Summary and implications

A number of recent employment law developments are likely to affect the day-to-day working practices of many businesses. They cover a wide range of issues: proposed changes to the collective consultations regime and TUPE, summary terminations, the European Court of Human Rights’ decision in Eweida and the thorny issue of annual leave rights.

We summarise below the impact these will have and the steps you or your HR department should consider taking:

  • Proposals to slash the time for collective redundancies consultations may allow you to restructure your business more efficiently and to conduct redundancies in a shorter timeframe. Changes are also being mooted to abolish the provisions in TUPE dealing with service provision change. But, as explained below, this may not necessarily result in TUPE no longer applying to the transfer of services from one provider to another.
  • Ensure you have appropriate powers to terminate employment contracts summarily and do so lawfully. This may be stating the obvious, but, an unlawful summary termination of the employment contract will not bring it to an end unless and until the employee “accepts” the termination or the employer otherwise terminates the contract validly. This could leave the employee calling the shots.
  • Review your organisation’s dress code and other policies and practices which may have an impact on employees’ manifestation of faith. A recent decision by the European Court of Human Rights (ECHR) confirms that protection against religion discrimination covers a broader spectrum of practices than originally thought.
  • Take reasonable steps to ensure your workers take their statutory holiday entitlement during the holiday year. Generally speaking, healthy staff are responsible for making their own holiday arrangements, and if they fail to do so may lose their holiday allowance. However, a recent tribunal decision suggests employers ought to take reasonable steps to ensure staff take their full holiday entitlement. Periodical reminders during the holiday year are fairly easy to administer and could protect the employer in case of a future dispute.

Collective redundancies and business transfers – an employer-friendly future on the horizon? From April this year, the minimum consultation period employers must undertake, when seeking to make 100+ redundancies in the same establishment, will be halved from 90 to 45 days. This change is expected to allow employers to restructure more effectively, while saving administrative and salary costs. However, the duty ought not to be taken lightly: there are no plans to correspondingly halve the period on which the compensatory award (for failure to consult) is based. This starting point for making this award will remain at 90 days’ actual pay, but may be reduced in light of evidence of partial compliance. There are also proposals to abolish TUPE’s “service provision change” regime; allow some post-transfer harmonisation of terms and conditions of employment; and limit the circumstances in which post-transfer dismissals are automatically unfair. Remember, however, that the abolition of the SPC regime will not necessarily exempt service contract transfers from TUPE, as they may still fall under TUPE’s traditional “business transfer” provisions. In fact, we anticipate greater uncertainty in determining when TUPE applies, similar to that experienced before TUPE 2006 was enacted. The Government has no plans to review TUPE’s insolvency provisions (which it believes have been “sufficiently clarified” by recent case law).

Summary terminations – have you got what it takes?

Occasionally, an employer will want to end an individual’s employment immediately. Sometimes, this will be because an employee is guilty of gross misconduct. But, other times, the reasons may be less clear cut and the employer will be willing to pay the employee’s notice pay, provided the arrangements are at an end.

A recent Supreme Court decision highlights some of the risks involved in adopting such a course of action. We clarify below the steps you may have to take to ensure termination is lawful. In brief:

  • In the absence of a PILON clause, you must allow the notice period to run, unless the employee expressly agrees to an earlier termination (with a payment in lieu). Failure to do so means the contract may keep running unless and until the employee accepts the termination or you bring the contract to an end lawfully (e.g. having given the necessary notice).
  • If you intend to rely on a contractual PILON, make sure you follow it to the letter, making it absolutely clear that you terminate under the PILON, stating expressly the date of termination and making the PILON payment in strict adherence to the terms of the contract (which ought to provide you with flexibility as to the date of payment).

Geys v Societe Generale – the facts

Societe Generale (the Bank) purported to dismiss Mr Geys in November 2007. At the time, the Bank did not make it clear that it was relying on its PILON clause and did not make it clear termination was with immediate effect. Payment under the PILON clause was not made until a few weeks later. Mr Geys reserved his rights throughout: he did not accept the termination and claimed that as his employment continued for some time, he was entitled to an additional €4.5m. The Supreme Court agreed.

Pre-termination negotiations and post-termination compensation

With effect from this summer, the Government is proposing to protect settlement discussions from disclosure in unfair dismissal claims – even in the absence of an existing dispute. This will give some protection for employers who offer employees termination with a compromise agreement in the absence of a dispute. However, as the protection is limited to unfair dismissal claims only, it is of limited value. Employees often combine unfair dismissal claims with other complaints (e.g. discrimination), to which the exemption will not apply.

The Government has also announced plans to revise the compensatory award for unfair dismissal claims to the lower of one year’s pay (calculated in accordance with the statutory concept of a “week’s pay”) or the current limit of £72,300.

Religious staff and the right to manifest a belief

Following the much publicised judgment in the case of Eweida and her three fellow claimants now may be a good time to review the impact your working practices and policies may have on employees’ religion-related rights.

In many instances, this will be a matter of common sense. For example, can your dress code be adjusted to accommodate the wearing of the cross or star of David? Can you introduce some flexibility into Sunday work requirements, allow employees time off for prayer and make catering provisions that are suitable for employees of a diverse religious background?

When assessing the validity of your policies and practices balance all the conflicting interests. It is no longer a trump card to argue that it is open for an employee to resign from a job if its requirements conflict with his/her religion.

Healthy workers must take their holiday entitlement at the relevant year or lose it

Generally speaking, workers on sick leave accrue and roll forward their statutory annual leave days. They may take their period of accrued leave on return to work or, on termination, receive pay in lieu. Earlier this year we argued successfully, before an employment tribunal, that the same could not automatically be said for healthy members of staff.

The judgment provides three important lessons: workers

  1. Workers who are well will lose their statutory holiday entitlement if they do not take it during the relevant holiday year. Late requests which genuinely cannot be accommodated may lead to such loss.
  2. Employers ought to take reasonable steps to ensure workers take their statutory annual leave. Periodical reminders during the holiday year, of the right to take leave and the risk of losing it, are advisable.
  3. Employers ought to have clear holiday policies, e.g. in relation to the notice workers must give, and grounds for refusing leave. The larger the employer, the more it may be expected to show flexibility and apply alternative arrangements, where possible.

Collective redundancies and TUPE consultation: agency workers

A very recent employment tribunal judgment dealt with the issue of compliance with the statutory duties to provide information about agency workers under the above two regimes. The tribunal made protective awards ranging from 40 to 60 days’ pay in respect of partial failures to comply with this requirement only. The lesson is clear: if engaged in TUPE or collective redundancies consultation, provide all statutory required data in full.