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March 2012 Updates

Redundancy and suitable alternative employment

In Samsung Electronics v Monte D'Cruz, the Employment Appeal Tribunal decided that an employer can still appoint "the best person for the job", even if a redundant employee is invited to apply for a newly created role, following a reorganisation. This goes against previous case law in this area and could impact on the amount of compensation that Claimants receive, even if their unfair dismissal claim is successful.

In this case, Samsung re-organised its print division. The Claimant was one of three Heads of Department who were informed that their roles would be merged into one new position of Head of Sales.

The Claimant applied for this new position and was required to give a presentation, which was scored against competencies normally used in the annual appraisal process. His application was unsuccessful.

The Claimant then also unsuccessfully applied for a more junior role arising out of the re-structure. Samsung decided to appoint an outside candidate.

The Employment Tribunal decided that the dismissal was unfair due to inadequate consultation and because it deemed the criteria for selection for the new roles to be too "subjective".

The Employment Appeal Tribunal disagreed. It decided that, when looking at the quality of consultation, the Tribunal had made an error by substituting its own view for that of the employer. It also decided that, when an employer is selecting for a new role, some subjectivity is inevitable.

It is important to note that, had the Employment Appeal Tribunal upheld the Claimant's successful unfair dismissal claim, it could still have decided that Samsung Electronics had made the correct decision in appointing an external candidate to the new role. In such circumstances, the Claimant's compensation would be limited to the losses that they had incurred between their termination date and the date of the appointment of the external candidate.

Redundancy selection pools

In Halpin v Sandpiper Books, the Employment Appeal Tribunal decided that the Tribunal should only interfere with a redundancy selection pool which has been chosen by an employer in very rare circumstances. The Tribunal should consider whether the selection pool was one that was reasonably open to the company. This is a decision for the management of the company.

In this case, the Respondent employed the Claimant in its London office as an Administrator/Analyst. The Claimant then moved to a sales role in China. The Respondent later decided to outsource the sales work and the Claimant was put at risk of redundancy. A lengthy consultation process followed and the Claimant was offered (but refused) alternative employment in the UK.

The Respondent dismissed the Claimant by reason of redundancy. He brought a claim for unfair dismissal which was unsuccessful. The Tribunal decided that the Claimant had been fairly selected for redundancy, as his role was a unique one, dealing solely with sales and based in China.

The Employment Appeal Tribunal agreed with the Tribunal's approach. The decision by the Respondent to limit the selection pool to a pool of one was reasonably open to it and, as stated above, this cannot easily be overturned.

TUPE - constructive unfair dismissals

If a TUPE transfer leads to a change in employees' normal place of work, it could lead to successful constructive and automatically unfair dismissal claims from the employees in question.

This has been demonstrated by the recent case of Abellio London v CentreWest London Buses.

The five Claimants in this case worked as bus drivers for CentreWest. They worked on a bus route which ran from the company's Westbourne Park depot. This location suited the employees' family circumstances and where they lived. The route was then transferred to Abellio, which intended to operate the route from its own depot in Battersea.

CentreWest and Abellio agreed that this was a service provision change to which TUPE applied.

The Claimants all had valid objections to the new location as it affected their travel and domestic arrangements. The new location would mean between one and two hours extra travelling time for each of them per day. As a consequence, they resigned.

The Employment Tribunal decided that there had been a substantial change to the employees' working conditions, and that this was to their material detriment. The move was also a fundamental breach of contract, because the mobility clause in the employees' contracts of employment did not extend to the new location. This meant that the employees had been constructively dismissed and the dismissals were automatically unfair, as they were by reason of the TUPE transfer.

The Employment Appeal Tribunal agreed with the Employment Tribunal's decision.

Policies prohibiting the employment of close relatives -
marital status discrimination

In Hawkins v Atex Group, the Employment Appeal Tribunal considered a case in which a Claimant (unsuccessfully) asserted unlawful discrimination on the grounds of marital status.

The Claimant had been employed for less than a year by a company that her husband managed when the company introduced a policy, which prohibited the employment of close relatives. This lead to her (and her daughter's) dismissal.

The Employment Tribunal struck out her claim and her appeal against that decision failed.

The Employment Appeal Tribunal decided that, in this case, the company wasn't applying a general rule about married women. Its decision to dismiss applied both to the Claimant and her daughter, and the Respondent was not motivated by the fact that the Claimant was married to her husband.

Dual contract arrangements

HMRC has published up to date guidance on dual contract arrangements. These most commonly occur where a foreign domiciled worker works both inside and outside the UK. The worker may claim to have two employment contracts, which are typically very carefully drafted, with the bulk of income being attributed to the contract which appears not to be subject to UK PAYE taxation.

HMRC can be suspicious of such arrangements and may decide to investigate them.

The new guidance sets out the evidence which HMRC expects an employer to keep and explains how it approaches the question of whether work in the UK is "merely incidental" to employment outside the UK.

What to do to concede, abandon or withdraw a claim in the
Employment Tribunal

The case of Segor v Goodrich Actuation Systems has highlighted how carefully the Tribunal should approach a situation where a party appears to be seeking to concede, abandon or withdraw part of their case.

In this case, claims for race and sex discrimination had been brought. The Employment Tribunal felt that the Claimant's lay (i.e. not legally qualified) representative had abandoned part of the Claimant's discrimination complaint and so did not deal with that aspect of the claim any further. The Claimant appealed this. Her appeal was successful.

The Employment Appeal Tribunal held that a Tribunal should take great care to ensure that, if a party seeks to abandon, or to concede, a central and important point during the course of a hearing, this is precisely what they intend and wish to do.

The Employment Appeal Tribunal considered it important for a Tribunal to check, and note with clarity, precisely what is being said. The individual should understand the significance of it and, if they are unrepresented, they should understand some of the consequences that may flow from it.

As a matter of principle, a concession or withdrawal of a claim cannot properly be accepted unless it is "clear, unequivocal and unambiguous".


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SRA number 404293