Employee Shareholders - Commencement Date

Regulation 2 of The Growth and Infrastructure Act 2013 (Commencement No. 3 and Savings) Order 2013 has been made, providing that the new section 205A of the Employment Rights Act 1996 on employee shareholders comes into force on 1st September 2013.

This section creates a new type of employment status, whereby employees give a bundle of employment rights (most importantly, most unfair dismissal claims and statutory redundancy payments) in exchange for an award of shares worth at least £2,000.  There are several safeguards, including a right to a statement detailing the shares, an requirement for the employee to take legal advice, and a 7-day cooling off period.

The law is complex and important, and has been one of the most vibrant topics in my MasterClasses over the last two weeks (seethis week's testimonials).  Just London and Manchester to go now (more details).

Sickness Absence and Holiday Pay

Thanks to Rad Kohanzad of Serjeants’ Inn Chambers for preparing this case summary

Can additional annual leave be carried forward in the absence of an agreement between the parties?

The EAT in Sood Enterprises v Healy said that it cannot.

Mr Healy was off work sick for a year and a half when he resigned. The EAT held that unlike 'ordinary' annual leave, provided for by Regulation 13 Working Time Regulations 1998, additional annual leave, provided for by Regulations 13A Working Time Regulations, cannot be carried over unless there is an agreement in place between the parties, which there was not.

In other words, when an individual is on long-term sick leave, only four weeks' annual leave carries over automatically - and not the additional 1.6 weeks granted by UK law which exceeds the European minimum of four weeks' annual leave.

Important: Starting Claims before new Fee Regime

The new employment tribunal fees regime arrives in a week, on Monday, 29th July 2013.

If you are planning to issue any Claim Forms before then, in order to avoid your client(s) paying fees, the Ministry of Justice has announced the latest time it will accept online submission of Claim Forms is 4pm on Friday, 26th July.  You will not be able to issue claims online over the weekend.

The new ET1 claim form will go live next Monday.  It is not yet known what it looks like, or what information it requires.

See here for the MOJ's information on the above.  And if you need to know anything about fees, or the myriad of other employment changes, come to this (but only if you can get to London or Manchester - the other venues have been and gone).

(and well done to the eagle-eyed Stefania Falford from Lennons, who spotted this and posted iton Twitter).

CJEU Decision in Alemo-Herron v Parkwood

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

In Alemo-Herron v Parkwood Leisure Ltd the European Court has delivered its long awaited judgment in the litigation concerning whether clauses in employment contracts which oblige an employer to follow determinations of a third party (such as a national negotiating body) in setting pay are binding on a transferee employer.

In British law, the answer was originally that such clauses are dynamic in nature, thus transferring to the new employer under TUPE even if the new employer has no say in the national bargaining arrangements. In the case of Werhof [2006] ECR 1-2397 the European Court held, however, that such clauses are static in nature, thus obliging the new employer to follow only the current collective agreement affecting pay and conditions and not future determinations by a third party when the employer is not a party to the negotiations.

In this case, a public sector to private sector transfer (the contracting out of Lewisham Council's leisure services), it was argued that the dynamic interpretation was permissible under British law even if not permitted under European law, under the principle that a Member State may, it its domestic law, grant rights more favourable than contained in European law.

The European Court disagreed.

This was because a dynamic clause referring to collective agreements undermines the balance between the interests of the transferee in its capacity as employer, on the one hand, and those of the employees, on the other. Under Article 16 of the Charter of Fundamental Rights of the European Union, an employer must have the right to conduct a business and assert its interests effectively in a contractual process to which it is party. This allows it to negotiate the process of determining changes in the working conditions of its employees with a view to its future economic activity.

A dynamic interpretation was therefore inconsistent with the Charter. As such, Member States are not permitted to allow dynamic clauses referring to collective agreements negotiated and adopted after the date of transfer where the transferee does not have the opportunity of participating in the negotiating process by which such a collective agreement was concluded.

PI Claim for Manner of Dismissal / Johnson Exclusion Zone

Thanks to David Campion of Garden Court North Chambers, for preparing this case summary

Was it correct to strike out a personal injury claim, arising from an employee's removal from work premises, as the claim fell within the Johnson v Unisys / Eastwood v Magnox exclusion area? 

Not where the removal from work may have taken place some weeks prior to dismissal, says the Court of Appeal in Monk v Essex County Council.

On 10th July 2008, the Claimant, a primary school administrative assistant was asked to leave school premises immediately. The Claimant alleged, in a High Court claim for personal injury, that she felt humiliated at her public removal and as a result suffered a psychiatric injury.

The Claimant's claim stated her dismissal occurred on 10th July, however the Claimant later argued that she was dismissed on 31st August, as she was paid until this date. Considering dismissal occurred on 10th July, the High Court struck out the claim as it fell within the Johnson v Unisys exclusion area.

The Court of Appeal confirmed that the Johnson exclusion area prevents the pursuance of common law claims, such as personal injury actions, which are caused by an employee's dismissal or the manner of dismissal, but not claims which are independent of dismissal.

Although not reaching a firm conclusion as to the date of dismissal, Moore-Bick LJ stated that if the Claimant had been dismissed on 10th July, her removal on that day was probably too closely related to dismissal to escape the Johnson exclusion area, whereas if she had been dismissed on 31st August, it would be difficult to argue her removal on 10th July was sufficiently closely related to dismissal to be excluded. Interestingly, Underhill LJ opined that even if the Claimant had been dismissed on 10th July, the Claimant's removal from work might still be regarded as independent of dismissal and not fall within the exclusion area.

The decision to strike out the claim was overturned and the Claimant was allowed to amend her claim to argue that she was dismissed on 31st August.

Confidential Information

Thanks to Vanessa Latham of Berrymans Lace Mawer for preparing this case summary.

This is a good example of an employer being granted injunctive relief where its former employees have gone into competition with it, having taken steps to compete with the employer whilst they were still employees.

In Whitmar Publications v Gamage, three employees had worked for the Claimant, a publisher, for a number of years. In January 2013, they resigned from their employment in order to go into competition with their employer. This was an urgent application for injunctive relief, and the court was able only to make a preliminary assessment of the weight of the evidence, but concluded that "there was a strong case" that the Defendants were taking steps to compete against their employer prior to their resignation, and that the steps they took were not just preparatory, but were active steps to compete.

"One of the badges of competitions in cases such as this", said the judge, "is the secrecy with which those who are competing go about their business". In one email, for example, the Defendants emphasised that all traces of their illicit plot should destroyed. On that basis, the Claimant had a "very good chance" of succeeding at trial, and the injunctive relief was granted.

Amendments to the EAT Rules

Thanks to Claire Darwin of Matrix Chambers for preparing this case summary.

The 1993 EAT Rules have been amended in the Employment Appeal Tribunal (Amendment) Rules 2013, ahead of the introduction of the government's new fee regime for enforcing employment rights. The amendments come into force on the same day - 29th July 2013.

There are 4 key changes and 1 key omission:

1. The removal of the right (pursuant to rule 3(8) of the old EAT rules) to submit a fresh Notice of Appeal within 28 days of the original Notice of Appeal being rejected by an EAT Judge (at the 'sift stage') on the grounds that the appeal does not have reasonable prospects of success.

2. The end of the automatic entitlement to an oral hearing (a so-called 'rule 3(10) hearing') after the sift stage, if the Appellant wishes to challenge the assessment of an EAT Judge that the Notice of Appeal discloses no reasonable grounds for bringing the appeal. Now if an EAT Judge considers that an appeal is "totally without merit" he can order that a party is "not entitled to have the matter heard before a Judge" at a rule 3(10) hearing.

3. A similar amendment in respect of cross-appeals, again if an EAT Judge considers that the statement of grounds of cross-appeal is "totally without merit".

Given that the law reports are full of appeal cases which, although ultimately successful, were initially rejected at the sift stage by an EAT Judge, the above three amendments are deeply troubling.

4. A new mechanism for challenging a decision by a Registrar to strike out your appeal on the basis that you haven't paid your EAT fee, when in fact you have paid it but the new "centralised processing facility" hasn't informed the EAT that you've paid it, or has lost your file etc. Appellants will be able to apply endlessly (there is no time bar or restriction on the number of times you can apply) to a Registrar to have their appeal reinstated pursuant to the new rule 17A(2).

5. However, whilst the new rule 34A(2A) provides that the EAT can order a Respondent to a successful appeal to reimburse the Appellant in respect of the EAT fees, the rules do not provide for a situation in which it is not the parties fault that they are in the EAT, but the fault of the Employment Tribunals Service because the parties had a dud Employment Tribunal. In these cases, the parties will simply have to try and recover their wasted costs and fees directly from the Ministry of Justice.

Presumably the EAT will amend the 2008 Practice Direction in the near future, so that it is consistent with the amended Rules.

Tribunal Fees: MOJ Factsheet

The Ministry of Justice has published its Employment Tribunal and Employment Appeal Tribunal Fees Stakeholder Factsheet, which summarises the new employment tribunal fees regime coming into force on 29th July 2013.  For a reminder of the current status of the judicial review challenges to the fees regime, click here.

For a thorough discussion of the new fees regime (amongst all the other big employment law changes of 2013), come to myEmployment Law MasterClass.  We're in Birmingham tomorrow and Cardiff on Thursday; then just London and Manchester to go.

Latest Employment Law Reform Announcements

Jo Swinson, the Parliamentary Under-Secretary of State for Employment Relations and Consumer Affairs, has issued a written ministerial statement announcing the following:- changing the cap on the unfair dismissal award to the lower of £74,200 or one year's pay with effect from 29 July 2013 (we knew this was happening sometime this month, but now the commencement date is confirmed). publication of the government's response to consultation over how Acas Early Conciliation will work.   a call for evidence on the framework of whistleblowing laws (this is separate from the whistleblowing reforms which came in on 25th June). Keep up to date with all these developments at myMasterClasses.  I'll be in Birmingham and Cardiff this week, followed by Manchester and London shortly.

Tribunal Fees - Further Update

Further to yesterday's emails on tribunal fees, here is a fuller update.

The (Scottish) Court of Session declined to grant an interim interdict, given the Lord Chancellor's undertaking that any tribunal fees paid after 29th July will be repaid if, at a full hearing in (probably) October, the Court decides the fees regime is unlawful.

This is welcome, but does not help those who will choose not to lodge tribunal claims between 29th July and the Court of Session hearing because they cannot afford the feeds.

Meanwhile, also yesterday, the judge in the (English) Unison JR case agreed to expedite the judicial review hearing.  It is understand a decision will be issued on whether permission is granted next week (and permission seems highly likely).  If permission is granted, then "consideration may be given to deferring implementation of the new fees regime" (according to the Unison press release).

Back to the Court of Session: the Lord Chancellor has conceded that a ruling by the Court of Session will bind the whole of the UK, not just Scotland.  Further, the government made three concessions in open court:-

• only one fee is due for multiple appeals in the EAT (the drafting of the Fees order suggests one fee per Appellant)
   
• preliminary hearings will not warrant any hearing fee
   
• Equal Pay claims fall into 'Type A' claims (triggering the lower fee level) - a drafting error which will need legislation to correct.

We had the QC from the Court of Session come along and talk to us, straight after the judgment, at yesterday's MasterClass in Edinburgh (see photos).  Next week's MasterClasses take place in Birmingham and Cardiff, followed afterwards by Manchester and London.

Tribunal Fees: JR Update

More details are now in of this morning's Judicial Review hearing in the Court of Session.

The Judge refused to grant an interim interdict, based upon the balance of convenience, given

• his view there was a strong prima facie case to go to a full hearing, coupled with
• an undertaking from the Lord Chancellor to the effect that any fees paid after 29th July will be refunded (with interest) if the fee regime is held to be unlawful.

A further hearing will be held later this year.

Costs of the hearing were awarded to Fox Solicitors, who brought the judicial review application.

Newsflash

The Court of Session has refused to grant an interim interdict (injunction) prohibiting employment tribunal fees.  In the absence of an appeal, or the English courts taking a different approach in the judicial review application brought by UNISON, fees will be coming in as expected on 29th July 2013.

More details will become available during the day. I'm on the podium at my MasterClass in Edinburgh (feeling a bit like a reporter saying 'reporting live from the scene'!).  We'll tweet updates as soon as they come in using hashtag #emplawmasterclass.

Right to be Accompanied

Thanks to Ed McFarlane of Deminos HR for preparing this case summary

If a worker ‘reasonably’ requests to be accompanied by a companion at a disciplinary or grievance hearing under s.10 Employment Relations Act 1999, does the request for a particular companion have to be ‘reasonable’?

No, says the EAT in Toal v GB Oils Ltd.

At a grievance hearing the employer refused the Claimant his choice of companion, a Trade Union official. A substitute official accompanied the Claimant. The Employment Tribunal held that the Claimant had waived the breach of his right to be accompanied by choosing another companion.

The EAT rejected this approach: by choosing another companion, the Claimant did not waive the right to be accompanied. The right to a companion is limited only to the categories set out in s.10(3) Employment Relations Act 1999, and within that may be whoever the worker wishes. The EAT rejected the guidance at paragraph 36 of the relevant ACAS Code of Practice relating to the ‘reasonableness’ of the choice of companion as creating problems of its own.

The EAT remitted the matter to the same employment tribunal for compensation to be assessed, noting that the statute provided for compensation linked to the loss or detriment suffered by the worker, and it was not a penal provision. If there was no loss or detriment, only nominal compensation in the traditional sum of 40 shillings (£2 in new money) or a sum ‘of that order’ should be ordered (para 33).

Conflict of Protected Characteristics

Thanks to Bonike Erinle of Farrar’s Building for preparing this case summary

Is a Christian hotelier's decision to restrict the offer of double bedrooms in a small, family-run bed and breakfast to married couples unlawful?

Yes, as this is a form of both direct and indirect discrimination, says the Court of Appeal in Black & anor v Wilkinson.

The Defendant refused to allow a homosexual couple who were not in a civil partnership to stay in her bed and breakfast, on the basis that her religious beliefs would only tolerate the sharing of double bedrooms by monogamous heterosexual married couples.

The Master of the Rolls considered:

• the county court was right to conclude that this was a case of direct discrimination.
   
• if not, it would still have been one of indirect discrimination, as the Defendant's policy put homosexual couples at a disadvantage on the ground of their sexual orientation when compared with heterosexual couples.
   
• the Defendant would not have been able to justify her treatment of homosexual couples by reference to her right to manifest religious beliefs, and to enjoyment of her home, as the proportionality exercise would have swayed in the Claimants' favour: (i) priority is only given to religious beliefs in certain narrowly circumscribed circumstances; (ii) the Defendant had failed to show that she would suffer serious damage if she were not to be allowed to refuse rooms to homosexual couples.

Confidential Pre-Termination Negotiations: Commencement Date

Confidential pre-termination negotiations, contained in s14 of theEnterprise and Regulatory Reform Act 2013, are coming into force on 29th July (see commencement order).

Also coming into force on 29th July is the re-naming of 'compromise agreements' as 'settlement agreements' (and well done to Zandau Laffart Weir solicitors for snaffling the website).

Confidential pre-termination negotiations are important.  They are a new, complex, statutory framework which will allow certain discussions to be kept confidential from a tribunal in most unfair dismissal cases.  If you want to know a little more, here is asample of the slides I'll be using at the Employment Law MasterClasses this month.

TUPE Consultation Response Delayed

Readers of this bulletin will know the government consulted on TUPE reform earlier this year. 

A response, along with draft Regulations to amend TUPE, was expected this week.  However, it is being reported that the Employment Minister, Jo Swinson, announced yesterday that BIS's response to the consultation (and the draft Regs) is unlikely to be published before September.  Query whether the government is still aiming for the proposed October implementation date...

Tribunal Fees: Judicial Review Update

As reported yesterday, the Court of Session in Scotland held an initial hearing this morning on a judicial review application challenging the legality of tribunal fees (due to come into force 29th July 2013).

The Court has expedited the full hearing, which will be heardTuesday and Wednesday next week.

The issues in the Scottish Judicial Review are understood to be slightly wider than those in the English Judicial Review.  In Scotland, the argument on the principle of equivalence appears stronger, because fees for lodging claims in the Sheriff Court are modest (about £87 issue fee, £207 per day hearing fee).  Thus the cost of a one day hearing in the Sheriff Court is under £300, compared with a £1,200 fee for a one-day discrimination claim in the tribunal if the fee regime is introduced.

We will keep you informed.  And if you're coming to myMasterClass in Edinburgh next Thursday, Fox and Partners (who have lodged the judicial review application) have agreed to join me on the podium and explain the grounds of the judicial review application and how the previous two days' hearing went.

Reasonable Adjustments

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

Does an employer breach its duty to make reasonable adjustments by requiring a disabled employee to undergo a competitive interview process?

Possibly, but not in the case of Wade v Sheffield Hallam University, decided by the EAT.

Following a reorganisation at the University, the Claimant's role was deleted and she applied for a new post in 2006.  She was unsuccessful on two essential criteria. In 2008 the same job vacancy arose, and again the Claimant was rejected.

Applying the provisions then in place under the Disability Discrimination Act 1995, the key question facing the EAT was whether or not the duty to make reasonable adjustments was breached by the employer's requirement that the Claimant go through a competitive interview process, rather than automatically appointing her to the new role.

In rejecting the claim, the employment tribunal consideredArchibald v Fife Council [2004] IRLR 651, in which the House of Lords indicated that disapplying a competitive interview process can be a reasonable adjustment. The EAT confirmed that on the current facts there was no breach of the duty to make reasonable adjustments because the Claimant could not meet the essential criteria necessary for the role.

New Judicial Review Challenge to Tribunal Fees

Last week, we reported UNISON's judicial review challenge to the tribunal fee system.

It looks like they may have been beaten to the starting line.  Fox and Partners in Scotland have lodged a petition for judicial review, challenging the introduction of tribunal fees.

Fox and Partners are seeking an interim interdict to prevent the imposition of fees on 29th July, pending a full court hearing addressing the issues.  The initial hearing is taking place tomorrow, Thursday 4th July 2013, at the Court of Session in Edinburgh.

I'll be spending almost an hour of my forthcoming MasterClassesdiscussing tribunal fees, including the loopholes in the legislation.  The first one is next week (in Edinburgh), followed by Cardiff, Birmingham, Manchester and London.  If you haven't booked, dohave a look at some feedback from delegates earlier this year.

Collective Redundancy Consultation: The Woolworths Case

We've all heard about it, and the transcript is now available.  The full title of the case is quite long, but everyone knows it as theUSDAW v Woolworths case.

The Employment Appeal Tribunal holds that there should be a purposive construction of section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992, so as to delete the words "at one establishment" (paragraph 53).

When Woolworths (and Ethel Austin) became insolvent, there was collective consultation.  Each store was treated as "one establishment", as has been accepted practice in the UK for many years. As a result, there was only collective consultation at the bigger stores, ie those with more than 20 employees. 

HHJ McMullen, in the EAT, has held that that does not reflect what the relevant EU Directive requires (which does not refer to single establishments, at least not in this context).  There is no ability for an employer to 'opt-out' of collective consultation under the DIrective by scattering their employees throughout different establishments around the UK, and the employers should have consulted with all employees, not just those at the larger stores.  TULRCA 1992 is more restrictive that the Directive and, insofar as it fetters rights granted by the Directive, it should be interpreted purposively so as to disapply that restriction.  That purposive construction can be achieved by deleting the words "at one establishment", so that s188 imposes collective redundancy requirements whenever an employer contemplates dismissing 20+ employees within 90 days on grounds of redundancy, irrespective of the number of 'establishments'.

The result of the case is that all the employees from the smaller stores (1,210 employees at Ethel Austin, and 3,233 at Woolworths) became entitled to a protective award.  This decision has huge ramifications.  The Secretary of State did not participate in the EAT hearing; it is unknown as yet whether there will be any attempt to take the case to the Court of Appeal.

Wragge & Co have some suggestions about the ramifications of the decision.  And, of course, I'll cover the implications in my MasterClasses later this month (see below).  If you haven't yet booked, please do - one of the London dates is fully booked and several others are reaching capacity.