1. Employment Law Update
Nick Hobden
Partner
E: nick.hobden@ts-p.co.uk
D: 01322 623700
James Willis
Senior Associate
E: james.willis@ts-p.co.uk
D: 01322 422540
22 March 2012
© Thomson Snell & Passmore 2012

2. Our subjects today
• Redundancy – pooling, alternative roles and collective consultation
• TUPE Service Provision Changes
• Change to unfair dismissal qualifying period
• Changes to Employment Tribunal Practice and Procedure
• Employment Law reforms
• Government proposals on executive pay
• Unfair Dismissal
• Confidential information post-termination
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3. Nick Hobden
Partner & Head of Employment
Nick Hobden
Partner
E: nick.hobden@ts-p.co.uk
D: 01322 623700
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4. Nick’s topics to be covered
• Redundancy: pooling, alternative roles and collective consultation
• TUPE Service Provision Changes
Hand over to James
• Government proposals on executive pay
• Unfair Dismissal
• Confidential information post-termination
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5. Recent case law on pooling – a pool of one
Halpin v Sandpiper Books Ltd:
• Company put sole employee in China ‘at risk’ and in pool of one
• Extensive consultation took place
• alternative employment in UK offered
• Dismissed, claimed unfair dismissal
• Was limiting the pool to one employee reasonable?
• Decision about size of pool for employer to make
• Meaningful consultation and followed fair procedure
• Pool of one a logical decision
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6. A pool the same size as the number of at risk employees
Capita Hartshead Ltd v Byard
• Employee one of four actuaries
• Capita lost number of her clients so put her ‘at risk’ in pool of one
• Justification of Pool:
• Only workload to have reduced
• Team morale
• Risk of losing clients
Tribunal found in employee’s favour:
• Other actuaries should have been included in pool
• Quality of employee’s work praised
• Capita overstated commercial risk of losing clients if transferred to another actuary
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7. General guidance from Capita Hartshead v Byard
• Choice of pool subject to ‘reasonable response’ test
• No need to limit pool to employees doing similar work
• Apply mind to problem of defining the pool
• Not for Tribunal to decide if fairer to act in another way
• Strong reasons behind decision to have a pool the same size as the
number of ‘at risk’ employees?
‘Bumping’
• Employer ‘bumps’ out an employee whose work not diminishing in
favour of ‘at risk’ employee.
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8. Selecting employees at risk for alternative employment
Samsung Electronics (UK) Ltd v Monte D’Cruz
• Employee one of four managers – positions merged into one
• Unsuccessfully applied for alternative roles
• Dismissed and claimed unfair dismissal
• Samsung should have used objective criteria to decide if employee
suitable for alternative role?
The EAT: Subjective Criteria
• Entitled to use own judgement
• Recruitment methods require degree of subjectivity
• Interview procedures not to be overly scrutinised
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9. Reducing the collective redundancy consultation period
Under current law minimum consultation period of 90 days where:
• 100 or more proposed redundancies
• In one workplace establishment
• Within a 90 day period
The government has proposed to reduce the consultation period from
90 to 30 days
• Improve employers’ flexibility
• Speeds up the decision making process
• Costs savings
Public consultation later this year
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10. TUPE Service Provision Changes
Recent case law has tightened up the circumstances when a Service
Provision Change (SPC) amounts to a transfer under TUPE 2006.
Reg 3(1)(b) TUPE 2006 defines an SPC as one of three situations:
1. Outsourcing activities from in-house to a contractor;
2. Change from one contractor to another; and
3. ‘Insourcing’ – bringing activities in-house.
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11. TUPE Service Provision Changes
Four scenarios:
1. Incoming contractor carrying out different activities to outgoing contractor
2. Change of client as well as change of contractor
3. Change of location amounting to a substantial and detrimental change
4. Employees as an ‘organised grouping’
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12. Enterprise Management Services v Connect Up
Will there be a transfer under TUPE where the activities carried out by
an incoming contractor differ to those of the outgoing contractor?
• 15% of work carried out by outgoing contractor omitted from incoming contractor’s
activities
• Activities became ‘fragmented’
• The incoming contractor lost significant amount of work to five other providers
EAT: TUPE?
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13. Hunter v McCarrick
Can there be a Service Provision Change where there is not only a
change of contractor, but also a change of client?
• Property management services carried out by contractor A on behalf of the client
• Activities transferred to contractor B
• Receivers appointed, properties taken out of the control of the client
• Contractor B carried out the services on behalf of the receivers
• Client changes?
EAT: TUPE?
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14. Abellio London Ltd v Musse and Others
Can a change of location under a TUPE transfer amount to ‘substantial
and detrimental change’ to give rise to a constructive dismissal claim?
• Change of contractor TUPE transfer
• Employees required to move to new depot six miles away
• Travel time extended by up to two hours every day
• Raised concerns and grievances and subsequently resigned
Did EAT find change was:
• material because it extended the working day by up to two hours?
• detrimental because the Claimants raised concerns with employer?
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15. Eddie Stobart Ltd v Moreman and Others
If employees spend the majority of their time on a particular contract,
can they constitute an ‘organised grouping’?
• ES Employees spent over 50% of time on contract for V
• Not assigned to the client, only because of the way shift patterns worked out
• Contract transferred to contractor B who did not accept TUPE applied
• ES argued did not have to show employees organised as members of a team, was
sufficient that spend majority of time on the contract
Did EAT find TUPE applied to activities for the client?
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16. James Willis
Senior Associate
James Willis
Senior Associate
E: james.willis@ts-p.co.uk
D: 01322 422540
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17. Changes to employment law - A confidence boost?
• The ‘Red Tape Challenge’ – ‘scrap, merge, simplify, improve’
• The aim? To boost business confidence and economic growth
• The UK economy requires laws that create a ‘flexible, effective and
fair’ labour market:
• Flexible – easy to get into and stay in work
• Effective – allowing employers to manage staff productivity
• Fair – level playing field for employers; protection for workers
• Don’t we have this now? What are they proposing?
Tuesday, 27 March 2012 17

18. The proposals
• Increasing the normal qualifying period for unfair dismissal claims
• Changes to the Employment Tribunal system
• Other possible changes?
Tuesday, 27 March 2012 18

19. Changes to unfair dismissal law
• Qualifying service required to claim unfair dismissal will increase from
one to two years’ service
• Applies to those starting new employment on or after 6 April 2012
• Those already in employment are unaffected
• Automatic unfair dismissal claims still possible
Tuesday, 27 March 2012 19

20. The law of unintended consequences
• A charter for businesses to sack people unfairly?
• More discrimination /auto-unfair dismissal claims?
• Heightened job insecurity?
• Indirect discrimination issues? Age, sex etc
Tuesday, 27 March 2012 20

21. Will it actually work?
• Do employers really need more than a year?
• John Cridland, Director General of the CBI said:
“We have been urging the Government to do everything it can to make
it easier for firms to grow and create jobs, and this will give employers,
especially smaller ones, more confidence to hire”
• 2000 fewer ET claims, £6m saved – is that enough?
• Impact currently open to question
Tuesday, 27 March 2012 21

22. Unfair dismissal and fixed term contracts
• Fixed term contracts might be used more frequently
• One year contracts make more sense
• But remember that employment laws (e.g. unfair dismissal and Fixed
Term Employees (Prevention of Less Favourable Treatment)
Regulations 2002) still apply
Tuesday, 27 March 2012 22

23. Changes to the Employment Tribunal system
• 218,000 claims made to Employment Tribunals in 2010-11
• Number of claims increased by 44% over two years
• Cost of running Employment Tribunals is £84m
• Running costs currently shouldered entirely by the tax payer
Tuesday, 27 March 2012 23

24. Introducing Employment Tribunal fees
• Justice Minister, Jonathan Djanogly said:
“Our proposed fees will encourage businesses and workers to settle
problems earlier, through non-tribunal routes like conciliation or
mediation and we want to give businesses – particularly small
businesses – the confidence to create new jobs without fear of being
dragged into unnecessary actions.”
• Consultation process closed on 6 March 2012
Tuesday, 27 March 2012 24

25. ET fees – the options
• Option One
• Issue fee, dependent on nature of claim (£200 for unfair dismissal claim)
• Hearing fee, payable when matter is listed for hearing (£1,000)
• Option two
• Issue fee alone, dependent on value of claim (£500 for claims of
<£30,000 and £1,750 for more valuable claims)
• Protection for the low paid and unemployed
• Will it work?
Tuesday, 27 March 2012 25

26. Other changes in force from this April
• Maximum deposit order value increases from £500 to £1,000 (for
cases presented on or after 6 April 2012)
• Maximum costs award by ET increases from £10,000 to £20,000 (for
cases presented on or after 6 April 2012)
• Witness statements will stand as evidence in chief and be taken as
read (for all cases presented on or after 6 April 2012)
• Judges to sit alone on unfair dismissal cases (for all cases heard on
or after 6 April 2012)
Tuesday, 27 March 2012 26

27. Potential future changes
• Pre-Claim Conciliation (not before 2014)
• Fine for employers who lose ET claims (half the total award (min. of
£100 and max. of £5,000)). Reduced by 50% if paid within 21 days.
• ‘Modern Workplace’ reforms - flexible parental leave, flexible working,
annual leave, compulsory pay audits (further news in Spring 2012?)
• Government to consult on:
• Protected conversations - “a boss and an employee feel able to sit down
together and have a frank conversation"
• Compromise agreements - unnecessarily complex and prescriptive?
Tuesday, 27 March 2012 27

28. Calls for evidence
• Collective redundancy consultation
• reduce 90-day period for collective consultation in large-scale redundancies
to 60, 45 or 30 days?
• TUPE 2006
• Does TUPE 2006 ‘gold-plate’ the Acquired Rights Directive? Is it overly
bureaucratic? (esp. service provision changes and insolvency proceedings)
• "Compensated no-fault dismissals" for micro-businesses (10 or fewer
employees)
• "Radically slimming down" dismissal procedures
Tuesday, 27 March 2012 28

29. Government Proposals on Executive Pay
Some of the proposals include:
• Listed companies to provide more information on how pay set
• Remuneration reports to cover both current and future pay policies
• Shareholders to have binding votes rather than advisory votes on pay
policies
• Provisions to reduce, withhold or clawback pay when company performs
poorly
• Encouraging appointment of directors from more diverse backgrounds
• Greater employee consultation in setting directors’ pay
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30. How is Executive Pay currently controlled?
• The Companies Act 2006:
• Remuneration reports disclosing:
• How pay formulated
• How performance criteria measured
• Shareholders only have advisory votes on the remuneration report
• The Corporate Governance Code:
To ensure shareholders engage in determining remuneration
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31. Unfair Dismissal: Gross Misconduct
Pennell v Tardis Environmental UK
• Lorry driver caused £2,500 damage to firm’s lorry
• Clean record but dismissed for gross misconduct
• Claimed unfair dismissal and wanted to be re-instated
• Employer failed to provide a reference
Be careful not to jump to conclusions in gross misconduct
investigations!
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32. Unfair Dismissal: Expired Warnings Airbus UK Ltd v Webb
Can employers take into account previous expired warning and the
underlying misconduct?
• Employee dismissed for misconduct three weeks after final written warning
expired
• Dismissal letter made no mention of the expired warning
What did Court of Appeal say?
• Expired warning not principal reason for dismissal
• Misconduct not time-limited
• Original misconduct relevant to reasonableness of employer’s response to
later misconduct
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33. Confidential Information Post-Termination
Caterpillar Logistics Services Ltd v Huesca De Crean
• Employee signed confidentiality agreement
• Resigned from Caterpillar to join one of customers
• Caterpillar threatened proceedings, though no breach of agreement
• Employee undertook not to breach agreement and to refrain from certain
activities
• Caterpillar sought injunctive relief:
• Preventing employee from disclosing information – defined in generic terms
• A ‘barring order’ preventing involvement in commercial relationship between
Caterpillar and new employer
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34. Confidential Information Post-Termination
Caterpillar not granted any of the relief sought:
• No evidence employee had broken or intended to break confidentiality
agreement
• Employee offered an undertaking
• Injunction application too vague – information not specified
• ‘Barring order’ only granted in exceptional circumstances
• NO restrictive covenants in employment contract!
• Caterpillar too aggressive from start of litigation process
• Caterpillar made no attempt to reach amicable solution
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35. Questions
Questions?
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