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June 2012 Updates

Employment law changes

1 June 2012:

New Regulations came into force setting out details of how employers' duties under the Pensions Act 2008 and the Pensions Act 2011 will be introduced gradually over time. Automatic enrolment comes in from 1 October 2012. However, only large employers with 250 or more staff will be required to auto-enrol staff into a qualifying pension scheme and pay a minimum contribution. The changes for smaller employers (i.e. those with more than 50 workers, but less than 249) will be phased in over several years from April 2014. It is expected that employers with less that 50 workers, will now not have to auto-enrol their employees until June 2015.

16 June 2012:

New legislation came into force, which increases the maximum total value of shares that may be granted to an employee from £120,000 to £250,000.

Assignment of a pub lease and TUPE implications

In the case of LOM Management v Sweeney, the Employment Appeal Tribunal gave guidance on the assignment of a lease of commercial premises. In this case it was decided that in general, this does not amount to a TUPE transfer, unless it can be shown that there was a transfer of an economic entity retaining its identity.

Here, a tenant ran MacConnell's Bar in Glasgow under a commercial lease from a brewery. The lease was then assigned to a new tenant. The Claimant, who worked at the bar, was away on holiday at the time of the assignment. On her return, she was informed by the new tenant that she no longer had a job at the pub.

An Employment Tribunal found that there was a TUPE transfer, automatically transferring her employment from the outgoing tenant to the incoming tenant and that the Claimant had been unfairly dismissed by the new tenant.

The Employment Appeal Tribunal disagreed. They decided that it must be shown that there was a transfer of a business, which was linked to the property, and that a business should satisfy the definition of an economic entity. In other words, it had to be shown that there was an organised group of people and assets carrying out an activity, which pursues a specific objective.

In summary, therefore, the assignment of a commercial lease does not, of itself, establish that TUPE applies.

Unfair selection for redundancy

The Employment Appeal Tribunal has clarified that, in some circumstances, subjective selection criteria can be used during a redundancy consultation process and that an employer is not just limited to using objective selection criteria.

In Mitchells of Lancaster (Brewers) Ltd v Tattersall, the Claimant was one of five members of the Respondent's senior management team. The Employment Tribunal found that the Claimant had been unfairly dismissed after a flawed redundancy selection process. The Employment Tribunal decided on a 20% Polkey deduction to the Claimant's award i.e. even if the Respondent had followed the correct procedure, the outcome would still have been the same and therefore limited the Claimant's compensation to the period it would have taken the Company to dismiss him correctly.

The Respondent appealed, but the Employment Appeal Tribunal upheld the finding of unfair dismissal. However, it disagreed with the Employment Tribunal's criticism of the Respondent's use of subjective selection criteria. In this case it was decided that, for a relatively small company in serious financial difficulty, it was not inappropriate for the Respondent to apply subjective selection criteria.

Update on the Enterprise and Regulatory Reform Bill

The Government has announced that it will not be pursuing compensated no fault dismissal proposals.

The Government has also announced that legislation to bring in settlement agreements would also be considered. This will allow employers to offer employees a termination package, without fear of the offer being raised in a tribunal claim.

This would go further than the current 'without prejudice' rule i.e. when settlement matters are discussed separately and off the record. There would, therefore, be no need for an existing dispute to exist between the parties. The Government will also publish standard 'settlement agreement' forms for employers and employees to use. It is not yet clear whether the requirement to obtain legal advice before signing a compromise agreement will be affected.

Also, the Government is proposing to make confidential those negotiations which take place before the termination of an employee's employment.

Victimisation and Union support

The Employment Appeal Tribunal reaffirmed in the case of University and College Union v Croad, that it is not unlawful victimisation for a Trade Union to refuse to fund litigation by a member against her employer for disability discrimination, if that employee also brings (or intends to bring) similar proceedings against the Trade Union.

In this case, the Claimant brought various claims, including disability discrimination, against her employer. She received advice and legal assistance from her Trade Union.

The Trade Union later withdrew support for the Claimant's action against her employer, on the grounds that it had become difficult to act for the Claimant, as she would not agree to follow the advice they had given her. The Claimant then also complained about the Trade Union 's support for her. She submitted a Tribunal claim against the Trade Union for disability discrimination. The claim failed, as did the Claimant's appeal.

The Employment Appeal Tribunal noted that there would, in any event, have been a conflict of interest if the Trade Union had represented the Claimant in a case against her employer whilst facing linked proceedings. It stated that protecting a party's own legal interests does not amount to discrimination.

Is a reduction in headcount required for redundancy?

In Packman v Fauchon, the Employment Appeal Tribunal decided that there can be a redundancy even if the headcount does not change.

In this case, the Claimant was employed as a book-keeper. The Company experienced a downturn in business. They also introduced a software package, which reduced the number of hours necessary for the book-keeper to work. The Company tried to persuade the Claimant to cut down her hours, but she refused. They then dismissed her.

On the facts of this case it was decided that the downturn in business meant there was less of a need for book-keeping staff. Since the Claimant did not agree to a significant reduction in her hours, the reason for her dismissal was redundancy.

The Claimant appealed, but the Employment Appeal Tribunal also agreed with the Tribunal. In this case it was decided that if the amount of work available for the same number of employees is reduced then a dismissal of an employee caused wholly or mainly for that reason, is a redundancy, and therefore falls under one of the fair reasons for dismissal.

Email: info@stewartlaw.co.uk


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