Mills & Reeve: HR Law Live

Job support scheme launch and other COVID news

The Chancellor’s launch of a new scheme to protect jobs hit the headlines last week. There have also been a number of other significant national developments over the last few days. 

These include:

• revisions to Government guidance on working from home
• an important joint statement on managing redundancies
• new legal obligations on employers to support self-isolation

Job Support Scheme

This new Scheme will run for six months from the beginning of November. The aim is to support viable jobs by providing financial assistance for short-time working. All SMEs automatically qualify for this support, but there will be eligibility requirements for larger businesses.

For more information see our FAQ document which collates what we know about the Scheme so far. Formal guidance with more detailed information is expected shortly.

Work from home if you can

Guidance has now been published, following the Government’s change of direction on 22 September about whether workers should return to the office. Revised guidance now states that “office workers who can work effectively from home should do so over the winter”.

As with previous iterations of the guidance, this leaves the decision about the precise arrangements to make in the hands of the employer, subject to the overriding legal requirement that the health risks of returning to the workplace must be reduced to the lowest practicable level. As previously, employers are encouraged to consult with their staff about the exact arrangements to be adopted.

New criminal sanctions to support test and trace

New regulations which came into force on 28 September impose new duties on employers to support test and trace. Relevant measures include imposing criminal sanctions on an employer if they “knowingly permit” a worker who is self-isolating to attend the workplace, though they may of course continue to work from home if they are self-isolating there.

The regulations also impose a legal obligation on workers to tell their employer they are self-isolating.

ACAS/CBI/TUC joint statement on handling redundancies

A joint statement from ACAS, the CBI and the TUC, issued on 24 September, encourages employers to “exhaust all possible alternatives before making redundancies”. This message is supported by articulating five key principles to help employers get the process right.

Publishing a joint statement like this is an unusual step, and it is safe to assume that employment tribunals will take note of it when assessing the fairness of any future redundancy process. However, the principles it sets out are well established, and it does not have the status of a formal code of practice.

Emergency legislation clarifies redundancy rights for furloughed employees

The Government has published new legislation on a week’s pay which comes into effect on 31 July. Its aim is to clarify the dismissal-related rights of employees who have been furloughed under the Coronavirus Job Retention Scheme, which ends on 31 October.  The basic idea is to ensure that statutory redundancy payments and other statutory dismissal-related entitlements are calculated based on the employee’s normal pay, rather than any reduced furlough rate.

Achieving this in practice is quite complicated, because there are four different ways of calculating a week’s pay, depending on the exact working arrangements.  This then forms the basis for calculating the amount of the relevant statutory payment, of which the two most commonly encountered are statutory redundancy payments and the basic award for unfair dismissal.

In the standard case of a salaried employee with normal working hours, this is achieved by treating their furloughed hours as normal working hours, and disregarding any reduction in the amount payable as a result of the employee being furloughed.  In other cases the averaging provisions need to be adjusted to achieve the same overall effect.

The new (and temporary) rules for calculating a week’s pay apply to the following statutory entitlements of employees who are – or have been – furloughed:

• Statutory redundancy payments
• Basic awards for unfair dismissal
• Payments guaranteed during the employee’s statutory notice period (these provisions don’t apply if the contractual notice period is at least a week longer than length of the minimum statutory notice)
• Compensation for breach of the requirement to give a written statement of reasons for dismissal
• Additional awards for failure to comply with an order for re-engagement or reinstatement
• Pay for periods during which employees under notice of redundancy take time off to look for work
• Calculating the trigger for engaging employees’ statutory rights in relation to short-time working

Redundancies and returning to work – immigration considerations

As staff begin to return to the workplace, or businesses consider implementing redundancies, it is important to consider the immigration compliance implications that may arise.

• Redundancies and restructures – additional considerations will apply in respect of staff who have Tier 2 visas. Changes to job titles, substantive duties, working hours, or work location and the termination of employment will all trigger reporting obligations. Where it is proposed an employee should take up a new role, or there are significant changes to the employee’s job content, careful consideration should be given to whether the role falls within the same SOC Code as the employee’s existing role. If the new role falls in a different SOC Code, a change of employment application would be required, subject to all of the usual requirements. This may impact on the timing and steps to be undertaken during the redundancy consultation exercise.
• Working from home – many staff will continue to work from home for several more weeks or months. Employers need to ensure that sponsored employees are monitored effectively in order that the employer is able to comply with its sponsor reporting obligations (e.g. in relation to absences from work, or failure to attend for work). Additional considerations may apply in respect of staff who are Key Personnel on the sponsor licence.
• Sponsor reporting duties – many employers have made changes to the working hours and salaries of staff as a consequence of the pandemic, including through use of the Coronavirus Job Retention Scheme and furlough. Many of these changes trigger sponsor reporting requirements. Further changes (e.g. return to previous working patterns, or flexible furlough) may trigger fresh reporting obligations. These must usually be completed within 10 working days.
• Right to work checks – the Home Office has published guidance for employers carrying out right to work checks during the pandemic. This introduces temporary changes to a manual right to work check by removing the requirement for an employee or prospective employee to submit their original right to work document. Instead it permits an employer to carry out a right to work check using video conferencing. However, where a check has been done in this way, a fully compliant check will need to be done within eight weeks of the end of the current arrangements. It would be sensible for the ‘full’ right to work check to be completed by employers as soon as it is practicable to do so.

Failure to take the necessary actions may have significant implications, either now (e.g. in respect of the ability of a migrant to remain in the UK), or several months or years in the future (e.g. during a Home Office audit) when the impact and timing of COVID-19 may be a distant memory. Visa holders and businesses with sponsored workers will want to ensure that all necessary steps are taken to minimise the risk of future compliance issues arising.

Alex Russell, Partner

Do employers need to consider bumping in redundancy consultations?

The Employment Appeal Tribunal has confirmed that there is no general rule that an employer is only required to consider bumping if it is raised by the employee. Whether or not bumping should be considered during redundancy consultations will depend on the particular facts of each case, in the context of the employment tribunal’s assessment of whether the employer’s decision to dismiss was reasonable – and hence fair.

Bumping refers to the process of transferring an employee whose role is at risk of redundancy into the role of another employee, who is then made redundant instead. The other employee is said to have been “bumped” out of their former position.

In this case, the claimant was engaged as a sales director and managed a team of account managers. Over time, it became clear that the division in which the claimant was employed was failing to grow as expected. The claimant’s role was unique in that he was the only sales director employed in the division, and as such he was informed that he was at risk of redundancy. During the consultation period, the employer relied on an email sent by the claimant during an earlier restructuring of the division which had stated that he did not wish to be made an account manager. It therefore did not consider transferring the claimant into a subordinate role as an alternative to redundancy.

The employment tribunal had concluded that, following earlier case law, the onus was on the claimant to suggest that he would consider taking an a more junior role to avoid redundancy. In absence of this, the ET ruled that the employer had not acted unreasonably in failing to consider bumping as part of the consultation process.

The EAT has now ruled that the ET was wrong to interpret the previous case law in this way. It did not set out a rigid rule in this respect. In addition, the ET had failed to recognise that the claimant had indeed raised the possibility of bumping. The EAT therefore remitted the case to the ET to reconsider its decision that the dismissal had been fair.

This latest EAT decision confirms that there is no firm rule on whether it is reasonable to consider bumping as part of a redundancy consultation process. Whether employers should consider bumping will depend on the individual circumstances of the redundancy. It may be more appropriate to consider this possibility where there is a single or small group of employees at risk of redundancy who have valuable transferable skills. It will be less likely to be appropriate to consider bumping where there are collective redundancies taking place, or where the employee at risk has a highly specialised role. In any case, employers must be aware that if an employee raises any possibility of bumping during a redundancy consultation process, then the employer should always take steps to consider whether this is a viable option.

Rumer Burnett, Trainee Solicitor

ECJ pushes back on starting point for collective redundancies consultation

In two Polish references about changing terms and conditions for hospital staff, the European Court of Justice has revisited the question of when consultation about collective redundancies should start.

For UK readers there is little surprising in its ruling that the Collective Redundancies Directive was engaged when two hospital employers in different parts of Poland sought to impose unfavourable changes to staff terms and conditions in order to save money. In one case it was a question of a temporary 15% pay cut and in the other the removal of generous long service payments.

What is more interesting is what the ECJ says about when the collective consultation required by the Directive should have started. That involved interpreting the somewhat vague wording of Article 2 which requires it to begin “where an employer is contemplating collective redundancies”. It is clear from earlier decisions that this must be prior to the decision to dismiss. But how much earlier?

In both these cases the employers sent out notices of amendment, which under Polish law had the effect of terminating the contract of employment if the employees did not accept the amendment. If they failed to object to the amendment by the mid-point of the notice period they were deemed to have accepted it. In one case, but not the other, sending the letters of amendment had been preceded by a period of individual consultation, after which about 20% of the employees accepted the change.

The ECJ has ruled that it should have commenced consultation before sending out the letters of amendment, since “it should reasonably have expected that some employees would not accept the change to their conditions of employment”.

As often with decisions of the ECJ it is not easy to apply this decision to the UK context, since the provisions in the Polish Labour Code about amending contracts of employment have no equivalent in English law. However the broad principle that emerges is that deciding on an action which is likely to lead to a number of dismissals in the future in the ECJ’s view amounts to “contemplating collective redundancies”, even if the precise numbers of actual job losses cannot be ascertained at that point.

In practice in the UK if negotiations about changing terms and conditions fail, imposing them is normally done by a letter of dismissal combined with an offer of re-engagement, which would clearly engage the obligation to consult. However there is more than a hint in these latest decisions that consultation should start at an earlier point, once the idea about imposing compulsory changes to terms and conditions has been formulated.

 

Could there be a gap in the UK's legal protection for pregnant women?

Pregnant women should enjoy additional protection against being made redundant, even in circumstances where it would be lawful to dismiss other employees, according to a recent advocate general’s opinion, given in a Spanish collective redundancies reference,

The question arose because the High Court in Catalonia was not sure whether a pregnant worker had to be given additional protection under EU law in a redundancy situation, or whether her rights in that situation were no greater than those enjoyed by the general workforce.

Advocate general Sharpston is of the opinion that it is not sufficient for an employer to comply with the requirements of the Collective Redundancies Directive when dismissing a pregnant employee on redundancy grounds. As well as establishing that the dismissal is “for one or more reasons not related to the individual employee concerned” and following the Directive’s information and consultation requirements, the employer must if at all possible redeploy a pregnant worker into suitable alternative employment.

Under UK law a women on maternity leave is given a similar level of protection. There is a requirement in the Maternity and Parental Leave Regulations which in effect requires an employer to give priority to a woman already on maternity leave when redeploying staff in a redundancy situation. There is however no equivalent requirement if a pregnant women is made redundant before going on maternity leave.

The reason for this gap in the legislation is not clear. Possibly it is because protecting the rights of women to return to work after maternity leave was seen as a particular priority, given they are underpinned by a specific requirement in the Equal Treatment Directive. However it is possible that the more general protection conferred by the Pregnant Workers Directive has been overlooked until now. This includes a “prohibition against dismissal” from the start or the pregnancy up to the end of the statutory maternity leave period “save in exceptional circumstances”.

The advocate general has said that a standard redundancy situation does not count as an “exceptional circumstance” for these purposes. If this opinion is adopted by the European Court of Justice it will mean that, on the face of it, our domestic legislation on redundancy has some gaps as far as pregnant workers are concerned, if it is to comply fully with EU law.

2016 amendments to Civil Service Compensation Scheme declared void

The High Court has ruled that amendments made to the Civil Service Compensation Scheme last year were unlawful and accordingly of no legal effect. These changes were introduced to reduce the value of voluntary exit, voluntary redundancy, compulsory redundancy and inefficiency payments. This ruling affects not only central government employees, but significant numbers of third sector and quasi-public sector workers whose employers participate in the Civil Service pension arrangements.

The Government introduced the changes in November 2016 following consultation with various unions and the agreement of eight unions. The reforms were not however agreed with Public and Commercial Services Union or the Prison Officers’ Association. The PCS brought judicial review proceedings to challenge the validity of the changes.

PCS successfully argued that the Government failed in its duty to consult with a view to reaching agreement (an obligation under the Superannuation Act 1972) in that it was excluded from further discussions about the amendments to the scheme that followed an initial consultation. Whilst PCS was included in the initial discussions the Court found that as the Government had held further discussions on the scheme that led to further changes without PCS being present, the Government had not fully met its duty to consult with a view to reaching agreement.

The Government has stated it will be appealing the judicial review decision, including on the basis that further discussion with PCS would not have made a difference to the scheme amendments. The Government has stated it will ask the Court to stay the current JR decision pending the appeal so that the 2016 terms can be used for now.

However pending further clarification it is likely that all voluntary exit, voluntary redundancy, compulsory redundancy and inefficiency exits will need to be calculated on the 2010 terms. The position with regard to payments already made under the 2016 terms is more complicated, as not all types of payment will necessarily be treated the same, through some may need to be recalculated.

Employers affected by this decision should await further guidance from the Cabinet Office. If decisions cannot be deferred, it would be prudent to take legal advice in relation to any redundancy or restructuring arrangements currently being progressed.

Patrick Gass, Principal Associate

Lack of sensitivity in handling redundancies can result in unfair dismissal

Being insensitive as an employer is not necessarily the same as being unreasonable, but it certainly doesn’t help when defending an unfair dismissal case.

Thomas v BNP Paribas is a decision of the Employment Appeal Tribunal about the dismissal of a senior manager, Mr Peter Thomas, on redundancy grounds. After over 40 years’ service, at the age of 59, he found himself as the only person in the selection pool for redundancy. That followed from a strategic review of his employer’s property management business, which had established that it was top heavy in management terms.

The main issue on appeal concerned the way consultation about alternative employment had been handled. The tribunal concluded that it had been conducted in an “insensitive and perfunctory manner” but that the dismissal had nevertheless been fair.

The employment tribunal’s findings addressed a particularly crass error in the initial consultation letter, which addressed the claimant as “Paul” instead of “Peter”. The EAT was more troubled by the employer’s decision to put him on garden leave at the start of the consultation, which had shocked and upset Mr Thomas.

However the EAT thought that the main flaw in the tribunal’s reasoning was its failure to explain why it had gone on to conclude that the dismissal had been fair, despite its strongly worded criticism of the way the consultation had been handled. It therefore remitted  the case to a new tribunal to look at this issue afresh.

It is not possible to predict the final outcome of this litigation. If the employer does lose, it will probably be because what in substance was a relatively reasonable consultation was marred by careless errors that arguably a reasonable employer would not have made. Certainly getting an employee’s Christian name wrong was not a good start, but it is more debatable whether putting him on garden leave was necessarily “insensitive and perfunctory". There may have been legitimate business reasons for acting in this way, though there is no doubt much will depend on exactly how this step was implemented.

Public sector exit payments: where are we now?

Earlier this week the Government published its response to its February 2016 consultation about reducing exit payments in the public sector.  But how will these changes fit in with its earlier and more targeted plans for imposing an overall cap on these payments? And what about plans to claw back payments from more highly paid workers who get another public sector job within 12 months?

Caps and clawbacks

There has been no concrete news since the end of last year, when a final draft of the claw-back regulations and an initial draft of the cap regulations were published. That means that there is nothing new to add to the briefing we published in January which summarises these proposals in some detail.

Originally the Government was planning to introduce both sets of regulations in April, but the timetable has slipped. It appears that October this year was the new target. It now seems likely that this will be missed too.  It is possible that we may see the claw-back regulations being introduced by the end of the year, though the Government may not be ready to impose the cap until next year.

Wider reforms

This week’s response to consultation makes it clear that the Government is seeking more wide-reaching changes to the way public sector exit payments are calculated, bearing in mind that the new cap will not have an impact on the “large majority” of exits.

The Government wishes to align the terms on offer in the public sector more closely with comparable terms available in the private sector, in the hope of achieving annual savings in the region of £250 million. Among other things, it is stipulating that there should be a maximum tariff of three weeks’ pay per year of service and an overall ceiling of 15 months’ pay when calculating redundancy payments.  It is also seeking to limit or end early access to a pension as part of an exit package.

The Government has now set a framework which will allow government departments to produce their proposals for each workforce. They have been given three months to put forward proposals and are then expected to begin the normal process of discussions and negotiations with Trade Unions and other workforce representatives.  Departments have been given nine months from now to conclude the negotiations and implement any necessary changes.

Jog Hundle, Partner

Employment law review of the year 2015/2016

To mark the beginning of another year, we have prepared a briefing looking at the key developments of 2015 which will continue to be significant as we move into 2016.

The introduction of Shared Parental Leave, the launch of the National Living Wage and the publication of the Trade Union Bill were arguably the stand-out developments of last year. But there have also been important developments in other areas including collective redundancies, disability discrimination and unfair dismissal.

Developments to look out for early in 2016 include a decision from the Employment Appeal Tribunal about commission and holiday pay and the Government’s response to consultation about the scope of compulsory gender pay reporting.