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
HR and Employment News Autumn 2013
Freedom of Contract vs. Collectively Agreed Terms In the recent case of Alemo-Herron and others v Parkwood Leisure
The employees later transferred from the Council to a private
Ltd C-425/11 the European Court of Justice (ECJ) has provided
company to carry out their roles working for a leisure department.
much needed clarification on the issue of whether in a TUPE
The employees were permitted to benefit from the national
transfer an employer is required to honour post-transfer collective
collective agreements at this time.
agreements that were negotiated without the new employer’s involvement.
Subsequently, the employees transferred again to another private company, Parkwood Leisure, however the new employer was not
In the past employers would always have to be wary of the
prepared to be bound by new collective agreement that had been
possibility of having to adhere to future collectively agreed
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, terms negotiated by a third-party on behalf of the transferring
on the one hand, and those of the transferee, on the other.
employees. The risk of being bound by collective terms the
Consequently, employers will not be required to adopt national
employer was not a party to has undoubtedly acted as a deterrent
collective bargaining terms and conditions that have been
for private sector employers bidding for public sector contracts.
negotiated in the employer’s absence after the transfer of former
In this case the claimant’s original employment contracts
public sector employees. It is noteworthy that the ECJ taking the stance that TUPE is not
with collective agreements negotiated from time to time by the
just about protecting staff, but also about protecting businesses.
National Joint Council for Local Government.
Significantly, the ECJ placed emphasis on the fact if employers
provided their terms and conditions would be in accordance
Freedom of Contract vs. Collectively Agreed Terms (continued)
were bound to incorporate terms and conditions that had been
receive transferring employees from the public sector as the case
negotiated in their absence their contractual freedom would be
indicates employers will have greater freedom to make properly
seriously reduced to the point that such a limitation is liable to
negotiated adjustments to transferring employees’ contracts.
adversely affect the very essence of its freedom to conduct a
If you are in any doubt as to the implications of this case we would
advise you to consider taking professional advice.
It is envisaged employers may welcome the ECJ’s “static”
For further information please contact Peter Woodhouse,
interpretation of the EU Directives. The judgment will be of
Partner at Stone King LLP, on 01225 337599 or by email at
particular importance for those employers who are likely to
Gross Misconduct – Is Dismissal Always Inevitable? 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.
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
The employee was called to a disciplinary hearing and the
that dismissal must then inevitably fall within the range of
panel found that there was clear evidence that she had been
reasonable responses gives no room for considering whether,
receiving sick pay from the hospital during her period of absence,
though the misconduct is gross and dismissal almost inevitable,
whilst she was carrying out work for private patients. The panel
mitigating factors may be such that dismissal is not reasonable.
“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 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 email@example.com
Key Employment Law Updates Since The Enterprise and Regulatory Reform Act 2013 was
behaviour” the negotiations may become admissible as evidence
introduced on 29th July 2013, the following significant legislative
in later proceedings. Of course, any argument about whether
changes have come into force,
there is has been “improper behaviour” is likely to involve the
• Pre- Termination Negotiations - Employers and employees in
employment tribunal hearing the evidence anyway.
certain circumstances will not need to show a dispute has arisen
• Introduction of Employment Tribunal Fees - Claims or
before relying upon conversations from becoming excluded from
counterclaims issued at an Employment Tribunal will now be
disclosure in any further Employment Tribunal proceedings.
subject to an application fee. The cost of the application will be
There are important limitations to the new provisions, firstly negotiations will only become inadmissible in later proceedings if
determined by a two-tier system, whereby more complicated claims will be subject to a higher fee.
the claim is for unfair dismissal. Consequently, claims for breaches
There will also be a distinction in fees between the cost of issuing
of contract, discrimination, and automatically unfair dismissal
a claim and the cost of setting down for hearing.
claims will not be afforded the same protection. Secondly, if it comes to light either party engaged in “improper
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 firstname.lastname@example.org
TUPE Reforms Announced In an attempt to “remove unfair legal risks that businesses
to reflect current case law authority that for there to be a
currently face when carrying out a transfer”, the Government
SPC the services provided must remain “fundamentally or
has recently published a response to their consultation on the
essentially the same”.
current laws relating to TUPE Transfers. The subsequent changes are intended to be laid before Parliament in December 2013.
3. The current Regulations will be amended to provide that where the place of work changes after a transfer, any
1. Employers will be able to renegotiate terms and conditions
redundancies due to that change will not be automatically
provided for in collective agreements one year after the
unfair. The Government’s intention is for employers not to be
transfer provided that overall the change is no less favourable.
faced with possible unfair dismissal claims simply because of
This amendment will mean UK legislation will reflect the
a change in location of the workplace.
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.
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
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.
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
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
bureaucratic for smaller businesses. For further information please contact Peter Woodhouse, Partner at Stone King LLP, on 01225 337599 or by email at email@example.com
Your Contacts Nick Watson Partner email: firstname.lastname@example.org | Peter Woodhouse Partner email: email@example.com
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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