Newsletter March 2012


It's a bumper TUPE special this month, with three cases on different aspects of those tricky laws that keep so many of us employment specialists happy.

Elsewhere, there is a helpful Court of Appeal decision to support the proposition that excessive cost can be a basis for justifying age discrimination and certain other forms of discrimination. There has to be an associated reason which is not purely cost, but the Court did not seem to find it hard to uncover such a reason in this case. Cost, it seems, is not such a dirty word in discrimination cases after all.

Darryl Evans
T: +44 (0)7771 725341

Who transfers under TUPE's service provision change rules?

I have been involved in many arguments about whether particular employees transfer under the service provision change rules, especially where just one or two people work on a service for some, but not all, of their time. Those arguing for a transfer tend to focus on what proportion of his/her time the employee spends on the services. While that will still be relevant, the decision in Eddie Stobart Ltd v Moreman and others (UKEAT 1223/11) assists the counter-argument.

Only employees assigned to an "organised grouping of employees" fall within the transfer. That is a two-step test: is there an organised grouping and is the employee in question assigned to that grouping?

In this case the Employment Appeals Tribunal (EAT) said that assignment to an organised grouping required more than merely employees principally carrying out the relevant activities "without any deliberate planning or intent". The employees must be organised by reference to the requirements of
the particular client. The employees may have spent most of their time working for one client, but they were organised according to their shifts, not the client's requirements, which was not enough.

Like all cases in this area, it was very fact specific, but it is nonetheless useful in attempts to repel transferring staff.

Use of franchise companies to replace employees legitimate under TUPE

Meter U Limited took over meter reading contracts from a prior service provider and TUPE applied. Nonetheless, Meter U dismissed the transferring meter readers as redundant, deciding it would use franchised companies instead of employed staff. It said this fell within the permitted defence under TUPE of an economic, technical or organisational reason (ETO) entailing a change in the nature and composition of its workforce.

The defence succeeded, even though the displaced employees could have taken up franchise arrangements through their own companies. The EAT accepted that external limited companies were not part of the workforce and therefore there was a workforce change and a valid ETO reason. This was subject to the proviso that the arrangements were genuine and not a sham. The caveat is
likely to be important: attempts to avoid TUPE by reengaging all staff through personal service companies might not pass muster. (Meter U Ltd v Hardy & Others UKEAT/0207/11.)

Change of location following TUPE transfer

Some bus drivers worked for CentreWest on the 414 bus route, which was operated from a depot in Westbourne Park. This location suited the drivers' domestic circumstances. The route was transferred to another bus company, Abellio, which intended to operate the route from its depot in

TUPE applied, but the drivers all raised objections to the new location, principally the one to two hours extra travelling per day. They resigned claiming this was a substantial change to their working conditions to their material detriment under Regulation 4(9) of TUPE.

The EAT upheld the decision of the tribunal that they were right and their dismissals were automatically unfair. The question of detriment needed to be considered from the employees' perspective and they clearly regarded the move as detrimental. This could be the case whether or not there had been a material breach of contract by the employer in requiring the employees to relocate, although in fact the tribunal had decided that the mobility clause in the contracts was not wide enough to permit forced relocation. (Abellio London Limited v Musse and others UKEAT0283/11 and 0631/11).

The best is good enough

As most employers know, the criteria for selecting for redundancy from a pool should be as objective as possible and any subjective assessment risks challenge. But does that equally apply when a person who has been selected for redundancy is being considered for a newly created or otherwise vacant alternative role? Or can the employer appoint the best person for the new job, even if that involves a degree of subjectivity?

Samsung re-organised its print division and three heads of department were informed their roles would be replaced by a new, single, position of Head of Sales. One of the department heads complained when he failed to secure the role based on criteria normally used in the annual appraisal process. He also applied for a more junior role arising out of the re-structure but lost out to an outside candidate.

The EAT said that where a post has disappeared and the employer was selecting for a new role, some subjectivity was inevitable. This is therefore a further reminder that 'selecting in' to new or alternative roles is rather easier than 'selecting out' for redundancy. (Samsung Electronics (UK) Ltd v Monte D'Cruz 2012 UKEAT 0039/11.)

Can cost alone justify discrimination?

Since the advent of age discrimination, which is lawful if objectively justified, the question of whether cost can be a sufficient justification has become increasingly debated in the courts. This has implications for indirect sex and race, and other forms of, discrimination which are also capable of objective justification.

Mr Woodcock was a displaced Chief Executive of Cumbria Primary Care Trust when his post disappeared during a large scale restructure of the NHS. He was given 12 months' notice of dismissal on the grounds of redundancy shortly before his 49th birthday and before the commencement of a formal consultation process, specifically so that the notice would expire prior to his 50th birthday. This had the effect of denying him a very substantial enhancement to his pension, at an equally substantial cost to the Trust, which would have vested at age 50.

The Court of Appeal accepted that there were two strands of legal authority on question of cost justifying discrimination. One established that an EU member state could not be permitted to justify discriminatory social policy on the grounds of cost (because, of course, they all have unlimited funds to access). The other was that an employer could not justify discrimination solely on the grounds of cost.

That said, the Court accepted that in this particular case the justification was not cost alone, but cost plus another factor, which was the genuine need to make Mr Woodcock redundant. This is good news for employers who might now feel that as long as they can come up with a plausible business reason which is not financial to put alongside the cost impact of not discriminating, they may have a sustainable defence. (Woodcock v Cumbria Primary Care Trust 2012 EWCA Civ 330).

Misconduct, suspension and Police involvement

In Crawford and another v Suffolk Mental Health Partnership NHS Trust (2012 EWCA Civ 138) two nurses were accused of tying a patient to a chair and dismissed after a disciplinary process.

The nurses won their unfair dismissal claims owing to procedural failures by the Trust which serve to highlight some important points for extreme cases of this kind.

Principally, where dismissal is likely to result in the loss of an individual's future career, the investigation, disciplinary process and appeal must be particularly fair and thorough, and the evidence of misconduct particularly clear and cogent.

The Court of Appeal also took the opportunity to stress that suspension should not be a knee-jerk reaction to allegations of misconduct, but only invoked if necessary after careful consideration. (In my experience too many employers suspend staff accused of misconduct without a proper assessment of whether it is necessary or appropriate.)

In addition, an employer should not refer allegations of misconduct by an employee to the Police without the most careful consideration and a genuine and reasonable belief that the allegations, if established, could be properly classed as criminal.

Loose talk costs money

That common principle was demonstrated again in James v Gina Shoes Ltd (UKEAT/0384/11). A managing director had asked Mr James, at performance management meetings, whether it was his age that meant he could not meet expectations and commented that if he were younger it might be possible to train him. After Mr James resigned, comments along the same lines were made at a grievance meeting.

The employment tribunal did not consider that these remarks raised a strong enough inference of discrimination for the onus to be put back on the employer to show that there was in fact no age discrimination in the decision. The EAT disagreed. This was enough evidence for the employer to have to disprove what, on the face of it, appeared to be unlawful discrimination.

Rescinding a resignation

The case of Chelmsford College Corporation v Teal (UKEAT/0277/11) is a reminder that once an employee has resigned, the resignation can only be rescinded with the agreement of both parties. The effect of that rescission is then that the resignation ceases to exist.

In this case the employee resigned before completing one year's service. The employer then agreed to the rescission of the resignation, but then when the employee resigned again a few weeks later, they had by then completed one year's service, and so were able to complain of unfair constructive

Government considers further changes to unfair dismissal rules

BIS has issued a 'call for evidence' for views on two possible measures to deal with concerns that dismissal procedures can be too onerous, particularly for smaller businesses.

The first concerns whether the Acas Code of Practice on Disciplinary and Grievance Procedures could be made more accessible and easier to use by smaller businesses. The Australian Small Business Fair Dismissal Code is suggested as an alternative that might be successfully applied in the UK (although I understand there are some questions over whether it works successfully in Australia).

The second relates to the idea of 'compensated no-fault dismissals' for businesses with fewer than ten staff. This would replace the employee's right to bring an unfair dismissal claim, but not any other type of claim arising from their dismissal.

The call for evidence closes on 8 June 2012

New qualifying period

Finally, a reminder that on 6th April the qualifying period for making unfair dismissal claims increased from one to two years, but remember this is only for employees whose employment starts on or after this date. So employees whose employment started any time before 6th April 2012 will still only need to complete one year's service before being able to make an unfair dismissal claim.

The information and any commentary contained in this newsletter are for general information purposes only and do not constitute legal or any other type of professional advice. Darryl Evans and Evans Employment Law Limited do not accept any and, to the extent permitted by law, exclude all, liability to any person for any loss which may arise from relying upon or otherwise using the information contained in this newsletter. If you have a particular query or issue you are strongly advised to obtain specific, personal advice and not to rely on the information or comments in this newsletter.

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