It's a trap!

Employment Law Newsletter - July 2015

 
 

In this issue ...

  Happy holidays, transfer news and then a bit more about holidays   Pulling in different directions?  
  The appeal cures things – just!   Early results for early conciliation  
  A bit of economic engineering?   Ignorance or misunderstanding is no excuse  
  Striking harder   Dual disadvantages must be related  
 

Happy holidays, transfer news and then a bit more about holidays

As this is our last issue until September, we would like to take this chance to wish those of you heading off on holiday, or at least taking a break, an enjoyable and relaxing time.

Whatever your location, many of you, while lying on the sunbed or slumped in the deckchair, will probably be keenly following the summer's football transfer news, the close season always being rife with conjecture, rumour and the occasional fact about the latest moves. But Collinson Grant's employment law and employee relations team has already acted to make an important new signing. Helen Moran, with a postgraduate diploma in human resources management from the CIPD, has extensive experience of advising employers and their managers on HR compliance, redundancies and restructuring. Having previously held HR posts with an NHS Trust and then Matalan, she joined us from AdviserPlus Business Solutions, where she was involved with various sectors, including financial services, manufacturing and professional services. Helen can be contacted on our usual office number or at hmoran@collinsongrant.com

And quickly back to holidays. Last week, you should have received our Newsflash featuring Plumb v Duncan Print Group, on the long-running saga about sickness absentees carrying over leave. It might be stretching things to call the decision of the Employment Appeal Tribunal (EAT) 'good news' for employers. But, at least the limitation of 18 months on carry over gives some much needed certainty that previous rulings (including those of the European Court of Justice) had failed to provide.

 

The appeal cures things – just!

A well-established principle of employment law is that a properly constituted and run disciplinary appeal process, when operating as a re-hearing of the case, can negate or 'make good' defects in the procedure resulting in the original disciplinary decision.

The decision in Adeshina v St George's University Hospitals NHS Foundation Trust is a useful reminder of that approach and an indicator of one limitation. The EAT dismissed the claimant's arguments that the appeal process was itself defective because (1) a member of the appeal panel had previously mentored a manager whose actions formed part of the claimant's defence and (2) the same member was, according to the claimant, also slightly implicated in those actions. On both counts, the EAT's view was that it was unrealistic and sometimes undesirable to expect an absence of previous knowledge or dealings between managers.

There was more finely balanced consideration of a third point the claimant made in attempting to invalidate the quality of the appeal – that another member of the appeal panel was subordinate to the manager who had made the original decision to dismiss. The EAT decided that the appeal's validity was not affected here, because the 'junior manager' was just one of three members of the panel, the other two being senior to the original decision maker. However, approving the content of the more detailed Acas guidance that supplements the basic code of practice, it agreed that the person hearing an appeal should generally be senior to the original decision-maker.

 

A bit of economic engineering?

Given that the Living Wage - as a national phenomenon, rather than a purely London-based one - is a product of the recent austerity years, it might be seen as a bit cheeky for the Government to call its replacement (in the case of those aged 25 and above) for the national minimum wage (NMW) the 'National Living Wage' (NLW). Of course, the new moniker, like the new rate from next April (£7.20/hour, compared with a NMW of £6.70/hour from this October) and the increase to £9/hour by 2020, serves a political purpose. It helps to soften the perception of the Government as one that is focused on cutting benefits (including tax credits) for the most vulnerable. But there's more to it than that. A change in name is significant here, as there is an important underlying change for another purpose.

The NMW has been and (where it will remain applicable) is, as it says on the tin, a protective, welfare-based measure. But it is likely the NLW is intended also to be a device of economic engineering.

The fault to be remedied is that of the UK's poor productivity relative to major competitors apart from Japan. A major cause is said to be that, although the UK has fuller employment than other countries, a substantial proportion of the jobs created in recent years are paid at the NMW or thereabouts (according to the OECD, amongst advanced economies, the UK is the 'market leader' for low paid jobs) and so occupied by low-skilled workers, frequently with little motivation to work harder or optimism about improving their lot. This is then compounded by employers who have been unwilling to invest in measures to increase performance in groups of workers who are often readily replaceable.

Part of the solution, particularly with limited public money available to drive productivity improvement through direct programmes of any size, can be seen as, to put it bluntly, inducing employers to get on with the task themselves – by making employment costs significant enough to prompt employers to start viewing these workers as more integral or embedded and to want a greater return on the larger investment required. It's not put quite like that in the Treasury's publication for Parliament about increasing productivity, Fixing the Foundations – Creating a More Prosperous Nation. There the rationale for the NLW is placed largely on the footing of allowing more people to enjoy the benefits of the anticipated economic growth (in essence, a continuation of the NMW's ethos and no more). But the two objectives are far from incompatible and the inclusion of the NLW in the 'productivity package' suggests that the idea of the 'lever' or 'gentle stick' on employers is at work here.

It's a plan, even if an implicit one. And, despite the ready ability of consumer-facing businesses - where many of the lowest paid workers operate - to pass on increases in costs, it might help (there is a prediction that the NLW will cost 60,000 jobs, but, even if that turns out to be true, other measures are forecast to increase jobs and, in any event, more unemployment does not necessarily mean lower productivity – witness France). It's far from a return to the old 'corporatist' tradition of industrial legislation of the 1970s, but, however you cut it, it's a quiet step up from the good old NMW – regulation simply to provide a basic level of individual economic security becomes regulation also to promote a collective economic objective.

 

Striking harder

Treading a more familiar track, albeit one that has grown over in recent years, the Government has just published its Trade Union Bill, the main concern of which is industrial action. Some elements were touched upon in our February 2015 and May 2015 issues, but here's a bit more detail and comment.

The isolated legitimacy of the core change is difficult to deny. After all, what's so difficult about a minimum turnout of 50% of members eligible to vote (those who would be asked to strike) and, in certain public services (health, education, fire, transport, border security and energy), a requirement for 40% of that category to support the industrial action? In fact, as the Government itself concedes, many recent ballots satisfy these thresholds anyway. But that very fact plus the small number of working days now lost to industrial action tend to suggest that the new restrictions are as much about posturing as about making any real difference to the working landscape.

The introduction of a statutory requirement for an accredited 'picketing supervisor', the absence of which and/or non-compliance with a raft of associated obligations will deprive picketing and its consequences of legal protection, looks a bit 'sledgehammer to crack a nut'. In recent years, there have been few instances of mass picketing in the style of Grunwick or Orgreave Colliery and, to the extent that inappropriate or intimidatory comments are made to those passing through the picket line, it is difficult to see how the supervisor is meant to negate this.

More understandable is the Bill's obligation on a union to give an employer two weeks' notice of action to be taken in pursuance of an affirmative ballot. This doubling of the current standard allows the employer and customers/consumers to plan more effectively to mitigate the effects. In particular, the change must be seen as operating almost in tandem with the proposed removal of the restriction on the supply of replacement agency labour during an industrial dispute (although, of course, this new freedom will not be a panacea in all cases – there are not too many agencies with a surfeit of tube drivers on their books).

Finally, the new requirement for a fresh ballot to occur after four months (even when the original dispute is still in train) would make a lot of sense. The current legislation and the associated case law on the questions of whether a dispute is continuing or separate, whether or not previously validated industrial action ceased or was merely suspended and whether there is a need for a fresh ballot is messy and uncertain.

 

Pulling in different directions?

In our May 2015 issue, we told you that the appeal of the employers in Lock v British Gas (first covered in the April 2015 edition) included a challenge to the critical aspect of the ruling in Bear v Fulton about the calculation of holiday pay (see our Special Edition of 5th November 2014) – that the Working Time Regulations (WTR) could be 'judicially re-written' to comply with decisions of the European Court under the Working Time Directive.

But, while we await the outcome, the Northern Ireland Court of Appeal (NICA) has extended Bear on its core substantive subject – the inclusion of overtime payments in the calculation of holiday pay. The EAT in Bear had said only that pay for 'non-guaranteed' overtime that a person has been required to work should be included. The headline for the NICA's decision, in Patterson v Castlereagh Borough Council, is, at its simplest, that earnings for purely voluntary overtime can also be taken into account.

However, that headline should be treated with caution by employers. Full arguments on the voluntary overtime point were not heard by the NICA, because the employers effectively conceded it. And, in any event, the NICA's decisions are only persuasive authority for tribunals and courts in the rest of the UK. To demand adjustments of holiday pay to accommodate voluntary overtime earnings, the Patterson 'principle' requires both endorsement after full consideration by an appellate court – preferably one in Great Britain – and, from the Lock appeal, survival of the ability of tribunals to read words into the WTR to permit overtime pay to be included in holiday pay calculations.

Some contrasting certainty is the fact that the 2 year limitation on 'back holiday pay' for tribunal claims presented from 1st July, mentioned in the January 2015 issue, is now in operation.

 

Early results for early conciliation

Acas has published results for the first year of early conciliation (EC).

In the period April 2014 to March 2015, more than 83,000 EC notifications were received (the statistics below cover all these, although the parties were only willing to explore EC in 75% of them). When the presence of group notifications is factored in, these represented over 100,000 individual disputes. Of these notifications, 63% did not ultimately proceed to the presentation of a claim to the employment tribunal and another 15% resulted in an EC settlement by COT3. And, of the 22% which did manifest a tribunal claim, just over a half were subsequently settled by COT3.

Although Acas reports that only 15% of individuals cited fees as a disincentive to pursuing a tribunal claim, the odds must be that a much greater proportion in the 63% above (as well as some of those who settled after putting a claim in) were put off by this factor.

 

Ignorance or misunderstanding is no excuse

One of the longest standing uncertainties in employment law is about the point in time at which and/or the subject on which the employer's duty to consult with employee representatives about 20+ redundancies arises. Does the obligation apply as soon as an employer considers taking a strategic or operational decision that, if taken, would entail redundancies (UK Coal Mining v NUM) or, alternatively, does the duty only bite once such a strategic decision has been made and redundancies must be seriously contemplated (Akavan v Fujitsu Siemens)? These conflicting authorities were mentioned in April 2010, beyond the reach of this newsletter's hyperlink.

The conflict was meant to be resolved by the subsequent case of USA v Nolan, but, for reasons we reported in January 2011 (still too distant in time for the hyperlink) and in February 2014, that case has still not produced the answer – it is still hung up, now in the Supreme Court, on the 'technical argument' about the jurisdiction of the UK courts over US Government bases, with no prospect of an imminent return to the Court of Appeal (CA) for a decision on the underlying and more important substantive point.

Now, to occupy the gaping space, comes another contribution from the EAT. In E Ivor Hughes Educational Foundation v Morris, a school's governors took the view that it would have to close unless pupil numbers quickly increased by a given amount. That target was not attained, so, soon after a confirmatory meeting of the governors, notices were issued to staff. At the end of the school year, the school did close and the redundancies took effect. At no point was there any consultation with employee representatives. The EAT concluded that the employer had breached the statutory duty to consult, regardless of whether the more restrictive Fujitsu or the more demanding UK Coal test were applied. Even though the original 'decision' was formally provisional or contingent on recruitment of pupils and so not strictly final, its nature there and then compelled contemplation of and planning for likely redundancies.

The EAT went on to affirm that the maximum 'protective award' of 13 weeks' pay per affected employee was appropriate. Although it accepted that the employer had not deliberately set out to disregard the law, it noted that the award is intended to be punitive and observed that the employer had been reckless in choosing not to seek legal advice on the situation.

While the Morris decision naturally rests on its own facts, their broad nature is not that unusual. It is quite common for a business, properly monitoring and evaluating circumstances over a period of time, at some point during that process to adopt the stance that if X does not happen, a measure will be necessary that is likely to cause redundancies. Nevertheless, provided there is proper collective consultation undertaken if and when that measure is ultimately approved unconditionally and the probability of 20+ redundancies increases (unlike Morris, where this did not happen), the dangers of this ruling about 'provisional decisions' is limited.

 

Dual disadvantages must be related

Two pre-requisites of indirect discrimination are the disadvantageous effects of an employer's 'provision, criterion or practice' on (1) the group of which the claimant is a member and (2) the claimant as an individual.

In UK Border Agency (UKBA) v Essop, the CA considered the relationship between them. It held that the reason for the claimant being put at a personal disadvantage must be the same as the reason for the group's disadvantage. So, a person's claims of indirect racial and age discrimination arising from the UKBA's requirement that all employees undergo an assessment to be eligible for promotion could not succeed simply because the statistics showed that employees of BME origin and those over-35 were more likely to fail the test than non-BME employees and those below that age. The reason for the individual's failure to meet the standard (for example, lack of personal application) might be quite separate from the reason for the BME group's or the over-35 group's difficulty.

 
 
 

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

www.collinsongranthr.com

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.