It's a trap!

Employment Law Newsletter - July 2013


In this issue ...

  Gone fishin'?..   What's sauce for the goose is sauce for the gander  
  More than a rumour!   No wonder  
  A taxing settlement   65 and out!  
  A group of one?   A striking decision  
  'It's not our job...'   (Not) Just like the old days  
  Not so fast! (after all)   Bye bye boomers, hello job hoppers  
  But there's a trade-off   Big Data can't predict everything  
  No objection possible    

Gone fishin'?..

Even in this era of long weekends and short breaks, we look forward to our 'proper' summer holidays. We know that many of you will be equally distracted in the coming weeks. And legislators and judges are certainly no strangers to the summer vacation, meaning there should be fewer employment law 'hot spots' over the next couple of months. So, we reckon the next edition of the newsletter is best held over until September (that's why this one is a bit fuller than usual - almost a 'bumper issue'), while you enjoy a break in the meantime.

Of course, we are still here through the long, hot(?!) summer, ready and waiting to provide support or to answer any question. So, do carry on calling us - from the office, car or even the beach!


More than a rumour!

It turned out to be true then - as the May issue presaged, the EAT has ruled (in USDAW v Woolworths) that the words 'at one establishment' in UK legislation on 'collective consultation' must be disregarded to make it tally with the governing EU Directive. So, as a rule of thumb, 20+ redundancies proposed to occur within a period of 90 days or less across a legal entity, regardless of the location(s) at which 'at risk' employees are based, will trigger the duty to consult with recognised trade unions or other employee representatives.

There might be ways around this in some situations where the aggregation of redundancies lacks some binding force. We shall be happy to advise. But, on any analysis, there is no doubt that the collective consultation duty has been greatly expanded, at least for the time being (another case has already been referred from an employment tribunal to the ECJ for a ruling on the same question, but it is unlikely to be considered for some months).

The rules of thumb are (i) watch what is happening across your organisation, and (ii) if in doubt when planning, assume that you will need to consult with representatives and factor in time accordingly.


A taxing settlement

In Barden v Commodities Research Unit International, the High Court has considered the position on the taxation of a compensatory amount in a settlement agreement which failed to make provision for taxation or even to label the sum (£1.35 million) as 'gross' or 'net'. It has held that the specified amount is gross and that tax must then be deducted from it. That accorded with reality - people tend to describe salaries as gross and settlement agreements rarely describe a figure as 'after all deductions'. So, good news for any employer who happens to overlook precision and forgo support on drafting - unless, of course, it also overlooks this feature and proceeds to account for tax as if the stated sum was net.


A group of one?

You can have a group of one. TUPE tells us so. Regulation 2(1) says that a reference to an 'organised grouping of employees' (OGE), the prerequisite of a 'service provision change' (SPC), includes 'a single employee'. Does that mean that just one employee of a contractor, totally dedicated to servicing a particular client, always transfers under TUPE if that client brings the activity 'in-house'? No, according to the EAT in Ceva Freight v Seawell.

The employee in question, a logistics coordinator in Ceva's 'warehouse outbound goods' team, devoted 100% of his time to a particular client, Seawell, on which others in the team only spent between 10% and 30% of their time. Seawell took the function in-house. The EAT said there was no SPC and, therefore, TUPE did not apply to transfer the employee to Seawell. The key point was that there was no OGE. First, because, although he was exclusively devoted to Seawell, he did not stand alone as a 'group of one' - others also did some Seawell work. Second, all those (including him) who did Seawell work were not sufficiently 'organised' to that end - they were principally organised for an activity other than Seawell ('outbound goods').

Encouraging for those taking back or taking over service arrangements. Less so for those losing them - unless they can get a plausible OGE in place sufficiently beforehand, they will end up holding on to employees who were previously assumed to be moving away with TUPE.


'It's not our job...'

Non-compliance with the duty of pre-transfer information/consultation under TUPE can result in an award of up to 13 weeks' pay per affected employee. And the transferor and transferee are 'jointly and severally liable' for this. So, how is the award apportioned between them? Well, you probably think that as Parliament has gone to the trouble of creating shared liability, it also arranged for the tribunal to divvy things up at the same time as it fixes the overall amount of the award. After all, it heard the evidence about why the duty was not observed in the first place.

Nothing so simple. In Country Weddings v Crossman, the EAT ruled that, if the two respondents against whom awards were made could not agree how much each should pay, the matter has to go to the County Court or High Court for determination.


Not so fast! (after all)

To finish off on TUPE for now (there's a lot about it in this issue, but it's been a bit scarce in recent ones), what about the Government's plans for changes to remove 'gold plating' and general confusion? The official statements about amendments being in place in October were confident and consistent. So, even with a delay in the Government's response to the recent consultation (in which it would lay out more precise plans), we and other commentators have counted 'TUPE in October' as a given and listed it accordingly alongside other recent innovations in employment legislation.

Well, surprise, surprise! The Government has just announced that no substantive response with draft regulations will be published before September. And that makes its self-imposed 'deadline' a month later look rather optimistic.


But there's a trade-off

On the other hand, the new provisions on confidential pre-termination conversations and negotiations about a settlement (aka 'protected conversations') will now commence on 29th July, not in the autumn as previously thought.


No objection possible

The Employment Relations Act 1999 gives an employee the right to be accompanied at a grievance or disciplinary hearing by a colleague or a trade union official (whether a full-timer or a 'shop steward'), provided that the employee 'reasonably requests' such accompaniment.

In Toal v GB Oils, the EAT has ruled that 'reasonably' (or 'reasonable') is not a reference to the suitability or desirability of the particular person nominated as companion. Provided the nominee fits into either of the permitted categories, that is the end of the matter. The key message here is that an employer does not have the legal right even to challenge the selection of, say, a collaborator in a disciplinary situation or, more bizarrely, the person who is a witness to the disciplinary matter or is the subject of the grievance (perhaps the claimant might think this was a good way of getting 'the accused' in the hearing to be cross-examined).

The EAT did add that, where no loss or detriment occurred because of the employer's refusal to accept a particular choice, only nominal compensation should be awarded for infringement of the statutory right. So, you might still take the view that it is worthwhile to reject a patently 'inappropriate' companion, provided there is ample scope for the employee to nominate another person.


What's sauce for the goose is sauce for the gander

In April's issue, we commented on a decision by the EAT about the evidentiary value in tribunal proceedings of covert recordings of internal hearings made by an (ex-)employee. In essence, the EAT did not prohibit or even materially discourage such subterfuge. As if by way of a balancing measure for employers, it has now produced a ruling (in City of Swansea v Gayle) that substantially condones covert surveillance to obtain the evidence necessary to justify dismissal.

On five separate occasions, Mr Gayle was filmed by a private investigator leaving a sports centre at times when his employer's clocking system said he was still at work. His dismissal for gross misconduct was held to be fair, the EAT observing that neither the view of some that the employer's conduct was distasteful or reprehensible nor the fact of an 'unnecessarily thorough' investigation could, of itself, make the termination unfair. And, on the 'human rights front', the EAT disagreed that Mr Gayle's right to privacy had been infringed. This was both because the surveillance occurred in a public place and because preventing crime and protecting others' rights were legitimate grounds for restricting his right to privacy anyway.


No wonder

The latest employment tribunal caseload statistics are out. They go some way to justifying the widespread changes to the rules of procedure that are currently being put in place.

Comparing the year to the end of March with the preceding 12 months, the number of new claims rose by 3% (in all, more than 191,000) and cases awaiting disposal increased by 13%. Behind these basic figures are even more worrying ones. The last quarter, from January to March 2013, saw 36% more claims received than in the equivalent period in 2012. And the average 'age' of a case by the time it was disposed of was about 19 months.


65 and out!

You will probably remember Seldon v Clarkson Wright & Jakes, the case that went all the way to the Supreme Court on the question of what could amount to 'justification' in direct age discrimination claims. (If not, see our June 2012 issue).

Well, the principle having been established (only a supposedly 'public interest aim' can suffice), the specific question of the lawfulness of the forced retirement at age 65 of a partner in a law firm was considered back at the employment tribunal. The tribunal's conclusion was that the age bar of 65 was objectively justified by such factors as the retention and career-development of other solicitors and succession planning. And, although the tribunal also took into account that UK legislation at the relevant time allowed employees (but not partners) to be forcibly retired at 65, the outcome is in line with the general trend of decisions from the ECJ on retirement at 65 or older.


A striking decision (or when is action not authorised by a union still a union activity?)

It's unusual for us to feature employment tribunal decisions, but, to be different, here's another.

Unofficial industrial action is, by definition, unlawful. It is in breach of the employment contract and, because it lacks the support of a ballot, also exposes participants to a dismissal without legal remedy and organisers to legal sanction. Moreover, the Government's guidance makes it clear that unofficial action is not within the scope of the statutory right to time off to undertake union activities.

But that has not stopped a tribunal (in Maunders v Proteus Well Services) from deciding that past participation in unofficial industrial action is a 'union activity' which, if it is a criterion for inclusion on a list of unwelcome prospective recruits, will infringe the specific laws prohibiting 'blacklists'. Oh, well...


(Not) Just like the old days

The recent spat between Unite and the Labour Party over the 'Falkirk selection' is a reminder of how the unions' power base has declined. Union membership statistics for 2012, just published by the Department for Business, Innovation and Skills, reveals an overall rise of about 60,000. But their combined membership (about 6.5 million) still constitutes just 26% of the UK's employed workforce.


Bye bye boomers, hello job hoppers

Ten thousand baby boomers will celebrate their 65th birthday every day between now and 2028. Many of them have been with one employer for years and have become part of the executive furniture. But as they retire, who will replace them?

The answer, according to researchers, is a generation which will be a lot more fickle.

Future Workplace, a New York-based consultancy firm, surveyed 1,138 workers born between 1977 and 1997 and found them almost unanimous that job-hopping was the way to go. Of those questioned, 91% said they expected to change jobs frequently, remaining with one employer for no more than three years.

Companies will need to understand how to harness the talents of these people, known to the advertising industry as Generation Y or Millenials.

They put a high value on personal development and career opportunities and they want an instant verdict on how they are doing. There is no need to scrap annual reviews altogether, but this important cohort responds much better to monthly meetings with managers to discuss performance and career development.


Big Data can't predict everything

Data analytics is touted as the future of HR. The idea is that you can mine 'Big Data' about the people you have hired and how they performed, and then predict the performance of job applicants.

A frequently quoted example of how this can work successfully in practice is what happened at Xerox, which cut staff turnover in its call centres sharply by recruiting on the basis of personality rather than previous experience.

Collinson Grant has been assessing and analysing the personal attributes of managers and potential managers on behalf of clients for many years. Before every decision on recruitment or promotion, directors can see how the candidate ranks against normative data on their managers.

Clients say this helps them get the right people into the right jobs, but there is more to it than the raw data. HR managers who use these methods know they have limitations as well as strengths.

Data on the intellectual functioning and personality of a candidate can predict how well they will perform a specific task, but they won't tell you how they would work in a particular team or how good they would be at motivating certain types of employee.

That is subject to many variables and must, in the end, be a matter of judgement.


If you would like to discuss this or any other issue facing your organisation please speak to your usual contact at Collinson Grant or Jo Hale on 0161 703 5600

Although care has been taken in the preparation of this Newsletter, Collinson Grant cannot accept responsibility for errors, omissions or advice given. Readers should note that only Acts of Parliament and Statutory Instruments have the force of law and only the courts can authoritatively interpret the law.