1. Multi-site collective redundancies: EAT ruling extends application of consultation obligations
It has been reported that the EAT has ruled that the obligation to inform and consult for collective redundancies applies whenever an employer proposes 20 or more redundancies within a 90 day window, even if these 20 are spread across a number of separate workplaces or "establishments".
The judgment in USDAW v WW Realisation 1 Ltd (in Liquidation) has not been published at the time of writing, but according to press releases from the union's representatives, HHJ McMullen ruled that UK legislation requiring 20 or more proposed dismissals at one establishment was incompatible with EU law and should be read omitting the single establishment wording.
This represents a very significant change to the law which will need to be considered by any multi-site employers currently planning mass redundancies. The likelihood of appeal is as yet unknown.
2. Failure to inform and consult: maximum award not appropriate for technical breach over election of representatives, nor where urgency due to insolvency
The EAT has reduced an award for failure to inform and consult on a TUPE transfer from seven weeks' pay to three weeks' pay, where the employer had attempted to comply with its obligations but had rushed the election of representatives with whom to consult.
The 18 affected employees were given one afternoon to nominate and vote for candidates for two representatives. One of the affected employees was excluded from the process as it was his day off and the EAT ruled that the employer should have waited. There was also a tie between two candidates for the second representative position and the employer simply chose one of them (on the basis that it was the other's day off on the day of the consultation meeting). The EAT considered that the employer should have notified the employees of the tie and allowed them to decide how to resolve it, although it accepted that the employer was not acting out of malice and was simply seeking a practical solution.
Although the breaches compromised the fairness of the election, they were only technical in nature and the actual consultation was satisfactory. Awards should reflect the seriousness of the employer's default and in this case two to three weeks' pay was appropriate. (Shields Automotive v Langdon)
The maximum award will also be inappropriate if compliance with the required consultation period would have meant the employer trading while insolvent. The EAT in AEI Cables Ltd v GMB reduced the award for failure to consult over mass redundancies to 60 days' pay despite there being a complete failure to inform and consult, to reflect the threat of insolvency and personal liability attaching to the directors. However this was still a substantial award and emphasises the importance of carrying out as much collective consultation as possible, even in a dire financial situation.
3. Unfair dismissal: employers should follow Acas Code on discipline where conduct or performance issues lead to a "SOSR" dismissal
Recent case law has highlighted risks for employers dismissing an employee for a breakdown in trust and confidence, for example where the employer is partly to blame for the breakdown or where in reality the issue is one of conduct or performance giving rise to the breakdown. A recent EAT ruling, Lund v St Edmund's School, heightens the risk. The Acas Code of Practice on disciplinary matters expressly applies to conduct and performance but is silent as to dismissals for "some other substantial reason". The EAT has now ruled that the Code does apply to dismissals where disciplinary proceedings have been, or ought to have been invoked, even if the dismissal is ultimately made "for some other substantial reason" and not conduct. In this situation, the employer risks a potential uplift to the unfair dismissal award of up to 25%, for breach of the Code.
The fact that the employer had contemplated dismissing for misconduct seems to have been a decisive factor. There may still be scope to argue that the Code does not apply to a dismissal for a breakdown in trust and confidence where the employer has chosen to focus solely on the breakdown and not its cause, but it may be unclear which side of the line a case falls. It is therefore advisable to follow the Code wherever there is an element of conduct or performance in the chain of events leading to dismissal. The Code should not apply to "SOSR" dismissals unconnected with conduct or performance, such as re-organisations.
4. Age discrimination: partnership mandatory retirement age of 65 lawful
Readers will be aware of the Supreme Court ruling in Seldon v Clarkson Wright & Jakes that a mandatory retirement age of 65 in a law firm partnership was potentially justifiable to achieve the legitimate aims of staff recruitment and retention and workforce planning (see here). The case was remitted to the tribunal to decide whether it was in fact justified in the particular case, and the tribunal has now confirmed that it was.
The most relevant factors were that all the firm's partners were in an equal bargaining position and had consented to the rule, and that at the time salaried partners and associates were subject to the statutory default retirement age of 65 (since abolished). The tribunal also took into account the fact that the original tribunal had considered the state pension age (65 for men at the time) to be a relevant but not significant factor, that the ECJ has upheld retirement ages of 65, and that mandatory retirement at some age does achieve the legitimate aim of avoiding the need to expel partners by performance management (although this by itself would not justify the specific age of 65).
The tribunal noted that the position might be different if Mr Seldon had been retired compulsorily after the abolition of the statutory default retirement age in 2011 and after the planned changes in the state pension age.
The ruling does not represent a green light for employers who have chosen to retain compulsory retirement ages, given the importance of the size and culture of the firm in this case, the lack of equality of bargaining power in the employment relationship, and the fact that the abolition of the default retirement age removes a rationale for choosing that age. It is unclear whether the availability of pension could provide sufficient rationale for choosing a cut off on its own, or whether it will be necessary to compile statistical evidence on the impact of specific retirement ages on recruitment/retention or succession-planning. It seems that if evidence is required, it will need to be specific to the industry or employer - the tribunal here criticised evidence on deterioration of performance with age on the grounds that it related only to employees and workers generally and not professionals such as law firm partners, and so was not sufficiently focused or relevant.
5. Termination: final version of Acas Code on settlement agreement discussions
ACAS has published its response to consultation on a statutory Code of Practice on settlement agreements, and in particular on the new provision for employers to have "protected settlement discussions" introduced by the Enterprise and Regulatory Reform Act and planned to come into effect this summer. This will enable employers to hold termination settlement discussions prior to starting a disciplinary or performance management process without the risk of the discussion being referred to in an ordinary unfair dismissal claim, unless there has been “improper conduct”.
Many of the changes are to explain more clearly the effect of the new protection. Other changes to note include:
- The Code still includes good practice tips, expressed as actions the employer "should" take, whereas legal requirements are set out as steps the employer "must" take.
- It is now clear that employers do not have to give reasons for proposing termination, although this is suggested to be helpful. It is also described as best practice (rather than a requirement of the Code) to allow the individual to be accompanied by a colleague or union representative to a meeting to discuss the proposals.
- A key part of the Code focuses on what is meant by improper behaviour. Acas states that it is not possible to provide an exhaustive list of such behaviour. The non-exhaustive list includes all types of discriminatory behaviour and “putting undue pressure on a party”. The examples of undue pressure given have been amended. The first draft included an employer allowing the employee less than seven working days to consider the offer or reducing the value of the offer within this time. The revised version amends this to "not giving the reasonable time for consideration" set out in paragraph 12 of the Code. Paragraph 12 provides that "what constitutes a reasonable period of time will depend on the circumstances of the case. As a general rule, a minimum period of ten calendar days should be allowed to consider the proposed formal written terms of a settlement agreement and to receive independent advice, unless the parties agree otherwise". This provides employers with a little more flexibility. The Code also contains a new paragraph giving non-exhaustive examples of conduct that is acceptable: setting out in a neutral manner the reasons that led to the proposal or factually stating the possibility of starting a disciplinary process if agreement is not reached.
- The template letters are to be revised and moved to as yet unpublished non-statutory guidance.
The Code has now been approved by Ministers and laid before Parliament on 13 May under the negative resolution procedure. Unless either of the Houses objects, it can be brought into force after 40 days.
6. Employment law reform: timetable for tribunal reform, Queen's speech, DBS certificates, consultation on equal pay audits
- The Government has confirmed that revised employment tribunal rules and fees for employment tribunal claims will apply from 29 July 2013. The new rules are available here. We are preparing a briefing on the new rules which will be available shortly.
- The Queen's Speech included only a few proposals relevant to employment law: increased fines for employing illegal workers, a £2,000 employment allowance to set against the NIC bill, stronger legislation to prevent the use of offshore employment payroll companies, the removal of the presumption of self-employment for LLP members, and the removal of employment tribunal powers to make wider recommendations (for example to update diversity policies or provide staff training) where a claimant brings a successful discrimination claim but is no longer employed.
- The Disclosure and Barring Service has announced that from 17 June 2013 individuals can subscribe to a service that will keep their criminal record certificate up to date, so that when they move jobs they can provide their previous DBS certificate to the new employer, who can then carry out a free online check to find out whether there have been any changes. DBS certificates will initially be sent only to the individual applicant to enable them to challenge the contents before the certificate is released to a potential employer. DBS guidance is available here.
- The Government is consulting until 18 July 2013 on the proposed scope of regulations to allow tribunals to order equal pay audits where an employer loses an equal pay case, planned for 2014. The consultation seeks views on a number of areas, including the government's decision not to require employers to publish the results of their audits generally (although they will be disclosed to the employees subject to the audit) and whether the EHRC good practice guidance on how to carry out an equal pay audit will be adequate.