In this issue:
- New employment law training programme 2012/2013
- April changes
- Justifying discrimination - cost considerations
- Redundancy consultation - trigger point
- Employment law blog
The Government plans to introduce “the most radical reform to the employment law system for decades”.
The coming year may therefore present a range of challenges. Not only will employers need to cope with existing employment law issues in the workplace, they may also be faced with a variety of new proposals which could change their day-to-day work.
We have designed our employment law training programme 2012/2013 to provide support during this period of reform. Combining common employment law issues with the impact of new developments, our programme will be useful for all HR professionals, senior managers and in-house lawyers.
If you would like to reserve your place on any of the workshops and seminars in our programme, please email seminars@Fieldfisher.com, specifying which session you would like to attend. If you would like to be added to our mailing list, please contact Lousie Fernandes-Owen.
Here are the key changes, and dates, to remember for April 2012:
- Unfair dismissal - the qualifying period for unfair dismissal will double from one to two years on 6 April 2012. This will only affect employees who start employment on or after this date.
- Deposit orders - if a tribunal or judge considers that a claim or response has little reasonable prospect of success the party can be ordered to pay a deposit as a condition of proceeding with their case. From 6 April 2012, the maximum deposit will increase from £500 to £1,000.
- Cost awards - a tribunal may order a party to pay costs (or, for an unrepresented party, preparation time). From 6 April 2012, the limit on costs or preparation time orders will increase from £10,000 to £20,000.
- Witness statements - from 6 April 2012, witness statements should be taken as read and stand as evidence-in-chief of the witness concerned unless the judge or tribunal directs otherwise.
- Unfair dismissal cases - from 6 April 2012, a judge may hear unfair dismissal proceedings alone.
- Statutory payments - the standard weekly rates for statutory maternity, paternity, additional paternity and adoption pay increased on 1 April 2012 from £128.73 to £135.45. The standard weekly rate for statutory sick pay will increase on 6 April 2012 from £81.60 to £85.85.
Dismissing a redundant employee without full consultation in order to avoid the cost of an enhanced pension was not unlawful age discrimination as the treatment was justified in the circumstances. This long-awaited decision from the Court of Appeal confirms that an employer cannot justify discriminatory treatment solely because the elimination of such treatment would involve increased costs.
In Woodcock v Cumbria Primary Care Trust, Mr Woodcock was employed in the NHS as a Chief Executive. As a result of a reorganisation, his position became redundant. The Trust realised that Mr Woodcock would have been entitled to early retirement and enhanced pension benefits if he was still employed at 50. The cost of funding an early retirement pension was estimated to be between £500,000 and £1,000,000. The Trust therefore accelerated the redundancy process and gave Mr Woodcock 12 months' notice, in accordance with his contract, before his 49th birthday. The Trust did not undertake any consultation process. The employment tribunal dismissed Mr Woodcock's claim of age discrimination. Mr Woodcock's appeal was also dismissed by the Employment Appeal Tribunal (EAT).
The Court of Appeal noted the two strands of European authorities which outlaw reliance on costs or economic considerations as justification for discrimination: (i) Member States cannot rely on budgetary considerations to justify a discriminatory social policy (ii) employers cannot justify discrimination "solely" on the ground that avoidance of such discrimination would involve increased costs. The Court acknowledged that there was "some degree of artificiality" about an approach to the question of justification which permits the avoidance of cost to be a legitimate aim only if it is linked to a non-cost factor (the "cost-plus" approach) as every decision taken by an employer is going to have regard to costs.
The Court confirmed that, on the unusual facts of this case, the dismissal notice was not served with the pure and simple aim of dismissing Mr Woodcock before his 49th birthday in order to save the Trust the expense it would incur if Mr Woodcock was still an employee at 50. It was genuinely served with the aim of giving effect to the Trust's genuine decision to terminate his employment on the grounds of his redundancy.
The Court also agreed with the EAT that it is an entirely legitimate aim for an employer to dismiss an employee who has become redundant. It was a legitimate part of that aim for the Trust to ensure that, in giving effect to it, the dismissal also saved the Trust the additional element of costs that, had it not timed the dismissal as it did, it would be likely to have incurred. The Court considered that Mr Woodcock had no right, entitlement or expectation to the enjoyment of the enhanced benefits that he would have received if he remained in the Trust's employment until he was 50. Had he done so, he would have been the beneficiary of a pure windfall. The Court also confirmed that giving Mr Woodcock notice without prior consultation was a proportionate means of achieving a legitimate aim. Although, in theory, he was denied an opportunity, in fact he was deprived of nothing as consultation would not have achieved anything and he would still have been dismissed.
The decision confirms that the requirement for a "cost-plus" approach to justification remains, notwithstanding the Court's acknowledgement that there is some artificiality about this approach. It remains to be seen whether future decisions will seek to address this artificiality.
In another long-awaited decision, the Advocate General has given his opinion on when the obligation to consult on collective redundancies is triggered under the European Collective Redundancies Directive (the Directive). The Advocate General has confirmed that the obligation arises when 'a strategic or commercial decision which compels the employer to contemplate or to plan for collective redundancies is made by a body or entity which controls the employer'. The opinion considers an earlier ECJ decision on collective consultation and, although it does not clarify the position completely, it draws out some useful commentary on when the collective consultation obligation could be triggered too early or too late.
In USA v Nolan, Nolan, a civilian employee of a US military base in the UK, brought a claim against the government of the USA for failure to inform and consult in relation to the decision to close the military base. Whilst consultation began in June 2006, a decision to close the base was made in March 2006, the British military authorities were informally notified of this decision in April 2006 and then formally notified in May 2006.
There is a difference in wording between the Directive and the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), which has led to confusion about the appropriate trigger point for consultation. The Directive provides that where an employer is 'contemplating' collective redundancies, he shall begin consultations with the workers' representatives in good time with a view to reaching an agreement. TULRCA, which implements the Directive, states that the obligation to consult arises where the employer is 'proposing' to dismiss as redundant 20 or more employees at an establishment within 90 days or less. TULRCA also provides that the consultation shall begin in good time.
In this case, the employment tribunal agreed that there had been a failure to consult the workers' representatives in good time. The US appealed to the EAT, unsuccessfully, then appealed to the Court of Appeal which made a reference to the European Court of Justice (ECJ) on the scope of the Directive.
The Advocate General confirmed that, under the Directive, collective consultations are to cover not only ways and means of avoiding collective redundancies or reducing the number of workers affected, but also mitigating the consequences of dismissal. The employer's obligations under the Directive must therefore arise at a time when there is still a possibility of preserving the effectiveness of such consultations, in particular the possibility of avoiding or reducing collective redundancies, or at least, mitigating the consequences. It would be too late if an employer began consultations after the decision to terminate the employment contracts had already been taken.
The Advocate General also considered the ECJ's decision in Akavan Erityisalojen Keskusliitto AEK ry and others v Fujitsu Siemens Computers Oy which has considered the scope of collective consultation. The Advocate General stated that it follows, as the ECJ observed in Akavan, that the collective consultation obligation under the Directive is deemed to arise where the employer is contemplating collective redundancies or is drawing up a plan for collective redundancies. The obligation should not be triggered prematurely, which could reduce flexibility for handling restructurings, create heavier administrative burdens and lead to unnecessary uncertainty for workers. The obligation should also not be triggered too late. Where a strategic or commercial decision has been adopted, a consultation which begins when a decision making collective redundancies necessary has already been taken cannot usefully involve any examination of conceivable alternatives with the aim of avoiding redundancies.
The Advocate General confirmed that an employer's collective consultation obligation arises under the Directive when a strategic or commercial decision which compels him to contemplate or to plan for collective redundancies is made by a body or entity which controls the employer. It is now for the Court of Appeal to identify in this case which of the events, before consultation actually began in June 2006, was in the nature of a strategic decision and exerted compelling force on the employer for the purposes of giving rise to the consultation obligation. It remains to be seen whether the ECJ will follow the Advocate General's opinion and provide further clarity regarding the trigger point for collective consultation.
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