Friday 31 May 2013

Enterprise and Regulatory Reform Act Commencement Dates - 2/3

We previously told you about the commencement dates forwhistleblowing changes and the introduction of tribunal fees.  Here's the next in our series of emails about commencement dates.

The provisions relating to financial penalties on employerscome into force in respect of any tribunal claim presented on or after 25th October 2013.  Here's what they say...

Where an employment tribunal concludes that an employer has breached any worker's rights (note: worker, not employee), and considers that the breach has any "aggravating factor", then it may order the employer to pay a penalty to the Secretary of State of between £100 and £5,000.  Like a parking fine, the penalty is halved if paid within 21 days of the tribunal's decision being sent to the employer.

There are complicated rules if more than one claim is involved, and considerable debate over what an "aggravating factor" is.  These issues, and others, will be discussed during session 2 of my forthcoming Employment Law MasterClass.  Come along - it's a very full day and shouldn't be missed.

Thursday 30 May 2013

Compulsory Retirement Age: Seldon

Thanks to PLC Employment for sending me a copy of the employment tribunal's written reasons
Remember Mr Seldon?  He was a partner with Clarkson Wright & Jakes, a well-respected firm of solicitors.  He brought a claim of age discrimination against them when he was forced to retire at age 65 under the partnership's mandatory rules.

Last year, the Supreme Court remitted his claim back to the employment tribunal, to consider a number of issues relating to justification (the main one being whether 65 was an appropriate age for mandatory retirment, or whether another age such as 68 or 70 should have been adopted).

The employment tribunal has, this week, found in favour of Clarkson Wright & Jakes.  In its written reasons, the tribunal held that retention and planning were legitimate aims, that collegiality was also (with some caveats) a legitimate aim, and that a mandatory retirement age achieved these three aims.  Importantly, it held that a mandatory retirement of 65 was a proportionate means of achieving those aims (see paragraphs 79-81 of the reasons).  Accordingly Mr Seldon lost.

Note that this is not a panacea for companies to justify a mandatory retirement age of 65.  First, justification will always depend on fact-sensitive matters relating to the particular employer.  Second, this case was decided based on social policy and demographics in 2006, before the abolition of the national retirement age.  Societal norms about people working beyond 65 have moved on in the last seven years, and the tribunal specifically stated that the case might be decided differently on facts arising today (para 92). 

Wednesday 29 May 2013

Employment Tribunal Fees

In a letter to stakeholders issued this morning, HM Courts & Tribunal Service have announced that the date for the implementation of fees into the employment tribunals (ET) and Employment Appeal Tribunal (EAT) will be Monday 29th July 2013.

Subject to the necessary Parliamentary approvals, from this date, all ET claims and EAT appeals from the employment tribunals presented to HM Courts & Tribunals Service will be liable under the Fees Order and supporting rules to pay a fee or provide an application for fee remission against that fee under the HM Courts & Tribunals Service remissions scheme.

This is an important topic, and if you're attending the Employment Law MasterClasses in July, I'll be explaining how the new fee system works and how the complicated fee remission rules are likely to apply.

Tuesday 28 May 2013

Enterprise and Regulatory Reform Act Commencement Dates - 1/3

On 25th June 2013, most of the provisions relating to whistleblowing come into force (in particular, sections 17, 18 and 20).  They are important, because if the principal reason for a dismissal is that a worker made a protected disclosure, then the normal two year qualifying period and the cap on the compensatory award are circumvented.  These changes will be discussed during session 3 of my forthcoming Employment Law MasterClass, being held in Edinburgh, Cardiff, Birmingham, Manchester and London during July 2013.

First, they confine whistleblowing protection to those who make disclosures which, in "the reasonable belief of the worker making the disclosure, is made in the public interest".  This effectively reverses the ruling in Parkins v Sodexho and will normally prevent a disclosure alleging a breach of the employee's contract of employment attracting whistleblowing protection. 'Public interest' is not defined, but it probably means something that affects a class of people and not just one individual.  Bear in mind that the disclosure doesn't have to be in the public interest; it is sufficient if the worker reasonably believes it to be in the public interest - a subtle but important difference.

Second, they expand whistleblowing protection to those who make disclosures in bad faith (ie motivated primarily by money or spite, rather than a desire to put right a wrong).  However, if the tribunal thinks that the disclosure was made in bad faith, then it will have the power to reduce compensation by up to 25%.

Third, they tweak the definition of 'worker' (for the purpose of whistleblowing only).

Also included in the Enterprise and Regulatory Reform Act 2013, but not coming into force on that date, is section 19 (which imposes vicarious liability on an employer for detriments, on grounds that a worker made a protected disclosure, by other workers on that first worker).  This reverses a loophole in the original drafting of the whistleblowing legislation, and brings vicarious liability for whistleblowing into line with the position under the Equality Act 2010.

Friday 24 May 2013

Disclosure and Barring Service: New Update Service

The Disclosure and Barring Service (which replaced the Criminal Records Bureau at the end of last year) is launching its new Update Service on 17th June 2013.

Previously called a 'Portable DBS/CRB check', job applicants will pay a fee of £13 a year, in exchange for which prospective employers can carry out a free 'update' search to check their DBS certificates remain valid / up to date.  This is cheaper (and much quicker) for employers, but of course shunts the cost of DBS checks onto the employee.

There's lots of guidance, and even some powerpoint slides, on theDBS website.  Alternatively, I'll be talking about DBS checks at my Employment Law MasterClass which is taking place throughout the UK during July.

Thursday 23 May 2013

Victimisation and Judicial Immunity

Jahad Rahman
Thanks to Jahad Rahman of Rahman Lowe Solicitors for preparing this case summary.
Did a decision by the Chief Adjudicator of the Traffic Parking Tribunal not to allocate cases to a Parking Adjudicator amount to a detriment for whistleblowing?  No, says the EAT in the case ofEngel v PATROL.

Mr Engel was a Parking Adjudicator authorised to hear appeals against decisions of local enforcement authorities. The Chief Adjudicator decided not to allocate cases to Mr Engel because of concerns she had about his conduct of two hearings in 2011.

Mr Engel complained about the actions of the Chief Adjudicator and claimed that he was subjected to a detriment by reason of the fact that he had made certain public interest disclosures about the Chief Adjudicator to the lead authority.

The EAT dismissed Mr Engel's appeal and held that the Chief Adjudicator's decision not to allocate cases could not amount to a detriment for making a protected disclosure because it was made by her in the exercise of judicial functions in her capacity as a judicial office holder, and was therefore, covered by judicial immunity.

The EAT stated that a decision not to allocate cases to a judge is sometimes taken pending the outcome of a disciplinary complaint. In the case of a complaint which might call into question a judge's "suitability to remain in office or to continue to try cases of a particular class, the decision would normally be taken to maintain public confidence in the administration of justice and to avoid any litigant whose case was determined by that judge having cause to challenge his judgment on the ground that he had heard the case. Non-allocation, would in those circumstances, clearly be a decision taken in the exercise of judicial functions".

Wednesday 22 May 2013

Supreme Court: Breach of Confidentiality

Michael Reed
Thanks to Michael Reed, Employment Legal Officer at the Free Representation Unit, for preparing this case summary.
Can an employee be liable for breach of confidence if they start a new business with others who, without the first employee knowing about it, misuse confidential information?  No, said the Supreme Court in Vestergaard Frandsen v Bestnet Europe Ltd.

Mrs Sig worked for Vestergaard (producer of mosquito nets). She left, with Mr Larsen and Dr Skovmand, to form Intection.

Intection's product design was based on confidential information Dr Skovmand took from Vestergaard. Mrs Sig did not know this until proceedings began.  The Supreme Court considered two issues:

  • Contract: The express confidentiality term in Mrs Sig's contract did not apply. It dealt with knowledge gained by her during employment, not knowledge gained by others. Nor could a term be implied to make her liable for assisting in the misuse of confidential information when she was unaware of the information or its misuse.
  • Common Design: Individuals could be liable for breach of confidence through a common design. Mr Larsen was liable on that basis; he knew Dr Skovmand was misusing confidential information and helped him. But involvement in a common design required knowledge that confidential information was being misused. Mrs Sig did not know.

The Supreme Court emphasised the general need to balance protection of intellectual property with free competition.

Monday 20 May 2013


Thanks to Keira Gore of Outer Temple Chambers for preparing this case summary.
Where a claimant alleges misconduct against a respondent and its staff, do those allegations render it impractical for the respondent to re-engage the claimant in a different location to that where he previously worked? Not necessarily, said the EAT inOasis Community Learning v Wolff.

Mr Wolff was employed as a teacher by Oasis Community Learning, which is an institution responsible for schools in different parts of the country. In correspondence connected with his claim Mr Wolff made allegations of misconduct against Oasis as an institution and members of its HR Department, including that they had fabricated and suppressed evidence. The EAT held that in the particular circumstances of the case, the employment tribunal had not erred in making an order for re-engagement at a different school in a different part of the country, against Oasis' submissions that any re-engagement was impractical. The EAT said: "the fact that an employee has made serious allegations against colleagues or managers at one workplace will not have such impact on the relationship which he will have with colleagues and managers at a different workplace".

Thursday 16 May 2013

TUPE and Outstanding Disciplinary Appeals

Thanks to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary.
Did a former employee transfer under TUPE if, at the time of transfer, an appeal against her prior dismissal was pending?

No, says the EAT, on the facts in in Bangura v Southern Cross Healthcare.

The employee worked in a care home owned by Southern Cross Healthcare Group plc. She was summarily dismissed on ground of misconduct about six weeks before the care home was transferred to Four Seasons Healthcare. At the time of transfer she had an appeal pending against her dismissal, but it had not by then (or at any time since then) been determined by Southern Cross.

An employment tribunal held that the TUPE Regulations did not transfer liability to Four Seasons since the employee was not employed by the transferor immediately before the transfer, as is required by Regulation 4(3) of TUPE.

She appealed on the ground that this seemed inconsistent with the earlier decision of the EAT in G4S Justice Services (UK) Limited v Anstey [2006] IRLR 588. In that case an employee in a similar situation, whose appeal against dismissal was successful, transferred to the transferee under TUPE on the basis that the original dismissal, by virtue of the successful appeal, had been overturned.

However, in Bangura, the EAT distinguished G4S. In G4S the appeal had been successful and the dismissal negatived. In the absence of a successful appeal, the normal principle applies, namely that a summary dismissal takes effect immediately and terminates the employment at that time. As the dismissal had nothing to do with the transfer, the employee was therefore not employed or deemed to be employed in the undertaking immediately before its transfer.

Wednesday 15 May 2013

Supreme Court: Methodist Minister is not an Employee

Thanks to Naomi Cunningham of Outer Temple Chambers for preparing this case summary.
Was a methodist minister an employee for the purposes of unfair dismissal protection?

No, says the Supreme Court (Baroness Hale dissenting), allowing the appeal and restoring the judgment of the ET in President of theMethodist Conference v Preston.

The minister carried out her functions under an agreement that entitled her to a stipend, accommodation and a pension; she paid tax under Schedule E, and was entitled to holiday and sick pay and subject to the possibility of disciplinary action. But the ET had felt bound by President of the Methodist Conference v Parfitt [1984] ICR 176 to hold that the spiritual character of the arrangement meant that there was no intention to create legal relations, so no contract.

The EAT and the CA had disagreed, holding that held that the reasoning of the CA in Parfitt could not survive the majority speeches in a more recent HL case, Percy v Board of National Mission of the Church of Scotland [2006] I.C.R. 134.

The majority of the Supreme Court holds that although there is no presumption against an intention to create legal relations in the appointment of a minister of religion, a consideration of the detailed internal arrangements of the Methodist Church leads to the conclusion that in this case there was no such intention; so no contract.

The gist of Baroness Hale’s succinct and pragmatic dissent: ‘it quacks like a duck and swims like a duck.’

Restrictive Covenants

Thanks to Paul Smith of Broadway House Chambers for preparing this case summary.
No principle of law here, but an interesting example of a restrictive covenant case - Romero Insurance Brokers v Templeton in the High Court.

The employee's contract included a clause that for a period of 12 months following termination he would not procure orders from, or do business with, a client of the employer with whom he had dealt within the last 6 months of his employment. Sir Raymond Jack reviewed the case law relating to business interests and what might be reasonably necessary to protect them. On the facts, he concluded that the covenant was reasonably necessary in the context of the insurance industry, where renewals usually take place annually, and granted Romero an injunction to enforce it.

The decision to grant an injunction was based, in part, upon the failure of the employee's contention that he had been constructively dismissed. Whilst the judgment does not expressly state that an employer who has repudiated an employee's contract will not be able to enforce restrictive covenants contained within it, it hints that this may be the case. The decision therefore adds flavour to this ongoing debate (read the Supreme Court judgment of Lord Wilson in Societe Generale v Geys, at paragraph 68)

Tuesday 14 May 2013

Collective Consultation: Compensation for Minor Breach

Thanks to Paul Smith of Broadway House Chambers for preparing this case summary.
When assessing protective awards, should an Employment Tribunal's focus be upon compensating the employee or punishing the employer?

Punishing the employer, says the EAT in Shields Automotive v Langdon & Brolly.

In this case the employer had failed to comply with the duty to inform and consult transferring employees (regs. 13 and 14 of TUPE). An election was called at 2pm with voting to be completed by 5pm the same day. Mr Brolly would not be able to vote as it was his day off. No explanation was given for the haste and Mr Langdon chose not to exercise his vote in protest. The election produced a tie for second place and the employer intervened by selecting one of the tied candidates themselves.

The EAT reiterated that in such circumstances an employer's duty was to take reasonable steps to ensure that the election was fair, but that to satisfy this test an employer must ensure that employees have a proper opportunity to exercise their right to vote. 

Langstaff P stated that the purpose of the award is to ensure that employers generally are mindful of their obligations to consult and inform, particularly in circumstances in which there will inevitably be pressures often of time upon the employer to do the opposite.  However, where the employer has taken steps (albeit technically inadequate) to comply with the duty to consult, the punishment should not be as great as if the employer has taken no steps at all.  Accordingly the starting point will normally be less than the maximum of 13 weeks' pay.

Messrs Langdon and Brolly were awarded 2 and 3 weeks' pay respectively (the latter's award was reduced from 7 weeks' pay on account of it being manifestly excessive)

TUPE Consultation by Insolvent Companies

Thanks to Laura Samuel of Berrymans Lace Mawer for preparing this case summary
Is it reasonable to expect an insolvent employer to continue to trade for 90 days, so that it can inform and consult in accordance with its obligations under s.188 TULCRA 1992?  No, says the Employment Appeal Tribunal in AEI Cables v GMB.
AEI, a manufacturer of copper wiring, had suffered financial difficulty as a result of a steep increase in the price of copper. It received advice from its accountants that, unless it reduced costs, there was a risk of the company trading whilst insolvent. The consequences of trading whilst insolvent are that the directors could incur personal liability for obligations assumed, and may also incur criminal liability for fraudulent trading. Following an unsuccessful request for an overdraft, the directors made 124 employees redundant with immediate effect.
The workers successfully claimed in the Employment Tribunal that there had been a breach of the duty to consult under s.188 TULCRA. The employment tribunal made 90 day protective awards to each employee under s.189 TULRCA.
On appeal to the EAT, the decision to make 90 day awards was overturned and 60 day awards were made instead. In explaining its decision, the EAT stressed that the purpose of making a protective award is penal, not compensatory. It is designed to encourage employers to comply with their obligation to consult. The ET was obliged to take into account mitigating factors, and should have asked the important question: “why did the respondent act as it did?”  Had the ET asked this question, it would have seen that the company could not trade lawfully following the advice it received from its accountants. In those circumstances, it was wrong for the ET to anticipate that a 90 day consultation could have taken place.
On the basis that AEI’s failure to consult was complete, but that “some consultation could clearly have taken place” in the limited time available, the EAT decided that an order for 60 days was appropriate.

Friday 10 May 2013

Acas Code of Practice and SOSR Dismissals

Thanks to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary.
Does the increase in compensation due to a breach of the ACAS Code of Practice apply to "some other substantial reason" dismissals?

Yes, says the EAT, on the facts in Lund v St Edmunds School.

Mr Lund had difficulties with his work, in particular, a frustration with the school's computer equipment. He alienated his colleagues, affecting morale. Ultimately he was dismissed as the school stated it had lost confidence in him. The employment tribunal found his dismissal was for "some other substantial reason", but procedurally unfair because he had no warning of the dismissal meeting and no opportunity to appeal. His dismissal was also substantively unfair because no one had attempted to deal with his concerns about the computer system before, as the tribunal put it, "attitudes hardened on both sides".

The tribunal awarded compensation, reducing it on ground of contributory fault. But the tribunal made no uplift for breach of the ACAS Code of Practice pursuant to Section 207A of the Trade Union and Labour Relations (Consolidation) Act 1992. It considered that the Code of Practice was "silent" as to whether it applies to "some other substantial reason" dismissals. Mr Lund appealed on this point.

The EAT held the tribunal was wrong. The mere fact that the employee was dismissed not for a reason relating to his conduct, but for "some other substantial reason", did not mean that the employee's claim did not concern a matter to which the ACAS code applied. His claim concerned conduct on his part which led his employers to consider whether he should be dismissed, even if it was not his conduct, but the effect of his conduct on others, which was the ultimate reason for dismissal. Nor was it correct to decline to apply the uplift simply because compensation had been reduced on ground of contributory fault. Mr Lund may have contributed to his dismissal but he had done nothing to contribute to the school's failure to act in accordance with the Code. To deny him an uplift on what remained of his compensatory award would have amounted to him being penalised twice over.

Wednesday 8 May 2013

Queen's Speech: Employment Law Proposals

Thanks to Laurie Anstis of Boyes Turner for giving me permission to reproduce hisblogpost.
The government has just issued its background briefing on the 2013 Queen’s Speech.
Of interest to employment lawyers and HR managers are:
1 The National Insurance Contributions Bill, which will introduce an “Employment Allowance”, add a general anti-avoidance rule for NICs, restrict the use of offshore payroll companies as intermediaries and remove the presumption of self-employment for LLP members.
2 The Deregulation Bill, which will repeal the employment tribunal’s power to make wider recommendations in discrimination cases and make changes to encourage the use of apprenticeships.
3 The Immigration Bill, which amongst other things threatens tougher penalties for employers who employ workers who do not have the right to work in the UK.
There are also separate provisions for changes to teachers’ pay.
This looks quiet compared with recent years, but there are still many changes in the pipeline (such as fees, new tribunal rules and changes to TUPE) which do not require primary legislation and so are not featured in the Queen’s Speech.

Enterprise and Regulatory Reform Act

The final text of the Enterprise and Regulatory Reform Act 2013 has been published, coming in at a mere 292 pages.

Sections 7-24, and Schedule 2, are the ones which are relevant to employment practitioners.

Friday 3 May 2013

Victiminsation after end of employment

[Thanks to Daniel Tivadar of 3 Hare Court for preparing this case summary]

Can a claim be brought for post-employment victimisation under the Equality Act 2010?

Yes, says the EAT (Langstaff P) in Onu v Akwiku, disagreeing with the decision in Rowstock Ltd v Jessemy handed down by the EAT less than two months ago.

The Claimant was a domestic servant who brought a claim against her previous employers for, amongst other things, victimisation after she had left employment. The Employment Tribunal held that victimisation was not made out on the facts. The Claimant appealed. The Respondent raised the new argument that post-employment victimisation claims were precluded by virtue of s. 108(7) of the Equality Act.

The EAT held that construction of the Act was to be approached in two stages: first, the meaning of the Act was to be ascertained as if it was a purely domestic statute. If the result of the "domestic construction"? was contrary to the requirements of the Equal Treatment Directive, then the second stage was to consider whether the Act could be interpreted in accordance with the UK's obligations under the Directive.

The EAT considered that the "domestic construction" of the Equality Act permitted employees to bring claims for acts of victimisation that took place after their employment had ended. It thought that the contrary decision of Rowstock Ltd v Jessemy had been wrongly decided. Although this meant that the second stage of construction was not reached, the EAT nonetheless recorded that the Directive further strengthened its conclusions.

As there are now two inconsistent EAT decisions, permission to appeal to the Court of Appeal was granted (as well as in the linked appeal of Taiwo v Olaigbe).               

Thursday 2 May 2013

CJEU: States cannot impose language of employment contracts

[Thanks to Jonathan Moffat of Outer Temple Chambers for preparing this case summary]

Does Article 45 TFEU (freedom of movement for workers) preclude legislation of a federated entity of a Member State which requires all employers whose established place of business is located in that entity's territory to draft cross-border employment contracts exclusively in that entity's official language failing which they are to be declared null and void?

Yes, held the CJEU in Anton Las v PSA Antwerp NV, on proportionality grounds.

The employee asserted that as the relevant contract with the employer was drafted in English rather than Dutch it should be deemed null and void, in which case the parties were not bound by the term concerning severance payments and that he was entitled to greater compensation on his dismissal. The employer contended that the relevant legislation infringed Article 45 TFEU and that the contract should be respected.

The CJEU held that Belgium's three objectives, the first of which was to promote and encourage the use of Dutch, constituted legitimate interests which, in principle, justified a restriction on Article 45 TFEU. However, the relevant legislation was not proportionate. Legislation which also permitted the drafting of an authentic version of such contracts in a language known to all parties concerned was less prejudicial to free movement while being appropriate to secure the pursued objectives.        

Continuity of Employment

[Thanks to Keira Gore of Outer Temple Chambers for preparing this case summary]

Does continuity of employment start from the date upon which an employee undertakes activities for an employer or, where later, the date upon which the employee's work under the contract of employment begins?

The latter, said the EAT in Koenig v The Mind Gym. Langstaff P (sitting alone) held that for the purposes of calculating continuity of employment, work outside a contract of employment cannot count. However, determining what work falls under a contract of employment is a matter of fact and degree

In that case, the Claimant was dismissed by the Respondent on 29 September 2010. Her written contract of employment provided that she had started work on 1 October 2009, which meant that she lacked sufficient continuity of service to bring an unfair dismissal claim. She appealed to the EAT on the basis that she had sufficient continuity of service by virtue of the fact that she had attended a meeting with a client of the Respondent on 29 September 2009 which should have been regarded as work under her contract of employment

The EAT dismissed the appeal, holding that the employment tribunal was entitled to conclude that there was no contract of employment operating on the 29 September 2009 because the Claimant was not obliged to attend the client meeting, she was not there in a capacity as an employee of the Respondent, she was not paid for her attendance, and she went to the meeting entirely of her own choice.                      

Wednesday 1 May 2013

Employee Ownership

[Thanks to IDS for this information]

As part of its drive to encourage employee ownership (different from employee shareholder status), the Department for Business, Innovation and Skills has published draft Model Documentation for an Employee Owned company.

Separately, BIS has announced forthcoming draft Regulations to make it simple(r) for companies to buy back shares from employee owners, with the proposals including that companies be able to pay for the share buy-back by instalments. Scroll about halfway down the page for the detail.