Canter Levin & Berg Employment Solutions Canter Levin & Berg Employment Solutions
April 2012

Welcome to our April newsletter.

This month's reports cover the usual wide range of employment law issues. We begin with the question of whether cost considerations provide a valid basis for defeating a claim for age discrimination. It is interesting to note that following the abolition of the statutory retirement age there was a widely held view that compulsory retirement would be difficult if not more or less impossible to implement. Although the Woodcock case deals with unfair dismissal and age discrimination in the context of pending entitlement (at age 50) to take early retirement, we will be reporting in next month's newsletter two important decisions of the Supreme Court which appear to have opened the door to employers relying once again on retirement as a basis for justifying dismissal. As noted in the Daily Telegraph "Over the past 18 months, retiring someone purely because of their age has gone from acceptable, to semi-acceptable for certain age groups, to completely outlawed and unacceptable, to acceptable once again as long as you can justify it."

We also have useful guidance for employers concerning potential pitfalls when carrying out a redundancy exercise. Although the basic principles governing redundancy are well established and apparently straightforward, procedural steps such as establishing fair criteria for selection for redundancy and identifying the "pool" of candidates for potential redundancies can, if not implemented correctly, lead to findings of unfair dismissal, even when the need for redundancies is clearly established. Although our reported cases are favourable for employers, there is a constant ebb and flow between decisions which adopt a restrictive interpretation of application of the required procedures and those which are more relaxed about this. Consequently, it's vital for employers to obtain advice from the outset. This service is included for our subscribers and we can also provide fixed price advice and support packages for non-subscribers.

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Martin Malone

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March 2012
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This month's news:

1. how far can cost considerations be a justification for age discrimination?

Woodcock v Cumbria Primary Care Trust is a decision of the Court of Appeal addressing the extent to which the cost factor can justify discrimination on the grounds of age. It dealt with the case of an NHS chief executive, Mr Woodcock, whose post with a PCT "disappeared" during a reorganisation. He was warned of possible redundancy, and spent some time working on other short term projects whilst informal discussions took place about finding him an alternative job. However, formal consultation was not started for several months, nor was he given the year's notice to which he was contractually entitled. A date for a consultation meeting was finally set in July 2007. However, as Mr Woodcock's 49th birthday in June 2007 loomed, it dawned on someone at the PCT that if he was not given notice quickly, he would still be employed at the age of 50, at which point he would be entitled to take early retirement, at vast expense to the employer. A decision was taken to give him notice without waiting for consultation to happen, to avoid this cost.

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2. establishing the trigger point for employers’ liability insurance

The decision of the Supreme Court in BAI (Run Off) Ltd v Durham & Ors is the most recent chapter in long running litigation on the liability of insurers under policies taken out by employers to cover them for industrial diseases contracted by employees. The litigation arose over the liability of insurers for mesothelioma, an incurable form of cancer caused by exposure to asbestos, which can take up to 40 years to develop after a single exposure. Because of the long time lag, by the time employees become aware that they have suffered the injury, their employer may have been defunct for many years, so they are entirely reliant on insurance cover in any compensation claim. A group of mesothelioma sufferers, and their families, brought proceedings to recover compensation, and the employers' insurers denied liability.

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3. no unfairness in process for selecting candidates for alternative employment

Consideration of alternative employment is a part of a fair redundancy procedure and it is common practice for employees to be asked to attend interviews for alternative jobs, competing against other internal, and sometimes external, applicants.

In Samsung Electronics (UK) Ltd v Monte-D’Cruz the Employment Appeal Tribunal (EAT) overturned a finding of unfair dismissal by an employment tribunal, which held that a redundancy was unfair, in part because the criteria used for selecting candidates for an alternative job were subjective and “nebulous”. The competencies against which applicants were assessed were “creativity, challenge, speed, strategic focus, simplicity, self-control/empowerment, customer focus, crisis awareness, continuous innovation and teamwork/leadership”. The tribunal thought it would have been better to select by reference to a person specification, and that past performance was not properly taken into account. 

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4. establishing the pool for redundancy selection

In the February 2012 decision in Capita Hartshead v Byard the Employment Appeal Tribunal (EAT) looked at a selection pool of one and found that a dismissal from such a restricted pool was unfair where an employer had not genuinely applied its mind to the question of what the pool for selection should be.

Hard on the heels of that case came Halpin v Sandpiper Books Ltd, which also looked at a selection pool of one. The employer was a book distributor which wished to expand its business in China. It employed Mr Halpin to work as a sales manager there. It had no other presence in that country. When it decided to close its office in China and use established local agents instead, it decided that there was only one employee at risk of redundancy and dismissed him after a consultation process which failed to identify opportunities to redeploy him. He claimed unfair dismissal, on the basis that restricting the pool to the only employee in China was unreasonable.

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5. are TUPE provisions limited only to contractual terms?

In Abellio London Ltd (Formerly Travel London Ltd) v Musse & Ors the Employment Appeal Tribunal gives us a useful reminder that the right of employees to resign in response to a detrimental change of terms on a transfer of an undertaking is not restricted to changes in to their contractual terms. When a transfer takes place, and employees are not happy with it, they have two options. They can inform either the transferring employer, or the transferee employer, that they object to becoming employed by the transferee, in which case their employment ends without any dismissal – or any right to make any claim. If, however, the transfer involves a substantial change to their working conditions which is to their detriment, they can resign, and will be treated as dismissed.

Abellio dealt with claims by several London bus drivers on route 414, who were based at a depot in Westbourne Grove. When the route was transferred to Abellio under a service provision change they were expected to transfer to a depot south of the river in Battersea. While there was a mobility clause in the contract, this only mentioned depots run by the transferor, and not Battersea, which was an Abellio depot. Further it added significantly to their daily commute – by between one and two hours a day.

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6. discrimination on the grounds of marriage or civil partnership

Last February, we reported on Dunn v Institute of Cemetery and Crematorium Management, which suggested that it could be unlawful to discriminate because a person is married to a particular person, and not simply on the ground that he or she is married. Hawkins v (1) Atex Group Ltd (2) Age Korsvold (3) Malo de Molina (4) Reardon looks at this issue and makes the point that it is crucial that the relationship is one of marriage (or civil partnership), and not just any close personal relationship. The case arose when a husband, wife, and their daughter were all dismissed on the ground that the husband had disobeyed a company instruction not to employ family members. His wife did not have enough service to make a claim of unfair dismissal, and so brought a claim alleging that the dismissal was discrimination on the ground of marital service. The claim was struck out as having no reasonable prospect of success and the Employment Appeal Tribunal upheld this decision.

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7. conversion of fixed terms to permanent contracts - what changes in terms are permitted?

Huet v Université de Bretagne occidentale is a case referred to the European Court of Justice (ECJ) from the administrative court in Rennes concerning the French equivalent of the Fixed-term Employees Regulations and makes an important practical point. The background was that Mr Huet had a series of fixed term contracts as a researcher at the université de Bretagne occidentale for a total period of six years. He was then given a permanent contract – but with a different title and slightly reduced pay, although his duties remained the same. He asked for his contract to be amended and brought a legal challenge when his request was refused.

The ECJ decided that there is no rule that fixed term contracts have to be converted into a permanent contract in identical terms once they have been renewed for longer than four years.

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8. pension rights of part-time judges - latest

Of direct personal interest to a minority of our readership – albeit a very important one(!) - is O'Brien v Ministry of Justice in which the European Court of Justice (ECJ) dealt with a long running case on the question of whether part-time fee paid judges are entitled to the protection afforded to part time workers by the EU Part Time Workers Framework Directive 97/81/EC. It arises because while full time judges, and salaried part time judges, are entitled to pensions as part of their terms of service, no pension provision is made for judges who work on a fee-paid sessional basis. Pensions for judges have traditionally been paid on what many regard as very generous terms so the issue is very significant for those affected.

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9. a call for evidence on compensated no-fault dismissals

Contrary to what you might have read in the papers (naming no broadsheet names), “compensated no-fault dismissals” have no date for implementation. However, The Department for Business Innovation and Skills has put out a “call for evidence” on that proposal, and, more generally, for views on how the current ACAS Code of Practice operates in practice – and whether it is too onerous. If you go to the trouble of wading through the whole document you will discover that it constantly refers to “perception” and “fear” of employment law regulation, and that in international league tables of such things, the UK shares second place with Canada after the US as the easiest place in the developed world to dismiss employees. You will also discover that health and safety is a bigger issue for most employers than unfair dismissal law.

Leaving aside the question of whether the reforms contemplated are based on rational considerations or not, it is interesting to see that a possible model for a dismissal regime for “micro” businesses is the Australian Small Business Code. This certainly has the merit of brevity, being a mere five pages, including a checklist for employers to complete.

But how would such a code stand alone, without any reference being made to the law of unfair dismissal, and whatever more extensive guidance is provided for other employers?

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