UK: Employment Newsletter - June 2013

Last Updated: 30 July 2013
Article by Brian Gegg

Pre-existing staff committee did not have necessary authority

By Jesper Christensen

The EAT recently considered whether members of a preexisting staff committee were 'appropriate representatives' within the meaning of the collective redundancy regime in the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA).

Where an employer chooses to consult pre-existing representatives, the representatives must have been appointed or elected by the affected employees and have authority from those employees to receive information and be consulted about the proposed dismissals on their behalf. In Kelly and another v Hesley Group Ltd, the EAT held that a Tribunal was wrong to conclude that employees on an existing staff committee satisfied these requirements.

Hesley Group did not recognise a trade union, so it decided to consult with the employee-members of an existing 'joint consultative committee' (JCC), which had been set up as an advisory body to communicate staff's views to management and vice versa. The JCC's constitution expressly stated that it did not have a negotiating function, and although members could be elected, the employer could also co-opt individuals onto the committee.

The Tribunal dismissed a claim brought by the employee representatives that the JCC did not satisfy the requirements of TULRCA. However, this decision was overturned by the EAT. Since the employer had a duty to consult appropriate employee representatives with a view to reaching agreement, the JCC's lack of authority to negotiate was problematic. The Tribunal had also failed to look at the purposes for and method by which the representatives were appointed, so it was not clear whether the JCC had the necessary authority to be consulted on behalf of affected employees. In addition, although Hesley Group had given the JCC an opportunity to raise the relevant issues, it had not complied with its obligation to ensure that proper consultation took place on ways of avoiding and reducing dismissals, and mitigating the consequences.

Although this case has been sent back to the Tribunal for further consideration, the decision provides some guidance in an area where there is very little case law. Employers who wish to consult an existing employee committee must ensure that the intended representatives have the necessary authority. In order to show that consultation is genuine, employers must also be proactive in providing information to employee representatives and ensuring that all relevant matters are discussed meaningfully, with a view to reaching agreement.

Decision to strike out disability discrimination claim upheld

By Brian Gegg

It is notoriously difficult for employers to persuade a Tribunal to strike out a discrimination claim. In order for a discrimination claim to be struck out without hearing all the evidence, it must have no reasonable prospect of success.

This is an extremely stringent test. However, in Patel v Lloyds Pharmacy Ltd, a disability discrimination claim was struck out early in the proceedings due to the employer's lack of knowledge of the claimant's disability.

Mr Patel was a locum pharmacist who had bipolar disorder. The area manager who recruited Mr Patel for Lloyds Pharmacy in 2008, Mr Butt, was aware of his disability prior to hiring him. In 2011, Mr Patel applied unsuccessfully for a full-time management position. Although he had disclosed his disability on an equal opportunities questionnaire, in line with routine practice this information was removed prior to the interviewers reviewing the applications. Mr Butt emailed one of the interviewers to inform him that he had reservations about employing Mr Patel due to problems with his attitude and punctuality. However, there was no evidence to suggest that Mr Patel's disability contributed to Mr Butt's dissatisfaction or that the interviewers knew of Mr Patel's disability. Mr Patel also scored very low on the standard recruitment exercises. When he was not offered a job he brought a disability discrimination claim.

The Tribunal and the EAT found that the interviewers lacked knowledge of Mr Patel's disability, and could not reasonably be expected to know about it. There could therefore be no discrimination arising from that disability. The EAT noted that although it was theoretically possible that one of the company's witnesses might admit to discrimination under skilful cross-examination, it would be wrong in principle to allow an apparently hopeless case to proceed purely in the hope that something might turn up in cross-examination.

This is a welcome example of a lack of knowledge providing a defence to a disability discrimination claim and resulting in an early strike out of the claim. However, employers should still do all they can reasonably be expected to do to find out if a worker has a disability.

Employee was victimised for bringing discrimination proceedings

By Caroline Yarrow

In Bouabdillah v Commerzbank AG, an Employment Tribunal has held that an employee was victimised when she was dismissed because she had brought discrimination claims against her previous employer.

The claimant, Ms Bouabdillah, had brought claims of sex discrimination and equal pay against Deutsche Bank. She resigned, and applied successfully to work at Commerzbank. During the recruitment process she was asked why she had left Deutsche Bank and omitted to mention that she had brought the Tribunal claims. She also filled out a pre-employment application form saying that she had never been the subject of civil proceedings. An article was published in the press about Ms Bouabdillah's litigation, following which Commerzbank dismissed her. It claimed that her failure to mention the litigation was a breach of trust which had exposed it to reputational risk.

The Employment Tribunal was unsympathetic to the Bank's argument. It held that Commerzbank had not analysed sufficiently whether there was a breakdown in trust and confidence, and had made a knee-jerk emotional reaction to the fact that Ms Bouabdillah's tribunal claim involved allegations of discrimination. Whilst her answers had not been entirely complete, they were not dishonest. In addition, there was no evidence of reputational damage. The Tribunal therefore agreed with Ms Bouabdillah that she had been dismissed because she had brought a sex discrimination claim, not because she had failed to disclose it.

This case is a reminder that a victimisation claim can be brought against a current employer in relation to a detriment that the employee has been subjected to because of a protected act done whilst employed by a previous employer. Given that the Tribunal also criticised Commerzbank's apparent lack of understanding of discrimination law, it is worth ensuring that managers involved in disciplinary procedures fully understand the law on discrimination and victimisation, and that this is backed up in documentation.

Tribunal fees and procedural changes expected to be introduced in July

By Nicholas Le Riche

It has been announced that all employment claims and appeals will be subject to fees from 29th July 2013, unless claimants qualify for fee remission under the remissions scheme. However, at the time of publication, it is understood that UNISON is bringing a judicial review against the decision to introduce fees.

Claimants will be required to pay an issue fee when submitting their claim, as well as a hearing fee which will be payable four to six weeks before the hearing date. The level of the fee will depend on the type of claim.

Level one claims will cover more straightforward and lower value claims such as redundancy payments, payments in lieu of notice and holiday pay. The issue fee for these claims will be £160, with a hearing fee of £230.

Level two claims will include more complicated claims such as unfair dismissal, whistleblowing, and discrimination claims. The issue fee for level two claims will be £250, with a hearing fee of £950.

Fees will also apply to counterclaims, group claims and other applications made during the course of proceedings, such as a request for default judgment. A fee of £600 will apply to judicial mediation.

The issue fee for an appeal to the EAT will be £400, and the hearing fee will be £1,200.

Under the scheme, Judges will have a discretionary power to order the unsuccessful party to reimburse the fees paid by the successful party.

Following consultation, the Government is currently finalising changes to the current remissions system which are expected to be implemented in October 2013. The proposed scheme includes a two-stage test based on a claimant's disposable capital and monthly income.

It is anticipated that the new Employment Tribunal Regulations will also take effect from July 2013. These Regulations contain some significant changes to Tribunal procedure including the introduction of an initial paper sift of claims to prevent weak cases proceeding, a 'preliminary hearing' which will combine the current case management discussion and pre-hearing review, and a greater emphasis on mediation.

Enterprise and Regulatory Reform Act 2013

By Kevin Poulter

The Enterprise and Regulatory Reform Act 2013 received Royal Assent on 25 April 2013.

The Act introduces a number of fundamental changes to employment law, including new provisions on whistleblowing, a new cap on the unfair dismissal compensatory award, and Employment Tribunal reform.

The following amendments were agreed in the final debate:

  • The Equality Act 2010 will be amended to cover caste discrimination. This is expected to be completed within one to two years;
  • The Agricultural Wages Board (AWB) will be abolished. This means that agricultural workers will now be paid the national minimum wage, which may be lower than the wages previously set by the AWB; and
  • the general duty of the Equality and Human Rights Commission will not be repealed.

Legislation on employee shareholder status finalised

By Garvey Hanchard

After a rocky passage through Parliament, legislation implementing the new employee shareholder status has finally been passed.

The Growth and Infrastructure Act 2013 amends the Employment Rights Act 1996 to allow existing employees or new recruits to give up certain statutory employment rights in return for receiving shares in a company worth at least £2,000.

Several last minute concessions had to be made by the Government in order to address concerns that there were insufficient safeguards built into the proposals for employees:

  • an offer of employee shareholder status must include a statement explaining the rights attached to the shares and the employment rights which are to be given up in return for those shares;
  • individuals must receive independent legal advice which will be paid for by the employer;
  • there will be a seven day cooling-off period from the day legal advice is received; and
  • Jobseekers' Allowance cannot be withdrawn if an employee shareholder job is refused.

The Finance Bill 2013 includes the relevant provisions on income tax, CGT and corporation tax. It is anticipated that the legislation on this new status will come into force from 1 September 2013.

A round-up of this month's other news and hot topics

Whistleblowing consultation; minimum wage increase; internship issues; migrant worker discrimination; and Trade Union share owners.

Public Concern at Work has set up an independent commission to look at the effectiveness of current legislation on workplace whistleblowing. The commission issued a public consultation which closed on 13 June 2013. The consultation sought views on various areas for possible reform, including whether whistleblowers should be rewarded, whether claims should be exempt from tribunal fees, and whether it should be mandatory for all organisations to have a whistleblowing policy in place.

National minimum wage increases will take effect on 1 October 2013. The standard adult hourly rate will increase to £6.31 (from £6.19), the apprentice rate to £2.68 (from £2.65), and the rate for workers aged between 18 and 20 to £5.03 (from £4.98).

Acting on information received from the campaign group, Intern Aware, the Government has passed details of 100 companies which are allegedly using unpaid interns to HM Revenue and Customs. This is a timely reminder for all employers to review the terms on which internships are engaged in order to limit the risk of interns being found to be employees or workers.

The European Commission has adopted a proposal for a new directive which aims to prevent discrimination and reduce the incidence of unfair practices faced by migrant workers in the EU. Member states will be required to introduce measures to improve labour mobility, for example, by creating national bodies to inform migrant workers of their rights and ensuring that proper procedures are in place for workers to enforce those rights.

The TUC, Unite and UNISON have formed a group to be known as the Trade Union Share Owners which aims to put union values at the centre of corporate governance. Its voting and engagement guidelines include recommendations that there should be worker representation on remuneration committees; directors' pay increases, pensions and notice periods should be in line with provisions for other staff; and directors should not receive an annual bonus.

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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