1. Equal pay: out of time tribunal claims can proceed in the High Court

Employers could face a substantial increase in historic equal pay claims.  The Supreme Court has upheld the Court of Appeal's decision that claimants who have failed to meet the time limit for an equal pay claim in the employment tribunal (generally six months) can bring their claim in the High Court (subject to a six year limitation period).

The reason for the delay is not relevant (unless there is an allegation of abuse of process), although might be taken into account when considering costs orders in the court. The Court’s discretion to strike out an equal pay claim where it could be more conveniently disposed of in the employment tribunal should not be exercised where the tribunal claim would be out of time.

Employers should review their document retention policies to ensure they retain sufficient evidence to respond to historic equal pay claims dating from as far back as six years ago. (Birmingham City Council v Abdulla, SC)

  1. Fixed-term employees: claims based on former fixed-term status permitted

Employers should not disadvantage an employee due to their former fixed term status.  The ECJ has ruled that EU law permits employees to bring claims for detrimental treatment occurring after they have ceased to be fixed–term, where the reason is their former fixed-term status.

A claim was possible under the Fixed-Term Work Directive where time spent on fixed-term contracts was not taken into account in determining the length of service and therefore pay of employees who had become permanent.  The ECJ also considered that a blanket rule ignoring such service in all circumstances could not be justified.

UK regulations will need to be read purposively to comply with this ruling. (Valenza and others v Autorita Garante della Concorrenza e del Mercato, ECJ)  

  1. Collective redundancy consultation: ECJ fails to rule on trigger due to lack of jurisdiction

Uncertainty remains over the trigger point for collective redundancy consultation where a strategic business decision foreseeably or inevitably leads to redundancies.

It had been hoped that the ECJ would provide some much needed clarity on this issue following the Advocate-General's opinion in USA v Nolan.  Unfortunately the ECJ concluded that, as civilian staff at a military base are excluded from the scope of the EU Directive (though not the UK law), it had no jurisdiction to decide this particular case.  The case will now go back to the Court of Appeal. (USA v Nolan, ECJ)  

  1. TUPE: Court of Appeal confirms no service provision change where client changes

The Court of Appeal has upheld the EAT's decision that the service provision change provisions of TUPE cannot apply where the client to whom services are being provided changes at the same time as the change in service provider.

This ruling is good news in particular for purchasers of property portfolios: although new managing agents are commonly appointed, the owner of the property also changes so there is no service provision change under TUPE even though the services are being provided in respect of the same property.

However, in some cases there might still be a transfer of a business, that is, the transfer of an economic entity which retains its identity.  Elias LJ noted simply that it is arguable whether the identity of the client might be viewed as an essential element of a business (such that a change of client would lead to a change in its identity).  It remains best practice to address the risk and potential costs in the contractual documentation. (Hunter v McCarrick, CA)

The need for the client to remain the same also prevented there being a service provision change in the case of SNR Denton UK LLP v Kirwan.  The EAT ruled that solicitors appointed by an administrator were acting for the administrator, not the company.  Therefore there was no TUPE transfer of an in-house solicitor who had been carrying out similar activities for the company prior to administration, because there was a change of client.  The activities may also have fallen within the exclusion of short-term services from the scope of TUPE.  

  1. Holiday pay: possible challenge to calculation method in UK regulations

The Supreme Court has ruled that UK aviation working time regulations can be interpreted to comply with the ECJ's decision that holiday pay should reflect normal remuneration, ie pay intrinsically linked to the performance of contractual tasks (in this case including flight pay supplements and possibly some part of base allowances).

The decision brings into question whether the "week's pay" regime for calculating holiday pay under the Working Time Regulations 1998 (WTR), applicable to employers in other industries, is consistent with the requirement for a worker to receive "normal remuneration" as interpreted by the ECJ, in particular the WTR exclusion of certain commission payments, overtime or discretionary bonuses.

Employers should bear in mind the possibility of a challenge where holiday pay calculated under the WTR is significantly less than usual take home pay.  Public sector workers might be able to enforce EU law directly, whereas private sector claimants would have the more difficult task of establishing that the WTR can be construed consistently. (BA v Williams, SC)

  1. Union recognition: union can apply to CAC where employees sufficiently strongly connected to GB

The High Court has decided that a bargaining unit of pilots working for a UK registered company in several European countries was sufficiently strongly connected to Great Britain to enable the trade union to seek statutory recognition for collective bargaining from the Central Arbitration Committee (CAC). Relevant factors included that the employment contracts were governed by English law and included an exclusive English jurisdiction clause. (Netjets Management Ltd v Central Arbitration Committee, HC)  

  1. BIS reforms: consultations on employee owner status

The government has now published its consultation document on implementing its proposal to introduce a new employment status "employee owners" (see our blog post).

Under this proposal, companies would be allowed to offer shares exempt from capital gains tax worth between £2,000 and £50,000 in exchange for the individual surrendering certain employment rights.

The government will use the Growth and Infrastructure Bill to amend the Employment Rights Act 1996 to create this new employment status and the capital gains tax exemption will be included in the Finance Bill 2013.

The consultation period closes on 8 November 2012 with the proposal due to come into force from April 2013. Jemima Coleman is a member of the Employment Lawyers Association working party responding to this consultation so please contact her if you would like to contribute your view.

Separately, as part of the government's wider consideration of the benefits of employee share ownership in the private sector, BIS has published its response to the Nuttall Review on employee ownership and, as a part of its response, a consultation paper on deregulating share buybacks, including draft regulations. Please see our corporate ebulletin for further information.

  1. BIS reforms: removal of statutory questionnaires and third party harassment provisions

The Enterprise and Regulatory Reform Bill has been amended to reflect the Government's plans to repeal the provisions in the Equality Act 2010 relating to third party harassment and the discrimination questionnaire procedure (reported in our blog post), despite opposition from the majority of respondents to the consultation.

The Bill has also been amended to include the proposed power for employment tribunals to order an employer to carry out a pay audit where it has lost an equal pay claim or discrimination claim relating to non-contractual pay (reported here).

The planned abolition of the tribunal's power to make recommendations in discrimination cases for the benefit of the wider workforce is also still on the cards, but is not a high priority and is not included in the amendments to the Bill.  

  1. New resources: disclosure and barring, social media, gender diversity
  1. Breaking news: Attrill bonus ruling to be appealed

The decision in Attrill v Dresdner Kleinwort is to be heard by the Court of Appeal next year - permission to appeal has been given this morning.  Our summary of the High Court ruling is available here.