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The Season of Uncertainty: A selective employment law round up

September 26, 2013

If I had a pound for every time someone said that Employment Law is a very fast moving area of law, then I would be rich. The reason why it is said so often is of course because it is true. Generally speaking it is this fluidity and speed of change in employment law that businesses and organisations find hard to keep up with. This leads to a perception among some employers that employment regulation gets in the way of doing business. This is particularly the case where a business or organisation has no HR support.

In an attempt to address this, our Government has given itself a “red tape challenge” and, through its Employment Law Review, has been seeking to change employment law to make it easier for employers to do business.

The first major piece of that was put in place in April 2012 when the period of employment needed in order to claim “Unfair Dismissal” was extended to two years, or so the media would have us believe. The truth of the matter is not quite as straightforward as the media might suggest, and the result is that (as often seems to be the case these days) people don’t really know what the rules say at the moment.

So when you are at those dinner parties and it comes up as a topic of conversation as it often does (or is that just the type of dinner party I end up at?), then you can set everyone straight by explaining that anyone employed in a job since before 6 April 2012 does still have the right to claim unfair dismissal (even if they do not have two years’ service); whereas no-one who started working on 6 April 2012 or later will benefit from the right until at least 6 April 2014 (i.e. the point at which they accrue two years’ service). However, regardless of whether they can claim “unfair dismissal”, employees can still claim that they have been dismissed unlawfully if their dismissal relates to an act of unlawful discrimination or victimisation etc (no matter when they started employment).

So it would seem that in an attempt to make it easier for employers to do business, elements of uncertainty have been introduced which are likely to make things more confusing and difficult, at least for a while. And that is not the only area of uncertainty at the moment either, as a number of other changes are being introduced.

So what other employment law topics are you likely to talk about over your prawn cocktail and duck a l’orange? Well, it could be one of the following subjects:

Pre-termination Negotiations

The summer of 2013 saw the introduction of new provisions aimed at enabling employers to have “pre-termination negotiations”, and offer a “settlement agreement” to unwanted employees, supposedly without fear of their discussions ending up in tribunal. Unlike without prejudice discussions, there does not need to be an existing dispute with an employee before pre-termination negotiations can take place.

However the pre-termination negotiation provisions only provide protection in relation to standard unfair dismissal claims. The protection in pre-termination negotiations does not therefore apply where for example the employee claims to have been dismissed for a discriminatory reason, or whistleblowing etc.

Pre-termination negotiations may help employers enter into settlement discussions where there is no existing dispute, but the problem is that they can be referred to in any claims other than standard unfair dismissal cases. Consequently employers cannot tell with any certainty that their discussions will not be disclosed in front of an employment tribunal, which heavily limits the usefulness of the pre-termination negotiations.

Pre-termination negotiations should therefore only be used with caution. The old advice continues to apply. Only say (or write) something that you would be happy to hear being repeated in the employment tribunal.

New Employment Tribunal Rules and Fees

New employment tribunal rules came into force from 29 July 2013. This included the introduction of a new fee system, with “issue fees” and “hearing fees” payable by the claimant.

The introduction of the new fee system has been challenged by applications for Judicial Review in both England & Wales and Scotland, on the basis that the fees may be unlawful as being discriminatory and preventing access to justice.

Both challenges will be considered at full hearings but have not prevented the changes going live on 29 July 2013 in the meantime. It could lead to the fees being repealed or changed in the near future. Or maybe they won’t?

It is intended that these fees will lead to a reduction in the number of cases going through the employment tribunal system. I have however already see communications from insurance companies who are supporting claimants and claimant lawyers with the tribunal fees after the event. A whole new breed of claims farmers could yet evolve in this area.

Collective Redundancy Consultation

Recently the period of time which employers need to spend consulting with employees where over 100 redundancies are proposed at one establishment was reduced to 45 days. A 30 day consultation is still required where between 20 and 99 redundancies are proposed.

That change will be helpful to employers entering into large scale restructuring, but unfortunately an element of uncertainty has been introduced from a different direction on this occasion.

You may recall that some time ago, the Administrators for Woolworths avoided having to pay out any additional compensation to redundant employees, because the meaning of “at one establishment” related to each individual shop. As there were less than 20 proposed redundancies at each shop, the collective consultation requirements were avoided. This is the basis upon which many multi-site redundancy processes have been handled over the years.

Unfortunately and to everyone’s surprise, when the case was appealed the appeal Judge took the decision that the words “at one establishment” should be disregarded for the purposes of collective consultation. As a consequence it was necessary to look at the employer as a whole, which meant that there were more than 20 proposed redundancies. The Judge did this on the basis of his interpretation that the wording of the UK legislation was inconsistent with European Law. The decision is subject to further appeal, and every other employment lawyer I have spoken with hopes an appeal will be successful.

The impact of the current position could be quite significant, and burdensome on some employers. There is however a potential light at the end of the tunnel from our counterparts in Northern Ireland. They have a similar, but slightly different employment tribunal system over there which means that they can make different decisions on the same piece of law.

Similarly to the Woolworths case, the Northern Irish case relates to claims for failure to collectively consult where the employer relied on the fact that the redundant employees were all employed at stores with less than 20 affected employees. However, instead of adopting the approach of the Judge in the Woolworths case, the Northern Ireland Employment Tribunal has referred the matter to the European Court of Justice to determine the meaning of “one establishment”. We await their decision.

At this moment in time the decision of the appeal Judge in the Woolworths case still takes precedence in England and Wales, so you will need to be mindful of that when undertaking more than 20 redundancies across the entire business. But if the ECJ provides a helpful decision, it will impact on the issue faced in the Woolworths case and could ultimately take us back to using the previous approach where we can often treat a single place of work as an “establishment”.

TUPE Changes

Okay, so I admit it, this one is unlikely to come up at the dinner party. But there has been a lot of talk and speculation about changes to TUPE, and in particular what will happen in relation to service provision changes.

In September 2013 Employment Relations Minister Jo Swinson announced the Government’s response following its consultation relating to TUPE reform earlier in the year. We still haven’t seen any new draft regulations, which are expected by December 2013, and it now looks like that the changes will be implemented in January 2014 at the very earliest.

Whilst recognising that TUPE cannot be repealed entirely, the Government has promised to make things simpler and give greater clarity. The Government claims that through these reforms “Employers and staff in a business which is changing owner will find the process of the transfer easier, fairer and more effective”.

Amongst the key changes announced by the Government are:

Service Provision Changes

This was the most controversial area in the consultation. There was a proposal to entirely remove the concept of “service provision change” from the regulations.

This did have a touch of irony to it considering that the concept of service provision changes was initially introduced in order to provide greater clarity than the pre-2006 case law provided. The problem however is that case law has been developing since the introduction of the concept seven years ago. Removing these rules would have been unlikely to prevent the regulations applying to all service provision changes, but it would instead have led to a whole new string of case law developing either along the lines of the pre-2006 case law, or at a completely different tangent.

Consequently, the Government has decided that it will not repeal the service provision change rules.

However, the Government does intend to provide clarification of the rules on service provision changes. This will include a requirement that, for a service provision change to have happened, the activities carried on after the change must be ‘fundamentally or essentially the same’ as those carried on before it, meaning that if businesses radically change the way they provide services, that change is unlikely to be caught by the TUPE regulations.

Whilst the intention behind this feels right, it will inevitably lead to a new string of case law on what ‘fundamentally or essentially the same’ actually means. Once again, intended clarity leads to some more uncertainty.

Combined TUPE and Redundancy Consultation

One thing that we are still hoping to see in the regulations, but which has not been prominent in the announcements to date, relates to reorganisation and the proposal to enable collective redundancy consultation to take place prior to the TUPE transfer, even when those redundancies will take place following the transfer. In practice, many employers take this approach anyway, but there has always been uncertainty in the law. A clarification would therefore be very welcome.

ETO Reasons

The rules will be amended so that where the place of work changes after the transfer, any redundancies due to that change will not be automatically unfair. They will instead be treated as an ‘economic, technical or organisational reason entailing changes in the workforce’. This means that as a starting point businesses will not face possible unfair dismissal claims simply because of a change in location of the workplace. This is a very positive step for businesses, as the case law had been moving in the opposite direction.

Employers should note however that they cannot rely on this until the new regulations come into force. For the time being, dismissals arising purely from a change in work place are likely to be considered as automatically unfair.

Harmonisation

The Government had intended to make it easier for businesses to harmonise terms and conditions of employment following a TUPE transfer. It now seems that businesses will only be able to renegotiate terms and conditions if they are provided for in collective agreements, and they do so one year after the transfer provided that overall the change is no less favourable. TUPE protects employees’ terms and conditions and does not generally allow them to be changed by reason of the transfer. However, as an exception, the Acquired Rights Directive (European Directive which TUPE implements) gives scope for changes to terms and conditions that are set out in collective agreements, from one year after the transfer. This will be of limited use to most employers, but will likely benefit those in the private sector who are taking over public sector services.

Relaxed Consultation for Micro-businesses

The new regulations will allow micro businesses to inform and consult employees directly when there is no recognised trade union or other existing representatives. The current TUPE regulations require businesses to inform and consult with trade unions representatives or elected employee representatives. Small businesses usually don’t have any employee representation arrangements in place to allow for this. The Government has therefore indicated that micro businesses of ten or fewer employees, will be able to consult directly with the affected employees. It remains to be seen how “business” and “micro-business” will be defined in this context.

At this stage we still cannot predict what the impact of the changes will be. What we can predict is that any changes that are made will lead to a period of uncertainty before we know whether or not they have been truly beneficial to employers, or not.

Looking ahead

2013 has therefore been a confusing time for everyone involved in employment law and employment rights, and that looks set to continue well into 2014 (and possibly beyond). It is a time when we are promised greater clarity and de-regulation, but we are faced instead with uncertainty and the prospect of disputes over unsettled law.

Things are sure to settle down over time, but in the meantime there are an uncomfortable number of questions for which we simply don’t have the answer.

So as we head through autumn, it continues to feel as though the current employment law landscape is just as unsettled as the seasonal weather.

Let me know what your thoughts and experiences are by leaving a comment.

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2 Comments
  1. Brilliant post, and it is so true, employment law is such a constant moving area of law and it is one that effects so many of us. By keeping on top of the latest developments we can really understand where we stand.

  2. Thanks Vertex Law. I appreciate the feedback.

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