Employment Law and Change a TUPE Update

Transcription

1 HR Summit 2014 Workshop Employment Law and Change a TUPE Update Victoria Vallely, Eversheds LLP 20 March 2014, The Baltic

2 Agenda for today Implications of recent case law. Overview of changes to the 2006 TUPE Regulations.

3 TUPE: quick recap Background Transfer of Undertakings (Protection of Employment) Regulations 2006 There must be a relevant transfer, namely: a business transfer Reg 3(1)(a); or a service provision change Reg 3 (1) (b) Broad effect is to preserve continuity of employment and terms and conditions of transferring employees

4 TUPE update Recent trends and developments

5 Recent trends and developments Removal of service provision change provisions panic over! Penalties for failure to inform and consult.

6 Recent trends and developments Harmonisation returns to the agenda Business taskforce and Government pledge. Meaning of establishment. Alemo-Herron and the transfer of collective agreements where are we?

7 Case Law Developments Recent decisions

8 Question 1 The long-running case of Alemo-Herron v Parkwood Jan 2009 EAT concludes that collectively agreed terms of employment continue to be subject to changes post transfer - the dynamic approach. Jan 2010 Court of Appeal disagrees and finds such terms freeze at the point of transfer the static approach. Jun 2011 Supreme Court not sure. Has sympathy with EAT analysis of the Acquired Rights Directive but refers the question to European Court. July 2013 Decision of CJEU. Q Which approach is right according to the European Court?

9 Answer 1 Alemo-Herron v Parkwood Leisure, 2013 A fundamental principle of TUPE is the preservation of employment terms. Reg 4 says an employment contract shall have effect after the transfer as if originally made between the [employee] and the transferee. Here, the contracts stated pay would be negotiated by a third party. The CJEU has confirmed the Directive does not oblige a transferee employer to pay future pay rises, agreed after the transfer date. The case will return to SC, the outcome of which is particularly important for organisations or sectors with nationally or sector-specific terms.

10 Answer 1 Important findings of CJEU: the Acquired Rights Directive does not allow a dynamic interpretation; a transferee employer cannot be bound by negotiations concluded post transfer in which it is not involved; the Directive does not aim solely to protect employee rights but seeks to balance the interests of employees and the transferee employer; the Directive cannot operate to prevent a transferee s freedom to conduct its business.

11 Question 2 ILUK, a company involved in film/tv services, merged with RKT but fell into liquidation. The former ILUK part of the business was sold as a distinct part, saving jobs. The former RKT side of the business closed. The former RKT employees claimed they were not properly informed or consulted over the sale of part, in accordance with TUPE requirements. Q were the former RKT employees, working in the part of ILUK which was not being sold, affected employees under TUPE and entitled to be informed and consulted over sale?

12 Answer 2 I Lab Facilities Limited v Metcalfe EAT, 2013 The ET upheld the claims, finding breach of Reg 13 as the non-transferring staff were affected by the sale. The EAT overturned this decision, holding that a claim for a failure to inform and consult cannot be brought where no transfer proceeds. The fact that the insolvent company had hoped to transfer some RKT staff to the new purchaser initially was not relevant as that did not happen.

13 Answer 2 I Lab Facilities Limited v Metcalfe EAT, 2013 Here, where the insolvent company transferred part of its business and closed the other part, the employees of the closed part were not affected employees of the transferor and so were not entitled to be informed and consulted under the TUPE Regulations.

14 Question 3 M worked in the warehouse of Ceva, dealing with outbound freight. He was unique in his team in that he spent 100% of his time working on the S account. S brought its freight-handling operations back inhouse but declined to accept this was an SPC or to accept the transfer of M s employment under TUPE. M was dismissed by S. Q - M claimed unfair dismissal. Did he win and, if so, against whom?

15 Answer 3 Ceva Freight (UK) Ltd v Seawell Ltd, 2013 For TUPE to apply, there must be an organised grouping of employees with the principal purpose of carrying out the activities. The ET identified a transfer but this was overturned on appeal, the EAT and Court of Session finding M had been unfairly dismissed by Ceva and that TUPE did not apply. As established in Eddie Stobart v Moreman, time spent on activities is not the correct focus; there must be conscious organisation of client work by the employer. Here, M was part of a team which worked for other clients and his role arose by default, not deliberate organisation.

16 Question 4 S operated a Toyota dealership which was due to transfer. The employees were given just hours to elect 2 employee reps for information/ consultation purposes On a tied vote, S chose the 2 nd rep. L and B, brought claims alleging S had breached its TUPE obligations to ensure fair election of employee reps. B was not even in work that day to be able to exercise his right to vote. Q the claims were upheld. How much compensation was awarded for the breach? 3 weeks? 6 weeks? 13 weeks?

17 Answer 4 Shields Automotive Ltd v Langdon, EAT, 2012 Regs 13 and 14 require that appropriate information disclosure and consultation takes place but also a fair election of reps. Penalty for breach is whatever is just and equitable, to a maximum of 13 weeks pay. ET found the timescale unduly rushed (without justification). It also found that the company s intervention over the tie-break compromised the election. It awarded 2 weeks pay to L and 7 weeks pay to B. This was appealed.

18 Answer 4 Shields Automotive Ltd v Langdon, EAT, 2012 On appeal, the EAT agreed with the ETs decision but found compensation to B excessive (on Susie Radin principles). Although compensation in this context is punitive, not compensatory, the difference in compensation between L and B was too great and 7 weeks compensation excessive. B s compensation was reduced to 3 weeks pay.

19 Answer 4 Shields Automotive Ltd v Langdon, EAT, 2012 Important to bear in mind also, that in most cases measures are taken by the transferee and affect only the transferring staff.

20 Question 5 W went into administration and closed its stores/ laid off employees. EA faced similar fate. Neither W nor EA informed or consulted employees regarding redundancies in accordance with TULRCA. Q Did the obligation to inform and consult and/ or pay protective awards apply only to employees employed at stores with 20 or more staff?

21 Answer 5 USDAW v WW Realisation 1 and others, 2013, EAT Vital question raised for employers = meaning of establishment. EAT found that obligations are triggered when 20 or more employees are potentially redundant across an employer, not just one site. Case was heard in Court of Appeal in January COA found employees who worked in stores where fewer than 20 employees were employed were entitled to be consulted collectively. COA held the words at one establishment were incompatible with the EU Collective Redundancies Directive. Case now referred to ECJ.

22 Overview of amended TUPE Regulations, 2013 Overhaul or tidying-up exercise?

23 The path to change Call for Evidence November 2011 Consultation January- April 2013 Response September 2013 New Regulations January 2014

24 Amended TUPE Regulations Key changes* Service provision changes kept but narrowed Employee liability information staying, with longer time frame Contractual changes permitted if right pre-exists or for ETO reason Limitations on effect of collective agreements Change of location = an ETO reason Pre-transfer collective redundancy consultation will count Micro-businesses (<10 employees) removed from collective consultation * Not Northern Ireland

25 Amended TUPE Regulations Service Provision Changes Consultation proposed repeal: intended benefits of SPC not being realised; provisions exceed EU requirements; SPC repeal might lead to awarding of more contracts/work; transfer of employees found wanting.

26 Amended TUPE Regulations Service Provision Changes Proposals rejected: (67% against repeal) Regulation 3(1)(b) and the Service Provision Change provisions are retained; Preserves certainty; Avoids redundancies/ costs; Professional services not exempt; Second generation not exempt; Activities must be fundamentally the same.

27 Amended TUPE Regulations Employee Liability Info Consultation proposed repeal: problematic in practice and timing too short; to be replaced with non-statutory guidance. Proposals rejected : (75% opposed repeal) Viewed as commercially important, providing greater certainty of obligations; Increase to 28 days before transfer (the right balance?); Reg 11(6) defence will still apply; Tenders NB Later commencement date 1 st May 2014.

28 Amended TUPE Regulations Contract changes/ harmonisation Consultation proposed greater alignment of Reg 4 with Directive wording Proposals accepted: restrictions now apply where the sole or principal reason for the variation is the transfer, not merely connected reasons; ETO reason still permitted; Harmonisation still prohibited but unilateral variations possible if pre-existing contract terms allow; Government to pursue question of harmonisation with European partners.

29 Amended TUPE Regulations Dismissal Consultation proposed greater alignment of Reg 7 with Directive wording Proposals accepted: See previous changes to Reg 4 ie restrictions now apply where the sole or principal reason for the dismissal is the transfer, not merely connected reasons; How might this affect reasons for dismissal which may not be the principal reason? How might this affect automatic unfairness?

30 Amended TUPE Regulations Collective agreements Consultation proposed: limit on duration of collectively agreed terms; review of static vs dynamic approach. Proposal accepted: contractual terms derived from collective agreement can be changed after 1 year, if no less favourable; terms negotiated by a third party fix on transfer.

31 Amended TUPE Regulations Change in location and ETO reasons Consultation proposed change in workplace location = ETO reason Proposal accepted: Entailing changes in the workforce includes a change in location so that redundancy = ETO reason; Ends constructive dismissal-type claims (Abellio London Limited v Musse).

32 Amended TUPE Regulations Collective consultation pre-transfer will count Consultation proposed: pre-transfer consultation about collective redundancies should count towards obligations; pre-transfer reliance on post-transfer ETO. Proposal partially confirmed : TULRCA amended so that, where 20+ redundancies are anticipated, pre-transfer collective consultation by the transferee will count

33 Amended TUPE Regulations Micro-businesses Consultation proposed: direct consultation for non-unionised, small employers (10 or fewer employees); inclusion of small employers. Proposal accepted: Proposals accepted: small employers exempted from electing employee reps; Moratorium on new regulations for small employers not applied to TUPE changes. NB later commencement date, 1 st July 2014

34 Amended TUPE Regulations Guidance Revised TUPE guidance promised in due course, specifically clarifying: the operation of the service provision change rules; employee liability information obligations; the meaning of by reason of the transfer ; how employers can change terms and conditions; collective consultation (pre and post transfer).

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