Collective Consultation And 'Establishments'

By Jesper Christensen

The duty to consult collectively applies where it is proposed to make 20 or more redundancies at one establishment, but there is no statutory definition of 'establishment'.

In Renfrewshire Council v Educational Institute of Scotland, the EAT had to consider whether the relevant establishment at which redundant teachers worked was their individual schools, or the Education and Leisure Service of the Council.

The employment tribunal judge originally decided that the relevant establishment was the Council's Education and Leisure Service. The tribunal judge focussed on where the teachers could be required to work under mobility clauses contained in their contracts of employment, and on the central control exercised by the Council over various employment issues such as dismissal and recruitment. However, this approach was criticised by the EAT, which made some helpful general points in what has been a tricky area for employers to date:

  • in most cases, an establishment will be less than the employer's whole undertaking;
  • an establishment implies a physical rather than an organisational presence; and
  • the assessment should be employee-focussed rather than employer-focussed.

The EAT held that the tribunal judge should not have focussed on mobility clauses which in practice had never been enforced, or on the body which controlled aspects of the teachers' work. More emphasis should have been placed on where the teachers actually worked. The case has been sent back to the tribunal for further consideration. However, assuming that the tribunal decides that the teachers were assigned to individual schools, this would result in them falling outside the collective consultation regime.

Restrictive Covenants In An Unsigned Contract

By Brian Gegg

The High Court has held in FW Farnsworth Ltd v Lacy that an employee was bound by the restrictive covenants contained in an updated contract of employment which he had not signed and returned.

Mr Lacy started work at FW Farnsworth Ltd in 2000. In 2003 he signed a contract which did not contain any restrictive covenants. In 2009 he was promoted to the lowest level of senior management and was sent a new contract which contained post termination restrictive covenants, as well as additional benefits including the right to join the pension scheme and to apply for private medical insurance. Although Mr Lacy did not sign and return this contract, he later joined the pension scheme and applied for private medical insurance. He resigned in 2012 to join a competitor and the company sought an injunction to enforce the restrictions contained in the 2009 contract. Mr Lacy argued that he was not bound by the covenants because he had not expressly accepted his latest contract. The company contended that his acceptance could be inferred from the acts of joining the pension scheme and applying for private medical insurance.

The High Court agreed that acceptance of the new contract could be implied by the fact that Mr Lacy had applied for private medical insurance cover. Joining the pension scheme was not relevant because Mr Lacy had been required to do so after his final salary scheme closed down.

It seems that if Mr Lacy had not applied for the medical cover, he would not have been bound by the 2009 contract. This case is therefore a reminder to ensure that employees are required to sign and return new contracts which contain restrictive covenants. Since agreement to any contractual changes may be implied by conduct, employees also need to make it very clear if they do not accept new contractual terms.

When Do Employers 'Decide' To Make Collective Redundancies?

In our May Bulletin, we reported on USA v Nolan, a dispute arising out of the closure of an American military base in the UK.

The central issue in this case was whether the obligation to consult collectively arises when an employer proposes to make a decision that will inevitably lead to redundancies, or only when that strategic decision has already been made and redundancies are proposed as a consequence. The ECJ was asked to clarify when collective redundancy consultation is triggered and what an employer should consult about. In March 2012, the Advocate-General gave his opinion that the obligation to consult arises when a strategic or commercial decision is taken that compels an employer to contemplate or plan collective redundancies. This opinion also seemed to disapprove of the EAT decision in UK Coal Mining Ltd v National Union of Mineworkers which held that consultation in respect of a factory closure should include discussion of the business reasons behind the redundancies.

However, the ECJ has now held that it does not have jurisdiction to give a ruling in USA v Nolan because civilian employees working on a military base fall within an exclusion in the European Collective Redundancies Directive for employees of public administrative bodies. The case will therefore now have to go back to the Court of Appeal.

The ECJ's refusal to provide clarification on these issues is all the more frustrating as we are left with differing interpretations of the legislation at national and European level. Although it remains safer to consult collectively at an earlier stage, this is often not practical commercially or in terms of employee relations.

Newsroom Comments Were Not Discrimination

In Heafield v Times Newspaper Ltd, the employment tribunal has held that a comment about the Pope shouted by an Editor across a busy newsroom and a subsequent reduction in shifts offered to the claimant did not amount to victimisation or harassment on the grounds of religion or belief.

Mr Heafield was a casual sub-editor on the Times Newspaper. He is a practising Roman Catholic, but none of his colleagues were aware of his religion. During the weeks leading up to the Pope comment, Mr Heafield had become unhappy about what he considered to be anti-Catholic coverage by the Times of the allegations concerning sexual abuse in the Catholic Church, but he did not voice his concerns. In March 2010, the newsroom was preparing a story concerning a further allegation against the Pope which, for the purposes of identifying the story for publication, was referred to as 'the Pope'. The senior sub-editor had not received the story as the deadline approached, and shouted across the newsroom 'Can anybody tell me what's happening to the f*****g Pope?'

Mr Heafield subsequently complained in writing that he had found this comment to be offensive, unnecessary and blasphemous. However, the complaint was not taken up by his manager, nor did Mr Heafield pursue a formal grievance. Mr Heafield subsequently brought a tribunal claim alleging that the Pope comment amounted to harassment on the grounds of religion or belief. This claim was dismissed by the tribunal, which held that although the comment amounted to unwanted conduct, there was no evidence that it was intended to violate Mr Heafield's dignity or to create a hostile or degrading environment for him. The comment was not made on the grounds of religion; it was simply an enquiry about a piece of work. In addition, there was no evidence of any generalised anti-Catholic banter in the newsroom.

Mr Heafield also alleged that a subsequent reduction in his shifts amounted to victimisation. However, the tribunal found that this was mainly a result of a general reduction in casual shifts offered by the newspaper. It also held that the failure to investigate Mr Heafield's complaint was due to his manager not giving it any credence, rather than an act of victimisation.

This decision is a useful reminder that conduct will only amount to harassment if it can reasonably be considered to have the purpose or effect of violating the claimant's dignity or creating a hostile or offensive environment. This means that a claim is unlikely to succeed where it was not reasonable to take offence, or where a claimant is particularly sensitive. The context of the conduct will be crucial. In this case, the relevant comment was made in the highly pressurised environment of a newsroom where shouting and swearing are not unusual.

Sickness Absence And Deduction From Wages

In Bent and others v Central Manchester University Hospitals NHS Foundation Trust, an employment tribunal has held that the Trust was not entitled to apply a local policy which sought to deny contractual pay increments where employees exceeded set sickness absence thresholds.

The NHS pay progression system, which was agreed nationally under the Agenda for Change Agreement (AfC Agreement), entitles NHS staff to automatic pay increments provided that their performance is satisfactory and they have demonstrated the agreed knowledge and skills appropriate to their new pay band. The AfC Agreement also states that automatic increments can only be deferred if there are significant weaknesses in performance. In 2010 the Trust introduced a 'Behavioural Incremental Pay Progression Policy' (BIPP) under which incremental pay progression was frozen if staff were being managed under the Trust's sickness absence policy. A group of workers who had been adversely affected by this policy brought claims for unlawful deductions from pay.

The Trust argued that the references to 'satisfactory performance' and 'demonstrating the agreed knowledge and skills' in the AfC Agreement should be interpreted widely to cover a requirement for regular attendance, and that high sickness levels could inhibit satisfactory performance. It also argued that local employers should be free to determine what is meant by these terms.

The tribunal rejected the Trust's arguments, agreeing with the claimants that the BIPP was inconsistent with the national pay progression policy which was expressly incorporated into their terms and conditions. Absence due to sickness could not be taken into account when considering performance for the purposes of pay progression under the AfC Agreement. Since the Trust had imposed a unilateral variation of employment terms, failure to pay annual increments under the BIPP amounted to unlawful deductions from pay.

High Court Can Hear 'Out Of Time' Equal Pay Claims

The Supreme Court has ruled in Birmingham City Council v Abdulla and others that equal pay claims can proceed in the High Court where they are out of time to be heard in the employment tribunal.

174 employees of Birmingham City Council brought equal pay claims in the High Court because they were outside the six month time limit to bring their claims in the employment tribunal, whereas the time limit for breach of contract claims in the civil courts is six years. The High Court and Court of Appeal rejected the Council's argument that the claims should be struck out on the basis that they could more conveniently be disposed of in an employment tribunal, because the tribunal would in any event have no jurisdiction to hear them.

The Supreme Court has now also held that since the tribunal would not have jurisdiction to hear the claims because they were out of time, they should be allowed to proceed in the High Court. This decision could result in more equal pay claims being pursued in the civil courts where the tribunal deadline has passed. Although the significant costs risks involved in bringing a civil claim may act as a deterrent, in practice, equal pay claims are often backed by trade unions.

Interns And The National Minimum Wage

It has been widely reported that NOW magazine, an auction house and an international media corporation have become the latest organisations to pay out settlements to former interns who demanded to receive the national minimum wage. So far, settlements have been made without recourse to the courts. However, the government has been warning for some time now that most interns who provide work personally are probably workers and should therefore receive the national minimum wage. This would not apply to interns who only observe or shadow employees without undertaking work themselves. However, the reality of the relationships are still capable of being different in individual businesses.

Stakeholder pension obligations repealed

Following the introduction of pensions auto-enrolment on 1 October 2012, the requirement for employers to provide access to stakeholder pension schemes has been abolished. Transitional provisions are in place to protect members of existing stakeholder schemes prior to their employer's staging date. However, because there has been no alignment between staging dates for autoenrolment and the repeal of stakeholder pensions obligations, some smaller employers may not have to provide access to a pension scheme at all until the final staging date in February 2018.

Discrimination For Political Affiliation In The Uk

UK law does not currently protect employees specifically from dismissal on the grounds of their political beliefs or affiliation. In the controversial case of Redfearn v The United Kingdom, the European Court of Human Rights (ECHR) has held that this omission is wrong in the UK, and breaches Article 11 of the European Convention of Human Rights, which protects freedom of association.

Mr Redfearn was employed in the Bradford area by Serco Ltd as a driver for children and adults with disabilities, many of whom were of Asian ethnic origin. There were no issues with his conduct or performance. Serco became aware that Mr Redfearn was a candidate for the BNP in forthcoming elections, and received advice that continuing to employ him would present a health and safety risk to passengers and employees, cause considerable anxiety to his passengers, and jeopardise Serco's reputation. Following his election as a local BNP councillor in 2004, he was therefore summarily dismissed. Mr Redfearn had insufficient service to claim unfair dismissal and the Court of Appeal rejected his claim of race discrimination since his complaint was in fact for discrimination on political grounds, which fell outside anti-discrimination law.

Mr Redfearn then brought a claim in the ECHR on the grounds that his dismissal interfered with his Convention rights to freedom of assembly and association (Article 11) and freedom of expression (Article 10), and that the UK Government should have enacted legislation protecting him from termination of his employment because of his political affiliation. The ECHR agreed that the lack of a remedy in the UK for a dismissal motivated solely by an employee's political opinion or affiliation infringed Article 11.

The ECHR also held that Article 11 protects persons and associations whose views 'offend, shock or disturb', as well as those whose views are more favourably regarded, which obviously gives rise to interesting questions in relation to extremist political parties. Since Mr Redfearn's dismissal, the Equality Act 2010 has introduced protection against discrimination arising from philosophical beliefs. The prevailing view is that this could cover a political philosophy or doctrine, but not support for a political party.

Subject to a possible appeal by the Government, this decision means that the UK will need to take steps to allow employees to contest a dismissal on the grounds of political opinion or affiliation. This could be done by creating a new claim of unlawful discrimination, or by creating a further exception to the qualifying period required for bringing unfair dismissal.

Facebook Comments About Gay Marriage

The High Court has held in Smith v Trafford Housing Trust that a Christian manager was entitled to express his opposition to gay marriage on Facebook, and that this did not constitute misconduct in relation to his employment.

In response to a BBC news story, Mr Smith made comments on his Facebook page opposing gay marriage. One work colleague then accused him of 'blatant homophobia'. Relying on contractual provisions in its Code of Conduct and Equal Opportunities Policy, the Trafford Housing Trust found that his comments had the potential to cause offence, could be seriously prejudicial to the reputation of the Trust, and breached its Code of Conduct and Equal Opportunities Policy. It concluded that this amounted to gross misconduct. However, because of his 19 years' service, Mr Smith was demoted rather than dismissed, with a phased 40% salary cut. Demotion was a sanction permitted under the disciplinary procedure in the event of misconduct. Since he was out of time to bring an unfair dismissal complaint, Mr Smith brought a breach of contract claim in the High Court alleging that the Trust had breached his contract of employment by demoting him, since his actions did not amount to misconduct.

The High Court upheld Mr Smith's claim. It found that no reasonable reader of the Facebook page would have concluded that Mr Smith's posts were made on behalf of his employer, although he clearly stated where he worked. The Court rejected the suggestion that having 45 colleagues as Facebook friends brought a work-related context to the postings for the purposes of the Code of Conduct and Equal Opportunities Policy. Whilst an employer may legitimately restrict an employee's freedom of expression and belief at work, this restriction should not extend to personal or social life. Although Mr Smith's comments had caused offence to an employee who held different views, the Court considered that this was a necessary price to pay for freedom of speech. It concluded that the comments were not capable of bringing the Trust into disrepute and did not amount to misconduct. Demotion was therefore a breach of his contract of employment. However, damages were limited to the pay differential during Mr Smith's notice period which amounted to just £98.

The termination of his contract and imposition of new terms and conditions was also a dismissal, although the issue of fairness did not arise since Mr Smith did not bring an unfair dismissal claim. Had he done so, it seems likely that he would have been successful.

The High Court commented that the encouragement of diversity in the recruitment of employees inevitably involves employing people with widely different religious and political beliefs, some of which, however moderately expressed, might cause distress to others who hold deeply-felt opposite views. This is also relevant when considering how far employers can regulate conduct outside work in relation to Facebook and other social media.

Although genuinely offensive comments on social media, and comments which conflict with the employee's role at work, or bring an employer into disrepute may legitimately give rise to disciplinary proceedings, this case emphasises the dangers for employers of overreacting to more moderate expressions of opinion.

Redundancy Fair Despite Minimal Consultation

In Ashby v JJB Sports plc, the EAT has upheld the decision of an employment tribunal that the dismissal of a senior executive was fair despite the absence of consultation, because consultation would have been futile.

Mr Ashby had been employed for ten years by JJB Sports, most recently as Head of Human Resources and Payroll at Associate Director level. In 2010 a new CEO was brought into JJB at a time when it was in serious financial difficulties. He implemented a restructuring including the creation of four new executive director roles which were senior to Mr Ashby's position. The HR Director role was filled by an external candidate without Mr Ashby knowing about the vacancy. It was also decided that Mr Ashby's payroll and other administrative duties could be absorbed by existing staff. Mr Ashby was not told about these changes until a meeting in which he was also told that he was being made redundant. He subsequently brought a claim for unfair dismissal, arguing that his dismissal was unfair due to lack of consultation and consideration of alternative employment.

The EAT agreed with the employment tribunal's decision that due to the extreme financial pressures experienced by JJB at the relevant time, this case fell into the narrow category of cases identified in Polkey v Dayton Services Ltd in respect of which consultation would have been futile. As regards the alternative vacancy, the tribunal had been entitled to conclude that the external candidate had qualifications which were 'head and shoulders' above Mr Ashby's. The lack of consultation was understandable given the speed with which JJB had to act to try to save the business, and the highly sensitive nature of the commercial decisions being taken.

AIthough the employer was successful in the particular circumstances of this case, it should not be seen as a fundamental change to the basic rule that lack of consultation will almost invariably make a redundancy dismissal unfair.

Continuity Of Employment During Work Gaps

Establishing continuity of service (using the rules set out in the Employment Rights Act 1996) is necessary for claims which require a qualifying period of employment. As long as an employee's contract of employment existed at some point in a given week with the same employer, that week will count towards continuous employment. A gap of more than one week will generally break continuity, subject to certain exceptions.

In Welton v Deluxe Retail Ltd, the EAT considered whether two contracts of employment with the same employer were continuous despite a gap of more than one week between the end of the first contract and the start of work under the second contract.

Mr Welton worked for Deluxe Retail Ltd at its Sheffield store, which closed down. Within a week of the closure, he accepted another job with Deluxe to work at its Blackpool store. However, he did not start work in Blackpool until nearly two weeks after he had finished work at Sheffield. When Mr Welton was dismissed a few months later, he had less than 12 months' service with the Blackpool store. His unfair dismissal claim therefore depended on having continuous service with his previous employment at the Sheffield store.

The EAT concluded that Mr Weldon's second contract of employment started from the time when he accepted the offer to work in Blackpool rather than when he actually started work there. He therefore had continuous employment because there was no whole week during which he was without a contract of employment. In any event, despite starting at a different location, the EAT also considered that Mr Weldon was 'absent on account of a temporary cessation of work', which is one of the exceptions in the Employment Rights Act that does not break continuity. Mr Weldon's situation can be distinguished from an employee starting work with a new employer, when continuous employment would commence on the date the employee starts work, not the date on which the offer of employment was accepted which is often much earlier. Special rules also apply to an employee starting work with an associated employer.

No Property In The Content Of Emails

In Heavy Transport N V v Adkins, a case in which a company was asking for the right to inspect emails held by its former CEO, the High Court has held that there is no property in the content of an email.

In making its judgment, the Court analysed the various potential options as to ownership of an email, and concluded that all of them would be unworkable in practice.

For example, if title passed to the recipient when an email is sent, the recipient would have the right to require the sender to delete it, and the only person entitled to the email would be the person who had most recently received it. Given that an email could have multiple recipients, simultaneously or consecutively, this option would be unrealistic and impractical. The Court held that satisfactory protection against misuse of information was already available through the laws relating to copyright and confidential information, as well as specific contractual obligations.

The ruling in this case is a reminder to employers that they do not have a general proprietary right to the content of emails held by employees, contractors and agents. This highlights the importance of clearly stating rights and obligations relating to work emails in contracts of employment or other contractual documentation and of backing up emails centrally.

Flexible Working Rights To Be Extended

The Government has confirmed that all employees with at least 26 weeks' continuous employment will have the right to request flexible working from 2014.

The current statutory procedure for considering flexible working requests will be replaced by a duty on employers to consider requests in a reasonable manner and within a reasonable period of time. Guidance on the meaning of 'reasonable' will be included in an ACAS code of practice which tribunals would have to take into account when considering complaints. As now, employees will only be able to make one request in a 12 month period.

New System Of Flexible Parental Leave And Pay From 2015

The Government has announced that a new system of flexible parental leave and pay will be introduced by 2015. The 52 weeks of maternity leave will remain in place as the default position for all employed women, and women who are currently eligible to receive statutory maternity pay or maternity allowance will continue to be able to do so for 39 weeks. In addition, there will still be two weeks' compulsory leave for mothers from the date of the baby's birth.

The new proposals will only apply where each parent meets the qualifying criteria for leave and/or pay in their own right. These parents will be able to end the mother's maternity leave and pay, or commit to ending it at a future date, and share the untaken balance of maternity leave and pay as flexible parental leave and pay.

Taking into account the two weeks' compulsory leave, this means that parents will be able to share up to 50 weeks of leave and 37 weeks of pay. Flexible parental leave and pay can either be taken by each parent consecutively, or by both parents at the same time, as long as the combined amount does not exceed the total entitlement.

Leave must be taken in a minimum of one week blocks. It is proposed that flexible parental leave can be taken by the biological father or the mother's partner. Fathers and partners of pregnant women will also have the right to take unpaid time off work to attend two antenatal appointments.

There is to be further consultation in 2013 on the details of the new system, although the Government has said that administrative arrangements will be as 'light touch' as possible.

In addition to these changes, from March 2013, unpaid parental leave will increase from 13 to 18 weeks for each child in order to comply with the revised EU Parental Leave Directive. From 2015 each parent will also be able to exercise this right to care for children up to 18 years old, rather than the current limit of 5 years.

And finally...

The Government has published its response to consultation on reforms which aim to clamp down on the widespread practice of civil servants who are also trade union representatives spending all their time doing trade union work. In future, trade union representatives working in the civil service will have to spend at least 50% of their time delivering their civil service role. Appropriate systems will also be introduced to increase accountability and to ensure that time spent on union work is properly monitored. BIS has issued details of responses to its recent Call for Evidence on the draft EU Posting of Workers Enforcement Directive. The new Directive seeks to improve implementation and enforcement of the rules on minimum employment and working conditions set out in the existing Posted Workers Directive. The responses include views on the proposals for clarifying what constitutes a posted worker, improving access to information on the applicable working conditions in different member states, and introducing joint and several liability in the construction sector. Discussions on the new Enforcement Directive are likely to continue at European level into next year.

Further employment-related amendments have been made to the Enterprise and Regulatory Reform Bill which is now progressing through the House of Lords. These include repeal of the third party harassment provisions and the discrimination questionnaire procedure in the Equality Act 2010, and introduction of a power for employment tribunals to order pay audits where an employer has lost an equal pay claim.

BIS has published the draft Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013, which will come into force in October 2013. The regulations include a requirement for quoted companies to disclose numbers of men and women on the board, in management positions, and in the organisation as a whole.

The Association of British Insurers (ABI) has published an updated version of its guidance on remuneration principles. There are no substantive changes to these principles, although the guidance has been restructured to make it clearer and a new appendix sets out the ABI's views on the new remuneration and reporting requirements which will apply to listed companies for financial years ending after 1 October 2013.

BIS has published an independent report on apprenticeships by Doug Richard. This recommends reform to improve the quality of apprenticeships and ensure that they are relevant to the changing needs of employers. Mr Richard's proposals include increasing government funding, using recognised industry standards to form the basis for every apprenticeship, and introducing mandatory off-site learning. The Government is due to respond to the review during 2013.

The European Commission has published a draft directive aimed at improving the gender balance among non-executive directors of listed companies.

This would require member states to introduce legislation ensuring that women hold at least 40% of non-executive director positions in listed companies, and that women are given priority if there are male and female candidates who are equally qualified. There would also need to be sanctions for infringements of the requirements of the directive. The directive will not apply to small and medium sized enterprises.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.