TSP Connect Employment Law Seminar 22 March 2012

1. TSP Connect Seminar
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. Nick Hobden
Partner & Head of Employment
Nick Hobden
Partner
E: nick.hobden@ts-p.co.uk
D: 01322 623700
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3. 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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4. 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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5. 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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6. 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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7. 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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8. 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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9. 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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10. 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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11. 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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12. 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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13. 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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14. 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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15. 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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16. 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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17. 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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18. 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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19. 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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20. 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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