January 2010
Authors:
Noel Deans
noel.deans@klgates.com
+44.(0)20.7360.8187
Paul Callegari
paul.callegari@klgates.com
+44.(0)20.7360.8194
Daniel J. Wise
In this first edition of 2010, we report on the EAT decision in Cable
Realisations Ltd v GMB Northern (on employers' duties to give
information under TUPE 2006), the EAT decision in Industrious v
Horizon on the ET's powers to set aside a compromise agreement,
the Court of Appeal decisions in Veakins v Keir Islington Ltd (on
harassment) and Duncombe (on extra-territorial effect of the UK
unfair dismissal legislation) and, in brief, the reduction in the
compensatory award, the coming into force of new immigration
rules on advertising vacancies for skilled work and the Court of
Appeal decision in Ladele v Islington LBC.
daniel.wise@klgates.com
+44.(0)20.7360.8271
EAT Decision On TUPE Consultation
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In Cable Realisations Ltd v GMB Northern the EAT has given guidance on how
long before a TUPE transfer an employer must give the information required under
Reg 13(2) TUPE to employee representatives.
Reg 13(2) of TUPE 2006 requires employers to provide certain information to
representatives "long enough before the relevant transfer to enable the employer of
any affected employees to consult the appropriate representatives of any affected
employees". The information is listed in Reg 13(2). It includes a requirement to
consult on when the transfer will take place, its legal, social and economic
implications and any measures that it is envisaged will be taken.
In this case the transferor decided in 2007 to either close or sell-off its business. It
received a (non-binding) purchase offer. The transferor met the representatives for
the first time on 3 July. On 15 August it provided the representatives with the
information required by Reg 13(2) and held a further meeting. The transferor's
annual 2 week shutdown was between 20 and 31 August, and 99% of the
representatives' employees were on holiday and 85% away from home. The transfer
was completed on 3 September.
The representatives' claim to the Tribunal alleging the transferor had failed to
comply with Reg 13(2) TUPE was successful. It found that providing the
information on 15 August was insufficient because the shutdown meant that there
were only 2 working days between then and the date of transfer. Dismissing the
appeal, the Employment Appeal Tribunal said that although consultation itself was
voluntary the provision of information was not. The information is designed to allow
for the possibility of a meaningful consultation before the transfer. The consultation
should take place while proposals are still at a formative stage. There should be
adequate time for the representatives to respond and for the transferor to consider the
response. Because of the shutdown this had not happened here.
On Notice
The case illustrates the need for employers to allow
a sufficient period for a meaningful consultation to
take place before transfer. The obligation to inform
is a technical one. It can arise even, as in this case,
where the transferee is not intending to take any
measures. Nevertheless, it is compulsory and
employers should bear the guidance given by
the EAT in mind. Furthermore, the awards which a
Tribunal can make can be stringent – up to 13 weeks
wages for each of the representatives' employees.
However, the failure to allow sufficient time was an
obvious one in this case. Provided employers allow
for a sufficient period within the guidance
suggested, it ought not to be difficult to avoid any
liability.
Setting Aside Compromise
Agreements In The Tribunal
In Industrious v Horizon Recruitment Ltd, the EAT
decided that Tribunals can decide whether
compromise agreements should be set aside, e.g. for
misrepresentation or duress, even if they constitute
valid agreements for the purposes of section 203 of
the Employment Rights Act 1996.
In this case a company employed the employee until
her resignation. The employee claimed that she had
agreed to resign in return for a monetary settlement
before the company's TUPE transfer to a second
company. A compromise agreement had indeed been
entered into between the three parties under which
she was to receive £43,750. It complied with section
203 of the Act. A few weeks, later the first company
went into liquidation and the £43,750 was not paid.
The employee claimed that both companies must
have known that the money was not going to be paid
at the time the agreement was signed and claimed it
should be set aside for misrepresentation. The
companies resisted, saying that the Tribunal had
power only to determine whether the requirements
under section 203(3) had been complied with.
Both the Tribunal and EAT rejected the companies'
argument. The EAT decided that the Tribunal is
entitled to consider whether a compromise
agreement can be set aside for misrepresentation, as
well as deciding if it is valid under the Act. The Act
permitted the parties to make a compromise
agreement. But "agreement" under the Act had to
mean a valid agreement, not induced by
misrepresentation.
Employers should be aware that it is now open to
both employers and employees in Tribunal
proceedings to seek to set aside a compromise
agreement. Cases involving duress and fraud are
likely to be fairly uncommon. But cases where
parties consider that a compromise has been
induced by a misrepresentation are likely to be
much more common and this case may open the
floodgates to a number of arguments in this area
where ex-employees begin to have second thoughts
about the deal, following signing the agreement.
In order that cases stay settled, employers should
not only ensure that the formalities of the Act are
complied with but also, so far as possible, ensure
that employees have no grounds for alleging
misrepresentation on the facts as well as ensuring
that this is recited in the agreement itself.
Court Of Appeal Decision On
Harassment
In the recent decision of Veakins v Keir Islington
Ltd, the Court of Appeal considered what type of
conduct in the workplace will give rise to
harassment under the Protection from Harassment
Act 1997. Whilst accepting her claim in this case, in
doing so the Court of Appeal attempted to reduce
the scope for bringing this sort of claim in an
employment law context to the more extreme cases.
Ms Veakins was an electrician. She worked without
incident for two years until she came under the
supervision of a new supervisor. The two had a
dispute about wages and the employee was given a
very public telling-off. This episode was followed
by others, the employee complaining of numerous
incidents spanning a two-month period.
The claimant successfully appealed to the Court of
Appeal, which upheld her claim. In doing so, the
Court re-iterated that the conduct complained of
must be oppressive and unacceptable as opposed to
merely unattractive, unreasonable or regrettable and
that it must be of an order to sustain criminal
liability. On the facts of this case the test had been
met.
January 2010
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On Notice
In particular, it drew attention to the presence of
malice and what it described as "victimisation,
demoralisation and the reduction of a substantially
reasonable and usually robust woman to a state of
clinical depression".
This case was, as the Court of Appeal put it,
"extraordinary" and "unusually one-sided". The
employee's evidence had been entirely unchallenged
by the employer. Although it is doubtful whether the
Act was originally intended to cover the workplace,
in a case of this sort the Court of Appeal has
endorsed its use.
Court Of Appeal Decision On
Application Of Unfair Dismissal
Legislation Abroad
In Duncombe v Secretary of State for Children,
Schools & Families, the Court of Appeal has given
an important decision on the extra-territorial effect
of UK unfair dismissal legislation. This follows the
Bleuse v MBT Transport Limited case in 2008. In
both cases, the Courts made creative use of the
principle of effectiveness, thus widening the scope
for employees to claim protection under UK
legislation, despite not working in the UK.
The claimant was a teacher seconded to work in a
European school in Germany who claimed that his
dismissal at the conclusion of a 9-year fixed term
contract was unlawful. He argued that his 9-year
contract was converted under EU law into a
permanent one. His employer resisted his claims for
wrongful and unfair dismissal on the basis that the
unfair dismissal provisions under the Employment
Rights Act 1996 did not have extra-territorial effect
as he worked in a school outside the UK. The
Tribunal accepted the employer's argument and
dismissed the claim. However the EAT allowed his
appeal against wrongful dismissal and sent the case
back to the Tribunal for determination.
On appeal from the employer the Court of Appeal
held that the employee could bring an unfair
dismissal claim even though he worked outside
the UK. The usual rules, as set out in the well known
case of Lawson v Serco, would tend to the
conclusion that the employee would not be able to
being a claim. However, he could in this case
because the principle of effectiveness in EU law was
fundamental. It required that the usual territorial
limitation be modified to permit a claim to be made
where it was necessary for vindication of a right
derived from EU law - in this case that was the
conversion of his fixed-term contract into a
permanent one.
The case is an important one for employers-particularly those with a global reach-- because it
carves out a significant exception to the usual
principles set out in the Serco case. The Court in
Serco did suggest that in the case of expatriate
workers the circumstances would have to be
unusual for an employee who worked and was
based abroad to come within the scope of UK
legislation. It now appears that employees relying
on an EU law right are outside this general rule.
Given the proliferation of EU employment law,
such situations are likely to be common and we can
anticipate both an increase in these kinds of cases as
well as a development of the jurisprudence in this
legal area.
In Brief
Immigration – New Rules On Advertising For
Skilled Workers In Tier 2
On 24 November the Government announced that
from 14 December 2009 the resident labour market
test for skilled workers in Tier 2 of the points-based
system is be extended to 4 weeks for all jobs replacing the current requirement to advertise jobs
for two weeks (or one week for jobs where the
salary is £40,000+). It should be noted this change
will apply to advertising campaigns that started on
or after 14 December 2009. Employers that have
already run advertisements will not need to readvertise. Further, the four weeks will not need to
run continuously. Updated guidance is available
at: www.ukba.homeoffice.gov.uk.
Compensation Limits Reduced
The annual review of compensation limits has
reduced the maximum compensatory award limit
from £66,200 to £65,300. A week's pay (for basic
award and redundancy pay) stays at £380. The
changes come into force on 1 February 2010. This is
the first time that the maximum has decreased.
Court Of Appeal Decision In Ladele V
Islington LBC
Lillian Ladele, an evangelical Christian registrar
employed by Islington LBC who refused to conduct
civil partnership ceremonies because she considered
January 2010
3
On Notice
this a breach of her faith, has lost her appeal in the
Court of Appeal.
Following her refusal, two gay members of staff said
they felt victimised by her stance. Her employer
disciplined her. She brought Tribunal claims for
discrimination and harassment. She succeeded
before the Tribunal in 2007 but lost before the EAT
and the Court of Appeal.
The Court held that her stance was "inconsistent
with the non-discriminatory objectives which the
council thought it important to espouse, both to their
staff and the wider community" and that it would
"necessarily undermine the council's clear
commitment to that objective if it were to connive
in allowing the claimant to manifest her belief by
refusing to do civil partnership duties." While the
decision is clear, there will still be many situations
where it will be possible for employers to
accommodate religious beliefs of this nature without
infringing any employee's rights. Such a course is
often preferable to expensive and divisive litigation.
Ladele appears likely to go to the Supreme Court.
Further developments will be reported in On Notice.
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