality Act 2010

 

 

2013 CASE LAW ROUNDUP

 Redundancy

USDAW and others v WW Realisation 1 Ltd and others This case involves the redundancy consultation obligations arising out of the closure of Woolworths and Ethel Austin stores between 2008 and 2010.   The EAT ruled that the words “at one establishment” in the UK’s collective redundancy legislation should be disregarded for the purposes of any collective redundancy involving 20 or more employees. This potentially results in employers needing to collectively consult whenever they propose to make 20 or more redundancies in a 90 day period, regardless of where the employees are based.  This case is however being appealed to the Court of Appeal.

Working time

Neal v Freightliner Ltd

 

An Employment Tribunal held that a freight worker was entitled to have overtime payments and shift premiums included in the calculation of his holiday pay as they were intrinsically linked to the performance of the tasks he was required to carry out under his employment contract.  This case is being appealed to the EAT.

Employee competition

Coppage and anor v Safety Net Security Ltd The Court of Appeal upheld an order that a former company director pay at least £50,000 following a breach of his post-termination restrictive covenants which prohibited solicitation of any customers of his former employer for a period of six months following termination.
Vestergaard Frandsen SA v Bestnet Europe Ltd The Supreme Court held that a former sales manager was not liable for misuse of confidential information.  The manager had not acquired information while working for Vestergaard and had no implied knowledge of the misuse of information by her new employer.

Transfer of undertakings

Alemo-Herron and others v Parkwood Leisure Ltd

Considering the status of collective agreements following a TUPE transfer, the ECJ decided that under the Acquired Rights Directive it is impermissible for UK courts to adopt a “dynamic” rather than a “static” interpretation.  Where transferring employees’ contracts provide that their terms are to be determined in accordance with collective agreements, the transferee cannot be bound by terms which are collectively agreed after the transfer if it is unable to be involved in the negotiating process.

Crystal Palace FC Ltd v Kavanagh & Ors

In a case which arose out of the dismissal of employees of the company which owned Crystal Palace football club when it went into administration, the Court of Appeal held that the employees were dismissed by the administrator shortly before the business was sold for a valid “economic, technical or organisational reason”. The administrators needed to reduce the wage bill in order to continue running the business and avoid liquidation.

Discrimination

Lockwood v Department of Work and Pensions

The Court of Appeal held that a severance scheme, which paid higher payments to older employees on the basis that they needed more of a cushion than younger employees, was objectively justified.

Cox v Essex County Fire and Rescue Service

In this disability discrimination case, the EAT decided that although the employee had advised that he was suffering from bipolar disorder, the absence of a definite diagnosis meant that the employer did not know, and could not have reasonably been expected to know, that the employee was disabled.

Croft Vest Ltd & Ors v Butcher

The EAT held that an employer who refused to pay for an employee with work-related stress and depression to have private psychiatric counselling and cognitive behavioural therapy breached its duty to make reasonable adjustments.

KEY CASES FOR 2014

 Redundancy

USDAW v Ethel Austin Ltd (in administration) and another case

 

The Court of Appeal will consider whether the words “at one establishment” in the UK’s collective redundancy legislation should be disregarded for the purposes of any collective redundancy involving 20 or more employees. (NB. this is the Woolworths case  – see above for EAT decision).
Lyttle and others v Bluebird UK Bidco 2 Ltd In an application from a Northern Ireland employment tribunal to the ECJ, clarification is sought as to the meaning in the UK’s collective redundancy legislation of the term “establishment” and whether the duty to collectively consult is triggered when 20 or more employees are dismissed at a particular establishment or across the whole of the employer’s business.

Working time

Lock v British Gas Trading Limited and others The ECJ will consider whether the holiday pay of a worker, who receives basic pay and sales-related commission, should be more than just basic pay, even though during holiday periods they are not undertaking work that would entitle them to commission.
Neal v Freightliner Following the Employment Tribunal in 2013 (see above), the EAT will consider if holiday pay must be calculated in a way which takes account of pay for voluntary overtime.

Discrimination

Z v A Government Department & the Board of Management of a Community School;    CD v ST There are currently two cases before the ECJ which will consider whether an mother who has a child via a surrogacy arrangement has pregnancy and maternity rights under EU law.
FOA on behalf of Karsten Kaltoft v Billund Kommune The ECJ will consider whether discrimination on grounds of obesity is prohibited by EU discrimination law.

Gallop v Newport City Council

 

Judgment is awaited in this case in which the Court of Appeal has considered if an employer’s lack of knowledge prevents the duty to make reasonable adjustments arising where the employer relied on advice from an occupational health adviser that an employee was not disabled for discrimination purposes.

Mba v Mayor and Burgesses of the London Borough of Merton

Judgment is awaited in this case in which the Court of Appeal has considered whether or not an employer’s requirement that all care workers work some Sunday shifts indirectly discriminated against a Christian residential care worker who strongly believed that Sunday should be a day of rest.

Employment law reforms

R (on the application of UNISON) v Lord Chancellor

 

Judgment is awaited in this case in which the High Court heard an application by UNISON claiming that the introduction of employment tribunal fees is in breach of EU law and contrary to the principle of access to justice.    A similar application to the Scottish Court of Session has been stayed pending the outcome of the High Court case.

R (on the application of Compromise Agreements Ltd) v Secretary of State for Business, Innovation and Skills

An application has been made for judicial review of the statutory cap of one year’s salary in unfair dismissal cases. The application is based on the premise that older people are more likely to be out of work for more than a year and therefore would be eligible to more than a year’s compensation were it not for the new cap.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/december-2013s-review-of-the-year/

Redundancy consultation: The impact of the new rules

Mary Clarke, a Partner in our Manchester office, comments:

The Government recently made a surprising announcement that it intends to push back many of its employment reforms from April 2013 to “the summer” (with no further specifics given).  Importantly, however, one important reform  has survived the Government’s timetable juggling and will still come into effect in April 2013. This is the proposal to reduce the number of days which must elapse between consultation beginning, and dismissals taking effect, in the case of large-scale redundancies.

From 6 April 2013, employers who are proposing to dismiss 100 or more employees will only have to begin consultation 45 days before any dismissals take effect, rather than 90.  The 30 day period will continue to apply where between 20 and 99 redundancies are proposed. The regulations can be viewed here.

At first glance, this seems like good news for employers. It allows employers to start consultation later and potentially gives greater flexibility by allowing employers to react more quickly to changing economic conditions. However, employers must always bear in mind that consultation must be meaningful.   Notwithstanding the new minimum period, if there are issues regarding pools and selection criteria, a 45 day consultation period may not be sufficient to ensure appropriate consultation takes place.

There is another catch as well. The regulations provide that the new 45 day period will apply to “proposals to dismiss as redundant 100 or more employees … which are made on or after 6 April 2013′.

The difficulty here is how an employer can determine with any certainty (and subsequently demonstrate to an employment tribunal if challenged)  that a proposal to make redundancies was made on or after 6 April. This is because redundancy proposals generally evolve over a period of time.

The practical impact of this is that employers who are involved in large-scale redundancy exercises after 6 April will need to consider carefully whether there were any discussions about possible redundancies before 6 April.  Such discussions could potentially be evidence that a proposal to make redundancies was made before that date. This could be subsequently relied on by an employee’s trade union or employee representative at tribunal to establish that consultation should have begun at least 90 days before the first dismissals, rather than 45.

Getting the consultation process right is essential – any shortcomings can be financially devastating. Tribunals can make a protective award of up to 90 days’ pay per affected employee where an employer fails to comply with its consultation obligations (this has remained unchanged despite the reduction in the consultation period). Employers who have any doubts about when redundancy proposals first began will need to weigh up the costs of an additional 45 days’ consultation, against the risk of a substantial protective award.

The regulations also make changes in relation to fixed term contracts.  They provide that when an employer makes proposals to make 20 or more employees redundant it can exclude from the scope of collective consultation obligations fixed term contracts which have reached their agreed termination date. In order to fall within the exclusion the contract must be clear about when it ends, either in relation to time or the completion of a specified task.  The effect of these changes is that an employer must first consider how many redundancies it is proposing and then disregard the employees on relevant fixed term contracts in determining which consultation obligations are triggered. However, a fixed term employee whose dismissal is proposed before the agreed termination date must still be included in the numbers for collective consultation.

We are still waiting for new non-statutory ACAS guidance which is designed to assist employers to understand their collective consultation obligations. With just days to go before the new rules come into force, employers will have very little time to digest the information before the new regime takes effect. Over coming months it remains to be seen whether the Government’s reforms will have eased burdens on employers or whether they will simply result in more litigation.

UPDATE (8/4/2013) : The ACAS guidance has now been published and is available to read here.

mary.clarke@dlapiper.com
+44 1614 235 4016

Permanent link to this article: http://www.dlapiperbeaware.co.uk/redundancy-consultation-the-impact-of-the-new-rules/