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The opinion of the Advocate General in the case known as the Woolworths
case, regarding the meaning of 'establishment' for the purposes of the
collective redundancy consultation, is last month's most eye-catching
development. That affects only employers dismissing 20 or more employees at
one time. For those having to deal with the normal day to day management of
staff there is still plenty to digest, covering such matters as sickness,
age discrimination and the effect of vaping in the workplace.
Darryl Evans
T: +44 (0)7771 725341
E: dfe@evansemployment.co.uk
The limits affecting the calculation of statutory redundancy payments and
unfair dismissal compensation are set for their annual increases. For
dismissals where the effective date of termination falls on or after 6th
April 2015:
a week's pay (used in calculating both the basic award in unfair
dismissal cases and statutory redundancy payments) will be capped at £475
(up from £464) the maximum compensatory award for unfair dismissal will be £78,335
(instead of £76,564), although remember that since July 2013 there has also
been a separate cap of one year's pay on 'ordinary' unfair dismissal
compensatory awards
Please note also that:
as of 5 April 2015, statutory maternity, adoption, paternity,
additional paternity and shared parental pay will increase to £139.58 a week from 6 April 2015, the weekly rate of statutory sick pay will
increase to £88.45
The Advocate General of the European Court has given his opinion on the
meaning of 'establishment' for the purposes of determining when redundancy
consultation at a representative level is needed. By way of reminder, the
Advocate-General is an adviser to the Court so this is not a legal decision,
just a guiding opinion. The Court does not need to follow it, although it
normally does.
The case concerned the closure of Woolworth stores at which fewer than 20
employees worked. The obligation to consult representatives of affected
staff (usually referred to as collective consultation) arises if 20 or more
people are dismissed within a 90 days period 'at one establishment'. Across
all Woolworth stores clearly that threshold was exceeded. But if a single
store could be regarded an 'establishment' then for many employees
collective consultation was not required and they would not be entitled to
compensation when the employer did not undertake it.
The Advocate-General's view is that the word 'establishment' means the local
employment unit to which the workers made redundant are assigned to carry
out their duties. There is no need to aggregate all dismissals in all of an
employer's establishments to determine whether the threshold of 20 is met.
What constitutes an establishment in a given case requires a factual
assessment, but it could mean that in the Woolworths case each shop was
capable of being a separate establishment in which case no collective
consultation was required at shops with less than 20 redundancies. (USDAW
and another v WW Realisation 1 Ltd (in liquidation) and others (C-80/14),
Lyttle and others v Bluebird UK Bidco 2 Ltd (C-182/13) and Cañas v Nexea
Gestión Documental SA Fondo de Garantía Salarial (C-392/13).)
Bieber [not that one] and others v Teather Limited (in liquidation) (2014
EWHC 4205) is a stark reminder to lawyers and clients alike about taking
care in any settlement discussions.
Shortly before the trial in this case, the defendant sent a settlement offer
to the claimants setting out solely the sum to be paid to the claimants. The
claimants accepted by email and indicated that they would be circulating a
draft consent order. The defendant replied 'Noted, with thanks'. On receipt
of the draft consent order, the defendant sent a long-form settlement
agreement to the claimants which included, amongst other things, an
indemnity in the event of third party claims. The claimants refused to sign
it.
The judge found that objectively, and considering the whole course of
negotiations, the parties had intended to reach a final and binding
settlement on the exchange of emails, without the need to agree further
terms.
This situation could equally well arise in settlement discussions with an
employee who is in the process of leaving employment. If the financial offer
is not delivered by handing over the whole settlement agreement, it should
clearly be made 'subject to contract' or 'subject to the agreement and
execution of a formal settlement agreement'.
In Shrestha v Genesis Housing Association Ltd (2015 EWCA Civ 94), the Court
of Appeal held that an employee was fairly dismissed after an investigation
established that he had claimed expenses for mileage in excess of that
recommended for the relevant journeys by the AA.
The employee claimed that the employer should have investigated every
defence he offered to the list of journeys in respect of which he was
alleged to have over-claimed, including his explanations of road works, one
way systems and parking difficulties adding to journey times and distances.
However the Court of Appeal said that it was reasonable for the employer to
rely on its investigation into a few of the journeys, from which it was
clear that there was no justification for the employee's defences.
This case is a useful reminder for employers that 'reasonable' investigation
is required, not one which leaves no stone unturned.
Mr Williams, a senior employee at Leeds United Football Club, had been made
redundant and had just started serving 12 months' notice. The Club wanted,
however, to avoid the substantial costs of the notice period so it arranged
for private investigators to look back at his (and other departing
colleagues') old emails. They found one containing obscene and pornographic
material sent by Mr Williams to a junior female employee and two friends at
other football clubs. The Club dismissed him one week into his notice period
and refused to pay him the rest of his notice pay, some £200,000.
The High Court decided that the sending of the email, even though it was
five years earlier, was a breach of the duty of trust and confidence and
could have amounted to harassment of the female employee. The expiry of
such a long period did not make any difference to the Club's ability to rely
on it to support dismissal as it was not aware of the email until the
investigators found it. Neither did the fact that the employer's motive was
simply to avoid the large notice payment - a breach was a breach. (Williams
v Leeds United Football Club (2015 EWHC 376).)
In a previous Newsletter I commented on the courts' inclination to find ways
of stopping an employer from being able to make unilateral changes to
employees' contracts. Two further cases bear that out.
In Hart v St Mary's School (Colchester) Ltd (UKEAT/0305/14) the Employment
Appeals Tribunal (EAT) held that the school committed a repudiatory breach
of contract when it imposed a change to a teacher's working hours that
required her to spread them over five days instead of three. The school
relied on a contractual provision that the teacher had to work at such times
as necessary, in the reasonable opinion of the Head, for the proper
performance of her duties. A further clause stated that, for part-time
staff, working hours may be 'subject to variation, depending upon the
requirements of the school timetable'. The EAT considered that the variation
clause was not sufficiently clear or unambiguous to allow for unilateral
variation.
Similarly, in Norman and others v National Audit Office (UKEAT/0276/14) the
EAT again overruled an Employment Tribunal decision that the National Audit
Office was entitled to rely on a general right to vary clause in employee
contracts to reduce the employees' entitlements without their consent.
Harmonisation of terms of employment following a TUPE transfer is a common
situation and one which led to a claim for age discrimination in the case of
Braithwaite and others v HCL Insurance BPO Services Ltd (UKEAT/0152/14 and
UKEAT/0153/14).
The new employer was incurring substantial losses and sought to introduce
changes to employees' terms and conditions as a result of which they would
lose the contractual right to private health insurance, carer days and
enhanced redundancy pay and their working hours and annual leave would
change. This put workers in the age band 38-64 at a particular disadvantage
because it was they who had built up greater entitlements through longer
service.
A key question was whether this discriminatory effect could be justified
(the technical requirement being 'a proportionate means of achieving a
legitimate aim'). The Employment Tribunal accepted as a legitimate aim the
employer's intention to reduce staff costs to ensure the business's future
viability and to have in place market-competitive, non-discriminatory terms
and conditions. The Tribunal then considered the alternative options
available to the employer before concluding that none of them would have
achieved the necessary cost savings nor addressed the anomalies in terms and
conditions. In doing so it undertook a balancing exercise between the needs
of the employer and the discriminatory effect on the employees. The EAT
supported the tribunal's approach and on that basis the employer's actions
were objectively justified, so there was no unlawful discrimination.
In Land Registry v Houghton and others (UKEAT/0149/14) the EAT decided that
a bonus scheme that excluded employees who had received a sickness absence
warning during the relevant financial year amounted to disability
discrimination. The scheme resulted in unfavourable treatment arising from
disability as exclusion was automatic, even for disability-related absences.
As to whether the discrimination could be objectively justified, the EAT
thought not, pointing to the fact that managers had no discretion under the
scheme to waive absence warnings in contrast to their right to waive a
conduct warning. Another factor was that three of the claimants had improved
their absence records after receiving warnings, but that could not be taken
into account under the scheme.
The case is not, therefore, saying that all disability-related absences must
be discounted in such schemes. However, the inflexible nature of the scheme
as regards absences meant that the treatment of those absences for disabled
employees could not be justified.
I do not normally report Employment Tribunal cases because they are of no
binding effect, but I want to make an exception for Insley v Accent Catering
(ET/3200687/2014). The claim was brought by a school catering assistant who
complained that she had been constructively dismissed when she was invited
to a disciplinary hearing for her use of an e-cigarette in front of pupils.
Her claim was dismissed, but the Tribunal indicated that had they been
hearing an unfair dismissal claim, their decision might have been different,
as the smoking of e-cigarettes did not fall within the school's smoking
policy, nor within the legislation banning smoking in the workplace.
It is a good time to look at your non-smoking policy and decide how to
approach the issue of e-cigarettes.
In Rynda (UK) Ltd v Rhijnsburger (2015 EWCA Civ 75) the employee's role was
to manage Dutch properties in a fund to which her employer provided asset
management services. She had no other duties and was the only employee who
carried out this task. Rynda (UK) Ltd took over provision of these services
from her employer. Did she transfer under TUPE?
For that, under the service provision change rules in TUPE, she needed to be
assigned to an organised grouping of employees whose principal purpose was
the provision of the services. The Court of Appeal concluded that she was
as she was responsible for all the Dutch properties and so TUPE did apply to
transfer her employment. The fact that she had devoted time to other
properties in the past did not affect the analysis. Neither did the fact
that she was a single employee - she could be an organised grouping on her
own.
The Court of Appeal has no doubt delighted one Employment Judge by
supporting his decision in the Employment Tribunal's decision and reversing
the EAT's contrary view. The question was whether a director and
shareholder of a company who performed part-time work for a company (80% of
his working time, in fact) without pay for over three years was both an
employee and a worker. The Tribunal and the Court of Appeal (although not
the EAT) said yes.
There was a contract created between company and individual even though
nothing was expressly agreed about pay. The Tribunal could legitimately
imply a term that the individual would be paid a reasonable rate from a
reasonable starting date in order to give business reality to the
arrangements. (Stack v Ajar-Tec Ltd (2015) EWCA Civ 46.)
The Fit for Work advice service has now been launched in order to provide a
free quasi occupational health support service, mainly aimed at SMEs. It is
starting with the advice service, which is available for employers,
employees and GPs via its website (fitforwork.org)
and telephone (0800 032 6235).
In addition to the advice service, there will be a phased roll out of the
referral service over the next few months with full implementation planned
for the end of May 2015.
Referrals will be to an occupational health professional, usually by a GP,
but employers may be able to refer an employee if, after 4 weeks' absence,
they have not been referred by their GP. The OH advisor will then try to
agree a return to work plan with the employee and the employer. As is
generally the case for sickness absences, using the service proactively is
likely to be helpful, rather than waiting for the GP or the employee to make
the first move.
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