Bright light!

Employment Law Newsletter - September 2016


In this issue ...

  Upstaging does not involve TUPE   It's a balancing act  
  Counting down time   Court of Appeal out of a job?  
  Tightening termination tax   Inflated injuries to feelings  
  (Un?)reasonable adjustments   Still full of life  
  More reasonable adjustments   Reading between the lines  

Upstaging does not involve TUPE

What happens when, in the face of direct competition for custom from an independent commercial entity (if you like, an 'intruder'), a local authority waves the white flag and decides to terminate its own service provided by a contractor? Specifically, is the council's contracted service-provider able to avoid ongoing liabilities to its staff by treating the situation as a service provision change (SPC) under TUPE?

In CT Plus (Yorkshire) CIC v Stagecoach, a case about a client council's cancellation of a local park-and-ride services contract with CT Plus from the day Stagecoach set up in competition, the Employment Appeal Tribunal (EAT) answered in the negative. The concept of an SPC had to be approached in a common sense manner and did not extend here to allowing TUPE to catch Stagecoach, which had no connection or relationship with the council.


Counting down time

It is usual, if not almost mandatory, for a disciplinary warning to contain a time limit after which it ceases to be live and capable of being properly taken into account in the event of an employee's further misconduct. But, if that further misconduct occurs, what is the relevant event for deciding whether or not the previous warning has been 'timed out' and has expired? Is it the act of misconduct itself or, alternatively, the resultant disciplinary hearing?

In Trye v UKME, the former fell within the 12-month 'validity period' of an earlier final warning, whereas the disciplinary hearing which dismissed the employee happened after that period had elapsed. In another exhibition of pragmatism, the EAT said that the employer had been entitled to take into account the final warning and, therefore, the dismissal was fair. In passing, it also confirmed that, to be a legitimate part of the dismissal decision, a final warning did not have to relate to precisely the same offence as the one that ultimately caused that decision.


Tightening termination tax

In the September 2014 and September 2015 issues, we tracked a review on the tax treatment of termination and compensatory payments. Consultation having been completed, the Government has now published detailed plans with draft legislation.

Although the broad principle of the tax exemption on termination payments of £30,000 or less will remain, the key changes are:

All PILONs, whether contractual or not, will be subject to deductions for income tax and NICs.
NICs coming into line with income tax, so being payable on termination payments above £30,000.

Moreover, payments for injury to feelings (normally in discrimination cases) will not be exempt from deductions, unless the condition constitutes a true psychiatric injury.

The new rules will not become operative until April 2018.


(Un?)reasonable adjustments

In G4S Cash Solutions v Powell, the Employment Appeal Tribunal (EAT) has concluded that there is nothing wrong 'in principle' with an employment tribunal finding that a 'reasonable adjustment' for a employee moved to a lower-skilled and less well remunerated role because of their disability was to protect their pay.

It puts this view on the footing that such maintenance of pay is just one type of the increased cost that almost inevitably faces employers subject to the duty to make reasonable adjustments. In our view, that supposed justification overlooks the fact that pay is pivotal to the 'value equation' of the working relationship and, moreover, can more readily arouse sensitivities that affect employee relations and workforce motivation.

Strangely, having taken the trouble to endorse this approach, the EAT then went on to say that, 'in changed circumstances', continuing the pay of a disabled employee at the pre-demotion rate would not be a reasonable adjustment that an employer would be required to make. It eschewed the opportunity to describe the applicable changed circumstances. So, in reasonable adjustment situations that involve a move to another discrete job of lower value, our advice to clients will continue to be that, pay should reduce to the appropriate level after a short period of time unless it is certain that the demotion will only be for a limited period anyway.


More reasonable adjustments

In Perratt v City of Cardiff Council, the EAT gave some better examples of what a reasonable adjustment might look like. Perratt, ultimately dismissed on the grounds of capability, suffered from Asperger's syndrome, which affected her memory, and also had mobility issues that created difficulties for her in getting to a central unit to collect printing. The EAT held that two reasonable adjustments by the Council in the circumstances should have been allowing her to record meetings (to ensure she remembered what she was required to do) and having a colleague collect her printing. Simple.


It's a balancing act

In XC Trains v CD & Aslef, the EAT clarified that, in indirect discrimination claims (this one was sex-based, concerning the inability of a single mother with three children aged under five to comply with the roster and weekend working requirements of her full-time post), the discriminatory effects of the employer's 'provision, criterion or practice' - here, the contractual requirement to work those rosters and weekends - must be weighed against the employer's legitimate business aim underlying that requirement. That 'scientific' approach was necessary to determine whether, despite its effects, the requirement was proportionate and was not unlawful.

On a separate aspect of this ruling, we have noted before that employment tribunals are usually pretty good at saying what is wrong with an employer's procedures, decisions or actions, but rarely so good at explaining what should have been done or in place. Our criticism has generally been focused on isolated issues involving single employees (typically, in an unfair dismissal setting). However, as the EAT pointed out here, a tribunal can go too far if it posits alternative arrangements on the more complex matter of working arrangements in a large employer without considering the effect on other employees or whether there was any factual basis for those suggestions.


Court of Appeal out of a job?

Last month, s.65 Criminal Justice and Courts Act took effect. It allows for appeals to go directly from the EAT in England and Wales (not Scotland) to the Supreme Court (so by-passing the Court of Appeal) where the point of law at stake is one of 'general public importance'. The process can only be triggered, by the EAT's certification, if one of several additional conditions is met.


Inflated injuries to feelings

According to the EAT in AA Solicitors v Majid, to allow for the effect of inflation, employment tribunals can now make their own adjustments to the 'Vento' bands of compensation for injury to feelings suffered in discrimination cases, without waiting for guidance from higher courts. Cue chaos...


Still full of life

If you thought that the 'overtime and holiday pay' furore, which arose with the EAT's ruling in Bear Scotland v Fulton (see various issues, starting in November 2014) had settled down, think again. In Brettle v Dudley MBC, an employment tribunal has just decided that overtime pay and other monetary enhancements derived from excess hours voluntarily worked should be included in the calculation of holiday pay due on the first 20 days of leave due under the Working Time Regulations (WTR).

This goes farther than Fulton, in which the EAT only endorsed the inclusion of pay for 'non-guaranteed' overtime in the WTR holiday pay arithmetic. Get ready to track another appeal!


Reading between the lines

In September 2015, we mentioned Ramphal v Department of Transport on the risk of a dismissal being found unfair because of HR's over-zealous or over-prescriptive guidance to the decision-maker.

Now, in a similar vein, comes Dronsfield v University of Reading. Here, an investigator's initial report into potential gross misconduct (which was specifically defined in the University's statutes) was altered on the advice of HR and the in-house legal department. The diluted version omitted some significant views of the investigator, including his opinion that there was no evidence to suggest that gross misconduct as defined in the University's statutes had occurred. The EAT ruled that such significant editorial work could render the dismissal unfair, regardless of how exemplary other aspects of the procedure are.


Just a quick reminder that Collinson Grant does a lot more than advise clients in all sorts of organisations about the complexities, constraints and opportunities presented by employment law. Our consultants also provide support regularly on: employee relations, reward, restructuring, recruitment, leadership and HR strategy. And we have well-honed skills in operations: managing and reducing costs, organisational design, process improvement, procurement and managerial controls. Do ask if you would like to know more.


If you would like to discuss this or any other issue facing your organisation please speak to your usual contact at Collinson Grant or Peter Howarth 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.