Nick HobdenPartnerE: nick.hobden@ts-p.co.ukD: 01322 623700

James WillisSenior AssociateE: james.willis@ts-p.co.ukD: 01322 422540

22 March 2012

© Thomson Snell & Passmore 2012

TSP Connect SeminarEmployment law update

Nick HobdenPartner & Head of Employment

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Nick HobdenPartnerE: nick.hobden@ts-p.co.ukD: 01322 623700

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Our subjects today

• Redundancy – pooling, alternative roles and collective consultation

• TUPE Service Provision Changes

• Government proposals on executive pay

• Unfair Dismissal

• Confidential information post-termination

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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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