Employment Matters

HR and Employment News Autumn 2013

CONTENTS

1-2 Freedom of Contract vs. Collectively Agreed Terms

2-3 Gross Misconduct – Is Dismissal Always Inevitable?

3 Key Employment Law Updates

4 TUPE Reforms Announced

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Freedom of Contract vs. Collectively Agreed TermsIn the recent case of Alemo-Herron and others v Parkwood Leisure

Ltd C-425/11 the European Court of Justice (ECJ) has provided

much needed clarification on the issue of whether in a TUPE

transfer an employer is required to honour post-transfer collective

agreements that were negotiated without the new employer’s

involvement.

In the past employers would always have to be wary of the

possibility of having to adhere to future collectively agreed

terms negotiated by a third-party on behalf of the transferring

employees. The risk of being bound by collective terms the

employer was not a party to has undoubtedly acted as a deterrent

for private sector employers bidding for public sector contracts.

In this case the claimant’s original employment contracts

provided their terms and conditions would be in accordance

with collective agreements negotiated from time to time by the

National Joint Council for Local Government.

The employees later transferred from the Council to a private

company to carry out their roles working for a leisure department.

The employees were permitted to benefit from the national

collective agreements at this time.

Subsequently, the employees transferred again to another private

company, Parkwood Leisure, however the new employer was not

prepared to be bound by new collective agreement that had been

negotiated by the national body, on the basis they had not been

a party to the relevant negotiations.

The employees issued claims against Parkwood Leisure for

unlawful deduction of wages, and the matter that was first heard

at the Employment Tribunal in 2008 was appealed through the

Courts until the Supreme Court referred the matter to the ECJ for

consideration.

The ECJ decided that the relevant EU Directive relating to

collective agreements seeks to

ensure a fair balance between the interests of those employees,

on the one hand, and those of the transferee, on the other.

Consequently, employers will not be required to adopt national

collective bargaining terms and conditions that have been

negotiated in the employer’s absence after the transfer of former

public sector employees.

It is noteworthy that the ECJ taking the stance that TUPE is not

just about protecting staff, but also about protecting businesses.

Significantly, the ECJ placed emphasis on the fact if employers

were bound to incorporate terms and conditions that had been

negotiated in their absence their contractual freedom would be

seriously reduced to the point that such a limitation is liable to

adversely affect the very essence of its freedom to conduct a

business.

It is envisaged employers may welcome the ECJ’s “static”

interpretation of the EU Directives. The judgment will be of

particular importance for those employers who are likely to

receive transferring employees from the public sector as the case

indicates employers will have greater freedom to make properly

negotiated adjustments to transferring employees’ contracts.

If you are in any doubt as to the implications of this case we would

advise you to consider taking professional advice.

For further information please contact Peter Woodhouse,

Partner at Stone King LLP, on 01225 337599 or by email at

pmw@stoneking.co.uk

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The recent case of Brito-Babapulle v Ealing Hospital NHS Trust

illustrates the importance for employers of following a proper

procedure before dismissing an employee, even in cases where

the employee may have committed an act of gross misconduct.

Employment legislation provides an employee will be fairly

dismissed if the employer had both a fair reason and the

employer in all the circumstances (including the employer’s

size and administrative resources) acted reasonably in treating

that reason as a sufficient reason for dismissal.

The first hurdle of showing a “fair reason” is often a relatively

unproblematic exercise, however the question of whether the

employer’s decision to dismiss the employee fell within the

“range of reasonable responses” that a reasonable employer

in the circumstances may have adopted is more susceptible to

disagreement.

The employee in this case had worked at Ealing Hospital

for twenty years as a haematologist, however due to health

problems she was absent from work in 2009 for a period of

eleven weeks. The Hospital had suspicions she was carrying

out work for private patients during this period, despite having

been previously informed this would be in breach of her terms

of employment.

The employee was called to a disciplinary hearing and the

panel found that there was clear evidence that she had been

receiving sick pay from the hospital during her period of absence,

whilst she was carrying out work for private patients. The panel

decided this amounted to gross misconduct and the employee

was subsequently summarily dismissed.

The employee later issued a claim for unfair dismissal at the

Watford Employment Tribunal. The Tribunal dismissed the

claim on the basis that the Hospital had carried out a reasonable

investigation and the decision to dismiss automatically fell

within the “band of reasonable responses” as the employee’s

actions amounted to gross misconduct.

However, on appeal the Employment Appeal Tribunal held,

The logical jump from gross misconduct to the proposition

that dismissal must then inevitably fall within the range of

reasonable responses gives no room for considering whether,

though the misconduct is gross and dismissal almost inevitable,

mitigating factors may be such that dismissal is not reasonable.

Gross Misconduct – Is Dismissal Always Inevitable?

Freedom of Contract vs. Collectively Agreed Terms (continued)

The EAT consequently referred the case back to the Employment

Tribunal to decide whether the decision to dismiss fell within the

band of reasonable responses in light of the employee’s prior

twenty years of unblemished service.

The case acts as a stark reminder for employers to review all the

circumstances of a matter before dismissing an employee, even

in cases where on first appearance the employee’s actions may

be perceived as amounting to gross misconduct.

If you are in any doubt as to what steps to take to initiate

disciplinary proceedings with an employee we would

recommend you seek professional advice.

For further information please contact Nick Watson,

Partner at Stone King LLP, on 01225 337599 or by email at

nw@stoneking.co.uk

Key Employment Law UpdatesSince The Enterprise and Regulatory Reform Act 2013 was

introduced on 29th July 2013, the following significant legislative

changes have come into force,

• Pre- Termination Negotiations - Employers and employees in

certain circumstances will not need to show a dispute has arisen

before relying upon conversations from becoming excluded from

disclosure in any further Employment Tribunal proceedings.

There are important limitations to the new provisions, firstly

negotiations will only become inadmissible in later proceedings if

the claim is for unfair dismissal. Consequently, claims for breaches

of contract, discrimination, and automatically unfair dismissal

claims will not be afforded the same protection.

Secondly, if it comes to light either party engaged in “improper

behaviour” the negotiations may become admissible as evidence

in later proceedings. Of course, any argument about whether

there is has been “improper behaviour” is likely to involve the

employment tribunal hearing the evidence anyway.

• Introduction of Employment Tribunal Fees - Claims or

counterclaims issued at an Employment Tribunal will now be

subject to an application fee. The cost of the application will be

determined by a two-tier system, whereby more complicated

claims will be subject to a higher fee.

There will also be a distinction in fees between the cost of issuing

a claim and the cost of setting down for hearing.

UNISON has been granted an application for judicial review

of the legality of the introduction of the fee regimes, as it is

argued employees’ rights provided under EU Directives will be

compromised if employees are required to pay to make a claim

against their employer. The High Court hearing is set to be heard

in October 2013, the result of the application will be of much

interest to employers and employees alike.

• Changes to the Unfair Dismissal Compensatory Award - When

an employee is unfairly dismissed their Compensatory award will

be capped at the lower amount of either the employee’s gross

annual salary, or £72,400.

The changes to the statutory limit could mean those employees

on a lower-middle income may find a reduction in the

compensation they are awarded.

For further information please contact Nick Watson,

Partner at Stone King LLP, on 01225 337599 or by email at

nw@stoneking.co.uk

“When an employee is unfairly dismissed their Compensatory award will be capped at the lower amount of either the employee’s gross annual salary, or £72,400.”

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email: employment@stoneking.co.uk © Stone King LLP 2013 10/2013

Employment Matters deals with some current legal topics. It should not be used as an alternative to specific legal advice on the individual circumstances of a particular problem.

Stone King LLP – registered limited liability partnership no OC315280, registered office 13 Queen Square, Bath BA1 2HJ

Your ContactsNick Watson Partner email: nw@stoneking.co.uk | Peter Woodhouse Partner email: pmw@stoneking.co.uk

TUPE Reforms AnnouncedIn an attempt to “remove unfair legal risks that businesses

currently face when carrying out a transfer”, the Government

has recently published a response to their consultation on the

current laws relating to TUPE Transfers. The subsequent changes

are intended to be laid before Parliament in December 2013.

1. Employers will be able to renegotiate terms and conditions

provided for in collective agreements one year after the

transfer provided that overall the change is no less favourable.

This amendment will mean UK legislation will reflect the

provisions of EU Directives that provide employers will be

provided with an opportunity to enter negotiations with the

transferring employees a year after the transfer.

2. In January 2013 the Government suggested they intended

to remove the current service provision change (SPC) rules

whereby TUPE applies in cases where services are outsourced,

taken back in-house by the customer or assigned to a new

contractor.

However, the Government has been persuaded by the

responses to the consultation that it would cause more

uncertainty to businesses if the current regulations were

removed. The Government intends to amend the Regulations

to reflect current case law authority that for there to be a

SPC the services provided must remain “fundamentally or

essentially the same”.

3. The current Regulations will be amended to provide that

where the place of work changes after a transfer, any

redundancies due to that change will not be automatically

unfair. The Government’s intention is for employers not to be

faced with possible unfair dismissal claims simply because of

a change in location of the workplace.

4. In an attempt to lessen the burden for smaller businesses,

employers who have fewer than ten employees will be able

inform and consult employees directly when there is no

recognised trade union or other existing representatives.

Under current provisions employers of any size are

required to inform, and sometimes also consult, employee

representatives such as trade unions representatives. It is

envisaged this change will make this process much less

bureaucratic for smaller businesses.

For further information please contact Peter Woodhouse,

Partner at Stone King LLP, on 01225 337599 or by email at

pmw@stoneking.co.uk