Michelmores Employment Conference

Woodwater House, Exeter

Michelmores Employment Conference 2013

Timetable

• 9.30am – The Rigours of Recruitment Rachael Lloyd

• 10.00am – TUPE Reforms – Old Dog New Tricks? – Andrew Tobey

• 10.45am – Coffee Break• 11.00am – Negotiate to Terminate

Tim Davies & Tom Stenner-Evans• 12.00pm – 12 Month Round Up

James Baker• 1.00pm - Lunch


The Rigours of RecruitmentRachael Lloyd, Solicitor

Recruitment – Get it Right!

• Risks are present as soon as you release your job advert

• Don’t be a horror story!• ‘Currys interview 'humiliation' as graduate made to

dance’

Pre-Employment

• Discrimination risks present even before the employment relationship begins

– Job advert – Application forms – personal and sensitive information– Interviewing – what you can and can’t say

Offering the Job

• Feedback to unsuccessful candidates – what are the risks?

• Offers– Offer Letters – KEY TERMS– Conditional offers – flexibility

Withdrawing Offers

• When can you withdraw an offer?– Conditional offers– Change of circumstances– Falsified CVs?

• Take care with communication

Background Checks

• Permission to work in the UK • Medical reports• Professional qualifications• DBS checks• Social media• Credit checks?

New Employment

• Probationary periods• Claw-back of training fees?• Types of contract & contractual terms• Tailor the contract to the individual

– Job description– Bonus/commission schemes– Restrictive covenants – past and present– Directorships


TUPE Reforms – Old Dog New Tricks?

Andrew Tobey, Partner, Head of Employment

Looking at 4 Key Areas:

• Service provision changes – what’s changed/what hasn’t/new case law

• Changing employee terms post-transfer• Information and consultation obligations• TUPE reforms – outcome of Government

consultation

TUPE Regulations 2006

• When is there a relevant transfer?• Relevant transfer 1

– Transfer of a businessRegulation 3(1)(a)‘a transfer of an undertaking, business or part of an

undertaking or business situated immediately before the transfer in the United Kingdom to another person where there is a transfer of an economic entity which retains its identity’

Relevant transfer 2 – Service Provision Change (SPC)• Regulation 3(1)(b)• 3 situations which qualify for an SPC are:-

– Original service contract outsourcing from client to contractor (‘Outsourcing’)

– Transferring the service contract from one contractor to another (‘Re-tendering’); and

– The transfer of a service contract back in-house (‘In-sourcing’)

The Conditions for an SPC (1)

(a) Immediately before the service provision change –(i) there is an organised grouping of employees

situated in Great Britain which has as its principal purpose the carrying out of the activities concerned on behalf of the client

The Conditions for an SPC (2) (ii) the client intends that the activities will,

following the Service Provision Change, be carried out by the transferee other than in connection with a single specific event or task of short-term duration; and

The activities concerned do not consist wholly or mainly of the supply of goods for the client’s use

SPC Conditions – Problem Areas

• Is there an organised grouping of employees assigned to the contract?

• Employer needs to specifically assign employees to client team

• Ability of employer to avoid SPC by non-assignment• Can be single employee service provider

[Eddie Stobart v Moreman EAT 2012][Seawell v Ceva Freight Court of Session 2013]

Is there sufficient similarity between the old and the new activity?• Activity needs to be essentially the same before and

after the transfer – a question of fact and degree• No SPC if there is a fundamental change in the

nature of the service provided• Minor differences can be disregarded – a common

sense and pragmatic approach is required

[Johnson Controls v Campbell & Others EAT 2012]

Fragmentation of the Service Post-Transfer

• SPC can be avoided if similar activity service is fragmented post-transfer between several providers

• Opportunity for client/contractor to prevent SPC applying by fragmentation of service

• No SPC if there is a change of client identity on transfer

[Hunter v McCarrick Court of Appeal 2013]

SPC Exceptions

• Doesn’t apply to short-term contracts or specific event contracts [Liddells Coaches v Cook EAT 2012]

• When activities consist of the supply of goods for the client’s own use [Pannu v George W King EAT 2012]

Government Reforms to SPC’s

• No scrapping of the SPC transfer concept to avoid creating greater business uncertainty and litigation

• Activities pre/post-transfer must remain ‘fundamentally or essentially the same to qualify as an SPC’

• Scope for avoidance by modifying service activity

Changing Employment Terms Post-Transfer

• What terms transfer under TUPE?• All the transferors rights, powers, duties and liabilities in

connection with employees’ contracts of employment transfer (Reg.4(2))– Essentially all transferor’s employee liabilities transfer over other than

criminal liabilities– Acts or omissions of the transferor are deemed to be acts/omissions of

the transferee– Terms transfer as in force as at the date of transfer– Need to obtain full disclosure of transferring employees terms/thorough

due diligence– Reg.11 disclosure of basic employee information – don’t rely on this – too

little/too late!

Varying terms and conditions post transfer

• Any changes to transferring employee’s terms and conditions that are by reason of/connected with the transfer are void unless change is due to an ETO reason

• If an ETO reason applies you still have to agree the change in the normal way

ETO reasons for changing terms

• ETO = economic, technical or organisational change which entails changes in the workforce

• Changes must affect the numbers or functions of the workforce

• Transferor can’t make use of transferee’s ETO business reasons

Varying terms and conditions post transfer

• How do you disconnect change from transfer?– Leave sufficient period of time between transfer and

change– Dismiss and re-engage– Link to a non-transfer related reason

Pre and post-Transfer proposed changes to terms and conditions

• Can allow transferring employee to resign and claim automatic unfair dismissal if substantial change is materially detrimental (Reg.4(9) /claim constructive dismissal if proposed change constitutes a fundamental breach (Reg. 4(11)

[Tapere v South London and Maudsley NHS Trust EAT 2009][Abellio London Ltd v Musse EAT 2012]

What does not constitute an ETO reason for a post-transfer change in terms?

• Harmonisation of transferring employees’ terms with transferees existing terms

• Relocation of employees workplace (if no change in overall workforce numbers or functions)

• Making a business more attractive to a purchaser by dismissing staff pre-transfer

New TUPE Reforms re: changes to terms and conditions

• Relocation of employee’s workplace will be an ETO reason i.e. a valid change if agreed and not an automatic unfair dismissal

• Terms and conditions inherited under collective agreements can be re-negotiated after 1 year post-transfer provided change is not any less favourable to employee – follows ruling in Alemo-Herron v Parkwood Leisure ECJ 2013

• Transfer related contract changes will only be void if they are by reason of the transfer itself, and not a reason connected with the transfer

The Alemo-Herron Decision – ECJ 2013

• Courts must apply ‘static’ not ‘dynamic’ approach to collective agreements i.e. transferring employee terms are frozen at transfer date and transferee not bound by changes made post-transfer under collective agreements to which they are not a party

• A significant change in approach to the application of TUPE/ARD

Pre transfer information and consultation

• Reg.13– Imposes duty on transferor and transferee to provide

information about the transfer and its implications and consult with appropriate reps of all ‘affected employees’

– Who are ‘affected employees? Not just the transferring employees

– Timing of consultation– Election of representatives (consequences of non-election)– Additional duty to consult if ‘measures’ are contemplated– Provision of information by transferee to transferor to

permit consultation re: measures

Practical tips on information and consultation obligations

• Don’t leave until the last minute• Leave plenty of time for election process• Be aware of the costs of failing to comply!

Penalties for failure to inform and consult

• Who can bring a claim?• The ‘special circumstances’ defence, if not ‘reasonably

practicable’ for employer to comply – construed narrowly/don’t rely on it

• Maximum of 13 weeks gross pay per affected employee (uncapped) – penal not compensatory award

[Todd v Strain & Others EAT 2010] (Failure to inform re: changes to salary payment dates by transferee)

[Shields Automotive v Langdon EAT 2012] (Protective award reduced from 7 to 3 weeks)

New changes to information and consultation obligations• Transferor’s liability to provide employee information

to transferee/ will be 28 days before transfer, not 14 (still inadequate)

• Micro-businesses (10 or less employees) can consult directly with their employees if no recognised union or existing representative group

Further changes in the pipeline?

• Re-balancing of TUPE towards the interests of new employer’s business?

• An ability to harmonise terms post-transfer?• Further micro opt outs?• Further reduction of ‘gold plating’?• New regs. before Parliament in December 2013.


Pre-Termination Negotiations

Tim Davies, PartnerTom Stenner-Evans, Solicitor

Davies & Partners Stationers

“Moving forward - never stationary”

Without Prejudice

‘The rule applies to exclude all negotiations genuinely aimed at settlement, whether oral or in writing, from being given in evidence.’

Rush & Tompkins v GLC [1989] AC 1280

Without Prejudice – Limitations

• There must be an existing dispute

‘I do not consider that the act of raising a grievance by itself means that parties to an employment relationship are necessarily in dispute.’

BNP Paribas v Mezzotero [2004] IRLR UKEAT 218

Pre-Termination Negotiations (PTNs)

• New section 111A ERA, inserted by section 14of the Enterprise and Regulatory Reform Act 2013

• Effective from 29 July 2013

PTNs - Definition

‘…any offer made or discussions held, before the termination of the employment, with a view to it being terminated on terms agreed between the employer and the employee’

PTNs - The Rule

Pre-termination negotiations are inadmissible in any subsequent claim for unfair dismissal

PTNs - The Limitations

• Only applies to ‘ordinary’ unfair dismissal claims (breach of contract, discrimination & whistleblowing claims are not protected)

• Query hybrid claims?

• Tribunal may dis-apply the rule where there has been ‘improper behaviour’


Pre-Termination Negotiation

Take 1


“Moving forward - never stationary”

7 November 2013

Dear Tom,Commencement of Performance Management

xxxxxxxxxxxxxx required to attend a formal performance management meeting

on 21 November 2013. The issues to be addressed at the meeting are xxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx right to be accompanied xxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx.


Pre-Termination Negotiation

Take 2

Settlement Offer - Considerations

• Salary: £48,000 pa• Benefits: Company car and BUPA• Notice: 3 months • Strength of my position:

– How strong are the performance grounds?– What claims might TSE bring if we dismiss him?– What is the chance those claims would succeed?– How much compensation might he recover from ET?

Settlement Offer – Considerations (2)

• What else might it cost us if we dismiss? – Legal fees– Management time lost in dealing with the claim(s)

• Wider commercial benefit in removing him? – Improved staff morale – Improved productivity

Heads of Terms

• Termination Date

• Arrangements until termination (e.g. garden leave, specific projects)

• Notice arrangements

• Benefits e.g. holiday pay, company car, medical cover

• Pension

• Termination Payment - tax treatment

Heads of Terms

• Reference

• Public announcement to staff/customers

• Confidentiality & derogatory comments

• Restrictive covenants

• Legal fees

• Deadline for acceptance/completion

STRICTLY PRIVATE AND CONFIDENTIAL

TSE : Proposed Terms of Severance

Without Prejudice and Subject to Contract

•Termination date: 30 November 2013

•Garden leave until then, assisting with handover duties as required

•All holiday to be used up before termination date

•3 months’ pay in lieu of notice - taxable

•1 month’s pay, tax free •Favourable reference – wording to be agreed

•Restrictive covenants to remain in force

•£350 + vat towards legal fees •Deadline for completion for agreement….

ACAS Code of Practice

• Key requirements and best practice

• No direct penalty for failure to follow the Code

• Right to be accompanied?

• Reasonable period to consider an offer: 10 days

• ‘Improper behaviour’

Improper Behaviour

• Not defined in the legislation

• ACAS Code:

– harassment, bullying and intimidation, including offensive words or aggressive behaviour

– physical assault or the threat of physical assault & other criminal behaviour

– all forms of discrimination and victimisation

Improper Behaviour (2)

• Undue pressure:

– not giving reasonable time for consideration of the proposal

– saying that, if the settlement is rejected, the employee will be dismissed

– an employee threatening to undermine an organisation's public reputation (unless PIDA applies).

Performance Review Meeting

Disclosure Obligations

• All documents relevant to an issue in the claim– Includes harmful documents!

• Reasonable search required– Includes emails, recordings, social media posts

• Be wary of internal emails / statements – must be disclosed even if marked as ‘private and confidential’– ‘necessary for the fair disposal of proceedings’

Nasse v The Science Research Council; Vyva v Leyland Cars [1979]

Privilege

• Privilege entitles a party to withhold evidence from production to a third party or the court. This evidence may be either written or oral.

• Once privilege has been established, an absolute right to withhold the document in question arises.

• Two key forms of privilege– Legal advice privilege– Litigation privilege

Legal Advice Privilege

• Applies to: – confidential communications– which pass between a client and his lawyer; and– which have come into existence for the purpose of giving

or receiving legal advice about what should prudently and sensibly be done in the relevant legal context.

Three Rivers District Council & Ors v The Bank of England [2004]

• Exercise caution when distributing advice internally• Only applies to lawyers!

Litigation Privilege

• Four rules to satisfy -1. material must be confidential2. it must be a communication between a lawyer (acting in a

professional capacity) and his client, or between either the lawyer (acting in a professional capacity) or the client and a third party, or be a document created by or on behalf of the client or his lawyer

3. it must be made for the dominant purpose of litigation; and4. litigation must be pending, reasonably contemplated or

existing. • More than a mere possibility, but not necessarily greater than

50%.

OPTIONS

• Option 1 – stand your ground (4 months’ pay & benefits)

• Option 2 – propose a further counter offer (5 months’ pay and benefits)

• Option 3 – agree Tom’s offer (6 months’ pay and benefits).


The Annual ‘12 Month Round-Up’ James Baker - Associate7 November 2013

Key Changes to Employment Law

1. ET Fees and New ET Rules2. UD Compensation Cap / Employer Penalties3. New ‘Day One’ Right: Political Opinion/Affiliation4. Whistleblowing Changes5. General Case Law Update6. A look ahead to 2014/157. Look at what you could be doing!

1. ET Fees

• £250 (plus £950, Hearing Fee)• £160 (plus £320 Hearing Fee) for ‘Level 1’ cases• Judicial Mediation - £600• Remission (if on benefits and disposable income less

than £50 p/w)• Fee recovery - in ET discretion• UNISON challenge

1. New ET Rules

• Simplified process• More case management

powers to Judges• Initial sift of ET1/ET3• Early ‘Preliminary Hearing’• Judges sitting alone: no wing

members.

2. UD Compensation Cap / Penalties

• Maximum one years’ pay (if less than £74,200) (NB: Only where EDT is after 29 July 2013)

• Power to further reduce, to lower of the above or national annual median wage (currently £28,000)

• From April 2014 - £100 - £5,000• Penalty for aggravating features• Payable to Exchequer• Half discount if paid within 21 days.

3. New ‘Day One Right’

• UD protection from Day One where:– The dismissal relates to

employees political opinion or affiliation

– Change required following EU ruling in BNP Redfearn case

– Effective 25th June 2013.

4. Whistleblowing Changes

• Must now be in ‘public interest’• But ‘good faith’ requirement removed• Reduced compensation (up to 25%) if not bona fide• VL for employers whose staff victimise WBs.


• Public Interest

‘Indeed, although our aim is to prevent the opportunistic use of breaches of an individual's contract that are of a personal nature, there are also likely to be instances where a worker should be able to rely on breaches of his own contract where those engage wider public interest issues. In other words, in a worker's complaint about a breach of their contract, the breach in itself might have wider public interest implications.’ [Hansard, 3 July 2012]


• Must now be in ‘public interest’• But ‘good faith’ requirement removed• Reduced compensation (up to 25%) if not bona fide• VL for employers whose staff victimise WBs.

4. Public Concern at Work’s Recent Report• Typical whistle-blower:

– skilled worker/professional: less than two years service– 60% of WBs receive no response– 63% blow the whistle at least twice– most likely response – disciplinary – 15% are dismissed!– Those who raise a concern with a Regulator generally have

better outcomes.

4. Whistleblowing Changes Cont/...

• Consulting on further changes;• E.g. paid incentive to WB (as in US finance sector);

‘…BIS, the Ministry of Justice and the Home Office will consider the case for incentivising whistle blowing, including the provision of financial incentives to support whistle blowing in cases of fraud, bribery and corruption. As part of this work we will examine what lessons can be drawn from the successful ‘Qui Tam’ provisions in the US where individuals who whistle-blow and work with prosecutors and law enforcement can receive a share of financial penalties levied against a company guilty of fraud against the government bribery or corruption in DFID-funded developing countries…’

4. Whistleblowing Changes Cont/...

• Mandatory referrals from Employment Tribunals to Regulators

• Legislation to avoid ‘black-listing’ of whistle-blowers– NB Ohyango v Berkely Solicitors [2013] IRLR 338

• Solicitor resigned and complained about BS to Legal Services Commission

• BS responded by making a complaint of forgery and dishonesty to the Solicitors Regulation Authority

• Held that notwithstanding the complaints to the LSC and the SRA were made after the termination of employment, O had still been subjected to a detriment as a result of having made a protected disclosure.

5. General Update - Employee Shareholders

• Growth and Infrastructure Act – from 1st Sept 2013• 3rd type of employment status• £2,000 shares for waiver of UD, SRP, flexible working

and other employment rights• Requires legal advice• Plus 7 day cooling off period• Much criticised – limited take up?

5. General Update – Case Law

• Disciplinary & Dismissal Related Cases – Brito v Ealing Hospital [UKEAT/0385/12]

• Consider all available sanctions even in cases of Gross Misconduct.

– Wright v North Ayrshire Council [UKEAT/0017/13]• Consider all causes of a resignation in a CUD claim• Don’t make assumptions about the likely cause of a resignation.

– SoS for Justice v Hibbert [UKEAT/0289/13]• Employee wrote letter of resingation: ‘I have no alternative but to

resign my position’• Words held not to be ambiguous and employer could rely on

resignation.


• Discrimination Related Cases – Whitham v Capita Insurance

• Provision of benefits must not be restricted for cost reasons alone.

– Croft Vets v Butcher [EAT 0420/12]• Where medical treatment is recommended by a medical expert

and relate to the employee’s ability to return to work, then the employer may be required to pay for the treatment as part of making ‘reasonable adjustments’.

– CD v ST [Case C 167/12] c.f. Z v A Government Dept• In surrogacy situations both ‘mothers’ are entitled to compulsory

maternity leave, with remaining rights to be divided – Advocate General’s Opinion only!


• Other Cases of Interest – Neal v Freightliner Ltd [1315342/12]

• Holiday pay must be calculated on normal earnings, not basic pay. Therefore include overtime and shift premiums etc.

– Coppage v Safety Net Services [2013 EWCA Civ 1176]• Non-Solicitation restrictive covenant for a 6 month period was

appropriate for the ‘face of the business’.

– Little v Richmond Pharmacology Ltd [UKEAT 490/12]• Indirect discrimination can be cured ‘on appeal’;• Attempt to deal with expeditiously and before key changes may be

made (e.g. before return to work on application to work flexibly).

6. In the Pipeline ...

• ACAS Early Conciliation– Due to commence (06/04/14)– Clock stops for up to 1 month– Conciliation not compulsory– Satellite litigation (on time limits) likely.

• TUPE Changes– Modify what amounts to a ‘Service Provision Change’, to

apply only where services are essentially the same– ELI to be provided 28 days before the transfer.

6. In the Pipeline ... Cont/...

• TUPE Changes– Collective Agreements – changes will apply for one year

post transfer;– Change of location will be within the ETO Defence– Consultation by transferee in respect of redundancy

consultation can count toward post-termination redundancies.

• Redundancy Consultation Changes– Consultation period already reduced from 90 to 45 days

for employers with over 100 employees;

6. In the Pipeline Cont/...

• Likely review of zero hours contracts (2014)– Likely legislation to curb abuses (e.g. exclusive contracts),

where precluded from working for a third party?

• Consultation with regard to flexible working (2014)– Right to request extended to all workers?– Removal of statutory right to request procedure?

• Flexible Parental Leave (2015)– After initial 2 weeks leave months and fathers can share

maternity leave entitlement and will be known as ‘flexible parental leave’.

6. In the Pipeline Cont/...

• Extension of Unpaid Parental Leave (2015)– To a parent with a child under the age of 18 years

• Surrogate Parents (2015)– Will be eligible for adoption leave

• School Leaving Age to rise to 17 (2015)– To 18 in 2016.

7. Food for thought …

… HR ‘Light Bites’

A new quarterly lunchtime meeting for individuals entering the world of Human Resources for the first time …

Led by Bethan and Rachael the first

meeting in January will be a practical

overview of employment law -

24 Jan 2014

Business

Michelmores Employment Conference