Nick HobdenPartnerE: nick.hobden@ts-p.co.ukD: 01322 623700

James WillisSenior AssociateE: james.willis@ts-p.co.ukD: 01322 422540

Guest speakerSue ThreaderEmployment Tribunal Panel Member

Date 15 September 2011

© Thomson Snell & Passmore 2011

TSP Connect SeminarEmployment Law Update

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Our subjects today

• TUPE and pre-pack administrations – liabilities

• Equality Act 2010 – one year on

• Retirement age

• Public sector equality duty for public service providers

• Agency Workers Regulations

• Collective consultation – recent cases

• Employment tribunals – observations on how to avoid them if you can and prepare for them if you must

James WillisSenior Associate

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James WillisSenior AssociateE: james.willis@ts-p.co.ukD: 01322 422540

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TUPE and pre-pack administrations

• Background:• TUPE 2006 was intended to foster a ‘rescue culture’

• Struggling businesses might transfer without certain employment-related liabilities

• Rules relating to changes to terms and conditions of employment ‘relaxed’

• Distinction drawn between ‘terminal’ and ‘non-terminal’ situations

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TUPE and pre-pack administrations

• ‘Terminal’ situations• The transferor is subject to “bankruptcy or any analogous insolvency

proceedings” aimed at liquidating the assets of the business

• TUPE will not apply to any alleged transfer

• Non-terminal” situations• The transferor is subject to “relevant insolvency proceedings”, but not with a

view to liquidation

• TUPE may still apply to any alleged transfer, but:• some liabilities may not transfer and will be picked up by NI Fund

• transferee may have greater scope to vary employees’ terms and conditions

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TUPE and pre-pack administrations

• Can a ‘pre-pack’ administration amount to a ‘terminal’ situation?• Let’s get the jargon straight:

• Administration is typically a form of insolvency proceedings aimed at rescuing the company or facilitating the sale of the company’s assets as a going concern

• ‘Pre-pack’ administration is one where the sale of a company’s assets is effectively agreed before a company is put into administration, with the sale completing on or very shortly after the appointment of the administrator

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TUPE and pre-pack administrations

• Oakland v Wellswood • BIS guidance suggested administrations will always be ‘non-terminal’

• Employment Appeal Tribunal disagreed and found that TUPE did not apply to this ‘pre-pack’

• Court of Appeal expressed some doubt over this decision, but did not overrule it

• OTG v Barke • Employment Appeal Tribunal reached a very different conclusion, ruling that

administrations can never have liquidation as their intended aim

• Therefore TUPE should apply to ‘pre-packs’, subject to the relaxation relating to liabilities and changes to terms and conditions

Conflicting EAT decisions!

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TUPE and pre-pack administrations

• Pressure Coolers v Molloy • The facts

• Maestro International Limited was subject to a ‘pre-pack’ administration

• Business was sold to Pressure Coolers at 11am

• At 3pm, employees were all summarily dismissed for redundancy

• The decision• Pressure Coolers argued that all liabilities (including dismissal-related ones such as

notice pay and basic award) ought to be picked up by the NI Fund

• EAT held that dismissal-related liabilities debts were not outstanding at the time of transfer. Therefore Pressure Coolers were liable for these

Time of dismissal is critical – ‘pre-pack’ buyers beware!

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Discrimination law update

• A brief recap on the Equality Act 2010:• Most of it came into force in October 2010

• Consolidation of 9 separate pieces of discrimination legislation

• Harmonising the various strands of discrimination law

• Introducing some new forms of discrimination (e.g. indirect disability discrimination and disability arising from discrimination)

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Discrimination law update

• Some EA 2010 provisions due to come into force later:• Public sector equality duty (5 April 2011)

• Positive action in recruitment and promotion (6 April 2011)

• Dual (Combined) discrimination

• And don’t forget the changes to age discrimination (removal of the default retirement age)

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Discrimination law update

• Positive action in recruitment and promotion• New provisions came into force in April 2011

• Employers can treat a person with “protected characteristics” more favourably in connection with recruitment and promotion if:• They are disadvantaged or there is low participation and

• The person is as qualified as other applicants

• Problems• Can’t have a general policy

• Each decision must be justified - burden of proof

• Will anyone be brave enough?

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Discrimination law update

• Dual (combined) discrimination• A perceived gap in protection (e.g. Asian women, gay men?)

• Dual discrimination intended to plug gap where, because of a combination of two ‘protected characteristics’, A treats B less favourably.

• Coalition decided to ‘shelve’ these provisions

• But Ministry of Defence v Debique (EAT) and Khan v Ghafoor (ET) – has case law ‘introduced’ dual discrimination anyway?

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Discrimination law update

• Apportioning liability for discriminatory acts• Discrimination claims can be brought against employer, other employees

and sometimes third parties

• More than one party found guilty of same discriminatory acts

• How is liability apportioned?

• London Borough of Hackney v Sivanandan• EAT said where two or more parties are jointly liable, parties are jointly and

severally liable for financial award

• Claimant can go against one or both respondents; each is liable for entire award

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Discrimination law update

• Justifying discrimination• Sometimes possible to ‘justify’ conduct which would otherwise be

discriminatory (e.g. indirect discrimination, age discrimination)

• Cross v British Airways (2005) - EAT held that employer cannot justify on grounds of cost alone

• Woodcock v Cumbria Primary Care Trust (2011) – EAT cast doubt on Cross, finding it "hard to see the principled basis" for the decision

• Cherfi v G4S Security Services Ltd (2011) – EAT considered case law and sided with Woodcock.

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Discrimination law update

• Scrapping the Default Retirement Age• Law is in the process of changing

• Employers cannot serve any further retirement notices under the old system

• Some retirement notices have been served (on or before 5 April 2011) but have yet to expire – they will be allowed to proceed, as long as employee is at least 65 on 30 September 2011

• It is conceivable that retirements under the ‘old’ law could continue until towards the end of next year. But take care!

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Discrimination law update

• Lawful compulsory retirement might still be possible

• Firm-wide or job-specific retirement age if it is “objectively justifiable” (proportionate means of achieving a legitimate aim)

• Do you want to be the test case?

• Removing the retirement age will be the prudent course of action for most employers

Nick HobdenPartner & Head of Employment

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Nick HobdenPartnerE: nick.hobden@ts-p.co.ukD: 01322 623700

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Nick’s topics to be covered

• The Public Sector Equality Duty

• The Agency Workers Regulations 2010

• Collective Consultation

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The Public Sector Equality Duty

• In s 149 of the Equality Act 2010, in force from 5th April this year

• Applies to public bodies and private/voluntary bodies who perform public functions

• Requires affected bodies to have ‘due regard’ to the need:• to eliminate discrimination, harassment, victimisation, and other similar

conduct;

• to advance equality of opportunity between those who share a ‘protected characteristic’ and those who don’t; and

• to foster good relations.

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Protected characteristics

• ‘Due regard’ means:• a ‘conscious approach and state of mind’

• an integral part of the decision-making process

• The duty covers protected characteristics:• Age

• Disability

• Gender reassignment

• Pregnancy and maternity

• Race (including ethnicity, nationality, colour, or national origin)

• Religion or belief (including a lack of)

• Sex

• Sexual orientation

• Marriage / civil partnership (only in respect of eliminating discrimination)

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Complying with the duty

• Affects all employees

• The duty must be fulfilled before and at the time the decision is made

• Delegation – public bodies expect compliance with duty

• Compliance is assessed by The Equality and Human Rights Commission (EHRC)

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The Agency Workers Regulations 2010

• Due to come into force from 1 October 2011

• Covers ‘temps’ – individuals supplied by a temporary work agency under direction of hirer

In scope Out of scope

TWAs – inc intermediaries Genuinely – self employed/ service providers - STATUS!

Hirer (end user) supervising and directing workers

In house (temp) staff banks or secondments to H2

Agency worker – employed/personally contracted to work (inc umbrella companies)

Managed service contracts under supervision of TWA not Hirer

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Day one rights

• Two ‘day one’ rights:• Right to be informed of relevant vacancies

• Access to collective facilities and amenities (on site)

• Objective justification

• NB. Provide numbers, type of work and where agency workers work to employee representatives in TUPE or collective redundancy situations

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Qualification

• 12-week qualifying period = qualify for the same basic working conditions as would be - as if recruited directly (Comparator?)

• When calculating the 12-week period:• A break of six weeks of more, or a move to a substantially different role =

resets the clock

• Any break due to holiday or sickness (up to 28 weeks) = pauses the clock

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The right to equal treatment

• ‘Basic working conditions’ = • Pay• Working time • Overtime• Holiday pay (over WTR)• Rest breaks (over WTR)• Bonuses linked to individual performance• Time off for ante natal appointments; alternative work on maternity

grounds; paid for maternity work suspension

• NB ordinarily included

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Exclusion from pay and basic working conditions

• NOT• occupational pensions (though note from October 2012 automatic pension

enrolment)

• occupational sick pay (above SSP)

• maternity, paternity and adoption pay (above statutory SMP, SPP and SAP rights)

• redundancy pay (statutory and contractual)

• notice pay (above statutory notice)

• benefits in kind (such as company cars)

• bonuses not linked to individual performance (such as loyalty bonuses)

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Enforcement and liability

• Right to request information from agency/hirer (day one rights and 12+ weeks rights)

• Worker may bring claim before Employment Tribunal for infringement/detriment

• Liability usually rests with agency for 12+ weeks, subject to:• ‘Reasonable steps’ defence

• Tribunal’s power to apportion liability for compensation and possibly £5,000 anti-avoidance fine

• Breach of ‘day one’ rights always hirer’s responsibility

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Collective consultationPhillips v Xtera Communications Ltd

• Case concerned the election of employee representatives

• There were 3 reps designated, only 3 applied

• No objections were received to these reps, although no vote held

• EAT held: • No requirement for a ballot in all cases; clearly not necessary here

• Fairness was ensured by employer asking for objections

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Lancaster University v The University & College Union

• University consultation procedure clearly flawed but tolerated for several years

• New union rep demands change, union brings a claim for a protective award

• EAT held: • Take a “top-down” approach to liability, starting at breach then looking for

mitigation

• Union’s tolerance for such a long period was a legitimate mitigating factor