Tag Archive: employment reforms

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/

Changes to whistleblowing law: In the public interest?

Alan Chalmers, Partner in our Sheffield office, comments:

Recent news stories concerning the NHS and the financial services industry have highlighted how challenging the issues associated with whistleblowing can be for an organisation. On the one hand, employers need to know if there are illegal, improper or dangerous practices going on, in order to manage risk and avoid litigation or even criminal liability. On the other hand, the disclosure of information about wrongdoing within an organisation to the public in general may hinder internal investigation, damage the reputation of the organisation and affect staff morale.

The law seeks to achieve a balance between these competing interests by providing protection for whistleblowers but only in limited circumstances. Under the current public interest disclosure legislation, it is unlawful for an employer to subject one of its workers to a detriment or to dismiss an employee on the ground that they have made a ‘protected disclosure’. This means a disclosure which in the reasonable belief of the worker, tends to show a criminal offence, breach of any legal obligation, miscarriage of justice, danger to health and safety of any individual, damage to the environment or a deliberate cover-up of any of these.

Whistleblowing claims can be attractive to employees as they are not subject to any length of service criteria, there is no cap on compensation, and there is also potential for negative publicity to put pressure on employers to agree a settlement. As a result, the law has increasingly been used in circumstances which were not foreseen when the legislation came into force. For example, claims have been brought by employees seeking to rely on disclosures of alleged breaches of their own employment contracts.

It is difficult to see the element of ‘public interest’ in many such claims. The Government has now decided to amend the ERA in order to limit the potential for them. However, it is far from clear that the proposed amendment achieves what it set out to. The Government in fact now proposes additional changes which, taken together with recent case law, may cause significant headaches for employers.

The first amendment proposed by the Government is to impose a requirement that, in order to be protected, the disclosure must be ‘in the public interest’. There is concern that this unnecessarily limits the scope of protection in relation to more serious types of disclosure (by imposing an additional requirement), but does not necessarily eliminate the ‘self-interest’ claims of employees alleging breach of their own contracts. This is likely to be a particular concern for employers in the financial services sector. Tribunals may have considerable sympathy with employees claiming that it was in the public interest to blow the whistle on alleged improper operation of the bonus system by a bank, even if it was their own interest affected.

Other proposed amendments to the draft Enterprise and Regulatory Reform Bill will widen the scope of the whistleblowing legislation. At present, most disclosures must be made in good faith. This reduces the likelihood of employees making unfounded allegations motivated by a grudge against the employer or the prospect of financial reward. The Government is proposing to remove the ‘good faith’ requirement. This may well lead to an increase in allegations being made post-termination in order to put pressure on employers to make a financial settlement.

Finally, the Government is also proposing to make employers vicariously liable for the acts of its employees towards whistleblowers. At present, the whistleblower is only protected from being subjected to a detriment by the employer. If colleagues subject the employee to harassment or give them the cold shoulder, the employee has no redress under whistleblowing law. The amendment proposed by the Government would bring whistleblowing protection in line with discrimination; the employer will be liable for the actions of its employees, but will have a statutory defence against claims if it can show it took all reasonable steps to prevent the whistleblower from being subjected to a detriment. If enacted, this will make it essential that employers have a robust formal whistleblowing policy, and train employees and managers on how the policy works.

Recent decisions of the EAT have also raised the prospect of more claims. In a recent case, Onyango v Adrian Berkeley t/a Berkeley Solicitors the EAT held that Mr Onyango was entitled to rely on a letter before claim and report to a regulator as being protected disclosures even though they were made after his employment had terminated. Where the employment relationship has terminated in difficult circumstances, and the parties are already in dispute, this gives considerable scope to the ex-employee to make allegations of wrongdoing in order to put pressure on the employer.

There are considerable problems with whistleblowing protection in its current form. However, it remains to be seen whether the proposed amendments will achieve the appropriate balance between protection for genuine whistleblowers and deterrence of ‘nuisance’ claims aimed purely at increasing the money paid to a departing employee.

alan.chalmers@dlapiper.com
+44 114 283 3259
 

 

 

Permanent link to this article: http://www.dlapiperbeaware.co.uk/changes-to-whistleblowing-law-in-the-public-interest/

TUPE: But not as we know it?

Sandra M Wallace, UK Group Head, comments:

The introduction of the service provision change (SPC) regulations in TUPE 2006 promised so much in terms of certainty, but unfortunately has delivered so little. Far from giving employers and employees alike much needed confidence about the circumstances in which TUPE will apply, recent case law has created a great deal of uncertainty. Now the Government has launched a consultation paper (pdf) indicating that it proposes to remove the SPC provisions altogether. With a long lead-in period, however, until any changes are likely come into force, and with no guarantee that they will provide any additional clarity, businesses still need to understand how the trend has been moving in recent months.

At its simplest, a service provision change occurs when activities carried out on behalf of a client by one person are instead carried out by another person. However, immediately before the change there has to be an organised grouping of employees situated in Great Britain which has as its principal purpose the carrying out of activities on behalf of the client. On the face of it these provisions are relatively straightforward but, over the last 12 months, they have, in fact, courted a good deal of controversy.

Organised grouping

In 2012, the first case to muddy the SPC waters was Eddie Stobart v Moreman and others. In this case, the EAT found that there had been no SPC in respect of employees who spent 50% or more of their time on a particular contract. The EAT said that the requirement of an organised grouping necessarily means that the employees be organised by reference to the requirements of the client in question. It does not apply to a situation where a group of employees may, without any deliberate intent or planning, be found to be working mostly on tasks which benefit a particular client.

Next came Argyll Coastal Services Ltd v Stirling where the EAT said the employees must be “deliberately organised for the purpose of carrying out the activities”. This approach was also taken in Seawell Ltd v Ceva Freight (UK) Ltd where the EAT found that an organised grouping does not arise merely by an employee spending 100% of their time on a particular contract. What is required is a client ‘team’ to be set up and specifically dedicated to the client. The EAT said “it cannot be a matter of happenstance”.

Activities

Further surprising decisions in late 2011/2012 arose in the context of ‘activities’. In order for an SPC to occur, the activities carried out by the new contractor must also be ‘fundamentally’ or ‘essentially’ the same as those carried out by the old contractor. However, surprisingly, in Nottinghamshire Healthcare NHS Trust v Hamshaw and others there was no SPC, and therefore no transfer of employees, when the Trust closed a care home and outsourced care of the residents to a new provider supervising independent living the residents’ own homes. Again, in Enterprise Management Services Ltd v Connect Up Ltd, there was no SPC when a new provider of IT support services provided the same services as the old provider with the exception of one small service which formed only 15% of the overall work. In Johnson Controls Ltd v UK Atomic Energy Authority there was no SPC when taxi booking services were taken back in-house when previously they had been provided by a taxi administration service. In each case, the courts held that the activities carried out after the change were essentially different from those carried out before.

Client identity

In 2012, the courts also confirmed a restrictive approach to the meaning of ‘client’. In order for there to be a SPC, the client must remain the same. In Hunter v McCarrick, the Court of Appeal found that when a property services company was replaced by another company on the sale of the property the employees of the original company did not transfer. There was no SPC as the client had changed.

This recent spate of cases has revealed a new trend in the interpretation of TUPE’s SPC provisions. Gone are many of the old assumptions about what constitutes an organised grouping of employees. Gone too are the traditional assumptions about the type of activities which need to carried out by the new provider for a SPC to occur. However, whether the Government’s plans to remove the SPC provisions altogether will assist parties to identify and understand their obligations better remains to be seen. The application (or not) of TUPE will remain very much a live issue. This is because service provision changes will still potentially fall within the definition of a business transfer (as they did pre-2006). Therefore complicated assessments of whether TUPE applies will still need to be made but potentially without the assistance of express statutory provisions.

sandra.wallace@dlapiper.com
+44 121 262 5913

Permanent link to this article: http://www.dlapiperbeaware.co.uk/tupe-but-not-as-we-know-it/

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