UK: HR Bytes - November 2011

Last Updated: 29 November 2011
Article by Kemp Little’s Employment Pratice Group


Employment law has gone political this month (you may say when was it ever not?).

Extracts were leaked from a report into employment laws commissioned by David Cameron from venture capitalist and Tory party donor Adrian Beecroft. Amongst other matters, Mr Beecroft has advocated the removal of the unfair dismissal regime altogether, leading to a spectacular PR own-goal for the Coalition in their attempts to cut red tape for businesses. The LibDems have already condemned the report.

This comes on top of last month's announcement that the government would make it harder to bring Employment Tribunal cases by raising the qualifying period for an unfair dismissal claim to two years and introducing fees for claims.

The government's positive and welcome attempt to cut red tape for employers looks set to become a political football.

To help you to negotiate your way through the minefield, we have launched the latest version of our UK Employment Law Guide 2011 – 2012. We're sure you'll find it useful.

What's new this month?

Legal Developments

  • When can an employer change terms and conditions of employment following a TUPE transfer?
  • Notice of termination issued by mistake cannot be withdrawn
  • Expiry of a work permit does not limit the compensation available for unfair dismissal
  • Can cost be relevant to the duty to make reasonable adjustments?
  • Employees on long-term sick leave must request holiday to be paid for it

Other news

  • Leaked Beecroft report suggests the abolition of the Unfair Dismissal regime, Clegg wades into the debate with "protected conversations"
  • CIPD gets political about the impact of new flexible working proposals
  • Further reductions in the number of non-EEA migrants entitled to work (and settle) in the UK are likely

What's coming up

  • HR Forum: Redundancies - lessons learned from the recession - 1 December 2011 - read more

Legal developments

When can an employer change terms and conditions of employment following a TUPE transfer?

In Smith and others v Trustees Of Brooklands College UKEAT/0128/11, part-time teaching assistants at a college were paid as if they were employed on a full-time contract. This arrangement was out of step with market practice and was contrary to their trade union's guidance on pay for teaching assistants.

The teaching assistants transferred under TUPE to a new college. Following the transfer, the HR Director reviewed rates of pay across the organisation and concluded that the teaching assistants had been overpaid in error. A phased reduction in pay was agreed with the teaching assistants but they subsequently brought claims for unlawful deductions from wages, arguing that the variation of their contracts was void under TUPE. The college argued that the variation was not by reason of the transfer or for a reason connected with the transfer, so it was not void under TUPE.

The EAT held that the reason for the variation was the HR Director's belief that the teaching assistants had been mistakenly paid the wrong rate. This was not a reason connected with the transfer, so the variation was effective.

The decision is a useful reminder that employees cannot just say that "but for" the transfer, there would have been a variation, in order to argue that the variation is void. The courts will look at the real reason for the change. However, it may be difficult to distinguish between a wish to harmonise terms and conditions with those in the existing workforce (which has been held to be transfer-related and void) and a need to correct terms which are out of step with standard market practice. This is a fine distinction which requires careful consideration.

Notice of termination issued by mistake cannot be withdrawn

CF Capital plc v Willoughby [2011] EWCA Civ 1115 is a Court of Appeal decision, stating that an employer may not withdraw notice of termination which has been given as a result of a misunderstanding, unless there are special circumstances (such as where notice is given in the heat of the moment) entitling the employer to withdraw the notice.

In this case the employer believed that the employee had agreed to move to self-employment and issued notice of termination of his employment. However, when the employee was unwilling to accept the new contract, the employer attempted to retract its notice. The employee rejected these attempts and brought a claim for wrongful and unfair dismissal.

Notice of termination (given by either side) can rarely be withdrawn and will usually require consent from both parties or very limited "special circumstances".

Expiry of a work permit does not limit the compensation available for unfair dismissal

In Ram v J D Wetherspoon PLC UKEAT/0080/11, the EAT held that an Indian national who was unfairly dismissed before the expiry of his five-year work permit should have been entitled to compensation for loss of earnings beyond the date of expiry of his work permit.

The first instance tribunal had held that employment beyond that date would have been illegal, and had only awarded him compensation up to the date of expiry of his permit. However, the claimant had applied for indefinite leave to remain. This application entitled him to remain in the UK and to continue to work for the respondent (had he not been dismissed), pending a decision on his application. The EAT held that, as a result, he was entitled to claim compensation beyond the expiry of the work permit, subject to the duty to mitigate his losses.

This case serves to highlight the issues for employers surrounding the termination of employees on work permits/ who have permission to work under the Points Based System.

Can cost be relevant to the duty to make reasonable adjustments?

Cordell v Foreign & Commonwealth Office UKEAT/0016/11 concerned a deaf diplomat who was offered a post in Kazakhstan which was later withdrawn by the FCO because of the cost of providing English lip-speaker support for her (£250,000 per year). The employee claimed that this amounted to direct discrimination and a breach of the duty to consider making reasonable adjustments, under the Disability Discrimination Act 1995.

The EAT agreed with the Tribunal that the cost of the support was unreasonable and, whilst there is no objective test by which Tribunals can weigh up competing budgetary considerations, the EAT set out a number of factors which the Tribunals should consider when deciding whether an adjustment was reasonable, including the size of any budget dedicated to reasonable adjustments, what the employer has chosen to spend in comparable situations, what other employers are prepared to spend and any collective agreement or other indication of what level of expenditure is regarded as appropriate by representative organisations. Ultimately, the outcome of each case will be a judgement call for the Tribunal, based on what is "right and just".

This is a useful reminder that the Tribunals do not expect employers (even employers with deep pockets, such as the government) to make reasonable adjustments "at whatever cost" and that cost is one of the central considerations in the assessment of reasonableness.

Employees on long-term sick leave must request holiday to be paid for it

In Fraser v Southwest London St George's Mental Health Trust the EAT held that an employee on long-term sick leave must request annual leave in accordance with Regulation 15 of the Working Time Regulations 1998 in order to be entitled to payment for it. Nothing in the previous case law of Stringer and ors v Revenue and Customs Commissioners suggested that Regulation 15 should not apply to workers who are off sick.

An entitlement to be paid for annual leave under Regulation 16 only arises in respect of leave actually taken. The employee in this case did not take any holiday during the years in question. The ordinary rule is 'use it or lose it' and neither the wording nor purpose of Regulation 14 (which gives a right on termination to pay in lieu of untaken leave) requires the revival of claims for holiday entitlement not taken in previous years.

The Judge noted that it might be artificial for an employee who is not at work to have to give notice that part of her absence should count as holiday, but he felt that this merely reflected the artificiality of a period of long-term sickness counting as holiday at all.

This is a welcome clarification for employers who have employees on PHI schemes or other long-term sickness absences spanning several years.

Other News

Leaked Beecroft report suggests the abolition of the Unfair Dismissal regime, Clegg wades into the debate with "protected conversations"

Hot on the tail of last month's announcement by the government that they are going to make it harder for employees to bring Tribunal claims, a leaked report commissioned by David Cameron from a Tory donor Adrian Beecroft has suggested that Cameron should junk the unfair dismissal regime.

Nonetheless, Mr Beecroft acknowledges the political reality that this could never happen and suggests instead that the government makes it easier to dismiss poor-performing employees. In particular he suggests making a distinction between "fault" and "no fault" dismissals and puts forward the concept of a "compensated no fault dismissal", under which employers could avoid the pitfalls of a capability process by terminating their employment and paying the equivalent of a statutory redundancy payment.

Only two pages of the report have been leaked but there are also rumours circulating about numerous other controversial proposed changes to employment and immigration legislation in the report, including the abolition of the flexible working regime, reduction of maternity leave, an exemption from the pensions auto-enrolment legislation coming into force next year for SMEs and start-ups and scrapping immigration checks for new workers. None of these matters are set out in the pages of the report which have been leaked to date.

Nick Clegg has waded into the debate (presumably trying to assuage the subsequent maelstrom) by suggesting instead that employers should be able to have frank discussions with under-performing employees and should have "protected conversations" which couldn't be reported to a court (hasn't he heard of "without prejudice" conversations?).

Why did Cameron commission the report in the first place? Could it have something to do with the fact that the minister in charge of business and the removal of red tape is one Vince Cable, Liberal Democrat who is reported to be "strongly opposed" to the proposals set out in Beecroft's report? No doubt there will be much more politics along the way.

CIPD gets political about the impact of new flexible working proposals

The government has just closed its consultation on the extension of the right to request flexible working to all employees with 26 weeks' service and the introduction of a duty to consider requests "reasonably". The proposals have led to some backlash from employers about the impact of such an extension.

The Chartered Institute of Personnel and Development (CIPD) has published statistics from the Employment Tribunals service, obtained via a Freedom of Information request, showing that in 2010/11 there were 277 tribunal claims for failure to comply with the flexible working procedures. Only 10 claims were successful.

CIPD uses these statistics to argue that recent fears expressed about the impact of extending the right to request flexible working are exaggerated.

However, in our view this overlooks the fact that the issue for employers isn't the flexible working procedures themselves, but how flexible working arrangements operate in practice and how to ensure employers' needs are met. This is where the real burden will come from if the government decides to extend the flexible working regime, particularly if it proceeds with its proposal to require employers to consider requests "reasonably", which may make it more difficult for employers to turn requests down.

Further reductions in the number of non-EEA migrants entitled to work (and settle) in the UK are likely

In a speech to the Institute of Government in October, David Cameron highlighted that the cap on migration of 20,700 for 2011 – 2012 has been undersubscribed every month since it was introduced, with businesses currently using less than half of their monthly quotas.

Cameron sees this as an opportunity to tighten the cap further and has asked the Migration Advisory Committee (which advises the government on immigration policy) to look into the area and to reconsider whether the limit is set at the right level

This is in spite of the fact that the Migration Advisory Committee has already reported that when the number of skilled non-EU migrants coming to the UK is reduced by 10,000, over half a billion pounds is lost from UK GDP.

The government seems to have failed to grasp that perhaps the reasons employers aren't using the quotas are because we are in a recession and the quotas have added yet another layer of bureaucracy, complication and delay which employers are trying to work around by sending their staff elsewhere in the world, or by working remotely, which further damages the UK economy in lost tax revenues.

In addition, the Migration Advisory Committee has suggested that the government should consider a minimum salary threshold of £35,000 for individuals applying for settlement (also known as permanent residence or indefinite leave to remain). This would cut the number of migrants allowed to remain in the UK after 5 years' work from 60,000 per annum to 20,000.

What's coming up

HR Forum: Redundancies - lessons learned from the recession - Thursday 1 December 2011

As the prospect of a double dip recession is looking increasingly likely, now is the time to take stock of the lessons learned during the past few years when implementing redundancies and other cost saving measures. Focussing on a number of key themes, including collective consultation, changes to terms and conditions and flexible, part-time and home working, we will explore the risks taken and pitfalls encountered and consider how these can be avoided or minimised in the future.

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.

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