In this issue Jane Wallenstein considers...
In United States of America v Nolan, Advocate General Mengozzi has given the opinion that the obligation to consult about collective redundancies is triggered, within a group structure, when a body or entity which controls the employer makes a strategic or commercial decision which compels the employer to contemplate or to plan for collective redundancies.
RSA Hythe, a US army base in Hampshire, was closed on 30 September 2006, resulting in around 200 civilian redundancies. One employee made a claim for a protective award on the basis that the USA had not consulted workforce representatives as required by S.188 of the Trade Union and Labour Relations (Consolidation) Act 1992. She argued that consultation should have begun before the decision to close the base was taken, and should have covered that operational decision. A tribunal upheld her claim, finding that, as the decision to close the base inevitably meant mass redundancies, there could be no meaningful consultation once it had been taken. When the case reached the Court of Appeal, it referred the issue to the European Court of Justice (ECJ) as previous ECJ case law was 'unclear'. It needed to know whether the obligation to consult is triggered when an employer proposes, but has not yet made, a strategic or commercial decision which will inevitably lead to redundancies, or only when that decision has been made and the employer is planning to proceed with the consequential redundancies.
The Advocate General has now given an opinion. He said that, as the Directive (on which s188 is based) requires consultation with workers' representatives to begin in good time and to cover ways to avoid or reduce the number of collective redundancies and mitigate their consequences, the obligation to consult must therefore be triggered when it is possible for such consultation to be effective – it would be too late if the decision to terminate employment contracts had already been taken.
He then summarised what was meant by the previous ECJ case law:
- Where the prospect of collective redundancies arises directly from an employer's decision, the obligation to consult arises when the employer contemplates collective redundancies or draws up a plan for collective redundancies.
- Where the prospect of redundancies results from a choice made by another entity, who is not the employer, the employer's obligation to consult arises when that other entity adopts a strategic or commercial decision that compels the employer to contemplate or to plan for collective redundancies.
- So, a decision by a parent company compelling a subsidiary to terminate employees' contracts can only be taken after consultation within that subsidiary, failing which the subsidiary, as the employer, is liable for failure to consult.
In the Nolan case, he said an employer’s obligation to consult is triggered when a strategic or commercial decision is taken it compels him to contemplate or plan for collective redundancies, it being for the UK to determine when that strategic decision is taken. The ECJ will now make its decision, taking into account the Advocate General’s opinion.
Unfortunately, the Opinion does not really do more than reiterate the case law which had confused the Court of Appeal in the first place. Hopefully there will be more clarity from the ECJ itself as this is a key area for employers, but, in the meantime, employers should careful consideration to when they should begin consultation to ensure it is not too late.
The Employment Tribunals (Constitution and Rules of Procedure) (Amendment) Regulations 2012
These regulations will be coming into force on 6 April 2012 and will apply to cases presented to a tribunal on or after this date. The key changes include:
- Witness statements
In many tribunals witnesses are required to read out their written statements at the hearing. The regulations now make it clear that this will no longer be, unless the tribunal or judge orders otherwise.
- Limit on deposit orders
Up until now, if a tribunal or judge considers that all or part of a claim or response has little reasonable prospect of success the party can be ordered to pay a deposit of up to £500 as a condition of proceeding with that part of their case. The regulations will increase that maximum to £1,000.
- Limit on costs or preparation time orders
The current limit in the tribunal on the amount that a tribunal may order a party to pay in respect of costs (or preparation time) is £10,000. This will be raised to £20,000 as part of the regulations.
National minimum wage increase
Despite calls to freeze the minimum wage to encourage recruitment, the government has now formally announced that the following national minimum wage rates will increase from 1 October 2012:
- The standard adult rate (workers aged 21 and over) will rise to £6.19 per hour (from £6.08).
- The rate for apprentices will rise to £2.65 per hour (from £2.60).
However, the development rate (workers aged between 18 and 20) of £4.98 per hour and the young workers rate (workers aged under 18 but above the compulsory school age who are not apprentices) of £3.68 per hour will remain unchanged. It has been suggested that the reason for this freeze is being done in an attempt to create more job opportunities for workers aged under 20, now that the number of unemployed 16-24 year olds has recently reached one million.
The decision from the Court of Appeal in the case of Woodcock v Cumbria Primary Care Trust has now been published. The previous decision in the EAT was previously discussed in our November 2010 edition The Court of Appeal has upheld the tribunal's finding that a redundancy dismissal of Mr Woodcock – the timing of which was motivated to avoid the cost of an enhanced pension if he was still employed at the age of 50 – was justified age discrimination.
The Court of Appeal held that, given the unusual facts of the case, issuing Mr Woodcock's dismissal notice was not purely treatment aimed at avoiding costs and that the Trust’s actions had been a proportionate means of achieving a legitimate aim. Like the tribunal and EAT, the Court considered that the dismissal was served with the legitimate aim of giving effect to the Trust's genuine decision to make him redundant and it was a legitimate part of that aim to ensure that it did so in a way which avoided additional costs. The Court noted that the tribunal had found the treatment to be proportionate and that the EAT had agreed that depriving Mr Woodcock of his right to consultation in advance of giving him notice of dismissal had not undermined the proportionality of the Trust's treatment. The implementation of the decision to dismiss Mr Woodcock had been delayed through no fault of the Trusts and while its "corner cutting" in theory deprived Mr Woodcock of an opportunity, in fact it deprived him of nothing of value, because, as the tribunal had found, consultation would not have achieved anything.
However, whilst this may look like an endorsement of the idea that employers can justify age discrimination by reference only to costs, it should be treated with caution as it is very fact specific – in particular the courts seem to have been influenced by the fact that Mr Woodcock would otherwise have received an undeserved “windfall”. Not all pensions are windfalls and in the course of its judgment the Court still referred to case law which has shown that 'an employer cannot justify discriminatory treatment ''solely'' because the elimination of such treatment would involve increased costs'. This is known as the “cost plus” argument and, as it was not specifically dealt with by the Court, remains unaffected by this case.
Although this is an employment tribunal decision, it is one that is likely to be of great interest to those within the health sector. The claim was lodged on behalf of more than 100 health workers who worked at Central Manchester University Hospitals NHS Foundation Trust; they argued that they should not be denied their incremental pay rise for taking time off work when unwell.
Under Agenda for Change health workers advance one point up their pay band each year until they reach the top of the band. In October, the Trust imposed a new rule which meant that any employee who was sick on four or more occasions in a year, or for 18 or more days in total, would lose that year’s increment.
The tribunal ruled that, essentially, Trusts cannot implement such a policy whereby Agenda for Change agreed increments are dependent on sickness absence. It is important to note, however, that the decision does not affect Trusts who are considering actual contractual derogations from Agenda for Change on increments.