Employers Update - January 2012
Welcome to our first 2012
edition of Employ!
The weeks
prior to Christmas saw no
let off in the number of
Judgments issued by the
Appeal Courts in employment
cases and we feature a few
of the most relevant cases
below, covering areas from
Annual Leave to TUPE.
In
addition, as social
media’s influence continues
to affect the workplace and
not always for the best, we
include a summary of two
recently reported cases
which may be of interest to
clients and contacts.
On behalf
of myself, Elaine and Leanne
and all partners and staff
at Taylors, we wish all our
clients a happy, prosperous
and claim free New Year.
Kind
regards
Will Clayton
Key
Employment Team Contacts:
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The Supreme Court has
ruled that employers can require workers to
take their annual leave accrued under the
Working Time Regulations 1998 during weeks
when the workers would not rostered for work
in any event.
This case concerned
off-shore oil workers, when spending time on
shore breaks but the principal involved
could be applicable in radically different
sectors too such as teaching or leisure:
Russell and others v Transocean
International Resources Ltd and others
[2011], Supreme Court.
The Employment Appeal Tribunal has
overturned an Employment Tribunal’s ruling
that a female employee was entitled to equal
pay with a male comparator who, because of
his greater experience, had been placed on a
higher pay increment point than her when he
was recruited.
The first Tribunal found that over time,
when it became clear that both employees
were performing at a similar level, the
employer's explanation for the initial pay
differential which was not tainted by sex
ceased to be a material factor and so in
their view could not defend the employer
from the Equal Pay claim.
The EAT disagreed and held that, on the
contrary, the very nature of some
incremental pay scales is such that the
point at which employees start on an
incremental pay scale may inevitably
continue to impact on and maintain
differences in pay and so allow employers to
justify the difference as a sufficiently
material factor to protect against Equal Pay
claims: Secretary of State for Justice v
Bowling, EAT.
An employee’s service is NOT a
relevant consideration when assessing the
fairness of a pre-dismissal investigation
into the cause and effect of an employee’s
long term incapacity....but it might be
relevant to the fairness of the employer’s
decision to dismiss: Dundee Council v Sharp,
EAT.
Employers that we talk to are often
understandably critical of the commercially
restrictive effects of the default service
provision change rules set out in Reg. 3 of
TUPE 2006.
As a brief but over-simplistic reminder,
where a contract to perform certain
activities on behalf of a client moves from
one contractor to another, Reg 3 of TUPE can
(and often does) apply. This leads to the
automatic transfer of the outgoing
contractor’s employees assigned to those
services into the employment of the incoming
contractor. This result can often frustrate
the client and the new contractor,
particularly if there were concerns about
the performance of the outgoing contractor’s
employees which might have influenced the
decision to re-tender.
Consequently, businesses have sometimes
been put-off from bidding for outsourced
public and private services because of the
risk of having to take on the previous
contractor’s employees under TUPE and then
deal with the costs of redundancies
necessary to introduce new talent and to run
the services more effectively.
The good news is that a run of 2011
Employment Appeal Tribunal decisions provide
some real scope for side-stepping TUPE.
In the two cases from December 2011 below,
Reg. 3 of TUPE was held not to apply to
transfers of contracts for services where:
- the activities carried on by the new
contractor / service provider are not
essentially the same as those carried on
by the predecessor [Enterprise
Management Services Ltd v Connect-Up Ltd
and others (EAT, December 2011)]; or
- the client / commissioner of the
services changes with the transfer and
is not the same client who benefited
from the services before the transfer
took place [Hunter v McCarrick (EAT,
December 2011)]
We are currently helping clients reassess
their approach to service contracting from a
TUPE costs and risks management perspective.
If TUPE is an issue for your business we
would like to hear from you.
Staying with the TUPE theme for the
moment, two recent Court of Appeal decisions
will be of interest to insolvency
practitioners and other clients looking to
purchase keys assets or businesses from
companies in Administration:-
Q: Can purchasers of a business or
part of a business that is in Administration
ever avoid taking employees assigned to that
business / part under TUPE ?
A: Not according to the Court of Appeal
in Key2Law (Surrey) –v- De’Antiquis.
At the risk of over simplifying what is a
fairly complex legal issue, the issues at
stake in Key2Law can be summarised as
follows, both Reg 4 of TUPE 2006 (which
provides for the automatic transfer of
contracts of employment); and Reg 7 (which
makes transfer connected dismissals
automatically unfair where there is a
relevant transfer) do not apply to
businesses in liquidation.
Over recent years the law has been less
clear for businesses in Administration where
the Administrator described the purpose of
the Administration as being the liquidation
of the assets of the business, as opposed to
rescuing the business or part as a going
concern. If the motives of the insolvency
practitioner when applying for
Administration were to achieve the
liquidation of the assets, the law became
such that the eventual purchaser of the
business or part from the Administration
could avoid the consequences and costs of
Reg’s 4 & 7. In other words, they could take
the assets or the going concern without the
connected employees.
The legal approach has changed as a
result of the Court of Appeal’s Judgment in
Key2law. Going forward as a matter of law
Administrations may not be regarded as being
akin Liquidations for the purposes of TUPE.
Consequently, Reg’s 4 & 7 will apply to all
relevant transfers from Administrations.
Q: In cases of businesses in
Administration, when does the clock start on
the protection given to employees under Reg
7 of TUPE from dismissal for a transfer
connected reason ?
A. It can start on day one of the
Administrators’ appointment: see Baillovone
v Spaceright
Facts: The Administrators of
Ultralon Holdings dismissed a Mr Baillavoine
from his role as chief executive on the same
day as the company went into administration.
At that point, the Administrators were yet
to find a buyer to rescue the business.
The buyer, Spaceright, appeared on the
scene some time later. The eventual sale
took place a month after Mr B’s dismissal.
Nevertheless, and in a surprising
decision that could serve to deter
insolvency practitioners from taking the
Administration route altogether, the Court
of Appeal upheld the Employment Judge’s
decision that Mr B’s dismissal was for a
reason connected to the transfer and that he
could therefore proceed with his unfair
dismissal claim.
On 27 December 2011, the Guardian
featured the US case of Mr Kravitz who is
being sued by his employees for over $200k,
for taking his Twitter followers with him
when he moved jobs. The employer, a company
which provides online information about
mobile phones, argues that Twitter
constitutes a customer database. It is
suggested that the employer will need to
establish that Twitter followers constitute
a trade secret. That might be a step too far
particularly if the tweets were a mix of
personal, private and business comments.
On 5 January 2012, the Telegraph reported
the case of John Flexman, a human resources
executive earning £68,000 per year. Mr
Flexman is claiming constructive dismissal
following a dispute with his employer over
his profile on the online professional
networking website LinkedIn.
The Tribunal has heard that Mr Flexman
was 'forced out of his job' after angering
his employer by uploading his CV to the
website and ticking a box to register an
interest in "career opportunities". Mr
Flexman was ordered to immediately remove
his CV from the website, accused of
"inappropriate use of social media" and
called to attend a disciplinary hearing. The
dispute led to Mr Flexman’s resignation. His
employers argue that Mr Flexman was in
breach of new company policy on conflicts of
interest which banned employees ticking the
"career opportunities" box. The case
continues…
The Annual increase in compensation
limits were also announced in December. With
effect from 1 February 2012:
- the maximum compensatory award for
unfair dismissal will rise from £68,400 to
£72,300; and
- the maximum amount of a week's pay, used
to calculate statutory redundancy pay (among
other things), will rise from £400 to £430.
These are the biggest increases we have seen
in recent years and reflect the annual
increase in the cost of living.
In the same vein, from early April 2012:
- The standard rates for statutory
maternity pay, statutory paternity pay
and statutory adoption pay will increase
from £128.73 to £135.45. The weekly
earnings threshold for these payments
will rise from £102 to £107;
- Statutory sick pay will increase
from £81.60 to £85.85, with the weekly
earnings threshold also rising from £102
to £107; and
- Maternity allowance will increase
from £124.88 to £135.45, with the
earnings threshold remaining at £30.
Employment Tribunal Fees: On 14
December 2011, the MoJ launched its
consultation, Charging Fees in Employment
Tribunals and the Employment Appeal
Tribunal, seeking views on two significantly
different fee charging structures which
might be adopted for charging fees in the
employment tribunal. Only one scheme is
proposed for charging fees in the EAT. The
consultation closes on 6 March 2012. If you
would like to take part, or for more
information, visit:
http://www.justice.gov.uk/consultations/et-fee-charging-regime-cp22-2011.htm
Copyright 2006 - 2012 Taylors Solicitors
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