04/04/2019
Welcome to our latest round-up of recent employment law developments and what they mean for you.
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Featured case |
TUPE and dismissing ‘difficult’ employees Sarah Lamont reports on a case which looks at dismissing an employee on a TUPE transfer, where the incoming employer anticipates difficulties with that employee. |
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Briefing |
An update from Jodie Sinclair on lawfully suspending employees from work, following new case law guidance from the Court of Appeal. |
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News round-up |
Ashley Norman rounds up recent employment law news in brief, including holiday pay guidance, new gender pay gap guidance, details of this month’s annual payment increases, and payslip changes effective this month. |
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Events and training |
Employment law update Please join us for our free half day training sessions, taking place in Leeds, London, Bristol and Birmingham, looking at current issues relating to the raising of concerns at work. |
TUPE and dismissing ‘difficult’ employees
Sarah Lamont reports on a case which looks at dismissing an employee on a TUPE transfer where the incoming employer anticipates difficulties with that employee.
The background
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) preserves employees’ rights under their contract of employment when a business, or part of one, is transferred to a new employer.
One of the key rights conferred on employees subject to a TUPE transfer is protection from unfair dismissal for a reason related to the transfer. In general, a dismissal linked to a TUPE transfer will be automatically unfair, unless the reason is for an ‘economic, technical or organisational reason’ entailing changes to the numbers or functions of the workforce (an ‘ETO reason’).
Employees also have the right to object formally to being TUPE transferred, and this means that their employment automatically ceases on the day of the transfer, without there being any dismissal.
A thorny question which sometimes arises when a workforce is transferred under TUPE, is whether the incoming employer can dismiss a ‘difficult’ employee because it anticipates problems with the working relationship post-transfer. Is the “sole or principal reason” for that dismissal the TUPE transfer itself and, therefore, automatically unfair – or is the dismissal because of the anticipated difficulties and therefore unconnected with the transfer? This is what the Court of Appeal (CA) looked at in Hare Wines Limited v Kaur & another
The facts
The Claimant, Ms Kaur, worked as a cashier for a wine wholesale business company, H&W Wholesale Limited (H&W), since 2002. When in December 2014 H&W started experiencing financial difficulties, it was decided that HW would transfer, under the TUPE Regulations, to Hare Wines Limited (Hare Wines). During her employment Ms Kaur had experienced a difficult working relationship with a colleague, Mr Chatha, who was later set to become a director for Hare Wines.
It was common ground between both parties that on 9 December 2014 there was a TUPE transfer of the businesses from H&W to Hare Wines. Over the course of that day H&W held several meetings with the employees from the company, including Ms Kaur. Following the meeting she received a letter from her employer which read: “…I must inform you that our business will now cease to trade. As a result we will unfortunately have to terminate your employment as of today”. The other employees were all retained.
Ms Kaur brought a claim for redundancy pay, notice pay and automatic unfair dismissal by reason of the TUPE transfer. The case was first heard at the Employment Tribunal (ET) who had to consider the contrasting evidence between the parties regarding the circumstances of Ms Kaur’s dismissal. Ms Kaur contended that at the meeting she was informed that Hare Wines did not wish to employ her, therefore the dismissal was because of the impending transfer. However, Hare Wines argued that Ms Kaur was unhappy about working for them due to the difficult working relationship with her colleague and, as she objected to the transfer, her employment ended. The ET agreed with Ms Kaur’s version of events, and found that the reason for the dismissal was the TUPE transfer and that she had, therefore, been automatically unfairly dismissed.
The case went to the Employment Appeal Tribunal where the findings of the ET were upheld. This decision was appealed to the CA.
The decision
The central issue for the CA to decide was whether Ms Kaur was dismissed because
(a) she got on badly with Mr Chatha and the proximity of the transfer was coincidental; or
(b) because Hare Wines did not want her on their books, the reason for that being that she got on badly with Mr Chatha.
Hare Wines argued that there is a difference between an employer refusing to take on an entire workforce, which would be a dismissal by reason of the transfer (and therefore unfair), and an employer who picks out one or two individuals to be dismissed, which would be for purely personal reasons and, therefore, not linked to the transfer.
The CA gave that argument short shrift. It found that Hare Wines had anticipated ongoing difficulties in the working relationship between Ms Kaur and Mr Chatha. It therefore decided that it did not wish her contract of employment to transfer and that was why she was told that she was dismissed. Accordingly, the transfer was more than just the ‘occasion’ for the dismissal; it was the principal reason for the dismissal. The problems between Mr Kaur and Mr Chatha were tolerable pre-transfer; but were not tolerable post-transfer – it was the transfer that made the difference and was, therefore, the principal reason for the dismissal.
What does this mean for me?
This is a useful case which proves to be a reminder to employers that a TUPE transfer is not an opportunity to terminate the contract of employment of a ‘difficult’ employee. The dismissal of an employee in the proximity of a transfer gives rise potential claims of automatically unfair dismissal by reason of TUPE transfer (unless there is a specific ETO reason – see ‘background’ above). Instead employers are expected to manage their new employees as they normally would by using their internal procedures and policies.
Suspension tension?
An update from Jodie Sinclair on lawfully suspending employees from work, following new case law guidance from the Court of Appeal.
At first glance, suspending an employee suspected of misconduct at work is a simple, low risk process: a sensible, potentially damage limiting exercise which quickly removes the employee in question from the workplace while their guilt or innocence is established. As such, it is understandable that many employers are quick to ‘pull the trigger’ on a suspension.
However, it is not a step to take lightly: there are significant traps for the unwary – as illustrated by the recent Court of Appeal case of The Mayor and Burgesses of the London Borough of Lambeth v Agoreyo, which has reconsidered suspension as a possible breach of the implied term of mutual trust and confidence. But before we delve into that case, what are the key points to remember before going ahead and suspending an employee?
- Is there alleged serious misconduct? It is important that suspension is not used as a knee jerk reaction to any misconduct. It should only be utilised if it is necessary
- to protect staff or business interests; or
- the employee is likely to hinder any investigation; and
- there is no workable alternative (such as temporarily moving the employee to another part of the organisation).
By way of example, damages for psychiatric illness were awarded where a care worker was suspended following allegations of sexual abuse, where there was no apparent cause for the allegations (Gogay v Hertfordshire County Council (2000))
- Once the decision is made that suspension is justified, how long should that suspension last? The important point to remember here is that employees should not be removed from the workplace indefinitely. The duration of the suspension should be as short as possible, and should be kept under regular review, with the employee being kept informed of the likely timescales and updated on any changes to the duration of the period of suspension. It should be made clear to the employee that the suspension does not amount to disciplinary action in itself (paragraph 8 of the Acas Code of Practice on disciplinary and grievance procedures). There is further information on handling the suspension process in the Acas guide to suspension
- Do you have to pay employees on suspension? Broadly, employees who are suspended pending an investigation should receive full pay. This was confirmed by the recent case of North West Anglia NHS Foundation Trust v Gregg. Please click here for our full briefing on this case, which also looked at concurrent police and disciplinary investigations. It may be possible to suspend an employee without pay, but only if it is a disciplinary sanction, rather than a neutral suspension pending investigation.
- Why is it important to get suspension right? The headline point here is that suspension is not a ‘neutral act’ – a principle that was established by the landmark case of Mezey v South West London & St George’s NHS Trust (2010). In that case, the Court of Appeal described suspension as ‘casting a shadow’ over an employee's competence’. This is not to say that suspension cannot be imposed, but an employer must have reasonable and proper cause for doing so, in order to avoid breaching the implied term of mutual trust and confidence.
As mentioned above, the application of this test was recently examined by the Court of Appeal in a case called The Mayor and Burgesses of the London Borough of Lambeth v Agoreyo. This case concerned a teacher working in a primary school who was accused of using unreasonable force with two children. The teacher was suspended pending an investigation into the allegations, but handed in her notice on the same day that she received her suspension letter. The teacher argued that her suspension was a repudiatory breach of contract, and she had, therefore, been constructively unfairly dismissed. The High Court found that the suspension had been issued as a ‘knee jerk’ reaction and the teacher in question had been constructively unfairly dismissed. The Court of Appeal (CA) has now overturned that decision, and said that there was reasonable and proper cause for the suspension. In making its decision, the CA made the following points.
- This type of case will always be very fact specific and will depending on the particular circumstances of each case.
- The school did have reasonable and proper cause for suspending the teacher, so that it could undertake an investigation into the allegations, which meant there was no breach of the implied term of trust and confidence.
- The High Court was wrong to ask whether it was ‘reasonable or necessary’ for the teacher to be suspended; the correct question for the courts (and, by extension, employers) is whether there was proper cause for the suspension. There is no test of necessity.
- The question of whether or not a suspension is ‘neutral’ is not relevant to the issue of constructive dismissal because the only question is whether there is reasonable and proper cause for the suspension. In this particular case, there was a safeguarding issue at stake which the employer needed to investigate, so the suspension was imposed with reasonable and proper cause.
So where does this leave employers? The comment in Mezey, that suspension is not a neutral act, is now less relevant than it has been to date, as the CA confirmed that the more pertinent question is whether there is reasonable and proper cause for a suspension; and this question will depend very much on the facts. That said, prudent employers should remain mindful that suspension is likely to have some stigma attached to it for the employee being suspended, even if it is now less relevant to technical legal test for constructive dismissal.
Employment news round-up, April 2019
Ashley Norman rounds up recent employment law news in brief, including holiday pay guidance, new gender pay gap guidance, details of this month’s annual payment increases, and payslip changes effective this month.
Holiday pay – lack of awareness reported and new guidance published
New guidance has been published by the Department for Business, Energy and Industrial Strategy (BEIS) on how to calculate holiday pay for workers undertaking irregular hours. The guidance is non-statutory and can be downloaded here.
Data has also been published by BEIS highlighting that there is a lack of understanding of how holiday pay entitlements operate, beyond a basic knowledge that workers are entitled to paid holiday. Somewhat surprisingly, 35% of those surveyed thought that only employees in permanent roles are entitled to holiday pay. The full survey can be downloaded here.
New gender pay gap reporting guidance
As the gender pay gap regulations have now bedded in and employers are filing their second annual reports, it is evident that most employers’ figures are showing a pay disparity between genders. The Government Equalities Office has now published two new pieces of guidance to help employers close their gender pay gap.
- “Eight ways to understand your gender pay gap” (click here to view) addresses how employers may identify areas for improvement.
- “Four steps to developing a gender pay gap action plan” (click here to view) provides information for employers on practical plans that have been successfully developed and implemented in tackling gender pay gaps.
The two pieces of guidance are intended to be complementary and read alongside one another in helping employers use the gender pay gap reporting requirement to assist with closing any gap that has been identified. The guidance is clear and concise and would form a useful starting point for equalising gender pay.
April increases
From 6 April 2019, annual increases to statutory payment and compensation limits will take effect.
| Current rate / limit | From 6 April 2019 | |
| Maximum limit on a week's pay | £508 | £525 |
| Maximum compensatory award for unfair dismissal | £83,682 | £86,444 |
| Minimum basic award for certain unfair dismissals (dismissals for reasons of trade union membership or activities, health and safety duties, pension scheme trustee duties or acting as an employee representative or workforce representative) | £6,203 | £6,408 |
New national minimum wage are now in force, with effect from 1 April 2019.
| National living wage (age 25+) | Standard adult rate (age 21+) |
Development rate (age 18-20) | Young workers rate (age 16-17) | Apprentice rate | |
| 1 April 2019 – 30 2020 | £8.21 | £7.70 | £6.15 | £4.35 | £3.90 |
| 1 April 2018 – 30 March 2019 | £7.83 | £7.38 | £5.90 | £4.20 | £3.70 |
Payslip changes – with effect from 6 April 2019
In accordance with the Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018 new legislation is coming into force this month which will require employers to provide to all workers new and improved payslips.
Additional information must be shown on a payslip for workers whose pay varies depending on the number of hours they have worked. When this is the case the number of extra hours worked need to be shown on the payslip together with the hourly rate. The payslip will also need to be clear as to which pay period the hours were worked in.
Example: if a worker has a fixed salary each month but her work is variable and during overtime she gets additional pay at an hourly rate, the hours of overtime and pay rate will need to be shown.
To comply with the new legislation the payslip will need to:
- show hours worked that can be either (i) as a single total of all such hours in a pay period or (ii) they can be broken down into separate figures for different types of work at different pay rates;
- indicate clearly the pay period the payslip refers to; and
- be provided either in a physical or an electronic format so that the worker can print this out.
If a worker’s pay does not vary by the hours of time worked there will be no need to include an hourly figure to account for the variation in pay caused by e.g. statutory sick leave or unpaid leave.
A worker who thinks that they have not received a payslip or that the payslip they have received lacks the required information as of 6 April 2019 may be able to bring a claim against their employer before an Employment Tribunal.
Events and training
Employment law update
Shining a light on wrongdoing at work
Please join us for our free half day training sessions, taking place in Leeds, London, Bristol and Birmingham, looking at current issues relating to the raising of concerns at work, including
- the existing legal framework relating to employees who ‘blow the whistle’
- an update on the latest whistleblowing case law, particularly in relation to the definition of what constitutes a protected disclosure in the ‘public’ interest
- practical steps employers can take to support a culture in which employees feel safe to voice concerns about potential wrongdoing
- fostering a whistleblowing culture as a strategic and Board level issue, relevant to the ‘fit and proper test’ and directors’ regulatory requirements
- ‘myth-busting’ current criticisms of confidential clauses (‘gagging clauses’ or ‘non-disclosure agreements’) in settlement agreements
- how to ensure that your use of confidentiality clauses is ethical, compliant and enforceable
- proposals for reform of confidentiality agreements.
Following the formal session, there will be time for discussion and knowledge sharing between the speakers and delegates, enabling an exchange of views and insight into employers’ experiences and practice.
Please click here for further details and booking information.
