March 2018 bulletin

Collective consultation

You may remember the press coverage of the investigation into the former children’s charity Keeping Kids Company and its eventual liquidation in the summer of 2015. The Employment Appeal Tribunal has now ruled that the charity breached collective redundancy laws by failing to collectively consult in the run-up to it stopping operations.

When proposing to dismiss 20 or more employees within a period of 90 days at one establishment, section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 requires employers to inform and consult with representatives of affected employees. Consultation must begin in ‘good time’. A breach of these collective consultation requirements entitles employees to a protective award of up to 90 days’ pay.

The charity suffered ongoing financial difficulties and on 12 June 2015 applied for a government grant of £3 million. The application included a business plan to restructure the company and discussed removing 50% of the posts. No specific posts were identified at that point. On 29 July the government offered the grant. The charity sent an email to all staff saying that matters had been resolved and salaries would be paid the next day. On 30 July it became known that the police were investigating allegations against the charity concerning the safeguarding of children. On 3 August the government terminated the agreement and demanded repayment of the grant. On 5 August the charity closed and all employees were dismissed.

Some employees won protective awards for failure to inform and consult over the redundancies. The judge decided that consultations with employee representatives should have begun promptly after 12 June when there was a proposal to dismiss, even though the charity did not know which roles would be deleted. The events in August did not excuse the obligation to consult, but they did reduce the size of the eventual award.

If your business is proposing collective redundancies you should ensure that consultation begins promptly after the proposal is made, even if you don’t yet know all of the detail.

Annual changes to national minimum wage and tribunal awards

The annual legislation making changes to the national minimum wage and various rates of tribunal awards has been laid before Parliament. The new increased hourly national minimum wage rates come in on 1 April and are as follows:

• Under 18s increased from £4.05 to £4.20;
• Ages 18-20 increased from £5.60 to £5.90;
• Ages 21-24 increased from £7.05 to £7.38; and
• Age 25 and over increased from £7.50 to £7.83.

The accommodation offset rate is increased from £6.40 to £7.00 per day and the rate for apprentices is £3.70 per hour.

From 1 April the rates for statutory maternity, paternity, adoption and shared parental pay will increase from £140.98 to £145.18. Statutory sick pay will increase from £89.35 to £92.06 from 6 April.

In addition, from 6 April the maximum employment tribunal award for unfair dismissal has increased to £83,682. A maximum week’s pay for calculating redundancy payments and the basic award for unfair dismissal has also increased to £508.

Changes to payments in lieu of notice on termination

The tax treatment of payments in lieu of notice (‘PILONs’) made to employees on termination of their employment will change on 6 April.

The tax treatment will no longer depend on the category of PILON or its contractual status. Instead tax will be charged on the basic pay the employee would have received if he or she had worked his or her notice. When notice is not worked, you must now treat a part of the termination payment (excluding statutory redundancy pay and approved contractual pay) as an amount to reflect the basic pay for the notice period, and you must tax it.

There is a formula set out in the relevant tax legislation (Income Tax (Earnings and Pensions) Act 2003) to guide you. Basic pay is employment income, not including overtime, bonuses, commissions etc.

You should follow HMRC guidance which will assist with the calculations and provide you with more information on the trickier areas, such as how to deal with contributions to pension schemes on termination. Your payroll teams should take tax advice on the relevant changes and ensure their payroll systems are updated before 6 April.

Knowledge of disability

If an employee is disabled under the Equality Act 2010, as their employer you must make reasonable adjustments to elements of their job which put them at a substantial disadvantage, compared to non-disabled employees. This is known as the ‘duty to make reasonable adjustments.’ There is a defence to this duty if you did not know and could not reasonably have been expected to know, that the employee was disabled. You are allowed to rely on specialist advice from occupational health. However, you do have to come to your own decision on disability and shouldn’t just rubber-stamp an occupational health assessment which doesn’t have a lot of detail or reasoning.

The Court of Appeal decided that an employer, Liberata UK did not have knowledge of its employee’s disability and so did not breach its duty to make reasonable adjustments. Ms Donelien had taken substantial periods of sick leave for various different medical reasons. She was eventually dismissed. The employer had relied on occupational health advice which wrongly stated Ms Donelien was not disabled. However, Liberata had also held return to work meetings with Ms Donelien and had considered letters from her GP before coming to its decision. None of this evidence clearly pointed to her being disabled. The Court felt that taking all of that evidence into account it was not reasonable to say that Liberata should have known that Ms Donelien was disabled.

You should always seek a full occupational health opinion and look at all the surrounding evidence before disregarding reasonable adjustments for someone with a medical condition. You should take reasonable steps to find out the nature of an employee’s illness and whether it may amount to a disability.

Equal treatment for agency workers

Agency workers are entitled to equal treatment with permanent employees in relation to certain basic terms and conditions of employment. These conditions include pay, holiday entitlement and rest breaks. This rule applies after the employee has completed 12 weeks’ service. The relevant legislation is Regulation 5 of the Agency Workers Regulations 2010.

Angard Staffing Solutions Ltd fell foul of this rule. They were an agency who supplied an agency worker Mr Kocur to their client, Royal Mail Group Ltd. Mr Kocur completed the 12 weeks’ service, but was then only given 28 days’ holiday and half-hour rest breaks, when Royal Mail’s permanent employees got 30.5 days’ holiday and one-hour rest breaks.

Angard tried to argue that because the agency worker received a higher rate of pay, this should offset his lower holiday entitlement and rest breaks. He was paid £10.50 per hour and the permanent employees were only paid £9.50 per hour. This argument was rejected by the Employment Appeal Tribunal who said that you have to compare each term of the contract separately. Mr Kocur was entitled to the same holiday entitlement and rest breaks as permanent employees hired directly by Royal Mail. He was also entitled to a swipe card and gym membership.

The EAT also ruled that it would be possible in theory for an employer to pay a higher rolled-up hourly rate to agency workers, to include some of their holiday entitlement. Although this would only work for any extra contractual holiday entitlement above the statutory minimum of 28 days holiday (which the worker must be entitled to take and be paid for). However, it is important that the arrangements are transparent and set out exactly which part of the pay relates to annual leave. That didn’t happen in Mr Kocur’s case.

Working Time

There are two recent cases to be aware of in relation to working time, both involving firefighters.

The first says that an award for injury to feelings can be made in an employment tribunal if an employee wins a claim of detriment for asserting working time rights. South Yorkshire Fire and Rescue transferred firefighters including Mr Mansell to another station, after he and others refused to work a new shift system which gave inadequate rest breaks. The tribunal decided that this transfer was a detriment on the basis that the firefighters had asserted their working time rights. The Employment Appeal Tribunal held that it was open for the firefighters to argue that they should get an injury to feelings award like other detriment claims, such as when making a complaint about sex discrimination. This could make compensation awards more expensive for employers on the losing side of these claims.

The second case was a decision by the Court of Justice of the European Union involving a volunteer firefighter who had to be on ‘stand-by’ in case he was called in to work. When on stand-by duty, Mr Matzak had to be contactable and stay within 8 minutes travel of his fire station. For this he was paid a stand-by allowance annually. He argued he was not paid properly for this stand-by time and that it should be classed as working time. The Court agreed.

When an employer decides where a worker must physically be (even if it’s their own home) and states that the worker must be available at short notice, then that should be classed as working time. The worker was entitled to be properly paid for that time. The intensity of the work during the stand-by period was irrelevant. It didn’t matter that the employee was resting at home.

Dismissal before a TUPE transfer

Employees have certain rights including protection from dismissal on the transfer of an undertaking, such as on a business sale or the outsourcing or insourcing of services. Such transfers are known as ‘TUPE transfers’ and are governed by the Transfer of Undertakings (Protection of Employment) Regulations 2006.

The dismissal of an employee is automatically unfair if the sole or principal reason for the dismissal is the TUPE transfer. If the employer can show that the dismissal was unrelated to the transfer, it will not be automatically unfair. A recent case has shown that if an employer takes the opportunity of a TUPE transfer to dismiss an employee with a conduct or performance issue, this can still be automatically unfair, as it is motivated by the transfer.

Ms Kaur was a cashier working for H&W Wholesale. She was dismissed two days before the employees and stock were transferred to Hare Wines under the TUPE Regulations. She had a strained working relationship with a colleague. The problems had been going on for a while and the colleague would become her manager after the transfer. Her employer did nothing about the relationship difficulties until just before the TUPE transfer, when it decided to resolve them by dismissing Ms Kaur. The Employment Appeal Tribunal ruled that the dismissal was automatically unfair, even although it was for reasons personal to Ms Kaur. It was still motivated by the sale to Hare Wines, making the TUPE transfer the principal reason for the dismissal.

And finally…

It’s been snowing. That means an avalanche of advice to employers on what to do if employees are unable to get to work. The answer, as is the case with so much of employment law, is ‘it depends on what the contract says’. If the employee is only paid for the hours actually worked then the general position is that he or she is not paid if the employer is offering work and the employee can’t get to it. For salaried staff the position is less clear. There is probably a contractual argument for docking a day’s pay from an employee’s salary, but taking that approach is hardly an effective way of building trust and confidence. If at all possible it is probably better to accept the occasional snow day and encourage staff to work at home or pick up any shortfall when a thaw sets in.

About David Parry

David graduated with a Law with French degree from Leicester and Strasbourg Universities. He qualified as a solicitor in 1989 and has specialised in employment law ever since, first at Cole & Cole (now Morgan Cole) then at Mallam Lewis & Taylor who merged with Darbys in 1999. David became a partner in 1995. Until 2013, David was the Head of the Employment Team at Darbys that became one of the best-regarded in Oxford and the Thames Valley. Contact David now

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