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Nick HobdenPartnerE: [email protected]: 01322 623700
James WillisSenior AssociateE: [email protected]: 01322 422540
Guest speakerSue ThreaderEmployment Tribunal Panel Member
Date 15 September 2011
© Thomson Snell & Passmore 2011
TSP Connect SeminarEmployment Law Update
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Our subjects today
• TUPE and pre-pack administrations – liabilities
• Equality Act 2010 – one year on
• Retirement age
• Public sector equality duty for public service providers
• Agency Workers Regulations
• Collective consultation – recent cases
• Employment tribunals – observations on how to avoid them if you can and prepare for them if you must
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TUPE and pre-pack administrations
• Background:• TUPE 2006 was intended to foster a ‘rescue culture’
• Struggling businesses might transfer without certain employment-related liabilities
• Rules relating to changes to terms and conditions of employment ‘relaxed’
• Distinction drawn between ‘terminal’ and ‘non-terminal’ situations
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TUPE and pre-pack administrations
• ‘Terminal’ situations• The transferor is subject to “bankruptcy or any analogous insolvency
proceedings” aimed at liquidating the assets of the business
• TUPE will not apply to any alleged transfer
• Non-terminal” situations• The transferor is subject to “relevant insolvency proceedings”, but not with a
view to liquidation
• TUPE may still apply to any alleged transfer, but:• some liabilities may not transfer and will be picked up by NI Fund
• transferee may have greater scope to vary employees’ terms and conditions
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TUPE and pre-pack administrations
• Can a ‘pre-pack’ administration amount to a ‘terminal’ situation?• Let’s get the jargon straight:
• Administration is typically a form of insolvency proceedings aimed at rescuing the company or facilitating the sale of the company’s assets as a going concern
• ‘Pre-pack’ administration is one where the sale of a company’s assets is effectively agreed before a company is put into administration, with the sale completing on or very shortly after the appointment of the administrator
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TUPE and pre-pack administrations
• Oakland v Wellswood • BIS guidance suggested administrations will always be ‘non-terminal’
• Employment Appeal Tribunal disagreed and found that TUPE did not apply to this ‘pre-pack’
• Court of Appeal expressed some doubt over this decision, but did not overrule it
• OTG v Barke • Employment Appeal Tribunal reached a very different conclusion, ruling that
administrations can never have liquidation as their intended aim
• Therefore TUPE should apply to ‘pre-packs’, subject to the relaxation relating to liabilities and changes to terms and conditions
Conflicting EAT decisions!
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TUPE and pre-pack administrations
• Pressure Coolers v Molloy • The facts
• Maestro International Limited was subject to a ‘pre-pack’ administration
• Business was sold to Pressure Coolers at 11am
• At 3pm, employees were all summarily dismissed for redundancy
• The decision• Pressure Coolers argued that all liabilities (including dismissal-related ones such as
notice pay and basic award) ought to be picked up by the NI Fund
• EAT held that dismissal-related liabilities debts were not outstanding at the time of transfer. Therefore Pressure Coolers were liable for these
Time of dismissal is critical – ‘pre-pack’ buyers beware!
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Discrimination law update
• A brief recap on the Equality Act 2010:• Most of it came into force in October 2010
• Consolidation of 9 separate pieces of discrimination legislation
• Harmonising the various strands of discrimination law
• Introducing some new forms of discrimination (e.g. indirect disability discrimination and disability arising from discrimination)
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Discrimination law update
• Some EA 2010 provisions due to come into force later:• Public sector equality duty (5 April 2011)
• Positive action in recruitment and promotion (6 April 2011)
• Dual (Combined) discrimination
• And don’t forget the changes to age discrimination (removal of the default retirement age)
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Discrimination law update
• Positive action in recruitment and promotion• New provisions came into force in April 2011
• Employers can treat a person with “protected characteristics” more favourably in connection with recruitment and promotion if:• They are disadvantaged or there is low participation and
• The person is as qualified as other applicants
• Problems• Can’t have a general policy
• Each decision must be justified - burden of proof
• Will anyone be brave enough?
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Discrimination law update
• Dual (combined) discrimination• A perceived gap in protection (e.g. Asian women, gay men?)
• Dual discrimination intended to plug gap where, because of a combination of two ‘protected characteristics’, A treats B less favourably.
• Coalition decided to ‘shelve’ these provisions
• But Ministry of Defence v Debique (EAT) and Khan v Ghafoor (ET) – has case law ‘introduced’ dual discrimination anyway?
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Discrimination law update
• Apportioning liability for discriminatory acts• Discrimination claims can be brought against employer, other employees
and sometimes third parties
• More than one party found guilty of same discriminatory acts
• How is liability apportioned?
• London Borough of Hackney v Sivanandan• EAT said where two or more parties are jointly liable, parties are jointly and
severally liable for financial award
• Claimant can go against one or both respondents; each is liable for entire award
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Discrimination law update
• Justifying discrimination• Sometimes possible to ‘justify’ conduct which would otherwise be
discriminatory (e.g. indirect discrimination, age discrimination)
• Cross v British Airways (2005) - EAT held that employer cannot justify on grounds of cost alone
• Woodcock v Cumbria Primary Care Trust (2011) – EAT cast doubt on Cross, finding it "hard to see the principled basis" for the decision
• Cherfi v G4S Security Services Ltd (2011) – EAT considered case law and sided with Woodcock.
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Discrimination law update
• Scrapping the Default Retirement Age• Law is in the process of changing
• Employers cannot serve any further retirement notices under the old system
• Some retirement notices have been served (on or before 5 April 2011) but have yet to expire – they will be allowed to proceed, as long as employee is at least 65 on 30 September 2011
• It is conceivable that retirements under the ‘old’ law could continue until towards the end of next year. But take care!
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Discrimination law update
• Lawful compulsory retirement might still be possible
• Firm-wide or job-specific retirement age if it is “objectively justifiable” (proportionate means of achieving a legitimate aim)
• Do you want to be the test case?
• Removing the retirement age will be the prudent course of action for most employers
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Nick’s topics to be covered
• The Public Sector Equality Duty
• The Agency Workers Regulations 2010
• Collective Consultation
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The Public Sector Equality Duty
• In s 149 of the Equality Act 2010, in force from 5th April this year
• Applies to public bodies and private/voluntary bodies who perform public functions
• Requires affected bodies to have ‘due regard’ to the need:• to eliminate discrimination, harassment, victimisation, and other similar
conduct;
• to advance equality of opportunity between those who share a ‘protected characteristic’ and those who don’t; and
• to foster good relations.
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Protected characteristics
• ‘Due regard’ means:• a ‘conscious approach and state of mind’
• an integral part of the decision-making process
• The duty covers protected characteristics:• Age
• Disability
• Gender reassignment
• Pregnancy and maternity
• Race (including ethnicity, nationality, colour, or national origin)
• Religion or belief (including a lack of)
• Sex
• Sexual orientation
• Marriage / civil partnership (only in respect of eliminating discrimination)
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Complying with the duty
• Affects all employees
• The duty must be fulfilled before and at the time the decision is made
• Delegation – public bodies expect compliance with duty
• Compliance is assessed by The Equality and Human Rights Commission (EHRC)
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The Agency Workers Regulations 2010
• Due to come into force from 1 October 2011
• Covers ‘temps’ – individuals supplied by a temporary work agency under direction of hirer
In scope Out of scope
TWAs – inc intermediaries Genuinely – self employed/ service providers - STATUS!
Hirer (end user) supervising and directing workers
In house (temp) staff banks or secondments to H2
Agency worker – employed/personally contracted to work (inc umbrella companies)
Managed service contracts under supervision of TWA not Hirer
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Day one rights
• Two ‘day one’ rights:• Right to be informed of relevant vacancies
• Access to collective facilities and amenities (on site)
• Objective justification
• NB. Provide numbers, type of work and where agency workers work to employee representatives in TUPE or collective redundancy situations
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Qualification
• 12-week qualifying period = qualify for the same basic working conditions as would be - as if recruited directly (Comparator?)
• When calculating the 12-week period:• A break of six weeks of more, or a move to a substantially different role =
resets the clock
• Any break due to holiday or sickness (up to 28 weeks) = pauses the clock
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The right to equal treatment
• ‘Basic working conditions’ = • Pay• Working time • Overtime• Holiday pay (over WTR)• Rest breaks (over WTR)• Bonuses linked to individual performance• Time off for ante natal appointments; alternative work on maternity
grounds; paid for maternity work suspension
• NB ordinarily included
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Exclusion from pay and basic working conditions
• NOT• occupational pensions (though note from October 2012 automatic pension
enrolment)
• occupational sick pay (above SSP)
• maternity, paternity and adoption pay (above statutory SMP, SPP and SAP rights)
• redundancy pay (statutory and contractual)
• notice pay (above statutory notice)
• benefits in kind (such as company cars)
• bonuses not linked to individual performance (such as loyalty bonuses)
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Enforcement and liability
• Right to request information from agency/hirer (day one rights and 12+ weeks rights)
• Worker may bring claim before Employment Tribunal for infringement/detriment
• Liability usually rests with agency for 12+ weeks, subject to:• ‘Reasonable steps’ defence
• Tribunal’s power to apportion liability for compensation and possibly £5,000 anti-avoidance fine
• Breach of ‘day one’ rights always hirer’s responsibility
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Collective consultationPhillips v Xtera Communications Ltd
• Case concerned the election of employee representatives
• There were 3 reps designated, only 3 applied
• No objections were received to these reps, although no vote held
• EAT held: • No requirement for a ballot in all cases; clearly not necessary here
• Fairness was ensured by employer asking for objections
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Lancaster University v The University & College Union
• University consultation procedure clearly flawed but tolerated for several years
• New union rep demands change, union brings a claim for a protective award
• EAT held: • Take a “top-down” approach to liability, starting at breach then looking for
mitigation
• Union’s tolerance for such a long period was a legitimate mitigating factor