Employment Review March Edition

Transcription

1 Employment Review March Edition In this month s review we look at recent caselaw relating to the introduction of Tribunal claim issue fees, post-employment victimisation and the harmonisation of terms and conditions in the context of a TUPE transfer. We also look ahead to the ACAS Early Conciliation procedure, penalties for employers whose conduct includes aggravating factors, and the increase in the maximum compensatory award for unfair dismissal and a week s pay for the calculation of redundancy payments. David Potter david.potter@freethcartwright.co.uk Tribunal Fees You will be aware that with effect from 29 July 2013, Claimants in the Employment Tribunal have been required to pay a fee to lodge a Tribunal claim and... Mandatory ACAS early conciliation The ACAS Early Conciliation procedure will take effect from 6 April 2014 and will become mandatory for all tribunal claims from 6 May This... Penalties for Employers Also on 6 April 2014, Regulations come into force giving tribunals the power to order an employer who loses at Tribunal to pay a financial penalty to the... Financial cap changes With effect from 6 April 2014, the maximum amount of a week s pay used to calculate redundancy payments and various other statutory payments... Harmony can be difficult to achieve In the case of Hazel v The Manchester College, the Court of Appeal considered whether an employer s desire to harmonise the terms and conditions of... The Equality Act is wrong The case of Jessemey v Rostock Limited considered whether the Equality Act 2010 provided protection for post-employment victimisation...

2 Tribunal Fees You will be aware that with effect from 29 July 2013, Claimants in the Employment Tribunal have been required to pay a fee to lodge a Tribunal claim and to have a Tribunal hearing. This has resulted in a reported significant reduction in the number of Employment Tribunal claims being lodged (although the statistics are still unclear as to the precise impact of the introduction of fees). In the case of R (Unison) v Lord Chancellor and another, Unison lodged a challenge to the introduction of fees in the High Court and the High Court gave its decision in February The challenge was made on a number of grounds, including that the fees meant that there was not an effective implementation of EU law in respect of UK employment rights. The decision of the High Court was not to overturn the government s decision to introduce Tribunal fees on the basis that Unison s application had been brought prematurely and that the robust evidence needed to persuade the Court to overturn the fees had been absent. However, the Court made it clear that it believed there would be a duty to amend the fee regime if future statistics showed that the principle of effectiveness under EU law is being infringed. Unison has indicated that it will appeal to the Court of Appeal. For the time being, therefore, Tribunal fees are still with us, although the indications are that if there is statistical evidence showing a significant reduction in the number of claims being brought and that the Employment Tribunal system does not therefore ensure effective legal protection in the field of employment law, then the fees may be ruled unlawful. The High Court indicated in their Judgment that, because the objective of introducing fees was to encourage careful decision making before cases were brought, Tribunals should order witness statements and documents to be exchanged before a hearing fee is due. In addition, revised guidance from the Ministry of Justice provides that a successful Claimant should generally expect to recover their fees from the Respondent.

3 Mandatory ACAS early conciliation The ACAS Early Conciliation procedure will take effect from 6 April 2014 and will become mandatory for all tribunal claims from 6 May This implements the following procedure: 1. Before lodging a Tribunal claim, a prospective Claimant must send to ACAS certain basic information in relation to the claim. 2. ACAS sends the information to a conciliation officer. 3. The conciliation officer must try to promote a settlement within a month. 4. If a settlement is not reached the conciliation officer will issue a certificate to that effect. A Claimant may not submit a claim without a certificate. Contacting ACAS for early conciliation will effectively stop the clock on the existing Tribunal time limit for bringing a claim and the conciliation period is ignored for the purpose of calculating time limits. The ACAS Early Conciliation process has come at a time where employee claims have already been drastically reduced by the introduction of a claim issue fee. It is unclear whether the introduction of a mandatory process to encourage settlement will provide a further incentive to employees who wish to avoid paying the claim issue fee, or further cause employers to test how serious an employee is by forcing the employee to do so.

4 Penalties for Employers Also on 6 April 2014, Regulations come into force giving tribunals the power to order an employer who loses at Tribunal to pay a financial penalty to the Secretary of State of up to 5,000 in cases where an employer s default is serious enough to constitute aggravating features. The Tribunal may order the employer to pay a penalty of 50% of the award made to the Claimant, subject to a maximum of 5,000. However, the employer s ability to pay the penalty must be taken into account and where a Claimant has brought multiple claims in respect of the same act, only a single penalty will be applied. Furthermore, the employer will have the ability to reduce the penalty sum by 50% if it pays within 21 days of the decision notice. The Regulations do not specify which features of a case a Tribunal may consider aggravating features. However, the government s explanatory note suggests that such features may include the size of the employer, the behaviour of the respective parties and the duration of a breach of the employee s rights. As the new Regulations are untested, it remains to be seen which features of a case will constitute aggravating factors. Employers should continue to observe correct procedure in order to minimise the risk of attracting a penalties should a claim arise on or after 6 April 2014 that ultimately proceeds to Tribunal. When dealing with claims commencing on or after 6 April 2014, the likelihood of incurring penalties should be a consideration of an employer when deciding whether a claim should be settled prior to a final hearing. Financial cap changes With effect from 6 April 2014, the maximum amount of a week s pay used to calculate redundancy payments and various other statutory payments increases from 450 to 464. The maximum compensatory award for unfair dismissal increases from 74,200 to the rather precise figure of 76,574. The compensatory award in any claim will therefore be a maximum of 76,574 or 52 weeks pay (whichever is lower).

5 Harmony can be difficult to achieve In the case of Hazel v The Manchester College, the Court of Appeal considered whether an employer s desire to harmonise the terms and conditions of employees contracts could amount an economic, technical or organisational reason entailing changes in the numbers or functions of the workforce. In this case, the two Claimants transferred to Manchester College under TUPE along with 1500 other employees when the College took over a contract providing offender learning at a prison. The transfer took place in August In January 2010, the College proposed approximately 200 redundancies and negotiated with the University and Colleges Union over new terms and conditions of employment for remaining staff. The Claimants were offered alternative employment on new contracts which involved a pay cut of 13.2% and 18.5% respectively. The Claimants refused to agree to the new terms and were dismissed in July The Claimants accepted re-engagement on new contracts and returned to work, but brought claims arguing their dismissals had been unfair and sought reinstatement on their old conditions. Dismissals that are for a reason connected with a TUPE transfer will be automatically unfair unless the employer can show that the dismissal was for an economic, technical or organisational reason entailing changes in the numbers or functions of the workforce. Case law has established that dismissals need to be linked to a change in the numbers of the workforce, rather than simply an organisational desire to harmonise. However, the College argued that, in this case, the reason for the dismissal was part of a wider cost-saving plan which included workforce changes in the form of redundancies. The Court of Appeal rejected the appeal, upholding the Tribunal s decision that these particular Claimants were dismissed for reasons connected with harmonisation of terms and not for reasons in connection with redundancy. The dismissals were therefore automatically unfair under TUPE and the employer was required to re-engage the Claimants on their previous terms and conditions of employment. Whilst redundancies are capable of amounting to an economic, technical or organisational reason entailing changes in the numbers or functions of the workforce, it was clear from the facts of this case that redundancy was not the motivating factor for the employer, but rather it was the fact that the employees had refused to agree to the new terms and conditions of employment. Employers should approach post-tupe harmonisation exercises with care, particularly when such exercises are not linked to a change in the number of the workforce.

6 The Equality Act is wrong The case of Jessemey v Rostock Limited considered whether the Equality Act 2010 provided protection for post-employment victimisation. The case concerned an ex-employee, Jessemey, whose employer, Rostock Limited had provided an unfavourable reference. An employment tribunal found that a previous discrimination claim by Jessemey was the cause of the unfavourable reference and Jessemey had therefore suffered victimisation. However, the wording of the Equality Act 2010 does not prohibit post-employment victimisation and the tribunal was unable to decide the case in favour of Jessemy. The EAT upheld the decision. At appeal, the Court of Appeal confirmed that, whilst the wording of the Equality Act 2010 does not strictly prohibit post-employment victimisation, it must be read to do so. The Court found that the omission must have been an error in drafting as post-employment victimisation was unlawful prior to the introduction of the Equality Act 2010 and there is no apparent reason why Parliament would have sought to remove the protection. In addition, a failure to prohibit postemployment victimisation would cause the UK to fall foul of its obligations under EU Law. The decision has clarified an area of law which may have been considered a loophole for employers who have received discrimination complaints by ex-employees and subjected the ex-employee to victimisation as a result. As references are the main area of exposure for an employer in the context of post-employment victimisation, this case makes it ever more important for an employer to balance the need for an accurate reference with the potential for allegations of victimisations that might flow from a bad reference.

7 Employment Team: Key contacts David Potter Cumberland Court, 80 Mount Street, Nottingham NG1 6HH Tel: Rena Magdani One Colton Square, Leicester LE1 1QH Tel: Gemma Elliott Floor 2, West Point, Cardinal Square, 10 Nottingham Road, Derby DE1 3QT Tel: Alan Lewis St James Building, Oxford Street, Manchester M1 6FQ Tel: Rebecca Sawbridge 6 Bennetts Hill, Birmingham B2 5ST Tel: rebecca.sawbridge@freethcartwright.co.uk Peter Gavin Churchill House, Regent Road, Stoke on Trent ST1 3RQ Tel: peter.gavin@freethcartwright.co.uk Christopher Sing Kimbells Freeth LLP Power House, Harrison Close, Knowlhill, Milton Keynes MK5 8PA Tel: christopher.sing@kimbellsfreeth.co.uk Melanie Slocombe Henmans Freeth LLP 5000 Oxford Business Park South Oxford OX4 2BH Tel: melanie.slocombe@henmansfreeth.co.uk This update is only a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist advice should be sought from a member of the Freeth Cartwright Employment Team in relation to any queries that may arise. Banking & Finance / Business Services / Corporate Finance / Construction / Employment / Public Sector / Real Estate / Services for Individuals / Taxation Birmingham / Derby / Leeds / Leicester / London / Manchester / Milton Keynes / Nottingham / Oxford / Sheffield / Stoke on Trent Want to know more? Visit freethcartwright.co.uk