Proposed Changes to TUPE 2006

[Just 28 of 220 places left on the fourth and final London Employment Law MasterClass this coming Tuesday - see details]

According to an article in Personnel Today, the government's proposed changes to TUPE are now likely to be published next month and come into force in January 2014.

The proposed changes are expected to include:-

• repealing regulation 3(1)(b) (the 'service provision change' definition of a transfer)
• repealing regulations 10 and 11 (employee liability notification requirements)
• amending the meaning of 'economic, technical or organisational reasons entailing changes in the workforce'
• allowing TUPE consultation to satisfy collective redundancy consultation requirements
• allowing microbusinesses to inform and consult directly with employees (rather than electing employee representatives)
• closing a loophole relating to the transfer of pensions

I'll be going through these (at breakneck pace - no more than 10 minutes!) at my MasterClass.

Employee Shareholders

Thanks to Practical Law for giving permission to reproduce their website summary (follow them on Twitter)

On 15 August 2013, HMRC updated its Share and Assets Valuation Manual (SVM) to take account of the implementation of employee shareholder employment status on 1 September 2013. In order to implement employee shareholder status, employees must, in return for giving up certain statutory employment rights, receive at lease £2,000 of shares (valued on a restricted basis). Employee shareholder shares worth up to £50,000 at acquisition (valued on an unrestricted basis) will be free from capital gains tax on disposal.

The new section of the SVM confirms that it will be possible to apply to HMRC for a valuation check prior to employee shareholder shares being awarded. A new form VAL 232 has been created for this purpose (although this does not seem to be available on HMRC's website yet). The form will require applicants to state both the restricted and unrestricted market value (perhaps in a similar way to form VAL 231, which is used for EMI valuations).

Starting a Claim in the Employment Tribunal

I don't normally distribute this kind of thing, but Leigh Day have produced a first-rate guide toStarting a Claim in the Employment Tribunal which is well worth reading. It explains, very practically, how to start a claim, how to deal with fees, how the remission system works and how the costs regime operates. This will all be covered in my final Employment Law MasterClass (in London, on 3rd September 2013), along with a ton of other important changes to employment law.  Just 44 out of 220 places left now - don't miss out.

Meaning of Dismissal

Thanks to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary What is the difference between dismissal and mutually agreed termination? The EAT has given a good example on the facts in Francis v Pertemps Recruitment. In this case Mr Francis was employed by Pertemps, an agency, which placed him in work with a client whose identity was specified in the contract of employment. Subsequently that client no longer had need for the services of Mr Francis. Pertemps therefore offered Mr Francis the choice either of two weeks' notice plus redundancy pay or two weeks' notice with the agency looking out for fresh work with a view to him working for a new client. At first he chose the latter. But then he changed his mind and chose the former. The HR department wrote to him confirming his position was redundant and that he was to treat the letter as "formal notice of redundancy". Furthermore the letter told him that he had a right to appeal "against the decision to terminate your employment". Mr Francis did in fact appeal (although this was unsuccessful). When Mr Francis claimed unfair dismissal, Pertemps argued that there was no dismissal but that the employment had ended consensually, by mutual agreement. The employment tribunal accepted this argument but the EAT overturned it. The question of whether there was a dismissal for unfair dismissal purposes depended on whether the contract of employment had been terminated by the employer. All the language used was consistent with termination by the employer. The choices offered to Mr Francis both involved his being given notice. The employer's arguments that "notice" and "redundancy" were loose terms, not intended to have their formal meaning, and that the right to appeal was "meaningless", were rejected as unrealistic. The appeal was allowed and a finding that there had been a dismissal was substituted.

O'Brien v MOJ - Part-Time Judges

Thanks to Sheryn Omeri of Cloisters for preparing this case summary

How should the pension of fee paid (ie part-time) judicial officers be calculated?

According to a number of straightforward principles, holds the employment tribunal in the important case of O'Brien v MOJ.

The Supreme Court had previously held that Mr O'Brien, a retired Recorder, was entitled to a pension on terms equivalent to those applicable to a circuit judge, pursuant to the Part Time Workers (Prevention of Less Favourable Treatment) Regulations 2000. It remitted the case to the employment tribunal to determine the principles upon which the quantum of that pension entitlement must be calculated to ensure equivalence.

The tribunal held that Mr O'Brien was entitled to a pension calculated from the start of his service in 1978 even though this pre-dated the commencement of the Regulations, and to an award of compensation that included an 'interest-like sum' in addition to the payment of arrears of pension and lump sum. The multiplicand for the purposes of computing Mr O'Brien's pension entitlement was to be determined by multiplying the salary of a full-time circuit judge as at the date of Mr O'Brien's retirement by a factor which equalled the total number of days on which he sat throughout his career divided by 210, and dividing the result by the length of his service.

This decision will, subject to any appeal, bind the Ministry of Justice with respect to all part-time judges - including fee-paid employment tribunal judges, recorders, deputy district judges and deputy High Court judges.

Gross misconduct and mitigating circumstances

Thanks to Rosa Dickinson of St Philips Chambers for preparing this case summary

Does a finding of gross misconduct automatically mean that dismissal is within the band of reasonable responses?

No, according to the EAT in Brito-Babapulle v Ealing Hospital NHS Trust. The tribunal must go on to assess whether dismissal is a reasonable sanction having regard to the mitigating circumstances of the case.

The Claimant (a hospital consultant) had been treating private patients while on sick leave from the NHS, and for this reason the NHS dismissed her for gross misconduct. The Claimant appealed against the tribunal's decision that her dismissal was fair.

The EAT found that the the tribunal was entitled to conclude that it was reasonable for the employer to find the Claimant guilty of gross misconduct, but had erred in assuming that this inevitably meant that dismissal was within the band of reasonable responses. The case was remitted for the tribunal to consider whether it was reasonable in all of the circumstances to dismiss the Claimant for this gross misconduct.

Compensatory Award

Thanks to Joanna Cowie of SA Law for preparing this case summary

Could post termination conduct affect the assessment of a compensatory award for unfair dismissal? Yes, according to the EAT in Cumbria County Council v Bates.

The Claimant, a teacher, was found to have been unfairly dismissed. At the remedies hearing, the tribunal was made aware that the Claimant was facing criminal proceedings for assaulting a former pupil. The Respondent requested an adjournment until the outcome of those proceedings, on the grounds that they may affect the Claimant's future employment prospects and were therefore relevant in assessing future loss of earnings and pension loss. Rejecting the application and referring to the decision in Soros v Davidson, the tribunal refused to take into account post-dismissal conduct, citing it as irrelevant when assessing the compensatory award. The Council and School's governing body appealed.

Allowing the appeal, and remitting the case to a new tribunal for consideration, the EAT held that the tribunal had erred in its approach. Applying the principles in Software 2000 Ltd v Andrews, the EAT decided that the Claimant's post-termination conviction for assault and subsequent 6 week prison sentence may have affected his future employment prospects and, consequently, could have substantially reduced any compensatory award.

Acas Imitators

Acas is warning employers of companies claiming to be part of and/or acting on behalf of Acas. They typically offer initial advice, which they don't charge for, but then ask people to sign up to a long-term, often expensive contract for employment and/or health and safety advice

If you know of people who have signed up to such a contract, Acas suggests contacing the Office of Fair Trading.

More information from Acas here.

Confidential Information / Liability of New Employer

Thanks to Sarah Russell of Slater & Gordon for preparing this case summary

Is copying your employer's Sage database and using it in the employment of a competitor actionable as a breach of confidence?

Yes, if the information it contains is actually used, according to the Patents County Court in Pintorex Limited v Keyvanfar.

Mr Keyvanfar copied the Claimant's database and loaded it onto a laptop owned by his new employer, Parax Office Limited ('Parax'). Mr Keyvanfar then used the pricing information it contained to approach two of the Claimant's clients, and undercut the Claimant's prices.

Parax was held to be liable for the breaches of confidence by Mr Keyvanfar, including those pre-dating Mr Keyvanfar's employment, on the basis that he was acting to further Parax's interests as Parax's agent, and that Parax had sufficient knowledge of what was going on to be jointly liable.

The Third Defendant, the sole Director of Parax, could also have been jointly liable for the breaches had he had a 'common design' to commit them, or 'dishonestly' ignored what was going on, but it was held he did not know and so could not be jointly liable.

Tribunal Fees

On 9th July 2013, the Court of Session refused to grant an interim interdict in the judicial review application brought by Fox & Partners against the introduction of tribunal fees.

The full judgment of Lord Bannatyne, setting out his reasons for refusing to grant the interim interdict, is now available. Paragraph 35 is interesting, setting out the government's figures about the expected income and costs of running the fees regime.

The full judicial review hearing is expected to be heard in October, as is the judicial review brought in England by Unison.

[I'll be going through the fee regime in my final MasterClass in London on 3rd September.  Only 60 places left in the room...]

Termination Payments

The Office of Tax Simplification has produced an interim report which, amongst other things, considers section 401 of the Income Tax (Earnings and Pensions Act) 2003, which provides that termination payments are subject to tax insofar as they exceed £30,000.

The relevant sections of the report are section 7 (p57) and Annexe G (p105). Some of the points made are:-

• the distinction in tax treatment is unfair with regard to PILONs, where properly advised employers are better able to avoid paying tax
• there is widespread confusion over the different treatment of (a) income tax and (b) national insurance payments on termination payments
• the government should consider increasing the £30,000 threshhold (which, adjusted for inflation, would be £71,000 today).

Subject Access Requests

The Information Commissioner has published a Code of Practice on how to deal with subject access requests for personal information from individuals under the Data Protection Act 1988. It provides guidance for data controllers on how to respond to subject access requests, explains how to deal with requests involving other peoples' information, and gives practical examples of requests and various exemptions.

EAT Practice Direction 2013

Last month, we sent out details of the statutory instrument amending the EAT Rules. An amended version of theRules is now available.

The EAT has now updated its Practice Direction, amended to cover fees and other matters. It is here: EAT Practice Direction 2013.

Disabiliy Discrimination: Approach to Reasonable Adjustments for Absence

Thanks to Paul Smith of Broadway House Chambers for preparing this case summary

In the context of making reasonable adjustments, what approach should be taken by employers in respect of employees whose disability interacts with other ailments?

There are two alternatives, says the EAT in HMRC Commissioners v Whiteley.

In this case the employee's disability was asthma. Her condition was exacerbated by respiratory infections which resulted in some absences from work. An employee being absent through illness for 10 days or more in a year would trigger a policy whereby the employer would consider subjecting the employee to disciplinary action. The employee complained that this policy put her at a disadvantage and that the employer had, accordingly, failed to make reasonable adjustments.

Mitting J (presiding) set out two possible avenues an employer could take when dealing with this type of situation. Firstly, they should consider, with expert evidence, the periods of absence and attempt to analyse with precision what was attributable to disability and what was not. Alternatively, they should ask, and conclude with proper information, what sort of periods of absence would the employee reasonably be expected to have over the course of an average year due to her disability.

The appeal itself concerned the employment tribunal's misinterpretation of the expert evidence and the matter was remitted to be heard afresh, but the guidance provided by the EAT is of wider application and should prove valuable to employers facing this difficult problem.

Unfair Dismissal Compensatory Award

The 'made' version of The Unfair Dismissal (Variation of the Limit of Compensatory Award) Order 2013 has been published.

It limits the compensatory award in most types of unfair dismissal cases at 52 weeks' pay or £74,200, whichever is the lower. The new limit applies to dismissals where the effective date of termination falls after Monday 29th July 2013.

Implied Terms: custom and practice

Thanks to Jahad Rahman of Rahman Lowe Solicitors for preparing this case summary

Can previous enhanced redundancy payments become contractually binding through custom and practice?

Possibly, says the Court of Appeal in Shumba & others v Park Cakes Ltd.

The Claimants, who had been subject to a TUPE transfer, were dismissed for redundancy. They claimed that they were unfairly dismissed and that they were entitled to enhanced redundancy pay on the basis that enhanced payments had been made over the years before the TUPE transfer. It was initially claimed that there was an express contractual entitlement to the enhanced benefits but that claim was not pursued and the entitlement was said to arise as a matter of custom and practice. The employment tribunal upheld the claims of unfair dismissal but the claims in relation to the redundancy payments were dismissed. Notwithstanding evidence in relation to past payments, the tribunal stated that it was "unable to infer that the enhanced terms were paid without exception".

The Court of Appeal upheld the decision of the EAT and held that the employment tribunal's failure to find that the enhanced redundancy benefits had been paid in the past on at least seven occasions was a material flaw in its reasoning. Accordingly, the case had to be remitted for re-hearing by a different tribunal.

At paragraph 36 of the Judgment, the Court of Appeal provides helpful guidance on when contractual rights concerning enhanced redundancy benefits may arise through custom and practice.

Vicarious Liability

Thanks to Miranda de Savorgnani of Outer Temple Chambers for preparing this case summary

Can a vicarious liability claim be struck out despite the fact-sensitive nature of such claims?

Emphatically yes, according to the Court of Appeal in Allen v Hampshire Police.

A police officer's wife brought a claim against the Constabulary, alleging her husband's ex-girlfriend (a police officer) had waged a campaign of harassment against her spanning four years. She claimed that the attacks were carried out in the purported performance of the officer's police function.

She appealed against strike out arguing that vicarious liability claims must be determined on the facts.

Gross LJ recalled that there must be a sufficiently 'close connection' between the relationship and the abuse, such that it created or significantly enhanced the risk that the victim would suffer the abuse.

Although vicarious liability claims are fact-sensitive and normally do not lend themselves to determination at a preliminary stage, where the facts alleged, taken at their highest did not reveal any, let alone close, connection between the tort and the tortfeasor's position as a police officer, there was a strong public interest in disposing of the claim as soon as possible.

EAT Judge's Observations on Employment Judges Sitting Alone

Thanks to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary

How should judges sitting alone approach unfair dismissal cases?

HHJ McMullen QC (sitting alone in the EAT) considered this question in Mitchell v St Josephs School.  He noted the transition from the "industrial jury" to judges sitting alone in unfair dismissal cases. But, he said the law is the same. In applying it, he suggested the role of a judge sitting alone is akin to a judicial review of the employer's procedure and decision.

On the facts of the case, the school bursar had failed to disclose the parlous state of the school's finances to the Board of Governors.

The EAT agreed with the employment tribunal that his dismissal was within the band of reasonable responses and therefore fair. Nor could the position be saved by the fact that the bursar had disclosed the state of affairs to two members of the Board. Applying the company law on attribution in Meridian Global Funds Management Asia Limited v Securities Commission [1995] 2 AC 500 and Orr v Milton Keynes Council, this did not mean the Board itself had knowledge of the finances.

In the appeal it was suggested that the Employment Judge had nonetheless adopted a subjective approach as to whether the dismissal was fair. The Judge's language, in using the first person singular, had laid himself open to this suggestion.

In the end it was considered, however, that the Judge directed himself correctly on the authorities and applied the law to the facts accordingly.

Compensation for Death in Service Benefits

Thanks to Sian McKinley of Cloisters for preparing this case summary Can the estate of an employee who was dismissed, and died shortly after, bring a claim for the loss of a death in service benefit which he had enjoyed whilst in employment? Yes, says the Court of Appeal in British Airways plc v Fox. Gary Fox died just days after he was dismissed by his employer, BA. It was said that his dismissal was unfair and/or discriminatory. While in employment he had been a member of BA’s death-in-service scheme under which, if he died while in employment, payment would be made to beneficiaries identified by the trustees of the scheme of a sum of about £85,000. Because he had been dismissed by the time he died, no such payment was made. The question was whether, in these circumstances, a claim for the full £85,000 could be maintained by Mr Fox’s estate. BA contended that Mr Fox could never have received the £85,000 had he lived, so he could never have been able to claim for its loss. The loss was suffered not by him but by the putative beneficiaries. Accordingly, the estate, standing in his shoes, had no claim to that sum either. The Court of Appeal disagreed. Underhill LJ remarked that employment law would be seriously defective if an employee were unable to claim compensation merely because the subject matter of a benefit was payable to others. The benefits in question formed part of the employee’s remuneration and its loss was a real pecuniary loss suffered by him. Normally, where a benefit such as life assurance has been lost, the appropriate measure of damage would be the cost of securing the equivalent benefit in the market. However, in these unusual circumstances, that approach was not appropriate. In light of the known fact of Mr Fox’s death so soon after dismissal, the value to him of the lost benefit was the full £85,000.

Disability Discrimination/Costs

Thanks to Vanessa James of SA Law for preparing this case summary

A solid decision in the case of Sud v London Borough of Ealing, demonstrates the Court of Appeal's commitment to supporting lower tribunals in strident costs awards where the decision to order the Claimant to pay 50% of the Respondent's costs was upheld.

Also supported was the EAT's right to decide not to remit a case back to an employment tribunal where they had found they could deal with a finding around the nature of the disability effectively and efficiently given the papers before them. Although the Claimant had pleaded her disability was a physical impairment, the tribunal had raised the issue of whether it was in fact a mental impairment and in spite of this being an 'imperfect' decision at first instance the EAT were able to resolve it adequately without the need to remit.

Adjournments on Medical Grounds

Thanks to Neil Addison of New Bailey Chambers for preparing this case summary

Is a tribunal justified in striking out a case where a Claimant is ill due to stress allegedly caused by the employer's bullying.

Yes, says the Court of Appeal in Riley v CPS. In this case the Claimant, a former Crown Prosecutor, had brought various allegations of bullying against fellow employees and was ultimately dismissed for making false allegations. Ultimately she brought a total of 3 separate employment tribunal proceedings against the CPS alleging, amongst other things, disability discrimination.

In August 2010 a 4 week trial was was scheduled for May 2011 but only 7 days before the scheduled trial the Claimant informed the employment tribunal that she was too ill to attend the trial. Her illness did not however prevent her simultaneously issuing a 4th employment tribunal claim. Medical evidence was given to the Employment Judge that the doctors were unable to identify a date upon which the Claimant was likely to be ready to commence a trial in part because she was unlikely to recover from her depression until after her trial. It was as the Judge said a "chicken and egg" situation.

The Judge decided that in the circumstances in particular the increasing delay and the effect that would have on the memory of witnesses a fair trial was no longer possible and so the case had to be struck out. The EAT agreed as has the Court of Appeal.

The Court noted that Article 6 of the European Convention on Human Rights gave both parties a right to a fair trial within a reasonable time. It was wrong to expect tribunals to adjourn cases merely in the hope that a Claimant's medical condition will improve. If doctors could not give any realistic prognosis of sufficient improvement within a reasonable time and the case itself dealt with matters that were already in the distant past, striking out must be an option available to tribunals.

As an aside, 3 days before the Court of Appeal hearing the Claimant applied for that case to be adjourned on health grounds and also the fact that she wanted to change lawyers. The Court refused that adjournment also, the case had to be dealt with.