Thursday 8 March 2012

Employment Law Update

1. Redundancy!

Best Practice: The key question is whether the employer has “genuinely applied its mind” to identifying the pool. A pool which is the same size as the number of employees to be made redundant should only be used where there are strong reasons to back up that decision.

• Capita Hartshead v Byard [EAT]: a redundancy dismissal was held to be unfair where the employer used a selection pool of just one employee.

• The employer’s decision to limit the size of the pool to one was not reasonable in the circumstances and the pool should have been wider:

• Other employees did similar work

• The claimant’s work had been praised

• The employer had overstated the commercial risks of widening the pool

2. Age Discrimination

Best Practice: Favourable decision for employers but should be approached with caution. In this case the “cheapness criteria” used by the employer was held to be the only practicable criteria it could have used in selecting applications for voluntary redundancy – this played a big part in the decision.

HM Land Registry v Benson and Ors (EAT):

• Employer’s policy to refuse applications for early retirement from employees aged 50 – 54 was not unlawful indirect age discrimination.

• Although Employer’s decision about allocating its resources in the most cost effective manner did put employees in that age group at a disadvantage, it was justified by being a proportionate means of achieving a legitimate aim.

3. More Age Discrimination!

Best Practice: Employers should be wary of attributing unacceptable performance to the age of an employee or any other protected characteristic (e.g. sex etc). Employer’s will be required to give a non-discriminatory explanation for any such remarks.

“You can’t teach an old dog new tricks”

James v Gina Shoes [EAT, 2012]:

• Ageist remarks made by a Director in the context of a performance management review amounted to a breach of trust and confidence and may amount to age discrimination.

• Tribunal wrong to hold that the remarks were taken “out of context”.

4. Withdrawal of Resignation Chelmsford College v Teal (EAT): Where an

employee is permitted to withdraw their resignation, the original contract is resurrected and their continuity of employment is unbroken

Best Practice: It has long been accepted that a party who has properly given notice of termination of employment cannot unilaterally withdraw that notice. Here, the employer accepted the employee’s withdrawal of resignation. This case serves as a useful reminder of the importance of clarity in communication between employer and employee.

5. Employment Status Weight Watchers v HMRC: Weight Watchers “Leaders” held to be

employees despite: being described as “independent contractors” in their contracts; being required to pay their own tax and NI; and being able to send a “substitute” to carry out meetings.

In reality the Leaders were required to perform services personally, the right to substitute was limited and WW exhibited a high degree of control regarding the times and place of the meetings.

Best Practice: This case harks back to the Autoclenz case covered in a previous HR Exchange update. It is important to remember that the practical reality will outweigh what is expressed in the employment contract itself! Ensure what is written in the contract accurately reflects the reality of the relationship.

6. Restrictive Covenants Towry EJ Ltd v Bennett and Ors [ET, 2012]:

• “Solicitation” held to mean: “directly or indirectly request, persuade or encourage clients of a former employer to transfer their business to their new employer”

• Solicitation cannot be inferred merely from the fact that a wave of clients move business – this could be down to loyalty. The burden of proof is on the employer to show that it was as a result of “persuasion”.

•Contrast with a “non-dealing” restriction – much stronger.Best Practice: Post termination restrictions are a valuable tool to protect business interests BUT should be handled carefully. They will only be enforceable as long as they go no further than necessary, should always tailored to a company’s exact requirements and reflect the employee’s position and level of seniority.

7. Springboard injunctions •QBE Management Services v Dymoke: Restrictive covenants may not be adequate to protect a business, particularly if the unlawful activity begins whilst the employee is still employed or on Garden Leave. Hence the development of the Springboard Injunction.

• In this case the employees were held to have achieved a classic “springboard” advantages by:

• Using their seniority to poach other employees;• Soliciting their Employer’s customers; • Misusing their employer’s confidential information; and• Failing to disclose the unlawful conduct whilst still employed

• The employer was granted 12 months springboard relief to remedy the head-start which the employees’ new business had gained through their unlawful actions and covert activity.

8. Fixed-Term Contracts•University of Stirling v UCU [EAT 2012]: Employees dismissed on expiry of their fixed term contracts were dismissed for a reason relating to them as individuals and therefore were not “redundancies” triggering collective consultation obligations.

• Compare with dismissals for a reason relating to the employer, such as the need of an employer to change its business.

Best Practice: HANDLE WITH CAUTION! This case goes against the previous prevailing view that expiry of fixed-term contracts can give rise to a redundancy situation requiring collective consultation. Key Question: Can the expiry of the fixed-term contract be seen as part of a wider exercise of potential job losses within the business? If YES, then depending on the numbers, collective consultation may be required.

9. Upcoming changes

6 April 2012: Unfair dismissal qualifying period increases to 2 years

Importantly this only applies to employees who begin employment after 6 April 2012.

Those employees whose continuous employment began on 5 April or before still only subject to the 1 year qualifying period.

10. Pensions Update

The Government have announced that the deadlines for implementation of the Pension Auto-Enrolment scheme have been pushed back for small businesses.

New implementation deadlines for small businesses are now as follows:

50 – 249 employees 1 April 2014 – 1 April 2015

30 – 49 employees 1 August 1015 – 1 October 2015

Less than 30 employees 1 January 2016 – 1 April 2017

11. Pensions Update [cont..]

BUT… small employers should NOT just sit back and breath a sigh of relief:

Auto enrolment represents a significant change in the workplace pensions regime: Administrative burden of ensuring all employees enrolled; Mandatory employer contributions.

Prudent for all employers, big and small, to consider strategy and get a handle on how the business is going to deal with the changes well in advance.

Remember – businesses are able to implement the changes earlier than their allotted implementation date if they so wish!

12. One to watch out for..• Should a woman who becomes a mother by way of surrogacy be entitled to paid maternity leave to bond with her baby, establish breastfeeding and maintain and develop family life?

• Current UK legislation does not specifically apply to a surrogates and European law does not refer to surrogate situations.

• The question has been referred to the European Court of Justice for determination.

WATCH THIS SPACE…

Taylors SolicitorsEmployment Team

Will Clayton – Partner – Head of EmploymentEmma Swan – Senior Associate

Leanne Eddleston - Solicitor

Rawlings HouseExchange Street

BLACKBURNBB1 7JN

Ninth Floor80 Mosley StreetMANCHESTER

M2 3FXTel: 0844 8000 263www.taylors.com